Exhibit 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
SUBORDINATED PROMISSORY NOTE
$1,719,706.50
May 16, 2009
FOR VALUE RECEIVED, the undersigned, Hy-Tech Machine, Inc., a Delaware
corporation (including its successors, the "Borrower"), hereby promises to pay
to the order of Hy-Tech Holdings, Inc., a Delaware corporation (successor in
interest by merger to Hy-Tech Machine, Inc., a Pennsylvania corporation) (the
"Holder"), in lawful money of the United States of America and in immediately
available funds the principal sum of One Million Seven Hundred Nineteen Thousand
Seven Hundred Six and Fifty One-Hundredths ($1,719,706.50) Dollars, together
with interest on the unpaid principal balance at the rate and on the terms and
conditions provided in this subordinated promissory note (the "Note").
1.
ACQUISITION AGREEMENT.
THIS NOTE EVIDENCES PAYMENT OF A PORTION
OF THE PURCHASE PRICE PAYABLE UNDER THAT CERTAIN ASSET PURCHASE AGREEMENT, DATED
AS OF FEBRUARY 12, 2007 (THE "ORIGINAL PURCHASE AGREEMENT"), BY AND AMONG
HOLDER, QUALITY GEAR HOLDINGS, INC., A DELAWARE CORPORATION (SUCCESSOR IN
INTEREST BY MERGER TO QUALITY GEAR & MACHINE, INC., A PENNSYLVANIA CORPORATION
(TOGETHER WITH HOLDER, "SELLERS"), HTM ASSOCIATES, A PENNSYLVANIA GENERAL
PARTNERSHIP ("HTM"), ROBERT H. OBER, ELIZABETH SMAIL, JAMES J. BROWNE, DANIEL
BERG AND JAMES HOHMAN (COLLECTIVELY, THE "SHAREHOLDERS") AND HY-TECH MACHINE,
INC., A DELAWARE CORPORATION ("BORROWER"), AS AMENDED BY THAT CERTAIN AMENDMENT
NO. 1 TO THE ORIGINAL PURCHASE AGREEMENT, DATED AS OF JUNE 26, 2009, BY AND
BETWEEN THE SELLERS, HTM, THE SHAREHOLDERS AND BORROWER (THE "AMENDED PURCHASE
AGREEMENT"). THIS NOTE IS THE PROMISSORY NOTE REFERRED TO IN THE AMENDED
PURCHASE AGREEMENT. UNLESS OTHERWISE DEFINED HEREIN, CAPITALIZED TERMS USED IN
THIS NOTE HAVE THE SAME MEANINGS SET FORTH IN THE AMENDED PURCHASE AGREEMENT.
2.
INTEREST; PRINCIPAL.
INTEREST ON THE UNPAID PRINCIPAL BALANCE OF
THIS NOTE SHALL ACCRUE (I) FROM THE DATE HEREOF AT THE RATE OF SIX (6.0%)
PERCENT PER ANNUM, (II) FROM AND AFTER ANY PAYMENT DATE, AS DEFINED HEREIN, BY
WHICH THE APPLICABLE INSTALLMENT PAYMENT, AS DEFINED HEREIN, HAS NOT BEEN MADE
AND CONTINUING UNTIL SUCH INSTALLMENT PAYMENT IS MADE, OR DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT PURSUANT TO SECTION 6(B), (C), (D) OR (E), AT THE RATE
SET FORTH IN (I) PLUS SIX (6.0%) PERCENT, OR (III) IF LESS THAN THE RATES
APPLICABLE UNDER (I) AND (II), THE MAXIMUM RATE PERMITTED BY LAW.
INTEREST
SHALL BE CALCULATED ON THE BASIS OF A 365 DAY YEAR FOR THE ACTUAL DAYS ELAPSED.
THE BORROWER SHALL PAY TO THE HOLDER ALL ACCRUED INTEREST ON EACH PAYMENT DATE
(AS DEFINED BELOW). SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE BORROWER
SHALL REPAY THE OUTSTANDING PRINCIPAL SUM HEREUNDER IN SIX (6) INSTALLMENTS OF
TWO HUNDRED EIGHTY SIX THOUSAND SIX HUNDRED EIGHTEEN ($286,618) DOLLARS (EACH,