**Exhibit 10.1**

 

**Lease Agreement**

 
|   | Customer  Number: 5033592 |   |
|--------|---------------------------|--------|

 

 

 

 

**Lessor and Lessee have executed this Lease Agreement**effective March6, 2002 and hereby agree to the terms contained below and in any attachmentsmade a part of this Lease Agreement.

 

This Lease and the attachments heretoconstitute the entire agreement of the parties with respect to the leasing ofthe Equipment and the other subject matter of this Lease.  This Lease supersedes all prior writtenand/or oral understandings or agreements with respect to the subject matterhereof, and no change, modification, addition, or termination of this Leaseshall be enforceable unless in writing and signed by Lessor and Lessee.

 
|                                                      |                    | **1600 Colonnade**             |       |
|-----------------------------------------------------------|-------------------------|--------------------------------|------------|
|                                                      |                    | **5500 Wayzata BLVD**          |       |
| **Lessee:**                                               |                    | **Minneapolis, MN 55416-1252** |       |
|                                                      |                    |                           |       |
| **Dakota  Growers Pasta Company**                         |                    |                           |       |
| *(print  or type full name)*                              |                    |                           |       |
|                                                      |                    |                           |       |
| **By:**                                                   |                    | **/s/ Thomas Friezen**         | **3/7/02** |   |   |   |
|                                                      | *Signature*             | *Date*                         |       |   |   |
|                                                      | **CFO**                 |                           |       |   |
|                                                      | *Title(if  applicable)* |                           |       |   |
|                                                      |                    |                           |       |   |   |
|                                                      | *Signature*             | *Date*                         |       |   |   |
|                                                      |                    |                           |       |
| **Address: **One Pasta  Avenue, Carrington, ND 58421 |                    |                           |       |
|                                                      |                    |                           |       |
|                                                      |                    |                           |       |
| **STATE OF  INCORPORATION/ORGANIZATION:**                 |                    |                           |       |
|                                                      | **North Dakota**        |                           |       |   |
|                                                      |                    |                           |       |
| REGISTRATION/ORGANIZATION  NUMBER:  7604000          |                    |                           |       |
|                                                           |                         |                                |            |  |  |  |  |

 

 
| **Lessor:** |                                                        |
|-------------|-------------------------------------------------------------|
|        |                                                        |
|        | **Farm******Credit Leasing******Services******Corporation** |   |
|        |                                                        |
|        | **By:**                                                     |   | **/s/ Kevin Krueger** |   |
|        | *Signature*                                                 |   |
|        |                                                        | **SVP** |   |
|        | *Title*                                                     |   |
|        |                                                        | **3/7/02** |   |
|        | *Date*                                                      |   |

 

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**In consideration of the mutual covenants hereinaftercontained, the parties hereby agree as follows:**

 

1. LEASE OF EQUIPMENT.  Lessorhereby leases to Lessee, and Lessee hereby leases from Lessor, subject to theterms of this Lease Agreement (“Lease” or “Lease Agreement”), the equipment andother property (collectively, the “Equipment”, any one item of which may bereferred to individually as an “Item of Equipment”) described in any Schedule A(“Schedule A”) executed by Lessor and Lessee and made a part hereof. Lesseehereby authorizes Lessor to include in any Schedule A the serial number andother information identifying the Equipment when determined by Lessor. Time isof the essence in Lessee’s payment and performance of each of its obligationsunder this Lease.

 

Each such Schedule A when executed by theparties shall be deemed to be a part of this Lease, it being understood andagreed that this Lease shall be a Master Lease. All Schedules, addenda or otherattachments to this Lease executed by Lessor and Lessee are hereby incorporatedherein and made a part hereof. Each Schedule A, incorporating the terms andconditions of this Lease, shall constitute a separate instrument of lease.

 

2. RENTALS/LEASE TERM.  Lesseeagrees to pay Lessor rentals for each Item of Equipment leased under this Leaseas set forth in the Schedule A applicable to such Item of Equipment. Allrentals shall be payable as described to Lessor at Lessor’s mailing address setforth in such Schedule A, or to such other person or at such other place asLessor may from time to time designate in writing. “Scheduled LeaseCommencement Date” for purposes of this Lease shall be the first day of themonth following the In-Service Date; provided, however, in the event the DailyBilling Option is selected on the applicable Schedule A, the Scheduled LeaseCommencement Date shall be the In-Service Date. “In-Service Date” shall be thedate Equipment is delivered and accepted by Lessee for lease as providedherein. The “Scheduled Lease Term” shall be as set forth in the applicableSchedule A. Rentals for each Item of Equipment shall commence on the ScheduledLease Commencement Date with respect to each Item of Equipment. If theIn-Service Date occurs prior to the Scheduled Lease Commencement Date, Lessorshall be entitled to a rental (“Interim Rent”) for the period from suchIn-Service Date to the Scheduled Lease Commencement Date (the “InterimPeriod”). Interim Rent shall be computed by dividing all rentals other thanInterim Rent due under the Lease by the actual number of days in the ScheduledLease Term and multiplying this result by the actual number of days fromIn-Service Date to Scheduled Lease Commencement Date. Interim Rent (if any)shall be due on the Scheduled Lease Commencement Date. The Scheduled LeaseTerm, including any Minimum Term as described in Paragraph 3 below, togetherwith the Interim Period, if any, and any renewal period(s) shall constitute theLease Term (“Lease Term”) for each Item of Equipment. Lessee agrees to payLessor at the expiration or other termination of the Lease Term, additionalrents, as described in the Schedule A or any other document executed inconnection with this Lease. The termination of this Lease with respect to certainItems of Equipment shall not affect the continuation of this Lease with respectto other Items of Equipment not subject to such termination. Unless otherwiseprovided in the event the Lessee exercises the option to renew the Lease,rentals for the renewal period shall be agreed to by the parties at the time ofrenewal.

 

3. MINIMUM LEASE TERM.  The MinimumLease Term, if any, (“Minimum Term”) shall be set forth in the Schedule A foreach Item of Equipment and shall commence on the Scheduled Lease CommencementDate. If the Minimum Term is less than the Scheduled Lease Term,  upon completion of the Minimum Term, theLessee is deemed to have continued the Lease on a month-to-month basis, untilcompletion of the Scheduled Lease Term unless the Lessee notifies the Lessor inwriting thirty (30) days prior to the end of the Minimum Term that it desiresto terminate the Lease.

 

4. FLOATING RENTAL RATE. Notwithstanding any provision to the contrary contained in Paragraph 2above, if Floating Rate is specified on the Schedule A applicable to an Item ofEquipment, the Lessee’s rental obligation for such Item of Equipment shall beadjusted at each rental due date based on the index specified on such ScheduleA. Rental adjustments will be calculated based on monthly changes in the indexup or down. Monthly changes in the index and the outstanding lease balance foreach Item of Equipment will be used to compute an adjusted rental amount.Rental adjustments will be compounded and accumulated monthly and billed to theLessee based on the Rental frequency specified on the appropriate Schedule A.

 

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5. LATE CHARGES.  If Lessee fails topay any rental or other amount required to be paid by Lessee to Lessor, withinfive (5) days after the due date thereof, Lessee shall (in addition to allother amounts due Lessor) pay Lessor the lesser of one and one-half percent(1.5%) per month, or the maximum amount allowed by law until paid on suchunpaid amounts.

 

6. SECURITY DEPOSIT.  If a SecurityDeposit amount is specified in the Schedule A, Lessee agrees to pay such amountto Lessor prior to the Scheduled Lease Commencement Date. If Lessee hasfulfilled all terms and conditions herein, the Security Deposit shall bereturned to Lessee without interest or it may be applied to any purchase optionexercised by Lessee at the expiration of the Lease.

 

7.  NOWARRANTIES/LESSEE’S OBLIGATIONS (VENDOR NOT AN AGENT).**LESSEE ACKNOWLEDGES THAT: LESSOR IS NOTTHE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER’S AGENT NOR A DEALERTHEREIN; THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY, DESCRIPTION ANDMANUFACTURE SELECTED BY LESSEE; LESSEE IS SATISFIED THAT THE EQUIPMENT ISSUITABLE AND FIT FOR ITS PURPOSES; LESSOR HAS NOT MADE AND DOES NOT MAKE ANYWARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THEFITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE EQUIPMENT, ITSFITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS INTHE EQUIPMENT OR WORKMANSHIP IN THE EQUIPMENT NOR ANY OTHER REPRESENTATION ORWARRANTY WHATSOEVER; LESSOR SHALL NOT BE LIABLE TO LESSEE AND LESSEE HEREBYWAIVES ANY CLAIM IT MAY HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (CONSEQUENTIALOR OTHERWISE) OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY THE EQUIPMENT LEASEDHEREUNDER. NO DEFECT OR UNFITNESS OF THE EQUIPMENT NOR ANY REPRESENTATION AS TOTHE EQUIPMENT OR ANY OTHER MATTER BY VENDOR SHALL RELIEVE LESSEE OF THEOBLIGATION TO PAY ANY RENTALS OR PERFORM ANY OTHER OBLIGATION UNDER THIS LEASE.LESSEE UNDERSTANDS AND AGREES THAT NEITHER VENDOR NOR ANY SALES REPRESENTATIVEOR OTHER AGENT OF VENDOR, IS AN AGENT OF LESSOR. NO SALES REPRESENTATIVE ORAGENT OF VENDOR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE.**Lessor hereby assigns to Lessee for the duration of this Lease allwarranties received by Lessor with respect to the Equipment, to the extentassignable, and Lessor shall have no obligation whatsoever to make any claim onsuch warranty.

 

8. LOCATION/INSPECTION/MARKING.  TheEquipment at all times shall be located at the address specified in theapplicable Schedule A unless Lessee has notified Lessor in writing of a changeof location for each Item of Equipment and Lessor consents to such change.Lessee shall make the Equipment available for inspection by Lessor’srepresentatives during Lessee’s normal business hours and shall make Lessee’slog, maintenance and other records pertaining to the Equipment available forinspection and duplication by Lessor’s representatives. Lessee shall affix toor place on the Equipment such labels, plates, or other markings indicatingLessor’s ownership in the Equipment as may be directed and supplied by Lessor.

 

9. USE.  Lessee agrees all Equipmentwill only be used in Lessee’s trade or business and will be operated bycompetent and qualified personnel only and in accordance with applicableoperating instructions, laws, government regulations, and applicable insurancepolicies.

 

10. RISK OF LOSS/GENERAL INDEMNITY. Lessee hereby assumes the risk of bodilyinjury or death, and of damage to property, including the Equipment, and theloss of such property, from whatsoever cause during the Lease Term. Lesseeshall indemnify and hold Lessor harmless from and against any and all claims,losses, liabilities (including patent infringement, negligence, tort and strictliability), damages, judgments, suits, and all legal proceedings, and any andall costs and expenses in connection therewith (including attorneys’ fees)arising out of or in any manner connected with the manufacture, sale, purchase,financing, ownership, delivery, rejection, non-delivery, possession, use,transportation, storage, condition, operation, maintenance, repair, return orother disposition of the Equipment or with this Lease, including, withoutlimitation, claims for injury to or death of persons, for damage to property,for violation of any law, rule or regulation of any public authority, and forenvironmental damage and clean-up. Lessee shall give Lessor prompt notice ofany such claim or liability. The

 

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provisions of this Paragraph shall survivethe expiration or termination of this Lease. Lessee agrees that upon writtennotice by Lessor of the assertion of any claim, action, damage, obligation,liability, or lien, Lessee shall, at its own cost and expense, at Lessor’swritten request, assume the full responsibility for the defense thereof. Anypayment pursuant to this Paragraph shall include an amount equal to any taxesrequired to be paid by Lessor as a result of the receipt of such payment.

 

11. ALTERATIONS/REPAIRS/PERSONAL PROPERTY. Any improvement, replacement, addition, accessory, or repair part forthe Equipment shall become the property of Lessor free of all liens andencumbrances and shall be deemed part of the Equipment. The Equipment is, andshall at all times be and remain, personal property, notwithstanding that anyItem of Equipment or any part thereof shall now be or hereafter become in any manneraffixed or attached to real property or any improvements thereof.

 

12. MAINTENANCE.  Lessee shall payall costs and expenses of whatever nature resulting from the use and operationof each Item of Equipment.  Lessee, atits expense, shall keep the Equipment in good repair, condition and workingorder, in full compliance with all applicable manufacturer’s recommendations,ordinary wear and tear excepted.

 

13. TAXES.  Lessee shall pay when dueand be responsible for all charges, taxes and fees which may now or hereafterbe imposed or levied by any governmental body or agency required to be paid orcollected by Lessor on or relating to the Equipment leased hereunder and thesale, purchase, rental, operation, maintenance or use thereof (excluding any taxeson or measured by the net income of Lessor) together with any penalties orinterest applicable thereto, whether the same be payable by or assessed toLessor or Lessee.  If under law orcustom such payments may be made only by Lessor, Lessee shall promptly notifyLessor and shall reimburse Lessor, upon demand, all such payments made byLessor. Upon request, Lessee will furnish to Lessor a photocopy of evidencesatisfactory to Lessor reflecting payment by Lessee.  The provisions of this Paragraph shall survive the expiration ortermination of this Lease.

 

14. PERSONAL PROPERTY TAXES. Wherever equipment is subject to personal property taxes in thejurisdiction where the Equipment is located, Lessor will properly report anyand all property values for all lease transactions with the appropriateproperty tax assessor or other proper official. Lessee shall reimburse Lessorfor all personal property taxes assessed by the applicable taxing jurisdiction.If Lessor does not notify Lessee of Lessor’s intent to file the applicableproperty tax return within fourteen (14) days of the personal property taxreturn due date, or if Lessee has made a written request that Lessor not filesuch return, Lessee shall file all property values with the appropriate taxingjurisdiction and assume full responsibility for the payment of all such taxes,assessments, penalties and interest when due. Lessee shall also reimburseLessor any costs and expenses incurred by Lessor (including reasonableattorneys’ fees), as a result of Lessee’s failure to report and pay such taxesand charges. The provisions of this Paragraph shall survive the expiration ortermination of this Lease.

 

15. INSURANCE.   Lessee shall at itsown expense acquire and maintain, during the term hereof, with such insurers,in such form and under such policies as shall be satisfactory to Lessor, both:

a) all risk propertyinsurance, naming Lessor as loss payee, in amounts and under coverages toprovide for rebuilding, repairing or replacing the Equipment in the event of anydamage, destruction, loss or theft of the Equipment. The amount of suchinsurance shall be at least equal to the Equipment Cost described in theSchedule A for each Item of Equipment; and

b) general comprehensivepublic liability insurance including coverage for any bodily injury, death, orproperty damage which may be caused by or related to the Equipment or itsoperation, in amounts satisfactory to Lessor. Such insurance shall name Lessoras an additional insured.

 

If any loss occurs it shall be paid by checkor draft payable to Lessor. Lessor may endorse Lessee’s name thereon asLessee’s agent. Lessee shall furnish to Lessor a certificate of insuranceindicating that such insurance coverages are in effect at the time theEquipment is delivered and shall deliver to Lessor, prior to the scheduledexpiration or lapse of such insurance coverage evidence satisfactory to Lessorof renewal or replacement coverage. Each insurer shall agree, by endorsement that, (i)  such insurance cannot be canceled or alteredwithout at least thirty (30) days prior written notice to Lessor, and (ii)insurance as to the interest of any named additional insured or loss payeeother than Lessee shall not be invalidated by any actions, inactions , breachof warranty or conditions or negligence of Lessee

 

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or any other person other than Lessor withrespect to such policy or policies.  IfLessee fails to pay insurance required to be provided by Lessee under thisLease, Lessor may, but is not obligated to provide such insurance. Lesseeshall, upon demand reimburse Lessor for any costs, fees, or expenses incurredin providing such insurance.

 

16. CASUALTY OCCURRENCE.

a)  For purposes of this Lease, a “Casualty Occurrence” shall mean anyItem of Equipment destroyed, irreparably damaged, lost, stolen, unaccountedfor, or taken or requisitioned by condemnation or otherwise during the term ofthis Lease.

b)  In the event that any Item of Equipment shall suffer a CasualtyOccurrence, Lessee shall promptly and fully inform Lessor with respectthereto.  Lessee shall pay to Lessor, onthe first day of the month following the giving of such notice, an amount(“Casualty Loss Value”) equal to the sum of: (i) the amount which will cause the Lessor to realize the same rate ofreturn up to the date of the Casualty Occurrence that the Lessor would haverealized had the Lease of the Equipment been in effect for the entire LeaseTerm; and (ii) all installments of rental then due with respect to that Item ofEquipment. The total rental described in the Schedule A which contained an Itemof Equipment for which a Casualty Loss Value was paid, shall be reduced by apercentage derived by dividing the Cost of the Item of Equipment experiencingthe Casualty Occurrence by the Total Equipment Cost described in such ScheduleA. Lessor shall be entitled to receive and retain any proceeds from anyinsurance with respect to such Item of Equipment up to the amount of theCasualty Loss Value. Provided an Event of Default has not occurred and iscontinuing, Lessor shall pay over such insurance proceeds to Lessee to theextent such amounts exceed the Casualty Loss Value or the entire insuranceproceeds received if Lessee has previously paid the Lessor the Casualty Loss Value.Upon Lessor’s receipt of such payment, Lessee shall be entitled to whateverinterest Lessor may have in said Item of Equipment, in its then condition andlocation, without warranties, express or implied, and this Lease shallterminate with respect to such Item of Equipment.

 

17. LOSS AND DAMAGE.  No loss, theft,damage, or destruction of Equipment shall relieve Lessee of the obligation topay rent or perform any other obligation under this Lease. In the event ofdamage to any Item of Equipment which does not constitute a CasualtyOccurrence, Lessee shall at its sole cost and expense immediately repair andrestore such Item of Equipment to the condition required by this Lease. Uponreceipt of evidence reasonably satisfactory to Lessor of completion of suchrepairs, Lessor will apply any insurance proceeds received by Lessor on accountof such loss to the cost of repairs..

 

18. EVENTS OF DEFAULT.  The followingshall constitute Events of Default:

a)  Lessee shall fail to pay all or any part of a rental payment orany other payment when due and payable; or

b)  Lessee shall fail to perform or shall breach any of the othercovenants herein and shall continue to fail to observe or perform the same fora period of ten (10) days after written notice thereof by Lessor; or

c)  Without Lessor’s consent, Lessee removes, sells, transfers,assigns, parts with possession, or sublets any Item of Equipment; or

d)  Lessee creates, incurs, or suffers to exist any mortgage, lien,or other encumbrance or attachment of any kind whatsoever upon or affecting theEquipment or this Lease or any of Lessor’s interests thereunder; or

e)  Lessee becomes insolvent, makes an assignment for the benefit ofcreditors, ceases or suspends its business, admits in writing its inability topay its debts as they mature; or bankruptcy, reorganization or otherproceedings for the relief of debtors or benefit of creditors shall beinstituted by or against Lessee; or

f)  Any representation or warranty made by Lessee herein or in anydocument or certificate furnished to Lessor proves to be incorrect in anymaterial respect when made; or

g) Lessee terminates itsexistence, changes its legal or organizational status, consolidates with,merges into, or conveys or leases substantially all of  its assets as an entirety to any person; or

h)  Lessee shall be in default under any other agreement executedwith Lessor at any time; or

i)   Lessee shall be in default under anymaterial obligation for the payment of borrowed money, for the deferredpurchase price of property or any payment under any lease agreement.

 

The occurrence of an Event of Default withrespect to any Schedule A shall, at the sole discretion of Lessor, constitutean Event of Default with respect to any or all Schedule As  to which Lessor is then a party.  Notwithstanding the foregoing, Lessor mayexercise all rights and remedies independently with respect to each Schedule A.

 

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In this Paragraph 18, “Lessee” also means anyguarantor of Lessee’s obligations under the Lease and “Lease” also means anyguaranty of those obligations.

 

19. REMEDIES UPON DEFAULT.  Upon theoccurrence of any Event of Default and at any time thereafter, Lessor may doany one or more of the following with or without terminating this Lease:

a)  Declare the entire amount of rental and other charges due and tobecome due hereunder for the entire Lease Term immediately due and payable;

b)  Take immediate possession of any and all Equipment withoutnotice;

c)  Sell or lease any Equipment or otherwise dispose, hold, or usesuch Equipment at Lessor’s sole discretion;

d) Demand payment of allcosts incurred by Lessor in the course of correcting any default (includingattorneys’ fees and costs as described in Paragraph 28 herein);

e)  Proceed against any or all security given inconnection herewith which includes but is not limited to sureties andguarantors;

f) Upon notice to Lessee,cancel this Lease and any or all Schedules executed pursuant hereto. Anycancellation or any  terminationhereunder shall only occur upon such notice by Lessor and only as to such Itemsof Equipment included in such notice. This Lease shall continue in full forceand effect as to the remaining Items of Equipment, if any;

g)  Exercise any other right or remedy available to Lessor under theUniform Commercial Code (“UCC”) or any other applicable law. If this Lease isdeemed at any time to be one intended as security or otherwise, Lessee agreesthat the Equipment shall secure all amounts whatsoever owing by Lessee toLessor;

h)  Recover from Lessee, not as a penalty but as liquidated damages,an amount equal to the sum of: (i) any accrued and unpaid rentals as of thedate the Lessor obtains possession of the Equipment following Lessee’s default(“Repossession Date”); plus (ii) the present value of all future rentalsreserved in the Lease and contracted to be paid over the unexpired term of theLease discounted at a rate equal to the six (6) month U.S. Treasury Bill rateas of the Repossession Date; plus (iii) all costs and expenses incurred byLessor in any repossession, recovery, storage, repair, sale, re-lease or otherdisposition of the Equipment including reasonable attorney’s fees and costsincurred in connection with or otherwise resulting from the Lessee’s default;plus (iv) the present value of the estimated residual value of the Equipment asof the expiration of the Lease; discounted at a rate equal to the six (6) monthU.S. Treasury Bill Rate as of the Repossession Date; ***Less*** the amount received by Lessor upon saleor re-lease of such Items of Equipment, if any.

 

Notwithstanding Paragraph 19(h) above, Lessorand Lessee agree that in the event it is adjudged or otherwise determined thatfollowing an Event of Default, Lessor is entitled to the present value of anydamages owed to Lessor, the discount rate shall be equal to the six (6) monthU.S. Treasury Bill rate in effect at the time the Event of Default occurred.Lessor’s rights and remedies provided hereunder or by law shall be cumulativeand shall be in addition to all other rights and remedies available toLessor.  Lessor’s failure to strictlyenforce any provisions of this Lease or any other right available to Lessorshall not be construed as a waiver thereof or as excusing Lessee from futureperformance.

 

With respect to any exercise by Lessor of itsright to recover and/or dispose of any Equipment or other Collateral (as suchterm is defined in Paragraph 25 herein) securing Lessee’s obligationshereunder, Lessee acknowledges and agrees as follows: (i) Lessor shall have noobligations, subject to the requirements of commercial reasonableness, toclean-up or otherwise prepare the Equipment or any other Collateral fordisposition, (ii) Lessor may comply with any applicable state or Federal lawrequirements in connection with any disposition of the Equipment or otherCollateral, and any actions taken in connection therewith shall not be deemedto have adversely affected the commercial reasonableness of any disposition ofsuch Equipment and/or other Collateral, and (iii) Lessor may sell the Equipmentor Collateral at public or private sale at which Lessor may purchase theEquipment or Collateral for its own account and apply the net proceeds (afterdeducting all reasonable expenses of Lessor) to amounts owed to Lessor after anEvent of Default with Lessee remaining liable for any deficiency.

 

20. ASSIGNMENT/SUBLEASE.

a)**LESSEE SHALL NOT ASSIGN OR IN ANY WAYDISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE ORENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT THE PRIORWRITTEN CONSENT OF LESSOR. ANY**

 

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**ATTEMPTED ASSIGNMENT BY LESSEE WITHOUT SUCH CONSENT SHALL BENULL AND VOID AND SHALL BE AN EVENT OF DEFAULT UNDER THIS LEASE.** No sale,assignment or sublease, whether authorized in this Lease or in violation of theterms hereof, shall relieve Lessee of its obligations, and Lessee shall remainprimarily liable hereunder.

b)  Lessor shall have the right, without notice to Lessee, to assignor create a security interest in this Lease, or assign any of its rights orinterests in this Lease, or in the Equipment. If Lessee is given notice of suchassignment or security interest, Lessee shall acknowledge such assignment orsecurity interest in writing upon terms satisfactory to Lessor. Upon writtennotice to Lessee from Lessor of any assignment or of any security interestcreated by Lessor hereunder, Lessee shall pay rentals directly to such assigneeif directed by Lessor to do so. Lessee agrees to confirm in writing receipt ofany notice of assignment, syndication, participation or placement, asreasonably may be requested by Lessor or any such assignee or participant(collectively, the “Assignee”).  Lesseehereby waives and agrees not to assert against any such Assignee any defense,setoff, recoupment, claim or counterclaim which Lessee has or may at any timehereinafter have against Lessor or any person other than such Assignee, for anyreason whatsoever.  Lessee will providereasonable assistance to Lessor in whatever manner necessary in order to permitLessor to complete any resale, syndication, assignment, participation orplacement of the transaction contemplated by this Lease.  Upon such assignment and except as mayotherwise be provided therein all references in this Lease to Lessor shallinclude such Assignee. Lessee acknowledges that any assignment or transfer byLessor shall not materially change Lessee’s duties or obligations under thisLease nor materially increase the burdens or risks imposed on Lessee.

 

21. OWNERSHIP.  Title to theEquipment shall remain with Lessor at all times and Lessee shall have no right,title, or interest therein except as expressly set forth in this Lease.

 

 22.  RETURN OFEQUIPMENT.  If Lessee does not exerciseany purchase option provided in this Lease, at the expiration of the Lease Termor other termination of this Lease, Lessee shall, at its own expense, deliverthe Equipment to such location as may be designated by Lessor. The Equipment shallbe delivered by Lessee to Lessor in the same condition as it was when deliveredto Lessee, normal wear and tear excepted. Lessor and Lessee agree that,notwithstanding terms contained in the Lease to the contrary, the Lease Termshall not expire until the Equipment is returned to Lessor as provided in thisParagraph. In addition to Lessor’s other rights and remedies, if the Equipmentis not returned in a timely fashion, or if repairs are necessary to place anyItem of Equipment in the condition required under this Lease, Lessee shallcontinue to pay to Lessor per diem rent at the last prevailing rate under theapplicable Schedule A with respect to such Item of Equipment, for the period ofdelay in redelivery, or for the period of time reasonably necessary toaccomplish such repairs, as applicable. Lessor’s acceptance of such rent on account of such delay or repair doesnot constitute a renewal of the term of the related Equipment or Schedule A ora waiver of Lessor’s right to prompt return of the Equipment in propercondition.

 

23. LESSEE’S OPTIONS.  So long as allamounts due Lessor have been paid and no Event of Default has occurred and iscontinuing, Lessee may, upon at least sixty (60) days advance written notice toLessor, have the option at the expiration of the Minimum Term to: (i) purchasethe Equipment at fair market value; (ii) continue the Lease as provided inParagraph 3 of this Lease; or (iii) return the Equipment to Lessor as providedin Paragraph 22 herein. So long as all amounts due Lessor have been paid and noEvent of Default has occurred and is continuing, Lessee may, upon at leastsixty (60) days advance written notice to Lessor, have the option at theexpiration of the Scheduled Lease Term to: (i) purchase the Equipment at thePurchase Option Amount specified on the applicable Schedule A or if no suchamount is specified, at fair market value; (ii) renew the Lease as provided inParagraph 2 herein; or (iii) return the Equipment to Lessor as provided inParagraph 22 herein. As used in this Paragraph 23, Equipment shall mean all,but not less than all, of the Equipment described in any Schedule A.

 

24. NOTICES.

a)  Any requirement of the UCC or other applicable statute ofreasonable notice shall be met if such notice is given at least ten (10) daysbefore the time of sale, disposition, or other event or thing giving rise tothe requirement of notice.

b)  All notices or communications hereunder shall be in writing,personally delivered, delivered by overnight courier service, sent by facsimileor other electronic transmission (with confirmation of receipt), or sent bycertified mail, return receipt requested, addressed to the other party at itsrespective address stated below the signature of such party or at such otheraddress as such party shall from time to time designate in writing to the otherparty, and shall be effective from the date of receipt.

 

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c)  Lessor and Lessee may in writing at any time, and from time totime, change the address to which notice shall be delivered or mailed.

 

25. FURTHER ASSURANCES/FINANCING STATEMENTS/SECURITY INTEREST. Lessee willpromptly execute, or otherwise authenticate, and deliver to Lessor such furtherdocuments, instruments, assurances and other records, and take such furtheraction as Lessor may from time to time reasonably request in order to carry outthe intent and purpose of this Lease and to establish and protect the rightsand remedies created or intended to be created in favor of Lessor under thisLease (including, without limitation (i) lien searches, (ii) certificates oftitle, and (iii) such UCC financing statements, fixture filings and waivers asreasonably may be required by Lessor in connection with any Item of Equipment,any change in circumstances relating to Lessee, or otherwise); provided,however, Lessee hereby authorizes Lessor to file any and all of the samewithout Lessee’s authentication, to the extent permitted by applicable law.Lessee shall provide written notice to Lessor not less than thirty (30) daysprior to any contemplated change in the name, the jurisdiction of organization,or address of the chief executive office, of Lessee and Lessee shall pay toLessor all costs incurred by Lessor including reasonable attorneys’ fees, toprepare and file any documents, including UCC financing statements, relating toany such change.  In order to secure theprompt payment of the rentals and all of the other amounts from time to timeoutstanding under and with respect to this Lease, and the performance andobservance by Lessee of all the agreements, covenants and provisions hereof, orin the event this Lease should be construed as a lease intended as security, orotherwise, Lessee hereby grants to Lessor a first priority security interest inthe Equipment together with, all additions, attachments, accessories andaccessions thereto whether or not furnished by the supplier of the Equipmentany intangibles, including software, all security deposits, and any and allsubstitutions, replacements or changes for any Item of Equipment, any otherproperty against which a security interest is granted by Lessee to Lessor(collectively, the “Collateral”), and any and all insurance and/or otherproceeds of the Equipment and the Collateral and in such event Lessor shallhave all of the rights and remedies of a secured party under the UCC.

 

26. NON-CANCELABLE LEASE/OBLIGATIONS UNCONDITIONAL/ WAIVER.  **THIS LEASE CANNOT BE CANCELLED OR TERMINATED EXCEPT ASEXPRESSLY PROVIDED HEREIN. LESSEE HEREBY AGREES THAT LESSEE’S OBLIGATION TO PAYALL RENTALS AND PERFORM ALL OTHER OBLIGATIONS HEREUNDER SHALL BE ABSOLUTE,IRREVOCABLE, UNCONDITIONAL AND INDEPENDENT AND SHALL BE PAID AND PERFORMEDWITHOUT ABATEMENT; DEDUCTION OR OFFSET OF ANY KIND OR NATURE WHATSOEVER.**Tothe extent permitted by applicable law, Lessee also hereby waives any rightsnow or hereafter conferred by statute or otherwise which may require Lessor tosell, lease or otherwise use any Equipment in mitigation of Lessor’s damages asset forth in Paragraph 19 or which may otherwise limit or modify any ofLessor’s rights or remedies under Paragraph 19. Any action by Lessee againstLessor for any default by Lessor under this Lease, including breach of warrantyor indemnity, shall be commenced within one (1) year after any such cause ofaction accrues.

 

27. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and warrantsthat: (i)  Lessee is duly organized,validly existing and in good standing under the laws of the jurisdictionspecified below the signature of Lessee, and the organizational number assignedto Lessee by such jurisdiction, if any, is as specified below the Lessee’ssignature;  (ii) Lessee’s full andaccurate legal name is as first provided above; (iii) Lessee is duly qualifiedto do business wherever necessary to carry on its present business andoperations; (iv) Lessee has full power, authority and legal right to enter intoand perform this Lease and the execution, delivery and performance of suchdocuments have been duly authorized, do not require the approval of anygovernmental body, will not violate any judgment, order, law or regulationapplicable to Lessee or any provision of Lessee’s certificate of incorporationor bylaws, if any, or constitute a default under, or result in the creation ofany lien, charge, encumbrance or security interest upon any assets of theLessee under any agreement or instrument to which Lessee is a party or by whichLessee or its assets may be bound or affected; (v) this Lease and all schedulesand attachments shall have been duly entered into, delivered and shallconstitute, legal, valid and binding obligations of Lessee, enforceable inaccordance with their terms when executed by Lessor and Lessee; (vi) there areno pending or threatened actions or proceedings to which Lessee is a party, andthere are no threatened actions or proceedings of which Lessee has knowledgewhich either individually or in the aggregate would have a material adverseeffect on the business or operations of Lessee.

 

28. ATTORNEYS’ FEES AND COSTS. Lessee acknowledges that Lessee shall beliable for all reasonable attorneys’ and other legal fees (includingconsultation, drafting documents, sending notices or instituting, prosecutingor defending litigation or arbitration) and other enforcement costs andexpenses (including court costs

 

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and other related litigation costs) incurredby reason of any default, Event of Default, the exercise of Lessor’s rights orremedies, Lessor’s enforcement or defense of any other provisions of thisLease, including all expenses incurred in connection with the return or otherrecovery of any Equipment or other Collateral, the sale, re-lease or otherdisposition thereof (including but not limited to costs of transportation,possession, storage, refurbishing, advertising and brokers’ fees) and all otherpre-judgment and post-judgment enforcement related actions taken by Lessor,and/or any actions taken by Lessor in any bankruptcy case involving Lessee, theEquipment or any other Collateral.

 

29. FINANCIAL STATEMENTS. Lessee shall promptly furnish Lessor with Lessee’sannual certified financial statements. Lessee shall also furnish Lessor withother financial information as Lessor may reasonably request. If Lessee doesnot have certified financial statements available in the normal course ofbusiness, Lessee shall provide uncertified financial statements that accuratelyreflect Lessee’s financial condition including copies of its most recentfederal income tax returns.

 

30. ENFORCEABILITY/CAPTIONS.

a)  If any part, term, or provision of this Lease is held by anycourt to be unenforceable or prohibited by law, the rights and obligations ofthe parties shall be construed and enforced with that part, term, or provisionlimited so as to make it enforceable to the greatest extent allowed by law, orif it is totally unenforceable, as if this Lease did not contain thatparticular part, term, or provision.

b) This Lease shall not beeffective unless and until accepted by execution by Lessor at the address asset forth below the signature of Lessor.

c) This Lease shall inure tothe benefit of Lessor, its successors, and assigns, and all obligations ofLessee shall bind its permitted successors and assigns.

d) The headings in thisLease have been included for ease of reference only and shall not be consideredin the construction or interpretation of this Lease.

 

31. CONSTRUCTION/JURISDICTION.**THIS LEASEAND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL IN ALL RESPECTSBE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THESTATE OF MINNESOTA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCHSTATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,REGARDLESS OF THE LOCATION OF THE EQUIPMENT.**Lessee herebyirrevocably submits and consents to the jurisdiction and venue of the state andfederal courts located in Minnesota for purposes of resolving all disputes ofany nature whatsoever regarding the Lease, or any transaction contemplatedhereby, and Lessee hereby irrevocably waives any objection which it may now orhereafter have to the laying of jurisdiction or venue in the federal or statecourts of Minnesota.  Lessor and Lesseeagree that a summons and complaint commencing an action or proceeding in anysuch court shall be properly served and shall confirm personal jurisdiction bymailing a copy thereof, by registered mail, postage prepaid, to such party atits address designated pursuant to this Lease, or as otherwise provided underthe respective rules of the state or federal courts of Minnesota. Lessee agreesthat any suit to enforce any claim arising out of the Lease or any course ofconduct or dealing of Lessor shall be brought and maintained exclusively in anyMinnesota state or federal court. Nothing herein shall affect the right ofLessor to bring any action or proceeding against Lessee in the courts of anyother jurisdiction.

 

32. WAIVER OF JURY TRIAL.**LESSEE AND LESSOR HEREBY IRREVOCABLYWAIVE THE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM ORCROSS-COMPLAINT IN ANY ACTION OR PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAYBE A PARTY ON ANY MATTER WHATSOEVER BASED UPON, ARISING OUT OF, OR IN ANY WAYPERTAINING OR RELATED TO, OR CONNECTED WITH, THIS LEASE OR ANY OTHER AGREEMENTOR INSTRUMENT EXECUTED IN CONNECTION HEREWITH OR ANY OBLIGATIONS HEREUNDER ORTHEREUNDER.  THIS WAIVER IS KNOWINGLY,WILLINGLY AND VOLUNTARILY MADE BY LESSEE AND LESSOR, WHO ACKNOWLEDGE THAT NOREPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIALBY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  THIS WAIVER SHALL APPLY TO ANY AMENDMENTS,RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE OR SUCH OTHER AGREEMENTSOR INSTRUMENTS.**

 

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33. FAIR MARKET VALUE. “Fair market value,”as to each Item of Equipment for all purposes in connection with this Lease,shall have the meaning and shall be determined in accordance with the procedureset forth in this Paragraph 33. Fair market value shall be determined on thebasis of, and be equal in amount to, the value which would be obtained in anarm’s length transaction between an informed and willing buyer-user (other thana lessee currently in possession or a used equipment dealer) under nocompulsion to buy, and an informed and willing seller under no compulsion tosell, and, in such determination, costs or removal from the location of currentuse shall not be a deduction from such value.

 

In the event Lessor and Lessee shall beunable to agree upon the fair market value of an Item of Equipment, adetermination of fair market value shall be made under the provisions of thisParagraph 33.  The party requesting suchdetermination shall deliver a written notice to the other party so indicatingand appointing an appraiser selected by the requesting party to determine thefair market value. Within fifteen (15) days after the receipt of such writtennotice the party receiving such notice shall deliver to the requesting party awritten notice appointing an appraiser of its selection to make suchdetermination. The two appraisers appointed in such written notices shall meetpromptly to determine the fair market value of such Item of Equipment as of theapplicable date.  If within thirty (30)days after the initial written notice the two appraisers so appointed by Lessorand Lessee shall be unable to agree upon the fair market value of such Item ofEquipment, such appraisers shall within five (5) days thereafter appoint athird appraiser.  The decision of thethree appraisers so appointed shall be given within a period of ten (10) daysafter the appointment of such third appraiser. Any decision in which any two appraisers so appointed and actinghereunder concur shall in all cases be binding and conclusive upon Lessor andLessee.  The fees and expenses of theappraisers shall be borne equally by Lessee and Lessor, unless the Lease shallhave been terminated pursuant to Paragraph 19, hereof, in which case Lesseeshall pay all such fees and expenses.

 

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**Schedule A**

 
|   | Contract Number:            | 001-6092228 |   |
|--------|-----------------------------|-------------|--------|
|   | Customer Number:            |        |   |
|   |  Customer Unit Number: |        |   |

 

**This Schedule A, when executed by both Lessee and Lessor** shall be madea part of that Lease Agreement dated March 6, 2002 (“Lease”), between Lesseeand Lessor.

 

 
| **Lessee:**                       |                    |                   |        |
|-----------------------------------|-------------------------|------------------------|-------------|
|                              |                    |                   |        |
| **Dakota  Growers Pasta Company** |                    |                   |        |
| *(print  or type full name)*      |                    |                   |        |
|                              |                    |                   |        |
| **By:**                           |                    | **/s/ Thomas Friezen** | **3/29/02** |   |   |   |
|                              | *Signature*             | *Date*                 |        |   |   |
|                              | **CFO**                 |                   |        |   |
|                              | *Title(if  applicable)* |                   |        |   |
|                              |                    |                   |        |   |   |
|                              | *Signature*             | *Date*                 |        |   |   |

 

 
| **Lessor:** |                                                        |                                        |                           |
|-------------|-------------------------------------------------------------|---------------------------------------------|--------------------------------|
|        |                                                        |                                        |                           |
|        | **Farm******Credit Leasing******Services******Corporation** |                                        |                           |   |
|        |                                                        |                                        |                           |
|        | **By:**                                                     |                                        | **/s/ Maggie J. Kiernan**      |   |   |   |
|        | *Signature*                                                 |                                        | **1600 Colonnade**             |   |
|        |                                                        | **Manager — Commercial Business Ops.** |                           | **5500 Wayzata BLVD** |   |
|        | *Title*                                                     |                                        | **Minneapolis, MN 55416-1252** |   |
|        |                                                        | **3/29/02**                                 |                           |   |   |
|        | *Date*                                                      |                                        |                           |   |

 

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| **Lessee Mailing Address** | **City, St, Zip Code, County**                 | **Contact** | **Phone**    |
|----------------------------|------------------------------------------------|-------------|--------------|
| One  Pasta Avenue          | Carrington, ND  58421    Foster | Ed Irion    | 701-652-2855 |
| **Vendor Name**            | **Address, City, St, Zip Code**                | **Contact** | **Phone**    |
|                       |                                           |        |         |

 

**EQUIPMENT**
| **Asset ID No.**                                                         |   | **New/ Used** |   | **MACRS Life** |   | **Quantity/Year/Manufacturer/Model/Description/Serial  Number**                                   |   | **Equipment  Cost** |   | **Fixed  Purchase Option or TRA amount by asset if applicable** |   |
|--------------------------------------------------------------------------|--------|---------------|--------|----------------|--------|---------------------------------------------------------------------------------------------------|--------|---------------------|--------|-----------------------------------------------------------------|--------|
| 274602                                                                   |   | Used          |   |           |   | Two (2) Braibanti Long  Goods Pasta Production Lines further described on the attached Exhibit A. |   | $5,000,000.00       |   | $1,750,000.00                                                   |   |
|                                                                     |   |          |   |           |   |                                                                                              |   |                |   |                                                            |   |
|                                                                     |   |          |   |           |   |                                                                                              |   |                |   |                                                            |   |
| **TOTAL NET  EQUIPMENT COST** (list sales tax separately, if applicable) |   | $5,000,000.00 |   |           |   |

 
| **Down Payment:**                    | Refund Lessee? o $ n/a                   | **Trade in:**              | Refund Lessee? o $ n/a                                   |
|--------------------------------------|------------------------------------------|----------------------------|----------------------------------------------------------|
| **Purchase Option Type:**            | ý FPO o FMV o TRA o Other           | **Purchase Option Cap:**   | n/a                                                      |
| **Transportation Addendum Applies:** | oYes  ýNo  Addendum Date: | **Tax Indemnity Applies:** | oYes ýNo  Addendum Date:                       |
|                                 |                                     |                       |                                                     |
| **Federal Income Tax Exempt:**       | oYes  ýNo  Why?           | **Sales Tax Exempt:**      | oYes ýNo  If yes, Tax ID#:                     |
|                                 |                                     |                       | If no, FCL to capitalize  tax: o Yes ý No |

 

 
| FCPR   | FC  DC   | Estimate | Basis  | OF     | Promotion | In-Service Date | Term Expires | Authorization Number |
|--------|---------------|----------|--------|--------|-----------|-----------------|--------------|----------------------|
|   | oYes ýNo |     |   |   |      | 3/31/02         |         |                 |

 

**FCL USE ONLY**

 

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**EQUIPMENT  LOCATION**
| **Asset ID No.** |   | **Company/Street  Address/Rural Route (No P.O. Box)** |       | **City** |       | **State** |       | **Zip Code** |       | **County** |       |
|------------------|--------|-------------------------------------------------------|------------|----------|------------|-----------|------------|--------------|------------|------------|------------|
|             |   |                                                  | ** ** |     | ** ** |      | ** ** |         | ** ** |       | ** ** |
|             |   |                                                  |       |     |       |      |       |         |       |       |       |
|             |   |                                                  |       |     |       |      |       |         |       |       |       |
|             |   |                                                  |       |     |       |      |       |         |       |       |       |

Sameas Lessee Mailing Address ý

 

**LEASE PRICING**
| **Lease Rate**

**Factor**                                 |   | **Scheduled  Lease**

**Term** |       | **Minimum  Lease**

**Term** |       | **Rental  amount ***

**(Detail  irregular rents below)** |       | **Rentals**

**(advanced  or arrears)** |       | **Rental  Frequency** |       | **Total  Number**

**of Rentals** |       |
|------------------------------------------------------------|--------|--------------------------------|------------|------------------------------|------------|-----------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------|------------|-----------------------------------|------------|
| .01439                                                     |   | 60  Months                     |       | 60  Months                   |       | $71,949.94                                                |       | Advance                                 |       | Monthly               |       | 60                                |       |
| **Irregular Rent Detail*: ****ý** Not Applicable |
| **Mo/Yr**                                                  |   | **$Payment  Amount**           |       | **Mo/Yr**                    |       | **$Payment  Amount**                                      |       | **Mo/Yr**                               |       | **$Payment  Amount**  |       | **Mo/Yr**                         |       | **$Payment  Amount** |   |
| **1.**                                                     |   | **$**                          | ** ** | **4.**                       | ** ** | **$**                                                     | ** ** | **7.**                                  | ** ** | **$**                 | ** ** | **10.**                           | ** ** | **$** | ** ** |
| **2.**                                                     |   | **$**                          | ** ** | **5.**                       | ** ** | **$**                                                     | ** ** | **8.**                                  | ** ** | **$**                 | ** ** | **11.**                           | ** ** | **$** | ** ** |
| **3.**                                                     |   | **$**                          | ** ** | **6.**                       | ** ** | **$**                                                     | ** ** | **9.**                                  | ** ** | **$**                 | ** ** | **12.**                           | ** ** | **$** | ** ** |
|                                                            |        |                                |            |                              |            |                                                           |            |                                         |            |                       |            |                                   |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 
| **Daily  Billing Option           **o Yes  ý No | **Floating Rate, indexed to 90-day Farm Credit****Discount  Note     **ý Yes  o No | **Lessee Maximum Percentage for purposes of Terminal****Rental  Adjustment**                       % ý Not Applicable |
|------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Security  Deposit**                                                                                            | **Lessee Percentage for Purposes of Lease Purchase**                                                                  |                                                                                                                                                                                                                                          |
| $                                                                                                                | ý Not  Applicable                                                                                                | **Addendum**                                                                                                                                                                                                                                  | %  ý  Not Applicable | *Exclusive  of applicable sales tax. |
|                                                                                                                  |                                                                                                                       |                                                                                                                                                                                                                                               |  |  |

 
|   |
|--------|
|   |
|   |
|   |
|   |

**COMMENTS**

 

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