**Exhibit10.4**

 

**CONTINUINGGUARANTEE**

 

**1.**             This Guarantee dated February 11,2003, is for valuable consideration and to induce CoBank, ACB (“CoBank”) toextend a loan or loans to **DAKOTA GROWERS PASTA COMPANY**,**INC.,**Carrington,North Dakota (“Borrower”), of which the undersigned is a wholly-ownedsubsidiary of the Borrower.  **PRIMOPIATTO, INC.**, theundersigned (“Guarantor”), unconditionally and absolutely guarantees andpromises to pay to CoBank, or order, on demand, in lawful money of the UnitedStates, any and all Indebtedness of Borrower to CoBank.  The word “Indebtedness” is used herein inits more comprehensive sense, and includes any and all advances, debts,obligations and liabilities of Borrower, including but not limited to allprincipal, interest, fees, expenses and stock subscription charges, heretofore,now or hereafter made, incurred or created, whether voluntary or involuntaryand however arising, whether due or not due, absolute or contingent, liquidatedor unliquidated, determined or undetermined, and whether Borrower may be liableindividually or jointly with others, or whether recovery upon such Indebtednessmay be or hereafter become barred by any statute of limitation, or whether suchIndebtedness may be or hereafter become otherwise unenforceable.

 

**2.**             **This Guarantee is continuing.**  No termination by Guarantor shall beeffective except by notice sent to CoBank by registeredmail naming a termination date effective not less than ninety (90) days afterthe receipt of such notice by CoBank. No such termination shall affect (i) any Indebtedness of Borrowerincurred prior to the effective date of termination or (ii) any Indebtednessfor interest, fees, expenses and/or stock subscription charges incurred aftertermination related to any Indebtedness outstanding on the effective date oftermination.

 

**3.**             This continuing guarantee is aguarantee of payment and not of collection. The obligations hereunder are joint and several, and independent uponthe Indebtedness of Borrower, and a separate action or actions may be broughtand prosecuted against Guarantorwhether action is brought against Borrower or whether Borrower be joined in anysuch action or actions; and Guarantor waives the benefit of any statutes oflimitations affecting its liability hereunder or the enforcement thereof.

 

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

 

**5.**             **Waivers. **Guarantor waives any right to require CoBank, as acondition to proceeding against Guarantor, to (a) proceed against Borrower orany other person; (b) proceed against or exhaust any security held fromBorrower or Guarantor; or (c) pursue any other remedy in CoBank’s powerwhatsoever.  Guarantor waives anydefense arising by reason of any disability or other defense or counter-claimthat the Borrower may assert on the underlying debt, including but not limitedto failure of consideration, breach of warranty, fraud, statute of frauds,bankruptcy, statute of limitations, lender liability, accord and satisfaction,and usury or by reason of the cessation from any cause whatsoever of theliability of Borrower.  Guarantor waivesthe pleading or assertion of any defense based on the failure of CoBank to keepGuarantor informed of the financial and business status of Borrower, it beingexpressly acknowledged by Guarantor that it is Guarantor’s responsibility tokeep so informed.  Until all Indebtednessof Borrower to CoBank shall have been paid in full, Guarantor shall have noright of subrogation, and waives any right to enforce any remedy which CoBanknow has, or may hereafter have against Borrower, and waives any benefit of, andany right to participate in any security now or hereafter held by CoBank.  Guarantor waives all setoffs andcounterclaims, and all presentments, demands for performance, notices ofnonperformance, protests, notices of dishonor, notices of sale of foreclosureof any security for the payment of the Indebtedness, and notices of acceptanceof this Guarantee and of the existence, creation, or incurring or new oradditional Indebtedness.

 

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

 

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

 

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

 

**8.**             Any Indebtedness of Borrower toGuarantor now or hereafter held by Guarantor is hereby subordinated to the Indebtedness of Borrower to CoBank; andsuch Indebtedness of Borrower to Guarantor, if CoBank so requests, shall becollected, enforced and received by Guarantor as trustee for CoBank and be paidover to CoBank on account of the Indebtedness of Borrower to CoBank but withoutreducing or affecting in any manner the liability of Guarantor under the otherprovisions of this Guarantee.

 

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

 

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

 

**11.**          CoBank’s rights under this Guaranteeare cumulative and not alternative, and shall not be exhausted by CoBank’sexercise of any one or more rights hereunder, or otherwise, or by any number ofsuccessive actions, unless and until all obligations of Borrower and Guarantorhave been paid or performed.  Theliability under this Guarantee shall continue notwithstanding theincapacity  or disability of Guarantor,and its benefits shall inure to CoBank’s successors and assigns.  CoBank may assign this Guarantee, in wholeor in part, without notice to Guarantor. Guarantor waives all exemptions and all setoffs and counterclaims.  Only to the extent that this Guarantee isinconsistent with any prior guarantee given by Guarantor to CoBank, or containsadditional provisions, does this Guarantee supersede such prior guarantees;otherwise, such prior guarantees remain in full force and effect.

 

**12.**          If any payment received by CoBank andapplied to the Indebtedness is subsequently set aside, recovered, rescinded, orrequired to be returned for any reason (including, without limitation, thebankruptcy, insolvency or reorganization of Borrower), the Indebtedness towhich such payment was applied shall for the

 

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purposesof this continuing guarantee be deemed to have continued in existence, and thiscontinuing guarantee shall be enforceable as to such Indebtedness as fully asif such applications had never been made.

 

**13.         **Guarantor expressly waivesany and all rights of subrogation, reimbursement, indemnity, exoneration,contribution or any other claim which it may now or hereafter have againstBorrower or any other person directly or contingently liable for theIndebtedness guaranteed hereunder, or against or with respect to Borrower’sproperty, including without limitation, any property securing its Indebtednessto CoBank, arising from the existence or performance of this Guarantee.  In furtherance, and not in limitation, ofthe preceding waiver, Guarantor agrees that any payment to CoBank by guarantorpursuant to this Guarantee shall be deemed to be a contribution to the capitalof Borrower or other obligated party and such payment shall not cause Guarantorto be a creditor of Borrower or any other obligated party.  In addition to, and not in substitution for,any other rights granted to CoBank by this Guarantee, including but not limitedto any rights set forth in Paragraph 11 above, in the event that a bankruptcycourt determines that any monies paid by Borrower to CoBank are avoidablepreferences because they were made for the benefit of Guarantor, then Guarantorshall indemnify and hold CoBank harmless from any losses, including, but notlimited to all costs and expenses, including reasonable attorneys’ fees, whichCoBank may incur as a result of such determination.

 

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

 

**15.**          Neither this Agreement, nor anyprovision hereof, may be amended, modified, waived, or discharged except by an instrument in writing duly signed by, or onbehalf of, CoBank.

 

**16.         **In case any right of CoBankherein shall be held to be invalid, illegal, or unenforceable, such invalidity,illegality and/or unenforceability shall not affect any other right grantedhereby.

 

**17.**          **Guarantor’s Representations.**  Guarantor represents and warrants that:  (a) no representations or agreements of anykind have been made to the Guarantor which would limit or qualify in any waythe terms of this Guarantee; (b) the Guarantor has not and will not, withoutCoBank’s prior written consent, sell, lease, assign, encumber, hypothecate,transfer or otherwise dispose of any of the Guarantor’s assets, or any interesttherein, other than in the ordinary course of business; (c) CoBank has made norepresentation to the Guarantor as to the creditworthiness of the Borrower; (d)the Guarantor will provide to CoBank financial and credit information in formacceptable to CoBank, including balance sheets and income statements no lessfrequently than annually, as soon as they become available, not later than 120days after each fiscal year end or at such other times as CoBank may request.

 

**18.**          **Security.** This Guarantee is secured pursuant to existing security agreement(s),mortgages or deeds of trust, including any replacements, modifications oramendments thereto.  In addition, atCoBank’s request, the Guarantor agrees to grant to CoBank, by means of suchinstruments and documents as CoBank shall require, a first lien on such of theGuarantor’s other assets, whether now existing or hereafter acquired, as CoBankmay from time to time require.

 

**IN WITNESSWHEREOF,** the undersigned Guarantor has executed thisGuarantee this 27th day of February, 2003.

 
| **PRIMO PIATTO, INC.** |
|------------------------|
|                   |   |
| By:                    | /s/  Timothy J. Dodd |   |
|                   |   |   |
| Title:                 | President/CEO |   |

 

 

 

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