December 14, 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 Periods ended
July 1, 2005
and September 30, 2005 and the Computation Period ending December
30, 2005.
(b) The failure of the Company to comply with Section 10.2(i) of
the Credit
Agreement or the inaccuracy of (i) the representation and warranty
in Section
9.4 of the Credit Agreement or (ii) 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,
September 8, 2005, October 28, 2005 and November 30, 2005 (the "
Disclosed
Matters
").
(c) The failure by the Company to deliver (i) 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 and
(ii)(x)
financial statements and the corresponding compliance certificate
pursuant to
Sections 10.1.1 and 10.1.3 of the Credit Agreement for the Fiscal
Year ended
September 30, 2005 and (y) 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 ending December 30, 2005
so long as
the Company delivers to
the Administrative Agent and the Lenders (A) in the case of the
foregoing
clause
(ii)(x)
, financial statements for such Fiscal Year not later than December
30,
2005, and (B) in the case of the foregoing
clause (ii)(y)
, financial statements
for such Fiscal Quarter not later than February 13, 2006, together
in each case
with: (A) 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 period,
without giving
effect to the Permitted
Adjustments (as defined below); and (B) 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 period. For purposes of this clause (c), "Permitted
Adjustments" means
(1) adjustments resulting (or that may result) from the pending
investigation by
the audit committee of the Company's board of directors, (2)
adjustments that
may result from the Disclosed Matters and (3) normal year-end audit
adjustments.
(d) The restatement of the Company's financial statements for the
fiscal
periods ending on or prior to April 1, 2005.
(e) The failure by the Company to deliver the consolidated plan and
financial forecast for the Fiscal Year commencing October 1, 2005
pursuant to
Section 10.1.8 of the Credit Agreement.
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)
March 16, 2006
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 (a) from the date of effectiveness hereof through
the end of
the Waiver Period, notwithstanding any contrary provision of the
Credit
Agreement, (i) the Applicable Eurocurrency Margin and the LC Fee
Rate will equal
4.500%, (ii) the Applicable Base Rate Margin will equal 3.250% and
(iii) the
Non-Use Fee Rate will equal 0.700% and (b) 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
(i) from
current or former employees of the Company or any Subsidiary
pursuant to the
American Italian Pasta Company 2000 Equity Incentive Plan, (ii)
from the
Company's 401-k plan and (iii) 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. Except as specifically set
forth herein,
the Credit Agreement shall remain in full force and effect and is
hereby
ratified in all respects.
This waiver letter shall become effective when the Administrative
Agent has
received (a) counterparts hereof executed by the Required Lenders
and
acknowledged by the Company and each Guarantor and (b) a waiver fee
for each
Lender that, on or prior to 5:00 p.m. (Chicago time) on December
14, 2005,
delivers an executed counterpart hereof to the Administrative
Agent,
such waiver fee to equal 0.25% of the sum of (i) the outstanding
principal
amount of such Lender's Term Loan and (ii) such Lender's Revolving
Commitment.
This waiver letter may be executed in counterparts and by the
parties
hereto on separate counterparts. A signature page hereto delivered
by facsimile
shall be effective as delivery of an original counterpart.
This letter agreement shall be a contract made under and governed
by the
laws of the St
