**Exhibit 10.1**

 

CONFIDENTIALTREATMENT REQUESTED. CERTAIN PORTIONS HAVE BEEN OMITTEDAND HAVE BEEN FILED SEPARATELY WITH THE COMMISSION.

 

**DNA, LLC**

**OPERATING AGREEMENT**

 

THIS OPERATING AGREEMENT(the “Agreement”), dated as of  October31, 2003, is among B-New, LLC, an Ohio limited liability company (“BNEW”),TechCom Group, LLC, a Florida limited liability company (“TechCom”), Buhler,Inc., a Minnesota corporation (“Buhler”), and Dakota Growers Pasta Company,Inc., a North Dakota corporation (“Dakota”) (BNEW, TechCom, Buhler and Dakotamay be referred to herein as a “Member and collectively as the “Members”).

 

RECITALS:

 

WHEREAS, the Members are allof the members of DNA, LLC, an Ohio limited liability company (the “Company”),as of the date hereof; and

 

WHEREAS, the Members desirethat the Company be treated as a partnership for tax purposes under theInternal Revenue Code, as amended (the “Code”), and qualify as a limitedliability company  under Ohio RevisedCode (“ORC”) Section 1705.01 etseq.; and

 

WHEREAS, the Members furtherdesire to provide for certain rights and obligations relating to the Companyand their ownership thereof;

 

NOW, THEREFORE, the partieshereto agree as follows:

 

1.                                       Purpose.                                                 The Company has been formed to license theTechnology (as hereinafter defined), and in connection therewith to develop,manufacture in North America, and sell globally low digestible carbohydratepasta, rice and potatoes under the Dreamfields name (the “Brand”), and tootherwise exploit and ultimately sell the Brand.

 

2.                                       Capital Contributions.

 

(A)                              Initial Contributions.

 

(i)                                     Each Member has on or before the date hereofcontributed to the capital of the Company the cash listed on Exhibit A, and hasbeen issued the number of membership units (“Units”) in the Company listed onExhibit A.

 

(ii)                                  Buhler shall contribute, when and as needed,additional funds as provided for in the schedule attached hereto as Exhibit Bto the Company to pay for the development of science, proof of principle,clinical studies and credential/claims development necessary to implement theCompany’s business plan.  Suchcontributions shall be made by the payment by Buhler to the Company ofapplicable invoices submitted by vendors of the Company, including invoices forthe management fees provided under section 6(E)(i) and/or (ii) below, andapplicable internal costs incurred by Buhler and accounted for by Buhler to theBoard of Managers.  Such contributionshall be an additional capital contribution by Buhler without the issuance ofany additional Units.

 

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(iii)                               Dakota shall contribute, when and as needed,additional funds as provided for in the schedule attached hereto as Exhibit Bto the Company to pay for the development of supply chain, product packagedevelopment, consumer research, test market launch and regional roll out,advertising and merchandising necessary to implement the Company’s businessplan.  Such contributions shall be madeby the payment by Dakota to the Company of applicable invoices submitted byvendors of the Company, including invoices for the management fees providedunder section 6(E)(i) and/or (ii) below, and applicable internal costs incurredby Dakota and accounted for by Dakota to the Board of Managers.  Such contribution shall be an additionalcapital contribution by Dakota without the issuance of any additional Units.

 

(iv)                              B-New hereby assigns and conveys all of itsrights, title and interest in and to the Brand to the Company as an additionalcapital contribution by B-New without the issuance of any additional Units.

 

(v)                              Notwithstanding anything contained herein, ifand to the extent the Company incurs legal fees under section 6(E)(iv)(2) ofthis Agreement, one or more Members may loan the needed funds to the Company.  Such loan or loans shall bear interest onthe outstanding amount of 8% per annum, and all loaned funds, and all accruedinterest, shall be paid in full prior to any distribution to the Members ofDistributable Cash Flow.

 

(B)                                Additional Contributions.       If at any time the Company’s Board ofManagers shall decide, in good faith and in the best interests of the Company,that additional equity contributions beyond that described in section (A) aboveare required to further the purposes of the Company, then each Member shall begiven at least 30 days to contribute a portion of the amount of additionalcapital required pursuant to a subscription for additional Units.  The purchase price per Unit shall bedetermined by the Company’s Board of Managers. The number of Units to which each Member shall be entitled to subscribeshall be equal to a fraction of the total number of Units to be offered, thenumerator of which shall equal the then number of Units held by the Member, andthe denominator of which shall equal the then aggregate number of Units thenheld by all Members.

 

(C)                                Capital Call Deficiencies.             In the event a Member fails to subscribe forthe full number of Units to which he is entitled under the provisions ofsubsection (B) above within 30 days after written notice (a “Capital CallNotice”), any other Member or Members who are willing and able to make suchcontribution may do so in proportion to the then respective number of Unitsheld by them, or in such other proportion as they may otherwise agree.

 

(D)                               Loans by Members.                                      Notwithstanding anything contained herein, noMember shall be required to make any capital contribution or loan to theCompany after the date hereof except as set forth in section (A) above.  If the Company’s Board of Managersdetermines that the Company requires additional funds, any Member or Affiliatethereof may, but shall not be obligated to, advance such funds.  Interest and similar charges or fees forloans or other advancements made by a Member or Affiliate thereof may equal butnot exceed the amount which would be charged by unrelated lending institutionson comparable loans for the same purpose in Cincinnati, Ohio, as determined ingood faith by the Company’s Board of Managers. As used herein, “Affiliate” means any person or entity who, directly orindirectly, controls, is controlled by or is under common control with, thespecified person.

 

3.                                       Allocations; Distributions.

 

(A)                              Section 704 Capital Accounts.                                Throughout the term of the Company, a Section704 Capital Account shall be maintained for each Member.  Such Section 704 Capital Account shall bedetermined and maintained at all times in strict accordance with all of theprovisions of Treasury 

 

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Regulations § 1.704-1(b)(2)(iv), asamended from time to time.  Inconnection with maintenance of such Section 704 Capital Accounts, the Companyshall maintain a set of books and records (the “Section 704 Books”) inaccordance with the accounting principles embodied in Regulation §1.704-1(b)(2)(iv),as amended from time to time.

 

(B)                                Tax Basis Capital Accounts.                                          In addition to the Section 704 CapitalAccounts, the Company shall maintain a “Tax Basis Capital Account” for eachMember to reflect such Member’s interest in the Company determined with respectto the adjusted basis for tax purposes of Company assets, and in connectiontherewith shall maintain a set of books and records (the “Tax Basis Books”) inaccordance with principles of federal income tax accounting.

 

(C)                                Additional Capital Accounts.                                    In addition to the Section 704 CapitalAccounts and the Tax Basis Capital Accounts, the Company shall maintainadditional capital accounts for each Member and such books and records as theManaging Director deems appropriate.

 

(D)                               Asset Revaluation.                                          Upon a change in the interest of a Member inthe Company, the assets of the Company may, upon the approval of the Company’sBoard of Managers, be revalued on the books of the Company to reflect the fairmarket value of such assets at the time of the occurrence of such event, andthe Section 704 Capital Accounts of the Members shall be adjusted in the mannerprovided in Treasury Regulations § 1.704-1(b)(2)(iv)(f) and (g).

 

(E)                                 Allocations.

 

(i)                                     After giving effect to the special allocationprovisions hereof, and except as set forth in subsection (ii) below, profitsshall be allocated among the Members in proportion to their respective Units,and losses shall be allocated in accordance with the balance of the Member’srespective Section 704 Capital Accounts.

 

(ii)                                  Notwithstanding anything contained herein,any gain on sale of the Brand shall be allocated as follows: 40% to BNEW; 20%to TechCom; 20% to Dakota; and 20% to Buhler.

 

(iii)                               The following special allocations shall bemade in the following order:

 

(a)                              Minimum Gain Chargeback.  Ifthere is a net decrease in minimum gain, as such term is used in Regulation§1.704-2(d), for a Company taxable year, then the Members shall be allocateditems of income and gain in accordance with Regulation §1.704-2(f).  This subsection (a) is intended to complywith the minimum gain chargeback requirement in such section of the Regulationsand shall be interpreted consistently therewith.

 

(b)                              Member Loan Minimum Gain Chargeback.  If there is a net decrease in minimum gainattributable to nonrecourse liability, as set forth in Regulation Section1.704-2(i), for a taxable year, then any Member with a share of such minimumgain shall be allocated items of Company income and gain in accordance withsuch Regulation.

 

(c)                                  Qualified Income Offset.  If a Member unexpectedly receives anyadjustment, allocation, or distribution, described in Regulation§1.704-1(b)(2)(ii)(d)(4), (5), or (6), items of income and gain shall bespecially allocated to such Member in an amount and manner sufficient toeliminate, to the extent required by the Regulations, the Adjusted CapitalAccount Deficit of such Member as quickly as possible.

 

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(d)                             Nonrecourse Deductions. Nonrecourse deductions, as such              termis used in Regulation §1.704-2(c), for any fiscal year or other period shall bespecially allocated among the Members in proportion to their respective Units.

 

(e)                                  Member Nonrecourse Deduction.  Any deduction attributable to nonrecoursedeductions, as such term is defined in Regulation §1.704-2(i)(2), for anyfiscal year or other period shall be specially allocated to the Member whobears the risk of loss with respect to the liability to which such nonrecoursedeductions are attributable in accordance with Regulation §1.704-2(i)(1).

 

(f)                                    Curative Allocations.  The allocations set forth herein (the“Regulatory Allocations”) are intended to comply with certain requirements ofRegulation §1.704-1(b).  Notwithstandingany other provision of this Section, the Regulatory Allocations shall be takeninto account in allocating other Profits, Losses and items of income, gain,loss and deduction among the Members so that, to the extent possible, the netamount of such allocations of other Profits, Losses and other items and theRegulatory Allocations to each Member shall be equal to the net amount thatwould have been allocated to each such partner if the Regulatory Allocationshad not been taken into account.

 

(g)                                 With respect to property of the Company thatis in the Company’s Section 704 Books at a value that differs from the value ofsuch property as reflected in the Company’s Tax Basis Books, allocations ofincome, gain, loss and deduction with respect to such property shall be sharedamong the Members in a manner that takes into account the variations betweenthe Tax Basis Book value of such property and the Section 704 Book value ofsuch property in the same manner as variations between the adjusted tax basisand fair market value of property contributed to a partnership are taken intoaccount in determining a partner’s share of tax items under Code Section704(c).

 

(F)                                 Distributions.

 

(i)                                     Distributable Cash Flow from operations shallbe: (a) allocated among and distributed to the Members in proportion to theirrespective Units; (b) calculated at least annually as of the end of each year(and on any more frequent basis determined by the Company’s Board of Managers);and (c) distributed to the Members not later than 90 days after the end of eachyear.

 

(ii)                                  Distributable Cash Flow from the sale of theBrand shall be: (a) allocated as follows: 40% to BNEW; 20% to TechCom; 20% toDakota; and 20% to Buhler; (b) distributed to the Members not later than 30days after the receipt of the price therefore, provided that if the price isanything other than cash, the Company may delay distribution until such time asthe price is converted into cash.

 

(iii)                                As used herein, the term “Distributable CashFlow” means cash revenues without deduction for depreciation, but afterdeducting cash funds used to pay all other expenses, debt payments,obligations, capital improvements and replacements and after deductingadditional cash funds in such amounts that the Company’s Board of Managersdetermines are appropriate to retain as a reserve for contingencies.

 

(G)                                754 Election.                             The Company may elect, pursuant to InternalRevenue Code Section 754, to adjust the basis of the Company property when aMember sells his interest in the Company. If this election is made, then to the extent an adjustment to theadjusted tax basis of any 

 

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Company asset pursuant to Internal RevenueCode Sections 734(b) or 743(b) is required, such adjustment to the Section 704Capital Accounts shall be treated as an item of gain or loss, as the case maybe, and such gain or loss shall be specially allocated to the Members in amanner consistent with Treasury Regulations §1.704-1(b)(2)(iv)(m).

 

(H)                               Liquidating Distribution.             The proceeds of any liquidation sale upon thedissolution of the Company shall be applied and distributed within 90 daysafter the closing of any such sale in the following order of priority: (i)First, to creditors other than the Members; (ii) Second, to the Members otherthan for capital; (iii) Third, to the Members in accordance with the positivebalance in the Section 704 Capital Accounts of each Member as such Section 704Capital Account is determined after making all adjustments thereto for thetaxable year of the Company during which the liquidation occurred, as arerequired by Regulation §1.704-1(b), such adjustments to be made within the timespecified in the Regulations.

 

4.                                       Transfers.

 

(A)                              Right of First Refusal.                            No Member shall sell, assign or transfer hisUnits to any person, unless the Member desiring to make the transfer(hereinafter referred to as the “Transferor”) shall have first made the offerto sell hereinafter described and such offer shall not have been accepted.

 

(i)                                     The Transferor must first notify the Companyin writing, which notice (the “Notice”) shall consist of a statement of theintention to transfer, the name and address of the prospective purchaser, thenumber of Units involved in the proposed transfer, and the terms of thetransfer.

 

(ii)                                  Within 30 days after receipt of theNotice,  the Company may, at its option,purchase all, but not less than all, of the Units proposed to betransferred.  The Company shall exercisethe election to purchase by giving written notice thereof to the Transferor;failure to provide such notice within the required time period shall constitutean election not to purchase.  In anyevent, the election notice shall specify the date for a closing of the purchasewhich shall not be more than 30 days after the date of the election notice.

 

(iii)                               The purchase price which shall be paid to theTransferor by the Company shall equal the price set forth in, and shallotherwise be on the terms contained in, the Notice.

 

(iv)                              If the Company does not elect to purchase allof the Units proposed to be transferred, Transferor may make a bona fidetransfer to the prospective purchaser named in the Notice, subject tosubsection (b) below and provided such sale is made in strict accordance withthe terms therein stated.  However, ifthe Transferor shall fail to consummate such transfer within 45 days followingthe expiration of the time herein provided for election, such Units shall againbecome subject to all restrictions of this Agreement.

 

(B)                                Consent of Members.                             Notwithstanding anything contained herein, noMember shall sell, transfer, convey, assign, pledge or in any way encumber hisUnits in the Company, or any part thereof or interest therein, without theunanimous written consent of all other Members.  If such consent is obtained, the transferee will be admitted as aMember only if and when the following conditions are met:

 

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(i)                                     The transferee must execute, and agree tohold such Units subject to this Agreement; and

 

(ii)                                  The sale or transfer must comply with anapplicable exemption from the registration requirements of the Securities Actof 1933, as amended, and applicable state securities statutes and, if requestedby the Company, the transferor or transferee shall furnish the Company with anopinion of legal counsel to such effect.

 

5.                                       Termination.

 

(A)                              Dissolution.                               The Company shall be dissolved upon theTermination of any Member, unless a majority-in-interest of the other Membersconsent to continue the business of the Company within 30 days after the dateof Termination.

 

(B)                                Definitions.

 

(i)                                     As used herein, “Termination” means: (a) aBankruptcy Event; (b) a Member who is an individual dies or is adjudicated anincompetent; (c) a trust that is a Member terminates; (d) a corporation,limited liability company or partnership that is a Member dissolves; or (e) ifan estate is a Member, the distribution of the estate’s membership interest.

 

(ii)                                  As used herein, “Bankruptcy Event” means aMember that does any of the following: (a) makes an assignment for the benefitof creditors; (b) files a voluntary petition in bankruptcy; (c) is adjudicateda bankrupt or insolvent; (d) files a petition or answer in any reorganization,arrangement, composition, readjustment, liquidation, dissolution or similarrelief proceeding under any law or rule that seeks for itself any of thosetypes of relief; (e) files an answer or other pleading admitting or failing tocontest the material allegations of a petition filed against him or her in anyproceeding seeking the relief described in clause (d) of this subsection (ii);(f) a period of 120 days has elapsed after the commencement against the Memberof any proceedings seeking the relief described in clause (d) of thissubsection (ii), and the proceeding has not been dismissed; (g) a period of 90days has elapsed after the appointment of a trustee, receiver, or liquidatorfor the Member or for all or any substantial part of his or her propertieswithout the Member’s consent to acquiescence, and the appointment has not beenvacated or stayed; or (h) a period of 90 days has elapsed after the expirationof that stay, and the appointment has not been vacated.

 

(C)                                Withdrawal.                               Except as expressly permitted herein, noMember shall withdraw or retire or in any way be entitled to a return of anypart of its capital account without the consent of the Board of Managers.

 

6.                                       Management Matters.

 

(A)                              Member Meetings.

 

(i)                                     Place.  All meetings of the Membersshall be held either at the principal office of the Company or at any otherplace within the United States, designated by the Board of Managers.

 

(ii)                                  Annual Meetings.  Anannual meeting of the Members shall be held at 9:00 AM on the first Tuesday inMay of each year if not a legal holiday, and if a legal holiday, then at thesame time on the next succeeding day not a legal holiday.  In the event that such annual meeting isomitted by oversight or otherwise on the date herein provided for, the Board ofManagers shall cause a 

 

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meeting in lieu thereof to be held as soonthereafter as is convenient, and any business transacted or elections held atsuch meeting shall be as valid as if transacted or held at the annual meeting.

 

(iii)                               Special Meetings. Special meetings of the Members may be called by the Clerk pursuant to aresolution of the Board of Managers. Calls for special meetings shall specifythe time, place and object or objects thereof, and no business other than thatspecified in the call therefor shall be considered at any such meetings.

 

(iv)                              Notice of Meetings.  Awritten or printed notice of the annual or any special meeting of the Members,stating the time and place, and in case of special meetings, the objectsthereof, shall be given to each Member entitled to vote at such meeting appearingon the books of the Company, by mailing same to his address as the same appearson the records of the Company, not less than 7 days or more than 60 days beforethe date of the meeting; provided, however, that no failure or irregularity ofnotice of any annual meeting shall invalidate the same or any proceedingthereat.  All notices with respect toany Units to which persons are jointly entitled may be given to that one ofsuch persons who is named first upon the books of the Company and notice so givenshall be sufficient notice to all the holders of such shares.

 

(v)                                 Quorum.  A majority in number of theUnits authorized, issued and outstanding, represented by the holders of recordthereof, in person or by proxy, shall be requisite to constitute a quorum atany meeting of Members.

 

(vi)                              Proxies.  Any Member entitled to voteat a meeting of Members may be represented and vote thereat by proxy appointedby an instrument in writing, subscribed by the Member, or by his dulyauthorized attorney, and submitted to the Clerk at or before such meeting.

 

(vii)                           Voting.         At any meeting of the Members, each Memberentitled to vote shall have one vote per Unit. With respect to any matter requiring the consent of or to be determinedby the Members, consent shall have been obtained if: (a) at a meeting of theMembers, upon due notice as required hereunder, at which a quorum is present,Members holding at least 51% of the total votes present, in person and byproxy, vote in favor; or (b) holders of at least 51% of the outstanding Unitsconsent in writing; provided, however, that where the consent of amajority-in-interest of certain Members is expressly required herein, thewritten consent of Members holding more than 50% of the designated Units shallbe required, and where the unanimous consent of the Members is required, thewritten consent of all Members shall be required.

 

(B)                                Board of Managers.

 

(i)                                     Election, Number and Term.  Theelection of the Board of Managers shall take place at the annual meeting ofMembers, or at a special meeting called for that purpose.  The number of Managers shall equal thenumber of Members who hold at least 20% of the outstanding Units (each Memberwho holds at least 20% of outstanding Units may be referred to herein as an“Appointing Member”). Each Appointing Member shall be entitled to appoint arepresentative to serve as a Manager. Managers shall hold office until the next annual meeting of the Membersand until their successors are elected, provided that an Appointing Member mayrecall and replace any Manager appointed by it at any time upon written noticeto all other Members. Any fee payable to a Manager for serving on the Board ofManagers shall be subject to the unanimous consent of the Members. If, at anytime, a Member is not entitled to appoint a Manager to the Board of Managers,such Member shall enjoy observation rights, even though no longer representedon the Board of Managers.

 

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(ii)                                  Annual Meetings.  Anannual meeting of the Board of Managers shall be held directly after the annualmeeting of the Members.

 

(iii)                               Special Meetings. Special meetings of the Board of Managers may be called by thePresident, or any two Managers. Calls for special meetings shall specify thetime, place and object or objects thereof, and no business other than thatspecified in the call therefor shall be considered at any such meetings.

 

(iv)                              Notice of Meetings.  Awritten or printed notice of the annual or any special meeting of the Board ofManagers, stating the time and place, and in case of special meetings, theobjects thereof, shall be given to each Manager, by mailing same to his addressas the same appears on the records of the Company, not less than 7 days or morethan 60 days before the date of the meeting; provided, however, that no failureor irregularity of notice of any annual meeting shall invalidate the same orany proceeding thereat.

 

(v)                                 Quorum.  A majority in number of theManagers shall be requisite to constitute a quorum at any meeting of the Boardof Managers.  A Manager may participatein a Board meeting by means of conference telephone or by any other means ofremote communication, provided, however, that in each case the Manager participatingfrom a remote location and all other Managers must be able to communicate witheach other during the meeting.

 

(vi)                              Voting.         At any meeting of the Board of Managers, eachManager shall have one vote.  Withrespect to any matter requiring the consent of or to be determined by the Boardof Managers, consent shall have been obtained if: (a) at a meeting of the Boardof Managers, upon due notice as required hereunder, at which a quorum ispresent, a majority of the Managers present vote in favor; or (b) all Managersconsent in writing.

 

(vii)                           Vacancies in the Board.  Aresignation from the Board of Managers shall be deemed to take effect upon itsreceipt by the Clerk, unless some other time is specified therein.  In case of any vacancy in the Board ofManagers, through death, resignation, or removal by the Appointing Member, theAppointing Member appointing such Manager shall appoint a new Manager bywritten notice to all other Members.

 

(C)                                Officers.   Subject only to the terms hereof, themanagement of the Company shall be reserved to the Officers. The Officers ofthe Company shall be a President, a Clerk, and such other Officers, with suchpowers and responsibilities, as the Board of Managers may elect.  The salary and other benefits payable to theOfficers shall be determined from time to time by the Board of Managers.

 

(i)                                     Election and Term.  AllOfficers shall be elected by the Board of Managers and shall hold office at thewill of the Board of Managers, except that the Manager appointed by BNEW shallat all times be the President.  Anyperson may hold more than one office, provided the duties thereof can beconsistently performed by the same person. Any vacancy shall be filled by theBoard of Managers.  The Board ofManagers shall further determine who shall assume the powers andresponsibilities of any Officer who is temporarily incapacitated or absent.

 

(ii)                                  President. The President shall be the chief executive officer of theCompany.  He shall perform all theduties commonly incident to his office and shall perform such other duties asthe Board of Managers shall designate. When present, he shall preside at all meetings of the Managers andMembers.  Subject to the terms hereof,the President shall sign all notes, deeds, mortgages, 

 

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extension agreements, modification ofmortgages agreements, property transfer documents, and leases, and shallgenerally have the supervision and control of the Company’s affairs.

 

(iii)                               Clerk.  The Clerk shall keep accurateminutes of all meetings of the Members and Board of Managers, and shall performall the duties commonly incident to such office, and shall perform such otherduties and have such other powers as the Board of Managers may designate.

 

(D)                               Extraordinary Transactions.

 

(i)                                     Notwithstanding anything contained herein tothe contrary, the unanimous consent of the Members shall be required to: (a)sell all or substantially all assets of the Company, and/or sell the Brand; (b)grant or sell licensing, manufacturing or distribution  rights to Brand rice or potato products; (c)consummate any merger, reorganization or consolidation involving the Companywhere the Company is not the surviving entity; (d) admit any new Member orissue Units to any party other than a then current Member; (e) pay any fee orremuneration to, or enter into any business contract or arrangement with, anyMember or Affiliate thereof; or (f) appoint any officer or pay any salary,wage, fee or other remuneration to any officer.

 

(ii)                                  Notwithstanding anything contained herein tothe contrary, the consent of the Board of Managers shall be required to: (a)purchase any material asset for or on behalf of the Company outside theordinary course of business; or (b) incur any material liability, obligation orexpense for or on behalf of the Company outside the ordinary course ofbusiness.

 

(E)                                 Transactions With Members.

 

(i)                                     The Company is hereby authorized to engageTechCom for a period of 12 months from and after the date hereof to manage theimplementation of the licensed Technology and to provide additional managementservices within the areas of metabolic science, clinical research, IPdevelopment and credential development, and in consideration therefore to payTechCom a monthly management fee of $*** during such 12 month period.  Said fee shall be for services rendered andfor expenses incurred in performing such services.  Said monthly fee shall be due on the last day of the monthbeginning with the first payment on October 31, 2003.  TechCom shall also be reimbursed on October 31, 2003, for aone-time charge of $*** spent in September, 2003, on NCI testing, plus a $***management fee for September, 2003, so that the total amount payable to TechComon October 31, 2003, is $***.  TechComshall provide such services as an independent contractor, and payments of themanagement fee to TechCom shall constitute payments for services rendered andshall thus be accounted for as an expense of the Company and be paid prior toany distribution of Distributable Cash Flow hereunder.

 

(ii)                                  The Company is hereby authorized to engageBNEW for a period of 12 months from and after the date hereof to provideoverall program management, Brand development and management, market andconsumer research, marketing plans, supply chain management and customerbusiness development, and in consideration therefore to pay BNEW a monthlymanagement fee of $*** during such 12 month period. Said fee shall be forservices rendered and for expenses incurred in performing such services. Saidmonthly fee shall be due on the last day of the month beginning with the firstpayment on October 31, 2003, except that the monthly payment due for October,2003, will be for only $***.  BNEW shallprovide such services as an independent contractor, and payments of themanagement fee to BNEW shall constitute payments for services rendered andshall thus be accounted for as an expense of the Company and be paid prior toany distribution of Distributable Cash Flow hereunder.

 

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*** - Confidential treatmentrequested.

 

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(iii)                               Subject to the terms hereof, and except forexpenses incurred by TechCom in performing its management services undersubsection (i) above for which TechCom shall be responsible and expensesincurred by BNEW in performing its management services under subsection (ii)above for which BNEW shall be responsible, the Members further authorize theCompany to reimburse a Member for any reasonable, actual, out-of-pocketexpenses incurred by the Member in performing its responsibilities hereunder orin connection with business of the Company, within 30 days after approval ofpayment by the Board of Managers, and all unreimbursed expenses shall be paidprior to distribution of Distributable Cash Flow.

 

(iv)                              Subject to the terms and conditions of thisAgreement, TechCom hereby grants to the Company an unconditional, irrevocable,royalty-free, perpetual, exclusive, world wide license to use TechCom’s patentpending technology to market and manufacture pasta, rice and potatoes only (the“Technology”), including all improvements to the Technology hereafter developedby TechCom, and TechCom shall promptly disclose to the Company in writing anyimprovements to the Technology hereafter made by TechCom.   The Company may, at its expense, make suchimprovements to the Technology as it deems appropriate subject to the priorconsent of TechCom, and the license granted hereunder shall cover suchimprovements, provided the Company shall promptly disclose to TechCom inwriting any improvements to the Technology made by the Company, and TechComshall be free, at no cost to TechCom, to use such improvements with respect toother food products.  TechCom herebywarrants to the Company that to the best of TechCom’s knowledge, the Company’suse of the Technology as contemplated hereby do not infringe the intellectualproperty rights of any third party.  TheCompany and TechCom shall, at the request of either the Company or TechCom,enter into a license agreement confirming the terms of such license which shallcontain normal and customary terms not inconsistent with the terms hereof andwhich shall provide as follows:

 

(1)                                  If the Company desires to use the Technologyin any market outside of the United States of America and TechCom has not yetfiled patent applications in such market, then the Company agrees to pay allexpenses and fees required during the period the Company uses the Technology insuch market pursuant to such license for the preparation, filing, prosecution,maintenance, annuities  related to anypatent application filed by TechCom, such costs to be paid by the Companywithin 30 days of delivery of an invoice and reasonable supportingdocumentation;

 

(2)                                  If the Company or TechCom becomes aware ofany infringement or alleged infringement of any patent rights covering theTechnology, such party shall immediately notify the other party in writing ofthe name and address of the alleged infringer, the alleged acts of infringementand any available evidence of infringement, and the parties shall work jointlyin good faith to use their reasonable best efforts to prevent infringement anddefend the patents, provided all legal fees to do so shall be paid for by theCompany, and any litigation shall be directed by and legal counsel shall beengaged by TechCom, all with consultation by the Company;

 

(3)                                  As between the Company and TechCom, theCompany shall be solely responsible for all product liability claims anddamages arising from the manufacture, sale or use of any Brand products , andshall obtain reasonable and appropriate insurance therefore; and

 

(4)                                  Except for manufacturing and/or distributioncontracts for Brand products or a sale by the Company of all or substantiallyall of its assets or any other liquidation, the Company shall not assign orsublicense such license rights without the prior written consent of TechCom.

 

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(5)                                  If the Company is dissolved pursuant tosection 12(a)(vi) of this Agreement, the license granted hereby shallautomatically thereupon terminate and all such rights shall revert to TechCom,provided TechCom shall not have rights to any other asset of the Company,including the Brand name, unless TechCom expressly hereafter purchases same orthe Company hereafter expressly distributes same to TechCom.

 

(6)                                  If during any calendar year beginning with2005, the Company does not realize bona fide sales of Brand products of atleast $1,000,000.00, then the license granted hereunder shall automaticallythereupon become non-exclusive.

 

(v)                                 The Company shall grant exclusivemanufacturing rights for Brand pasta products to Dakota, subject to executionof a manufacturing agreement containing normal and customary terms withreasonable and competitive terms, plus a reasonable premium to Dakota as hereafteragreed to by Dakota and the Board of Managers and subject to performance byDakota. The Company and Dakota shall negotiate in good faith the terms of theManufacturing Agreement and use their reasonable best efforts to negotiate andexecute a fully binding definitive agreement by December 31, 2003.  Notwithstanding anything contained herein,if the Company and Dakota do not enter into a fully binding, definitive,exclusive manufacturing agreement for Brand pasta products by December 31,2003, Dakota may, at any time thereafter prior to the execution of suchagreement, withdraw as a Member by providing written notice to all otherMembers.  Upon any such withdrawal, theCompany shall return the balance in Dakota’s Section 704 Capital Account as ofthe date of withdrawal within one year after the date of withdrawal.  The Company shall be authorized (but notobligated) to grant exclusive manufacturing rights for Brand rice and/orpotatoes to Dakota, subject to Dakota’s capability to manufacture such productsand subject to approval by the Board of Managers.  The Company shall be further authorized (but not obligated) toengage Dakota to distribute some or all of the Brand products on reasonable andcompetitive terms, subject to Dakota’s capability to distribute such productsand subject to approval by the Board of Managers.  Notwithstanding anything contained herein, TechCom shalldetermine who shall manufacture Brand rice products, subject to the reasonableapproval of the Board of Managers as to the terms of such engagement and thequalification and capability of such prospective manufacturer.

 

(F)                                 Certain Market Transactions.                                     The Members acknowledge that TechCom desiresthe Company to market and sell products the same or substantially the same asthe Brand products except under a different brand name and different price, inconnection with humanitarian or charitable causes related to public healthprojects, institutional markets (e.g., school lunch, feeding programs) andgovernmental markets.  The Members agreeto consider such ventures in good faith and to work cooperatively with TechComto consummate such ventures.

 

7.                                       Additional Interests.  Anymembership interest in the Company issued to any Member after the date hereof(including any additional subscription or contribution or any purchase of analready outstanding interest) shall automatically become subject to the termsand restrictions hereof without the requirement of further action.  The term “Units” as used herein shallinclude any such additional interest.

 

8.                                       Legend.  Each certificate, if any, forany interest in the Company now held or hereafter issued by the Company shall,in addition to any other legend required by applicable law, be endorsed with alegend indicating that the transfer of such Unit is subject to the restrictionscontained herein.

 

9.                                       Financial Reporting.

 

(A)                              The Company shall maintain and provide toeach Member upon request, the financial statements listed in clauses (i) and(ii) below, prepared, in each case in accordance with then-current GenerallyAccepted Accounting Principles (other than Capital Contributions, Profits andLosses and other 

 

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allocations, distributions and otheradjustments with respect to Member’s Capital Accounts, which shall construed,determined and reported to Members in accordance with this Agreement.)

 

(i)                                   As soon as practicable following the end ofeach Company fiscal year (and in any event not later than ninety (90) daysafter the end of such fiscal year), a balance sheet of the Company as of theend of such fiscal year and the related statements of operations, Members’Capital Accounts and changes therein, and cash flows for such fiscal year,together with appropriate notes to such financial statements, all of whichshall be audited and certified by the Company’s accountants, and in each case,to the extent the Company was in existence, setting forth in comparative formthe corresponding figures for the immediately preceding fiscal year.

 

(ii)                                  As soon as reasonably practicable followingthe end of each of the first three fiscal quarters of each fiscal year andfollowing the end of each of the first eleven (11) fiscal months of each fiscalyear (and in any event not later than thirty (30) days after the end of suchfiscal quarter or fiscal month, as the case may be), an unaudited balance sheetof the Company as of the end of such fiscal quarter or fiscal month, as thecase may be, and the related unaudited statements of operations and cash flowsfor such fiscal quarter or fiscal month, as the case may be, and for the fiscalyear to date, in each case, to the extent the Company was in existence, settingforth in comparative form the corresponding figures for the prior fiscal year’sfiscal quarter or fiscal month, as the case may be, and the fiscal quarter orfiscal month, as the case may be, just completed.

 

(B)                                Within 90 days after the end of the Company’sfiscal year, the Company shall furnish each Member with all informationnecessary for the preparation of such portion of their federal income taxreturn as it relates to the Company.

 

10.                                 Records.  The Members and theirdesignated representatives shall be permitted access to Company records at allreasonable times on reasonable prior notice for the purpose of evaluating orprotecting their investment in the Company or to obtain information necessaryto comply with legal obligations.

 

11.                                 Tax Matters Partner.  ThePresident, or such person designated by the President from time to time, shallbe the “Tax Matters Partner” as defined in Code §6231(a)(7). The Tax MattersPartner shall, at the Company’s expense, exercise due diligence on behalf ofthe Company in responding to and resisting any Internal Revenue Serviceattempts to adjust Company items of income, gain, loss, deduction orcredit.  The specific actions to betaken by the Tax Matters Partner, including commencement of litigation, shallbe determined by it in its sole discretion. At the Company’s expense, the Tax Matters Partner may retain suchcounsel and other advisors as it deems necessary in order to promptly respondto or pursue any Internal Revenue Service inquiry, statement, or otheradministrative or judicial proceeding.

 

12.                                 Dissolution of the Company.

 

(A)                              Dissolution.                               The Company shall terminate and be dissolvedupon the first to occur of the following: (i) December 31, 2050; (ii) the saleor disposition of all or substantially all assets of the Company; (iii) thedetermination of at least two members of the Board of Managers; (iv) the determinationof a majority in interest of the Members; (v) upon the Termination of a Memberas provided in Section 5, unless the requisite Members elect to continue theCompany in accordance with the terms thereof; or (vi) by any Member if theCompany has not realized bona fide sales of Brand products of at least$1,000,000.00 by March 1, 2005,  bywritten notice to all Members delivered at any time prior to April 1, 2005.

 

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(B)                                Liquidation.                                Upon the dissolution of the Company, thePresident shall proceed to liquidate and wind up the Company.  Subject to the unanimous consent of theMembers, all assets of the Company shall be sold at public or private sale, andon approved terms and conditions; provided that if the Members are unable toreach unanimous agreement within 30 days after dissolution (unless extended bytheir unanimous consent), all assets of the Company shall be sold by publicauction after at least 30 days’ prior written notice to all of the Members.

 

13.                                 Put Option.

 

(A)                              If one Manager does not agree with all otherManagers on any matter subject to vote under paragraph 6(D)(ii), the Memberwhose appointed Manager votes differently (the “Dissenting Member”) from theother Managers appointed by the other Members (the “Majority Members”) mayrequire the Company to purchase all, but not less than all, of the Units thenheld by the Dissenting Member.  TheDissenting Member must provide written notice of such election within 30 daysafter the vote giving rise to the election, or else the Dissenting Member shallhave waived its right to require the purchase of its Units hereunder withrespect to such vote.  The purchaseshall be effective as of the date of election by the Dissenting Member (the“Effective Date”).  The purchase priceper Unit payable to the Dissenting Member shall equal 75% of the Unit Value (ashereinafter determined), and shall be payable in 3 equal annual installmentscommencing on the first anniversary of the Effective Date, together with interestof 8% on the unpaid purchase price.

 

(B)                                At the annual meeting of the Members, theMembers shall, in good faith, attempt to determine by unanimous consent theUnit Value for purposes of this section 13, provided that the value may bechanged by the unanimous written consent of the Members at any time..  Any value so determined shall remain ineffect until the next determination, but in any event not past the next annualmeeting of Members.  The value sodetermined shall be equitably adjusted to reflect any subsequent stockdividend, stock split, reverse split or similar recapitalization of theCompany.  If no Unit Value under thissubparagraph (B) shall be in effect, the Unit Value shall be the fair marketvalue per Unit of all of the issued and outstanding Units as determined byappraisal.  Within 30 days after thedate of the exercise of the put option herein, the Company shall appoint anappraiser, who shall proceed to determine the value of the Units as of the dateof  the exercise of the put option, andshall be final and binding upon all interested persons.  The Company shall promptly furnish to theappraiser such information concerning its financial condition, earnings,capitalization, business prospects and sales of its capital as it may reasonablyrequest.  The Company and DissentingMember shall each be responsible for one-half of the costs of the appraisal.

 

14.                                 Power of Attorney. Each Member hereby irrevocably constitutes and appoints each Officer,with full power of substitution as his true and lawful attorney in his name,place and stead to make, execute, acknowledge, file or record any and alldocuments necessary or appropriate to duly organize, qualify or maintain theCompany as a limited liability company under the laws of Ohio or any otherapplicable jurisdiction, or to record the termination and dissolution thereof,or to consummate the sale or transfer of any interest in accordance with theterms hereof or amendment hereto arising therefrom.  It is expressly intended by each of the Members that the power ofattorney granted hereunder is coupled with an interest, and it is agreed thatsaid power of attorney shall survive the delivery of an assignment by saidMember of the whole or any portion of his interest, provided that the foregoingpower of attorney of the assignor Member shall survive the delivery of suchassignment solely for the purpose of enabling the Members to execute, sign,acknowledge and file any and all instruments necessary to effect thesubstitution of the assignee as a Member.

 

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15.                                 Liability of Officers, Managers and Members.

 

(A)                              Limitation on Liability.                         No Officer, Manager or Member shall beliable, responsible or accountable in damages or otherwise to the Company or anyMember for any loss, damage, liability or expense incurred by the Company orMember by reason of any act, alleged act or omission of such Officer, Manageror Member which was performed in good faith on behalf of the Company in amanner reasonably believed by it to be within the scope of the authoritygranted to it hereunder or by law, and in, or not opposed to, the bestinterests of the Company, provided that such Officer, Manager or Member is notguilty of gross negligence or willful misconduct.

 

(B)                                Indemnification.          The Company hereby agrees to indemnify andhold harmless each Officer, Manager and Member from and against any claim,demand, loss, damage, liability or expense by reason of any act, alleged act oromission performed or omitted by any such party in good faith on behalf of theCompany in a manner reasonably believed it to be within the scope of theauthority conferred by this Agreement or by law and in, or not opposed to, thebest interests of the Company, so long as such party is not guilty of grossnegligence or willful misconduct.

 

16.                                 Public Announcements.                No Member, nor any of their respectiveaffiliates or representatives, shall issue any press release or publicstatement concerning this Agreement, the formation or existence of the Companyor the transactions contemplated hereby without obtaining the prior written orverbal approval of the other Members, unless such disclosure is required byapplicable law or regulation or by an order from a court of competentjurisdiction;  provided, however, thatthe Member intending to make such release shall give the other Members priornotice and shall use its best efforts consistent with such applicable law,regulation or order to consult with the other parties with respect to the textof any such release of information.

 

17.                                 Counterparts. This Agreement may be executed in counterparts which taken togethershall constitute one instrument, notwithstanding the fact that all parties havenot executed this Agreement on the same date or that all signatures do notappear on the same copy.

 

18.                                 Notices.  All notices, offers,acceptances, waivers and other communication under this Agreement shall be inwriting and shall be sufficiently given when received and receipted for throughcertified mail, return receipt requested, or when personally delivered.  Except as otherwise provided in thisAgreement, time shall be counted to or from the date of personal receipt or thedate certified delivery is indicated as having been made.

 

19.                                 Captions.  Captions are included forconvenient reference only and shall not affect the interpretation of anyprovision of this Agreement.

 

20.                                 Severability.  Theinvalidity, illegality, or unenforceability of any provision of this Agreementshall not affect or impair the validity, legality, and enforceability of theother provisions hereof and the Agreement shall be construed in all respects asif such invalid or unenforceable provisions were omitted.

 

21.                                 Waiver.  Neither any course of conductnor any delay by any of the parties hereto in exercising any rights hereundershall waive any rights of such party under this Agreement.

 

22.                                 Modifications. This Agreement may be amended only upon the consent of all Members;provided that the President is hereby authorized to amend this Agreement toreflect any transfers of Units upon any such transfer.

 

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23.                                 Choice of Law. This Agreement shall be governed by and construed in accordance with theinternal laws of the State of Ohio, and in particular by ORC Section 1705.01 etseq., and shall be entered in the record of minutes of the proceedingsof the members of the Company.

 

IN WITNESS WHEREOF, theparties have executed this Agreement as of the date first set forth above.

 
| Witnessed By: |   | B-New, LLC                          |
|---------------|--------|-------------------------------------|
|          |   |                                |   |
|          |   | By:                                 |   | /s/ Mike Crowley |   |
|          |   |                                |   |   |
|          |   | Title:                              |   | Principal |   |
|          |   |                                |   |   |
|          |   | TechCom Group, LLC                  |   |
|          |   |                                |   |   |
|          |   | By:                                 |   | /s/ Jonathan Anfinsen |   |
|          |   |                                |   |   |
|          |   | Title:                              |   | VP of Operations |   |
|          |   |                                |   |   |
|          |   | Buhler, Inc.                        |   |
|          |   |                                |   |
|          |   | By:                                 |   | /s/ Achim Klotz / /s/Beat  Haeni |   |
|          |   |                                |   |   |
|          |   | Title:                              |   | President / Corp.  Development |   |
|          |   |                                |   |   |
|          |   | Dakota Growers Pasta  Company, Inc. |
|          |   |                                |   |
|          |   | By:                                 |   | /s/ Tim Dodd |   |
|          |   |                                |   |   |
|          |   | Title:                              |   | President/CEO |   |
|               |        |                                     |  |  |  |  |  |  |

 

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Date:October 31, 2003

 

EXHIBITA

 
| **Member**                         |   | **Aggregate  Cash Contribution** |   | **Units** |   |
|------------------------------------|--------|----------------------------------|--------|-----------|--------|
| B-New, LLC                         |   | $                                | 280.00 |      | 28     |   |
| TechCom Group, LLC                 |   | $                                | 240.00 |      | 24     |   |
| Buhler, Inc.                       |   | $                                | 240.00 |      | 24     |   |
| Dakota Growers Pasta Company, Inc. |   | $                                | 240.00 |      | 24     |   |

 

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Date:October 31, 2003

 

EXHIBITB

 

 

ConfidentialTreatment Requested.

 

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