MURDOCK COMMUNICATIONS CORP, SC 13D/A, 1998-05-01

MURDOCK COMMUNICATIONS CORP
SC 13D/A, 1998-05-01
TELEGRAPH & OTHER MESSAGE COMMUNICATIONS

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 3)

Murdock Communications Corporation
----------------------------------------------------
(Name of Issuer)

Common Stock, no par value
----------------------------------------
(Title of Class of Securities)

62647W108
----------------------
(CUSIP Number)

Thomas J. Berthel Copy to: Michael K. Denney
100 Second Street S.E. Bradley & Riley, P.C.
Cedar Rapids, Iowa 52407-4250 100 1st St. S.W.
(319) 365-2506 Cedar Rapids, IA 52404
(319) 363-0101

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
----------------------------------------------------

April 30, 1998
----------------------------------------
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement of Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].

Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.

*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).

CUSIP No. 62647W108
(Continued on following pages)

Exhibit Index Appears on Page 14. Page 1 of 31 Pages

<PAGE> 2
CUSIP No 62647W108

- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) X
---
(b)
---
- --------------------------------------------------------------------------------
3) SEC Use Only

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO

- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e)

-------

- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization
IOWA

- --------------------------------------------------------------------------------
(7) Sole Voting Power
NONE

-----------------------------------------------------
(8) Shared Voting Power
Number of 1,260,561
Shares
Beneficially -----------------------------------------------------
Owned by Each (9) Sole Dispositive Power
Reporting NONE
Person With
-----------------------------------------------------
(10) Shared Dispositive Power

1,260,561
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,260,561

- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)

-------

- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 20.8%

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
CO

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

Page 2 of 31 Pages
<PAGE> 3
CUSIP No 62647W108

- --------------------------------------------------------------------------------
1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
THOMAS J. BERTHEL ###-##-####

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO

- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e)

-------

- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization
IOWA

- --------------------------------------------------------------------------------
(7) Sole Voting Power
109,303

-----------------------------------------------------
(8) Shared Voting Power
Number of NONE
Shares
Beneficially -----------------------------------------------------
Owned by Each (9) Sole Dispositive Power
Reporting 109,303
Person With
-----------------------------------------------------
(10) Shared Dispositive Power

NONE
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 109,303

- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)

-------

- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 2.2%

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
IN

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

Page 3 of 31 Pages
<PAGE> 4
CUSIP No 62647W108

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
BK, OO

- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e)

-------

- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization
IOWA

- --------------------------------------------------------------------------------
(7) Sole Voting Power
188,571

-----------------------------------------------------
(8) Shared Voting Power
Number of 1,664,275
Shares
Beneficially -----------------------------------------------------
Owned by Each (9) Sole Dispositive Power
Reporting 188,571
Person With
-----------------------------------------------------
(10) Shared Dispositive Power

1,664,275
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 1,852,847

- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)

-------

- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 29.5%

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
CO

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

Page 4 of 31 Pages
<PAGE> 5
CUSIP No 62647W108

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO

- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e)

-------

- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization
IOWA

- --------------------------------------------------------------------------------
(7) Sole Voting Power
NONE

-----------------------------------------------------
(8) Shared Voting Power
Number of 45,000
Shares
Beneficially -----------------------------------------------------
Owned by Each (9) Sole Dispositive Power
Reporting NONE
Person With
-----------------------------------------------------
(10) Shared Dispositive Power

45,000
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 45,000

- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)

-------

- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) .9%

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
PN

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

Page 5 of 31 Pages
<PAGE> 6

CUSIP No 62647W108

- --------------------------------------------------------------------------------
1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
TELECOMMUNICATIONS INCOME FUND X, L.P. 42-1401715
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) X
---
(b)
---
- --------------------------------------------------------------------------------
3) SEC Use Only

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)

- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
-------
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 10.8%

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
PN
- --------------------------------------------------------------------------------

Page 6 of 31 Pages

<PAGE> 7

CUSIP No 62647W108

- --------------------------------------------------------------------------------
1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
BERTHEL FISHER & COMPANY FINANCIAL SERVICES, INC. 42-1029773
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) X
---
(b)
---
- --------------------------------------------------------------------------------
3) SEC Use Only

- --------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO, WC
- --------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e)

- --------------------------------------------------------------------------------
14) Type of Reporting Persons (See Instructions)
CO
- --------------------------------------------------------------------------------

Page 7 of 31 Pages

<PAGE> 8

CUSIP No 62647W108

- --------------------------------------------------------------------------------
1) Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
BERTHEL FISHER & COMPANY INVESTMENTS, INC. 42-1443035
- --------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) X
---
(b)
---
- --------------------------------------------------------------------------------
3) SEC Use Only

-------
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization
IOWA
- --------------------------------------------------------------------------------
(7) Sole Voting Power
NONE
----------------------------------------------
Number of (8) Shared Voting Power
Shares 154,185
Beneficially ----------------------------------------------
Owned by Each (9) Sole Dispositive Power
Reporting NONE
Person With ----------------------------------------------
(10) Shared Dispositive Power
154,185
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person 154,185
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
-------
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11) 3.1%

Page 8 of 31 Pages

<PAGE> 9

ITEM 2. IDENTITY AND BACKGROUND.

Item 2 is amended by adding the following information:

This statement is being filed jointly by (a) Berthel Fisher & Company
Leasing, Inc. ("Leasing"), (b) Berthel Fisher & Company Investments, Inc.
("Investments"), (c) Berthel Fisher & Company Financial Services, Inc.
("Financial Services"), (d) T.J. Berthel Investment, L.P., an Iowa limited
partnership ("Investment L.P."), (e) T.J. Berthel Enterprises, Inc.
("Enterprises"), (f) Berthel Fisher & Company ("BFC"), (g) Telecommunications
Income Fund IX, L.P. ("TIFIX"), (h) Telecommunications Income Fund X, L.P.
("TIFX") and (i) Thomas J. Berthel ("Mr. Berthel"). Leasing, Investments,
Financial Services, Investment L.P., Enterprises, BFC, TIFIX, TIFX and Mr.
Berthel are referred to herein as the "Reporting Persons." Deanna Berthel
("Deanna"), individually and as custodian for Paige Berthel ("Paige") and
Brandon Berthel ("Brandon") is not a Reporting Person because Deanna, Paige and
Brandon no longer own any shares or have any voting or dispositive power with
respect to shares of the Issuer.

TIFIX is an Iowa limited partnership. Its principal place of business
is Cedar Rapids, Iowa, and its principal office is 100 Second Street, S.E.,
Cedar Rapids, Iowa, 52401. Leasing is the sole general partner of TIFIX.
TIFIX is publicly held.

TIFX is an Iowa limited partnership. Its principal place of business
is Cedar Rapids, Iowa, and its principal office is 100 Second Street, S.E.,
Cedar Rapids, Iowa, 52401. Leasing is the sole general partner of TIFX. TIFX
is publicly held.

Ronald O. Brendengen has been elected Chief Operating Officer of BFC.

During the past five years, none of the Reporting Persons, and, to the
best knowledge of the Reporting Persons, none of the Other Officers and
Directors, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors), and none of them has been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.

Each of the Reporting Persons who is a natural person and each of the
Other Officers and Directors is a United States citizen.

ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

Item 3 is amended by adding the following information:

Leasing

On March 5, 1998, the Issuer issued to Leasing warrants for 112,500
shares of common stock of the Issuer, exercisable by Leasing at $1.4375 per
share. The warrants are exercisable for a period of three years beginning June
30, 1998. In consideration of the issuance of the warrants, Leasing
renegotiated an existing Issuer Note. The existing Note was

Page 9 of 31 Pages

<PAGE> 10

dated December 31, 1997, and provided for the payment of principal of
$792,786.40 with interest at 15.5% per annum. The existing Note called for
three monthly payments of interest only ($10,240.16) followed by two monthly
payments of $22,265.29, with the balance due in full on June 30, 1998. The
Issuer did not make any payments on the existing Note. The renegotiated Note
is dated February 27, 1998, and provides for a principal balance of $813,744.40
with interest at 14% per annum. The renegotiated Note calls for sixty monthly
payments. The first five payments are interest only payments of $9,493.68,
beginning March 30, 1998. The last fifty-five payments are in the amount of
$20,129.65, beginning August 30, 1998. The renegotiated Note is payable in
full on February 28, 2003.

On March 5, 1998, the Issuer also issued to Leasing warrants for
350,000 shares of common stock of the Issuer, exercisable by Leasing at $1.4375
per share. The warrants are exercisable for a period of three years beginning
June 30, 1998. The warrants were issued as partial consideration for Leasing
providing $700,000 of additional new lease financing to the Issuer. The new
lease financing provides for a term of forty-one months, with five monthly
payments of $8,167 and thirty-six monthly payments of $23,925. The first
payment was due March 25, 1998.

TIF IX

On March 5, 1998, the Issuer issued to TIF IX warrants for 45,000
shares of common stock of the Issuer, exercisable by TIF IX at $1.4375 per
share. The warrants are exercisable for a period of three years beginning June
30, 1998. In consideration of the issuance of the warrants, TIF IX
renegotiated two existing leases between TIF IX, as lessor, and the Issuer, as
lessee. One of the renegotiated leases permitted the Issuer to skip five
monthly lease payments, permitted the Issuer to make five reduced monthly
payments beginning March 30, 1998, decreased the regular monthly payment from
$3092 to $2635 and extended the lease term for an additional 22 months. The
other renegotiated lease permitted the Issuer to skip five monthly lease
payments, permitted the Issuer to make five reduced monthly payments beginning
March 30, 1998, decreased the regular monthly payment from $4158 to $3870 and
extended the lease term for an additional 16 months.

TIF X

On March 5, 1998, the Issuer issued to TIF X warrants for 592,500
shares of common stock of the Issuer, exercisable by TIF X at $1.4375 per
share. The warrants are exercisable for a period of three years beginning June
30, 1998. In consideration of the issuance of the warrants, TIF X renegotiated
five existing leases between TIF X, as lessor, and the Issuer, as lessee. Four
of the renegotiated leases permit the Issuer to skip five monthly lease
payments, and the other renegotiated lease permits the Issuer to skip seven
monthly lease payments. Each of the renegotiated leases permits the Issuer to
make five reduced monthly payments beginning March 30, 1998. The term of each
of the renegotiated leases has been extended to a 55 month term beginning
August 30, 1998 instead of terms ending at various times between December, 1998
and July, 2001. By extending the terms, the monthly payments were reduced
significantly.

Page 10 of 31 Pages
<PAGE> 11

Mr. Berthel

On March 5, 1998, Mr. Berthel loaned $100,000 to the Issuer in
consideration of the issuance by Issuer of its note in the amount of $100,000
and the issuance of warrants for 100,000 shares of common stock of the Issuer,
exercisable by Mr. Berthel at $1.4375 per share. The warrants are exercisable
for a period of three years beginning June 30, 1998. The Issuer's note bears
interest at the rate of 14% per annum and the principal, together with
interest, is payable on March 5, 1999. The funds loaned to the Issuer by Mr.
Berthel were borrowed from Hartford-Carlisle Savings Bank, 100 First Street,
Carlisle, Iowa, on March 5, 1998, pursuant to a demand note that, if no prior
demand is made, is due on March 5, 1999.

Investments

On March 5, 1998, the Issuer issued to Investments warrants for 10,000
shares of common stock of the Issuer, exercisable by Investments at $1.4375 per
share. The warrants are exercisable for a period of three years beginning June
30, 1998. The warrants were issued to Investments as consideration for closing
the private placement of $100,000 of the Issuer's securities in a private
offering to an accredited investor.

Financial Services

On April 24, 1998, the Issuer issued to Financial Services warrants
for 52,500 shares of common stock of the Issuer, exercisable by Financial
Services at $1.75 per share. The warrants are exercisable for a period of
three years beginning June 30, 1998. The warrants were issued to Financial
Services as consideration for closing the private placement of $525,000 of the
Issuer's securities in an offering to accredited investors. The Issuer also
paid a cash commission of 7% and a one percent placement fee in connection with
the offering.

ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

Item 5 is amended by adding the following information:

Leasing

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by Leasing was 1,260,561. Leasing owns in its name 81,282
shares and warrants for 541,779 shares of common stock of the Issuer. Leasing
shares with BFC the power to vote or to direct the vote and the power to
dispose or to direct the disposition of all of the shares of common stock and
all warrants for shares of common stock owned by Leasing. Leasing shares with
BFC and TIFIX voting power and dispositive control of warrants for 45,000
shares of common stock of the Issuer owned by TIFIX. Leasing shares with BFC
and TIFX voting power and dispositive control of warrants for 592,500 shares of
common stock of the Issuer owned by TIFIX. As of April 30, 1998, the 1,260,561
shares beneficially owned by Leasing, including the shares to be issued upon
exercise of warrants, constitute approximately 20.8% of the total number of
shares of the common stock of the Issuer outstanding as of March 12, 1998.
Because BFC is a controlling person of Leasing, BFC and Leasing have the shared
power to vote or to direct the vote and the shared power to dispose or to
direct the disposition

Page 11 of 31 Pages

<PAGE> 12

of all of the shares owned by Leasing. Because Leasing is the general partner
and a controlling person of both TIFIX and TIFX, Leasing has the shared power
to vote or to direct the vote and the shared power to dispose or to direct the
disposition of all of the shares owned by TIFIX and TIFX.

Within the last sixty days, warrants for 112,500 shares of common
stock of the Issuer were issued to Leasing in consideration of Leasing
renegotiating terms of an existing Issuer Note. Within the last sixty days,
warrants for 45,000 shares of common stock of the Issuer were issued to TIFIX
in consideration of TIFIX renegotiating terms of existing leases between TIFIX,
as lessor, and the Issuer, as lessee. Within the last sixty days, warrants for
592,500 shares of common stock of the Issuer were issued to TIFX in
consideration of TIFX renegotiating terms of existing leases between TIFX, as
lessor, and the Issuer, as lessee. All of the warrants issued to Leasing,
TIFIX and TIFX within the last sixty days are exercisable for $1.4375 per
share.

Due to a transposition of numbers in Amendment No. 2 to this Schedule
13D, it was reported that Leasing owned 160,579 of common stock of the Issuer,
instead of 160,561. The shares reported in this Amendment No. 3 reflect the
correct number of shares.

TIFIX

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by TIFIX was warrants for 45,000 shares of common stock.
TIFIX owns all of such warrants in its own name. TIFIX shares with Leasing the
power to vote or to direct the vote and the power to dispose or to direct the
disposition of all of the warrants for shares of common stock owned by TIFIX.
As of April 30, 1998, the warrants for 45,000 shares beneficially owned by
TIFIX constitute approximately .9% of the total number of shares of the common
stock of the Issuer outstanding as of March 12, 1998. Because BFC is a
controlling person of Leasing, BFC and Leasing have the shared power to vote or
to direct the vote and the shared power to dispose or to direct the disposition
of all of the warrants for shares owned by TIFIX. Because Leasing is the
general partner and a controlling person of TIFIX, Leasing has the shared power
to vote or to direct the vote and the shared power to dispose or to direct the
disposition of all of the shares owned by TIFIX.

Within the last sixty days, warrants for 45,000 shares of common stock
of the Issuer were issued to TIFIX in consideration of TIFIX renegotiating
terms of existing leases between TIFIX, as lessor, and the Issuer, as lessee.
All of the warrants issued to TIFIX within the last sixty days are exercisable
for $1.4375 per share.

TIFX

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by TIFX was warrants for 592,500 shares of common stock.
TIFX owns all of such warrants in its own name. TIFX shares with Leasing the
power to vote or to direct the vote and the power to dispose or to direct the
disposition of all of the warrants for shares of common stock owned by TIFX.
As of April 30, 1998, the warrants for 592,500 shares beneficially owned by
TIFX constitute approximately 10.8% of the total number of shares of the common
stock

Page 12 of 31 Pages

<PAGE> 13

of the Issuer outstanding as of March 12, 1998. Because BFC is a controlling
person of Leasing, BFC and Leasing have the shared power to vote or to direct
the vote and the shared power to dispose or to direct the disposition of all of
the warrants for shares owned by TIFX. Because Leasing is the general partner
and a controlling person of TIFX, Leasing has the shared power to vote or to
direct the vote and the shared power to dispose or to direct the disposition of
all of the shares owned by TIFX.

Within the last sixty days, warrants for 592,500 shares of common
stock of the Issuer were issued to TIFX in consideration of TIFX renegotiating
terms of existing leases between TIFX, as lessor, and the Issuer, as lessee.
All of the warrants issued to TIFX within the last sixty days are exercisable
for $1.4375 per share.

Mr. Berthel

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by Mr. Berthel was 109,303, including warrants for 2,716
shares of common stock. Mr. Berthel owns in his name 106,587 shares and
warrants for 2,716 shares of common stock of the Issuer. Mr. Berthel has the
sole power to vote or to direct the vote and the sole power to dispose or to
direct the disposition of all of the shares of common stock and all warrants
for shares of common stock owned by Mr. Berthel. As of April 30, 1998, the
109,303 shares beneficially owned by Leasing, including the shares to be issued
upon exercise of warrants, constitute approximately 2.2% of the total number of
shares of the common stock of the Issuer outstanding as of March 12, 1998.

Within the last sixty days, warrants for 100,000 shares of common
stock of the Issuer and the Issuer's note for $100,000 were issued to Mr.
Berthel in consideration of Mr. Berthel loaning $100,000 to the Issuer. The
note provides for the payment of $100,000, together with interest at the rate
of 14% per annum, on March 5, 1999. All of the warrants issued to Mr. Berthel
within the last sixty days are exercisable for $1.4375 per share. The funds
loaned to the Issuer by Mr. Berthel were borrowed from Hartford-Carlisle
Savings Bank, 100 First Street, Carlisle, Iowa, on March 5, 1998, pursuant to a
demand note that, if no demand is made, is due on March 5, 1999.

Investments

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by Investments was 154,185. Investments owns in its name
120,185 shares and warrants for 34,000 shares of common stock of the Issuer.
Investments shares with BFC the power to vote or to direct the vote and the
power to dispose or to direct the disposition of all of the shares of common
stock and all warrants for shares of common stock owned by Investments. As of
April 30, 1998, the 154,185 shares beneficially owned by Investments, including
the shares to be issued upon exercise of warrants, constitute approximately
3.1% of the total number of shares of the common stock of the Issuer
outstanding as of March 12, 1998. Because BFC is a controlling person of
Investments, BFC and Investments have the shared power to vote or to direct the
vote and the shared power to dispose or to direct the disposition of all of the
shares owned by Investments.

Page 13 of 31 Pages

<PAGE> 14

Within the last sixty days, warrants for 10,000 shares of common stock
of the Issuer were issued to Investments in consideration of Investments'
participation in the private placement of securities of the Issuer in the
amount of $100,000. All of the warrants issued to Investments within the last
sixty days are exercisable for $1.4375 per share.

Financial Services

As of April 30, 1998, the aggregate number of shares of the Issuer
beneficially owned by Financial Services was 60,958. Financial Services owns
in its name 7,958 shares and warrants for 53,000 shares of common stock of the
Issuer. Financial Services shares with BFC the power to vote or to direct the
vote and the power to dispose or to direct the disposition of all of the shares
of common stock and all warrants for shares of common stock owned by Financial
Services. As of April 30, 1998, the 60,958 shares beneficially owned by
Financial Services, including the shares to be issued upon exercise of
warrants, constitute approximately 1.2% of the total number of shares of the
common stock of the Issuer outstanding as of March 12, 1998. Because BFC is a
controlling person of Financial Services, BFC and Financial Services have the
shared power to vote or to direct the vote and the shared power to dispose or
to direct the disposition of all of the shares owned by Financial Services.

Within the last sixty days, warrants for 52,500 shares of common stock
of the Issuer were issued to Financial Services in consideration of Financial
Services' participation in the private placement of securities of the Issuer in
the amount of $525,000. All of the warrants issued to Financial Services
within the last sixty days are exercisable for $1.75 per share.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Beginning
at
Page:
---------
A Joint Filing Agreement, dated April 30, 1998,
between the Reporting Persons relating to the
filing of a joint statement on Schedule 13D. 17

B Promissory Note issued by the Issuer to Mr. Berthel 19

C Promissory Note from Mr. Berthel to Hartford-Carlisle
Savings Bank and Letter of Direction to the Issuer 20

D Amended and Restated Note and Security Agreement 23

Page 14 of 31 Pages

<PAGE> 15

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.

Dated: April 30, 1998 T. J. BERTHEL INVESTMENT, L. P.
By: T. J. BERTHEL ENTERPRISES, INC.
General Partner

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

BERTHEL FISHER & COMPANY FINANCIAL
SERVICES, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, Chief
Executive Officer

BERTHEL FISHER & COMPANY LEASING, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

BERTHEL FISHER & COMPANY
INVESTMENTS, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President
Executive Officer

BERTHEL FISHER & COMPANY

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

By: /s/
-----------------------------------
THOMAS J. BERTHEL

T. J. BERTHEL ENTERPRISES, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

TELECOMMUNICATIONS INCOME FUND IX, L.P.
By: BERTHEL FISHER & COMPANY LEASING, INC.
General Partner
By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

Page 15 of 31 Pages

<PAGE> 16

TELECOMMUNICATIONS INCOME FUND X, L.P.
By: BERTHEL FISHER & COMPANY LEASING, INC.
General Partner

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).

Page 16 of 31 Pages

<PAGE> 17

EXHIBIT A
JOINT FILING AGREEMENT

We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is filed on behalf of
each of us.

Dated: April 30, 1998 T. J. BERTHEL INVESTMENT, L. P.
By: T. J. BERTHEL ENTERPRISES, INC.
General Partner

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

BERTHEL FISHER & COMPANY FINANCIAL
SERVICES, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, Chief
Executive Officer

BERTHEL FISHER & COMPANY LEASING, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

BERTHEL FISHER & COMPANY
INVESTMENTS, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President
Executive Officer

BERTHEL FISHER & COMPANY

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

By: /s/
-----------------------------------
THOMAS J. BERTHEL

T. J. BERTHEL ENTERPRISES, INC.

By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

Page 17 of 31 Pages

<PAGE> 18

TELECOMMUNICATIONS INCOME FUND IX, L.P.
By: BERTHEL FISHER & COMPANY LEASING, INC.
General Partner
By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

TELECOMMUNICATIONS INCOME FUND X, L.P.
By: BERTHEL FISHER & COMPANY LEASING, INC.
General Partner
By: /s/
-----------------------------------
THOMAS J. BERTHEL, President

Page 18 of 31 Pages

<PAGE> 19

EXHIBIT B
PROMISSORY NOTE ISSUED BY THE ISSUER TO MR. BERTHEL

PROMISSORY NOTE

$100,000 March 5 1998

FOR VALUE RECEIVED, the undersigned, MURDOCK COMMUNICATIONS CORPORATION
(hereinafter "Borrower"), promises to pay to the order of THOMAS J. BERTHEL
(the "Holder") at 1112 29th Avenue, S.W., Cedar Rapids, Iowa 52404, the
principal sum of One Hundred Thousand Dollars ($100,000), on March 5, 1999.

The Borrower promises to pay interest on the unpaid principal balance
of this Note from time to time outstanding from the date hereof, payable at
maturity, at the rate of 14% per annum.

The undersigned agrees to pay interest on the unpaid principal balance
and all accrued interest, upon demand for such interest by the Holder, from and
after maturity at a rate of 18% per annum or, if lesser, the maximum rate
allowable under applicable law. The Borrower may prepay all or any part of the
unpaid principal and interest hereunder, at any time, without premium or
penalty.

Payments of both principal and interest are to be made in lawful
currency of the United States of America.

If a default occurs under this Note or if the undersigned becomes
insolvent or the subject of bankruptcy or insolvency proceedings, the unpaid
balance shall, at the option of the Holder and without notice, mature and
become immediately payable. The Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees.

MURDOCK COMMUNICATIONS
CORPORATION

By
---------------------------------
Title:
---------------------------

Page 19 of 31 Pages

<PAGE> 20
EXHIBIT C
PROMISSORY NOTE FROM MR. BERTHEL TO HARTFORD-CARLISLE
SAVINGS BANK AND LETTER OF DIRECTION TO THE ISSUER

<TABLE>
<S> <C> <C>
Borrower: Thomas J. Berthel (SSN: ###-##-####) Lender: Hartford-Carlisle Savings Bank
100 - 2nd Street, SE 100 1st Street
Cedar Rapids, IA 52404 P. O. Box D
Carlisle, IA 50047
- ---------------------------------------------------------------------------------------------

Principal Amount: $100,000.00 Initial Rate: 10.000% Date of Note: March 5, 1998
</TABLE>

PROMISE TO PAY. THOMAS J. BERTHEL ("Borrower") promises to pay to
Hartford-Carlisle Savings Bank ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Hundred Thousand & 00/100
Dollars ($100,000.00), together with interest on the unpaid principal balance
from March 5, 1998, until paid in full. The interest rate will not increase
above 21.000%.

PAYMENT. Borrower will pay this loan on demand, or if no demand is made, in
one principal payment of $100,000.00 plus interest on March 5, 1999. This
payment due March 5, 1999, will be for all principal and accrued interest not
yet paid. Interest on this Note is computed on a 365/365 simple interest
basis; that is, by applying the ratio of the annual interest rate over the
number of days in a year (366 during leap years), multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal
balance is outstanding. Borrower will pay Lender at Lender's address shown
above or at such other place as Lender may designate in writing. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the HARTFORD-CARLISLE
SAVINGS BANK, PRIME RATE (the "Index'). HARTFORD-CARLISLE SAVINGS BANK PRIME
RATE, CARLISLE, IOWA. Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each RATE CHANGE BY HARTFORD-CARLISLE SAVINGS BANK, CARLISLE, IOWA. The Index
currently is 8.500% per annum. The interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 1.500 percentage points
over the Index, adjusted if necessary for the maximum rate limitation described
below, resulting in an Initial rate of 10.000% per annum. Notwithstanding any
other provision of this Note, the variable interest rate or rates provided for
in this Note will be subject to the following maximum rate. NOTICE: Under no
circumstances will the interest rate on this Note be more than the lesser of
21.000% per annum or the maximum rate allowed by applicable law.

PREPAYMENT; MINIMUM INTEREST CHARGE. In any event, even upon full prepayment
of this Note, Borrower understands that Lender is entitled to a minimum
interest charge of $7.50. Other than Borrower's obligation to pay any minimum
interest charge, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed to
by Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments under the payment schedule. Rather, they will reduce the
principal balance due.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
$15.00.

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower falls to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform
when due any other term, obligation, covenant, or condition contained in this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Any representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf is false or misleading
in any material respect either now or at the time made or furnished. (d)
Borrower dies or becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws. (e) Any creditor tries to take any of
Borrower's property on or in which Lender has a lien or security interest.
This includes a garnishment of any of Borrower's accounts with Lender. (f) Any
of the events described in this default section occurs with respect to any
guarantor of this Note. ((g) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the indebtedness is impaired.

If any default, other than a default in payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) if Borrower, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within twenty (20) days;
or (b) if the cure requires more than twenty (20) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrower also will
pay Lender that amount. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses whether or not there
is a lawsuit, including attorneys' fees

Page 20 of 31 Pages
<PAGE> 21

and legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law. This Note has been delivered to Lender and accepted by Lender in the
State of Iowa. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Warren County, the State of Iowa.
This Note shall be governed by and construed in accordance with the laws of the
State of Iowa.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.

PURPOSE OF LOAN. The specific purpose of this loan is: INVESTMENT - MURDOCK.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo
enforcing any of its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses this Note, to
the amount allowed by law, waive presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan, or release any party or guarantor or
collateral; or impair, fall to realize upon or perfect Lender's security
interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE
AND OTHER DOCUMENTS RELATING TO THIS DEBT.

BORROWER:

Page 21 of 31 Pages
<PAGE> 22

LETTER OF DIRECTION

Murdock Communications Corporation
1112 29th Avenue, S.W.
Cedar Rapids, IA 52404

Gentlemen:

Pursuant to a Promissory Note dated March 5 , 1998 (the "Investor
Note"), Murdock Communications Corporation (the "Company") has agreed to repay
the loan from the undersigned to the Company in the principal amount of
$100,000, plus accrued interest thereon at a rate of 14% per annum, on March 5
1999 (the "Maturity Date"). The undersigned hereby requests and directs the
Company, for the benefit of the undersigned and in satisfaction of the
Company's obligations under the Note, to pay on the Maturity Date:

(a) to Hartford-Carlisle Savings Bank (the "Bank"), 100 First
Street, P.O. Box D, Carlisle, Iowa 50247, the principal sum of $100,000 plus
interest accrued at the variable rate provided in the undersigned's Promissory
Note to the Bank, a copy of which is attached hereto (the "Bank Note"); and

(b) to the undersigned the difference between the accrued interest
payable to the Bank pursuant to the Bank Note and the interest payable to the
undersigned pursuant to the Investor Note.

This letter of direction may be revoked or modified by the
undersigned, prior to the Maturity Date, by a written document executed by the
undersigned and delivered to the Company.

Dated March 5, 1998.

_______________________________________
Thomas J. Berthel

Acknowledged and Agreed
the 5th day of March, 1998.

MURDOCK COMMUNICATIONS CORPORATION

By________________________________
Title:___________________________

Page 22 of 31 Pages
<PAGE> 23

EXHIBIT D
AMENDED AND RESTATED NOTE AND SECURITY AGREEMENT

AMENDED AND RESTATED NOTE AND SECURITY AGREEMENT
AMENDED SECOND AMENDMENT TO NOTE AND EXCHANGE AGREEMENT
[Corporate Debtor with Individual Guarantors]

Note #079-18000-020
Date 2-27-98
-----------

This Note and Security Agreement is entered into by and among Murdock
Communications Corporation, 1112 29th Ave. SW, Cedar Rapids, IA 52404 a Iowa
corporation, ("Debtor"), and Berthel Fisher & Company Leasing, Inc., an Iowa
corporation, 100 Second Street SE, Cedar Rapids, Iowa ("Lender").

RECITALS

A. Debtor has requested that Lender provide Debtor with a working
capital loan.

B. The Guarantors each directly or indirectly own stock of the
Debtor;

C. Debtor and the Guarantors each individually perceive
substantial business advantage from the transactions contemplated by this Note
and Security Agreement;

D. Lender has, as a condition to making the Loan to Debtor
required that Debtor and the Guarantors each participate and that the parties
execute and deliver this Note and Security Agreement.

The parties agree:

1. Definitions.

"Equipment" means certain telephonic equipment specified on Schedule A
attached hereto.

"Obligations" shall mean (a) the unpaid principal amount of, and
accrued interest on, the loan to Debtor evidenced by this Note and Security
Agreement and (b) all other indebtedness, obligations, and liabilities of
Debtor to Lender, now existing or hereafter incurred under, arising out of, or
in connection with this Note and Security Agreement, whether for principal
interest, fees, expenses or otherwise.

"Operator Service Providers" means companies that provide live or
automated operator switched service with the basic goal of completing calls.
Non-AT&T or non-telephone companies are often referred to as "alternate"
operator services (AOS).

"Site Lease" means an agreement to allow Debtor to locate pay
telephones, attachments and enclosures and offer telephonic services at
specific locations.

Page 23 of 31 Pages
<PAGE> 24

2. Payments. Debtor promises to pay to the order of Lender or
its assignee the principal sum of Eight Hundred Thirteen Thousand Seven Hundred
Forty-four and 40/100 Dollars ($813,744.40) with interest at the rate of
Fourteen percent (14.0%) per annum on the unpaid balance remaining from time to
time unpaid based upon a 360 day year. The principal and interest shall be
paid in Sixty (60) monthly installments beginning with the 30th day of March
1998 by the following schedule:

Five (5) monthly Interest Only Payments of $9,493.68 beginning on
March 30, 1998, then Fifty-Five (55) monthly payments of $20,129.65
beginning August 30,1998.

All accrued interest and principal shall be due and payable on
February 28, 2003.

Debtor acknowledges and agrees that () all costs, expenses and
liabilities in connection with its operations shall be borne by Debtor, (ii)
Debtor's obligation to pay Lender all amounts due is absolute and
unconditional, and (iii) Debtor shall not be entitled to any abatement,
reduction, set-off, or counterclaim.

If the payment is not received by Lender within ten (1 0) days of the
due date, Debtor agrees to pay Lender an amount equal to five percent (5%) (or
the maximum amount provided by law if five percent is in excess of the amount
Lender is entitled to receive under and applicable law) of the monthly payment
amount.

All payments called for under this Note and Security Agreement to be
made to Lender shall be made as designated by Lender or Lender's assignee.

Each such payment shall be applied first to any late charges, then to
interest due on the unpaid principal and the remainder in reduction of the
principal.

It is agreed that in no event and under no circumstances shall any
amount paid by the Debtor to Lender exceed the highest lawful rate permissible,
under applicable law. If in any circumstances whatsoever, it is determined
that performance under this Note and Security Agreement shall result in payment
of interest in excess of that allowed by applicable law, then such excess
interest collected shall not be applied to the payment of interest and interest
shall be at the highest rate allowed by applicable law.

In the event of default and acceleration or in the event Debtor
prepays the Obligations, the amount due upon payment after default or upon
prepayment is all late charges and unpaid interest plus the present value of
the installment payments not yet paid, using as a discount factor, the lower of
the 3 year Treasury rate or 5%.

3. Security Interest. Debtor grants to Lender a security
interest in the following described collateral (collectively the "Collateral")
to secure the Obligations.

(a) All Equipment, attachments and enclosures located as
specified on Schedule A attached hereto.

(b) All additions, substitutions, repairs, replacements,
accessories, accessions, parts and equipment now or hereafter affixed to the
Equipment.

Page 24 of 31 Pages
<PAGE> 25

(c) All revenues from whatever source derived from the
Equipment including, without limitation, coins, credit card charges, debit card
charges, payments to Debtor as dial around compensation, long distance revenue,
and commissions from Operator Service Providers (hereinafter defined).

(d) All of Debtor's rights in the Site Leases described
on Schedule A attached hereto and any additional Site Leases entered into later
if the equipment moved to the site was the Equipment on Schedule A. The Site
Leases (each, a "Site Lease") are the contracts pursuant to which Debtor has or
will install and operate the Equipment, whether now owned or hereafter
acquired. In addition, Debtor shall assign to Lender each of the Site Leases,
using a form satisfactory to Lender. Debtor shall pledge and deliver to Lender
each of the original Site Leases and Lender shall hold the original Site Leases
until the Obligations are paid in full.

(e) The proceeds of all insurance polices covering the
Collateral and all proceeds of the Collateral.

4. Expenses. Debtor, upon demand, shall pay to Lender all
expenses, including, but not limited to, reasonable attorney's fees and legal
expenses incurred by Lender in seeking to collect the Obligations or to defend
or enforce any of Lender's rights in the Collateral. Such amounts shall be an
Obligation under this Note and Security Agreement and if not paid on demand
shall bear interest at a default rate of 1 1/2 times the rate specified in
paragraph 2.

5. Representations, Warranties and Covenants. Debtor and
Guarantors represent, warrant and agree (which shall survive until the
Obligations are paid in full):

(a) Corporate Authority. Debtor is duly organized and
existing under the laws of the state of its incorporation, is qualified and in
good standing in all states in which it is doing business, and the execution
and performance of this Note and Security Agreement are within the corporate
powers, have been duly authorized and are not in contravention of any law or
Debtor's charter or any agreement or undertaking of which Debtor is party or by
which it is bound.

(b) Title to Collateral. Debtor is the owner of the
Collateral free and clear of any and all adverse liens, security interest,
claims, encumbrances and the like and has full authority to use same as
Collateral. Debtor will defend the Collateral against all other persons who,
at any time, may claim an interest in it.

(d) Negative Pledge. Except for the security interests
created hereunder, Debtor agrees that during the term of this Note and Security
Agreement and as long as any Obligations are outstanding, Debtor will not grant
a security interest in the Collateral to any other person.

(e) Adverse Lien. During the term of this Agreement,
Debtor will keep the Collateral from any and all adverse liens or encumbrances.

Page 25 of 31 Pages
<PAGE> 26

(f) Sale of Collateral. Debtor will not sell, offer for
sale, transfer or dispose of the Collateral or any interest in the Collateral
without the prior written consent of Lender or Lender's assignee.

(g) Unlawful Uses of Collateral. Debtor will not use or
permit any person to use the Collateral in a manner prohibited by law, in
violation of any insurance policy or in any manner inconsistent with Lender's
security interest.

(h) Care of Collateral. Debtor agrees to maintain the
Collateral in good order and repair at all times and will not waste or destroy
the Collateral or any part of it. Debtor shall make no material alterations in
the Equipment without the prior written consent of Lender or Lender's assignee.

(I) Taxes. If Debtor fails to pay any tax or assessment
relating to the Collateral as required when due, Lender may, at its option, pay
or discharge same, although it is not required to do so. Any payments made by
Lender under this Section shall become the Obligation of Debtor and shall be
secured by the Collateral.

(j) Insurance. Debtor shall either (I) procure insurance
insuring the Collateral against loss through theft, fire or casualty or (ii)
may be self-insured, if approved in advance by Lender. If insured, any
insurance policy shall name Lender as Loss Payee under the property damage
provisions and Additional Named Insured under the liability provisions where
applicable and provide evidence of insurance to the Lender and be satisfactory
to Lender as to the terms and duration and contain a term to the effect that
notice of termination will be sent to Lender at least thirty (30) days prior to
any contemplated termination and be delivered to Lender. If Debtor at any time
adds insurance covering the Collateral or changes policies, Debtor agrees that
the new policies will comply with the terms of this paragraph.

If self-insured, Debtor warrants and agrees that it will
provide proof of any fund or assets which Debtor has established or set aside
for the payment of any losses sustained with regard to the Collateral. Debtor
continues to bear the entire risk of loss for destruction of or damage to the
Collateral. If Debtor shall obtain insurance coverage on the Collateral from
an outside insurance company Debtor agrees that the new policies shall comply
with the terms of this paragraph.

(k) Sticker. Upon request, Debtor shall, at its expense,
affix and maintain on the Equipment, a sticker approved by Lender indicating
Debtor's ownership of the Equipment.

(l) Leases. Debtor is not in default with respect to any
Site Leases and all Site Leases listed on Schedule A are assignable to Lender.

(m) Reports. Debtor shall provide Lender at its address
all quarterly reports of Debtor's financial condition and annual financial
reports reviewed by an independent certified public accountant or more
frequently as requested.

(n) Bills. Debtor shall provide copies of telephone
company bills for each site where the Equipment is located to verify the status
of such site prior to the execution of this Note and Security Agreement and
annually thereafter or more often upon request of Lender.

Page 26 of 31 Pages
<PAGE> 27

(o) Use of Equipment. Debtor will comply with all laws,
regulations, and ordinances, and all applicable requirements of the
manufacturer of the Equipment, applicable to the physical possession,
operation, condition, use and maintenance of the Equipment. Debtor agrees to
obtain all permits and licenses necessary for the operation of the Equipment.

(p) Corporate Changes. Debtor will not enter into any
merger or consolidation or effect any reorganization or recapitalization
without the prior written consent of Lender.

6. Financing Statements and Site Lease Assignments. Debtor
agrees to execute one or more financing statements or assignment of Site Lease
in a form satisfactory to Lender who is authorized to file a financing
statement in any location deemed necessary or advisable to perfect Lender's
security interest in the Collateral and to hold the Site Leases. Debtor
expressly agrees to sign such financing statements or assignment of Site Leases
on request of Lender. Debtor also agrees to cooperate fully with Lender in
executing additional financing statements, amendments to financing statements,
modification of Site Leases and the like as may be deemed necessary or
advisable by Lender in order to maintain and continue Lender's first priority
security interest in the Collateral.

7. Collateral Paper. Debtor agrees to provide Lender with all
executed originals of the Site Leases and Debtor shall stamp each copy of Site
Lease with a notation of the assignment to Lender.

8. Right of Inspection. Lender has a right to inspect the
Collateral at any reasonable place and time and in any reasonable manner.
Debtor agrees to pay Lender not more than Five Hundred Dollars ($500) each year
in non- accountable expenses incurred by Lender for the purpose of inspecting
the Equipment and conducting Equipment and record audits. Debtor agrees to pay
within 30 days of invoice. If Debtor fails to pay, the amount of the unpaid
invoice shall be added to the principal balance and shall accrue interest at
the rate specified in the first paragraph of Section 1.

9. Default. It is agreed that the following events shall
constitute a default under this Note and Security Agreement:

(a) Nonpayment. Any failure of Debtor to pay when due any
Obligations secured by this Note and Security Agreement shall constitute a
default. This includes, but is not limited to, any failure to pay principal or
interest when due, failure to pay taxes, failure to pay insurance and failure
to pay delinquent charges.

(b) Nonperformance. Any failure of Debtor to perform or
observe fully and in any satisfactory manner the terms of any Obligations
secured by this Note and Security Agreement shall constitute a default.

(c) Warranties and Representations that Prove False.
Any warranty or representation made to Lender in order to induce the making of
the Loan to Debtor whether made by Debtor, or others on behalf of Debtor,
including agents, employees, sureties, guarantors, co-signors and the like, and
whether such representations are contained in this agreement or in related
materials, such as financial statements, loan applications, supporting
documentation and guarantees, or in any financial instrument, such as a
promissory note,

Page 27 of 31 Pages
<PAGE> 28

executed in conjunction with this Note and Security Agreement, if incorrect in
any material respect shall operate as a default under this Note and Security
Agreement.

(d) Levy and Attachments. Seizure, attachment or levy on
any property of Debtor whether or not such property is the subject of the
security interest created by this Note and Security Agreement, shall operate as
a default under this Note and Security Agreement.

(e) Insolvency and the Like. It shall operate as a
default under this Note and Security Agreement if for any reason Debtor becomes
insolvent or Debtor becomes subject to any proceeding under the bankruptcy or
insolvency laws, including an assignment for the benefit of creditors or Debtor
has its property placed under the custody of a receiver or trustee.

(f) Alteration of Debtor's Operating Conditions. Without
Lender's written permission, dissolution or other termination of the existence
of Debtor or any forfeiture of its right to do business, as well as any merger,
consolidation or the like with another, shall constitute a default under this
Note and Security Agreement.

(g) Loss or Destruction of Collateral. The theft, loss,
destruction, substantial damage to or alteration of the Collateral, whether in
whole or in part, shall constitute a default under this Note and Security
Agreement.

(h) Unauthorized Use of Collateral or Proceeds. The
sale, transfer or use of the Collateral or its proceeds except as authorized in
this Note and Security Agreement shall a default under this Note and Security
Agreement.

(I) Others. Any transfer of any Operator Service
Provider Agreement or any other billing or collection agreement without the
prior written consent of Lender shall constitute a default under this Note and
Security Agreement. Any failure of any Operator Service Provider or other
billing or collection company to make payments directly to Lender as required
under this Note and Security Agreement shall constitute a default under this
Note and Security Agreement.

(j) Change of Location. Any change in the location of
the Equipment without the prior approval of Lender and delivery of the new Site
Leases and the execution and delivery or any new financing statements and
Assignment of Site Leases required by Lender shall constitute a default under
this Note and Security Agreement.

10. Acceleration. Upon the occurrence of an event of default or
at any other time Lender may deem itself insecure, Lender may, without notice
to the Debtor, declare all or any of the Obligations immediately due and
payable.

11. Rights and Remedies on Default.

(a) Code Rights. Upon the occurrence of an event of
default, Lender shall have all rights and remedies provided by law, including
but not limited to those provided in the Uniform Commercial Code with respect
to the Collateral.

(b) Right to Possession. Upon the occurrence of an event
of default lender shall have the right to take possession of the Collateral.

Page 28 of 31 Pages
<PAGE> 29

(c) Right to Sell. Upon the occurrence of an event of
default lender shall have the right to sell, assign, deliver, encumber or
otherwise dispose of any of the Collateral.

(d) Notice of Sale. Lender shall give Debtor notice of
the time and place of the public sale of the Collateral or of the time after
which any private sale or other intended disposition is to be made by sending a
notice of such sale to Debtor by regular mail at least ten (10) days before the
sale or disposition, which Debtor agrees shall be reasonable notice.

(e) Charges. In the event that Collateral is sold or
otherwise disposed of, the resale price or return shall be applied in the first
instance to the reasonable expenses retaking, holding, preparing for sale or
lease, selling, leasing and the like.

(f) Attorney's Fees. The proceeds of the disposition may
be applied in the first instance to Lender's attorney's fees and legal
expenses.

(g) Attorney in Fact. Debtor appoints Lender the
attorney in fact of Debtor for the purpose of carrying out the provisions of
this Note and Security Agreement and taking any action and executing any
instrument which the Lender may deem necessary or advisable the accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of such appointment,
Lender may assume ownership for all purposes of all Site Leases pursuant to
which Debtor has installed and operated Equipment as listed on Schedule A
attached hereto, including assumption of Debtor's@s obligations under such
agreements, and be entitled to receive as Debtor's own property, all revenues,
rents, profits, income and other benefits to derive from such agreements.
Where allowed by law, Lender shall have the right to execute and file any
financing statements on behalf of Debtor to protect its interest in Collateral.
Lender shall also have the right to endorse the name of Debtor on any checks,
notes or any other instruments for the payment of money, to deposit the same in
bank accounts, in either Lender's own name or in the name of Debtor to
institute, prosecute, settle or compromise any summary or legal proceedings for
the recovery of any of the gross receipts from the operation of the Equipment
and to initiate, prosecute, settle or compromise any other proceedings for the
protection of the Equipment, for the recovery of any damages done to the
Equipment or to defend any legal proceedings brought against Debtor arising out
of the operation of the Equipment. Lender, as Debtor's attorney-in-fact, shall
also have the right to make claim for, receive payment or endorse all
documents, checks or drafts for loss or damage or return premium under
insurance policies issued on collateral.

Debtor shall indemnify and hold Lender harmless from any loss, claim
of damage to persons or property arising out of Debtor's use, possession or
storage of the Equipment.

12. Reimbursement of Fees. In the event Lender is a party to any
litigation affecting the security or the lien of its security interest in the
Collateral, including any suit by Lender to close its security interest in the
Collateral or any suit in which Lender may be named a party defendant in which
it is obligated to protect its right or lien, including bankruptcy proceedings,
Lender may incur expenses and advance payments for lien searches, costs,
expenses and reasonable attorney's fees, which amount shall be deemed
additional Obligations secured by the Collateral.

Page 29 of 31 Pages
<PAGE> 30

13. Miscellaneous.

(a) All rights and remedies of Lender inure to the
benefit of its successors, assigns, representatives, receivers and trustees.

(b) In the event any provision of this Note and Security
Agreement shall be found to be unenforceable in any legal proceeding, the
remaining provisions shall remain in force and effect.

(c) Prior to Funding this Note, Debtor shall deliver to
Lender all documents required by this Note and Security Agreement in a form
satisfactory to Lender.

(d) This Note and Security Agreement becomes effective
when signed and delivered to Lender.

(e) Debtor acknowledges receipt of a copy of this Note
and Security Agreement.

(f) This Note and Security Agreement is and shall be
deemed to be binding upon and shall inure to the benefit of the successors and
assigns of Lender and Debtor, provided however, Debtor may not assign any of
its rights or delegate any of its obligations hereunder without the prior
written consent of Lender. This Note and Security Agreement may be assigned by
Lender without notice to Debtor and the Guarantors, in which event the assignee
shall be entitled to exercise all rights and powers but not be chargeable with
any obligations or liabilities of Lender hereunder. Assignee may also grant a
security interest in the Collateral and this Note and Security Agreement. The
Assignee's rights or the rights of the Holder of a security interest in this
Note and Security Agreement shall be free from all defenses, set offs and
counterclaims which Debtor may be entitled to assert.

(g) This Note and Security Agreement is and shall be
deemed to be contract entered into and made pursuant to the laws of the State
of Iowa and shall in all respects be governed, construed, applied, and enforced
in accordance with the laws of said state and any action to enforce, construe,
invalidate or modify this Agreement shall be brought in a court of competent
jurisdiction in Linn County, Iowa. Debtor waive the right to demand a trial by
jury in any action hereunder.

(h) Any demand or notice required or permitted to be
given shall be deemed effective when deposited in the United States mail
addressed to the party at the address shown or to such other address as may be
provided in writing prior to the giving of such notice by the party to be
notified.

(I) This Note and Security Agreement constitutes the
entire agreement among the parties hereto and may not be changed or canceled
orally, but only in writing, signed by the party to be charged.

(j) Debtor agrees to deliver to Lender its successors and
assigns, upon request of Lender, such certificates, acknowledgment, consents,
opinions of counsel and any other instruments, all in form and substance
satisfactory to Lender, which Lender may, in its sole discretion, determine to
be necessary or proper to confirm any or all of the representations

Page 30 of 31 Pages
<PAGE> 31

and agreements made by Debtor hereunder or to facilitate the assignment by
Lender of its right, title and interest in and to the Collateral and this Note
and Security Agreement.

14. Guarantors. Lender has required the participation of the
Guarantors as a precondition to making the loan evidenced by this Note and
Security Agreement. The Guarantors by their execution of this Note and
Security Agreement acknowledge that the obligations of Debtor to Lender are
enforceable in accordance with their terms, that such obligations of Debtor to
Lender constitute guaranteed obligations of the Guarantors under the personal
guarantees executed by, the Guarantors this same date and that the guarantees
are in full force and effect, without amendment or defense of any description.

Murdock Communications Corporation

By:____________________________________

Title:_________________________________

Berthel Fisher & Company Leasing, Inc.

By:____________________________________

Title:_________________________________

Page 31 of 31 Pages