Exhibit 4.66
Discovery Zone, Inc. Secured Rejection Note (the "Secured Rejection Note")
$4,416,237.90 July 29, 1997
(the "Effective Date")
FOR VALUE RECEIVED, the undersigned, Discovery Zone, Inc., a
Delaware corporation ("MAKER"), promises to pay to the order of McDonald's
Corporation, a Delaware corporation, its successors and assigns ("HOLDER"),
on or before the stated Maturity Date at such place as Holder may from time
to time designate in writing, the principal sum of FOUR MILLION FOUR HUNDRED
SIXTEEN THOUSAND TWO HUNDRED THIRTY-SEVEN AND NINETY ONE HUNDREDTHS DOLLARS
($4,416,237.90) (such sum, as the same may be reduced from time to time as
herein provided, the "Principal Amount"), in lawful money of the United
States of America, together with interest accrued thereon, to be computed and
paid as specified in Section 1 below.
1. Payment of Principal and Interest.
The Principal Amount of the Secured Rejection Note shall be due and
payable in six equal annual installments (each, a "Principal Installment") of
SEVEN HUNDRED THIRTY-SIX THOUSAND THIRTY-NINE AND SIXTY-FIVE ONE HUNDREDTHS
DOLLARS ($736,039.65), commencing on the first anniversary of the Effective
Date and on each successive anniversary thereof through and including the
sixth anniversary (the sixth anniversary of the Effective Date, the "Maturity
Date"). On the date on which any Principal Amount is due and payable, the
Maker shall pay the Principal Amount then due plus all unpaid interest
accrued thereon to, but not including, such payment date in full.
The Maker may at any time and from time to time prepay the Principal
Amount then outstanding, in whole or in part, without premium or penalty,
upon at least one business day's prior written notice to Holder, specifying
the date and the amount of the prepayment. If any such notice is given, the
amount set forth in the notice shall be due and payable on the date set forth
in the notice, together with accrued interest to, but not including, such
date on the amount to be prepaid. Amounts prepaid shall be in an aggregate
principal amount of at least $25,000 or a whole multiple of $10,000 in excess
thereof and shall be applied to the Principal Amount of the Secured Rejection
Note and, upon such application, the amount of each Principal Installment due
thereafter shall be reduced to an amount equal to the reduced Principal
Amount divided by the remaining number of Principal Installments (including,
but not limited to, that Principal Installment due on the Maturity Date).
Within five Business Days following the consummation of the sale of
any of the Collateral (as hereinafter defined), the Maker shall apply the Net
Proceeds first, to the prepayment of the Secured Rejection Note in the manner
provided in the immediately preceding paragraph, second, to the prepayment of
any other notes secured by the Mortgages (including the Secured Rent Deferral
Notes issued by the Maker to the Holder) then outstanding, pro rata based
on the then outstanding principal amounts of any such notes, and the balance,
if any, as provided in Section 6(b) of the Mortgages. "Collateral" shall
mean the Mortgaged Property or Trust Property, as the case may be, as such
terms are defined in the Mortgages and Assignments of Rents, Deeds of Trust
and/or similar security instruments granted by Maker in favor of Holder of
even date herewith with respect to the fourteen properties listed on Exhibit
A hereto (the "Mortgages"). "Net Proceeds" shall mean the sales price for
any item of the Collateral after deducting any brokerage fees and
commissions, transfer taxes and other customary closing costs payable by
Maker in connection with such sale.
The Principal Amount outstanding from time to time shall bear
interest at a rate per annum equal to 11% (the "Base Rate"). Interest shall
be due and payable annually, in arrears, on each due date for each Principal
Installment (each an "Interest Payment Date") and on the Maturity Date. In
the event that any Interest Payment Date falls on a day that Banks in the
City of New York are not open for business, such Interest Payment Date will
fall on the next day Banks in the City of New York are open for business. If
all or any portion of (i) any Principal Amount, (ii) any interest payable
thereon or (iii) any other amount payable hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), the
delinquent amount shall bear interest at a rate per annum which is equal to
the Base Rate plus 2% (the "Default Rate") for each day elapsed from the date
of such nonpayment until such amount is paid in full (as well as after as
before judgment).
2. Security for the Loan.
This Secured Rejection Note is secured by the Mortgages.
3. Events of Default.
If any of the following events shall occur and be continuing:
(a) Maker shall fail to pay any Principal Amount when such
Principal Amount becomes due in accordance with the terms hereof within ten
days after receipt of written notice from the Holder of Maker's failure to
pay such Principal Amount or Maker shall fail to pay any interest on the
Principal Amount such interest becomes due in accordance with the terms
hereof within ten days after receipt of written notice from the Holder of
Maker's failure to pay such interest on the Principal Amount;
(b) Maker or any of its subsidiaries (i) shall default in any
payment of principal of or interest of any indebtedness (other than this
Secured Rejection Note or the Secured Rent Deferral Notes) beyond the period
of grace, if any, provided in the instrument or agreement under which such
indebtedness was created equal to or greater than $2.5 million; or (ii) shall
default in the observance or performance of any other agreement or condition
relating to any such indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto (beyond the expiration of any cure
period), or any other event shall occur or condition exist, the effect of
which default or event or condition is to cause, or to permit the
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holder or holders of such indebtedness to cause, with the giving of notice if
required, such indebtedness to become due prior to its stated maturity;
(c) Maker or any of its subsidiaries shall default in the
observance or performance of any payment or other obligation under two or
more of any of the lease or sublease agreements under which Maker or such
affiliate leases or subleases real property from McDonald's Corporation and,
as a result of such defaults, ▇▇▇▇▇▇▇▇'▇ Corporation terminates two or more
of such leases in accordance with their respective terms;
(d) Maker or any of its subsidiaries shall default in the
observance or performance of any agreement or condition contained in this
Secured Rejection Note (other than any agreement relating to the payment of
the Principal Amount and/or any interest thereon) or in any of the Mortgages
and such default shall continued unremedied for a period of thirty (30) days;
provided that if such default is not readily susceptible of cure in such
thirty (30) day period, and provided that Maker proceeds in a diligent manner
to cure such default, Maker shall have such additional time to effect such
cure as shall be reasonably necessary to effect such cure;
(e) Excepting only those continuing proceedings relating to the
bankruptcy cases of Maker's debtor predecessors in interest captioned In re
Discovery Zone, Inc., et al., Case No. 96-411 (HSB) (Jointly Administered),
before the United States Bankruptcy Court for the District of Delaware, Maker
or any of its subsidiaries shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Maker or any of its
subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Maker or any of its
subsidiaries any case proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for relief or any
such adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
the Maker or any of its subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in
the entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Maker or any of its subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set froth in clause (i), (ii) or (iii) above; or (v) the
Maker or any of its subsidiaries shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due;
(f) One or more judgments or decrees shall be entered against the
Maker or any of its subsidiaries involving in the aggregate a liability (not
paid or fully covered by insurance, subject to a commercially reasonable
deductible) of $2.5 million or more and all such
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judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from he entry thereof; or
(g) Any of the Mortgages shall cease, for any reason, to be in full
force and effect, or Maker or any of its subsidiaries shall so assert or the
liens created by any of the Mortgages shall cease to be enforceable and of
the same effect and priority purported to be created thereby;
then, (A) if such event is an event specified in clause (i), (ii) or (iv) of
subparagraph (e) above, automatically this Secured Rejection Note and all
amounts owing hereunder shall immediately become due and payable, and (B) if
such event is any other event specified in this Section 3, Holder may, by
notice to Maker, declare the Secured Rejection Note and all amounts owing
hereunder to be immediately due and payable, whereupon the same shall
immediately become due and payable. Except as expressly provided in this
paragraph, presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
4. Payment of Expenses and Taxes.
Maker agrees (i) to pay or reimburse Holder for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Secured Rejection Note and the Mortgages, including without
limitation the reasonable fees and disbursements of counsel to Holder and
(ii) to pay, indemnify, and hold Holder harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting
from any delay in paying, stamp and other similar taxes, if any, which may be
payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any
waiver or consent under or in respect of, this Secured Rejection Note and the
Mortgages and (iii) to pay, indemnify and hold Holder harmless from and
against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the enforcement, performance and
administration of this Secured Rejection Note and the Mortgages, including
without limitation any of the foregoing relating to the violation of,
noncompliance with or liability under environmental law applicable to the
operations of Maker or any of its subsidiaries on the Collateral; provided
that Maker shall have no obligation hereunder to Holder with respect to
indemnified liabilities arising from the gross negligence or willful
misconduct of the Holder or any environmental activities or contamination
occurring on any Collateral after Maker transfers or conveys such Collateral
to Holder or any other person following a foreclosure on such Collateral or
deed-in-lieu thereof. The agreements in this Section 4 shall survive
repayment of the Secured Rejection Note and all other amounts payable
hereunder.
5. Authority.
Maker represents that it has full power authority and legal right to
execute and deliver this Secured Rejection Note and the Mortgages and to
perform its obligations hereunder and thereunder, and that this Secured
Rejection Note and the Mortgages constitute the valid and
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binding obligation of Maker, enforceable against Maker in accordance with its
terms, except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity, regardless of whether considered in proceedings at law or in equity.
6. Notices.
All notices, requests and demands to or upon Maker or Holder to be
effective shall be in writing (including by facsimile transmission), and,
unless otherwise expressly provided therein, shall be deemed to have been
duly given or made (a) in the case of delivery by hand, when delivered, (b)
in the case of delivery by mail, three days after being deposited in the
mails, postage prepaid, or (c) in the case of delivery by facsimile
transmission, when sent and receipt has been confirmed, addressed as follows,
or to such other address as may be hereafter notified by the respective
parities hereto:
Maker: Discovery Zone, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Holder: ▇▇▇▇▇▇▇▇'▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
7. Consent to Jurisdiction; Governing Law.
(a) THIS SECURED REJECTION NOTE WAS NEGOTIATED IN THE STATE OF NEW
YORK, AND MADE BY MAKER AND ACCEPTED BY HOLDER IN THE STATE OF NEW YORK,
WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES
AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURED
REJECTION NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO NOTES MADE AND PERFORMED IN SUCH STATE AND ANY APPLICABLE LAW
OF THE UNITED STATES OF AMERICA. IT IS BEING UNDERSTOOD THAT THE LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF THIS
SECURED REJECTION NOTE AND ALL OF THE INDEBTEDNESS OR OBLIGATIONS ARISING
HEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, MAKER HEREBY
UNCONDITIONALLY
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AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER
JURISDICTION GOVERNS THIS SECURED REJECTION NOTE, AND THIS SECURED REJECTION
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST MAKER OR HOLDER
ARISING OUT OF OR RELATING TO THIS SECURED REJECTION NOTE SHALL BE INSTITUTED
IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND MAKER WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING, AND MAKER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. MAKER DOES
HEREBY DESIGNATE AND APPOINT ▇▇▇▇▇▇▇▇ & STERLING, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-6069 (ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ESQ.), AS ITS
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND
ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY
FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE OF
MAKER MAILED OR DELIVERED TO MAKER IN THE MANNER PROVIDED HEREIN SHALL BE
DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MAKER, IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MAKER (I) SHALL GIVE
PROMPT NOTICE TO HOLDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT
HEREUNDER, (II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE
DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN OFFICE
IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
8. Miscellaneous
(a) This Secured Rejection Note may be modified, amended, waived,
extended, changed, discharged or terminated only by an agreement in writing
signed by the party against whom enforcement of any such modification,
amendment, waiver, extension, change, discharge or termination is sought.
(b) No failure to exercise and no delay in exercising any right,
remedy, power or privilege hereunder or under the Mortgages shall operate as
a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder or under the Mortgages preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein and
under the Mortgages are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.
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(c) This Secured Rejection Note shall be binding upon and inure to
the benefit of Maker and ▇▇▇▇▇▇ and their respective successors and assign,
except that Maker may not assign or transfer any of its rights or obligations
under this Secured Rejection Note without the prior written consent of
Holder. Holder may sell, transfer or assign the Secured Rejection Note (or
any of its rights hereunder) to any person upon prior written notice of such
sale, transfer or assignment to Maker. Upon any such sale, transfer or
assignment, the assignee shall have all the rights, remedies, powers and
privileges of Holder hereunder.
IN WITNESS WHEREOF, ▇▇▇▇▇ has duly executed or has caused its
respective duly authorized officers to execute this Secured Rejection Note on
its behalf, as of the day and year first above written.
DISCOVERY ZONE, INC.
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
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EXHIBIT A
Location Location Number
Indianapolis, Indiana (307)
Kennesaw, Georgia (334)
▇▇▇▇▇▇▇▇▇▇, Illinois (335)
▇▇▇▇▇▇▇ County (Littleton), Colorado (338)
Columbus, Ohio (339)
Blaine (▇▇▇▇ Rapids), Minnesota (340)
Forest Park, Ohio (343)
▇▇▇▇ Valley, Texas (344)
Arlington, Texas (347)
San Antonio, Texas (348)
Sterling Heights, Michigan (349)
Philadelphia (▇▇▇▇▇▇▇▇ ▇▇▇▇▇), Pennsylvania (352)
Aurora, Colorado (353)
Vancouver, Washington (357)
