<PAGE>
SUBORDINATED PROMISSORY NOTE
$5,300,000.00 June __, 2000
Minneapolis, Minnesota
FOR VALUE RECEIVED, the undersigned, ____________________________, a
______________________ (the "Company"), hereby promises to pay to the order
of ____________________________, a ________________________ (the "LENDER"),
in lawful money of the United States, at Minneapolis, Minnesota, the
principal sum of Five Million Three Hundred Thousand and 00/100 Dollars
($5,300,000.00) in twelve (12) consecutive quarterly installments of Four
Hundred Forty-one Thousand Six Hundred Sixty-six and 00/100 Dollars
($441,666.66) commencing July 1, 2002 and continuing on the last day of each
calendar quarter thereafter until April 1, 2005, and to pay interest in like
money on the unpaid balance hereof at the rate of 12% per annum (computed on
the basis of a 365- or 366-day year) from the date hereof, payable quarterly,
on the first day of October, January, April and July in each year, commencing
October 1, 2000, until payment in full of the principal hereof.
For purposes of the following subordination provisions, the term
"SENIOR DEBT" shall mean and include all principal, premium, if any, and
interest on any indebtedness for borrowed money owed by the Company.
The Senior Debt shall continue to be Senior Debt and entitled to the benefits
of the following subordination provisions irrespective of any amendment,
increase, modification or waiver of any term of the Senior Debt or extension
or renewal of the Senior Debt, except as expressly otherwise indicated in any
amendments, modifications, increases, extensions or renewals which are signed
by the holder thereof.
This Note and the indebtedness evidenced hereby are subordinate and
junior in right of payment to all Senior Debt of the Company, whether
outstanding at the date hereof or incurred hereafter, so that:
a. In the event the Company shall default in the payment of any
principal, premium, if any, or interest on, or any other sums
payable under the terms and provisions of the documents with
respect to, any Senior Debt when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment
or by declaration of acceleration or otherwise, then, unless
and until such default shall have been completely cured or
waived, no direct or indirect payment (in cash, property or
securities or by setoff or otherwise) shall be or agreed to be
made on account of this Note, or in respect of any redemption,
retirement, purchase or other acquisition of this Note.
b. Upon the happening of any event of default under the terms of
any Senior Debt, other than one subject to or described in
paragraph (a) above, which has the effect of permitting the
holders of such Senior Debt to accelerate the maturity thereof
<PAGE>
(whether or not such acceleration occurs), then, in any such
event, unless and until such event of default or default shall
have been completely cured or waived, no direct or indirect
payment (in cash, property or securities or by set-off or
otherwise) shall be made or agreed to be made on account of
this Note, or in respect of any redemption, retirement,
purchase or other acquisition of this Note, during the period
commencing on receipt by the holder of this Note of written
notice of such event of default or default, and continuing for
180 days thereafter; PROVIDED that only one such notice shall
be given pursuant to the terms of this paragraph (b) in any 12
consecutive calendar months. Any notice to the holder of this
Note pursuant to this paragraph (b) shall be by certified
mail, return receipt requested, addressed to the then current
notice address of such holder under the Agreement
c. In the event of
i) Any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment,
composition or other similar proceeding relating to
the Company, its creditors as such or its property,
ii) Any proceeding for the liquidation, dissolution or
other winding-up of the Company, voluntary or
involuntary, whether or not involving insolvency or
bankruptcy proceedings,
iii) Any assignment by the Company for the benefit of
creditors, or
iv) Any other marshalling or distribution of the assets
of the Company,
All Senior Debt including any interest thereon accruing at the
legal rate after the commencement of any such proceedings
shall first be paid in full, in cash or cash equivalents,
before any payment or distribution, whether in cash,
securities or other property (other than securities of the
Company or any other corporation, provided for by a plan of
reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these
subordination provisions with respect to this Note, to the
payment of all Senior Debt at the time outstanding and to any
securities issued in respect thereof under any such plan of
reorganization or readjustment), shall be made to the holder
of this Note. Any cash, securities or other property which
would otherwise (but for these subordination provisions) be
payable or deliverable in respect of principal on this Note
shall be paid or delivered directly to the holders of Senior
Debt in accordance with the priorities then existing among
such holders until all Senior Debt (including any interest
thereon accruing at the legal rate after the commencement of
any such proceedings) shall have been paid in full.
d. In the event that this Note is declared due and payable before
its expressed maturity because of the existence of a default
(under circumstances where the terms of subdivision (c) are
not applicable) then the holders of the Senior Debt
outstanding at the time this Note so becomes due and payable
shall be entitled to
2
<PAGE>
receive payment in full in cash or cash equivalents of all the
principal, premium, if any, and interest on, or any other sums
payable under the terms and provisions of the documents with
respect to, the Senior Debt before the holder of this Note
shall be entitled to receive any payment on account of the
principal on this Note.
e. So long as any Senior Debt is outstanding, the holder of this
Note may not declare this Note to be due and payable prior to
its expressed maturity, and will not take, demand, sue for, or
receive from the Company (and the Company will not make, give
or permit, directly or indirectly) any payment or security for
the principal amount of this Note or the indebtedness
evidenced hereby, unless all of the holders of the Senior Debt
shall have declared such Senior Debt due and payable; provided
that under no circumstances should the holder hereof undertake
any such action if paragraphs (a) - (c) above are applicable.
f. If any payment or distribution of any character, whether in
cash, securities or other property (other than shares of
capital stock of the Company or any other corporation provided
for by a plan or reorganization or readjustment the payment of
which is subordinate, at least to the extent provided in these
subordination provisions with respect to this Note, to the
payment of all Senior Debt at the time outstanding and to any
securities issued in respect thereof under any such plan of
reorganization or readjustment), shall be received by the
holder of this Note in contravention of any of the terms
hereof and before all the Senior Debt shall have been paid in
full, such payment or distribution shall be received in trust
for the benefit of, and shall be paid over or delivered and
transferred to, the holders of the Senior Debt at the time
outstanding in accordance with the priorities then existing
among such holders for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay
all such Senior Debt in full. In the event of failure of the
holder of this Note to endorse or assign any such payment,
distribution or security, each holder of Senior Debt is hereby
irrevocably authorized to endorse or assign the same.
g. No present or future holder of any Senior Debt shall be
prejudiced in the right to enforce subordination of this Note
by any act or failure to act on the part of the Company or
such holder. Nothing contained herein shall impair, as between
the Company and the holder of this Note, the obligation of the
Company, which is unconditional and absolute, to pay to the
holder hereof the principal, premium, if any, and interest
hereon as and when the same shall become due and payable in
accordance with the terms hereof, nor shall anything herein
prevent the holder of this Note from exercising all remedies
otherwise permitted by law or hereunder upon default
hereunder, subject to the relative rights of the holders of
the Senior Debt expressed herein.
h. Upon the indefensible payment in full of all Senior Debt, the
holder of this Note shall be subrogated to all rights of any
holders of Senior Debt to receive any further payments or
distributions applicable to the Senior Debt until this Note
shall have been paid in full, and, for the purposes of such
subrogation, no payment or distribution received by the
holders of Senior Debt of cash, securities
3
<PAGE>
or other property to which the holder of this Note would have
been entitled except for these subordination provisions shall,
as between the Company and its creditors other than the
holders of Senior Debt, on the one hand, and the holder of
this Note, on the other, be deemed to be a payment or
distribution by the Company to or on account of Senior Debt.
i. So long as the Senior Debt has not been indefensibly paid in
full, the holder of this Note shall not accept any voluntary
prepayment hereof without the consent of all of the Senior
Debt.
j. Each holder of this Note by its acceptance of this Note
undertakes and agrees for the benefit of each holder of Senior
Debt to execute, verify, deliver and file any proofs of claim
which any holder of Senior Debt may at any time require in
order to prove and realize upon any rights or claims
pertaining to this Note and to effectuate the full benefit of
the subordination contained herein; and upon failure of any
such holder so to do, any holder of Senior Debt shall be
deemed to be irrevocably appointed the agent and
attorney-in-fact of such holder to execute, verify, deliver
and file any such proofs of claim.
k. The applicable holders of the Senior Debt may, from time to
time, at their respective sole discretion and without notice
to the holder of this Note, take any or all of the following
actions: (a) retain or obtain a security interest in any
property to secure any of the Senior Debt, (b) retain or
obtain the primary or secondary obligation of any other
obligor or obligors with respect to any of the Senior Debt,
(c) extend or renew for one or more periods (whether or not
longer than the original period), alter or exchange any of the
Senior Debt, or release or compromise any obligation of any
nature of any obligor with respect to any of the Senior Debt,
and (d) release its security interest in, or surrender,
release or permit any substitution or exchange for, all or any
part of any property securing any of the Senior Debt, or
substitution or exchange for, all or any part of any property
securing any of the Senior Debt, or extend or renew for one or
more periods (whether or not longer than the original period)
or release, compromise, alter or exchange any obligations of
any nature of any obligor with respect to any such property.
l. The applicable holders of the Senior Debt may, from time to
time, without notice to the holder of this Note, assign or
transfer any or all of the Senior Debt or any interest
therein; and, notwithstanding any such assignment or transfer
or any subsequent assignment or transfer thereof, such Senior
Debt shall be and remain Senior Debt for the purposes of this
Note, and every immediate and successive assignee or
transferee of any of the Senior Debt or of any interest
therein shall, to the extent of the interest of such assignee
or transferee in the Senior Debt, be entitled to the benefits
of the subordination provisions of this Note.
m. No delay on the part of any holder of the Senior Debt in the
exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by any holder of
the Senior Debt or of any right or remedy shall preclude other
or
4
<PAGE>
further exercise thereof or the exercise of any other right
or remedy; nor shall any modification or waiver of any of the
provisions of this Note be binding upon the holders of the
Senior Debt except as expressly set forth in a writing duly
signed and delivered on behalf of such holders.
n. Any one or more of the following events, if they occur and are
continuing, will be deemed to be Events of Default under this
Note, without notice, except as expressly provided below:
i) Default in the payment of any installment of interest
on this Note as and when the same becomes due and
payable, and the continuance of such default for a
period of two business days subsequent to written or
telephone notice thereof; or
ii) Default in the payment (whether or not prohibited by
the provisions of this Note) of the principal of this
Note as and when the same becomes due and payable
either at maturity or upon prepayment, and the
continuance of such default for a period of two
business days subsequent to written or telephone
notice thereof; or
iii) Failure of the Company to observe or perform any
other of the covenants or agreements on the part of
the Company contained in this Note, and the
continuance of such default for a period of twenty
(20) days after written notice (such written notice
to state it is a "Notice of Default" under this Note)
of such failure, specifying the failure, and
requiring the Company to remedy the same, has been
given to the Company by the Lender; or
iv) Entry by a court having jurisdiction of a decree or
order for relief concerning the Company in an
involuntary case under any applicable bankruptcy,
insolvency, reorganization, or other similar law, or
appointment of a receiver, liquidator, trustee,
assignee, custodian (or other similar official) of
the Company or of its property, or ordering of the
winding up or liquidation of its affairs, and the
remaining in full force undischarged and unstayed of
such decree or order for a period of twenty (20)
days; or
v) Institution by the Company of a voluntary case under
any applicable bankruptcy, insolvency,
reorganization, or other similar law, or consent by
the Company to the entry of an order for relief in an
involuntary case under such law, or consent of the
Company to the appointment of or taking possession by
a receiver, liquidator, trustee, assignee, custodian
(or other similar official) of it or of its property,
or making by the Company of its inability to pay its
debts generally as they become due, or taking by the
Company of any corporate action furthering any of the
above purposes.
o. If an Event of Default occurs and is continuing, Lender may
declare the principal of this Note, together with any accrued
and unpaid interest, if not already due, to
5
<PAGE>
be due and payable immediately. Upon any such declaration,
such principal and interest will become due and payable,
subject only to any applicable subordination provisions of
this Note.
p. If Lender declares the principal of this Note, together with
all accrued and unpaid interest on this Note, due and payable
immediately, Lender may proceed, subject, however, only to any
applicable subordination provisions of this Note, to protect
and enforce the rights of Lender by an action at law, suit in
equity, or other appropriate proceeding.
This Note is being delivered in the State of Minnesota and shall be
construed and enforced in accordance with the laws of such State.
______________________, a ___________ corporation
By: _____________________________________________
Its: _____________________________________________
6
