Document:

Prepared by MerrillDirect

Exhibit 10.4

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

 

FIVE-YEAR CONTRACT EXTENSION BETWEEN:

U.S. FOODSERVICETM

AND

DAKOTA GROWERS PASTA COMPANY

December 28, 2000

          The
following is an addendum of the terms and conditions to the February 6, 1997
Five-Year Contract Agreement.  This
Agreement will be effective from December 28, 2000 through December 31, 2006,
and supersedes all prior commitments.

 

	

A.

  	

Products

  
	 

  	

         1.

  	

Dry pasta products for
  the foodservice and retail markets packed under the Roseli®, Monarca® and
  Pasta Sanita brand.

  
	 

  	 

  	 

  
	 

  	

         2.

  	

Dry pasta products for
  the foodservice and retail markets packed exclusively under the Bellagio
  S.p.A. brand imported from Italy.

  
	 

  	 

  	 

  
	

B.

  	

Pricing:
  Terms of Sale

  
	 

  	

         1.

  	

Current pricing as of
  August 1, 2000, is based on $*** cwt. semolina.  Attached is a revised August 1, 2000 – June 30, 2001 price
  list.  (Example: Heavy Wall Elbow
  price at $*** semolina + $*** conversion = $***/lb. F.O.B. delivered.)

  
	 

  	 

  	 

  
	 

  	

         2.

  	

Product pricing will
  be subject to adjustment every calendar quarter or at the end of each current
  price list.  An adjustment to pricing
  will be made based on the projected Minneapolis semolina price during that period.  

  
	 

  	 

  	 

  
	 

  	

         3.

  	

It is understood that
  U.S. FoodserviceTM reserves the right to contract at a specific semolina price
  quarterly or longer periods of time, provided Dakota Growers is able to
  secure sufficient raw materials to cover U.S. FoodserviceTM requirements.

  
	 

  	 

  	 

  
	 

  	

         4.

  	

All price adjustments
  will be mutually agreed upon and set between the two parties prior to the
  start of every succeeding pricing period.

  
	 

  	 

  	 

  
	 

  	

         5.

  	

All other terms of
  sale are noted on the current net price list, which is attached to this
  Agreement.

  
	 

  	 

  	 

  
	 

  	

         6.

  	

Packaging and
  transportation costs will be reviewed once per year on the anniversary date
  of the Agreement, and any adjustments, up or down will be made to the pricing
  in effect at that time.

  

 

 

(* - Confidential
treatment requested.)

 

	
  C.
  	
  Product
  Ordering: Inventory Levels
  
	 
  	
           1.
  	
  Product
  will be shipped within eight (8) working days after an order is received.

  
	 
  	
           2.
  	
  Whenever
  possible, product will be ordered in full pallet quantities. In the event
  that full pallet quantities are not possible, even layers will be ordered.

  
	 
  	
           3.
  	
  Finished
  goods inventories equal to one month’s normal usage will be maintained by
  Dakota Growers on a good-faith basis.

  
	 
  	
           4.
  	
  It
  is understood that because of the lead-time required, packaging material
  inventories equal to four (4) months or more of normal usage may need to be
  maintained by Dakota Growers.

  
	
  D.
  	
  Promotional
  Payments, Allowances, Chain Rebates
  
	 
  	
        This Agreement is a net pricing
  program other than previously agreed upon chain account rebates as follows:

  
	 
  	
        (Confidential treatment requested.)

  
	
  E.
  	
  Contract
  Incentive Program 
  
	 
  	 
  	 
  
	 
  	
        (Confidential treatment requested.)

  
	
  F.
  	
  Entirety
  and Interpretation of Agreement
  
	 
  	
           1.
  	
  This
  Agreement contains the entire understanding, and all prior negotiations and
  understandings are superceded and merged into this Agreement.

  
	 
  	
           2.
  	
  This
  Agreement shall be construed in accordance with and governed by the laws of
  the State of North Dakota.

  
	
  G.
  	
  Duration
  of Agreement; Exclusivity
  
	 
  	
           1.
  	
  While
  this Agreement is in effect, U.S. FoodserviceTM authorizes only Dakota Growers
  to pack the Roseli®, Monarca® and Italian imported Bellagio S.p.A. brand dry
  pasta products.

  
	 
  	
           2.
  	
  This
  Agreement binds both parties through December 31, 2006, unless it is mutually
  agreed by both parties to terminate or amend it.

  
	 
  	
           3.
  	
  This
  Agreement may not be amended or modified orally at any time.  However, this Agreement may be amended or
  modified by a written instrument if mutually agreed and signed by parties
  hereto.

  
	 
  	
           4.
  	
  This
  Agreement may not be transferred or assigned, or any portions thereof, by
  U.S. FoodserviceTM, without the written consent of Dakota Growers Pasta
  Company.

  
				

 

 

Reviewed and accepted by

Dakota Growers Pasta Company

____________________________________

Timothy Dodd, President & General Manager

____________________________________

Gary Mackintosh, Executive Vice President, Sales & Marketing

 

Date________________________________

Reviewed and accepted by

U.S. FoodserviceTM

 

____________________________________

Timothy Lee, Senior Vice President

____________________________________

Bill Carter, Vice President

 

Date________________________________

 

 

Schedule A

(Confidential treatment requested.)Prepared by MerrillDirect

Exhibit 10.5

DAKOTA
GROWERS PASTA COMPANY

GROWERS
AGREEMENT

          This
contract (the Agreement) is made between DAKOTA GROWERS PASTA COMPANY (a North
Dakota cooperative association, herein referred to as the Cooperative), and the
undersigned producer of small grains or association of agricultural producers,
including associations, cooperatives and other entities operated on a
cooperative basis (herein referred to as the Member).  The Agreement is effective as of the date it is approved and
accepted by the Cooperative.

PREAMBLE

          This
Agreement records legal relations between Member and Cooperative as seller and
buyer of durum.  The parties are also
related under Articles of Association and Bylaws of the Cooperative.  Member acknowledges that Articles, Bylaws
and any reasonable policies, rules and regulations adopted by the Board of
Directors constitute a contract between the Cooperative and each member of the
Cooperative, as fully as though each Member had individually signed a separate
instrument containing such terms. 
Member acknowledges receipt of a copy of the Articles and Bylaws.

          The
Cooperative is organized and operated as a cooperative for the mutual benefit
of all members of the Cooperative.  The
cooperative enterprise is the processing of durum and producing pasta products
for sale for human consumption.

          Member
acknowledges his opportunities to realize economic benefits based upon his
membership in and patronage of the Cooperative and his opportunities to
influence the management of the Cooperative by the election of its directors
are factors which countervail any assertion that this agreement is a
"contract of adhesion" or is "unconscionable" in any of its
terms.  Therefore, the Member disclaims
any rights to strict construction of this Agreement in his favor and against
the Cooperative.

          The
Member's commitment of durum to the Cooperative are intrinsically related to
his status as a holder of Equity Stock in the Cooperative; for each share of
Equity Stock held, one bushel of Number One Hard Amber Durum is committed for
each processing year.  If the number of
shares of Equity Stock held by Member changes, his committed number of bushels
of durum may also be changed as the Board of Directors of the Cooperative may
determine according to reasonable policies of uniform application.

          1.       Hard Amber Durum Committed to the
Cooperative

          a.       Amount.  Member agrees to sell and deliver to the Cooperative bushels
equal in number to shares of Equity Stock in the Cooperative owned by the
Member of Number One Hard Amber Durum wheat during each processing year.  A processing year shall start on the first
day of August of each year and shall end on the last day of July of the
following year.  The first processing
year shall start on August 1, 1993.

 

          Member
represents and warrants that Member is a producer of small grains with the
ability and resources to produce Number One Hard Amber Durum wheat or an
association of agricultural producers, including associations, cooperatives and
other entities operated on a cooperative basis, with the ability and resources
to grow or procure from its membership Number One Hard Amber Durum wheat.  If the Member is unable to deliver the
committed number of bushels of durum from
the Member's own production or the Member’s membership if such Member is an
association of agricultural producers due to crop failure or similar cause,
that circumstance shall not excuse delay or non-delivery.  Instead, the Member shall obtain durum from
other sources at Member’s cost, and shall deliver it to the Cooperative, just
as if it had actually been produced by Member or the Member’s membership if
such Member is an association of agricultural producers.  It is the intention of the parties that the
Member shall be obligated to deliver all durum committed to be sold and
delivered under this Agreement in all events, unless the obligation shall be
terminated or canceled pursuant to the express terms of this Agreement.

Whether produced by the Member or obtained from other
sources, only durum conforming to quality specifications established by the
Cooperative shall be acceptable.

          The
Cooperative shall have no obligation to accept more durum than the amount
committed, regardless of the Member's total durum production.

          b.       Quality.  Member represents and warrants that durum shall conform to the
Cooperative's quality specifications established in good faith.  The Cooperative's enterprise, processing
durum and producing pasta products for sale for human consumption, requires
Number One Hard Amber Durum.  Unique
grading factors and quality specifications may be applicable so the Cooperative
can produce, sell and deliver high quality pasta products.  The Member acknowledges that Member is a
"merchant" with respect to durum which Member has committed to
produce and deliver, and Member warrants that durum tendered for delivery under
this Agreement shall be merchantable and that Member will use his judgment and
skill to select and deliver suitable durum which shall conform to quality
specifications established by the Cooperative.

          2.       Delivery, Acceptance and Rejection

          Member
agrees to tender delivery of the durum in one or more installments, in
accordance with the delivery schedule established by the Cooperative and mailed
by ordinary mail to the Member.  The
delivery schedule shall designate one or more dates and places of delivery,
which may be an elevator or other facility not owned by the Cooperative.

          Time of
delivery in compliance with the delivery schedule is essential to the
Cooperative.

The Member retains risk of loss of any durum
Member intends to deliver to the Cooperative until it is delivered to the
facility designated by the Cooperative.

          When
delivery of durum is tendered, the Cooperative has a right of inspection.  Durum tendered for delivery shall be
inspected before it is unloaded. 
Grading factors and quality specifications established by the
Cooperative shall govern inspections.

          Acceptance
occurs when the Cooperative shall have inspected the durum and notified the
Member by ordinary mail that it has been accepted.

          Durum of
substandard quality, as determined by the Cooperative, shall be rejected.  If the tender of delivery is rejected for
failure to conform to specifications, the Cooperative shall notify the Member
of the rejection, including a statement of the particular defect.  If the Cooperative rejects any tender of
delivery, and the time for delivery has not yet expired, the Member may notify
the Cooperative of his intention to make a conforming delivery and may then
within the contract time make a conforming delivery.

          Durum
tendered for delivery which is rejected shall not be unloaded.  The Cooperative shall not be obliged to hold
the rejected durum for the Member, and the Cooperative shall not be obliged to
sell rejected durum for the Member.

          Title passes on tender of delivery, free from any
security interest or other lien, except as provided by paragraphs 3d and
5.  Rejection revests title to the durum
in the Member.

          If the
tender of delivery of any installment is rejected for failure to conform to
specifications, the Cooperative shall have other rights and remedies as
provided in Section 7 of this Agreement.

          3.       Price and Payment

          The
Cooperative agrees to pay Member for durum delivered and accepted as follows:

          a.       Price and Advance Payment.  Within 15 days of each delivery by the
Member and after acceptance, the Cooperative will pay to the Member an amount
of money not less than 80 percent of the market value of the durum delivered
and accepted.  market value means the
quantity delivered multiplied by the then current average local market
price.  Average local market price shall
be determined from time to time by the Cooperative's Board of Directors in the
exercise of good faith business judgment and based upon market information in
the trade area in which the Cooperative's pasta plant is located.  The parties intend that the market
information considered by the directors in establishing representative per
bushel prices will include price fluctuations in a changing market as
determined by the Board of Directors.

          b.       Additional Payments and Per-Unit
Retains.  The Cooperative may make
one or more payments in addition to the advance payment as determined by the
Cooperative's Board of Directors, provided the Cooperative may require
deduction from proceeds otherwise payable to Members for the Cooperative's
purchase of durum, on a per-unit basis, which deductions shall be retained by
the Cooperative as patronage capital. 
Per-unit retains shall annually determined by the Board of Directors,
and shall be a uniform amount or percentage per unit, fixed without reference
to the net earnings or net proceeds of the Cooperative.

          c.       Transportation.  The Cooperative's Board of Directors shall
establish transportation allowances to be paid to Members for delivery of durum
to places designated by the Cooperative. 
Transportation allowances shall be determined by the Cooperative's Board
of Directors pursuant to reasonable policies of uniform application.  Any amount payable for transportation shall
be paid with the Advance payment.  The
Member is not entitled to a transportation allowance for a tender of delivery
which is rejected.

          Any amount
paid for transportation shall not be accounted for as patronage for purposes of
determining Member's Patronage Equity Credits and Patronage Distributions.

          d.       Security Interests.  Member shall notify the Cooperative of any
security interest in Member's durum crops. 
The Cooperative shall have the right to apply payments due to the Member
in satisfaction of the secured obligation.

          The
Member's rights to payments are unsecured and may be subordinate to secured
obligations owed by the Cooperative.

          4.       Adjustments

          a.       Reduced Capacity. If the total
number of bushels contracted for sale and delivery to the Cooperative by all
Members under similar Uniform Marketing Agreements exceeds the number of
bushels that the cooperative determines that it needs during a processing year,
the Cooperative will have the right to reduce the committed number of bushels
on a prorate basis, so that the total number of bushels committed to the
Cooperative by all members will fulfill the Cooperative's anticipated
needs.  The Cooperative will notify
Member of any changes in the number of bushels to be delivered by Member to the
Cooperative in any processing year.

 

          b.       Force
Majeure.  In the occurrence of any event that cannot be reasonably controlled or
avoided by the Cooperative which causes a cessation or interruption of its
normal course of business of receiving, handling, processing or packaging,
selling or shipping pasta products, the Cooperative will be excused from
performance during the period that the Cooperative's operations are so
affected.  The Cooperative may, during
such period, accept such portion of Member's durum as the Cooperative has
informed Member it can in its judgment handle. 
The Cooperative shall give written notice by ordinary mail to Member of
the Cooperative's inability to perform and the reason for the nonperformance.

          c.       Open Market Sales.  The ordinary business of the Cooperative is
the processing of Hard Amber Durum into pasta products for human
consumption.  However, the Cooperative
may sell any durum delivered pursuant to this Agreement on an open market
basis.

          5.       Assignment

          Member may
not assign this Agreement or delegate performance of its obligations without
the written consent of the Cooperative. 
Consent may be granted or denied as the Cooperative shall determine in
the exercise of business judgment, and with due consideration to related
provisions of the Bylaws of the Cooperative. 
This restriction of assignment shall not be construed to limit Member's
grant of a security interest in growing crops or proceeds, provided that any
security agreement shall not empower either Member or member’s secured party to
avoid Member's obligations to deliver durum in performance of this Agreement.

          The
Cooperative may assign this Agreement as collateral for loans.

          6.       Terms of Agreement

          This
Agreement has an indefinite term and shall continue until terminated as
provided in the paragraph 6, or until canceled as provided in paragraph 7,
Remedies.

          This
Agreement may be terminated in any of the following manners:

          a.       By the written agreement of the Member
and the Cooperative as an incident to the Member's transfer of stock in the
Cooperative and with the consent of the Cooperative as provided in the Bylaws.

          b.       By unilateral action of the Member,
without cause, effective on the last day of a processing year, upon not less
than 18 months advance notice to the Cooperative, provided that a termination
by unilateral action of Member shall not be effective before July 31,
1999.  A notice of termination under
this paragraph must be dispatched and received by registered or certified mail.

          c.       The Member shall have the right to
terminate this Agreement effective at the end of a processing year during which
the Cooperative has voluntarily commenced bankruptcy or insolvency proceedings
or has been adjudicated insolvent.

          7.       Remedies

          a.       If the Cooperative fails to pay the
advance payment for durum delivered and accepted, the Member may recover the
advance payment and shall also be entitled to any additional payments
determined as provided in Section 3b. 
The Member may not claim or recover any incidental or consequential damages
for non-payment.

          b.       If the Cooperative rejects any durum
tendered for delivery, it shall not be liable for damages, provided the
Cooperative has performed in good faith in the establishment of quality
specifications and in the inspection and rejection of durum tendered for
delivery.  If the obligation of good
faith is violated, then the Member may resell the durum and recover the
difference between the resale price and the contract price (as determined under
paragraph 3) (less per-unit retains), but less expenses saved in consequence of
the Cooperative's rejection.  The Member
may not claim or recover any incidental or consequential damages or lost
profits caused by wrongful rejection.

          If the
Cooperative rejects any durum tendered for delivery, the Member may not
withhold future scheduled deliveries.

          c.       If the Member fails to make delivery or
the Cooperative rejects any tender of delivery, the Cooperative may make in
good faith and without unreasonable delay any reasonable purchase of durum in
substitution for that due from the Member. 
The Cooperative may recover from the Member as damages the difference
between the cost of substitute durum and the advance payment, and any
incidental or consequential damages.

          d.       If the Member fails to make delivery or
the Cooperative rejects any tender of delivery, the Cooperative may recover
from the Member the difference between the average local market price (as
defined by paragraph 3a) and the advance payment, and any incidental or
consequential damages.  The measure of
damages herein provided is reasonable in light of the anticipated or actual
harm caused by Member's breach, the difficulties of proof of other measures of
damages, and the inconvenience or nonfeasibility of otherwise obtaining an
adequate remedy.

          e.       The Member acknowledges his status as a member
of the Cooperative is subject to termination for cause by action of the
Cooperative's Board of Directors, as provided in the Bylaws of the
Cooperative.  In the event of
termination of membership, this Agreement shall be canceled as of the July 31
next following the termination of membership. 
Termination of membership or cancellation of this Agreement shall not be
construed as a renunciation or discharge of any claim for an antecedent breach.

          f.        Resort to any remedy or failure to
effect any available remedy shall not bar any other remedy.

          8.       No Waiver of Breach

          No waiver
of a breach of any of the provisions contained in this Agreement shall be
construed to be a waiver of any subsequent breach of the same or of any other
provision of this Agreement.

          9.       Complete Agreement

          This
document is intended as a complete and exclusive statement of the terms of the
Agreement, and may not be contradicted by evidence of any prior agreement or of
a contemporaneous oral agreement.

          10.     Modification

          This
Agreement may not be modified by oral agreement or conduct of the parties but
may only be amended or modified by the Board of Directors, subject to
ratification by a majority vote of the Members present at any regular or
special membership meeting with a quorum present and notice given.  This limitation on modifications shall not
be construed to limit the provisions for delivery schedules, quality standards,
prices and payment terms to be determined by the Cooperative.

          11.     Notices

          All
notices from one party to another shall be in writing and dispatched by
ordinary mail, postage prepaid, except as specific provisions of this Agreement
require certified or registered mail.

          12.     Governing Law

          This
Agreement shall be governed by and enforced in accordance with the laws of the
state of North Dakota.

 

 

 

 

Adopted as of 1/6/01.

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