PROMISSORY NOTE

Eagan, Minnesota
$125,000                                                           May 3, 2011

For Value Received, Minot 123, LLC,  a North Dakota  limited liability company
(the “Company”), promises to pay to the order of Hypertension Diagnostics, Inc.,
a Minnesota corporation (“Holder”), pursuant to the terms herein, in lawful
money of the United States of America, the principal sum of One Hundred Twenty
Five Thousand Dollars ($125,000), together with interest in arrears on the
unpaid principal balance remaining unpaid from time to time (computed on the
basis of actual days elapsed in a 360-day year) at a rate equal to Eight Percent
(8%) per annum, in the manner provided below, as evidenced by this Promissory
Note (the “Note”).  In the event of an exercise of a Repayment Option, as
provided herein, this Note shall be secured by the assets of the Company.   This
Note is being issued pursuant to that certain Restructuring Agreement by and
between the Company and Holder of even date herewith.

1.           PAYMENTS.

1.1           Repayment Option.   The proceeds from this Note shall be used to
acquire a property located at 123 1st Street, Minot, North Dakota (the “M
Building”).   The Company will use its best efforts to make M Building
“Operational and Rentable” by the end of 45 calendar days from the date of this
Note (the “Operational Date”).    Operational and Rentable shall mean that with
respect to the M Building, the following systems are in working order or have
otherwise been repaired and replaced to be in working order: elevators,
electrical systems, boilers, coolers, controls, glass plate repairs, lighting
replacement and repairs, pipes and plumbing, structural repairs and asbestos
abatement to such a level that M Building shall be deemed rentable to third
parties.   The determination of whether M Building is Operational and Rentable
shall be made in the sole discretion and in good faith by the Board of Directors
of the Holder, or any committee thereof, excluding any Board of Director of the
Holder who has direct or indirect ownership interest in the Company (the
“Independent Board”).  To the extent that the Independent Board believes that M
Building is not Operational and Rentable, the Company agrees that this Note
shall be repaid 90 days from the date of such determination by the Independent
Board (the “Note Maturity Date”).   The obligation to repay the Note because of
such determination that M Building is not Operational and Rentable shall be
secured by a second mortgage on M Building which shall be second only to the
first mortgage held by the seller of  M Building to the Company or any assignee
thereof.

1.2            Principal and Interest.  To the extent that the Note must be
repaid because the Independent Board has determined that M Building is not
Operational and Rentable,  the principle and any accrued interest on the Note
shall be payable on the Note Maturity Date.

1.3           M Building Deemed Operational and Rentable.  To the extent that
the Independent Board determines that M Building is Operational and Rentable as
provided in Section 1.1, this Note may be forgiven by the Independent Board of
the Holder.

1.4           Prepayment.  At any time after the date hereof, the Company may,
without premium or penalty, at any time and from time to time, prepay all or any
portion of the outstanding principal balance due under this Note, provided that
each such prepayment is accompanied by the accrued interest on the amount of
principal prepaid calculated to the date of such prepayment.  The Company shall
provide Holder with not less than fifteen (15) days written notice prior to such
prepayment.

2.           DEFAULT.

2.1           Events of Default.  The occurrence of any one or more of the
following events with respect to Company shall constitute an event of default
hereunder (“Event of Default”):

(a)           If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a “Bankruptcy Law”), the Company shall (i) commence a
voluntary case or proceeding; (ii) consent to the entry of an order for relief
against it in an involuntary case; (iii) consent to the appointment of a
trustee, receiver, assignee, liquidator or similar official; (iv) make an
assignment for the benefit of its creditors; or (v) admit in writing its
inability to pay its debts as they become due;

(b)           If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against the Company in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for the Company or substantially all of the Company’s
properties, or (iii) orders the liquidation of the Company, and in each case the
order or decree is not dismissed within 90 days; or

(c)           Failure of the Company to pay when due any amounts owed hereunder.

(d)           The issuing of any mortgage or security interest on the M Building
other than the $200,000 mortgage issued to the seller of the M Building to the
Company.

2.2           Notice by the Company. The Company shall notify Holder in writing
at the Holder’s address last shown in the Company’s records within five days
after the occurrence of any Event of Default of which the Company acquires
knowledge.

2.3           Remedies.  Upon the occurrence of an Event of Default hereunder
(unless all Events of Defaults have been cured or waived by Holder), Holder may,
at its option, (i) by written notice to the Company, declare the entire unpaid
principal balance of this Note, together with all accrued interest thereon,
immediately due and payable regardless of any prior forbearance, (ii) exercise
all rights under the Security Agreement, and/or (iii) exercise any and all
rights and remedies available to it under applicable law, including, without
limitation, the right to collect from the Company all sums due under this
Note.  The Company shall pay all reasonable costs and expenses incurred by or on
behalf of Holder in connection with Holder’s exercise of any or all of its
rights and remedies under this Note, including, without limitation, reasonable
attorneys’ fees.

3.           TRANSFERABILITY. The Holder is not prohibited from transferring its
right, title and interest in this Note.

 

 
 

--------------------------------------------------------------------------------

 

4.           MISCELLANEOUS.

4.1           Waiver.  The rights and remedies of Holder under this Note shall
be cumulative and not alternative.  No waiver by Holder of any right or remedy
under this Note shall be effective unless in a writing signed by
Holder.  Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Holder will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege.  To
the maximum extent permitted by applicable law, (a) no claim or right of Holder
arising out of this Note can be discharged by Holder, in whole or in part by a
waiver or renunciation of the claim or right unless in a writing, signed by
Holder; (b) no waiver that may be given by Holder will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
the Company will be deemed to be a waiver of any obligation of the Company or of
the right of Holder to take further action without notice or demand as provided
in this Note.  The Company hereby waives presentment, demand, protest and notice
of dishonor and protest.

4.2           Notices.  Any notice required or permitted to be given hereunder
shall be given by the Company to the Holder or the Holder to the Company in
writing and shall be (a) personally delivered ; (b) sent by overnight courier of
national reputation, or (c) transmitted by facsimile or electronic mailing.

4.3           Severability.  If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.

4.4           Governing Law.  This Note will be governed by the laws of the
State of Minnesota without regard to conflicts of laws principles.

4.5           Parties in Interest.  This Note shall bind the Company and its
successors and assigns.  This Note shall not be assigned by Holder without the
express prior written consent the Company, which consent may be granted or
withheld in the Company’s reasonable discretion.

4.6           Authorization.  The Company is authorized to issue this Note and
the issuance of this Note will not conflict with any contract or agreement of
the Company.

4.7           Section Headings, Construction.  The headings of Sections in this
Note are provided for convenience only and will not affect its construction or
interpretation.  All references to “section” or “Sections” refer to the
corresponding Section or Sections of this Note unless otherwise specified.

All words used in this Note will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the words
“hereof” and “hereunder” and similar references refer to this Note in its
entirety and not to any specific section or subsection hereof.

 
 

 
 

--------------------------------------------------------------------------------

 

In Witness Whereof, the Company has executed and delivered this Note as of the
date first stated above.
 

                                                                                     
     MINOT 123, LLC           By:
 /s/ Kenneth Brimmer
   
 Its Manager