EXHIBIT 10.41
PROMISSORY NOTE
$1,200,000.00 October 14, 2003
Edina, Minnesota
FOR VALUE RECEIVED, HEI, INC., a Minnesota corporation ("Maker") promises
to pay to the order of COMMERCE BANK, a Minnesota state banking corporation
("Payee") or its assigns, at its office located at 7650 Edinborough Way, Suite
150, Edina, Minnesota 55435, or such other place as may be designated from time
to time by the holder hereof, in lawful money of the United States of America,
the principal sum of ONE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS
($1,200,000.00), or the unpaid principal balance outstanding from all sums
advanced against this Note, whichever amount is less, together with interest
thereon as hereinafter provided.
1. Interest shall accrue on the principal balance hereof as follows:
(a) Commencing on the date hereof, to and including October 31, 2006,
interest shall accrue on the outstanding principal balance hereof at the
rate of interest equal to 6.50% per annum; and
(b) Commencing on November 1, 2006, to and including the Maturity Date
(as hereinafter defined), interest shall accrue on the principal balance
hereof at a fixed rate per annum, which rate shall be equal to the greater
of (i) the Three-Year Treasury Base Rate (as hereinafter defined) plus
three percent (3.0%), or (ii) the Prime Rate (as hereinafter defined) plus
one percent (1.0%).
As used herein, (a) "Three Year Treasury Base Rate" shall mean the average
yield rounded up to the nearest one-eighth percent (.125%) on the twenty
business days immediately preceding November 1, 2006 of the yield on United
States Treasury Notes adjusted to a constant maturity of three years as
published the Federal Reserve Board Release H.15 (or from such other
appropriate source determined by Payee if such Release is no longer published);
and (b) "Prime Rate" shall mean the rate published in the Wall Street Journal
as the base rate on corporate loans posted by at least 75% of the nation's
thirty largest banks.
2. Maker shall pay the principal of this Note and interest thereon as
follows:
(a) On the first day of each month, commencing on November 1, 2003, to
and including October 1, 2006, there shall be due and Maker shall pay
monthly installments of principal and interest in the amount of Nine
Thousand Eleven and No/100 Dollars ($9,011.00); and
(b) On the first day of each month, commencing on November 1, 2006, to
and including October 1, 2009, there shall be due and maker shall pay
monthly installments of principal and interest, each of which shall be in
an amount equal to the amount that would be required to amortize the
remaining principal balance of this Note, over a term ending on November 1,
2023, at the then applicable interest rate provided above.
PROMISSORY NOTE
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$1,200,000.00 October 14, 2003
Edina, Minnesota
On November 1, 2009 (the "Maturity Date"), the entire remaining principal
balance of this Note, together with any accrued, unpaid interest, shall be due
and payable in full.
3. Maker may prepay this Note in full at any time by giving Payee sixty
(60) days prior written notice. At any time of prepayment, and in consideration
of Payee's willingness to accept such prepayment, Maker shall pay, in addition
to the then outstanding principal balance plus accrued unpaid interest, a
prepayment premium as follows:
(a) From the date hereof, to and including October 31, 2005, an amount
equal to two percent (2%) of the outstanding principal balance of this Note
as of the date of prepayment; and
(b) From November 1, 2005, to and including, October 31, 2007, an
amount equal to one percent (1%) of the outstanding principal balance of
this Note as of the date of prepayment.
(c) From and after November 1, 2007, this Note may be prepaid in full
at any time without payment of a prepayment premium.
4. Interest charges will be calculated on amounts advanced hereunder on
the actual number of days said amounts are outstanding. Such interest shall be
computed on the basis of a year comprised of 360 days, but charged for the
actual number of days elapsed (including the first day but excluding the last
day) occurring in the period for which interest is payable. Payments under this
Note shall be applied initially against accrued interest and escrow charges, if
any, and thereafter in reduction of principal.
5. This Note is executed and delivered pursuant to, and is entitled to
the benefits of, that certain Term Loan Agreement, dated of even date herewith
(the "Loan Agreement"), between Maker, as borrower and Payee, as lender and
evidences the loan made or to be made pursuant to the terms and conditions of
the Loan Agreement.
6. This Note is secured, inter alia, by
(a) that certain Combination Mortgage, Security Agreement, Assignment
of Rents and Fixture Financing Statement of even date herewith between
Maker as Mortgagor and Payee as Mortgagee, covering certain real property
in the County of Carver, State of Minnesota, as described therein (the
"Mortgage").
7. Maker acknowledges that if any payment required under this Note is not
paid within ten (10) days after the same becomes due and payable, Payee will
incur extra administrative expenses (i.e., in addition to expenses incident to
receipt of timely payment) in connection with the delinquency in payment.
Because, from the nature of the case, the actual damages suffered by Payee in
incurring such extra administrative expenses would be impracticable or
difficult to ascertain, it is agreed that three percent (3%) of the amount of
the
PROMISSORY NOTE
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$1,200,000.00 October 14, 2003
Edina, Minnesota
delinquency payment shall be the amount of damages to which the Payee is
entitled, upon such breach, in compensation for such extra administrative
expenses. Therefore, the Maker shall, in such event, without further notice, pay
to Payee liquidated damages in the amount of three percent (3%) of the amount of
such delinquent payments. The provisions of this paragraph are intended to
govern only the determination of the above-described damages in the event of a
breach in performance of the obligation of Maker to make timely payments
hereunder. Nothing in this Note shall be construed as an express or implied
agreement by Payee to forbear in the collection of any delinquent payment, or be
construed as in any way giving the undersigned the right, express or implied, to
fail to make timely payment hereunder, whether upon payment of such damages or
otherwise. The right of Payee to receive payment of such liquidated damages, and
receipt thereof, are without prejudice to the right of Payee to collect such
delinquent payments and any other amounts required to be paid hereunder or under
any security for this Note or to declare a default hereunder or under any
security for this Note.
8. Maker hereby waives presentment and demand for payment, notice of
intent to accelerate maturity, protest or notice of protest and non-payment,
bringing of suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and properties securing
payment hereunder, and expressly agree that this Note, or any payment
hereunder, may be extended from time to time, and consent to the acceptance of
further security or the release of any security for this Note, all without in
any way affecting the liability of Maker. No extension of time for the payment
of this Note, or any installment thereof, made by agreement by Payee shall
affect the original liability under this Note of Maker.
9. It shall be an "Event of Default" under this Note if:
(a) Maker fails to pay when due or, if payable on demand, upon demand,
any principal of this Note, prepayment premium (if applicable), or interest
on this Note, any other amount of money required to be paid pursuant to
this Note, or any other obligation of Maker to Payee within ten (10) days
after the same becomes due, whether at the stated maturity or at a date
fixed for any installment payment or any accelerated payment date or
otherwise; or
(b) Maker fails to comply with or perform any other term, covenant,
agreement or condition of this Note, the Mortgage, the Loan Agreement, or
any other document or instrument securing the payment of this Note, and
such failure or breach shall continue for a period of thirty (30) days
after written notice thereof is delivered by the holder of this Note to
Maker; or
(c) Maker
(i) becomes insolvent or fails to pay its debts generally as they
become due,
(ii) suspends business,
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$1,200,000.00 October 14, 2003
Edina, Minnesota
(iii) makes a general assignment for the benefit of creditors,
(iv) admits in writing its inability to pay its debt generally as
they mature,
(v) files a petition in bankruptcy or a petition or answer
seeking liquidation of it or a reorganization, arrangement with
creditors or other similar relief under the Federal bankruptcy laws or
under any other applicable law of the United States of America or any
state thereof, whether now or hereafter in effect,
(vi) petitions for or applies to any tribunal for, or consents to
the appointment of a trustee, custodian, liquidator, receiver or
similar official for it or for a substantial part of its property,
(vii) is adjudicated a bankrupt or has an involuntary petition in
bankruptcy, or a case commenced against it under the Federal
bankruptcy laws, as now or hereafter in effect, and an order for
relief entered therein,
(viii) takes any action for the purpose of effecting or
consenting to any of the foregoing, or
(ix) has an order, judgment or decree entered appointing without
such entity's consent, a trustee, custodian, liquidator, receiver or
similar official for it or for a substantial part of its property, or
approving a petition in any such proceeding or approving a petition
filed or case commenced against it seeking liquidation of it or a
reorganization, arrangement with creditors or other similar relief
under the Federal bankruptcy laws or under any other applicable law of
the United States of America or any State thereof, whether now or
hereafter in effect, which order, judgment or decree shall not be
vacated or set aside or stayed within 60 days from the date of entry;
or
(d) Maker is dissolved, liquidated or wound up; or
(e) Any representation or warranty made by Maker in the Mortgage or
made in connection with the execution and delivery of this Note and the
Mortgage, or the making of the loan secured hereby, shall be incorrect or
untrue in any material respect; or
(g) An "Event of Default" as defined in the Mortgage or the Loan
Agreement or any other Loan Document (as defined in the Loan Agreement)
shall occur.
10. Upon the occurrence of an Event of Default (after expiration of any
applicable cure or grace periods), in addition to any other rights or remedies
Payee may have at law or in equity, Payee may, at its option, and without
notice to Maker, declare immediately due and payable the entire unpaid
principal sum hereof, together with all accrued and unpaid interest thereon at
a rate which is three percent (3%) per annum above the interest rate then
applicable hereunder on the date of such Event of Default (the "Default Rate"),
plus any other sums owing
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$1,200,000.00 October 14, 2003
Edina, Minnesota
at the time of such Event of Default pursuant to this Note, the Mortgage, the
Loan Agreement or any other Loan Document.
The failure to exercise the foregoing or any other options shall not
constitute a waiver of the right to exercise the same or any other option at
any subsequent time in respect of the same event or any other event. The
acceptance by the holder of any payment hereunder which is less than payment in
full of all amounts due and payable at the time of such payment shall not
constitute a waiver of the right to exercise any of the foregoing options at
that time or at any subsequent time.
11. This Note shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, except that
Maker may not assign or transfer its rights hereunder without the prior written
consent of the Payee, which consent may be withheld in Payee's sole discretion.
12. This Note shall be governed by, interpreted and construed according to
the laws of the State of Minnesota. Maker hereby irrevocably submits to the
jurisdiction of the Minnesota District Court, Fourth District, and the Federal
District Court, District of Minnesota, Fourth Division, over any action or
proceeding arising out of or relating to this Note, and Maker hereby agrees that
all claims in respect of such action or proceeding may be heard and determined
in such Minnesota State or Federal court.
13. The invalidity or unenforceability in particular circumstances of any
provision of this Note shall not extend beyond such provision or such
circumstances and no other provision of this instrument shall be affected
thereby.
HEI, INC.
By: /s/ Douglas J. Nesbit
----------------------------
Its: Chief Financial Officer