STOCK PURCHASE NOTE
$125,000 December 13, 1995
FOR VALUE RECEIVED, the undersigned, Discus Acquisition Corporation
("Discus"), a Minnesota corporation, hereby promises to pay to the order of
Pyramid Investors at the address provided under Section 8 in lawful money of the
United States in accordance with the terms hereof the sum of One Hundred
Thousand Dollars ($100,000) plus interest thereon at the rate provided herein
from the date hereof until paid in full.
1. Payment Terms.
1.1 Interest. Interest will accrue on the unpaid principal of
this Note at the annual rate of twenty percent (20%) from the date hereof to
March 31, 1996, eight percent (8%) from April 1, 1996 to December 13, 1998, and
thirteen percent (13%) at all times thereafter.
1.2 Principal. The principal of this Note, together with all
accrued and unpaid interest not then otherwise due, will be due March 31, 1996.
1.3 Prepayments; Application of Payments. This Note may be
prepaid, in whole or in part, at any time and from time to time without premium
or penalty. Payments on this Note will be applied first to accrued interest due
and unpaid, next (to the extent such payment is a prepayment) to accrued
interest unpaid and not yet due, next to costs and expenses accrued hereunder,
with the balance to principal.
2. Subordination. The payee by acceptance hereof agrees that the
repayment of this Note shall be and hereby is subordinated in favor of The CIT
Group/Business Credit, Inc. ("CIT") on the same terms, provisions and conditions
as set forth in that certain Subordination Agreement dated December 13, 1995
(the "Subordination Agreement"); by and among Bridgewater Resources Corp., CIT,
Discus, Peerless Chain Company, and Peerless Chain of Iowa, Inc. The payee
further agrees that upon the request of CIT the payee shall execute a separate
subordination agreement incorporating such similar terms and conditions. Discus
can prepay the principal and interest evidenced by this Note on the terms
contained in the last sentence of paragraph 8(b) of the Subordination Agreement.
3. Costs of Enforcement. Upon a Default, Buyer will be obligated to pay
all costs of collection and enforcement of the rights and remedies of the holder
hereof, including court costs and attorneys' fees, whether or not legal
proceedings are commenced.
4. Waivers. Buyer waives presentment for payment, demand, protest,
notice of protest and notice of dishonor. No delay by the holder hereof in
exercising any right or remedy hereunder, at law or in equity will operate as a
waiver of such right or remedy and no single or partial exercise of any such
right or remedy will preclude any further exercise thereof, or the exercise of
any other rights or remedies.
5. Notices. Any notice, request, instruction or other document to be
given hereunder by Buyer or the holder of this Note to the other party will be
in writing and delivered personally or by telephonic facsimile transmission or
sent by registered or certified mail, postage prepaid (and if by telephonic
facsimile transmission with a copy sent by mail),
if to the holder of this Note to:
Pyramid Investors
c/o Perkins Capital Management, Inc.
730 East Lake Street
Wayzata, MN 55391-1769
Facsimile No.: (612) 473-4702
if to Discus to:
Discus Acquisition Corporation
2430 Metropolitan Centre
333 South Seventh Street
Minneapolis, Minnesota 55402
Attn: William H. Spell
Facsimile No.: 612-371-9651
with a copy to:
Briggs and Morgan
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Attn: Avron L. Gordon
Facsimile No.: 612-334-8650
or at such other address for a party as may be specified by like notice. Any
notice which is delivered personally or by telephonic facsimile transmission in
the manner provided herein will be deemed to have been duly given to the party
to whom it is directed upon actual receipt by such party (or its agent for
notices hereunder). Any notice which is addressed and mailed in the manner
herein provided will be conclusively presumed to have been duly given to the
party to which it is addressed at the close of business, local time of the
recipient, on the third day after the day it is so placed in the mail.
6. Arbitration. Subject to the last sentence of this Section, any
controversy or claim arising out of or relating to any provisions of this Note
or the breach hereof, unless resolved by mutual agreement of the parties, will
be finally settled by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association in effect on the effective date of
this Agreement by a single arbitrator appointed in accordance with said Rules.
The determination of the arbitrator will be final and binding upon the parties
to the arbitration and judgment upon the award rendered by the arbitrator will
be entered in any court of competent jurisdiction. The place of arbitration will
be Minneapolis, Minnesota. Notwithstanding the foregoing, a party may seek
injunctive relief with respect to any controversy or claim arising out of or
relating to any provisions of this Note in any court of competent jurisdiction.
7. Governing Law; Consent to Jurisdiction. This Note will be construed
in accordance with and governed by the laws of the State of Minnesota applicable
to agreements made and to be performed in such jurisdiction without reference to
conflicts of law principles. Buyer by execution and delivery of this Note, and
the holder of this Note by acceptance hereof, each irrevocably consents that any
legal action or proceeding against it under, arising out of or in any manner
relating to this Note may be brought only in an arbitration proceeding as
provided in Section 9 or in a court of the State of Minnesota or in the United
States District Court for the District of Minnesota. Each of Buyer and the
holder of this Note further expressly and irrevocably assents and submits to the
personal jurisdiction of the arbitrators selected pursuant to Section 9 or any
of such courts in any such action or proceeding. Each of Buyer and the holder of
this Note further irrevocably consents to the service of any complaint, summons,
notice or other process relating to any such action or proceeding by delivery
thereof to it by hand or by mail in the manner provided for in Section 8 hereof.
Each of Buyer and the holder of this Note further hereby expressly and
irrevocably waives any claim or defense in any action or proceeding based on any
alleged lack of personal jurisdiction, improper venue or forum non conveniens or
any similar basis.
8. Neither this Note nor any term hereof may be changed, waived,
discharged or terminated orally but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, Buyer has caused this Note to be duly executed and
delivered on the day and year first above written.
DISCUS ACQUISITION CORPORATION
By
Its CEO