Document:

exv10w15

 

Exhibit 10.15

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (this “Agreement”) is made as of this 1st day of
August, 2004, by LIFECORE BIOMEDICAL, INC., a Minnesota corporation (the
“Debtor”), in favor of M&I MARSHALL & ILSLEY BANK, a Wisconsin state banking
corporation (the “Secured Party”).

In order to secure the payment of the obligations of the Debtor to the Secured
Party pursuant to that certain Reimbursement Agreement of even date herewith
(the “Reimbursement Agreement”) by and between the Debtor and the Secured
Party, all debts and obligations of the Debtor under any interest rate hedging
documents and/or agreements now or hereafter entered into by the Debtor and the
Secured Party with respect to the transaction contemplated by the Reimbursement
Agreement, including, but not limited to, a rate swap transaction, basis swap,
forward rate transaction, commodity option, equity or equity index rate swap,
equity or index option, bond option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, collar transaction, currency
swap transaction, cross-currency rate swap transaction, currency option or any
similar transaction or combination of similar transactions (including, as
applicable, any ISDA Master Agreement and each schedule, transaction and
confirmation relating to or entered into under an ISDA Master Agreement or any
such other agreement), all as amended, modified, supplemented or extended from
time to time, and including all obligations of the Debtor to reimburse the
Secured Party for any and all amounts paid, and other losses suffered, by the
Secured Party, as a result of the early termination of such transaction, the
amount of which is indeterminate on the date hereof, and each and every other
debt, liability and obligation of every type and description which the Debtor
may now or at any time hereafter owe to the Secured Party (whether such debt,
liability or obligation now exists or is hereafter created or incurred, whether
it arises under or is evidenced by this Agreement, the Reimbursement Agreement,
or any other present or future instrument or agreement or by operation of law,
and whether it is direct or indirect, due or to become due, absolute or
contingent, primary or secondary, liquidated or unliquidated, or sole, joint or
joint and several) (all such debts, liabilities and obligations of the Debtor
to the Secured Party are herein collectively referred to as the “Secured
Obligations”), the Debtor hereby agrees as follows:

1. SECURITY INTEREST AND COLLATERAL. In order to secure the payment and
performance of the Secured Obligations, the Debtor hereby grants to the Secured
Party a security interest (herein called the “Security Interest”) in and to the
following property (hereinafter collectively referred to as the “Collateral”):

SEE EXHIBIT A ATTACHED HERETO AND INCORPORATED

HEREIN BY THIS REFERENCE.

2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The Debtor hereby represents
and warrants to, and covenants and agrees with, the Secured Party as follows:

(a) The Collateral will be used primarily for business purposes. The
Collateral shall be located on the real property located at 3515 Lyman
Boulevard, Chaska, Minnesota 55318.

 

(b) The Debtor is a Minnesota corporation and the address of the Debtor’s
chief executive office is 3515 Lyman Boulevard, Chaska, Minnesota 55318,
and it keeps and will keep all of its books and records with respect to
all of its accounts at such address. The Debtor shall not change its
state of organization or chief executive office without the Secured
Party’s prior written consent. The Debtor’s state of organization has
been its state of organization since the date of the Debtor’s
organization.

(c) If any part or all of the Collateral will become so related to
particular real estate as to become a fixture, the Debtor will promptly
advise the Secured Party as to real estate concerned and the record owner
thereof and execute and deliver any and all instruments necessary to
perfect the Security Interest therein and to assure that such Security
Interest will be prior to the interest therein of the owner of the real
estate.

(d) During the preceding one (1) year, the Debtor has not changed its
name or operated or conducted business under any trade name or “d/b/a”
which is different from its corporate name. The Debtor shall promptly
notify the Secured Party of any change in such name or if it operates or
conducts business under any trade name or “d/b/a” which is different from
such name.

(e) The Debtor has (or will have at the time the Debtor acquires rights
in Collateral hereafter acquired or arising) and will maintain absolute
title to each item of Collateral free and clear of all security
interests, liens and encumbrances, except the Security Interest, and such
other security interests as are permitted under the Reimbursement
Agreement (the Security Interest and the security interests permitted
under the Reimbursement Agreement are hereinafter collectively referred
to as the “Permitted Interests”), and will defend the Collateral against
all claims or demands of all persons other than the Secured Party and
those holding Permitted Interests. Except as permitted in the
Reimbursement Agreement, the Debtor will not sell or otherwise dispose of
the Collateral or any interest therein.

(f) The Debtor will not permit any Collateral to be located in any state
(and, if a county filing is required, in any county) in which a financing
statement covering such Collateral is required to be, but has not in fact
been, filed.

(g) The Debtor authorizes the Secured Party to file all of the Secured
Party’s financing statements and amendments to financing statements, and
all terminations of the filings of other secured parties, all with
respect to the Collateral, in such form and substance as the Secured
Party, in its sole discretion, may determine.

(h) All rights to payment and all instruments, documents, chattel paper
and other agreements constituting or evidencing Collateral are (or will
be when arising or issued) the valid, genuine and legally enforceable
obligation, subject to no defense, set-off or counterclaim (other than
those arising in the ordinary course of business) of each account debtor
or other obligor named therein or in the Debtor’s records pertaining
thereto as being obligated to pay such obligation. The Debtor will not
agree to any modification, amendment or cancellation of any such
obligation without the Secured Party’s prior
written consent, and will not subordinate any such right to payment to
claims of other creditors of such account debtor or other obligor.

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(i) The Debtor will (i) keep all Collateral in good repair, working order
and condition, normal depreciation excepted, and will, from time to time,
replace any worn, broken or defective parts thereof; (ii) other than
taxes and other governmental charges contested in good faith and by
appropriate proceedings, promptly pay all taxes and other governmental
charges levied or assessed upon or against any Collateral or upon or
against the creation, perfection or continuance of the Security Interest;
(iii) keep all Collateral free and clear of all security interests, liens
and encumbrances except the Permitted Interests; (iv) at all reasonable
times, permit the Secured Party or its representatives to examine or
inspect any Collateral, wherever located, and to examine, inspect and
copy the Debtor’s books and records pertaining to the Collateral and its
business and financial condition and to discuss with account debtors and
other obligors requests for verifications of amounts owed to the Debtor;
(v) keep accurate and complete records pertaining to the Collateral and
pertaining to the Debtor’s business and financial condition and will
submit to the Secured Party such periodic reports concerning the
Collateral and the Debtor’s business and financial condition as the
Secured Party may from time to time reasonably request; (vi) promptly
notify the Secured Party of any loss or material damage to any Collateral
or of any material adverse change, known to the Debtor, in the prospect
of payment of any sums due on or under any instrument, chattel paper or
account constituting Collateral; (vii) if the Secured Party at any time
so requests promptly deliver to the Secured Party any instrument,
document or chattel paper constituting Collateral, duly endorsed or
assigned by the Debtor to the Secured Party; (viii) at all times keep all
Collateral insured against risks of fire (including so called extended
coverage), theft, collision (in case of collateral consisting of motor
vehicles) and such other risks and in such amounts as the Secured Party
may reasonably request, with any loss payable to the Secured Party to the
extent of its interest and notify the Secured Party in writing of any
loss or damage to the Collateral or any part; (ix) from time to time
execute such financing statements or other forms, including, without
limitation, patent and trademark recordation forms, as the Secured Party
may reasonably deem required to be filed in order to perfect the Security
Interest and, if any Collateral is covered by a certificate of title,
execute such documents as may be required to have the Security Interest
properly noted on a certificate of title; (x) pay when due or reimburse
the Secured Party on demand for all costs of collection of any of the
Secured Obligations and all other out-of-pocket expenses (including in
each case all reasonable attorneys’ fees) incurred by the Secured Party
in connection with the creation, perfection, satisfaction or enforcement
of the Security Interest or the execution or creation, continuance or
enforcement of this Agreement or any or all of the Secured Obligations
including expenses incurred in any litigation or bankruptcy or insolvency
proceedings; (xi) execute, deliver or endorse any and all instruments,
documents, assignments, security agreements and other agreements and
writings which the Secured Party may at any time reasonably request in
order to secure, protect, perfect or enforce the Security Interest and
the Secured Party’s rights under this Agreement, including, without
limitation, an assignment of claim with respect to any account which is a
government receivable; (xii) not use or keep any Collateral, or permit it
to be used or kept, for any unlawful purpose or in violation of any
federal, state or local law, statute or ordinance; (xiii) permit

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the Secured Party at any time and from time to time to send requests
(both before and after the occurrence of an Event of Default under the
Reimbursement Agreement) to account debtors or other obligors for
verification of amounts owed to Debtor; and (xiv) not permit any
Collateral to become part of or to be affixed to any real property,
without first assuring to the reasonable satisfaction of the Secured
Party that the Security Interest will be prior and senior to any interest
or lien then held or thereafter acquired by any mortgagee of such real
property or the owner or purchaser of any interest therein. If the
Debtor at any time fails to perform or observe any agreement contained in
this Section 2(i), and if such failure shall continue for a period of ten
(10) calendar days after the Secured Party gives the Debtor written
notice thereof (or, in the case of the agreements contained in clauses
(viii) and (ix) of this Section 2(i), immediately upon the occurrence of
such failure, without notice or lapse of time) the Secured Party may (but
need not) perform or observe such agreement on behalf and in the name,
place and stead of the Debtor (or, at the Secured Party’s option, in the
Secured Party’s own name) and may (but need not) take any and all other
actions which the Secured Party may reasonably deem necessary to cure or
correct such failure (including, without limitation, the payment of
taxes, the satisfaction of security interests, liens or encumbrances
(other than Permitted Interests), the performance of obligations under
contracts or agreements with account debtors or other obligors, the
procurement and maintenance of insurance, the execution of financing
statements, the endorsement of instruments, and the procurement of
repairs, transportation or insurance); and, except to the extent that the
effect of such payment would be to render any loan or forbearance of
money usurious or otherwise illegal under any applicable law, the Debtor
shall thereupon pay the Secured Party on demand the amount of all moneys
expended and all costs and expenses (including reasonable attorneys’
fees) incurred by the Secured Party in connection with or as a result of
the Secured Party’s performing or observing such agreements or taking
such actions, together with interest thereon from the date expended or
incurred by the Secured Party at the rate set forth in the Reimbursement
Agreement. To facilitate the performance or observance by the Secured
Party of such agreements of the Debtor, the Debtor hereby irrevocably
appoints (which appointment is coupled with an interest) the Secured
Party, or its delegate, as the attorney-in-fact of the Debtor with the
right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf of the
Debtor, any and all instruments, documents, financing statements, forms,
applications for insurance and other agreements and writings required to
be obtained, executed, delivered or endorsed by the Debtor under this
Section 2.

3. ASSIGNMENT OF INSURANCE. The Debtor hereby assigns to the Secured Party, as
additional security for the payment of the Secured Obligations, any and all
moneys (including but not limited to proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of the
Debtor under or with respect to, any and all policies of insurance covering the
Collateral, and the Debtor hereby directs the issuer of any such policy to pay
any such moneys to the Secured Party. Before and upon the occurrence of an
Event of Default, and at any time thereafter, the Secured Party may (but need
not) in its own name or in the Debtor’s name, execute and deliver proofs of
claim, receive all such moneys (subject to the Debtor’s rights), endorse checks
and other instruments representing payment of such monies, and adjust,
litigate, compromise or release any claim against the issuer of any such
policy.

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4. COLLECTION OF ACCOUNTS. The Secured Party may, or at the Secured Party’s
request, the Debtor shall, either prior to or after the occurrence of an Event
of Default, and at any time thereafter, notify any account debtor or any
obligor on an instrument to make payment directly to a lockbox (the “Lockbox”)
under the sole control of the Secured Party, whether or not the Secured Party
was theretofore making collections with respect thereto, and the Secured Party
shall be entitled to take control of any proceeds thereof. If so requested by
the Secured Party, the Debtor shall insert appropriate language on each invoice
directing its customers to make payment to the Lockbox. The Debtor hereby
authorizes and directs the Secured Party to deposit into a collateral account
(the “Collateral Account”) all checks, drafts and cash payments, received in
the Lockbox. All deposits in the Collateral Account shall constitute proceeds
of Collateral and shall not constitute payment of any of the Secured
Obligations. At its option, the Secured Party may, at any time, apply finally
collected funds on deposit in the Collateral Account to the payment of the
Secured Obligations in such order of application as the Secured Party may
determine, or permit the Debtor to withdraw all or any part of the balance on
deposit in the Collateral Account. The Debtor agrees that it will promptly
deliver to the Secured Party for deposit into the Collateral Account, all
payments on accounts and chattel paper received by it. All such payments shall
be delivered to the Secured Party in the form received (except for the Debtor’s
endorsement where necessary). Until so deposited, all payments on accounts and
chattel paper received by the Debtor shall be held in trust by the Debtor for
and as the property of the Secured Party and shall not be commingled with any
funds or property of the Debtor.

5. REMEDIES. Upon the occurrence of an Event of Default, and at any time
thereafter, the Secured Party may exercise any one or more of the following
rights or remedies if any or all of the Secured Obligations are not paid when
due: (i) exercise and enforce any or all rights and remedies available after
default to a secured party under the Uniform Commercial Code, including but not
limited to the right to take possession of any Collateral, proceeding without
judicial process or by judicial process (without a prior hearing or notice
thereof, which the Debtor hereby expressly waives), and the right to sell,
lease or otherwise dispose of or use any or all of the Collateral; (ii) the
Secured Party may require the Debtor to assemble the Collateral and make it
available to the Secured Party at a place to be designated by the Secured Party
which is reasonably convenient to both parties; (iii) exercise its rights under
any lessors’ agreements regardless of whether or not the Debtor is in default
under such leases; and (iv) exercise or enforce any or all other rights or
remedies available to the Secured Party by law or agreement against the
Collateral, against the Debtor or against any other person or property. The
Secured Party is hereby granted a non-exclusive, worldwide and royalty-free
license to use or otherwise exploit all trademarks, franchises, copyrights and
patents of the Debtor that the Secured Party deems necessary or appropriate to
the disposition of any Collateral. If notice to the Debtor of any intended
disposition of Collateral or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if
given (in the manner specified in Section 6 below) at least ten (10) calendar
days prior to the date of intended disposition or other action.

6. MISCELLANEOUS. This Agreement does not contemplate a sale of accounts or
chattel paper, and, as provided by law, the Debtor is entitled to any surplus
and shall remain liable for any deficiency. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security Interest can be
released, only explicitly in a writing signed by the Secured Party. A waiver
signed by the Secured Party shall be effective only in the specific instance
and for the

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purpose given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any of the Secured Party’s rights or remedies. All rights and
remedies of the Secured Party shall be cumulative and may be exercised
singularly or concurrently, at the Secured Party’s option, and the exercise or
enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to the
Debtor shall be deemed sufficiently given if deposited in the United States
mails, registered or certified, postage prepaid, or personally delivered to the
Debtor at its address set forth herein. The Secured Party’s duty of care with
respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if the Secured Party exercises reasonable care in physically safe
keeping such Collateral or, in the case of Collateral in the custody or
possession of a bailee or other third person, exercises reasonable care in the
selection of the bailee or other third person, and the Secured Party need not
otherwise preserve, protect, insure or care for any Collateral. The Secured
Party shall not be obligated to preserve any rights the Debtor may have against
any other party, to realize on the Collateral at all or in any particular
manner or order, or to apply any cash proceeds of Collateral in any particular
order of application. This Agreement shall be binding upon and inure to the
benefit of the Debtor and the Secured Party and their respective heirs,
representatives, successors and assigns and shall take effect when signed by
the Debtor and delivered to the Secured Party, and the Debtor waives notice of
the Secured Party’s acceptance hereof. Except to the extent otherwise required
by law, this Agreement shall be governed by the laws of the State of Minnesota
and, unless the context otherwise requires, all terms used herein which are
defined in Articles 1 and 9 of the Uniform Commercial Code, as in effect in
said state, shall have the meanings therein stated and all capitalized terms
used herein which are defined in the Reimbursement Agreement shall have the
meanings therein stated. If any provision or application of this Agreement is
held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be
given effect, and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby. All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Secured Obligations.

IN WITNESS WHEREOF, the Debtor has executed and delivered to the Secured Party
this Security Agreement as of the day and year first above written.

	 	 	 	 	 
	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ DENNIS J. ALLINGHAM
	

	 	 	 	

	

	 	 	 	Its: President and CEO

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EXHIBIT A

(Description of Collateral)

All of the Debtor’s Accounts, chattel paper (including, without
limitation, electronic chattel paper and tangible chattel paper),
deposit accounts, documents, Equipment, General Intangibles,
goods, instruments, Inventory, Investment Property,
letter-of-credit rights, letters of credit, patents, patent
rights, copyrights, trademarks, trade names, goodwill, royalty
rights, franchise rights, license rights, software, payment
intangibles, all sums on deposit in any collateral account, any
items in any lockbox, and Receivables; together with (i) all
substitutions and replacements for and products of any of the
foregoing; (ii) proceeds of any and all of the foregoing; (iii) in
the case of all tangible goods, all accessions; (iv) all
accessories, attachments, parts, equipment and repairs now or
hereafter attached or affixed to or used in connection with any
tangible goods; (v) all warehouse receipts, bills of lading and
other documents of title now or hereafter covering such goods;
(vi) all collateral subject to the lien of any Security Document;
(vii) any money, or other assets of the Debtor, that now or
hereafter come into the possession, custody or control of the
Lender; and (viii) all supporting obligations. Capitalized terms
used herein shall have the meanings assigned thereto in Exhibit B
attached hereto.

 

EXHIBIT B

(Definitions)

“Accounts” means all of the Debtor’s accounts, as such term is defined in the
Uniform Commercial Code in effect in the State of Minnesota (the “UCC”),
including without limitation the aggregate unpaid obligations of customers and
other account debtors to the Debtor arising out of the sale or lease of goods
or rendition of services by the Debtor on an open account or deferred payment
basis.

“Equipment” means all of the Debtor’s equipment, as such term is defined in the
UCC, whether now owned or hereafter acquired, including but not limited to all
present and future machinery, vehicles, furniture, fixtures, manufacturing
equipment, shop equipment, office and recordkeeping equipment, parts, tools,
supplies, and including specifically (without limitation) the goods described
in any equipment schedule or list herewith or hereafter furnished to the
Secured Party by the Debtor.

“General Intangibles” means all of the Debtor’s general intangibles, as such
term is defined in the UCC, whether now owned or hereafter acquired, including
(without limitation) all present and future patents, patent applications,
copyrights, trademarks, trade names, trade secrets, customer or supplier lists
and contracts, manuals, operating instructions, permits, franchises, the right
to use the Debtor’s name, and the goodwill of the Debtor’s business.

“Investment Property” means all of the Debtor’s investment property, as such
term is defined in the UCC, whether now owned or hereafter acquired, including
but not limited to all securities, security entitlements, securities accounts,
commodity contracts, commodity accounts, stocks, bonds, mutual fund shares,
money market shares and U.S. Government securities.

“Lockbox” means any lockbox established pursuant to any Security Document.

“Receivables” means each and every right of the Debtor to the payment of money,
whether such right to payment now exists or hereafter arises, whether such
right to payment arises out of a sale, lease or other disposition of goods or
other property, out of a rendering of services, out of a loan, out of the
overpayment of taxes or other liabilities, or otherwise arises under any
contract or agreement, whether such right to payment is created, generated or
earned by the Debtor or by some other person who subsequently transfers such
person’s interest to the Debtor, whether such right to payment is or is not
already earned by performance, and howsoever such right to payment may be
evidenced, together with all other rights and interests (including all liens
and security interests) which the Debtor may at any time have by law or
agreement against any account debtor or other obligor obligated to make any
such payment or against any property of such account debtor or other obligor;
all including but not limited to all present and future accounts, contract
rights, loans and obligations receivable, chattel papers, bonds, notes and
other debt instruments, tax refunds and rights to payment in the nature of
general intangibles.

“Security Documents” means any document delivered to the Secured Party from
time to time to secure the obligations of the Debtor to the Secured Party.exv10w16

 

Exhibit 10.16

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT is made as of the 1st day of August, 2004,
among LIFECORE BIOMEDICAL, INC., a Minnesota corporation (the “Pledgor”), M&I
MARSHALL & ILSLEY BANK, a Wisconsin state banking corporation (the “Lender”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as
trustee (the “Agent”).

R E C I T A L S:

WHEREAS, the City of Chaska, Minnesota (the “Issuer”) is issuing its $5,630,000
Variable Rate Demand Purchase Revenue Bonds (Lifecore Biomedical, Inc.
Project), Series 2004 (the “Bonds”), under the Indenture of Trust dated as of
August 1, 2004 (the “Indenture”), between the Issuer and the Agent, as Trustee;

WHEREAS, the Indenture requires the Agent, as Trustee, acting for the Pledgor,
to purchase the Bonds from the holders thereof under certain circumstances as
set forth in the Indenture;

WHEREAS, the Pledgor has entered into the Reimbursement Agreement dated as of
August 1, 2004, between the Pledgor and the Lender (hereinafter, as the same
may from time to time be amended or supplemented, the “Reimbursement
Agreement”), in order for the Lender to issue the letter of credit thereunder
(the “Letter of Credit”) which may be drawn upon, inter alia, to pay the
purchase price of the Bonds, and

WHEREAS, it is a condition precedent to the Lender’s delivery of the Letter of
Credit that the Pledgor and the Agent shall execute and deliver this Pledge
Agreement;

NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender to enter into the Reimbursement Agreement and issue the Letter of Credit
thereunder and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor and the Agent hereby
agree with the Lender as follows:

1. Defined Terms. Unless otherwise defined herein, terms defined in the
Reimbursement Agreement shall have such defined meanings when used herein.

2. Pledge. As collateral security for the prompt and complete payment when due
of all amounts due from the Pledgor to the Lender under the Reimbursement
Agreement and the performance of all other obligations of the Pledgor under the
Reimbursement Agreement (all the foregoing being hereinafter called the
“Obligations”), the Pledgor hereby pledges, assigns, hypothecates, transfers
and grants to the Lender a lien on and security interest in all its right,
title and interest to all Bonds purchased with proceeds of draws on the Letter
of Credit, together with all payments, earnings, proceeds and substitutions of
such Bonds (collectively, such Bonds and all payments, earnings, proceeds and
substitutions of such Bonds are hereinafter referred to as the “Borrower
Bonds”). The Pledgor agrees that the Agent shall receive, hold and deliver
Borrower Bonds as provided in the Indenture. (All property at any time pledged
to the Lender
hereunder and all income therefrom and proceeds thereof, are herein
collectively sometimes called the “Collateral.”)

 

3. Registration and Custody of Borrower Bonds. The Pledgor and the Agent
acknowledge and agree that during any period in which the Agent holds Borrower
Bonds, the Agent shall hold them as agent and custodian for the Lender, shall
register the Borrower Bonds in the name of the Lender, as pledgee, and shall,
upon written request of the Lender, deliver to the Lender (or a person
designated by the Lender) the Borrower Bonds. The Agent acknowledges the
Lender’s security interest in the Borrower Bonds and agrees to hold the
Borrower Bonds in accordance with the terms of this Agreement. The Lender
appoints the Agent as its attorney to transfer the Borrower Bonds on the books
kept for the registration thereof in accordance with the terms of this
Agreement.

4. Payments on Borrower Bonds; Voting Rights.

(a) All payments on the Borrower Bonds, including (without limitation)
any payment of principal of or premium, if any, or interest on, or
proceeds of sale of the Borrower Bonds, shall be subject to this
Agreement, and the Agent, as agent for the Lender, shall receive, collect
and hold any such payments in respect of the Borrower Bonds. The Agent
agrees to pay any such payment to the Lender forthwith upon receipt. In
the event any such payments are received by the Pledgor, the Pledgor
agrees to accept such payments as the Lender’s agent, to hold such
payments in trust on behalf of the Lender and to deliver such payments
forthwith to the Agent. All sums of money so paid in respect of the
Borrower Bonds which shall be paid directly to the Lender by the Agent
shall be credited against the Obligations.

(b) The Lender shall be entitled to exercise all of the rights of an
owner of the Borrower Bonds with respect to voting, consenting and
directing the Agent as if the Lender were the owner of the Borrower
Bonds, and the Pledgor hereby grants and assigns to the Lender all such
rights.

5. Release of Borrower Bonds. If a payment is made by or on behalf of the
Pledgor in respect of its Obligations and if the other conditions respecting
payment of amounts due to the Lender under the Reimbursement Agreement are met,
the Lender agrees upon receipt of such payment to release from the lien of this
Agreement and to instruct the Agent to deliver to the Pledgor or to such other
party as shall make payment to the Lender, as the case may be, Borrower Bonds
in the principal amount so paid and upon receipt of such instruction the Agent
shall deliver such Borrower Bonds to such party; provided, however, that if
such payment is less than the minimum denomination of Bonds then available
under the Indenture, Borrower Bonds shall be released only at such time as the
cumulative amount of payments made under the Reimbursement Agreement and for
which no Borrower Bonds have been released under this paragraph equal to the
minimum denomination of Bonds then available. If the Bonds are then rated by a
Rating Agency (as that term is defined in the Indenture), no Borrower Bonds
shall be released pursuant to this paragraph unless the Lender has,
contemporaneously with such payment, reinstated the amount available to be
drawn under the Letter of Credit by an amount equal to the principal amount
drawn under the Letter of Credit at the time the Bonds became Borrower Bonds.
Notwithstanding the foregoing, no Borrower Bonds shall be released from the
lien of this Agreement if the Agent receives notice from the Lender that an
Event of Default has occurred and is continuing, unless the Lender shall
otherwise agree in writing.

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6. Rights of the Lender. The Lender shall not be liable for failure to collect
or realize upon the Obligations or any collateral security or guarantee
therefor, or any part thereof, or for any delay in so doing nor shall it be
under any obligation to take any action whatsoever with regard thereto. Except
as otherwise required by the provisions of the Uniform Commercial Code, if an
Event of Default has occurred and is continuing, the Lender may thereafter,
without notice, exercise all rights, privileges or options pertaining to any
Borrower Bonds as if it were the holder and absolute owner thereof, upon such
terms and conditions as it may determine, all without liability except to
account for property actually received by it, but the Lender shall have no duty
to exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.

7. Remedies. If any portion of the Obligations has been declared due and
payable, the Lender without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other person
(all and each of which demands, advertisements and/or notices are hereby
expressly waived), may, subject to compliance with requirements of the Uniform
Commercial Code, forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give an
option or options to purchase, contract to sell or otherwise dispose of and
deliver said Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at any exchange, broker’s board or at any of the
Lender’s offices or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk, with the right to the
Lender upon any such sale or sales, public or private, to purchase the whole or
any part of said collateral so sold, free of any right or equity of redemption
in the Pledgor, which right or equity is hereby expressly waived or released.
The Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any and all of the Collateral or in any way
relating to the rights of the Lender hereunder, including reasonable attorneys’
fees and legal expenses, to the payment, in whole or in part, of the
Obligations in such order as the Lender may elect, the Pledgor remaining liable
for any deficiency remaining unpaid after such application, and only after so
applying such net proceeds and after the payment by the Lender of any other
amount required by any provision of law, including, without limitation, the
Uniform Commercial Code, need the Lender account for the surplus, if any, to
the Pledgor. The Pledgor agrees that the Lender need not give more than ten
days’ notice of the time and place of any public sale or of the time after
which a private sale or other intended disposition is to take place and that
such notice is reasonable notification of such matters. No notification need
be given to the Pledgor if it has signed after default a statement renouncing
or modifying any right to notification of sale or other intended disposition.
In addition to the rights and remedies granted to it in this Agreement and in
any other instrument or agreement securing, evidencing or relating to any of
the Obligations, the Lender shall have all the rights and remedies of a secured
party under the Uniform Commercial Code of the State of Minnesota. The Pledgor
further agrees that the Pledgor shall be liable for the deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all amounts to which the Lender is entitled, and the fees of any attorneys
employed by the Lender to collect such deficiency.

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8. Representations, Warranties and Covenants of the Pledgor. The Pledgor
represents and warrants that: (a) on the date of delivery to the Lender of any
Borrower Bonds, neither the Issuer nor the Agent will have any right, title or
interest in and to the Borrower Bonds (except the interest of the Agent as
agent for the Lender); (b) the Pledgor has, and on the date of delivery to the
Lender of any Borrower Bonds will have, full power, authority and legal right
to pledge all of its right, title and interest in and to such Borrower Bonds
pursuant to this Agreement; (c) this Agreement has been duly authorized,
executed and delivered by the Pledgor and constitutes a legal, valid and
binding obligation of the Pledgor enforceable in accordance with its terms
(subject, as to enforceability, to limitations resulting from Bankruptcy,
insolvency and other similar laws affecting creditors’ rights generally and
principles of equity); (d) no consent of any other party (including, without
limitation, creditors of the Pledgor) and no consent, license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental authority, domestic or foreign, is
required to be obtained by the Pledgor in connection with the execution,
delivery or performance of this Agreement; (e) the execution, delivery and
performance of this Agreement will not violate any provision of any applicable
law or regulation or of any order, judgment, writ, award or decree of any
court, arbitrator or governmental authority, domestic or foreign, or of any
securities issued by the Pledgor, or of any mortgage, indenture, lease,
contract, or other agreement, instrument or undertaking to which the Pledgor is
a party or which purports to be binding upon the Pledgor or upon any of its
assets and will not result in the creation or imposition of any lien, charge or
encumbrance on or security interest in any of the assets of the Pledgor except
as contemplated by this Agreement; and (f) the pledge, assignment and delivery
of Borrower Bonds pursuant to this Agreement, and as provided in the Indenture,
will create a valid first lien on and a first perfected security interest in
all right, title or interest of the Pledgor in or to such Borrower Bonds, and
the proceeds thereof, subject to no prior pledge, lien, mortgage,
hypothecation, security interest, charge, option or encumbrance or to any
agreement purporting to grant to any third party a security interest in the
property or assets of the Pledgor which would include the Borrower Bonds. The
Pledgor covenants and agrees that it will defend the Lender’s right, title and
security interest in and to the Borrower Bonds and the proceeds thereof against
the claims and demands of all persons whosoever; and covenants and agrees that
it will have like title to and right to pledge any other property at any time
hereafter pledged to the Lender as collateral hereunder and will likewise
defend the Lender’s right thereto and security interest therein. The Pledgor
shall be deemed to have represented and warranted to the Lender on each date
that a drawing is made under the Letter of Credit that the statements contained
herein are true and correct.

9. No Disposition, etc. Without the prior written consent of the Lender, the
Pledgor agrees that it will not sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, nor will it
create, incur or permit to exist any pledge, lien, mortgage, hypothecation,
security interest, charge, option or any other encumbrance with respect to any
of the Collateral, or any interest therein, or any proceeds thereof, except for
the lien and security interest provided for by this Agreement.

10. Sale of Collateral.

(a) The Pledgor recognizes that the Lender may be unable to effect a
public sale of any or all of the Borrower Bonds by reason of certain
prohibitions contained in the Securities Act of 1933, as amended, and
applicable state securities laws, but may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such securities

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for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that
any such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale and, notwithstanding
such circumstances, agrees that the fact that the Borrower Bonds are sold
in a private sale shall not in and of itself be deemed a failure to sell
the Borrower Bonds in a commercially reasonable manner.

(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any
portion or all of the Borrower Bonds valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at the Pledgor’s expense. The Pledgor
further agrees that a breach of any of the covenants contained in this
paragraph 10 will cause irreparable injury to the Lender, that the Lender
has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
paragraph shall be specifically enforceable against the Pledgor and the
Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense
that no Event of Default has occurred under the Reimbursement Agreement.

(c) Notwithstanding anything to the contrary contained in paragraph 7 or
this paragraph 10, at the time of the sale of any Borrower Bonds as
contemplated herein, any rating assigned to such Bonds by a Rating Agency
shall cease to apply to such Borrower Bonds unless the Lender has
reinstated the amount available to be drawn under the Letter of Credit by
an amount equal to the principal amount drawn under the Letter of Credit
at the time the Bonds became Borrower Bonds.

11. Further Assurances. The Pledgor agrees that at any time and from time to
time upon the written request of the Lender, the Pledgor will execute and
deliver such further documents and do such further acts and things as the
Lender may reasonably request in order to effect the purposes of this
Agreement.

12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

13. No Waiver, Cumulative Remedies. The Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Lender,
and then only to the extent therein set forth. A waiver by the Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which the Lender would otherwise have on any further
occasion. No failure to exercise nor any delay in exercising on the part of
the Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are
not exclusive of any rights or remedies provided by law.

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14. Indemnification. The Pledgor agrees to indemnify Agent for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in connection
with the acceptance or administration of its duties hereunder including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.

15. Waivers, Amendments; Applicable Law. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the Lender and the Pledgor. This
Agreement and all obligations of the Pledgor and the Agent hereunder shall be
binding upon the successors and assigns of the Pledgor and the Agent,
respectively, and shall, together with the rights and remedies of the Lender
hereunder, inure to the benefit of the Lender and its successors and assigns.
This Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Minnesota.

16. Term. This Agreement shall remain in full force and effect for so long as
the Letter of Credit or any of the Obligations remains outstanding.

17. Notice. All notices and other communications provided for hereunder shall
be given as provided in the Indenture.

18. Counterparts. This Agreement may be executed in several counterparts, each
of which shall constitute one and the same instrument.

19. Section Headings. Section headings in this Agreement are included for
convenience only and shall not constitute a part of this Agreement for any
other purpose.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered on the day and year first above written.

	 	 	 	 	 
	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ DENNIS J. ALLINGHAM
	

	 	 	 	

	

	 	 	 	Its: President and CEO
	 
	 	 	 	 
	 	 	M&I MARSHALL & ILSLEY BANK
	 
	 	 	 	 
	

	 	By:
	 	/s/ SCOTT THORSON

	

	 	 	 	Its: Senior Vice President
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL
	 	 	ASSOCIATION
	 
	 	 	 	 
	

	 	By:
	 	/s/ MARTHA K. EARLEY

	

	 	 	 	Its: Assistant Vice President

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