NAVARRE CORPORATION
EXHIBIT 10.11
TERM NOTE
$9,596,827.00 New Hope, Minnesota
October 14, 1999
1. FOR VALUE RECEIVED, NETRADIO CORPORATION, a Minnesota corporation, its
successors and assigns (the "Borrower") promises to pay to the order of NAVARRE
CORPORATION, a Minnesota corporation (the "Lender"), at its address at 7400 49th
Avenue North, New Hope, Minnesota 55428, the principal sum of NINE MILLION FIVE
HUNDRED NINETY-SIX THOUSAND EIGHT HUNDRED TWENTY-SEVEN AND 00/100 DOLLARS
($9,596,827.00), in lawful money of the United States and immediately available
funds, together with interest on the unpaid balance accruing as of the date
hereof at an initial rate equal at all times to one-half percent (0.5%) in
excess of the "Prime Rate of Interest" (as hereinafter defined) as the same
changes from time to time and is adjusted in the manner hereinafter set forth.
2. Accrued interest on this Note shall be payable in consecutive monthly
installments commencing on November 14, 1999, and continuing on the fourteenth
(14th) day of each month thereafter. The principal balance hereof, plus accrued
interest thereon, shall be due and payable on the earlier of (i) November 14,
2001, or (ii) the occurrence of an "Event of Default" (as hereinafter defined)
(the earlier of said dates hereinafter referred to as (the "Maturity Date").
3. The term "Prime Rate of Interest" shall mean the prime rate of interest or
reference rate of interest (or equivalent successor rate) published in the
Midwest Edition of the WALL STREET JOURNAL as a basis for determining the rate
of interest on commercial borrowing, whether or not the Lender makes loans to
other parties at, above or below said base rate of interest.
4. The rate of interest due hereunder shall initially be determined as of the
date hereof and shall thereafter be adjusted on the first day of each month
(each such day hereinafter being referred to as an "Adjustment Date") to the
Prime Rate of Interest in effect on such Adjustment Date. All such adjustments
to said rate shall be made and become effective as of the Adjustment Date and
said rate as adjusted shall remain in effect until and including the day
immediately preceding the next Adjustment Date. Interest hereunder shall be
computed on the basis of a year of three hundred sixty (360) days but charged
for actual days principal is unpaid.
5. All payments and prepayments shall, at the option of the Lender, be applied
first to any costs of collection, second to any late charges, third to accrued
interest and the remainder thereof to principal (and, in the case of prepayment
of principal, to installments of principal in the inverse order of their
maturity).
6. Any one or more of the following events shall constitute an "Event of
Default" hereunder and under the documents related hereto:
(a) the Borrower shall fail to pay when due, any amounts required to be
paid by the Borrower under this Note or any other indebtedness of the
Borrower to the Lender whether any such indebtedness is now existing or
hereafter arises and whether direct or indirect, due or to become due,
absolute or contingent, primary or secondary or joint or joint and
several; or
(b) the Borrower shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any present or future
state or federal bankruptcy act or under any similar federal or state
law, or shall be adjudicated a bankrupt or insolvent, or shall make a
general assignment for the benefit of its creditors, or shall be unable
to pay its debts generally as they become due; or if an order for
relief under any present or future federal bankruptcy act or similar
state or federal law shall be entered against the Borrower; or if a
petition or answer requesting or proposing the entry of such order for
relief or the adjudication of the Borrower as a debtor or a bankrupt or
its reorganization under any present or future state or federal
bankruptcy act or any similar federal or state law shall be filed in
any court and such petition or answer shall not be discharged or denied
within thirty (30) days after the filing thereof; or if a receiver,
trustee or liquidator of the Borrower of all or substantially all of
the assets of the Borrower or of the collateral or any part thereof,
shall be appointed in any proceeding brought against the Borrower and
shall not be discharged within thirty (30) days of such appointment; or
if the Borrower shall consent to or acquiesce in such appointment; or
if any property of the Borrower (including without limitation the
estate or interest of the Borrower in the collateral or any part
thereof) shall be levied upon or attached in any proceeding; or
(c) final judgment(s) for the payment of money shall be rendered
against the Borrower and shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively
stayed; or
(d) the Borrower shall be or become insolvent (whether in the equity or
bankruptcy sense) or shall liquidate, dissolve, terminate or suspend
its business operations or otherwise fail to operate its business in
the ordinary course, or sell all or substantially all of its assets,
without the prior written consent of the Lender; or
(e) any representation or warranty made by the Borrower herein or in
other any document related hereto shall prove to be untrue or
misleading in any material respect, or any statement, certificate or
report furnished hereunder or under any of the foregoing documents by
or on behalf of the Borrower shall prove to be untrue or misleading in
any material respect on the date when the facts set forth and recited
therein are stated or certified; or
(f) any material adverse change in the condition of the Borrower
(financial or otherwise) which, in the reasonable opinion of the
Lender, increases its risk with respect to this Note or any other
obligations, or the Lender otherwise in good faith deems itself
insecure for any reason with respect to the payment of this Note, any
other obligations of the Lender; or
(g) the Borrower shall fail to pay, withhold, collect or remit any tax
or tax deficiency when assessed or due (other than any tax or tax
deficiency which is being contested in good faith and by proper
proceedings and for which it shall have set aside on its books adequate
reserves therefor) or notice of any state or federal tax liens shall be
filed or issued; or
(h) any property of the Borrower shall be garnished, levied upon, or
attached in any proceeding and such garnishment or attachment shall
remain undischarged for a period of thirty (30) days during which
execution has not been effectively stayed.
7. Notwithstanding anything to the contrary contained herein, if and for so long
as an Event of Default, or an event or condition which with the passage of time
or the giving of notice or both would constitute an Event of Default, has
occurred and continues or exists, the rate of interest hereunder shall be four
and one-half percent (4.5%) per annum in excess of the Reference Rate of
Interest in effect at the time such increased rate of interest is imposed. Such
increased rate of interest is intended to compensate the Lender for (i) the
resulting increased cost of servicing and monitoring the credit facility; and
(ii) the increased risk to the Lender.
8. Upon the occurrence of any Event of Default or at any time thereafter, the
outstanding principal balance hereof and accrued interest and all other amounts
due hereon shall become immediately due and payable, without formal notice or
demand.
9. Upon the occurrence at any time of an Event of Default, the Lender shall have
the right to set off any and all amounts due hereunder by the Borrower to the
Lender against any indebtedness or obligation of the Lender to the Borrower and
while such Event of Default is continuing.
10. Upon the occurrence at any time of an Event of Default, the Borrower
promises to pay all costs of collection of this Note, including but not limited
to attorneys' fees, paid or incurred by the Lender on account of such
collection, whether or not suit is filed with respect thereto and whether or not
such costs are paid or incurred, or to be paid or incurred, prior to or after
the entry of judgment.
11. Demand, presentment, protest and notice of nonpayment and dishonor of this
Note are hereby waived.
12. This Note shall be governed by and construed in accordance with the laws of
the State of Minnesota.
13. The Borrower irrevocably submits to the jurisdiction of any Minnesota state
court or federal court over any action or proceeding arising out of or relating
to this Note, and any instrument, agreement or document related hereto, and the
Borrower hereby irrevocably agree that all claims in respect of such action or
proceeding may be heard and determined in such Minnesota state or federal court.
The Borrower hereby irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the maintenance of such action or
proceeding. The Borrower agrees that judgment final by appeal, or expiration of
time to appeal without an appeal being taken, in any such action or proceeding
shall be conclusive and may be enforced in any other jurisdictions by suit on
the judgment or in any other manner provided by law. Nothing in this paragraph
shall affect the right of the Lender to serve legal process in any other manner
permitted by law or affect the right of the Lender to bring any action or
proceeding against the Borrower or its property in the courts of any other
jurisdiction to the extent permitted by law.
NETRADIO CORPORATION
By:
-----------------------------
Its
-----------------------------