Exhibit
10.4


 


CONTINUING
GUARANTEE


 


1.             This Guarantee dated February 11,
2003, is for valuable consideration and to induce CoBank, ACB (“CoBank”) to
extend a loan or loans to DAKOTA GROWERS PASTA COMPANY, INC., Carrington,
North Dakota (“Borrower”), of which the undersigned is a wholly-owned
subsidiary of the Borrower.  PRIMO
PIATTO, INC., the
undersigned (“Guarantor”), unconditionally and absolutely guarantees and
promises to pay to CoBank, or order, on demand, in lawful money of the United
States, any and all Indebtedness of Borrower to CoBank.  The word “Indebtedness” is used herein in
its more comprehensive sense, and includes any and all advances, debts,
obligations and liabilities of Borrower, including but not limited to all
principal, interest, fees, expenses and stock subscription charges, heretofore,
now or hereafter made, incurred or created, whether voluntary or involuntary
and however arising, whether due or not due, absolute or contingent, liquidated
or unliquidated, determined or undetermined, and whether Borrower may be liable
individually or jointly with others, or whether recovery upon such Indebtedness
may be or hereafter become barred by any statute of limitation, or whether such
Indebtedness may be or hereafter become otherwise unenforceable.


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


IN WITNESS
WHEREOF, the undersigned Guarantor has executed this
Guarantee this 27th day of February, 2003.


 


	
  PRIMO PIATTO, INC. 

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Timothy J. Dodd

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  President/CEO

  	
   

  



 


 


 


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