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EXHIBIT 10.4
PROMISSORY NOTE
$4,500,000.00 December 15, 1999
1. Promise to Pay. FOR VALUE RECEIVED, the undersigned, CHORUS
CORPORATION a Minnesota corporation ("Maker"), hereby promises to pay to the
order of JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan corporation, its
successors or assigns ("Noteholder"), the principal sum of Four Million Five
Hundred Thousand and No/100 Dollars ($4,500,000.00), with interest on the unpaid
principal balance thereof from the date hereof until maturity at the rates per
annum hereinafter specified (the rate from time to time in effect hereunder
being herein referred to as the "Interest Rate"), both principal and interest
being payable as hereinafter provided in lawful money of the United States of
America at 225 West Wacker Drive, Suite 1200, Chicago, Illinois 60606 or at such
other place as from time to time may be designated by Noteholder. Interest shall
be calculated and paid on the basis of a 30-day month and 360-day year.
2. Interest Rate and Payments. The unpaid principal balance of this
Note shall accrue interest at the rate or rates per annum set forth below and
shall be payable as follows:
2.1 Interest Rate. Subject to the following provisions of this
paragraph 2.1 and to the provisions of paragraph 2.2 below, the
outstanding principal balance hereof shall bear interest at the rate
of eight and fifty-one one hundredths percent (8.51%) per annum.
Subject to the provisions of paragraph 2.2 below, the Interest Rate
shall be adjusted, effective as of the first (1st) day of January,
2000 and the first (1st) day of each month thereafter, to the rate
per annum equal to the greater of (i) the Index Rate determined with
respect to such date, plus two and five one hundredths percent
(2.05%), or (ii) six percent (6%). For purposes hereof, the term
"Index Rate" shall mean the one-month London Interbank Offered Rates
(LIBOR) as shown in the "Money Rates" column in the "Money and
Investing" section of The Wall Street Journal as published on the
last business day prior to the date on which the applicable interest
rate adjustment is to occur, or if such index is no longer published
daily, the one-month LIBOR as available through the Bloomberg L.P.
or a similar service designated by Noteholder.
2.2 At any time on or after January 1, 2000, and prior to June 30,
2004, but only once during any calendar year, Maker shall have the
right to request, by written notice to Noteholder, that Noteholder
convert this Note and the loan evidenced hereby to a fixed rate
Note. Within fifteen (15) days after such written notice is given by
Maker (which notice shall be accompanied by current financial
statements for the property encumbered by the Mortgage and such
other documents as are reasonably requested by Noteholder),
Noteholder shall give
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written notice to Maker specifying the interest rate spread which
Noteholder intends to use to calculate the adjusted Interest Rate,
which will be quoted over a nineteen (19)-year U.S. Treasury Index
if Maker makes such request during the first Loan Year (as
hereinafter defined), and which will be quoted over the U.S.
Treasury Index having a maturity closest to January 1, 2020. If
Maker makes such request during the first Loan Year, the interest
rate spread shall be two and fifteen one hundredths percent (2.15%).
If Maker makes such request after the first Loan Year, the interest
rate spread shall be selected by Noteholder in its sole discretion.
Maker agrees to provide Noteholder with any updated financial
information and other information reasonably requested by Noteholder
necessary for Noteholder to determine the appropriate interest rate
spread. Maker, if it so elects, shall notify Noteholder in writing,
on or before the date five (5) business days after such written
notice specifying the interest rate spread was given by Noteholder
(the date of such written notice by Maker being herein referred to
as the "Reset Date") that Maker accepts and agrees to Noteholder's
proposed interest rate spread. If Maker does not accept and agree to
Noteholder's proposed interest rate spread by giving written notice
of such acceptance and agreement to Noteholder as provided above,
Maker shall be deemed to have elected to withdraw its request to
convert this Note and the loan evidenced hereby to a fixed rate, and
this Note shall bear interest as provided in paragraph 2.1 above,
and otherwise be payable, as though Maker had not requested such
conversion. In the event Maker accepts and agrees to Noteholder's
proposed interest rate spread, (i) the Interest Rate shall be
adjusted, effective as of the first day of the first full calendar
month occurring at least forty-five (45) days after the Reset Date
(such first day of such month being herein referred to as the "Fixed
Rate Loan Commencement Date"), to the rate per annum equal to (x)
the applicable U.S. Treasury Index in effect on the Reset Date, plus
(y) Lender's proposed interest rate spread, and (ii) commencing on
the first day of the first full calendar month following the Fixed
Rate Loan Commencement Date, and on the first day of each month
thereafter, Maker shall pay Noteholder monthly payments of principal
and interest in an amount equal to the amount necessary to amortize
the unpaid principal balance of this Note as of the Fixed Rate Loan
Commencement Date (following the payment of principal due on such
date), together with interest thereon at the Interest Rate, as
adjusted in accordance with the provisions of this paragraph 2.2, in
equal monthly payments over the period commencing on the Fixed Rate
Loan Commencement Date to and including December 31, 2019 (i.e., the
remainder of the original 20-year amortization period), and (iii)
Maker and Noteholder shall enter into such documents amending this
Note and the other Loan Documents as Noteholder may request, and
(iv) Maker shall have no further right to request that Noteholder
convert this Note to a fixed rate Note. Maker shall pay all costs
and expenses incurred by Noteholder in connection with any such
request, whether or not Maker thereafter elects to accept and agree
to Noteholder's proposed interest rate spread, including without
limitation Noteholder's attorneys' fees incurred in connection with
such request
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and amending this Note and the other Loan Documents, title insurance
premiums and costs and recording fees.
2.3 Monthly Payments. Principal and interest upon this Note shall be
paid as follows:
(a) Interest only on the unpaid principal balance at the
Interest Rate shall be due and payable on the date hereof in an
amount equal to interest accrued from and including the date hereof
through the last day of December, 1999.
(b) Subject to the provisions of paragraph 2.2 above, on the
first (1st) day of February, 2000, and on the first (1st) day of
each month thereafter, Maker shall pay Noteholder monthly payments
of principal and interest in an amount equal to the amount necessary
to amortize the then unpaid principal balance of this Note, together
with interest hereon at the Interest Rate in effect on the day
immediately prior to the date on which the monthly payment in
question is due, in equal monthly payments over the period
commencing on the first (1st) of the month preceding the date on
which such monthly payment is due to and including December 31,
2019.
(c) On the first (1st) day of January, 2005, or, if this Note is
converted to a fixed rate Note pursuant to the provisions of Section
2.2 above, on the first (1st) day of January, 2020 (the applicable
date being herein referred to as the "Maturity Date"), the entire
unpaid principal balance together with all accrued interest, if not
sooner paid, shall be due and payable.
3. Treatment of Payments. All payments of principal, interest, late
charges (as described below), and prepayment premium (as described below), if
any, due under this Note shall be paid to Noteholder by wire transfer or check
of immediately available funds to such bank or place, and in such other manner,
as Noteholder may from time to time designate. If such payment is received by
2:00 p.m., such payment will be credited to Maker's account as of the date on
which received. If such payment is received after 2:00 p.m., such payment will
be credited to Maker's account on the business day next following the date on
which received. Each installment payment under this Note shall be applied first
to the payment of any cost or expense for which Maker is liable hereunder or
under the other Loan Documents, including any unpaid late charge, then to
accrued interest and the remainder to the reduction of unpaid principal. Time is
of the essence as to all payments hereunder.
4. Late Charges. If any monthly installment of principal and/or
interest is not paid in full on or before the tenth day of the month in which
such payment is due, then a charge for late payment ("Late Charge") in the
amount of five percent (5%) of the amount of such installment shall be
immediately assessed and shall be immediately due and payable by Maker. The
parties hereby recognize that the Late Charge is a reasonable approximation of
an actual loss difficult to
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estimate. Noteholder's failure to collect such Late Charge shall not constitute
a waiver of Noteholder' s right to require payment of such Late Charge for past
or future defaults. The Late Charge shall be in addition to all other rights and
remedies available to Noteholder upon the occurrence of a default under the Loan
Documents.
5. Default Interest. Upon the occurrence of (a) an Event of Default (as
defined in the Loan Agreement) or (b) maturity of this Note, interest shall
accrue hereunder at an annual rate (the "Default Rate") equal to the lesser of
(i) eighteen percent (18%) and (ii) the maximum rate allowed by law. The Default
Rate shall accrue on the entire outstanding balance hereof, including, without
limitation, delinquent interest and any and all costs and expenses incurred by
Noteholder in connection therewith.
6. Security. This Note is made pursuant to a Loan Agreement of even
date herewith (the "Loan Agreement") and secured by, among other things, a
Mortgage, Security Agreement and Financing Statement (hereinafter called the
"Mortgage") of even date herewith in favor of Noteholder evidencing a lien on
certain real property in Ramsey County, Minnesota, described therein, and
evidencing a security interest in certain personal property, fixtures and
equipment described therein. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.
7. Event of Default. Upon the failure to pay any installment of
principal and/or interest due on this Note as above promised or upon the
occurrence of an Event of Default, Noteholder shall have the option of declaring
the indebtedness evidenced hereby to be immediately due and payable ("the Loan
Acceleration"). After Loan Acceleration, Noteholder shall have the option of
applying any payments received to principal or interest or any other costs due
pursuant to the terms of this Note or the Loan Documents.
8. Prepayment. No prepayment of the principal balance of the Note is
allowed prior to the expiration of the first Loan Year. Thereafter, prior to the
conversion, if any, of this Note to a fixed rate Note pursuant to Section 2.2
hereof, the Maker may prepay this Note in whole, but not in part1, upon 30 days'
prior written notice, upon payment of a prepayment premium equal to 3% of the
principal amount being prepaid if prepayment is made during the second Loan
Year, 2% of the principal amount being prepaid if prepayment is made during the
third Loan Year, 1% of the principal amount being prepaid if prepayment is made
during the fourth Loan Year, and no prepayment premium shall be payable if
prepayment is made thereafter. If this Note is converted to a fixed rate Note
pursuant to Section 2.2 hereof, the provisions of the immediately preceding
sentence of this paragraph 8 shall no longer apply, and thereafter Maker may
prepay this Note in whole, but not in part, upon 30 days' prior written notice,
upon payment of a yield maintenance premium ("Premium") equal to the greater of
(i) 1% of the outstanding principal balance at the time of prepayment or (ii)
the present value on the date of prepayment of all future principal and interest
payments beginning with the payment due on the second month following the date
of prepayment, including any balloon payments, assuming payment in accordance
with the repayment terms of this Note less the current outstanding principal
balance of the loan evidenced hereby. The
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interest rate used in calculating the present value shall be the Treasury Rate,
as defined herein, divided by twelve. "Treasury Rate" shall be the yield as
reported by Bloomberg L.P. of U.S. Government Treasury Securities having a
maturity date which is the same as the Maturity Date three (3) business days
prior to the date of prepayment ("Index"). If for any reason the Index is not
published, the Treasury Rate shall be based on the yields reported in another
publication of comparable reliability and institutional acceptance as selected
by Noteholder in its sole discretion which most closely approximates yields in
percent per annum of selected U.S. Treasury securities of varying maturities. If
no Treasury Constant Maturities are published for the specific length of time to
the Maturity Date, the index to be utilized shall be the weighted average of the
Treasury Constant Maturities published for the two periods most nearly
corresponding to the Maturity Date. No Premium shall apply to a payment in full
during the ninety (90)-day period prior to the Maturity Date or due to taking
through condemnation or a casualty where Noteholder applies proceeds to prepay
the loan evidenced hereby. No involuntary partial prepayment shall suspend or
reduce any required installment payments. If Loan Acceleration has occurred, and
Maker wishes to pay the loan evidenced hereby in full, the payment tendered must
include either (i) the applicable prepayment premium, if the payment is tendered
during a period when prepayment is permitted under this Note, or (ii) the
greater of such prepayment premium or 10% of the principal amount owed on the
date of default, if the payment is tendered during a period when prepayment is
prohibited under this Note. For purposes of this Note, the term "Loan Year"
shall mean the one-year period commencing on January 1, 2000, and each one-year
period thereafter.
9. Non-Usurious Loan. It is the intent of Noteholder and Maker in this
Note and the other Loan Documents now or hereafter securing this Note to
contract in strict compliance with applicable usury law. In furtherance thereof,
Noteholder and Maker stipulate and agree that none of the terms and provisions
contained in this Note, or in any other instrument executed in connection
herewith including but not limited to the Loan Documents, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, or interest at a rate in excess of the maximum interest rate permitted to
be charged by applicable law. Neither Maker nor any guarantors, endorsers or
other parties now or hereafter becoming liable for payment of this Note shall
ever be required to pay interest on this Note at a rate in excess of the maximum
interest that may be lawfully charged under applicable law, and the provisions
of this paragraph shall control over all other provisions of this Note, the Loan
Documents and any other instruments now or hereafter executed in connection
herewith which may be in apparent conflict herewith. Noteholder expressly
disavows any intention to charge or collect excessive unearned interest or
finance charges in the event the maturity of this Note is accelerated. If the
maturity of this Note is accelerated for any reason or if the principal of this
Note is paid prior to the Maturity Date, and as a result thereof the interest
received for the actual period of existence of this Note exceeds the applicable
maximum lawful rate, Noteholder shall, at its option, either refund the amount
of such excess or credit the amount of such excess against the principal balance
of this Note then outstanding and thereby shall render inapplicable any and all
penalties of any kind provided by applicable law as a result of such excess
interest. In the event that Noteholder collects monies which are deemed to
constitute interest which would increase the effective interest rate on this
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Note to a rate in excess of that permitted to be charged by applicable law, all
such sums deemed to constitute interest in excess of the lawful rate shall, upon
such determination, at the option of Noteholder, be either immediately returned
or credited against the principal balance of this Note then outstanding, in
which event any and all penalties of any kind under applicable law as a result
of such excess interest shall be inapplicable. By execution of this Note Maker
acknowledges that it believes this Note and all interest and fees paid in
connection with the loan represented by this Note, to be nonusurious. Maker
agrees that if, at any time, Maker should believe that this Note or the loan
represented by this Note is in fact usurious, Maker will give Noteholder notice
of such condition and Maker agrees that Noteholder shall have ninety (90) days
in which to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. The term "applicable law" as used in
this Note shall mean the laws of the State of Minnesota or the laws of the
United States, whichever allows the greater rate of Interest, as such laws now
exist or may be changed or amended or come into effect in the future.
10. Noteholder's Attorney Fees. Should the indebtedness represented by
this Note or any part thereof be collected at law or in equity or through any
bankruptcy, receivership, probate or other court proceedings or if this Note is
placed in the hands of attorneys for collection after default, or if the lien or
priority of the lien represented by the Mortgage or the other Loan Documents is
the subject of any court proceeding, Maker and all endorsers, guarantors and
sureties of this Note jointly and severally agree to pay to Noteholder in
addition to the principal and interest due and payable hereon reasonable
attorney and collection fees including those incurred by Noteholder for any
appeal.
11. Maker's Waivers. Maker and all endorsers, guarantors and sureties
of this Note and all other persons liable or to become liable on this Note
severally waive presentment for payment, demand, notice of demand and of
dishonor and nonpayment of this Note, notice of intention to accelerate the
maturity of this Note, notice of acceleration, protest and notice of protest,
diligence in collecting, and the bringing of suit against any other party, and
agree to all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.
12. Payment of Taxes and Fees. Maker agrees to pay the cost of any
revenue, tax or other documentary fee or stamps now or hereafter required by law
to be affixed to this Note or the Mortgage.
13. Governing Law. This Note and the rights, duties and liabilities of
the parties hereunder and/or arising from or relating in any way to the
indebtedness evidenced by this Note or the transaction of which such
indebtedness is a part shall be governed and construed for all purposes by the
law of the State of Minnesota.
14. WAIVER OF TRIAL BY JURY. MAKER HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
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ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED HEREBY, THE APPLICATION
FOR THE LOAN EVIDENCED HEREBY, THE LOAN DOCUMENTS OR ANY ACTS OR OMISSIONS OF
NOTEHOLDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH.
IN WITNESS WHEREOF, Maker has caused this Note to be duly executed as
of the day and year first above written.
MAKER:
CHORUS CORPORATION, a Minnesota
corporation
Taxpayer ID Number: 41-1569588
By: /s/ Frank Kraemer
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Name: Frank Kraemer
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Title: CFO
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STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 15 day of
December, 1999, by Frank Kraemer , the CFO of
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Chorus Corporation, a corporation organized under the laws of the State of
Minnesota, on behalf of the corporation.
/s/ John R. Haley
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Notary Public
NOTARY STAMP:
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John R. Haley
Notary Public-Minnesota
ANOKA COUNTY
My Commission Expires Jan. 31, 2000
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