Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction — Form S-4
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-4/A Amendment to Form S-4, Registration Statement 177 1.12M
2: EX-3.1 Restated Certificate of Incorporation 53 195K
3: EX-3.2 Amended and Restated By-Laws 9 37K
5: EX-4.11 Security Agreement Dated as of July 17, 1988 71 397K
6: EX-4.12 Subsidiary Security Agreement Dated July 17, 1998 29 135K
7: EX-4.13 Collateral Assignment of Patents, Trademarks Etc. 24 84K
4: EX-4.5 Warrant Agreement 61 243K
8: EX-5.1 Opinion re: Legality 2 13K
9: EX-10.1 Series A Purchase Agreement 61 261K
10: EX-10.2 Series B Purchase Agmt 59 249K
11: EX-10.69 Amendment to Loan and Security Agreement 7 30K
12: EX-10.70 Material Contract 23 79K
13: EX-10.78 Consulting Agreement 6 25K
14: EX-12.1 Statement re: Computation of Ratios 1 13K
15: EX-21.1 List of Subsidiaries of the Registrant 1 7K
16: EX-23.1 Consent of Experts or Counsel 1 8K
17: EX-23.2 Consent of Pricewaterhousecoopers LLP 1 9K
18: EX-25.1 Statement of Eligibilty and Qualification 4 17K
19: EX-99.1 Letter of Transmittal 15 70K
20: EX-99.2 Notice of Guaranteed Delivery 3 17K
21: EX-99.3 Exchange Agent Agreement 10 40K
EX-10.78 — Consulting Agreement
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CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of August 26, 1999 (the
"Agreement"), by and between Discovery Zone, with principal offices at 565
Taxtor Road, Elmsford, New York 10523 ("DZ") and Carl Marks Consulting Group LLC
with principal offices at 135 East 57th Street, New York, NY 10022 (inclusive of
any senior personnel, employees and associates thereof, "CMCG" or "Consultant").
WHEREAS, DZ desires to engage the financial and management
consulting service of CMCG, subject to the terms and conditions hereinafter set
forth; and
WHEREAS, CMCG has agreed to provide such financial and
management consulting services subject to the terms and conditions hereinafter
set forth;
NOW THEREFORE, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Engagement: DZ hereby agrees to engage CMCG, and CMCG
hereby agrees to serve DZ, as a financial and management consultant. It is
further agreed that Stanley B. Frieze, a Managing Partner of CMCG, shall
supervise this engagement, with whatever resources from CMCG as needed. Stanley
B. Frieze and CMCG will devote substantial time, but not full time to this
engagement. DZ understands and acknowledges that CMCG has and will continue to
have other engagements during the term of this agreement.
2. Scope: Implementation: - To maximize the speed and
effectiveness of implementation efforts, we will install one of our most senior
and experienced consultants to operate as interim Chief Operating Officer, full
time for approximately four to six months and part time for as long as necessary
thereafter. In this capacity we would serve on a day to day basis running store
operations and implementing required operational and financial controls.
During this phase, we will continue to refine strategic
thinking for the business, direct any additional analysis and plan required
infrastructure change in Projects, resource requirements, and time frames will
be firmed and the tracking of those implementation efforts will be followed
carefully.
The advantage of using interim management will be to receive
the benefits of outside business management expertise, while gaining needed
hands-on implementation help.
During the implementation phase, we will provide whatever
additional levels of technical or functional support that you require. These
could include infrastructure, MIS systems or other project-oriented support.
3. Term: The term of this Agreement shall commence as of the
date of this Agreement and shall continue until the engagement is completed
unless canceled with or without
cause by either party on five (5) business days written notice, in which event
any compensation owing to CMCG pursuant to paragraph 4 below shall be
immediately due and payable.
4. Compensation: DZ shall pay CMCG for its services a fee of
(i) $400.00 per hour for Stanley B. Frieze, (ii) $42,500.00 per month for
Richard Shepperd, and (iii) $42,500.00 per month for Chet Oblieleski, and (iv)
$250.00 per hour for other CMCG employees and associates as required. CMCG shall
make available its personnel as required during the engagement. CMCG shall
receive a retainer from DZ of $50,000.00 upon the execution of this agreement.
When invoices are submitted on a weekly basis they will be deducted from the
$50,000.00 retainer. The $50,000.00 retainer will be maintained at all times.
CMCG will submit subsequent consulting service fee and Expense invoices on the
Monday following each week in which consulting services are provided. It is
agreed that all of those invoices will be paid within five (5) days of the date
of submission.
These arrangements will stay in place for the first thirty
(30) days. At that point we will review with Wellspring Capital Management, LLC
what the arrangements will be going forward.
5. Expenses: CMCG shall be entitled to reimbursement for all
reasonable expenses incurred by it in the performance of its duties (the
"Expenses") upon presentation of appropriate documentation therefor. Such
Expenses shall include, but not be limited to, transportation of any CMCG senior
personnel, employees or associates on business related to the engagement, cost
of hotels, meals, etc. Such Expenses shall also include, but not be limited to,
all reasonable legal fees incurred by CMCG in connection with the performance of
the services contemplated by this Agreement, provided that DZ first consents to
the retention of such counsel for such services. All incurred Expenses will be
reimbursed weekly within seven (7) days of the receipt of invoices therefor.
6. Indemnification: DZ hereby agrees to indemnify CMCG and
hold it harmless for all acts taken or omissions, and all decisions made, by
CMCG (other than as a result of CMCG's gross negligence or willful misconduct)
and CMCG agrees to indemnify DZ and hold it harmless for all acts taken and all
decisions made while performing services for DZ and each party agree to pay
directly, upon presentation thereof, all statements or invoices for all fees and
expenses, including reasonable attorneys' fees actually and necessarily incurred
by the other party in connection with the defense of any such claims based on
alleged acts, omissions or decisions (other than made or taken through gross
negligence or willful misconduct), including any suit or proceeding relating
thereto and any appeal therefrom and the costs of any settlement thereof
("Claim"), provided that with respect to costs incurred in any appeal of a
judgment, the indemnifying party first consents to appealing such judgment. The
indemnified party shall have the sole right to select counsel of its choosing
and control the defense of any such claim, but the indemnifying party shall have
the right to accept or reject any settlement of any claim for which
indemnification is sought hereunder. For purposes of this paragraph CMCG or DZ
as the case may be includes its shareholders, officers, directors, employees
and/or agents, and their affiliates
and each of their respective shareholders, officers, directors, employees and/or
agents. The provisions of this Section 5 shall survive the Term of this
Agreement.
7. Proprietary Work Product and Confidential Company
Information: CMCG acknowledges and agrees that any work product produced by CMCG
is for the sole use of DZ and the Board of Directors and is not intended for
distribution to, or to be relied upon by, any third parties. The provisions of
this Section 6 shall survive the Term of this Agreement.
In addition, CMCG acknowledges and agrees that as a result of
the services to be provided hereunder, the persons performing such services may
acquire knowledge and information of a secret and confidential nature. CMCG
further acknowledges and agrees that this information constitutes valuable
property of DZ generally not being disseminated or made known to persons or
organizations outside DZ at all, or if made known, being done so only under
specific and restrictive conditions such as to ensure that it does not become
readily available to the public, and also that confidential information of
others may be received by DZ with restrictions on its use and disclosure.
Accordingly, CMCG agrees that:
(i) CMCG and any person performing any services for CMCG
hereunder shall not, during the term of this Agreement
nor at any time thereafter, disclose to anyone outside
DZ or use in other than DZ business any secret or
confidential information of DZ or its subsidiaries or
affiliates, except as authorized by authoritative
personnel of DZ. DZ information which is not readily
available to the public shall be considered secret and
confidential for the purpose of this Agreement and
shall include, but not be limited to, information
relating to DZ, its subsidiaries and affiliates,
customers, processes, products apparatus, data,
compounds, business studies, business and contracting
plans, business procedures and finances;
(ii) CMCG and any person performing any services for CMCG
hereunder shall not, during the term of this Agreement
nor at any time thereafter, disclose to any other
person or use secret or confidential information of
others, which, to the knowledge of CMCG, has been
disclosed to CMCG with restriction on the use or
disclosure thereof, in violation of those
restrictions.
(iii) Notwithstanding the foregoing, CMCG and any person
performing services for CMCG hereunder shall not be
liable for the disclosure of information which may
otherwise be deemed confidential hereunder:
(a) if the information is in, or becomes part of,
the public domain, other than by CMCG's
disclosure of the information; or
(b) if the information is furnished to a third
party by DZ without restriction of the third
party's right to disseminate the information; or
(c) if the information is already of record in
CMCG's files at the time of disclosure or is
disclosed to CMCG by a third party as a matter
of right; or
(d) if the information is disclosed with DZ written
approval; or
(e) if the information is compelled to be revealed
via subpoena, civil investigative demand or
other judicial or administrative process.
8. Reliance on Client's Information: DZ acknowledge and agrees
that CMCG, in performance of its duties under the Agreement, will be relying on
the truth, completeness and accuracy of the written documentation delivered and
the verbal communication made by DZ and its agents to CMCG and its agents in
connection with any and all matters relating to CMCG's engagement hereunder.
9. Notices: All notices, requests, demands and other
communications provided for by this Agreement shall be in writing addressed to
the parties at the address for such party first set forth above, and shall be
transmitted by either facsimile (fax), personal or overnight courier delivery or
by certified mail. All notices, etc. shall be deemed given when received by the
party to whom it is addressed.
10. Successors and Assigns: This Agreement shall inure to the
benefit of, and be binding upon each of DZ and CMCG and their respective
successors or assigns. Neither party may assign its rights and/or obligations
under this Agreement it without the written consent of the other party, which
consent shall not be unreasonably withheld.
11. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to principles of conflicts of law.
12. Amendments: No amendment, modification, termination or
waiver of any provision of this Agreement or consent to any departure by any
party therefrom shall be effective unless in writing signed by the parties
hereto, and, in any event, shall be effective only in the specific instance for
the specific purposes for which given.
13. No Waiver; Cumulative Remedies: No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude the exercise of any other right, power or
remedy. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
14. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
15. Counterparts: This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Waiver Of Jury Trial: Each of the parties to this
Agreement hereby waives its right to a jury trial with respect to any claim,
action, suit or proceeding made or brought by one of the parties against the
other in connection with or arising from this Agreement.
17. Independent Contractor Relationship: CMCG shall serve as
an independent contractor to DZ pursuant to the terms and conditions of this
Agreement and this Agreement does not create and shall not be construed to
create a relationship of principal and agent, joint venturer, co-partners,
employer and employee, master and servant or any similar relationship between
CMCG and DZ, and the parties hereto expressly deny the existence of any such
relationship.
18. Loan Origination Fees, etc.: Should CMCG introduce DZ to
any capital source with whom DZ ultimately closes a transaction, upon such
closing CMCG will be entitled to a fee.
If CMCG is asked to introduce DZ to any capital source the fee
will be on a mutually agreeable negotiated basis before undertaking such
activity.
19. Search Fees: Should CMCG introduce any individual to, and
subsequently hire that individual, DZ will pay CMCG a search fee equal to 25%
of the total first year's compensation package. This applies to any CMCG
personnel which the Company may subsequently hire.
20. Sale of Company. Should CMCG introduce Wellspring Capital
Management, LLC to any person or entity with whom Wellspring ultimately closes a
transaction for a merger, acquisition, sale of substantially all of the assets,
or any similar level of extraordinary transaction for DZ, or for substantially
all of DZ or for any division of subsidiary thereof, upon closing CMCG will be
entitled to a fee of the value of the transaction to be negotiated on a mutually
agreeable basis before CMCG undertakes such activity.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective offices thereunto duly authorized,
as of the date first written above.
DISCOVERY ZONE
By: /s/ Scott W. Bernstein
----------------------------
Scott W. Bernstein
President & CEO
CARL MARKS CONSULTING GROUP, LLC
By: /s/ Stanley B. Frieze
----------------------------
Stanley B. Frieze
Managing Partner
Dates Referenced Herein and Documents Incorporated by Reference
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