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                                                                   EXHIBIT 10.46

                               TERM LOAN AGREEMENT

         THIS TERM LOAN AGREEMENT ("Agreement") is dated as of October 28, 2003,
between HEI, INC., a Minnesota corporation ("Borrower"), located at 1495 Steiger
Lake Lane, Victoria, MN 55386 and COMMERCE FINANCIAL GROUP, INC., a Minnesota
corporation ("Lender"), located at 7650 Edinborough Way, Suite 160, Edina, MN
55435.

                                   WITNESSETH:

         WHEREAS, Borrower has applied to Lender for a loan of $1,150,000.00
secured by the Collateral (as hereinafter defined);

         WHEREAS, Lender is willing to make such loan on the terms hereof;

         NOW, THEREFORE, in consideration of the above premises and the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.       Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:

         "Affiliate" shall include, with respect to any party, any Person which
directly or indirectly controls, is controlled by, or is under common control
with such party and, in addition, in the case of Borrower, each officer,
director, shareholder, joint venturer and partner of Borrower. A Person shall be
deemed to control another Person if the controlling Person owns 10% or more of
any class of voting stock of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.

         "Bank Note" means that certain $1,200,000 promissory note dated as of
October 14, 2003 executed by Borrower in favor of Lender.

         "Borrower" has the meaning set forth in the preamble hereto.

         "Collateral" means the Equipment and the Project.

         "Debt" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services, (ii) obligations as lessee under leases
that have been or should be, in accordance with GAAP, recorded as capital
leases, (iii) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in

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(i) or (ii) above, and (vi) liabilities in respect of unfunded vested benefits
under plans covered by Title IV of ERISA.

         "Debt Service Coverage Ratio" for any measurement period means a ratio
the numerator of which is (A) (i) the sum of Borrower's trailing twelve-month
(a) after-tax net income (as defined by GAAP); (b) depreciation, (c)
amortization, and (d) interest expense on Borrower's term debt; less (ii) any
cash or asset distributions or dividends paid to shareholders in such
twelve-month period and the denominator of which is (B) Borrower's aggregate
payments on Debt, including interest, on such Debt (including, without
limitation, any payments on capitalized leases allocable to principal and
interest in accordance with GAAP) scheduled to have been paid during such
twelve-month measurement period.

         "Default" means any event, which, with the giving of notice or passage
of time or both, would constitute an Event of Default.

         "Equipment" means all equipment of Borrower now or hereafter located at
HEI, Inc., High Density Interconnect Division, 610 South Rockford Drive, Tempe,
Arizona, including but not limited to, machinery, vehicles, furniture, fixtures,
manufacturing equipment, shop equipment, office and record keeping equipment,
parts and tools.

         "Event of Default" has the meaning set forth in Article 8.

         "GAAP" means accounting principles generally accepted in the United
States of America including those promulgated by the Securities and Exchange
Commission, consistently applied.

         "Improvements" means the approximate 45,408 square foot
office/manufacturing/warehouse facility known as the HEI, Inc. corporate office
and manufacturing facility located upon the Property at 1495 Steiger Lake Lane,
Victoria, MN 55386.

         "Lender" has the meaning set forth in the preamble hereto.

         "Loan Documents" means this Agreement and the other documents listed in
Section 2.1(a)-(f) hereof, and any other document that now or hereafter
evidences or secures the Obligations.

         "Loan Year" means a period commencing on November 1, 2003, or any
anniversary thereof and ending on the 365th, or in the case of a leap year, the
366th day thereafter.

         "Mortgage" has the meaning provided in Section 2.1(f) hereof.

         "Note" has the meaning provided in Section 2.1(b) hereof.

         "Obligations" means the indebtedness evidenced by the Note and all
other advances, debts, liabilities, obligations, covenants and duties owing by
Borrower of any kind or nature, present or future, which arise under this
Agreement or any other Loan Document, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
joint,

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several, or joint and several, direct or indirect (including those acquired by
assignment or purchase), absolute or contingent, due or to become due, and
however acquired. The term includes, but is not limited to, all interest, fees,
charges, expenses, attorneys' fees, and any other sum chargeable to Borrower
under this Agreement or any other Loan Document.

         "Payment Reserve Account" has the meaning provided in Section 6.9
hereof.

         "Person" means any natural person, corporation, firm, association,
government, governmental agency or other entity, whether acting in an
individual, fiduciary or other capacity.

         "Project" means the Improvements and the Property.

         "Property" means the real property located in the County of Carver,
State of Minnesota, legally described on Exhibit A attached hereto and made a
part hereof.

         "Security Agreement" has the meaning provided in Section 2.1(c) hereof.

         "Title Company" means Stewart Title Company.

         "Whitebox Subordinated Note" means that certain Subordinated Promissory
Note issued by Borrower to Colorado MEDtech, Inc. in the original principal
amount of $2,600,000.00 dated as of January 24, 2003, and assigned to Whitebox
Hedged High Yield Partners on or about May 8, 2003.

                                   ARTICLE II

                                 LOAN DOCUMENTS

         2.       Documents Delivered Herewith. Prior to or contemporaneously
with the execution of this Agreement, Borrower has delivered to Lender the
following documents and/or instructions:

         2.1      The Loan Documents:

                  (a)      This Agreement properly executed and delivered on
                           behalf of Borrower;

                  (b)      Promissory Note (the "Note") properly executed and
                           delivered on behalf of Borrower in the amount of
                           $1,150,000.00, made payable by Borrower to Lender's
                           order;

                  (c)      Commercial Security Agreement (the "Security
                           Agreement") in a form satisfactory to Lender executed
                           by Borrower securing the Note and creating a lien
                           upon the Equipment;

                  (d)      Listing of the Equipment in a form satisfactory to
                           Lender;

                  (e)      UCC-1 Financing Statement; and

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                  (f)      Combination Mortgage, Security Agreement, Assignment
                           of Rents and Fixture Financing Statement (the
                           "Mortgage") in a form satisfactory to Lender executed
                           by Borrower securing the Note and creating a lien
                           upon the Property and the Project subject only to
                           those encumbrances shown on Exhibit B hereto.

         2.2      The Title Documents:

                  (a)      A title binder, in form and substance satisfactory to
                           Lender, issued by Gibraltar Title Agency, LLC on
                           behalf of Stewart Title Company, at Borrower's
                           expense, with such title binder constituting a
                           commitment by such title company to issue a
                           mortgagee's title policy or policies in favor of
                           Lender as mortgagee under the Mortgage in the amount
                           of $1,000,000 that:

                           (i)      specifically insures that the Mortgage is a
                                    junior lien on the Property subject only to
                                    a first lien on the Property in the amount
                                    of $1,200,000 in favor of Commerce Bank
                                    those encumbrances shown on Exhibit B of the
                                    Mortgage; and

                           (ii)     contains a comprehensive endorsement, a
                                    usury endorsement, a zoning endorsement, and
                                    such other endorsements as Lender may
                                    require in form satisfactory to Lender.

                  (b)      Evidence of payment of all required real estate taxes
                           and special assessments, mortgage registration tax,
                           title insurance premiums and costs and recording
                           fees.

         2.3      The Project Documents:

                  (a)      A FIRREA complying appraisal of the Project, showing
                           an appraised value of not less than $2,200.000 and
                           otherwise satisfactory to Lender, receipt and
                           acceptance of which is hereby acknowledged; and

                  (b)      A Phase I environmental report in form and content
                           acceptable to Lender in its sole and absolute
                           discretion, showing no substantial environmental
                           hazards on the Project, receipt and acceptance of
                           which is hereby acknowledged; and

                  (c)      Evidence satisfactory to Lender of policies of
                           insurance coverage on the Property and the Project in
                           the amount required by the Mortgage;

                  (d)      A policy of flood insurance naming Lender as
                           additional insured, covering the Property and the
                           Improvements in the maximum amount available, or
                           evidence satisfactory to Lender that the Property and
                           Improvements are not located within a designated
                           flood plain;

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                  (e)      A letter from the appropriate governmental entity
                           stating the zoning classification which is applicable
                           to the Property and stating that the use of the
                           Project is a permitted use under such zoning
                           classification; and

         2.4      The Organization Documents:

                  (a)      A copy of the Articles of Incorporation of Borrower
                           and all amendments thereto, certified by the
                           Secretary of Borrower to be true, correct and
                           complete;

                  (b)      A copy of the Bylaws of Borrower, certified by an
                           officer of Borrower to be true, correct and complete;

                  (c)      A resolution of Borrower in form reasonably
                           satisfactory to Lender regarding the execution by
                           Borrower of the Loan Documents and all other
                           documents or instruments required to be executed and
                           delivered in connection herewith and the performance
                           of the covenants and agreements required hereby; and,
                           together with a certificate executed by the Secretary
                           of Borrower indicating the names and titles of
                           persons authorized to execute the Loan Documents and
                           other documents required hereunder;

                  (d)      Certificate of Good Standing of recent date for
                           Borrower issued by the Secretary of State of
                           Minnesota; and

                  (e)      An opinion of counsel for Borrower with respect to
                           certain matters relating to the transactions
                           contemplated by this Agreement.

                                   ARTICLE III

                                    TERM LOAN

         3.1.     Commitment for Term Loan. Subject to the terms and conditions
hereof and of the Loan Documents and the other documents delivered herewith,
Lender hereby lends to Borrower and Borrower hereby borrows from Lender, the
amount of $1,150,000.00 (the "Loan").

         3.2.     Use of Proceeds. The proceeds of the Loan shall be used by
Borrower to paydown its working capital line of credit and to fund the Payment
Reserve Account.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

         4.1      Conditions Precedent to Term Loan Advance. Lender shall have
no obligation to make the Loan unless on or before the date of disbursement,
Lender shall have received the following or confirmation of completion of the
following events:

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                  (a)      The documents for the Loan set forth in Article II of
                           this Agreement properly executed and delivered to
                           Lender;

                  (b)      Establishment of the Payment Reserve Account by
                           Borrower;

                  (c)      Payment of the loan commitment fee in the amount of
                           $5,750.00; and

                  (d)      Evidence satisfactory to Lender that the Whitebox
                           Subordinated Note has been paid in full.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

         5.       Representations and Warranties. In order to induce Lender to
enter into this Agreement, Borrower hereby represents and warrants that:

                  5.1      Organization and Good Standing. Borrower is a duly
         organized and validly existing Minnesota corporation, in good standing
         and qualified and licensed to do business under the laws of the State
         of Minnesota.

                  5.2      Authority. Borrower has full power, right and
         authority to execute and deliver the Loan Documents and the other
         documents required hereby, to borrow the funds herein provided for, and
         to perform and observe each and all of the matters and things provided
         for in said documents. The execution and delivery of the Loan Documents
         and such other documents as are required hereby and the performance or
         observance of the terms hereof and thereof have been duly authorized by
         all necessary action of the board of directors of Borrower.

                  5.3      Binding Obligation. This Agreement is, and the other
         Loan Documents when delivered hereunder will be, legal, valid and
         binding obligations of Borrower enforceable against Borrower in
         accordance with their respective terms.

                  5.4      Ownership of Collateral. Borrower (a) is the owner of
         the Equipment and has no knowledge of any unrecorded claims, liens, and
         encumbrances against the Equipment, and (b) is the owner of the
         Property in fee simple and of all personal property described in the
         Mortgage and has no knowledge of any unrecorded claims, liens, and
         encumbrances against the Property or the personal property described in
         the Mortgage.

                  5.5      Compliance with Laws. The Improvements have been
         approved, to the extent required by any applicable law, statute,
         including, without limitation, the ADA, ordinance, regulation, or
         effective restrictive covenant, by all federal, state, regional and
         local authorities, and the anticipated use of the Property and the
         Project comply with all applicable zoning and environmental ordinances,
         regulations and restrictive covenants affecting the Property and the
         Project and all requirements for such use have been satisfied. No
         violation

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         of any law, ordinance, regulation or requirement exists with respect to
         the Property or the Project.

                  5.6      ERISA. No plan (as that term is defined in the
         Employee Retirement Income Security Act of 1974 ("ERISA")) of the
         Borrower (a "Plan") that is subject to Part 3 of Subtitle B of Title 1
         of ERISA had an accumulated funding deficiency (as such term is defined
         in ERISA) as of the last day of the most recent fiscal year of such
         Plan ended prior to the date hereof, or would have had such an
         accumulated funding deficiency on such date if such year were the first
         year of such Plan, and no material liability to the Pension Benefit
         Guaranty Corporation has been, or is expected by the Borrower to be,
         incurred with respect to any such Plan. No Reportable Event (as defined
         in ERISA) has occurred and is continuing in respect to any such Plan.

                  5.7      Litigation. Except as set forth on Schedule 5.7,
         there are no actions, suits or proceedings pending, or to the knowledge
         of Borrower threatened, against or affecting it in an amount in excess
         of $100,000, or against or affecting the Equipment or the Property or
         the Project, or involving the validity or enforceability of the
         Security Agreement or the Mortgage or the priority of the lien thereof,
         at law or in equity, except actions, suits and proceedings fully
         covered by insurance; and Borrower is not in default with respect to
         any order, writ, injunction, decree or demand of any court or any
         governmental authority.

                  5.8      Compliance with Agreements. The consummation of the
         transaction contemplated hereby and performance of the Loan Documents
         will not result in any breach of, or constitute a default under, any
         mortgage, deed of trust, lease, bank loan or credit agreement,
         corporate agreement, corporate charter, by-law or other instrument to
         which Borrower is a party or by which it may be bound or affected.

                  5.9      Absence of Defaults. No Default or Event of Default
         has occurred and is continuing as of the date hereof hereunder or under
         the Existing Loan Documents.

                  5.10     Availability of Utilities. All utility services
         necessary for the operation of the Improvements for their intended
         purpose are available to the Project, including water, storm and
         sanitary sewer, drainage, gas, electric and telephone facilities.

                  5.11     Accuracy of Financial Information. All financial
         statements of Borrower heretofore delivered to Lender, are true and
         correct in all material respects, have been prepared in accordance with
         GAAP, and fairly present the respective financial conditions of the
         subjects thereof as of the respective dates thereof; no materially
         adverse change has occurred in the financial conditions reflected
         therein since the respective dates thereof, and no additional
         borrowings have been made by Borrower since the date thereof other than
         the borrowing contemplated hereby.

                  5.12     Survival of Representations. All representations and
         warranties contained in this Article 3 shall survive the delivery of
         the Loan Documents, the making of the Loan, and no investigation at any
         time made by or on behalf of Lender shall diminish its rights to rely
         thereon.

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                                   ARTICLE VI

                        AFFIRMATIVE COVENANTS OF BORROWER

         6.       Affirmative Covenants. To further induce Lender to make the
requested loan, Borrower hereby covenants and agrees that it will:

                  6.1.     Maintenance of Insurance. At all times, insure the
         Equipment and the Property and the Improvements in the manner set forth
         in the Security Agreement and in Section 2.01 of the Mortgage, and from
         time to time, upon Lender's request, furnish it evidence of such
         coverage in form satisfactory to Lender and its counsel.

                  6.1.     Payment of Taxes, etc. Promptly pay and discharge all
         taxes, assessments and other governmental charges imposed upon it or
         upon its income and profits or upon the Project, and any and all claims
         for labor, material or supplies or rental charges or charges of any
         other kind which, if unpaid, might by law become a lien or charge upon
         any of its property, except as Borrower shall contest in good faith and
         by appropriate proceedings, providing such reserves as appropriate by
         GAAP. Borrower shall make all required withholding deposits.

                  6.3      Maintenance of Properties. Maintain all of its
         properties in good repair, working order and condition, ordinary wear
         and tear excepted, and from time to time make or cause to be made all
         needful renewals, replacements and repairs so that at all times
         Borrower's business can be conducted efficiently.

                  6.4      Accounting Records. Keep true and complete and
         accurate books of record and account in accordance with GAAP, and allow
         Lender upon Lender's request to examine and take extracts from the
         books and records of Borrower.

                  6.5      Financial Information. Furnish to Lender:

                  (a)      As soon as available and in any event within ninety
                           (90) days after the close of each of its fiscal
                           years, a copy of the annual financial statements of
                           Borrower, including balance sheet, related statements
                           of earnings, stockholders' equity and statements of
                           cash flow for such year, prepared in accordance with
                           GAAP, and audited by an independent certified public
                           accountant of recognized standing selected by
                           Borrower and acceptable to Lender;

                  (b)      Within forty-five (45) days after the end of
                           Borrower's fiscal quarters, financial statements of
                           Borrower as of the end of each such calendar quarter
                           which statements have been prepared in accordance
                           with GAAP and certified by Borrower's chief financial
                           officer; and

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                  (c)      From time to time such other information pertaining
                           to Borrower and its properties and financial
                           condition as Lender may reasonably request.

         Provision of the foregoing, as between Borrower and Lender, shall be at
         the sole cost and expense of Borrower.

                  6.6      Conduct of Business. Conduct the same general type of
         business as it presently conducts, maintain its existence, and continue
         its compliance with all valid, applicable statutes, laws, rules and
         regulations.

                  6.7      Right of Inspection. Permit any person designated by
         Lender to visit and inspect any of the properties, partnership books
         and financial records of Borrower to discuss its affairs, finances and
         accounts with the officers of Borrower, all at such reasonable times
         and as often as Lender may reasonably request.

                  6.8      Notices. As soon as practicable, but in no event
         later than five (5) business days after Borrower obtains knowledge
         thereof, give notice to Lender of:

                  (a)      the commencement of any uninsured litigation relating
                           to Borrower in which the damages claimed exceed
                           $50,000.00 or relate to the Equipment, the Property
                           or the Improvements or the operation thereof;

                  (b)      the commencement of any material arbitration or
                           governmental investigation or proceeding not
                           previously disclosed by Borrower to Lender which has
                           been instituted or, to the knowledge of Borrower, is
                           threatened against Borrower or to which any property
                           of Borrower is subject which, if determined adversely
                           to Borrower, would have a material adverse effect
                           upon Borrower;

                  (c)      any adverse development which occurs in any
                           litigation, arbitration or governmental investigation
                           or proceeding previously disclosed by Borrower to
                           Lender which, if determined adversely to Borrower,
                           would have a material adverse effect upon Borrower;
                           or

                  (d)      any Default or Event of Default.

                  6.9      Payment Reserve Account. On the date hereof,
         establish an account with Lender (the "Payment Reserve Account") in the
         amount of $50,000.00, which account shall bear interest at a rate not
         less than the average yield of United States Treasury obligations
         adjusted to a constant maturity of 30 days as published in the Federal
         Reserve Board Release H.15 on the first business day of each month. At
         any time after the occurrence and during the continuation of any Event
         of Default, Lender may, at any time or from time to time, apply funds
         in the Payment Reserve Account to cure any Event of Default hereunder,
         without waiving such Event of Default, or any default, whether or not
         declared, under any other Loan Document or to the payment of any
         amounts, in such order as Lender may elect, as shall have become or
         shall become due and payable by Borrower under this Agreement or any
         other

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         Loan Document. If Lender so applies funds in the Payment Reserve
         Account as provided in the preceding sentence, Borrower shall pay to
         Lender, within ten (10) days after demand therefor, an amount equal to
         the amount so applied in order to restore the funds in the Payment
         Reserve Account to $50,000.00. Borrower's failure to restore the funds
         in the Account to $50,000.00 as provided in this Section 6.9 shall be
         deemed an Event of Default hereunder and shall entitle Lender to the
         exercise of all of Lender's rights and remedies under the Loan
         Documents. No Person, including, without limitation, Borrower, shall
         have any right to withdraw any of the funds held in the Payment Reserve
         Account, except that upon payment of all amounts payable by Borrower to
         Lender under this Agreement or under any other Loan Document, any funds
         remaining in the Payment Reserve Account shall be returned by Lender to
         Borrower or paid to whomever may be legally entitled thereto.

         Notwithstanding the foregoing, provided that there is not then an Event
         of Default (as defined in the Mortgage) which has occurred and is
         continuing under the Loan, the amount held by Lender in the Payment
         Reserve Account will be released by Lender to Borrower upon the earlier
         of (i) Borrower reporting four consecutive fiscal quarterly periods of
         pre-tax earnings, (ii) Borrower successfully raises additional capital
         of a least $7,500,000, or (iii) the last day of the second Loan Year.

                  6.10     Debt Service Coverage Ratio. Beginning as of
         Borrower's fiscal quarter ended February 28, 2005, and at all times
         thereafter during the term of the loan, maintain a Debt Service
         Coverage Ratio equal to or greater than 1.20:1, which ratio shall be
         calculated based on Borrower's 10-Q and 10-K Reporting and measured as
         of the last day of each fiscal quarter of Borrower for the immediately
         preceding twelve-month period.

                  6.11.    Prepaid Loan Payment. On the date hereof, deposit
         with Lender a prepaid loan payment in the amount of $28,462.50, which
         shall be applied to the Loan by Lender on the due date of the final
         loan payment due under the Loan or upon such earlier prepayment of the
         Loan by Borrower.

                                   ARTICLE VII

                         NEGATIVE COVENANTS OF BORROWER

         7.       Negative Covenants. Borrower covenants and agrees that for so
long as it is indebted to Lender, it will not, without Lender's prior written
consent:

                  7.1      Liens. Create or suffer to exist any mortgage,
         pledge, lien, security interest or other lien or encumbrance of any
         kind, of or upon (i) the Equipment or, (ii) the Property or the
         Improvements, or of or upon the income or profits therefrom, except
         those encumbrances made in favor of Lender or Commerce Bank.

                  7.2      Defaults. Default upon or fail to pay any contract or
         fail to pay any of its debts or obligations as the same mature.

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                  7.3      Leases of the Property. Enter into any oral or
         written leases of the Equipment or the Property or the Improvements
         without the prior written consent of Lender.

                  7.4      Dividends, Distributions, etc. Pay any dividend or
         make any distribution of assets to shareholders of Borrower or any
         Affiliate of Borrower.

                  7.5      Consolidation, Merger, Sale of Assets; etc.
         Consolidate with or merge into or with any other Person, or sell (other
         than sales in the ordinary course of business), transfer, lease or
         otherwise dispose of all or a substantial part of its assets.

                                  ARTICLE VIII

                                     DEFAULT

         8.1      Events of Default. The occurrence of any of the following
events shall constitute an "Event of Default":

         (a)      If Borrower (i) fails to pay when due or, if payable on
                  demand, upon demand, any principal of the Note or the Bank
                  Note, or prepayment premium (if applicable), or (ii) fails to
                  pay when due or, if payable on demand, upon demand, any
                  interest on the Note or the Bank Note or fees under this
                  Agreement, and, in the case of a default under this clause
                  such default continues for ten (10) days; or

         (b)      If Borrower defaults in the due performance and observance of
                  any covenants set forth in this Agreement, the Mortgage, or
                  any other Loan Document and such default or breach shall
                  continue for a period of thirty (30) days after written notice
                  thereof to Borrower by Lender; or

         (c)      If any financial statement, certificate, representation, or
                  warranty made by or on behalf of Borrower shall prove to have
                  been incorrect in any material respect or any representation
                  made herein is untrue when made or becomes untrue with the
                  passage of time; or

         (d)      If Borrower (i) becomes insolvent or fails to pay its debts
                  generally as they become due, (ii) suspends business, (iii)
                  makes a general assignment for the benefit of creditors, (iv)
                  admits in writing its inability to pay its debts 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

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                  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

         (e)      If Borrower fails to pay any Debt (but excluding Debt
                  evidenced by the Note) of the Borrower, or any interest
                  thereon, when due (whether by scheduled maturity, required
                  prepayment, acceleration, demand or otherwise) and such
                  failure shall continue after the applicable grace period, if
                  any, specified in the agreement or instrument relating to such
                  Debt; or any other default under any agreement or instrument
                  relating to any such Debt, or any such Debt shall be declared
                  to be due and payable or required to be prepaid (other than by
                  scheduled required prepayment), prior to the stated maturity
                  thereof; or

         (f)      If judgment for the payment of money in excess of $100,000.00
                  is entered against Borrower and is not stayed, vacated,
                  bonded, paid, discharged or appealed in good faith within 60
                  days after the entry thereof; or

         8.2      Rights and Remedies. If any Event of Default shall occur and
be continuing, Lender may, at its option (in addition to Lender's rights under
the Note, the Security Agreement, the Mortgage, or any other Loan Document),
exercise any or all of the following rights and remedies:

         (a)      Declare the Note, all interest thereon, and all other
                  obligations under, or pursuant to, any Loan Document to be
                  immediately due and payable, and upon such declaration such
                  Note, interest and other obligations shall immediately be due
                  and payable, without presentment, demand, protest or any
                  notice of any kind, all of which are expressly waived; and/or

         (b)      Exercise any right or remedy specified herein and in the other
                  Loan Documents, including (without limiting the generality of
                  the foregoing) the right to foreclose the Mortgage and/or the
                  Security Agreement or any other right or remedy available to a
                  mortgagee or secured party at law or in equity; and/or

         (c)      Exercise any other right or remedy available to Lender at law,
                  in equity or under statute; and/or

         (d)      Cure the event of default on behalf of Borrower, and, in doing
                  so, may enter upon the Project, and may expend such sums as it
                  may reasonably deem desirable, including attorneys' fees, all
                  of which shall be deemed to be advances hereunder, even though
                  causing the Loan to exceed the face amount of the Note, shall
                  bear interest at the Default Rate (as defined in the Note) and
                  shall be payable by Borrower on demand.

                                      -12-

<PAGE>

                                   ARTICLE IX

                                  MISCELLANEOUS

         9.1      No Waiver; Cumulative Remedies. No failure or delay on the
part of Lender in exercising any right or remedy under, or pursuant to, any Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy or power preclude other or further exercise
thereof, or the exercise of any other right, remedy or power. The remedies in
the Loan Documents are cumulative and are not exclusive of any remedies provided
by law.

         9.2      Amendments and Waivers. No amendment, change, waiver or
modification of this Agreement or any Loan Document shall be valid unless the
same is in writing and is signed by Lender, and no waiver by Lender of any
breach or default by Borrower of any of its obligations, agreements or covenants
under this Agreement or any Loan Document shall be deemed to be a waiver of any
subsequent breach of the same, or any other obligation, agreement or covenant,
nor shall any forbearance by Lender to seek or enforce a remedy for such breach
be deemed a waiver of its rights and remedies with respect to such breach.

         9.3      Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by or on
behalf of Borrower in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the advances hereunder.
All statements contained in any certificate or other instrument delivered by or
on behalf of Borrower pursuant thereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by Borrower.

         9.4      Notices. All notices and other communications provided under
this Agreement shall be in writing (including telecopier communication) and
mailed, telecopied or delivered, if to Borrower, at its address stated in the
preamble hereof, Attention: CEO & CFO; and if to Lender, at its address stated
in the preamble hereof, Attention: James E. Senske; or, as to each party, at
such other address as shall be designated by such party in a written notice to
the other party. Any such notice shall be deemed effective (a) upon personal
delivery; (b) upon the third business day (as hereinafter defined) after the
placing thereof in the United States mail, postage prepaid, certified or
registered mail; or (c) upon the business day succeeding the day in which said
notice is deposited with a national overnight air carrier, fees prepaid.

         9.5      Costs and Expenses. Borrower agrees to pay on demand all
reasonable costs, expenses and disbursements of Lender in connection with
Borrower's application for the Loan, the preparation of the Loan Documents and
closing of the Loan, including reasonable attorneys' fees and legal expenses, as
well as all costs and expenses of Lender in connection with Lender's enforcement
of the obligations of Borrower hereunder or under the Note or any other Loan
Documents, whether or not suit is commenced including, without limitation,
reasonable attorneys' fees and legal expenses in connection with any appeal of a
lower court's order or judgment. The obligations of Borrower under this Section
9.5 shall survive any termination of this Agreement.

         9.6      Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, Lender is hereby authorized at any time,
and from time to time, to the fullest extent

                                      -13-

<PAGE>

permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of Borrower against
any and all of the obligations of Borrower, now or hereafter existing under any
Loan Document, irrespective of whether or not Lender shall have made any demand
under any Loan Document and although such obligations may be unmatured. Lender
agrees promptly to notify Borrower after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Lender under this Section 9.6 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that Lender may have.

         9.7      Governing Law. This Agreement and all other Loan Documents
shall be governed by, interpreted, and construed in accordance with the laws of
the State of Minnesota. Any term used in this Agreement and not otherwise
defined shall have the definition given that term in the Uniform Commercial Code
as in effect in the State of Minnesota from time to time, and such definition
automatically shall change on the effective date of any amendment to the Uniform
Commercial Code that changes such definition. If any term in this Agreement
shall be held to be illegal or unenforceable, the remaining portions of this
Agreement shall not be affected, and this Agreement shall be construed and
enforced as if this Agreement did not contain the term held to be illegal or
unenforceable. The Borrower 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 Agreement and agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court.

         9.8      Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto
except that Borrower's rights hereunder are not assignable.

         9.9      Execution in Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be an original,
but all of which shall constitute one agreement.

         9.10     Headings. Section headings contained in this Agreement are for
convenience only and shall not be used in construing any provision of this
Agreement.

              THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK

                                      -14-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the date and year first above written.

                                    HEI, INC.

                                    By: /s/ DOUGLAS NESBIT
                                        ----------------------------------------
                                        Its: Chief Financial Officer
                                             -----------------------------------

                                    COMMERCE FINANCIAL GROUP, INC.

                                    By: /s/ JIM E. SENSKE
                                        ----------------------------------------
                                        Its: President
                                             -----------------------------------


                                      -15-