**Exhibit 10.5**

 

**SUBORDINATED**

**PROMISSORY NOTE**

 

 

FOR VALUE RECEIVED,the undersigned, CYBEX INTERNATIONAL, INC., a New York corporation (the “Obligor”), does hereby promise to pay to the order of UM HOLDINGS, LTD., a New Jersey corporation (the “Lender”), as hereinafter provided, the principal sumof Nine Hundred and Ninety Thousand Dollars ($990,000), together with interest on the unpaid principal hereof from the date of this Note until paid, at the rate of 10% per annum. 

 

Both the principal of and interest on this Note are payable in lawful money of the United States of America. 

 

This Note shall be deemed to be “Junior Debt” for purposes of thesubordination agreement dated July 24, 2002 (the “Subordination Agreement”) among Obligor, Lender, Wachovia Bank, National Association, as agent for the lenders named therein, and such lenders, and as such shall be subject to the terms andprovisions of the Subordination Agreement, including the provisions thereof subordinating the payment of the principal, interest, fees and costs hereunder to the payment in full of all Obligations (as defined in the Subordination Agreement), as morefully therein provided. Subject to the Subordination Agreement, the principal of and interest on this Note shall become payable in full on the later of January 1, 2004 or one business day after all Obligations (as defined in the SubordinationAgreement) shall have been indefeasibly paid in full. 

 

If anyone or more of the following Events of Default shall occur: 

 

A.    A failure to pay the principal of or interest on this Note when due, and the continuance of such default 30 days after written notice thereof shall have been provided by the Lender to the Obligor; 

 

B.    A material attachment, garnishment, levy or lienshall be made, issued or filed against any of the assets of the Obligor, and such action shall not be discharged within sixty days; or 

 

C.    The Obligor shall (i) apply for, consent to or permit the appointment of a receiver, trustee or liquidator of the Obligor or ofall or a substantial part of its assets, (ii) be unable, or admit in writing its inability, to pay debts as they mature, (iii) make a 

general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, or (v) file a voluntarypetition in bankruptcy or a petition or an answer seeking reorganization, or an arrangement with creditors or to take advantage of any insolvency law, or any answer admitting the material allegations of a petition filed against the Obligor in anysuch proceeding; or 

 

D.    A change ofcontrol of the Obligor occurs of a nature that would be required to be reported in the Obligor’s proxy statement under the Securities Exchange Act of 1934, as amended; 

 

then in any such event, but subject to the Subordination Agreement, the holder of this Note may at any time thereafter (unless all suchEvents of Default shall theretofore have been fully cured to the satisfaction of such holder, and all costs and expenses, including without limitation attorneys’ fees and expenses, incurred by or on behalf of such holder shall have been paid bythe Obligor), by notice to the Obligor, declare the entire outstanding principal of this Note to be due and payable immediately, and upon such declaration such principal, and all accrued but unpaid interest, shall become and be immediately due andpayable, without further notice. 

 

Subject to the SubordinationAgreement, this Note may at the option of the Obligor at any time or from time to time be prepaid, in whole or in part, without penalty or premium. 

 

The principal of and interest on this Note is subject to automatic conversion into shares of the Common Stock of the Obligor, in the event and on theterms more fully provided in Section 4 of the Subordination Agreement. 

 

Should the indebtedness represented by this Note or any part thereof be collected in any proceeding or placed in the hands of attorneys for collection, the Obligor agrees to pay, in addition to the principal and interest due and payablehereon, all costs of collecting this Note, including reasonable attorneys’ fees and expenses. 

 

The Obligor expressly waives presentment, demand, protest or any other notice whatsoever. 

 

IN WITNESS WHEREOF, the undersigned has executed and delivered this Note on the day and year first above written.

 
    
CYBEX INTERNATIONAL, INC. 
    By: 
/s/    JOHNAGLIALORO        
      **Authorized signatory**