THIS NOTE HAS NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS, AND IS SUBJECT TO
CERTAIN INVESTMENT REPRESENTATIONS. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT, AND
THE APPLICABLE BLUE SKY LAWS, OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO COUNSEL FOR THE COMPANY THAT SUCH TRANSACTION WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER THE ACT OR APPLICABLE BLUE SKY LAWS.
NORTHWEST TELEPRODUCTIONS, INC.
10-1/2% Subordinated Note
$_________________ ______________, 1996
(Principal Amount) (Date of Issue)
FOR VALUE RECEIVED, Northwest Teleproductions, Inc., a Minnesota
corporation (the "Company"), promises to pay, subject to Sections 1, 2 and 3
hereof, to _________________, or its registered assigns, the principal amount of
______________________ ($______), upon presentation and surrender of this Note
at the principal business office of the Company, and to pay interest thereon at
such office from the date hereof at the rate of 102 percent (102%) per annum as
provided below. Interest shall be computed on the basis of a 365-day year. The
Company shall pay unpaid accrued interest to the holder annually on July 31 of
each year until the principal has been paid in full or applied to the exercise
of Warrants as described in Section 1. Notwithstanding the maturity or other
provisions hereof, the Company may prepay this Note in whole or in part, without
any premium or penalty, at any time. Any partial prepayments shall be applied
against principal payments in the order in which they come due. This Note is one
of a duly authorized issue of unsecured notes of the Company, issued to the
holders thereof, in the aggregate principal amount of Four Hundred Twelve
Thousand Five Hundred Dollars ($412,500.00) (collectively, the "1996
Subordinated Notes"). Subject to Sections 1, 2 and 3 hereof, the original
principal amount of this Note stated above shall be paid as follows: (i)
one-third on July 31, 1998, (ii) one-third on July 31, 1999, and (iii) one-third
on July 31, 2000.
1. Application to Warrant Exercise. Prior to payment of this Note by the
Company, the holder of this Note may apply any portion of any unpaid accrued
interest or unpaid principal toward the exercise price of the Warrants issued to
the holder in connection with the issuance of this Note. If some but less than
all of the outstanding principal amount of this Note is applied by the holder
toward the exercise price of the Warrants, such principal so applied (the
"Applied Principal") shall reduce by the full amount of the Applied Principal
the next principal payment to come due as described above, and if the Applied
Principal is greater than the next principal payment to come due it shall fully
satisfy such next principal payment and shall also reduce or fully satisfy,
depending on the amount of the Applied Principal remaining, subsequent principal
payments in the order in which they come due.
1
2. Subordination. This Note is unsecured in all respects. The Company
covenants and agrees, and the holder of this Note by acceptance thereof
covenants and agrees, that this Note is subordinate to all indebtedness of the
Company outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed by the Company with banks, finance companies, trust companies,
pension trusts, insurance companies, other financial institutions or other
similar third-party lenders designated by the Company (collectively, "Senior
Debt"). Upon any distribution of the assets of the Company in a dissolution,
winding up, liquidation, bankruptcy, receivership, reorganization or similar
proceeding relating to the Company, the holders of such Senior Debt are entitled
to receive payment in full before the holder of this Note is entitled to receive
any payment in such distribution. If in any of such situations referred to in
the preceding sentence, a payment is made to the holder of this Note before all
applicable Senior Debt has been paid in full or provision has been made for such
payment, the payment made to the holder of this Note must be paid over to the
holders of such Senior Debt.
3. Notes Rank Equally. This Note and all other 1996 Subordinated Notes
shall be pari passu ranking equally and ratably without priority over one
another. In this regard, any payment to be made by the Company on this Note or
any other 1996 Subordinated Note shall be paid pro rata to all 1996 Subordinated
Notes. If any holder of this Note or any other 1996 Subordinated Note receives a
payment thereon from the Company in excess of the pro rata portion to which he
is entitled, the holder shall pay over to holders of the other 1996 Subordinated
Notes their pro rata portion of such excess.
4. Transferability. This Note may be transferred, or divided into two or
more Notes of smaller principal amount, subject to applicable law and the
following conditions. The holder of this Note, by acceptance hereof, agrees to
give written notice to the Company before transferring this Note of such
holder's intention to do so, describing briefly the manner of the proposed
transfer. If, in the opinion of counsel satisfactory in form and substance to
the Company and its counsel, the proposed transfer may be effected without
constituting a violation of the applicable federal and state securities laws,
then the holder shall be entitled to transfer this Note in the manner
contemplated in the transfer notice to the Company, provided that an appropriate
legend may be endorsed on this Note respecting restrictions upon transfer
thereof necessary or advisable in the opinion of counsel satisfactory to the
Company to prevent further transfers which would be in violation of the
securities laws or adversely affect the exemptions relied upon by the Company.
To such effect, the Company may request that the intended transferee execute an
investment letter satisfactory to the Company and its counsel.
A register of the issuance and transfer of this Note and other 1996
Subordinated Notes of this issue shall be kept at the office of the Company, and
this Note may be transferred only on the books of the Company maintained at its
office. Each transfer shall be in writing signed by the then registered holder
hereof or the holder's legal representatives or successors, and no transfer
hereof shall be binding upon the Company unless in writing and duly registered
on the register maintained at the Company's office. Upon transfer of this Note,
the transferee, by accepting the Note, agrees to be bound by the provisions,
terms, conditions and limitations of this Note and the investment letter, if
any, required by the Company.
If (i) no opinion of counsel referred to in this Section has been provided
to the Company or (ii) in the opinion of counsel, the proposed transfer or
disposition of this Note described in the holder's written transfer notice given
pursuant to this Section may not be effected without registration or without
adversely affecting the exemptions relied upon by the Company, the holder will
limit its activities and restrict its transfer accordingly.
2
5. Replacement of Note. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Note and in the
case of any such loss, theft or destruction, upon delivery of a bond of
indemnity satisfactory to the Company if requested by the Company, or in the
case of any such mutilation, upon surrender and cancellation of such Note, the
Company shall issue a new Note identical in form to the lost, stolen, destroyed
or mutilated Note.
6. Events of Default. Each of the following events shall be an Event of
Default ("Event of Default") for purposes of this Note:
(a) Note Terms. The Company defaults in the due and punctual
performance or observance of any material terms contained in this Note, and
such default continues for a period of thirty (30) consecutive days after
written notice thereof to the Company by the holder of this Note, except
that any such default by the Company will not result in an Event of Default
if such default is waived by the holder(s) of a majority of the total
principal amount then outstanding of the 1996 Subordinated Notes of the
Company; or
(b) Insolvency Matters. The Company makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts
as they become due, or files a voluntary petition in bankruptcy, or is
adjudicated a bankrupt or insolvent, or files any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, or files any answer admitting the
material allegations of a petition filed against the Company for any such
relief, or seeks or consents to or acquiesces in the appointment of any
trustee, receiver or liquidator of the Company or all or any substantial
part of the properties of the Company.
7. Remedies on Default. Upon the occurrence of an Event of Default as
described under Section 6 hereof, the holder hereof shall have the option to
declare the principal amount hereof and all accrued but unpaid interest thereon
through the date of the Company's full payment hereof, to be immediately due and
payable upon written notice from the holder to the Company.
8. Modification and Waiver. No purported amendment, modification or waiver
of any provision hereof shall be binding unless set forth in a written document
signed by the Company and the holder of this Note (in the case of amendments or
modifications) or by the party to be charged thereby (in the case of waivers).
Any waiver shall be limited to the provision hereof in the circumstances or
events specifically made subject thereto, and shall not be deemed a waiver of
any other term hereof or of the same circumstance or event upon any reoccurrence
thereof.
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9. Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been given, when received, if personally delivered or delivered by telex,
telegram or telecopy, or five (5) days after depositing in the U.S. Mails for
delivery by first class mail, postage prepaid and addressed as follows: (i) if
to any holder of this Note, addressed to such holder at the holder's address as
shown on the books of the Company, or at such other address as such holder may
specify by written notice to the Company, or (ii) if to the Company, at ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, or at such other
address as the Company may specify by written notice to the holder of this Note.
10. Successors and Assigns. All the terms and provisions of this Note shall
be binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the Company and each holder of this Note.
11. Applicable Law. The laws of the State of Minnesota shall govern the
validity of this Note, the construction of its terms and the interpretation of
the rights and duties of the Company and each holder of this Note, without
giving effect to principles of conflict of laws.
12. Corporate Obligation. No recourse under or upon any obligation,
covenant or agreement contained in this Note, or for any claim based hereon or
otherwise in respect hereof, shall be had against any promoter, subscriber to
shares, incorporator, shareholder, officer, or director, as such, past, present
or future, of the Company or of any successor corporation, either directly or
through the Company or any successor or corporation or through any trustee,
receiver, or any other person, whether by virtue of any constitution, statute,
or rule of law, or by the enforcement of any assessment or penalty or otherwise,
except as expressly agreed to by the party charged.
13. Payment. Upon payment in full, together with payment of any accrued but
yet unpaid interest hereon, this Note will terminate and be of no further force
or effect.
IN WITNESS WHEREOF, the Company has caused this Note to be signed by its
duly authorized officer.
NORTHWEST TELEPRODUCTIONS, INC.
By
Its
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DATES AND PRINCIPAL AMOUNTS OF
10-1/2% SUBORDINARD NOTES ISSUED TO REGISTRANT'S DIRECTORS
Director Date of Issue Amount
▇▇▇▇▇ ▇. ▇▇▇▇ July 30, 1996 $ 37,500
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ August 30, 1996 $ 37,500
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ August 30, 1996 $300,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ August 30, 1996 $ 37,500
--------
$412,500