Document:

Exhibit 10.1

 

MLA No. RIE539B

 

MASTER LOAN AGREEMENT

 

THIS MASTER LOAN AGREEMENT is entered into as of May 23, 2005,
between CoBANK, ACB (“CoBank”) and DAKOTA GROWERS PASTA COMPANY, INC., Carrington, North Dakota
(the “Company”).

 

BACKGROUND

 

CoBank and the Company are parties to a Master Loan
Agreement dated February 24, 2004, as amended (the “Existing Agreement”).  Pursuant to the terms of the Existing
Agreement, the parties entered into one or more Supplements thereto.  CoBank and the Company now desire to amend
and restate the Existing Agreement and to apply such new agreement to the
existing Supplements, as well as any new Supplements that may be issued
thereunder.  For that reason and for
valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), CoBank and the Company hereby agree that the Existing Agreement
shall be amended and restated to read as follows:

 

SECTION 1.         Supplements.  In the event the Company desires to borrow from CoBank
and CoBank is willing to lend to the Company, or in the event CoBank and the
Company desire to consolidate any existing loans hereunder, the parties will
enter into a Supplement to this agreement (a “Supplement”).  Each Supplement will set forth the amount of
the loan, the purpose of the loan, the interest rate or rate options applicable
to that loan, the repayment terms of the loan, and any other terms and
conditions applicable to that particular loan. 
Each loan will be governed by the terms and conditions contained in this
agreement and in the Supplement relating to the loan.  As of the date hereof, the following
Supplements are outstanding hereunder and shall be governed by the terms and
conditions hereof:  (a) the Statused
Revolving Credit Supplement dated May 23, 2005 and numbered RIE539S01B; (b) the
Single Advance Term Loan Supplement dated February 24, 2004 and numbered
RIE539T03; (c) the Single Advance Term Loan Supplement dated February 24,
2004 and numbered RIE539T04; (d) the Non-Revolving Credit Supplement
(Letter of Credit) dated May 23, 2005 and numbered RIE539T05B; and (e) the
Multiple Advance Term Loan Supplement dated May 23, 2005 and numbered
RIE539T06.

 

SECTION 2.         Availability.  Loans will be made available on any day on which
CoBank and the Federal Reserve Banks are open for business upon the telephonic
or written request of the Company. 
Requests for loans must be received no later than 12:00 Noon Company’s
local time on the date the loan is desired. 
Loans will be made available by wire transfer of immediately available
funds to such account or accounts as may be authorized by the Company.  The Company shall furnish to CoBank a duly
completed and executed copy of a CoBank Delegation and Wire and Electronic
Transfer Authorization Form, and CoBank shall be entitled to rely on (and shall
incur no liability to the Company in acting on) any request or direction
furnished in accordance with the terms thereof.

 

SECTION 3.         Repayment.  The Company’s obligation to repay each loan shall be
evidenced by the promissory note set forth in the Supplement relating to that
loan or by such replacement note as CoBank shall require.  CoBank shall maintain a record of all loans,
the interest accrued thereon, and all payments made with respect thereto, and
such record shall, absent proof of manifest error, be conclusive evidence of
the outstanding principal and interest on the loans.  All
payments shall be made by wire transfer of immediately available funds, by
check, or by automated clearing house or other similar cash handling processes
as specified by separate agreement between the Company and CoBank.  Wire transfers shall be made to ABA No. 307088754
for advice to and credit of CoBank (or to such other account as CoBank may
direct by notice).  The Company shall
give CoBank telephonic notice no later than 12:00 Noon Company’s local time of
its intent to pay by wire and funds received after 3:00 p.m. Company’s
local time shall be credited on the next business day.  Checks shall be mailed to CoBank,

 

 

Department 167, Denver,
Colorado 80291-0167 (or to such other place as CoBank may direct by
notice).  Credit for payment by check
will not be given until the later of:  (a) the
day on which CoBank receives immediately available funds; or (b) the next
business day after receipt of the check.

 

SECTION 4.         Capitalization.  The Company agrees to purchase such equity in CoBank
as CoBank may from time to time require in accordance with its Bylaws.  However, the maximum amount of equity which
the Company shall be obligated to purchase in connection with any loan may not
exceed the maximum amount permitted by the Bylaws at the time the Supplement
relating to that loan is entered into or such loan is renewed or refinanced by
CoBank.

 

SECTION 5.         Security.  The Company’s obligations under this agreement, all Supplements
(whenever executed), and all instruments and documents contemplated hereby or
thereby, shall be secured by a statutory first lien on all equity which the
Company may now own or hereafter acquire in CoBank.  In addition, the Company’s obligations under
each Supplement (whenever executed) and this agreement shall be secured by a
first lien (subject only to exceptions approved in writing by CoBank) pursuant
to all security agreements, mortgages, and deeds of trust executed by the
Company in favor of CoBank (including the St. Paul Bank for Cooperatives),
whether now existing or hereafter entered into. 
As additional security for those obligations:  (i) the Company agrees to grant to
CoBank, by means of such instruments and documents as CoBank shall require a first
priority lien on such of its other assets, whether now existing or hereafter
acquired, as CoBank may from time to time require; and (ii) the Company
agrees to grant to CoBank, by means of such instruments and documents as CoBank
shall require, a first priority lien on all realty which the Company may from
time to time acquire after the date hereof.

 

SECTION 6.         Conditions Precedent.

 

(A)  Conditions to Initial
Supplement.  CoBank’s obligation to extend credit
under the initial Supplement hereto is subject to the conditions precedent that
CoBank receive, in form and content satisfactory to CoBank, each of the
following:

 

This Agreement, Etc.  A duly executed copy of this agreement and all
instruments and documents contemplated hereby.

 

(B)  Conditions to Each
Supplement.  CoBank’s obligation to extend credit
under each Supplement, including the initial Supplement, is subject to the
conditions precedent that CoBank receive, in form and content satisfactory to
CoBank, each of the following:

 

(i)            Supplement.  A duly executed copy of the Supplement and all
instruments and documents contemplated thereby.

 

(ii)           Evidence of Authority.  Such certified board resolutions, certificates of
incumbency, and other evidence that CoBank may require that the Supplement, all
instruments and documents executed in connection therewith, and, in the case of
initial Supplement hereto, this agreement and all instruments and documents
executed in connection herewith, have been duly authorized and executed.

 

(iii)         Fees and Other Charges.  All fees and other charges provided for herein
or in the Supplement.

 

(iv)          Evidence of Perfection, Etc.  Such evidence as CoBank may require that CoBank has a
duly perfected first priority lien on all security for the Company’s
obligations, and that the Company is in compliance with Section 8(D) hereof.

 

 

(C)  Conditions to Each Loan.  CoBank’s obligation under each Supplement to make any
loan to the Company thereunder is subject to the condition that no “Event of
Default” (as defined in Section 11 hereof) or event which with the giving
of notice and/or the passage of time would become an Event of Default hereunder
(a “Potential Default”), shall have occurred and be continuing.

 

SECTION 7.         Representations and Warranties.

 

(A)  This Agreement.  The Company represents and warrants to CoBank that as
of the date of this Agreement:

 

(i)            Compliance.  The Company and, to the extent contemplated hereunder,
each “Subsidiary” (as defined below), is in compliance with all of the terms of
this agreement, and no Event of Default or Potential Default exists hereunder.

 

(ii)           Subsidiaries. 
The Company has the following “Subsidiary(ies)” (as defined below):  (a) Primo Piatto, Inc.; and (b) DNA
Dreamfields Company, LLC.  For purposes
hereof, a “Subsidiary” shall mean a corporation of which shares of stock having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation are owned, directly or indirectly, by the Company.

 

(B)  Each Supplement.  The execution by the Company of each Supplement hereto
shall constitute a representation and warranty to CoBank that:

 

(i)            Applications.  Each representation and warranty and all information
set forth in any application or other documents submitted in connection with,
or to induce CoBank to enter into, such Supplement, is correct in all material
respects as of the date of the Supplement.

 

(ii)           Conflicting Agreements, Etc.  This agreement, the Supplements, and all security and
other instruments and documents relating hereto and thereto (collectively, at
any time, the “Loan Documents”), do not conflict with, or require the consent
of any party to, any other agreement to which the Company is a party or by
which it or its property may be bound or affected, and do not conflict with any
provision of the Company’s bylaws, articles of incorporation, or other
organizational documents.

 

(iii)         Compliance.  The Company and, to the extent contemplated hereunder,
each Subsidiary, is in compliance with all of the terms of the Loan Documents
(including, without limitation, Section 8(A) of this agreement on
eligibility to borrow from CoBank).

 

(iv)          Binding Agreement.  The Loan Documents create legal, valid, and binding
obligations of the Company which are enforceable in accordance with their
terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors’ rights generally.

 

SECTION 8.         Affirmative Covenants.  Unless otherwise agreed to in writing by CoBank while
this agreement is in effect, the Company agrees to and with respect to
Subsections 8(B) through 8(G) hereof, agrees to cause each Subsidiary to:

 

(A)  Eligibility.  Maintain its status as an entity eligible to borrow
from CoBank.

 

(B)  Corporate Existence, Licenses,
Etc.  (i) Preserve and keep in full force and effect
its existence and good standing in the jurisdiction of its incorporation or
formation; (ii) qualify and remain qualified to transact business in all
jurisdictions where such qualification is required; and (iii) obtain and
maintain all licenses, certificates, permits, authorizations, approvals, and
the like which are material to the conduct of its business or required by law,
rule, regulation, ordinance, code, order, and the like (collectively, “Laws”).

 

 

(C)  Compliance with Laws.  Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to
environmental protection and any patron or member investment program that it
may have.  In addition, the Company
agrees to cause all persons occupying or present on any of its properties, and
to cause each Subsidiary to cause all persons occupying or present on any of
its properties, to comply in all material respects with all environmental
protection Laws.

 

(D)  Insurance.  Maintain insurance with insurance companies or
associations acceptable to CoBank in such amounts and covering such risks as
are usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage
as CoBank may request.  All such policies
insuring any collateral for the Company’s obligations to CoBank shall have
mortgagee or lender loss payable clauses or endorsements in form and content
acceptable to CoBank.  At CoBank’s
request, all policies (or such other proof of compliance with this Subsection as
may be satisfactory to CoBank) shall be delivered to CoBank.

 

(E)   Property Maintenance.  Maintain all of its property that is necessary to or
useful in the proper conduct of its business in good working condition,
ordinary wear and tear excepted.

 

(F)   Books and Records.  Keep adequate records and books of account in which
complete entries will be made in accordance with generally accepted accounting
principles (“GAAP”) consistently applied.

 

(G)  Inspection.  Permit CoBank or its agents, upon reasonable notice
and during normal business hours or at such other times as the parties may
agree, to examine its properties, books, and records, and to discuss its
affairs, finances, and accounts, with its respective officers, directors,
employees, and independent certified public accountants.

 

(H)  Reports and Notices.  Furnish to CoBank:

 

(i)            Annual Financial Statements.  As soon as available, but in no event more than 120
days after the end of each fiscal year of the Company occurring during the term
hereof, annual consolidated and consolidating financial statements of the
Company and its consolidated Subsidiaries, if any, prepared in accordance with
GAAP consistently applied.  Such
financial statements shall:  (a) be
audited by independent certified public accountants selected by the Company and
acceptable to CoBank; (b) be accompanied by a report of such accountants
containing an opinion thereon acceptable to CoBank; (c) be prepared in
reasonable detail and in comparative form; and (d) include a balance
sheet, a statement of income, a statement of retained earnings, a statement of
cash flows, and all notes and schedules relating thereto.

 

(ii)           Interim Financial
Statements.  As soon as available, but in no event more
than 50 days after the end of each month (other than the last month in each
fiscal year of the Company), a consolidated balance sheet of the Company and
its consolidated Subsidiaries, if any, as of the end of such month, a
consolidated statement of income for the Company and its consolidated
Subsidiaries, if any, for such period and for the period year to date, and such
other interim statements as CoBank may specifically request, all prepared in
reasonable detail and in comparative form in accordance with GAAP consistently
applied and, if required by written notice from CoBank, certified by an
authorized officer or employee of the Company acceptable to CoBank.

 

(iii)         Notice of Default.  Promptly after becoming aware thereof, notice of the
occurrence of an Event of Default or a Potential Default.

 

(iv)          Notice of Non-Environmental
Litigation.  Promptly after the commencement thereof,
notice of the commencement of all actions, suits, or proceedings before any
court, arbitrator, or governmental department, commission, board, bureau,
agency, or instrumentality affecting the Company 

 

 

or any Subsidiary which,
if determined adversely to the Company or any such Subsidiary, could have a
material adverse effect on the financial condition, properties, profits, or operations
of the Company or any such Subsidiary.

 

(v)            Notice of Environmental
Litigation, Etc.  Promptly after receipt thereof, notice of
the receipt of all pleadings, orders, complaints, indictments, or any other
communication alleging a condition that may require the Company or any
Subsidiary to undertake or to contribute to a cleanup or other response under
environmental Laws, or which seek penalties, damages, injunctive relief, or
criminal sanctions related to alleged violations of such Laws, or which claim
personal injury or property damage to any person as a result of environmental
factors or conditions.

 

(vi)          Bylaws and Articles. 
Promptly after any change in the Company’s bylaws or articles of
incorporation (or like documents), copies of all such changes, certified by the
Company’s Secretary.

 

(vii)         Compliance Certificate.  Together with
each set of financial statements furnished to CoBank pursuant to Section 8(H) hereof
for a period corresponding to a period for which one or more of the financial
covenants set forth in Section 10 hereof are required to be tested, a
certificate of an officer or employee of the Company acceptable to CoBank
setting forth calculations showing compliance with each of the financial
covenants that require compliance at the end of the period for which the
statements are being furnished.

 

(viii)        Budgets.  As soon as
available, but in no event more than 90 days after the end of any fiscal year
of the Company occurring during the term hereof, copies of the Company’s
board-approved annual budgets and forecasts of operations and capital
expenditures.

 

(ix)          Other Information.  Such other information regarding the condition or
operations, financial or otherwise, of the Company or any Subsidiary as CoBank
may from time to time reasonably request, including but not limited to copies
of all pleadings, notices, and communications referred to in Subsections 8(H)(iv) and
(v) above.

 

SECTION 9.         Negative Covenants.  Unless otherwise agreed to in writing by CoBank, while
this agreement is in effect the Company will not and will not permit its
Subsidiaries to:

 

(A)  Borrowings.  Create, incur, assume, or allow to exist,
directly or indirectly, any indebtedness or liability for borrowed money
(including trade or bankers’ acceptances), letters of credit, or the deferred
purchase price of property or services (including capitalized leases), except
for:  (i) debt to CoBank; (ii) accounts
payable to trade creditors incurred in the ordinary course of business; (iii) current
operating liabilities (other than for borrowed money) incurred in the ordinary
course of business; (iv) debt of the Company to Massachusetts Mutual Live
Insurance Company, Baystate Health Systems, Inc., C.M. Life Insurance
Company, The Security Mutual Life Insurance Company of Lincoln, Nebraska, and
the Canada Life Assurance Company, or their successors in an amount not to
exceed $23,500,000.00, and all extensions, renewals and refinancings thereof; (v) purchase
money indebtedness for real property, plant, and equipment, provided that such
indebtedness does not exceed 100% of the purchase price of the asset(s) being
acquired and such indebtedness does not exceed, in the aggregate, $1,000,000.00
at any one time outstanding; and (vi) capitalized leases in existence from
time to time.

 

(B)  Liens.  Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any of its
property, real or personal (collectively, “Liens”).  The foregoing restrictions shall not apply
to:  (i) Liens in favor of CoBank; (ii) Liens
for taxes, assessments, or governmental charges that are not past due; (iii) Liens
and deposits under workers’ compensation, unemployment insurance, and social
security Laws; (iv) Liens and deposits to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), and like
obligations arising in the ordinary course of business 

 

 

as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, materialmen,
warehousemen, and like persons that secure obligations that are not past due; (vi) easements,
rights-of-way, restrictions, and other similar encumbrances which, in the
aggregate, do not materially interfere with the occupation, use, and enjoyment
of the property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject thereto; (vii) Liens
existing on the date hereof in favor of Massachusetts Mutual Life Insurance
Company, Baystate Health Systems, Inc., C.M. Life Insurance Company, The
Security Mutual Life Insurance Company of Lincoln, Nebraska, and Canada Life
Assurance Company or their successors to secure indebtedness permitted hereunder;
and (viii)  purchase money Liens on real property, plant, and equipment,
provided that the Lien attaches only to the property being financed and fixed
improvements thereon, the Lien attaches at or about the time the property is
acquired, and the debt secured by such Lien is permitted under the terms of
this agreement.

 

(C)  Mergers, Acquisitions, Etc.  Merge or consolidate with any other entity or acquire
all or a material part of the assets of any person or entity, or form or create
any new Subsidiary or affiliate, or commence operations under any other name,
organization, or entity, including any joint venture.

 

(D)  Transfer of Assets.  Sell, transfer, lease, or otherwise dispose of any of
its assets, except in the ordinary course of business.

 

(E)   Loans and Investments. 
Make any loan or advance to any person or entity, or purchase any
capital stock, obligations or other securities of, make any capital
contribution to, or otherwise invest in any person or entity, or form or create
any partnerships or joint ventures except: 
(i) trade credit extended in the ordinary course of business; (ii) loans
and investments by the Company in the stock or other equities of DNA
Dreamfields Company, LLC, provided that the aggregate amount of all such loans
and investments may not exceed $16,000,000.00; (iii) loans and investments
by the Company in the stock and other equities of Primo Piatto, Inc.; and (iv) other
loans in an aggregate principal amount not to exceed, at any one time
outstanding, $1,000,000.00.

 

(F)   Contingent Liabilities.  Assume, guarantee, become liable as a surety, endorse,
contingently agree to purchase, or otherwise be or become liable, directly or
indirectly (including, but not limited to, by means of a maintenance agreement,
an asset or stock purchase agreement, or any other agreement designed to ensure
any creditor against loss), for or on account of the obligation of any person
or entity, except by the endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of the Company’s
business.

 

(G)  Change in Business.  Engage in any business activities or operations
substantially different from or unrelated to the Company’s present business
activities or operations.

 

SECTION 10.       Financial Covenants.  Unless otherwise agreed to in writing, while this
agreement is in effect:

 

(A)  Current Ratio. 
The Company and its consolidated Subsidiaries will have at the end of
each fiscal quarter of the Company a ratio of consolidated current assets to
consolidated current liabilities (both as determined in accordance with GAAP
consistently applied) of not less than 1.20 to 1.

 

(B)  Maximum Total Debt to EBITDA.  The Company and its consolidated Subsidiaries
will have at the end of each fiscal quarter of the Company a ratio of Total
Debt to EBITDA of not greater than 4.25 to 1.00.  For purposes hereof:  (1) Total Debt” shall mean the
sum of (i) all indebtedness, obligations and liabilities of the Company
with respect to borrowed money (including the issuance of debt securities), (ii) all
guaranties, endorsements and other contingent obligations of the Company with
respect to indebtedness arising from money borrowed by others, (iii) all
reimbursement and other obligations with respect to letters of credit, bankers
acceptances, customer advances, and other extensions of credit whether or not
representing obligations for borrowed money, (iv) the aggregate of the
principal components of all leases and other agreements for the use,
acquisitions retention of real or personal 

 

 

property which are required to
be capitalized under GAAP, (v) all indebtedness, obligations and
liabilities representing the deferred purchase price of property or services, (vi) all
indebtedness secured by a lien of the Property of the Company, whether or not
the Company has assumed or become liable for the payment of such indebtedness,
and (vii) all obligations of the Company under any agreement providing for
an interest rate swap, cap, and floor, contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described above; and (2) “EBITDA” shall mean (i) net income
before provision for incomes taxes for the preceding four fiscal quarter period
ending on such date (the “Four Quarter Period”), plus (ii) interest
expense, including without limitation, implicit interest expense on capitalized
leases for the Four Quarter Period, plus (iii) depreciation expense,
amortization expense, and similar noncash charges for the Four Quarter Period,
plus (iv) any extraordinary, unusual or non-recurring losses or charges
for the Four Quarter Period, minus (v) any gain associated with the sale
or write-down of assets for the Four Quarter Period, minus (vi) any gain
from discontinuance of operations for the Four Quarter Period, minus (vii) any
extraordinary, unusual or non-recurring gains or credits for the Four Quarter
period (all a determined in accordance with GAAP consistently applied).

 

(C)  Minimum
Fixed Charge Coverage Ratio.  The
Company and its consolidated Subsidiaries will at the end of each fiscal
quarter of the Company, a Minimum Fixed Charge Coverage Ratio of not less than
1.15 to 1.00.  For purposes hereof, the
Minimum Fixed Charge Coverage Ratio is the ratio of (a) EBITDA (as defined
above) for the Four Quarter Period (as defined above), minus capital
expenditures (excluding capitalized expenses and expenditures contemplated as
part of this financing) not funded by debt for the Four Quarter Period, minus
stock repurchases for the Four Quarter Period, minus equity retirements and
dividends declared during the Four Quarter Period; to (b) interest expense
for the Four Quarter Period, plus the sum of all scheduled principal payments
made in respect of the long term debt for the Four Quarter Period.

 

(D)  Minimum Tangible Net Worth. 
The Company and its consolidated Subsidiaries will maintain at the end
of each fiscal quarter of the Company an excess of consolidated “Tangible
Assets” (as defined below) over consolidated total liabilities (as determined
in accordance with GAAP consistently applied) at not less than the sum of (a) $40,000,000.00,
plus (b) 30% of cumulative net income of the Company and its consolidated
subsidiaries beginning with consolidated net income for fiscal year ending July 31,
2005 and accumulating thereafter with consolidated net income at all subsequent
fiscal year ends, plus (c) 100% of all contributed capital received by the
Company and its consolidated subsidiaries after July 31, 2004.  For purposes hereof, “Tangible Assets” shall
mean all assets (as determined in accordance with GAAP consistently applied)
less all assets which would be classified as intangible assets under GAAP
(including, but not limited to, goodwill, patents, trademarks, trade names,
copyrights, and franchises).  In
addition, for purposes of subsection (b) above, “net income” shall
not include any net loss, such that, in the event of a net loss at any fiscal
year end, such net loss shall not reduce the cumulative net income.

 

SECTION 11.       Events of Default.  Each of the following shall constitute an “Event of
Default” under this agreement:

 

(A)  Payment Default.  The Company should fail to make any payment to, or to
purchase any equity in, CoBank when due.

 

(B)  Representations and
Warranties.  Any representation or warranty made or
deemed made by the Company herein or in any Supplement, application, agreement,
certificate, or other document related to or furnished in connection with this
agreement or any Supplement, shall prove to have been false or misleading in
any material respect on or as of the date made or deemed made.

 

(C)  Certain Affirmative
Covenants.  The Company or, to the extent required
hereunder, any Subsidiary should fail to perform or comply with Sections 8(A) through
8(H)(ii), 8(H)(vi)(vii), and (viii), or any reporting covenant set forth in any
Supplement hereto, and such failure continues for 15 days after written notice
thereof shall have been delivered by CoBank to the Company.

 

 

(D)  Other Covenants and
Agreements.  The Company or, to the extent required
hereunder, any Subsidiary should fail to perform or comply with any other
covenant or agreement contained herein or in any other Loan Document or shall
use the proceeds of any loan for an unauthorized purpose.

 

(E)   Cross-Default.  The Company should, after any applicable grace period,
breach or be in default under the terms of any other agreement between the
Company and CoBank.

 

(F)   Other Indebtedness.  The Company or any Subsidiary should fail to pay when
due any indebtedness to any other person or entity for borrowed money or any
long-term obligation for the deferred purchase price of property (including any
capitalized lease), or any other event occurs which, under any agreement or
instrument relating to such indebtedness or obligation, has the effect of
accelerating or permitting the acceleration of such indebtedness or obligation,
whether or not such indebtedness or obligation is actually accelerated or the
right to accelerate is conditioned on the giving of notice, the passage of
time, or otherwise.

 

(G)  Judgments.  A
judgment, decree, or order for the payment of money shall be rendered against
the Company or any Subsidiary and either: 
(i) enforcement proceedings shall have been commenced; (ii) a
Lien prohibited under Section 9(B) hereof shall have been obtained; or
(iii) such judgment, decree, or order shall continue unsatisfied and in
effect for a period of 20 consecutive days without being vacated, discharged,
satisfied, or stayed pending appeal.

 

(H)  Insolvency, Etc.  The Company or any Subsidiary shall:  (i) become insolvent or shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they come due; or (ii) suspend its business operations or a
material part thereof or make an assignment for the benefit of creditors; or (iii) apply
for, consent to, or acquiesce in the appointment of a trustee, receiver, or
other custodian for it or any of its property or, in the absence of such
application, consent, or acquiescence, a trustee, receiver, or other custodian
is so appointed; or (iv) commence or have commenced against it any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation Law of any jurisdiction.

 

(I)    Material Adverse Change.  Any material adverse change occurs, as reasonably
determined by CoBank, in the Company’s financial condition, results of
operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.

 

(J)   Revocation
of Guaranty.  Any guaranty, suretyship, subordination
agreement, maintenance agreement, or other agreement furnished in connection
with the Company’s obligations hereunder and under any Supplement (including
the Continuing Guarantee dated May 20 2005, of Primo Piatto, Inc. )
shall, at any time, cease to be in full force and effect, or shall be revoked
or declared null and void, or the validity or enforceability thereof shall be
contested by the guarantor, surety or other maker thereof (the “Guarantor”), or
the Guarantor shall deny any further liability or obligation thereunder, or
shall fail to perform its obligations thereunder, or any representation or
warranty set forth therein shall be breached, or the Guarantor shall breach or
be in default under the terms of any other agreement with CoBank (including any
loan agreement or security agreement), or a default set forth in Subsections (F) through
(H) hereof shall occur with respect to the Guarantor.

 

SECTION 12.       Remedies.  Upon the occurrence and during the continuance of an
Event of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice.  For all
purposes hereof, the term “Potential Default” means the occurrence of any event
which, with the passage of time or the giving of notice or both would become an
Event of Default.  In addition, upon the
occurrence and during the continuance of any Event of Default, CoBank may, upon
notice to the Company, terminate any commitment and declare the entire unpaid
principal balance of the loans, all accrued interest thereon, and 

 

 

all other amounts payable
under this agreement, all Supplements, and the other Loan Documents to be
immediately due and payable.  Upon such a
declaration, the unpaid principal balance of the loans and all such other
amounts shall become immediately due and payable, without protest, presentment,
demand, or further notice of any kind, all of which are hereby expressly waived
by the Company.  In addition, upon such
an acceleration:

 

(A)  Enforcement.  CoBank may proceed to protect, exercise, and enforce
such rights and remedies as may be provided by this agreement, any other Loan
Document or under Law.  Each and every
one of such rights and remedies shall be cumulative and may be exercised from
time to time, and no failure on the part of CoBank to exercise, and no delay in
exercising, any right or remedy shall operate as a waiver thereof, and no
single or partial exercise of any right or remedy shall preclude any other or future
exercise thereof, or the exercise of any other right.  Without limiting the foregoing, CoBank may
hold and/or set off and apply against the Company’s obligations to CoBank the
proceeds of any equity in CoBank, any cash collateral held by CoBank, or any
balances held by CoBank for the Company’s account (whether or not such balances
are then due).

 

(B)  Application of Funds.  CoBank may apply all payments received by it
to the Company’s obligations to CoBank in such order and manner as CoBank may
elect in its sole discretion.

 

In addition to the rights and remedies set forth above:  (i) if the Company fails to purchase any
equity in CoBank when required or fails to make any payment to CoBank when due,
then at CoBank’s option in each instance, such payment shall bear interest from
the date due to the date paid at 4% per annum in excess of the rate(s) of
interest that would otherwise be in effect on that loan; and (ii) after
the maturity of any loan (whether as a result of acceleration or otherwise),
the unpaid principal balance of such loan (including without limitation,
principal, interest, fees and expenses) shall automatically bear interest at 4%
per annum in excess of the rate(s) of interest that would otherwise be in
effect on that loan.  All interest provided
for herein shall be payable on demand and shall be calculated on the basis of a
year consisting of 360 days.

 

SECTION 13.       Broken Funding Surcharge.  Notwithstanding any provision contained in any
Supplement giving the Company the right to repay any loan prior to the date it
would otherwise be due and payable, the Company agrees to provide three
Business Days’ prior written notice for any prepayment of a fixed rate balance
and that in the event it repays any fixed rate balance prior to its scheduled
due date or prior to the last day of the fixed rate period applicable thereto
(whether such payment is made voluntarily, as a result of an acceleration, or
otherwise), the Company will pay to CoBank a surcharge in an amount equal to
the greater of:  (i) an amount which
would result in CoBank being made whole (on a present value basis) for the
actual or imputed funding losses incurred by CoBank as a result thereof; or (ii) $300.00.  Notwithstanding the foregoing, in the event
any fixed rate balance is repaid as a result of the Company refinancing the
loan with another lender or by other means, then in lieu of the foregoing, the
Company shall pay to CoBank a surcharge in an amount sufficient (on a present
value basis) to enable CoBank to maintain the yield it would have earned during
the fixed rate period on the amount repaid. 
Such surcharges will be calculated in accordance with methodology
established by CoBank (a copy of which will be made available to the Company upon
request).

 

SECTION 14.       Complete Agreement,
Amendments.  This agreement, all Supplements, and all
other instruments and documents contemplated hereby and thereby, are intended
by the parties to be a complete and final expression of their agreement.  No amendment, modification, or waiver of any
provision hereof or thereof, and no consent to any departure by the Company
herefrom or therefrom, shall be effective unless approved by CoBank and
contained in a writing signed by or on behalf of CoBank, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given.  In the
event this agreement is amended or restated, each such amendment or restatement
shall be applicable to all Supplements hereto.

 

 

SECTION 15.       Other Types of Credit.  From time to time, CoBank may issue letters of
credit or extend other types of credit to or for the account of the
Company.  In the event the parties desire
to do so under the terms of this agreement, such extensions of credit may be
set forth in any Supplement hereto and this agreement shall be applicable
thereto.

 

SECTION 16.       Applicable Law.  Except to the extent governed by applicable federal
law, this agreement and each Supplement shall be governed by and construed in
accordance with the laws of the State of Colorado, without reference to choice
of law doctrine.

 

SECTION 17.       Notices.  All notices hereunder shall be in writing and shall be
deemed to be duly given upon delivery if personally delivered or sent by
telegram or facsimile transmission, or three days after mailing if sent by
express, certified or registered mail, to the parties at the following
addresses (or such other address for a party as shall be specified by like
notice):

 

	
  If to CoBank, as follows:

  	
   

  	
  If to the Company, as follows:

  
	
   

  	
   

  	
   

  
	
  For general correspondence purposes:

  	
   

  	
  Dakota Growers Pasta Company, Inc.

  
	
  P.O. Box 5110

  	
   

  	
  One Pasta Avenue

  
	
  Denver, Colorado 80217-5110

  	
   

  	
  Carrington, North Dakota 58421-0021

  
	
   

  	
   

  	
   

  
	
  For direct delivery purposes, when desired:

  	
   

  	
   

  
	
  5500 South Quebec Street

  	
   

  	
   

  
	
  Greenwood Village, Colorado 80111-1914

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attention: Credit Information Services

  	
   

  	
  Attention: Chief Financial Officer

  
	
  Fax No.: (303) 224-6101

  	
   

  	
  Fax No.: (701) 652-3552

  

 

SECTION 18.       Taxes and Expenses.  To the extent allowed by law, the Company agrees to
pay all reasonable out-of-pocket costs and expenses (including the fees and
expenses of counsel retained or employed by CoBank) incurred by CoBank and any
participants from CoBank in connection with the origination, administration,
collection, and enforcement of this agreement and the other Loan Documents,
including, without limitation, all costs and expenses incurred in perfecting,
maintaining, determining the priority of, and releasing any security for the
Company’s obligations to CoBank, and any stamp, intangible, transfer, or like
tax payable in connection with this agreement or any other Loan Document.

 

SECTION 19.       Effectiveness and
Severability.  This agreement shall continue in effect
until:  (i) all indebtedness and
obligations of the Company under this agreement, all Supplements, and all other
Loan Documents shall have been paid or satisfied; (ii) CoBank has no
commitment to extend credit to or for the account of the Company under any
Supplement; and (iii) either party sends written notice to the other
terminating this agreement.  Any
provision of this agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof.

 

SECTION 20.       Successors and Assigns.  This agreement, each Supplement, and the other Loan
Documents shall be binding upon and inure to the benefit of the Company and
CoBank and their respective successors and assigns, except that the Company may
not assign or transfer its rights or obligations under this agreement, any
Supplement or any other Loan Document without the prior written consent of
CoBank.

 

SECTION 21.       Participations, Etc.  From time to time, CoBank may
sell to one or more banks, financial institutions or other lenders a
participation in one or more of the loans or other extensions of credit made
pursuant to this agreement.  However, no
such participation shall relieve CoBank of any commitment made to the Company
under any Supplement hereto.  In
connection with the foregoing, CoBank may disclose information concerning the
Company and its Subsidiaries to any participant or prospective participant,
provided that such participant or 

 

 

prospective
participant agrees to keep such information confidential.  A sale of participation interest may include
certain voting rights of the participants regarding the loans hereunder
(including without limitation the administration, servicing and enforcement
thereof).  CoBank agrees to give written
notification to the Company of any sale of participation interests.

 

SECTION 22.       Agency
and Intercreditor Agreement.  The Company acknowledges that all loans made
by CoBank to the Company are subject to the terms of an Agency and
Intercreditor Agreement dated as of July 15, 1998, by and between CoBank
(under the name of its predecessor, St. Paul Bank for Cooperatives),
Massachusetts Mutual Life Insurance Company, MML Bay State Life Insurance
Company, C. M. Life Insurance Company, The Security Mutual Life Insurance
Company of Lincoln, Nebraska, and The Canada Life Assurance Company (referred
to collectively as the “Lenders”).  The
Company hereby reaffirms and consents to the terms thereof.

 

IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly authorized officers as of the date shown above.

 

	
  CoBANK, ACB

  	
  DAKOTA GROWERS PASTA

  
	
   

  	
    COMPANY, INC.

  
	
   

  	
   

  
	
  By:

  	
    /s/ Gary Sloan

  	
   

  	
  By:

  	
    /s/ Thomas Friezen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
  Title:

  	
    CFOExhibit 10.2

 

Loan No. RIE539S01B

 

STATUSED REVOLVING CREDIT SUPPLEMENT

 

THIS SUPPLEMENT to the Master Loan Agreement dated May 23,
2005 (the “MLA”), is entered into as of May 23, 2005, and effective June 2,
2005 (“Effective Date”), between CoBANK, ACB
(“CoBank”) and DAKOTA GROWERS PASTA COMPANY,
INC., Carrington, North Dakota (the “Company”), and amends and
restates the Supplement dated February 17, 2005 and numbered RIE539S01A.

 

SECTION 1.         The Revolving Credit Facility. 
On the terms and conditions set forth in the MLA and this Supplement,
CoBank agrees to make loans to the Company during the period set forth below in
an aggregate principal amount not to exceed, at any one time outstanding, the
lesser of $25,000,000.00 (the “Commitment”), or the “Borrowing Base” (as
calculated pursuant to the Borrowing Base Report attached hereto as Exhibit A).  Within the limits of the Commitment, the
Company may borrow, repay and reborrow.

 

SECTION 2.         Purpose. 
The purpose of the Commitment is to finance the inventory and
receivables referred to in the Borrowing Base Report.

 

SECTION 3.         Term. 
The term of the Commitment shall be from the Effective date hereof, up
to and including May 31, 2006, or such later date as CoBank may, in its
sole discretion, authorize in writing.

 

SECTION 4.         Interest. 
The Company agrees to pay interest on the unpaid balance of the loans in
accordance with one or more of the following interest rate options, as selected
by the Company:

 

(A)          Weekly Quoted Variable
Rate.  At a rate per annum equal at all times to the
rate of interest established by CoBank on the first Business Day of each
week.  The rate established by CoBank
shall be effective until the first Business Day of the next week.  Each change in the rate shall be applicable
to all balances subject to this option and information about the then current
rate shall be made available upon telephonic request.

 

(B)          Quoted Rate. 
At a fixed rate per annum to be quoted by CoBank in its sole discretion
in each instance.  Under this option,
rates may be fixed on such balances and for such periods, as may be agreeable
to CoBank in its sole discretion in each instance, provided that:  (1) the minimum fixed period shall be 30
days; (2) amounts may be fixed in increments of $500,000.00 or multiples
thereof; and (3) the maximum number of fixes in place at any one time
shall be 10.

 

(C)          LIBOR. 
At a fixed rate per annum equal to “LIBOR” (as hereinafter defined) plus
2 1/4%.  Under this option:  (1) rates may be fixed for “Interest
Periods” (as hereinafter defined) of 1, 2, 3 or 6 months as selected by the
Company; (2) amounts may be fixed in increments of $500,000.00 or
multiples thereof; (3) the maximum number of fixes in place at any one
time shall be 10; and (4) rates may only be fixed on a “Banking Day” (as hereinafter
defined) on 3 Banking Days’ prior written notice.  For purposes hereof:  (a) “LIBOR” shall mean the rate (rounded
upward to the nearest sixteenth and adjusted for reserves required on “Eurocurrency
Liabilities” (as hereinafter defined) for banks subject to “FRB Regulation D”
(as herein defined) or required by any other federal law or regulation) quoted
by the British Bankers Association (the “BBA”) at 11:00 a.m. London time 2
Banking Days before the commencement of the Interest Period for the offering of
U.S. dollar deposits in the London interbank market for the Interest Period
designated by the Company; as published by Bloomberg or another major
information vendor listed on BBA’s official website; (b) “Banking Day”
shall mean a day on which CoBank is open for business, dealings in U.S. dollar
deposits are being carried out in the London 

 

 

interbank market, and
banks are open for business in New York City and London, England; (c) “Interest
Period” shall mean a period commencing on the date this option is to take
effect and ending on the numerically corresponding day in the next calendar
month or the month that is 2, 3 or 6 months thereafter, as the case may be;
provided, however, that:  (i) in the
event such ending day is not a Banking Day, such period shall be extended to
the next Banking Day unless such next Banking Day falls in the next calendar
month, in which case it shall end on the preceding Banking Day; and (ii) if
there is no numerically corresponding day in the month, then such period shall
end on the last Banking Day in the relevant month; (d) “Eurocurrency
Liabilities” shall have meaning as set forth in “FRB Regulation D”; and (e) “FRB
Regulation D” shall mean Regulation D as promulgated by the Board of Governors
of the Federal Reserve System, 12 CFR Part 204, as amended.

 

The Company shall select the applicable rate option at the time it
requests a loan hereunder and may, subject to the limitations set forth above,
elect to convert balances bearing interest at the variable rate option to one
of the fixed rate options.  Upon the
expiration of any fixed rate period, interest shall automatically accrue at the
variable rate option unless the amount fixed is repaid or fixed for an
additional period in accordance with the terms hereof.  Notwithstanding the foregoing, rates may not
be fixed for periods expiring after the maturity date of the loans.  All elections provided for herein shall be
made electronically (if applicable), telephonically or in writing and must be
received by CoBank not later than 12:00 Noon Company’s local time in order to
be considered to have been received on that day; provided, however, that in the
case of LIBOR rate loans, all such elections must be confirmed in writing upon
CoBank’s request.  Interest shall be
calculated on the actual number of days each loan is outstanding on the basis
of a year consisting of 360 days and shall be payable monthly in arrears by the
20th day of the following month or on such other day in such month as CoBank
shall require in a written notice to the Company; provided, however, in the
event the Company elects to fix all or a portion of the indebtedness
outstanding under the LIBOR interest rate option above, at CoBank’s option upon
written notice to the Company, interest shall be payable at the maturity of the
Interest Period and if the LIBOR interest rate fix is for a period longer than
3 months, interest on that portion of the indebtedness outstanding shall be
payable quarterly in arrears on each three-month anniversary of the commencement
date of such Interest Period, and at maturity.

 

SECTION 5.         Promissory Note. 
The Company promises to repay the unpaid principal balance of the loans
on the last day of the term of the Commitment. 
In addition to the above, the Company promises to pay interest on the
unpaid principal balance of the loans at the times and in accordance with the
provisions set forth in Section 4 hereof. 
This note replaces and supersedes, but does not constitute payment of
the indebtedness evidenced by, the promissory note set forth in the Supplement
being amended and restated hereby.

 

SECTION 6.         Borrowing Base Reports, Etc.  The Company agrees to furnish a Borrowing Base Report
to CoBank at such times or intervals as CoBank may from time to time
request.  Until receipt of such a
request, the Company agrees to furnish a Borrowing Base Report to CoBank within
50 days after each month end calculating the Borrowing Base as of the last day
of the month for which the Report is being furnished.  However, if no balance is outstanding hereunder
on the last day of such month, then no Report need be furnished.  Regardless of the frequency of the reporting,
if at any time the amount outstanding under the Commitment exceeds the
Borrowing Base, the Company shall immediately notify CoBank and repay so much
of the loans as is necessary to reduce the amount outstanding under the
Commitment to the limits of the Borrowing Base.

 

SECTION 7.         Letters of Credit.  If agreeable to CoBank in its sole discretion in each
instance, in addition to loans, the Company may utilize the Commitment to open
irrevocable letters of credit for its account. 
Each letter of credit will be issued within a reasonable period of time
after receipt of a duly completed and executed copy of CoBank’s then current
form of application or, if applicable, in accordance with the terms of any
CoTrade Agreement between the parties, and shall reduce the amount available
under the Commitment by the maximum amount capable of being drawn
thereunder.  Any draw under any letter of
credit issued hereunder shall be deemed an advance under the Commitment.  Each 

 

 

letter of credit must be
in form and content acceptable to CoBank and must expire no later than the
maturity date of the loans. 
Notwithstanding the foregoing or any other provision hereof, the maximum
amount capable of being drawn under each letter of credit must be statused
against the Borrowing Base in the same manner as if it were a loan, and in the
event that (after repaying all loans) the maximum amount capable of being drawn
under the letters of credit exceeds the Borrowing Base, then the Company shall
immediately notify CoBank and pay to CoBank (to be held as cash collateral) an
amount equal to such excess.

 

SECTION 8.         Commitment Fee.  In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 1/4 of 1% per annum (calculated on a 360 day
basis), payable quarterly in arrears by the 20th day following each calendar
quarter.  Such fee shall be payable for
each quarter (or portion thereof) occurring during the original or any extended
term of the Commitment.  For purposes of
calculating the commitment fee only, the “Commitment” shall mean the dollar
amount specified in Section 1 hereof, irrespective of the Borrowing Base.

 

SECTION 9.         Amendment Fee.  In consideration of the amendment, the
Company agrees to pay to CoBank on the execution hereof a fee in the amount of
$31,250.00.

 

IN WITNESS WHEREOF, the parties have caused this Supplement to be
executed by their duly authorized officers as of the date shown above.

 

	
  CoBANK, ACB

  	
  DAKOTA GROWERS PASTA

  
	
   

  	
    COMPANY, INC.

  
	
   

  	
   

  
	
  By:

  	
    /s/ Gary Sloan

  	
   

  	
  By:

  	
    /s/ Thomas Friezen

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
    Vice President

  	
   

  	
  Title:

  	
    CFO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]