Document:

exv10w11

 

Exhibit 10.11

$5,630,000

City of Chaska, Minnesota

Variable Rate Demand Purchase Revenue Bonds

(Lifecore Biomedical, Inc. Project),

Series 2004

TAX EXEMPTION AGREEMENT

Dated as of August 1, 2004

By and Between

CITY OF CHASKA, MINNESOTA

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Trustee

and

LIFECORE BIOMEDICAL, INC.

This instrument drafted by:

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, MN 55401-1498

 

 

TAX EXEMPTION AGREEMENT

     The undersigned are, respectively, duly qualified and acting officers of
the City of Chaska, Minnesota (the “Issuer”), Lifecore Biomedical, Inc. (the
“Borrower”), and Wells Fargo Bank, National Association, as trustee ( the
“Trustee”). The City Administrator of the Issuer is charged, with others, with
the responsibility for delivering the $5,630,000 City of Chaska, Minnesota
Variable Rate Demand Purchase Revenue Bonds (Lifecore Biomedical, Inc.
Project), Series 2004 (the “Bonds”) on August 19, 2004 (the “Closing Date”).
The Bonds were authorized pursuant to the Issuer’s resolution adopted July 19,
2004. The Bonds are being issued pursuant to an Indenture of Trust dated as of
August 1, 2004 (the “Indenture”) between the Issuer and the Trustee. The Bonds
were sold pursuant to a Bond Purchase Agreement (the “Purchase Agreement”)
dated August 19, 2004, by and between the Issuer, the Borrower, and Northland
Securities, Inc. (the “Underwriter”). Pursuant to Section 1.150(f)(1)(i) of
the Regulations, the Bonds are deemed to have been sold on the Closing Date.
Certain terms are defined in Article VII hereof. Terms used herein and not
defined herein shall have the meanings given to them in the Indenture.

     One purpose of executing this Agreement is to set forth various facts
regarding the Bonds and to establish the expectations of the Issuer, the
Borrower, and the Trustee as to future events regarding the Bonds and the use
of Bond proceeds. To the extent such facts do not relate directly to the
Issuer or the Trustee, the Issuer and the Trustee are relying upon the
certifications of the Borrower and other parties, which is deemed by the
undersigned to be reasonable and prudent. The certifications and
representations made herein and the expectations presented herein are intended,
and may be relied upon, as a certification of an officer of the Issuer given in
good faith as described in Section 1.148-2(b)(2) of the Regulations.

     The certifications, covenants and agreements contained herein are made on
behalf of the Issuer, the Borrower, and the Trustee for the benefit of the
owners from time to time of the Bonds. We do hereby certify, covenant and
agree on behalf of the Issuer, the Borrower, and the Trustee, respectively, the
following:

 

 

ARTICLE I

DESCRIPTION OF THE PURPOSE OF THE BONDS

     Section 1.1 Purpose of the Bonds. The Bonds are being issued to provide
refinancing for an existing manufacturing facility of the Borrower located in
the City (the “Project”), through the refunding in full of the outstanding
Industrial Development Revenue Bonds (Lifecore Biomedical, Inc. Project),
Series 1990, issued by the Issuer in the original aggregate principal amount of
$7,000,000 (the Refunded Bonds”). A breakdown of sources and uses of funds
appears in Section 2.1 hereof.

     The proceeds from the sale of the Bonds will be loaned by the Issuer to
the Borrower pursuant to a Loan Agreement dated as of August 1, 2004 (the “Loan
Agreement”) between the Issuer and the Borrower. The proceeds of the Bonds
will be deposited with the Trustee into the Project Fund and applied to the
refunding of the Refunded Bonds, provided, however, that any proceeds
representing accrued interest on the Bonds shall be deposited in the Bond Fund.

     In connection with the issuance of the Bonds, M&I Marshall Ilsley Bank
(the “Bank”) has issued its Irrevocable Letter of Credit (the “Letter of
Credit”) pursuant to a Reimbursement Agreement dated as of August 1, 2004 (the
“Reimbursement Agreement”) between the Bank and the Borrower to support payment
of the principal of and interest on the Bonds and to pay the purchase price of
Bonds tendered for purchase (sometimes referred to as “Tendered Bonds”), in
accordance with the Indenture.

     Section 1.2 Redemption in Whole of Refunded Bonds. The Borrower has
caused the Refunded Bonds to be called for redemption in whole on September 1,
2004 (the “Call Date”), in accordance with the provisions of the Prior
Indenture. The Call Date will be less than 90 days from the date of issuance
of the Bonds. The original principal amount of the Series 2004 Bonds is in an
amount not greater than the current outstanding principal amount of the
Refunded Bonds. The principal amount of the Series 2004 Bonds is not larger
than the amount necessary to cause the Refunded Bonds to be redeemed in whole,
in accordance with the provisions of the Prior Indenture and in accordance with
the provisions hereof. The entire gross proceeds of the Series 2004 Bonds
($5,630,000) are to be expended solely for the payment and discharge on the
Call Date of the outstanding principal amount of the Refunded Bonds. The
weighted average maturity of the Series 2004 Bonds does not exceed the
remaining weighted average maturity of the Refunded Bonds.

     Section 1.3 Reimbursement. Except for certain preliminary expenditures evidenced by the files and
records of the Borrower (the “Preliminary Expenditures”), none of the proceeds
of the Refunded Bonds were used and none of the proceeds of the Bonds will be
used to reimburse the Borrower for an expenditure paid prior to the date which
is 60 days prior to the date on which the Issuer adopted a reimbursement
resolution with respect to the Project. Any such reimbursement that is
allocated to proceeds of the Bonds is referred to herein as a “Reimbursement
Allocation.” With respect to the Preliminary Expenditures, the Borrower
represents and covenants as follows:

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     (a) All Preliminary Expenditures relate to architectural,
engineering, surveying, soil testing, bond issuance and similar costs
that were incurred prior to commencement of construction, or acquisition
of the Project and do not include any costs related to land acquisition,
site preparation and similar costs incident to commencement of
construction.

     (b) All Preliminary Expenditures represent (i) costs of a type that
would be properly chargeable to a capital account under the Code (or
would be so chargeable with a proper election) under federal income tax
principles if the Borrower were treated as a corporation subject to
Federal income taxation or (ii) a cost of issuing the Bonds.

     (c) Funds corresponding to Gross Proceeds used to reimburse a
Preliminary Expenditure will not be used within one year after making any
Reimbursement Allocation in a manner that results in the creation of
Replacement Proceeds of the Bonds or any other issue. The preceding
sentence does not apply to amounts deposited in a bona fide Bond Fund.

     (d) No Reimbursement Allocation will employ any action that (A)(i)
enables the Borrower to exploit the difference between tax-exempt and
taxable interest rates to obtain a material financial advantage and (ii)
overburdens the tax-exempt bond market to avoid arbitrage restrictions or
(B) avoids the restrictions under Sections 142 through 147 of the Code.

     Section 1.4 Working Capital. (a) All of the proceeds of the Bonds, plus
investment earnings, will be used, directly or indirectly, to pay principal or
interest on the Bonds or to refinance costs of a type that were and are
properly chargeable to a capital account (or would be so chargeable with a
proper election) under general federal income tax principles in effect at the
time the cost was paid, other than the following:

     (i) an amount not to exceed five percent of the Sale Proceeds
of the Bonds for working capital expenditures directly related to
capital expenditures financed by the Refunded Bonds;

     (ii) payments of interest on the Bonds for a period commencing
on the date of issuance of the Bonds and ending on the later of the
date three years after such date or one year after the date on
which the Project is placed in service;

     (iii) costs of issuing the Bonds and qualified administrative
costs of investments within the meaning of Sections
1.148-5(e)(2)(i), 1.148-5(e)(2)(ii) or 1.148-5(e)(3) of the
Regulations;

     (iv) payments of rebate or yield reduction payments made to
the United States under the Regulations;

     (v) principal of or interest on an issue paid from unexpected
excess sale or investment proceeds; and

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     (vi) principal of or interest on an issue paid from investment
earnings on a reserve or replacement fund that are deposited in a
bona fide debt service fund.

     (b) No Gross Proceeds may be spent for non-capital purposes pursuant
to this Section if the expenditure merely substitutes Gross Proceeds for
other amounts that would have been used to make such expenditures in a
manner that gives rise to Replacement Proceeds.

     Section 1.5 Consequences of Contrary Expenditure. The Borrower
acknowledges that if Gross Proceeds of the Bonds are spent for non-capital
purposes other than as permitted by Section 1.4 hereof, a like amount of
then-available funds of the Borrower will be treated as unspent Gross Proceeds,
which, among other things, may be subject to the yield restrictions described
in Section 5.2 hereof and rebate described in Article III hereof.

     Section 1.6 Abusive Transactions. Neither the Issuer, the Borrower nor
any member of the same Controlled Group of either of the foregoing has employed
a device or entered into any arrangements or understandings in connection with
the issuance of the Bonds, or the acquisition or construction of the Project,
or in connection with any transaction or series of transactions related to the
issuance of the Bonds, or the acquisition or construction of the Project, to
obtain a material financial advantage based on arbitrage. Neither the Issuer,
the Borrower nor any member of the same Controlled Group of either of the
foregoing will realize any material financial advantage based on arbitrage in
connection with the issuance of the Bonds or in connection with any transaction
or series of transactions related to the issuance of the Bonds or the
acquisition or construction of the Project. In particular, neither the Issuer,
the Borrower nor any member of the same Controlled Group as either of the
foregoing has or will receive a rebate or credit resulting from any payments
having been made in connection with the issuance of the Bonds or the
acquisition or construction of the Project.

     Section 1.7 Hedges; Bonds Not Hedge Bonds. The Bonds will not be hedge
bonds as defined in Section 149(g) of the Code since the Issuer and the
Borrower reasonably expect that at least 85% of the spendable proceeds of the
Bonds will be used to carry out the governmental purposes of the issue within a
three year period
beginning on the Delivery Date and not more than 50% of the proceeds of
the Bonds are or will be invested on investments (other than Tax Exempt
Obligations) having a yield that is substantially guaranteed for four years or
more.

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ARTICLE II

USE OF PROCEEDS; DESCRIPTION OF FUNDS

     Section 2.1 Use of Proceeds; Funds Established.

     (a) The Sources and Uses of Funds anticipated in connection with the
issuance of the Bonds are, as follows:

	 	 	 	 	 	 	 	 	 
	Sources of Funds
	 	 	 	 	 	 	 	 
	Proceeds of Bonds
	 	 	 	 	 	$	5,630,000	 
	Existing Reserves and other
Fund Balances held by Prior Trustee
	 	 	1,105,350	 
	 
	 	 	 	 	 	 	
 	 
	Total
	 	 	 	 	 	$	6,735,350	 
	Uses of Funds
	 	 	 	 	 	 	 	 
	Redemption Price for Refunded Bonds
	 	 	 	 
	Outstanding Principal
	 	$	6,105,000	 	 	 	 	 
	Premium
	 	 	119,200	 	 	 	 	 
	Accrued Interest
	 	 	312,881	 	 	 	 	 
	Total
	 	 	 	 	 	$	6,537,081	 
	Letter of Credit Fees
	 	 	 	 	 	 	90,210	 
	Issuance Expenses (including
underwriting commissions, legal
fees, trustee fees, printing
expenses, etc.)
	 	 	108,059	 
	 
	 	 	 	 	 	 	
 	 
	Total
	 	 	 	 	 	$	6,735,350	 

     (b) The Bonds have been sold by the Underwriter pursuant to the
Purchase Agreement. In accordance with the Purchase Agreement, the Bonds
are being issued on the Closing Date by delivery of the Bonds to the
Underwriter for a purchase price calculated as follows:

	 	 	 	 	 
	Principal
	 	$	5,630,000	 
	Plus: Accrued Interest
	 	 	0	 
	Less: Underwriter’s Discount
	 	 	56,300	 
	 
	 	 	
 	 
	Total purchase price
	 	$	5,573,700	 

     The Indenture creates the following funds and accounts: the Project Fund,
the Bond Fund and the Rebate Fund (sometimes collectively referred to herein as
the “Funds”).

     (c) On the Closing Date the total purchase price of the Bonds, as
shown in (a) above ($5,573,700) will be deposited in the Project Fund.

     (d) All income derived from the investment of moneys on deposit in
any of the Funds created under the Indenture shall be credited to such
Fund. The Borrower anticipates that there will be no investment earnings
with respect to the Project Fund because forthwith upon the issuance of
the Bonds and the deposit of the proceeds thereof

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into the Project Fund
all moneys in the Project Fund will be transferred to the Prior Trustee
for application to the redemption in whole of the Refunded Bonds, in
accordance with the provisions of the Prior Indenture.

     (e) Costs of issuance incurred in connection with the issuance of
the Bonds (other than costs of issuance in an amount not to exceed 2.00%
of the proceeds of the Bonds) will be paid by the Borrower from sources
other than proceeds of the Bonds or moneys held by the Prior Trustee
under the provisions of the Prior Indenture for payment of the Refunded
Bonds.

     (f) Payments received by the Trustee from draws on the Letter of
Credit to pay the principal of and premium, if any, and interest on the
Bonds will be deposited in the Bond Fund created under the Indenture.
Moneys on deposit in the Bond Fund will be used to pay interest and
principal on the Bonds.

     (g) Interest on the Bonds and principal due at maturity will be paid
from the Bond Fund established under the Indenture. The redemption price
of the Bonds will also be paid from the Bond Fund.

     (h) Moneys received from draws under the Letter of Credit to pay the
Purchase Price of Tendered Bonds shall be deposited into the Bond Fund on
the date that payment of the Purchase Price is due and moneys received
from the sale, remarketing or placement of Tendered Bonds shall be paid
to the Bank to reimburse amounts drawn under the Letter of Credit to pay
the Purchase Price of the Bonds.

     Section 2.2 Purpose of the Bond Fund. The Bond Fund will be used
primarily to achieve a proper matching of revenues and earnings with principal
and interest in each bond year. It is expected that the Bond Fund will be
depleted at least once a year, except for a reasonable carry over amount not to
exceed the greater of (i) one year’s earnings, in the aggregate, on the
investment of moneys in the Bond Fund for the immediately preceding bond year
or (ii) in the aggregate, one-twelfth (1/12th) of the principal and interest
payments on the Bonds for the immediately preceding bond year.

     Section 2.3 Purpose of the Project Fund. At closing, proceeds of the
Bonds in the amount of $5,573,700 will be credited to the Project Fund. Moneys
deposited in the Project Fund are to be transferred forthwith upon such deposit
to the Prior Trustee for application to the redemption in whole of the Refunded
Bonds on the Call Date.

     Section 2.4 No Replacement, Sinking or Pledged Funds.

     (a) Except as otherwise provided in Sections 2.1 and 2.2 hereof,
after the issuance of the Bonds on this date, neither the Issuer, the
Borrower, nor any member of the same Controlled Group of which the Issuer
or the Borrower is a member has on hand any property, including cash and
securities, that has a sufficiently direct nexus to the purposes financed
with the Bonds to support the conclusion that the amounts derived from
such property would have been used for such purposes if the Bonds had not
been issued.

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     (b) Except as otherwise provided in Sections 2.1 and 2.2 hereof,
neither the Issuer, the Borrower, nor any member of the same Controlled
Group of which the Issuer or the Borrower is a member has established or
expects to establish any funds or accounts in which any Replacement
Proceeds will be deposited.

     (c) Except as otherwise provided in Sections 2.1 and 2.2 hereof, no
property has been or is expected to be pledged or otherwise restricted
(no matter where held or the source thereof) to provide reasonable
assurance, in the event the Issuer, the Borrower, or any member of the
same Controlled Group of which the Issuer or the Borrower is a member
encounters financial difficulty, of its availability to be used, directly
or indirectly, for the payment of amounts due or to become due on the
Bonds or the Loan Agreement. No compensating balance, negative pledge or
similar arrangement exists with respect to, in any way, the Bonds, or the
Loan Agreement.

     (d) No portion of the Bonds is being issued solely for the purpose
of investing the proceeds thereof at a yield higher than the Yield on the
Bonds.

     (e) The term of the Bonds is not longer than is reasonably necessary
for the governmental purposes of the Bonds. The weighted average
maturity of the Bonds as determined by the Underwriter is 9.181 years.
The proceeds of the Bonds will be applied to pay the costs of refunding
the Refunded Bonds, as shown on Exhibit A hereto. The reasonably
expected remaining economic life of the portions of the Project financed
with proceeds of the Refunded Bonds is 26.75 years. The weighted average
maturity of the Bonds does not exceed 120% of the average reasonably
expected economic life of the property refinanced with the proceeds of
the Bonds.

     Section 2.5 No Grants. No proceeds of the Bonds are being used to make
grants to any person.

     Section 2.6 Letter of Credit.

     (a) The Letter of Credit is essential in marketing the Bonds at the
Variable Rate, including the initial Variable Rate specified in the
Indenture, (ii) the absence of the Letter of Credit would materially
affect in an adverse manner the Variable Rates at which the Bonds have or
will be sold (either initially or by remarketing), and (iii) the present
value of the fees for the Letter of Credit paid to the Bank is less than
the present value of
the interest reasonably expected to be saved as a result of using
the Letter of Credit to secure the Bonds, using as a discount rate the
expected yield on the Bonds.

     (b) Neither the Issuer nor the Borrower, nor any member of the same
Controlled Group as the Issuer or the Borrower is a Related Person as
defined in Section 144(a)(3) of the Code to the Bank. Other than the
fees paid to the Bank, neither the Bank, nor any person who is a Related
Person to the Bank within the meaning of Section 144(a)(3) of the Code
will use any Gross Proceeds.

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ARTICLE III

REBATE FUND; ARBITRAGE REQUIREMENT

     Section 3.1 Rebate Fund. The Rebate Fund created in the Indenture shall
be continuously held, invested, expended and accounted for in accordance with
this Agreement; provided, however, that the Rebate Fund need not be maintained
if the Issuer, the Trustee, and the Borrower shall have received an opinion of
Bond Counsel acceptable to the Trustee to the effect that failure to maintain
the Rebate Fund shall not cause the Bonds to become arbitrage bonds within the
meaning of Section 148 of the Code or otherwise adversely affect the exclusion
from gross income of interest on the Bonds for federal income tax purposes.
Moneys in the Rebate Fund shall not constitute a part of the “trust estate”
held for the benefit of the Bondholders, or, except as provided in Section 9.2
hereof, for the benefit of the Issuer, or the Borrower. Except as provided in
the Regulations, moneys in the Rebate Fund (including earnings and deposits
therein) shall be held in trust by the Trustee for future payment to the United
States government as required by the Regulations and as contemplated under the
provisions of this Agreement.

     Section 3.2 Issuer’s and Borrower’s Covenants; Records. The Issuer and
the Borrower covenant and agree to take such actions and the Borrower covenants
and agrees to make, or cause to be made, all calculations, transfers and
payments that may be necessary to comply with the rebate requirements contained
in Section 148(f) of the Code with respect to the Bonds. The Borrower will
make, or cause to be made, rebate payments in accordance with law with respect
to the Bonds. Bond Counsel has provided a letter attached hereto as Exhibit C
concerning the principles set forth in certain Regulations regarding rebate.
The Borrower agrees that the Computation Dates for the Bonds will be the day
immediately preceding the anniversary date of the Dated Date each year
beginning in the year 2005, and, if all of the Bonds are paid in full prior to
such dates, the date of such payment.

     The Trustee and the Borrower agree to keep and retain or cause to be kept
and retained, until the date six years after the final payment with respect to
the Bonds, adequate records with respect to the investment of all Gross
Proceeds and amounts in the Rebate Fund, if any. Such records shall include
(i) purchase price; (ii) purchase date; (iii) type of investment; (iv) accrued
interest paid; (v) interest rate (if applicable); (vi) principal amount; (vii)
maturity date; (viii) interest payment date (if applicable); (ix) date of
liquidation; (x) amounts received upon liquidation. If any investment becomes
Gross Proceeds of the Bonds on a date other than the date such investment is
purchased, the records required to be kept shall include the fair market value
of such investment on the date it becomes Gross Proceeds. If any investment is
retained after the date the last Bond is retired, the records required to be
kept shall include the fair market value of such investment on the date the
last Bond is retired. Amounts will be segregated wherever held in order to
maintain these records.

     Section 3.3 Fair Market Value.

     (a) In General. Whenever the Borrower shall purchase or sell, or
cause any party to purchase or sell, any Nonpurpose Investment, such
purchase or sale shall be made only at the fair market value of such
Nonpurpose Investment. Except as described below, the fair market value
of a Nonpurpose Investment is the price determined by

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reference to an
established securities market for the Investment, as of the date on which
a contract to purchase or sell the Investment becomes binding, at which a
willing buyer would purchase the investment from a willing seller in a
bona fide, arm’s length transaction. The price shall not be adjusted to
take into account “administrative costs” of the investment (within the
meaning of Section 1.148-5(e)(1) of the Regulations) except as permitted
by Section 1.148-5(e)(2) of the Regulations. The fair market value of a
United States Treasury obligation purchased directly from the United
States Treasury is its purchase price.

     (b) Guaranteed Investment Contracts. In the case of a Nonpurpose
Investment that has specifically negotiated withdrawal or reinvestment
provisions and a specifically negotiated interest rate, including an
agreement to supply investments on two or more future dates, the fair
market value is its purchase price if the following conditions are
satisfied:

     (1) The Borrower or its agent makes a bona fide solicitation
for the purchase of the Investment that satisfies all of the
following requirements:

     (a) The bid specifications were in writing and were
timely forwarded to potential providers.

     (b) The bid specifications included all material terms
of the bid. A term is material if it may directly or
indirectly affect the yield or the cost of the Investment.

     (c) The bid specifications included a statement
notifying potential providers that submission of a bid is a
representation that the potential provider did not consult
with any other potential provider about its bid, that the bid
was determined without regard to any other formal or informal
agreement that the potential provider has with the Issuer or
any other person (whether or not in connection with the
Bonds), and that the bid is not being submitted solely as a
courtesy to the Borrower or any other person for purposes of
satisfying the requirements of paragraph (2) below.

     (d) The terms of the bid specifications are commercially
reasonable. A term is commercially reasonable if there is a
legitimate business purpose for the term other than to
increase the purchase price or reduce the yield of the
Investment.

     (e) The terms of the solicitation take into account the
Borrower’s reasonably expected deposit and drawdown schedule
for the amounts to be invested.

     (f) All potential providers had an equal opportunity to
bid. For example, no potential provider was given the
opportunity to review other bids (i.e., a last look) before
providing a bid.

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     (g) At least three reasonably competitive providers were
solicited for bids. A reasonably competitive provider is a
provider that has an established industry reputation as a
competitive provider of the type of investments being
purchased.

     (2) The bids received must meet all of the following
requirements:

     (a) Bids are received from at least three providers that
were solicited under a bona fide solicitation meeting the
requirements of paragraph (1) above and that do not have a
material financial interest in the Bonds. The Underwriter is
deemed to have a material financial interest in the Bonds
until 15 days after the date hereof. In addition, any entity
acting as a financial advisor with respect to the purchase of
the Investment at the time the bid specifications are
forwarded to potential providers has a material financial
interest in the Bonds. A provider that is a related party to
a provider that has a material financial interest in the
Bonds is deemed to have a material financial interest in the
Bonds.

     (b) At least one of the three bids described in the
preceding paragraph is from a reasonably competitive
provider, within the meaning of paragraph (1)(g) above.

     (c) The agent soliciting the bids does not bid to
provide the Investment.

     (3) The winning bid is the highest yielding bona fide bid
(determined net of any broker’s fees).

     (4) The amount paid to the agent soliciting the bids does not
exceed the amount authorized by the applicable Regulations.

     (c) Certificates of Deposit. In the case of a certificate of
deposit that has a fixed interest rate, a fixed payment schedule and a
substantial penalty for early withdrawal, the fair market value of the
certificate is its purchase price if the yield on the certificate is not
less than (i) the yield on reasonably comparable direct obligations of
the United States, and (ii) the highest yield that is published or posted
by the provider to be currently available from the provider on reasonably
comparable certificates of deposit offered to the public.

     (d) Commingled Funds. Gross Proceeds of the Bonds may be invested
in a Commingled Fund only if the Commingled Fund complies with the
special accounting rules set forth at Section 1.148-6(e) of the
Regulations. Generally, this requires that, not less frequently than as
of the close of each fiscal period, all payments and receipts (including
deemed payments and receipts) on investments held by a Commingled Fund
must be allocated (but not necessarily distributed) among the
different investors in the fund in accordance with a consistently
applied, reasonable ratable allocation method. For this purpose, the
term “investor” means each different source of funds invested in a
Commingled Fund, and the term “fiscal period” means any consistent fiscal
period that does not exceed 3 months.

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ARTICLE IV

ADDITIONAL PAYMENTS

     In addition to the amounts provided in this Agreement, the Borrower hereby
agrees to pay to the Trustee for deposit into the Rebate Fund for payment to
the United States any amount which under the Regulations must be deposited in
the Rebate Fund for payment to the United States with respect to the Bonds, but
which is not available under the Indenture for transfer to the Rebate Fund for
payment to the United States.

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ARTICLE V

YIELD AND YIELD LIMITATIONS

     Section 5.1 Issue Price. The Underwriter has certified that at the time
it agreed to market the Bonds, based upon its assessment of the then prevailing
market conditions, it reasonably expected that all Bonds would be sold on the
date hereof to the public (excluding bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters or wholesalers) at par.

     Section 5.2 Yield Limits and Election.

     (a) All Gross Proceeds and all amounts in the Rebate Fund, to the
extent not exempted in (b) below, shall be invested at market prices and
at a yield (after taking into account any yield reduction payments to the
extent permitted by and made pursuant to Section 1.148-5(c) of the
Regulations) not in excess of the yield on the Bonds, plus, for amounts
in the Project Fund only, 1/8 of 1%.

     (b) The following may be invested without yield restriction:

     (i) amounts invested in Tax-Exempt Obligations (to the extent
permitted by the Indenture);

     (ii) amounts in the Rebate Fund;

     (iii) amounts deposited in the Bond Fund that have not been on
deposit under the Indenture for more than 13 months, so long as
such funds continue to qualify as bona fide debt service funds as
described in Section 2.2 hereof;

     (iv) [Intentionally Omitted]

     (v) [Intentionally Omitted]

     (vi) all amounts for the first 30 days after they become Gross
Proceeds;

     (vii) all amounts derived from the investment of proceeds for
a period of one year from the date received; and

     (viii) an amount not to exceed $100,000 (a “Minor Portion”).

     Section 5.3 Fees of the Bank. Based on the certifications of the
Underwriter and the Bank, which the Borrower and the Issuer have no reason to
believe are untrue, and the representations contained in this Agreement the
fees of the Bank for the Letter of Credit will be treated as interest on the
Bonds for purposes of calculating Bond Yield. Neither the Borrower, the Issuer
nor any member of the
same Controlled Group of the Borrower or the Issuer is a related person to
the Bank within the meaning of Section 144(a)(3) of the Code. Other than the
fees paid to the Bank, neither the Bank, nor any person who is a Related Person
to the Bank within the meaning of Section 144(a)(3) of the Code will use any
proceeds received from the sale of the Bonds or investment earnings thereon.

-12-

 

     Section 5.4 Continuing Nature of Yield Limits. Subject to Section 9.5,
once moneys are subject to the yield limits of Section 5.2, they remain yield
restricted until they cease to be Gross Proceeds.

     Section 5.5 Debt Service on the Loan Agreement. Payments of debt service
on the Loan Agreement, exactly equal debt service payments on the Bonds. No
fees will be payable to the Issuer in connection with the issuance of the Bonds
in an amount in excess of one-eighth of one per cent per annum. Expenses
incurred by the Issuer in connection with the issuance of the Bonds will be
reimbursed by the Borrower. The earnings and profits of any temporary
investment of amounts held under the Indenture will accrue to the Borrower and
not to the Issuer. It is not expected that payments will be made sooner than
necessary under the Loan Agreement, provided that the Borrower may make early
payments to effect the redemption of the Bonds.

     Section 5.6 Other Payments Relating to the Bonds. The Issuer will require
the Borrower to reimburse it for a portion or all of its costs relating to the
issuance of the Bonds.

     Except for (a) costs of issuance relating to the Bonds, (b) fees and
expenses of the Trustee, as set forth in the Indenture, and (c) the fees of the
Issuer as set forth above, no consideration, in cash or in kind, is being or
will be paid by any person to any person in connection with or relating to
issuing, carrying or redeeming the Bonds or issuing, carrying or repaying the
amounts owing under the Loan Agreement.

     Section 5.7 Calculation of Bond Yield. The Bonds are a “variable yield
issue”, as defined in Section 1.148-1(b) of the Regulations. Accordingly, Bond
Yield will be computed separately for each computation period. As provided in
Section 1.148-4(c) of the Regulations, the Bond Yield for each computation
period will be the discount rate that, when used in computing the present
value, as of the first day of the computation period, of all the payments of
principal and interest and fees for qualified guarantees that are attributable
to the computation period, produces an amount equal to the present value, using
the same discount rate, of the aggregate issue price of the Bonds as of the
first day of the computation period. Such payments will include principal and
interest to be paid on the Bonds and fees paid to the Bank for the Letter of
Credit, as a qualified guarantee. As required in Section 1.148-4(f) of the
Regulations and based in part on the Underwriter’s Certificate, it is
determined that, computed over the term of the Letter of Credit, the present
value of the savings resulting from the Letter of Credit (i.e., the present
value of the difference between the interest payable on the Bonds and the
interest which would be payable on the Bonds
if the Letter of Credit had not been obtained, utilizing a discount rate
equal to the yield on the Bonds and taking into account the fees for the Letter
of Credit) is greater than the present value of the aggregate fees paid to the
Bank. Further, as evidenced by the Closing Certificate of the Bank, (i) the
Letter of Credit unconditionally shifts the ultimate credit risk for the Bonds
to the Bank (ii) the fees and charges to be paid to the Bank for the Letter of
Credit do not exceed a reasonable charge for the transfer of credit risk and
are comparable to fees and charges charged by other guarantors in comparable
transactions; and (iii) the fees and charges to be paid to the Bank for the
Letter of Credit do not include any direct or indirect payment for a cost, risk
or other element that is not customarily borne by guarantors of tax-exempt
obligations.

-13-

 

     In the event that the Bonds are converted to a Fixed Rate, on the
Conversion Date, the Bonds will be treated (for purposes of computing the Bond
Yield) as having been retired on that date and reissued as a “fixed yield
issue.” Following the Conversion Date the Bond Yield on the Bonds will be
calculated, as provided in Section 1.148-4(b) of the Treasury Regulations, as
that discount rate which when used in computing the present value as of the
Conversion Date of all unconditionally payable payments of principal, interest,
and fees paid or reasonably expected to be paid for qualified guarantees on the
Bonds, produces an amount which is equal to the present value, using the same
discount rate, of the aggregate issue price thereof.

     Section 5.8 Yield Reduction Payments. The Bonds qualify for the special
yield reduction rule of Section 1.148-5(c) of the Regulations prior to the
Conversion Date because the Bonds are a variable yield issue. The Issuer may
determine to make yield reduction payments to the United States under Section
1.148-5(c) of the Regulations with respect to Nonpurpose Investments held in
the Project Fund, and such payments may be taken into account as a payment for
that Nonpurpose Investment which reduces the yield thereon. Payments of Rebate
under Section 3.2 hereof may be taken into account as yield reduction payments
to the extent permitted by Section 1.148-5(c) of the Regulations.

-14-

 

ARTICLE VI

BORROWER PROJECT AND TAX COVENANTS

     Section 6.1 Use of Proceeds.

     (a) Substantially all (that is, not less than 95%) of the proceeds
of the Refunded Bonds were used for the acquisition, construction,
reconstruction or improvement of land or property of a character subject
to the allowance for depreciation under the Internal Revenue Code.

     (b) Not less than 95% of the proceeds of the Refunded Bonds were
used to provide a facility which is used in the manufacturing or
production of tangible personal property (including the processing
resulting in a change in the condition of the property). An office shall
not be described in the preceding sentence unless (a) the office is
located on the premises of the manufacturing facility, and (b) not more
than a de minimis amount of the functions to be performed at such office
is not directly related to the day-to-day operations at such facility.
For purposes of the first sentence of this paragraph, the term
“manufacturing facility” includes facilities which are directly related
and ancillary to a manufacturing facility (determined without regard to
this sentence) if (i) such facilities are located on the same site as the
manufacturing facility, and (ii) not more than 25 percent of the net
proceeds of the Bonds are used to provide such facilities.

     (c) The aggregate of (i) capital expenditures with respect to
facilities in or attributable to the City which are or were used by the
Borrower, or any other principal user of the Project Facilities or by any
person related to the Borrower or such other principal user paid or
incurred within a period of 36 months prior to the date of issuance of
the Refunded Bonds, whether allocable or attributable to the Project
Facilities or any other facility within or attributable to the City, plus
(ii) the original aggregate principal amount of the Refunded Bonds,
together with the then outstanding principal amounts of any “prior
issues,” plus (iii) the capital expenditures made with respect to
facilities in or attributable to the City by the Borrower or such other
principal user of the Project Facilities or by any person related to the
Borrower or such other principal user within a period of 36 months after
the date of issuance of the Refunded Bonds, whether allocable or
attributable to the Project Facilities or any other facility within or
attributable to the City, all as such terms are used in Section 144(a) of
the Internal Revenue Code of 1986, and regulations thereunder, did not
exceed $10,000,000.

     (d) The Borrower did not use any portion of the proceeds of the
Refunded Bonds and shall not use any portion of the proceeds of the Bonds
to provide any private or commercial golf course facility, country club,
massage parlor, tennis club, skating facility (including roller skating,
skateboard or ice skating), racquet sports facility (including any
handball or racquetball court), hot tub facility, suntan facility,
racetrack, airplane, skybox, or other private luxury box, any facility
primarily used for gambling, or any store the principal business of which
is the sale of alcoholic beverages for
consumption off premises, and the Borrower does not expect that the
Project Facilities, or any part thereof, will be used for any of such
purposes.

-15-

 

     (e) The Borrower used less than 25 percent of the proceeds of the
Refunded Bonds either directly or indirectly to finance the acquisition
of land (or any interest therein), and used not more than 25 percent of
the proceeds of the Refunded Bonds and of the Refunded Bonds to provide a
facility the primary purpose of which is retail food or beverage service,
automobile sales or service, or the provision of recreation or
entertainment, and the Borrower does not expect that the Project
Facilities, or any portion thereof, shall subsequently be used primarily
for any of such purposes.

     (f) None of the proceeds of the Refunded Bonds were used for the
acquisition of any existing building or other used property, unless at
least 15 percent (or in the case of a structure other than a building 100
percent) of the cost of acquisition of such existing property financed by
proceeds of the Refunded Bonds was spent for rehabilitation expenditures,
within the meaning of Section 147(d) of the Internal Revenue Code, within
two years of the date of acquisition or, if later, the date of issuance
of the Refunded Bonds.

     (g) The aggregate outstanding amount of tax-exempt facility-related
bonds allocated to the Borrower (including related persons) or any other
principal user of the Project Facilities (including related persons) when
added to the aggregate amount of the Series 2004 Bonds allocated to the
Borrower (including related persons) or such other principal user
(including related persons), all as such terms are defined in Section
144(a) of the Internal Revenue Code of 1986 (or the applicable
predecessor Section of the Internal Revenue Code of 1954, as amended
prior to the enactment of the Tax Reform Act of 1986), does not exceed
$40,000,000.

     (h) The Borrower is not a principal user, nor related to any
principal user, of any facilities other than the Project Facilities
within the City which were acquired in whole or in part, directly or
indirectly, by the issuance of tax-exempt bonds which are outstanding on
the date hereof, within the meaning of Section 144 of the Internal
Revenue Code of 1986 and regulations thereunder. No tax-exempt bonds
issued with respect to the Project Facilities are outstanding as of the
date hereof except for the Refunded Bonds.

     (i) The weighted average maturity of the Series 2004 Bonds does not
exceed 120% of the average weighted economic life of the Project
Facilities.

     (j) The weighted average maturity of the Series 2004 Bonds does not
exceed the remaining weighted average maturity of the Refunded Bonds.

     (k) The original principal amount of the Series 2004 Bonds is in an
amount not greater than the current outstanding principal amount of the
Refunded Bonds. The principal amount of the Series 2004 Bonds is not
larger than the amount necessary to cause the Refunded Bonds to be
redeemed in whole, in accordance with the provisions of the Prior
Indenture and in accordance with the provisions hereof. The entire gross
proceeds of the Series 2004 Bonds ($5,630,000) are to be expended
solely for the payment and discharge on the Call Date of the outstanding
principal amount of the Refunded Bonds. The Refunded Bonds will be
redeemed in whole within 90 or fewer days from the date of issuance of
the Series 2004 Bonds.

-16-

 

     Section 6.2 MACRS Information. The cost of Modified Accelerated Cost
Recovery System (“MACRS”) (within the meaning of Section 168 of the Code)
assets comprising the Project and the cost of land and other property, all of
which have been or will be financed or refinanced with the proceeds of the
Bonds is as follows:

     (a) Buildings

     (b) Site Improvements

     (c) Fixtures

     (d) Equipment and Furnishings

     (e) Land

     Section 6.3 The cost of the aforementioned assets will be recovered using
the straight line method over the applicable recovery periods, or pursuant to
such other method as may be required by the Code.

-17-

 

ARTICLE VII

DEFINITIONS

     “Agreement” means this Tax Exemption Agreement.

     “Bond Counsel” means Dorsey & Whitney LLP, or any other nationally
recognized firm of attorneys experienced in the field of municipal bonds whose
opinions are generally accepted by purchasers of municipal bonds.

     “Closing” or “Closing Date” means August 19, 2004.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Commingled Fund” means any fund or account containing both Gross Proceeds
and an amount in excess of $25,000 that are not Gross Proceeds if the amounts
in the fund or account are invested and accounted for, collectively, without
regard to the source of funds deposited in the fund or account. An open-ended
regulated investment company under Section 851 of the Code is not a Commingled
Fund.

     “Control” means the possession, directly or indirectly through others, of
either of the following discretionary and non-ministerial rights or powers over
another entity:

     (a) to approve and to remove without cause a controlling portion of
the governing body of a Controlled Entity; or

     (b) to require the use of funds or assets of a Controlled Entity for
any purpose.

     “Controlled Entity” means any entity or one of a group of entities that is
subject to Control by a Controlling Entity or group of Controlling Entities.

     “Controlled Group” means a group of entities directly or indirectly
subject to Control by the same entity or group of entities, including the
entity that has the Control of the other entities.

     “Controlling Entity” means any entity or one of a group of entities
directly or indirectly having Control of any entities or group of entities.

     “Dated Date” means August 1, 2004

     “External Commingled Fund” means a Commingled Fund in which the Issuer,
the Borrower, and all members of the same Controlled Group as the Issuer or the
Borrower own, in the aggregate, not more than ten percent of the beneficial
interests in such fund.

     “Gross Proceeds” means (a) Sale Proceeds, (b) all amounts in the Bond Fund
and the Project Fund, (c) any other Replacement Proceeds, (d) any transferred
proceeds (as defined in Section 1.148-9 of the Regulations or applicable
provisions of prior law) of the Bonds and (e) amounts actually or
constructively received from the investment and reinvestment of amounts
described above.

-18-

 

     “Guaranteed Investment Contract” includes (i) any investment that has
specifically negotiated withdrawal or reinvestment provisions and a
specifically negotiated interest rate and (ii) any agreement to supply
investments on two or more future dates (e.g., a forward supply contract).

     “Investment Property” means any security, obligation (other than a
tax-exempt obligation unless such tax-exempt obligation is a “specified private
activity bond” within the meaning of Section 57(a)(5)(C) of the Code), annuity
contract, or any other investment-type property.

     “Nonpurpose Investment” means any Investment Property in which Gross
Proceeds of the Bonds are invested.

     “Regulations” means United States Treasury Regulations (including
Temporary Regulations) associated with the tax-exempt bond provisions of the
Code.

     “Replacement Proceeds” means (a) amounts in Bond Funds, redemption funds,
reserve funds, replacement funds or any similar funds, to the extent reasonably
expected to be used directly or indirectly to pay principal or interest on the
Bonds, or amounts due under the Loan Agreement, (b) any amounts for which there
is provided, directly or indirectly, a reasonable assurance, in substance, that
the amount will be available to pay principal or interest on the Bonds or,
amounts due under the Loan Agreement, if the Borrower encounters financial
difficulties, including any liquidity device or negative pledge to the extent
described in Section 1.148-1(c)(3)(ii) of the Regulations and (c) any other
amounts treated as replacement proceeds under Section 1.148-1(c) of the
Regulations.

     “Sale Proceeds” means amounts actually or constructively received from the
sale of the Bonds, including (a) amounts used to pay underwriters’ discount or
compensation and accrued interest, if any, other than accrued interest for a
period not greater than one year before Closing but only if it is to be paid
within one year after Closing and (b) amounts derived from the sale of any
right that is part of the terms of a bond or is otherwise associated with a
bond (e.g., a redemption right).

     “Tax-Exempt Obligations” means (i) obligations described in Section 103(a)
of the Code, the interest on which is not includable in the gross income of the
owner thereof for federal income tax purposes and is not an item of tax
preference for purposes of the alternative minimum tax imposed by Section 55 of
the Code, (ii) interests in regulated investment companies to the extent that
at least 95 percent of the income to the holder of the interest is interest on
which is not includable in the gross income of any owner thereof for federal
income tax purposes and is not an item of tax preference for purposes of the
alternative minimum tax imposed by Section 55 of the Code or (iii) certificates
of indebtedness issued by the United States Treasury pursuant to the Demand
Deposit State and Local Government Series Program described in 31 CFR part 344.

     “Underwriter” means Northland Securities, Inc.

     “Yield” or “yield” means that discount rate which when used in computing
the present value of all payments of principal and interest paid and to be paid
on an obligation (using semiannual compounding on the basis of a 360-day year)
produces an amount equal to its purchase price, including accrued interest.
For this purpose, fees for qualified guarantees and
payments made or received on qualified hedges, as those terms are defined
in Treasury

-19-

 

Regulations Sections 1.148-4(f) and 1.148-4(h)(2), respectively,
are taken into account in computing yield on the Bonds.

     “Yield Reduction Payment” means a rebate payment or any other amount paid
to the United States in the same manner as rebate amounts are required to be
paid or at such other time or in such manner as the Internal Revenue Service
may prescribe that will be treated as a reduction in Yield with respect to an
investment.

-20-

 

ARTICLE VIII

CONCERNING THE TRUSTEE

     Section 8.1 Trustee Charges and Expenses; Other Expenses. The Borrower
hereby agrees to pay to the Trustee all reasonable fees, charges, and expenses
of such Trustee charged or incurred in connection with its services hereunder
and any payments due the Trustee under Section 8.3 hereof, including reasonable
legal fees and expenses of agents such as accountants employed in connection
with this Agreement. The Borrower shall pay all reasonable fees, charges, and
expenses of the Issuer incurred in connection with this Agreement.

     Section 8.2 Resignation and Removal of the Trustee. The Trustee at the
time acting hereunder may at any time resign from the trusts created by this
Agreement by giving written notice to the Issuer and the Borrower as provided
in the Indenture.

     The Trustee shall, upon the written request of the Borrower, execute and
deliver an instrument transferring to its successor Trustee all the estates,
properties, rights, powers, and trusts of such predecessor hereunder; and every
predecessor Trustee shall deliver all securities and moneys held by it as
Trustee hereunder to its successors.

     Any corporation or association into which the Trustee may be merged or
converted, or with which it may be consolidated, or to which it may sell or
transfer its corporate trust business and assets as a whole or substantially as
a whole, or any corporation or association resulting from any such conversion,
sale, merger, consolidation, or transfer to which such Trustee or any successor
to it shall be a party, provided such corporation or association is eligible
under the Indenture to the Trustee, shall be and become the successor Trustee
hereunder and vested with all the trusts, powers, discretions, immunities,
privileges, and all other matters as was its predecessor, without the execution
or filing of any instrument or any further act, deed, or conveyance on the part
of any of the parties hereto, unless otherwise required by law.

     Section 8.3 Acceptance. The Trustee shall accept the trusts imposed upon
it by this Agreement and agree to perform said trusts, but only upon and
subject to the express terms and conditions stated in the Bond Indenture.

     The Trustee shall not be under any liability for interest on any moneys
received hereunder except as provided in this Agreement with respect to the
continuous investment of funds and except as may otherwise be agreed upon.

     When any consent or other action by the Trustee is called for pursuant to
this Agreement, it may defer such action pending such investigation or inquiry
or receipt of such supporting evidence as it may require. The Trustee shall be
entitled to reimbursement for expenses reasonably incurred and advances
reasonably made, with interest, in the performance of its
obligations hereunder. Notwithstanding anything to the contrary herein,
absent negligence or willful misconduct, the Trustee shall not be liable to the
Issuer or the Borrower or any Bondholders for any action taken or not taken
hereunder.

     The Trustee will take such further action as the Borrower or the Issuer
may direct in order to comply with the rebate requirements contained in Section
148(f) of the Code.

-21-

 

ARTICLE IX

MISCELLANEOUS

     Section 9.1 Termination; Interest of the Borrower and Issuer in Rebate
Fund. This Agreement shall terminate if (a) the Trustee shall have filed with
the Issuer and the Borrower a written notice of termination of this Agreement,
which notice shall contain a certification that the Bonds have been fully paid
and retired, (b) all amounts due to the Trustee under Section 8.1 hereof shall
have been paid to the Trustee and (c) all amounts remaining on deposit in the
Rebate Fund, if any, shall have been paid to or upon the order of the United
States. Notwithstanding the foregoing, the provisions of Section 3.2 hereof
shall not terminate until the sixth anniversary of the date the Bonds are fully
paid and retired. Termination of this Agreement shall not affect the
provisions of Section 8.3 hereof with respect to the duties and liabilities of
the Trustee.

     The parties hereto recognize that amounts, if any, on deposit in the
Rebate Fund are held for payment to the United States Treasury. The foregoing
notwithstanding, the Borrower and the Issuer shall be deemed to have an
interest in such amounts to the extent such amounts represent amounts available
to satisfy the obligation of the Issuer and the Borrower to rebate certain
amounts to the United States Treasury with respect to the Bonds.

     Section 9.2 No Common Plan of Financing. Within 15 days of the Closing
Date, neither the Issuer, the Borrower nor any member of the same Controlled
Group of which the Issuer or the Borrower is a member has sold or delivered
(nor will either the Issuer, the Borrower or any member of the same Controlled
Group of which the Issuer, or the Borrower is a member sell or deliver within
15 days after the date hereof) any other tax-exempt obligations that are
reasonably expected to be paid out of substantially the same source of funds as
the Bonds.

     Section 9.3 No Sale of Project. No portion of the property financed with
proceeds of the Bonds is expected to be sold or otherwise disposed of prior to
the last maturity of the Bonds, except as otherwise provided in the Loan
Agreement unless:

     (a) prior to such sale, lease or other disposition the Borrower
delivers to the Trustee and the Issuer an opinion of Bond Counsel to the
effect that any such disposition will not adversely affect the validity
of the Bonds or any exemption of the interest on the Bonds from federal
income taxation to which such Bonds would otherwise be entitled, (b)
prior to such sale, lease, or other disposition, there is delivered to
the Trustee an Officer’s Certificate of the Borrower, stating that, in
the judgment of such officer, (1) such property has become inadequate,
obsolete, or worn out, (2) such property has been owned and used by the
Borrower for a period not less than the
reasonably expected economic life
of the property as set forth herein, and (3) that any amounts received by
the Borrower upon such disposition will be applied by the Borrower in
such manner as will not adversely affect the validity of the Bonds or any
exemption from federal income
taxation to which the interest on the Bonds would otherwise be
entitled, or (c) the Borrower provides the Trustee and the Issuer with an
Officer’s Certificate of the Borrower, stating that (1) all sales,
leases, or other dispositions in excess of the amount set forth above
were made during the preceding 12-month period were of property that, in
the judgment of such officer, had become inadequate, obsolete or worn
out, (2) such property had been owned and used by the Borrower for a
period not less than the

-22-

 

reasonably expected economic life of the
property as set forth herein and (3) that any amounts received by the
Borrower upon such disposition shall be applied by the Borrower to
acquire additional property useful to the Borrower. The Borrower agrees
to apply the proceeds of any disposition referred to in a certificate of
the type described in subsection (b) or (c) above as provided in such
subsection and agrees that any property acquired with such proceeds shall
be deemed to be property financed with the proceeds of the Bonds for the
purposes of applying the provisions of the Loan Agreement. The Issuer
may request that, in connection with the delivery of the certificate
described in subsection (b) or (c) above, the Borrower, deliver an
opinion of Bond Counsel to the effect that such disposition will not have
an adverse effect on the validity of the Bonds or any exemption from
federal income taxation to which the interest on the Bonds would
otherwise be entitled.

     Section 9.4 Future Events. The Issuer, the Trustee, and the Borrower
acknowledge that any changes in facts or expectations from those set forth
herein may result in different yield restrictions or rebate requirements and
agree that Bond Counsel will be contacted if such changes do occur.

     Section 9.5 Permitted Changes; Opinion of Bond Counsel. The yield
restrictions contained in Section 5.2, or any other restriction or covenant
contained herein need not be observed or may be changed if the Issuer, the
Trustee and the Borrower receive an opinion of Bond Counsel to the effect that
such noncompliance or change will not adversely affect the exclusion from gross
income of interest on the Bonds for federal income tax purposes.

     Section 9.6 Severability. If any clause, provision or section of this
Agreement is ruled invalid by any court of competent jurisdiction, the
invalidity of such clause, provision or section shall not affect any of the
remaining clauses, sections or provisions hereof.

     Section 9.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

     Section 9.8 Notices. All notices, demands, communications and requests
which may or are required to be given hereunder or by any party hereto shall be
deemed given on the date on which the same
shall have been mailed by registered or certified mail, postage prepaid,
addressed to such parties at the addresses set forth in the Indenture and the
Loan Agreement:

     Section 9.9 Successors and Assigns. The terms, provisions, covenants and
conditions of this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the Issuer, the Borrower and the Trustee.

     Section 9.10 Heading. The headings of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part of this
Agreement.

     Section 9.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.

-23-

 

     Section 9.12 Expectations. This Agreement is being executed by the Issuer
to establish the expectations of the Issuer regarding the expenditure of the
proceeds of the Bonds, pursuant to Section 148 of the Code and Section
1.148-2(b) of the Regulations. The Issuer and its signatory have made no
independent investigation of the matters stated herein. The expectations of
the Issuer described herein are based upon the provisions of the Loan Agreement
and Indenture and upon the representations of the Underwriter and the Borrower
as to the matters contained in this Agreement and in their certificates
attached hereto. Nothing has come to the attention of the Issuer which would
lead it to believe that any of the expectations described in this Agreement,
and any of the expectations of the Borrower and Underwriter described in their
respective certificates, are not reasonable or correct. No facts, estimates,
conditions or circumstances that would materially alter the expectations
described in this Agreement are known to the Issuer.

-24-

 

     IN WITNESS WHEREOF, City of Chaska, Minnesota has caused these presents to
be executed in its name by a duly authorized officer thereof all as of the
Closing Date.

	 	 	 	 	 
	 	 	CITY OF CHASKA, MINNESOTA
	 
	 	 	 	 
	

	 	By:
	 	   /s/ DAVE POKORNEY
	

	 	 	 	

	

	 	 	 	City Administrator

[Signature Page to Tax Exemption Agreement by and between the

City of Chaska, Minnesota, Wells Fargo Bank, National Association, as Trustee,

and Lifecore Biomedical, Inc.]

 

 

     IN WITNESS WHEREOF, the Trustee has caused these presents to be executed
all as of the Closing Date.

	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL
	 	 	ASSOCIATION,
	 	 	   as Trustee
	 
	 	 	 	 
	

	 	By:
	 	/s/ MARTHA K. EARLEY
	

	 	 	 	

	

	 	 	 	Its Assistant Vice President

[Signature Page to Tax Exemption Agreement by and between the

City of Chaska, Minnesota, Wells Fargo Bank, National Association, as Trustee,

and Lifecore Biomedical, Inc.]

 

 

     IN WITNESS WHEREOF, the Borrower has caused these presents to be executed
all as of the Closing Date.

	 	 	 	 	 
	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ DENNIS J. ALLINGHAM
	

	 	 	 	

	

	 	 	 	Its President and Chief Executive Officer

[Signature Page to Tax Exemption Agreement by and between the

City of Chaska, Minnesota, Wells Fargo Bank, National Association, as Trustee,

and Lifecore Biomedical, Inc.]

 

 

EXHIBIT A

AVERAGE ECONOMIC LIFE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Adjusted	 	 	 	 	 	Adjusted
	 	 	Economic	 	Prior	 	Future	 	Economic	 	 	 	 	 	Economic Life
	Type of Asset
	 	Life(1)
	 	Years(2)
	 	Years(3)
	 	Life(4)
	 	Asset Cost(5)
	 	x Asset Cost(6)

	Building
	 	 	40	 	 	 	13.25	 	 	 	N/A	 	 	 	26.75	 	 	$	5,573,000	 	 	 	149,077,760	 

TOTAL

* Average economic weighted life.

	 	(1)	 	The “Economic Life” of an asset is expressed in years and is
the longer of (1) reasonably expected economic life of the asset, or
(2) the “midpoint life” under the Asset Depreciation Range (“AOR”)
system, as set forth in Revenue Procedure 77-10, 1977-1 C.B. 548, as
superseded by Revenue Procedure 83-35, 1983-1 C.B. 745, where
applicable, and the “guideline lives” under Revenue Procedure 62-21,
1962-2 C.B. 418, in the case of structures.
	 
	 	(2)	 	This applies only if the asset has already been placed in
service as of the date hereof. The term “Prior Years” refers to the
number of years prior to the date hereof that an asset was placed in
service.
	 
	 	(3)	 	This applies only if the asset has not yet been placed in
service as of the date the Bonds are issued. The term “Future
Years” refers to the number of years after the Closing Date that an
asset is expected to be placed in service.
	 
	 	(4)	 	The “Adjusted Economic Life” of an asset is equal either to
the Economic Life minus Prior Years or the Economic Life (for Future
Years), whichever is applicable.
	 
	 	(5)	 	The term “Asset Cost” refers to the purchase price of the
asset to the Borrower.
	 
	 	(6)	 	The product of the Adjusted Economic Life and Asset Cost.

     The “average reasonably expected economic life” of the Project Facilities
financed or refinanced by the Bonds is 26.75 years which is computed by
dividing the total product of Adjusted Economic Life and the Asset Cost, or
$149,077,750 by the total Asset Cost for assets so financed or refinanced, or
$5,573,000. For this purpose, the reasonably expected economic life of each
asset has been determined as of the later of (i) the Closing Date, or (ii) the
date on which such asset is expected to be placed in service.

A-1

 

EXHIBIT B

UNDERWRITER’S CERTIFICATE AND

RECEIPT FOR BONDS

        I, the undersigned, a duly qualified and acting officer of Northland
Securities, Inc. (the “Underwriter”), hereby acknowledge that on the date
hereof, upon payment of the purchase price therefor, I received on behalf of
the foregoing the fully registered bonds generally described as the $5,630,000
City of Chaska, Minnesota Variable Rate Demand Purchase Revenue Bonds (Lifecore
Biomedical, Inc. Project), Series 2004 (the “Bonds”).

        In such connection, I hereby certify, as follows:

	 	1.	 	The Underwriter, Lifecore Biomedical, Inc. (the
“Borrower”) and the City of Chaska, Minnesota (the “Issuer”)
executed on August 19, 2004 a Bond Purchase Agreement (the
“Purchase Agreement”) in connection with the Bonds. The
Purchase Agreement has not been modified since its execution.
	 
	 	2.	 	The Underwriter hereby confirms that the first
offering price at which all of the principal amount of the
Bonds has been placed is equal to the par amount of the Bonds.
The initial offering price of the Bonds to the public
(excluding bond houses, brokers and other intermediates) was
equal to 100% of the principal amount of the issue, determined
without regard to administrative costs incurred in the
issuance of the Bonds (such as underwriting, legal and
accounting fees). A substantial amount of the Bonds of each
maturity was sold at the initial offering price to the initial
purchasers of the Bonds (excluding bond houses, brokers and
other intermediaries).
	 
	 	3.	 	The Underwriter has not and will not receive any
compensation with respect to or related to the issuance of the
Bonds in excess of the Underwriter’s fee (except for a fee in
the first six months as the Remarketing Agent equal to
one-eighth of one percent per annum of the aggregate
outstanding principal amount of Bonds, which shall be prorated
for the period from closing to February 1, 2005).
	 
	 	4.	 	The initial Variable Rate (as set forth in
Section 2.02(c) of the Indenture) set by the Remarketing Agent
for each of the Bonds is    % and
represents the lowest rate that enabled such Bond to be
marketed at par on the date hereof.

B-1

 

	 	5.	 	If the Bonds were not secured by the Letter of
Credit, the interest rates at which the Bonds could be sold or
remarketed would be materially adversely affected.
	 
	 	6.	 	Payment of the principal of and interest on the
Bonds at the stated maturities thereof is secured by the
Letter of Credit issued by M&I Marshall & Ilsley Bank (the
“Bank”). Based upon our experience, the fees charged by the
Bank for the Letter of Credit is a reasonable charge for the
transfer of the credit risk with respect to the Bonds to the
Bank and does not represent in whole or in part direct or
indirect payments for a cost, risk or other element that is
not customarily borne by a credit facility provider providing
similar credit enhancement for the payment of principal of and
interest on tax-exempt bonds. The present value of such fees
paid is less than the present value of the interest to be
saved as a result of the security afforded by the Letter of
Credit. In determining the present value savings, the
expected yield on the Bonds (determined without regard to
costs of issuance of the Bonds) has been used as the discount
rate.
	 
	 	7.	 	The Remarketing Agent is required to use its best
efforts to remarket Bonds that are tendered for purchase and
not retired.
	 
	 	8.	 	The Underwriter has calculated the weighted
average maturity of the Bonds to be 9.181 years.
	 
	 	9.	 	The Bonds have been offered and sold by the
Underwriter solely to institutional investors in transactions
that are exempt from registration under the Securities Act of
1933, as amended.

        All terms not defined herein shall have the same meanings as in the Tax
Exemption Agreement dated as of August 1, 2004 among the Issuer, the Borrower
and Wells Fargo Bank, National Association, as trustee.

     Dated:
August      , 2004

	 	 	 	 	 
	 	 	NORTHLAND SECURITIES, INC.
	 
	 	 	 	 
	

	 	By:
	 	

	

	 	 	 	

B-2

 

EXHIBIT C

August __, 2004

City of Chaska, Minnesota

Chaska, Minnesota

Wells Fargo Bank, National Association,

   as Trustee

Minneapolis, Minnesota

Lifecore Biomedical, Inc.

Chaska, Minnesota

	 	 	 
	Re:

	 	$5,630,000 Variable Rate Demand Purchase Revenue Bonds
	

	 	(Lifecore Biomedical, Inc. Project), Series 2004
	

	 	City of Chaska, Minnesota
	

	 	(the “Bonds”)

Ladies and Gentlemen:

     We have acted as Bond Counsel in connection with the issuance on this date
of the above-referenced Bonds (the “Bonds”). In a Tax Exemption Agreement
delivered by each of you this date (the “Tax Agreement”), the City of Chaska,
Minnesota (the “Issuer”), Wells Fargo Bank, National Association, as trustee
(the “Trustee”) and Lifecore Biomedical, Inc. (the “Borrower”) have agreed to
comply with the arbitrage rebate requirements of Section 148 of the Internal
Revenue Code of 1986. The purpose of this letter is to set out generally the
rules that you must follow to comply with the Tax Agreement. This letter does
not describe how to actually compute the amount to be rebated to the United
States, and due to the complexity involved, the computation will, in all
likelihood, require consultation with an expert.

     The Internal Revenue Service has issued final regulations relating to
arbitrage and rebate matters. This letter is based on these regulations which
are subject to change in the future. Such changes may require further
recalculation of rebate amounts. For these reasons, it is very important for
you and your tax advisors to keep abreast of developments in this area.

     The following advice is based on factual information contained in the Tax
Agreement. If the facts or expectations stated therein change, please call us
to determine whether this results in a change in the following rules. Please
note that the rules governing permissible yield on investments set forth in the
Tax Agreement are in addition to the rebate rules, and although you
might be allowed to earn a yield in excess of Bond Yield under the yield
rules, such excess may

C-1

 

still be required to be rebated. In some cases, the
payment of rebate may assist in compliance with the yield restriction
requirements. Thus, rebate compliance and yield restriction may, in certain
circumstances, operate together rather than independently. In any case, rebate
compliance is essential to the maintenance of the tax exemption of interest on
the Bonds even if no amounts are subject to yield restriction. Terms not
defined herein shall have the meanings set forth in the Tax Agreement. Yield
is defined in Article VII of the Tax Agreement.

     General Rule. Except in the case of certain exceptions as summarized
below, every five years and at the final retirement of all of the Bonds, you
must compute and pay (as described below) to the United States the difference
(the “Excess Earnings”) between the amount earned on all investments and
reinvestments of Gross Proceeds (as defined in the Tax Agreement) of the Bonds
(“Actual Earnings”) and the amount that would have been earned if Gross
Proceeds had been invested at the Bond Yield (the “Allowable Earnings”).
Earnings to be taken into account are not determined under normal tax
accounting principles. In addition to taking into account earnings received
(either actually or constructively), receipts with respect to investments that
have not been liquidated are computed by assuming that such investments are, in
essence, converted to cash as of each computation date (as such dates are
described below). The “cash value” of investments determined in this manner is
subject to many special rules. Under many circumstances, the “market value” of
an investment may be used. The application of these rules is complex and in
all likelihood will require consultation with an expert.

     To properly plan for the eventual payment of rebate to the United States,
we suggest that you make annual calculations estimating rebate liability. The
Indenture establishes a Rebate Fund into which you may also wish to deposit
annual estimates of rebate liability so that the payment to the United States
may be made from amounts set aside. Federal tax law does not, however, require
such set asides. In any event, we strongly encourage you to make an annual
estimate of the rebate liability. The calculations can be lengthy and often
produce surprising results. Experience indicates that the calculation is far
more difficult as the period of time for which the calculation is being
performed increases.

     Phantom Income. With certain exceptions, amounts paid for administrative
costs are not treated as increasing earnings for purposes of rebate
calculations. Administrative costs that do not increase earnings are
reasonable, direct administrative costs, other than carrying costs, and
generally include brokerage commissions for the purchase of investment
agreements (but only to the extent that the commission does not exceed the
present value of annual payments equal to 0.05 percent of the weighted average
amount reasonably expected to be invested per year) and separately stated
brokerage or selling commissions (but not legal and accounting fees), record
keeping, custody and similar costs and expenses.

     Computation Dates. Each calculation of Excess Earnings should be made as
of a “Computation Date.” The Computation Date should be the same date in each
calendar year (except that the final Computation Date should be the date on
which all of the Bonds are actually retired). As indicated above, a
Computation Date is required at least every five years. The first Computation
Date must be on or before the fifth anniversary of the issuance of the Bonds.
Each Computation Date, other than the Final Computation Date, is the end of a
bond year. A bond year ends on any date within one year of the issuance of the
Bonds that you choose. In the Tax
Agreement you have chosen the date immediately prior to the anniversary
date of the Dated Date of the Bonds.

C-2

 

     Except as provided below, on a variable yield issue such as the Bonds,
Excess Earnings are computed for the period of time between Computation Dates
(or from the date of issue of the Bonds in the case of the first Computation
Date) by calculating Allowable Earnings based on the Bond Yield for the Bonds
for that period of time and comparing it with Actual Earnings for the same
period. Once calculated for each such period, rebate for that period cannot
change—i.e., a snapshot for that period is taken and it never changes. Prior
to the first date on which a rebate payment is required, you may choose to
treat the end of any bond year as a Computation Date for purposes of the
snapshot approach. After such date, you must consistently treat either the end
of each bond year or the end of each fifth bond year as Computation Dates, and
you may not change these Computation Dates after the first required rebate
payment date.

     Bond Yield. For variable yield issues such as the Bonds, as discussed
above, Bond Yield is computed as of each Computation Date for the period from
the prior Computation Date (or from the date of issue of the Bonds in the case
of the first Computation Date) to the current Computation Date, and it is based
upon (i) the actual payments of principal and interest on the Bonds (including
amounts treated as interest) and (ii) the assumed receipt on such date of an
amount equal to the value of the outstanding Bonds. The rules for computing
Bond Yield are quite complex and an expert should be consulted.

     Generally, upon conversion of a variable yield issue to a fixed yield
issue the yield on the issue after the conversion date will be calculated under
the fixed yield rules. Certain special rules and elections apply upon such a
conversion and an expert should be consulted.

     Gross Proceeds. Gross Proceeds is defined in Article VII of the Tax
Agreement. Based upon the facts and expectations presented in the Tax
Agreement, the Gross Proceeds are all moneys and investments in the funds and
accounts (regardless of where held) held by the Trustee under the Indenture
other than the Bond Purchase Fund and the Rebate Fund. If, contrary to the
expectations described in the Tax Agreement, moneys or investments are pledged
or otherwise set aside for payment of principal of or interest on the Bonds,
such amounts may also constitute Gross Proceeds.

     Universal Cap. Gross Proceeds will cease to be allocated to the Bonds
(and will therefore be treated as if spent) if the amount of Gross Proceeds
exceeds the outstanding amount of the Bonds (the “Universal Cap”). Although
special rules are applicable in the case of discount bonds, the outstanding
amount of bonds is roughly equal to the outstanding principal amount.
Generally, but not always, the market value of investments is used to test the
amount of Gross Proceeds. The Universal Cap may cause allocations on the
second anniversary of the issue date and as of the first day of each bond year
thereafter.

     Commingled Funds. Funds allocated to two or more issues, or containing
amounts that are not Gross Proceeds of the Bonds and amounts that are Gross
Proceeds of the Bonds (including, for example, parity reserve funds) in which
amounts are invested collectively without regard to source of funds must be
treated as commingled funds. Investment earnings on commingled funds must be
allocated to the Gross Proceeds of the Bonds according to a
consistently applied reasonable ratable allocation method. Such method,
for example, may be based on average daily balances. Investments in commingled
funds must generally be valued annually to properly allocate unrealized gain or
loss to the Gross Proceeds of the Bonds. This mark to market requirement will
generally not apply if the weighted average maturity of all

C-3

 

investments held in
the commingled fund during a particular fiscal year does not exceed 18 months,
and does not apply to commingled debt service reserve funds.

     Bona Fide Debt Service Fund Exception to the General Rule. Based upon the
information in the Tax Agreement, the Bond Fund is a bona fide debt service
fund. If the earnings in the Bond Fund in a bond year (as described above
under “Computation Dates”) is less than $100,000 in the aggregate, they will
not be subject to the rebate requirement and you may keep such earnings for
that year. If during such period earnings on these funds are $100,000 or
greater, all such earnings will be subject to rebate. However, if the average
annual debt service on the Bonds is no more than $2,500,000, you may treat
these funds as satisfying the $100,000 limitation in each year. To the extent
that the Bond Fund ceases to be a “bona fide debt service fund” as described in
Section 2.2 of the Tax Agreement, some Bond Fund moneys may be subject to the
rebate requirement (if this occurs, please call us for advice).

     Tax-Exempt Obligation Exception to the General Rule. To the extent that
any Gross Proceeds are invested in Tax-Exempt Obligations (as defined in
Article VII of the Tax Agreement), the earnings thereon would not be considered
when calculating Excess Earnings. To the extent that 100% of Gross Proceeds
are continually invested in Tax-Exempt Obligations, there would be no rebate
requirement.

     Investment of Rebate Fund and Other Funds. Investments of moneys in the
Rebate Fund and any other fund must be made in arm’s-length transactions in a
manner that does not reduce the amount to be rebated to the United States.
Investment decisions (other than the decision to invest in Tax-Exempt
Obligations to avoid rebate) must be made on the basis of normal investment
criteria of safety, yield and when the money will be needed. All interest
rates and yields must be market rates and yields. Money must not be allowed to
remain uninvested except for small amounts or for short periods of time, as
provided in Section 3.3 of the Tax Agreement. Specific rules exist for
certificates of deposit and investment agreements (including repurchase
agreements) as set forth in Section 3.3 of the Tax Agreement.

     Rebate Payments. Within 60 days after the Computation Date that is the
end of the fifth bond year and every fifth bond year thereafter, at least 90%
of the Excess Earnings and all earnings on the Excess Earnings (net of an
appropriate credit, which depends on whether unexpended Gross Proceeds continue
to exist) must be paid to the United States. Within 60 days of final payment
of principal of and interest on the Bonds to the Bondholders, all Excess
Earnings and all earnings on the Excess Earnings (net of the credit) must be
paid to the United States.

DORSEY & WHITNEY LLP

C-4exv10w12

 

Exhibit 10.12

August 19, 2004

IRREVOCABLE LETTER OF CREDIT NUMBER SB/IRB 314

	 	 	 
	BENEFICIARY
	 	APPLICANT
	 	 	 
	Wells Fargo Bank, National Association
	 	Lifecore Biomedical, Inc.
	Sixth Street and Marquette Avenue
	 	3515 Lyman Boulevard
	Minneapolis, Minnesota 55479
	 	Chaska, Minnesota 55318
	 	 	 
	
	 	AMOUNT
	 	 	 
	
	 	USD $5,699,411.00
	 	 	 
	
	 	EXPIRY DATE
	 	 	 
	
	 	September 15, 2007

     Wells Fargo Bank, National Association, as Trustee (the “Trustee”) under
the Indenture of Trust, dated as of August 1, 2004 (the “Indenture”) between
the City of Chaska, Minnesota (the “Issuer”), and the Trustee, pursuant to
which $5,630,000.00 in aggregate principal amount of the Issuer’s Variable Rate
Demand Purchase Revenue Bonds (Lifecore Biomedical, Inc. Project), Series 2004
(the “Bonds”) are being issued on behalf of Lifecore Biomedical, Inc., a
Minnesota corporation (the “Borrower”), to finance the refinancing of certain
indebtedness for the Borrower is hereby irrevocably authorized to draw on M&I
Marshall & Ilsley Bank, Irrevocable Letter of Credit Number SB/IRB 314 for
account of the Borrower pursuant to a Reimbursement Agreement dated as of
August 1, 2004 (as amended or extended, the “Credit Agreement”) between us and
the Borrower, available by your drawing upon the terms and conditions
hereinafter set forth, an aggregate amount not exceeding USD $5,699,411.00
hereinafter, as reduced from time to time in accordance with the provisions
hereof, the “Stated Amount”).

     Of the Stated Amount (a) up to $5,630,000.00 (the “Principal Portion”) may be
drawn at any time and from time to time with respect to (i) payment of the
purchase price of Bonds or beneficial ownership interests tendered for purchase
or (ii) amounts due as principal of the Bonds, whether at maturity or upon
acceleration, demand or prepayment or call for redemption; and (b) up to
$69,411.00 (the “Interest Portion”) may be drawn at any time and from time to
time with respect to payment of up to 45 days’ accrued interest on the Bonds
(up to a maximum rate of 10% per annum) whether at interest payment dates,
maturity or upon acceleration, demand or prepayment or call for redemption or
the interest component of the purchase price of Bonds or

 

 

PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

beneficial ownership interests tendered for purchase on or prior to the stated
maturity of the Bonds (provided, however, that any amount drawn with respect to
interest may not exceed the amount of unpaid interest accrued and to accrue on
the Bonds to the applicable interest payment date or the date fixed for
redemption or the purchase date, as determined by you pursuant to the Indenture
and herein).

     All interest shall be calculated on the basis of actual number of days
over a 365-day or 366-day, as the case may be, year.

     This Letter of Credit shall expire at 4:00 p.m., Milwaukee, Wisconsin
time, on September 15, 2007 (the “Expiry Date”). Notwithstanding the
foregoing, this Letter of Credit shall expire earlier than such date upon the
first to occur of (a) the date of receipt by us of notice from you as Trustee
that a Substitute Letter of Credit (as defined in the Indenture) has been
issued in substitution for this Letter of Credit and such Substitute Letter of
Credit is then effective, which notice shall be in the form of Exhibit F
hereto; (b) the date on which we honor a final drawing or drawings available to
be made under this Letter of Credit, in which event this Letter of Credit shall
expire immediately after we honor such drawing or drawings; (c) the date of
receipt by us of notice from you as Trustee of a certificate stating that no
Bonds remain outstanding under the Indenture and the Indenture has been
discharged, which notice shall be in the form of Exhibit G hereto; (d) fourteen
(14) calendar days after the earlier of (i) the date of the acceleration of the
Bonds under the Indenture because of the occurrence of an Event of Default or
(ii) the date you have received written notice from us to accelerate the Bonds
because of the occurrence of an Event of Default under the Credit Agreement, as
the case may be; or (e) a Conversion Date for the Bonds of which you have
provided us notice in the form of Exhibit I hereto.

     In the event that any Expiry Date of this Letter of Credit as specified in
the preceding paragraph is not a Business Day (as hereinafter defined), this
Letter of Credit shall expire at 4:00 p.m., Milwaukee, Wisconsin time, on the
next following Business Day.

     Upon its expiration, the Letter of Credit and all amendments related
thereto shall be returned by you to us.

     Funds under this Letter of Credit are available to you against your
written certificate(s) presented to us, signed by an individual purporting to
be an authorized officer, appropriately completed, in the form of Exhibit A, B
or C hereto as indicated below. Presentation of such certificates shall be
made at the offices of M&I Marshall & Ilsley Bank, 770 North Water Street,
Milwaukee, Wisconsin 53202, Attention: Trade Services-IRB LC, 10th Floor, or
at any other office which may be designated by us by written notice delivered
to you.

 

 

PAGE 3 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

     If a drawing in respect of payment for interest on the Bonds or for
amounts due at maturity or upon acceleration, demand or prepayment or call for
redemption is made by you hereunder at or prior to 1:30 p.m., Milwaukee,
Wisconsin time, on a Business Day and provided that such drawing and the
documents presented in connection therewith conform to the terms and conditions
hereof, we shall initiate a wire to you of the amount specified by 11:00 a.m.,
Milwaukee, Wisconsin time, on the next Business Day. If such a drawing is made
after 1:30 p.m., Milwaukee, Wisconsin time, on a Business Day and provided that
such drawing and the documents presented conform to the terms and conditions
hereof, we will initiate a wire to you of the amount specified by 11:00 a.m.,
Milwaukee, Wisconsin time, on the second following Business Day.

     If a drawing in respect of payment of the purchase price of tendered Bonds
is made by you hereunder at or prior to 10:30 a.m., Milwaukee, Wisconsin time,
on a Business Day and provided that such drawing and the documents presented in
connection therewith conform to the terms and conditions hereof, we shall
initiate a wire to you of the amount specified by 2:00 p.m., Milwaukee,
Wisconsin time, on the same Business Day. If such a drawing is made after
10:30 a.m., Milwaukee, Wisconsin time, on a Business Day and provided that such
drawing and the documents presented conform to the terms and conditions hereof,
we shall initiate a wire to you of the amount specified by 11:00 a.m.,
Milwaukee, Wisconsin time, on the next Business Day.

     For purposes of this Letter of Credit, presentation of a certificate shall
be made in person, by mail or by telecopy (or other electronic
telecommunication) without further need of documentation, it being understood
that appropriate certificates submitted via such telecopy (or other electronic
telecommunication) are to be the sole operative instruments of drawing;
provided, however, that with respect to any drawing which reduces the Stated
Amount hereunder to zero (a) if such drawing is made in person or mail, the
drawing certificate shall be accompanied by the original of this Letter of
Credit and all amendments hereto, and (b) if such drawing is made by facsimile
or other electronic means, the original of this Letter of Credit and all
amendments hereto shall be sent on the day of such draw by overnight delivery
to us at the address set forth below. No sight drafts are required to be
presented hereunder. Drawings shall be presented to us at our office located
at 770 North Water Street, Milwaukee, Wisconsin 53202, Attention: Trade
Services-IRB LC, telecopy number (414) 765-7788 (or such other place or
electronic address as we may from time to time specify).

     This Letter of Credit is not negotiable by any financial institution other
than M&I Marshall & Ilsley Bank. As used herein “Business Day” shall mean a
day in which each of the cities where the principal corporate trust offices of
the Trustee and the principal offices of M&I

 

 

PAGE 4 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

Marshall & Ilsley Bank are located is not a Saturday, a Sunday or a day on
which banking institutions are authorized or required by law to close.

     Payment of all drawings under this Letter of Credit will be made in
immediately available funds and from moneys of M&I Marshall & Ilsley Bank and
not from funds of any Borrower under the Credit Agreement.

     No drawing may be made hereunder to pay principal of, or interest on, or
the purchase price of, or premium on, any Pledged Bonds (as defined in the
Indenture)

     Principal Portion Drawings. Drawings under the Principal Portion to pay
principal of the Bonds due to redemption, acceleration, prepayment or maturity
(an “A Drawing”) must be made by presentation to us of your appropriately
completed written certificate, signed by an individual purporting to be an
authorized officer, in the form of Exhibit A hereto. Drawings under the
Principal Portion to purchase tendered Bonds or beneficial ownership interests
of tendered Bonds (a “B Drawing”) must be made by presentation to us of your
appropriately completed written certificate signed by an individual purporting
to be an authorized officer in the form of Exhibit B hereto.

     Interest Portion Drawings. Drawings under the Interest Portion to pay
interest due and payable on the Bonds (a “C Drawing”) must be made by
presentation to us of your appropriately completed written certificate signed
by an individual purporting to be an authorized officer in the form of Exhibit
C hereto.

     In the case of any A Drawing or B Drawing, the Stated Amount shall
automatically be reduced (subject to the provisions below regarding
reinstatement with respect to a B Drawing) by (a) an amount of the Principal
Portion equal to 100% of the amount of such drawing and (b) unless the Interest
Portion has already been reduced pursuant to a C Drawing which has not been
reinstated, an amount of the Interest Portion equal to 45 days’ interest on the
amount of the Principal Portion drawing calculated at an assumed rate of 10%
per annum. In the case of any C Drawing, the Interest Portion shall
automatically be reduced by the amount of such drawing except to the extent the
Interest Portion has already been reduced because of a concurrent A Drawing.

     Reinstatement of A Drawings and B Drawings. A Drawings shall not be
reinstated. Reductions in the Principal Portion and Interest Portion resulting
from a B Drawing shall be reinstated upon the resale of all or any portion of
the Bonds or beneficial ownership interests purchased with the proceeds of such
B Drawing and the receipt by us of (a) such resale proceeds in the amount by
which the Principal Portion and Interest Portion of the Stated Amount is to be

 

 

PAGE 5 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

reinstated plus interest due us on such drawing as set forth in the Credit
Agreement and (b) a notice from you as Trustee as to the amount by which the
Principal Portion and Interest Portion of the Stated Amount is to be
reinstated, which notice shall be in the form of Exhibit H hereto.

     Reinstatement of C Drawings. The Interest Portion shall be automatically
reinstated in an amount equal to the amount of any reduction resulting from a C
Drawing upon the earlier of (a) our receipt from the Borrower, in accordance
with the terms of the Credit Agreement, of an amount equal to such C Drawing or
(b) the seventh Business Day following the honoring of such drawing.
Notwithstanding the foregoing, such amount shall not be reinstated if we shall
have delivered written notice to you, as Trustee, which notice shall be given
on or before the close of business on the seventh Business Day following the
honoring of such C Drawing, that such amount available to be drawn under the
Letter of Credit to pay interest on the Bonds has not been reinstated and such
notice directs acceleration of the Bonds.

     Likewise, the Principal Portion shall be reduced automatically upon the
date notice is received from you in the form of Exhibit E attached hereto
appropriately completed that prepayment of the Bonds (whether by optional or
mandatory redemption or otherwise) under the Indenture (other than Letter of
Credit proceeds) has taken place. The Interest Portion (unless it has already
been reduced because of a C Drawing that has not been reinstated) and the
Stated Amount shall be reduced proportionately to the reduction in the
Principal Portion.

     If there has been an acceleration of the Bonds under the Indenture because
of the occurrence of an Event of Default under the Indenture, you must present
a drawing hereunder to pay principal and interest then due on the Bonds within
thirteen (13) calendar days after the date of the acceleration of the Bonds
under the Indenture because of the occurrence of an Event of Default, and the
payment date on the Bonds (the “Acceleration Payment Date”) shall not be later
than fourteen (14) calendar days from the date of the acceleration of the Bonds
under the Indenture because of the occurrence of an Event of Default, and the
Interest Portion which would otherwise be available under this Letter of Credit
will be reduced to cover interest to accrue on the Bonds only to such
Acceleration Payment Date (and the Stated Amount will be reduced
correspondingly).

     If we have notified you that an Event of Default has occurred under the
Credit Agreement, that we are terminating this Letter of Credit and that we are
directing you to cause a mandatory tender of the Bonds, you must present a
drawing hereunder to pay principal and interest due with respect to such tender
of the Bonds within thirteen (13) calendar days after the date which we have
given you such notice and the purchase date for the tender on the Bonds the
(“Mandatory Bond Purchase Date”) shall not be later than fourteen (14) calendar
days from the date of our notice to you and the Interest Portion which would
otherwise be available under this

 

 

PAGE 6 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

Letter of Credit to cover the interest portion of the tender price will be
reduced to cover interest to accrue on the Bonds only to such Mandatory Bond
Purchase Date (and the Stated Amount will be reduced correspondingly).

     If a demand for payment made by you hereunder does not, in any instance,
conform to the terms and conditions of this Letter of Credit, we shall give you
prompt notice that the purported demand for payment was not effected in
accordance with the terms and conditions of this Letter of Credit, stating the
reasons therefor and that we are holding any documents at your disposal or are
returning the same to you, as we may elect. Upon being notified that the
purported demand for payment was not effected in accordance with this Letter of
Credit, you may attempt to correct any such nonconforming demand for payment
if, and to the extent that, you are entitled (without regard to the provisions
of this sentence) and able to do so.

     Only the Trustee may make a drawing under this Letter of Credit. Upon the
payment to the Trustee or to the Trustee’s account of the amount specified in a
drawing drawn hereunder, we shall be fully discharged on our obligation under
this Letter of Credit with respect to such drawing and we shall not thereafter
be obligated to make any further payments under this Letter of Credit with
respect to such drawing to the Trustee or any other person who may have made to
the Trustee or makes to the Trustee a demand for payment of principal of or
interest on or purchase price of any Bond.

     We shall be entitled to conclusively rely upon all certificates for
drawing presented to us and we shall have no duty to investigate any facts set
forth in any certificates.

     This Letter of Credit applies only to the principal amount of the Bonds
and the purchase price of Tendered Bonds or beneficial ownership interests and
an amount equal to up to 45 days’ interest accruing on the Bonds on or prior to
the redemption date or stated maturity of the Bonds or the tender date with
respect to purchased Bonds or beneficial ownership interests, and does not
apply to any interest that may accrue thereon after such maturity or redemption
date or tender date (unless reinstated as provided above, in the case of
purchase price of tendered bonds or beneficial ownership interests). This
Letter of Credit does not apply to any redemption premium, if any, or any fees
or expenses of the Trustee or the Issuer and no funds are available under this
Letter of Credit for payment of any such amounts.

     Communications with respect to this Letter of Credit shall be in writing
and shall be addressed to us at 770 North Water Street, Milwaukee, Wisconsin
53002, Attention: Trade Services-IRB LC, 10th Floor or shall be by facsimile
at (414) 765-7788 or by other electronic telecommunications, specifically
referring thereon to “M&I Marshall & Ilsley Bank Irrevocable

 

 

PAGE 7 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

Letter of Credit Number SB/IRB 314.” We will communicate to you by mail
or facsimile or other electronic telecommunications.

     Except as otherwise expressly stated herein, this Letter of Credit is
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revisions), International Chamber of Commerce, Publication No. 500 (the
“Uniform Customs”). This Letter of Credit is issued under the laws of the
State of Wisconsin and shall, as to matters not governed by the Uniform
Customs, be governed by and construed in accordance with the laws of said
State, without regard to principles of conflicts of law.

     It is understood that if documents relating to a drawing are presented to
us in compliance with all the terms of this Letter of Credit prior to the date
on which this Letter of Credit would otherwise expire as set forth in this
Letter of Credit, and if our business has been interrupted by an Act of God,
riot, civil commotion, insurrection, war or any other cause beyond our control,
or by any strike or lockout (such event herein called an “Interruption Event”)
which prevents us from meeting our obligations under this Letter of Credit with
respect to such drawing prior to such time, we shall remain obligated to pay
the amount of such drawing until two Business Days after the resumption of our
business following the Interruption Event. It is further understood that if
the beneficiary is prevented by circumstances reasonably beyond its control
from presenting documents with respect to any drawing prior to the date on
which this Letter of Credit would otherwise expire as set forth in this Letter
of Credit because of such an Interruption Event, we shall remain obligated to
pay the amount of such drawing until two Business Days after the resumption of
your business following the Interruption Event.

     This Letter of Credit is transferable in its entirety (but not in part) to
any transferee who has succeeded to you as Trustee under the Indenture and such
transferred Letter of Credit may be successively transferred. Transfer of the
available drawing(s) under this Letter of Credit to such transferee shall be
effected by presentation to us of this original Letter of Credit and all
amendments related thereto accompanied by the transfer forms attached hereto as
Exhibit D. We will then, at our option, either (a) issue to the transferee a
replacement Letter of Credit which shall be identical to this Letter of Credit
except that it shall set forth the transferee, as Beneficiary, and it will
reflect any amendments then applicable or (b) endorse on the reverse side of
this Letter of Credit the new beneficiary and forward the Letter of Credit to
the new beneficiary.

     This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Bonds), except only certificates required
herein and the Uniform Customs referred to herein; and any such reference

 

 

PAGE 8 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO. SB/IRB
314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE.

shall not be deemed to incorporate herein by reference any document,
instrument or agreement except such certificates.

     We hereby agree that all drawings made in compliance with the terms of
this Letter of Credit will be duly honored by us upon receipt of the
certificates as specified if presented at such office on or before the Expiry
Date.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	M&I MARSHALL & ILSLEY BANK
	 
	 	 	 	 
	

	 	By
	 	/s/ PAT SEAGO, VP
	

	 	 	 	

	

	 	 	 	Authorized Officer

 

 

EXHIBIT A, PAGE 1 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

	 	 	 	CERTIFICATE FOR THE PAYMENT OF THE $5,630,000 VARIABLE
RATE DEMAND PURCHASE REVENUE BONDS (LIFECORE
BIOMEDICAL, INC. PROJECT), SERIES 2004 OF THE CITY OF
CHASKA, MINNESOTA (“A Drawing”)

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attention: Trade Services-IRB LC - 10th Floor

     The undersigned, a duly authorized officer of                                                          
                    (the “Trustee”), hereby certifies to M&I Marshall & Ilsley Bank (“M&I”) with reference to M&I
Marshall & Ilsley Bank Irrevocable Letter of Credit Number SB/IRB 314 (the
“Letter of Credit”; any capitalized term used herein and not defined shall have
its respective meaning as set forth in the Letter of Credit) issued by M&I in
favor of the Trustee, that:

     (1) The Trustee is the Trustee under the Indenture for the holders of the
Bonds.

     (2) The Trustee is making A Drawing under the Letter of Credit for the
benefit of the holders or beneficial owners of the Bonds and with respect to
the payment of principal of the Bonds.

     (3) The amount of principal of the Bonds which is due and payable (whether
at maturity or upon acceleration or prepayment or call for redemption) on the
date of this Certificate or on the Business Day immediately following the date
hereof is $                   , and such amount does not exceed the amount available
on the date hereof to be drawn under the Letter of Credit in respect of the
payment of principal of the Bonds. The Stated Amount has been reduced to
$                   , after taking into account the principal payment and accrued
interest thereon of 45 days at 10% interest. The amount which is being drawn
does not cover any premium on the Bonds or any fees or expenses related
thereto. The amount which is being drawn does not cover any amounts due with
respect to any Credit Facility Bonds.

     (4) The date of this Certificate is the date on which or the Business Day
immediately preceding the date on which the principal amount described in the
first sentence of paragraph (3) of this Certificate is due on the Bonds
(whether at maturity or upon acceleration or prepayment or call for
redemption). The date on which the principal amount is due on the Bonds is
                   .

 

 

EXHIBIT A, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

     (5) The amount of this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture.

     (6) Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
appropriate amount owing on account of the Bonds pursuant to the Indenture, and
(b) no portion of said amount shall be applied by the undersigned for any other
purpose, and (c) no portion of said amount shall be commingled with any other
funds held by the undersigned.

     (7) Please remit the proceeds to                                       .1

     (8) This certificate is being presented (i) as a result of an acceleration
of the obligations of the Bond issuer to pay principal on the Bonds as a result
of an Event of Default under the Indenture or (ii) as a result of redemption in
whole of the Bonds or (iii) as a result of payment in full of the Bonds at
their stated maturity. If so permitted by the Indenture, you have not
purchased the Bonds with respect to this drawing.2

     (9) The original Letter of Credit and all amendments related thereto are
presented herewith.2

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

	1	 	Insert wire transfer instructions.
	 
	2	 	Include in Certificate only if certificate covers a final drawing hereunder or acceleration of the Bonds.

 

 

EXHIBIT B, PAGE 1 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

	 	 	 	CERTIFICATE FOR THE PAYMENT OF THE $5,630,000 VARIABLE
RATE DEMAND PURCHASE REVENUE BONDS (LIFECORE
BIOMEDICAL, INC. PROJECT), SERIES 2004 OF THE CITY OF
CHASKA, MINNESOTA (“B Drawing”)

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attention: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”), hereby certifies to M&I
Marshall & Ilsley Bank (“M&I”) with reference to M&I Marshall & Ilsley Bank
Irrevocable Letter of Credit Number SB/IRB 314 (the “Letter of Credit”; any
capitalized term used herein and not defined shall have its respective meaning
as set forth in the Letter of Credit) issued by M&I in favor of the Trustee,
that:

     (1) The Trustee is the Trustee under the Indenture for the holders of the
Bonds.

     (2) The Trustee is making A Drawing under the Letter of Credit for the
benefit of the holders or beneficial owners of the Bonds and with respect to
the payment of the purchase price of the tendered Bonds or beneficial ownership
interests. The Trustee hereby demands payment under the Letter of Credit in
the amount of $                    for the payment of the purchase price of the tendered
Bonds or beneficial ownership interests which are being purchased. Of such
amount, $                    is demanded with respect to the principal component of such
purchase price, and $                    is demanded with respect to the interest
component of such purchase price.

     (3) The amount demanded does not exceed the amount available on the date
hereof to be drawn under the Letter of Credit in respect of the payment of the
purchase price of the Bonds or beneficial ownership interests tendered. The
amount which is being drawn does not cover any premium on the Bonds or any fees
or expenses related thereto or any amounts due with respect to any Credit
Facility Bonds.

     (4) The Stated Amount will automatically be reduced in the amount of
$                   , being the sum of the principal component drawn hereunder, as set
forth in paragraph 2, plus 45 days’ interest on such principal component at 10%
per annum. The Stated Amount, as so reduced, will be $                   .

 

 

EXHIBIT B, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

     (5) The date of this Certificate is the date on which the purchase price
of the tendered Bonds or beneficial ownership interests described in paragraph
(2) of this Certificate is due pursuant to the terms of the Indenture.

     (6) The amount of this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture.

     (7) Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the purchase of the tendered Bonds
or beneficial ownership interests required under the Indenture or deposit such
amount into the Bond Fund to cover untendered Bonds which are subject to tender
under the Indenture, and (b) no portion of said amount shall be applied by the
undersigned for any other purpose, and (c) no portion of said amount shall be
commingled with any other funds held by the undersigned except that amounts
deposited into the [bond purchase account] may be commingled with proceeds from
the remarketing of Bonds.

     (8) Please remit the proceeds to                                       .1

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

	1	 	Insert wire transfer instructions.

 

 

EXHIBIT C, PAGE 1 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

	 	 	 	CERTIFICATE FOR THE PAYMENT OF THE $5,630,000 VARIABLE
RATE DEMAND PURCHASE REVENUE BONDS (LIFECORE
BIOMEDICAL, INC. PROJECT), SERIES 2004 OF THE CITY OF
CHASKA, MINNESOTA (“C Drawing”)

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attention: Trade Services-IRB LC - 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”), hereby certifies to M&I
Marshall & Ilsley Bank (“M&I”) with reference to M&I Marshall & Ilsley Bank
Irrevocable Letter of Credit Number SB/IRB 314 (the “Letter of Credit”; any
capitalized term used herein and not defined shall have its respective meaning
as set forth in the Letter of Credit) issued by M&I in favor of the Trustee,
that:

     (1) The Trustee is the Trustee under the Indenture for the holders of the
Bonds.

     (2) The Trustee is making A Drawing under the Letter of Credit for the
benefit of the holders or beneficial owners of the Bonds and with respect to
the payment of interest on the Bonds. The Trustee hereby demands payment under
the Letter of Credit in the amount of $                    for the payment of interest
accrued on the Bonds (whether at a scheduled interest payment date or upon
acceleration, prepayment or call for redemption).

     (3) The amount demanded hereby does not exceed the amount available on the
date hereof to be drawn under the Letter of Credit in respect of payment of
interest accrued on the Bonds. The amount demanded does not cover any premium
on the Bonds or any fees or expenses related thereto or any amounts due with
respect to any Credit Facility Bonds.

     (4) The date of this Certificate is the date on which or the Business Day
immediately preceding the date on which the interest amount described in
paragraph (2) of this Certificate is due on the Bonds. The date on which the
interest amount is due on the Bonds is                                       .

     (5) The amount of this Certificate was computed in accordance with the
terms and conditions of the Bonds and the Indenture.

 

 

EXHIBIT C, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

     (6) Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
appropriate interest amount owing on account of the Bonds pursuant to the
Indenture, and (b) no portion of said amount shall be applied by the
undersigned for any other purpose, and (c) no portion of said amount shall be
commingled with any other funds held by the undersigned.

     (7) Please remit the proceeds to                                       .1

     (8) This Certificate is presented in connection with an acceleration of
the Bonds. The payment date on the Bonds is                                       ,                     and the date
to which interest on the Bonds is accrued is                                       ,                    , both of which
dates are not more than fourteen (14) calendar days after the date of the
acceleration of the Bonds under the Indenture because of the occurrence of an
Event of Default.2

     (9) The original Letter of Credit and all amendments related thereto are
presented herewith.3

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

	1	 	Insert wire transfer instructions.
	 	 	 
	2	 	Include in Certificate only if certificate covers an acceleration of the Bonds.
	 	 	 
	3	 	Include in Certificate only if certificate covers a final drawing hereunder or acceleration of the Bonds.

 

 

EXHIBIT D WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

INSTRUCTION TO TRANSFER IN ENTIRETY

                                      ,                    

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attention: Trade Services-IRB LC – 10th Floor

     Re: Irrevocable Letter of Credit Number SB/IRB 314

     For value received, the undersigned beneficiary hereby irrevocably
transfers to:

	 	 	 	 	 
	 	 	

	 	 	(Name of Transferee)
	 
	 	 	 	 
	 	 	

	 	 	(Address)
	 
	 	 	 	 
	

	 	Attention:	 	 
	 	 	 	

	 
	 	 	 	 
	

	 	Telephone / Facsimile	 	 
	

	 	Nbrs:	 	 
	

	 	 	 	

all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety. Said transferee has succeeded the undersigned as
Trustee under the Indenture of Trust dated as of August 1, 2004, between the
City of Chaska, Minnesota, and the undersigned.

     By this transfer, all rights of the undersigned beneficiary in such Letter
of Credit are transferred to the transferee and the transferee shall hereafter
have the sole rights as beneficiary thereof; provided, however, that no rights
shall be transferred to a transferee unless such transfer complies with the
requirements of such Letter of Credit pertaining to transfers.

     The original Letter of Credit and all amendments are returned herewith and
in accordance therewith we ask you to either (a) issue a new irrevocable letter
of credit in favor of the transferee with provisions consistent with the Letter
of Credit, except for the change in beneficiary and which will reflect any
amendments then applicable or (b) endorse on the reverse side of this Letter of
Credit the new beneficiary and forward the Letter of Credit to the new
beneficiary.

 

 

EXHIBIT D, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT
NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	 	 	[Trustee]
	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

	

	 	 	 	 
	 	 	SIGNATURE GUARANTEE
	 
	 	 	 	 
	 	 	[Name of Bank]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Telephone No.	 	 
	

	 	 	 	

 

 

EXHIBIT E WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

	 	 	 	CERTIFICATE FOR THE REDUCTION OF LETTER OF CREDIT FOR THE
$5,630,000 VARIABLE RATE DEMAND PURCHASE REVENUE BONDS
(LIFECORE BIOMEDICAL, INC. PROJECT), SERIES 2004 OF THE CITY
OF CHASKA, MINNESOTA

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attention: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”), hereby certifies to M&I
Marshall & Ilsley Bank (“M&I”) with reference to M&I Marshall & Ilsley Bank
Irrevocable Letter of Credit Number SB/IRB 314 (the “Letter of Credit”; any
capitalized term used herein and not defined shall have its respective meaning
as set forth in the Letter of Credit) as follows:

     (1) Bonds in the principal amount of $                    have been redeemed
under the Indenture by a prepayment of such Bonds under the terms of the
Indenture, other than Letter of Credit proceeds. Forty-five days of interest
on such prepaid principal amount at 10% per annum is $                   . The
Principal Portion, Interest Portion and Stated Amount of the Letter of Credit
shall be irrevocably reduced accordingly, to take into account such reduction
of principal and interest. Thus, the Stated Amount of the Letter of Credit,
effective on the date of this Certificate, is $                    representing the
Principal Portion of $                    and the Interest Portion of $                   .

     (2) The original Letter of Credit and all amendments related thereto are
presented herewith.1

	1	 	Include when Stated Amount is zero.

 

 

EXHIBIT E, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF
CREDIT NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL
ASSOCIATION, AS TRUSTEE

     IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

 

 

EXHIBIT F WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

	 	 	 	NOTICE OF DELIVERY OF SUBSTITUTE LETTER OF CREDIT FOR
SB/IRB 314 FOR THE $5,630,000 VARIABLE RATE DEMAND
PURCHASE REVENUE BONDS (LIFECORE BIOMEDICAL, INC.
PROJECT), SERIES 2004 OF THE CITY OF CHASKA,
MINNESOTA

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attn: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”) hereby certifies to M&I
Marshall & Ilsley Bank with reference to M&I Marshall & Ilsley Bank Irrevocable
Letter of Credit Number SB/IRB 314 (the “Letter of Credit”) that a Substitute
Letter of Credit as defined in the Indenture has been issued in substitution
for the Letter of Credit issued by M&I Marshall & Ilsley Bank. The effective
date of such Substitute Letter of Credit is prior to the date of this
certificate. We are hereby returning to you for termination your Letter of
Credit and all amendments related thereto.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

 

 

EXHIBIT G WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

NOTICE OF DISCHARGE OF INDENTURE

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attn: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”) hereby certifies to M&I
Marshall & Ilsley Bank with reference to M&I Marshall & Ilsley Bank Irrevocable
Letter of Credit Number SB/IRB 314 (the “Letter of Credit”) that no Variable
Rate Demand Purchase Revenue Bonds (Lifecore Biomedical, Inc. Project), Series
2004 of the City of Chaska, Minnesota, remain outstanding under the Indenture
and the Indenture has been discharged and thus that the Letter of Credit issued
by M&I Marshall & Ilsley Bank hereby terminates. We are hereby returning to
you your Letter of Credit and all amendments related thereto.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

 

 

EXHIBIT H WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

NOTICE OF AMOUNT OF LETTER OF CREDIT BEING REINSTATED AFTER B DRAWING

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attn: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”) hereby certifies to M&I
Marshall & Ilsley Bank with reference to M&I Marshall & Ilsley Bank Irrevocable
Letter of Credit Number SB/IRB 314 (the “Letter of Credit”) that $                   
principal amount of the Bonds or beneficial ownership interests purchased with
the proceeds of a B Drawing have been remarketed. We understand that you have
received in full the resale proceeds from the remarketing of such Bonds or
beneficial ownership interests and all other funds due you. Thus, the Stated
Amount of the Letter of Credit, effective on the date of this Certificate,
shall be reinstated by the amount of $                    representing the Principal
Portion of $                    and the Interest Portion of $                    (which Interest
Portion represents 45 days of interest on such Principal Portion at the rate of
10% per annum). The Stated Amount of the Letter of Credit after this
reinstatement is $                    with respect to the Bonds.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	[Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	 
	 	 	 	 
	 	 	Telephone No.
	

	 	 	 	

 

 

EXHIBIT H, PAGE 2 WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF
CREDIT NO. SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL
ASSOCIATION, AS TRUSTEE

ACKNOWLEDGMENT

     M&I Marshall & Ilsley Bank hereby acknowledges that the Stated Amount of
the Letter of Credit has been reinstated on                                       ,                     and the
Stated Amount of the Letter of Credit after this reinstatement is $                   .

	 	 	 	 	 
	 	 	M&I MARSHALL & ILSLEY BANK
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	

	 	Telephone No.	 	 
	

	 	 	 	

 

 

EXHIBIT I WHICH FORMS AN INTEGRAL PART OF IRREVOCABLE LETTER OF CREDIT NO.
SB/IRB 314 ISSUED IN FAVOR OF: WELLS FARGO BANK, NATIONAL ASSOCIATION, AS
TRUSTEE.

NOTICE OF CONVERSION

M&I Marshall & Ilsley Bank

770 North Water Street

Milwaukee WI 53202

Attn: Trade Services-IRB LC – 10th Floor

     The undersigned, a duly authorized officer of                                                          
(the “Trustee”) hereby certifies to M&I
Marshall & Ilsley Bank with reference to M&I Marshall & Ilsley Bank Irrevocable
Letter of Credit Number SB/IRB 314 (the “Letter of Credit”) that a Conversion
Date with respect to the Bonds occurred on                                        [insert date] and
thus that the Letter of Credit issued by M&I Marshall & Ilsley Bank hereby
terminates. We are hereby returning to you your Letter of Credit and all
amendments related thereto.

     IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the                     day of                                       ,                    .

	 	 	 	 	 
	 	 	

	

	 	 	 	 [Trustee]
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	

	 	Title:	 	 
	

	 	 	 	

	

	 	Telephone No.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]