Document:

exv10w1

 

Exhibit 10.1

WAIVER AND AMENDMENT

Dated as of May 27, 2006

HEI, Inc.

1495 Steiger Lake Lane

Victoria, MN 55386

			
	Attn:	 	Mack V. Traynor, CEO

Dear Mr. Traynor:

          Reference is made to that certain Term Loan Agreement (the “Loan Agreement”), dated October
28, 2003, by and between HEI Inc., a Minnesota corporation (the “Borrower”) and Commerce Bank, a
Minnesota banking corporation (the “Lender”), as amended by the certain Waiver and Amendment dated
as of November 30, 2003, between Borrower and Lender; and that certain Promissory Note (the
“Promissory Note”), dated October 28, 2003, made by the Borrower in favor of the Lender.

          The Borrower has advised the Lender that preliminary financial results for the Borrower’s
quarterly reporting period ended May 27, 2006, indicate that as of such date the Borrower failed to
comply with the Debt Service Coverage Ratio covenant set forth in Section 6.10 of the Loan
Agreement, and, consequently Borrower would be deemed to have been in default under Section 6.10 of
the Loan Agreement as of May 27, 2006. The Borrower has further advised the Lender that the
Borrower is likely to be in default under Section 6.10 of the Loan Agreement until completion of
the Borrower’s quarterly reporting period ending November 25, 2006. The Borrower has accordingly
requested certain waivers relating to Sections 6.10 of the Loan Agreement.

          In consideration of the promises herein set forth, and subject to Sections 9.1 and 9.2 of the
Loan Agreement and, the Borrower and the Lender hereby agree as follows:

          1.      The Lender hereby waives the Borrower’s default existing as of the date hereof under
Section 6.10 of the Loan Agreement.

          2.      The Lender hereby waives the Borrower’s compliance with the Debt Service Coverage Ratio
covenant under Section 6.10 of the Loan Agreement, to and including Borrower’s reporting period
ending August 31, 2006. Borrower will be required to comply with the Debt Service Coverage Ratio
under Section 6.10 of the Loan Agreement as of the reporting period ending November 25, 2006.

 

 

HEI, Inc.

Waiver and Amendment

May 27, 2006

Page 2 of 2

          3.      As a condition to the effectiveness of the waivers by the Lender contained herein,
the Borrower shall, on or before June 30, 2006, re-establish the $100,000 Payment Reserve Account
with Lender pursuant to the provisions of Section 6.9 of the Loan Agreement, except that the
release provisions set forth in the second paragraph of Section 6.9 of the Loan Agreement are
hereby amended and restated as follows:

“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 the Lender to the
Borrower upon the earlier of (i) Borrower’s successful compliance with the Debt Service
Coverage Ratio covenant under Section 6.10 of the Loan Agreement for two consecutive
quarterly reporting periods beginning with the quarterly reporting period ending November
25, 2006, or (ii) the payoff date of the Loan.”

          The Loan Agreement and Promissory Note shall remain in full force and effect, without
modification except as set forth herein or in any other amendments entered into in accordance with
the requirements of the Loan Agreement and/or Promissory Note, as applicable.

          This Waiver and Amendment may be executed simultaneously in two or more counterparts, each of
which shall be an original, but all of which constitute but one agreement.

          If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this Waiver and Amendment and return the same to the Borrower, whereupon this Waiver
and Amendment shall become a binding agreement between the Lender and the Borrower.

	 	 	 	 	 
	 	 	Sincerely,
	 
	 	 	 	 
	 	 	COMMERCE BANK
	 
	 	 	 	 
	 	 	/s/ James E. Senske
	 	 	 
	 

	 	By:
	 	James E. Senske
	 

	 	Its:
	 	President

Acknowledged as of the date first written above.

	 	 	 	 	 
	 	 	HEI, INC.
	 
	 	 	 	 
	 	 	/s/ Mack V. Traynor, III
	 	 	 
	 

	 	By:
	 	Mack V. Traynor, III,  June 21, 2006
	 

	 	Its:
	 	President & CEO

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Exhibit 10.2

Commerce Leasing Corporation

Commerce Mortgage Company

WAIVER AND AMENDMENT

Dated as of May 27, 2006

HEI, Inc.

1495 Steiger Lake Lane

Victoria, MN 55386

			
	Attn:	 	Mack V. Traynor, CEO

Dear Mr. Traynor:

          Reference is made to that certain Term Loan Agreement (the “Loan Agreement”), dated October
28, 2003, by and between HEI Inc., a Minnesota corporation (the “Borrower”) and Commerce Financial
Group, Inc., a Minnesota corporation (the “Lender”), as amended by the certain Waiver and Amendment
dated as of November 30, 2003, between Borrower and Lender; and that certain Promissory Note (the
“Promissory Note”), dated October 28, 2003, made by the Borrower in favor of the Lender.

          The Borrower has advised the Lender that preliminary financial results for the Borrower’s
quarterly reporting period ended May 27, 2006, indicate that as of such date the Borrower failed to
comply with the Debt Service Coverage Ratio covenant set forth in Section 6.10 of the Loan
Agreement, and, consequently Borrower would be deemed to have been in default under Section 6.10 of
the Loan Agreement as of May 27, 2006. The Borrower has further advised the Lender that the
Borrower is likely to be in default under Section 6.10 of the Loan Agreement until completion of
the Borrower’s quarterly reporting period ending November 25, 2006. The Borrower has accordingly
requested certain waivers relating to Sections 6.10 of the Loan Agreement.

          In consideration of the promises herein set forth, and subject to Sections 9.1 and 9.2 of the
Loan Agreement and, the Borrower and the Lender hereby agree as follows:

          1.      The Lender hereby waives the Borrower’s default existing as of the date hereof under
Section 6.10 of the Loan Agreement.

          2.      The Lender hereby waives the Borrower’s compliance with the Debt Service Coverage Ratio
covenant under Section 6.10 of the Loan Agreement, to and including Borrower’s reporting period
ending August 31, 2006. Borrower will be required to comply with the Debt Service Coverage Ratio
under Section 6.10 of the Loan Agreement as of the reporting period ending November 25, 2006.

 

 

HEI, Inc.

Waiver and Amendment

May 27, 2006

Page 2 of 2

     3. As a condition to the effectiveness of the waivers by the Lender contained herein,
the Borrower shall, on or before June 30, 2006, establish a payment reserve account in the amount
of $25,000 with Lender pursuant to the provisions of Section 6.9 of the Loan Agreement, except that
the release provisions set forth in the second paragraph of Section 6.9 of the Loan Agreement are
hereby amended and restated as follows:

“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 the Lender to the
Borrower upon the earlier of (i) Borrower’s successful compliance with the Debt Service
Coverage Ratio covenant under Section 6.10 of the Loan Agreement for two consecutive
quarterly reporting periods beginning with the quarterly reporting period ending November
25, 2006, or (ii) the payoff date of the Loan.”

     The Loan Agreement and Promissory Note shall remain in full force and effect, without
modification except as set forth herein or in any other amendments entered into in accordance with
the requirements of the Loan Agreement and/or Promissory Note, as applicable.

     This Waiver and Amendment may be executed simultaneously in two or more counterparts, each of
which shall be an original, but all of which constitute but one agreement.

     If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this Waiver and Amendment and return the same to the Borrower, whereupon this Waiver
and Amendment shall become a binding agreement between the Lender and the Borrower.

	 	 	 	 	 
	 

	 	Sincerely,	 	 
	 
	 	 	 	 
	 

	 	COMMERCE FINANCIAL GROUP, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ James E. Senske
 

By:    James E. Senske
	 	 
	 

	 	Its:    President	 	 

Acknowledged as of the date first written above.

	 	 	 	 	 
	 

	 	HEI, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Mack V. Traynor, III,  June 21, 2006
 

By:    Mack V. Traynor, III
	 	 
	 

	 	Its:    President & CEO	 	 

 - 2 -exv10w3

 

Exhibit 10.3

Commerce Leasing Corporation

Commerce Mortgage Company

WAIVER

Dated as of May 27, 2006

HEI, Inc.

1495 Steiger Lake Lane

Victoria, MN 55386

Attn: Mack V. Traynor, CEO

Dear Mr. Traynor:

     Reference is made to that certain Master Equipment Lease No. 0512231 (the “Master Lease”),
dated as of December 23, 2005, by and between HEI Inc., a Minnesota corporation (the “Lessee”) and
Commerce Leasing Corporation, a division of Commerce Financial Group, Inc., a Minnesota corporation
(the “Lessor”); those certain lease commitments (the “Lease Commitments”) by the Lessor for the
benefit of the Lessee dated as of December 5, 2005, December 8, 2005, February 23, 2006 and
February 24, 2006; and those certain supplements (the “Supplements”) to the Master Lease made by
the Lessee in favor of the Lessor (the Master Lease, together with the Lease Commitments and the
Supplements, is collectively, the “Lease”).

     The Lessee has advised the Lessor that preliminary financial results for the Lessee’s
quarterly reporting period ended May 27, 2006, indicate that as of such date the Lessee failed to
comply with the Minimum Total Tangible Stockholders’ Equity covenant set forth in the Lease, and,
consequently the Lessee would be deemed to have been in default under the Lease as of May 27, 2006.
The Lessee has further advised the Lessor that the Lessee is likely to be in default under the
Debt Service Coverage Ratio covenant set forth in the Lease until completion of the Lessee’s
quarterly reporting period ending November 25, 2006. The Lessee has accordingly requested certain
waivers relating to the covenants set forth in the Lease.

     In consideration of the promises herein set forth, and subject to the provisions of Section 13
and 27 of the Master Lease, the Lessee and the Lessor hereby agree as follows:

     1. The Lessor hereby waives the Lessee’s default existing as of the date hereof under the
Minimum Total Tangible Stockholders’ Equity covenant of the Lease.

     2. The Lessor hereby waives the Lessee’s compliance with the Debt Service Coverage Ratio
covenant under the Lease, to and including the Lessee’s reporting period ending August 31, 2006.
Lessee will be required to comply with the Debt Service Coverage Ratio covenant under the Lease as
of the reporting period ending November 25, 2006.

 

 

HEI, Inc.

Waiver

May 27, 2006

Page 2 of 2

     3. As a condition to the effectiveness of the waivers by the Lessor contained herein,
the implied economic interest rate for each Supplement under the Master Lease shall be increased by
2.0% and the monthly rental payments for such Supplements shall be adjusted accordingly until such
time that the Lessee is in full compliance with the covenants set forth in the Lease.

     The Lease shall remain in full force and effect, without modification except as set forth
herein or in any amendments entered into in accordance with the requirements of the Lease, as
applicable.

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

     If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed
counterpart of this Waiver and return the same to the Lessor, whereupon this Waiver shall become a
binding agreement between the Lessor and the Lessee.

	 	 	 	 	 
	 

	 	Sincerely,	 	 
	 
	 	 	 	 
	 

	 	COMMERCE FINANCIAL GROUP, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ James E. Senske
 

By:    James E. Senske
	 	 
	 

	 	Its:    President	 	 

Acknowledged as of the date first written above.

	 	 	 	 	 
	 

	 	HEI, INC.	 	 
	 
	 	 	 	 
	 

	 	/s/ Mack V. Traynor, III
 

By:    Mack V. Traynor, III
	 	 
	 

	 	Its:    President & CEO	 	 

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