September 15, 2005
American Italian Pasta Company
4100 N. Mulberry Drive
Suite 200
Kansas City, MO 64116
Re:
Waivers under Credit Agreement
Ladies/Gentlemen:
Please refer to the Credit Agreement dated as of July 16, 2001 (as
previously amended or otherwise modified, the "
Credit Agreement
") among American
Italian Pasta Company (the "
Company
"), various financial institutions and Bank
of America, N.A., as administrative agent (in such capacity, the "
Administrative
Agent
"). Capitalized terms used but not otherwise defined herein shall
have the
respective meanings given to them in the Credit Agreement.
At the request of the Company, the Required Lenders waive until the
Waiver Termination Date (as defined below) any Event of Default
(collectively,
the "
Known Defaults
") arising from (a) the failure of the Company to comply with
Section 10.6.1 (Minimum Fixed Charge Coverage Ratio), 10.6.2
(Maximum Leverage
Ratio) and 10.6.4 (Minimum EBITDA) of the Credit Agreement for the
Computation
Period ended July 1, 2005 and the Computation Period ending
September 30, 2005,
(b) the failure of the Company to comply with Section 10.2(i) of
the Credit
Agreement or the inaccuracy of the representation and warranty in
Section 9.4 of
the Credit Agreement or of any certificate delivered pursuant to
Section 10.1.1,
10.1.2 or 10.1.3 with respect to any financial statements
previously delivered
by the Company to the Administrative Agent or any Lender pursuant
to the Credit
Agreement, in each case to the extent arising out of the matters
described by
the Company in its press release dated August 9, 2005 and in
conference calls
with the Lenders held on July 12, 2005, August 11, 2005 and
September 8, 2005
(the "
Disclosed Matters
"), and (c) the failure by the Company to deliver
financial statements and the corresponding compliance certificate
pursuant to
Sections 10.1.2 and 10.1.3 of the Credit Agreement for the Fiscal
Quarter ended
July 1, 2005 so long as, in the case of this
clause (c)
, the Company delivers to
the Administrative Agent and the Lenders, not later than September
19, 2005,
financial statements for such Fiscal Quarter together with (i) a
statement to
the effect that such financial statements accurately set forth the
financial
condition and results of operations of the Company and its
Subsidiaries for, and
as of the end of, such Fiscal Quarter, without giving effect to the
Permitted
Adjustments (as defined below) and (ii) calculations in reasonable
detail (but
without giving effect to the Permitted Adjustments) of the
financial covenants
set forth in Section 10.6 of the Credit Agreement as of the last
day of such
Fiscal Quarter. For purposes of the foregoing, "
Permitted Adjustments
" means (x)
adjustments resulting (or that may result) from the pending
investigation by the
audit committee of the Company's board of directors, (y)
adjustments that may
result from the Disclosed Matters and (z) normal year-end audit
adjustments.
As used herein, "
Waiver Termination Date
" means the earliest to occur
of (i) failure of the Company to comply with the requirements set
forth in
clause (c)
of the preceding paragraph, (ii) the occurrence of any Event of
Default or Unmatured Event of Default other than the Known
Defaults, (iii) December 16, 2005 and (iv) the date of the
effectiveness of an
amendment to the Credit Agreement amending the financial covenants
set forth in
clause (a)
of the preceding paragraph. The Company acknowledges that (absent
the
Required Lenders granting, in their sole and complete discretion, a
subsequent
waiver or amendment), immediate Events of Default shall exist on
the Waiver
Termination Date as a result of (x) the Known Defaults and (y) any
other
then-existing event that constitutes an Event of Default.
In consideration of the waivers set forth above, the Company agrees
with the Lenders that, during the Waiver Period and at any time
thereafter
during the existence of an Event of Default, the Company will not,
and will not
permit any Subsidiary to, make any Restricted Payment of the type
described in
clause (iii) of the proviso to Section 10.10 of the Credit
Agreement, other than
repurchases of the Company's capital stock (a) from current or
former employees
of the Company or any Subsidiary pursuant to the American Italian
Pasta Company
2000 Equity Incentive Plan, (b) from the Company's 401-k plan and
(c) pursuant
to the terms of any other employee benefit arrangement as in effect
prior to
September 1, 2005.
This waiver letter is limited to the matters specifically set forth
herein and shall not be deemed to constitute a waiver, consent or
amendment with
respect to any other matter whatsoever.
