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Senior Subordinated Note due January 31, 2009 (except as provided herein)

Promissory Note

Senior Subordinated Note due January 31, 2009 (except as provided herein) | Document Parties: DPAC TECHNOLOGIES CORP | Makers Corp | QuaTech, Inc You are currently viewing:
This Promissory Note involves

DPAC TECHNOLOGIES CORP | Makers Corp | QuaTech, Inc

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Title: Senior Subordinated Note due January 31, 2009 (except as provided herein)
Governing Law: Ohio     Date: 10/16/2008
Industry: Semiconductors     Sector: Technology

Senior Subordinated Note due January 31, 2009 (except as provided herein), Parties: dpac technologies corp , makers corp , quatech  inc
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EXHIBIT 10.2

EXECUTION COPY

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.

Senior Subordinated Note
due January 31, 2009 (except as provided herein)

 

 

 

Makers Corp.

 

  QuaTech, Inc. and DPAC Technologies

 

 

 

Payee

 

  Canal Mezzanine Partners, L.P.

 

 

 

Principal Amount

 

  $250,000

 

 

 

Stated Interest Rate

 

13% per annum

 

 

 

Default Interest Rate

 

  16% per annum

 

 

 

Date of Note

 

  October 10, 2008

 

 

 

Made At

 

  Hudson, Ohio

 

 

 

Maturity Date

 

  January 31, 2009 (except as provided herein)

 

 

 

Payment Dates

 

  Interest : Last day of each month beginning October 31, 2008

 

 

  Principal: January 31, 2009 (except as provided herein)

 

 


 

This is the Senior Subordinated Note due January 31, 2009 (the “ Note ”) provided for in the Senior Subordinated Note and Warrant Purchase Agreement dated as of January 31, 2008 (as amended, restated, supplemented or otherwise modified from time to time, the “ Purchase Agreement ”) by and between the Payee, as purchaser, and the Makers, as sellers.

This Note is one of the Related Documents referred to in the Purchase Agreement.

FOR VALUE RECEIVED , the Makers hereby promises to pay to the order of the Payee the Principal Amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), together with Interest, Prepayment Premium, if any, and Assessments (each as defined herein or in the Purchase Agreement), upon the terms and subject to the conditions set forth in this Note.

Section 1. Definitions and Miscellaneous Provisions

Any capitalized term used but not otherwise defined in this Note shall have the definition given such term as set forth in the Purchase Agreement, which definition is, to the extent applicable, incorporated herein by reference. The provisions of Section 12 of the Purchase Agreement are applicable to this Note and are incorporated herein by reference.

Section 2. Maturity and Pay Off

The unpaid Principal Amount of this Note, together with all accrued but unpaid Interest and Assessments, shall be due and payable in full on the Maturity Date, provided that if such unpaid Principal and Interest shall not have been refinanced pursuant to a transaction with Payee or any affiliate thereof, or otherwise repaid, on or before the Maturity Date (a “ Refinancing ”), then such Principal Amount shall become due and payable in full on the Maturity Date set forth in the Initial Note (January 31, 2013) and the Makers shall pay to the Payee a $250,000 extension fee on the January 31, 2008 (such fee shall be the joint and several liability of each of the Makers). Payment of the Principal Amount and all accrued but unpaid Interest and Assessments may be Accelerated upon the occurrence of an Event of Default as provided for in this Note. Upon request of the Makers, the Payee will furnish to the Makers a letter setting forth the amount of Principal Amount, Interest, Prepayment Premium and Assessments required to pay this Note in full as of a specified Pay Off Date.

Section 3. Interest

Interest shall accrue on the unpaid Principal Amount from the date of this Note through and including the Pay Off Date at the applicable interest rate (“ Interest ”). All accrued but unpaid Interest shall be paid monthly in arrears on each Payment Date specified above, commencing October 31, 2008.

At all times that the Default Interest Rate is not in effect, the interest rate on this Note shall be a fixed rate per annum equal to the Stated Interest Rate. Upon the occurrence of an Event of Default, this Note shall accrue interest at a rate per annum equal to the Default Interest Rate unless the Payee elects, in the sole exercise of its discretion, to waive imposition of the Default Interest Rate by giving written notice of such election to the Makers (a “ Default Rate Waiver ”). Absent a Default Rate Waiver, the interest rate on this Note shall be a fixed rate per annum equal to the Default Interest Rate, and the Default Interest Rate shall continue to be the interest rate on this Note until the Event of Default has been remedied or waived and no other Default or Event of Default is continuing, unremedied or unwaived, provided that the Note has not been Accelerated.

 

2


 

Notwithstanding any provision of this Note to the contrary: (i) in no event shall the interest rate on this Note be a rate per annum in excess of the maximum interest rate permissible under Applicable Law (including any applicable interest rate ceiling imposed by United States Small Business Administration regulations as applicable), and (ii) to the extent that Interest (or other amounts paid with respect to this Note that are deemed to be Interest under Applicable Law) results in Interest payments in excess of those permitted under Applicable Law, such excess payments shall be applied first to the payment of the unpaid Principal Amount, second to the payment of any other amounts due from the Makers to the Payee, and third, if no other obligations are owing to the Payee, then refunded to the Makers. The Makers agree that if such excess payments are applied in the manner provided for in this paragraph, then to the fullest extent permitted by Applicable Law, Payee shall not be subject to any penalty provided for by any Applicable Law relating to charging or collecting Interest in excess of that permitted by Applicable Law.

Interest shall accrue based upon: (i) the actual number of days elapsed over each month, including any additional days elapsed because the scheduled Payment Date fell on a day other than a Business Day; (ii) months consisting of thirty (30) days each; (iii) quarters consisting of three (3) 30-day months, and (iv) monthly compounding of any Interest or Assessment accrued but unpaid as of each Payment Date.

Section 4. Principal Amount

The Principal Amount shall be paid in full on the Maturity Date Date (except as set forth in Section 2 above).

Section 5. Prepayments

The Makers may prepay the Principal Amount in whole at any time; provided that (i) the Makers deliver irrevocable written notice to the Payee at least thirty (30) days prior to such prepayment, which notice shall include written confirmation from the Makers that such prepayment is permissible under the Senior Loan Agreement and (ii) each partial prepayment of Principal Amount shall be equal to $100,000 or an integral multiple thereof.

If the Principal Amount is paid on or prior to the Maturity Date of Note, the Makers shall pay all accrued but unpaid Interest.

If notice of prepayment is given, the Principal Amount to be prepaid as stated in the notice, together with Interest accrued thereon through the date of prepayment with respect to the Principal Amount prepaid and all unpaid Assessments shall become due and payable on the date specified in the notice.

 

3


 

Section 6. Late Payments

A payment of Principal Amount, Interest or Assessment shall be deemed to be a Payment Default if such payment is not received prior to 2:00 p.m., Hudson, Ohio time on the fifth day after such payment is due. The Payee may, in the sole exercise of its discretion, by written notice to the Makers, assess a fee of $500 for each Payment Date with respect to which there is a late payment to reimburse the Payee for the cost of processing such late payment. Such late fee shall be deemed to be an Assessment for purposes of this Note. The Payee may not assess a late fee with respect to any Payment Date after payment of this Note is Accelerated.

Section 7. Payments

Unless otherwise agreed by the Payee, all payments in connection with this Note shall be made by wire transfer of immediately available funds to the account of the Payee at or before 2:00 p.m. Hudson, Ohio time on each Payment Date. Any wire transfer received by the Payee after 2:00 p.m. Hudson, Ohio time shall be deemed to have been received by the Payee prior to such time on the next Business Day.

Unless otherwise specified in writing by the Payee to the Makers, all such payments shall be wired as follows:

Morgan Bank, N.A.
10 West Streetsboro Street
Hudson, Ohio 44236

ABA # 041202702
Account # 128075483

In the event that any scheduled Payment Date falls on a day other than a Business Day, the Payment Date shall be deemed to be the following Business Day, and such additional days shall be deemed to have elapsed for purposes of computing Interest payable on such Payment Date.

Section 8. Events of Default

(a)  Enumeration of Defaults. The occurrence of each of the following events shall be an “ Event of Default ” for the purposes of this Note. An Event of Default shall be deemed to continue until waived by written notice by the Payee to the Makers or remedied by action of the Makers.

(b)  Payment Default. The Makers default in the payment when due of any Principal Amount, Interest or Assessment, and such default is not remedied (including the payment of any Assessment) within the grace period provided for in Section 6 of this Note (a “


 
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