**Exhibit10.2**

 

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

 

 

**EXCLUSIVEMANUFACTURING AGREEMENT**

 

This Exclusive ManufacturingAgreement (this “Agreement”) is made as of this 26th day of December, 2003 (the“Effective Date”), by and between Dakota Growers Pasta Company, Inc., a NorthDakota corporation (“Dakota Growers”), and DNA Dreamfields Company, LLC, anOhio limited liability company (“DNA”).

 

W  I T  N  E S  S  E T  H

 

WHEREAS, Dakota Growers,B-New, LLC, an Ohio limited liability company, TechCom Group, LLC, a Floridalimited liability company (“TechCom”), and Buhler, Inc., a Minnesotacorporation, have formed and capitalized DNA for the purposes of, among otherthings, manufacturing in North America and selling globally, low digestiblecarbohydrate pasta, rice and potatoes under the brand name, “Dreamfields” (the“Brand”);

 

WHEREAS, Dakota Growers isin the business of manufacturing, marketing, distributing and selling dry pastaproducts;

 

WHEREAS, Dakota Growersdesires to manufacture, on an exclusive basis, dry pasta products under theBrand (the “Products”), and DNA desires that Dakota Growers so manufacture, onan exclusive basis, the Products, upon the terms and subject to the conditionsof this Agreement;

 

WHEREAS, Dakota Growers andDNA have entered into a certain Trademark License Agreement (the “TrademarkLicense”), dated of even date herewith, pursuant to which DNA has granted toDakota Growers an exclusive license to use the Brand in connection with DakotaGrowers’ manufacture, marketing, sale and distribution of the Products; and

 

WHEREAS, Dakota Growers andDNA have entered into a certain Technology Sublicense Agreement (the“Technology Sublicense”), dated of even date herewith, pursuant to which DNAhas granted to Dakota Growers an exclusive sublicense to use certain technologynecessary to manufacture the Products.

 

NOW,THEREFORE,****in consideration of the mutual covenantshereinafter expressed, the parties agree as follows:

 

1.                                       Exclusive Product Manufacture.  Thetypes of Products are set forth on Exhibit A hereto, as Exhibit Amay from time to time be updated by the mutual written agreement of DNA andDakota Growers.  During the Term (asdefined in Section 2 hereof), subject to the terms and conditions ofthis Agreement, Dakota Growers hereby agrees to manufacture, on an exclusivebasis, all of the Products necessary to meet the Forecasted Market Demand (asdefined in Section 4 hereof) for each period covered by a Three-MonthForecast (as defined in Section 4 hereof), to the extent such ForecastedMarket Demand materializes within such period covered by such Three-MonthForecast.  During the Term (as definedin Section 2 hereof), DNA hereby agrees not to: (a) directly orindirectly manufacture the Products for its own account; or (b) directly orindirectly enter into any agreements, arrangements or

 

1

----

 

relationships (i) with any third parties(other than Dakota Growers) to develop or manufacture the Products, or anyproducts that are competitive with the Products or (ii) that would enableany third party to develop or manufacture the Products, or any products thatare competitive with the Products. Subject to the terms and conditions of the Technology Sublicense, DNAhereby agrees to share with Dakota Growers all intellectual property,manufacturing techniques and methods and other proprietary information owned byor licensed to DNA necessary for the manufacture of the Products.  DNA and Dakota Growers hereby acknowledgethat the technology being sublicensed by DNA to Dakota Growers pursuant to theterms and conditions of the Technology Sublicense is owned by TechCom and isbeing licensed by TechCom to DNA.

 

2.                                       Term.  This Agreement shall commenceon the Effective Date and shall continue in force and effect so long as theTrademark License is in force and effect, subject to early termination asprovided in Section 8 hereof (the “Term”).

 

3.                                       ManufacturingProcedures; Title to Products; Etc.

 

3.1                                 Specifications. Dakota Growers shall manufacture the Products in accordance with suchspecifications as are set forth on Exhibit B hereto (the“Specifications”), to the extent not inconsistent with applicable law, andshall maintain sufficient capacity to manufacture sufficient quantities of theProducts to meet the Forecasted Market Demand (as defined in Section 4hereof) for each period covered by a Three-Month Forecast (as defined in Section4 hereof).  Dakota Growers may notmake any changes to Specifications without the prior written approval fromDNA.  DNA may from time to time makereasonable alterations or modifications to the Specifications by written noticethereof to Dakota Growers, but only to the extent that such alternations ormodifications do not materially disrupt Dakota Growers’ operations or result inthe incurrence by Dakota Growers of unreasonable costs and expenses inimplementing such alterations and modifications.

 

3.2                                 Responsibilities. Subject to the terms and conditions of this Agreement, Dakota Growersshall be responsible for all facets of the manufacture of the Products,including, without limitation, the ordering and purchasing of all raw materialsrequired to produce the Products.

 

3.3                                 Orders; Pricing; Shipment; Title and Risk ofLoss.  Except as provided otherwise  in any written agreement by and between DNAand Dakota Growers:

 

(a)                                  DNA shall order Products from Dakota Growersby the issuance of separate purchase orders (each, a “Purchase Order”) for Products,which Purchase Orders shall contain terms consistent with this Agreement exceptas provided otherwise in any written agreement by and between DNA and DakotaGrowers.  Such Purchase Orders shall bein form and substance satisfactory to Dakota Growers, as determined in DakotaGrowers sole and absolute discretion. Each Purchase Order shall designate the desired types and quantities ofProducts, delivery dates and destinations, and shall be submitted to Dakota Growersat least fifteen (15) days prior to the delivery date specified in suchPurchase Order.  At the time DNA hasissued a Purchase Order for a specified amount of Products and Dakota Growershas accepted such Purchase Order, DNA shall be committed to purchase the entireamount of the Products ordered and the Purchase Order shall become irrevocable.

 

(b)                                 Title in and to Products shall pass fromDakota Growers to DNA, and the risk of loss of, or damage to, such Productsshall pass to DNA, in accordance with the terms and conditions set forth in thePurchase Order covering such Products, but not prior to delivery to the shipperunless agreed to in writing by DNA and Dakota Growers.

 

2

----

 

(c)                                  The pricing for Products manufactured byDakota Growers pursuant to this Agreement is set forth on Exhibit Chereto (as Exhibit C hereto may from time to time be amended by thewritten agreement of DNA and Dakota Growers). Dakota Growers shall invoice DNAupon transfer of title and based on the pricing set forth on Exhibit Chereto, for the amount of Products so transferred.  Each such invoice shall describe the number of type of Productsso transferred by Dakota Growers. Within thirty (30) days of receipt of an invoice delivered by DakotaGrowers pursuant to this subsection (c), DNA shall remit to DakotaGrowers the amount set forth therein.

 

(d)                                 The pricing set forth on Exhibit Chereto for Products manufactured by Dakota Growers pursuant to this Agreementis F.O.B. (as defined by the Uniform Commercial Code) the location where suchProducts are actually manufactured by Dakota Growers, and transportation ofsuch Products from such location is the responsibility of DNA.  DNA shall be responsible for makingarrangements, including, but not limited to, the retention of a carrier, toship Products on the delivery date specified in the Purchase Order relating tosuch Products.  DNA shall be responsiblefor the accuracy of all shipping instructions sent to Dakota Growers.  For non-standard shipments such asdrop-shipments to multiple locations or exports, DNA shall provide DakotaGrowers with bills of lading, shipping and export documents, as required.

 

3.4                                 Other Branded Products.  Inthe event that DNA elects to pursue the manufacture of any other Brandedproducts, including, but not limited to, Branded rice and potatoes, DNA shallhave the right (but not the obligation) to grant Dakota Growers with exclusivemanufacturing rights in respect of such Branded products.

 

4.                                       Forecasts.** **No later than five(5) business days prior to thefirst day of each calendar month during the Term, DNA will provide DakotaGrowers with a non-binding, rolling three-month forecast of the quantities ofProducts that DNA reasonably anticipates will be necessary to meet marketdemand for Products during the three-month period covered thereby (each, a“Three-Month Forecast”).  Dakota Growersshall have three (3) business days from the date of receipt of a Three-MonthForecast to review such Three-Month Forecast and make and communicate to DNA inwriting any reasonable good-faith adjustments to such Three-MonthForecast.  Any reasonable adjustmentsmade in good faith by Dakota Growers to a Three-Month Forecast shallautomatically be incorporated into such Three-Month Forecast.  The quantities of Products that arereasonably anticipated to be necessary to meet market demand for Productsduring a three-month period covered by a Three-Month Forecast shall be deemedto be the “Forecasted Market Demand” in respect of such three-month period.

 

5.**                                      **Warranties.

 

5.1                                 Dakota Growers represents and warrants to DNAthat all Products manufactured by Dakota Growers pursuant to this Agreementshall have been manufactured in accordance with the Specifications (to theextent not inconsistent with applicable law) and applicable law.

 

5.2                                 Dakota Growers represents and warrants to DNAthat all Products manufactured by Dakota Growers pursuant to this Agreement arein accordance with the applicable law and legal regulations of the country oforigin and, prior to distribution to a country other than the country oforigin, of destination.

 

5.3                                 EXCEPT AS OTHERWISE SET FORTH IN THISAGREEMENT, DAKOTA GROWERS HEREBY DISCLAIMS ALL WARRANTIES, EXPRESSED ORIMPLIED, INCLUDING WITHOUT LIMITATION, THE WARRANTY OF FITNESS FOR A PARTICULARPURPOSE WITH

 

3

----

 

RESPECT TO ANY PRODUCTS FURNISHED UNDER OR INCONNECTION WITH THIS AGREEMENT.

 

5.4                                 NO REPRESENTATION OR OTHER AFFIRMATION OFFACT MADE BY DAKOTA GROWERS, INCLUDING, BUT NOT LIMITED TO, STATEMENTSREGARDING SUITABILITY FOR USE OR PERFORMANCE OF THE PRODUCTS, SHALL BE DEEMEDTO BE A WARRANTY BY DAKOTA GROWERS FOR ANY PURPOSE OR TO GIVE RISE TO ANYLIABILITY OF DAKOTA GROWERS WHATSOEVER.

 

5.5                                 EXCEPT FOR DAMAGES ARISING DIRECTLY FROM ABREACH OF THE WARRANTY SET FORTH IN SECTIONS 5.1 AND 5.2 HEREOF, IN NOEVENT SHALL ONE PARTY BE LIABLE TO THE OTHER BE LIABLE FOR ANY LOSS, DAMAGE OREXPENSE THAT RESULTS FROM THE SALE, USE OR PERFORMANCE OF THE PRODUCTS THATCONFORM WITH THE SPECIFICATIONS, INCLUDING, BUT NOT LIMITED TO:  (A) INCIDENTAL, INDIRECT, SPECIAL ORCONSEQUENTIAL DAMAGES, OR (B) ANY DAMAGES WHATSOEVER RESULTING FROM PERSONALINJURY, WHETHER IN AN ACTION BASED ON CONTRACT OR TORT, OR OTHERWISE INCLUDING,BUT NOT LIMITED TO, PRODUCTS LIABILITY OR NEGLIGENCE OR STRICT LIABILITY.

 

5.6                                 DNA hereby agrees to indemnify Dakota Growersagainst, and hold Dakota Growers harmless from, any and all losses, damages andexpenses (including, but not limited to, reasonable attorneys’ fees) incurredor suffered by Dakota Growers relating to or arising out of or in connectionwith the sale, use or performance of the Products that conform with theSpecifications, including, but not limited to, incidental, indirect or specialdamages or any damages whatsoever resulting from personal injury, whether in anaction based on contract or tort, or otherwise including, but not limited to,products liability or negligence or strict liability.

 

6.                                       Force Majeure.

 

Neither Dakota Growers norDNA shall be held responsible for damages caused by a breach of this Agreementdue to conditions beyond their reasonable control, such as fires, strikes,floods, acts of God, wars, riots, insurrections, governmental restrictions orother lawful acts of public authorities.

 

7.                                       Confidential Information.

 

7.1                                 Each party agrees that all information markedas confidential, proprietary, trade secrets, know how, manuals and otherinformation disclosed to it by the other party (including, but not limited to,formulae and the Specifications), whether disclosed prior to or during theTerm, is confidential and proprietary to the disclosing party (“ConfidentialInformation”).  Confidential Informationshall not include information which:

 

(a)                                  is in or hereafter enters the public domainthrough no fault or action of the party to which it is disclosed; or

 

(b)                                 is obtained by the party to which it isdisclosed from a third party which is not subject to any legal restriction onits right to use and disclose such information; or

 

(c)                                  is independently developed by employees ofthe party to which it is disclosed without use of any Confidential Informationof the other party; or

 

(d)                                 is required by law or judicial oradministrative processes to be disclosed.

 

4

----

 

7.2                                 The parties agrees not to use anyConfidential Information of the other party during the term of this Agreementand for a period of three (3)years thereafter for any purpose other than as permitted or required forperformance hereunder.

 

7.3                                 Upon termination or expiration of thisAgreement for any reason, the parties shall return to each other allConfidential Information of the other party in tangible form, includingConfidential Information in electronic or magnetic form.

 

8.                                       Termination andSurvival.

 

8.1                                 Termination for Insolvency.  Ifa party (an “Insolvent Party”) makes an assignment for the benefit of itscreditors, files a voluntary petition under federal or state bankruptcy orinsolvency laws, a receiver or custodian is appointed for that party’s business,or proceedings are instituted against that party under federal or statebankruptcy or insolvency laws that have not been stayed or dismissed withinsixty (60) days, this Agreement may be terminated by any party hereto otherthan the Insolvent Party, with termination effective immediately upon writtennotice to the Insolvent Party.

 

8.2                                 Breach; Mutual Agreement.  Ifeither party (the “Terminating Party”) believes that the other party (the“Defaulting Party”) has materially breached this Agreement, the TerminatingParty shall give the Defaulting Party written notice thereof (the “Notice toCure”).  The Notice to Cure must statethe nature of the breach in reasonable detail and that the Terminating Partyviews such alleged breach as a basis for terminating this Agreement.  If the Defaulting Party fails to cure thealleged breach within sixty (60) days (the “Cure Period”) after its receipt ofthe Notice to Cure, this Agreement shall, at the option of the TerminatingParty, terminate.  DNA expressly agrees thatthe remedies at law for any breach by DNA of the exclusivity provisions of thisAgreement, including, but not limited to, Section 1 of this Agreement,would be inadequate and that, in addition to any other remedies that DakotaGrowers may have in the event of any such breach, Dakota Growers shall beentitled to temporary and permanent injunctive relief without the necessity ofproving actual damages or posting bond. DNA acknowledges that Dakota Growers would not enter into this Agreementunless DNA agreed to the exclusivity provisions of this Agreement, including,but not limited to, Section 1 of this Agreement.  In addition, this Agreement may beterminated by the mutual written consent of each of DNA and Dakota Growers.

 

8.3                                 Survival.  Termination or expiration ofthis Agreement shall not relieve either party of its obligations under thisAgreement or for liability for any breach of this Agreement to the extent anysuch obligation or liability was incurred or arose prior to or in connectionwith the termination, expiration or non-renewal hereof.  The provisions of Sections 5, 6,7 and 8 shall survive the termination or expiration of thisAgreement and remain in full force and effect thereafter.

 

9.                                       Miscellaneous.

 

9.1                                 Notices. Any notice or other communication hereunder shall be in writing andshall be deemed given when so delivered in person, by overnight courier (withreceipt confirmed), by facsimile transmission (with receipt confirmed bytelephone or by automatic transmission report) or upon receipt if sent bycertified mail, return receipt requested, as follows (or to such other personsand/or addresses as may be specified in writing, by proper notice, to the otherparty hereto):

 

5

----

 
| If  to Dakota Growers: |   | Dakota  Growers Pasta Company, Inc. |
|------------------------|--------|-------------------------------------|
|                   |   | One  Pasta Avenue                   |
|                   |   | Carrington,  ND 58421               |
|                   |   | Attention:  Thomas P. Friezen  |
|                   |   | Telephone:  (701) 652-4893          |
|                   |   | Facsimile:  (701) 652-3701          |
|                   |   |                                |
| With  copies to:       |   | Lindquist  & Vennum P.L.L.P.    |
|                   |   | 4200  IDS Center                    |
|                   |   | Minneapolis,  MN  55402        |
|                   |   | Attention:  Ronald D. McFall   |
|                   |   | Telephone:  (612) 371-3551          |
|                   |   | Facsimile:  (612) 371-3207     |
|                   |   |                                |
| If  to DNA:            |   | DNA  Dreamfields Company, LLC       |
|                   |   | 14  West Park Place                 |
|                   |   | Oxford,  OH 45056                   |
|                   |   | Attention:  Mike Crowley            |
|                   |   | Telephone:  (513) 524-9256          |
|                   |   | Facsimile:  (513) 524-5167          |
|                   |   |                                |
| With  copies to:       |   | Ulmer  & Berne LLP              |
|                   |   | 600  Vine Street                    |
|                   |   | Suite  2800                         |
|                   |   | Cincinnati,  OH 45201               |
|                   |   | Attention:  Scott P. Kadish         |
|                   |   | Telephone:  (513) 762-6200          |
|                   |   | Facsimile:  (513) 762-6245          |

 

9.2                                 Entire Agreement; Amendment.  Theparties hereto acknowledge that this Agreement, together with all exhibits andschedules attached hereto, sets forth the entire agreement and understanding ofthe parties and supersedes all prior written or oral discussions, agreements orunderstandings with respect to the subject matter of this Agreement.  No modification of any of the terms of thisAgreement, or any amendments thereto, shall be deemed to be valid unless inwriting and signed by the party against whom enforcement is sought.  No course of dealing or usage of trade shallbe used to modify the terms and conditions herein.

 

9.3                                 Waiver.  No waiver by either party ofany default shall be effective unless in writing, nor will any waiver operateas a waiver of any other default or of the same default on a future occasion.

 

9.4                                 Obligations to Third Parties.  Eachparty warrants and represents that its undertaking under this Agreement do notviolate any of its contractual obligations, express or implied, undertaken withany third party.

 

9.5                                 Assignment.  Except as otherwise providedherein, this Agreement shall be binding upon and inure to the benefit of thesuccessors or permitted assigns of each of the parties; provided, however,that the rights and obligations of the parties hereto may not be assigned or transferred(including, without limitation, by virtue of the merger or sale of all orsubstantially all of the assets of a party hereto) without the prior writtenconsent of the other party, which consent will not be unreasonably withheldand, provided, further, that, in the event of any assignment ortransfer (including, without limitation, by virtue of the merger or sale of allor substantially all of the assets of DNA or its successors and assigns) by DNA

 

6

----

 

or any or DNA’s permitted successors orassigns of the Trademark License or the Technology Sublicense, this Agreementshall concurrently therewith be assigned to such assignee of the TrademarkLicense or the Technology Sublicense. It is the intent that this Agreement, the Trademark License and theTechnology Sublicense shall survive any assignment or transfer of the Brand.

 

9.6                                 Governing Law.  This Agreement shall be governed by and construed in accordance with thelaws of the State of Ohio, without giving effect to the principles of conflictsof law thereof.  ANY LITIGATION BASEDHEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, SHALLBE BROUGHT AND MAINTAINED EXCLUSIVELY: (i) IN THE COURTS OF THE STATE OFMINNESOTA (HENNEPIN COUNTY) OR IN THE UNITED STATES DISTRICT COURT FOR THEDISTRICT OF MINNESOTA, IN THE CASE OF ANY LITIGATION COMMENCED BY DNA; AND (ii)IN THE COURTS OF THE STATE OF OHIO (HAMILTON COUNTY) OR IN THE UNITED STATESDISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO, IN THE CASE OF ANY LITIGATIONCOMMENCED BY DAKOTA GROWERS.  EACH PARTYHEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OFTHE STATE OF MINNESOTA (HENNEPIN COUNTY) AND OF THE UNITED STATES DISTRICTCOURT FOR THE DISTRICT OF MINNESOTA FOR THE PURPOSE OF ANY SUCH LITIGATIONCOMMENCED BY DNA, AND EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TOTHE JURISDICTION OF THE COURTS OF THE STATE OF OHIO (HAMILTON COUNTY) AND OFTHE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO FOR THEPURPOSE OF ANY SUCH LITIGATION COMMENCED BY DAKOTA GROWERS.  EACH OF THE PARTIES FURTHER IRREVOCABLYCONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BYPERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF MINNESOTA AND OHIO,RESPECTIVELY.  THE PARTIES HEREBYEXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANYOBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANYSUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THATANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

9.7                                 Severability.  Ifany provision hereof should be held invalid, illegal or unenforceable in anyrespect by a court of competent jurisdiction, then, to the fullest extent permittedby law, all other provisions hereof shall remain in full force and effect andshall be liberally construed in order to carry out the intentions of theparties hereto as nearly as may be possible.

 

9.8                                 Headings, Interpretation.  Theheadings used in this Agreement are for convenience only and are not a part ofthis Agreement.

 

9.9                                 Counterparts. This Agreement may be executed in any number of counterparts, each ofwhich shall be deemed to be an original, and all of which counterparts, takentogether, shall constitute one and the same instrument.

 

* * * * *

 

7

----

 

IN WITNESS WHEREOF**,** theparties hereto have each caused this Exclusive Manufacturing Agreement to beexecuted by their duly authorized officers as of the date first above written.

 

 
|   | **DAKOTA GROWERS PASTA COMPANY,  INC.** |
|--------|-----------------------------------------|
|   |                                    |
|   |                                    |
|   |                                    |   |
|   | By:                                     |        /s/ Tim Dodd |   |
|   | Its:                                    |        President/CEO |   |
|   |                                    |
|   | **DNA DREAMFIELDS COMPANY, LLC**        |
|   |                                    |
|   |                                    |
|   |                                    |   |
|   | By:                                     |        /s/ Mike Crowley |   |
|   | Its:                                    |        President |   |
|        |                                         |  |  |  |

 

8

----

 

**EXHIBIT A**

**TYPES OF PRODUCTS**

 

Confidential Treatment Requested.

 

9

----

 

**EXHIBIT B**

**PRODUCT SPECIFICATIONS**

 

Confidential Treatment Requested.

 

10

----

 

**EXHIBIT C**

**PRICING**

 

 

Confidential Treatment Requested.

 

11

----