Document:

Exhibit 10.1

 

Lease Agreement

 

	

   

  	

  Customer

  Number: 5033592

  	

   

  

 

 

 

 

Lessor and Lessee have executed this Lease Agreement effective March

6, 2002 and hereby agree to the terms contained below and in any attachments

made a part of this Lease Agreement.

 

This Lease and the attachments hereto

constitute the entire agreement of the parties with respect to the leasing of

the Equipment and the other subject matter of this Lease.  This Lease supersedes all prior written

and/or oral understandings or agreements with respect to the subject matter

hereof, and no change, modification, addition, or termination of this Lease

shall be enforceable unless in writing and signed by Lessor and Lessee.

 

	

   

  	

   

  	

  1600 Colonnade

  	

   

  
	

   

  	

   

  	

  5500 Wayzata BLVD

  	

   

  
	

  Lessee:

  	

   

  	

  Minneapolis, MN 55416-1252

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Dakota

  Growers Pasta Company

  	

   

  	

   

  	

   

  
	

  (print

  or type full name)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

  /s/ Thomas Friezen

  	

  3/7/02

  	

   

  	

   

  	

   

  
	

   

  	

  Signature

  	

  Date

  	

   

  	

   

  	

   

  
	

   

  	

  CFO

  	

   

  	

   

  	

   

  
	

   

  	

  Title(if

  applicable)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Signature

  	

  Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Address:  One Pasta

  Avenue, Carrington, ND 58421

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  STATE OF

  INCORPORATION/ORGANIZATION:

  	

   

  	

   

  	

   

  
	

   

  	

  North Dakota

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  REGISTRATION/ORGANIZATION

  NUMBER:  7604000

  	

   

  	

   

  	

   

  
								

 

 

	

  Lessor:

  	

   

  
	

   

  	

   

  
	

   

  	

  Farm  Credit Leasing  Services  Corporation

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Kevin Krueger

  	

   

  
	

   

  	

  Signature

  	

   

  
	

   

  	

   

  	

  SVP

  	

   

  
	

   

  	

  Title

  	

   

  
	

   

  	

   

  	

  3/7/02

  	

   

  
	

   

  	

  Date

  	

   

  

 

20

 

In consideration of the mutual covenants hereinafter

contained, the parties hereby agree as follows:

 

1. 

LEASE OF EQUIPMENT.  Lessor

hereby leases to Lessee, and Lessee hereby leases from Lessor, subject to the

terms of this Lease Agreement (“Lease” or “Lease Agreement”), the equipment and

other property (collectively, the “Equipment”, any one item of which may be

referred to individually as an “Item of Equipment”) described in any Schedule A

(“Schedule A”) executed by Lessor and Lessee and made a part hereof. Lessee

hereby authorizes Lessor to include in any Schedule A the serial number and

other information identifying the Equipment when determined by Lessor. Time is

of the essence in Lessee’s payment and performance of each of its obligations

under this Lease.

 

Each such Schedule A when executed by the

parties shall be deemed to be a part of this Lease, it being understood and

agreed that this Lease shall be a Master Lease. All Schedules, addenda or other

attachments to this Lease executed by Lessor and Lessee are hereby incorporated

herein and made a part hereof. Each Schedule A, incorporating the terms and

conditions of this Lease, shall constitute a separate instrument of lease.

 

2. 

RENTALS/LEASE TERM.  Lessee

agrees to pay Lessor rentals for each Item of Equipment leased under this Lease

as set forth in the Schedule A applicable to such Item of Equipment. All

rentals shall be payable as described to Lessor at Lessor’s mailing address set

forth in such Schedule A, or to such other person or at such other place as

Lessor may from time to time designate in writing. “Scheduled Lease

Commencement Date” for purposes of this Lease shall be the first day of the

month following the In-Service Date; provided, however, in the event the Daily

Billing Option is selected on the applicable Schedule A, the Scheduled Lease

Commencement Date shall be the In-Service Date. “In-Service Date” shall be the

date Equipment is delivered and accepted by Lessee for lease as provided

herein. The “Scheduled Lease Term” shall be as set forth in the applicable

Schedule A. Rentals for each Item of Equipment shall commence on the Scheduled

Lease Commencement Date with respect to each Item of Equipment. If the

In-Service Date occurs prior to the Scheduled Lease Commencement Date, Lessor

shall be entitled to a rental (“Interim Rent”) for the period from such

In-Service Date to the Scheduled Lease Commencement Date (the “Interim

Period”). Interim Rent shall be computed by dividing all rentals other than

Interim Rent due under the Lease by the actual number of days in the Scheduled

Lease Term and multiplying this result by the actual number of days from

In-Service Date to Scheduled Lease Commencement Date. Interim Rent (if any)

shall be due on the Scheduled Lease Commencement Date. The Scheduled Lease

Term, including any Minimum Term as described in Paragraph 3 below, together

with the Interim Period, if any, and any renewal period(s) shall constitute the

Lease Term (“Lease Term”) for each Item of Equipment. Lessee agrees to pay

Lessor at the expiration or other termination of the Lease Term, additional

rents, as described in the Schedule A or any other document executed in

connection with this Lease. The termination of this Lease with respect to certain

Items of Equipment shall not affect the continuation of this Lease with respect

to other Items of Equipment not subject to such termination. Unless otherwise

provided in the event the Lessee exercises the option to renew the Lease,

rentals for the renewal period shall be agreed to by the parties at the time of

renewal.

 

3. 

MINIMUM LEASE TERM.  The Minimum

Lease Term, if any, (“Minimum Term”) shall be set forth in the Schedule A for

each Item of Equipment and shall commence on the Scheduled Lease Commencement

Date. If the Minimum Term is less than the Scheduled Lease Term,  upon completion of the Minimum Term, the

Lessee is deemed to have continued the Lease on a month-to-month basis, until

completion of the Scheduled Lease Term unless the Lessee notifies the Lessor in

writing thirty (30) days prior to the end of the Minimum Term that it desires

to terminate the Lease.

 

4. 

FLOATING RENTAL RATE. 

Notwithstanding any provision to the contrary contained in Paragraph 2

above, if Floating Rate is specified on the Schedule A applicable to an Item of

Equipment, the Lessee’s rental obligation for such Item of Equipment shall be

adjusted at each rental due date based on the index specified on such Schedule

A. Rental adjustments will be calculated based on monthly changes in the index

up or down. Monthly changes in the index and the outstanding lease balance for

each Item of Equipment will be used to compute an adjusted rental amount.

Rental adjustments will be compounded and accumulated monthly and billed to the

Lessee based on the Rental frequency specified on the appropriate Schedule A.

 

21

 

5. 

LATE CHARGES.  If Lessee fails to

pay any rental or other amount required to be paid by Lessee to Lessor, within

five (5) days after the due date thereof, Lessee shall (in addition to all

other amounts due Lessor) pay Lessor the lesser of one and one-half percent

(1.5%) per month, or the maximum amount allowed by law until paid on such

unpaid amounts.

 

6. 

SECURITY DEPOSIT.  If a Security

Deposit amount is specified in the Schedule A, Lessee agrees to pay such amount

to Lessor prior to the Scheduled Lease Commencement Date. If Lessee has

fulfilled all terms and conditions herein, the Security Deposit shall be

returned to Lessee without interest or it may be applied to any purchase option

exercised by Lessee at the expiration of the Lease.

 

7.  NO

WARRANTIES/LESSEE’S OBLIGATIONS (VENDOR NOT AN AGENT). LESSEE ACKNOWLEDGES THAT: LESSOR IS NOT

THE MANUFACTURER OF THE EQUIPMENT NOR THE MANUFACTURER’S AGENT NOR A DEALER

THEREIN; THE EQUIPMENT IS OF A SIZE, DESIGN, CAPACITY, DESCRIPTION AND

MANUFACTURE SELECTED BY LESSEE; LESSEE IS SATISFIED THAT THE EQUIPMENT IS

SUITABLE AND FIT FOR ITS PURPOSES; LESSOR HAS NOT MADE AND DOES NOT MAKE ANY

WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE

FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE EQUIPMENT, ITS

FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN

THE EQUIPMENT OR WORKMANSHIP IN THE EQUIPMENT NOR ANY OTHER REPRESENTATION OR

WARRANTY WHATSOEVER; LESSOR SHALL NOT BE LIABLE TO LESSEE AND LESSEE HEREBY

WAIVES ANY CLAIM IT MAY HAVE AGAINST LESSOR FOR ANY LOSS, DAMAGE (CONSEQUENTIAL

OR OTHERWISE) OR EXPENSE CAUSED DIRECTLY OR INDIRECTLY BY THE EQUIPMENT LEASED

HEREUNDER. NO DEFECT OR UNFITNESS OF THE EQUIPMENT NOR ANY REPRESENTATION AS TO

THE EQUIPMENT OR ANY OTHER MATTER BY VENDOR SHALL RELIEVE LESSEE OF THE

OBLIGATION TO PAY ANY RENTALS OR PERFORM ANY OTHER OBLIGATION UNDER THIS LEASE.

LESSEE UNDERSTANDS AND AGREES THAT NEITHER VENDOR NOR ANY SALES REPRESENTATIVE

OR OTHER AGENT OF VENDOR, IS AN AGENT OF LESSOR. NO SALES REPRESENTATIVE OR

AGENT OF VENDOR IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE.

Lessor hereby assigns to Lessee for the duration of this Lease all

warranties received by Lessor with respect to the Equipment, to the extent

assignable, and Lessor shall have no obligation whatsoever to make any claim on

such warranty.

 

8. 

LOCATION/INSPECTION/MARKING.  The

Equipment at all times shall be located at the address specified in the

applicable Schedule A unless Lessee has notified Lessor in writing of a change

of location for each Item of Equipment and Lessor consents to such change.

Lessee shall make the Equipment available for inspection by Lessor’s

representatives during Lessee’s normal business hours and shall make Lessee’s

log, maintenance and other records pertaining to the Equipment available for

inspection and duplication by Lessor’s representatives. Lessee shall affix to

or place on the Equipment such labels, plates, or other markings indicating

Lessor’s ownership in the Equipment as may be directed and supplied by Lessor.

 

9. 

USE.  Lessee agrees all Equipment

will only be used in Lessee’s trade or business and will be operated by

competent and qualified personnel only and in accordance with applicable

operating instructions, laws, government regulations, and applicable insurance

policies.

 

10. 

RISK OF LOSS/GENERAL INDEMNITY. Lessee hereby assumes the risk of bodily

injury or death, and of damage to property, including the Equipment, and the

loss of such property, from whatsoever cause during the Lease Term. Lessee

shall indemnify and hold Lessor harmless from and against any and all claims,

losses, liabilities (including patent infringement, negligence, tort and strict

liability), damages, judgments, suits, and all legal proceedings, and any and

all costs and expenses in connection therewith (including attorneys’ fees)

arising out of or in any manner connected with the manufacture, sale, purchase,

financing, ownership, delivery, rejection, non-delivery, possession, use,

transportation, storage, condition, operation, maintenance, repair, return or

other disposition of the Equipment or with this Lease, including, without

limitation, claims for injury to or death of persons, for damage to property,

for violation of any law, rule or regulation of any public authority, and for

environmental damage and clean-up. Lessee shall give Lessor prompt notice of

any such claim or liability. The

 

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provisions of this Paragraph shall survive

the expiration or termination of this Lease. Lessee agrees that upon written

notice by Lessor of the assertion of any claim, action, damage, obligation,

liability, or lien, Lessee shall, at its own cost and expense, at Lessor’s

written request, assume the full responsibility for the defense thereof. Any

payment pursuant to this Paragraph shall include an amount equal to any taxes

required to be paid by Lessor as a result of the receipt of such payment.

 

11. 

ALTERATIONS/REPAIRS/PERSONAL PROPERTY. 

Any improvement, replacement, addition, accessory, or repair part for

the Equipment shall become the property of Lessor free of all liens and

encumbrances and shall be deemed part of the Equipment. The Equipment is, and

shall at all times be and remain, personal property, notwithstanding that any

Item of Equipment or any part thereof shall now be or hereafter become in any manner

affixed or attached to real property or any improvements thereof.

 

12. 

MAINTENANCE.  Lessee shall pay

all costs and expenses of whatever nature resulting from the use and operation

of each Item of Equipment.  Lessee, at

its expense, shall keep the Equipment in good repair, condition and working

order, in full compliance with all applicable manufacturer’s recommendations,

ordinary wear and tear excepted.

 

13. 

TAXES.  Lessee shall pay when due

and be responsible for all charges, taxes and fees which may now or hereafter

be imposed or levied by any governmental body or agency required to be paid or

collected by Lessor on or relating to the Equipment leased hereunder and the

sale, purchase, rental, operation, maintenance or use thereof (excluding any taxes

on or measured by the net income of Lessor) together with any penalties or

interest applicable thereto, whether the same be payable by or assessed to

Lessor or Lessee.  If under law or

custom such payments may be made only by Lessor, Lessee shall promptly notify

Lessor and shall reimburse Lessor, upon demand, all such payments made by

Lessor. Upon request, Lessee will furnish to Lessor a photocopy of evidence

satisfactory to Lessor reflecting payment by Lessee.  The provisions of this Paragraph shall survive the expiration or

termination of this Lease.

 

14. 

PERSONAL PROPERTY TAXES. 

Wherever equipment is subject to personal property taxes in the

jurisdiction where the Equipment is located, Lessor will properly report any

and all property values for all lease transactions with the appropriate

property tax assessor or other proper official. Lessee shall reimburse Lessor

for all personal property taxes assessed by the applicable taxing jurisdiction.

If Lessor does not notify Lessee of Lessor’s intent to file the applicable

property tax return within fourteen (14) days of the personal property tax

return due date, or if Lessee has made a written request that Lessor not file

such return, Lessee shall file all property values with the appropriate taxing

jurisdiction and assume full responsibility for the payment of all such taxes,

assessments, penalties and interest when due. Lessee shall also reimburse

Lessor any costs and expenses incurred by Lessor (including reasonable

attorneys’ fees), as a result of Lessee’s failure to report and pay such taxes

and charges. The provisions of this Paragraph shall survive the expiration or

termination of this Lease.

 

15. 

INSURANCE.   Lessee shall at its

own expense acquire and maintain, during the term hereof, with such insurers,

in such form and under such policies as shall be satisfactory to Lessor, both:

a) all risk property

insurance, naming Lessor as loss payee, in amounts and under coverages to

provide for rebuilding, repairing or replacing the Equipment in the event of any

damage, destruction, loss or theft of the Equipment. The amount of such

insurance shall be at least equal to the Equipment Cost described in the

Schedule A for each Item of Equipment; and

b) general comprehensive

public liability insurance including coverage for any bodily injury, death, or

property damage which may be caused by or related to the Equipment or its

operation, in amounts satisfactory to Lessor. Such insurance shall name Lessor

as an additional insured.

 

If any loss occurs it shall be paid by check

or draft payable to Lessor. Lessor may endorse Lessee’s name thereon as

Lessee’s agent. Lessee shall furnish to Lessor a certificate of insurance

indicating that such insurance coverages are in effect at the time the

Equipment is delivered and shall deliver to Lessor, prior to the scheduled

expiration or lapse of such insurance coverage evidence satisfactory to Lessor

of renewal or replacement coverage. 

Each insurer shall agree, by endorsement that, (i)  such insurance cannot be canceled or altered

without at least thirty (30) days prior written notice to Lessor, and (ii)

insurance as to the interest of any named additional insured or loss payee

other than Lessee shall not be invalidated by any actions, inactions , breach

of warranty or conditions or negligence of Lessee

 

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or any other person other than Lessor with

respect to such policy or policies.  If

Lessee fails to pay insurance required to be provided by Lessee under this

Lease, Lessor may, but is not obligated to provide such insurance. Lessee

shall, upon demand reimburse Lessor for any costs, fees, or expenses incurred

in providing such insurance.

 

16. 

CASUALTY OCCURRENCE.

a)  For purposes of this Lease, a “Casualty Occurrence” shall mean any

Item of Equipment destroyed, irreparably damaged, lost, stolen, unaccounted

for, or taken or requisitioned by condemnation or otherwise during the term of

this Lease.

b)  In the event that any Item of Equipment shall suffer a Casualty

Occurrence, Lessee shall promptly and fully inform Lessor with respect

thereto.  Lessee shall pay to Lessor, on

the first day of the month following the giving of such notice, an amount

(“Casualty Loss Value”) equal to the sum of: 

(i) the amount which will cause the Lessor to realize the same rate of

return up to the date of the Casualty Occurrence that the Lessor would have

realized had the Lease of the Equipment been in effect for the entire Lease

Term; and (ii) all installments of rental then due with respect to that Item of

Equipment. The total rental described in the Schedule A which contained an Item

of Equipment for which a Casualty Loss Value was paid, shall be reduced by a

percentage derived by dividing the Cost of the Item of Equipment experiencing

the Casualty Occurrence by the Total Equipment Cost described in such Schedule

A. Lessor shall be entitled to receive and retain any proceeds from any

insurance with respect to such Item of Equipment up to the amount of the

Casualty Loss Value. Provided an Event of Default has not occurred and is

continuing, Lessor shall pay over such insurance proceeds to Lessee to the

extent such amounts exceed the Casualty Loss Value or the entire insurance

proceeds received if Lessee has previously paid the Lessor the Casualty Loss Value.

Upon Lessor’s receipt of such payment, Lessee shall be entitled to whatever

interest Lessor may have in said Item of Equipment, in its then condition and

location, without warranties, express or implied, and this Lease shall

terminate with respect to such Item of Equipment.

 

17. 

LOSS AND DAMAGE.  No loss, theft,

damage, or destruction of Equipment shall relieve Lessee of the obligation to

pay rent or perform any other obligation under this Lease. In the event of

damage to any Item of Equipment which does not constitute a Casualty

Occurrence, Lessee shall at its sole cost and expense immediately repair and

restore such Item of Equipment to the condition required by this Lease. Upon

receipt of evidence reasonably satisfactory to Lessor of completion of such

repairs, Lessor will apply any insurance proceeds received by Lessor on account

of such loss to the cost of repairs..

 

18. 

EVENTS OF DEFAULT.  The following

shall constitute Events of Default:

a)  Lessee shall fail to pay all or any part of a rental payment or

any other payment when due and payable; or

b)  Lessee shall fail to perform or shall breach any of the other

covenants herein and shall continue to fail to observe or perform the same for

a period of ten (10) days after written notice thereof by Lessor; or

c)  Without Lessor’s consent, Lessee removes, sells, transfers,

assigns, parts with possession, or sublets any Item of Equipment; or

d)  Lessee creates, incurs, or suffers to exist any mortgage, lien,

or other encumbrance or attachment of any kind whatsoever upon or affecting the

Equipment or this Lease or any of Lessor’s interests thereunder; or

e)  Lessee becomes insolvent, makes an assignment for the benefit of

creditors, ceases or suspends its business, admits in writing its inability to

pay its debts as they mature; or bankruptcy, reorganization or other

proceedings for the relief of debtors or benefit of creditors shall be

instituted by or against Lessee; or

f)  Any representation or warranty made by Lessee herein or in any

document or certificate furnished to Lessor proves to be incorrect in any

material respect when made; or

g) Lessee terminates its

existence, changes its legal or organizational status, consolidates with,

merges into, or conveys or leases substantially all of  its assets as an entirety to any person; or

h)  Lessee shall be in default under any other agreement executed

with Lessor at any time; or

i)   Lessee shall be in default under any

material obligation for the payment of borrowed money, for the deferred

purchase price of property or any payment under any lease agreement.

 

The occurrence of an Event of Default with

respect to any Schedule A shall, at the sole discretion of Lessor, constitute

an Event of Default with respect to any or all Schedule As  to which Lessor is then a party.  Notwithstanding the foregoing, Lessor may

exercise all rights and remedies independently with respect to each Schedule A.

 

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In this Paragraph 18, “Lessee” also means any

guarantor of Lessee’s obligations under the Lease and “Lease” also means any

guaranty of those obligations.

 

19. 

REMEDIES UPON DEFAULT.  Upon the

occurrence of any Event of Default and at any time thereafter, Lessor may do

any one or more of the following with or without terminating this Lease:

a)  Declare the entire amount of rental and other charges due and to

become due hereunder for the entire Lease Term immediately due and payable;

b)  Take immediate possession of any and all Equipment without

notice;

c)  Sell or lease any Equipment or otherwise dispose, hold, or use

such Equipment at Lessor’s sole discretion;

d) Demand payment of all

costs incurred by Lessor in the course of correcting any default (including

attorneys’ fees and costs as described in Paragraph 28 herein);

e)  Proceed against any or all security given in

connection herewith which includes but is not limited to sureties and

guarantors;

f) Upon notice to Lessee,

cancel this Lease and any or all Schedules executed pursuant hereto. Any

cancellation or any  termination

hereunder shall only occur upon such notice by Lessor and only as to such Items

of Equipment included in such notice. This Lease shall continue in full force

and effect as to the remaining Items of Equipment, if any;

g)  Exercise any other right or remedy available to Lessor under the

Uniform Commercial Code (“UCC”) or any other applicable law. If this Lease is

deemed at any time to be one intended as security or otherwise, Lessee agrees

that the Equipment shall secure all amounts whatsoever owing by Lessee to

Lessor;

h)  Recover from Lessee, not as a penalty but as liquidated damages,

an amount equal to the sum of: (i) any accrued and unpaid rentals as of the

date the Lessor obtains possession of the Equipment following Lessee’s default

(“Repossession Date”); plus (ii) the present value of all future rentals

reserved in the Lease and contracted to be paid over the unexpired term of the

Lease discounted at a rate equal to the six (6) month U.S. Treasury Bill rate

as of the Repossession Date; plus (iii) all costs and expenses incurred by

Lessor in any repossession, recovery, storage, repair, sale, re-lease or other

disposition of the Equipment including reasonable attorney’s fees and costs

incurred in connection with or otherwise resulting from the Lessee’s default;

plus (iv) the present value of the estimated residual value of the Equipment as

of the expiration of the Lease; discounted at a rate equal to the six (6) month

U.S. Treasury Bill Rate as of the Repossession Date; Less the amount received by Lessor upon sale

or re-lease of such Items of Equipment, if any.

 

Notwithstanding Paragraph 19(h) above, Lessor

and Lessee agree that in the event it is adjudged or otherwise determined that

following an Event of Default, Lessor is entitled to the present value of any

damages owed to Lessor, the discount rate shall be equal to the six (6) month

U.S. Treasury Bill rate in effect at the time the Event of Default occurred.

Lessor’s rights and remedies provided hereunder or by law shall be cumulative

and shall be in addition to all other rights and remedies available to

Lessor.  Lessor’s failure to strictly

enforce any provisions of this Lease or any other right available to Lessor

shall not be construed as a waiver thereof or as excusing Lessee from future

performance.

 

With respect to any exercise by Lessor of its

right to recover and/or dispose of any Equipment or other Collateral (as such

term is defined in Paragraph 25 herein) securing Lessee’s obligations

hereunder, Lessee acknowledges and agrees as follows: (i) Lessor shall have no

obligations, subject to the requirements of commercial reasonableness, to

clean-up or otherwise prepare the Equipment or any other Collateral for

disposition, (ii) Lessor may comply with any applicable state or Federal law

requirements in connection with any disposition of the Equipment or other

Collateral, and any actions taken in connection therewith shall not be deemed

to have adversely affected the commercial reasonableness of any disposition of

such Equipment and/or other Collateral, and (iii) Lessor may sell the Equipment

or Collateral at public or private sale at which Lessor may purchase the

Equipment or Collateral for its own account and apply the net proceeds (after

deducting all reasonable expenses of Lessor) to amounts owed to Lessor after an

Event of Default with Lessee remaining liable for any deficiency.

 

20. 

ASSIGNMENT/SUBLEASE.

a) LESSEE SHALL NOT ASSIGN OR IN ANY WAY

DISPOSE OF ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR

ENTER INTO ANY SUBLEASE OF ALL OR ANY PART OF THE EQUIPMENT WITHOUT THE PRIOR

WRITTEN CONSENT OF LESSOR. ANY

 

25

 

ATTEMPTED ASSIGNMENT BY LESSEE WITHOUT SUCH CONSENT SHALL BE

NULL AND VOID AND SHALL BE AN EVENT OF DEFAULT UNDER THIS LEASE. No sale,

assignment or sublease, whether authorized in this Lease or in violation of the

terms hereof, shall relieve Lessee of its obligations, and Lessee shall remain

primarily liable hereunder.

b)  Lessor shall have the right, without notice to Lessee, to assign

or create a security interest in this Lease, or assign any of its rights or

interests in this Lease, or in the Equipment. If Lessee is given notice of such

assignment or security interest, Lessee shall acknowledge such assignment or

security interest in writing upon terms satisfactory to Lessor. Upon written

notice to Lessee from Lessor of any assignment or of any security interest

created by Lessor hereunder, Lessee shall pay rentals directly to such assignee

if directed by Lessor to do so. Lessee agrees to confirm in writing receipt of

any notice of assignment, syndication, participation or placement, as

reasonably may be requested by Lessor or any such assignee or participant

(collectively, the “Assignee”).  Lessee

hereby waives and agrees not to assert against any such Assignee any defense,

setoff, recoupment, claim or counterclaim which Lessee has or may at any time

hereinafter have against Lessor or any person other than such Assignee, for any

reason whatsoever.  Lessee will provide

reasonable assistance to Lessor in whatever manner necessary in order to permit

Lessor to complete any resale, syndication, assignment, participation or

placement of the transaction contemplated by this Lease.  Upon such assignment and except as may

otherwise be provided therein all references in this Lease to Lessor shall

include such Assignee. Lessee acknowledges that any assignment or transfer by

Lessor shall not materially change Lessee’s duties or obligations under this

Lease nor materially increase the burdens or risks imposed on Lessee.

 

21. 

OWNERSHIP.  Title to the

Equipment shall remain with Lessor at all times and Lessee shall have no right,

title, or interest therein except as expressly set forth in this Lease.

 

 22.  RETURN OF

EQUIPMENT.  If Lessee does not exercise

any purchase option provided in this Lease, at the expiration of the Lease Term

or other termination of this Lease, Lessee shall, at its own expense, deliver

the Equipment to such location as may be designated by Lessor. The Equipment shall

be delivered by Lessee to Lessor in the same condition as it was when delivered

to Lessee, normal wear and tear excepted. Lessor and Lessee agree that,

notwithstanding terms contained in the Lease to the contrary, the Lease Term

shall not expire until the Equipment is returned to Lessor as provided in this

Paragraph. In addition to Lessor’s other rights and remedies, if the Equipment

is not returned in a timely fashion, or if repairs are necessary to place any

Item of Equipment in the condition required under this Lease, Lessee shall

continue to pay to Lessor per diem rent at the last prevailing rate under the

applicable Schedule A with respect to such Item of Equipment, for the period of

delay in redelivery, or for the period of time reasonably necessary to

accomplish such repairs, as applicable. 

Lessor’s acceptance of such rent on account of such delay or repair does

not constitute a renewal of the term of the related Equipment or Schedule A or

a waiver of Lessor’s right to prompt return of the Equipment in proper

condition.

 

23. 

LESSEE’S OPTIONS.  So long as all

amounts due Lessor have been paid and no Event of Default has occurred and is

continuing, Lessee may, upon at least sixty (60) days advance written notice to

Lessor, have the option at the expiration of the Minimum Term to: (i) purchase

the Equipment at fair market value; (ii) continue the Lease as provided in

Paragraph 3 of this Lease; or (iii) return the Equipment to Lessor as provided

in Paragraph 22 herein. So long as all amounts due Lessor have been paid and no

Event of Default has occurred and is continuing, Lessee may, upon at least

sixty (60) days advance written notice to Lessor, have the option at the

expiration of the Scheduled Lease Term to: (i) purchase the Equipment at the

Purchase Option Amount specified on the applicable Schedule A or if no such

amount is specified, at fair market value; (ii) renew the Lease as provided in

Paragraph 2 herein; or (iii) return the Equipment to Lessor as provided in

Paragraph 22 herein. As used in this Paragraph 23, Equipment shall mean all,

but not less than all, of the Equipment described in any Schedule A.

 

24. 

NOTICES.

a)  Any requirement of the UCC or other applicable statute of

reasonable notice shall be met if such notice is given at least ten (10) days

before the time of sale, disposition, or other event or thing giving rise to

the requirement of notice.

b)  All notices or communications hereunder shall be in writing,

personally delivered, delivered by overnight courier service, sent by facsimile

or other electronic transmission (with confirmation of receipt), or sent by

certified mail, return receipt requested, addressed to the other party at its

respective address stated below the signature of such party or at such other

address as such party shall from time to time designate in writing to the other

party, and shall be effective from the date of receipt.

 

26

 

c)  Lessor and Lessee may in writing at any time, and from time to

time, change the address to which notice shall be delivered or mailed.

 

25. 

FURTHER ASSURANCES/FINANCING STATEMENTS/SECURITY INTEREST. Lessee will

promptly execute, or otherwise authenticate, and deliver to Lessor such further

documents, instruments, assurances and other records, and take such further

action as Lessor may from time to time reasonably request in order to carry out

the intent and purpose of this Lease and to establish and protect the rights

and remedies created or intended to be created in favor of Lessor under this

Lease (including, without limitation (i) lien searches, (ii) certificates of

title, and (iii) such UCC financing statements, fixture filings and waivers as

reasonably may be required by Lessor in connection with any Item of Equipment,

any change in circumstances relating to Lessee, or otherwise); provided,

however, Lessee hereby authorizes Lessor to file any and all of the same

without Lessee’s authentication, to the extent permitted by applicable law.

Lessee shall provide written notice to Lessor not less than thirty (30) days

prior to any contemplated change in the name, the jurisdiction of organization,

or address of the chief executive office, of Lessee and Lessee shall pay to

Lessor all costs incurred by Lessor including reasonable attorneys’ fees, to

prepare and file any documents, including UCC financing statements, relating to

any such change.  In order to secure the

prompt payment of the rentals and all of the other amounts from time to time

outstanding under and with respect to this Lease, and the performance and

observance by Lessee of all the agreements, covenants and provisions hereof, or

in the event this Lease should be construed as a lease intended as security, or

otherwise, Lessee hereby grants to Lessor a first priority security interest in

the Equipment together with, all additions, attachments, accessories and

accessions thereto whether or not furnished by the supplier of the Equipment

any intangibles, including software, all security deposits, and any and all

substitutions, replacements or changes for any Item of Equipment, any other

property against which a security interest is granted by Lessee to Lessor

(collectively, the “Collateral”), and any and all insurance and/or other

proceeds of the Equipment and the Collateral and in such event Lessor shall

have all of the rights and remedies of a secured party under the UCC.

 

26. 

NON-CANCELABLE LEASE/OBLIGATIONS UNCONDITIONAL/ WAIVER.  THIS LEASE CANNOT BE CANCELLED OR TERMINATED EXCEPT AS

EXPRESSLY PROVIDED HEREIN. LESSEE HEREBY AGREES THAT LESSEE’S OBLIGATION TO PAY

ALL RENTALS AND PERFORM ALL OTHER OBLIGATIONS HEREUNDER SHALL BE ABSOLUTE,

IRREVOCABLE, UNCONDITIONAL AND INDEPENDENT AND SHALL BE PAID AND PERFORMED

WITHOUT ABATEMENT; DEDUCTION OR OFFSET OF ANY KIND OR NATURE WHATSOEVER. To

the extent permitted by applicable law, Lessee also hereby waives any rights

now or hereafter conferred by statute or otherwise which may require Lessor to

sell, lease or otherwise use any Equipment in mitigation of Lessor’s damages as

set forth in Paragraph 19 or which may otherwise limit or modify any of

Lessor’s rights or remedies under Paragraph 19. Any action by Lessee against

Lessor for any default by Lessor under this Lease, including breach of warranty

or indemnity, shall be commenced within one (1) year after any such cause of

action accrues.

 

27. 

REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee represents and warrants

that: (i)  Lessee is duly organized,

validly existing and in good standing under the laws of the jurisdiction

specified below the signature of Lessee, and the organizational number assigned

to Lessee by such jurisdiction, if any, is as specified below the Lessee’s

signature;  (ii) Lessee’s full and

accurate legal name is as first provided above; (iii) Lessee is duly qualified

to do business wherever necessary to carry on its present business and

operations; (iv) Lessee has full power, authority and legal right to enter into

and perform this Lease and the execution, delivery and performance of such

documents have been duly authorized, do not require the approval of any

governmental body, will not violate any judgment, order, law or regulation

applicable to Lessee or any provision of Lessee’s certificate of incorporation

or bylaws, if any, or constitute a default under, or result in the creation of

any lien, charge, encumbrance or security interest upon any assets of the

Lessee under any agreement or instrument to which Lessee is a party or by which

Lessee or its assets may be bound or affected; (v) this Lease and all schedules

and attachments shall have been duly entered into, delivered and shall

constitute, legal, valid and binding obligations of Lessee, enforceable in

accordance with their terms when executed by Lessor and Lessee; (vi) there are

no pending or threatened actions or proceedings to which Lessee is a party, and

there are no threatened actions or proceedings of which Lessee has knowledge

which either individually or in the aggregate would have a material adverse

effect on the business or operations of Lessee.

 

28. 

ATTORNEYS’ FEES AND COSTS. Lessee acknowledges that Lessee shall be

liable for all reasonable attorneys’ and other legal fees (including

consultation, drafting documents, sending notices or instituting, prosecuting

or defending litigation or arbitration) and other enforcement costs and

expenses (including court costs

 

27

 

and other related litigation costs) incurred

by reason of any default, Event of Default, the exercise of Lessor’s rights or

remedies, Lessor’s enforcement or defense of any other provisions of this

Lease, including all expenses incurred in connection with the return or other

recovery of any Equipment or other Collateral, the sale, re-lease or other

disposition thereof (including but not limited to costs of transportation,

possession, storage, refurbishing, advertising and brokers’ fees) and all other

pre-judgment and post-judgment enforcement related actions taken by Lessor,

and/or any actions taken by Lessor in any bankruptcy case involving Lessee, the

Equipment or any other Collateral.

 

29. 

FINANCIAL STATEMENTS. Lessee shall promptly furnish Lessor with Lessee’s

annual certified financial statements. Lessee shall also furnish Lessor with

other financial information as Lessor may reasonably request. If Lessee does

not have certified financial statements available in the normal course of

business, Lessee shall provide uncertified financial statements that accurately

reflect Lessee’s financial condition including copies of its most recent

federal income tax returns.

 

30. 

ENFORCEABILITY/CAPTIONS.

a)  If any part, term, or provision of this Lease is held by any

court to be unenforceable or prohibited by law, the rights and obligations of

the parties shall be construed and enforced with that part, term, or provision

limited so as to make it enforceable to the greatest extent allowed by law, or

if it is totally unenforceable, as if this Lease did not contain that

particular part, term, or provision.

b) This Lease shall not be

effective unless and until accepted by execution by Lessor at the address as

set forth below the signature of Lessor.

c) This Lease shall inure to

the benefit of Lessor, its successors, and assigns, and all obligations of

Lessee shall bind its permitted successors and assigns.

d) The headings in this

Lease have been included for ease of reference only and shall not be considered

in the construction or interpretation of this Lease.

 

31. CONSTRUCTION/JURISDICTION. THIS LEASE

AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL IN ALL RESPECTS

BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE

STATE OF MINNESOTA (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH

STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,

REGARDLESS OF THE LOCATION OF THE EQUIPMENT. Lessee hereby

irrevocably submits and consents to the jurisdiction and venue of the state and

federal courts located in Minnesota for purposes of resolving all disputes of

any nature whatsoever regarding the Lease, or any transaction contemplated

hereby, and Lessee hereby irrevocably waives any objection which it may now or

hereafter have to the laying of jurisdiction or venue in the federal or state

courts of Minnesota.  Lessor and Lessee

agree that a summons and complaint commencing an action or proceeding in any

such court shall be properly served and shall confirm personal jurisdiction by

mailing a copy thereof, by registered mail, postage prepaid, to such party at

its address designated pursuant to this Lease, or as otherwise provided under

the respective rules of the state or federal courts of Minnesota. Lessee agrees

that any suit to enforce any claim arising out of the Lease or any course of

conduct or dealing of Lessor shall be brought and maintained exclusively in any

Minnesota state or federal court. Nothing herein shall affect the right of

Lessor to bring any action or proceeding against Lessee in the courts of any

other jurisdiction.

 

32. WAIVER OF JURY TRIAL. LESSEE AND LESSOR HEREBY IRREVOCABLY

WAIVE THE RIGHT TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, COUNTERCLAIM OR

CROSS-COMPLAINT IN ANY ACTION OR PROCEEDING TO WHICH LESSEE AND/OR LESSOR MAY

BE A PARTY ON ANY MATTER WHATSOEVER BASED UPON, ARISING OUT OF, OR IN ANY WAY

PERTAINING OR RELATED TO, OR CONNECTED WITH, THIS LEASE OR ANY OTHER AGREEMENT

OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH OR ANY OBLIGATIONS HEREUNDER OR

THEREUNDER.  THIS WAIVER IS KNOWINGLY,

WILLINGLY AND VOLUNTARILY MADE BY LESSEE AND LESSOR, WHO ACKNOWLEDGE THAT NO

REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL

BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT.  THIS WAIVER SHALL APPLY TO ANY AMENDMENTS,

RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE OR SUCH OTHER AGREEMENTS

OR INSTRUMENTS.

 

28

 

33. FAIR MARKET VALUE. “Fair market value,”

as to each Item of Equipment for all purposes in connection with this Lease,

shall have the meaning and shall be determined in accordance with the procedure

set forth in this Paragraph 33. Fair market value shall be determined on the

basis of, and be equal in amount to, the value which would be obtained in an

arm’s length transaction between an informed and willing buyer-user (other than

a lessee currently in possession or a used equipment dealer) under no

compulsion to buy, and an informed and willing seller under no compulsion to

sell, and, in such determination, costs or removal from the location of current

use shall not be a deduction from such value.

 

In the event Lessor and Lessee shall be

unable to agree upon the fair market value of an Item of Equipment, a

determination of fair market value shall be made under the provisions of this

Paragraph 33.  The party requesting such

determination shall deliver a written notice to the other party so indicating

and appointing an appraiser selected by the requesting party to determine the

fair market value. Within fifteen (15) days after the receipt of such written

notice the party receiving such notice shall deliver to the requesting party a

written notice appointing an appraiser of its selection to make such

determination. The two appraisers appointed in such written notices shall meet

promptly to determine the fair market value of such Item of Equipment as of the

applicable date.  If within thirty (30)

days after the initial written notice the two appraisers so appointed by Lessor

and Lessee shall be unable to agree upon the fair market value of such Item of

Equipment, such appraisers shall within five (5) days thereafter appoint a

third appraiser.  The decision of the

three appraisers so appointed shall be given within a period of ten (10) days

after the appointment of such third appraiser. 

Any decision in which any two appraisers so appointed and acting

hereunder concur shall in all cases be binding and conclusive upon Lessor and

Lessee.  The fees and expenses of the

appraisers shall be borne equally by Lessee and Lessor, unless the Lease shall

have been terminated pursuant to Paragraph 19, hereof, in which case Lessee

shall pay all such fees and expenses.

 

29

 

Schedule A

 

	

   

  	

  Contract Number: 

  	

  001-6092228

  	

   

  
	

   

  	

  Customer Number:

  	

   

  	

   

  
	

   

  	

   Customer Unit Number:

  	

   

  	

   

  

 

This Schedule A, when executed by both Lessee and Lessor shall be made

a part of that Lease Agreement dated March 6, 2002 (“Lease”), between Lessee

and Lessor.

 

 

	

  Lessee:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Dakota

  Growers Pasta Company

  	

   

  	

   

  	

   

  
	

  (print

  or type full name)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

   

  	

  /s/ Thomas Friezen

  	

  3/29/02

  	

   

  	

   

  	

   

  
	

   

  	

  Signature

  	

  Date

  	

   

  	

   

  	

   

  
	

   

  	

  CFO

  	

   

  	

   

  	

   

  
	

   

  	

  Title(if

  applicable)

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Signature

  	

  Date

  	

   

  	

   

  	

   

  

 

 

	

  Lessor:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Farm  Credit Leasing  Services  Corporation

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ Maggie J. Kiernan

  	

   

  	

   

  	

   

  
	

   

  	

  Signature

  	

   

  	

  1600 Colonnade

  	

   

  
	

   

  	

   

  	

  Manager — Commercial Business Ops.

  	

   

  	

  5500 Wayzata BLVD

  	

   

  
	

   

  	

  Title

  	

   

  	

  Minneapolis, MN 55416-1252

  	

   

  
	

   

  	

   

  	

  3/29/02

  	

   

  	

   

  	

   

  
	

   

  	

  Date

  	

   

  	

   

  	

   

  

 

30

 

	

  Lessee Mailing Address

  	

  City, St, Zip Code, County

  	

  Contact

  	

  Phone

  
	

  One

  Pasta Avenue

  	

  Carrington, ND  58421  

  Foster

  	

  Ed Irion

  	

  701-652-2855

  
	

  Vendor Name

  	

  Address, City, St, Zip Code

  	

  Contact

  	

  Phone

  
	

   

  	

   

  	

   

  	

   

  

 

EQUIPMENT

	

  Asset ID No.

  	

   

  	

  New/ Used

  	

   

  	

  MACRS Life

  	

   

  	

  Quantity/Year/Manufacturer/Model/Description/Serial

  Number

  	

   

  	

  Equipment

  Cost

  	

   

  	

  Fixed

  Purchase Option or TRA amount by asset if applicable

  	

   

  
	

  274602

  	

   

  	

  Used

  	

   

  	

   

  	

   

  	

  Two (2) Braibanti Long

  Goods Pasta Production Lines further described on the attached Exhibit A.

  	

   

  	

  $5,000,000.00

  	

   

  	

  $1,750,000.00

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  TOTAL NET

  EQUIPMENT COST (list sales tax separately, if applicable)

  	

   

  	

  $5,000,000.00

  	

   

  	

   

  	

   

  

 

	

  Down Payment:

  	

  Refund Lessee? o $ n/a

  	

  Trade in:

  	

  Refund Lessee? o $ n/a

  
	

  Purchase Option Type:

  	

  ý FPO o FMV o TRA 

  o Other

  	

  Purchase Option Cap:

  	

  n/a

  
	

  Transportation Addendum Applies:

  	

  oYes  ýNo  Addendum Date:

  	

  Tax Indemnity Applies:

  	

  oYes ýNo  Addendum Date:

  
	

   

  	

   

  	

   

  	

   

  
	

  Federal Income Tax Exempt:

  	

  oYes  ýNo  Why?

  	

  Sales Tax Exempt:

  	

  oYes ýNo  If yes, Tax ID#:

  
	

   

  	

   

  	

   

  	

  If no, FCL to capitalize

  tax: o Yes ý No

  

 

 

	

  FCPR

  	

  FC  DC

  	

  Estimate

  	

  Basis

  	

  OF

  	

  Promotion

  	

  In-Service Date

  	

  Term Expires

  	

  Authorization Number

  
	

   

  	

  oYes ýNo

  	

   

  	

   

  	

   

  	

   

  	

  3/31/02

  	

   

  	

   

  

 

FCL USE ONLY

 

31

 

EQUIPMENT  LOCATION

	

  Asset ID No.

  	

   

  	

  Company/Street

  Address/Rural Route (No P.O. Box)

  	

   

  	

  City

  	

   

  	

  State

  	

   

  	

  Zip Code

  	

   

  	

  County

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

Same

as Lessee Mailing Address ý

 

LEASE PRICING

	

  Lease Rate

  Factor

  	

   

  	

  Scheduled

  Lease

  Term

  	

   

  	

  Minimum

  Lease

  Term

  	

   

  	

  Rental

  amount *

  (Detail

  irregular rents below)

  	

   

  	

  Rentals

  (advanced

  or arrears)

  	

   

  	

  Rental

  Frequency

  	

   

  	

  Total

  Number 

  of Rentals

  	

   

  
	

  .01439

  	

   

  	

  60

  Months

  	

   

  	

  60

  Months

  	

   

  	

  $71,949.94

  	

   

  	

  Advance

  	

   

  	

  Monthly

  	

   

  	

  60

  	

   

  
	

  Irregular Rent Detail*: 

  ý Not Applicable 

  
	

  Mo/Yr

  	

   

  	

  $Payment

  Amount

  	

   

  	

  Mo/Yr

  	

   

  	

  $Payment

  Amount

  	

   

  	

  Mo/Yr

  	

   

  	

  $Payment

  Amount

  	

   

  	

  Mo/Yr

  	

   

  	

  $Payment

  Amount

  	

   

  
	

  1.

  	

   

  	

  $

  	

   

  	

  4.

  	

   

  	

  $

  	

   

  	

  7.

  	

   

  	

  $

  	

   

  	

  10.

  	

   

  	

  $

  	

   

  
	

  2.

  	

   

  	

  $

  	

   

  	

  5.

  	

   

  	

  $

  	

   

  	

  8.

  	

   

  	

  $

  	

   

  	

  11.

  	

   

  	

  $

  	

   

  
	

  3.

  	

   

  	

  $

  	

   

  	

  6.

  	

   

  	

  $

  	

   

  	

  9.

  	

   

  	

  $

  	

   

  	

  12.

  	

   

  	

  $

  	

   

  
																													

 

	

  Daily

  Billing Option
            o Yes  ý No 

  	

  Floating Rate, indexed to 90-day Farm Credit  Discount

  Note      ý Yes  o No 

  	

  Lessee Maximum Percentage for purposes of Terminal  Rental

  Adjustment                        % ý Not Applicable 

  
	

  Security

  Deposit

  	

  Lessee Percentage for Purposes of Lease Purchase

  	

   

  
	

  $

  	

  ý Not

  Applicable

  	

  Addendum

  	

  %

  ý

  Not Applicable

  	

  *Exclusive

  of applicable sales tax.

  
					

 

	

   

  
	

   

  
	

   

  
	

   

  
	

   

  

COMMENTS

 

32CONFIDENTIAL TREATMENT REQUESTED

Exhibit 10.2

 

CONFIDENTIAL

TREATMENT REQUESTED. CERTAIN PORTIONS HAVE BEEN OMITTED AND HAVE BEEN FILED

SEPARATELY WITH THE COMMISSION.

 

CO-PACKING AGREEMENT

 

 

THIS  AGREEMENT, executed as of

April 30, ­2002, is between NEW WORLD PASTA COMPANY, a

company incorporated in Delaware, with an address at 85 Shannon Road,

Harrisburg, PA 17112 (“New World Pasta”) and DAKOTA GROWERS PASTA CO., a

company incorporated in North Dakota, with an address of One Pasta Avenue,

P. O. Box 21, Carrington, ND 58421-0021 (“Co-packer”).

 

WHEREAS, Co-Packer is a

manufacturer of dried pasta products, and is capable of and willing to produce,

package and deliver certain dried pasta products to New World Pasta; and

 

WHEREAS, New World Pasta

desires to have Co-packer produce, package and deliver certain dried pasta

products to New World Pasta;

 

NOW, THEREFORE, in

consideration of the mutual covenants set forth in this Agreement, and for

other valuable consideration, the parties agree as follows:

 

 

ARTICLE 1

DEFINITIONS

 

1.1          Definitions.

 

Unless the context otherwise requires, the

following words and phrases have the meanings set forth below:

 

AFFILIATE means, with

regard to any party or person, any person, corporation or other entity who or

which directly or indirectly controls or is controlled by, or is under direct

or indirect control with, such party or person, and for such purpose,

“controlling” means possessing, directly or indirectly, the power to direct or

cause the direction of the management and affairs of such party or person, whether

through ownership of voting shares, contract or otherwise.

 

AGREEMENT means this

co-packing agreement, and any exhibit or schedule attached hereto or referred

to herein, and all documents that amend this Agreement.

 

APPLICABLE LAWS mean all

federal, state or local laws, regulations, rules or requirements applicable to

the manufacture and supply of the Products to New World Pasta in effect at any

time during the Term of this Agreement.

 

33

 

BUSINESS DAY means any day

except Saturday, Sunday and a national holiday in the United States or Canada.

 

CASE means a case

containing specified number of cartons of Products described in Schedule “A”.

 

CONFIDENTIAL INFORMATION has the meaning

in Section 11.1(1).

 

(CONFIDENTIAL TREATMENT REQUESTED)

 

DESIGNATED OFFICERS has the meaning

set forth in Section 12.1(2).

 

DISPUTES has the meaning

set forth in Subsection 12.1(1).

 

EFFECTIVE DATE means  (CONFIDENTIAL

TREATMENT REQUESTED)

 

FACILITY means the

Co-Packer’s Carrington, North Dakota and New Hope, Minnesota plants.

 

FORCE MAJEURE EVENT has the

meaning set forth in Subsection 13.9.

 

INITIAL MEDIATION PERIOD has the meaning

set forth in Subsection 12.1(2).

 

NON-CONFORMING PRODUCT means Product

that is unacceptable to New World Pasta because of Co-packer’s deviation from

the Specifications or an error by Co-packer in the manufacturing or packaging

process.

 

OPERATING EQUIPMENT means all

equipment, supplies and materials of  every nature and kind as may from time to

time be required or used in the production of the Products.

 

PACKAGING SPECIFICATIONS has the meaning

set forth in Subsection 2.3.

 

PRICE SCHEDULE has the meaning

set forth in Subsection 3.l.

 

PRODUCTS mean the dried

pasta products identified on the attached Schedule “A”.

 

PRODUCT SPECIFICATIONS has the meaning

set forth in Subsection 2.3.

 

SPECIFICATIONS mean the

Product Specifications and the Packaging Specifications, as defined in this

Agreement.

 

TERM has the meaning

set forth in Section 10.1.

 

 

1.2          Paragraphs

and Headings.

 

The division of this Agreement into paragraphs and the insertion of

headings are for convenience of reference only and shall not affect the

construction or interpretation of the Agreement.

 

34

 

ARTICLE 2

MANUFACTURE AND SUPPLY

 

2.1          Manufacture

and Supply of Products.  (CONFIDENTIAL

TREATMENT REQUESTED)

 

 

2.2          Production

Facility.  (CONFIDENTIAL TREATMENT

REQUESTED)

 

 

2.3          Production   (CONFIDENTIAL TREATMENT REQUESTED)

 

 

 

ARTICLE 3

PRICES OF PRODUCT

 

3.1          Prices.  (CONFIDENTIAL TREATMENT REQUESTED)

 

 

 

ARTICLE 4

PURCHASE

PROCEDURES AND TERMS

 

4.1          Forecast and Orders. 

(CONFIDENTIAL TREATMENT REQUESTED)

 

 

4.2          Payment

Terms.

 

Payment terms shall be net thirty (30) days

from date of invoice.

 

 

4.3          Products

Acceptability.

 

(1)           Co-packer recognizes that it is fundamental to the success

of the marketing, distribution and sale of Products that New World Pasta obtain

good quality Products from Co-packer. 

Accordingly, Co-packer warrants to New World Pasta that the Products

will be free from any defects of whatsoever kind in manufacture, ingredients

and packaging, and will conform in every respect to the Specifications.

 

(2)           The

provisions of this section shall not be deemed to diminish, restrict or exclude

the operation of any warranty implied or imposed by law or otherwise, nor any

other rights and remedies provided by law for breach of warranty and breach of

contract.

 

 

4.4          Recall  Procedure.  (CONFIDENTIAL TREATMENT REQUESTED)

 

 

35

 

ARTICLE 5

ADDITIONAL

OBLIGATIONS OF CO-PACKER

 

5.1          Conflicting

Agreements.

 

Co-packer covenants and represents that it

has not, nor will it enter into any, agreements or arrangements with, or incur

obligations to any third party that would interfere or conflict with any of the

provisions of this Agreement in any manner whatsoever.

 

 

5.2          Information

Requests.

 

Co-packer shall promptly furnish to New World

Pasta in writing all information and/or reports reasonably requested by New World

Pasta in writing, relating to the Products and performance of Co-packer’s

obligations hereunder.

 

 

5.3          Trademarks.

 

(1)           Co-packer shall not, for any reason during the Term of

this Agreement, except as authorized in writing by New World Pasta, alter, deface

or remove any trade-marks, patent numbers, notices, information or legends on

Products.

 

(2)           Co-packer hereby acknowledges the validity of New World

Pasta’s title to all trademarks, trade names and logos and designs (whether or

not registered) owned, licensed or claimed by New World Pasta and used in

connection with the packaging, labeling or marketing of Products.  Co-packer covenants and agrees that it will

not at any time directly or indirectly contest the validity of the title to the

aforesaid intellectual property by New World Pasta.

 

 

 

ARTICLE 6

OVERSIGHT

AND INSPECTIONS

 

6.1          Quality

Control and Reports.

 

Co-packer shall establish and maintain a

rigorous quality control program acceptable to New World Pasta covering all

Products sold to New World Pasta. 

Co-packer shall provide to New World Pasta any and all quality control

reports and such other reports as New World Pasta may reasonably request in

writing from time to time.

 

 

6.2          Inspections.

 

Co-packer shall at all times during normal

business hours permit New World Pasta’s personnel and other New World Pasta

designated representatives to have reasonable access to those portions of the

Facility where Products are manufactured, the Products, and all locations where

the Products are stored for the purpose of ensuring Co-packer is complying with

its obligations hereunder.

 

 

6.3          Regulatory

Matters.

 

Co-packer shall obtain all regulatory and/or governmental permits

necessary to manufacture and sell the Products hereunder.  Co-packer shall bear the responsibility for

filing any reports relating to the Products required by applicable government

authorities.

 

36

 

ARTICLE 7

PROCESS

IMPROVEMENTS

 

7.1          Shared

Benefits.

 

Co-packer will

make available to New World Pasta all technologies and productivity improvement

programs available to any other co-pack customer of Co-packer.  This section 7.1 shall not be construed to

require (i) Co-packer to make available any such technologies or programs if

such use would be prohibited by an agreement with a third party or (ii)

disclosure to New World Pasta of any proprietary information of Co-packer.

 

 

7.2          New

Formulations or Packaging.  

(CONFIDENTIAL TREATMENT REQUESTED)

 

 

7.3          Special

Batches.  (CONFIDENTIAL TREATMENT REQUESTED)

 

 

 

ARTICLE 8

REPRESENTATIONS,

WARRANTIES AND COVENANTS

 

8.1          New World

Pasta.

 

New World Pasta represents and warrants to

Co-packer as follows:

 

(1)           Qualification. 

New World Pasta is a corporation duly organized, validly existing and in

good standing under the laws of the United States.

 

(2)           Authorization and Enforceability.  New World Pasta has full corporate power and

corporate authority to make, execute, deliver and perform this Agreement, and

the execution, delivery and performance of this Agreement by New World Pasta

had been duly executed and delivered by New World Pasta and constitutes a valid

and binding obligation of New World Pasta enforceable against New World Pasta

in accordance with its terms.

 

(3)           No Pending Litigation.  There is no pending or threatened litigation challenging New

World Pasta’s authority to enter into and perform this Agreement.

 

(4)           Consents.  No consent, approval or authorization of, or

registration or filing with, any person is required in connection with the

execution, delivery and performance of this Agreement, or the performance of

the Agreement by New World Pasta.

 

 

8.2          Co-packer.

 

Co-packer represents and warrants to New

World Pasta as follows:

 

(1)           Qualification. 

Co-packer is a corporation duly organized, validly existing and in good

standing under the laws of the United States (and Canada, if applicable) and

has all requisite power and authority to operate its business as and where

presently being conducted.

 

37

 

(2)           Authorization and Enforceability.  Co-packer has full corporate power and

corporate authority to make, execute, deliver and perform this Agreement, and

the execution, delivery and performance of this Agreement by Co-packer has been

duly authorized by all necessary action on the part of Co-packer.  This Agreement has been duly executed and

delivered by Co-packer and constitutes a valid and binding obligation of

Co-packer enforceable in accordance with its terms.

 

(3)           No Pending Litigation.  There is no pending or threatened litigation challenging

Co-packer’s authority to enter into and perform this Agreement.

 

(4)           Consents. 

No consent, approval or authorization of, or registration or filing

with, any person is required in connection with the execution, delivery and

performance of this Agreement, or the performance of this Agreement by

Co-packer.

 

(5)           Title. 

Co-packer has, or at the time of delivery shall have, and shall transfer

to New World Pasta good title to the Products, free and clear of liens and encumbrances

of any kind whatsoever.

 

(6)                                  Products.  All Products sold or delivered to New World

Pasta hereunder shall: (i) conform to Specifications; (ii) be produced in

accordance with good faith manufacturing practices under strict sanitary

conditions; (iii) not be adulterated or misbranded; (iv) not be short in

weight; and (v) comply in all respects with all applicable federal, state and

local laws, rules and regulations. 

Without limiting the foregoing, all Products sold or delivered to New

World Pasta hereunder shall be a product which can be shipped and/or sold in

interstate commerce.

 

(7)           Raw Materials, Supplies, Packaging Materials,

Ingredients.  All raw materials,

supplies, packaging materials and ingredients used by Co-packer in Products

shall be merchantable, of good quality and fit for the purpose intended.

 

 

8.3          Co-packer’s

Affirmative Covenants.  (CONFIDENTIAL

TREATMENT REQUESTED)

 

 

8.4          Co-packer’s

Negative Covenants.  (CONFIDENTIAL

TREATMENT REQUESTED)

 

 

 

ARTICLE 9

INDEMNIFICATION

AND INSURANCE

 

9.1          Indemnification. 

(CONFIDENTIAL TREATMENT REQUESTED)

 

 

9.2          Insurance.  (CONFIDENTIAL TREATMENT REQUESTED)

 

38

 

ARTICLE 10

TERM AND

TERMINATION

 

10.1        Term.  (CONFIDENTIAL

TREATMENT REQUESTED)

 

 

10.2        Early

Termination.  (CONFIDENTIAL TREATMENT

REQUESTED)

 

 

10.3        Results of

Termination or Expiry.  (CONFIDENTIAL

TREATMENT REQUESTED)

 

 

ARTICLE 11

CONFIDENTIALITY

 

11.1        Confidentiality.

 

(1)           Non Disclosure. 

Each party recognizes that all proprietary or secret information of the

other party used or disclosed in the production of the Products and the

performance of such party’s obligations hereunder, including but not limited to

information relating to equipment, Specifications, product formulations,

recipes, processes, operations, production schedules, know-how, customers,

suppliers, test results, marketing studies, promotional activities, and

forecasts, and the like (collectively, the “Confidential Information”), is

invaluable to the owner of such information. 

Each party shall instruct its employees to hold in confidence any and

all Confidential Information of the other party to which they may have access

or which may be disclosed or described to them.  Co-packer shall not use, nor attempt to use, any Confidential

Information of New World Pasta except in the performance of its obligations

hereunder.  Each party shall exercise at

least the same degree of care in safekeeping all Confidential Information of

the other party which may in any manner come into its possession as it

exercises with respect to its own Confidential Information, shall disclose or

grant access thereto only to those employees having a need to know for the

performance by such party of its obligations hereunder, and shall promptly

surrender to the other party all written or otherwise reproducible records and

evidences of any Confidential Information of the other party in its possession

upon the termination or expiry of this Agreement or any prior request of the

owner of such Confidential Information.

 

(2)           Injunctive Relief. 

Each party expressly acknowledges that the Confidential Information of

the other party is unique and may be of great value to the owner, but that the

value of the Confidential Information may be impractical or difficult to assess

in monetary terms.  Accordingly, in the

event of an actual or threatened violation of the provisions of Subsection

11.1(1), each party expressly consents to the enforcement thereof by injunctive

relief; in addition to any and all other remedies available to such party at

law, in equity, or otherwise.

 

(3)           Exceptions. 

The provisions of Subsection 11.1 (1) and (2) above shall not apply to

any Confidential Information (i) which is known to the receiving party prior to

the time of disclosure by the owner, (ii) which at the time of disclosure by

the owner, or thereafter, is or becomes publicly known or available through no

fault of the receiving party, (iii) which is disclosed in writing to the

receiving party by a third party who has the legal right to make the

disclosure, or (iv) the disclosure of which is expressly consented to in

advance and in writing by the owner or is required by Applicable Law.

 

39

 

11.2        Survival of

Confidentiality Provisions.

 

The provisions of this Article 11 shall

survive the termination or expiration of this Agreement.

 

 

 

ARTICLE 12

DISPUTE

RESOLUTION

 

12.1        Dispute

Resolution.  (CONFIDENTIAL TREATMENT

REQUESTED)

 

 

 

ARTICLE 13

GENERAL

 

13.1        Conflicting Documents.

 

To the extent that any purchase orders,

invoices, sales receipts, shipping documents, forms, billing documents or other

similar documents issued in connection with the sale of Products hereunder

contain terms or conditions which conflict with, or derogate from this

Agreement, they shall be null and void and the terms of this Agreement shall

control.

 

 

13.2        Notices.

 

All notices, requests, claims, waivers,

consents, approvals or other communication hereunder shall be in writing (a

“Notice”) and shall be given or made (and shall be deemed to have been duly

given or made upon receipt) by delivery by hand, by reputable overnight courier

service, by facsimile transmission, or by registered or certified mail (postage

prepaid, return receipt requested) to the respective parties at the addresses

(or at such other address for a party as shall be specified in a notice given

in accordance with this Section) listed below:

 

If to New World Pasta:

 

New World Pasta Company

85 Shannon Road

Harrisburg, PA  17112

 

Attention:  Antonina Piano

Fax:  (717) 526-2468

 

 

with a copy to:

 

New World Pasta Company

85 Shannon Road

Harrisburg, PA  17112

 

Attention:  Vice President and General Counsel

 

40

 

If to Co-packer:

 

Dakota Growers Pasta Co.

7300 36th Avenue

North

New Hope, MN 55427

 

Attention:  James Cochran

Fax  (___) _______

 

with a copy to:

 

Dakota Growers Pasta Co.

One Pasta Avenue, P. O. Box

21

Carrington, ND 58421-0021

 

Attention:  Tim Dodd

 

or to such other address as any party may,

from time to time, designate in a Notice given in a like manner.  Notice given by hand shall be deemed

delivered when received by the recipient. 

Notice given by reputable overnight courier shall be deemed delivered on

the next following business day after the same is sent.  Notice given by facsimile transmission shall

be deemed delivered on the day of transmission provided telephone confirmation

of receipt is obtained promptly after completion of transmission.

 

 

13.3        Independent

Contractor.

 

This Agreement shall not constitute or give

rise to a partnership between the parties. 

All activities by Co-packer hereunder shall be carried on by Co-packer

as an independent contractor and not as an agent for New World Pasta.  All activities by New World Pasta hereunder

shall be carried on by New World Pasta as an independent contractor and not as

an agent for Co-packer.  Neither party

shall have, nor represent that it has, the power to bind the other party to

this Agreement.

 

 

13.4        Governing

Law.

 

This Agreement

shall be construed and governed in accordance with the laws of Pennsylvania,

United States.

 

 

13.5        Entire Agreement.

 

This

Agreement constitutes the entire understanding of the parties and supersedes

any prior agreements or understandings, written or oral, between the parties

with respect to the subject matter hereof. 

All exhibits or schedules attached hereto are hereby incorporated by

reference and made a part of this Agreement as if set forth herein.

 

 

13.6        Successors

and Assigns.

 

The provisions of this Agreement shall be

binding upon and inure to the benefit of the parties hereto and their

respective successors and assigns; provided, however, that no party may,

directly or indirectly, license, subcontract, assign, delegate or otherwise

transfer any of its rights or obligations under this Agreement, except to an

Affiliate, without the prior written consent of the other party hereto, which

shall not be unreasonably withheld.

 

41

 

13.7        Severability.

 

This Agreement shall be deemed severable, and

the invalidity or unenforceability of any term or provision hereof shall not

affect the validity or enforceability of this Agreement or of any other term or

provision hereof.  Furthermore, in lieu

of any such invalid or unenforceable term or provision, the parties hereto

agree that there shall be added as a part of this Agreement a provision as

similar in terms to such invalid or unenforceable provision as may be possible

and be valid and enforceable.

 

 

13.8        Waivers and

Amendments.

 

This Agreement may not be altered or amended,

nor may rights hereunder be waived, except in a writing executed by both

parties to this Agreement.  No waiver of

any term, provision or condition of or failure to exercise or delay in

exercising any rights or remedies under this Agreement shall be deemed to be,

or construed as, a further or continuing waiver of any such term, provision,

condition, right or remedy or as a waiver of any other term, provision or

condition of this Agreement.

 

 

13.9        Force

Majeure.

 

Neither party shall be responsible to the

other for nonperformance or delay in performance occasioned by any causes

beyond its control including without limitation an act of God, fire, storm,

labor relations disruption (including strike, lock-out, illegal work stoppages,

slowdowns, boycotts or other labor disputes), any law, regulation or order of

any governmental body or authority having jurisdiction over the party, act of

war, insurrection, riot or other civil disturbance, bankruptcy or insolvency of

a landlord of any of the premises, transportation disruption caused by any

third party (including freight embargoes, highway, railway or other delivery

disruption), power failure, computer failure or any other cause beyond its

reasonable control, or beyond the control of any person directly or indirectly

engaged by it (any such event being referred to as a “Force Majeure

Event”).  The obligations of the party

prevented from performing shall be suspended for the duration of the Force

Majeure Event.  The party suffering Force

Majeure shall forthwith give notice in writing to the other party of such

fact.  Upon receipt of such Notice by

the other party, representatives of the parties shall establish plans and

procedures to overcome or mitigate the effects of the Force Majeure Event and

the party suffering from the Force Majeure Event shall use all reasonable

efforts to minimize any adverse effects on the other party.  When Co-packer has reason to believe that

deliveries of Product will not be made as scheduled, Co-packer shall use all

reasonable efforts to assist New World Pasta in securing alternative supplies

of Product, including using its commercially reasonably best efforts to supply

Products from Co-packer’s other facilities.

 

42

 

13.10      Specific

Performance.

 

The parties acknowledge and agree that a

remedy at law for any breach, or threatened breach, or any material provision

of this Agreement will be inadequate and, accordingly, subject to Section 12.1,

the party affected by such breach shall, in addition to any other rights and

remedies which such party may have, be entitled to equitable relief, including

injunctive relief, and to the remedy of specific performance with respect to

such breach or threatened breach, as may be available from any court of

competent jurisdiction.  Such right to

obtain equitable relief may be exercised at the option of the affected party,

concurrently with, prior to, after, or in lieu of, the exercise of any other

rights or remedies which the affected party may have as a result of any such

breach or threatened breach.

 

 

13.11      Announcements.

 

During the Term of this Agreement and

thereafter, neither party hereto shall make or allow any public announcement or

other disclosure to anyone regarding this Agreement or the terms hereof, unless

such announcement or disclosure is approved in advance, in writing, as to form,

substance and timing by the other party hereto.

 

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as

of the date and year first above written.

 

	

   

  	

   

  	

  NEW WORLD

  PASTA COMPANY

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Burton R. Freeman

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Burton R. Freeman

  
	

   

  	

   

  	

  Title:

  	

  VP Mfg

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  DAKOTA

  GROWERS PASTA CO.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Tim Dodd

  	

   

  
	

   

  	

   

  	

  Name:

  	

  Tim Dodd

  
	

   

  	

   

  	

  Title:

  	

  Pres./G.M.

  
							

 

43

 

Schedule “A” -     Description of Products

 

(CONFIDENTIAL TREATMENT REQUESTED)

 

Schedule “B” -      Pricing Schedule

 

(CONFIDENTIAL TREATMENT REQUESTED)

 

Schedule “C” -      Product Specifications

 

(CONFIDENTIAL TREATMENT REQUESTED)

 

Schedule “D” -     Packaging Specifications

 

(CONFIDENTIAL TREATMENT REQUESTED)

 

44

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