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Imp. Proj. #497
COUNCIL Originating Department City Manager Kirk McDonald B y' Management Assistant a ails) I 1 • By: Approved for Agenda 5 -18 -92 Agenda Section Ordinances and Resolutions Item No. 10.1 RESOLUTION GIVING APPROVAL TO INDUSTRIAL DEVELOPMENT BOND PROJECT ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK, CALLING FOR PUBLIC HEARING ON ISSUANCE OF REVENUE BONDS AND AUTHORIZING SUBMISSION OF APPLICATION FOR BOND ALLOCATION -d 4 1 C/ '7 The enclosed resolution gives approval to the Industrial Development Bond Project for Paddock Laboratories, Inc., calls for a public hearing on the issuance of revenue bonds, and authorizes submission of the application for bond allocation. Staff recommends approval of the resolution. MOTION BY f -' SECOND BY Review: Administration: Finance: RFA -001 CITY OF NEW HOPE RESOLUTION NO. 92-96 RESOLUTION GIVING APPROVAL TO INDUSTRIAL DEVELOPMENT BOND PROJECT ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK, CALLING FOR PUBLIC HEARING ON ISSUANCE OF REVENUE BONDS AND AUTHORIZING SUBMISSION OF APPLICATION FOR BOND ALLOCATION WHEREAS, a proposal has been made to this Council by Paddock Laboratories, Inc., a Minnesota corporation (the "Company"), and Bruce G. Paddock (the "Owner"), to undertake a project in the City of New Hope (the "City") consisting of the acquisition, construction and equipping of an approximately 50,000 square foot manufacturing facility therein (together with ancillary facilities and related site improvements, the "Project"), to be located on a site situated approximately 400 feet east of the intersection of County Road 156 and Quebec Avenue North in the City, and to be owned by the Owner or a partnership to be formed by the Owner (the "Borrower") for lease by the Borrower to the Company, and to be used by the Company in its manufacturing business, all pursuant to the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469.1651, as amended (the "Act"); and WHEREAS, financing for the Project is to consist of the issuance by the City of its Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992, in an estimated aggregate principal amount of up to $4,000,000 (the "Bonds"), the proceeds of which are to be loaned by the City to the Borrower pursuant to a Loan Agreement under which the Borrower will agree to make loan repayments at times and in amounts sufficient to pay, when due, all principal of, premium, if any, and interest on the Bonds; and WHEREAS, the Bonds shall be additionally secured by a Letter of Credit to be issued by Norwest Bank Minnesota, National Association; and WHEREAS, this Council has been requested to conduct a public hearing on said proposal and to publish notice of said public hearing not less than 14 days prior to the date fixed for the hearing; and WHEREAS, the proposal to issue the Bonds requires an allocation of issuance authority in an amount not to exceed $4,000,000; BE IT RESOLVED by the City Council of the City of New Hope, Minnesota, as follows: -2- 1. Subject only to such further proceedings to be had and taken by the City as may be required by law, approval is hereby granted to the Project and the issuance of the Bonds. 2. A public hearing shall be conducted by this Council on the proposal to undertake the Project and issue the Bonds on Monday, June 8, 1992, at 7:00 o'clock P.M. at the City Hall, at which hearing all persons who appear shall be given an opportunity to express their views with respect to said proposal, and publication of notice of the hearing shall be given, as required by law, in the official newspaper of the City and a newspaper of general circulation in the City by City staff. 3. Submission by City staff to the Minnesota Department of Finance of an Application for Allocation with respect to the Bonds is hereby approved, together with all such supporting documentation and papers and deposits as may be required by law. 4. The Borrower is hereby authorized to enter into such contracts, in its own name and not as agent for the City, as may be necessary for the carrying out of the Project by any means available to it and in the manner it determines, without advertisement for bids as may be required for the acquisition or construction of municipal facilities, but the City shall not be liable on any such contracts. 5. This Resolution is intended to constitute an "official action" toward the issuance of the Bonds, within the meaning of Treasury Regulation, Section 1.103-8(a)(5)(iii). Adopted by the City Council of the City of New Hope, Hennepin County, Minnesota, this 18th day of May, 1992. Attest: City Clerk Ma c: A -3- Extract of Minutes of Meeting of the City Council of the City of New Hope, Minnesota Pursuant to due call and notice thereof, a special meeting of the City Council of the City of New Hope, Minnesota was duly held at the City Hall in said City on Monday, May 18, 1992 at 5 :30 o'clock P.M. The following members were present: Enck, Otten, L'Herault and the following were absent: Member Erickson, Williamson Otten introduced and read in full the following written resolution and moved its adoption: RESOLUTION #92 -96 RESOLUTION GIVING APPROVAL TO INDUSTRIAL DEVELOPMENT BOND PROJECT ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK, CALLING FOR PUBLIC HEARING ON ISSUANCE OF REVENUE BONDS AND AUTHORIZING SUBMISSION OF APPLICATION FOR BOND ALLOCATION The motion for the adoption of the foregoing resolution was duly seconded by Member L'Herault , and upon vote being taken thereon the following voted in favor thereof: Enck, Otten, L'Herault and the following voted against the same: None whereupon said resolution was declared duly passed and adopted. STATE OF MINNESOTA) ) SS. COUNTY OF HENNEPIN) I, the undersigned, being the duly qualified and acting City Clerk of the City of New Hope, Minnesota (the "City/°), do hereby certify that attached hereto is a compared, true and correct copy of a resolution duly adopted by the City Council of the City, and that the attached Extract of Minutes of a special meeting of the City Council duly called and held May 18, 1992, is a full, true and correct transcript therefrom insofar as the same relates to the issuance of industrial development revenue bonds by the City on behalf of Paddock Laboratories, Inc., a Minnesota corporation, and Bruce G. Paddock. WITNESS My hand and seal officially as said City Clerk this 19th day of May , 1992. City Clerk (Seal) MFFOOEB2.WP5 -4- NOTICE OF PUBLIC HEARING ON INDUSTRIAL DEVELOPMENT PROJECT AND ISSUANCE OF REVENUE BONDS BY THE CITY OF NEW HOPE ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE Go PADDOCK NOTICE IS HEREBY GIVEN that a public hearing shall be conducted by the City Council, of the City of New Hop&, Minnesota (the "City "), on an industrial development project proposed to be undertaken and financed pursuant to Minnesota Statutes, Sections 469,152 to 469.165, as amended (the "Act "), on behalf of Paddock Laboratories, Inc., a Minnesota corporation (the "Company "), and Bruce G. Paddock (the "Owner "). The hearing will be held on Monday, June 8, 1992, at 7100 o'clock P.M., at the City Hall, located at 4401 Xylon Avenue North in the City. The project as proposed consists generally of they acquisition, construction and equipping of an approximately 50,000 square foot manufacturing facility in the City (together with ancillary facilities and related site improvements, the "Project "), to be owned by the Owner or a partnership to be formed by the Owner, and leased to the Company. The Project is to be used by the Company in its manufacturing business. The Project is to be located on a site situated approximately 400 feet east of the intersection of County Read 156 and Quebec: Avenue North in the City. Under the proposal, up to approximately $4,000,000 in principal amount of Industrial Development Revenue Bonds of the City of New Hope will be issued to finance the Project. At said time and place the City Council, shall give all parties who appear an opportunity to express their views with respect to the proposal to undertake and finance the Project. A draft copy of the proposed.Application to the Minnesota Department of Trade and Economic Development for they Project, together with all attachments and exhibits thereto, shall be available for public inspection, following publication of this notice, in the office of the City Clark, Monday through Friday, except legal holidays, from 8:00 o'olock A.M. to 4:30 o'clock P.M., to and including the date of hearing. Dated: May 20, 1993. BY ORDER OF THE CITY COUNCIL City Clerk Published in the New Hope- Golden Valley Sun Post on May 20, 1992. STATE OF MINNESOTA Form H DEPARTMENT OF FINANCE Revised June - 1991 CASH AND DEBT MANAGEMENT DIVISION APPLICATION FOR ALLOCATION OF BONDING AUTfIORTTY FOR TAX EXEMPT FINANCING UNDER FEDERAL TAX LAW Pursuant to Minnesota Statutes Chapter 474A (all references to sections herein are to Minnesota Statutes as amended) NAME OF ISSUER City of New Hope NAME OF PROJECT. Paddock Laboratories, Inc. AMOUNT OF ISSUANCE AUTHORITY REQUESTED. TYPE OF QUALIFIED BONDS TO BE ISSUED (per M.S. 474A.02) X Small Issue Bonds (for manufacturing projects & the Minnesota Rural Finance Authority) 8 4,000,000 Residential Rental Public Facilities Bonds Project Bonds Redevelopment Bonds Mortgage Bonds Governmental Bonds Student Loan Bonds DESCRIPTION OF PROJEC1% The acquisition, construction and equipping of a pharmaceutical manufacturing facility in the City of New Hope. THIS COWI.EIF.D APPLICATION FORM MUST BE ACCOMPANIED BY. 1. a nonrefundable application fee of $100 for each $500,000 amount of Issuance Authority Requested, with the request rounded to the nearest $500,000 -- minimum fee is $100; 2, a preliminary resolution; 3. a statement of bond counsel that the proposed issue of obligations requires an allocation; 4. the type of qualified bonds to be issued; S. an application deposit in the amount of 1 of the requested allocation before the last Monday in July or 2 on or after the last Monday in July; 6. all issuers must pay the application deposit by a check made payable to the Department of Finance (except the Minnesota Housing Finance Agency and Minnesota Rural Finance authority); 7. A public purpose scoring worksheet for manufacturing project applications. An issuer must issue obligations equal to all or a portion of the alloca- tion received within 90 days of the allocation or within the time period permitted by federal tax law, whichever is less or the allocation is cancelled. If an application is rejected, the commissioner must notify the applicant and return the application deposit to the applicant within 30 days unless the applicant requests in writing that the application be resubmitted. Allocations from the pools will be evidenced by the issuance of a certificate of allocation. From the beginning of the calendar year until the last Monday in July the commissioner shall allocate available bonding authority from the small issue and public facilities pools on Monday of each week to ap- plications received on or before the Monday of the preceding week. Allocations made from the housing pool will be under M.S. 474A.061, sub. 2A. After the first Monday in August through the last Monday in November, available bonding authority shall be allocated on Monday of every other week. If a Monday falls on a holiday, the allocation will be made or the application must be received by the next business day after the holiday. An entitlement issuer may not apply for an allocation from the housing pool, the public facilities pool, or the unified pool (for public facilities bonds, residential rental bonds, or mortgage bonds), unless it has permanently issued bonds equal to the amount of its entitlement allocation for the current year plus any amount of bonding authority carried forward from previous years or returned for reallocation all of its unused entitlement allocation. An entitlement issuer may, however. apply for an allocation for small issue bonds, redevelopment bonds or go�em_ mental bonds after the second to the last Monday in July, regardless of the status of any current entitlement or carryforward allocation. ;he Minnesota Housing Finance Agency may not apply for an allocation from the unified pool until after the last Monday in August. An issuer who received an allocation prior to the first Tuesdav in August may retain the allocation after the first Tuesday in august by submitting a letter of intent and an additional deposit in the amount of 1% of the allocation to be retained. The letter of intent and additional deposit must be received by the Department prior to the First Tuesday in August or the allocation will be cancelled and reallocated. The letter must state the intent of the issuer to issue obligations pursuant to the al- PUBLIC PURPOSE SCORING WORKSHEET BOND ALLOCATION FOR SMALL ISSUE MANUFACTURING PROJECPS (See r.verae side for instructions) Name of Isauer. City of New Hope Name of Business: Paddock Laboratories Inc. Address of Business: 3101 Louisiana Avenue North New Hope, Minnesota 55427 Amount of Allocation Authority Requested: S 4,000,000 The following criteria are used to determine the amount of allocation authority requested for which this project is eligible. • SM NS7XUC77ONS ON XgVERSS SM BEFORE COWIA IIVG FORK 1. Employment Changes Within the Next 2 Years Points Scored New Jobs Created in Minnesota 40 Plus Jobs Retained in Minnesota Less Jobs Lost or Relocated in Minnesota Net Jobs Total S100,000 + Allocation Authority Requested = . 025 X Net Jobs Total X 15 = 15 2. Payroll Changes First Full Year of Operation Increase in Net Payroll $400,000 + Allocation Authority Requested = 10 X 100 = 10 3. Tax Base Increase First Full Year of Operation Estimated Net Increase Property Tax 17 7 1 00 0+ Allocation Authority Requested - .044 X 500 = 22 4. Current Community Unemployment Unemployment Rate for Community %® + State Average Unemployment % = X 10 = TOTAL POINTS SCORED If Total Points Scored is less than So complete the following: Total Points + 50 = 0. of Application Pro Rata Points Scored Allocation Authority Requested Application Pro Rata Points Scored Above Pro Rata Allocation Authority Allowed I Certification: I the Issuer certify that a hove inf tion is true and correct to the best of my knowledge. Signature of Issuer ' Date May 18, 1992 Title City Manager Phone 0612) 531 -5100 w V). 6% 40 tr# W co w U- I-- w 0 w 2: cc Ic ui u Cl) Z 0 (10 w <(J)S-JK 1. �- Z C 6 Cc (L 00 D c) �z �- R w Z < 2 CL Cr 0 x CL < 0— —< w (1) u>2 a- I F o LL I i < w Jo C� M 9 U.) U o C CP - cn 1 W M—W fl- C-4 CC C ---tft r— 01 C\j W W 4 —, -3 Lr) w w w �_u w V). 6% 40 tr# W co w U- I-- w 0 w 2: cc Ic ui u Cl) Z 0 (10 w <(J)S-JK 1. �- Z C 6 Cc (L 00 D c) �z �- R w Z < 2 CL Cr 0 x CL < 0— —< w (1) u>2 a- I F --I o LL I i < w Jo C� M 9 U.) U 0 u LU LL 0 C CP - cn 1 cr- w U) > W M J u 0 0 < Ll M—W fl- C-4 CC S z 0 ---tft --I cr c 00) 0 in < w C� M 9 U.) U CP - cn 1 M—W fl- C-4 CC LU 04 C14 — aim O LL 01 w w C) W W 4 —, -3 co C 0 w w 0 N cc a- '5 0 3 S Z < Im OD OD LL co 0) 0 LO Ul En o C,4 cr) —0 r-4 CL W- U- S C u1 0 C 0 CL C. w z LD LD z -t w P, Z Ct S. SL al W It LU 4 CL . F- m F Ct w F- a 0 z w 70 _jj 0) 0) UJ 2 o LU ul cc CC > 0 a. < CO cc A ir LU W w Z W U U 0) --I w cc 01 w w C) W W 4 —, -3 () 00 W 0 a- '5 Z 4J- 10 3 u1 z LD Ct S. SL 4 3 F- m I Ct w F- a 0 z 0 4-� = 0 M w w W C w Z a IM z -1 z 0 z 0 -i -i 1. - 0) S- a LL a: >- x W EM 0 > 4- off U_ U_ LL 0 N CL m cc w 4) > (D co co a) L LU i > L, Lmu E Co IL z E ui co < 3 -r- ?5 w x z < cr. --I The purpose of tonight's public hearing is to determine if the City shall cause to be issued $4,000,000 in Industrial Revenue Bonds by the developer for the construction of a manufacturing facility at 40th and Quebec. The bonds are backed by the development and the City has no obligations whatsoever to service or pay the bonded debt. On May 18, 1992, the City Council adopted a resolution providing approval to the industrial development bond project for Paddock Laboratories and called for a public hearing on the issuance of revenue bonds. 1►� i 11 • ► IC w •�ti!+fs /lI Review: Administration: COUNCIL REQUEST F OR ACTION • .. Finance: RFA -001 . �u P ze V e `' FAEGRE 8, BENSON 2200 NORWEST CENTER 90 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402 -3901 612/336 -3000 FACSIMILE 336 -3026 May 19, 1992 TO: Distribution List Re: City of New Hope Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 Gentlemen: In connection with the City Council's June 8 meeting, I enclose proposed forms of the following: 1. Preliminary Resolution; 2. Application to Department of Trade and Economic Development; 3. Letter from City to Department; 4. Preliminary Bond Counsel Opinion; and 5. Plan for Employment Preference. Very truly yours, r Richard A. Helde RAH: sin Enclosure MFFOOED8.WP5 DENVER DES MOINES WASHINGTON, D. C. LONDON FRANKFURT Distribution List City of New Hope, Minnesota Mr. Daniel Donohue City Manager City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 Mr. Bruce G. Paddock President Paddock Laboratories, Inc. 3101 Louisiana Avenue North Minneapolis, Minnesota 55427 Mr. Joseph W. Glenn Assistant Vice President Syndications and Private Placements Norwest Bank Minnesota, N.A. Sixth and Marquette Minneapolis, MN 55479 -0154 Mr. Arlen Nissen Norwest Bank Minnesota, N.A. Old St. Anthony Office 425 East Hennepin Avenue Minneapolis, Minnesota 55479 -2060 Mr. Richard A. Helde Faegre & Benson 2200 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402 MFFOOEEI.WPS STATE OF MINNESOTA SS. COUNTY OF HENNEPIN I, the undersigned, being the duly qualified and acting City Clerk of the City of New Hope, Minnesota (the "City"), do hereby certify that attached hereto is a compared, true and correct copy of a resolution duly adopted by the City Council of the City, and that the attached extract of minutes of a regular meeting of the City Council held Monday, June 8, 1992, is a full, true and correct transcript therefrom insofar as the same relates to a project to be undertaken pursuant to Minnesota Statutes, Sections 469.152 to 469.165, as amended, on behalf of Paddock Laboratories, Inc. and Bruce G. Paddock. WITNESS My hand and the official seal of the City this 9th day of June , 1992. City Clerk (Seal) MFFOOEDA.WP5 CITY OF NEW HOPE RESOLUTION NO. 92 -104 RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROPOSED INDUSTRIAL DEVELOPMENT PROJECT AND THE ISSUANCE BY THE CITY OF REVENUE BONDS THEREFOR ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT AND AUTHORIZING SUBMISSION OF AN APPLICATION TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL THEREOF BE IT RESOLVED by the City Council of the City of New Hope, Minnesota (the "City "), as follows: 1. There has been presented to this Council a proposal by Paddock Laboratories, Inc., a,Minnesota corporation (the "Company "), in connection with a project under the Minnesota Municipal Industrial Development Act, Minnesota Statutes, Sections 469..152 to 469.165, as amended (the "Act ") to consist generally of the acquisition, construction and equipping 'of an approximately 50,000 square foot manufacturing facility in the City (including ancillary facilities and site improvements in connection therewith, the "Project"), to be owned by Bruce G. Paddock, owner of the Company (the "Owner "), or a partnership to be formed by the Owner (in either case, the "Borrower "), and to be used by the Lessee in its manufacturing business. The Project is to be located on a site to be situated approximately 400 feet east of the intersection of County Road 156 and Quebec Avenue North in the City. The Borrower will enter into a revenue agreement with the City upon such terms and conditions as are necessary to produce income and revenues sufficient to pay when due the principal of and the interest on up to approximately $4,000,000 Industrial Development Revenue Bonds of the City to be issued pursuant to the Act, to provide monies for the Project; and the City will pledge its interest in the revenue agreement to secure the bonds. 2. As required by the Act, this Council conducted a public hearing on Monday, June 8, 1992 on the proposal to undertake and finance the Project after publication in the official newspaper and a newspaper of general circulation in the City of a notice setting forth the time and place of hearing; stating the general nature of the Project and an estimate of the principal amount of bonds or other obligations to be issued to finance the Project; stating that a draft copy of the proposed Application to the Minnesota Department of Trade and Economic Development, together with all attachments and exhibits thereto, is available for public inspection at the office of the City Clerk, in the City Hall, at all times between the hours of 8:00 A.M. to 4:30 P.M. each day except Saturdays, Sundays and legal holidays to and including the day of hearing; and stating that all parties who appear at the public hearing shall have an opportunity to express their views with respect to the proposal. 3. It is hereby found, determined and declared that the Project furthers the purposes set forth in the Act in that the purpose of the Project is and the effect thereof will be to promote, attract encourage and develop economically sound industry and commerce through governmental action for the purpose of preventing the emergence of blighted and marginal lands and areas of chronic unemployment. -2- 4. The Borrower has entered into preliminary discussions with Norwest Bank Minnesota, National Association, as placement agent, and the placement agent has reported preliminarily that the Project and the sale of bonds therefor are feasible. 5. The Borrower has agreed to pay any and all costs incurred by the City in connection with the Project whether or not the Project is approved by the Minnesota Department of Trade and Economic Development and whether or not the Project is carried to completion. 6. The Project is hereby given preliminary approval by the City subject to approval of the Project by the Minnesota Department of Trade and Economic Development and subject to final approval by this Council and by the placement agent as to the ultimate details of the Project and as to the terms of the bonds. 7. In accordance with the requirements of the Act, the Mayor, the City Manager, the City Clerk, and such other officers and representatives of the City as may from time to time be designated are hereby authorized and directed to submit the proposal for the Project to the Minnesota Department of Trade and Economic Development and request its approval thereof, and the Mayor, the City Manager, the City Clerk, and other officers, employees and agents of the City are hereby authorized to provide the Department with such preliminary information as it may require. The Borrower, Faegre & Benson, as bond counsel, the City Manager, the City Attorney, and other City officials are also -3- agreement and such other documents as may be necessary or appropriate to the Project so that, when and if the proposed Project is approved by the Department and this Council gives its final approval thereto, the Project may be carried forward expeditiously. S. The Borrower is hereby authorized to enter into such contracts, in its own name and not as agent for the City, as may be necessary for the carrying out of the Project by any means available to it and in the manner it determines, without advertisement for bids as may be required for the acquisition or construction of municipal facilities, but the City shall not be liable on any such contracts. Adopted by the City Council of the City of New Hope, Hennepin County, Minnesota, this 8th day of June, 1992. Mayor Attest: Y &60 F�T(� City Clerk -4- Extract of Minutes of Meeting of the City Council of the City of New Hope, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of New Hope, Minnesota was duly held at City Hall,in said City on Monday, June 8, 1992 at 7:00 o'clock P. M. The following members were present: Erickson, L'Nerault, Otten, Enck, Williamson and the following were absent: None The Mayor announced that this was the time and place for a public hearing on a proposal for the undertaking and financing by the City of an industrial development project and the issuance of revenue bonds therefor on behalf of Paddock Laboratories, Inc. and Bruce G. Paddock. The following persons appeared: After all persons present had an opportunity to express their views, the hearing was closed. Member Otten then introduced and read the following written resolution and moved its adoption: RESOLUTION GIVING PRELIMINARY APPROVAL TO A PROPOSED INDUSTRIAL DEVELOPMENT PROJECT AND THE ISSUANCE BY THE CITY OF REVENUE BONDS THEREFOR ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK UNDER THE MUNICIPAL INDUSTRIAL DEVELOPMENT ACT AND AUTHORIZING SUBMISSION OF AN APPLICATION TO THE MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR APPROVAL THEREOF The motion for adoption of the foregoing resolution was duly seconded by Member L'Herault , and upon vote being taken thereon the following voted in favor thereof: Erickson, L'Herault, Otten, Enck, Williamson and the following voted against the same: None whereupon said resolution was declared duly passed and adopted. June 8, 1992 Minnesota Department of Trade and Economic Development Division of Community Development 900 American Center Building 150 East Kellogg Boulevard St. Paul, MN 55101 RE: Proposed City of New Hope Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project) Dear Sir or Madams We have examined the Application for Approval for the above described project submitted by the City of New Hope under the Minnesota Municipal Industrial Development Act, including the Resolution giving preliminary approval to the Project, adopted by the City Council, attached thereto. It is our opinion that the proposed project described in the Application constitutes a "project" within the meaning of the Act, and that, when finally and duly authorized and issued, the bonds will be valid and binding obligations under the Act_. Very truly yours, FAEGRE & BENSON By Richard A. Helde MFFOOEDD.WPS 0 PLAN FOR EMPLOYMENT PREFERENCE OF ECONOMICALLY DISADVANTAGED OR UNEMPLOYED INDIVIDUALS Pursuant to Minnesota Session Laws 1983, Chapter 289, Section 113, Subd. 11, the Company shall make every effort to comply with the requirements of said Statute for the purpose of providing employment to those individuals who are unemployed or who are economically disadvantaged and who otherwise qualify for employment with the Company. It is the intent of the Company to target employment opportunities to qualified individuals who are unemployed or economically disadvantaged. It further is the intent of the Company to provide such reports as may be required by Statute to the Commissioner of Energy and Economic Development. e Revised January, 1990 A STATE OF MINNESOTA MINNESOTA DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT DIVISION OF COMMUNITY DEVELOPMENT APPLICATION FOR APPROVAL OF INDUSTRIAL DEVELOPMENT BOND PROJECT PURSUANT TO MINNESOTA STATUTES, SECTION 469.152 THROUGH 165 (please submit this form in duplicate - all supporting data in single copy only) Date: s Js a ere L i s a 2 e .. s e The governing body of .Newexope.ee..,,.,,, County of .sen Minnesota, hereby applies to the Minnesota Department of Trade and Economic Development (Department) for approval of a proposed Industrial Development Bond issue as required by Minn. Stat. 469.152 -.165. Add ress of issuer . 449 xy j n G( e No; the6s... 0 ..... . .... .00.....s..e.6. ..... oo..a00. . . ... . ............. i N � �'r 1� a Tv Y 1' .. i �`1�� r a �....... ....... ..... .................. ... . . . .... . . Att : ............ oci�yo�l . Telephone: 5 —5 100 00.0.00.00.00 .....,0 s.. We have entered into preliminary discussions with: Firm: ...... Addres .. 3101. Louis iana.SYeaue.North.... Att orney: ............... Add ress: ............ City .....New�Hope..... State ........ Minneapolis City: e.ee ............... State mNN........ Name of Project Paddock Laboratories, Inc. Project +. a e+. e e. e e s e e e .. s e .. s e.+ e. e s .. e e. s ..... e e.+ e e a s+. e ..... s .. e s s e. e ... •. This firm is engaged primarily in (nature of business) : many fa: t. ; ; n. of pha: ma: e: t:: als e s e s e.+. e .... a .... e e s. s. s e ... a ... e e e. s. a s. e s ... e s. e e. s ... a .. s .. •+ e s .............. • ... s . e .. •.•. e e .see .... e e e .. a. e e e e e. e e s e e .... a ........ e e e .. e e s e e e. e ....... a ..... e e. e. e e• .. •. The proceeds from the sale of the Industrial Development Bonds will be used to (describe the pro : ; li l y , . , .. . . . in. the. City,. together. wiib. ancillary. faci liza es. and. xe� aZc�. .9�X .e. � ppjrPYpNep.%, , .... , . . e e .. •• ... + .......... s .. e e e e e .. e e s .. a ... • .see .... e s ....... a .... a ...... a .... 00"o ....... . Address of e Project feet east of the intersection of County Road 156 and Quebec Avenue • e e .. e. e e. s s ... e s. s. s s e e. e e. s ... e e e. e e e ..... e e e .... • .......... •. et' Oiti` ee e eee eeeeseeeeeeeeeeeeeeeseeeeeeeeeeeeeees. essaeeee .eee.eeea.seeeese.e.......... Proceeds from the sale of the bonds of approximately $ 4 ? will be applied toward payment of costs now estimated as follows: Acquisition of land: $ 0. 607,000 New construction: x,0,0.0 , Demolition and site preparation: .... 4.0.,.0.0.0..... Acquisition and Installation of Equipment: ..3 .0.0., .0.0o .... Fees: Architectural, engineering, inspection, fiscal, legal, administration, or printing: ..3.7.5.,.0.04.... Construction Interest: , , .4Sp„J0Jq,4 Initial Bond Reserve: ........ -A Contingencies: Other: ... .601,.0.011 .... AEDP I /10 -1 It is presently estimated that construction will begin on or about co%EA'EO,A%....... 1992.., and will be complete on or about uAY..lo .............. 19.9 When completed, there will be approximately . ?�... new jobs created by the project at an annual payroll of approximately $.400,,00,0,,,., based upon currently prevailing wages.' (If applicable) There are ..... existing jobs provided by business. (If applicable) There will be ..... jobs created by construction of the project. Number of hours 2A. AAA.- 25.A04Average wage level $.- W— bcur....... Repayment of the proposed issue will be amortized over a period of ....2. 0....... years. The following exhibits are furnished with this application and are incorporated herein by reference: 1. An opinion of bond counsel that the proposal constitutes a project under Minn. Stat. 469.153, subd. 2. 2. A copy of the resolution by the governing body of the issuer giving preliminary approval for the issuance of its revenue bonds and stating that the project, except for a project under Minn. Stat. 469.153, subd. 2(g) or (j) would not be undertaken but for the availability of Industrial Development Bond financing. 3. A comprehensive statement by the municipality indicating how the project satisfies the public or purpose and policies of Minn. Stat. 469.152 -.165. 4. A letter of intent to purchase the bond issue or a letter confirming the feasibility of the project from a financial standpoint. 5. A statement signed by the principal representative of the issuing authority to the effect that upon entering into the revenue agreement, the information. required by Minn. Stat. 469.154, subd. 5 will be submitted to the Department (not applicable to project under Minn. Stat. 469.153, subd. 2(g) or (j). 6. A statement signed by the principal representative of the issuing authority that the project does not include any property to be sold or affixed to or consumed in the production of property for sale, and does not include any housing facility to be rented or used as a permanent residence. 7. A statement signed by a representative of the issuing authority that a public hearing was conducted pursuant to Minn. Stat. 469.154, subd. 4. The statement shall include the date, time and place of the meeting and certify that a draft copy of this application with all attachments was available for public inspection and that all interested parties were.affo'rded an opportunity to express their views. 8. Copies of notice(s) as published which indicate the date(s) of publication and the newspaper(s) in which the notice(s) were published. 9. Provide a plan for compliance of employment preference of economically disadvantaged or unemployed individuals. (S.ee Minn. Stat. 469.154, subd. 7.) AEDP I /10 -2 We, the undersigned, are duly elected representatives of .4ew,xop� ..................... Minnesota and solicit your approval of this project at your earliest convenience so that we may carry it to a final conclusion. Signed by: (Principal Officers or Representatives of Issuing Authority; type or print official's name on the line to the e of the- ignature line. Thank you.) Edward Erickson e a e e e• s e e n. e e s e s e s s s e. s e• e e.• e e s s e. e e• e e♦ L • e e s e. e s• s e• e e.•• e• e s e Mayor /chair Si na Valerie Leone �1�L�_. e e s e e e e e s e e•• e s e. e e•. e e• e s e• s e. e e e e s e e s• s s s • e e e••• e•. e. e e•• s •see . e 00 Title City Clerk Signature This approval shall not be deemed to be an approval by the Department or the State of the feasibility of the project or the terms of the revenue agreement to be executed or the bonds to be issued therefor. a s e e e s. e. e e• s e .. e e s e• s• e e e e e s e. e e e e. e e s s s s• e e •• e e• a. e e e e e• e e e e. e e e e Authorized Signature, Minnesota Department of Date of Approval Trade and Economic Development Please,return to: Minnesota Department of Trade and Economic Development Division of Community Development Attn: Richard Nadeau 900 American Center Building 150 East Kellogg Boulevard St. Paul, Minnesota 55101 AEDP I /10 -3 4401 Xylon Avenue North New Hope. Minnesota 55428 Phone. 531 -51 FA X (612 531 - 5 - - June 8, 1992 Minnesota Department of Trade and Economic Development Division of community Development 900 American Center Building 150 East Kellogg Boulevard St. Paul, MN 55101 RE: Proposed City of New Hope Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project) Dear Sir or Madam: Paddock Laboratories, Inc., a Minnesota corporation (the "Company"), has proposed that the proceeds of the above-referenced issue be used to assist in the financing of a Project consisting of the acquisition, construction and equipping of a manufacturing facility (together with ancillary facilities and site improvements in connection therewith, the "Project"), to be located in the City of New Hope (the "City"), and to be owned by Bruce G. Paddock (the "Owner") or a partnership to be formed by the owner (in either case the "Borrower"), and leased by the Borrower to the Company. Enclosed please find the Application of the City for approval of the Project, in duplicate, including a copy of the Preliminary Resolution adopted by the City Council. Based on the representations of the Owner and the Company, the City believes that the Project will be in the public interest and serve a valid purpose under the laws of the State of Minnesota, including the Municipal Industrial Development Act, Minnesota Statutes, Sections 469.152 to 469-165, as amended (the "Act"), primarily because the Project is expected to assist in the promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action for the purposes of increasing employment, increasing the tax base and preventing the emergence of blighted and marginal lands and areas of chronic unemployment. I further certify, in order to provide the information required to be supplied to the Minnesota Department of Trade and Economic Development as Exhibits 5, 6 and 7 to the Application to the Department for approval of the Project, as follows: (1) Upon entering into the revenue agreement for the Project between the City and the Borrower, all information required by the Act will be submitted to the Department. Family Styled City fo� For Family Living (2) The Project does not include any property to be sold or affixed to or consumed in the production of property for sale, and does not include any housing facility to be rented or used as a permanent residence. (3) Pursuant to the Act, a notice of a public hearing with respect to the Project was published in the official newspaper of the City and a newspaper of general circulation in the City at least 14 days but not more than 30 days prior thereto, and a public hearing was conducted with respect to the Project at the City Hall of the City at 7:00 o'clock P. M. on Monday, June 8, 1992, at which hearing all interested parties were afforded an opportunity to express their views. c Mayor City of New Hope, Minnesota MFFOOEDC.WP5 -2- COUNCIL The enclosed Bond Resolution provides for the issuance and sale of $4,000,000 Minnesota Industrial Development Revenue Bonds for the industrial development project by Paddock Laboratories, Inc. The resolution states that the City shall proceed to issue the bonds in an amount not to exceed $4,000,000 in the form and upon the terms set forth in the Indenture. The closing will be held on June 25, 1992. Staff recommends approval of the resolution. EM V� / ?1'f'ff . c, c L L SECOND BY Review: Administration: Finance: i W DOIiSEY & WHITNEY 350 PARK AVENUE NEW YORK, NEW YORK 10022 (212)415-9200 1330 CONNECTICUT AVENUE, N. W. WASHINGTON, D. C. 20036 (202)857-0700 3 GRACECHURCH STREET LONDON EC3V OAT, ENGLAND 44- 71-929-3334 36, RUE TRONCHET 75009 PARIS, PEA CE 33-1 -4266 -59-49 35 SQUARE DE MEEUS B -1040 BRUSSELS, BELGIUM 32- 2- 504-46 -11 A PdRTNERSHIP 1 --DING PROFESSI- CORPOBA]TONS 2200 FIRST BANK PLACE EAST MINNEAPOLIS, MINNESOTA 55402-1498 612) 340-2600 TELEX 29-0605 FAX ( 612 ) 340- 2868 JEROME P. G=GAN (612) 340 -2962 201 FIRST AVENUE, S. W., SUITE 340 ROCHESTER, MINNESOTA 55902 (507)2813-3156 1200 FIRST INTERSTATE CENTER BILLINGS, MONTANA 59103 (40r.)252-3800 507 DAVIDSON BUILDING GREAT FALLS, MONTANA 59401 (406)727-3632 127 EAST FRONT STREET MISSOULA, MONTANA 59802 (406)721-6025 801 GRAND, SUITE 3900 DES MOINES, IOWA 50309 (515) 283-1000 July 2, 1992 Ms. Valerie Leone City Clerk City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 Re: Paddock Laboratories Dear Val: Enclosed is a revised copy of the June 22nd resolution of the City Council related to the industrial revenue bonds for Paddock Industries which was forwarded to me by Dick Helde. This is the form of resolution that should be included in the City's minutes. If you have any questions, please give me a call. JPG:cmn Enclosure cc: Steven Sondrall RESOLUTION NO. 92 -121 PROVIDING FOR THE ISSUANCE AND SALE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS PURSUANT TO MINNESOTA STATUTES, SECTIONS 469.152 TO 469.165, TO PROVIDE FUNDS FOR INDUSTRIAL DEVELOPMENT PROJECT ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK BE IT RESOLVED by the City Council of the City of New Hope, Minnesota (the "City "), as follows: 1. Authority The City is by the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469.152 to 469.165, as amended (the "Act ") , authorized to issue and sell its revenue bonds for the purpose of financing costs of authorized projects and to enter into contracts necessary or convenient in the exercise of the powers granted by the Act. 2. Authorization of Project Documents Presented Bruce G. Paddock (the "Borrower ") has proposed to this Council that the City issue and sell its Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project) , Series 1992, in substantially the form set forth in the hereinafter - mentioned Indenture of Trust (the "Bonds ") pursuant to the Act, and loan the proceeds thereof to the Borrower, for the purpose of financing the acquisition, construction and equipping of a manufacturing facility, together with related and ancillary facilities, in the City (the "Project ") , for lease by the Borrower to Paddock Laboratories, Inc., a Minnesota corporation (the "Company" or the "Lessee "), for use in its manufacturing business. Forms of the following documents relating to the Bonds and the Project have been submitted to the City and are now on file in the offices of the City Clerk: (a) Loan Agreement (the "Loan Agreement ") dated as of June 1, 1992, between the City and the Borrower, whereby the City agrees to make a loan to the Borrower of the gross proceeds of sale of the Bonds and the Borrower agrees to complete the Project and to pay amounts in repayment of the loan sufficient to provide for the full and prompt payment of the principal of, premium, if any, and interest on the Bonds; and (b) Indenture of Trust (the "Indenture " ") dated as of June 1, 1992, between the City and First Trust National Association, as Trustee, pledging revenues, including those to be derived from the Letter of Credit described below and from the Loan Agreement, as security for the Bonds, and setting forth proposed recitals, covenants and agreements relating thereto; and (c) Letter of Credit (the "Letter of Credit") to be issued by Norwest Bank Minnesota, National Association (the "Bank") to the Trustee, supporting payment, inter alia, of the principal of and interest on the Bonds (this document not to be executed by the City); and (d) Remarketing Agreement (the "Remarketing Agreement") dated as of June 1, 1992, between the Borrower and Norwest Bank Minnesota, National Association, as Remarketing Agent, providing for the remarketing of the Bonds from time to time, as provided for in the Indenture, and as further provided therein (this document not to be executed by the City). 3. Ein�ftincts It is hereby found, determined and declared that: (a) Based upon information furnished by the Borrower, the Project constitutes a project authorized by and described in the Act. (b) The Project furthers the purposes set forth in the Act in that the purpose of the Project is and the ef thereof will be to promote the public welfare by the active promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action for the purpose of preventing the emergence of blighted and marginal lands and areas of chronic unemployment; by increasing employment opportunities in the City; and by the more intensive development of land available in the area to provide a more adequate tax base to f inance the costs of governmental services in the municipality, county and school district where the Project is located. (c) The Project has been approved by the Department of Trade and Economic Development of the State of Minnesota as tending to further the purposes and policies of the Act. (d) There is no litigation pending or, to the best of its knowledge, threatened against the City relating to the Project or to the Bonds, the Loan Agreement, the Private Placement Agreement or the Indenture, or questioning the organization, powers or authority of the City to issue the Bonds or execute such agreements. (e) The execution, delivery and performance of the City's obligations under the Bonds, the Indenture and the Loan Agreement do not and will not violate any order of any court or any agency of government of which the City is aware or in any proceeding to which the City is a party, or any indenture, agreement or other instrument to which the City is a party or by which it or any of its property is bound, or be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument. -2- (f) It is desirable that the Bonds be issued by the City upon the terms set forth in the Indenture, under the provisions of which the City's interests in the Loan Agreement will be pledged to the Trustee as security for the payment of principal of, premium, if any, and interest on the Bonds (except for certain rights to indemnity, repayment of advances and payment of fees and expenses). (g) The Loan Agreement provides for payments to be made by or on behalf of the Borrower to the Trustee of such amounts as will be sufficient to pay the principal of, premium, if any, and interest on the Bonds when due. The Loan Agreement obligates the Borrower to provide for the payment of operation and maintenance expenses, including adequate insurance, taxes and special assessments. (h) Under the provisions of the Act, and as provided in the Loan Agreement and Indenture, the Bonds are not to be payable from nor charged upon any funds other than amounts payable pursuant to the Letter of Credit or the Loan Agreement, and moneys in the funds and accounts held by the Trustee under the Indenture which are pledged to the payment thereof; the City is not subject to any liability thereon; no owners of the Bonds shall ever have the right to compel the exercise of the taxing power of the City to pay any of the Bonds or the interest thereon, nor to enforce payment thereof against any property of the City; the Bonds shall not constitute a charge, lien or encumbrance, legal or equitable, upon any property of the City; and each Bond issued under the Indenture shall recite that such Bond, including interest thereon, shall not constitute or give rise to a charge against the general credit or taxing powers of City. 4. Approval and Execution of Documents The forms of Loan Agreement, Indenture, Letter of Credit and Remarketing Agreement, referred to in paragraph 2, are approved. The Loan Agreement and Trust Indenture shall be executed in the name and on behalf of the City by one or more officers of the City, in substantially the form on file, but with all such changes therein, not inconsistent with the Act or other law, as may be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof, and then shall be delivered to the Trustee. The forms of Remarketing Agreement and Letter of Credit now on file may be modified after the date hereof as determined to be necessary or desirable by the Bank, the Borrower, the Placement Agent and Bond Counsel. 5. Approval. Execution and Delivery of Bonds The City shall proceed forthwith to issue the Bonds, to be dated the date of the initial issuance and delivery thereof, in an aggregate principal amount not to exceed $4,000,000, in the form and upon the terms set forth in the Indenture, which terms are for this purpose incorporated in this resolution and made a part hereof. The Bonds shall mature and bear interest as provided in the Indenture, and the initial rate of interest thereon shall not exceed 6.00% per -3- annum. Norwest Bank Minnesota, National Association, has agreed pursuant to the provisions of a Private Placement Agreement to privately place the Bonds at a purchase price equal to par, and said purchase price is hereby found to be favorable and is hereby accepted. Officers of the City are authorized and directed to prepare and execute the Bonds as prescribed in the Indenture to deliver them to the Trustee, together with a certified copy of this Resolution and the other documents required by the Indenture, for authentication, registration and delivery to the original purchaser or purchasers. As provided in the Indenture, each Bond shall contain a recital that it is issued pursuant to the Act, and such recital shall be conclusive evidence of the validity and regularity of the issuance thereof. 6. fertificates, etc. The officers of the City are authorized and directed to prepare and furnish to bond counsel and the Placement Agent certified copies of all proceedings and records of the City relating to the Bonds, and such other affidavits and certificates as may be required to show the facts appearing from the books and records in the officers' custody and control or as otherwise known to them; and all such certified copies, certificates and affidavits, including any heretofore furnished, shall constitute representations of the City as to the truth of all statements contained therein. 7. Authorization. The officers of the City are authorized and directed to deliver a certified copy of this Bond Resolution to the County Auditor, together with such other information as such County Auditor may require, and obtain the certificate of the County Auditor as to entry of the Bonds on his bond register as required by the Act and Section 475.63, Minnesota Statutes. 8. .$10 Million The City the $10 million election with respect to the capital expenditures for the Project, as Section 144(a) of the Internal Revenue Code of shall apply to the Bonds and the Project. hereby elects that Bonds and certain provided under 1986, as amended, -4- Adopted by the City Council of the City of New Hope, Hennepin County, Minnesota, this 22nd day of June, 1992. ay or r Attest: City Clerk STATE OF MINNESOTA ) } SS. COUNTY OF HENNEPIN ) I, the undersigned, being the duly qualified and acting City Clerk of the City of New Hope, Minnesota (the "City "), do hereby certify that attached hereto is a compared, true and correct copy of a resolution duly adopted by the City Council of the City, and that the attached extract of minutes of a regular meeting of the City Council held Monday, June 22, 1992, is a full, true and correct transcript therefrom insofar as the same relates to a project to be undertaken pursuant to Minnesota Statutes, Sections 469.152 to 469.165, as amended, on behalf of Paddock Laboratories, Inc. and Bruce G. Paddock. WITNESS My hand and the official seal of the City this day of `� Lam' , 1992. (Seal) MFF0105C.WP5 Extract of Minutes of Meeting of the City Council of the City of New Hope, Minnesota Pursuant to due call and notice thereof, a regular meeting of the City Council of the City of New Hope, Minnesota was duly held at City Hall in said City on Monday, June 22, 1992 at 7:00 o'clock P. M. The following members were present: Erickson, Enck, L'Herault, Otten, Williamson and the following were absent: none Member L'Herault then introduced and read the following written resolution and moved its adoption: PROVIDING FOR THE ISSUANCE AND SALE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS PURSUANT TO MINNESOTA STATUTES, SECTIONS 469.152 TO 469.165, TO PROVIDE FUNDS FOR INDUSTRIAL DEVELOPMENT PROJECT ON BEHALF OF PADDOCK LABORATORIES, INC. AND BRUCE G. PADDOCK The motion for adoption of the foregoing resolution was duly seconded by Member Otten, and upon vote being taken thereon the following voted in favor thereof: all present and the following voted against the same: none whereupon said resolution was declared duly passed and adopted. FAEGRE 8, BENSON 2200 NORWEST CENTER 90 SOUTH SEVENTH STREET MINNEAPOLIS, MINNESOTA 55402 612/336-3000 FACSIMILE 336-3026 Mr, Daniel Donohue City Manager City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Mr. Jerry Gilligan Dorsey & Whitney 2200 First Bank Place East 200 South Sixth Street Minneapolis, MN 55402 June 16, 1992 Mr. Steve Sondrall Corrick & Sondrall 8525 Edinbrook Crossing, Suite 203 Brooklyn Park, MN 55443 Re: $4,000,000 City of Hew Hope, Minnesota Industrial Development.Revenue Bonds (Paddock Laboratories, Inc. Project) Series 1992 Gentlemen: I enclose the proposed form of Bond Resolution for action by the City Council at its June 22 meeting. I will be circulating proposed forms of the City's closing certificates under separate cover. The pre-closing has been set for Wednesday, June 24, with the closing to be held on the 25th. Yours very truly, RAH/bp/MFF0105E Enclosure DENVER DES MOINES Richard A. Helde WASHINGTON, D. C. LONDON FRANKFURT VU/ 1 / 04 10 -. 4J rAA OIZ 04V 2044 vuk(bty WtiillNhy Julne 17, 1992 Mr. Richard A. Helde Faegre & Benson 2200 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402 Re: K000.000 Industrial Development Revenue Bonds , (Paddock Laboratories, inc, Project), Series 1992 City of New flope, Minnesota Dear Dick-, L0002 201 VXRST 1 k 1 ZWUZ, S. W, SUITR 040 8001K Y 18 -R-MzMSQTA 55902 ( 88 8 - ;X5G 1200 FIRST ZgMESTATZ C!XW=R XULINOB, MONTANA 39109 (4Qd)858-38O0 607 DAV133$OX MU=I OARAT F MONTANA, 09401 (400)727 - 3633 127 EAST FRONT STREET XWSOUL&, YONVANA. 39802 (406)721-64�45 201 ORAJ4 =T& 3900 WES KOZWZB, ZOW,& 50300 (315) kt10 -1000 In connection with the Bonds referred to above, I have reviewed the draft of the Resolution to be considered by the New Dope City Council on June 22 and the June 8, 1992 drafts of Private Placement Agreement, Remarketing Agreement, Loan Agreement and Indenture of Trust you forwarded to me and have the following Comments. 1. As a general comment the documents to be executed by the City and the Bonds should be set up for execution by the Mayor and City Manager. Th 1 no need for the City Clerk to attest to their signatures. 2. Private Placement AgKeement. Remove the City as a party to this Agreement. The City's approval of the sale of the Bonds in the resolution should be sufficient without having the City be a party to the Private Placement Agreement. 3. Remarketin A --- -- L In the second to the last line of the first WI clause, the word "from" should be changed to "between" and "to" should be changed to "and". DoiRsEy & WTIIT WZY A P.J.—snavi, 350 PAAK AVE-"t NJR!W "RK, NEW YO= 100ee 22 00 FIRST BA-Vir P"CE F-4ST (g12)415,9§100 XINNEAPOLIS, XJXXESOT� 55402-14198 1330 CONNECTICUT AVMME N. W. (612) WABIONOTON, D. C. g0036 340-2600 (202) a,-1V - 0700 TRLF,X �9 -O645 O)RACrCRURCU 87MXBT FAX (�) 340-21368 LONDON ZCaV OAT, 3X01,AND 36, RUN TRONCUZT JEROM P. GUJJr.AN 75009 rAR119, FRANCS (612) 340-2�XM 3!5 SQUARX bE mzzfiq n-1040 BRUSH BL9, 9Rt 32-2-604-46 Julne 17, 1992 Mr. Richard A. Helde Faegre & Benson 2200 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402 Re: K000.000 Industrial Development Revenue Bonds , (Paddock Laboratories, inc, Project), Series 1992 City of New flope, Minnesota Dear Dick-, L0002 201 VXRST 1 k 1 ZWUZ, S. W, SUITR 040 8001K Y 18 -R-MzMSQTA 55902 ( 88 8 - ;X5G 1200 FIRST ZgMESTATZ C!XW=R XULINOB, MONTANA 39109 (4Qd)858-38O0 607 DAV133$OX MU=I OARAT F MONTANA, 09401 (400)727 - 3633 127 EAST FRONT STREET XWSOUL&, YONVANA. 39802 (406)721-64�45 201 ORAJ4 =T& 3900 WES KOZWZB, ZOW,& 50300 (315) kt10 -1000 In connection with the Bonds referred to above, I have reviewed the draft of the Resolution to be considered by the New Dope City Council on June 22 and the June 8, 1992 drafts of Private Placement Agreement, Remarketing Agreement, Loan Agreement and Indenture of Trust you forwarded to me and have the following Comments. 1. As a general comment the documents to be executed by the City and the Bonds should be set up for execution by the Mayor and City Manager. Th 1 no need for the City Clerk to attest to their signatures. 2. Private Placement AgKeement. Remove the City as a party to this Agreement. The City's approval of the sale of the Bonds in the resolution should be sufficient without having the City be a party to the Private Placement Agreement. 3. Remarketin A --- -- L In the second to the last line of the first WI clause, the word "from" should be changed to "between" and "to" should be changed to "and". 06/171/92 16:43 FAX 612 340 2644 DORSEY WHITNEY DORSHY & WRIT Page -2- Mr. Richard A. Helde June 17, 1992 4. Loan Agreement. (a) In Section 2,01(j) delete the words "or charter provision". (b) In the second line of Section 2.02(p) delete "council" and insert "of the City Council" after member. (c) The term "Opinion of Bond Counsel" is used in various places in the Loan Agreement and is not defined. If it is defined it could also be used in Sections 4.10 and 5.02. (d) In the first sentence of Section 4.08(b) delete the phrase "and the Municipality agrees to call the Series 1992 Bonds for redemption on such date". The agreement of the Borrower to call the Bonds for redemption is sufficient. (e) In the second sentence of Section 6.08 delete the phrase "and will not suffer or permit any default to occur under the Indenture". (f) Add the following sentence to the end of Section 7,02: 'Whenever any Default shall occur with respect to any obligation of the Borrower to the Municipality under Sections 4.04(b), 6.01, 7.04 or 7.05 hereof, the Municipality may take whatever action at law or in equity which may appear necessary or desirable to enforce the obligations of the Borrower to the Municipality thereunder." 5. Indenture of Trust. (a) In the first sentence of Section 2.03 delete the phrase "and shall be attested to by the manual or facsimile signature of the City Clerk or the Assistant City Clerk". Section 2.06, (b) Delete the reference to "City Clerk in the second paragraph of (c) In Article VII delete the third paragraph, and in the fourth paragraph delete "or the Issuer" in the first line and the ninth line and delete the last sentence. The obligations with respect to use of proceeds and investment of funds held under the Indenture are the Borrower's and it is not appropriate for the City to make the covenants and agreements contained in Article VII. NAM 06/17/92 16:44 FAX 612 340 2644 DURSEY WHITNEY DORSET Page -3- Mr. Richard A. Helde June 17, 1992 end. (d) In Section 10.01(f) delete "-Treasurer" in the forth line from the (e) Please furnish me with a copy of the DTC Letter of Representations referred to in the Indenture. 6. Resolution.. (a) The Resolution needs to be revised to reflect the City not being a Party to the Private Placement Agreement, (b) You may wish to add "AND BRUCE G. PADDOCK" at the end of the title to the Resolution. If this is not added you should delete the reference to Bruce G. Paddock on the certificate of City Clerk attached to the resolution. Q On Page 2 "bank" should be capitalized in the second line of (d) at the top of the page, (d) Add "Based upon information furnished by the Borrower," at the beginning of clause (a) of the Findings on page 2. 7. 1 noted that the page references in the Table of Contents in both the Indenture of Trust and Loan Agreement are incorrect. Should you have any questions concerning these comments, please give me a call. JPG:cmn cc Steven Sondrall Daniel Donahue Yours truly 5ir e F Lgj M14 I SECOND DRAFT: 06/22/92 CITY OF NEW HOPE, MINNESOTA INDUSTRIAL DEVELOPMENT REVENUE BONDS (PADDOCK LABORATORIES, INC. PROJECT) SERIES 1992 Dated as of June 1, 1992 Between This instrument was drafted by Faegre & Benson 2200 Norwest Tower 90 South Seventh Street Minneapolis, Minnesota 55402-3901 $4,000,000 City of New Hope Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 TABLE OF CONTENTS WWW Parties . . . . . . . . . . . . . . . . . . . . . . . . Recitals . . . . . . . . . . . . . . . . . . . . . . . . . ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.01 Definitions . . . . . . . . . . . . 2 Section 1.02 Characteristics of Certificate or Opinion . 7 Section 1.03 Description of Project . . . . . . . . . . 7 Section 1.04 Additional Provisions as to Interpretation 8 ARTICLE II REPRESENTATIONS, ETC. Section 2.01 Representations by the Municipality . . . . 9 Section 2.02 Representations and Covenants by the Borrower . . . . . . . . . . . . . . . . 10 ARTICLE III ISSUANCE OF THE SERIES 1992 BONDS; ACQUISITION AND CONSTRUCTION OF PROJECT Section 3.01 Section 3.02 Agreement to issue A ' ' B'B'nd's' ;" Application of Bond Proceeds . . . . . . 14 Section 3.03 A Disbursements from the Project Fund . . 14 Section 3.04 Obligation of the Borrower to Cooperate in Furnishing Documents to the Trustee and the Bank . . . . . . . . . . . . . . 15 ARTICLE IV LOAN PAYMENTS AND DEPOSITS Section 4.01 The Loan . . . . . . . . . . . . . . . . 18 Section 4.02 Repayment of Loan . . . . . . . . . . . . 18 Section 4.03 Mandatory Purchase of Bonds . . . . . . . 19 Section 4.04 Additional Payments . . . . . . . . . . . 19 Section 4.05 No Set-Off; Borrower's Obligations ARTICLE V PROJECT FACILITIES Section 5.01 Unconditional . . . . . . . . . . . . . . 19 Section 4.06 Interest on Loan Repayments and 29 Section 6.03 Other Overdue Payments . . . . . . . . . 20 Section 4.07 Options to Prepay Loan . . . . . . . . . 21 Section 4.08 Tax Exempt Status of Series 1992 Bonds 21 Section 4.09 Investment of Funds, Credits . . . . . . 24 Section 4.10 Substitute Letter of Credit . . . . . . . 24 ARTICLE V PROJECT FACILITIES Section 5.01 Use of Project Facilities . * ' * ' * * * 26 Section 5.02 Maintenance and Possession of Project 29 Section 6.03 Facilities by Borrower . . . . . . . . . 26 Section 5.03 Liens . . . . . . . . . . . . . . . . . . 26 Section 5.04 Taxes and Other Governmental Charges 27 Section 5.05 Insurance . . * , * * - - - - - - * 27 Section 5.06 Damage or Destruction . . . . . . . . . . 27 Section 5.07 Condemnation . . . . . . . . . . . . . . 28 ARTICLE VI SPECIAL COVENANTS Section 6.01 No Warranty of Condition or Suitability; ARTICLE VIII MISCELLANEOUS Section 8.01 Indemnification . . . . . . . . . . . . . 29 Section 6.02 Financial Statements . . . . . . . . . . 29 Section 6.03 Annual Statement and Certificate; Reports 29 Section 6.04 [This section intentionally omitted] . . 30 Section 6.05 Records and Inspection . . . . . . . . . 30 Section 6.06 Filings, Further Assurances . . . . . . . 30 Section 6.07 Assignments . . . . . . . . . . . . . . . 30 Section 6.08 Observance of Indenture Covenants & Terms 31 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES Captions . . . . . . . . . . . . . . . Section 7.01 Events of Default . . . . . . . . . . . . 32 Section 7.02 Remedies on Default . . . . . . . . . . . 33 Section 7.03 Remedies Cumulative, Delay Not to Constitute Waiver . . . . . . * * * * * * 34 Section 7.04 Agreement to Pay Attorneys' Fees and Expenses . . . . . . . . . . . . . . . . 34 Section 7.05 Advances . . . . . . . . . . . . . . . . 34 ARTICLE VIII MISCELLANEOUS Section 8.01 Amounts Remaining in Funds . . . . . . . 36 Section 8.02 Notices . . . . . . . . Section 8.03 References to Bonds Ineffective after Bonds Bonds Paid . . . . . . . . . . . . . . . 37 Section 8.04 Binding Effect . . . . . . . . . . . . . 37 Section 8.05 Amendments, Changes and Modifications . . 37 Section 8.06 Counterparts . . . . . . . . . . . . . . 37 Section 8.07 Severability . . . . . . . . . . . . . . 37 Section 8.08 Captions . . . . . . . . . . . . . . . . 38 - i - Section 8.09 Benefit of Bondholders . . . . . . . . . 38 Section 8.10 Term of Agreement . . . . . . . . . . . . 38 Section 8.11 Certain References to Bank, Letter of Credit, etc. . . . . . . . . . . . . . . 38 -iii- I P 1ployii k W20 ZA_ DO 34 � S D0 M % THIS LOAN AGREEMENT, made as of the 1st day of 1992, between the CITY OF NEW HOPE, a Minnesota municipal corporation (herein sometimes called the "Municipality"), Bruce G. Paddock, an individual (herein sometimes called "Borrower"), WITNESSETH: June, and the WHEREAS, Sections 469.152 to 469.165, Minnesota Statutes, as amended, known as the Minnesota Municipal Industrial Development Act, (the "Act") authorizes and empowers municipalities of the State of Minnesota to issue and sell revenue bonds and refunding revenue bonds and lend the proceeds thereof to a contracting party for the purpose of financing or refinancing projects authorized thereby; and WHEREAS, Bruce G. Paddock, an individual A (the "Borrower"), has proposed to construct and equip on certain land in the Municipality (the "Land") a manufacturing facility (the "Project") for lease to Paddock Laboratories, Inc., a Minnesota corporation (the "Company" or the "Lessee"); WHEREAS, the Minnesota Department of Trade and Economic Development approved the Project as tending to further the purposes and policies of the Act; and WHEREAS, the Municipality proposes to make a loan to the Borrower pursuant to the Act to provide financing for the Project; and WHEREAS, the Municipality proposes to issue its $4,000,000 Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 (the "Series 1992 Bonds") pursuant to an Indenture of Trust of even date herewith, between the Municipality and First Trust National Association in Saint Paul, Minnesota, 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 Letter of Credit to be issued by Norwest Bank Minnesota, National Association, to support payment of the Bonds; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained, the parties hereto covenant and agree as follows: I 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 469.165, as amended from time to time. "Authorized Borrower Representative" means the Borrower or any person at the time designated to act on behalf of the Borrower by written certificate furnished to the Municipality and the Trustee, containing the specimen signature of such person and signed by the Borrower. Such Certificate may designate an alternate or alternates. "Authorized Municipal Representative" means the person at the time designated to act on behalf of the Municipality by written certificate furnished to the Borrower and Trustee containing the specimen signature of such person and signed on behalf of the Municipality by its Mayor, City Clerk or City Manager. Such certificate may designate an alternate or alternates. "Bank" means (i) Norwest Bank Minnesota, National Association, a national banking association organized and existing under the laws of the United States of America in its capacity as issuer of the Letter of Credit, and (ii) any Substitute Bank. "Bank Mortgage" means (i) the Combination Mortgage, Security Agreement and Fixture Financing Statement A from the Borrower to the Bank, as from time to time amended or supplemented, and (ii) the mortgage or security agreement, if any, securing the Borrower's obligations under a Credit Agreement with any Substitute Bank, and any amendments or supplements thereto. "Bond Counsel" means Independent nationally recognized bond counsel. "Bond Documents" means this Loan Agreement, the Indenture, the Letter of Credit and the Bond Resolution. Indenture. "Bond Fund" means the Bond Fund created under the I "Bond Resolution" means the resolution of the Municipality adopted by the City Council on June 22, 1992, authorizing the issuance and sale of the Series 1992 Bonds, as the same may be amended, modified or supplemented by any amendments or modifications thereof. "Bonds" means the Series 1992 Bonds. "Borrower" means Bruce G. Paddock, an individual, his successors and assigns. "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. I "Certified Resolution" means a copy of a resolution of the City Council, certified by the City Clerk to have been duly adopted by said City Council and to be in full force and effect on the date of such certification. "City Council" or "Council" means the City Council of the Municipality or its successor as governing body of the Municipality. "Closing Date" means the date on which the Series 1992 Bonds are delivered to the original purchaser or purchasers thereof. "Company" means Paddock Laboratories, Inc., a Minnesota c-orporation, its successors and assigns. "Completion Date" means the date specified in Section 3.01 on which acquisition, construction and equipping of the Project are to be substantially completed. "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 his 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, or a final decision by any court of competent jurisdiction that interest on the Bonds is includable in the gross income of the -3- recipient under Section 103 and related Sections of the Internal Revenue Code and regulations thereunder for any reason other than that the Holder is a substantial user or a related person under Section 147(a) of the 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. "Financial Newspaper" or "Financial Journal" means Northwestern Financial Review or any other newspaper or journal devoted to financial news circulated in the English language in Minneapolis or St. Paul, Minnesota. "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 Municipality and First Trust 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 Company or 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 Municipality, the Borrower or the Company as a partner, officer, shareholder, 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. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "Land" means the land and interests in land constituting the site of the Project. "Lease" means any lease agreement with respect to the Project Facilities between the Borrower and the Company. -4- I "Lessee" means the Company. "Lessor" means the Borrower. "Letter of Credit" shall have the meaning set forth in the Indenture. "Loan Agreement" means this Loan Agreement between the Municipality and the Borrower, dated as of June 1, 1992, 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. "Municipality" means the City of New Hope, a Minnesota municipal corporation, its successors and assigns. "Net Proceeds", when used with respect to any insurance or condemnation award, means the gross proceeds from the insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorney's fees and any extraordinary expenses of the Trustee) incurred in the collection of such gross proceeds. "Opinion of Counsel" means a written opinion of counsel (who need not be Independent Counsel unless so specified) appointed by the Borrower or Municipality 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. "Outstanding" when used as of any particular time with reference to Bonds, shall have the meaning provided in the Indenture. "Placement Agent" mean Norwest Bank Minnesota, National Association. "Placement Agreement" means the Private Placement Agreement dated June _ff 1 1992, by and between the Municipality, the Borrower and the Placement Agent. hereof. "Project" means the Project described in Section 1.03 "Project Building" means the building acquired and constructed as the Project and located on the Land. "Project Costs" shall have the meaning set forth in the Indenture. "Project Equipment" means all those items of furnishings, furniture, equipment, building service equipment and fixtures located in the Project Building or used in connection with the Project Facilities and acquired and installed with the proceeds of the Bonds. "Project Facilities" means the Land, the Project Building and the Project Equipment, all as the same may at any time exist. "Project Fund" means the Project Fund established under the Indenture. "Project Supervisor" means the Project Supervisor appointed pursuant to Section 3.07 hereof, and includes any alternate or alternates. "Purchase Price shall have the meaning set forth in the Indenture. "Qualified Investments" means investments authorized and described in Article VII of the Indenture. "Redeem" or "redeem" or "redemption" means "prepay" or "prepayment" as the case may be. "Remarketing Agent" means Norwest Bank Minnesota, National Association, its successors and assigns. "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 chairman 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 1992 Bonds" means the City of New Hope Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992, authorized by the Indenture, this Loan Agreement and the Bond Resolution and described in the Indenture. "Substitute Bank" shall have the meaning set forth in the Indenture. "Substitute Letter of Credit" shall have the meaning set forth in the Indenture. 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 funds 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. This Loan Agreement is governed by and shall be construed in accordance with the laws of Minnesota. [The balance of this page is intentionally left blank.] REPRESENTATIONS, ETC. Section 2.01 Representations by the Municipality. The Municipality makes the following representations as the basis for its undertakings herein: (a) The Municipality is a duly organized and existing municipal corporation and is a statutory city under the laws of Minnesota, including Minnesota Statutes, Chapter 412. (b), Based on information furnished by the Borrower, the Project comprises real and personal properties useful and to be used in connection with the operation of a revenue producing enterprise and is an authorized "project" under the Act. (c) In authorizing the Project, the Municipality's purpose is, and in the judgment of the City Council, the effect thereof will be, to promote the public welfare by: the promotion, attraction, encouragement and development of economically sound industry and commerce through governmental action for the purpose of preventing the emergence of blighted and marginal lands and areas of chronic unemployment; and increasing the tax base of the Municipality and other affected taxing jurisdictions. (d) On June 8, 1992, after publication of notice of hearing in the official newspaper and a newspaper of general circulation in the Municipality, the City held a public hearing on the Project, and thereafter the City Council, as the applicable elected representative of the City, duly adopted resolutions giving approval to the Project and the issuance of the Series 1992 Bonds. (e) The Project has been approved by the Minnesota Department of Trade and Economic Development as tending to further the purposes and policies of the Act. (f) On June 22, 1992, the City Council, pursuant to the Bond Resolution, granted final approval to the issuance of the Series 1992 Bonds. (g) The issuance and sale of the Series 1992 Bonds, the execution and delivery of this Loan Agreement and the Indenture, the performance of all covenants and agreements of the Municipality contained in this Loan Agreement and the Indenture, and the loan hereunder are authorized and have been duly authorized by resolutions of the City Council, including the Bond Resolution duly adopted at a meeting of the City Council duly called and held by the requisite vote of its members and published as may be required by law. 990a I (h) The Borrower has requested that the municipality issue the Series 1992 Bonds of the Municipality as provided in the Act, Indenture and Bond Resolution and lend the proceeds thereof to the Borrower pursuant to this Loan Agreement. The Municipality will issue Series 1992 Bonds in the aggregate principal amount of $4,000,000, and the Series 1992 Bonds shall be in the form and shall be subject to the terms and provisions set forth in the Indenture. (i) There is no litigation pending or, to the best of its knowledge threatened, against the Municipality relating to the acquisition, construction or financing of the Project or to the Bonds or to this Loan Agreement or the Indenture or questioning the powers or authority of the Municipality under the Act, or questioning the corporate existence or boundaries of the Municipality or the title of any of the present officers of the Municipality to their respective offices. (j) The execution, delivery and performance of this Loan Agreement by the Municipality do not violate any agreement A or any court order or judgment in any litigation to which the Municipality is a party or by which it is bound. Section 2.02 Representations and Covenants by the Borrower. The Borrower makes the following representations and covenants: (a) The Company is a corporation duly organized and existing under the laws of Minnesota. (b) The Borrower intends, but shall not be obligated, to own the Project Facilities to the expiration or sooner termination 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 or the Company is a party or by which either 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 or the Company is or was a party or by which either is bound. (d) The proceeds of the Series 1992 Bonds to be deposited in the Project Fund, together with the other funds I to be contributed for the purpose by the Borrower in accordance herewith or with the Credit Agreement, will be sufficient to fully pay the costs of the Project. (e) There is no litigation pending, or to the best of its knowledge threatened, against the Borrower or the Company affecting its ability to own or operate the Project or carry out the terms of this Loan Agreement. (f) The Land is currently zoned properly for the Project Facilities and the Borrower has or will timely obtain all necessary licenses and permits required for construction of the Project Building. (g) Substantially all (950) of the proceeds of Series 1992 Bonds are to be the 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. (h) Neither the Borrower nor any other principal user of the Project Facilities (nor any person related to the Borrower or such other principal user) is a principal user, nor related to any principal user, of any facilities other than the Project Facilities within the Municipality which were acquired in whole or in part, directly or indirectly, by the issuance of tax-exempt bonds which are outstanding on the date of issuance of the Series 1992 Bonds, within the meaning of Section 144 of the Internal Revenue Code and regulations thereunder. (i) The aggregate of (i) capital expenditures with respect to facilities in or attributable to the Municipality 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 Series 1992 Bonds, whether allocable or attributable to the Project Facilities or any other facility within or attributable to the Municipality, plus (ii) the original principal amount of the Series 1992 Bonds, plus (iii) the capital expenditures made with respect to facilities in or attributable to the Municipality and used 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 Series 1992 Bonds, whether allocable or attributable to the Project Facilities or any other facility within or attributable to the Municipality, all as such terms are used in Section 144 of the Internal Revenue Code and regulations thereunder, do not and will not in the aggregate exceed $10,000,000. -11- (j) The aggregate outstanding amount of tax-exempt facility-related bonds allocated, respectively, to the Borrower or any other principal user of the Project Facilities (or any related persons), when added to the aggregate face amount of the Series 1992 Bonds allocated to the Borrower or such principal user, or any related persons, all as such terms are defined in Section 144 of the Internal Revenue Code, does not and will not exceed $40,000,000 with respect to any such person. (k) The weighted average maturity of the Series 1992 Bonds does not exceed 1200 of the weighted average economic life of the Project Facilities, as of the date on which the Project Facilities are first placed in service. (1) The Borrower will not use any proceeds of the Series 1992 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 in the future for any of such purposes. (m) The Borrower will use less than 25 percent of the proceeds of the Series 1992 Bonds either directly or indirectly to finance the acquisition of land (or any interest therein), and will not use more than 25 percent of the proceeds of the Series 1992 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 shall be used in the future primarily for any of such purposes. (n) No part of the proceeds of the Series 1992 Bonds are to be used for the acquisition of any existing structure or other used property, unless at least 15 percent (or in the case of facilities other than a building 100 percent) of the cost of acquisition of such existing property financed by proceeds of the Series 1992 Bonds is spent for rehabilitation expenditures within the meaning of Section 147(d) of the Internal Revenue Code, within two years of the date of acquisition or, if later, the date of issuance of the Series 1992 Bonds. (o) Not less than 95 percent of the net proceeds of the Series 1992 Bonds will be 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 such property). For purposes of this paragraph "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. For purposes of this paragraph, an office shall be includible in the Project if 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. (p) To the best of the Borrower's knowledge and belief, no Amember the pitahcil or other officer or employee of the Municipality is directly or indirectly interested in this Loan Agreement, the Series 1992 Bonds, the Project or any contract, agreement or job hereby contemplated to be entered into or undertaken. [The balance of this page intentionally left blank] ARTICLE III ISSUANCE OF THE SERIES 1992 BONDS; ACQUISITION AND CONSTRUCTION OF PROJECT Section 3.01 Agreement to Acquire and Construct Project. The Borrower agrees that it will proceed with all reasonable dispatch to (a) acquire and construct the Project Building substantially in accordance with the plans and specifications to be placed on file in the office of the Company, as such plans and specifications are from time to time amended by the Borrower and (b) acquire and install all items of Project Building or elsewhere on the Land. The Borrower may make changes in the Project Building or items or Project Equipment to be installed at any time; provided that no changes will be made which would delete from the Project and 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 continue to constitute an authorized "project" within the meaning of the Act. The work of the Project shall be in accordance with all applicable zoning, planning and building regulations of governmental authorities having jurisdiction of the Project. The acquisition, construction and improvement of the Project Building on the Land and acquisition and installation of the Project Equipment may be performed in the manner determined by the Borrower and by any means available to the- Borrower without advertisement for bids. The Borrower shall use its best efforts to cause said acquisition, construction and installation to be completed by December 1, 1994, or as soon thereafter as may be practicable, delays incident to force majeure as defined in Section 7.01 hereof only excepted. Section 3.02. Agreement to Issue Bonds, Application of Bond Proceeds. In order to provide funds to loan to the Borrower for payment of the Project Costs, the Municipality has, or will have, upon or promptly after the execution of this Loan Agreement, issued and delivered the Series 1992 Bonds to the purchasers thereof and the Municipality has or will have deposited the proceeds of said Series 1992 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. Disbursements from the Project Fund. The Municipality has, in the Indenture, authorized and directed the Trustee, with the consent of the Bank, to use the moneys in the Project Fund to pay or reimburse the Borrower for payments made for Project Costs. All moneys in the Project Fund (including moneys earned pursuant to the provisions of Section 3.09 hereof) remaining after the Completion Date and payment in full of the costs of acquisition, construction and installation of the Project and of all other items of Project Costs shall be deposited in the Bond Fund, provided that no amount shall be -.14- I deposited in the Bond Fund under this Section if the result thereof would be that less than 95 of the net proceeds of the Series 1992 Bonds (including accrued interest received upon the sale of the Series 1992 Bonds and earnings on amounts deposited in the Project Fund) would have bene 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. Any balance not transferable to the Bond Fund shall be applied by the Trustee as may be provided in the Indenture and as shall not jeopardize the exclusion of interest on the Series 1992 Bonds from gross income, for Federal income tax purposes. Disbursements from the Project Fund for Project Costs shall be made only with the written consent of the Bank. Moneys in the Project Fund shall be subject to withdrawal from time to time only for the purpose of paying amounts due to contractors or others for Project Costs incurred on or after May 18, 1992, or the reimbursement to the Borrower for payments made on or after May 18, 1992, by the Borrower for Project Costs incurred on or after May 18, 1992, provided that moneys in the Project Fund may be used to pay or reimburse Project Costs incurred or paid prior to May 18, 1992, if such payments shall not result in less than 95% of the net proceeds of the Series 1992 Bonds being used for the acquisition, construction, reconstruction or improvement of land or property subject to the allowance for depreciation under the Internal Revenue Code. The Municipality and the Borrower agree that none of the funds in the Project Fund shall be used for any purposes other than the payment or reimbursement of Project Costs and the payment of principal of, premium, if any, on and interest on the Bonds. Notwithstanding any other provision thereof, the Borrower covenants that it will not apply proceeds of the Series 1992 Bonds in an amount greater than 2.000 of the proceeds thereof to the payment of the costs of issuance thereof (including underwriting discount). Section 3.04. Obligation of the Borrower to Cooperate in Furnishing Documents to the Trustee and the Bank. The Borrower agrees to cooperate in furnishing to the Trustee and the Bank W the documents and directions that are required to effect payments out of the Project Fund, and (ii) the documents referred to in the Indenture required for the authentication and deliver of the Series 1992 Bonds. Such obligations are subject to any provision of this Loan Agreement or the Indenture requiring additional documentation. At the request of the Trustee, the Borrower shall also furnish to the Trustee, at any time and from time to time, applications for payment by contractors under Project contracts. -15- Bank from the proceeds of draws made on the Letter of Credit. Each payment under this Section shall be made directly to the Trustee at its corporate trust office for the account of the Municipality for deposit as provided in the Indenture. The Borrower shall furnish to the Municipality, if the Municipality so requests, advice of the transmittal of such payments at the time of transmittal of payment. 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 and 4.06 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. agrees: Section 4.04 Additional Payments. The Borrower also (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 Municipality, when due, all reasonable fees and expenses of the Municipality 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 IMO 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 Municipality, the Trustee, the Bank, any Holder of a Bond or any other person; any failure of the Municipality to perform any covenant or agreement contained herein or in any other agreement between the Municipality and the Borrower; any indebtedness or liability at any time owing to the Borrower by the Municipality, 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; bankruptcy or insolvency of the Municipality 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 of either; or any failure of the Municipality, 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 law, any and all rights which it may now time hereafter may be conferred upon it, to terminate or cancel, or to limit its Loan Agreement except in accordance with hereof. the extent permitted by have or which at any by statute or otherwise, Liability under, this the express terms 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. -20- Section 4.07 Options to Prepay Loan. a) The Borrower shall have and is hereby granted, r-ne option to prepay the loan anc� require the' 8e'ries 1952 Bonds to be redeemed, in whole or in part, upon the deposit of funds sufficient therefor or making provision satisfactory to the Trustee and 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 twenty (20) days prior to the date upon which such prepayment is to be made, give written notice of such prepayment to the Municipality, 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 6- - to the Trustee an amount which, togeth6:�" " 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. The Municipality, 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 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 Municipality therefor. Except as herein otherwise provided, Bonds shall be called for redemption by the Municipality only upon the direction of the Borrower. Section 4.08 Tax Exempt Status of Series 1992 Bonds. It is the intention of the parties hereto that the interest paid on the Series 1992 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 requested by the Municipality, the Bank or the Trustee to establish the exclusion from gross income of interest on the Series 1992 Bonds under Section 103 and related Sections of the Internal Revenue Code, and under Minnesota law, and (B) file such information and statements, acting alone or with the Municipality, with the Internal Revenue Service, as may be required from the Borrower or the Municipality to establish or preserve such exclusion or as may be required by Section 103 and related Sections of the Internal Revenue Code, 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 1992 Bonds to be redeemed on the next interest payment date A following notice to the Borrower of the Determination of Taxability'K', A Any redemption required under this Section shall be effected upon the following terms and conditions: Borrower f the Determination of Taxability the Borrower shall give written notice of the Determination of Taxability and of its intention to redeem the outstanding Series 1992 Bonds to the Municipality, the Bank and the Trustee, stating the date of redemption and the Borrower shall make arrangements satisfactory to the Trustee for the giving of notice required for redemption of all of the outstanding Series 1992 Bonds and for the transmittal of funds needed for such redemption in advance of that date. (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 1992 Bonds, plus accrued interest thereon to the redemption date, plus a premium equal to 3.00°; of the aggregate principal amount of the Series 1992 Bonds to be redeemed. (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 1992 Bonds and all other advances, fees, costs and expenses incurred by the Trustee under the Indenture or by the Issuer under this Agreement. -22- (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 1992 Bonds on the next interest payment date A 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 Municipality, 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 Municipality 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 of the Internal Revenue Code and regulations thereunder. Specifically, the Borrower agrees (i) to limit the amount of nonpurpose obligations with a yield higher than the yield on the Bonds in which "gross proceeds" (as that term is used in said Section 148 and pertinent regulations) of the Bonds are invested to 150 percent of the debt service on the Bonds for the current bond year, as required by said Section 148 and pertinent regulations, and to reduce the amount of nonpurpose obligations with a yield higher than the yield on the Bonds, beginning the first bond year after the expiration of the temporary period provided in Treasury Regulation §1.103-14(b)(1), or any successor provision, as the amount of outstanding Bonds is reduced by redemption of Bonds resulting in a -reduction in annual debt service, as required by said Section 148 and pertinent regulations, and (ii) to comply with the rebate requirements imposed under said Section 148 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 or cause the Trustee to maintain 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 Municipality or the Trustee may make (but has no obligation to make) payment to the United States or the Municipality may deposit the required amount with the Trustee with appropriate instructions to make payment to the -23- 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 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 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 with the consent of the Bank 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 Municipality 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 sixty (60) 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 -24- 0 proposed Substitute Letter of Credit and that the substitution of the proposed Substitute Letter of Credit will not, by itself, result in the reduction or withdrawal of the rating(s), if any, then borne by the Bonds; 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 Series 1992 Bonds to become includable in the gross income of the recipients thereof for purposes of federal income taxation. [The balance of this page is intentionally left blank.] IRM 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, to the extent necessary to maintain the excludability of Bond interest from the gross income of the recipients thereof, as a "manufacturing facility" within the meaning of Section 144(a) of the Internal Revenue Code. 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 Municipality, and agrees to comply with all the orders, rules, regulations and requirements of the Board of Fire Underwriters and officers or boards of the City, County 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 Municipality, the validity of any law, ordinance, order, rule, regulation or requirement of the nature herein referred to. Section 5.02 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 includable 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, other than to lease the same to the Company, but the Borrower may, subject to any applicable provisions of the Credit Agreement and the Bank Mortgage, sell or enter into a lease of any part of the Project Facilities or enter into an agreement for the 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 the 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 the tax-exempt status of interest on the Bonds shall not be jeopardized thereby. Section 5.03 Liens. The Borrower will pay or cause to be paid all utility charges and other charges arising from the sum operations at the Project Facilities which, if unpaid, would become a lien on the Project Facilities; provided, that the Borrower may in good faith contest any mechanics or other 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 unless the Municipality, the Bank or the Trustee shall notify the Borrower that, in the opinion of Independent Counsel, by nonpayment of any such items the Project Facilities or any part thereof will be subject to loss or forfeiture, in which event the Borrower shall promptly pay and cause to be satisfied and discharged all such unpaid items. 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 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, 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 unless the Municipality, the Bank or the Trustee shall notify the Borrower that, in the opinion of Independent Counsel, by nonpayment of any such items, the Project Facilities or any part thereof, or the revenue therefrom, will be subject to loss or forfeiture, in which event such taxes, assessments, license fees or charges shall be paid promptly. 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, in any event, will maintain such insurance as is required by the Credit Agreement and the Bank Mortgage. Section 5.06 Damage or Destruction. The Borrower agrees to notify the Trustee and the Bank immediately in the case of damage exceeding $250,000 in amount to, or destruction of, the Project Facilities or any portion thereof resulting from fire or other casualty. In the event of any such damage or destruction, the Borrower shall proceed either to repair, reconstruct or restore the Project Facilities, as deemed necessary or desirable by the Borrower, or to cause the Series 1992 Bonds to be prepaid and redeemed, all as may be further provided in the Indenture, the Credit Agreement or the Bank Mortgage. Any prepayment or redemption of Bonds shall be effected in accordance with all applicable provisions of the Indenture and of Section 4.07 -27- ARTICLE VI SPECIAL COVENANTS Section 6.01 No Warranty of Condition or Suitability; Indemnification. The Municipality 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 it will be suitable for the Borrower's purposes or needs. The Borrower releases the Municipality from, agrees that the Municipality shall not be liable for, and agrees to hold the Municipality, its City Council 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 Municipality acting as the issuer of the Bonds. The Borrower further agrees to indemnify and hold harmless the Municipality, its officers and employees against any and all losses, claims, damages or liability to which the Municipality, its officers and employees may become subject under any law in connection with the issuance, offering and sale of the Bonds and the carrying out of the transactions contemplated by this Loan Agreement, and to reimburse the Municipality, its officers and employees, for any legal and other expenses (including reasonable counsel fees) incurred by the Municipality, its officers and employees in connection with investigating any such losses, claims, damages or liabilities or in connection with defending any actions relating thereto. The Municipality agrees, at the request and expense of the Borrower, to cooperate in the making of any investigation in defense of any such claim and promptly to assert any or all of the rights and privileges and defenses identified in writing by the Borrower. The provisions of this Section shall survive the payment and redemption of the Bonds. Section 6.02 Financial Statements. The Borrower agrees to furnish to the TrusteeA financial statements for each fiscal year as are required to be furnished to the Bank under the Credit Agreement. Section 6.03 Annual Certificate; Reports. The Borrower agrees to furnish to the Trustee, within 120 days after the end of each fiscal year, 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 Municipality under this Loan Agreement or the Indenture, or, if there be any such Default or default by the Municipality, explaining the nature thereof and specifying the steps being taken to remedy the same. In addition, the Borrower shall render to the Municipality, the Remarketing Agent, the Bank, the Department_ of Trade and Economic Development for the State of Minnesota (or its successor) and the Trustee such additional reports concerning the Borrower, the Bonds or the Project as the Municipality, the Bank, the Remarketing Agent and the Trustee may from time to time request, or as may be required by any law, regulation or ordinance of the State of Minnesota, the Department of Trade and Economic Development (or its successor) or the Municipality. specifications, contracts, performance and payment bonds, building permits, surveys, insurance, change orders, decisions of architects and all other documents relating to the Project, (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. n The Municipality and the Trustee shall have the right to inspect all such materials, except any materials made private or confidential by federal or state law or regulation, and the Project Facilities, at all reasonable times and to make such copies and extracts as they may desire. At the request of the Municipality or the Trustee, the Borrower shall furnish to the Municipality or the Trustee, at the Borrower's expense, a copy of any such materials which are required by the Municipality or the Trustee in the performance of their duties under the Loan Agreement, Indenture or the Act. Section 6.06 Filings, Instruments of Further Assurance The Borrower agrees to cause all financing statements related to the Indenture and all supplements thereto 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 6.07 Assignments The Borrower consents to the pledge and assignment of the Loan Repayments and other interests of the Municipality in this Loan Agreement by the Municipality 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 -30- Section 6.04 [This section intentionally omitted] 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 6.08 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 municipality may observe and perform, all the conditions, covenants and requirements of the Indenture. The Municipality agrees that it will observe and perform all obligations imposed upon it by the Indenture and the BondsA provided that the Municipality has no obligation to use its own funds or funds of the State of Minnesota to perform or cause performance of any such obligations. [The balance of this page is intentionally left blank.] -31- 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 thirty 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 Municipality or Trustee; or (a) The occurrence of any Default under the Indenture and the continuance thereof after the expiration of any period of grace granted therein; or (e) If the Borrower files a petition in voluntary bankruptcy, for the composition of its affairs or for its reorganization under any state or federal bankruptcy or insolvency law, or makes an assignment for the benefit of creditors, or consents in writing to the appointment of a trustee or receiver for itself or for the whole or any substantial part of its _property, and including any Act of Bankruptcy, as defined in the Indenture; or (f) If a court of competent jurisdiction shall enter an order, judgment or decree declaring the Borrower an insolvent, or adjudging the Borrower bankrupt, or appointing a trustee or receiver of the Borrower or of the whole or any substantial part of its property under any applicable law or statute of the United States of America or any State thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within 60 days from the date of the entry thereof; or (g) If, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Borrower or of the whole or any substantial part of its property, and -32- such custody or control shall not be terminated within 60 days from the date of assumption of such custody or control. The provisions of paragraph (c) of this Section are subject to the following limitations: (1) No Default in the payment of money to the Municipality (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 majeurell 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; 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 thirty days after notice and if the Borrower has taken all action reasonably possible to remedy such Default within such thirty day period, the Default shall not become an Event of Default for so long as the Borrower shall diligently proceed to remedy such Default and in accordance with any directions or limitations of time made by the Bank or the Trustee. 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 maYA be taken =tha 10 .p (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. -33- 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 Municipality 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 n or to enforce performance and observance of any obligation, agreement or covenant under this Loan Agreement. Wh6i6ei � . Section 7.03 Remedies Cumulative, Delay Not to Constitute Waiver No remedy conferred upon or reserved to the Municipality 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 Municipality 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 Municipality 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 expenses so incurred. 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 Municipality 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 Municipality or the Trustee, as the case may be, upon demand, all costs and expenses so incurred and advances so made, with interest at the rate of ten percent (100) per annum. Any such advance shall be entitled to priority of payment from any funds thereafter received from the Borrower or under Section 7.02. [The balance of this page is intentionally left blank.] -35- ARTICLE VIII MISCELLANEOUS Section 8.01 Amounts Remaining in Funds. 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, shall belong to and be paid to the Borrower or the Bank, as their interests may appear. 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 mailed by either certified or registered mail, return receipt requested, postage prepaid, addressed as follows: A. To the Municipality --City of New Hope City Hall 4401 Xylon Avenue North Minneapolis, Minnesota 55428 Attention: City Manager B. To the Borrower --Mr. Bruce G. Paddock Paddock Laboratories, Inc. 3101 Louisiana Avenue North New Hope, Minnesota 55427 C. To the Trustee --First Trust National Association 0-t" Attn:"'C6'r'p6r'ate Trust Depdrtment D. To the Bank Norwest Bank Minnesota, National Association Minneapolis, Minne 55402�- Attention: E. To the Remarketing Agent --Norwest Bank Minnesota, Association Norwest Center Sixth and Marquette Minneapolis, Minnesota Attention: Syndications Private Placements National -36- 55479-0154 and 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 Reference 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 Municipality, the Borrower and their respective successors and assigns, and subject to the further I-linitation that any obligation of the Municipality created by or arising out of this Loan Agreement shall not be a general debt of the Municipality but shall be payable solely out of the proceeds derived from this Loan Agreement or the sale of the Bonds. Section 8.05 Amendments, Chancres 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 Trustee, 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 this Loan Agreement, which shall at the time be construed and enforced -37- 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 Municipality, and accordingly all covenants and agreements on the part of the Borrower and the Municipality 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 Bank, 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, the Credit Agreement or the Bank Mortgage, 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, the Credit Agreement orthe Bank Mortgage shall be of no force or effect and this Loan Agreement and the Indenture shall be construed as if all such references were void. own I [Signature Page to Loan Agreement] MFFOOFA5.WP5 -40- �• �. mW • a $4,000,000 CITY OF NEW HOPE, MINNESOTA INDUSTRIAL DEVELOPMENT REVENUE BONDS (PADDOCK LABORATORIES, INC. PROJECT) SERIES 1992 1101 WIN It Dated as of June 1, 1992 Between CITY OF NEW HOPE and FIRST TRUST NATIONAL ASSOCIATION This instrument was drafted by Faegre & Benson 2200 Norwest Tower 90 South Seventh Street Minneapolis, Minnesota 55402 -3901 I TABLE OF CONTENTS (This Table of Contents is not a part of the Indenture of Trust and is only for convenience of reference.) Page PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GRANTING CLAUSES . . . . . . . . . . . . . . . .. . . . . . . . I ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE II SECTION 2.01. Authorized Amount of Bonds . . . . . . . . . . 13 SECTION 2.02. Issuance of Bonds . . . . . . . . . . . . . . 13 SECTION 2.03. Execution; Limited Obligations . . . . . . . . 15 SECTION 2.04. Authentication . . . . . . . . . . . . . . . . 16 SECTION 2.05. Form of Bonds . . . . . . . . . . . . . . . . 16 SECTION 2.06. Delivery of Bonds . . . . . . . . . . . . . . 17 SECTION 2.07. Mutilated, Lost, Stolen or . . . 23 Destroyed Bonds . . ' ' ' ' ' * ' * ' * * * ' 17 SECTION 2.08. Transfer of Bonds; Persons Treated as Owners . . . . . . . . . . . . . . 17 SECTION 2.09. Destruction of Bonds . . . . . . . . . . . . . 18 SECTION 2.10. Temporary Bonds . . . . . . . . . . . . . . . 19 SECTION 2.11 Book-Entry System . . . . . . . . . . . . . . 19 ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY SECTION 3.01. Extraordinary Redemption . . . . . . . . . . . 21 SECTION 3.02. Optional Redemption . . . . . . . . . . . . . 21 SECTION 3.03. Mandatory Sinking Fund Redemption . . . . . . 22 SECTION 3.04. Notice of Redemption . . . . . . . . . . . . . 22 SECTION 3.05. Redemption Payments . . . . . . . . . . . . . 23 SECTION 3.06. Cancellation . . . . . . . . . . . . . . . . . 23 SECTION 3.07. Partial Redemption of Bonds . . . . . . . . . 23 ARTICLE IV [GEORM • • SECTION 4.01. Conversion of Interest Rate on . . . . . . . . . . . . . . . . SECTION Optional Conversion Date . . . . . . . . . . . SECTION 4.02. Conversion of Interest Rate on 5.03. Instruments of Automatic Conversion Date . . . . . . . . . . SECTION 4.03. Exchange of Bonds after Filing . . . . . . . . . . . . . SECTION Conversion Date . . . . . . . . . . . . . . . SECTION 4.04. Condition to Conversion . . . . . . . . . . . SECTION 4.05. Additional Notices . . . . . . . . . . . . . . SECTION 4.06. Demand Purchase Option . . . . . . . . . . . . SECTION 4.07. Funds for Purchase of Bonds . . . . . . . . . SECTION 4.08. Delivery of Purchased Bonds . . . . . . . . . SECTION 4-09. Delivery of Proc-eeds of Sale of Purchased Bonds - - - - - - - - - - - - - - - SECTION 4.10. Duties of Trustee with Respect to Purchase of Bond . . . . . . . . . ... . . . . ARTICLE V Leipf��Offlm*z h1Z W SECTION 5.01. Payment of Principal, Premium, if any, ARTICLE VI REVENUES AND FUNDS SECTION 6.01. SECTION 6.02. SECTION 6.03. SECTION 6.04. SECTION 6.05. SECTION 6.06. SECTION 6.07. SECTION 6.08. SECTION 6.09. SECTION 6.10. SECTION 6.11. Creation of the Bond Fund . . . . . . . . . . Payments into the Bond Fund . . . . . . . . . Use of Money in the Bond Fund . . . . . . . . Rebate Fund . . . . . . . . * * * * * * * * * Payments into the Rebate Fund; Investments . . Disbursements from Rebate Fund . . . . . . . . Creation of the Project Fund . . . . . . . . . Payments into the Project Fund . . . . . . . . Disbursements for the Project Fund . . . . . . Nonpresentment of Bonds . . . . . . . . . . . Money to be Held in Trust . . . . . . . . . . Page 24 25 26 26 27 27 27 28 11 30 30 30 31 31 31 32 32 32 32 32 33 33 33 33 34 34 -ii- and Interest . . . . . . . . . . . . . . . . . SECTION 5.02. Performance of Covenants . . . . . . . . . . . SECTION 5.03. Instruments of Further Assurance . . . . . . . SECTION 5.04. Recording and Filing . . . . . . . . . . . . . SECTION 5.05. Inspection of Books . . . . . . . . . . . . . SECTION 5.06. Rights Under Agreement . . . . . . . . . . . . ARTICLE VI REVENUES AND FUNDS SECTION 6.01. SECTION 6.02. SECTION 6.03. SECTION 6.04. SECTION 6.05. SECTION 6.06. SECTION 6.07. SECTION 6.08. SECTION 6.09. SECTION 6.10. SECTION 6.11. Creation of the Bond Fund . . . . . . . . . . Payments into the Bond Fund . . . . . . . . . Use of Money in the Bond Fund . . . . . . . . Rebate Fund . . . . . . . . * * * * * * * * * Payments into the Rebate Fund; Investments . . Disbursements from Rebate Fund . . . . . . . . Creation of the Project Fund . . . . . . . . . Payments into the Project Fund . . . . . . . . Disbursements for the Project Fund . . . . . . Nonpresentment of Bonds . . . . . . . . . . . Money to be Held in Trust . . . . . . . . . . Page 24 25 26 26 27 27 27 28 11 30 30 30 31 31 31 32 32 32 32 32 33 33 33 33 34 34 -ii- SECTION 6-12. Repayment to the Bank and the Borrower from the Bond Fund or the Rebate Fund . . . . 34 SECTION 6.13. Letter of Credit . . . . . . . . . . . . . . . 34 INVESTMENT OF MONEY . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE VIII DISCHARGE OF INDENTURE SECTION 8.01. Discharge of Indenture . . . . . . . . . . . . 38 SECTION 8.02. Defeasance- of Bonds . . . . . . . . . . . . . 38 ARTICLE IX DEFAULTS AND REMEDIES SECTION 9.01. Defaults : ' * * * * * * * I * * I * * * * I * 41 SECTION 9.02. Acceleration . . * ' * * * * * * * * * * * * 41 SECTION 9.03. : Other Remedies; Rights of Owners of Bonds . 42 SECTION 9.04. Right of Owners of Bonds to Direct 51 SECTION 10.05. Proceedings . . . . . . . . . . . . . . . . . 43 SECTION 9.05. Appointment of Receivers . . . . . . . . . . . 43 SECTION 9.06. Waiver . * * * * * * * * ' * * * * * * * * * * 43 SECTION 9.07. Application of Money . . . . . . . . . . . . . 43 SECTION 9.08. Remedies Vested in Trustee . . . . . * * ' * * 45 SECTION 9.09. Rights and Remedies of Owners of Bonds . . . . 45 SECTION 9.10. Termination of Proceedings . . . . . . . . . . 46 SECTION 9.11. Waivers of Default . . . . . : . * * * * * 46 SECTION 9.12. Notice of Defaults under Section 9.01(g); Opportunity to Cure Such Defaults . . . . . . 47 ARTICLE X TRUSTEE SECTION 10.01. Acceptance of Trusts . . . . . . . . . . . . 48 SECTION 10.02. Fees, Charges and Expenses of the Trustee . . 50 SECTION 10.03. Notice to Owners of Bonds if Default Occurs . 51 SECTION 10.04. Intervention by the Trustee . . . . . . . . . 51 SECTION 10.05. Successor Trustee . . . . . . . . . . . . . . 51 SECTION 10.06. Resignation by the Trustee . . . . . . . . . 51 SECTION 10.07. Removal of the Trustee . . . . . * ' * * * * 51 SECTION 10.08. Appointment of Successor Trustee by Owners of Bonds . . . . . . * * * * * * * * * 52 SECTION 10.09. Acceptance by Successor Trustee . . . . . . . 52 SECTION 10.10. Appointment of Co-Trustee . . . . . . . . . . 53 - iii SECTION 10.11. Notice to Rating Agencies and Owners . . . . 53 ARTICLE XI SUPPLEM INDENTURES SECTION 11.01. Supplemental Indentures Not Requiring Consent of Owners of Bonds . . . . . . . . . 54 SECTION 11.02. Supplemental Indentures Requiring Consent of Owners of Bonds . . . . . . . . . 54 ARTICLE XII AMENDMENT OF AGREEMENT SECTION 12.01. Amendments to Agreement Not Requiring Consent of Owners of Bonds . . . . . . . . . 56 SECTION 12.02. Amendments to Agreement Requiring Consent of Owners of Bonds . . . . . . . . . 56 ARTICLE XIII MISCELLANEOUS SECTION 13.01. Consents of Owners of Bonds . . . . . . . . . 57 SECTION 13.02. Limitation of Rights . . . . . . . . . . . . 57 SECTION 13.03. Severability . . . . . . . . . . . . . . . . 57 SECTION 13.04. Notices * * * * * ' * * * ' ' * ' * * * ' * * 57 SECTION 13.05. D Payments Due on Saturdays, Sundays and Holidays . . . . . . . . . . . . . . . . 58 SECTION 13.06. Counterparts . . . . . . . . . . . . . . . . 59 SECTION 13.07- Applicable Provisions of Law . . . . . . . . 59 SECTION 13-08. Rules of -Interpretation . . . . . . . . . . . 59 SECTION 13.09. Captions . . . . . . . . . . . . . . . . . . 59 SECTION 13.10. Certain References to Bank Letter of Credit Date, Etc. . . . . . . . . . 59 SECTION 13.11. Limitation of Issuer's Liability . . . . . . 59 TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . 57 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 57 EXHIBIT A - Variable Rate Form of Bond . . . . . . . . . . . A-1 EXHIBIT B - Fixed Rate Form of Bond . . . . . . . . . . . . . B-1 -iv- I INDENTURE OF TRUST THIS INDENTURE OF TRUST is dated as of June 1, 1992, between the CITY OF NEW HOPE, a Minnesota municipal corporation (the "Issuer") and FIRST TRUST NATIONAL ASSOCIATION, a national banking organized and existing under the laws of the United States of America with its principal office in Saint Paul, Minnesota (the "Trustee"). W I T N E S S E T H WHEREAS, Bruce G. Paddock, an individual (the "Borrower"), has requested that the Issuer issue its revenue bonds pursuant to Minnesota Statutes, Sections 469.152 to 469.165, as amended (the "Act"), to provide financing with respect to the acquisition, construction and equipping of a manufacturing facility in the City (the "Project") to be owned by the Borrower and leased by the Borrower to Paddock Laboratories, Inc., a Minnesota corporation (the "Company" or the "Lessee"); and WHEREAS, as authorized by the Act, the Issuer proposes to issue its Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 in the aggregate principal amount of $4,000,000 (the "Bonds") pursuant to this Indenture and to lend the proceeds from the sale thereof to the Borrower pursuant to a Loan Agreement (the "Agreement") of even date herewith between the Issuer and the Borrower, in order to provide financing with respect to the Project, all in accordance with the provisions hereof and of the Agreement; and WHEREAS, all things necessary to make the Bonds when authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the Issuer according to the import thereof, and to constitute this Indenture a valid assignment and pledge of the payments under the Agreement (except for amounts payable to the Issuer under Sections 4.04(b), 6.01, 7.04 and 7.05 of the Agreement) for payment of the principal of, premium, if any, and interest on the Bonds, and to constitute this Indenture a valid assignment of the rights of the Issuer under the Agreement except as otherwise stated herein, have been done and performed, and the creation, execution and delivery of this Indenture, and the issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized. NOW, THEREFORE, THIS INDENTURE WITNESSETH: GRANTING CLAUSES That the Issuer, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of the Bonds by the Owners thereof, I and of the sum of one dollar, lawful money of the United States of America, to it duly paid by the Trustee at or before the execution and delivery of these presents, and for other good and valuable consideration, the receipt of which is hereby acknowledged, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds according to their tenor and effect and to secure the performance and observance by the Issuer of all the covenants expressed herein and in the Bonds, does hereby assign and grant a security interest in the following to the Trustee, and its successors in trust and assigns forever, for the securing of the performance of the obligations of the Issuer hereinafter set forth: GRANTING CLAUSE FIRST All right, title and interest of the Issuer in and to the Agreement, including, but not limited to, the present and continuing right to make claim for, collect, receive and receipt for any of the sums, amounts, income, revenues, issues and profits and any other sums of money payable or receivable under the Agreement (except for amounts payable to the Issuer under Sections 4.04, 6.01, 7.04 and 7.05 thereof), to bring actions and proceedings thereunder or for the enforcement thereof, and to do any and all things which the Issuer is or may become entitled to do under the Agreement; GRANTING CLAUSE SECOND All right, title and interest of the Issuer in and to all money and securities from time to time held by the Trustee under the terms of this Indenture; GRANTING CLAUSE THIRD Any and all other property rights and interests of every kind and nature from time to time hereafter by delivery or by writing of any kind granted, bargained, sold, alienated, demised, released, conveyed, assigned, transferred, mortgaged, pledged, hypothecated or otherwise subjected hereto, as and for additional security herewith, by the Borrower or any other person on its behalf or with its written consent or by the Issuer or any other person on its behalf or with its written consent, including but not limited to the Letter of Credit described herein and proceeds thereof, and the Trustee is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof; TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or hereafter acquired, unto the Trustee and its respective successors in said trust and assigns forever; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and -2- 6 protection of all present and future Owners of the Bonds, from time to time, issued under and secured by this Indenture without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any of the other Bonds except in the case of funds held hereunder for the benefit of particular Owners of Bonds, and for the benefit of the Bank to the extent provided herein; PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the principal of, premium, if any, and interest on the Bonds due or to become due thereon, at the times and in the manner set forth in the Bonds according to the true intent and meaning thereof, and shall cause the payments to be made on the Bonds as required hereunder, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, and shall well and truly cause to be kept, performed and observed all of its covenants and conditions pursuant to the terms of this Indenture, and shall pay or cause to be paid to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon the final payment thereof this Indenture and the rights hereby granted shall cease, determine and be void, except to the extent specifically provided in Article VIII hereof; otherwise this Indenture shall remain in full force and effect. THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered and all said property, rights and interests, including, without limitation, the amounts payable under the Agreement and any other amounts hereby assigned and pledged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as herein expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant with the Trustee and with the respective Owners of the Bonds as follows: -3- ARTICLE I 100VA0 • All capitalized, undefined terms used herein shall have the meanings assigned to such terms in Article I of the Agreement. In addition, the following words and phrases shall have the following meanings: "Act" means Minnesota Statutes, Sections 469.152 to 469.165, as amended from time to time. "Act of Bankruptcy" means the filing of a petition in bankruptcy (or the other commencement of a bankruptcy or similar proceeding) by or against the Borrower under any applicable bankruptcy, insolvency, reorganization or similar law, now or hereafter in effect, or any act described in Section 7.01(e), (f) or (g) of the Loan Agreement. "Agreement" or "Loan Agreement" means the Loan Agreement of even date herewith between the Issuer and the Borrower, and any amendments and supplements thereto. "Authorized Borrower Representative" means Borrower Representative. "Automatic Conversion Date" date immediately preceding the Letter provided, that if the Letter of Credi neither June i, 2t nor the immediately preceding such �date shall Conversion Date. means the interest payment of Credit Termination Date; Termination Date is June interest payment date constitute an Automatic "Bank" means (i) Norwest Bank Minnesota, National Association, a national banking association organized and existing under the laws of the United States of America, in its capacity as issuer of the Letter of Credit, and (ii) any Substitute Bank. "Bank Mortgage" , means the Mortgage. "Beneficial Owner" means with respect to Bonds while in Book-Entry Form, each person who beneficially owns such Bond(s) and on whose behalf, directly or indirectly, such Bond is held by the Depository pursuant to a Book-Entry System. hereof. "Bond Fund" means the fund created in Section 6.01 "Bond Registrar" means the Trustee, as the registrar for the Bonds, appointed by the Issuer pursuant to Section 2.08 hereof. -4- "Bond Resolution" means the resolution adopted by the City Council on June 22, 1992, authorizing the issuance of the Series 1992 Bonds, together with any amendments thereof. "Bonds" means the Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 issued by the Issuer pursuant to this Indenture. "Bond Year" means the twelve-month period beginning June 1 in any year and ending May 31 in the following year. "Book -Entry Form" means Bonds which are held in the name of the Depository (or its nominee) with each maturity evidenced by a single Bond certificate. "Book-Entry System" means a system of record keeping, securities clearance and funds transfer and settlement maintained for securities by the Depository and Participants. "Borrower" means Bruce G. Paddock, an individual, his heirs, successors and assigns. "Borrower Representative" or "Authorized Borrower Representative means the Borrower or any other person or persons at the time designated to act on behalf of the Borrower by a written certificate furnished to the Issuer and the Trustee containing the specimen signatures of such person or persons and signed by the Borrower. Such certificate may designate an alternate or alternates. "Business Day" means a day which in each of the cities where the principal corporate trust offices of the Trustee and the principal offices of the Bank are located is not a Saturday, a Sunday or a day on which banking institutions are authorized or required by law to close. "City" or "Municipality" or "Issuer" means the City of New Hope, a Minnesota municipal corporation. "City Council" means the City Council of the City. "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended. "Company" means Paddock Laboratories, Inc., a Minnesota corporation, its successors and assigns. "Completion Date" shall have the meaning provided in the Loan Agreement. "Construction Period" means the period between the beginning of construction of the Project or the date on which -5- I Bonds are first delivered to the original purchaser or purchasers thereof, whichever is earlier, and the Completion Date. "Conversion Date means the earlier to occur of either the Optional Conversion Date or the Automatic Conversion Date. "Conversion Option" means the option granted to the Borrower pursuant to Section 4.01 hereof, as a result of which the interest rate on the Bonds is converted from the Variable Rate to the Fixed Rates as of the Optional Conversion Date. "Credit Agreement" means (i) theca L" Reimbursement.Agreement of even date herewith be tweenthb Borrower and Norwest Bank Minnesota, National Association, and any amendments and supplements thereto and (ii) the letter of credit agreement or reimbursement agreement between the Borrower and any Substitute Bank, and any amendments and supplements thereto. "Date of Issuance" means the date on which the Bonds are initially authenticated and delivered pursuant to Section 2.06 hereof. "Default" means any Default under this Indenture as specified in and defined by Section 9.01 hereof. "Demand Purchase Option" means the option granted to Owners of Bonds to require that Bonds be purchased prior to the Conversion Date pursuant to Section 4.06 hereof. "Depository" means The Depository Trust Company in New York, New York, its successors or assigns, or any other person who shall be a Holder of all Bonds directly or indirectly for the benefit of Beneficial Owners and approved by the Borrower and Placement Agent to act as the Depository; provided that any Depository shall be registered or qualified as a "clearing agency" - within the meaning of Section 17A of the Securities Exchange Act, as amended. "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, 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 for any reason other than that the Holder is a substantial user or a related person under Section 147(a) of the 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. I "Disbursing Agreement" shall have the meaning provided in the Credit Agreement. "First Optional Redemption Date" means the June 1 occurring in the year which is a number of years after the Conversion Date equal to the number of years between the June 1 immediately following the Conversion Date (unless s the Conversion Date is a June 1, in which case from such June 1), and June 1, 2012 multiplied by 1/2 and rounded up to the nearest whole number. "Fixed Rates" means the interest rate or rates in effect on the Bonds from and after the Conversion Date, as said rate or rates are determined in accordance with Section 2.02(d) hereof. "Governmental Obligations" means any of the following which are noncallable: (a) direct general obligations of, or obligations the payment of the principal of and interest on which are unconditionally guaranteed by, the United States of America; (b) bonds, debentures or notes issued by Federal National Mortgage Association, Government National Mortgage Association, Federal Financing Bank, Federal Farm Credit Banks, Federal Land Banks, Federal Home Loan Banks, Farmers Home Administration, Federal Home Loan Mortgage Corporation or any other comparable federal agency hereafter created to the extent that said obligations are unconditionally guaranteed by the United States of America; and (c) shares of an investment company registered under the Federal Investment Company Act of 1940 whose shares are registered under the Securities Act of 1933 and whose only investments are in obligations described in (a) or (b) above. "Indenture" means this Indenture of Trust dated as of June 1, 1992, and any amendments or supplements hereto. "Independent Counsel" shall have the meaning provided in the Loan Agreement. "Issuer" or "Municipality" or "City" means the City of New Hope, and its successors and assigns. "Lease" means any lease agreement with respect to the Project Facilities between the Borrower and the Company. "Lessee" means the Company. "Lessor" means the Borrower. I "Letter of Credit" means (i).that certain Letter of Credit dated the date of issuance of the Bonds and issued by Norwest Bank Minnesota, National Association, and (ii) any Substitute Letter of Credit. "Letter of Credit Termination Date" means the later of (i) that date upon which the Letter of Credit shall expire or terminate pursuant to its terms, or (ii) that date to which the expiration or termination of the Letter of Credit may be extended, from time to time, either by extension or renewal of the existing Letter of Credit or the issuance of a Substitute Letter of Credit. "Letter of Representations" means the Letter of Representations among the Depository, the Municipality and the Trustee entered into in connection with issuance of the Bonds and any amendments or supplements thereto. "Loan Agreement" means the Agreement. "Mortgage" or "Bank Mortgage" means (i) the Combination Mortgage, Security Agreement and Fixture Financing Statement A from the Borrower to the Bank, and any amendments or supplements thereto and (ii) the mortgage or the security agreement, if any, securing the Borrower's obligation under a Credit Agreement with any Substitute Bank, and any amendments and supplements thereto. "Optional Conversion Date" means that date, which shall be a Business Day on or after December 1, 1992, from and after which the interest rate on the Bonds is converted from the Variable Rate to the Fixed Rates as a result of the exercise of the Conversion Option by the Borrower. "Outstanding" or "Bonds Outstanding" means all Bonds which have been authenticated and delivered under this Indenture, except: (a) Bonds canceled after purchase in the open market or because of payment at or redemption prior to maturity; (b) Bonds paid or deemed to be paid pursuant to Article VIII hereof; (c) Bonds in lieu of which others have been authenticated under Section 2.07 or Section 2.08 hereof; and (d) Bonds in lieu of which others have been issued pursuant to Section 2.04(b) hereof. "Owner" means the person or persons in whose name or names a Bond shall be registered on the books of the Bond Registrar kept for that purpose in accordance with provisions of this Indenture. I (f) Expenses of administration, supervision and inspection properly chargeable to the Project, administration fees of the Municipality, title insurance premiums, abstracting and filing fees, legal expenses and fees, fiscal consultant fees and expenses, costs of audits and of preparing, offering and issuing any of the Bonds and initial fees of the Trustee; (g) Interest on the Bonds during the Construction Period; and (h) Any other obligation or expense heretofore or hereafter incurred by the Borrower in connection with the acquisition and construction of the Project defined as and constituting a proper Project cost under the Act and approved by the Borrower. Notwithstanding the foregoing, Project Costs shall be limited as provided in Section 3.03 of the Loan Agreement. "Project Equipment" shall have the meaning set forth in the Loan Agreement. hereof. "Project Fund" means the fund created in Section 6.07 "Project Supervisor" means the Project Supervisor appointed pursuant to Section 3.07 of the Loan Agreement, and includes any alternate or alternates. "Purchase Price" means an amount equal to 1000 of the principal amount of any Bond tendered or deemed tendered pursuant to Section 4.01, 4.02 or 4.06 hereof, plus, in the case of purchase pursuant to Section 4.06 hereof, accrued and unpaid interest thereon to the date of purchase. "Qualified Investments" means those investments enumerated in Article VIZ hereof. hereof. "Rebate Fund" means the fund created in Section 6.04 "Record Date" means that day which is the fifth day (whether or not a Business Day) preceding any interest payment date. "Reference Rate" means the rate publicly announced by Norwest Bank Minnesota, National Association from time to time as its reference rate; changes in the reference rate shall be on the day they are announced; Norwest Bank Minnesota, National Association may lend to its customers at rates that are at, above or below the reference rate. -10- I "Remarketing Agent" means the Remarketing Agent acting as such under the Remarketing Agreement. "Principal Office" of the Remarketing Agent means the principal office of the Remarketing Agent designated in the Remarketing Agreement. "Remarketing Agreement" means the Remarketing Agreement of even date herewith between the Borrower and Norwest Bank Minnesota, National Association, and any amendments or supplements thereto. "Series 1992 Bonds" means the Bonds. "State" means the State of Minnesota. "Substitute Bank" means a commercial bank, savings and loan association, insurance company or other financial institution which has issued a Substitute Letter of Credit. "Substitute Letter of Credit" means a letter of credit, insurance policy, guaranty or other credit device delivered to the Trustee in accordance with Section 4.10 of the Agreement (i) issued by the Bank or a Substitute Bank, (ii) replacing any existing Letter of Credit, (iii) dated as of a date prior to the expiration date of the Letter of Credit for which the same is to be substituted, (iv) which shall expire on a date which is no earlier than 15 days after an interest payment date for the Bonds and (v) issued on substantially identical terms and conditions as the then existing Letter of Credit, except that the Substitute Letter of Credit may expire on a date which is later than the expiration date of the Letter of Credit being replaced, and except that the stated amount of the Substitute Letter of Credit shall equal the sum of (A) the aggregate principal amount of Bonds at the time Outstanding, plus (B) an amount equal to at least 50 days' interest (computed at the maximum interest rate applicable to the Bonds) on all Bonds at the time Outstanding. "Trustee" means First Trust National Association, a national banking association organized and existing under the laws of the United States of America, and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at the time serving as successor trustee hereunder. "Principal Office" of the Trustee means the address specified in Section 13.04 hereof or such other address as may be designated in writing to the Issuer, the Remarketing Agent and the Borrower. "Trust Estate" means the property conveyed to the Trustee pursuant to the Granting Clauses hereof. "Variable Rate" means the interest rate in effect on the Bonds from the date of issuance of the Bonds until (but not -11- including) the Conversion Date, as said rate is determined in accordance with Section 2.02(c) hereof. -12- I ARTICLE 11 Section 2.01. Authorized Amount of Bonds. The total principal amount of Bonds that may be issued hereunder is hereby expressly limited to $4,000,000. Section 2.02. Issuance of Bonds. (a) Prior to the Conversion Date, the Bonds shall be issuable in fully registered form without coupons in authorized denominations of $100,000 and, above $100,000, any integral multiple of $5,000. From and after the Conversion Date, the Bonds shall be issuable in fully registered form without coupons in authorized denominations of $5,000 or any integral multiple thereof. Unless the Issuer shall otherwise direct, the Bonds shall be lettered "R and shall be numbered consecutively from 1 upward. (b) Each Bond shall be dated the date of its authentication and shall bear interest, payable, so long as the Bonds bear interest at the Variable Rate, on the first day of each month and on the Conversion Date, commencing July 1, 1992, and payable from and after the Conversion Date on June 1 and December 1 of each year, commencing on the June 1 or December 1 next following the Conversion Date, in each case from the interest payment date next preceding the date thereof to which interest has been paid or duly provided for, unless the date thereof is an interest payment date to which interest has been paid or duly provided for, in which case from the date thereof, or unless no interest has been paid or duly provided for on the Bonds, in which case from the Date of Issuance, until payment of the principal thereof has been made or duly provided for. Notwithstanding the foregoing, any Bond dated after any Record Date and before the following interest payment date shall bear interest from such following interest payment date, provided, however, that if the Issuer shall default in the payment of interest due on such interest payment date, then such Bond shall bear interest from the next preceding interest payment date to which interest has been paid or duly provided for, or, if no interest has been paid or duly provided for on the Bonds, from the Date of Issuance. The Bonds shall all mature on June 1, 2012, and shall be subject to redemption, including mandatory sinking fund redemption, on the terms and conditions and at the prices specified in Article III hereof. (c) Prior to the Conversion Date, the Bonds shall bear interest at the Variable Rate. From alufi 199 2 through and including 40W�, 1992, the Variable Rate shall be equal to -*. per annum. Thereafter, the Variable Rate shall be a variable rate of interest equal to the lesser of: -13- (i) 10.00 per annum, or (ii) that rate which the Remarketing Agent determines, as of each Wednesday (or if the Remarketing Agent is not open for business on any Wednesday then on the last preceding day on which it is open for business) commencing 1992, is the minimum rate which the Bonds would have t I o 'bear in order to enable the Remarketing Agent to remarket the Bonds at par on such date (whether or not any Bonds are actually to be remarketed on such date). The Variable Rate shall change each Thursday (whether or not such day is a Business Day) to the rate most recently determined in accordance with the preceding sentence; provided, that if such Thursday is after a Record Date but prior to the succeeding interest payment date, the Variable Rate shall not change on such date but shall change an the succeeding interest payment date. The.Remarketing Agent shall notify the Trustee, and, upon request, the Borrower and the Bank, by telephone (followed by written verification) of the initial Variable Rate and each change in the Variable Rate no later than 4:00 time on the day that a determination is made under clause (ii), above. The determination of the Variable Rate by the Remarketing Agent shall be conclusive and binding upon the Trustee, the Issuer, the Borrower, the Bank and the Owners of the Bonds. (d) The Bonds shall bear interest at the Fixed Rates from and after the Conversion Date until their stated maturities. The Fixed Rates and related matters shall be provided for, as follows: (i) Not less than 25 days prior to the Conversion Date, the Remarketing Agent shall deliver to the Trustee, the Bank and the Borrower a schedule of the interest rate or rates constituting the Fixed Rates, together with any proposed principal amortization schedule for the Bonds described in this paragraph (i). Such amortization schedule may consist of serial maturities, term maturities with mandatory redemption requirements or any combination thereof, which amortize the principal of the Bonds on the same dates and in the same amounts as the mandatory redemption schedule set forth in Section 3.03 hereof and which, in the judgment of the Remarketing Agent, produces, with the interest rates described in the following sentence, the lowest overall net interest cost, provided, however, that the provision of such amortization schedule does not, in the opinion of nationally recognized bond counsel jeopardize the exclusion from gross income of interest on the Bonds for purposes of federal income taxation. A separate interest rate shall be assigned to each stated maturity, and shall be the rate which, in the judgment of -14- the Remarketing Agent, is the minimum rate which Bonds of such stated maturity must bear in order to enable the Remarketing Agent to remarket such Bonds at par on the Conversion Date. (ii) Upon receipt from the Remarketing Agent of any amortization schedule described in subparagraph (1), together with the opinion of counsel described therein, and the schedule of the Fixed Rates, the Trustee shall, by lot or such other method as the Trustee deems fair, allocate to each $5,000 of principal amount of Bonds Outstanding a stated maturity in accordance with such schedules prepared by the Remarketing Agent. (iii) On the Conversion Date, the interest rate on the Bonds shall be converted from the Variable Rate to the Fixed Rates, and, upon compliance with the preceding provisions of this paragraph (d), the stated maturity of the Bonds shall be converted to the maturity or maturities established by the Remarketing Agent in accordance with clause (i) and the interest rate or rates attributable to such maturities shall be converted to the rate or rates determined by the Remarketing Agent in accordance with clause (i). (e) Prior to the Conversion Date, interest on the Bonds shall be computed on the basis of a 365-day or 366-day year, as the case may be, and the actual number of days elapsed. On and after the Conversion Date, interest on the Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. The principal of and premium, if any, on the Bonds shall be payable in lawful money of the United States of America at the Principal Office of the Trustee, or of its successor in trust. The Purchase Price of the Bonds shall be payable in lawful money of the United States of America by the Trustee to the Owner of Bonds entitled to receive such Purchase Price at its address shown on the registration books maintained by the Trustee, unless otherwise instructed by such Owner at least 24 hours prior to the time such Purchase Price is due. Payment of interest on the Bonds shall be made on each interest payment date to the Owner thereof as of the applicable Record Date by check mailed by the Trustee to such Owner at its address as it appears on the registration books maintained by the Trustee or at such other address as is furnished to the Trustee in writing by such Owner, or in such other manner as may be mutually acceptable to the Trustee and the Owner of any Bond. Section 2.03. Execution; Limited Obligations. The Bonds shall be executed on behalf of the Issuer with the manual or facsimile signature of the Mayor or Acting Mayor and its City Manager or Assistant City Manager, and shall have the official seal of the Issuer or a facsimile thereof affixed or imprinted thereon �4- All authorized facsimile signatures shall have the k " A same force and effect as if manually signed. The Bonds shall not -15- be general obligations of the Issuer but limited and special obligations payable solely from the amounts payable under the Agreement and other amounts specifically pledged therefor under this Indenture, and shall be a valid claim of the respective Owners thereof only against the Bond Fund and other money held by the Trustee and the amounts payable under the Agreement or otherwise pledged therefor, which amounts are hereby pledged, assigned and otherwise secured for the equal and ratable payment of the Bonds and shall be used for no other purpose than to pay the principal of, premium, if any, and interest on the Bonds, except as may be otherwise expressly authorized in this Indenture. The principal of, premium, if any, and interest on the Bonds shall be payable solely and only from the Bond Fund, except as otherwise specifically provided hereby. Neither the State, nor any political subdivision thereof or body corporate and politic of the State other than the Issuer shall in any event be liable for the payment of the principal of or interest on the Bonds or for the performance of any pledge, obligation or agreement of any kind whatsoever of Issuer, and none of the Bonds or any of Issuer's agreements or obligations hereunder or in the Bonds shall be construed to constitute an indebtedness of the State or any political subdivision or body corporate and politic of the State other than Issuer, within the meaning of any constitutional or statutory provision whatsoever. Neither the faith and credit nor the taxing power of Issuer is pledged to the payment of principal of or interest on the Bonds. Section 2.04. Authentication (a) No Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this Indenture unless and until a certificate of authentication on such Bond substantially in the form set forth in Exhibits A and B attached hereto shall have been duly executed by the Trustee, and such executed certificate of authentication upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The certificate of authentication on any Bond shall be deemed to have been executed by the Trustee if signed by an authorized signatory of the Trustee, but it shall not be necessary that the same signatory execute the certificate of authentication on all of the Bonds. (b) In the event any Bond is deemed tendered to the Trustee as provided in Section 4.01 or 4.02 hereof but is not physically delivered to the Trustee, the Issuer shall execute and the Trustee shall authenticate a new Bond of like denomination as that deemed tendered. Section 2.05. Form of Bonds The Bonds and the certificate of authentication to be endorsed thereon prior to the Conversion Date are to be in substantially the form set forth in Exhibit A attached hereto, with appropriate variations, omissions 0 and insertions as permitted or required by this indenture. The Bonds which bear interest at the Fixed Rates and the certificate of authentication to be endorsed thereon are to be in substantially the form set forth in Exhibit B attached hereto, with appropriate variations, omissions and insertions as permitted or required by this Indenture. Section 2.06. Delivery of Bonds On the Date of Issuance the Issuer shall execute and deliver to the Trustee and the Trustee shall authenticate the Bonds and deliver them as directed by the Issuer as hereinafter in this Section provided. Prior to the delivery by the Trustee of the Bonds, the following shall be furnished to or filed with the Trustee: (1) duly executed counterparts of the Loan Agreement and this Indenture and the duly executed Letter of Credit; (2) a certified copy of the Bond Resolution; (3) a request and authorization to the Trustee on behalf of the Issuer and signed by the Mayor, Acting Mayor, n or City Manager to authenticate and deliver the Bonds to the purchasers thereof and for the purchase price therein identified; and (4) an opinion of Faegre & Benson, as bond counsel, to the effect that the Bonds have been duly and validly issued and bear interest excludible from gross income for purposes of federal income taxation. Upon payment of the proceeds to the Trustee, the Trustee shall deposit such proceeds to the credit of the Project Fund. Section 2.07. Mutilated, Lost, Stolen or Destroyed Bonds In the event any Bond is mutilated, lost, stolen or destroyed, the Issuer shall execute and the Trustee shall authenticate a new Bond of like date and denomination as that mutilated, lost, stolen or destroyed, provided that, in the case of any mutilated Bond, such mutilated Bond shall first be surrendered to the Issuer or the Trustee, and in the case of any lost, stolen, or destroyed Bond, there first shall be furnished to the Issuer and the Trustee evidence of such loss, theft or destruction satisfactory to the Issuer and the Trustee, together with an indemnity satisfactory to them which indemnity shall, in any event, name the Trustee, the Issuer and the Borrower as a beneficiary. In the event any such Bond shall have matured, the Trustee, instead of issuing a duplicate Bond, may pay the same without surrender thereof, making such requirements as it deems fit for its protection, including a lost instrument bond. The Issuer and the Trustee may charge the Owner of such Bond with their reasonable fees and expenses for such service. In executing a new Bond, the Issuer may rely conclusively upon a representation by the Trustee that the Trustee is satisfied with the adequacy of the evidence presented concerning the mutilation, loss, theft or destruction of any Bond. Section 2.08. Transfer of Bonds; Persons Treated as Owners The Trustee shall keep records for the transfer of the Bonds as provided in this Indenture, and the Trustee is hereby -17- I constituted and appointed the Bond Registrar of the Issuer. Upon surrender for transfer of any Bond at the Principal Office of the Trustee, duly endorsed for transfer or accompanied by an assignment duly executed by the Owner or his attorney duly authorized in writing, the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds in authorized denominations for a like aggregate principal amount.. Any Bond, upon surrender thereof at the Principal Office of the Trustee duly endorsed for transfer or accompanied by an assignment duly executed by the Owner or his attorney duly authorized in writing, may, at the option of the Owner thereof, be exchanged for an equal aggregate principal amount of Bonds of any denominations authorized by this Indenture in an aggregate principal amount equal to the principal amount of such Bond. In each case, the Trustee may require the payment by the Owner of the Bond requesting exchange or transfer of any tax or other governmental charge required to be paid with respect to such exchange or transfer. The Trustee shall not be required to exchange or register a transfer of (a) any Bonds during the 15-day period next preceding the selection of Bonds to be redeemed and thereafter until the date of the mailing of a notice of redemption of Bonds selected for redemption, or (b) any Bonds selected, called or being called for redemption in whole or in part except, in the case of any Bond to be redeemed in part, the portion thereof not so to be redeemed; provided that the foregoing shall not apply to the registration of transfer of any Bond which has been tendered to the Trustee pursuant to Section 4.06 hereof, and in any such case, for purposes of selection for redemption, the Bond so tendered and the Bond issued to the transferee thereof pursuant to Section 4.08 hereof shall be deemed and treated as the same Bond. If any Bond shall be transferred and delivered pursuant to Section 4.08(a) hereof after such Bond has been called for redemption, the Trustee shall deliver to such transferee a copy of the applicable redemption notice, indicating that the Bond delivered to such transferee has previously been called for redemption. The Trustee and the Issuer may treat the person in whose name a Bond is registered as the absolute Owner thereof for all purposes, and neither the Issuer nor the Trustee shall be bound by any notice or knowledge to the contrary, but such registration may be changed as hereinabove provided. All payments made to the Owner shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Section 2.09. Destruction of Bonds. Whenever any Outstanding Bond shall be delivered to the Trustee for cancellation pursuant to this Indenture, or for replacement pursuant to Section 2.07 hereof, such Bond shall be promptly canceled and cremated or otherwise destroyed by the Trustee, and counterparts of a certificate of destruction evidencing such cremation or other destruction shall be furnished by the Trustee to the Issuer and the Borrower. Section 2.10. Temporary Bonds. Until Bonds in definitive form are ready for delivery, the Issuer may execute, and, upon the request of the Issuer, the Trustee shall authenticate and deliver, subject to the provisions, limitations and conditions set forth above, one or more Bonds in temporary form, whether printed, typewritten, lithographed or otherwise produced, substantially in the form of the definitive Bonds, with appropriate omissions, variations and insertions, and in authorized denominations. Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the benefits of this Indenture. Upon presentation and surrender of any Bond or Bonds in temporary form, the Issuer shall, at the request of the Trustee, execute and deliver to the Trustee, and the Trustee shall authenticate and deliver, in exchange therefor, a Bond or Bonds in definitive form. Such exchange shall be made by the Trustee without making any charge therefor to the Owner of such Bond in temporary form. Bonds in definitive form may be issued hereunder in typewritten form. Section 2.11 Book-Entry Syste The Bonds shall be initially issued in Book Entry Form by using and delivering to the Depository one typed Bond for each stated maturity of the Bonds, registered to CEDE & Co., and by entering into the Letter of Representations. While the Bonds remain issued in Book-Entry Form, the provisions of this Indenture which conflict with the operation of the Book-Entry System shall not apply, and the provisions of the Letter of Representations relating to such Book-Entry System and the following provisions shall prevail. (a) Recristration, Recording and Transfer of Ownership The Depository (or its nominees) shall be and remain recorded on the registration records maintained by the Trustee as the Holder of all Bonds which are in Book-Entry Form. No transfer of any Bond in Book-Entry Form shall be made, except from one Depository to another (or its nominee) or except to terminate the Book-Entry Form. All Bonds of each stated maturity in Book-Entry Form shall be issued and remain in a single Bond certificate registered in the name of the Depository (or its nominee); provided, however, that upon termination of the Book-Entry Form pursuant to the Letter of Representations or as otherwise directed by written notice from the Borrower to the Municipality, Trustee and Depository, the Municipality shall, upon delivery of all Bonds from the Depository, promptly execute, and the Trustee shall thereupon authenticate and deliver, Bonds to all persons who were Beneficial Owners thereof immediately prior to such termination; and the Trustee shall register such Beneficial Owners as Holders of the applicable Bonds. The Trustee, as bond registrar and paying agent, -19- I shall maintain accurate books and records of the principal balance, if any, of each such Outstanding Bond in Book-Entry Form, which shall be conclusive for all purposes whatsoever. Upon the authentication of any new Bond in Book-Entry Form in exchange for a previous Bond, the Trustee shall designate thereon the principal balance remaining on such Bond according to the Trustee's books and records. (b) Notices. The Municipality and Trustee shall each give notices to the Depository of such matters and at such times as are required by the Letter of Representations. All notices of any nature required or permitted hereunder to be delivered to a Holder of a Bond in Book-Entry Form shall be transmitted to Beneficial owners of such bonds at such times and in such manner as shall be determined by the Depository and the Participants in accordance with the Book-Entry System and Letter of Representations. (c) Payments. All payments of principal of, premium, if any, and interest on Bonds while in Book-Entry Form shall be paid to the Depository in accordance with the Book-Entry System and Letter of Representations in same day funds by wire transfer. All payments of principal of, premium, if any, and interest on any Bonds in Book-Entry Form due Beneficial Owners shall be made at such times and in such manner as shall be determined by the Depository and the Participants in accordance with the Book-Entry System and Letter of Representations. (d) Limitations on Liabilit With respect to Bonds in Book-Entry Form, and any Beneficial Owners thereof, except as expressly provided to the contrary herein, the Municipality, the Borrower and the Trustee shall have no responsibility, liability or obligation of any nature whatsoever with respect to (i) the non-payment to any Beneficial Owner or any other person, other than the Depository, of any amount due for principal or interest; (ii) the failure to give any notice or other information to the applicable Beneficial Owner; (iii) the inaccuracy of the records of the Depository or any Participant, or (iv) the failure in any manner of the Depository or any Participant to timely or properly comply with procedures or requirements of the Book-Entry System. No such payment, failure or inaccuracy shall cause an Event of Default under the Indenture or the Loan Agreement. ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY Section 3.01. Extraordinary Redemption. The Bonds are subject to extraordinary redemption in the event that (1) A the Borrower shall exercise its option to cause the Bonds to be redeemed as provided in Sections 5.06 or 5.07 of the Agreement, or ( A q) the Borrower shall be obligated, as a result of the occurrence of a Determination of Taxability, to cause the Bonds to be redeemed as provided in Section 4.08 of the Agreement. If called for ex ' traordinary redemption, the Bonds shall be subject to redemption, subject to any contrary provisions of the Agreement, on the earliest interest payment date for which timely notice of redemption may be given, in whole, at a redemption price equal to 1000 of the principal amount thereof plus accrued interest to the redemption date, plus, in the event that the Bonds are to be redeemed pursuant to clause (3) above, a premium in the amount of 3.00% of the principal amount of each Bond to be redeemed. In addition, the Bonds are subject to mandatory redemption, in whole, on the Automatic Conversion Date, at a redemption price equal to 100 of the principal amount thereof, in the event that any condition precedent required to be satisfied pursuant to Section 4.04 hereof shall not have been satisfied on or prior to the date required therefor. Section 3.02. Optional Redemption. On or prior to the Conversion Date, the Bonds are subject to redemption by the Issuer, at the option of the Borrower, in whole or in part, and a� -k on December i992, a any interest' payment date thereafter, and if in part, the Bonds to be redeemed shall. be selected as provided in Section 3.07 hereof, at the redemption price of 100- of the principal amount thereof plus accrued interest to the redemption date. After the Conversion Date, the Bonds are subject to redemption by the Issuer, at the option of the Borrower, on or after the First Optional Redemption Date, in whole at any time or in part on any interest payment date, and if in part, the Bonds to be redeemed shall be selected as provided in Section 3.07 hereof, at the redemption prices (expressed principal amount) set forth in the following interest to the redemption date: Redemption Dates First Optional Redemption Date through the following May 31 as percentages of table plus accrued Redemption Prices 102-0. I First Anniversary of the First Optional Redemption Date through the following May 31 1010 Second Anniversary of the First Optional Redemption Date and thereafter 100 1 - 1 . Section 3.03. Mandatory Sinking Fund Redemption. The Bonds maturing on June 1, 2012, are subject to mandatory redemption, the principal portions of Bonds to be redeemed to be selected as provided in Section 3.07 hereof, at a redemption price equal to 1000 of the principal amount thereof plus accrued interest to the redemption date, on June 1 of the years, and in the principal amounts, as follows: Year * Final Maturity At its option, to be exercised on or before the 45th day next preceding any of the foregoing mandatory redemption dates, the Issuer, or the Borrower acting on behalf of the Issuer, may deliver Bonds to the Trustee for cancellation or receive a credit in respect of its mandatory redemption obligation for any Bonds which, prior to said date, have been redeemed (other than as a result of mandatory redemption pursuant to this Section) and canceled by the Trustee and not theretofore applied as a credit against any mandatory redemption obligation. Each Bond so delivered or previously redeemed shall be credited by the Trustee at the principal amount thereof against the obligation of the -22- Principal —Amount Issuer on such mandatory redemption date and the mandatory redemption obligation on such date shall be accordingly reduced. Section 3.04. Notice of Redemption. Notice of the call for redemption, identifying the Bonds or portions thereof to be redeemed, shall be given by the Trustee by mailing first class mail a copy of the redemption notice by at least fifteen (15) days but not more than sixty (60) days prior to the date fixed for redemption to the Owner of each Bond to be redeemed in whole or in part at the address shown on the registration records maintained by the Trustee. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. Notwithstanding the foregoing provisions of this Section 3.04, delivery by the Trustee of a copy of a redemption notice to a transferee of a Bond which has been called for redemption, pursuant to the requirements of Section 2.08, shall be deemed to satisfy the requirements of the first sentence of this Section 3.04 with respect to any such transferee. Section 3.05. Redemption Payments. Upon the giving of notice and the deposit of money for redemption at the required times on or prior to the date fixed for redemption, as provided in this Article, interest on the Bonds or portions thereof thus called shall no longer accrue after the date fixed for redemption. Section 3.06. Cancellation. All Bonds which have been redeemed shall not be reissued but shall be canceled and cremated or otherwise destroyed by the Trustee in accordance with Section 2.09 hereof. Section 3.07. Partial Redemption of Bonds. (a) Upon surrender of any Bond for redemption in part only, the Issuer shall execute and the Trustee shall authenticate and deliver to the Owner thereof a new Bond or Bonds of authorized denominations, in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. (b) In case a Bond is of a denomination larger than the minimum authorized denomination, a portion of such Bond may be redeemed, but Bonds shall be redeemed only in principal amounts equal to the minimum authorized denomination or any integral multiple thereof. (c) Whenever the Bonds are to be redeemed in part, Bonds which are Pledged Bonds at the time of selection of Bonds for redemption shall be selected for redemption prior to the selection of any other Bonds. After the selection of Pledged Bonds, the Trustee shall select for redemption Bonds in inverse order of maturities (if applicable, after the Conversion Date) and, within any maturity, in such manner as the Trustee may determine. -23- ARTICLE IV CONVERSION OF INTEREST RATE; DEMAND PURCHASE OPTION Section 4.01. Conversion of Interest Rate on Optional Conversion Date. The interest rate on the Bonds shall be converted from the Variable Rate to the Fixed Rates upon the exercise of the Conversion Option by the the by notice to the Trustee specifying 777`, 'M6 the Conversion Date h-n exercise of the Conversion Option the Bonds shAll'be subject to mandatory tender for purchase by the Borrower from the Owners thereof on the Optional Conversion Date, subject to the rights of the owners to retain the ownership of their Bonds in the manner provided in this Section 4.01. Upon receipt of any such notice from the Borrower, and the Fixed Rates from the Remarketing Agent and the satisfaction of the conditions precedent set forth in Section 4.04 hereof, the Trustee shall deliver or mail by first class mail a notice at least twenty (20) days but not more than thirty (30) days prior to the Optional Conversion Date to the Owner of each Bond at the address shown on the registration books. Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. Said notice shall state in substance the following: 1. The Conversion Date. 2. The stated maturity or maturities of principal of such Owner's Bonds from and after the Conversion Date. 3. The Fixed Rates which will take effect on such Owner's Bonds on the Conversion Date. 4. That from and after the Conversion Date the Demand Purchase Option will not be available to Owners of Bonds. 5. That all Owners of Bonds who have not given notice of their desire to retain Bonds as provided in this Section shall be deemed to have tendered their Bonds for purchase on the Conversion Date. 6. That the Letter of Credit will be surrendered to the Bank for cancellation one (1) Business Day after the Conversion Date. 7. The manner in which an Owner of Bonds may elect to retain Bonds after the Optional Conversion Date. Any Owner of Bonds desiring to retain Bonds after the Optional Conversion Date must notify the Trustee in writing which WE notice must be received no later than fifteen (15) days prior to the Optional Conversion Date. Said notice shall state in substance the following: (a) The Bond numbers and principal amounts of the Bonds which the Owner thereof elects to retain after the Conversion Date; (b) That the Owner thereof recognizes that the events set forth in 1 through 6 above will occur; (c) That the Owner thereof recognizes that the rating, if any, assigned to the Bonds based on the Letter of Credit will no longer apply to the Bonds after the Conversion Date; and (d) That the Owner thereof elects to continue to own the Bonds specified in (a) above after the Conversion Date and acknowledges that under Section 4.03 the Bonds are required to be delivered in exchange for replacement Bonds in order to receive the interest payable on the Bonds after the Conversion Date. Owners of Bonds not providing the Trustee with the notice described above shall be required to tender their Bonds to the Trustee for purchase by the Borrower at the Purchase Price, and any such Bonds not delivered to the Trustee on or prior to the Optional Conversion Date ("Undelivered Bonds"), for which there has been irrevocably deposited in trust with the Trustee an amount of money sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased pursuant to this Section 4.01. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS (OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE AS PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE OPTIONAL CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE OPTIONAL CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR. On the Business Day following the Optional Conversion Date, the Trustee shall surrender the Letter of Credit to the Bank for cancellation. Section 4.02. Conversion of Interest Rate on Automatic Conversion Date. The interest rate on the Bonds shall be converted from the Variable Rate to the Fixed Rates on the Automatic Conversion Date, and the Bonds shall be subject to mandatory tender for purchase by the Borrower from the Owners thereof on the Automatic Conversion Date, subject to the rights of the Owners to retain the ownership of their Bonds in the manner provided in this Section 4.02. Upon satisfaction of the -25- conditions precedent set forth in Section 4.04 and the Fixed Rates from the Remarketing Agent, the Trustee shall deliver or mail a notice, conforming to the requirements set forth in Section 4.01 above, at least twenty (20) days but not more than thirty (30) days prior to the Automatic Conversion Date to the Owner of each Bond at the address shown on the registration books. Any notice given as provided in this Section shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. Any Owner of Bonds desiring to retain Bonds after the Automatic Conversion Date must notify the Trustee in writing which notice must be received no later than fifteen (15) days prior to the Automatic Conversion Date. Said notice shall conform to the requirements set forth in Section 4.01 above. Owners of Bonds not providing the Trustee with the notice described above shall be required to tender their Bonds to the Trustee for purchase by the Borrower at the Purchase Price, and any such Bonds not delivered to the Trustee on or prior to the Automatic Conversion Date ("Undelivered Bonds"), for which there has been irrevocably deposited in trust with the Trustee an amount of money sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased pursuant to this Section 4.02. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS (OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE AS PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE AUTOMATIC CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE AUTOMATIC CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR. On the Business Day following the Automatic Conversion Date, the Trustee shall surrender the Letter of Credit to the Bank for cancellation. Section 4.03. Exchange of Bonds after Conversion Date. At any time following the Conversion Date, an Owner of Bonds who has given notice of its election to continue to hold Bonds as provided in Section 4.01 or 4.02 above may deliver said Bonds to the Trustee, and upon such delivery, the Trustee shall exchange said Bonds for replacement Bonds in the form of Exhibit B hereto. Such exchange shall be made by the Trustee without making any charge therefor to the Owner of such Bonds. Notwithstanding Section 2.02 hereof, no payment of interest shall be made on any Bond not so exchanged, but any interest payable on an interest payment date shall be held in trust (without interest) and shall be paid when the Bond to which it relates is so exchanged. Section 4.04. Conditions to Conversion. As conditions to the giving of notice as provided in Section 4.01 or 4.02 above, the Borrower shall provide the Trustee with an opinion of nationally recognized bond counsel to the effect that the proposed conversion of the interest rate on the Bonds from the Variable Rate to the Fixed Rates, together with any corresponding amortization schedule proposed with respect thereto, as provided in Section 2.02(d), will not adversely affect the exemption of the interest on the Bonds from federal income taxation, and the Remarketing Agent shall advise the Trustee of the Fixed Rates. Section 4.05. Additional Notices. The Trustee shall promptly provide the Borrower and the Bank copies of any notice delivered to the Owners of the Bonds pursuant to Section 4.01 or 4.02 hereof and any notice received by the Trustee from any Owner of a Bond pursuant to Section 4.01 or 4.02 hereof. Section 4.06. Demand Purchase Option. Prior to the Conversion Date, any Bond shall be purchased by the Borrower at the Purchase Price from the Owner thereof upon: (i) delivery to the Trustee at its Principal Office and to the Remarketing Agent at its Principal Office of a notice (which shall be irrevocable and effective upon receipt) which states (1) the aggregate principal amount and Bond numbers of the Bonds to be purchased, and (2) the date on which such Bonds are to be purchased, which date shall be a Business Day not prior to the seventh (7th) day next succeeding the date of delivery of such notice and which date shall be prior to the Conversion Date; and (ii) delivery to the Trustee at its Delivery Office, at or prior to 11:00 A.M., Minneapolis time, on the Business Day preceding the date designated for purchase in the notice described in (i) above, of such Bonds to be purchased, with an appropriate endorsement for transfer or accompanied by a bond power endorsed in blank, and if such Bonds are to be purchased prior to the next succeeding interest payment date and after the Record Date in respect thereof, a due-bill for interest due on such interest payment date; provided, that such Bonds shall be so purchased pursuant to this Section 4.06 only if the Bonds are delivered to the Trustee and conform in all respects to the description thereof in the notice described in clause (i). Section 4.07. Funds for Purchase of Bonds. On the date Bonds are to be purchased pursuant to Section 4.01, 4.02 or 4.06 hereof, such Bonds shall be purchased at the Purchase Price only from the funds listed below. Funds for the payment of the Purchase Price shall be derived from the following sources in the order of priority indicated: (i) money drawn by the Trustee under the Letter of Credit; -27- (ii) the proceeds of the sale of such Bonds which have been remarketed by the Remarketing Agent to any entity other than the Borrower or the Issuer prior to 11:00 a.m., Minneapolis time, on the Business Day preceding the date such Bonds are to be purchased in an amount which the Remarketing Agent has telephonically notified the Trustee is on deposit with the Remarketing Agent to be transferred to the Trustee by the Remarketing Agent pursuant to the Remarketing Agreement; and (iii) any other money furnished to the Trustee and available for such purpose. Section 4.08. Delivery of Purchased Bonds. (a) Bonds purchased with money described in Section 4.07(1) hereof with respect to which reimbursement is made to the Bank from proceeds of a remarketing effected by the Remarketing Agent, and Bonds purchased with money described in Section 4.07 (ii) hereof, shall be delivered by the Trustee to the Remarketing Agent for redelivery to or upon the order of the purchasers thereof. (b) Bonds purchased with money described in Section 4.07(i) hereof with respect to which reimbursement shall not have been made to the Bank shall be held by the Trustee for the benefit of the Bank pursuant to the Pledge Agreement. (c) Bonds purchased with money described in Section 4.07(iii) shall, at the direction of the Borrower, be (i) delivered as instructed by the Borrower or (ii) canceled by the Trustee; provided, however, that any Bonds so purchased after the selection thereof by the Trustee for redemption shall be canceled by the Trustee. (d) The Trustee shall deliver to the person to whom the Trustee is to deliver such Bonds the due bills, if any, delivered to the Trustee with such Bonds in accordance with Section 4.06 hereof. Bonds delivered as provided in this Section shall be registered in the manner directed by the recipient thereof. Section 4.09. Delivery of Proceeds of Sale of Purchased Bonds. (a) Except in the case of the sale of any Pledged Bonds, the proceeds of the sale of any Bonds delivered to the Trustee pursuant to Section 4.01, 4.02 or 4.06 hereof, to the extent not required to pay the Purchase Price thereof in accordance with Section 4.07 hereof, shall be paid to or upon the order of the Borrower. I".4a (b) In the event the Remarketing Agent shall have remarketed any Pledged Bonds and the Bank shall have released such Pledged Bonds from the lien of the Pledge Agreement, such Bonds shall be delivered by the Trustee in accordance with Section 4.08(a) hereof and the proceeds of sale of such Bonds shall be delivered to the Bank. Section 4.10. Duties of Trustee with Respect to Purchase of Bonds. (a) The Trustee shall hold all Bonds delivered to it pursuant to Section 4.01, 4.02 or 4.06 hereof in trust for the benefit of the respective Owners of Bonds which shall have so delivered such Bonds until money representing the Purchase Price of such Bonds shall have been delivered to or for the account of or to the order of such Owners of Bonds. (b) The Trustee shall hold all money delivered to it pursuant to this Indenture for the purchase of Bonds in a separate account in trust for the benefit of the person or entity which shall have so delivered such money until the Bonds purchased with such money shall have been delivered to or for the account of such person or entity. (c) The Trustee shall promptly deliver to the Borrower and the Bank a copy of each notice delivered to it in accordance with Section 4.06 hereof. (d) Upon any failure of the delivery to it of Bonds in accordance with said Section 4.06, the Trustee shall give telephonic or telegraphic notice thereof to the Borrower, the Remarketing Agent and the Bank. (e) The Trustee shall draw money under the Letter of Credit in accordance with the terms thereof to the extent required by Sections 4.07 and 6.13 hereof to provide for timely payment of the Purchase Price of Bonds. -29- ARTICLE V GENERAL COVENANTS Section 5.01. Payment of Principal, Premium, if any, and Interest. The Issuer covenants that it will promptly pay or cause to be paid the principal of, premium, if any, and interest on every Bond issued under this Indenture at the place, on the dates, and in the manner provided herein and in said Bonds according to the true intent and meaning thereof, but solely from the amounts pledged therefor which are from time to time held by the Trustee in the Bond Fund. The principal of, premium, if any, and interest on the Bonds are payable from the amounts to be paid under the Agreement and otherwise as provided herein and in the Agreement, which amounts are hereby specifically pledged to the payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or in this Indenture shall be construed as pledging any other funds or assets of the Issuer. Neither the Issuer, the State, nor any political subdivision of the State shall in any event be liable for the payment of the principal of, premium, if any, or interest on any of the Bonds or for the performance of any pledge, obligation or agreement undertaken by the Issuer except to the extent that the money pledged herein is sufficient therefor. No Owner of any Bonds has the right to compel any exercise of taxing power of the Issuer, the State or any political subdivision of the State to pay the Bonds or the interest thereon, and the Bonds do not constitute an indebtedness of the Issuer or a loan of credit thereof within the meaning of any constitutional or statutory provision. Section 5.02. Performance of Covenants. The Issuer covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Indenture and in the Agreement, in any and every ]Bond executed, authenticated and delivered hereunder and in all of its proceedings pertaining hereto. The Issuer covenants that it is duly authorized under the Constitution and laws of the State, including particularly and without limitation the Act, to issue the Bonds and to execute this Indenture, to assign the Agreement, and to pledge the amounts to be paid under the Agreement and other amounts hereby pledged in the manner and to the extent herein set forth, that all action on its part for the issuance of the Bonds and the execution and delivery of this Indenture has been duly and effectively taken, and that the Bonds in the hands of the Owners thereof are and will be valid and enforceable obligations of the Issuer according to the terms thereof and hereof. Section 5.03. Instruments of Further Assurance. The Issuer will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indentures -30- supplemental hereto and such further acts, instruments and transfers as the Trustee may reasonably require for the better assuring, transferring, conveying, pledging, assigning and confirming unto the Trustee all and singular the amounts pledged hereby to the payment of the principal of, premium, if any, and interest on the Bonds. The Issuer, except as herein and in the Agreement provided, will not sell, convey, mortgage, encumber or otherwise dispose of any part of the amounts, revenues and receipts payable under the Agreement or its rights under the Agreement. Section 5.04. Recording and Filing. The Borrower has agreed pursuant to the Agreement that it will cause all financing statements related to this Indenture and all supplements hereto 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 hereunder, and to take or cause to be taken any and all other action necessary to perfect the security interest, pledge and assignment created by this Indenture, as the Trustee may request. Section 5.05. Inspection of Books. All books and records, if any, in the Issuer's possession relating to the Project and the amounts derived from the Project shall at all reasonable times be open to inspection by such accountants or other agents as the Trustee may from time to time designate. Section 5.06. Rights Under Agreement. The Agreement, a duly executed counterpart of which has been filed with the Trustee, sets forth the covenants and obligations of the Issuer and the Borrower, and reference is hereby made to the Agreement for a detailed statement of said covenants and obligations of the Borrower thereunder, and the Issuer agrees that the Trustee in its name or in the name of the Issuer may enforce all rights of the Issuer and all obligations of the Borrower under and pursuant to the Agreement for and on behalf of the Owners of Bonds, whether or not the Issuer is in default hereunder. -31- FAMA00—iffn W ON Section 6.01. Creation of the Bond Fund. There is hereby established with the Trustee a trust fund designated the Bond Fund, which shall be used to pay when due the principal and Purchase Price of, premium, if any, and interest on the Bonds. Section 6.02. Payments into the Bond Fund. There shall be deposited into the Bond Fund from time to time the following: (a) all payments specified in Section 4.02 of the Agreement; (b) any money drawn under the Letter of Credit which money shall be deposited in a separate sub-account of the Bond Fund and shall not be commingled with any other money held by the Trustee; (c) amounts held by the Trustee pursuant to Section 4.10 hereof; and (d) all other money received by the Trustee under and pursuant to any of the provisions of the Agreement which is required to be or which are accompanied by directions that such money is to be paid into the Bond Fund. Section 6.03. Use of Money in the Bond Fund. Except as provided in Sections 4.07, 4.10 and 6.12 hereof, money in the Bond Fund shall be used solely for the payment of the principal of, premium, if any, and interest on the Bonds and for the redemption of the Bonds prior to maturity. Funds for the payment of the principal of and interest on the Bonds shall be derived from the following sources in the order of priority indicated: (i) money drawn by the Trustee under the Letter of Credit; (ii) money on deposit in the Bond Fund from payments made by the Borrower under Section 4.02 of the Agreement; and (iii) any other money furnished to the Trustee and available for such purpose. Section 6.04. Rebate Fund. There is hereby established with the Trustee a trust fund designated the Rebate Fund, which shall be disbursed in accordance with the provisions of the Agreement and this Indenture. Section 6.05. Payments into the Rebate Fund; Investments. The Trustee shall make information regarding the Bonds and investments hereunder available to the Borrower, and -32- shall make deposits and disbursements into the Rebate Fund as directed by the Borrower in order that the Borrower may comply with the provisions of Section 4.08(d) of the Agreement and Section 6.06 hereof. Section 6.06. Disbursements from Rebate Fund. Not later than 60 days after each installment computation date and not later than 60 days after the final computation date, the Trustee shall pay to the United States not less than the minimum amount required to be rebated to the United States in respect of the Bonds under Section 148(f) of the Internal Revenue Code and pertinent regulations. In any event, not later than 60 days after the final computation date, the Trustee shall pay to the United States one hundred percent (100- of the rebatable arbitrage owing with respect to the Bonds under Section 148(f) of the Internal Revenue Code and pertinent regulations. All payments to be made under this Section by the Trustee shall be made solely from amounts on deposit in the Rebate Fund or from other amounts made available therefor by the Borrower or the Bank- Each payment shall be accompanied by such documents as may be required by then applicable Treasury Regulations and by a statement prepared by the Borrower and furnished to the Trustee summarizing the determination of the amount to be paid to the United States. In performing the obligations set forth in this Section 6.06, all provisions of Section 4.08(d) of the Loan Agreement shall be incorporated herein. Section 6.07. Creation of the Project Fund. There is hereby created by the Issuer and ordered established with the Trustee a trust fund to be designated the Project Fund, which shall be disbursed in accordance with the Agreement and this Indenture. Section 6.08. Payments into the Project Fund. Upon the original issuance and delivery of the Series 1992 Bonds, all of the proceeds of the sale of the Series 1992 Bonds shall be deposited in the Project Fund. Such additional moneys shall be deposited into the Project Fund as shall be required pursuant to the Loan Agreement and the Disbursing Agreement to provide for the completion of the Project. Section 6.09. Disbursements from Project Fund. (a) Moneys in the Project Fund shall be disbursed for Project Costs in accordance with the provisions of Section 3.03 of the Loan Agreement, and in accordance with the applicable provisions of the Disbursing Agreement. The Trustee is hereby authorized and directed to issue its checks for each disbursement to be made from the Project Fund. (b) The Trustee shall maintain adequate records pertaining to the Project Fund and all disbursements therefrom. -33- 0 Section 6.10. Nonpresentment of Bonds In the event any Bond shall not be presented for payment when the principal thereof becomes due, either at maturity, or at the date fixed for redemption thereof, or otherwise, if funds sufficient to pay any such Bond shall have been made available to the Trustee for the benefit of the Owner thereof, all liability of the Issuer to the Owner thereof for the payment of such Bond shall forthwith cease, ... ............................... A Lena and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such funds, without liability for interest thereon, for the benefit of the Owner of such Bond who shall thereafter be restricted exclusively to such funds for any claim of whatever nature on his part under this Indenture with respect to such Bond. Section 6.11. Money to be Held in Trust All money required to be deposited with or paid to the Trustee for the account of any fund or account referred to in any provision of this Indenture or the Agreement shall be held by the Trustee in trust, and shall, while held by the Trustee, constitute part of the Trust Estate and be subject to the lien and security interest created hereby. Section 6.12. Repayment to the Bank and the Borrower from the Bond Fund or the Rebate Fund In the event that any payment of interest or principal by the Borrower is on deposit in the Bond Fund on the date such payment is due on the Bonds and the Trustee has drawn money under the Letter of Credit to make such payment on the Bonds, the Trustee shall transfer such amount to the Bank to be applied to the satisfaction of the Borrower's obligations under the Reimbursement Agreement. Any amounts remaining in the Bond Fund, the Project Fund, the Rebate Fund or any other fund or account created hereunder after payment in full of the principal of, premium, if any, and interest on the Bonds, the fees, charges and expenses of the Trustee and all other amounts required to be paid hereunder, including any amounts due the United States under Section 148 of the Code, and including any amounts owing to the Municipality under the Loan Agreement or this Indenture, shall be paid immediately to the Bank to the extent of any indebtedness of the Borrower to the Bank under the Credit Agreement, and, after repayment of all such indebtedness and the payment of the fees, charges and expenses of the Municipality and the Remarketing Agent, to the Borrower. Section 6.13. Letter of Credit During the term of the Letter of Credit, the Trustee shall draw money under the Letter of Credit in accordance with the terms thereof (x) to pay the principal of and interest on the Bonds when due (whether on an interest payment date or by reason of maturity, redemption, acceleration of maturity or otherwise), and (y) to pay the Purchase Price of Bonds when due. Specifically, the Trustee's duties shall include, but not be limited to, submitting to the Bank a draft under the Letter of -AA- I Credit in accordance with the provisions thereof by not later than 11:00 a.m. one Business Day in advance of any date on which the principal of, Purchase Price for, or interest on the Bonds is due. If the Trustee has not received written notice from the Bank not less than 30 days prior to the Letter of Credit Termination Date to the effect that the Bank will extend or renew the Letter of Credit, effective on or before the Letter of Credit Termination Date, and if a Substitute Letter of Credit has not been furnished to the Trustee that meets all of the applicable requirements set forth in the Loan Agreement and this Indenture, and if the Letter of Credit Termination Date does not coincide with the Conversion Date, the Trustee shall submit on or before the Letter of Credit Termination Date a draft under the Letter of Credit to the Trustee in the full amount thereof. -35- ARTICLE VII INVESTMENT OF MONEY Any money held as a part of the Bond Fund shall be invested or reinvested by the Trustee, to the extent permitted by law, in Governmental Obligations maturing in not more than 30 days. Any money held as a part of any other Fund hereunder shall be invested or reinvested by the Trustee, to the extent permitted by law, at the written request of and as directed by a Borrower Representative, in any of the following Qualified Investments: (i) Governmental Obligations; or (ii) certificates of deposit or time deposits with thean or wt any ©th banking or savings institution whcYi is insured by the Federal Deposit Insurance Corporation, provided that such certificates of deposit or time deposits any,;p ixz t tut x if not fully insured by` the Federal Depos t Insurance Corporation, are fully secured by Governmental Obligations; or (iii) any other investment authorized by law which is approved by the Bank. The Trustee may make any and all such investments through itself or any bank or trust company under common control with the Trustee. All such investments shall at all times be a part of the fund or account from which the money used to acquire such investments shall have come and all income and profits on such investments shall be credited to, and losses thereon shall be charged against, such fund. Investments in the Rebate Fund and Project Fund shall be made so as to mature or be subject to redemption at the option of the owner thereof on or prior to the date or dates that the Borrower anticipates that money therefrom will be required. All investments hereunder shall be registered in the name of the Trustee, as Trustee under this Indenture. All investments hereunder shall be held by or under the control of the Trustee. The Trustee shall sell and reduce to cash a sufficient amount of investments in the Bond Fund whenever the cash balance in the Bond Fund is insufficient, together with any other funds available therefor, to pay the principal or Purchase Price of, premium, if any, and interest on the Bonds when due. n In the event that the Borrower n upon the advice of nationally recognized bond counsel or special tax counsel is of the opinion that it is necessary to restrict or limit the yield on the investment of any moneys, securities or other obligations paid to or held by the Trustee under the Indenture in order to comply with or implement those provisions of the documents intended to prevent the Bonds (or any series or portion thereof) from being considered an "arbitrage bond" within the meaning of Section 148(a) of the Code and the arbitrage regulations, the Borrower ^ shall issue to the Trustee a written notice to such effect (no other direction being required), with a copy to the -36- Borrower or the Issuer, as the case may be, and the Trustee hereby agrees to take such actions as may be necessary to restrict the yield on such moneys, securities or other obligations in accordance therewith. A -37- ARTICLE VIII DISCHARGE OF INDENTURE Section 8.01. Discharge of Indenture. If the Issuer shall pay or cause to be paid, in accordance with the provisions of this Indenture, to the Owners of the Bonds, the principal of, premium, if any, and interest due or to become due thereon at the times and in the manner stipulated therein, and if the Issuer shall not then be in default in any of the other covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and observed by it or on its part and if the Issuer shall pay or cause to be paid to the Trustee all sums of money due or to become due according to the provisions hereof, then these presents and the estate and rights hereby granted shall cease, determine and be void, whereupon the Trustee shall cancel and discharge the lien of this Indenture, and execute and deliver to the Issuer such instruments in writing as shall be requested by the Issuer and requisite to release the lien hereof and reconvey, release, assign and deliver unto the Issuer any and all of the estate, right, title and interest in and to any and all rights or property conveyed, assigned or pledged to the Trustee or otherwise subject to the lien of this Indenture, except amounts in the Bond Fund or Rebate Fund required to be paid to the United States under Section 6.06 hereof or to such other party as is provided for under Section 6.12 hereof and except cash held by the Trustee for the payment of the principal or Purchase Price of, premium, if any, or interest on particular Bonds. Section 8.02. Defeasance of Bonds. Any Bond shall be deemed to be paid within the meaning of this Article and for all purposes of this Indenture when (a) payment of the principal of and premium, if any, on such Bond, plus interest thereon to the due date thereof (whether such due date is by reason of maturity or upon redemption as provided herein) either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (1) money sufficient to make such payment or (2) Governmental Obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of sufficient money to make such payment, and (b) all payments to the United States under Section 6.06 hereof or Section 4.08(d) of the Loan Agreement, and all necessary and proper fees, compensation and expenses of the Trustee and the Issuer pertaining to the Bonds with respect to which such deposit is made, shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. At such time as a Bond shall be deemed to be paid hereunder, as aforesaid, such Bond shall no longer be secured by or entitled to the benefits of this Indenture, except for the purposes of any such payment from such money or Governmental Obligations. Notwithstanding the foregoing, no deposit under clause (a)(ii) of the immediately preceding paragraph shall be deemed payment of such Bonds as aforesaid until (a) proper notice of redemption of such Bonds shall have been previously given in accordance with Article III of this Indenture, or in the event said Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, until the Borrower shall have given the Trustee, in form satisfactory to the Trustee, irrevocable instructions to notify, as soon as practicable, the Owners of the,Bonds, that the deposit required by (a)(ii) above has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this Section 8.02 and stating the maturity or redemption date upon which money is to be available for the payment of the principal of and the applicable redemption premium, if any, on said Bonds, plus interest thereon to the due date thereof, or (b) the maturity of such Bonds. All money so deposited with the Trustee as provided in this Section 8.02 may also be invested and reinvested, at the direction of the Borrower, in Governmental Obligations, maturing in the amounts and times as hereinbefore set forth, and all income from all Governmental obligations in the hands of the Trustee pursuant to this Section 8.02 which is not required for the payment of the Bonds and interest and premium, if any, thereon with respect to which such money shall have been so deposited shall be deposited in the Bond Fund as and when realized and collected for use and application as is other money deposited in the Bond Fund. The Trustee hereby covenants that no deposit will knowingly be made or accepted and no use knowingly made of any such deposit which would cause the Bonds to be treated as arbitrage bonds within the meaning of Section 148 of the Code. Notwithstanding any provision of any other Article of this Indenture which may be contrary to the provisions of this Section 8.02, all money or Governmental Obligations set aside and held in trust pursuant to the provisions of this Section 8.02 for the payment of Bonds (including interest and premium thereon, if any) shall be applied to and used solely for the payment of the particular Bonds (including the interest and premium thereon, if any) with respect to which such money or Governmental Obligations have been so set aside in trust. Anything in Article XI hereof to the contrary notwithstanding, if money or Governmental Obligations have been deposited or set aside with the Trustee pursuant to this Section 8.02 for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no amendment to the provisions -39- of this Section 8.02.shall be made without the consent of the Owner of each Bond affected thereby. Notwithstanding anything else in the Loan Agreement or this Indenture to the contrary, the Trustee is authorized to require as a condition to any defeasance of Bonds hereunder an Opinion of Counsel rendered by nationally recognized bond counsel to the effect that such defeasance would not jeopardize the tax- exempt status of interest on the Bonds. -40- ARTICLE IX DEFAULTS AND REMEDIES Section 9.01. Defaults. If any of the following events occur, it is hereby declared to constitute a "Default": (a) default in the due and punctual payment of interest on any Bond when due; (b) default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by declaration of acceleration; (c) default in the due and punctual payment of the Purchase Price of any Bond at the time required by Section 4.01, 4.02 or 4.06 hereof; (d) at any time prior to the Letter of Credit Termination Date, receipt by the Trustee, within 4 calendar days following a drawing under the Letter of Credit, of notice from the Bank that the Letter of Credit will not be reinstated to an amount equal to at least the principal of and 50 days' interest on all Outstanding Bonds, assuming a maximum interest rate of 10.00 per annum; (e) receipt by the Trustee of notice from the Bank that an "Event of Default" has occurred under the Credit Agreement, together with a direction from the Bank to the Trustee requiring the acceleration of the Bonds; A Section 9.02. Acceleration. Upon the occurrence of (i) any Default under subsection (a), (b ( c ) A of Section 9.01, the Trustee may, A and, at the written request of the Owners of not less than twenty-five percent (250) in aggregate principal amount of Outstanding Bonds A shall, or (ii) any Default under subsection (d) "'; (e) of Section 9.01, the A Trustee shall, by notice in writing delivered to the Issuer and the Borrower, declare the principal of all Bonds and the interest accrued thereon to the date of such acceleration immediately due and payable. Prior to the Letter of Credit Termination Date the Bonds shall cease to bear interest on the date of such declaration of acceleration. Upon any declaration of acceleration hereunder, the Trustee may immediately declare the Loan Repayments required to be made by the Borrower under Section 4.02 of the Agreement to be immediately due and payable and, prior to the Letter of Credit Termination Date, shall immediately draw money under the Letter of Credit to pay the principal of all Outstanding Bonds and the accrued interest thereon to the date of acceleration to the extent required by Section 6.13 hereof. Default Subject to the provisions of Section 9.02 hereof, if a snaii nave occurred and be continuing r a 1 q. aggregd so to do by the Owners of twenty-five percent (25 9 6) in 6 ate principal amount of Outstanding Bonds and provided the Trustee is indemnified as provided in Section 10.01(1) hereof, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Section and by Section 9.02 hereof, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of Bonds. Subject to the provisions of Section 9.02 hereof, no remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Owners of Bonds) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Owners of Bonds hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Default shall impair any such right or power or shall be construed to be a waiver of any such Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient. No waiver of any Default hereunder, whether by the Trustee or by the Owners of Bonds, shall extend to or shall affect any subsequent Default or shall impair any rights or remedies consequent thereon. -42- Section 9.04. Right of Owners of Bonds to Direct Proceedings. Subject to the provisions of Section 9.02 hereof, the Owners of a majority in aggregate principal amount of the Outstanding Bonds shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or any other proceedings hereunder provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture. Section 9.05. Appointment of Receivers. Upon the occurrence of a Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners of Bonds under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Trust Estate and of the revenues, earnings, income, products and profits thereof, pending such proceedings, with such powers as the court making such appointment shall confer. Section 9.06. Waiver. Upon the occurrence of a Default, to the extent that such rights may then lawfully be waived, neither the Issuer nor anyone claiming through or under it, shall set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws of any jurisdiction now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture, and the Issuer, for itself and all who may claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of all such laws. Section 9.07. Application of Money. All money received by the Trustee pursuant to any right given or action taken under the provisions of this Article shall, after payment of the costs and expenses of the proceedings resulting in the collection of such money and of the expenses, liabilities and advances incurred or made by the Trustee (provided that money drawn by the Trustee under the Letter of Credit shall not be used for such purposes), be deposited in the Bond Fund and applied as follows: (a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such money shall be applied: FIRST - to the payment to the persons entitled thereto of all installments of interest then due on the Bonds, in the order of the maturity of the installments of such interest (with interest on overdue installments of such interest, to the extent permitted by law, at any applicable late payment rate provided for herein or in the Bonds) and, if the amount available shall not be -43- sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege; and SECOND - to the payment to the persons entitled thereto of the unpaid principal of and premium, if any, on any of the Bonds which shall have become due (other than Bonds matured or called for redemption for the payment of which money is held pursuant to the provisions of this Indenture), with interest on overdue installments of principal and premium, if any, to the extent permitted by law, at any applicable late payment rate provided for herein or in the Bonds and, if the amount available shall not be sufficient to pay in full all Bonds due on any particular date, then to the payment ratably according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege; and THIRD - to the payment to the persons entitled thereto as the same shall become due of the principal of and premium, if any, and interest on the Bonds which may thereafter become due and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with interest and premium, if any, then due and owing thereon, payment shall be made ratably according to the amount of interest, principal and premium, if any, due on such date to the persons entitled thereto without any discrimination or privilege. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such money shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due, respectively, for principal and interest, to the persons entitled thereto without any discrimination or privilege, with interest on overdue installments of interest or principal, to the extent permitted by law, at any applicable late payment rate provided for herein or in the Bonds. (c) If the principal of all the Bonds shall have been declared due and payable and if such declaration shall thereafter have been rescinded and annulled under the provisions of this Article, then, subject to the provisions of Section 9.07(b) hereof, in the event that the principal of all the Bonds shall later become due or be declared due and -44- payable, the money shall be applied in accordance with the provisions of Section 9.07(a) hereof. Whenever money is to be applied pursuant to the provisions of this Section, such money shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such money available for application and the likelihood of additional money becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such money and of the fixing of any such date, and shall not be required to make payment to the Owner of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Whenever the principal of, premium, if any, and interest on all Bonds have been paid under the provisions of this Section and all expenses and charges of the Trustee have been paid or duly provided for, any balance remaining in the Bond Fund shall be paid to the Borrower or the Bank as provided in Section 6.12 hereof. Money drawn under the Letter of Credit shall be applied only to the payment of principal or Purchase Price of, and interest on, the Bonds. Section 9.08. Remedies Vested in Trustee. All rights of action (including the right to file proof of claims) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Owners of the Bonds, and any recovery of judgment shall be for the equal and ratable benefit of the Owners of the Outstanding Bonds. Section 9.09. Rights and Remedies of Owners of Bonds. No Owner of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless (subject to the provisions of Section 9.02 hereof) (i) a Default has occurred of which the Trustee has been notified as provided in Section 10.01(h) hereof, or of which by said subsection it is deemed to have notice, (ii) the Owners of twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds shall have made written request to the Trustee -45- .and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding and shall have offered to the Trustee indemnity as provided in Section 10-01(1), and (iii) the Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding. Such notification, request and offer of indemnity are hereby declared in every case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture, or for the appointment of a receiver or for any other remedy hereunder, it being understood and intended that no one or more Owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or equity shall be instituted, had and maintained in the manner herein provided and for the equal and ratable benefit of the Owners of all Outstanding Bonds. However, nothing contained in this Indenture shall affect or impair the right of any Owner of Bonds to enforce the payment of the principal of, premium, if any, and interest on any Bond at and after the maturity thereof, or the obligation of the Issuer to pay the principal of, premium, if any, and interest on each of the Bonds issued hereunder to the respective owners thereof at the time and place, from the source and in the manner in the Bonds expressed. No Owner of any Bond shall have any right to institute any suit, action or proceeding at equity or at law to enforce a drawing under the Letter of Credit, except as may be specifically required under the provisions of this Indenture. Section 9.10. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, subject to any determination in such proceedings, the Issuer, the Trustee and the Owners of Bonds shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. Section 9.11. Waivers of Default. Subject to the further provisions of this Section, the Trustee shall waive any Default hereunder and its consequences and rescind any declaration of acceleration of principal (and shall waive any corresponding Default under the Agreement and its consequences) upon the written request of the Owners of (1) at least a majority in aggregate principal amount of all Outstanding Bonds in respect of which default in the payment of principal or interest, or both, exists or (2) at least a majority in aggregate principal amount of Outstanding Bonds in the case of any other Default. -46- Any default under subsection (d) of Section 9-01 hereof may only be waived if the Bank shall notify the Trustee in writing that the Letter of Credit has been fully reinstated to the amount described in such subsection (d). Any Default under subsection (e) of Section 9.01 hereof (and the corresponding Default under the Agreement) may only be waived upon the written request of the Bank (and in such case the consent of the Owners of the Bonds shall not be required); and provided further that there shall not be waived any Default specified in subsection (a), (b) or (c) of Section 9.01 hereof unless prior to such waiver or rescission, all arrears of principal and interest (other than principal of or interest on the Bonds which became due and payable by declaration of acceleration), and all expenses of the Trustee in connection with such Default shall have been paid or provided for. In case of any waiver or rescission described above, or in case any proceeding taken by the Trustee on account of any such Default shall have been discontinued or concluded or determined adversely, then and in every such case the Issuer, the Trustee and the Owners of Bonds shall be restored to their former positions and rights hereunder, respectively, but no such waiver or rescission shall extend to any subsequent or other Default, or impair any right consequent thereon. No waiver, rescission or annulment of a Default hereunder shall be made without the consent of the Bank if the Bank shall theretofore have honored in full all drawings under the Letter of Credit required to be made under the provisions of this Indenture. Section 9.12. Notice of Defaults under Section 9.01(8); Opportunity to Cure Such Defaults. No Default under Section 9.01(8) hereof shall be deemed a Default until notice of such Default shall be given to the Issuer, the Bank and the Borrower by the Trustee or by the Owners of not less than twenty-five percent (250) in aggregate principal amount of all Outstanding Bonds, and the Issuer and the Borrower shall have had thirty (30) days after receipt of such notice to correct said Default or to cause said Default to be corrected and shall not have corrected said Default or caused said Default to be corrected within the applicable period; provided, however, if said Default be such that it cannot be corrected within the applicable period, it shall not constitute a Default if corrective action is instituted by the Issuer or the Borrower within the applicable period and diligently pursued until the Default is corrected. With regard to any Default concerning which notice is given to the Issuer and the Borrower under the provisions of this Section, the Issuer hereby grants the Borrower full authority for the account of the Issuer to perform any covenant or obligation alleged in said notice to constitute a Default, in the name and stead of the Issuer with full power to do any and all things and acts to the same extent that the Issuer could do and perform any such things and acts and with power of substitution. -47- ARTICLE X Section 10.01. Acceptance of Trusts The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee, prior to the occurrence of a Default and after the curing of all Defaults which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and the Agreement. In case a Default has occurred (which has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in the exercise of such rights and powers as an ordinary, prudent man would exercise or use in the conduct of his own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform any of its duties by or through attorneys, agents, receivers or employees, and shall be entitled to advice of counsel concerning its duties hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the Issuer, the Borrower or the Bank) selected by the Trustee in the exercise of reasonable care. The Trustee shall not be responsible for any loss or damage resulting from any action or inaction taken or not taken, as the case may be, in good faith in reliance upon such opinion or advice. (c) The Trustee shall not be responsible for any recital herein or in the Bonds (except with respect to the certificate of authentication endorsed on the Bonds), or for the validity of the execution by the Issuer of this Indenture or of any supplements hereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Borrower under the Agreement except as hereinafter set forth; but the Trustee may require of the Issuer and the Borrower full information and advice as to the performance of the aforesaid covenants, conditions and agreements. The Trustee shall have no obligation to perform any of the duties of the Issuer under the Agreement. (d) The Trustee shall not be accountable for the use of any Bonds authenticated or delivered hereunder. The Trustee may become the Owner of.Bonds secured hereby with the same rights which it would have if not the Trustee hereunder. (e) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond shall be conclusive and binding upon all future owners of the same Bond..and upon Bonds issued in exchange therefor or in place thereof. (f) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate signed by an authorized officer of the Issuer or a Borrower Representative as sufficient evidence of the facts therein contained and prior to the occurrence of a Default of which the Trustee has ' been notified as provided in Section 10.01(h) hereof, or of which by said subsection the Trustee is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a certificate of the Clerk A Of the Issuer to the effect that a resolution in the form therein set forth has been adopted by the Issuer as conclusive evidence that such resolution has been duly adopted and is in full force and effect. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty. (h) The Trustee shall not be required to take notice or be deemed to have notice of any Default hereunder except for Defaults specified in subsections (a) , (b) , (c) , (d) or (e) of Section 9.01 hereof, unless the Trustee shall be specifically notified in writing of such Default by the Issuer, the Bank or by the Owners of at least twenty-five percent (250) in aggregate principal amount of Outstanding Bonds, and all notices or other instruments required by this Indenture to be delivered to the Trustee, must, in order to be effective, be delivered at the Principal Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Default except as aforesaid. 3WOM (i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect all books and records of the Issuer pertaining to the Project and the Bonds, and to make such copies and memoranda from and with regard thereto as may be desired. (j) The Trustee shall not be required to give any bond or surety in respect of the execution of this Indenture or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Indenture.with respect to the authentication of any Bonds, the withdrawal of any cash, the release of any property or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action, deemed desirable by the Trustee for the purpose of establishing the right of the Issuer to the authentication of any Bonds, the withdrawal of any cash or the taking of any other action. (1) Before taking any action under this Indenture or under the Agreement, other than action under Section 6.13 or 9.02, the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of any expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its gross negligence or willful default in connection with any such action. (m) All money received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purpose or purposes for which it was received but need not be segregated from other funds except to the extent otherwise required herein or required by law. (n) The Trustee's right to payment of its fees and expenses shall survive final payment or defeasance of the Bonds and the Trustee's removal or resignation. Section 10.02. Fees, Charges and Expenses of the Trustee. The Trustee shall be entitled to payment of reasonable fees for its services rendered hereunder and reimbursement of all advances, counsel fees and other expenses reasonably made or incurred by the Trustee in connection with such services. Upon the occurrence of a Default, but only upon the occurrence of a Default, the Trustee shall have a first lien with right of payment prior to payment on account of principal of, premium, if any, and interest on any Bond upon the Trust Estate (exclusive of the proceeds of any drawing under the Letter of Credit) for the -50- foregoing fees, charges and expenses of the Trustee. When the Trustee incurs expenses or renders services after the occurrence of an Act of Bankruptcy with respect to the Borrower, the expenses and the compensation for the services are intended to constitute expenses of administration under any federal or state bankruptcy, insolvency, arrangement, moratorium, reorganization or other debtor relief law. The Issuer shall have no liability to pay any fees, charges or other expenses of the Trustee hereinabove mentioned except from the amounts pledged under this Indenture. Section 10.03. Notice to Owners of Bonds if Default Occurs. If aDefault occurs of which the Trustee has been notified as provided in Section 10.01(h) hereof, or of which by said subsection it is deemed to have notice, then the Trustee shall promptly give notice thereof to the Bank and to the Owner of each Bond. Section 10.04. Intervention by the Trustee. In any judicial proceeding which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of the Owners of the Bonds, the Trustee may intervene on behalf of the Owners of the Bonds and shall do so if requested in writing by the Bank or the Owners of at least twenty-five percent (25 of the aggregate principal amount of Outstanding Bonds. Section 10.05. Successor Trustee. Any corporation or association into which the Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which it is a party, shall be and become successor Trustee hereunder and vested with all of the title to the Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 10.06. Resignation by the Trustee. The Trustee and any successor Trustee may at any time resign from the trusts hereby created by giving thirty (30) days' notice to the Issuer, the Bank, the Borrower, and to the Owner of each Bond. Such resignation shall not take effect until the appointment of a successor Trustee or temporary Trustee. Section 10.07. Removal of the Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to the Issuer and signed by the Owners of a majority in aggregate principal amount of Outstanding Bonds. Such removal shall not take effect until the appointment of a successor Trustee or temporary Trustee. -51- Section 10.08. Appointment of Successor Trustee by Owners of Bonds. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in the course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by a court, a successor may be appointed by the Owners of a majority in aggregate principal amount of Outstanding Bonds by an instrument or concurrent instruments in writing signed by such Owners, or by their attorneys-in-fact duly authorized, a copy of which shall be delivered personally or sent by registered mail to the Issuer, the Borrower and the Bank. In case of any such vacancy, the Issuer may appoint a temporary successor Trustee to fill such vacancy until a successor Trustee shall be appointed by the Owners of Bonds in the manner above provided; such temporary successor Trustee shall immediately and without further act be superseded by the Trustee appointed by the Owners of Bonds. If no successor Trustee has accepted appointment in the manner provided in Section 10.09 hereof within ninety (90) days after the Trustee has given notice of resignation to the Issuer and the Owner of each Bond, the Trustee may petition any court of competent jurisdiction for the appointment of a temporary successor Trustee; any such temporary successor Trustee shall immediately and without further act be superseded by a Trustee appointed by the Issuer or the Owners of Bonds as provided above. Every successor Trustee appointed pursuant to the provisions of this Section shall be, if there be such an institution willing, qualified and able to accept the trust upon customary terms, a bank or trust company within or without the State, in good standing and having reported capital and surplus of not less than $25,000,000. Section 10.09. Acceptance by Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its or his predecessor and also to"the Issuer, the Bank and the Borrower an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but its predecessor shall, nevertheless, on the written request of the Issuer, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall deliver all securities and money held by it as Trustee hereunder to its successor. Should any instrument in writing from the Issuer be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. -52- Section 10.10. Appointment of Co-Trustee- It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in case of litigation under this Indenture or the Agreement, and in particular in case of the enforcement thereof on Default, or in case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein or therein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, the Trustee may appoint an additional individual or institution as a separate or Co-Trustee, in which event each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture or the Agreement to be exercised by 'or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or Co-Trustee, but only to the extent necessary to enable such separate or Co-Trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate or Co-Trustee shall run to and be enforceable by either of them. Should any deed, conveyance or instrument in writing from the Issuer be required by the separate or Co-Trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to him or it such properties, rights, powers, trusts, duties and obligations, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the Issuer. In case any separate or Co-Trustee, or a successor, shall die, become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate or Co-Trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a successor to such separate or Co-Trustee. Any Co-Trustee appointed by the Trustee pursuant to this Section may be removed by the Trustee, in which case all powers, rights and remedies vested in the Co-Trustee shall again vest in the Trustee as if no such appointment of a Co-Trustee had been made. Section 10.11. Notice to Owners. The Trustee shall provide each Owner of a Bond with prompt written notice of any Substitute Bank or Substitute Letter of Credit not less than seven (7) Business Days prior to the effectiveness thereof. -53- ARTICLE X1 SUPPLEMENTAL INDENTURES Section 11.01. Supplemental Indentures Not Requiring Consent of Owners of Bonds. The Issuer and the Trustee may, with the consent of the Bank, and without consent of, or notice to, any of the Owners of Bonds, enter into an indenture or indentures supplemental to this Indenture for any one or more of the following purposes: (a) To cure any ambiguity or formal defect or omission in this Indenture; (b) To grant to or confer upon the Trustee for the benefit of the Owners of Bonds any additional rights, remedies, powers or authorities that may lawfully be granted to or conferred upon the Owners of Bonds or the Trustee; (c) To subject to this Indenture additional revenues, properties or collateral; (d) To modify, amend or supplement this Indenture or any indenture supplemental hereof in such manner as to permit the qualification hereof and thereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect or to permit the qualification of the Bonds for sale under the securities laws of any of the states of the United States of America; (e) To evidence the appointment of a separate or Co-Trustee or the succession of a new Trustee hereunder; (f) To make any amendment or modification required in order to achieve or maintain any credit rating on the.Bonds; or (g) To effect any other change herein which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Owners of Bonds. Section 11.02. Supplemental Indentures Requiring Consent of Owners of Bonds. Exclusive of supplemental indentures permitted by Section 11.01 hereof and subject to the terms and provisions contained in this Section, and not otherwise, the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds, with the consent of the Bank, shall have the right, from time to time, to consent to and approve the execution by the Issuer and the Trustee of such other indenture or indentures supplemental hereto as shall be deemed necessary and desirable for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental - indenture; provided, however, that nothing in this Section or in Section 11.01 hereof contained shall permit, or be construed as permitting, without the consent of the Bank and the Owners of all Bonds Outstanding, (a) an extension of the maturity of the principal of, or the interest on, any Bond issued hereunder, or (b) a reduction in the principal amount or Purchase Price of, or redemption premium on, any Bond or the rate of interest thereon, or (c) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indentures or any modifications or waivers of the provisions of this Indenture or the Agreement, or (e) the creation of any lien ranking prior to or on a parity with the lien of this Indenture on the Trust Estate or any part thereof, except as hereinbefore expressly permitted, or (f) the deprivation of the Owner of any Outstanding Bond of the lien hereby created on the Trust Estate. If at any time the Issuer shall request the Trustee to enter into any such supplemental indenture for any of the purposes of this Section, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of the proposed execution of such supplemental indenture to be given to the Bank and to the Owners of the Bonds, in the manner provided in Section 3.04 of this Indenture. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the Principal Office of the Trustee for inspection by all Owners of Bonds. If, within sixty (60) days or such longer period as shall be prescribed by the Issuer following such notice, the Bank and the Owners of not less than a majority in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no Owner of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the Issuer from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution of any such supplemental indenture as in this Section permitted and provided, this Indenture shall be and be deemed to be modified and amended in accordance therewith. No supplemental indenture under this Article shall become effective unless and until the Borrower shall have consented to the execution and delivery of such supplemental indenture. In this regard, the Trustee shall cause notice of the proposed execution of any such supplemental indenture together with a copy of the proposed supplemental indenture to be mailed to the Borrower at least fifteen (15) Business Days prior to the proposed date of execution and delivery of any such supplemental indenture. CUM ARTICLE XII AMENDMENT OF AGREEMENT Section 12.01. Amendments to Agreement Not Requiring Consent of Owners of Bonds. The Issuer and the Trustee may, with the W#ff4ii consent of the Bank, and without the consent of or notice — t 1. o t . he Owners of Bonds, consent to any amendment, change or modification of the Agreement as may be required (i) by the provisions of the Agreement, (ii) for the purpose of curing any ambiguity or formal defect or omission in the Agreement, (iii) so as more precisely to identify the Project, or to substitute or add additional improvements or equipment to the Project or additional rights or interests in property acquired in accordance with the provisions of the Agreement, (iv) to enter into an indenture or indentures supplemental hereto as provided in Section 11.01 hereof, or (v) in connection with any other change therein which, in the judgment of the Trustee, is not to the prejudice ofthe Trustee or the Owners of Bonds. Section 12.02. Amendments to Agreement Requiring Consent of Owners of Bonds. Except for the amendments, changes or modifications as provided in Section 12.01 hereof, neither the Issuer nor the Trustee shall consent to any other amendment, change or modification of the Agreement without mailing of notice and the written approval or consent of the Bank and the Owners of at least a majority in aggregate principal amount of the Outstanding Bonds, provided that the consent of the Bank and the Owners of all Bonds Outstanding is required for any amendment, change or modification of the Agreement that would permit the termination or cancellation of the Agreement or a reduction in or postponement of the payments under the Agreement or any change in the provisions relating to payment thereunder. If at any time the Issuer and the Borrower shall request the consent of the Trustee to any such proposed amendment, change or modification of the Agreement, the Trustee shall, upon being satisfactorily indemnified with respect to expenses, cause notice of such proposed amendment, change or modification to be given in the same manner as provided by Section 11.02 hereof with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file at the principal office of the Trustee for inspection by all Owners of Bonds. -56- ARTICLE XIII MISCELLANEOUS Section 13.01. Consents of Owners of Bonds. Any consent, request, direction, approval, objection or other instrument required by this Indenture to be signed and executed by the Owners of Bonds may be in any number of concurrent documents and may be executed by such Owners of Bonds in person or by an agent or agents appointed in writing. Proof of the execution of any such consent, request, direction, approval, objection or other instrument or of the written appointment of any such agent or of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument. The fact and date of the execution by any person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by an officer authorized by law to take acknowledgments of deeds certifying that the person signing such instrument or writing acknowledged to him the execution thereof. The fact of ownership of Bonds and the amount or amounts, numbers and other identification of such Bonds, and the date of owning the same shall be proved by the registration books of the Issuer maintained by the Trustee pursuant to Section 2.08 hereof. Section 13.02. Limitation of Rights. With the exception of any rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture or the Bonds is intended or shall be construed to give to any person or company other than the parties hereto, the Bank and the Owners of the Bonds any legal or equitable right, remedy or claim under or with respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of the parties hereto, the Bank and the Owners of the Bonds as herein provided. Section 13.03. Severability. if Indenture shall be held or deemed to be or illegal, inoperative or unenforceable, the any other provision or provisions herein c same invalid, inoperative or unenforceable whatever. any provision of this shall, in fact, be same shall not affect Dntained or render the to any extent Section 13.04. Notices. Any notice, request, complaint, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or mailed by first class mail, postage prepaid or sent by telegram, addressed as follows: -57- A- To the Municipality -- City of New Hope City Hall 4401 Xylon Avenue North New Hope, Minnesota 55428 Attention: City Manager B. To the Borrower -- Mr. Bruce G. Paddock Paddock Laboratories, Inc. 3101 Louisiana Avenue North New Hope, Minnesota 55427 C. To the Trustee -- First Trust National Association S* Attention: Corporate Trust Department E. To the Remarketing -- Norwest Bank Minnesota, Agent National Association Norwest Center Sixth and Marquette Minneapolis, Minnesota 5547- 0154 Attention: Syndications and Private Placements A duplicate copy of each notice required to be given hereunder by any person listed above shall also be given to the others. The Issuer, the Borrower, the Trustee, the Remarketing Agent and the Bank may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 13.05. Payments Due on Saturdays, Sundays and Holidays. In any case where the date of maturity of interest on or principal of the Bonds or the date fixed for purchase or redemption of any Bonds shall not be a Business Day, then payment of principal, Purchase Price, premium, if any, or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for purchase or redemption. own Section 13.06. Counterparts. This Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of such shall constitute but one and the same instrument. Section 13.07. Applicable Provisions of Law. This Indenture shall be governed by and construed in accordance with the laws of the State. Section 13.08. Rules of Interpretation. Unless expressly indicated otherwise, references to Sections or Articles are to be construed as references to Sections or Articles of this instrument as-originally executed. Use of the words "herein," "hereby," "hereunder," "hereof," "hereinbefore," "hereinafter" and other equivalent words refer to this Indenture and not solely to the particular portion in which such word is used. ' Section 13.09. Captions. The captions and headings in this Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or Sections of this Indenture. Section 13.10. Certain References to Bank, 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, the Credit Agreement or the Bank Mortgage, and all provisions herein or in the Loan Agreement requiring the consent of the Bank for any purpose shall no longer be of any force or effect and the Loan Agreement and this 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 this Indenture to the Bank or its consent or to the Letter of Credit, the Credit Agreement or the Bank Mortgage shall be of no force or effect and the Loan Agreement and this Indenture shall be construed as if all such references were void. Section 13.11. Limitation of Issuer's Liability. No agreement or provision contained in this Indenture nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project or the issuance, sale and delivery of the Bonds shall give rise to any pecuniary liability of the Issuer or a charge against its general credit or taxing powers, or shall obligate the Issuer financially in any way except with respect to the proceeds of the Bonds and the revenues under the Agreement pledged to the payment of the Bonds and the interest thereon. No Owner shall ever have the right to compel any exercise of the taxing power of the Issuer to pay the Bonds or interest thereon, nor to enforce payment of them against any property of the Issuer except the -59- revenues under the Agreement pledged to the payment thereof_ No failure of the Issuer to comply with any term, condition, covenant or agreement herein shall subject the Issuer to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be paid or recovered from the revenues under the Agreement pledged to the payment of the Bonds and the interest thereon or proceeds of the Bonds; and no execution on any claim, demand, cause of action or judgment shall be levied upon or collected from the general credit, general funds or taxing powers of the Issuer. Nothing herein shall preclude a proper party in interest from seeking and obtaining specific performance against the Issuer for any failure to comply with any term, condition, covenant or agreement herein; provided, that no costs, expenses or other monetary relief shall be recoverable from the Issuer except as may be payable from the revenues under the Agreement pledged to the payment of the Bonds and the interest thereon. .e IN WITNESS WHEREOF, the Issuer has caused these presents to be executed in its name, and to evidence its acceptance of the trusts hereby created, the Trustee has caused these presents to be executed in its name. [SEAL] CITY OF NEW HOPE By Its Mayor And by Its City Manager A FIRST TRUST NATIONAL ASSOCIATION as Trustee [SEAL] m Its And by Its -62- EXHIBIT A (VARIABLE RATE FORM OF BOND) UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF NEW HOPE INDUSTRIAL DEVELOPMENT REVENUE BOND (Paddock Laboratories, Inc. Project) Series 1992 AT THE TI] THE RIGHT 'PERMS SET DEEMED TO DESCRIBED Interest Rate Variable Maturity Date June 1, 2012 See Reverse for Certain Definitions Registered Owner: Principal Amount: Date of Original Issuance CUSIP June , 1992 THE CITY OF NEW HOPE, a Minnesota municipal corporation (the "Issuer "), for value received, hereby promises to pay, solely from the sources hereinafter described, to the registered owner named above or registered assigns, on the maturity date specified above, upon surrender hereof, the principal sum stated above, and in like manner to pay interest on said sum at the rate described below on the first day of each month and on the Conversion Date, commencing July 1, 1992, from the preceding interest payment date to which interest has been paid or duly provided for, unless no interest has been paid or duly provided for on the Bonds (as hereinafter defined), in which case from the Date of Original Issuance specified above, until payment of the principal hereof has been made or duly provided for. The principal of this Bond is payable in lawful money of the United States of America at the principal corporate trust office of First Trust National Association in Saint Paul, Minnesota, as trustee (together with its successors in trust, the "Trustee ") or at the duly designated office of any successor Trustee under SUBJECT TO MANDATORY TENDER FOR PURCHASE MANNER HEREINAFTER DESCRIBED, SUBJECT TO TO ELECT TO RETAIN THIS BOND UPON THE v, AND MUST BE SO TENDERED OR WILL BE TENDERED UNDER CERTAIN CIRCUMSTANCES THIS BOND IS KE AND IN THE OF THE OWNER FORTH THEREI HAVE BEEN SO HEREIN. A -1 the Indenture of Trust dated as of June 1, 1992 between the Issuer and the Trustee (which Indenture, as from time to time amended and supplemented, is hereinafter referred to as the "Indenture"). Payment of interest on this Bond shall be made on each interest payment date to the registered Owner hereof as of the close of business on the fifth day (whether or not a Business Day) preceding such interest payment date (a "Record Date") and shall be paid by check mailed by the Trustee to such registered Owner at his address as it appears on the registration records maintained by the Trustee as Bond Registrar or at such other address as is furnished to the Trustee in writing by such registered Owner, or in such other manner as may be mutually acceptable to-the Trustee and the registered Owner of this Bond. The Purchase Price (hereinafter defined) of this Bond shall be payable by the Trustee to the registered Owner hereof at his address as it appears on the registration books maintained by the Trustee as Bond Registrar or at such other address as may be specified by such Owner at least 24 hours prior to the time such Purchase Price is due. Neither the Bonds nor the interest thereon, nor any of the agreements or obligations of the Issuer, shall be construed to constitute an indebtedness of the City of New Hope, Minnesota or the State of Minnesota within the meaning of any constitutional or statutory limitation, or to constitute or give rise to a charge against the general credit or taxing powers of the Issuer. The Bonds are limited obligations of the Issuer payable solely from the revenues described in the Indenture. Neither the Issuer, the State, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Bonds except from said revenues, and neither the faith and credit nor the taxing power of the Issuer, the State or any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. ADDITIONAL PROVISIONS OF THIS BOND ARE CONTAINED ON THE REVERSE HEREOF AND SUCH PROVISIONS SHALL FOR ALT PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HERE. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the certificate of authentication hereon shall have been signed by the Trustee. NW., (Form of Certificate of Authentication) CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the issue described in the within-mentioned Indenture of Trust. Date of Authentication: FIRST TRUST NATIONAL ASSOCIATION as Trustee B Authorized Signature (Reverse of Bond] This Bond shall bear interest as follows: (A) Prior to the Conversion Date, this Bond shall bear interest at the "Variable Rate." From t�1-1. ,2`5 1992 through and including uy 1992, the Variable Rate s1ia be equal to the rate set f6rth'"In the Indenture. Thereafter, the "Variable Rate" shall be a variable rate of interest equal to the lesser of (i) 10.00 per annum, or (ii) that rate which the Remarketing Agent determines, as of each Wednesday (or if the Remarketing Agent is not open for business on any Wednesday then on the last preceding day on which it is open for business) is the minimum rate which the Bonds would have to bear in order to enable the Remarketing Agent to remarket such Bonds at par on such date (whether or not any Bonds are actually to be remarketed on such date). The Variable Rate shall change on each Thursday following any such determination, provided that if,such Thursday is after the Record Date but prior to the succeeding interest payment date, the Variable Rate shall not change on such Thursday but shall change on the succeeding interest payment date. (B) The Bonds shall bear interest at the Fixed Rates from and after the Conversion Date until their stated maturities. Not more than 45 nor less than 35 days prior to the Conversion Date, the Remarketing Agent may, upon the fulfillment of certain conditions, determine a principal amortization schedule for the Bonds and shall determine a schedule of the interest rate or rates constituting the Fixed Rates. Any such principal amortization schedule may to the extent provided in the Indenture consist of serial maturities, term maturities with mandatory redemption requirements or any combination thereof, which, in the judgment of the Remarketing Agent, produces, with the interest rates described in the following sentence, the lowest overall net interest cost, A separate interest rate shall be assigned to each stated maturity and shall be the rate which,'in the judgment of the Remarketing Agent, is the minimum rate which Bonds of such stated maturity must bear in order to enable the Remarketing Agent to remarket such Bonds at par on the Conversion Date. Thereupon the Trustee shall, by lot or such other method as the Trustee deems fair, allocate to each $5,000 of principal of Bonds Outstanding a stated maturity and an interest rate if and to the extent that any such amortization schedule has, in accordance with the requirements of the Indenture, been prepared by the Remarketing Agent. On the Conversion Date, the stated maturity of the Bonds shall be converted to any maturity or maturities so established by the Remarketing Agent and the interest rate attributable to such maturity shall be converted to the rate or rates so determined by the Remarketing Agent. Prior to the Conversion Date, interest on the Bonds shall be computed on the basis of a 365-day or 366-day year, as the case may be, and the actual number of days elapsed. On and after the Conversion Date, interest on the Bonds shall be computed on the basis of a 360-day year of twelve 30-day months. As used herein, the term "Conversion Date" means the earlier to occur of either the Optional Conversion Date or the Automatic Conversion Date; the term "Automatic Conversion Date" means the interest payment date immediately preceding the Letter of Credit Termination Date (other than June 1, 2012, and the interest payment date preceding June 1, 2012, if such date is the Letter of Credit Termination Date); the term "Letter of Credit Termination Date' means the later of (i) that date upon which the Letter of Credit (hereinafter defined) shall expire or terminate pursuant to its terms, or (ii) that date to which the expiration or termination of the Letter of Credit may be extended, from time to time, either by extension or renewal of the existing Letter of Credit or the issuance of a Substitute Letter of Credit (as defined in the Indenture); the term "Optional Conversion Date" means that date, which shall be a Business Day, from and after which the interest rate on the Bonds is converted from the Variable Rate as a result of the exercise of the Conversion Option Bruce G. Paddock, an individual (the Borrower); the term "Conversion Option" means the option granted to the Borrower in the Indenture pursuant to which the interest rate on the Bonds is converted from the Variable Rate to the Fixed Rates as of the Optional Conversion Date; the term "Purchase Price" means an amount equal to 100% of the principal amount of any Bond tendered or deemed tendered for purchase pursuant to the Indenture or with respect to which the Demand Purchase Option (as defined below) has been exercised, plus, in the case of a purchase pursuant to the exercise of such Demand Purchase Option, accrued and unpaid interest thereon to the date of purchase. The interest rate on the Bonds may be converted from the Variable Rate to the Fixed Rates upon satisfaction of certain conditions and notice given by the Borrower in accordance with the requirements of the Indenture, and the Bonds shall be subject to mandatory tender by the Owners thereof for purchase by the Borrower on the Conversion Date. On and after the Conversion Date the Demand Purchase Option will not be available to the Owners of the Bonds. Any Owner of Bonds who desires to retain Bonds after the Conversion Date must notify the Trustee in writing received no less than fifteen days prior to the Conversion Date in the form described in the notice given by the Trustee at least twenty days but not more than thirty days prior to the Conversion Date. Owners of Bonds who do not provide the Trustee with said notice shall be required to tender their Bonds to the Trustee for purchase by the Borrower at the Purchase Price. Accrued interest on the Bonds will be payable on the Conversion Date to the Owners of Bonds as of the applicable Record Date. Any Bonds not delivered to the Tender Agent on or prior to the Conversion Date ("Undelivered Bonds"), for which there has been irrevocably deposited in trust with the Trustee an amount of money sufficient to pay the Purchase Price of the Undelivered Bonds, shall be deemed to have been purchased at the Purchase Price. IN THE EVENT OF A FAILURE BY AN OWNER OF BONDS (OTHER THAN AN OWNER OF BONDS WHO HAS GIVEN NOTICE AS PROVIDED ABOVE) TO DELIVER ITS BONDS ON OR PRIOR TO THE CONVERSION DATE, SAID OWNER SHALL NOT BE ENTITLED TO ANY PAYMENT (INCLUDING ANY INTEREST TO ACCRUE SUBSEQUENT TO THE CONVERSION DATE) OTHER THAN THE PURCHASE PRICE FOR SUCH UNDELIVERED BONDS, AND ANY UNDELIVERED BONDS SHALL NO LONGER BE ENTITLED TO THE BENEFITS OF THE INDENTURE, EXCEPT FOR THE PURPOSE OF PAYMENT OF THE PURCHASE PRICE THEREFOR. At any time following the Conversion Date, an Owner of Bonds who has given notice of its election to continue to hold Bonds as provided above may deliver this Bond to the Trustee; and upon such delivery the Trustee shall exchange this Bond for a replacement Bond evidencing interest at the applicable Fixed Rate. No payment of interest shall be made on any Bond not so exchanged, but any interest payable on an interest payment date shall be held in trust (without interest) and shall be paid when the Bond to which it relates is so exchanged. This Bond shall be purchased, at the option of the Owner hereof ("Demand Purchase Option") at the Purchase Price, upon: (a) delivery to the Trustee at its principal corporate trust office and to the Remarketing Agent at its principal office of a notice (which shall be irrevocable and effective upon receipt) which states (i) the aggregate principal amount and the numbers of Bonds to be purchased; and (ii) the date on which such Bonds are to be purchased, which date shall be a Business Day not prior to the seventh (7th) day next up succeeding the date of delivery of such notice and which date shall be prior to the Conversion Date; and (b) delivery to the Trustee at its office designated below at or prior to 11:00 A.M., Minneapolis time, on the Business Day preceding the date designated for purchase in the notice described in (a) above of such Bonds to be purchased with an appropriate endorsement for transfer or accompanied by a bond power endorsed in blank, and if such Bonds are to be purchased prior to the next succeeding interest payment date and after the Record Date in respect thereof a due-bill for interest due on such interest payment date; provided, that this Bond shall be so purchased only if this Bond is delivered to the Trustee and conforms in all respects to the description thereof in the notice described in (a). Any delivery of a notice required to be made to the Trustee at its principal corporate trust office pursuant to (a) above shall be delivered to the Trustee at its principal corporate trust office in Saint Paul, Minnesota, or to the office designated for such purpose by any successor Trustee. Any delivery of a notice required to be made to the Remarketing Agent pursuant to paragraph (a) above shall be delivered to the principal offices of the Remarketing Agent in Minneapolis, Minnesota, or to the office designated for such purpose by any successor Remarketing Agent. This Bond is one of an authorized issue of Bonds limited in aggregate principal amount to $4,000,000 (the "Bonds") issued for the purpose of providing financing for the acquisition and construction of a manufacturing facility in the City of New Hope (the "Project"). The proceeds from the sale of the Bonds have been lent by the Issuer to the Borrower under the terms of a Loan Agreement dated as of June 1, 1992 (which agreement, as from time to time amended and supplemented, is hereinafter referred to as the "Agreement"), under which the Borrower is obligated to pay amounts which are sufficient to pay the principal and Purchase Price of, premium, if any, and interest on the Bonds as the same shall become due in accordance with their terms and provisions and the terms and provisions of the Indenture. The Bonds are all issued under and are equally and ratably secured by and entitled to the protection of the Indenture, pursuant to which all payments due from the Borrower to the Issuer under the Agreement (other than certain indemnification payments and the payment of certain expenses of the Issuer) are assigned to the Trustee to secure the payment of the principal and Purchase Price of, and premium, if any, and interest on the Bonds. The Borrower has caused to be delivered to the Trustee an irrevocable Letter of Credit (together with any Substitute Letter of Credit, the "Letter of Credit") issued by Norwest Bank Minnesota, National Association (in such capacity, the` "Bankll) and dated the date of original issuance of the Bonds, which will expire, unless earlier terminated or extended, on 1, . Subject to certain conditions, the Letter of Credit may be replaced by a letter of credit, guaranty, insurance policy or other credit device (a "Substitute Letter of Credit") of another commercial bank, savings and loan association, insurance company or other financial institution. Under the Letter of Credit, the Trustee will be entitled to draw up to an amount sufficient to pay (a) the principal of the Bonds or the portion of the Purchase Price corresponding to the principal of the Bonds and (b) up to 50 days' accrued interest (at maximum rate of 10.000 per annum) on the Bonds or the portion of the Purchase Price of the Bonds corresponding to accrued interest thereon. Reference is hereby made to the Indenture for a description of the property pledged and assigned, the provisions, among others, with respect to the nature and.extent of the security, the rights, duties and obligations of the Issuer, the Trustee and the Owners of the Bonds and the terms upon which the Bonds are issued and secured. This Bond is transferable by the registered Owner hereof in person or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of authorized denomination or denominations for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Issuer and the Trustee may deem and treat the registered Owner hereof as the absolute Owner hereof (whether or not this Bond shall be overdue) for all purposes, and neither the Issuer nor the Trustee shall be bound by any notice or knowledge to the contrary. , Prior to the Conversion Date, the.Bonds are issuable as fully registered bonds in the authorized denominations of $100,000 and, above $100,000, any integral multiple of $5,000. From and after the Conversion Date, the Bonds shall be issuable as fully registered bonds in the denominations of $5,000 or any integral multiple thereof. The Bonds are subject to extraordinary redemption upon the occurrence of any of the events described in Section 3.01 of the Indenture, including exercise by the Borrower of its option to cause the Bonds to be redeemed as provided in Sections 5.06 and 5.07 of the Agreement, or the occurrence of a Determination of Taxability, as more fully provided in Section 4.08 of the Agreement. If called for extraordinary redemption, the Bonds shall be subject to redemption by the Issuer on any interest payment date, in whole, at a redemption price of one hundred percent (1000) of the principal amount thereof plus accrued M-*1 interest to the redemption date, and, in the event of a Determination of Taxability, a premium in the amount of 3.00o of the principal amount of each Bond redeemed. Reference is hereby made to Section 3.01 of the Indenture and Sections 4.07(a) and 4.08 of the Agreement for a description of the circumstances under which the Bonds are subject to extraordinary redemption. The Bonds are subject to mandatory redemption, in whole, on the Automatic Conversion Date, at 1000 of the principal amount thereof plus accrued interest to the redemption date, if on or prior to the twentieth day prior to the Automatic Conversion Date (i) the Borrower has failed to provide the Trustee with an opinion of nationally recognized bond counsel to the effect that the proposed conversion of the interest rate on the Bonds to the Fixed Rates on the Automatic Conversion Date will not adversely affect the exemption of the interest on the Bonds from federal income taxation, or (ii) the Fixed Rates have not been established in accordance with the terms of the Indenture. Subject to certain credits provided in the Indenture, the Bonds are subject to mandatory sinking fund redemption at a redemption price equal to par plus accrued interest on June 1 of the years and in the principal amounts set forth in the Indenture. On or prior to the Conversion Date, the Bonds are subject to redemption by the Issuer, at the option of the Borrower, on any interest payment date, in whole or in part, and if in part, the Bonds to be redeemed to be selected in such manner as the Trustee shall determine (except as otherwise provided in the Indenture), at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date. After the Conversion Date, the Bonds are subject to redemption by the Issuer, at the option of the Borrower, on or after the First Optional Redemption Date (hereinafter defined), in whole at any time or in part on any interest payment date, less than all of the Bonds to be selected in such manner as the Trustee shall determine (except as otherwise provided in the Indenture), at the redemption prices (expressed as percentages of principal amount) set forth in the following table plus accrued interest to the redemption date: Redemption Redemption Dates Prices First Optional Redemption Date through the following May 31 1020 A- 9 First Anniversary of the First Optional Redemption Date through the following May 31 101 Second Anniversary of the First Optional Redemption Date and thereafter 1000 As used herein, the term "First Optional Redemption Date" means the June 1 occurring in the year which is a number of years after the Conversion Date equal to the number of years between the June I immediately following the Conversion Date (unless the Conversion Date is a June 1, in which case from such June 1) and June 1, 2012, multiplied by 1/2 and rounded up to the nearest whole number. In the event any of the Bonds or portions thereof are called for redemption as aforesaid, notice of the call for redemption, identifying the Bonds or portions thereof to be redeemed, shall be given by the Trustee by mailing a copy of the redemption notice at least fifteen (15) days but not more than sixty (60) days prior to the date fixed for redemption to the Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books maintained by the Trustee as Bond Registrar. Any notice mailed as provided above shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. No further interest shall accrue on the principal of any Bond called for redemption after the redemption date if funds sufficient for such redemption have been deposited with the Trustee. Notwithstanding the foregoing, the notice requirements contained in the first sentence of this paragraph may be deemed satisfied with respect to a transferee of a Bond which has been purchased pursuant to the Demand Purchase Option after such Bond has previously been called for redemption, notwithstanding the failure to satisfy the notice requirements of the first sentence of this paragraph with respect to such transferee, as more fully provided in Section 3.04 of the Indenture. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Sections 469.152 to 469.165, as amended (the "Act"), and by appropriate action duly taken by the Issuer which authorizes the execution and delivery of the Agreement and the Indenture. The Bonds have been issued in conformity with the provisions, restrictions and limitations of the Act. The Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, unless certain circumstances described in the Indenture shall have occurred. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Owners of the Bonds at any time by the Issuer with the consent of the Bank and the holders of a majority in aggregate principal amount of the.Bonds at the time outstanding. Any such consent or any waiver by the Bank and the holders of a majority in aggregate principal amount of the Bonds shall be conclusive and binding upon the Owner and upon all future Owners of this Bond and of any Bond issued in replacement hereof whether or not notation of such consent or waiver is made upon this Bond. The Indenture also contains provisions which, subject to certain conditions, permit or require the Trustee to waive certain past defaults under the Indenture and their consequences. It is hereby certified, recited and declared that all acts, conditions and things required to exist, to happen and to be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Bond and the issue of which it forms a part, together with all other obligations of the Issuer, does not exceed or violate any constitutional or statutory limitation. FOR VALUE RECEIVED, . the undersigned, hereby sells, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the records kept for registration thereof, with full power of substitution in the premises. Dated: PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER TAX IDENTIFYING NUMBER OF ASSIGNEE NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatever. Signatures must be guaranteed by a commercial bank or trust company or by a brokerage firm having a membership in one of the major stock exchanges. The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants UNIF TRANS MIN ACT .... Custodian .... in common (Gust) (Minor) TEN ENT as tenants by the entireties under Uniform Transfers to JT TEN as joint tenants Minors with right of survivorship and Act............ not as tenants (State) in common Additional abbreviations may also be used although not in the above list. A - 12 EXHIBIT B (FIXED RATE FORM OF BOND) UNITED STATES OF AMERICA STATE OF MINNESOTA COUNTY OF HENNEPIN CITY OF NEW HOPE INDUSTRIAL DEVELOPMENT REVENUE BOND (Paddock Laboratories, Inc. Project) Series 1992 Interest Rate Maturity Date Date of Issuance CUSIP SEE REVERSE FOR CERTAIN DEFINITIONS REGISTERED OWNER: 01 DOLLARS THE City of New Hope, a Minnesota municipal corporation (the "Issuer"), for value received, hereby promises to pay solely from the source and as hereinafter provided, to the registered owner named above or registered assigns, on the maturity date specified above, upon surrender hereof, the principal sum stated above and in like manner to pay interest (calculated on the basis of a 360-day year of twelve 30-day months) on said sum at the rate per annum specified above on June ,1 and December 1 of each year, commencing 1, . or from the interest payment date next preceding the date hereof to which interest has been paid or duly provided for, unless the date hereof is an interest payment date to which interest has been paid or duly provided for, in which case from the date hereof or unless no interest has been paid or duly provided for on the Bonds (as hereinafter defined), in which case from the Date of Issuance specified above until payment of the principal hereof has been made or duly provided for. The principal of this Bond is payable in lawful money of the United States of America at the principal corporate trust office of First Trust National Association in Saint Paul, Minnesota, as trustee (together with its successors in trust, the "Trustee") or at the duly designated office of any successor Trustee under the Indenture of Trust dated as of June 1, 1992 between the Issuer and the Trustee (which Indenture, as from time to time amended and supplemented, is hereinafter referred to as the "Indenture"). Payment of interest on this Bond shall be made on each interest payment date to the registered Owner hereof as no of the close of business on the fifth day (whether or not a Business Day) preceding such interest payment date and shall be paid by check mailed by the Trustee to such registered Owner at his address as it appears on the registration books maintained by the Trustee as Bond Registrar or at such other address as is furnished to the Trustee in writing by such registered Owner, or in such other manner as may be mutually acceptable to the Trustee and the registered Owner of this Bond. This Bond is one of an authorized issue of Bonds limited in aggregate principal amount to $4,000,000 (the "Bonds") issued for the purpose of providing financing for the acquisition and construction of a manufacturing facility in the City (the "Project"). The proceeds from the sale of the Bonds have been lent by the Issuer to Bruce G. Paddock, an individual (the "Borrower") under the terms of a Loan Agreement dated as of June 1, 1992 (which agreement, as from time to time amended and supplemented, is hereinafter referred to as the "Agreement"), under which the Borrower is obligated to pay amounts which are sufficient to pay the principal of, premium,..if any, and interest on the Bonds as the same shall become due in accordance with their terms and provisions and the terms and provisions of the Indenture. Neither the Bonds nor the interest thereon, nor any of the agreements or obligations of the Issuer, shall be construed to constitute an indebtedness of the City of New Hope, or the State of Minnesota within the meaning of any constitutional or statutory limitation, or to constitute or give rise to a charge against the general credit or taxing powers of the City. The Bonds are limited obligations of the Issuer payable solely from the revenues described in the Indenture. Neither the Issuer, the State, nor any political subdivision thereof shall be obligated to pay the principal of or interest on the Bonds except from said revenues, and neither the faith and credit nor the taxing power of the Issuer, the State or any political subdivision thereof is pledged to the payment of the principal of or interest on the Bonds. ADDITIONAL PROVISIONS OF THIS BOND ARE CONTAINED ON THE REVERSE HEREOF AND SUCH PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the certificate of authentication hereon shall have been signed by the Trustee. IN WITNESS WHEREOF, THE City of New Hope, has caused this Bond to be executed in its name by the manual or facsimile signature of its duly authorized officers, and its official seal or a facsimile thereof to be affixed or imprinted hereon. E-Im (SEAL) CITY OF NEW HOPE By Its Mayor And by Its City Manager A Im (Form of Certificate of Authentication) CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the issue described in the within- mentioned Indenture of Trust. Date of Authentication: FIRST TRUST NATIONAL ASSOCIATION as Trustee By Authorized Signature [Reverse of Bond] The Bonds are all issued under and are equally and ratably secured by and entitled to the protection of the Indenture, pursuant to which all payments due from the Borrower to the Issuer under the Agreement (other than certain indemnification payments and the payment of certain expenses of the Issuer) are assigned to the Trustee to secure the payment of the principal of and premium, if any, and interest on the Bonds. Reference is hereby made to the Indenture for a description of the property pledged and assigned, the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the Issuer, the Trustee and the Owners of the Bonds, and the terms upon which the Bonds are issued and secured. This Bond is transferable by the registered Owner hereof in person or by its attorney duly authorized in writing, at the principal corporate trust office of the Trustee but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of authorized denomination or denominations for the same aggregate principal amount will be issued to the transferee in exchange herefor. The Issuer and the Trustee may deem and treat the registered Owner hereof as the absolute Owner hereof (whether or not this Bond shall be overdue) for all purposes, and neither the Issuer nor the Trustee shall be bound by any notice or knowledge to the contrary. The Bonds are issuable as fully registered Bonds in the denomination of $5,000 or any integral multiple thereof. The Bonds are subject to redemption in the event (1) the Borrower shall exercise its option to cause the Bonds to be redeemed,as provided in Section 4.07(a) of the Agreement, or (2) the Borrower shall be obligated to cause the Bonds to be redeemed as provided in Section 4.08 of the Agreement. If called for redemption at any time pursuant to (1) or (2) above, the Bonds shall be subject to redemption by the Issuer on any interest payment date, in whole at a redemption price of one hundred percent (1000) of the principal amount thereof plus accrued interest to the redemption date. Reference is hereby made to Section 4.07(a) and Section 4.08 of the Agreement for a description of the circumstances under which the Borrower may cause or be required to cause the Bonds to be redeemed. [Insert any mandatory sinking fund redemption provisions] The Bonds are subject to redemption by the Issuer, at the option of the Borrower, on or after June 1, _, in whole at any time or in part on any interest payment date, and if less than all of the Bonds are to be redeemed, the Bonds to be redeemed shall be selected [in inverse order of maturity and] in such manner as the Trustee shall determine (except as otherwise provided in the Indenture), at the redemption prices (expressed as percentages of principal amount) set forth in the following table plus accrued interest to the redemption date: Redemption Redemption Dates Prices June 1, through May 31, 102- June 1, through May 31, 101 June 1, and thereafter 100 In the event any of the Bonds or portions thereof are called for redemption as aforesaid, notice of the call for redemption, identifying the Bonds or portions thereof to be redeemed, shall be given by the Trustee by mailing a copy of the redemption notice at least fifteen (15) days but not more than sixty (60) days prior to the date fixed for redemption to the Owner of each Bond to be redeemed in whole or in part at the address shown on the registration books maintained by the Trustee as Bond Registrar. Any notice mailed as provided above shall be conclusively presumed to have been duly given, whether or not the Owner receives the notice. No further interest shall accrue on the principal of any Bond called for redemption after the redemption date if funds sufficient for such redemption have been deposited with the Trustee. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Minnesota, particularly Minnesota Statutes, Sections 469.152 to 469.165, as amended (the "Act"), and by appropriate action duly taken by the Issuer which authorizes the execution and delivery of the Agreement and the Indenture. The Bonds have been issued in 1= conformity with the provisions, restrictions and limitations of the Act. The Owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any default under the Indenture, or to institute, appear in or defend any suit or other proceedings with respect thereto, unless certain circumstances described in the Indenture shall have occurred. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Owners of the Bonds at any time by the Issuer with the consent of the Owners of a majority in aggregate principal amount of the Bonds at the time outstanding. Any such consent or any waiver by the Owners of a majority in aggregate principal amount of the Bonds shall be conclusive and binding upon the Owner and upon all future Owners of this Bond and of any Bond issued in replacement hereof whether or not notation of such consent or waiver is made upon this Bond. The Indenture also contains provisions which, subject to certain conditions, permit or require the Trustee to waive certain past defaults under the Indenture and their consequences. It is hereby certified, recited and declared that all acts, conditions and things required to exist, to happen and to be performed precedent to and in the execution and delivery of the Indenture and the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Bond and the issue of which it-forms a part, together with all other obligations of the Issuer does not exceed or violate any constitutional or statutory limitation. ME., FOR VALUE RECEIVED, assigns and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. �. - It PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the Bond in every particular, without alteration or enlargement or any change whatever. Signature must be guaranteed by a commercial bank or trust company or by a brokerage firm having a membership in a major stock exchange. The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants UNIF TRANS MIN ACT .... Custodian .... in common (Gust) (Minor) TEN ENT as tenants by the entireties under Uniform Transfers to JT TEN as joint tenants Minors with right of survivorship and Act ............ not as tenants (State) in common Additional abbreviations may also be used although not in the above list. MFFOOFA4.WP5 IM SECOND DRAFT: 06/22/92 REDLINED REMARKETING AGREEMENT THIS REMARKETING AGREEMENT dated as of June 1, 1992 between BRUCE G. PADDOCK, an individual (the "Borrower") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association, acting as placement agent (the "Remarketing Agent"); W I T N E S S E T H WHEREAS, the City of New Hope, Minnesota (the "Issuer") pursuant to the provisions of the Act (as defined in the Indenture hereinafter referred to) intends to issue and sell its Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992, in the aggregate principal amount of $4,000,000 (the "Bonds") pursuant to an Indenture of Trust dated as of June 1, 1992 (the "Indenture") -On a the Issuer Ad n A First Trust National Association, as trustee (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 and 4.06 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 inhe 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) (ii) 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 placement of the Bonds referred to in such notice, at a price equal to their principal amount plus accrued interest, to "accredited investors" as such term is defined by Rule 501(a) under the Securities Act of 1933, as amended, or investors who otherwise have such knowledge and experience in financial and business matters that the purchaser is capable of evaluating the merits and risks of an investment in the Bonds, and who agree to purchase the Bonds for investment purposes only and without a view to re-sell or distribute the Bonds. (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 placement 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, to sophisticated investors, knowledgeable in making investments similar in nature and character to the Bonds, who agree to purchase the Bonds for investment purposes only and without a view to resell or distribute the Bonds, subject to the following conditions: -2- . Section 6. Proceeds of Sale of the Bonds The proceeds of the sale of any Bonds as a result of the placement 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 placement 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, including Section 8 hereof; (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 placement of the Bonds on the Conversion Date pursuant to Section 4, to prepare and deliver to the Trustee, the Bank and the Borrower any principal amortization schedule of the Bonds in connection therewith and 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 (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. Compliance With Glass - Steagall Act Nothing contained herein with respect to the Remarketing Agent's obligations shall be construed to require the Remarketing Agent to take any action in arranging the placement of the Bonds that would constitute, in the sole opinion of the Remarketing Agent, a violation of any provisions of the Glass - Steagall Act in particular, without limitation, Section 16 (12 U.S.C. § 24) and Section 21 (12 U.S.C. S 378(a)) of such Act. -4- 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. IN WITNESS WHEREOF, the parties hereto have caused this Remarketing Agreement to be duly executed as of the day and year first above written. NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By Its Assistant Vice President BRUCE G. PADDOCK MFFOOFE9 cm I SECOND DRAFT: REDLINED June 1992 PRIVATE PLACEMENT AGREEMENT Mr. Bruce G. Paddock c/o Paddock Laboratories, Inc. 3101 Louisiana Avenue North New Hope, Minnesota 55427 Gentlemen: 06/22/92 Re: $4,000,000 Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 City of New Hope, Minnesota Norwest Bank Minnesota, National Association (the "Placement Agent") agrees to serve as the initial placement agent for the Bonds referred to above, if and when the Bonds are issued, and in such capacity the Placement Agent will use its best efforts to arrange for the initial placement of the Bonds at a price equal to 100% of their principal amount. Such placement shall be made only to "accredited investors" as such term is defined by Rule 501(a) under the Securities Act of 1933, as amended, or.i who otherwise have such knowledge and experience in financial and business matters that the purchaser is capable of evaluating the merits and risks of an investment in the Bonds, who agree to purchase the Bonds for investment purposes only and without a view to re-sell or distribute the Bonds. Each initial purchaser of the Bonds shall sign an Investment Letter in form and substance satisfactory to the Placement Agent and the City. The initial delivery of the Bonds will take place on June 1992, or at such later time as is agreed to. This agreement is mad be issued in accordance with an June 1, 1992, between the City Trust National Association, as will be in a form acceptable to payment of the principal of, up e on the basis that the Bonds will Indenture of Trust dated as of of New Hope, Minnesota and First trustee, which Indenture of Trust the Placement Agent, and that the to 50 days' interest on, and the purchase price of, the Bonds will be secured by an irrevocable direct pay letter of credit to be issued by Norwest Bank Minnesota, National Association. As compensation for placing the Bonds, the Placement Agent will be paid a placement fee of $ by Bruce G. Paddock (the "Borrower ") upon the issuance of the Bonds. Whether or not the Bonds are issued, any fees, expenses or costs in connection therewith shall be borne solely by the Borrower and not by the City. In addition, the Borrower will and hereby does indemnify the Placement 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. Nothing contained herein with respect to the Placement Agent's obligations to arrange for the initial placement of the Bonds shall be construed to require the Placement Agent to take any action in arranging the placement of the Bonds that would constitute, in the sole opinion of the Placement Agent, a violation of any provisions of the Glass - Steagall Act, in particular, without limitation, Section 16 (12 U.S.C. §24) and Section 21 (12 U.S.C. §378(a)) of such Act. If the foregoing is acceptable to you, kindly sign and return to the Placement Agent the enclosed duplicate copy hereof, whereupon it will become a binding agreement between the Placement Agent and you in accordance with its terms. Very truly yours, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By Its Assistant Vice President BRUCE G. PADDOCK [Signature Page to Private Placement Agreement] MFFOOFEA.WP5 SECOND DRAFT: 06/22/92 REDLINED June 5, 1992 PRIVATE PLACEMENT AGREEMENT Mr. Bruce G. Paddock c/o Paddock Laboratories, Inc. 3.101 Louisiana Avenue North New Hope, Minnesota 55427 Gentlemen: Re: $4,000,000 Industrial Development Revenue Bonds (Paddock Laboratories, Inc. Project), Series 1992 City of New Hope, Minnesota Norwest Bank Minnesota, National Association (the "Placement Agent ") agrees to serve as the initial placement agent for the Bonds referred to above, if and when the Bonds are issued, and in such capacity the Placement Agent will use its best efforts to arrange for the initial placement of the Bonds at a price equal to 100% of their principal amount. Such placement shall be made only to "accredited investors" as such term is defined by Rule 501(a) under the Securities Act of 1933, as amended, or investors who otherwise have such knowledge and experience in financial and business matters that the purchaser is capable of evaluating the merits and risks of an investment in the Bonds, who agree to purchase the Bonds for investment purposes only and without a view to re -sell or distribute the Bonds. Each initial purchaser of the Bonds shall sign an Investment Letter in form and substance satisfactory to the Placement Agent and the City. The initial delivery of the Bonds will take place on June , 1992, or at such later time as is agreed to. This agreement is made on the basis that the Bonds will be issued in accordance with an Indenture of Trust dated as of June 1, 1992, between the City of New Hope, Minnesota and First Trust National Association, as trustee, which Indenture of Trust will be in a form acceptable to the Placement Agent, and that the payment of the principal of, up to 50 days' interest on, and the purchase price of, the Bonds will be secured by an irrevocable direct pay letter of credit to be issued by Norwest Bank Minnesota, National Association. As compensation for placing the Bonds, the Placement Agent will be paid a placement fee of $ by Bruce G. Paddock (the "Borrower ") upon the issuance of the Bonds. Whether or not the Bonds are issued, any fees, expenses or costs in connection therewith shall be borne solely by the Borrower and not by the City. In addition, the Borrower will and hereby does indemnify the Placement 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. Nothing contained herein with respect to the Placement Agent's obligations to arrange for the initial placement of the Bonds shall be construed to require the Placement Agent to take any action in arranging the placement of the Bonds that would constitute, in the sole opinion of the Placement Agent, a violation of any provisions of the Glass - Steagall Act, in particular, without limitation, Section 16 (12 U.S.C. §24) and Section 21 (12 U.S.C. §378(a)) of such Act. If the foregoing is acceptable to you, kindly sign and return to the Placement Agent the enclosed duplicate copy hereof, whereupon it will become a binding agreement between the Placement Agent and you in accordance with its terms. Very truly yours, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By Its Assistant Vice President BRUCE G. PADDOCK [Signature Page to Private Placement Agreement] MFFOOFEA.WP5