EXHIBIT 10.02
NON-NEGOTIABLE, SECURED PURCHASE MONEY PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, S2 HOLDINGS, INC., a Delaware
corporation, with its chief executive offices at 000 Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxx, Xxxxxxxx 00000 ("Maker"), hereby promises to pay to the order
of X.X. XXXXXXXXX X.X.X., LIMITED PARTNERSHIP, a Nevada limited partnership
("Payee"), the original principal amount of Twenty-Two Million Seventy-Three
Thousand Two Hundred Seventy Dollars ($22,073,270), as such original principal
amount may be increased or reduced as provided in Paragraph 1 of this Note
(which original principal amount, as so increased or reduced, is referred to
herein as "principal", "principal amount" or "principal sum"), with interest
accrued thereon at the rate of eight percent (8%) per annum, compounded annually
(determined by multiplying the outstanding principal of this Note at the
beginning of each month by 1/12 of 8%), all in lawful money of the United States
of America, and all payable as hereinafter provided, but in no event later than
December 31, 2021.
This Note is being executed and delivered in accordance with, and is
subject to the terms and conditions of, the Purchase Agreement, effective as of
February 15, 2001, among Payee, X.X. Xxxxxxxxx Management Company, Inc. ("JGW"),
X.X. Xxxxxxxxx Receivables II LLC, Receivables II-A LLC, Receivables II-A
Holding Company LLC, Maker and DVL, Inc. (the "Purchase Agreement") including,
without limitation, the provisions of the Purchase Agreement regarding
reductions of the principal of this Note under Sections 1(c) thereof and
permitted offsets of the principal of this Note under Article 9 thereof. This
Note is referred to in the Purchase Agreement as Note 1. A second note, referred
to in the Purchase Agreement as Note 2, is also being executed and delivered in
accordance with, and is subject to the terms and conditions of, the Purchase
Agreement. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement.
1. (i) The Purchase Price and the principal amount of the Notes
shall, effective as of the first day of each month, be increased PARI PASSU by
(i) an amount, if any, equal to eighty-one percent (81%) of (x) the actual cash
collected by the Subsidiaries in the immediately prior month (the "Calculation
Month") in excess of (y) the total dollar amount for the Calculation Month as
shown on the schedule of "Performing Scheduled Payments as of January 31, 2001"
attached to the Purchase Agreement as SCHEDULE 1(C)(I)-1, plus (ii) an amount,
if any, equal to eighty-one percent (81%) of (x) the rehabilitated claims in the
Calculation Month as shown on the monthly servicer reports for each of the
Subsidiaries (the "Monthly Servicer Reports") for the Calculation Month, samples
of which reports are attached to the Purchase Agreement as SCHEDULE 1(C)(I)-2,
in excess of (y) the new defaults in the Calculation Month as shown on the
Monthly Servicer Reports for the Calculation Month; provided, however, it is
understood and agreed that increases shall be made at such 81% level only to the
extent there are no then outstanding cumulative reductions in the principal
amount of the Notes that were made at a 100% level; otherwise, the increases
referred to above in this sentence shall be made at the
100% level, and not at the 81% level, until such cumulative reductions made at
the 100% level have been reduced to zero.
(ii) The Purchase Price and the principal amount of the Notes
shall, effective as of the first day of each month, be reduced PARI PASSU by an
amount, if any, equal to one hundred percent (100%) of (x) the new defaults in
the Calculation Month as shown on the Monthly Servicer Reports for the
Calculation Month in excess of (y) the rehabilitated claims in the Calculation
Month as shown on the Monthly Servicer Reports for the Calculation Month;
provided, however, it is understood and agreed that reductions shall be made at
such 100% level only to the extent there are no then outstanding cumulative
increases in the principal amount of the Notes that were made at an 81% level;
otherwise, the reductions referred to above in this sentence shall be made at
the 81% level, and not at the 100% level, until the cumulative increases made at
the 81% level have been reduced to zero.
(iii) The Purchase Price and the principal amount of the Notes
shall, on a monthly basis, also be increased PARI PASSU, on a dollar-for-dollar
basis, by the amount of any reserve fund(s) existing on or prior to February 15,
2001, which reserve fund(s) have been established under, or as provided in, the
Securitization Documents, paid after February 15, 2001 to the Class A
Certificateholders, the Series 1997-A Noteholders, the Series 1998-1 Noteholders
and the Series 1998-A Noteholders.
(iv) In the event of any "Significant Event" (as defined in the
Pooling and Servicing Agreement), "Event of Default" (as defined in the 9/30/97
Indenture and the 12/23/98 Indenture), "Servicer Default" (as defined in the
1997-1 Supplement, the 1997-A Supplement, the 1998-1 Supplement and the 1998-A
Supplement) that results in any suspension of payment to the Subsidiaries under
the relevant Supplement, the Purchase Price and the principal amount of the
Notes will be reduced PARI PASSU by an amount equal to eighty-one percent (81%)
of the net present value of the remaining cash flow attributable to the "Seller
Interest" (as defined in the Pooling and Servicing Agreement) or the "Issuer
Interest" (as defined in the 9/30/97 Indenture and the 12/23/98 Indenture) of
the relevant Subsidiary, as determined pursuant to the following sentence. The
calculation of the net present value of such remaining cash flow payable to the
relevant Subsidiary will be made using the "cash available" column of the
"secmodel" as adjusted on a monthly basis, a copy of which has been furnished,
and is acceptable, to Buyer. The discount rate used in the calculation of such
net present value will be the discount rate used in the relevant Supplement
listed on Exhibit A to the Purchase Agreement. After reductions have been made
under this Paragraph 1(iv) with respect to any securitization described in the
Securitization Documents, no further reductions will be made under Paragraph
1(ii) with respect to such securitization. If the suspension referred to above
is reversed for any reason, this clause (iv) shall have no application.
(v) Eighty-Seven and 16/100ths percent (87.16%) of all such
increases and reductions, if any, shall be allocated to Note 1, and the balance
shall be allocated to Note 2. All such increases and reductions, if any, shall
be endorsed by SSC on a grid or schedule to be
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attached to the Notes, and SSC is authorized by Buyer to make such endorsements.
All increases and reductions under this Paragraph 1 shall be made without
duplication.
(vi) It is understood and agreed that this Note shall not be
deemed to have been repaid if the principal reduces to zero under this Paragraph
1 at any time prior to December 31, 2021, but shall be deemed to have been
repaid upon payment in full of all principal and accrued interest outstanding on
December 31, 2021.
2. Maker shall pay the principal of this Note and accrued interest
thereon as follows: Within twenty (20) days after the end of each calendar
month, provided Maker receives distributions or other monies in such calendar
month with respect to its Class B Interest or immediately after Maker receives
such distributions or monies, commencing with March 20, 2001, and until this
Note has been paid in full, Maker shall pay to Payee an amount equal to
eighty-seven and 16/100ths percent (87.16%) of eighty-one percent (81%) of the
Cash Flow (as that term is hereinafter defined) of Maker for such month. In the
event of a sale, transfer, financing or other similar transaction relating to
the Class B Interest that results in the receipt of cash proceeds by Maker in
respect thereto, Maker shall pay to Payee an amount to be agreed to in good
faith by Maker and Payee taking into account Xxxxx's contribution to such
transaction and the then respective after-tax positions of Maker and Payee and,
in such event, future payments under SCHEDULE A attached hereto and made a part
hereof shall be appropriately reduced. The foregoing provisions of this
Paragraph 2 shall not limit or affect in any manner Payee's rights, and/or
Maker's obligations, in the Pledge Agreement; nor, without limiting the
foregoing, may the Class B Interest be sold, assigned or otherwise transferred
or encumbered, except as permitted in the Pledge Agreement. All payments shall
first be applied to the accrued but unpaid interest on this Note and then to the
principal outstanding on this Note, until this Note is paid in full and fully
amortized. Notwithstanding the foregoing, in no event shall the amount retained
by Maker for any such month out of Cash Flow be less than one-twelfth (1/12th)
of the amount set forth in said SCHEDULE A, column 1 (in respect of the year of
the relevant payment) nor greater than the amount set forth in said SCHEDULE A,
column 2 (in respect of the year of the relevant payment). For purposes of this
Note, "Cash Flow" means all gross revenues from whatever source of Maker and any
entity in which Maker owns more than forty-nine percent (49%) of the equity
interests therein on a consolidated basis. On or before twenty (20) days after
the end of each such month, there shall be delivered by Maker to Payee a
statement of the chief financial officer of Maker indicating the Cash Flow for
the immediately preceding month set forth in reasonable detail; provided,
however, as long as JGW is Master Servicer (as defined in the Securitization
Documents referred to in the Purchase Agreement), Maker shall not be required to
deliver such statement to Payee. Xxxxx and its representatives shall from time
to time have the right to inspect and make copies of the books and records of
Maker to determine whether any and all payments by Maker were in the correct
amount. The cost of such inspection shall be borne by Xxxxx, except that if such
examination reveals that there is an underpayment to Payee of more than five
percent (5%) for any month for which the inspection is made, the cost of such
inspection shall be paid by Maker to Payee within ten (10) days after demand
therefor. Notwithstanding any other provision of this Note, the entire unpaid
balance of the principal sum, plus all accrued and unpaid interest thereon, and
all other sums, if any, due and payable
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hereunder shall be paid on December 31, 2021, regardless of the amount of
Maker's Cash Flow from time to time. Any interest not paid when due hereunder
shall accrue and be added to principal.
3. Subject to the provisions of this Note permitting reduction of, or
offset against, principal otherwise due under this Note and to the terms of the
Purchase Agreement (including, without limitation, provisions of the Purchase
Agreement permitting reduction of, or offset against, principal otherwise due
under this Note), the principal sum and all other sums due hereunder shall be
payable without set-off or deduction at the address of Payee at Green Valley
Executive Suites, 0000 X. Xxxxx Xxxxxx Xxxxxxx, Xxxxxxxx 0, Xxxxx 000,
Xxxxxxxxx, XX 00000, or at such other place as Payee, from time to time, may
designate in writing, and provided Maker has notice of such other place, Maker
shall make payment at such other place.
4. At any time after the fifth (5th) anniversary of the execution of
the Notes, Maker shall have the right at any time to prepay the Notes in whole
(but not in part) provided Maker pays an amount equal to (x) (i) Twenty-Five
Million Three Hundred Twenty-Five Thousand Dollars ($25,325,000), plus (ii) the
amount of any and all net increases in the principal amount of the Notes under
Paragraph 1, plus (iii) all accrued but unpaid interest on the Notes, minus (y)
the sum of all principal payments actually paid on the Notes; otherwise, Maker
shall not have the right to prepay, and shall not prepay, the Notes, in whole or
in part, without Xxxxx's prior written consent in each instance (which consent
may be withheld by Payee for any reason or for no reason).
5. If any payment of principal, interest or any other payment due
hereunder is not made within ten (10) days when due (including, without
limitation, when due as a result of acceleration under Paragraph 5), then,
provided Maker receives distributions or other monies with respect to its Class
B Interest with respect to the month such payment was due in an amount
sufficient to make such payment, the amount of such payment shall, until paid,
bear interest at a rate equal to the rate specified in the first paragraph
hereof plus two and one-half percent (2.5%); provided, however, the proviso set
forth above in this Paragraph 4 shall not apply to the payment due on December
31, 2021.
6. (i) Upon the failure of Maker to pay any installment of
principal or interest due hereunder within ten (10) days after the due date
thereof (and the continuation of such failure for five (5) days after written
notice from Payee) or (ii) upon the commencement of an involuntary case or the
filing of a petition against Maker seeking bankruptcy of Maker under the Federal
bankruptcy laws, as now or hereafter constituted, or under any other applicable
Federal or state bankruptcy, insolvency, reorganization or other similar law, or
seeking the appointment of a receiver, liquidator, custodian, trustee (or
similar official) of Maker for any substantial part of its property, or seeking
the winding-up or liquidation of its affairs (and such involuntary case or
petition is not dismissed within thirty (30) days after the filing thereof), or
the commencement by Maker of a voluntary case or the institution by Maker of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, under the
Federal bankruptcy laws as now or hereafter constituted, or any
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other applicable Federal or state bankruptcy or insolvency or other similar law,
or the consent by Maker to the appointment of or taking possession by a
receiver, liquidator, trustee, custodian (or other similar official) of Maker
for any substantial part of its property, or the making by it of any assignment
for the benefit of creditors, or (iii) if Maker sells any material assets
outside of the ordinary course of business (it being understood and agreed that
a Capital Event shall not be deemed to be outside of the ordinary course of
business) or authorizes any merger, consolidation, dissolution or liquidation of
Maker, or (iv) there is any default not cured within any applicable grace
period, under the Pledge Agreement, then the entire unpaid balance of principal
and all other sums due under this Note shall accelerate and be immediately due
and payable.
7. Maker hereby waives presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of protest of this
Note, and all other notices in connection with the delivery, acceptance,
performance, default, or enforcement of the payment of this Note. Maker agrees
that Maker's liability shall be unconditional, without regard to the liability
of any other party, and shall not be affected in any manner by any indulgence,
extension of time, renewal, waiver or modification granted or consented to by
Xxxxx. Maker agrees that additional makers, endorsers, guarantors, or sureties
may become parties hereto without notice to Maker or affecting its liability
hereunder. Maker hereby waives and releases all errors, defects and
imperfections in any proceeding instituted by Xxxxx under the terms of this
Note.
8. If any provision of this Note is held to be invalid or
unenforceable by a court of competent jurisdiction, the other provisions of this
Note shall remain in full force and effect and shall be liberally construed in
favor of Payee in order to effect the provisions of this Note. In addition, in
no event shall the rate of interest payable under this Note exceed the maximum
rate of interest permitted to be charged by applicable law (including the choice
of law rules) and any interest paid in excess of the permitted rate shall be
refunded to Maker. Such refund shall be made by application of the excessive
amount of interest paid against any sums outstanding and shall be applied in
such order as Payee may determine. If the excessive amount of interest paid
exceeds the sums outstanding, the portion exceeding the said sums outstanding
shall be refunded in cash by Xxxxx. Any such crediting or refund shall not cure
or waive any default by Maker hereunder. Maker agrees, however, that in
determining whether or not any interest payable under this Note exceeds the
highest rate permitted by law, any non-principal payment, including, without
limitation, fees and late charges, shall be deemed, to the extent permitted by
law, to be an expense, fee, premium or liquidated damages, rather than interest.
9. All rights and remedies of Payee under this Note and any
applicable law are separate and cumulative, and the exercise of one shall not
limit or prejudice the exercise of any other such rights or remedies. The
enumeration in this Note of any waivers or consents by Maker shall not be deemed
exclusive of any additional waivers or consents by Maker which may be deemed to
exist in law or equity. No delay or omission by Payee in exercising any right or
remedy shall operate as a waiver thereof. No waiver of any rights and remedies
hereunder, and no modification or amendment of this Note, shall be deemed made
by Payee unless in writing and duly signed by Xxxxx. Any such written waiver
shall apply only to the particular instance
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specified therein and shall not impair the further exercise of such right or
remedy or of any other right or remedy of Payee, and no single or partial
exercise of any right or remedy under this Note shall preclude any other or
further exercise thereof or any other right or remedy.
10. Maker will reimburse Payee, upon demand, for all costs and
expenses incurred in connection with the collection and/or enforcement of this
Note, the Pledge Agreement and/or the Guaranty or with respect to any litigation
or controversy arising from this Note, the Pledge Agreement and/or the Guaranty
(including, without limitation, reasonable attorneys' fees) whether or not suit
is actually instituted.
11. Maker agrees that this Note shall be governed by and construed
according to the laws of the State of Delaware applicable to contracts wholly
performed within such jurisdiction.
12. Payee shall have the absolute right to pledge and/or assign all
or, at any time and from time to time, any part of its right, title and interest
in, to and under this Note and/or the Pledge Agreement to any one or more of
Payee's affiliates and/or to any one or more banks or other institutional
lenders (including, without limitation, insurance companies, pension or
retirement funds or systems, or regulated entities), or by operation of law;
provided, however, this Note is non-negotiable.
13. The obligations of Maker under this Note are secured, limited
recourse obligations of Maker, payable solely from the collateral pledged to
Payee pursuant to the Pledge Agreement; provided, however, if Maker violates the
terms of Section 8 and/or 9 of the Pledge Agreement in any respect, the
obligations of Maker under this Note shall be fully recourse obligations of
Maker, and any and all assets of Maker will be available for payment of such
obligations.
14. Maker acknowledges that this Note will be pledged to ING (U.S.)
Capital LLC and ING (U.S.) Investment Corporation (together, "ING") to secure
certain obligations owed by DGV Acquisition Company to ING pursuant to a
Purchase Agreement, dated April 6, 2000, and that from and after the occurrence
of an event of default thereunder, and during the continuance thereof, ING may
exercise the rights and remedies of Payee under this Note and the Pledge
Agreement, subject to the obligations of Payee under the Pledge Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this Note on March 30,
2001 and delivered this Note on April __, 2001, but this Note is effective as of
February 15, 2001.
S2 HOLDINGS, INC.
By:
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Name:__________________
President
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