Contract
THIS
INSTRUMENT IS SUBJECT TO THAT CERTAIN SUBORDINATION AND INTERCREDITOR AGREEMENT
DATED AS OF OCTOBER 25, 2010, BETWEEN HY-TECH HOLDINGS, INC., A DELAWARE
CORPORATION, AS THE SUBORDINATED CREDITOR, AND CAPITAL ONE LEVERAGE FINANCE
CORPORATION, AS SENIOR AGENT FOR ALL SENIOR LENDERS.
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.
AMENDED
AND RESTATED
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$573,235.00
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As
of October 25, 2010
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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 Five Hundred Seventy-Three Thousand Two Hundred Thirty-Five
and 00/100 ($573,235.00) Dollars, together with interest on the unpaid principal
balance at the rate and on the terms and conditions provided in this amended and
restated subordinated promissory note (the “Note”).
This Note is being executed and
delivered as a restatement of the outstanding indebtedness evidenced by that
certain $1,719,706.50 note dated May 16, 2009 (hereinafter referred as the
“Original Note”) in the current outstanding aggregate principal amount due
thereunder of $573,235.00. This Note shall not constitute a cancellation or
novation with respect to the indebtedness evidenced by the Original
Note. Such indebtedness (as heretofore evidenced by the Original Note
and as hereafter evidenced by this Note) shall continue to be secured by, inter
alia, the personal property security for the Original Note without interruption
in the lien or priority thereof. Subject to the foregoing provisions
this Note amends, restates and supersedes the Original Note in its entirety and
specifically extends the Maturity Date, as hereinafter defined, and modifies the
payments of principal and interest heretofore provided to conform same to the
Subordination Agreement as hereinafter defined. By its execution
hereof, Borrower agrees that interest has been paid to date and Holder waives
and discharges the Borrower and P&F Industries, Inc. from any claims it may
have against such persons or their affiliates in connection with the superseded
note and the loan documents executed and delivered in connection
therewith.
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”),
Xxxxxx X. Xxxx, Xxxxxxxxx Xxxxx, Xxxxx X. Xxxxxx, Xxxxxx Xxxx and Xxxxx Xxxxxx
(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 an amendment and restatement of 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 (a) from the date
hereof at the rate of eight (8.0%) percent per annum, (b) 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 eight (8.0%) 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. Subject to the terms and conditions of
the Subordination Agreement and the Loan Agreement, each as hereinafter defined,
the Borrower shall (i) pay to the Holder all accrued interest on each Payment
Date (as defined below) and (ii) shall prepay to the Holder the outstanding
Principal Sum hereunder in installments equal to the amount of Excess Cash Flow
permitted to be received by the Holder under the Subordination Agreement and
Loan Agreement each as hereinafter defined, as and when permitted thereunder
(such date(s) on which payments under clauses (a) and (b) are made, each a
“Payment Date”, until October 25, 2013 (the “Maturity Date”) at which time any
remaining Principal Sum, together with accrued interest shall be
repaid.
If any
such interest or principal payment is not permitted to be made under the
Subordination Agreement or Loan Agreement (as defined below), such amounts shall
be paid on the first Business Day that such payment is permitted to be made
under the Subordination Agreement or Loan Agreement.
3. Manner and Application of
Payment. If a
payment to be made by the Borrower hereunder shall become due on a Saturday,
Sunday or bank holiday in either New York City, New York, or Pittsburgh,
Pennsylvania, such payment shall be made on the next succeeding day that is a
business day in both of the above-referenced cities. All payments of principal
and interest shall be made to the Holder in immediately available funds to an
account designated by the Holder in writing. Any payment made hereunder shall be
applied first to costs and expenses due hereunder, then to accrued interest and
thereafter to principal.
4. Prepayment. Subject to the
Subordination Agreement, Borrower may at its option, prepay the outstanding
principal balance of this Note, in whole or in part, at any time or, from time
to time, without premium or penalty; provided, that any such prepayment shall
also include all accrued but unpaid interest on the Note through the repayment
date.
5. Subordination. ALL OBLIGATIONS
UNDER THIS NOTE ARE SUBJECT TO THE TERMS OF A SUBORDINATION AND INTERCREDITOR
AGREEMENT, DATED AS OF OCTOBER 25, 2010, AMONG THE BORROWER, THE
HOLDER AND CAPITAL ONE LEVERAGE FINANCE CORPORATION AS AGENT AND THE LENDERS
PARTY TO THE LOAN AGREEMENT FROM TIME TO TIME (AS AMENDED, RESTATED,
SUPPLEMENTED OR MODIFIED, FROM TIME TO TIME (THE “SUBORDINATION
AGREEMENT”). NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS NOTE,
THE PAYMENT AND PRIORITY OF ALL CLAIMS OF PAYEE UNDER THIS NOTE ARE SUBORDINATE
IN RIGHT, TIME, AND PRIORITY TO THE CLAIMS OF CAPITAL ONE LEVERAGE FINANCE
CORPORATION AS AGENT AND THE LENDERS PARTY TO THE LOAN AGREEMENT DATED AS OF
OCTOBER 25, 2010 AS AMENDED, RESTATED, SUPPLEMENTED OF MODIFIED FROM TIME TO
TIME (THE “LOAN AGREEMENT”).
6.
Default. Each of the following
events shall be an “Event
of Default”
hereunder:
(a) the
Borrower fails to pay any of the principal, interest or any other amounts
payable under this Note when and as the same becomes due and payable, which is
not cured within fifteen (15) days of such nonpayment, except to the extent such
payment is not permitted under the Subordination Agreement;
(b) the
Borrower files any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law or any other law for the relief of,
or relating to, debtors, now or hereafter in effect, or seeks the appointment of
a custodian, receiver, trustee (or other similar official) of the Borrower or
all or any substantial portion of the Borrower's assets, or makes any assignment
for the benefit of creditors or takes any action in furtherance of any of the
foregoing, or fails to generally pay its debts as they become due;
(c) an
involuntary petition is filed, or any proceeding or case is commenced, against
the Borrower (unless such proceeding or case is dismissed or discharged within
sixty (60) days of the filing or commencement thereof) under any bankruptcy,
reorganization. arrangement, insolvency, adjustment of debt, liquidation or
moratorium statute now or hereafter in effect, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) is
applied for, appointed for the Borrower or to take possession, custody or
control of any property of the Borrower, or an order for relief is entered
against the Borrower in any of the foregoing:
(d) the
Borrower shall fail to perform any material covenant, condition or agreement
under this Note: or
(e) any
representation or warranty made or deemed made by the Borrower under this Note
shall have been false or misleading, in any material respect when made or deemed
made:
7. Remedies. Upon the occurrence
and during the continuance of an Event of Default hereunder:
(a) all
unpaid principal, accrued interest and other amounts owing hereunder shall, at
the option of the Holder, be immediately due, payable and collectible by the
Holder pursuant to applicable law;
(b) any
and all unpaid principal, interest or other amounts due under this Note shall
thereafter bear interest at the maximum rate set forth in Section 2 hereof;
and
(c) the
Holder may exercise any and all rights and remedies it may have under this Note
or under applicable law.
All
rights and remedies shall be cumulative and not exclusive. The failure of the
holder hereof to exercise all or any of its rights, remedies, powers or
privileges hereunder or applicable law in any instance shall not constitute a
waiver thereof in that or any other instance.
8. Governing Law; Consent to
Jurisdiction. This Note and any disputes hereunder shall be governed by
and construed in accordance with the internal laws of the State of New York
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of laws of any jurisdiction other than those of the State of New
York. Each of the Borrower and the Holder (a) submits to the exclusive
jurisdiction of any state or federal court sitting in New York, New York
in any action or
proceeding arising out of or relating to this Note, (b) agrees that all claims
in respect of such action or proceeding may be heard and determined only in any
such court, (c) waives any claim of inconvenient forum or other challenge to
venue in such court, and (d) agrees not to bring any action or proceeding
arising out of or relating to this Note in any other court.
9. Successors and Assigns. This
Note and all obligations of the Borrower hereunder shall be binding upon the
successors and assigns of the Borrower, and shall, together with the rights and
remedies of the Holder hereunder, inure to the benefit of the Holder, any future
holder of this Note and their respective successors and assigns, provided,
however, the Borrower may not transfer or assign its rights or obligations
hereunder without the express written consent of the Holder, which consent may
riot be unreasonably withheld or delayed and any purported transfer or
assignment by the Borrower without the Holder's written consent shall be null
and void. The Holder may assign, transfer, participate or endorse its rights
under this Note. Upon request, the Borrower shall, at the expense of the Holder,
execute and deliver to the assignee of this Note, a replacement Note of equal
and like tenor in an amount assigned to and assumed by such
assignee.
10. Waiver of Jury Trial. THE
BORROWER AND THE HOLDER EACH WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS NOTE. ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. The Borrower ( i) certifies that neither the Holder nor any
representative, agent or attorney of the Holder has represented. expressly or
otherwise, that the Holder would not. in the event of litigation, seek to
enforce the foregoing waivers and acknowledges that, in entering into this Note,
the Holder is relying upon, among other things, the foregoing waivers and
certifications.
11. Entire Agreement;
Amendments; Invalidity.
This Note, the Amended Purchase Agreement and the Subordination Agreement
constitute the entire agreement and understanding of the parties and supersede
and replace in their entirely any prior discussions, agreements, etc., all of
which are merged herein
and (herein. None of the terms of this Note may be amended or otherwise modified
except by an instrument executed by each of the Borrower and the Holder. If any
term of this Note shall be held to be invalid, illegal or unenforceable, the
validity of all other terms hereof shall in no way be affected thereby, and this
Note shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein.
12. Notices. All notices, demands
and other communications provided for or permitted hereunder shall be made in
writing as set forth in the Amended Purchase Agreement.
13. Counterparts. This Note may be
executed in any number of counterparts (including by facsimile), all of which
taken together shall constitute one and the same instrument and any of the
parties hereto may execute this Note by signing any such counterpart signature
page or counterpart.
[Signature
page follows on next page.]
IN
WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of the
date first above written.
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HY-TECH
MACHINE, INC.
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By:
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/s/
Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx
X. Xxxxxx, Xx.
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Vice
President
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GUARANTY
For good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and pursuant to that certain Guaranty executed as of February 12,
2007, P&F Industries, Inc., a Delaware corporation, hereby guarantees the
prompt and faithful performance of all of the Borrower's obligations under the
terms of the foregoing Note. This Guaranty has been executed as of the date
first set forth above.
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P&F
INDUSTRIES, INC.
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By:
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/s/
Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx
X. Xxxxxx, Xx.
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Vice
President, Chief Operating Officer and Chief Financial
Officer
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ACKNOWLEDGMENT
The
undersigned hereby acknowledges and agrees to the terms of this Amended and
Restated Note, as of the date first set forth above.
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HY
TECH HOLDINGS, INC.
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BY:
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/s/
Xxxxxx X. Xxxxxx, Xx.
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Name:
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Xxxxxx
X. Xxxxxx, Xx.
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Title:
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Vice
President
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