Document:

exv10w9

 

Exhibit 10.9

$5,630,000

City of Chaska, Minnesota

Variable Rate Demand Purchase Revenue Bonds

(Lifecore Biomedical, Inc. Project)

Series 2004

LOAN AGREEMENT

Dated as of August 1, 2004

Between

CITY OF CHASKA, MINNESOTA

and

LIFECORE BIOMEDICAL, INC.

This instrument was drafted by:

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, Minnesota 55402-1498

 

 

$5,630,000 City of Chaska, Minnesota

Variable Rate Demand Purchase Revenue Bonds

(Lifecore Biomedical, Inc. Project), Series 2004

TABLE OF CONTENTS

LOAN AGREEMENT

	 	 	 	 	 
	ARTICLE I DEFINITIONS AND INTERPRETATION
	 	 	2	 
	Section 1.01 Definitions
	 	 	2	 
	Section 1.02 Characteristics of Certificate or Opinion
	 	 	6	 
	Section 1.03 Description of Project
	 	 	6	 
	Section 1.04 Additional Provisions as to Interpretation
	 	 	6	 
	ARTICLE II REPRESENTATIONS, ETC
	 	 	8	 
	Section 2.01 Representations by the Issuer
	 	 	8	 
	Section 2.02 Representations, Warranties and Covenants by the Borrower
	 	 	8	 
	ARTICLE III ISSUANCE OF THE SERIES 2004 BONDS; REFUNDING OF REFUNDED BONDS
	 	 	12	 
	Section 3.01 Changes to Project
	 	 	12	 
	Section 3.02 Agreement to Issue Series 2004 Bonds; Application of
Series 2004 Bond Proceeds
	 	 	12	 
	Section 3.03 Deposits to and Disbursements from the Project Fund
	 	 	12	 
	Section 3.04 Obligation of the Borrower to Cooperate in Furnishing
Documents to Trustee
	 	 	12	 
	Section 3.05 Title to the Project
	 	 	13	 
	ARTICLE IV LOAN PAYMENTS AND DEPOSITS
	 	 	14	 
	Section 4.01 The Loan
	 	 	14	 
	Section 4.02 Repayment of Loan
	 	 	14	 
	Section 4.03 Mandatory Purchase of Bonds
	 	 	15	 
	Section 4.04 Additional Payments
	 	 	15	 
	Section 4.05 No Set-Off; Borrower’s Obligations Unconditional
	 	 	15	 
	Section 4.06 Interest on Loan Repayments and Other Overdue Payments
	 	 	16	 
	Section 4.07 Options to Prepay Loan
	 	 	16	 
	Section 4.08 Tax Exempt Status of Series 2004 Bonds
	 	 	17	 
	Section 4.09 Investment of Funds, Credits
	 	 	18	 
	Section 4.10 Substitute Letter of Credit
	 	 	19	 
	ARTICLE V PROJECT FACILITIES
	 	 	20	 
	Section 5.01 Use of Project Facilities
	 	 	20	 
	Section 5.02 Ownership, Maintenance and Possession of Project Facilities
by Borrower
	 	 	20	 
	Section 5.03 Liens
	 	 	20	 
	Section 5.04 Taxes and Other Governmental Charges
	 	 	20	 

 

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	Section 5.05 Insurance
	 	 	21	 
	Section 5.06 Damage or Destruction
	 	 	21	 
	Section 5.07 Condemnation
	 	 	21	 
	ARTICLE VI SPECIAL COVENANTS
	 	 	22	 
	Section 6.01 No Warranty of Condition or Suitability; Indemnification
	 	 	22	 
	Section 6.02 Annual Certificate; Reports
	 	 	23	 
	Section 6.03 Borrower to Maintain its Existence; Conditions Under Which
Exceptions Permitted
	 	 	23	 
	Section 6.04 Records and Inspection
	 	 	24	 
	Section 6.05 Filings, Instruments of Further Assurance
	 	 	24	 
	Section 6.06 Assignments
	 	 	24	 
	Section 6.07 Observance of Indenture Covenants and Terms
	 	 	24	 
	Section 6.08 Obligations Regarding Continuing Disclosure
	 	 	25	 
	ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
	 	 	26	 
	Section 7.01 Events of Default
	 	 	26	 
	Section 7.02 Remedies on Default
	 	 	26	 
	Section 7.03 Remedies Cumulative, Delay Not to Constitute Waiver
	 	 	27	 
	Section 7.04 Agreement to Pay Attorneys’ Fees and Expenses
	 	 	27	 
	Section 7.05 Advances
	 	 	28	 
	ARTICLE VIII MISCELLANEOUS
	 	 	29	 
	Section 8.01 Amounts Remaining in Funds
	 	 	29	 
	Section 8.02 Notices
	 	 	29	 
	Section 8.03 References to Bonds Ineffective after Bonds Paid
	 	 	30	 
	Section 8.04 Binding Effect
	 	 	30	 
	Section 8.05 Amendments, Changes and Modifications
	 	 	30	 
	Section 8.06 Counterparts
	 	 	30	 
	Section 8.07 Severability
	 	 	30	 
	Section 8.08 Captions
	 	 	31	 
	Section 8.09 Benefit of Bondholders
	 	 	31	 
	Section 8.10 Term of Agreement
	 	 	31	 
	Section 8.11 Certain References to the Bank, the Letter of Credit, Etc
	 	 	31	 
	Section 8.12 No Liability of Issuer
	 	 	31	 
	Section 8.13 Governing Law; Venue
	 	 	32	 
	Section 8.14 Right of Borrower To Perform Issuer’s Agreements
	 	 	32	 
	Section 8.15 Complete Agreement
	 	 	32	 
	EXHIBIT A (Form of Draw Request)
	 	 	A-1	 

 

ii

 

LOAN AGREEMENT

     This LOAN AGREEMENT, made as of the 1st day of August 2004, between the
CITY OF CHASKA, a Minnesota municipal corporation (herein sometimes called the
“City” or the “Issuer”), and LIFECORE BIOMEDICAL, INC., a Minnesota corporation
(herein sometimes called the “Borrower”),

WITNESSETH:

     WHEREAS, Minnesota Statutes, Sections 469.152 to 469.1651, as amended
(collectively the “Act”), authorizes and empowers the Issuer to issue and sell
revenue bonds and refunding revenue bonds and lend the proceeds thereof to
corporations for the purpose of financing or refinancing projects authorized
thereby; and

     WHEREAS, Lifecore Biomedical, Inc., a Minnesota corporation (the
“Borrower”), has undertaken a “project,” within the meaning of the Act (as more
specifically referred to herein, the “Project”); and

     WHEREAS, the Issuer proposes to make a loan to the Borrower pursuant to
the Act to provide refinancing for the Project through the refunding in full of
the Refunded Bonds (described herein); and

     WHEREAS, the Issuer proposes to issue its $5,630,000 Variable Rate Demand
Purchase Revenue Bonds (Lifecore Biomedical, Inc. Project), Series 2004 (the
“Series 2004 Bonds”) pursuant to an Indenture of Trust of even date herewith,
between the Issuer and Wells Fargo Bank, National Association, as trustee (the
“Trustee”), to provide the funds to be loaned to the Borrower hereunder, and to
assign its interests in this Loan Agreement to the Trustee (except for certain
rights of indemnity and to payment of fees, expenses and advances), as security
for the Bonds; and

     WHEREAS, the Borrower has arranged to deliver to the Trustee as a
condition to the issuance of the Bonds a “direct pay” Irrevocable Letter of
Credit to be issued by M&I Marshall & Ilsley Bank, to support payment of the
Bonds.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto covenant and agree as follows:

 

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

     Section 1.01 Definitions. Unless the context otherwise requires, the
terms defined in this Article I and in the recitals and succeeding Articles of
this Loan Agreement shall, for all purposes of this Loan Agreement and of any
agreement supplemental hereto, have the meanings herein specified, such
definitions to be equally applicable to both the singular and plural forms of
any of the terms defined:

     “Act” means Minnesota Statutes, Sections 469.152 to 469.1651, as amended.

     “Authorized Borrower Representative” means the person at the time
designated to act on behalf of the Borrower by written certificate furnished to
the Issuer and the Trustee, containing the specimen signature of such person
and signed on behalf of the Borrower by its President, Secretary or any Vice
President. Such Certificate may designate an alternate or alternates.

     “Bank” means (i) M&I Marshall & Ilsley Bank, a state banking association
organized and existing under the laws of the State of Wisconsin in its capacity
as issuer of the Letter of Credit, and (ii) any Substitute Bank.

     “Bond Counsel” means Independent nationally recognized bond counsel.

     “Bond Documents” means this Loan Agreement, the Indenture, the Remarketing
Agreement, the Tax Exemption Agreement and the Letter of Credit.

     “Bond Fund” means the Bond Fund created under the Indenture.

     “Bond Resolution” means the resolution adopted by the Issuer on July 19,
2004, authorizing the issuance and sale of the Series 2004 Bonds, as the same
may be amended, modified or supplemented by any amendments or modifications
thereof.

     “Bonds” means the Series 2004 Bonds.

     “Borrower” means Lifecore Biomedical, Inc., a Minnesota corporation, its
successors and assigns.

     “Call Date” means, whenever used with reference to the redemption of the
Refunded Bonds, September 1, 2004.

     “Certificate” means a certification in writing required or permitted by
the provisions of this Loan Agreement or the Indenture, signed and delivered to
the Trustee or other proper person or persons. If and to the extent required
by the provisions of Section 1.02 hereof, each Certificate shall include the
statements provided for in said Section 1.02.

     “Certified Resolution” means a copy of a resolution of the Issuer,
certified by the City Clerk of the Issuer to have been duly adopted by the
Issuer and to be in full force and effect on the date of such certification.

2

 

     “City” means the City of Chaska, Minnesota.

     “Closing Date” means the date on which the Series 2004 Bonds are delivered
to the original purchaser or purchasers thereof.

     “Credit Agreement” shall have the meaning set forth in the Indenture.

     “Default” means default by the Borrower in the performance or observance
of any of the covenants, agreements or conditions on its part contained in this
Loan Agreement, exclusive of any notice or period of grace required for a
default to constitute an “Event of Default” as described in Section 7.01 of
this Loan Agreement.

     “Determination of Taxability” means the issuance of a statutory notice of
deficiency by the Internal Revenue Service, or a ruling of the National Office
or any District Office of the Internal Revenue Service, or a final decision by
any court of competent jurisdiction that interest on the Bonds is includible in
the gross income of the recipient under Section 103 and related Sections of the
Internal Revenue Code and regulations thereunder, except for any period during
which a Bond is owned by a “substantial user” or “related person,” within the
meaning of Section 147(a) of the Internal Revenue Code, provided that the
period for a contest or appeal, if any, of such action, ruling or decision has
expired without any such appeal or contest having been instituted, or, if
instituted, such contest or appeal has been unsuccessfully concluded.

     “Event of Default” means an Event of Default described in Section 7.01 of
this Loan Agreement which has not been cured.

     “Governing Body” means the City Council or its successor as governing body
of the Issuer.

     “Holder” or “Bondholder” or “Owner” means the person in whose name a Bond
shall be registered in the registration records maintained by the Trustee.

     “Indenture” means the Indenture of Trust between the Issuer and Wells
Fargo Bank, National Association, as trustee, of even date herewith, under
which the Bonds are authorized to be issued, and including any indenture
supplemental thereto.

     “Independent”, when used with reference to an attorney, engineer,
architect, certified public accountant, or other professional person, means a
person who (i) is in fact independent, (ii) does not have any material
financial interest in the Borrower or the transaction to which his Certificate
or opinion relates (other than the payment to be received for professional
services rendered), and (iii) is not connected with the Issuer, or the Borrower
as an officer, member, director or employee.

     “Independent Counsel” means an Independent attorney duly admitted to
practice law before the highest court of any state.

     “Independent Engineer” means an Independent engineer or engineering firm
or an Independent architect or architectural firm qualified to practice the
profession of engineering or architecture under the laws of Minnesota.

3

 

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

     “Issuer” means the City of Chaska, Minnesota.

     “Land” means the land and interests in land located in City of Chaska,
Minnesota, constituting the site of the Project.

     “Letter of Credit” shall have the meaning set forth in the Indenture.

     “Loan Agreement” means this Loan Agreement between the Issuer and the
Borrower, dated as of August 1, 2004, as from time to time amended or
supplemented.

     “Loan Repayments” means the payments made or to be made by the Borrower
pursuant to Section 4.02 of this Loan Agreement.

     “Opinion of Counsel” means a written opinion of counsel (who need not be
Independent Counsel unless so specified) appointed by the Borrower or Issuer,
as the case may be, and acceptable to the Trustee or appointed by the Trustee.
If and to the extent required by the provisions of Section 1.02 hereof, each
Opinion of Counsel shall include the statements provided for in said Section
1.02.

     “Original Purchaser” means Northland Securities, Inc.

     “Outstanding” when used as of any particular time with reference to Bonds,
shall have the meaning provided in the Indenture.

     “Prior Indenture” means the Trust Indenture dated as of September 1, 1990,
between the Issuer and the Prior Trustee.

     “Prior Trustee” means Wells Fargo Bank, National Association
(successor-by-merger to “Norwest Bank Minnesota, National Association”), acting
in the capacity of trustee under the Prior Indenture.

     “Project” means the Project described in Section 1.03 hereof.

     “Project Buildings” means the building or buildings constituting the
Project, located on the Land.

     “Project Costs” shall have the meaning set forth in the Indenture.

     “Project Equipment” means all those items of equipment, building service
equipment and fixtures located in the Project Buildings or used in connection
with the Project Facilities and acquired and installed with the proceeds of the
Refunded Bonds.

     “Project Facilities” means the Land, the Project Buildings and the Project
Equipment, all as the same may at any time exist.

     “Project Fund” means the Project Fund established under the Indenture.

4

 

     “Purchase Price” shall have the meaning set forth in the Indenture.

     “Qualified Investments” means investments authorized and described in
Article VII of the Indenture, but only to the extent authorized by the Act.

     “Redeem” or “redeem” or “redemption” means “prepay” or “prepayment” as the
case may be.

     “Refunded Bonds” means the Industrial Development Revenue Bonds (Lifecore
Biomedical, Inc. Project), Series 1990, issued by the Issuer in the original
aggregate principal amount of $7,000,000, pursuant to the Prior Indenture.

     “Reimbursement Agreement” means the Reimbursement Agreement of even date
herewith between the Borrower and the Bank, as amended or supplemented from
time to time.

     “Remarketing Agent” means Northland Securities, Inc.

     “Remarketing Agreement” means the Remarketing Agreement of even date
herewith between the Borrower and the Remarketing Agent, as amended or
supplemented from time to time.

     “Responsible Officer” of any Trustee means and includes the chair of the
board of directors, the president, every vice president, every assistant vice
president, the cashier, every assistant cashier, every corporate trust officer,
and every officer and assistant officer of such trustee, other than those
specifically above mentioned, to whom any corporate trust matter is referred
because of his knowledge of, and familiarity with, a particular subject.

     “Series 2004 Bonds” means the City of Chaska, Minnesota Variable Rate
Demand Purchase Revenue Bonds (Lifecore Biomedical, Inc. Project), Series 2004,
authorized by the Indenture, this Loan Agreement and the Bond Resolution and
described in the Indenture.

     “Sinking Fund” means the Sinking Fund established by the Trustee pursuant
to Section 3.03 of the Indenture as part of the Bond Fund.

     “Substitute Bank” shall have the meaning set forth in the Indenture.

     “Substitute Letter of Credit” shall have the meaning set forth in the
Indenture.

     “Tax Exemption Agreement” means the Tax Exemption Agreement of even date
herewith among the Issuer, the Borrower and the Trustee, as amended or
supplemented from time to time.

     “Trustee” means the trustee at the time serving as such under the
Indenture.

     “Trust Estate” means the interest of the Issuer in this Loan Agreement
assigned under Granting Clause I of the Indenture; the revenues, moneys,
investments, contract rights, general intangibles and instruments and proceeds
and products and accessions thereof as set forth in

5

 

Granting Clause II of the
Indenture; and additional property held by the Trustee pursuant to Granting
Clause III of the Indenture, including the Letter of Credit.

     Section 1.02 Characteristics of Certificate or Opinion. Every certificate
or opinion with respect to compliance with a condition or covenant provided for
in the Indenture or this Loan Agreement, shall include: (i) a statement that
the person or persons making such certificate or opinion have read such
covenant or condition and the definitions herein relating thereto; (ii) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (iii) a statement that, in the opinion of the signers, they have made or
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such covenant or
condition has been complied with; and (iv) a statement as to whether, in the
opinion of the signers, such condition or covenant has been complied with.

     Any such Certificate made or given by an officer of the Issuer or the
Borrower may be based, insofar as it relates to legal matters, upon an Opinion
of Counsel, unless such person knows that the Opinion of Counsel with respect
to the matters upon which his Certificate may be based as aforesaid is
erroneous, or, in the exercise of reasonable care, should have known that the
same was erroneous. Any such Opinion of Counsel may be based (insofar as it
relates to factual matters in the possession of the Issuer or the Borrower),
upon the Certificate of an officer or officers of the Issuer or the Borrower,
unless such counsel knows that the Certificate with respect to the matters upon
which his opinion may be based as aforesaid is erroneous.

     Section 1.03 Description of Project. The term “Project” refers to the
acquisition and construction of a manufacturing facility by the Borrower in the
City, to the extent financed with proceeds of the Refunded Bonds.

     Section 1.04 Additional Provisions as to Interpretation. All references
herein to “Articles”, “Sections” and other subdivisions are to the
corresponding Articles, Sections or subdivisions of this Loan Agreement; and
the words “herein”, “hereof”, “hereunder” and other words of similar import
refer to this Loan Agreement as a whole and not any particular Article, Section
or subdivision hereof.

     Whenever in this Loan Agreement it is provided or permitted that there be
deposited with or held in trust by the Trustee money or securities in the
necessary amount to pay or redeem any Bonds, the amount so to be deposited or
held shall be the principal amount of such Bonds and all unpaid interest
thereon to maturity, except that in the case of Bonds which are to be redeemed
prior to maturity and in respect of which there shall have been furnished to
the Trustee proof satisfactory to it that notice of such redemption on a
specified redemption date has been duly given or provision satisfactory to the
Trustee shall be made for such notice, the amount so to be
deposited or held shall be the principal amount of such Bonds and interest
thereon to the redemption date, together with the redemption premium, if any.

     Any terms defined in the Indenture but not defined herein shall have the
same meaning herein unless the context hereof clearly requires otherwise.

6

 

     This Loan Agreement is governed by and shall be construed in accordance
with the laws of Minnesota.

7

 

ARTICLE II

REPRESENTATIONS, ETC.

     Section 2.01 Representations by the Issuer. The Issuer makes the
following representations as the basis for its undertakings herein:

     (a) The Issuer is a duly organized and existing municipal
corporation under the laws of the State of Minnesota.

     (b) On March 5, 1990, after publication of notice of hearing in the
official newspaper of the Issuer, being a newspaper of general
circulation in the community, the Issuer held a public hearing on the
Project and the issuance of the Refunded Bonds, and thereafter the
Governing Body, as the applicable elected representative, duly adopted
the Bond Resolution and thereby granted final approval to the issuance of
the Refunded Bonds.

     (c) The issuance and sale of the Series 2004 Bonds, the execution
and delivery of this Loan Agreement and the Indenture, the performance of
all covenants and agreements of the Issuer contained in this Loan
Agreement and the Indenture, and the loan hereunder are authorized and
have been duly authorized by resolutions of the Issuer, including the
Bond Resolution, which was duly adopted at a meeting of the Issuer duly
called and held, by the requisite vote of its members, all as required by
law.

     (d) The Borrower has requested that the Issuer issue the Series 2004
Bonds as provided in the Act, the Indenture and the Bond Resolution and
lend the proceeds thereof to the Borrower pursuant to this Loan
Agreement. The Issuer will issue the Series 2004 Bonds in the aggregate
principal amount of $5,630,000, and the Series 2004 Bonds shall be in the
form and shall be subject to the terms and provisions set forth in the
Indenture.

     (e) There is no litigation pending or, to the best of its knowledge
threatened, against the Issuer relating to the Project or to the Bonds or
to this Loan Agreement or the Indenture or questioning the powers or
Issuer of the Issuer under the Act, or questioning the corporate
existence of the Issuer or the title of any of the present officers of
the Issuer to their respective offices.

     (f) The execution, delivery and performance of this Loan Agreement
by the Issuer do not violate any agreement or any court order or judgment
in any litigation to which the Issuer is a party or by which it is bound.

     Section 2.02 Representations, Warranties and Covenants by the Borrower.
The Borrower makes the following representations, warranties and covenants:

     (a) The Borrower is a corporation duly organized and existing under
the laws of Minnesota.

     (b) Subject to Section 5.02 hereof, the Borrower intends, but shall
not be obligated, to own and operate the Project Facilities to the
expiration or sooner termination

8

 

of this Loan Agreement, as provided
herein, except to the extent such operation may be interrupted by
strikes, riots, acts of God or public enemy or other circumstances beyond
the control of the Borrower.

     (c) The execution and delivery of this Loan Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or constitute a breach of or default under any bond,
debenture, note or other evidence of indebtedness or any contract, loan
agreement or lease to which the Borrower is a party or by which it is
bound, or violate any law, regulation or order of the United States or
the State of Minnesota or agency or political subdivision thereof, or any
court order or judgment in any proceeding to which the Borrower is or was
a party or by which it is bound.

     (d) The proceeds of the Series 2004 Bonds to be deposited in the
Project Fund, together with other funds to be contributed for the purpose
by the Borrower, will be sufficient to cause the Refunded Bonds to be
redeemed in whole on the Call Date.

     (e) There is no litigation pending, or to the best of its knowledge
threatened, against the Borrower materially and adversely affecting the
Project or its ability to carry out the terms of this Loan Agreement.

     (f) The Land is currently zoned properly for the Project Facilities
and the Borrower has obtained or will timely obtain all necessary
licenses and permits required for renovation and operation of the Project
Buildings.

     (g) To the best of the Borrower’s knowledge and belief, no member of
the Governing Body of the Issuer or other officer or employee of the
Issuer is directly or indirectly interested in this Loan Agreement, the
Series 2004 Bonds, the Project or any contract, agreement or job hereby
contemplated to be entered into or undertaken.

     (h) The Borrower has approved the terms and conditions of the
Indenture and the Bonds.

     (i) The Official Statement relating to the issuance and sale of the
Series 2004 Bonds, including all Appendices thereto, does not contain any
untrue statement of a material fact, and does not omit to state a
material fact, required to be stated therein or necessary in order to
make the statements contained therein not misleading.

     (j) The Borrower shall take no action nor omit to take any action
the effect of which would be to jeopardize the tax-exempt status of the
Series 2004 Bonds.

     (k) 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.

     (l) 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).

9

 

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.

     (m) 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.

     (n) 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.

     (o) 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.

     (p) 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

10

 

two years
of the date of acquisition or, if later, the date of issuance of the
Refunded Bonds.

     (q) 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.

     (r) 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.

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

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

     (u) 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.

     (v) Within the meaning of Treasury Regulation, § 1.148-1(c)(3), any
amount required by the Bank under the Credit Agreement to be held by the
Borrower or affiliate of the Borrower at a particular level for the
direct or indirect benefit of the Bank will not be “pledged” to the Bank
or other party for the following reasons: (i) the amount does not exceed
reasonable needs for which it is maintained; (ii) the required level is
tested no more frequently than every six months; and (iii) the amount may
be spent without any substantial restriction other than a requirement to
replenish the amount by the next testing date.

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ARTICLE III

ISSUANCE OF THE SERIES 2004 BONDS;

REFUNDING OF REFUNDED BONDS

     Section 3.01 Changes to Project. Subject to the terms of the Credit
Agreement and the documents related thereto, the Borrower may make changes in
the Project Facilities at any time; provided that no changes will be made which
would delete from the Project any essential characteristics of the Project as
specified in Section 1.03 nor which materially and adversely affect the total
operating unity and efficiency or capacity of the Project Facilities and that,
after such changes, the Project shall remain in compliance with all applicable
requirements of this Loan Agreement and of law, including all relevant
provisions of the Internal Revenue Code required to be met in order to maintain
the exclusion from gross income, for federal income tax purposes, of interest
on the Series 2004 Bonds. The Project Facilities, to the best knowledge of the
Borrower, are in compliance with all applicable zoning, planning and building
regulations of governmental authorities having jurisdiction of the Project
Facilities.

     Section 3.02 Agreement to Issue Series 2004 Bonds; Application of Series
2004 Bond Proceeds. In order to provide funds to loan to the Borrower for the
refunding of the Refunded Bonds, the Issuer has, or will have, upon or promptly
after the execution of this Loan Agreement, issued and delivered the Series
2004 Bonds to the Original Purchaser thereof and the Issuer has or will have
deposited the proceeds of said Series 2004 Bonds as follows: (i) in the Bond
Fund all accrued interest (if any) received, and (ii) in the Project Fund the
balance of the proceeds received from said sale.

     Section 3.03 Deposits to and Disbursements from the Project Fund. The
Issuer has, in the Indenture, authorized and directed the Trustee to use the
moneys in the Project Fund to cause the Refunded Bonds to be redeemed in whole
on the Call Date, as further specified in the Indenture.

     The Borrower covenants and agrees that, in addition to the proceeds of the
Series 2004 Bonds, it will deposit moneys in the Project Fund or provide funds
to the indenture trustee for the Refunded Bonds as may be required to refund
and redeem in full the Refunded Bonds on the Call Date, and that on the Call
Date there shall accordingly be sufficient funds on hand with the indenture
trustee for the Refunded Bonds to pay all principal of, premium, if any, and
interest then due on the Refunded Bonds. The Borrower further covenants and
agrees that it will cause or has caused the indenture trustee for the Refunded
Bonds to publish and mail notice of the redemption in whole of the Refunded
Bonds, in accordance with the provisions of the Prior Indenture.

     The Borrower agrees that the issuance costs financed by the Series 2004
Bonds shall not exceed 2.00% of the proceeds of the Series 2004 Bonds, all
within the meaning of Section 147(g) of the Internal Revenue Code.

     Section 3.04 Obligation of the Borrower to Cooperate in Furnishing
Documents to Trustee. The Borrower agrees to cooperate in furnishing to the
Trustee (i) any documents referred to in the Indenture that are required to
effect payments out of the Project Fund, and

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(ii) the documents referred to in
Section 2.06 of the Indenture required for the authentication and delivery of
the Series 2004 Bonds. Such obligations are subject to any provision of this
Loan Agreement or the Indenture requiring additional documentation.

     Section 3.05 Title to the Project. The Issuer acknowledges and agrees
that as between the Issuer and the Borrower, neither the Issuer, the Trustee
nor any Holder of the Bonds shall be entitled to or have any interest in the
Land, the Project Building, the Project Equipment, or in any other Project
Facilities, or in the Borrower’s title thereto or interest therein.

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ARTICLE IV

LOAN

PAYMENTS AND DEPOSITS

     Section 4.01 The Loan. The Issuer agrees, upon the terms and conditions
in this Loan Agreement, to lend to the Borrower the gross proceeds of issuance
of the Bonds ($5,630,000) (the “Loan”) and further agrees to deposit the
proceeds of sale thereof into the Bond Fund and Project Fund established with
the Trustee as provided herein and in the Indenture, which deposits shall
constitute the making of the Loan from the Issuer to the Borrower hereunder.
Such proceeds shall thereafter be invested and disbursed by the Trustee in
accordance with the provisions of this Loan Agreement and the Indenture.

     Section 4.02 Repayment of Loan. The Borrower covenants and agrees to
repay the Loan, together with interest and premium, if any, in Loan Repayments
which in the aggregate shall be in an amount sufficient to pay, in full and
when due, all the Bonds. To provide for the repayment of the Loan (until the
principal of, premium (if any) and interest on the Bonds shall have been fully
paid or provision for payment thereof shall have been made in accordance with
the Indenture), the Borrower agrees to pay or cause to be paid for the account
of the Issuer in immediately available funds the following amounts:

     (a) into the Bond Fund on September 1, 2004, and on the 1st day of
each month thereafter, a sum equal to (i) the amount, if any, then
payable as principal of and premium, if any, on the Bonds, plus (ii) the
amount then payable as interest on the Bonds;

     (b) into the Bond Fund forthwith, the amount of the deficiency in
the event the funds on deposit in the Bond Fund on any Bond payment date
are for any reason insufficient to pay principal, premium (if any) and
interest on the Bonds then due or to become due on any Bond principal or
interest payment date (whether at maturity or upon redemption or
acceleration of maturity in event of default); and

     (c) into the Rebate Fund moneys in the amount necessary to comply
with the provisions of Section 4.08(d) hereof.

Paragraphs (a) and (b) are subject, however, to the amounts of any credits
allowable under Section 4.09 hereof; and provided however, that the obligation
of the Borrower to make any payment under paragraph (a) or (b) above shall be
deemed satisfied and discharged to the extent of any corresponding payment made
by the Bank to the Trustee under the Letter of Credit, it being the intention
of the parties hereto that each payment owing with respect to the Bonds is to
be made directly to the Trustee by the Bank from the proceeds of draws made on
the Letter of Credit. If and to the extent the Borrower shall make payment to
the Trustee hereunder prior to a drawing under the Letter of Credit and the
Bank shall thereafter make payment of such amount pursuant to a drawing under
the Letter of Credit, the Trustee shall transmit to the Bank the amounts so
paid by the Borrower to the extent necessary in reimbursement of such drawing.
In addition, if the Bank shall make payment pursuant to a drawing under the Letter
of Credit sufficient to satisfy the Borrower’s obligation to make payments
hereunder, the Borrower shall not be obligated to make such payment hereunder
but shall, instead, cause payment to be made directly to the Bank in
reimbursement for such drawing in accordance with the terms of the Credit
Agreement.

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     Section 4.03 Mandatory Purchase of Bonds. The Borrower agrees to pay or
cause to be paid to the Trustee such amounts as shall be necessary to enable
the Trustee to pay the Purchase Price of Bonds delivered to it for purchase,
all as more particularly described in Sections 4.01, 4.02, 4.06 and 4.11 of the
Indenture; provided, however, that the obligation of the Borrower to make any
such payment under this Section 4.03 is intended to be discharged, first, from
proceeds of the Letter of Credit and, second, from proceeds of a remarketing of
Bonds, all as further set forth in Section 4.07 of the Indenture.

     Section 4.04 Additional Payments. The Borrower also agrees:

     (a) to pay to the Trustee, for itself or remittance to the paying
agents, promptly after being billed, until the principal of and interest
on the Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the provisions of the
Indenture, (i) an amount equal to the annual fee of the Trustee, as
trustee, for the ordinary services of the Trustee rendered and its
ordinary expenses incurred under the Indenture during the preceding
billing period, (ii) the reasonable fees and charges of paying agents on
the Bonds for acting as paying agent as provided in the Indenture, as and
when the same become due, and (iii) the reasonable fees and charges of
the Trustee for necessary extraordinary services rendered by it and
extraordinary expenses incurred by it under the Indenture, as and when
the same become due; provided, that the Borrower may, without creating a
default hereunder, contest in good faith the necessity for any such
extraordinary services and extraordinary expenses and the reasonableness
of any such fees, charges or expenses; and

     (b) to pay to the Issuer, when due, all reasonable fees and expenses
of the Issuer, including the fees and expenses of counsel to the Issuer,
incurred in connection with the issuance, payment, redemption and
exchange of Bonds or otherwise in connection with the transactions
contemplated by this Loan Agreement and the Indenture.

     Section 4.05 No Set-Off; Borrower’s Obligations Unconditional. The
obligation of the Borrower to make the payments required hereby shall be
absolute and unconditional. Until such time as the principal of, premium, if
any, and interest on the Bonds shall have been fully paid or provision for the
payment thereof shall have been made in accordance with the Indenture, the
Borrower (i) will perform and observe all of its agreements contained in this
Loan Agreement and (ii) will pay without abatement, diminution or deduction
(whether for taxes or otherwise) all amounts required to be paid hereunder,
regardless of any cause or circumstance whatsoever including, without limiting
the generality of the foregoing:
any defense, set-off, recoupment or counterclaim which the Borrower may
have or assert against the Issuer, the Trustee, the Bank, any Holder of a Bond
or any other person; any failure of the Issuer to perform any covenant or
agreement contained herein or in any other agreement between the Issuer and the
Borrower; any indebtedness or liability at any time owing to the Borrower by
the Issuer, the Trustee, the Bank, any Holder of a Bond or any other person;
any acts or circumstances that may constitute failure of consideration; damage
to or condemnation of the Project Facilities; failure or delay in completion of
the Project; eviction by paramount title; commercial frustration of purpose;

15

 

bankruptcy or insolvency of the Issuer or the Trustee; any change in the tax or
other laws of the United States of America or of the State of Minnesota or any
political subdivision thereof; or any failure of the Issuer, the Bank, or the
Trustee to perform and observe any agreement, whether express or implied, or
any duty, liability or obligation, arising out of or connected with this Loan
Agreement, the Credit Agreement or the Indenture.

     The Borrower hereby waives, to the extent permitted by law, any and all
rights which it may now have or which at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate or cancel, or to limit its
liability under, this Loan Agreement except in accordance with the express
terms hereof.

     Section 4.06 Interest on Loan Repayments and Other Overdue Payments. In
the event the Borrower shall fail to make Loan Repayments required by Section
4.02 or 4.03 hereof, the installment so in default shall continue as an
obligation of the Borrower until the amount in default shall have been fully
paid, and the Borrower agrees to pay interest on such default at the rate or
rates of interest specified in the Bonds. In the event the Borrower shall fail
to make any payment required under Section 4.04 hereof or if advances are made
pursuant to Section 7.05 hereof, the item so in default shall continue as an
obligation of the Borrower until the amount shall have been fully paid and the
Borrower agrees to pay interest on such payment in default at a rate equal to
the rate or rates of interest specified in the Bonds.

     Section 4.07 Options to Prepay Loan.

     (a) The Borrower shall have and is hereby granted, the option to
prepay the loan and require the Series 2004 Bonds to be redeemed, in
whole or in part, upon the deposit of funds sufficient therefor or making
provision satisfactory to the Trustee and the Bank therefor, if and to
the extent the Bonds are subject to optional redemption under Section
3.01 or Section 3.02 of the Indenture, as further provided therein, or in
order to cause the Bonds to be defeased in accordance with the provisions
of the Indenture.

     (b) To exercise the options granted in this Section, the Borrower
shall, at least forty-five (45) days prior to the date upon which such
prepayment is to be made, give written notice of such prepayment to the
Issuer, the Bank and the Trustee. Such notice shall request the
redemption pursuant to the applicable provisions of the Indenture of a
specified principal amount of Bonds if less than all outstanding Bonds
are to be redeemed and shall otherwise comply with the provisions hereof
and of the Indenture. On or before the date specified for the redemption
of the Bonds, the Borrower shall pay or cause to be
paid to the Trustee an amount which, together with other funds held
by the Trustee and available for the purpose, is equal to the redemption
price of the Bonds to be redeemed and accrued interest thereon to the
redemption date, and in any case, such further amounts, if any, as may be
required to redeem the Bonds called for redemption by the Trustee on the
redemption date. So long as the Letter of Credit is still in effect,
redemption shall be accomplished by means of a drawing on the Letter of
Credit, and the amounts deposited hereunder shall be used to reimburse
the Bank for such drawing.

     The Issuer, at the request at any time of the Borrower and if the Bonds
are then callable, shall forthwith take all steps that may be necessary under
the applicable redemption provisions of

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the Indenture to effect redemption of
all or part of the then outstanding Bonds, as may be specified by the Borrower,
on the earliest redemption date on which such redemption may be made under such
applicable provisions, provided that the Borrower shall have made available
funds in adequate amount therefor or shall have made arrangements satisfactory
to the Issuer therefor. Except as herein otherwise provided, Bonds shall be
called for redemption by the Issuer only upon the direction of the Borrower.

     Section 4.08 Tax Exempt Status of Series 2004 Bonds. It is the intention
of the parties hereto that the interest paid on the Series 2004 Bonds will not
be included in the gross income of the recipients of said interest by reason of
Section 103 and related Sections of the Internal Revenue Code. In order to
confirm and carry out such intention:

     (a) The Borrower shall (A) provide such Certificates of the
Authorized Borrower Representative, Opinions of Bond Counsel, and other
evidence as may be necessary or reasonably requested by the Issuer, the
Bank or the Trustee to establish the exclusion from gross income of
interest on the Series 2004 Bonds under Section 103 and related Sections
of the Internal Revenue Code, and (B) file such information and
statements, acting alone or with the Issuer, with the Internal Revenue
Service, as may be required from the Borrower or the Issuer to establish
or preserve such exclusion or as may be required by Section 103 and
related Sections of the Internal Revenue Code, including Section 149(e)
thereof, regulations thereunder and related provisions of law or
regulation.

     (b) If there shall occur a Determination of Taxability, the Borrower
shall have the obligation to, and hereby covenants and agrees that it
shall forthwith repay the loan and cause the Series 2004 Bonds to be
redeemed on the next interest payment date following notice to the
Borrower of the Determination of Taxability. Any redemption required
under this Section shall be effected upon the following terms and
conditions:

         (i) Forthwith after receipt by the Borrower of receipt of the
Determination of Taxability the Borrower shall give written notice
of the Determination of Taxability and of its intention to redeem
the outstanding Series 2004 Bonds to the Issuer, the Bank and the
Trustee, stating the date of redemption and the Trustee shall make
arrangements for the giving of notice required for redemption of
all of the outstanding Series 2004 Bonds and the
Borrower shall make arrangements for the transmittal of funds
needed for such redemption in advance of that date. If the Letter
of Credit is then in effect, redemption shall occur with the
proceeds of a draw under the Letter of Credit.

         (ii) The aggregate redemption price payable by the Borrower
shall be an amount which will be equal to the principal amount of
all then outstanding Series 2004 Bonds, plus accrued interest
thereon to the redemption date.

         (iii) The Borrower shall also pay an amount equal to the
Trustee’s and any paying agent’s fees under the Indenture, accrued
and to accrue until final payment and redemption of the Series 2004
Bonds and all other advances, fees,

17

 

costs and expenses incurred by
the Trustee under the Indenture or by the Issuer under this
Agreement or any other agreement or instrument relating to the
Bonds.

     (c) If there shall be a Determination of Taxability and the Borrower
shall fail to give notice thereof and of its intention to redeem the
Bonds as above described, the Trustee shall nevertheless be authorized to
give notice of redemption of the outstanding Series 2004 Bonds on the
next interest payment date thereafter whenever it shall have determined,
in good faith, that a Determination of Taxability has been made; and the
Trustee shall give such notice of redemption if the Issuer, the Bank or
any Bondholder shall furnish to the Trustee a copy of the Determination
of Taxability duly certified or authenticated to the satisfaction of the
Trustee. The Trustee shall furnish to the Borrower, the Bank and the
Issuer a copy of the notice given or to be given by it pursuant to this
paragraph, and the Borrower shall thereupon become obligated to pay the
aggregate redemption price to the Trustee as a Loan Repayment prior to
the redemption date and to pay all fees, expenses, costs and advances of
the Trustee and any paying agent under the Indenture.

     (d) The Borrower hereby acknowledges and confirms its obligations
under Section 148(f) of the Internal Revenue Code and regulations
thereunder. Specifically, the Borrower agrees to comply with the rebate
requirements imposed under said Section 148(f) and pertinent regulations,
including the requirement to make or cause to be made annual (or other
periodic) calculations of the amount subject to rebate thereunder, and to
maintain and to provide to the Trustee copies of records of such
determinations until six years after the retirement of the Bonds, and the
requirement to make all required rebates to the United States not later
than 60 days after each installment computation date and not later than
60 days after the final computation date. If the Borrower shall fail to
deposit with the Trustee the full amount of any rebate required to be
paid by the Borrower when such deposit is due, the Issuer or the Trustee
may make (but has no obligation to make) payment to the United States or
the Issuer may deposit (but has no obligation to deposit) the required
amount with the Trustee with appropriate instructions to make payment to
the United States, and such payment or deposit shall be an advance under
Section 7.05 of this Loan Agreement. In construing the Borrower’s
obligations hereunder, all terms used in this paragraph (d) shall have
the meanings provided in said Section 148(f) and regulations thereunder,
and all provisions set forth in the Indenture for the purpose of
complying with said Section and regulations shall be incorporated herein
by reference. The Borrower agrees to make all required rebate payments
to the United
States, as and when required, and such payments shall constitute
additional Loan Repayments under Section 4.02 hereof. In performing or
causing to be performed the obligations set forth in this paragraph, the
Borrower and the Trustee may require such reports or opinions of
accountants, Certificates of the Borrower, and Opinions of Counsel as the
Borrower or the Trustee may deem necessary or desirable. All costs
therefor shall be borne by the Borrower.

     Section 4.09 Investment of Funds, Credits. To the extent authorized by
the Act, moneys on deposit to the credit of any Fund or Account maintained by
the Trustee under the Indenture shall be invested by the Trustee, upon request
by the Authorized Borrower Representative to the Trustee, in Qualified
Investments. Investments permitted under this

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Section may be purchased from
the Trustee or any of its affiliates. Investments so purchased shall be deemed
at all times to be a part of the respective Fund or Account, but may from time
to time be sold or otherwise converted into cash, whereupon the proceeds
derived from such sale or conversion shall be credited to the respective Fund
or Account. Any interest or profit shall be credited to the respective Fund or
Account. The Trustee shall redeem or sell, at the best price obtainable, any
investments so purchased, whenever it shall be necessary to do so in order to
provide moneys to meet any payment from any such Fund or Account. Neither the
Trustee nor the Issuer shall be liable for any loss resulting from any such
investment, nor from failure to preserve rights against endorsers or other
prior parties to instruments evidencing any such investment. Investment of
funds pursuant to this Section shall be limited as to amount and yield of
investment in such manner that no part of the outstanding Bonds shall be deemed
“arbitrage bonds” under Section 148 of the Internal Revenue Code and
regulations thereunder.

     Section 4.10 Substitute Letter of Credit. The Borrower may provide for
the delivery to the Trustee of a Substitute Letter of Credit. Any Substitute
Letter of Credit shall be delivered to the Trustee not less than 45 days prior
to the expiration of the Letter of Credit it is being issued to replace;
provided, however, that on or before the date of such delivery of a Substitute
Letter of Credit to the Trustee, the Borrower shall furnish to the Trustee (a)
written evidence from each rating agency, if any, by which the Bonds are then
rated, to the effect that such rating agency has reviewed the proposed
Substitute Letter of Credit and that the substitution of the proposed
Substitute Letter of Credit will not result in the modification, reduction or
withdrawal of the rating(s), if any, then borne by the Bonds; provided,
however, that if at the time of such substitution the Bonds are not then rated
by a rating agency, there is no requirement that any issuer of a Substitute
Letter of Credit have an equivalent financial standing to that of the Bank or
that the long or short-term obligations of an issuer of a Substitute Letter of
Credit have an equivalent credit rating as those of the Bank; and (b) an
Opinion of Counsel by nationally recognized bond counsel to the effect that the
delivery of such Substitute Letter of Credit shall not cause the interest on
the Bonds to become includible in the gross income of the recipients thereof
for purposes of federal income taxation.

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ARTICLE V

PROJECT FACILITIES

     Section 5.01 Use of Project Facilities. The Borrower will use the Project
Facilities only in furtherance of its lawful purposes and will cause the
Project Facilities to be used and operated only as a facility eligible to be
and defined as a “project” under the Act and in accordance with all pertinent
provisions of Sections 103, 145 and 150 of the Internal Revenue Code, to the
extent necessary or desirable to maintain the excludability of Bond interest
from the gross income of the recipients thereof.

     The Borrower will not use or permit any person to use the Project
Facilities for any use or purpose in violation of the laws of the United
States, the State of Minnesota, or any ordinance of the Issuer, and agrees to
comply with all the orders, rules, regulations and requirements of the
agencies, officers or boards of the City, City or State or other governmental
authority having jurisdiction over the Project Facilities. The Borrower shall
have the right to contest by appropriate legal proceedings, without cost or
expense to the Issuer, the validity of any law, ordinance, order, rule,
regulation or requirement of the nature herein referred to.

     Section 5.02 Ownership, Maintenance and Possession of Project Facilities
by Borrower. The Borrower agrees that so long as the Bonds are outstanding,
the Borrower will keep or cause to be kept the Project Facilities in good
repair and good operating condition, making such repairs and replacements as
are necessary in the judgment of the Borrower so that the Project Facilities
will remain a “project” under the Act and the interest on the Bonds will be and
remain not includible in gross income for purposes of federal income taxation.
The Borrower has no present intention to sell, lease or otherwise dispose of
the Project Facilities, but the Borrower may sell or enter into a lease of any
part of the Project Facilities or enter into an agreement for the management or
use of the Project Facilities so long as (i) no such sale, lease or agreement
shall be inconsistent with the provisions of this Loan Agreement, the Indenture
or the Act, including Section 5.01 hereof; (ii) if at such time the Letter of
Credit is not in effect, the Borrower shall remain fully obligated under this
Loan Agreement as if such sale, lease or agreement had not been made; (iii) any
purchaser shall assume all of the obligations of the Borrower under this Loan
Agreement; and (iv) the Borrower furnishes the Trustee with an opinion of Bond
Counsel to the effect that proposed sale, lease or other transaction shall not
cause the interest on the Bonds to become includible in the gross income of the
recipients thereof for purposes of federal income taxation.

     Section 5.03 Liens. The Borrower will pay or cause to be paid all utility
charges and other charges arising from the operations at the Project
Facilities; provided, that the Borrower may, subject to the terms of the Credit
Agreement and the documents related thereto, in good faith contest any such
liens filed or established against the Project Facilities, and in such event
may permit the items so contested to remain undischarged and unsatisfied during
the period of such contest and any appeal therefrom.

     Section 5.04 Taxes and Other Governmental Charges. The Borrower will pay
or cause to be paid, as the same respectively become due, any taxes, special
assessments, license fees and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or

20

 

levied against or with respect to the
operations of the Project Facilities, or any improvements, equipment or related
property installed or brought by the Borrower therein or thereon. The Borrower
may and subject to the terms of the Credit Agreement and the documents related
thereto, at its expense, in good faith contest any such taxes, assessments,
license fees and other governmental charges and, in the event of any such
contest, may permit the taxes, assessments, license fees or other charges so
contested to remain unpaid during the period of such contest and any appeal
therefrom to the extent permitted by law.

     Section 5.05 Insurance. The Borrower shall maintain, or cause to be
maintained, at its cost and expense, insurance, including all-risk and
liability coverage, with respect to the Project Facilities in such amounts and
upon such terms as are customary and prudent for properties similar to the
Project Facilities and as required by the Credit Agreement.

     Section 5.06 Damage or Destruction. In the event of any damage to or
destruction of the Project Facilities or any portion thereof, and subject to
the terms of the Credit Agreement and the documents related thereto, the
Borrower shall proceed either to repair, reconstruct or restore the Project
Facilities or cause the Series 2004 Bonds to be prepaid and redeemed, all as
may be further provided in the Indenture. Any prepayment or redemption of
Bonds shall be effected in accordance with all applicable provisions of the
Indenture and of Section 4.07 hereof. In connection with any application or
proposed application of moneys pursuant to this Section, the Trustee shall
require the Borrower to furnish an opinion of Bond Counsel to the effect that
such application or proposed application of moneys shall not cause the interest
on the Bonds to become includible in the gross income of the recipients thereof
for purposes of federal income taxation.

     Section 5.07 Condemnation. If the Project Facilities or any portion
thereof is condemned or taken for any public or quasi-public use and title
thereto vests in the party condemning or taking the same, and subject to the
terms of the Credit Agreement and the documents related thereto, the Borrower
shall elect either to repair, reconstruct or restore the Project Facilities, as
may be deemed necessary or desirable by the Borrower, or to cause the Bonds to
be prepaid and redeemed. Any prepayment or redemption of Bonds shall be
effected in accordance with all applicable provisions of the Indenture and of
Section 4.07 hereof. In connection with any application or proposed
application of moneys pursuant to this Section, the Trustee shall, require the
Borrower to furnish an opinion of Bond Counsel to the effect that such
application or proposed application of moneys shall not cause the interest on
the Bonds to become includible in the gross income of the recipients thereof
for purposes of federal income taxation.

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ARTICLE VI

SPECIAL COVENANTS

     Section 6.01 No Warranty of Condition or Suitability; Indemnification.
The Issuer does not make any warranty, either express or implied, as to the
design or capacity of the Project, as to the suitability for operation of the
Project, or that the Project will be suitable for the Borrower’s purposes or
needs. The Borrower releases the Issuer from, agrees that the Issuer shall not
be liable for, and agrees to hold the Issuer, its city council members and its
respective officers and employees, harmless against, any claim, cause of
action, suit or liability for any loss or damage to property or any injury to
or death of any person that may be occasioned by any cause whatsoever
pertaining to the Project Facilities or the use thereof as a result of the
Issuer acting as the issuer of the Bonds.

     The Borrower will, to the fullest extent permitted by law, protect,
indemnify and save the Issuer and its officers, agents, and employees, and any
person who controls the Issuer within the meaning of the Securities Act of
1933, harmless from and against all liabilities, losses, damages, costs,
expenses (including attorneys’ fees and expenses of the Issuer), taxes, causes
of action, suits, claims, demands and judgments in connection with the
transaction contemplated by this Agreement or arising from or related to the
issuance or sale of the Bonds, including but not limited to:

     1. any injury to or death of any person or damage to property in or
upon the Project Facilities or growing out of or connected with the use,
non-use, condition or occupancy of the Project Facilities or any part
thereof, including any and all acts or operations relating to the
acquisition or installation of property or improvements. The foregoing
indemnification obligations shall not be limited in any way by any
limitation on the amount or type of damages, compensation or benefits
payable by or for the Borrower, customers, suppliers or affiliated
organizations under any workers’ compensation acts, disability benefit
acts or other employee benefit acts;

     2. violation of any agreement, provision or condition of this
Agreement, the Bonds or the Indenture, except a violation by the party
seeking indemnification;

     3. violation by the Borrower of any contract, agreement or
restriction which shall have existed at the commencement of the term of
this Agreement or shall have been approved by the Borrower;

     4. violation by the Borrower of any law, ordinance, court order or
regulation affecting the Project Facilities or a part thereof or the
ownership, occupancy or use thereof;

     5. any statement or information relating to the expenditure of the
proceeds of the Bonds contained in the Tax Exemption Agreement or similar
document furnished by the Borrower to the Issuer or the Trustee which, at
the time made, is misleading, untrue or incorrect in any material
respect; and

22

 

     6. any untrue statement or alleged untrue statement of a material
fact contained in any offering material relating to the sale of the Bonds
(as from time to time amended or supplemented) or arising out of or based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, other than any statement or omission
relating to or provided by the Issuer, the Bank, the Original Purchaser
or the Remarketing Agent.

     Promptly after receipt by the Issuer or any such other indemnified person,
as the case may be, of notice of the commencement of any action with respect to
which indemnity may be sought against the Borrower under this Section, such
person will notify the Borrower in writing of the commencement thereof, and,
subject to the provisions hereinafter stated, the Borrower shall assume the
defense of such action (including the employment of counsel, who shall be
counsel subject to the approval of the Issuer, which approval shall not be
unreasonably withheld, and the payment of expenses). Insofar as such action
shall relate to any alleged liability with respect to which indemnity may be
sought against the Borrower, the Issuer or any such other indemnified person
shall have the right to employ separate counsel of their own choice in any such
action and to participate in the defense thereof, and the fees and expenses of
such counsel shall be at the expense of the Borrower. The Borrower shall not
be liable to indemnify any person for any settlement of any such action
effected without its consent.

     The provisions of this section shall survive payment and discharge of the
Bonds.

     Section 6.02 Annual Certificate; Reports. The Borrower agrees to furnish
to the Trustee, on or before August 1 of each year during the term hereof, a
Certificate of the Authorized Borrower Representative that there is no Default
under this Loan Agreement and that he has no knowledge of any default by the
Issuer under this Loan Agreement or the Indenture, or, if there be any such
Default or default by the Issuer, explaining the nature thereof and specifying
the steps being taken to remedy the same.

     The Borrower shall provide the Issuer with such information as may be
necessary or desirable for the Issuer to comply with the reporting requirements
of Minnesota Statutes, Section 469.154, Subdivisions 5 and 7, and shall take
such further action as may be necessary or desirable to insure that such
reporting requirements are complied with.

     Section 6.03 Borrower to Maintain its Existence; Conditions Under Which
Exceptions Permitted. The Borrower agrees that, so long as the Bonds are
outstanding, it will maintain its existence as a corporation under the laws of
Minnesota; will not dissolve or otherwise dispose of all or substantially all
of its assets; and will not consolidate with or merge into another corporation
or permit one or more other corporations to consolidate with or merge into it;
provided, that the Borrower may, subject to the terms of the Credit Agreement
and the documents related thereto, without violating the agreement contained in
this Section, consolidate with or merge into another institution, or permit one
or more other of such institutions to consolidate with or merge into it, or
sell or otherwise transfer to another such institution all or
substantially all of its assets as an entirety and thereafter dissolve
upon satisfaction of the following conditions: (i) if the surviving, resulting
or transferee institution, as the case may be, is other than the Borrower, such
surviving, resulting or transferee institution shall assume in

23

 

writing all of
the obligations of the Borrower herein; and (ii) the Borrower shall furnish to
the Trustee an opinion of Bond Counsel to the effect that such consolidation,
merger or transfer shall not cause the interest on the Bonds to become
includible in the gross income of the recipients thereof for purposes of
federal income taxation.

     If merger or sale or other transfer is made as provided in this Section,
the provisions of this Section shall continue in full force and effect and no
further merger or sale or other transfer shall be made except in compliance
with the provisions of this Section.

     Section 6.04 Records and Inspection. To the extent required by any
provision of this Loan Agreement or the Indenture or by law relating to the
Project or the issuance of the Bonds, the Borrower shall maintain (i) copies of
all building permits, surveys, insurance, and all other documents relating to
the Project Facilities, (ii) copies of federal, state, municipal and other
licenses and permits obtained by the Borrower relating to the completion or
operation of the Project Facilities, (iii) financial books and records
reflecting the condition of the Borrower, and (iv) all other documents,
instruments, reports and records required to be maintained hereunder. The
Issuer and the Trustee shall have the right to inspect all such materials if
required to assess compliance with any of the provisions hereof, except any
materials made private or confidential by federal or state law or regulation,
and the Project Facilities, at all reasonable times during regular business
hours and to make such copies and extracts as they may desire. At the request
of the Issuer or the Trustee, the Borrower shall furnish to the Issuer or the
Trustee, at the Borrower’s expense, a copy of any such materials which are
reasonably required by the Issuer or the Trustee in the performance of their
duties under the Loan Agreement, the Indenture or the Act.

     Section 6.05 Filings, Instruments of Further Assurance. The Borrower
agrees to cooperate with the Trustee in order that all financing statements
related to the Indenture and all supplements thereto as shall reasonably be
requested in writing by the Issuer or the Trustee, to be recorded and filed in
such manner and in such places as may from time to time be required by law in
order to preserve and protect fully the security of the Owners of the Bonds and
the rights of the Trustee thereunder, and to take or cause to be taken any and
all other action necessary to perfect the security interest, pledge and
assignment created by the Indenture, as the Trustee may request.

     Section 6.06 Assignments. The Borrower consents to the pledge and
assignment of the Loan Repayments and other interests of the Issuer in this
Loan Agreement by the Issuer to the Trustee as provided in the Indenture.
Except as otherwise provided in Section 5.02 hereof, the interests and
obligations of the Borrower under this Loan Agreement are nonassignable and
shall not be assigned except to a trustee in bankruptcy or similar officer
pursuant to the United States Bankruptcy Code or similar law. Without limiting
the foregoing, funds and investments in the Bond Fund and Project Fund
and other funds comprising the Trust Estate are trust funds not subject to
assignment by the Borrower or execution, attachment, or garnishment by any
creditor of the Borrower.

     Section 6.07 Observance of Indenture Covenants and Terms. The Borrower
will not do, in any manner, anything which will cause or permit to occur any
default under the Indenture, but will faithfully observe and perform, and will
do all things necessary so that the Issuer may

24

 

observe and perform, all the
conditions, covenants and requirements of the Indenture. The Issuer agrees
that it will observe and perform all obligations imposed upon it by the
Indenture and the Bonds provided that the Issuer has no obligation to use its
own funds or funds of the State of Minnesota to perform or cause performance of
any such obligations.

     Section 6.08 Obligations Regarding Continuing Disclosure. In the event
that the interest rate on the Bonds is converted to the Fixed Rates, the
Borrower shall cause all pertinent requirements of Rule 15c2-12, promulgated by
the Securities and Exchange Commission, to be complied with in connection with
such conversion.

[The balance of this page is intentionally left blank.]

25

 

ARTICLE VII

EVENTS OF DEFAULT AND REMEDIES

     Section 7.01 Events of Default. The following shall be “Events of
Default” under this Loan Agreement and the term “Event of Default” shall mean,
whenever used in this Loan Agreement, any one or more of the following events:

     (a) If the Borrower fails to pay or cause to be paid the amount of
any Loan Repayment required to be paid under Section 4.02 hereof when
due; or

     (b) If the Borrower shall fail to perform any obligation under
Section 4.03 hereof with respect to the mandatory purchase of outstanding
Bonds; or

     (c) If the Borrower shall default in the due and punctual
performance of any of the other covenants, conditions, agreements and
provisions contained in this Loan Agreement on the part of the Borrower
to be performed, and such Default shall have continued for a period of
sixty days after written notice, specifying such Default and requiring
the same to be remedied, shall have been given to the Borrower and the
Bank by the Issuer or Trustee; or

     (d) The occurrence of any Default under the Indenture and the
continuance thereof after the expiration of any period of grace or cure
granted therein.

The provisions of paragraph (c) of this Section are subject to the following
limitations: (1) No Default in the payment of money to the Issuer (other than
a Loan Repayment) shall become an Event of Default. (2) If by reason of force
majeure the Borrower is unable in whole or in part to carry out its agreements
contained herein, the Borrower shall not be deemed in default during the
continuance of such disability. The term “force majeure” as used herein
includes but is not limited to the following: acts of God; strikes, lockouts
or other employee disturbances; acts of public enemies; orders of any kind of
the government of the United States of America or of the State of Minnesota or
any of their departments, agencies, political subdivisions or officials, or any
civil or military authority; insurrections; riots; epidemics; landslides;
lightning; earthquakes; fires; tornadoes, hurricanes, storms; floods; washouts;
droughts; restraint of government and people; civil disturbances; explosions,
breakage or accident to machinery, transmission pipes or canals; material
failure of utilities; or any other cause or event not reasonably within the
control of the Borrower. (3) If the Default can be remedied but not within a
period of sixty days after notice and if the Borrower has taken all action
reasonably possible to remedy such Default within such sixty day period, the
Default shall not become an Event of Default for so long as the Borrower shall
diligently proceed to remedy such Default. The Borrower agrees, however, to
use its best efforts to remedy with all reasonable dispatch any cause or causes
preventing the Borrower from carrying out its agreements.

     Section 7.02 Remedies on Default. Whenever any Event of Default shall have happened and be subsisting,
any one or more of the following steps may be taken, except that, so long as
the Letter of Credit remains in full force and effect, the following steps may
be taken

26

 

only upon the occurrence and continuance of an Event of Default
described in Section 7.01 (a), (b) or (d):

     (a) The Trustee may declare all or any amounts of Loan Repayments
thereafter to become due and payable under Section 4.02 hereof for the
remainder of the term of this Loan Agreement to be immediately due and
payable, whereupon the same shall become immediately due and payable.

     (b) The Trustee may take whatever action in law or in equity which
appears necessary or desirable to enforce this Loan Agreement in
accordance with the provisions hereof.

Any amounts collected by the Trustee pursuant to action taken under the
foregoing paragraphs shall be applied as provided in the Indenture.

     Whenever any Default shall occur, the Trustee (or the Issuer with respect
to Sections 4.04(b), 6.01, 7.04 and 7.05 hereof) may take whatever action at
law or in equity which may appear necessary or desirable to collect the
payments then due or to enforce performance and observance of any obligation,
agreement or covenant under this Loan Agreement. Whenever any Default shall
occur with respect to any obligation of the Borrower to the Issuer under
Sections 4.04 (b), 6.01, 7.04 or 7.05 hereof, the Issuer may take whatever
action at law or in equity which may appear necessary or desirable to enforce
the obligations of the Borrower to the Issuer thereunder.

     Section 7.03 Remedies Cumulative, Delay Not to Constitute Waiver. No
remedy conferred upon or reserved to the Issuer or the Trustee by this Loan
Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Loan Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any Default shall impair any such
right or power, and any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Issuer or the
Trustee to exercise any remedy reserved to it in this Article, it shall not be
necessary to give any notice, other than such notice as may be herein expressly
required. In the event any agreement contained in this Loan Agreement should
be breached by either party and thereafter waived by the other party, such
waiver shall be limited to a particular breach so waived and shall not be
deemed to waive any other breach hereunder.

     Section 7.04 Agreement to Pay Attorneys’ Fees and Expenses. In the event
the Borrower should default under any of the provisions of this Loan Agreement
and the Issuer or the Trustee should employ attorneys or incur other expenses
for the collection of payments due or to become due hereunder or the
enforcement of performance or observance of any obligation or agreement on the
part of the Borrower contained in this Loan Agreement the Borrower agrees that
it will on demand therefor reimburse the reasonable fee of
such attorneys and such other reasonable expenses as are so incurred.
This provision is in addition to and not in lieu of any other provision for
payment of attorneys fees herein.

27

 

     Section 7.05 Advances. In the event the Borrower shall fail to pay any
Loan Repayments under Section 4.02 hereof, or to do any other thing or make any
other payment required to be done or made by any other provision of this Loan
Agreement, the Issuer or the Trustee, each in its own discretion, may do or
cause to be done any such thing or make or cause to be made any such payment at
the expense or as an advance for the account of the Borrower, and the Borrower
shall pay to the Issuer or the Trustee, as the case may be, upon demand, all
costs and expenses so incurred and advances so made, with interest at a rate
equal to the Reference Rate, plus 2.00% per annum.

[The balance of this page is intentionally left blank.]

28

 

ARTICLE VIII

MISCELLANEOUS

     Section 8.01 Amounts Remaining in Funds.

     (a) It is agreed by the parties hereto that any amounts remaining in
any Fund or Account maintained by the Trustee under the Indenture after
payment in full of the Bonds (or provision for payment thereof having
been made in accordance with the provisions of the Indenture) and any
additional amounts payable to the Trustee and fees, charges and expenses
of any paying agents and all other amounts required to be paid under the
Indenture or this Agreement, shall belong to and be paid to the Borrower
or the Bank, as their interests may appear.

     (b) In the event that at any time the Trustee holds moneys in the
Bond Fund as a result of a payment made under Section 4.02 hereof or
otherwise and in respect of which a credit is given due to a
corresponding payment made by the Bank under the Letter of Credit, the
Trustee is authorized to remit such money to the Bank in satisfaction of
the reimbursement obligations under the Credit Agreement.

     Section 8.02 Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered personally or the earlier of actual receipt or three days
following the mailing thereof by either certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:

	 	 	 	 	 	 	 
	A.

	 	To the Issuer
	 	—
	 	City of Chaska
	

	 	 	 	 	 	City Hall

Chaska, Minnesota 55318

Attention: City Administrator
	 
	 	 	 	 	 	 
	B.

	 	To the Borrower
	 	—
	 	Lifecore Biomedical, Inc.
	

	 	 	 	 	 	3515 Lyman Boulevard

Chaska, Minnesota 55318

Attention: Chief Financial Officer
	 
	 	 	 	 	 	 
	C.

	 	To the Trustee
	 	—
	 	Wells Fargo Bank, National Association
	

	 	 	 	 	 	MAC N9303-110
	

	 	 	 	 	 	Sixth and Marquette
	

	 	 	 	 	 	Minneapolis, MN 55479
	

	 	 	 	 	 	Attn: Corporate Trust Services
	 
	 	 	 	 	 	 
	D.

	 	To the Remarketing Agent
	 	—
	 	Northland Securities, Inc.
	

	 	 	 	 	 	45 South Seventh Street

Suite 2500
	

	 	 	 	 	 	Minneapolis, Minnesota 55402
	

	 	 	 	 	 	Attention: Public Finance Department
	 
	 	 	 	 	 	 

29

 

	 	 	 	 	 	 	 
	E.

	 	To the Bank
	 	—
	 	M&I Marshall & Ilsley Bank
	

	 	 	 	 	 	651 Nicollet Mall

Minneapolis, MN 55402

Attention: Commercial Banking
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	with a copy to:
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	M&I Marshall & Ilsley Bank
	

	 	 	 	 	 	770 North Water Street, NW 18

Milwaukee, WI 53202

A duplicate copy of each notice, certificate, request or other communication
given hereunder to any party shall also be given to the others. Any party may,
by notice given hereunder, designate any further or different addresses to
which subsequent notices, certificates, requests or other communications shall
be sent.

     Section 8.03 References to Bonds Ineffective after Bonds Paid. Upon
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Indenture) and all fees and charges of
the Trustee and any paying agents of the Bonds, all references in this Loan
Agreement to the Bonds and the Trustee shall be ineffective and neither the
Trustee nor the Holders of any of the Bonds shall thereafter have any rights
hereunder, saving and excepting those that shall have heretofore vested.

     Section 8.04 Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns, and subject to the further limitation that
any obligation of the Issuer created by or arising out of this Loan Agreement
shall not be a general debt of the Issuer but shall be payable solely out of
the proceeds derived from this Loan Agreement or the sale of the Bonds.

     Section 8.05 Amendments, Changes and Modifications. Except as otherwise
provided in this Loan Agreement or in the Indenture, subsequent to the issuance
of the Bonds and prior to payment of the Bonds in full (or provision for the
payment thereof having been made in accordance with the provisions of the
Indenture), this Loan Agreement may not be effectively amended, changed,
modified, altered or terminated without the prior written consent of the
parties hereto, the Trustee and the Bank, and the Indenture may not be
effectively amended, changed, modified, altered or terminated except as
provided in the Indenture.

     Section 8.06 Counterparts. This Loan Agreement may be executed in several
counterparts, each of which shall be regarded as an original and all of which
shall constitute but one and the same Loan Agreement.

     Section 8.07 Severability. In case any section or provision of this Loan
Agreement, or in case any covenant, stipulation, obligation, agreement, act or
action, or part thereof, made, assumed, entered into, or taken under this Loan
Agreement, or any application thereof, is for any reason held to be illegal or
invalid, or is at any time inoperable by reason of any law, or actions
thereunder, such illegality or invalidity or inoperability shall not affect the
remainder thereof or any other section or provision of this Loan Agreement or
any other covenant, stipulation, obligation, agreement, act or action, or part
thereof, made, assumed, entered into, or taken under

30

 

this Loan Agreement, which
shall at the time be construed and enforced as if such illegal or invalid or
inoperable portion were not contained therein, nor shall such illegality or
invalidity or inoperability or any application thereof affect any legal and
valid and operable application therefor from time to time, and each such
section, provision, covenant, stipulation, obligation, agreement, act or
action, or part thereof, shall be deemed to be effective, operative, made,
entered into or taken in the manner and to the full extent from time to time
permitted by law.

     Section 8.08 Captions. The captions or headings in this Loan Agreement
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Loan Agreement.

     Section 8.09 Benefit of Bondholders. This Loan Agreement is executed in
part to induce the purchase by others of Bonds to be issued by the Issuer, and
accordingly all covenants and agreements on the part of the Borrower and the
Issuer as set forth in this Loan Agreement are hereby declared to be for the
benefit of the Holders from time to time of the Bonds.

     Section 8.10 Term of Agreement. Except as otherwise provided herein, this
Loan Agreement shall remain in full force and effect from the date of execution
hereof until such time as the Indenture has been discharged in accordance with
its terms.

     Section 8.11 Certain References to the Bank, the Letter of Credit, Etc.
If at any time the Bank has failed to honor a conforming draft submitted under
the Letter of Credit in accordance with the provisions thereof, or is subject
to any insolvency or receivership proceeding, and at all times following the
Letter of Credit Termination Date, all references herein or in the Indenture to
the Bank or the Credit Agreement, and all provisions herein or in the Indenture
requiring the consent of the Bank for any purpose shall no longer be of any
force or effect and this Loan Agreement and the Indenture shall be construed as
if all such
references were void. If at any time there shall be no Letter of Credit
required at such time to be in effect, all references herein or in the
Indenture to the Bank or its consent, or to the Letter of Credit or the Credit
Agreement shall be of no force or effect and this Loan Agreement and the
Indenture shall be construed as if all such references were void.

     Section 8.12 No Liability of Issuer. It is understood and agreed by the
Borrower that no covenant, provision or agreement of the Issuer herein or in
the Bonds or in any other document executed by the Issuer in connection with
the issuance, sale and delivery of the Bonds, or any obligation herein or
therein imposed upon the Issuer or breach thereof, shall give rise to a
pecuniary liability of the Issuer or a charge against its general credit or
general fund or shall obligate the Issuer financially in any way except with
respect to the application of revenues under this Agreement, and the proceeds
of the Bonds. No failure of the Issuer to comply with any term, condition,
covenant or agreement therein shall subject the Issuer to liability for any
claim for damages, costs or other financial or pecuniary charges except to the
extent that the same can be paid or recovered from this Agreement or revenues
therefrom or proceeds of the Bonds. No execution on any claim, demand, cause
of action or judgment shall be levied upon or collected from the general credit
or general funds of the Issuer. In making the agreements, provisions and
covenants set forth herein, the Issuer has not obligated itself except with
respect to this Agreement and the application of revenues hereunder as
hereinabove provided. The Bonds constitute special obligations of the Issuer,
payable solely from the revenues pledged to

31

 

the payment thereof pursuant to
this Agreement and the Indenture, and do not now and shall never constitute an
indebtedness or a loan of the credit of the Issuer, the State or any political
subdivision thereof within the meaning of any constitutional or statutory
provision whatsoever. The Issuer has no taxing power. It is further
understood and agreed by the Borrower and the Holders that the Issuer shall
incur no pecuniary liability hereunder and shall not be liable for any expenses
related hereto. If, notwithstanding the provisions of this Section, the Issuer
incurs any expense, or suffers any losses, claims or damages or incurs any
liabilities, the Borrower will indemnify and hold harmless the Issuer from the
same and will reimburse the Issuer for any legal or other expenses incurred by
the Issuer in relation thereto, and this covenant to indemnify, hold harmless
and reimburse the Issuer shall survive delivery of and payment for the Bonds.

     Section 8.13 Governing Law; Venue. This Loan Agreement is governed by the
laws of the State of Minnesota, without regard to the choice of law rules of
the State of Minnesota. Venue for any action under this Loan Agreement to
which the Issuer is a party shall lie within the district courts of the State
of Minnesota, and the parties hereto consent to the jurisdiction and venue of
any such court and hereby waive any argument that venue in such forums is not
convenient.

     Section 8.14 Right of Borrower To Perform Issuer’s Agreements. The Issuer
irrevocably authorizes and empowers, to the extent possible under law, the
Borrower to perform in the name and on behalf of the Issuer any agreement made
by the Issuer in this Loan Agreement or in the Indenture which the Issuer fails
to perform in a timely fashion if
the continuance of such failure could result in an Event of Default. This
Section will not require the Borrower to perform any agreement of the Issuer.

     Section 8.15 Complete Agreement. This Loan Agreement represents the
entire agreement between the Issuer and the Borrower with respect to its
subject matter.

[The balance of this page is intentionally left blank.]

32

 

     IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be duly executed in their respective names, all as of the date
first above written, but actually on the
       day of August, 2004.

	 	 	 	 	 
	 	 	CITY OF CHASKA
	 
	 	 	 	 
	

	 	By
	    /s/ GARY F. VAN EYLL

	

	 	 	 	    Mayor
	 
	 	 	 	 
	

	 	And by
	      /s/ DAVE POKORNEY

	

	 	 	 	      City Administrator

[Signature Page to Loan Agreement dated as of August 1, 2004, between the City of Chaska,

Minnesota and Lifecore Biomedical, Inc.]

33

 

	 	 	 	 	 
	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 
	

	 	By:
	 	     /s/ DENNIS J. ALLINGHAM

	

	 	 	 	    Its President and Chief Executive Officer

[Signature Page to Loan Agreement dated as of August 1, 2004, between the City of Chaska,

Minnesota and Lifecore Biomedical, Inc.]

34

 

EXHIBIT A

DRAW REQUEST

	To: Wells Fargo Bank, National Association, as trustee

	1.	 	The undersigned Authorized Borrower Representative (the “Authorized
Borrower Representative”) of Lifecore Biomedical, Inc., a Minnesota
corporation (the “Corporation”) hereby authorizes and requests the
above-referenced trustee (the “Trustee”) to disburse from the Project Fund
(the “Project Fund”) held by the Trustee, pursuant to the Indenture of
Trust dated as of August 1, 2004, (the “Indenture”), between the City of
Chaska, Minnesota (the “Issuer”) and the Trustee, in order to (i)
reimburse the Borrower for certain expenditures paid by the Borrower prior
to the issuance of the Series 2004 Bonds described in the Indenture (the
“Bonds”) pursuant to the Indenture, or (ii) pay designated parties for
expenditures by the Borrower paid after the issuance of the Bonds, all as
more specifically described in the attachments hereto.
	 
	2.	 	The Authorized Borrower Representative further certifies, pursuant to
Section 6.09 of the Indenture, that (i) none of the items for which
reimbursement or payment is sought has formed the basis for any payment
heretofore made from the Project Fund, and (ii) each item for which
reimbursement or payment is sought is or was necessary in connection with
the Project.

Answer Items 3 And 4 Only If Applying For Reimbursement Of

Expenditures Paid Before Bond Closing.

	3.	 	With respect to reimbursement of expenditures incurred and paid prior to
the issuance of the Bonds, the Authorized Borrower Representative further
certifies, pursuant to Section 1.150-2 (the “Regulations”) of the Income
Tax Regulations under the Internal Revenue Code of 1986, as amended (the
“Code”), that:

     (a) De minimis Expenditures. The expenditure for which
reimbursement is hereby sought is/is not (circle one) a de minimis
expenditure as defined and within the permitted limit described in
paragraph (f)(1) of the Regulations (lesser of $100,000 or 5% of the
proceeds).

     (b) Preliminary Expenditures. The expenditure for which
reimbursement is hereby sought is/is not (circle one) a Preliminary
Expenditure (as defined and within the permitted limit described in
paragraph (f)(2) of the Regulations).

If the expenditure is described under (a) or (b), go to question 4 below.

     (c) Declaration of Official Intent. The expenditure for which
reimbursement is hereby sought is not described under (a) or (b) above.
On February 28, 2002, a date no later than 60 days after payment of the
expenditure for which reimbursement is hereby

A-1

 

	 	 	sought, the Borrower made a written declaration of official intent,
stating that: (i) the Borrower reasonably expects to reimburse the
expenditure with the Bond proceeds; (ii) a general description of the
project for which reimbursement is sought or an identification by name
and functional purpose of the fund or account from which the expenditure
is to be paid; and (iii) the maximum principal amount of Bonds expected
to be issued for the project.

     (d) Reimbursement Period. The reimbursement is being sought for an
expenditure which has already been paid and such reimbursement would be
on or before the later of:

        (i) eighteen months after the expenditure was paid; or

        (ii) the date the property was placed in service or abandoned,
but in no event more than three years after the expenditure was
paid.

     (e) Capital Expenditure. The reimbursed expenditure is for a
“capital expenditure” as defined in Section 1.150-2(d)(3) of the Code.

	4.	 	The Authorized Borrower Representative hereby requests reimbursement for
an expenditure which meets the requirements of (i) paragraph 3(d) and (e)
above, and (ii) one of the following [check one or provide specific
information for multiple items on an attachment]:

	 	 	 	 	 
	(a)
                 
  

de minimis 

expenditures

	 	(b)        
           

preliminary 

expenditures
	 	(c)      
              declaration

of official intent

	5.	 	The undersigned further certifies that this statement and all exhibits
and attachments hereto, and documents furnished in connection herewith,
shall be conclusive evidence of the facts and statements set forth herein
and shall constitute full warrant, protection and Issuer to the Trustee
for its actions taken pursuant hereto, and that this statement constitutes
the approval of the Borrower of each disbursement hereby requested and
authorized.
	 
	6.	 	The undersigned further certifies that the Borrower has general funds
which, together with amounts remaining in the Project Fund, are sufficient
to complete the Project.

	 	 	 	 	 
	Dated:
_________________
	 	 	 	 
	

	 		 	 
	 

	 	 	 	

	

	 	 	 	Authorized Borrower Representative
	 
	 	 	 	 
	

	 	 	 	Approved:
	 
	 	 	 	 
	

	 	 	 	M&I MARSHALL ILSLEY BANK
	 
	 	 	 	 
	 

	 	 	 	By
	

	 	 	 	

	

	 	 	 	    Its
	

	 	 	 	

A-2exv10w10

 

Exhibit 10.10

$5,630,000

City of Chaska, Minnesota

Variable Rate Demand Purchase Revenue Bonds

(Lifecore Biomedical, Inc. Project)

Series 2004

REMARKETING AGREEMENT

Dated as of August 1, 2004

Between

LIFECORE BIOMEDICAL, INC.

and

NORTHLAND SECURITIES, INC.

This document drafted by:

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, MN 55402-1498

 

 

REMARKETING AGREEMENT

     This REMARKETING AGREEMENT dated as of August 1, 2004, between LIFECORE
BIOMEDICAL, INC., a Minnesota corporation (the “Borrower”) and NORTHLAND
SECURITIES, INC., acting as remarketing agent (the “Remarketing Agent”);

W I T N E S S E T H

     WHEREAS, City of Chaska, Minnesota (the “Issuer”) has approved the
issuance and sale of its Variable Rate Demand Purchase Revenue Bonds (Lifecore
Biomedical, Inc. Project), Series 2004, in the aggregate principal amount of
$5,630,000 (the “Bonds”) pursuant to an Indenture of Trust dated as of August
1, 2004 (the “Indenture”) between the Issuer and Wells Fargo Bank, National
Association, as trustee (as defined in the Indenture, the “Trustee”); and

     WHEREAS, the Bonds are subject to purchase under certain circumstances, as
described in the Bonds and in Sections 4.01, 4.02, 4.06 and 4.11 of the
Indenture; and

     WHEREAS, the Borrower desires that the Remarketing Agent provide a
mechanism for remarketing the Bonds according to the terms and subject to the
conditions described herein;

     NOW, THEREFORE, for and in consideration of the covenants herein made, the
parties hereto hereby agree as follows:

     Section 1. Definitions. Unless a different meaning clearly appears from
the context, all words and terms used herein shall have the respective meanings
assigned to them in the Indenture.

     Section 2. Acceptance of Duties. The Remarketing Agent agrees to serve as
the Remarketing Agent for the Bonds, and to carry out the duties and
obligations of the Remarketing Agent under the Indenture and this Remarketing
Agreement, on the terms and conditions set forth herein.

     Section 3. Remarketing of the Bonds — Variable Rate.

     (a) While the Bonds bear interest at the Variable Rate, so long as
no Event of Default under the Indenture has occurred and is continuing,
the Remarketing Agent shall perform the functions of the Remarketing
Agent set forth in Section 2.02(c) of the Indenture, and (ii) upon
delivery of notice to the Remarketing Agent by any Owner of Bonds in
accordance with Section 4.06 of the Indenture, the Remarketing Agent
shall use its best efforts to arrange for the subsequent remarketing of
the Bonds referred to in such notice, at a price equal to their principal
amount plus accrued interest.

     (b) Within one Business Day after receipt thereof, the Remarketing
Agent shall deliver to the Trustee a copy of any notice delivered to the
Remarketing Agent pursuant to Section 4.06 of the Indenture.

 

 

     (c) At or prior to 11:00 A.M., Minneapolis, Minnesota time, on the
Business Day preceding the date any Bonds are to be purchased pursuant to
Section 4.06 of the Indenture, the Remarketing Agent shall give notice by
telephone or telex, promptly confirmed in writing, to the Borrower and
the Bank specifying the principal amount of such Bonds, if any,
remarketed by it pursuant to Section 3(a) hereof and on or prior to 9:00
A.M., Minneapolis, Minnesota time on the date any Bonds are to be
purchased pursuant to Section 4.06 of the Indenture, the Remarketing
Agent shall, simultaneously with the payment of the Purchase Price for
the Bonds by the Bank, pursuant to a draw under the Letter of Credit (or
as soon thereafter as remarketing proceeds are available therefor),
transfer the proceeds of any such remarketing to the Bank.

     (d) It is the express intention of the parties hereto that neither
the determination of any interest rate on the Bonds nor any purchase,
sale or transfer of any Bonds as herein provided, shall constitute or be
construed to be the extinguishment of any Bonds or the obligations
represented thereby or the reissuance of any Bonds.

     Section 4. Remarketing of the Bonds on the Conversion Date. Provided no
Default under the Indenture has occurred and is continuing, the Remarketing
Agent shall, at the request of the Borrower, such request to be delivered to
the Remarketing Agent at least 45 days prior to the Conversion Date, use its
best efforts to arrange for the subsequent remarketing of the Bonds which are
delivered to the Trustee on the Conversion Date pursuant to Section 4.01 or
Section 4.02 of the Indenture, at a price equal to not less than the principal
amount thereof, subject to the following conditions:

     (a) satisfactory compensation and other terms and conditions shall
have been agreed upon by the Borrower and the Remarketing Agent;

     (b) the Remarketing Agent shall have received an opinion of
nationally recognized bond counsel to the effect that the interest on the
Bonds will continue to be excluded from gross income for federal income
taxation purposes after the Conversion Date;

     (c) the Remarketing Agent shall have received an Official Statement,
private placement memorandum, or other appropriate disclosure document
satisfactory in form and substance to the Remarketing Agent, to be used
in connection with its efforts to arrange for the remarketing of the
Bonds; and

     (d) the Remarketing Agent shall have received such additional
documents, certificates and legal opinions as it may reasonably request.

     Further details regarding any such remarketing shall be negotiated between
the Borrower and the Remarketing Agent prior to the Conversion Date.

     Section 5. Remarketing Agent Compensation.

     (a) As long as the Bonds bear interest at the Variable Rate, the
Borrower shall pay to the Remarketing Agent during the term hereof a
continuing remarketing and administration fee (the “Remarketing Fee”)
computed at the annual rate of one-eighth of

2

 

1.00% per annum of the aggregate principal amount of the Bonds
outstanding from time to time. Such fee shall be payable annually, in
advance, commencing on the Closing Date, and thereafter on the first day
of each September during the term hereof (each such date sometimes
referred to as a “Fee Payment Date”), based on the outstanding principal
amount of the Bonds on each Fee Payment Date. Such fee shall be computed
on the basis of the actual number of days elapsed in a year of 365 or 366
days, as the case may be. The amount of the Remarketing Fee payable on
the Closing Date for the period from the Closing Date to and including
September 1, 2005, shall be prorated.

     (b) If the Remarketing Agent is requested by the Borrower to use its
best efforts to arrange for the remarketing of the Bonds on the
Conversion Date pursuant to Section 4, the Remarketing Agent shall be
paid such remarketing fee as may then be mutually agreed upon by the
Borrower and the Remarketing Agent.

     (c) In addition to the fees set forth above, the Borrower shall
reimburse the Remarketing Agent for its reasonable actual out-of-pocket
expenses incurred in connection herewith and shall indemnify the
Remarketing Agent for, and hold it harmless against, any loss, liability
or expense (including counsel fees and disbursements), incurred without
gross negligence or willful misconduct on its part, arising out of or in
connection with its performance of its obligations hereunder.

     Section 6. Proceeds of Sale of the Bonds. The proceeds of the sale of any
Bonds as a result of the remarketing thereof by the Remarketing Agent, to the
extent not used to pay the Purchase Price of such Bonds in accordance with
Section 4.07 of the Indenture, shall be paid in accordance with the provisions
of Section 4.09 or any other applicable Section of the Indenture or hereof.

     Section 7. Duties of the Remarketing Agent. The Remarketing Agent hereby
agrees:

     (a) to use its best efforts to arrange for the remarketing of any
Bond delivered to the Trustee for purchase pursuant to Section 4.06 of
the Indenture in accordance with Section 3(a) hereof, except as otherwise
provided in this Remarketing Agreement;

     (b) to determine the Variable Rate at the times and in the manner
provided in Sections 2.02(c) (ii) of the Indenture and to notify the
Trustee, the Borrower and the Bank of each change in the Variable Rate at
the times and in the manner provided in Section 2.02(c) of the Indenture;

     (c) if the Remarketing Agent is requested by the Borrower to use its
best efforts to arrange for the remarketing of the Bonds on the
Conversion Date pursuant to Section 4, to prepare and deliver to the
Trustee, the Bank and the Borrower the schedule of the interest rate or
rates constituting the Fixed Rates, at the time and in the manner
provided in Section 2.02(d)(i) of the Indenture;

     (d) to carry out all of the other duties and obligations of the
Remarketing Agent under the Indenture; and

3

 

     (e) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available
for inspection by the Issuer, the Borrower, the Bank and the Trustee at
all reasonable times.

     Section 8. Replacement of Remarketing Agent by Borrower. The Borrower may
replace the Remarketing upon 30 days’ notice in writing to the Remarketing
Agent and the Trustee, but such replacement shall only become effective if the
appointment of a successor Remarketing Agent has become effective and notice
has been given in writing by the Borrower to the Trustee of the name and
address of the successor Remarketing Agent.

     In the event that the Remarketing Agent shall be removed or be dissolved,
or if the property or affairs of the Remarketing Agent shall be taken under the
control of any state or federal court or administrative body, the Borrower
shall appoint as successor Remarketing Agent an institution authorized by law
to perform all the duties imposed upon it under this Agreement.

     If a successor Remarketing Agent shall be appointed pursuant to this
Section, all references herein to the “Remarketing Agent” shall thereafter
refer to such successor.

     Section 9. Successor Remarketing Agent. The Remarketing Agent may at any
time resign and be discharged of the duties and obligations created by this
Agreement by giving at least 30 days’ notice to the Borrower, the Issuer, the
Bank and the Trustee. The Remarketing Agent may be removed at any time, at the
direction of the Borrower, for any reason, with or without cause, upon not less
than 30 days’ notice, by an instrument signed by the Borrower and filed with
the Remarketing Agent, the Tender Agent, the Issuer and the Trustee. The
Remarketing Agent shall be relieved from further performance of its obligations
hereunder upon the acceptance of such obligations by a successor.

     In the event that the Remarketing Agent shall resign, or if the property
or affairs of the Remarketing Agent shall be taken under the control of any
state or federal court or administrative body, the Borrower shall appoint as
successor Remarketing Agent an institution authorized by law to perform all the
duties imposed upon it under this Agreement.

     If a successor Remarketing Agent shall be appointed pursuant to this
Section, all references herein to the “Remarketing Agent” shall thereafter
refer to such successor.

     Section 10. Delivery and Approval of Amendments to Indenture, Etc. Prior
to the execution of any amendment or supplement to the Indenture, the Loan
Agreement or the Letter of Credit, or the delivery of a Substitute Letter of
Credit, the Borrower shall deliver to the Remarketing Agent a copy of such
amendment, supplement or Substitute Letter of Credit.

     Section 11. Borrower’s Remedy. The Borrower’s remedy against the
Remarketing Agent under this Agreement in the event of a breach by the
Remarketing Agent of its obligations hereunder shall be the right to the return
of any fees paid to the Remarketing Agent hereunder during such time as the
Remarketing Agent breached or failed to perform its obligations hereunder
and/or the termination of the Remarketing Agent, provided however in the event
of willful misconduct or gross negligence of the Remarketing Agent in
connection with the operation of this Remarketing Agreement the Borrower may
recover its actual damages. The Borrower acknowledges and agrees that any
breach of this Agreement by the Remarketing Agent

4

 

shall not constitute a defense, setoff, or otherwise be deemed to excuse
performance by the Borrower of its obligations under the Loan Agreement, the
Reimbursement Agreement, or any related document.

     Section 12. Notices. The Remarketing Agent hereby designates as its
notice address the address shown for it in Section 13.04 of the Indenture.
Unless otherwise provided herein, all notices, requests, certificates or other
communications hereunder shall be sufficiently given if the same shall be duly
mailed by first class or registered mail, return receipt requested, postage
prepaid, or sent by any electronic method capable of creating a written
document, addressed to the address or addresses provided in the Indenture. Any
party mentioned above may, by notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.

     The Remarketing Agent may rely upon, and is authorized to honor, any
telephonic requests or directions which the Remarketing Agent believes, in its
sole discretion, to emanate from an authorized representative of the Borrower
or the Trustee, regardless of the source of such request or direction. Any
telephonic request or direction to the Remarketing Agent shall promptly be
confirmed in writing; provided, however, that failure to receive any such
notice shall not affect the authority of the Remarketing Agent to rely and act
upon such request or direction.

     Section 13. Amendments. This Agreement may be amended by an instrument in
writing signed by the Borrower and the Remarketing Agent. The Borrower shall
promptly give a written notice to the Trustee after an amendment is made to
this Agreement.

     Section 14. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Minnesota.

     Section 15. 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.

5

 

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

	 	 	 	 	 
	 	 	NORTHLAND SECURITIES, INC.
	 
	 	 	 	 
	

	 	By
	     /s/ CHRIS FLANNERY

	 
	 	 	 	 
	

	 	 	Its 	     Senior Vice President

[Signature page to Remarketing Agreement dated as of August 1, 2004, between

Lifecore Biomedical, Inc. and Northland Securities, Inc.]

6

 

	 	 	 	 	 
	 	 	LIFECORE BIOMEDICAL, INC.
	 
	 	 	 	 
	

	 	By
	 	    /s/ DENNIS J. ALLINGHAM

	

	 	 	 	Its President and Chief Executive Officer

[Signature page to Remarketing Agreement dated as of August 1, 2004, between

Lifecore Biomedical, Inc. and Northland Securities, Inc.]

7

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