Exhibit 10.4


 


CONTINUING GUARANTEE


 


1.             Absolute Guarantee.  For valuable consideration
and to induce CoBank, ACB (“CoBank”) to extend a loan or loans to Dakota
Growers Pasta Company, Inc. Carrington, North Dakota
(“Borrower”), of which DNA Dreamfields Company, LLC, (“Guarantor”), is a wholly
owned subsidiary of Borrower. Guarantor unconditionally and absolutely
guarantees and promises to pay to CoBank, or order, on demand, in lawful money
of the United States, any and all Indebtedness of Borrower to CoBank; provided
that the liability of the Guarantor hereunder shall be limited to the maximum
amount of the Indebtedness which Guarantor may guarantee without rendering this
Guarantee void or voidable under any applicable
fraudulent conveyance or fraudulent transfer law.  The word “Indebtedness” is used herein in its
more comprehensive sense, and includes any and all advances, debts, obligations
and liabilities of Borrower, including but not limited to all principal,
interest, fees, expenses and stock subscription charges, heretofore, now or
hereafter made, incurred or created, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Borrower may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
may be or hereafter become barred by any statute of limitation, or whether such
Indebtedness may be or hereafter become otherwise unenforceable.


 


2.             Continuing Guarantee.  No termination by Guarantor shall be
effective except by notice sent to CoBank by registered mail naming a
termination date effective not less than ninety (90) days after the receipt of
such notice by CoBank.  No such
termination shall affect (i) any Indebtedness of Borrower incurred prior
to the effective date of termination or (ii) any Indebtedness for
interest, fees, expenses and/or stock subscription charges incurred after
termination related to any Indebtedness outstanding on the effective date of
termination.


 


3.             Guarantee of Payment.  This continuing guarantee is
a guarantee of payment and not of collection. 
The obligations hereunder are joint and several, and independent upon
the Indebtedness of Borrower, and a separate action or actions may be brought
and prosecuted against Guarantor whether action is brought against Borrower or
whether Borrower be joined in any such action or actions; and Guarantor waives
the benefit of any statutes of limitations affecting its liability hereunder or
the enforcement thereof.


 


4.             Authorities of CoBank.  Guarantor authorizes CoBank,
without notice or demand and without affecting liability hereunder, from time
to time, to (a) grant additional credit to Borrower, and renew,
compromise, extend, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, the Indebtedness or any part thereof, including
increase or decrease of the rate of interest thereon; (b) take and hold
security for the payment of this Guarantee or the Indebtedness guaranteed, and
exchange, enforce, waive and release any such security; (c) apply such
security and direct the order or manner of sale thereof as CoBank in its
discretion may determine; and (d) release or substitute any one or more
endorsers or guarantors of the Indebtedness.


 


5.             Waivers.  Guarantor waives any right
to require CoBank, as a condition to proceeding against Guarantor, to (a) proceed
against Borrower or any other person; (b) proceed against or exhaust any
security held from Borrower or Guarantor; or (c) pursue any other remedy


 


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in CoBank’s power
whatsoever.  Guarantor waives any defense
arising by reason of any disability or other defense or counter-claim that the
Borrower may assert on the underlying debt, including but not limited to
failure of consideration, breach of warranty, fraud, statute of frauds,
bankruptcy, statute of limitations, lender liability, accord and satisfaction,
and usury or by reason of the cessation from any cause whatsoever of the
liability of Borrower.  Guarantor waives
the pleading or assertion of any defense based on the failure of CoBank to keep
Guarantor informed of the financial and business status of Borrower, it being
expressly acknowledged by Guarantor that it is Guarantor’s responsibility to
keep so informed.  Until all Indebtedness
of Borrower to CoBank shall have been paid in full, Guarantor shall have no
right of subrogation, and waives any right to enforce any remedy which CoBank now
has, or may hereafter have against Borrower, and waives any benefit of, and any
right to participate in any security now or hereafter held by CoBank.  Guarantor waives all setoffs and
counterclaims, and all presentments, demands for performance, notices of
nonperformance, protests, notices of dishonor, notices of sale of foreclosure
of any security for the payment of the Indebtedness, and notices of acceptance
of this Guarantee and of the existence, creation, or incurring or new or
additional Indebtedness.


 


GUARANTOR WARRANTS AND
AGREES THAT EACH OF THE WAIVERS SET FORTH IN THIS AGREEMENT IS MADE WITH
GUARANTOR’S FULL KNOWLEDGE OF ITS SIGNIFICANCE AND CONSEQUENCES AND THAT, UNDER
THE CIRCUMSTANCES, THE WAIVERS ARE REASONABLE AND NOT CONTRARY TO PUBLIC POLICY
OR LAW.  IF ANY SUCH WAIVER IS DETERMINED
TO BE CONTRARY TO ANY APPLICABLE LAW OR PUBLIC POLICY, SUCH WAIVER SHALL BE
EFFECTIVE ONLY TO THE EXTENT PERMITTED BY LAW OR PUBLIC POLICY.


 


6.             Lien;
Right of Setoff.  In addition to
all liens upon, and all rights of setoff against the monies, securities or
other property of Guarantor given to CoBank by law or by contract, CoBank shall
have a lien upon and a right to setoff against all monies securities and other
property of Guarantor now or hereafter in the possession of or on deposit with
CoBank, whether held in a general or special account of deposit, or for
safekeeping or otherwise; and every such lien and right of setoff may be
exercised without demand upon or notice to Guarantor.  No lien or right of setoff shall be deemed to
have been waived by any act or conduct on the part of CoBank, or by any neglect
to exercise such right of setoff or to enforce such lien, or by any delay in so
doing, and every right of setoff and lien shall continue in full force and
effect until such right of setoff or lien is specifically waived or released by
an instrument in writing executed by CoBank.


 


7.             No Waiver.  No exercise or nonexercise
of any right hereby given CoBank, no dealing by CoBank with Borrower or any
other Guarantor, no change, impairment, or suspension of any of CoBank’s rights
or remedies, shall in any way affect any of the obligations of Guarantor
hereunder or any security furnished by Guarantor or give Guarantor any recourse
against CoBank.  The Guarantor represents
to CoBank that he is now and will be completely familiar with the business,
operation, and condition of Borrower, and Guarantor waives any right to require
CoBank to notify Guarantor of any facts concerning Borrower, unknown to
Guarantor, material or otherwise, which might affect the relationship of
CoBank, Guarantor, and Borrower, or which might cause Guarantor to give CoBank
notice of termination of this Guarantee as herein provided.


 


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8.             Subordination.  Any Indebtedness of Borrower
to Guarantor now or hereafter held by Guarantor is hereby subordinated to the
Indebtedness of Borrower to CoBank; and such Indebtedness of Borrower to
Guarantor, if CoBank so requests, shall be collected, enforced and received by
Guarantor as trustee for CoBank and be paid over to CoBank on account of the
Indebtedness of Borrower to CoBank but without reducing or affecting in any
manner the liability of Guarantor under the other provisions of this Guarantee.


 


9.             Corporate Authority.  Although Borrower is a corporation,
it is not necessary for CoBank to inquire into the powers of Borrower, or the
officers, directors, or agents acting or purporting to act on its behalf, and
any Indebtedness made or created in reliance upon the professed exercise of
such powers shall be guaranteed hereunder.


 


10.          Attorneys’ Fees.  Guarantor agrees to pay the
attorneys’ fees of CoBank and all other costs and expenses which may be
incurred by CoBank in the enforcement of this Guarantee.  This Guarantee shall be interpreted and enforced
in accordance with the laws of the State of Colorado.


 


11.          Remedies Cumulative.  CoBank’s rights under this
Guarantee are cumulative and not alternative, and shall not be exhausted by
CoBank’s exercise of any one or more rights hereunder, or otherwise, or by any
number of successive actions, unless and until all obligations of Borrower and
Guarantor have been paid or performed. 
The liability under this Guarantee shall continue notwithstanding the
incapacity or disability of Guarantor, and its benefits shall inure to CoBank’s
successors and assigns.  CoBank may
assign this Guarantee, in whole or in part, without notice to Guarantor.  Guarantor waives all exemptions and all
setoffs and counterclaims.  Only to the
extent that this Guarantee is inconsistent with any prior guarantee given by
Guarantor to CoBank, or contains additional provisions, does this Guarantee
supersede such prior guarantees; otherwise, such prior guarantees remain in
full force and effect.


 


12.          Reinstatement of Payment.  If any payment received by
CoBank and applied to the Indebtedness is subsequently set aside, recovered,
rescinded, or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of Borrower), the
Indebtedness to which such payment was applied shall for the purposes of this
continuing guarantee be deemed to have continued in existence, and this
continuing guarantee shall be enforceable as to such Indebtedness as fully as
if such applications had never been made.


 


13.          Indemnification.  Guarantor expressly waives
any and all rights of subrogation, reimbursement, indemnity, exoneration,
contribution or any other claim which it may now or hereafter have against
Borrower or any other person directly or contingently liable for the
Indebtedness guaranteed hereunder, or against or with respect to Borrower’s
property, including without limitation, any property securing its Indebtedness
to CoBank, arising from the existence or performance of this Guarantee.  In furtherance, and not in limitation, of the
preceding waiver, Guarantor agrees that any payment to CoBank by guarantor
pursuant to this Guarantee shall be deemed to be a contribution to the capital
of Borrower or other obligated party and such payment shall not cause Guarantor
to be a creditor of Borrower or any other obligated party.  In addition to, and not in substitution for,
any other rights granted to CoBank by this Guarantee, including but not limited
to any rights set forth in Paragraph 11 above, in the event that a bankruptcy
court determines that any monies paid by Borrower to CoBank are avoidable
preferences because they 


 


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were made for the benefit of
Guarantor, then Guarantor shall indemnify and hold CoBank harmless from any
losses, including, but not limited to all costs and expenses, including
reasonable attorneys’ fees, which CoBank may incur as a result of such
determination.


 


14.          Right of Foreclosure.  The Guarantor agrees that if all or a portion
of the Indebtedness is, at any time, secured by a deed of trust or mortgage
covering interests in real property, CoBank, in its sole discretion, without
notice or demand, and without affecting the liability of the Guarantor, may
foreclose the deed of trust or mortgage, and the interest in real property,
secured thereby by nonjudicial sale; and the Guarantor hereby waives any
defense to the recovery by CoBank against the Guarantor of any deficiency after
a nonjudicial sale.


 


15.          Amendment.  Neither this Agreement, nor any
provision hereof, may be amended, modified, waived, or discharged except by an
instrument in writing duly signed by, or on behalf of, CoBank.


 


16.          Severability.  In case any right of CoBank
herein shall be held to be invalid, illegal, or unenforceable, such invalidity,
illegality and/or unenforceability shall not affect any other right granted
hereby.


 


17.          Guarantor’s Representations.  Guarantor represents and warrants that:  (a) no representations or agreements of
any kind have been made to the Guarantor which would limit or qualify in any
way the terms of this Guarantee; (b) the Guarantor has not and will not,
without CoBank’s prior written consent, sell, lease, assign, encumber,
hypothecate, transfer or otherwise dispose of any of the Guarantor’s assets, or
any interest therein, other than in the ordinary course of business; (c) CoBank
has made no representation to the Guarantor as to the creditworthiness of the
Borrower; (d) the Guarantor will provide to CoBank financial and credit
information in form acceptable to CoBank, including balance sheets and income
statements no less frequently than annually, as soon as they become available,
not later than 120 days after each fiscal year end or at such other times as
CoBank may request.


 


18.          This Guarantee is secured by
a Security Agreement of even date herewith, executed by Guarantor.


 


IN WITNESS WHEREOF, the undersigned Guarantor
has executed this Guarantee as of the 29th day of January, 2008.


 


 


	
   

  	
  DNA Dreamfields Company, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Edward Irion

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  



 


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