Exhibit 99.3
January __, 1998
EXCHANGE AGENT AGREEMENT
State Street Bank and Trust Company
Corporate Trust Department
Two International Place, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Ladies and Gentlemen:
Discovery Zone, Inc. (the "Company") proposes to make an offer
(the "Exchange Offer") to exchange any and all of its outstanding 13 1/2% Senior
Secured Notes due 2002 (the "Old Notes") for up to an aggregate principal amount
of $85,000,000 of its 13 1/2% Senior Secured Notes due 2002 and of $85,000,000
of its 13 1/2% Senior Secured Notes due 2002 (the "New Notes"). The terms and
conditions of the Exchange Offer as currently contemplated are set forth in a
rospectus dated _____, 1998 (the "Prospectus"), proposed to be distributed to
all record holders of the Old Notes. The Old Notes and the New Notes are
collectively referred to herein as the "Notes."
The Company hereby appoints State Street Bank and Trust
Company to act as exchange agent (the "Exchange Agent") in connection with the
Exchange Offer. References hereinafter to "you" shall refer to State Street Bank
and Trust Company.
The Exchange Offer is expected to be commenced by the Company
on or about _______, 1998. The Letter of Transmittal accompanying the Prospectus
is to be used by the holders of the Old Notes to accept the Exchange Offer, and
contains instructions with respect to the delivery of certificates for Old Notes
tendered.
The Exchange Offer shall expire at 5:00 P.M., New York City
time, on _______, 1998 or on such later date or time to which the Company may
extend the Exchange Offer (the "Expiration Date"). Subject to the terms and
conditions set forth in the Prospectus, the Company expressly reserves the right
to extend the Exchange Offer from time to time and may extend the Exchange Offer
by giving oral (confirmed in writing) or written notice to you before 9:00 A.M.,
New York City time, actually received by you on the business day following the
previously scheduled Expiration Date.
The Company expressly reserves the right to amend or terminate
the Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted by the Company for exchange, upon the occurrence of any of the
conditions of the Exchange Offer specified in the Prospectus under the caption
"The Exchange Offer -- Termination." The Company will give oral (confirmed in
writing) or written notice of any amendment or termination of the Exchange
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Offer or nonacceptance of any old Note to you as promptly as practicable in all
cases prior to the time you are obligated to take any action in contravention of
such amendment or termination or nonacceptance.
In carrying out your duties as Exchange Agent, you are to act
in accordance with the following instructions:
1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein, subject to such instructions as you
shall receive in accordance with and subject to the terms of the preceding
sentence and other applicable terms of this Agreement; provided, however, that
in no way will your general duty to act in good faith be discharged by the
foregoing.
2. You will establish an account with respect to the Old Notes
at the Depository Trust Company (the "Book-Entry Transfer Facility") for
purposes of the Exchange Offer within two business days after the date of the
Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the Old
Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes
into your account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer.
3. You are to examine each of the Letters of Transmittal and
certificates for Old Notes (or confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation")) and
Agent's Messages (as defined below) and any other documents, including, without
limitation, Notices of Guaranteed Delivery, delivered or mailed to you by or for
holders of the Old Notes to ascertain whether: (i) the Letters of Transmittal,
the Agent's Messages, the Notices of Guaranteed Delivery and any such other
documents are duly executed and properly completed in accordance with
instructions set forth therein; and (ii) the Old Notes have otherwise been
properly tendered. In each case where the Letter of Transmittal or any other
document has been improperly completed or executed or any of the certificates
for Old Notes are not in proper form for transfer or some other irregularity in
connection with the acceptance of the Exchange Offer exists, you will endeavor
to inform the presenters of the need for fulfillment of all requirements and to
take any other action as may be necessary or advisable to cause such
irregularity to be corrected.
You shall segregate all tenders which are in accordance with
the procedures set forth in the Prospectus, the Letter of Transmittal or the
Notice of Guaranteed Delivery from those in which the Letter of Transmittal,
Agent's Message, Notice of Guaranteed Delivery or any other document has been
improperly completed or executed, or some other irregularity in connection with
the acceptance of the Exchange Offer exists including, with respect to a Notice
of Guaranteed Delivery, the receipt of the Old Notes ("Defective Deposits").
Upon notice to the Company or its representatives, you shall use your best
efforts to assist the Company to
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cause holders who effected any Defective Deposit to cure such Defective Deposit.
The term "Agent's Message" means a message, transmitted by DTC and received by
you and forming part of a Book-Entry Confirmation, that states that DTC has
received an express acknowledgment from a participant in its system
("Participant") tendering Old Notes that are the subject of such Book-Entry
Confirmation that such Participant has received and agrees to be bound by the
terms of the Letter of Transmittal, and that the Company may enforce such
agreement against such Participant.
4. With the approval of Xxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx
or Xxxxxx X. Xxxxx, all of whom are officers of the Company (each an "Officer"
and together, "Officers") (such approval, if given orally, to be confirmed in
writing) or any other party designated by such Officer in writing, you are
authorized to waive any irregularities in connection with any tender of Old
Notes pursuant to the Exchange Offer.
5. Tenders of Old Notes may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer -- Procedures for Tendering," and Old Notes shall be considered
properly tendered to you only when tendered in accordance with the procedures
set forth therein. Notwithstanding the provisions of this paragraph 5, Old Notes
which an Officer (or any other party designated by an Officer in writing) shall
approve as having been properly tendered shall be considered to be properly
tendered (such approval, if given orally, shall be confirmed in writing).
6. You shall advise the Company with respect to any Old Notes
received subsequent to the Expiration Date and follow its written instructions
with respect to disposition of such Old Notes.
7. You shall accept tenders:
(a) in cases where the Old Notes are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the
Letter of Transmittal) is acting in a fiduciary or a representative
capacity only when proper evidence of his or her authority so to act is
submitted; and
(c) from persons other than the registered holder of Old Notes
provided that customary transfer requirements, including any applicable
transfer taxes, are fulfilled.
You shall accept partial tenders of Old Notes where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Old Notes to the transfer agent for split-up and return by standard means
any untendered Old Notes to the holder (or such other person as may be
designated in the Letter of Transmittal) as promptly as practicable after
expiration or
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termination of the Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance before 5:00 P.M. New York City time
within two business days following the Expiration Date, of all Old Notes
properly tendered and you, on behalf of the Company, will exchange such Old
Notes for New Notes and cause such Old Notes to be cancelled provided State
Street has been supplied with inventory. Delivery of New Notes will be made on
behalf of the Company by you at the rate of $1,000 principal amount of New Notes
for each $1,000 principal amount of the corresponding series of Old Notes
tendered promptly after notice (such notice if given orally, to be confirmed in
writing) of acceptance of said Old Notes by the Company; provided, however, that
in all cases, Old Notes tendered pursuant to the Exchange Offer will be
exchanged only after timely receipt by you of a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees, together with (i) the Note being tendered (if such Note is
held in certificated form), properly endorsed for transfer, or (ii) a Book-Entry
Confirmation (if such Note is held in book-entry form), or (iii) a Notice of
Guaranteed Delivery, and any other required documents. The New Notes shall be
issued only in fully registered form, without coupons, in denominations of
$1,000 or multiples thereof. In no event will you exchange Notes prior to the
Expiration Date.
9. Tenders pursuant to the Exchange Offer are irrevocable,
except that, subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of Transmittal, Old Notes tendered pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date.
10. The Company shall not be required to exchange any Old
Notes tendered if any of the conditions set forth in the Exchange Offer are not
met. Written notice of any decision by the Company not to exchange any Old Notes
tendered shall be given by the Company to you before 5:00 P.M. New York City
time within two business days following the Expiration Date.
11. If, pursuant to the Exchange Offer, the Company does not
accept for exchange all or part of the Old Notes tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the caption "The Exchange Offer -- Termination" or otherwise, and you shall have
been advised by the Company (such notice if given orally to be confirmed in
writing) of such nonacceptance, you shall as soon as practicable after the
expiration or termination of the Exchange Offer return those certificates for
unaccepted Old Notes (or effect appropriate book-entry transfer), together with
any related required documents and the Letters of Transmittal relating thereto
that are in your possession, to the persons who deposited them.
12. All certificates for reissued Old Notes or unaccepted Old
Notes shall be
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forwarded by (a) first-class certified mail, return receipt requested under a
blanket surety bond protecting you and the Company from loss or liability
arising out of the non-receipt or non- delivery of such certificates or (b) by
registered mail insured separately for the replacement value of each of such
certificates.
13. You are not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, bank or
other persons or to engage or utilize any person to solicit tenders.
14. As Exchange Agent hereunder you:
(a) shall have no duties or obligations other than those
specifically set forth herein or as may be subsequently agreed to in
writing by you and the Company;
(b) will not be required to and will make no representations
and have no responsibilities as to the validity, sufficiency, value or
genuineness of any Notes, Letters of Transmittal or documents deposited
with you, or of any Notes delivered by you, pursuant to the Exchange
Offer or of any signatures or endorsements, other than your own, or any
thereof;
(c) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or
liability, unless you shall have been furnished with reasonable
indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to you and reasonably
believed by you to be genuine and to have been signed by the proper
party or parties;
(e) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as to its
due execution and validity and effectiveness of its provisions, but
also as to the truth and accuracy of any information contained therein,
which you shall in good faith believe to be genuine or to have been
signed or represented by a proper person or persons;
(f) may rely on and shall be protected in acting upon written
or oral instructions, with respect to any matter relating to your
duties as Exchange Agent, from any officer of the Company;
(g) may consult with your counsel with respect to any
questions relating to your duties and responsibilities and the advice
or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
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omitted to be taken by you hereunder in good faith and in accordance
with the advice or opinion of such counsel; and
(h) shall not advise any person tendering Old Notes pursuant
to the Exchange Offer as to the wisdom of making such tender or as to
the market value or decline or appreciation in market value of any Old
Notes.
15. You shall advise by facsimile transmission ((914)
000-0000) or telephone ((000) 000-0000), and promptly thereafter confirm in
writing to, Xxxxxx X. Xxxxx at Discovery Zone, Inc., 000 Xxxxxx Xxxx, Xxxxx
Xxxxx, Xxxxxxxx, Xxx Xxxx 00000, of the Company and such other person or persons
as it may request, daily (and more frequently during the week immediately
preceding the Expiration Date and if otherwise requested) up to and including
the Expiration Date, as to the number of Old Notes which have been tendered
pursuant to the Exchange Offer and the items received by you pursuant to this
Agreement, separately reporting and giving cumulative totals as to items
properly received and items improperly received. In addition, you will also
assist the Company by informing, and cooperating, in making available to, the
Company or any such other person or persons upon request (such request if given
orally, to be confirmed in writing) made from time to time prior to the
Expiration Date of such other information as it or he or she reasonably
requests. Such cooperation shall include, without limitation, the granting by
you to the Company and such person as the Company may request of access to those
persons on your staff who are responsible for receiving tenders, in order to
ensure that immediately prior to the Expiration Date the Company shall have
received information in sufficient detail to enable it to decide whether to
extend the Exchange Offer. The Company shall prepare a final list of all persons
whose tenders were accepted and deliver said list to you before 5:00 P.M. New
York City time within two business days after the Expiration Date. You shall
prepare a list of the aggregate principal amount of Old Notes tendered, the
aggregate principal amount of Old Notes accepted and deliver said list to the
Company.
16. Letters of Transmittal and Notices of Guaranteed Delivery
shall be stamped by you as to the date and the time of receipt thereof and shall
be preserved by you for a period of time at least equal to the period of time
you preserve other records pertaining to the transfer of notes. You shall
dispose of unused Letters of Transmittal which were supplied to you by the
Company for curing purposes only and other surplus materials by returning them
to the Company.
17. You hereby expressly waive any lien, encumbrance or right
of set-off whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any, borrowed by the
Company, or any of its subsidiaries or affiliates pursuant to any loan or credit
agreement with you or for compensation owed to you hereunder.
18. For services rendered as Exchange Agent hereunder, you
shall be entitled
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to such compensation as set forth on Schedule I attached hereto.
19. You hereby acknowledge receipt of the Prospectus and the
Letter of Transmittal and further acknowledge that you have examined each of
them. Any inconsistency between this Agreement, on the one hand, and the
Prospectus and the Letter of Transmittal (as they may be amended from time to
time), on the other hand, shall be resolved in favor of the latter two
documents, except with respect to the duties, liabilities and indemnification of
you as Exchange Agent, which shall be controlled by this Agreement.
20. The Company covenants and agrees to indemnify and hold you
harmless in your capacity as Exchange Agent hereunder against any loss,
liability, cost or expense, including reasonable attorneys' fees and expenses,
arising out of or in connection with any act, omission, delay or refusal made by
you in reliance upon any signature, endorsement, assignment, certificate, order,
request, notice, instruction or other instrument or document reasonably believed
by you to be valid, genuine and sufficient and in accepting any tender or
effecting any transfer of Old Notes reasonably believed by you in good faith to
be authorized, and in delaying or refusing in good faith to accept any tenders
or effect any transfer of Old Notes; provided, however, that the Company shall
not be liable for indemnification or otherwise for any loss, liability, cost or
expense to the extent arising out of your gross negligence or willful
misconduct. In no case shall the Company be liable under this indemnity with
respect to any claim against you unless the Company shall be notified by you, by
letter or cable or by facsimile confirmed by letter, of the written assertion of
a claim against you or of any other action commenced against you, promptly after
you shall have received any such written assertion or notice of commencement of
action. The Company shall be entitled to participate at its own expense in the
defense of any such claim or other action, and, if the Company so elects, the
Company shall assume the defense of any suit brought to enforce any such claim.
In the event that the Company shall assume the defense of any such suit, the
Company shall not be liable for the fees and expenses of any additional counsel
thereafter retained by you so long as the Company shall retain counsel
satisfactory to you to defend such suit.
21. THIS AGREEMENT AND YOUR APPOINTMENT AS EXCHANGE AGENT
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. This Agreement and your appointment as Exchange Agent
hereunder shall inure to the benefit of, and the obligations created hereby
shall be binding upon, the successors and assigns of each of the parties hereto.
22. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
23. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in
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any way be affected or impaired thereby.
24. This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged. This Agreement may not be modified orally.
25. Unless otherwise provided herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
facsimile or similar writing), shall be delivered by hand or first class mail,
postage prepaid, shall be deemed given when received and shall be sent to the
addresses listed below or to such other addresses as the addressee shall
designate from time to time by notice:
Company: Discovery Zone, Inc.
000 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
Exchange Agent: State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Corporate Trust Department/
Transfer Unit
26. Unless terminated earlier by the parties hereto, this
Agreement shall terminate 90 days following the Expiration Date. Notwithstanding
the foregoing, Paragraphs 19, 21 and 23 shall survive the termination of this
Agreement. Upon any termination of this Agreement, you shall promptly deliver to
the Company any certificates for Notes, other related documents, funds or
property then held by you as Exchange Agent under this Agreement.
27. This Agreement shall be binding and effective as of the
date hereof.
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Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.
DISCOVERY ZONE, INC.
By: __________________________
Name:
Title:
Accepted as the date
first above written:
STATE STREET BANK AND TRUST COMPANY, Exchange Agent
By: ________________________
Name:
Title:
SCHEDULE I
The fee is $5,000, which fee does not include the original
disseminating of Letters of Transmittal or Prospectuses or the
handling of such subsequent request for Letters of Transmittal
or Prospectuses which services are not being provided by the
Exchange Agent hereunder.
In addition, the Company will pay the reasonable fees of the
Exchange Agent's counsel which fees are incurred by the
Exchange Agent in connection with the performance of its
duties under and for preparation of the Exchange Agent
Agreement.
