Document:

Exhibit
10.5

 

TECHNOLOGY
SUBLICENSE AGREEMENT

 

THIS TECHNOLOGY SUBLICENSE
AGREEMENT (the “Agreement”) is entered into as of December 26th, 2003, by and
between DNA DREAMFIELDS COMPANY, LLC, an Ohio limited liability company
(“DNA”), and DAKOTA GROWERS PASTA COMPANY, INC., a North Dakota corporation
(“Dakota Growers”).

 

W  I  T 
N  E  S 
S  E  T 
H

 

WHEREAS, Dakota Growers,
B-New, LLC, an Ohio limited liability company, TechCom Group, LLC, a Florida
limited liability company (“TechCom”), and Buhler, Inc., a Minnesota
corporation, have formed and capitalized DNA for the purposes of, among other
things, manufacturing in North America and selling globally, low digestible
carbohydrate pasta, rice and potatoes under the brand name, “Dreamfields” (the
“Brand”);

 

WHEREAS, Dakota Growers is
in the business of manufacturing, marketing, distributing and selling dry pasta
products;

 

WHEREAS, Dakota Growers and
DNA have entered into a certain Exclusive Manufacturing Agreement (the
“Manufacturing Agreement”), dated of even date herewith, pursuant to which
Dakota Growers has agreed to manufacture, on an exclusive basis, low digestible
carbohydrate dry pasta products under the Brand (the “Products”), and DNA has
engaged Dakota Growers to so manufacture, on an exclusive basis, the Products,
upon the terms and subject to the conditions of the Manufacturing Agreement;

 

WHEREAS, Dakota Growers and
DNA have entered into a certain Trademark License Agreement (the “Trademark
License”), dated of even date herewith, pursuant to which DNA has granted to
Dakota Growers an exclusive license to use the Brand in connection with the
manufacture, sale and distribution of the Products, upon the terms and subject
to the conditions of the Trademark License;

 

WHEREAS, Dakota Growers and
DNA have entered into a certain Services Agreement (the “Services Agreement”),
dated of even date herewith, pursuant to which Dakota Growers has agreed to
provide to DNA, on an exclusive basis, certain administrative, accounting,
sales and distribution services to facilitate the sale and distribution of the
Products, upon the terms and subject to the conditions of the Services
Agreement;

 

WHEREAS, in connection with
the formation and capitalization of DNA and pursuant to the DNA, LLC Operating
Agreement, TechCom granted to DNA an unconditional, irrevocable, royalty-free,
perpetual, exclusive and world-wide license to use TechCom’s patent-pending
technology (the “Technology”) to market and manufacture the Products (the
“TechCom License”), including all improvements to the Technology thereafter
developed by TechCom or DNA; and

 

WHEREAS, in order to
facilitate Dakota Growers’ manufacture, on an exclusive basis, of the Products,
and the sale and distribution of the Products by Dakota Growers, DNA desires to
grant to Dakota Growers an exclusive sublicense to use the Technology to
manufacture the Products in North America.

 

NOW, THEREFORE, in
consideration of the foregoing and the mutual agreements, provisions and
covenants contained in this Agreement, the parties agree as follows:

 

1.                                       Grant of Sublicense. 
Subject to the terms and conditions of this Agreement, DNA hereby grants
to Dakota Growers an unconditional, irrevocable, royalty-free, perpetual,
exclusive, world-wide sublicense to use the Technology, and any and all rights
of use or ownership DNA now or hereafter maintains in and to the Technology,
for purposes of manufacturing in North America, and marketing, selling and
distributing globally, the Products (the “Sublicensed Purposes”).  Dakota Growers may, at its expense, make
improvements to the

 

1

 

Technology, as it deems appropriate, subject
to the prior consent of DNA, and the sublicense granted hereunder shall cover
such improvements, provided Dakota Growers promptly discloses to DNA, in
writing, any improvements to the Technology made by Dakota Growers.  DNA hereby acknowledges and agrees that the
sublicense granted hereby is exclusive to Dakota Growers and DNA hereby
represents and warrants to Dakota Growers that Dakota Growers’ use of the
Technology as contemplated hereby will not infringe upon the intellectual
property rights of any third party.

 

2.                                       Terms of Use. 
Dakota Growers hereby acknowledges and agrees that the sublicense of the
Technology is limited to Dakota Growers’ use of the Technology for the
Sublicensed Purposes, and Dakota Growers hereby agrees to use the Technology
only for the Sublicensed Purposes, subject to the condition that the Products
must meet the Specifications (as defined in the Manufacturing Agreement).  DNA shall be permitted, on reasonable notice
and during normal business hours, to enter the premises of Dakota Growers to
inspect Dakota Growers’ operations and verify that the Products being manufactured
under the Sublicense meet the Specifications.

 

3.                                       Foreign Markets; Patents.  If
Dakota Growers desires to use the Technology in any market outside of the
United States of America and patent applications have not yet been filed in
such market, then DNA agrees to pay all expenses and fees required during the
period Dakota Growers uses the Technology in such market pursuant to such
license for the preparation, filing, prosecution, maintenance, annuities
related to any patent application filed, such costs to be paid by DNA within
thirty (30) days of delivery of an invoice and reasonable supporting
documentation.

 

4.                                       Infringement.  If
DNA or Dakota Growers becomes aware of any infringement or alleged infringement
of any patent rights covering the Technology, such party shall immediately
notify the other party in writing of the name and address of the alleged
infringer, the alleged acts of infringement, and the parties shall work jointly
in good faith to use their reasonable best efforts to prevent infringement and
defend the patents, provided all legal fees to do so shall be paid for by DNA,
and any litigation shall be directed by, and legal counsel shall be engaged by
DNA, all with consultation by Dakota Growers.

 

5.                                       Assignment.  Dakota Growers shall not
sublicense the Technology under this Agreement without the prior written
consent of DNA, except that Dakota Growers may sublicense the Technology under
this Agreement to any subsidiary of Dakota Growers without the prior written
consent of DNA.  DNA may not transfer or
otherwise assign this Agreement without the prior written consent of Dakota
Growers, which consent may be denied in Dakota Growers’ sole and absolute
discretion.  In the event of any
assignment or transfer of the Manufacturing Agreement, the Trademark License
and/or the TechCom License, this Agreement shall contemporaneously therewith be
automatically assigned and transferred to the transferee or assignee of the
Manufacturing Agreement, the Trademark License and/or the TechCom License. If
the terms of the TechCom License are modified in any way, DNA shall give
written notice to Dakota Growers of such modifications and, if Dakota Growers
consents in writing to such modifications, every additional, changed, or
altered term shall contemporaneously therewith be automatically a term of this
Agreement.

 

6.                                       Termination.

 

6.1                                 Dissolution and Insolvency.  If
either party hereto (an “Insolvent Party”) makes an assignment for the benefit
of its creditors, files a voluntary petition under federal or state bankruptcy
or insolvency laws, a receiver or custodian is appointed for that party’s
business, or proceedings are instituted against that party under federal or
state bankruptcy or insolvency laws that have not been stayed or dismissed
within sixty (60) days, this Agreement may be terminated by the party hereto
other than the Insolvent Party, with termination effective immediately upon
written notice to the Insolvent Party.

 

6.2                                 Breach.  If either party (the
“Terminating Party”) believes that the other party (the “Defaulting Party”) has
materially breached this Agreement, the Terminating Party shall give the
Defaulting Party written notice thereof (the “Notice to Cure”).  The Notice to Cure must state the nature of
the breach in reasonable detail

 

2

 

and that the Terminating Party views such
alleged breach as a basis for terminating this Agreement.  If the Defaulting Party fails to cure the
alleged breach within sixty (60) days (the “Cure Period”) after its receipt of
the Notice to Cure, this Agreement shall, at the option of the Terminating
Party, terminate.  DNA expressly agrees
that the remedies at law for any breach by DNA of the exclusivity provisions of
this Agreement, including, but not limited to, Section 1 of this
Agreement, would be inadequate and that, in addition to any other remedies that
Dakota Growers may have in the event of any such breach, Dakota Growers shall
be entitled to temporary and injunctive relief without the necessity of proving
actual damages or posting bond.  DNA
acknowledges that Dakota Growers would not enter into this Agreement unless DNA
agreed to the exclusivity provisions of this Agreement, including, but not
limited to, Section 1 of this Agreement.

 

6.3                                 This agreement automatically terminates if
both the Manufacturing Agreement and the Services Agreement are
terminated.  In addition, this Agreement
may be terminated by the mutual written consent of each of Licensor and
Licensee.

 

6.4                                 Survival.  Termination of this Agreement
shall not relieve either party of its obligations under this Agreement or for
liability for any breach of this Agreement to the extent any such obligation or
liability was incurred or arose prior to or in connection with the termination.

 

7.                                       Relationship of Parties. 
Except as provided in this Agreement or in any other agreement between
Dakota Growers and DNA, none of the parties will act or represent or hold
itself out as having authority to act as an agent or partner of the other
party, or in any way bind or commit the other party to any obligations.  Nothing contained in this Agreement will be
construed as creating a partnership, joint venture, agency, trust or other
association of any kind, each party being individually responsible only for its
obligations as set forth in this Agreement. 
The employees performing the services contemplated by this Agreement
will remain employees of Dakota Growers, and DNA shall not have any
responsibility for such employees.

 

8.                                       Force Majeure.  If
Dakota Growers is prevented from complying, either totally or in part, with any
of the terms or provisions of this Agreement by reason of war, rebellion, fire,
flood, storm or other acts of God, then upon written notice to DNA, the
affected provisions and requirements of this Agreement will be suspended during
the period of such disability, and Dakota Growers will make all reasonable
efforts to remove such disability as soon as practicable and to carry out is
obligations under this Agreement after such disability is removed.

 

9.                                       Notices.  Any notice, request, demand,
waiver, consent, approval or other communication which is required or permitted
to be given to any party hereunder will be in writing and will be deemed given
only if delivered to the party personally or sent to the party by facsimile
(followed by hard copy sent by registered or certified mail) or if sent by
reputable overnight courier, addressed to the party at its address set forth
below:

 

 

	
  If
  to Dakota Growers:

  	
   

  	
  If
  to DNA:

  
	
   

  	
   

  	
   

  
	
  Dakota
  Growers Pasta Company, Inc.

  	
   

  	
  DNA
  Dreamfields Company, LLC

  
	
  One
  Pasta Avenue

  Carrington, ND 58421

  Attention: Thomas P. Friezen

  Tel.: (701) 652 4893

  Fax: (701) 652-3701

  	
   

  	
  14
  West Park Place

  Oxford, OH 45056

  Attention: Mike Crowley

  Tel.: (513) 524-9256

  Fax: (513) 524-5167

  

 

3

 

	
  with
  a copy to:

  	
   

  	
  with
  a copy to:

  
	
   

  	
   

  	
   

  
	
  Lindquist
  & Vennum P.L.L.P.

  	
   

  	
  Ulmer
  & Berne LLP

  
	
  4200
  IDS Center

  80 South Eighth Street

  Minneapolis, MN 55402

  Attention: Ronald D. McFall

  Tel.: (612) 371-3551
Fax: (612) 371-3207

  	
   

  	
  600
  Vine Street

  Suite 2800

  Cincinnati, OH 45201

  Attention: Scott P. Kadish

  Tel.: (513) 762-6200

  Fax: (513) 762-6245

  

 

10.                                 Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Ohio, without giving effect to the principles of conflicts
of law thereof.  ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, SHALL
BE BROUGHT AND MAINTAINED EXCLUSIVELY: (i) IN THE COURTS OF THE STATE OF
MINNESOTA (HENNEPIN COUNTY) OR IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MINNESOTA, IN THE CASE OF ANY LITIGATION COMMENCED BY DNA; AND (ii)
IN THE COURTS OF THE STATE OF OHIO (HAMILTON COUNTY) OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO, IN THE CASE OF ANY LITIGATION
COMMENCED BY DAKOTA GROWERS.  EACH PARTY
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF
THE STATE OF MINNESOTA (HENNEPIN COUNTY) AND OF THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF MINNESOTA FOR THE PURPOSE OF ANY SUCH LITIGATION
COMMENCED BY DNA, AND EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF OHIO (HAMILTON COUNTY) AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO FOR THE
PURPOSE OF ANY SUCH LITIGATION COMMENCED BY DAKOTA GROWERS.  EACH OF THE PARTIES FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF MINNESOTA AND OHIO,
RESPECTIVELY.  THE PARTIES HEREBY
EXPRESSLY AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

11.                                 Entire Agreement. 
This Agreement constitutes the entire understanding of the parties and
supersedes any prior agreements or understandings, written or oral, between the
parties with respect to the subject matter hereof.

 

12.                                 Construction; Interpretation; Severability.  The
parties agree that any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived.  If any provision, clause or part of this
Agreement, or the application thereof under certain circumstances, is held
invalid, the remainder of this Agreement, or the application of such provision,
clause or part under other circumstances, will not be affected thereby.

 

13.                                 Further Assurances. 
Each party will cooperate and take such action as may be reasonably
requested by the other party in order to carry out the provisions and purpose
of this Agreement and the transaction contemplated hereby.

 

14.                                 No Third Party Beneficiaries. 
This Agreement is for the sole benefit of the parties and their
permitted assigns and nothing in this Agreement, expressed or implied, will
give or be construed to give to any person or entity, other than the parties
and such assigns, any legal or equitable rights hereunder.

 

4

 

15.                                 Amendment and Waiver.  The
parties may, by mutual written agreement, amend this Agreement in any respect,
and any party, as to such party, may: (i) extend the time for the performance
of any of the obligations of the other party; (ii) waive any inaccuracies in
representations and warranties by the other party; (iii) waive compliance by
the other party with any of the agreements contained herein and performance of
any obligations by the other party; and; (iv) waive the fulfillment of any
condition that is precedent to the performance by such party of any of its
obligations under this agreement.  To be
effective, any such amendment or waiver must be in writing and signed by the
party against whom enforcement of the same is sought.

 

16.                                 Confidentiality. 
Each party agrees that all information marked as confidential,
proprietary, trade secrets, know how, manuals and other information disclosed
to it by the other party is confidential and proprietary to the disclosing
party (“Confidential Information”). 
Confidential Information shall not include information which: (a) is in
or hereafter enters the public domain through no fault or action of the party
to which it is disclosed; (b) is obtained by the party to which it is disclosed
from a third party which is not subject to any legal restriction on its right
to use and disclose such information; (c) is independently developed by
employees of the party to which it is disclosed without use of any Confidential
Information of the other party; or (d) is required by law or judicial or
administrative processes to be disclosed. 
The parties agree not to use any Confidential Information of the other
party during the term of this Agreement and for a period of three (3) years
thereafter for any purpose other than as permitted or required for performance
hereunder.  Upon termination or
expiration of this Agreement for any reason, the parties shall return to each
other all Confidential Information of the other party in tangible form,
including Confidential Information in electronic or magnetic form.

 

17.                                 Counterparts. 
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but which together will constitute one and
the same instrument.

 

*  *  *  *  *

 

5

 

IN
WITNESS WHEREOF, the parties have caused this Technology Sublicense Agreement
to be duly executed effective as of the day and year first above written.

 

 

	
   

  	
  DAKOTA
  GROWERS PASTA COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
          /s/
  Tim Dodd

  	
   

  
	
   

  	
  Its:

  	
          President/CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DNA
  DREAMFIELDS COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
          /s/
  Mike Crowley

  	
   

  
	
   

  	
  Its:

  	
          President

  	
   

  
						

 

6Exhibit 10.6

 

DAKOTA
GROWERS PASTA COMPANY, INC.

AMENDED AND RESTATED 2003 STOCK OPTION PLAN

 

1.                                       Purpose.  The purpose of the Dakota
Growers Pasta Company, Inc. 2003 Amended and Restated Stock Option Plan is to
provide a continuing, long-term incentive to selected eligible officers,
directors and key employees, vendors or consultants of Dakota Growers Pasta
Company, Inc. (“Dakota Growers”) and of any subsidiary company of Dakota
Growers, as herein defined; to provide a means of rewarding outstanding performance;
and to enable Dakota Growers to maintain a competitive position to attract and
retain key personnel necessary for continued growth and profitability.  Options granted under the Plan may be
incentive stock options (as defined under Section 422 of the Code) or
non-qualified stock options, as determined by the Administrator at the time of
grant of an option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder.

 

2.                                       Definitions.  The following words and
phrases as used herein shall have the meanings set forth below:

 

a.                                       “Board” shall mean the Board of Directors of
Dakota Growers as it may be comprised from time to time.

 

b.                                      “Change in Control” shall mean any of the
following

 

(1)                                  any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes a
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of Dakota Growers representing 50% or more of the
combined voting power of Dakota Growers’ then outstanding securities; or

 

(2)                                  a business combination, following which
shareholders of Dakota Growers do not continue to own at least 50% of the
voting power of the resulting entity or the members of Dakota Growers’ Board of
Directors prior to the transaction do not constitute a majority of the
resulting entity’s Board of Directors; or

 

(3)                                  a liquidation, dissolution or sale of all or
substantially all of the assets of Dakota Growers, and immediately thereafter,
there is no substantial continuity of ownership with respect to Dakota Growers
and the entity to which such assets have been transferred.

 

c.                                       “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time or any successor statute.

 

d.                                      “Committee” shall mean a committee of the
Board as may be designated by the Board, from time to time, for the purpose of
administering this plan as contemplated by Article 4 hereof.  If at any time no Committee shall be in
office, then the functions of the Committee specified in the Plan shall be
exercised by the Board.

 

e.                                       “Common Stock” shall mean the common stock,
$.01 par value, of Dakota Growers.

 

f.                                         “Consultant” means any person, including an
advisor, engaged by Dakota Growers or any Parent Corporation or Subsidiary of
Dakota Growers to render services, who is not an employee of Dakota Growers or
any Subsidiary of Corporation.

 

1

 

g.                                      “Non-Employee Directors” shall mean a
“Non-Employee Director” within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act, as amended, or any successor rule.

 

h.                                      “Fair Market Value” of any security on any
given date shall be determined by the Committee as follows:  (a) if the security is listed for trading on
one or more national securities exchanges, or is traded on the Nasdaq National
Market System or the Nasdaq Small Cap Market, the last reported sales price on
the principal such exchange or Nasdaq System on the date in question, or if
such security shall not have been traded on such principal exchange on such
date, the last reported sales price on such principal exchange or the Nasdaq
System on the first day prior thereto on which such security was so traded; or
(b) if the security is not listed for trading on a national securities exchange
or the Nasdaq System, but is traded in the over-the-counter market, including
the Nasdaq OTC Bulletin Board System, closing bid price for such security on
the date in question, or if there is no such bid price for such security on
such date, the closing bid price on the first day prior thereto on which such
price existed; or (c) if neither (a) nor (b) is applicable, by any means deemed
fair and reasonable by the Committee, which determination shall be final and
binding on all parties.

 

i.                                          “Incentive Stock Option” shall mean any stock
option granted pursuant to this Plan as an “incentive stock option” within the
meaning of Section 422 of the Code.

 

j.                                          “Non-Qualified Stock Option” shall mean any
stock option granted pursuant to this Plan that is not an Incentive Stock
Option.

 

k.                                       “Option” shall mean any stock option granted
pursuant to this Plan, whether an Incentive Stock Option or a Non-Qualified
Stock Option.

 

l.                                          “Optionee” shall mean any person who is the
holder of an Option granted pursuant to this Plan.

 

m.                                    “Outside Director” shall mean a director who
(a) is not a current employee of Dakota Growers or any member of an affiliated
group which includes Dakota Growers; (b) is not a former employee of Dakota
Growers who receives compensation for prior services (other than benefits under
a tax-qualified retirement plan) during the taxable year; (c) has not been an
officer of Dakota Growers; (d) does not receive remuneration from Dakota
Growers, either directly or indirectly, in any capacity other than as a
director, except as otherwise permitted under Code Section 162(m) and
regulations thereunder.  For this
purpose, remuneration includes any payment in exchange for goods or services.  This definition shall be further governed by
the provisions of Code Section 162(m) and regulations promulgated thereunder.

 

n.                                      “Plan” shall mean this Amended and Restated
2003 Stock Option Plan of Dakota Growers.

 

o.                                      “Subsidiary” shall mean any corporation
(other than Dakota Growers) which at the time qualifies as a subsidiary of
Dakota Growers under Section 425(f) of the Code.

 

p.                                      “Tax Date” shall mean the date on which the
amount of tax to be withheld is determined under the Code.

 

q.                                      “Vendor” shall mean any entity that provides
goods or services, or any combination thereof, to Dakota Growers or any
Subsidiary of Corporation.

 

3.                                       Shares Available Under Plan.  The
number of shares which may be issued pursuant to Options granted under this
Plan shall not exceed 500,000 shares of the Common Stock of Dakota Growers;
provided, however, that shares which become avail­able as a result of canceled,
unexercised, lapsed or terminated Options granted under this Plan shall be
available for issuance pursuant to Options subsequently granted under this Plan
under a

 

2

 

stock for stock exercise of a stock option or
the withholding of stock for the payment of taxes, only the net number of
shares issued to the optionee shall be used to calculate the number of shares remaining
for distribution under the Plan.  The
shares issued upon exercise of Options granted under this Plan may be
authorized and unissued shares or shares previously acquired or to be acquired
by Dakota Growers.

 

4.                                       Administration.

 

4.1.                              The Plan will be administered by a Committee of at least two directors,
all of whom shall be Outside Directors and Non-Employee Directors, or, if a
Committee is not appointed, by the Board. 
The Committee may be the Compensation Committee or a subcommittee of the
Compensation Committee of the Board.

 

4.2.                              The Committee will have plenary authority, subject to provisions of the
Plan, to determine when and to whom Options will be granted, the term of each
Option, the number of shares covered by it, the participation by the Optionee
in other plans, and any other terms or conditions of each Option.  The Committee shall determine with respect
to each grant of an Option whether a participant shall receive an Incentive
Stock Option or a Non-Qualified Stock Option. 
The number of shares, the term and the other terms and conditions of a
particular kind of Option need not be the same, even as to Options granted at
the same time.  The Committee’s recom­menda­tions
regarding Option grants and terms and conditions thereof will be conclusive.

 

4.3.                              The Committee will have the sole responsi­bility for construing and
interpreting the Plan, for establishing and amending any rules and regulations
as it deems necessary or desirable for the proper administration of the Plan,
and for resolving all questions arising under the Plan.  Any decision or action taken by the
Committee arising out of or about the construction, administration,
interpretation and effect of the Plan and of its rules and regulations will, to
the extent permitted by law, be within its absolute discretion, except as
otherwise specifically provided herein, and will be conclusive and binding on
all Optionees, all successors, and any other person, whether that person is
claiming under or through any Optionee or otherwise.

 

4.4.                              The Committee will designate one of its members as chairman.  It will hold its meetings at the times and
places as it may determine.  A majority
of its members will constitute a quorum, and all determinations of the
Committee will be made by a majority of its members.  Any determination reduced to writing and signed by all members
will be fully as effective as if it had been made by a majority vote at a
meeting duly called and held.  The
Committee may appoint a secretary, who need not be a member of the Committee,
and may make such rules and regulations for the conduct of its business as it
may deem advisable.

 

4.5.                              No member of the Committee will be liable, in the absence of bad faith,
for any act or omission with respect to his services on the Committee.  Service on the Committee will constitute
service as a member of the Board, so that the members of the Committee will be
entitled to indemnification and reimbursement as Board members pursuant to its
Bylaws.

 

4.6.                              The Committee will regularly inform the Board as to its actions with
respect to all Options granted under the Plan and the terms and conditions and
any such Options in a manner, at any times, and in any form as the Board may
reasonably request.

 

4.7.                              Any other provision of the Plan to the contrary notwithstanding, the
Committee is authorized to take such action as it, in its discretion, may deem
necessary or advisable and fair and equitable to Optionees in the event
of:  a Change in Control of Dakota
Growers; a tender, exchange or similar offer for all or any part of the Common
Stock made by any entity, person or group (other than Dakota Growers, any
Subsidiary of Dakota Growers or any savings, pension or other benefit plan for
the benefit of employees of Dakota Growers or its Subsidiaries); a merger of
Dakota Growers into, a consoli-

 

3

 

dation of Dakota Growers
with, or an acquisition of Dakota Growers by another corporation; or a sale or
transfer of all or substan­tially all of Dakota Growers’ assets.  Such action, in the Committee’s discretion,
may include (but shall not be deemed limited to):  establishing, amending or waiving the forms, terms, conditions or
duration of Options so as to provide for earlier, later, extended or additional
terms for exercise of the whole, or any installment, thereof; alternate forms
of payment; or other modifications.  The
Committee may take any such actions pursuant to this Section 4.7 by adopting
rules or regulations of general applicability to all Optionees, or to certain
categories of Optionees; by amending or waiving terms and conditions in stock
option agreements; or by taking action with respect to individual
Optionees.  The Committee may take any
such actions before or after the public announcement of any such Change in
Control, tender offer, exchange offer, merger, consolidation, acquisition or
sale or transfer of assets.

 

5.                                       Participants.

 

5.1.                              Participation in this Plan shall be limited to officers, employees or
Consultants, either of Dakota Growers or of a Subsidiary, and to all Directors
of the Company.

 

5.2.                              Subject to other provisions of this Plan, Options may be granted to the
same participants on more than one occasion.

 

5.3.                              The Committee’s determination under the Plan including, without
limitation, determination of the persons to receive Options, the form, amount
and type of such Options, and the terms and provisions of Options, need not be
uniform and may be made selectively among otherwise eligible participants,
whether or not the participants are similarly situated.

 

6.                                       Terms and Conditions.

 

6.1.                              Each Option granted under the Plan shall be evidenced by a written
agreement, which shall be subject to the provisions of this Plan and to such
other terms and conditions as Dakota Growers may deem appropriate.

 

6.2.                              Each Option agreement shall specify the period for which the Option
thereunder is granted (which in no event shall exceed ten years from the date
of the grant for any Option granted pursuant to Section 6.3(a) hereof, five
years from the date of grant for any Option granted pursuant to 6.3(b) hereof
and ten years and one day from the date of grant for any Option designated by
the Committee as a Non-Qualified Stock Option) and shall provide that the
Option shall expire at the end of such period; provided, however, the term of
each Option shall be subject to the power of the Committee, among other things,
to accele­rate or otherwise adjust the terms for exercise of Options pursuant
to Section 4.7 hereof in the event of the occurrence of any of the events set
forth therein.

 

6.3.                              The exercise price per share shall be determined by the Committee at
the time any Option is granted; provided, however, that the exercise price per
share purchasable under an Incentive Stock Option, shall be determined as
follows:

 

(a)                                  For employees who do not own stock possessing
more than ten percent (10%) of the total combined voting power of all classes
of stock of Dakota Growers or of any Subsidiary, the Incentive Stock Option
exercise price per share shall not be less than one hundred percent (100%) of
Fair Market Value of the Common Stock of Dakota Growers on the date the Option
is granted, as determined by the Committee.

 

(b)                                 For employees who own stock possess­ing more
than ten percent (10%) of the total combined voting power of all classes of
stock of Dakota Growers or of any Subsidiary, the Incentive Stock Option
exercise price per share shall not be less than one hundred ten percent

 

4

 

(110%)
of the Fair Market Value of the Common Stock of Dakota Growers on the date the
Option is granted, as determined by the Committee.

 

6.4.                              The aggregate Fair Market Value (determined as of the time the Option
is granted) of the Common Stock with respect to which an Incentive Stock Option
under this Plan or any other plan of Dakota Growers or its Subsidiaries is
exercisable for the first time by an Optionee during any calendar year shall
not exceed $100,000.

 

6.5.                              An Option shall be exercisable at such time or times, and with respect
to such minimum number of shares, as may be determined by Dakota Growers at the
time of the grant.  The Option agreement
may require, if so determined by Dakota Growers, that no part of the Option may
be exercised until the Optionee shall have remained in the employ of Dakota
Growers or of a Subsidiary for such period after the date of the Option as
Dakota Growers may specify. 
Notwithstanding the foregoing and subject to the discretionary
acceleration rights of the Committee, an Option granted to a director, officer
or 10% shareholders of Dakota Growers shall not be exercisable for a period of
six (6) months unless the Option has been approved by a majority of
disinterested members of the Board, the Committee or the shareholders of Dakota
Growers.

 

6.6.                              Any and all shares of Common Stock issued upon exercise of an Option
granted hereunder shall be uncertificated when originally issued and shall be
originally issued, recorded and transferred by electronic means, in accordance
with the Bylaws of Dakota Growers.  Any
such uncertificated shares of Common Stock shall be subject to such repurchase
agreements and restrictions on the sale or transfer thereof as are prescribed
by Dakota Growers.  In the event that
any such shares of Common Stock are subsequently certificated in accordance
with the Bylaws of Dakota Growers, Dakota Growers may prescribe the form of
legend which shall be affixed to the stock certificate representing such
certificated shares and such certificated shares shall be subject to the
provisions of any repurchase agreement or other agreement restricting the sale
or transfer thereof.  Such agreements or
restrictions shall be noted on the certificate representing certificated shares
so issued.

 

7.                                       Exercise of Option.

 

7.1.                              Each exercise of an Option granted hereunder, whether in whole or in
part, shall be by written notice thereof, delivered to the Secretary of Dakota
Growers (or such other person as he may designate).  The notice shall state the number of shares with respect to which
the Options are being exercised and shall be accompanied by payment in full for
the number of shares so designated. 
Shares shall be registered in the name of the Optionee unless the
Optionee otherwise directs in his or her notice of election.

 

7.2.          Payment
shall be made to Dakota Growers either (i) in cash, including certified check,
bank draft or money order, (ii) at the discretion of Dakota Growers, by
delivering Common Stock of Dakota Growers already owned by the participant and
held by such participant for at least 6 months; (iii) if the Option is not an
Incentive Stock Option, at the discretion of Dakota Growers, by deduction from
the number of shares to be delivered upon exercise of the Option a number of
shares, the aggregate Fair Market Value of which, as of the same date the
Exercise Price is determined, shall equal the exercise price, or a combination
of (i), (ii) and (iii).  With respect to
(ii) the Fair Market Value of stock so delivered shall be determined as of the
date immediately preceding the date of exercise.

 

7.3.                              Upon notification of the amount due and prior to, or concurrently with,
the issuance to the Optionee of 
uncertificated shares of Common Stock purchased pursuant to the exercise
of an Option, the Optionee shall promptly pay to Dakota Growers any amount necessary
to satisfy applicable federal, state or local withholding tax requirements.

 

5

 

7.4.                              If the terms of an Option so permit, an Optionee, other than a member
of the Committee, may elect by written notice to the Secretary of Dakota
Growers (or such other person as he may designate), to satisfy the withholding
tax requirements associated with the exercise of an Option by authorizing
Dakota Growers to retain from the number of shares of Common Stock that would
otherwise be deliverable to the Optionee that number of shares having an
aggregate Fair Market Value on the Tax Date equal to the tax payable by the
Optionee under Section 7.3.  Any such
election shall be in accordance with, and subject to, applicable tax and
securities laws, and regulations and rulings and in the event shares are
withheld, the amount withheld may not exceed the minimum required federal,
state and FICA withholding amounts. 
Where shares are transferred to an Optionee prior to the Tax Date, the
Optionee shall agree in any such election to surrender that number of shares
having an aggregate Fair Market Value on the Tax Date equal to the tax payable
by the Optionee under Section 7.3.  In
addition, any election to have shares withheld pursuant to this Section 7.4
will be irrevocable by the Optionee and will in any event be subject to the
disapproval of the Committee.

 

8.                                       Adjustments of Option Stock.  In
case the shares issuable upon exercise of any Option granted under the Plan at
any time outstanding shall be subdivided into a greater or combined into a
lesser number of shares (whether with or without par value), the number of
shares purchasable upon exercise of such Option immediately prior thereto shall
be adjusted so that the Optionee shall be entitled to receive a number of
shares which he or she would have owned or have been entitled to receive after
the happening of such event had such Option been exercised immediately prior to
the happening of such subdivision or combination or any record date with
respect thereto.  An adjust­ment made
pursuant to this paragraph shall become effective immediately after the
effective date of such subdivision or combination retroactive to the record
date, if any, for such subdivision or combination.  The Option price (as such amount may have theretofore been
adjusted pursuant to the provisions hereof) shall be adjusted by multiplying
the Option price immediately prior to the adjustment of the number of shares
purchasable under the Option by a fraction, of which the numerator shall be the
number of shares purchasable upon the exercise of the Option imme­di­ately
prior to such adjustment, and of which the denominator shall be the number of
shares so purchasable immediately thereafter. 
Substituted shares of stock shall be deemed shares under Section 3 of
the Plan.

 

9.                                       Assignments.  Any Option granted under this
Plan shall be exercisable only by the Optionee to whom granted during his or
her lifetime and shall not be assignable or transferable otherwise than by will
or by the laws of descent and distribution.   
Notwithstanding the foregoing, the Board or the Committee may, in its
discretion, determine that an Option may be exercised by a person other than
the Optionee and that an Option may be transferable based on the tax and
federal securities law considerations then in effect for such Options.

 

10.                                 Severance; Death; Disability.  An
Option shall terminate, and no rights thereunder may be exercised, if the
person to whom it is granted ceases to be employed by Dakota Growers or by a
Subsidiary except that:

 

10.1.                        If the employment of the Optionee is termi­nated by any reason other
than his or her death or disability, the Optionee may at any time within not
more than three months after termination of his or her employment, exercise his
or her Incentive Stock Option rights but only to the extent they were
exercisable by the Optionee on the date of termination of his or her
employment.  If the employment of the
Optionee is terminated by any reason other than his or her death or disability,
the Optionee may at any time within 90 days after termination of his or her
employment, exercise his or her Non-Qualified Stock Option rights, but only to
the extent they were exercisable by the Optionee on the date of termination of
his or her employment.  Provided,
however, that if the employment is terminated by deliberate, willful or gross
misconduct as determined by the Committee or for cause as defined under the
employee’s employment agreement with Dakota Growers as determined by the
committee, all rights under any Option shall terminate and expire upon such
termination.

 

10.2.                        If the Optionee dies while in the employ of Dakota Growers or a
Subsidiary, or within not more than three months after termination of his or
her employment, the Optionee’s rights under the Option may be exercised at any
time within one year following such death by his or her personal

 

6

 

representative
or by the person or persons to whom such rights under the Option shall pass by
will or by the laws of descent and distribution, but only to the extent they
were exercisable by the Optionee on the date of death.

 

10.3.                        If the employment of the Optionee is termi­nated because of disability,
the Optionee, or his or her legal representative, may at any time within not
more than one year after termination of his or her employment, exercise his or
her Option rights but only to the extent they were exercisable by the Optionee
on the date of termination of his or her employment.

 

10.4.                        Notwithstanding anything contained in Sections 10.1, 10.2 and 10.3 to
the contrary, no Option rights shall be exercisable by anyone after the
expiration of the term of the Option. 
Further, notwithstanding anything contained in Sections 10.1, 10.2 and
10.3 to the contrary, in the event of termination of employment, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422 of the Code, the Option will
thereafter be treated as a Non-Qualified Stock Option.

 

10.5.                        Transfers of employment between Dakota Growers and a Subsidiary, or
between Subsidiaries, will not constitute termination of employment for
purposes of any Option granted under this Plan.  The Committee may specify in the terms and conditions of an
Option whether any authorized leave of absence or absence for military or
government service or for any other reasons will constitute a termination of
employment for purposes of the Option and the Plan.

 

10.6.                        If the Optionee is a Vendor or Consultant of Dakota Growers or a
Subsidiary and such relationship shall terminate for any reason whatsoever, the
Vendor or Consultant may exercise his, her, or its Option rights, but only to
the extent that they were exercisable by the Vendor or Consultant as of the
date of termination of the relationship.

 

11.                                 Rights of Participants. 
Neither the participant nor the personal representatives, heirs, or
legatees of such participant shall be or have any of the rights or privileges
of a shareholder of Dakota Growers in respect of any of the shares issuable
upon the exercise of an Option granted under this Plan unless and until such
shares are electronically recorded, in uncertificated form, on the stock
transfer books of the Company as having been issued to the participant or to
such personal representatives, heirs or legatees.

 

12.                                 Securities Registration.  If
any law or regulation of the Securities and Exchange Commission or of any other
body having jurisdiction shall require Dakota Growers or the parti­ci­pant to
take any action in connection with the exercise of an Option, then
notwithstanding any contrary provision of an Option agreement or this Plan, the
date for exercise of such Option and the delivery of the shares purchased
thereunder shall be deferred until the completion of the necessary action.  In the event that Dakota Growers shall deem
it necessary, Dakota Growers may condition the grant or exercise of an Option
granted under this Plan upon the receipt of a satisfactory certificate that the
Optionee is acquiring the Option or the shares obtained by exercise of the
Option for investment purposes and not with the view or intent to resell or
otherwise distribute such Option or shares. 
In such event, such shares shall be subject to applicable laws
restricting the transfer of such shares and, if such shares are in certificated
form, the stock certificate evidencing such shares shall bear a legend
referring to applicable laws restricting transfer of such shares.  In the event that Dakota Growers shall deem
it necessary to register under the Securities Act of 1933, as amended, or any
other applicable statute, any Options or any shares with respect to which an
Option shall have been granted or exercised, then the participant shall
cooperate with Dakota Growers and take such action as is necessary to permit
registration or qualification of such Options or shares.

 

7

 

13.                                 Duration and Amendment.

 

13.1.                        There is no express limitation upon the duration of the Plan, except
for the requirement of the Code that all Incentive Stock Options must be
granted within ten years from the date the Plan is approved by the
shareholders.

 

13.2.                        The Board may terminate or may amend the Plan at any time, provided, however,
that the Board may not, without approval of the shareholders of Dakota Growers
by a majority of the voting power of shares issued and outstanding, (i)
increase the maximum number of shares as to which options may be granted under
the Plan, (ii) permit the granting of Incentive Stock Options at less than 100%
of Fair Market Value at time of grant, or (iii) permit any change which results
in any repricing of any award or option heretofore granted hereunder.

 

14.                                 Approval of Shareholders. 
This Plan expressly is subject to approval of holders of a majority of
the outstanding shares of Common Stock of Dakota Growers, and if it is not so
approved on or before one year after the date of adoption of this Plan by the
Board, the Plan shall not come into effect, and any Options granted pursuant to
this Plan shall be deemed canceled.

 

15.                                 Conditions of Employment.  The
granting of an Option to a participant under this Plan who is an employee shall
impose no obligation on Dakota Growers to continue the employ­ment of any
participant and shall not lessen or affect the right of Dakota Growers to
terminate the employment of the participant.

 

16.                                 Other Options. 
Nothing in the Plan will be construed to limit the authority of Dakota
Growers to exercise its corporate rights and powers, including, by way of illu­stra­tion
and not by way of limitation, the right to grant options for proper corporate
purposes otherwise than under the Plan to any employee or any other person,
firm, corporation, association, or other entity, or to grant Options to, or
assume Options of, any person for the acquisition by purchase, lease, merger,
consolidation, or otherwise, of all or any part of the business and assets of
any person, firm, corporation, association, or other entity.

 

 

	
  Originally
  adopted by Board of Directors:

  	
   

  	
  November
  21, 2002

  
	
  Approved
  by Shareholders:

  	
   

  	
  January
  11, 2003

  
	
  Amended
  and Restated by Board of Directors:

  	
   

  	
  January
  10, 2004

  

 

8

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