Document:

Prepared by MERRILL CORPORATION

Exhibit 10.7

 

MLA No. E539

 

MASTER LOAN AGREEMENT

 

 

                THIS MASTER LOAN AGREEMENT is entered into

as of June 20, 2001, between CoBANK, ACB (successor to the St. Paul

for Cooperatives) ("CoBank") and DAKOTA GROWERS PASTA COMPANY, Carrington,

North Dakota (the "Company").

 

BACKGROUND

 

From time to time CoBank may make loans to the Company.  In order to reduce the amount of paperwork

associated therewith, CoBank and the Company would like to enter into a master

loan agreement.  For that reason, and in

consideration of CoBank making one or more loans to the Company, CoBank and the

Company agree 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.

 

        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 and 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, the Company agrees to grant to CoBank, by means of such instruments

and documents as CoBank shall require, a first lien on such of its other

assets, whether now existing or hereafter acquired, as CoBank may from time to

time require.

 

        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 substance

satisfactory to CoBank, each of the following:

 

                            (i)        This Agreement, Etc.  A duly executed copy of

this agreement and all instruments and documents contemplated hereby.

 

                            (ii)                            Guarantee

and Related Documents:  (a) A

guarantee of payment from Primo Piatto, Inc.; and (b) such certified board

resolutions, evidence of incumbency, and other evidence as CoBank may require

that the guarantee all instruments and documents executed in connection

therewith have been duly authorized and executed.

 

                (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,

evidence 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:  Primo Piatto, Inc.  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

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 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)        Financial

Covenant Certificates. 

Together with each set of financial statements furnished to CoBank

pursuant to Section 8(H) hereof, a certificate of an officer or employee of the

Company acceptable to CoBank setting forth calculations showing compliance with

the financial covenants set forth in Section 10 hereof.

                        (viii)        Annual 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 Subsidiaryas 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 Subsidiary 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 Life 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 in an aggregate amount

not to exceed $27,000,000.00, debt of the Company to the City of Carrington in an

amount not to exceed $172,000.00, debt of the Company to Northern Plains

Cooperative in an amount not to exceed $30,000.00, and debt of the Company to

Dakota Central Telecommunications in an amount not to exceed to $30,000.00, 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 provided the aggregate principal amount does not exceed

$1,000,000.00; 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; and (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; (vi) 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, Canada Life Assurance Company, the City of

Carrington, Northern Plains Cooperative, and Dakota Central Telecommunications

to secure indebtedness permitted hereunder; and (vii) purchase money Liens on

real property, plant, and equipment permitted under Section 9(A)(v).

 

                (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.  Lend or advance money, credit, or

property to any person or entity, except for: 

(i) trade credit extended in the ordinary course of business; and (ii)

miscellaneous 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 Subsidiary will, on a combined basis, have at the end of each

period for which financial statements are required to be furnished pursuant to

Section 8(H) hereof, a ratio of consolidated current assets to consolidated

current liabilities (both as determined in accordance with GAAP consistently

applied) of not less than 1.35 to 1.

 

                (B)        Long Term Debt To Net Worth.  The Company and its consolidated Subsidiary,

on a combined basis, will have at the end of each period for which financial

statements are required to be furnished pursuant to Section 8(H) hereof, a

ratio of consolidated Long Term Debt to consolidated Net Worth of not more than

1.10 to 1.  Long Term Debt means the sum

of long-term liabilities, minus deferred taxes payable, plus current

liabilities, minus the quotient of current assets divided by 1.35, plus the

present value of operating leases (all, together with Net Worth, as calculated

in accordance to GAAP consistently applied).

 

                (C)        Debt Service Coverage Ratio.  The Company and its consolidated Subsidiary,

on a combined basis, will have at the end of each fiscal year of the Company, a

"Debt Service Coverage Ratio" (as defined below) for that year of not

less than 1.50 to 1.  For purposes

hereof, the term "Debt Service Coverage Ratio" shall mean the

following (all as calculated for the applicable year in accordance with GAAP

consistently applied):  (i) net income

(after taxes), minus cash patronage refunds and dividends, minus patronage

income, minus retains revolved, plus equity retains, plus depreciation and

amortization, plus lease payments, plus (or minus) extraordinary losses (or

gains); to (ii) all principal payments due within the year on all long-term

debt, plus lease payments.

 

        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)        Guarantees,

Etc.  Any guarantee,

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 June 20, 2001, 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 (I) 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.  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 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 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.  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 3 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:

  

  CoBank, ACB

  

  P.O. Box 5110

  Denver, Colorado 80217-5110

  Attention:  Credit Information

  Services

  Fax No:  303-224-6101

  	

   

  	

  If to the Company, as follows:

  

  DAKOTA GROWERS PASTA COMPANY

  

  One Pasta Avenue

  Carrington, North Dakota 58421

  Attention:  Chief Financial Officer

  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 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.  CoBank agrees

that all Loans that are made by CoBank and that are retained for its own

account and are not included in a sale of participation interest shall be

entitled to patronage distributions in accordance with the bylaws of CoBank and

its practices and procedures related to patronage distribution.  Accordingly, all Loans that are included in

a sale of participation interest shall not be entitled to patronage

distributions.  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.

 

        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

  
	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFO

  

 

No. E539S01

 

STATUSED REVOLVING CREDIT SUPPLEMENT

 

 

                THIS SUPPLEMENT

to the Master Loan Agreement dated June 20, 2001 (the "MLA"), is

entered into as of June 20, 2001, between CoBANK, ACB ("CoBank") and DAKOTA

GROWERS PASTA COMPANY, Carrington, North Dakota (the

"Company").

 

                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 the “Borrowing Base” (as calculated

pursuant to the Borrowing Base Report attached hereto as Exhibit A) or

$19,000,000.00 (the "Commitment"). 

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, and to renew, extend, and refinance the

Company’s obligations to CoBank under the Company’s existing seasonal loan (the

“Existing Seasonal Loan”) pursuant to Note No. A637S01A (the “Note”) and the

Loan Agreement dated December 5, 2000 (the “Existing Agreement”).  The Company agrees that on the date when all

conditions precedent to CoBank’s obligation to extend credit hereunder have

been satisfied:  (a) the principal

balance outstanding under the Existing Seasonal Loan shall be transferred to

and charged against the Commitment; (b) all accrued obligations of the Company

under the Existing Seasonal Loan for the payment of interest or other charges

shall be transferred to and become part of the Company’s obligations under this

Supplement as if fully set forth herein; and (c) the Note and the Existing

Agreement shall be deemed replaced and superseded as applicable to this

Supplement, but the indebtedness evidenced by such Note shall not be deemed to

have been paid off, by this Supplement and the MLA.  In addition, in the event any balances bearing interest at a

fixed rate are outstanding on the date such loans are being transferred hereto,

then such balances shall continue to be subject to such rates for the remaining

agreed upon fixed rate periods but shall otherwise be subject to the terms

hereof.

 

                SECTION 3.         Term.  The term of the Commitment shall be from

June 20, 2001, up to but not including January 1, 2002, 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 principal balance of each loan in accordance with one or more of the

following interest rate options, as selected by the Company:

 

                        (A)                        Variable

Rate Option.  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 may not exceed CoBank’s National Variable Rate (as

hereinafter defined) on that day plus 1% (100 basis points) and 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.  For purposes hereof, the National Variable Rate shall mean the

rate of interest established by CoBank from time to time as its National

Variable Rate, which Rate is intended by CoBank to be a reference rate and not

its lowest rate.  The National Variable

Rate will change on the date established by CoBank as the effective date of any

change therein and CoBank agrees to notify the Company promptly after any such

change.

                        (B)                        Fixed Rate Option.  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 (including periods extending beyond the maturity date of the loans

(as set forth in Section 5 hereof)) as may be agreeable to CoBank in its sole

discretion in each instance.  In the

event CoBank consents to one or more balances being fixed for a period or

periods extending beyond the maturity date but the Commitment is not renewed,

then each such balance shall be due and payable on the last day of its fixed

rate period and Section 5 hereof shall, for each such balance, be deemed

amended accordingly.

 

The Company shall select the applicable rate option at

the time it requests a loan hereunder and may, on any Business Day, elect to

convert balances bearing interest at the variable rate option to the fixed rate

option.  In addition, prior to the

expiration of any fixed rate period, the Company may, subject to

Section 13 of the MLA, repay any fixed rate balance, convert any fixed

rate balance to the variable rate option, or refix the rate at a new rate to be

quoted by CoBank.  Upon the expiration

of any fixed rate period, the Company may, subject to the terms hereof, refix

the rate or convert the rate to the variable rate option.  In the absence of any such election,

interest shall automatically accrue at the variable rate option.  All elections provided for herein shall be

made telephonically or in writing and must be received by 12:00 Noon Company's

local time.  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.

 

                SECTION 5.                Promissory Note.  The Company promises to repay the unpaid

principal balance of the loans on the first CoBank business day following 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 dated December 5, 2000, and

numbered Note No. A637S01A.

 

                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 45 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.  In addition to loans and if agreeable to CoBank in its sole

discretion in each instance, the Company may utilize the Commitment to open

irrevocable letters of credit for its account. 

Each letter of credit shall reduce the amount available under the

Commitment by the maximum amount capable of being drawn thereunder.  The rights and obligations of the parties

with respect to each letter of credit will be governed by the Reimbursement

Agreement attached hereto as Exhibit B (which rights and obligations shall be

in addition to the rights and obligations of the parties hereunder and under

the MLA).  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.

                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

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFO

  

 

No. E539T01

 

CONSOLIDATING SUPPLEMENT

(Variable and Quoted Fixed Rate Term Loan)

 

 

                THIS

SUPPLEMENT to the Master Loan Agreement dated June 20, 2001 (the

"MLA"), is entered into as of June 20, 2001, between CoBANK, ACB

("CoBank") and DAKOTA GROWERS PASTA COMPANY, Carrington,

North Dakota (the "Company").

 

                SECTION 1.                Consolidation.  The loan made by CoBank under the

Loan Agreement dated December 5, 2000, and numbered Note No. 33061 is hereby

consolidated under the MLA.  Henceforth,

the loan will be governed by the terms hereof and the MLA.  As of the date hereof, the unpaid principal

balance of the loan is $6,000,000.00.

 

                SECTION 2.         Interest.  The Company agrees to pay interest on the unpaid

principal balance of each loan in accordance with one or more of the following

interest rate options, as selected by the Company:

 

                (A)                Variable Rate Option.  At a rate per annum equal at all times to

the rate of interest established by CoBank on the first Business Day of each

month.  The rate established by CoBank

may not exceed CoBank’s National Variable Rate (as hereinafter defined) on that

day plus 1% (100 basis points) and shall be effective until the first Business

Day of the next month.  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.  For purposes hereof, the

National Variable Rate shall mean the rate of interest established by CoBank

from time to time as its National Variable Rate, which Rate is intended by

CoBank to be a reference rate and not its lowest rate.  The National Variable Rate will change on the

date established by CoBank as the effective date of any change therein and

CoBank agrees to notify the Company promptly after any such change.

 

                (B)                Fixed Rate Option.  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.

 

The Company shall select

the applicable rate option at the time it requests each loan hereunder and may,

on any Business Day, elect to convert balances bearing interest at the variable

rate option to the fixed rate option. 

In addition, prior to the expiration of any fixed rate period, the

Company may, subject to Section 13 of the MLA, convert any fixed rate

balance to the variable rate option or refix the rate at a new rate to be

quoted by CoBank.  Upon the expiration

of any fixed rate period, the Company may, subject to the terms hereof, refix

the rate or convert the rate to the variable rate option. In the absence of any

such election, interest shall automatically accrue at the variable rate

option.  All elections provided for

herein shall be made telephonically or in writing and must be received by 12:00

Noon Company's local time.  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.

 

                SECTION 3.                Promissory Note.  The Company promises to repay the

loan as follows:  (1) in one quarterly

installment of $610,000.00 on December 30, 2002; (2) in 7 equal,

consecutive quarterly installments of $685,000.00, with the first such

installment due on March 31, 2003, and the last such installment  due on 

September  30, 2004;  and 

(3)  followed  by a final 

installment in an amount  equal

to the  remaining  unpaid 

principal  balance of the  loans on 

December  31,  2004. 

If any installment due date is not a day on which CoBank is open for

business, then such installment shall be due and payable on the next day on

which CoBank is open for business. In addition to the above, the Company

promises to pay interest on the unpaid principal balance of the loan in

accordance with the rate options and at the times set forth above.  This note replaces and supersedes, but does

not constitute payment of the indebtedness evidenced by, the promissory note

dated December 5, 2000, and numbered Note No. 33061.

                SECTION 4.                Prepayment.  The

Loan may be prepaid in whole or in part on one CoBank business day’s prior

written notice. Unless otherwise agreed, all prepayments will be applied to

principal installments in the inverse order of their maturity and to such

balances, fixed or variable, as CoBank shall specify.

 

                SECTION 5.         Agency Fee.  The Company agrees to pay to CoBank an agency

fee on the average daily balance at the rate of 1/10 of 1% per annum

(calculated on a 360 day basis), payable quarterly in arrears by the 20th day

following each calendar quarter.

 

                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

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFO

  

 

Loan No. E539T02

 

CONSOLIDATING SUPPLEMENT

(Variable and Quoted Fixed Rate Term Loan)

 

 

                THIS

SUPPLEMENT to the Master Loan Agreement dated June 20, 2001 (the

"MLA"), is entered into as of June 20, 2001, between CoBANK, ACB

("CoBank") and DAKOTA GROWERS PASTA COMPANY, Carrington,

North Dakota (the "Company").

 

                SECTION 1.                Consolidation.  The loan made by CoBank under the

Loan Agreement dated December 5, 2000, and numbered Note No. 35062 is hereby

consolidated under the MLA.  Henceforth,

the loan will be governed by the terms hereof and the MLA.  As of the date hereof, the unpaid principal

balance of the loan is $7,375,000.00.

 

                SECTION 2.         Interest.  The Company agrees to pay interest on the unpaid

principal balance of each loan in accordance with one or more of the following

interest rate options, as selected by the Company:

 

                (A)                Variable Rate Option.  At a rate per annum equal at all times to

the rate of interest established by CoBank on the first Business Day of each

month.  The rate established by CoBank

may not exceed CoBank’s National Variable Rate (as hereinafter defined) on that

day plus 1% (100 basis points) and shall be effective until the first Business

Day of the next month.  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.  For purposes hereof, the

National Variable Rate shall mean the rate of interest established by CoBank

from time to time as its National Variable Rate, which Rate is intended by

CoBank to be a reference rate and not its lowest rate.  The National Variable Rate will change on

the date established by CoBank as the effective date of any change therein and

CoBank agrees to notify the Company promptly after any such change.

 

                (B)                Fixed Rate Option.  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.

 

The Company shall select

the applicable rate option at the time it requests each loan hereunder and may,

on any Business Day, elect to convert balances bearing interest at the variable

rate option to the fixed rate option. 

In addition, prior to the expiration of any fixed rate period, the

Company may, subject to Section 13 of the MLA, convert any fixed rate

balance to the variable rate option or refix the rate at a new rate to be

quoted by CoBank.  Upon the expiration

of any fixed rate period, the Company may, subject to the terms hereof, refix

the rate or convert the rate to the variable rate option. In the absence of any

such election, interest shall automatically accrue at the variable rate

option.  All elections provided for

herein shall be made telephonically or in writing and must be received by 12:00

Noon Company's local time.  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.

 

                SECTION 3.                Promissory Note.  The Company promises to repay the

loan as follows:  (1) in 11 equal,

consecutive quarterly installments of $625,000.00, with the first such

installment due on March 31, 2002, and the last such installment due on

September 30, 2004; and (2) followed by a final installment in an amount equal

to the remaining unpaid principal balance of the loans on December 31,

2004.  If any installment due date is

not a day on which CoBank is open for business, then such installment shall be

due and payable on the next day on which CoBank is open for business. In

addition to the above, the Company promises to pay interest on the unpaid

principal balance of the loan in accordance with the rate options and at the

times set forth above.  This note

replaces and supersedes, but does not constitute payment of the indebtedness

evidenced by the promissory note dated December 5, 2000, and numbered Note No.

35062.

 

                 SECTION 4.                Prepayment.  The Loan may be prepaid in whole

or in part on one CoBank business day’s prior written notice. Unless otherwise

agreed, all prepayments will be applied to principal installments in the

inverse order of their maturity and to such balances, fixed or variable, as

CoBank shall specify.

                SECTION 5.         Agency Fee.  The Company agrees to pay to CoBank an agency fee on the average

daily balance at the rate of 1/10 of 1% per annum (calculated on a 360 day

basis), payable quarterly in arrears by the 20th day following each calendar quarter.

 

                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

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFO

  

 

No. E539T03

 

CONSOLIDATING SUPPLEMENT

(Variable Rate Term Loan)

 

 

                THIS

SUPPLEMENT to the Master Loan Agreement dated June 20, 2001 (the

"MLA"), is entered into as of June 20, 2001, between CoBANK, ACB

("CoBank") and DAKOTA GROWERS PASTA COMPANY, Carrington, North Dakota,

(the "Company").

 

                SECTION 1.                Consolidation.  The loan made by CoBank under the

Loan Agreement dated December 5, 2000, and numbered 39181NP, is hereby

consolidated under the MLA.  Henceforth,

the loan will be governed by the terms hereof and the MLA.  As of the date hereof, the unpaid principal

balance of the loan is $9,600,000.00.

 

                SECTION 2.         Interest.  The unpaid principal balance of the loan shall bear

interest at 5.71% per annum.  Interest

will be calculated on the actual number of days the 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.

 

                SECTION 3.                Promissory Note.  The Company promises to repay the

loan in 8 equal, consecutive annual installments of $1,200,000.00, with the

first such installment due on September 30, 2001, and the last such installment

due on September 30, 2008.  If any

installment due date is not a day on which CoBank is open for business, then

such installment shall be due and payable on the next CoBank business day. In

addition to the above, the Company promises to pay interest on the unpaid

principal balance hereof at the rate and at the times set forth above.  This note replaces and supersedes, but does

not constitute payment of the indebtedness evidenced by, the promissory note

dated December 5, 2000, and numbered Note No. 39181NP.

 

                SECTION 4.                Prepayment.  The loan may be prepaid in whole

or in part on one CoBank business day's prior written notice.  Unless otherwise agreed, all prepayments

will be applied to principal installments in the inverse order of their

maturity.

 

                SECTION 5.                Nonpatronage Designation.  The loan shall be on a nonpatronage

basis.  Hence, no patronage shall be

paid with respect to such loan.

 

                SECTION 6.         Agency Fee.  The Company agrees to pay to CoBank an agency

fee on the average daily balance at the rate of 1/10 of 1% per annum

(calculated on a 360 day basis), payable quarterly in arrears by the 20th day

following each calendar quarter.

 

 

                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

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFO

  

 

Loan No. E539T04

 

SINGLE ADVANCE TERM LOAN SUPPLEMENT

 

 

                THIS SUPPLEMENT

to the Master Loan Agreement dated June 20, 2001 (the "MLA"), is

entered into as of June 20, 2001, between CoBANK, ACB ("CoBank") and DAKOTA

GROWERS PASTA COMPANY, Carrington, North Dakota (the

"Company").

 

                SECTION 1.         The Term Loan.  On the terms and conditions set forth in the

MLA, CoBank agrees to make a loan to the Company in an amount not to exceed

$9,600,000.00 (the "Commitment"). 

The available Commitment shall be decreased by $1,200,000.00 on the 31st

day of December each year.  The

Commitment shall expire upon any advance being made hereunder (regardless of

amount) or at 12:00 noon (Company’s local time) on December 31, 2008, whichever

occurs earlier, or on such later date as CoBank may, in its sole discretion,

authorize in writing.

 

                SECTION 2.         Purpose.  The purpose of the Commitment is to finance

the Bank of North Dakota draws on the letter of credit in its favor in

accordance with the terms and conditions thereof.  In addition, the purpose of the Commitment is to consolidate

under this Supplement the Company's existing indebtedness to CoBank under

Company's existing Term Loan (the "Existing Term Loan") pursuant to

Note No. 39182NP (the "Note") and the Loan Agreement dated December

5, 2000 (the "Existing Agreement"). 

The Company agrees that on the date when all conditions precedent to

CoBank's obligation to extend credit hereunder have been satisfied:  (a) all accrued obligations of the Company

under the Existing Term Loan for the payment of interest or other charges shall

be transferred to and become part of the Company's obligations under this

Supplement as if fully set forth herein; and (b) the Note and the Existing

Agreement shall be deemed replaced and superseded as applicable to this

Supplement, but the indebtedness evidenced by such note shall not be deemed to

have been paid off, by this Supplement and the MLA.

 

                SECTION 3.                Availability.  The loan will be made available as provided

in Section 2 of the MLA.

 

                SECTION 4.         Interest.  The unpaid principal balance of each loan

shall bear interest at a rate per annum equal at all times to 2% (200 basis

points) above the rate of interest established by CoBank from time to time as

its National Variable Rate, which Rate is intended by CoBank to be a reference

rate and not its lowest rate. The National Variable Rate will change on the

date established by CoBank as the effective date of any change therein and

CoBank agrees to notify the Company promptly after any such change.  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 on demand.

 

                SECTION 5.                Promissory Note.  The Company promises to repay the loan on

demand.  In addition to the above, the

Company promises to pay interest on the unpaid principal balance of the loan on

demand at the rate set forth above. 

This note replaces and supersedes, but does not constitute payment of

the indebtedness evidenced by, the promissory note dated December 5, 2000, and

numbered Note No. 39182NP.

                SECTION 6.                Nonpatronage Designation.  The loan shall be on a nonpatronage

basis.  Hence, no patronage shall be

paid with respect to such loan.

 

                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

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Gary Sloan

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President

  	

   

  	

  Title:

  	

  CFOPrepared by MERRILL CORPORATION

Exhibit 10.13

 

MLA

No. E539A

 

AMENDMENT

 

                THIS

AMENDMENT is entered into as of October 16, 2001, between CoBANK, ACB

(“CoBank”) and DAKOTA GROWERS PASTA COMPANY, Carrington, North Dakota (the

“Company”).

 

BACKGROUND

 

                CoBank

and the Company are parties to a Master Loan Agreement dated June 20, 2001

(such agreement, as previously amended, is hereinafter referred to as the

“MLA”).  CoBank and the Company now

desire to amend the MLA.  For that

reason, and for valuable consideration (the receipt and sufficiency of which

are hereby acknowledged), CoBank and the Company agree as follows:

 

1.     Section 10(C) of the MLA is hereby amended

and restated to read as follows:

 

SECTION

10.  Financial Covenants.  Unless otherwise agreed to in writing, while

this agreement is in effect:

 

        (C)                Debt

Service Coverage Ratio.  The Company and its consolidated Subsidiary,

on a combined basis, will have at the end of each fiscal year of the Company, a

"Debt Service Coverage Ratio" (as defined below) for that year of not

less than 1.50 to 1.  For purposes

hereof, the term "Debt Service Coverage Ratio" shall mean the

following (all as calculated for the applicable year in accordance with GAAP

consistently applied):  (i) net income

(after taxes), minus cash patronage refunds and dividends payable in subsequent

fiscal year based on the current fiscal year’s net income, minus patronage

income, minus retains revolved, plus equity retains, plus depreciation and

amortization, plus lease payments, plus (or minus) extraordinary losses (or

gains); to (ii) all principal payments due within the year on all long-term

debt, plus lease payments.

 

Except as set forth in

this amendment, the MLA, including all amendments thereto, shall continue in

full force and effect as written.

 

 

                IN

WITNESS WHEREOF, the parties have

caused this amendment to be executed by their duly authorized officers as of

the date shown above.

 

	

  CoBANK, ACB

  	

   

  	

  DAKOTA GROWERS PASTA COMPANY

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Rebecca Kennedy

  	

   

  	

  By:

  	

  /s/ Thomas Friezen

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Assistant Corporate

  Secretary

  	

   

  	

  Title:

  	

  CFO

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