Exhibit 10.3

 

PROMISSORY NOTE 

      $500,000.00   Due: March 1, 2016   Note # _____________

  

DATED: September 8, 2015     PLACE: Ramsey, Minnesota     BORROWER: Pro-Dex
Sunfish Lake, LLC, a Delaware limited liability company

 

FOR VALUE RECEIVED, the undersigned Pro-Dex Sunfish Lake, LLC, a Delaware
limited liability company (“Borrower”), promises to pay to the order of
Fortitude Income Fund, LLC, a Delaware limited liability company (“Lender”), the
principal sum of Five Hundred Thousand and 00/100 Dollars ($500,000.00),
together with interest on the unpaid principal balance thereof, outstanding from
time to time, in the manner set forth below.

 

1.          INTEREST. Commencing from the date hereof, the rate of interest
which shall accrue and be paid on the aggregate amount advanced on this Note,
which from time to time remains unpaid, shall be a fixed interest rate equal to
twelve percent (12.00%) per annum. Interest shall be calculated on the principal
balance outstanding at the end of each day and on the basis of a year of three
hundred sixty-five (365) days.

 

2.          PAYMENTS. Time, Place and Amount of Payments.

 

a.          Interest Only Payments. Interest only payments shall commence on the
first day of the first month after any advance of principal under this Note and
on the first day of each and every month thereafter, until March 15, 2016, when,
at such time, the entire outstanding principal balance, all accrued interest,
and all others sums due hereunder shall be fully due and payable. Interest only
payments shall be in an amount sufficient to pay in full all accrued interest
with respect to the principal amount of this Note outstanding during the
immediately preceding month.

 

b.          Application of Payments. All payments shall be credited first to
late fees and penalties, interest, and then to principal, except that if any
advance made by the Lender under the terms of any instruments securing this Note
is not repaid, any monies received, at the option of the Lender, may first be
applied to repay such advances, plus interest thereon, and the balance, if any,
shall be applied as set forth above.

 

c.          Place of Payments. All payments to the Lender will be made at North
Loop Capital, FBO Fortitude Income Fund, 701 Washington Ave N, Suite 550,
Minneapolis, MN 55401, or at such other location as requested by the Lender in
writing.

 

 

 

 

d.          Right to Extend. Borrower has the right to extend the entire
principal balance, after having given at least one month prior notice, for three
months time at a fixed interest rate equal to twelve percent (12.00%) per annum
and 0.75% points paid upfront points on the balance extended. Interest only
payments shall commence on the first day of the first month after any advance of
principal under this Note and on the first day of each and every month
thereafter, until June 15, 2016, when, at such time, the entire outstanding
principal balance, all accrued interest, and all others sums due hereunder shall
be fully due and payable.

 

e.          Second Right to Extend. Borrower has the right to extend the entire
principal balance, after having given at least one month prior notice, for three
months time at a fixed interest rate equal to twelve percent (12.00%) per annum
and 0.75% points paid upfront points on the balance extended. Interest only
payments shall commence on the first day of the first month after any advance of
principal under this Note and on the first day of each and every month
thereafter, until September 15, 2016, when, at such time, the entire outstanding
principal balance, all accrued interest, and all others sums due hereunder shall
be fully due and payable.

 

3.          SECURITY. Payment of this Note is secured by a Combination Mortgage,
Security Agreement and Fixture Financing Statement (“Mortgage”) covering, in
part, real property located in Anoka County, Minnesota, and an Assignment of
Leases and Rents (“Assignment”) executed in favor of Lender of an even date
herewith. This Note, Mortgage and Assignment may collectively be referred to
hereafter as the “Loan Documents”.

 

4.          LATE CHARGES. Borrower shall pay to the Lender a late charge of four
percent (4%) of any monthly installment not received by the Lender within ten
(10) days after the installment is due.

 

5.          PREPAYMENT PENALTY. In the event Borrower prepays all or any portion
of this Note, or the Loan evidenced hereby, except scheduled monthly interest
payments, on or before January 1, 2016, Borrower shall pay to Lender a
prepayment fee of two percent (2.00%) of the principal amount prepaid on the
Note. Any such prepayment of principal shall be applied first to accrued
interest and any other sums due hereunder and shall not affect or suspend the
remaining installments of principal and interest due pursuant to this Note.

 

6.          DEFAULT. If Borrower fails to pay any amount due hereunder, within
five (5) days of its due date, or if a default or an event of default occurs
under any of the Loan Documents, and any applicable cure period has expired,
then, in any such event, the entire unpaid principal balance hereof, together
with accrued interest thereon and any other sums due hereunder, shall become
immediately due and payable at the option of Lender, time being of the essence
of this Note. The terms and provisions of the Loan Documents are incorporated
herein by reference as if set forth therein in full.

 

7.          DEFAULT INTEREST RATE. Upon an Event of Default (as hereinafter
defined), the interest rate payable hereunder shall thereafter increase and
shall be payable on the whole of the unpaid principal balance at a rate equal to
the lesser of (i) four percent (4%) per annum

 

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in excess of the rate of interest then in effect under the terms of this Note or
(ii) the highest rate of interest permitted under the laws of the State of
Minnesota (hereinafter referred to as the “Default Rate”). Interest on this Note
at the Default Rate shall be immediately due and payable without notice or
demand. The Default Rate shall be applicable whether or not Lender has exercised
its option to accelerate the maturity of this Note and declare the entire unpaid
principal indebtedness to be due and payable. The Default Rate shall continue
until Borrower has cured all Events of Default as permitted herein, Borrower has
paid all indebtedness evidenced by this Note in full, or all foreclosure
proceedings have been completed and all redemption periods have expired,
whichever shall occur first. This provision shall not be deemed to excuse a
default and shall not be deemed a waiver of any other rights Lender may have,
including the right to declare the entire unpaid principal balance and accrued
interest immediately due and payable.

 

8.          GENERAL TERMS. The Borrower hereby agrees to pay on demand all costs
of collection, including reasonable attorney’s fees and legal expense, in the
event this Note is not paid when due, whether or not legal proceedings are
commenced.

 

This Note is issued in and shall be governed by the laws of the State of
Minnesota. All payments made under the provisions of this Note which may be
construed as interest shall not, in the aggregate over the term hereof, exceed
the rate that may now be lawfully contracted for in writing in the State of
Minnesota.

 

No delay on the part of the holder in exercising any right or remedy hereunder
shall operate as a waiver of or preclude the exercise of such right or remedy or
of any other remedy under this Note. No waiver by the holder hereof shall be
effective unless in writing signed by such holder. A waiver on any one occasion
shall not be construed as a waiver of any such right or remedy on a future
occasion.

 

This Note may not be amended, modified, discharged or changed, except only by an
instrument in writing and signed by the party against whom enforcement of any
amendment, modification, discharge or change is sought.

 

Borrower and all co-makers, endorsers, sureties, guarantors and other
accommodation parties hereby waive presentment for payment, demand, dishonor,
notice of dishonor, protest, notice of protest, and notice of nonpayment, and
also notice of acceleration of maturity on default or otherwise, and consent,
without affecting their liability hereunder, to any and all extensions,
renewals, substitutions, and alterations of any of the terms of this Note and to
the release of, or failure by the holder hereof to exercise any rights against
any party liable for payment hereof or any property securing payment hereof. Any
such extension, renewal, substitution, alteration or release may be made without
notice to said parties.

 

The rights and remedies of the holder as provided in this Note and the Loan
Documents shall be cumulative and concurrent, and may be pursued singly,
successively, or together against Borrower, any collateral, any guarantors of
this Note and any other funds, property or security held by the holder for the
payment of the indebtedness due under this Note. The failure to exercise any
such right or remedy shall in no event be construed as a waiver or release of
such rights or remedies or of the right to exercise them at any later time.

 

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Borrower certifies that this loan is not a consumer or consumer-related loan and
is being used for business purpose.

 

Borrower acknowledges receipt of a copy of this Note on date of execution. 

          Pro-Dex Sunfish Lake, LLC, a     Delaware limited liability company  
      By: -s- Richard L. Van Kirk [rhf150667006_v1.jpg]           Its: President

 

663301-v1

 

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