10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[ X ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934

                      For the period ended: January 3, 2003

                                       OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                EXCHANGE ACT OF 1934
                        For the transition period from          to

                        Commission file number: 001-13403

                         American Italian Pasta Company
             (Exact name of Registrant as specified in its charter)


                Delaware                                  84-1032638
      (State or other jurisdiction of                  (I.R.S. Employer
      incorporation or organization)                  Identification No.)

           4100 N. Mulberry Drive
           Kansas City, Missouri                            64116
 (Address of principal executive office)                  (Zip Code)

       Registrant's telephone number, including area code: (816) 584-5000

                                 Not Applicable
- --------------------------------------------------------------------------------
             (Former name, former address and former fiscal year, if
                           changed since last report)

     Indicate by check mark whether the Registrant has (1) filed all documents
and reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

     The number of shares outstanding as of February 14, 2003 of the
Registrant's Class A Convertible Common Stock was 17,664,707 and there were no
shares outstanding of the Class B Common Stock.


                                     Page 1

                         American Italian Pasta Company
                                    Form 10-Q
                          Quarter Ended January 3, 2003


                                Table of Contents


Part I - Financial Information                                              Page

     Item 1.    Consolidated Financial Statements (unaudited)

                Consolidated Balance Sheets at December 31, 2002
                and September 30, 2002.                                        3

                Consolidated Statements of Income for the three
                months ended December 31, 2002 and 2001.                       4

                Consolidated Statement of Stockholders' Equity
                for the three months ended December 31, 2002.                  5

                Consolidated Statements of Comprehensive Income
                for the three months ended December 31, 2002
                and 2001.                                                      6

                Consolidated Statements of Cash Flows for the
                three months ended December 31, 2002 and 2001.                 7

                Notes to Consolidated Financial Statements                     8

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations                 11

     Item 3.    Quantitative and Qualitative Disclosures About
                Market Risk                                                   18

     Item 4.    Controls and Procedures                                       19

Part II - Other Information

     Item 1.    Legal Proceedings                                             19

     Item 2.    Changes in Securities                                         19

     Item 3.    Defaults Upon Senior Securities                               19

     Item 4.    Submission of Matters to a Vote of Security Holders           19

     Item 5.    Other Information                                             20

     Item 6.    Exhibits and Reports on Form 8-K                              20

Signature Page                                                                21


                                     Page 2

                         AMERICAN ITALIAN PASTA COMPANY

                           Consolidated Balance Sheets

                                             December 31,          September 30,
                                                2002                   2002
                                                       (In thousands)
Assets                                                   (Unaudited)
Current assets:
   Cash and temporary investments            $  3,989               $  8,247
   Trade and other receivables                 43,467                 46,463
   Prepaid expenses and deposits               12,500                 11,282
   Inventory                                   54,181                 49,720
   Deferred income taxes                        2,778                  2,420
Total current assets                          116,915                118,132
Property, plant and equipment:
   Land and improvements                       11,184                 11,061
   Buildings                                  112,117                111,041
   Plant and mill equipment                   313,104                312,092
   Furniture, fixtures and equipment           15,552                 15,509
                                              451,957                449,703
     Accumulated depreciation                (105,206)               (99,607)
                                              346,751                350,096
     Construction in progress                  61,884                 45,844
Total property, plant and equipment           408,635                395,940
Intangible assets                             127,749                119,360
Other assets                                    9,631                  7,177
Total assets                                 $662,930               $640,609
                                             ========               ========
Liabilities and stockholders' equity
Current liabilities:
     Accounts payable                        $ 29,262               $ 21,320
     Accrued expenses                          16,631                 11,359
     Income tax payable                         1,075                  1,585
     Current maturities of long-term debt       4,535                  4,279
Total current liabilities                      51,503                 38,543
Long-term debt                                265,033                258,193
Deferred income taxes                          50,190                 46,767
Commitments and contingencies
Stockholders' equity:
   Preferred stock, $.001 par value:
         Authorized shares - 10,000,000            --                     --
     Class A common stock, $.001 par value:
         Authorized shares - 75,000,000            20                     20
     Class B common stock, $.001 par value:
          Authorized shares - 25,000,000           --                     --
     Additional paid-in capital               213,548                213,671
     Treasury stock                           (45,027)               (34,394)
     Unearned compensation                       (638)                  (940)
     Retained earnings                        130,785                121,862
     Accumulated other comprehensive loss      (2,484)                (3,113)
Total stockholders' equity                    296,204                297,106
Total liabilities and stockholders' equity   $662,930               $640,609
                                             ========               ========

          See accompanying notes to consolidated financial statements.


                                     Page 3

                         AMERICAN ITALIAN PASTA COMPANY

                        Consolidated Statements of Income

                                                         Three Months Ended
                                                            December 31,
                                                     2002                   2001
                                                           (In thousands)
                                                             (Unaudited)

Revenues                                           $107,036               $ 92,003
Cost of goods sold                                   73,459                 59,159
Gross profit                                         33,577                 32,844
Selling and marketing expense                        13,593                 13,796
General and administrative expense                    2,812                  2,977
Provision for acquisition and start-up expenses       1,428                     --
Operating profit                                     15,744                 16,071
Interest expense, net                                 2,427                  2,556
Income before income tax expense                     13,317                 13,515
Income tax expense                                    4,394                  4,663
Net income                                         $  8,923               $  8,852
                                                   ========               ========
Earnings Per Common Share:
    Net income per common share                       $ .50                  $ .50
                                                   ========               ========
    Weighted-average common shares outstanding       17,831                 17,689
                                                   ========               ========
Earnings Per Common Share - Assuming Dilution:
    Net income per common share assuming dilution     $ .49                  $ .48
                                                   ========               ========
    Weighted-average common shares outstanding       18,397                 18,554
                                                   ========               ========


          See accompanying notes to consolidated financial statements.


                                     Page 4

                         AMERICAN ITALIAN PASTA COMPANY

                 Consolidated Statement of Stockholders' Equity


                                                               Three months ended
                                                               December 31, 2002
                                                              ------------------
                                                                 (In thousands)
                                                                   (unaudited)
Class A Common Shares
  Balance, beginning of period                                          19,677
  Issuance of shares of Class A Common stock to option holders
    & other issuances (cancellations)                                       (2)
  Balance, end of period                                                19,675
                                                                     =========
Class A Common Stock
  Balance, beginning and end of period                               $      20
                                                                     =========
Additional Paid-in Capital
  Balance, beginning of period                                       $ 213,671
  Issuance of shares of Class A Common stock to option holders
    & other issuances (cancellations)                                     (123)
  Balance, end of period                                             $ 213,548
                                                                     =========
Treasury Stock
  Balance, beginning of period                                       $ (34,394)
  Purchase of treasury stock                                           (10,633)
  Balance, end of period                                             $ (45,027)
                                                                     =========
Unearned Compensation
  Balance, beginning of period                                       $    (940)
  Cancellation of common stock                                             250
  Earned compensation                                                       52
  Balance, end of period                                             $    (638)
                                                                     =========
Other Comprehensive Income (Loss)
  Foreign currency translation adjustment
    Balance, beginning of period                                     $  (1,611)
    Change during the period                                             1,355
    Balance, end of period                                                (256)

  Interest rate swaps fair value adjustment
    Balance, beginning of period                                        (1,502)
    Change during the period                                              (726)
    Balance, end of period                                              (2,228)

  Total accumulated other comprehensive loss                         $  (2,484)
                                                                     =========
Retained Earnings
  Balance, beginning of period                                       $ 121,862
  Net income                                                             8,923
  Balance, end of period                                               130,785

Total Stockholders' Equity                                            $296,204
                                                                     =========

          See accompanying notes to consolidated financial statements.


                                     Page 5

                         AMERICAN ITALIAN PASTA COMPANY

                 Consolidated Statements of Comprehensive Income


                                                 Three months ended December 31,
                                                      2002             2001
                                                          (In thousands)
                                                            (unaudited)


Net income                                          $ 8,923           $ 8,852

Other comprehensive income (loss)

  Net unrealized losses on qualifying cash
    flow hedges (net of income tax benefit of
    $356 and $134, respectively)                       (726)             (389)

  Foreign currency translation adjustment
    (net of income tax benefit (expense) of
    ($667) and $40, respectively)                     1,355               (76)

  Total other comprehensive income (loss)               629              (465)

  Comprehensive income                              $ 9,552           $ 8,387
                                                    =======           =======


          See accompanying notes to consolidated financial statements.


                                     Page 6

                         AMERICAN ITALIAN PASTA COMPANY

                      Consolidated Statements of Cash Flows

                                                              Three Months Ended
                                                                 December 31,
                                                              2002          2001
                                                                (In thousands)
                                                                  (Unaudited)
Operating activities:
Net income                                                $   8,923     $   8,852
Adjustments to reconcile net income to net
cash provided by operations:
    Depreciation and amortization                             5,781         4,872
    Deferred income tax expense                               3,423         1,420
    Changes in operating assets and liabilities:
           Trade and other receivables                        3,104           569
           Prepaid expenses and deposits                     (1,615)         (122)
           Inventory                                         (3,370)       (1,624)
           Accounts payable and accrued expenses             11,654        (2,988)
           Income tax payable                                  (737)        2,925
           Other                                             (1,448)         (307)
Net cash provided by operating activities                    25,715        13,597

Investing activities:
Purchase of pasta brands                                     (6,877)           --
Additions to property, plant and equipment                  (15,368)      (14,770)
Net cash used in investing activities                       (22,245)      (14,770)

Financing activities:
Additions to deferred debt issuance costs                    (1,106)           --
Proceeds from issuance of debt                                8,020            --
Principal payments on debt and capital lease
     obligations                                             (4,485)         (390)
Proceeds from issuance of common stock, net of
     issuance costs                                             122         1,559
Purchase of treasury stock                                  (10,633)           --  
Net cash provided by (used in) financing activities          (8,082)        1,169

Effect of exchange rate changes on cash                         354           536

Net increase (decrease) in cash and temporary
    investments                                              (4,258)          532
Cash and temporary investments at beginning of period         8,247         5,284
Cash and temporary investments at end of period           $   3,989      $  5,816
                                                          ==========     ========

          See accompanying notes to consolidated financial statements.


                                     Page 7

                         AMERICAN ITALIAN PASTA COMPANY
                   Notes to Consolidated Financial Statements

                                December 31, 2002


1.   Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three-month period ended December 31,
2002 are not necessarily indicative of the results that may be expected for the
year ended September 30, 2003. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended September 27, 2002.

American Italian Pasta Company (the “Company” or “AIPC”) uses a 52/53 week
financial reporting cycle with a fiscal year which ends on the last Friday of
September or the first Friday of October. The Company's first three fiscal
quarters end on the Friday last preceding December 31, March 31, and June 30 or
the first Friday of the following month. For purposes of this Form 10-Q, the
first fiscal quarter of fiscal years 2003 included 14 weeks of activity and
fiscal 2002 included thirteen weeks of activity and are described as the
three-month periods ended December 31, 2002 and 2001.

Reclassifications

Certain amounts within the prior period financial statements have been
reclassified to conform to the current period presentation.

Inventories

Inventories are stated using product specific standard costs which approximate
the lower of cost or market determined on a first-in, first-out (FIFO) basis.
Inventories consist of the following:

                                                    December 31,   September 30,
                                                        2002            2002
                                                           (In thousands)
 Finished goods                                       $38,698        $38,881
 Raw materials, packaging materials and
 work-in-process                                       15,483         10,839
                                                      $54,181        $49,720
                                                      =======        =======

2.   Stock Options/Earnings Per Share

A summary of the Company's stock option activity:

                                                       Number of Shares
     Outstanding at September 30, 2002                    2,665,821
          Exercised                                          (1,269)
          Granted                                           181,000
          Canceled/Expired                                  (14,063)
     Outstanding at December 31, 2002                     2,831,489
                                                          =========


                                     Page 8

Dilutive securities, consisting of options to purchase the Company's Class A
common stock, included in the calculation of diluted weighted average common
shares were 566,000 shares for the three-month period ended December 31, 2002
and 865,000 shares for the three-month period ended December 31, 2001.

Pro forma information regarding net income and earnings per share has been
determined as if the Company had accounted for its employee stock options under
the fair value method of SFAS No. 123, "Accounting for Stock-Based
Compensation".

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows (in thousands except for earnings per share
information):


                                          Three months ended December 31
                                             2002                2001

Net income, as reported                    $  8,923            $  8,852
Deduct: Total stock-based
     employee compensation
     expense determined under
     fair value based method
     for all awards,net of
     related tax effects                     (1,453)               (679)

Pro forma net income                       $  7,470            $  8,173
                                           ========            ========
Earnings per share:
     Basic - as reported                   $    .50            $    .50
                                           ========            ========
     Basic - pro forma                     $    .42            $    .46
                                           ========            ========
     Diluted - as reported                 $    .49            $    .48
                                           ========            ========
     Diluted - pro forma                   $    .41            $    .44
                                           ========            ========

3.   Continued Dumping and Subsidy Offset Act of 2000

On October 28, 2000, the U.S. government enacted the "Continued Dumping and
Subsidy Offset Act of 2000" (the "Act") which provides that assessed
anti-dumping and subsidy duties liquidated by the Department of Commerce after
October 1, 2000 will be distributed to affected domestic producers. Accordingly,
in December 2002 and 2001, AIPC received payments from the Department of
Commerce in the amounts of $2.4 million and $7.6 million, respectively, as the
Company's calculated share, based on tariffs liquidated by the government from
October 1, 2000 to September 30, 2002 on Italian and Turkish imported pasta.

According to Congressional documents, these payments to affected U.S. producers
are for the purpose of maintaining jobs and investments that might be affected
through unfair trade practices, and to offset revenues lost through foreign
companies' dumping practices and foreign governments' subsidy practices. There
are no specific requirements on how the funds are to be used by the Company
other than the funds are intended to benefit future periods. As such, the
Company used a significant portion to increase investment in brand building
activities (for example, slotting to expand or recapture distribution and
consumer promotion reinforcing the long-term quality tradition of the Company's
brands), and continued strengthening of the Company's organization.

During the first quarter of 2003 and 2002, the Company recognized $0.6 million
and $1.9 million of retail revenue, respectively, which equals 25% of the


                                     Page 9

payments received. The Company recognizes the receipts ratably over the related
fiscal year, which patterns the program year under which the payments were
received. Accordingly, the Company expects to recognize an additional 25% or $.6
million, in each of the next three quarters of the current fiscal year.

It is the Company's understanding that overpayments under this program may be
recovered by U.S. Customs for a number of reasons up to one year after payment
is made. The Company has not received any claims of overpayment. For this reason
and to match the revenue received with the incremental expenditures made under
the program, the Company recognizes the receipt ratably over the current fiscal
year.

The legislation creating the dumping and subsidy offset payment (referred to as
the Byrd Amendment) provides for annual payments from the U.S. government.
However it is not possible to reasonably estimate the potential amount, if any,
to be received in future periods.


4.   Brand Acquisitions

On October 2, 2002, the Company announced the purchase of the Martha Gooch and
LaRosa pasta brands from ADM in the United States and the Lensi pasta brand from
Pastificio Lensi of Vinci, Italy for an approximate total of $9.5 million,
including trade liabilities. The Pastificio Lensi transaction was completed
prior to the fiscal year ended September 27, 2002, and the Martha Gooch and
LaRosa transactions were completed in early October 2002. No manufacturing
assets were included in the transactions.


5.   Stock Repurchase Plan

In November 2002, the Company's Board of Directors authorized up to $20 million
to implement a common stock repurchase plan. The Company purchased 323,398
shares for $10,633,000, at prices ranging from $32.52 to $33.00 per share during
the period ended December 31, 2002.


6.   Amendment to Credit Facility

On December 13, 2002, the Company completed an amendment to its revolving credit
facility. The amendment provides the Company with an additional $100 million
term loan capacity. The terms of the original credit facility provide commitment
reductions of $110 million between October 1, 2002 and October 1, 2005. The
additional term loan capacity is nearly sufficient to offset the cumulative
annual reductions in credit availability required by the original credit
facility. The original terms of the facility remain generally the same.


7.   Subsequent Events

On January 15, 2003, the Company purchased an additional 43,000 shares of its
common stock at $34.45 per share under the Stock Repurchase Plan.

On January 31, 2003, the Company purchased the Golden Grain/Mission pasta brand
from PepsiCo for approximately $43 million plus inventory. No significant
manufacturing assets were included in the transaction.


                                    Page 10

Item 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS

The discussion set forth below, as well as other portions of this Quarterly
Report, contains statements concerning potential future events. Such
forward-looking statements are based upon assumptions by our management, as of
the date of this Quarterly Report, including assumptions about risks and
uncertainties faced by AIPC. Readers can identify these forward-looking
statements by their use of such verbs as expects, anticipates, believes or
similar verbs or conjugations of such verbs. If any of our assumptions prove
incorrect or should unanticipated circumstances arise, our actual results could
materially differ from those anticipated by such forward-looking statements. The
differences could be caused by a number of factors or combination of factors
including, but not limited to, those factors identified in our Annual Report on
Form 10-K dated December 19, 2002. That report has been filed with the
Securities and Exchange Commission (the "SEC" or the "Commission") in
Washington, D.C. and can be obtained by contacting the SEC's public reference
operations or obtaining it through the SEC's web site on the World Wide Web at
http://www.sec.gov. Readers are strongly encouraged to consider those factors
when evaluating any such forward-looking statement. We will not update any
forward-looking statements in this Quarterly Report to reflect future events or
developments.

Results of Operations

Overview

We are the largest producer and one of the fastest-growing major marketers of
dry pasta in North America. We began operations in 1988 with the introduction of
new, highly efficient durum wheat milling and pasta production technology. We
believe our singular focus on pasta, our vertically-integrated facilities and
highly efficient production facilities focused primarily on specific market
segments and our highly skilled workforce make us a more efficient company and
enable us to produce high-quality pasta at very competitive costs. We believe
that the combination of our low cost structure, the addition of several new
brands to our portfolio of brands, our scalable production facilities and our
key customer relationships create significant opportunity for continued growth.

We generate revenues in two customer markets: retail and institutional. Retail
market revenues include the revenues from sales of our pasta products to
customers who resell the pasta in retail channels. These revenues represented
76% and 77% of our total revenue for the three months ended December 31, 2002
and 2001, respectively, and include sales to club stores and grocery retailers,
and encompass sales of our private label and branded products. Institutional
market revenues include revenues from product sales to customers who use our
pasta as an ingredient in food products or who resell our pasta in the
foodservice market. It also includes revenues from opportunistic sales to
government agencies and other customers that we pursue periodically when
capacity is available to increase production volumes and thereby lower average
unit costs. The institutional market represented 24% and 23% of our total
revenue for the three months ended December 31, 2002 and 2001, respectively.
Average sales prices in the retail and institutional markets vary depending on
customer-specific packaging and raw material requirements, product manufacturing
complexity and other service requirements. Average retail and institutional
prices will also vary due to changes in the relative share of customer revenues
and item specific sales volumes (i.e., product sales mix). Generally, average
retail sales prices are higher than institutional sales prices. We anticipate
continued changes to historical income statement patterns resulting from the
Mueller's(R) brand acquisition in November 2000, the acquisition of seven pasta
brands from Borden Foods in July 2001, subsequent smaller acquisitions in
September and October 2002, and the


                                    Page 11

Golden Grain/Mission pasta brand in January 2003. Selling prices of our branded
products are significantly higher than selling prices in our other business
units including private label. This is expected to result in higher revenues,
gross profits, and gross margin percentages. Revenues are reported net of cash
discounts, pricing allowances and product returns.

We seek to develop strategic customer relationships with food industry leaders
that have substantial pasta requirements. We have a supply agreement with Sysco
and other arrangements with food industry leaders, such as Sam's Club, that
provide for the "pass-through" of direct material cost changes as pricing
adjustments. The pass-throughs are generally limited to actual changes in cost
and, as a result, impact percentage profitability in periods of changing costs
and prices. The pass-throughs are generally effective 30 to 90 days following
such cost changes and thereby significantly reduce the long-term exposure of our
operating results to the volatility of raw material costs. These pass-through
arrangements also require us to pass on the benefits of any price decrease in
raw material costs.

Our cost of goods sold consists primarily of raw materials, packaging,
manufacturing (including depreciation) and distribution costs. A significant
portion of our cost of goods sold is durum wheat. We purchase durum wheat on the
open market and, consequently, those purchases are subject to fluctuations in
cost. We manage our durum wheat cost risk through durum wheat cost
"pass-through" agreements in long-term contracts and other noncontractual
arrangements with our customers and advance purchase contracts for durum wheat
which are generally less than twelve months' duration.

Our capital asset strategy is to achieve low-cost production through vertical
integration and investment in the most current pasta-making assets and
technologies. The manufacturing- and distribution-related capital assets that
have been or will be acquired to support this strategy are depreciated over
their respective economic lives. Because of the capital-intensive nature of our
business and our current and future facilities expansion plans, including
completion of our new facility in Arizona, we believe our depreciation expense
for production and distribution assets may be higher than that of many of our
competitors. Depreciation expense is a component of inventory cost and cost of
goods sold. Plant expansion costs include incremental direct and indirect
manufacturing and distribution costs that are incurred as a result of
construction, commissioning and start-up of new capital assets. These costs are
expensed as incurred but are unrelated to current production and, therefore,
reported as a separate line item in the statement of operations. By locating our
newest facility in Arizona closer to our western U.S. customers, we believe we
will generate significant logistical savings and provide superior service to our
west coast customers, while creating additional capacity to support the
continued rapid growth of our business sourced from our existing plants. We
believe adding this strategic location will further enhance our low-cost
producer position in the industry.

Selling and marketing costs have increased substantially over the last two years
in line with the significant expansion of our retail business. These costs
increased 198.9% from fiscal year 2000 through fiscal year 2002, and constituted
12.7% of revenues for the three months ended December 31, 2002. We do not expect
continued rapid growth in our selling and marketing expenditures because we have
substantially completed the development of the selling and marketing
infrastructure needed to support our branded businesses. We expect selling and
marketing expense to exceed 10% of revenues for the foreseeable future.

As noted, in November 2000, we purchased the Mueller's® pasta brand from
Bestfoods. In July 2001, we purchased seven pasta brands from Borden Foods. In
addition, we purchased the Lensi brand and Martha Gooch® and LaRosa® brands


                                    Page 12

in September and October 2002, respectively. As discussed below, the timing of
these brand acquisitions had an impact on the period-to-period comparisons.

Critical Accounting Policies

This discussion and analysis discusses our results of operations and financial
condition as reflected in our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. As discussed in note 1 to our September 30, 2002 consolidated
financial statements, the preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires our
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and reported amounts of revenues and
expenses during the reporting periods. On an ongoing basis, our management
evaluates its estimates and judgments, including those related to the impairment
of intangible assets, the method of accounting for stock options, the estimates
used to record product return reserves, accounts receivable and allowance for
doubtful accounts and derivatives. Our management bases its estimates and
judgments on its substantial historical experience and other relevant factors,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other
sources. See note 1 to our September 30, 2002 consolidated financial statements
for a complete listing of our significant accounting policies. Our most critical
accounting policies are described below.

Impairment Testing of Intangible Assets. In accordance with Statement of
Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible
Assets," we do not amortize the cost of intangible assets with indefinite lives.
SFAS No. 142 requires that we perform certain fair value based tests of the
carrying value of indefinite lived intangible assets at least annually and more
frequently should events or changes in circumstances indicate that the carrying
amount of an asset may not be fully recoverable. These impairment tests are
impacted by judgments as to future cash flows and brand performance. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. Future events could cause
our management to conclude that impairment indicators exist and that the value
of intangible assets is impaired.

Stock Options.  We have elected to follow Accounting Principles Board Opinion
(APB) No. 25, "Accounting for Stock Issued to Employees," and related
Interpretations in accounting for our employee stock options and adopted the pro
forma disclosure requirements under SFAS No. 123 "Accounting for Stock-Based
Compensation." Under APB No. 25, because the exercise price of our employee
stock options is equal to or greater than the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123 and has been determined as if we had accounted for our employee
stock options under the fair value method of SFAS No. 123. The fair value for
these options was estimated at the date of grant using a Black-Scholes option
pricing model with the following weighted-average assumptions: risk-free
interest rate of 2.0% for fiscal 2003; dividend yield of zero; a volatility
factor of the expected market price of our common stock of .408 for fiscal 2003;
and a weighted-average expected life of the options of one to five years.


                                    Page 13

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
our employee stock options have characteristics significantly different from
those traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of our employee stock options.

Product Return Reserves.  Revenue is recognized generally when our products are
shipped to our customers. It is our policy across all classes of customers that
all sales are final. As is common in the consumer products industry, customers
occasionally return products for a variety of reasons. Examples include product
damaged in transit, discontinuance of a particular size or form of product and
shipping errors. We record an estimate of products to be returned by customers
as a reserve against sales. We generally base this reserve on our historical
returns experience and sales volume. Significant judgment is required when
estimating the reserves for product returns and there is a risk that actual
product returns may differ from our estimates.

Accounts Receivable - Significant Customers. We generate approximately 25% of
our revenues and corresponding accounts receivable from sales to two customers.
If our primary customers experience significant adverse conditions in their
industry or operations, our customers may not be able to meet their ongoing
financial obligations to us for prior sales or complete the purchase of
additional products from us under the terms of our existing firm purchase and
sale commitments.

Allowance for Doubtful Accounts - Methodology. We evaluate the collectibility of
our accounts receivable based on a combination of factors. In circumstances
where we are aware of a specific customer's inability to meet its financial
obligations to us (e.g. bankruptcy filings, substantial down-grading of credit
scores), we record a specific reserve for bad debts against amounts due to
reduce the net recognized receivable to the amount we reasonably believe will be
collected. For all other customers, we recognize reserves for bad debts based on
the length of time the receivables are past due, and our historical experience.
If circumstances change (i.e., higher than expected defaults or an unexpected
material adverse change in a major customer's ability to meet its financial
obligations to us), our estimates of the recoverability of amounts due us could
be reduced by a material amount.

Derivatives. We hold derivative financial instruments to hedge a variety of risk
exposures including interest rate risks associated with our long-term debt and
foreign currency fluctuations for transactions with our overseas subsidiary.
These derivatives qualify for hedge accounting as discussed in detail in note 1
to our September 30, 2002 consolidated financial statements. We do not
participate in speculative derivatives trading. Hedge accounting results when we
designate and document the hedging relationships involving these derivative
instruments. While we intend to continue to meet the conditions for hedge
accounting, if hedges did not qualify as highly effective or if we did not
believe that forecasted transactions would occur, the changes in the fair value
of the derivatives used as hedges would be reflected in earnings.

To hedge foreign currency risks, we use futures contracts. The fair values of
these instruments are determined from market quotes. In addition, we use some
over-the-counter forward contracts in hedging these risks. These forward
contracts are valued in a manner similar to that used by the market to value
exchange-traded contracts; that is, using standard valuation formulas with
assumptions about future foreign currency exchange rates derived from existing
exchange rates, and interest rates observed in the market. To hedge interest


                                    Page 14

rate risk, an interest rate swap is used in which we pay a variable rate and
receive a fixed rate. This instrument is valued using the market standard
methodology of netting the discounted future fixed cash receipts and the
discounted expected variable cash payments. The variable cash payments are based
on an expectation of future interest rates derived from observed market interest
rate curves. We have not changed our methods of calculating these fair values or
developing the underlying assumptions. The values of these derivatives will
change over time as cash receipts and payments are made and as market conditions
change. Our derivative instruments are not subject to multiples or leverage on
the underlying commodity or price index. Information about the fair values,
notional amounts, and contractual terms of these instruments can be found in
note 1 to our September 30, 2002 consolidated financial statements and the
section titled "Quantitative and Qualitative Disclosures About Market Risk."

We consider our budgets and forecasts in determining the amounts of our foreign
currency denominated purchases to hedge. We combine the forecasts with
historical observations to establish the percentage of our forecast we are
assuming to be probable of occurring, and therefore eligible to be hedged. The
purchases are hedged for exposures to fluctuations in foreign currency exchange
rates.

We do not believe we are exposed to more than a nominal amount of credit risk in
our interest rate and foreign currency hedges as the counter parties are
established, well-capitalized financial institutions. Our exposure is in liquid
currency (Euros), so there is minimal risk that appropriate derivatives to
maintain our hedging program would not be available in the future.


QUARTER ENDED DECEMBER 31, 2002, COMPARED TO QUARTER ENDED DECEMBER 31, 2001

Revenues. Total revenues increased $15.0 million, or 16.3%, to $107.0 million
for the three-month period ended December 31, 2002, from $92.0 million for the
three-month period ended December 31, 2001. The increase for the three-month
period ended December 31, 2002 was primarily due to volume growth of 20.1% over
the prior year period. Revenue growth lagged volume growth due primarily to
changes in sales mix, and a reduction in the payments received from the U.S.
government under the Continued Dumping and Subsidy Offset Act of 2000 (CDO).
(See note 3 to the consolidated financial statements.)

Revenues for the Retail market increased $10.4 million, or 14.7%, to $81.3
million for the three-month period ended December 31, 2002, from $70.8 million
for the three-month period ended December 31, 2001. The increase primarily
reflects volume growth of 19.3%. Revenue growth lagged volume growth due
primarily to changes in sales mix, and a reduction in the payments received from
the U.S. government under the CDO. In the first quarter of 2003 and 2002, we
recognized retail revenue of $0.6 million and $1.9 million, respectively,
related to this program.

Revenues for the Institutional market increased $4.6 million, or 21.8%, to $25.8
million for the three-month period ended December 31, 2002, from $21.2 million
for the three-month period ended December 31, 2001. This increase was primarily
a result of volume growth of 22.1%.

Gross Profit. Gross profit increased $0.7 million, or 2.2%, to $33.6 million for
the three-month period ended December 31, 2002, from $32.8 million for the
three-month period ended December 31, 2001. This increase was primarily
attributable to revenue growth associated with increased volumes. These
increases were partially offset by higher raw material costs, principally durum
wheat. Gross profit as a percentage of revenues decreased to 31.4% for the
three-month period ended December 31, 2002 from 35.7% for the three-month period
ended December 31, 2001. The decrease in gross profit as a percentage


                                    Page 15

of revenues relates to the lower net revenue impact of the Continued Dumping and
Subsidy Offset payment, product sales mix associated with the continued strong
growth of our ingredient, private label and club businesses, and the impact of
higher raw material costs, principally durum wheat.

Selling and Marketing Expense.  Selling and marketing expense decreased $0.2
million, or 1.5%, to $13.6 million for the three-month period ended December 31,
2002, from $13.8 million for the three-month period ended December 31, 2001.
Selling and marketing expense as a percentage of revenue decreased to 12.7% for
the three-month period ended December 31, 2002, from 15.0% for the comparable
prior year period. The lower marketing and selling expense as a percentage of
sales is attributable primarily to higher rates of revenue growth for our
businesses which require little marketing and selling support.

General and Administrative Expense. General and administrative expenses
decreased $0.2 million, or 5.5% to $2.8 million for the three-month period ended
December 31, 2002 from $3.0 million for the three-month period ended December
31, 2001. General and administrative expense as a percentage of revenues
decreased to 2.6% for the three-month period ended December 31, 2002, from 3.2%
for the comparable prior year period. The decrease primarily relates to higher
legal expense in the prior year quarter of $250,000.

Provision for Acquisition and Plant Start-up Expenses. The provision for
acquisition and plant start-up expenses of $1.4 million for the quarter ended
December 31, 2002 consisted of one-time costs associated with the brand
acquisitions and plant start-up costs related to the Arizona facility.

Operating Profit. Operating profit for the three-month period ended December 31,
2002, was $15.7 million, decreasing $0.3 million or 2.0% from the $16.1 million
reported for the three-month period ended December 31, 2001. Excluding the
impact of the $1.4 million charge for acquisition and plant start-up costs,
operating profit for the current quarter totaled $17.2 million, increasing $1.1
million or 6.9%. Operating profit decreased as a percentage of revenues to 14.7%
(16.0% excluding acquisition and plant start-up costs) for the three-month
period ended December 31, 2002, from 17.5% for the three-month period ended
December 31, 2001 as a result of the factors discussed above.

Interest Expense. Interest expense for the three-month period ended December 31,
2002, was $2.4 million, decreasing $.1 million from the $2.6 million reported
for the three-month period ended December 31, 2001. The decrease related
primarily to lower interest rates in the current year.

Income Tax. Income tax expense for the three-month period ended December 31,
2002, was $4.4 million, decreasing $0.3 million from the $4.7 million reported
for the three-month period ended December 31, 2001, reflecting effective tax
rates of 33% and 34.5%, respectively.

Net Income. Net income for the three-month period ended December 31, 2002, was
$8.9 million, increasing $0.1 million or approximately .8%. Excluding the impact
of the $1.4 million ($956,000 after tax) charge for acquisition and plant
start-up costs, net income for the current quarter totaled $9.9 million. Diluted
earnings per common share were $0.49 per share for the three-month period ended
December 31, 2002 compared to $0.48 per share for the three-month period ended
December 31, 2001. Excluding the impact of the $1.4 million charge for
acquisition and plant start-up costs, diluted earnings per common share were
$.54 in the current year. Net income as a percentage of net revenue was 8.3%
versus 9.6% in the prior year. Excluding the impact of the $1.4 million charge
for acquisition and plant start-up costs, net income as a percentage of net
revenue was 9.2%.


                                    Page 16

Financial Condition and Liquidity

Our primary sources of liquidity are cash provided by operations and borrowings
under our credit facility. Cash and temporary investments totaled $4.0 million,
and working capital totaled $65.4 million on December 31, 2002.

Our net cash provided by operating activities totaled $25.7 million for the
three-month period ended December 31, 2002 compared to $13.6 million for the
three-month period ended December 31, 2001. This increase of $12.1 million was
primarily due to lower working capital requirements and higher earnings before
depreciation, amortization and income taxes.

Cash used in investing activities principally relates to the purchase of pasta
brands and investments in manufacturing, distribution, milling and management
information system assets. Capital expenditures were $15.4 million for the
three-month period ended December 31, 2002 compared to $14.8 million in the
comparable prior year period. The majority of these expenditures relate to our
new Arizona manufacturing facility. Additionally, we plan to spend approximately
$20 million in the remainder of fiscal year 2003, primarily for cost saving,
maintenance, and capacity expansion projects. We anticipate completion of the
majority of these projects during the fiscal year ending September 30, 2003.

Net cash used by financing activities was $8.1 million for the three-month
period ended December 31, 2002 compared to net cash provided by financing
activities of $1.2 million for the three-month period ended December 31, 2001.
The $8.0 million borrowing in fiscal 2002 relates to the purchase of treasury
stock. We have purchased 323,398 shares of Company stock for $10.6 million in
the three months ended December 31, 2002. We continue to use our available
credit facility, as well as cash from operations, to fund capital expansion
programs as necessary.

We currently use cash to fund capital expenditures, repayments of debt, working
capital requirements and acquisitions. We expect that future cash requirements
will principally be for capital expenditures, repayments of indebtedness,
working capital requirements and acquisitions.

On December 13, 2002, we completed a $100 million term loan facility as an
amendment to our existing revolving credit agreement. The terms of the original
revolving credit facility provide for commitment reductions of $110 million
between October 1, 2002 and October 1, 2005. The additional term loan capacity
is nearly sufficient to offset the cumulative annual reductions in credit
availability required by the original credit facility. The original terms of the
credit agreement remain generally the same.

We believe that net cash expected to be provided by operating activities and net
cash provided by financing activities will be sufficient to meet our expected
capital and liquidity needs for the foreseeable future.


                                    Page 17

     Selected
    Contractual
  Obligations at
 December 31, 2002                     Payments Due by Period
                  --------------------------------------------------------------
                  --------------------------------------------------------------
                               Less than                                 After
                     Total       1 year      1-3 years     4-5 years    5 years
                  --------------------------------------------------------------
                  --------------------------------------------------------------

Long term debt     $268,629    $ 4,153       $69,476       $195,000      $--

Capital lease
obligations             996        430           566             --       --

Unconditional
durum
purchase
obligations          40,308     39,805           503             --       --

Total contractual
cash
obligations        $309,933    $44,388       $70,545       $195,000      $--
                   ========    =======       =======       ========      ===


     We have current commitments for $40.3 million in raw material purchases for
fiscal years 2003 and 2004. Additionally, we have approximately $20 million in
expenditures remaining under the previously referenced capital programs. We
anticipate the majority of these current capital programs will be fully funded
by the end of fiscal year 2003. We expect to fund these commitments from
operations and borrowing capacity under our credit facility. At this time, the
current and projected borrowings under the credit facility do not exceed the
facility's available commitment. The facility matures on October 2, 2006. We
anticipate that any borrowing outstanding at that time will be satisfied with
funds from operations or will be refinanced. We currently have no other material
commitments.

     We believe that net cash provided by operating and financing activities
will be sufficient to meet our expected capital and liquidity needs for the
foreseeable future.


Item 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our principal exposure to market risk associated with financial instruments
relates to interest rate risk associated with variable rate borrowings and
foreign currency exchange rate risk associated with borrowings denominated in
foreign currency. We occasionally utilize simple derivative instruments such as
interest rate swaps to manage our mix of fixed and floating rate debt. We had
various fixed interest rate swap agreements with notional amounts of $150
million outstanding at December 31, 2002. The estimated fair value of the
interest rate swap agreements of ($3.4 million) is the amount we would be
required to pay to terminate the swap agreements at December 31, 2002. If
interest rates for our long-term debt under our credit facility had averaged 10%
more and the full amount available under our credit facility had been
outstanding for the entire year, our interest expense would have increased, and
income before taxes would have decreased by $0.6 million for the quarter ended
December 31, 2002. We hedge our net investment in our foreign subsidiaries with
euro borrowings under our credit facility. Changes in the U.S. dollar equivalent
of euro-based borrowings are recorded as a component of the net translation
adjustment in the consolidated statement of stockholders' equity.


                                    Page 18

     The functional currency for our Italy operation is the Euro. At December
31, 2002, long-term debt includes obligations of 37.5 million Euros ($36.0
million) under a credit facility which bears interest at a variable rate based
upon the Euribor rate.


Item 4.      CONTROLS AND PROCEDURES

     During November and early December 2002, the Company conducted a review of
its disclosure controls and procedures. Based on their evaluation of these
controls and procedures as of February 14, 2003, Mr. Webster, our CEO, and Mr.
Schmidgall, our CFO, concluded that the Company's disclosure controls and
procedures were appropriate and effective in causing information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934 to be
recorded, processed, summarized and reported within the required time periods.
There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since February 14, 2003.


PART II - OTHER INFORMATION

Item 1.     Legal Proceedings
- -------------------------------
            Not applicable

Item 2.     Changes in Securities
- -------------------------------

     On December 31, 2002 the Company entered into a Certificate and First
Amendment to Rights Agreement, amending the Rights Agreement, dated December 3,
1998, between the Company and UMB Bank, N.A., as rights agent. The Rights
Agreement provides certain purchase rights to the Company's Class A Convertible
common stock, par value $.001 per share.

     This amendment amends the definition of an "Acquiring Person" to allow an
Institutional Investor to own up to, but not including, twenty percent (20%) of
the outstanding shares of the Company's common stock before being deemed to be
an Acquiring Person. An "Institutional Investor" is defined to include persons
deemed to be an Institutional Investor by the Board of Directors of the Company
and (i) has a Schedule 13G on file with the Securities and Exchange Commission
pursuant to the requirements of Rule 13d-1 under the Exchange Act with respect
to its holdings of shares of the Company's common stock as long as the person is
engaged in the business of managing investment funds for unaffiliated securities
investors and holds or exercises voting or dispositive power over the shares of
the Company's common stock; (ii) acquires beneficial ownership of the shares of
the Company's common stock pursuant to trading activities undertaken in the
ordinary course of such person's business and not with the purpose nor effect of
exercising power to direct or cause the direction of the management and policies
of the Company or of otherwise changing or influencing the control of the
Company; and (iii) if such person is a person included in Rule 13b-1(b)(1)(ii)
of the Exchange Act, such person is not obligated to, and does not, file a
Schedule 13D with respect to the securities of the Company.


Item 3.     Defaults Upon Senior Securities
- -------------------------------
            Not applicable

Item 4.     Submission of Matters to a Vote of Security Holders
- -------------------------------
            Not applicable


                                    Page 19

Item 5.     Other Information
- -------------------------------
            Not applicable

Item 6.     Exhibits and Reports on Form 8-K
- -------------------------------
            (a) Exhibits.

               4.1  Certificate and First Amendment to Rights Agreement, which
                    is attached as Exhibit 4 to the Company's Form 8-K filed on
                    January 6, 2003, is incorporated by reference herein as
                    Exhibit 4.1.

               4.2  First Amendment to the Credit Agreement, dated December 12,
                    2002, among American Italian Pasta Company, various
                    financial institutions and Bank of America, N.A. as
                    administrative agent.

               10.1 Asset Purchase Agreement, dated September 30, 2002, among
                    American Italian Pasta Company, Gooch Foods, Inc. and
                    Archer-Daniels-Midland Company.

               99   Certification pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002.



            (b) Reports on Form 8-K.

                None


                                    Page 20

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                       American Italian Pasta Company



February 14, 2003                         /s/ Timothy S. Webster
- ------------------------------------   -----------------------------------------
Date                                    Timothy S. Webster
                                        President and Chief Executive Officer
                                        (Principal Executive Officer)



February 14, 2003                         /s/ Warren B. Schmidgall
- ------------------------------------   -----------------------------------------
Date                                    Warren B. Schmidgall
                                        Executive Vice President and Chief
                                        Financial Officer
                                        (Principal Financial and
                                        Accounting Officer)


                                    Page 21

                                  CERTIFICATION


I, Timothy S. Webster, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of American Italian
         Pasta Company;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

5.       The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involved management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.       The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


Date:    February 14, 2003
                                          /s/ Timothy S. Webster
                                       -----------------------------------------
                                       Timothy S. Webster, President & CEO


                                    Page 22

                                  CERTIFICATION


I, Warren Schmidgall, certify that:

1.       I have reviewed this quarterly report on Form 10-Q of American Italian
         Pasta Company;

2.       Based on my knowledge, this quarterly report does not contain any
         untrue statement of a material fact or omit to state a material fact
         necessary to make the statements made, in light of the circumstances
         under which such statements were made, not misleading with respect to
         the period covered by this quarterly report;

3.       Based on my knowledge, the financial statements, and other financial
         information included in this quarterly report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the registrant as of, and for, the periods presented in
         this quarterly report;

4.       The registrant's other certifying officers and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

          a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               quarterly report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "evaluation Date"); and

          c)   presented in this quarterly report our conclusions about the
               effectiveness of the disclosure controls and procedures based on
               our evaluation as of the Evaluation Date;

5.      The registrant's other certifying officers and I have disclosed, based
         on our most recent evaluation, to the registrant's auditors and the
         audit committee of registrant's board of directors (or persons
         performing the equivalent function):

          a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involved management or
               other employees who have a significant role in the registrant's
               internal controls; and

6.      The registrant's other certifying officers and I have indicated in this
         quarterly report whether or not there were significant changes in
         internal controls or in other factors that could significantly affect
         internal controls subsequent to the date of our most recent evaluation,
         including any corrective actions with regard to significant
         deficiencies and material weaknesses.


Date:    February 14, 2003
                                          /s/ Warren Schmidgall
                                       -----------------------------------------
                                       Warren Schmidgall, EVP & CFO


                                    Page 23

EX-4

                                                                    Exhibit 4.2


                                 FIRST AMENDMENT

     THIS FIRST AMENDMENT dated as of December 12, 2002 (this "Amendment")
amends the Credit Agreement dated as of July 16, 2001 (the "Credit Agreement")
among American Italian Pasta Company (the "Company"), various financial
institutions (the "Lenders") and Bank of America, N.A., as administrative agent
(in such capacity, the "Administrative Agent"). Capitalized terms used but not
otherwise defined herein have the respective meanings given to them in the
attached Exhibit A.

     WHEREAS, the Company, the Lenders and the Administrative Agent have entered
into the Credit Agreement; and

     WHEREAS, the parties hereto desire to amend the Credit Agreement in certain
respects as more fully set forth herein;

     NOW, THEREFORE, the parties hereto agree as follows:

     SECTION 1 Amendments. Subject to the satisfaction of the conditions
precedent set forth in Section 4, (a) the Required Lenders agree that, on the
Term Loan Funding Date (as defined below), the Credit Agreement shall be amended
in its entirety to read as set forth on the attached Exhibit A and (b) each Term
Lender agrees that, on the Term Loan Funding Date, such Term Loan Lender will
make a Term Loan as contemplated by Section 2.1.3 of the Credit Agreement. For
purposes hereof, "Term Loan Funding Date" means the date on or before December
13, 2002 specified by the Company as the date on which the Term Loans are to be
made.

     SECTION 2 No Commitment Reduction. For the avoidance of doubt, the Required
Lenders agree that the Company will not be required to apply the proceeds of the
Term Loans pursuant to Section 6.1.2 of the Credit Agreement.

     SECTION 3 Representations and Warranties. The Company represents and
warrants to the Administrative Agent and the Lenders that, after giving effect
to the effectiveness hereof:

     (a) each warranty set forth in Section 9 of the Credit Agreement, as
amended hereby (as so amended, the "Amended Credit Agreement"), is true and
correct in all material respects as of the date of the execution and delivery of
this Amendment by the Company, with the same effect as if made on such date;

     (b) no Event of Default or Unmatured Event of Default exists; and

     (c) there has not occurred a material adverse change since September 30,
2001 in the business, assets, liabilities (actual or contingent), operations,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole.

     SECTION 4 Effectiveness. This Amendment shall become effective when the
Administrative Agent shall have received the following:

     (a) counterparts of this Amendment executed by the Company, the Required
Lenders and each Term Lender;

     (b) a Note payable to each new Lender;

     (c) an opinion of counsel to the Company and the Guarantors in form and
substance reasonably acceptable to the Administrative Agent;

     (d) certified copies of resolutions of the Board of Directors of the
Company with respect to the transactions contemplated hereby;

     (e) evidence that the Company has paid all accrued and invoiced fees and
expenses of the Administrative Agent and the Arranger (including reasonable
attorneys' fees);

     (f) an amendment fee for each existing Lender that delivers an executed
signature page to this Amendment to the Administrative Agent by 5:00 p.m.
(Chicago time) on December 12, 2002 in an amount equal to 0.075% of such
Lender's Commitment prior to the effectiveness of this Amendment;

     (g) a Confirmation substantially in the form of Exhibit B; and

     (h) such other documents as the Administrative Agent may reasonably
request.

     SECTION 5 Miscellaneous.

     5.1 Continuing Effectiveness, etc. As herein amended, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed in
all respects. After the effectiveness of this Amendment, all references in the
Credit Agreement to "this Agreement" and in the other Loan Documents to "Credit
Agreement" or similar terms shall refer to the Amended Credit Agreement.

     5.2 Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.

     5.3 Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of Illinois applicable to contracts made and
to be performed entirely within such state.

     5.4 Successors and Assigns. This Amendment shall be binding upon the
Company, the Lenders (including each Term Lender) and the Administrative Agent
and their respective successors and assigns, and shall inure to the benefit of
the Company, the Lenders and the Administrative Agent and the respective
successors and assigns of the Lenders and the Administrative Agent.

     5.5 Pricing Adjustment. Upon the closing of the Golden Grain Acquisition,
pricing will increase to Level VI and will remain at Level VI until adjusted
pursuant to Schedule 1.1(b)


                                      -2-

of the Amended Credit Agreement following the end of the Fiscal Quarter ending
December 31, 2002.

     5.6 Funding Fee. On the Term Loan Funding Date, the Company shall pay to
the Administrative Agent, for the account of each Term Lender, a funding fee in
the amount previously agreed to among the Company, the Administrative Agent and
such Term Lender.


                                      -3-

     Delivered as of the day and year first above written.

                                      AMERICAN ITALIAN PASTA COMPANY



                                      By:  /s/ Warren Schmidgall
                                         ---------------------------------------
                                      Title:  Executive Vice President/Chief
                                              Financial Officer


                                      S-1

                                      BANK OF AMERICA, N.A., as Administrative
                                      Agent



                                      By:  /s/ David A. Johanson
                                         ---------------------------------------
                                      Title: Vice President


                                      S-2

                                      BANK OF AMERICA, N.A., as a Lender



                                      By:  /s/ Thomas R. Mahoney
                                         ---------------------------------------
                                      Title:  Senior Vice President


                                      S-3

                                      BANK ONE, NA, with its main office in
                                      Chicago, IL, as Documentation Agent and
                                      as a Lender



                                      By:  /s/ Cindy L. Wavrunek
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-4

                                      U.S. BANK NATIONAL ASSOCIATION, as
                                      Syndication Agent and as a Lender



                                      By:  /s/ John P. Mills
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-5

                                      ING CAPITAL LLC



                                      By:  /s/ William B. Redmond
                                         ---------------------------------------
                                      Name:   William B. Redmond
                                      Title:  Director


                                      By:_______________________________________

                                      Title:____________________________________


                                      S-6

                                      FLEET NATIONAL BANK, as Co-Agent and as
                                      a Lender



                                      By:  /s/ Lori H. Jou
                                         ---------------------------------------
                                      Name:   Lori H. Jou
                                      Title:  Vice President


                                      S-7

                                      KEYBANK NATIONAL ASSOCIATION, as Co-Agent
                                      and as a Lender



                                      By:  /s/ David J. Wechter
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-8

                                      COÕPERATIEVE CENTRALE RAIFFEISEN-
                                      BOERENLEENBANK B.A., "RABOBANK NEDERLAND"
                                      NEW YORK BRANCH, as Co-Agent and as a
                                      Lender



                                      By:  /s/ André Blom
                                         ---------------------------------------
                                      Title:  Managing Director Credit Risk
                                              Management

                                      By:  /s/ Brad Peterson
                                         ---------------------------------------
                                      Title:  Executive Director


                                      S-9

                                      WACHOVIA BANK, NATIONAL ASSOCIATION



                                      By:  /s/ James Skufca
                                         ---------------------------------------
                                      Title:  Managing Director


                                      S-10

                                      WELLS FARGO BANK, N.A., as Co-Agent and
                                      as a Lender



                                      By:  /s/ Steven W. Giles
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-11

                                      BANCA NAZIONALE DEL LAVORO S.P.A.



                                      By:  /s/ Leonardo Valentini
                                         ---------------------------------------
                                      Title:  First Vice President

                                      By:  /s/ Francesco Di Mario
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-12

                                      THE BANK OF NEW YORK



                                      By:  /s/ John-Paul Marotta
                                         ---------------------------------------
                                              John-Paul Marotta
                                      Title:  Vice President


                                      S-13

                                      COMERICA BANK



                                      By:  /s/ Neran Shaya
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-14

                                      COMMERCE BANK, N.A.



                                      By:  /s/ Lance Holden
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-15

                                      SUNTRUST BANK, as Co-Agent and as a Lender



                                      By:  /s/ Michael Lapresi
                                         ---------------------------------------
                                      Title:  Director


                                      S-16

                                      UNICREDITO ITALIANO



                                      By:  /s/ Christopher J. Eldin
                                         ---------------------------------------
                                              Christopher J. Eldin
                                      Title:  First Vice President & Deputy
                                              Manager

                                      By:  /s/ Luciano Cenedese
                                         ---------------------------------------
                                              Luciano Cenedese
                                      Title:  First Vice President


                                      S-17

                                      UMB BANK, N.A.



                                      By:  /s/ David A. Proffitt
                                         ---------------------------------------
                                              David A. Proffitt
                                      Title:  Senior Vice President


                                      S-18

                                      COBANK, ACB



                                      By:  /s/ John C. Holsey
                                         ---------------------------------------
                                      Title:  Executive Vice President


                                      S-19

                                      AGSTAR FINANCIAL SERVICES, PCA DBA FARM
                                      CREDIT SERVICES COMMERCIAL FINANCE GROUP



                                      By:  /s/ James Grafing
                                         ---------------------------------------
                                      Title:  Senior Vice President


                                      S-20

                                      AGFIRST, FCB



                                      By:  /s/ Bruce Fortner
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-21

                                      FARM CREDIT BANK OF WICHITA



                                      By:  /s/ Greg E. Somerhalder
                                         ---------------------------------------
                                              Greg E. Somerhalder
                                      Title:  Vice President


                                      S-22

                                      FARM CREDIT SERVICES OF AMERICA, PCA



                                      By:  /s/ Steve Moore
                                         ---------------------------------------
                                              Steve Moore
                                      Title:  Vice President


                                      S-23

                                      GREENSTONE FARM CREDIT SERVICES, FLCA



                                      By:  /s/ Alfred S. Compton, Jr.
                                         ---------------------------------------
                                              Alfred S. Compton, Jr.
                                      Title:  VP/Sr. Lending
                                              Officer


                                      S-24

                                      NORTHWEST FARM CREDIT SERVICES, PCA



                                      By:  /s/ Carol Magness
                                         ---------------------------------------
                                      Title:  Vice President


                                      S-25

                                    EXHIBIT A

                        FORM OF AMENDED CREDIT AGREEMENT

                                  SEE ATTACHED

                                   EXHIBIT A

================================================================================



                                CREDIT AGREEMENT

                            dated as of July 16, 2001

                                      among

                         AMERICAN ITALIAN PASTA COMPANY,

                         VARIOUS FINANCIAL INSTITUTIONS,

                         U.S. BANK NATIONAL ASSOCIATION,
                              as Syndication Agent,

                                  BANK ONE, NA,
                             as Documentation Agent,

                              FLEET NATIONAL BANK,
                          KEYBANK NATIONAL ASSOCIATION,
                 COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
                   B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
                                  SUNTRUST BANK
                                       and

                             WELLS FARGO BANK, N.A.,
                                  as Co-Agents,

                                       and

                             BANK OF AMERICA, N.A.,
                             AS ADMINISTRATIVE AGENT

                         BANC OF AMERICA SECURITIES LLC

                    Sole Lead Arranger and Sole Book Manager

================================================================================

                               TABLE OF CONTENTS

                                                                            Page

SECTION 1         DEFINITIONS; OTHER INTERPRETIVE PROVISIONS;
                  ACCOUNTING PRINCIPLES........................................1

        1.1     Definitions....................................................1

        1.2     Other Interpretive Provisions.................................17

        1.3     Accounting Principles.........................................18

SECTION 2         COMMITMENTS OF THE LENDERS; BORROWING
                  PROCEDURES; LETTER OF CREDIT PROCEDURES.....................18

        2.1     Commitments...................................................18

                2.1.1   Revolving Loans.......................................18

                2.1.2   Letter of Credit Commitment...........................18

                2.1.3   Term Loans............................................18

                2.1.4   Commitment Limits.....................................19

                2.1.5   Valuation of Certain Eurocurrency Loans and
                        Certain Letters of Credit.............................19

        2.2     Loan Procedures...............................................19

                2.2.1    Various Types of Loans...............................19

                2.2.2    Borrowing Procedures.................................19

                2.2.3    Conversion and Continuation Procedures...............20

        2.3     Letter of Credit Procedures...................................21

                2.3.1    Issuance of Letters of Credit........................21

                2.3.2    Participations in Letters of Credit..................21

                2.3.3    Reimbursement Obligations............................22

                2.3.4    Limitation on the Issuer's Obligations...............22

                2.3.5    Funding by Revolving Lenders to the Issuer...........22

        2.4     Swing Line Loans..............................................23

                2.4.1    Swing Line Loans.....................................23

                2.4.2    Swing Line Loan Procedures...........................23

                2.4.3    Refunding of, or Funding of Participations
                         in, Swing Line Loans.................................23

                2.4.4    Repayment of Participations..........................24

        2.5     Participation Obligations Unconditional.......................24

        2.6     Warranty......................................................25

        2.7     Conditions....................................................25

        2.8     Commitments Several...........................................25

SECTION 3         LOAN ACCOUNTS AND NOTES.....................................25

        3.1     Loan Account..................................................25

        3.2     Notes.........................................................25

SECTION 4         INTEREST....................................................26

        4.1     Interest Rates................................................26

        4.2     Interest Payment Dates........................................26

        4.3     Setting and Notice of Certain Rates...........................26

        4.4     Computation of Interest.......................................26

SECTION 5         FEES........................................................27

        5.1     Non-Use Fees..................................................27

        5.2     Letter of Credit Fees.........................................27

        5.3     Administrative Agent's and Arranger's Fees....................27

SECTION 6         REDUCTION OR TERMINATION OF THE REVOLVING
                  COMMITMENTS; PREPAYMENTS....................................27

        6.1     Reduction or Termination of the Revolving Commitments.........27

                6.1.1    Scheduled Reductions of the Aggregate
                         Revolving Commitment Amount..........................27

                6.1.2    Mandatory Reductions of the Aggregate
                         Revolving Commitment Amount..........................28

                6.1.3    Voluntary Reduction of Commitments...................28

                6.1.4    All Reductions Pro Rata..............................28

        6.2     Prepayments...................................................28

                6.2.1    Mandatory Prepayments of Revolving Loans
                         Resulting from Commitment Reductions.................28

                6.2.2    Mandatory Prepayments of Revolving Loans
                         Resulting from Currency Fluctuations.................28

                6.2.3    Mandatory Prepayments of the Term Loans..............29

                6.2.4    Voluntary Prepayments................................29

                6.2.5    All Prepayments......................................29

                6.2.6    Application of Prepayments...........................29

        6.3     Repayment of Loans............................................29


                                       ii

SECTION 7         MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.............29

        7.1     Making of Payments............................................30

        7.2     Application of Certain Payments...............................30

        7.3     Due Date Extension............................................30

        7.4     Setoff........................................................30

        7.5     Proration of Payments.........................................30

        7.6     Taxes with respect to Payments by the Company.................31

SECTION 8         INCREASED COSTS; SPECIAL PROVISIONS FOR
                  EUROCURRENCY LOANS..........................................32

        8.1     Increased Costs...............................................32

        8.2     Basis for Determining Eurocurrency Interest
                Rate Inadequate or Unfair.....................................33

        8.3     Changes in Law Rendering Eurocurrency Loans Unlawful..........34

        8.4     Funding Losses................................................35

        8.5     Right of Lenders to Fund through Other Offices................35

        8.6     Discretion of Lenders as to Manner of Funding.................35

        8.7     Mitigation of Circumstances; Replacement of Affected Lender...35

        8.8     Conclusiveness of Statements; Survival of Provisions..........36

SECTION 9         WARRANTIES..................................................36

        9.1     Organization, etc.............................................36

        9.2     Authorization; No Conflict....................................36

        9.3     Validity and Binding Nature...................................37

        9.4     Financial Information.........................................37

        9.5     No Material Adverse Change....................................37

        9.6     Litigation and Contingent Liabilities.........................37

        9.7     Ownership of Properties; Liens................................38

        9.8     Subsidiaries..................................................38

        9.9     ERISA Compliance..............................................38

        9.10    Investment Company Act........................................38

        9.11    Public Utility Holding Company Act............................38

        9.12    Regulation U..................................................39

        9.13    Taxes.........................................................39

        9.14    Environmental Compliance......................................39

        9.15    Information...................................................39


                                      iii

        9.16    Golden Grain Acquisition......................................39

SECTION 10        COVENANTS...................................................40

        10.1    Reports, Certificates and Other Information...................40

                10.1.1   Audit Report.........................................40

                10.1.2   Quarterly Reports....................................40

                10.1.3   Compliance Certificates..............................40

                10.1.4   Reports to SEC and to Shareholders...................41

                10.1.5   Notice of Default, Litigation and ERISA Matters......41

                10.1.6   Subsidiaries.........................................41

                10.1.7   Management Reports...................................41

                10.1.8   Projections..........................................41

                10.1.9   Other Information....................................41

        10.2    Books, Records and Inspections................................41

        10.3    Insurance.....................................................42

        10.4    Compliance with Laws; Payment of Taxes........................42

        10.5    Maintenance of Existence, etc.................................42

        10.6    Financial Covenants...........................................42

                10.6.1   Minimum Fixed Charge Coverage Ratio..................42

                10.6.2   Maximum Leverage Ratio...............................43

                10.6.3   Minimum Consolidated Net Worth.......................43

                10.6.4   Minimum Consolidated EBITDA..........................43

        10.7    Limitations on Debt...........................................44

        10.8    Liens.........................................................44

        10.9    Business......................................................45

        10.10   Restricted Payments...........................................45

        10.11   Investments...................................................45

        10.12   Mergers, Consolidations, Sales................................45

        10.13   Use of Proceeds...............................................46

        10.14   Inconsistent Agreements.......................................46

        10.15   Transactions with Affiliates..................................46

        10.16   Employee Benefit Plans........................................46

        10.17   Environmental Laws............................................46

        10.18   Unconditional Purchase Obligations............................47


                                       iv

        10.19   Further Assurances............................................47

        10.20   Transfers to Foreign Subsidiaries.............................47

SECTION 11        CONDITIONS PRECEDENT........................................47

        11.1    Initial Credit Extension......................................47

                11.1.1   Agreement and Notes..................................48

                11.1.2   Resolutions..........................................48

                11.1.3   Incumbency and Signature Certificates................48

                11.1.4   Opinion of Counsel for the Company...................48

                11.1.5   Guaranty.............................................48

                11.1.6   Pledge Agreement.....................................48

                11.1.7   Collateral Partnership Assignment....................48

                11.1.8   Membership Interest Pledge Agreement.................48

                11.1.9   Financing Statements.................................48

                11.1.10 Borden Brands Acquisition Documents...................48

                11.1.11 Other.................................................48

        11.2    All Credit Extensions.........................................49

                11.2.1   No Default...........................................49

                11.2.2   Confirmatory Certificate.............................49

SECTION 12        EVENTS OF DEFAULT AND THEIR EFFECT..........................49

        12.1    Events of Default.............................................49

                12.1.1   Non-Payment of the Loans, etc........................49

                12.1.2   Non-Payment of Other Debt............................49

                12.1.3   Bankruptcy, Insolvency, etc..........................49

                12.1.4   Non-Compliance with Provisions of This Agreement.....50

                12.1.5   Warranties...........................................50

                12.1.6   ERISA................................................50

                12.1.7   Judgments............................................50

                12.1.8   Change in Control....................................50

                12.1.9   Invalidity of Loan Documents.........................50

        12.2    Effect of Event of Default....................................51

SECTION 13        THE ADMINISTRATIVE AGENT....................................51

        13.1    Appointment and Authorization.................................51

        13.2    Delegation of Duties..........................................52


                                       v

        13.3    Liability of Administrative Agent.............................52

        13.4    Reliance by Administrative Agent..............................52

        13.5    Notice of Default.............................................53

        13.6    Credit Decision...............................................53

        13.7    Indemnification...............................................54

        13.8    Administrative Agent in Individual Capacity...................54

        13.9    Successor Administrative Agent................................55

        13.10   Other Agents..................................................55

        13.11   Non-Receipt of Funds by the Administrative Agent..............55

SECTION 14        GENERAL.....................................................56

        14.1    Waiver; Amendments............................................56

        14.2    Notices.......................................................56

        14.3    Payments Set Aside............................................57

        14.4    Costs, Expenses and Taxes.....................................58

        14.5    Successors and Assigns........................................58

        14.6    Assignments; Participations...................................58

                14.6.1   Assignments..........................................58

                14.6.2   Participations.......................................59

                14.6.3   Designation of SPVs..................................60

        14.7    Governing Law.................................................61

        14.8    Counterparts..................................................61

        14.9    Judgment Currency.............................................61

        14.10   Indemnification by the Company; Exculpation...................62

        14.11   Economic and Monetary Union in the European Community.........62

        14.12   Confidentiality...............................................63

        14.13   No Third Parties Benefitted...................................63

        14.14   Forum Selection and Consent to Jurisdiction...................64

        14.15   Waiver of Jury Trial..........................................64

        14.16   MISSOURI STATUTORY NOTICE.....................................64

        14.17   Entire Agreement..............................................65


                                       vi

SCHEDULES

SCHEDULE 1.1(a)               Lenders, Commitments and Percentages
SCHEDULE 1.1(b)               Pricing Schedule
SCHEDULE 9.6                  Litigation and Contingent Liabilities
SCHEDULE 9.8                  Subsidiaries
SCHEDULE 10.7(f)              Debt to be Repaid
SCHEDULE 10.8                 Liens
SCHEDULE 10.11                Investments
SCHEDULE 14.2                 Addresses for Notices


EXHIBITS

EXHIBIT A             Form of Note
EXHIBIT B             Form of Notice of Borrowing
EXHIBIT C             Form of Notice of Conversion/Continuation
EXHIBIT D             Form of Guaranty
EXHIBIT E             Form of Pledge Agreement
EXHIBIT F             Form of Compliance Certificate
EXHIBIT G             Form of Opinion of Blackwell Sanders Peper Martin LLP, counsel to the Company and the
                      Guarantors
EXHIBIT H             Form of Assignment Agreement
EXHIBIT I             Form of Collateral Partnership Assignment
EXHIBIT J             Form of Membership Interest Pledge Agreement


                                      vii

                                CREDIT AGREEMENT

         This CREDIT AGREEMENT dated as of July 16, 2001 (this "Agreement") is
among AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation (the "Company"),
various financial institutions (together with their respective successors and
assigns, collectively the "Lenders" and individually each a "Lender") and BANK
OF AMERICA, N.A. ("Bank of America"), as letter of credit issuer and swing line
lender and as administrative agent for the Lenders.

         WHEREAS, the Company has requested that the Lenders provide revolving
credit facilities to the Company; and

         WHEREAS, the Lenders are willing to extend commitments to make loans
to, and to issue or participate in letters of credit for the account of, the
Company on the terms and subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

         SECTION 1      DEFINITIONS; OTHER INTERPRETIVE PROVISIONS;
ACCOUNTING PRINCIPLES.

         1.1  Definitions. When used herein the following terms shall have the
following meanings:

         Acquisition means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any business or
division of a Person, (b) the acquisition of in excess of 50% of the capital
stock, partnership interests, membership interests or equity of any Person, or
(c) a merger or consolidation or any other combination with another Person
(other than a Person that is a Subsidiary) provided that the Company or the
Subsidiary is the surviving entity.

         Administrative Agent means Bank of America in its capacity as
administrative agent for the Lenders hereunder and any successor thereto in such
capacity.

         Affected Lender means any Lender that has given notice to the Company
(which has not been rescinded) of (a) any obligation by the Company to pay any
amount pursuant to Section 7.6 or 8.1 or (b) the occurrence of any circumstance
of the nature described in Section 8.2 or 8.3.

         Affected Loan - see Section 8.3.

         Affiliate of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person.

         Agent-Related Persons means the Administrative Agent (including any
successor administrative agent arising under Section 13.9), together with its
Affiliates (including, in the

case of Bank of America in its capacity as Administrative Agent, the Arranger),
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons.

         Agent's Payment Office means, with respect to payments in any currency
or notices with respect thereto, the applicable address of the Administrative
Agent set forth on Schedule 14.2 or such other address or addresses as the
Administrative Agent may from time to time specify in accordance with Section
14.2.

         Aggregate Revolving Commitment Amount means $300,000,000, as such
amount may be reduced from time to time in accordance with this Agreement.

         Aggregate Revolving Outstandings means at any time the sum of (a) the
aggregate Dollar Equivalent principal amount of all outstanding Revolving Loans
and Swing Line Loans and (b) the Stated Amount of all Letters of Credit.

         Agreement - see the Preamble.

         Applicable Asset Sale Proceeds means the Net Cash Proceeds from any
Asset Sale, excluding (a) Net Cash Proceeds from any sale of fixed assets so
long as such Net Cash Proceeds are used within 90 days to purchase other fixed
assets for use in the business of the Company or a Subsidiary and (b) the first
$5,000,000 (or the Dollar Equivalent thereof) of Net Cash Proceeds received from
all other Asset Sales in any Fiscal Year.

         Applicable Base Rate Margin - see Schedule 1.1(b).

         Applicable Debt Issuance Proceeds means the Net Cash Proceeds from any
Debt Issuance, excluding $25,000,000 of Net Cash Proceeds received from the
first Debt Issuance of $75,000,000 or more after the Effective Date which meets
all of the requirements of Section 10.7(g).

         Applicable Eurocurrency Margin - see Schedule 1.1(b).

         Applicable Percentage means a Revolving Percentage or a Term
Percentage, as the context may require.

         Applicable Revolving Proceeds means, on the date of receipt by the
Company or any Subsidiary of any Applicable Asset Sale Proceeds or Applicable
Debt Issuance Proceeds, the product of (a) the amount of such Applicable Asset
Sale Proceeds or Applicable Debt Issuance Proceeds multiplied by (b) the
Revolving Reduction Percentage on such date.

         Applicable Term Proceeds means on the date of receipt by the Company or
any Subsidiary of any Applicable Asset Sale Proceeds or Applicable Debt Issuance
Proceeds, the product of (a) the amount of such Applicable Asset Sale Proceeds
or Applicable Debt Issuance Proceeds multiplied by (b) the Term Prepayment
Percentage on such date.

         Arranger means Banc of America Securities LLC.


                                      -2-

         Asset Sale means the sale, lease, assignment or other transfer for
value by the Company or any Subsidiary to any Person (other than the Company or
any Subsidiary) of any asset or right of the Company or such Subsidiary
(including any sale or other transfer of stock of any Subsidiary, whether by
merger, consolidation or otherwise, but excluding any sale of inventory or
license of trademarks, in each case in the ordinary course of business).

         Assignee - see Section 14.6.1.

         Assignment Agreement - see Section 14.6.1.

         Attorney Costs means and includes all reasonable fees and disbursements
of any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.

         Available Currency means Dollars, Euros, British Pounds Sterling,
Italian Lire and any other currency that (i) in the opinion of the
Administrative Agent is freely transferable and freely convertible into Dollars,
(ii) is requested by the Company and (iii) is approved by each Lender.

         Bank of America - see the Preamble.

         Base Rate means at any time the greater of (a) the Federal Funds Rate
plus 0.5% per annum and (b) the rate per annum then most recently publicly
announced by Bank of America as its prime rate. (The "prime rate" is a rate set
by Bank of America based upon various factors, including Bank of America's costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.) Any change in the prime rate announced by Bank of
America shall take effect at the opening of business on the day specified in the
public announcement of such change.

         Base Rate Loan means any Loan which bears interest at or by reference
to the Base Rate.

         Borden Brands Acquisition means the acquisition by the Company of
certain assets pursuant to the Borden Brands Purchase Agreement.

         Borden Brands Purchase Agreement means the Asset Purchase Agreement
dated as of June 1, 2001 among Borden Foods Corporation, BFC Investments, L.P.,
BF Foods International Corporation and the Company.

         Business Day means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the laws of, or are in
fact closed in, the state where the Agent's Payment Office with respect to
payments in Dollars is located and (i) in the case of a Business Day which
relates to a Eurocurrency Loan denominated in a currency other than Euro or to a
Letter of Credit denominated in a currency other than Dollars, a day on which
dealings in deposits in such currency are carried on in the London interbank
market and (ii) in the case of a Business Day which relates to a Eurocurrency
Loan or a Letter of Credit denominated in Euro, a TARGET Day.


                                      -3-

         Capital Lease means, with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person which, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of such Person.

         Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or guaranteed by
the United States Government, (b) commercial paper, maturing not more than one
year from the date of issue, which is issued by (i) a corporation (except the
Company or an Affiliate of the Company) organized under the laws of any State of
the United States of America or of the District of Columbia and rated at least
A-1 by Standard & Poor's Ratings Services, Inc., a division of The McGraw Hill
Companies, Inc., or P-1 by Moody's Investors Service, Inc., at the time of
investment or (ii) any Lender (or its holding company), (c) any certificate of
deposit or bankers' acceptance or Eurocurrency time deposit, maturing not more
than one year after the date of issue, which is issued by either (i) a financial
institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $100,000,000 or (ii)
any Lender, (d) any repurchase agreement with a term of one year or less which
(i) is entered into with (A) any Lender, or (B) any other commercial banking
institution of the stature referred to in clause (c)(i), (ii) is secured by a
fully perfected Lien in any obligation of the type described in any of clauses
(a) through (c) and (iii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase obligation of
such Lender (or other commercial banking institution) thereunder or (e)
investments in money market funds that invest solely in Cash Equivalent
Investments of the types described in clauses (a) through (d).

         Change in Control means an event or series of events by which:

         (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, but excluding any employee
benefit plan maintained for employees of the Company and its Subsidiaries, or
any Person acting in its capacity as trustee, agent or other fiduciary or
administrator of any such plan), becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a
Person shall be deemed to have "beneficial ownership" of all securities that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of 25%
or more of the equity interests of the Company; or

         (b) during any period of 12 consecutive months, a majority of the
members of the board of directors of the Company cease to be composed of
individuals (i) who were members of such board on the first day of such period,
(ii) whose election or nomination to such board was approved by individuals
referred to in clause (i) above constituting at the time of such election or
nomination at least a majority of such board or (iii) whose election or
nomination to such board was approved by individuals referred to in clauses (i)
and (ii) above constituting at the time of such election or nomination at least
a majority of such board.

         Code means the Internal Revenue Code of 1986.

         Collateral Documents means the Pledge Agreement, the Membership
Interest Pledge Agreement, each Collateral Partnership Assignment and any other
agreement pursuant to which


                                      -4-

the Company or any Guarantor grants collateral to the Administrative Agent for
the benefit of the Lenders.

         Collateral Partnership Assignment means a Collateral Assignment of
Partnership Interests executed by the Company or a Subsidiary and the
Administrative Agent, substantially in the form of Exhibit I.

         Commitment means, as to any Lender, such Lender's commitment to make
Loans, and (if applicable) to issue or participate in Letters of Credit and to
participate in Swing Line Loans, under this Agreement.

         Commitment Reduction Date - see Section 6.1.1.

         Company - see the Preamble.

         Computation Date means the last Business Day of each calendar month and
(a) with respect to matters relating to Loans, each date on which (i) the
Company borrows, converts or continues, as applicable, any Loan; (ii) the Dollar
Equivalent amount of any Eurocurrency Loan of an Affected Lender is required to
be determined under Section 8.3; or (iii) the Aggregate Revolving Commitment
Amount is reduced pursuant to Section 6.1; and (b) with respect to matters
relating to any Letter of Credit, each date on which (i) such Letter of Credit
is issued or the amount available to be drawn thereunder changes or (ii) the
Aggregate Revolving Commitment Amount is reduced pursuant to Section 6.1.

         Computation Period means any period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter.

         Consolidated EBITDA means, with respect to the Company and its
Subsidiaries for any period, an amount equal to the sum of (a) Consolidated Net
Income for such period plus (b) to the extent deducted in determining such
Consolidated Net Income for such period, Interest Expense, income tax expense,
depreciation and amortization; provided that, for purposes of determining
Consolidated EBITDA, (i) the consolidated net income of any Person (or division
or similar business unit) acquired by the Company or any Subsidiary during such
period (plus, to the extent deducted in determining such consolidated net
income, interest expense, income tax expense, depreciation and amortization of
such Person (or division or business unit)) shall be included on a pro forma
basis for the portion of such period prior to the date of such Acquisition (as
if the consummation of such Acquisition and the incurrence or assumption of any
Debt in connection therewith occurred on the first day of such period) and (ii)
the consolidated net income of any Person (or division or similar business unit)
disposed of by the Company or any Subsidiary during such period (plus, to the
extent deducted in determining such consolidated net income, interest expense,
income tax expense, depreciation and amortization of such Person (or division or
business unit)) shall be excluded on a pro forma basis for the portion of such
period prior to the date of such disposition (as if the consummation of such
disposition occurred on the first day of such period).

         Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and its
Subsidiaries for such period.


                                      -5-

         Consolidated Net Worth means the Company's consolidated stockholders'
equity.

         Covenant Change Notice means a notice from the Company to the
Administrative Agent stating that the maximum Leverage Ratio is to be reduced as
set forth in the proviso to Section 10.6.2.

         Credit Extension means the making of any Loan or the issuance of any
Letter of Credit.

         Debt of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, whether or not evidenced by bonds, debentures,
notes or similar instruments, (b) all obligations of such Person as lessee under
Capital Leases which have been recorded as liabilities on a balance sheet of
such Person, (c) all obligations of such Person to pay the deferred purchase
price of property or services (other than prepaid interest and trade accounts
payable in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person (it being understood that if such Person has not
assumed or otherwise become personally liable for any such indebtedness, the
amount of the Debt of such Person in connection therewith shall be limited to
the lesser of the face amount of such indebtedness or the fair market value of
all property of such Person securing such indebtedness), (e) all obligations,
contingent or otherwise, with respect to the face amount of all letters of
credit (whether or not drawn) and banker's acceptances issued for the account of
such Person (including the Letters of Credit), (f) the net liabilities of such
Person under all Hedging Agreements to which it is a party and (g) all Guaranty
Obligations of such Person.

         Debt Issuance means any issuance of Debt by the Company which is not
permitted by any provision of Section 10.7 other than clause (g).

         Debt to be Repaid means the Debt listed on Schedule 10.7(f).

         Dollar Equivalent means, at any time, (a) as to any amount denominated
in Dollars, the amount thereof at such time, and (b) as to any amount
denominated in any other Available Currency, the equivalent amount in Dollars as
determined by the Administrative Agent at such time on the basis of the Spot
Rate for the purchase of Dollars with such Available Currency on the most recent
Computation Date or such other date as is specified herein.

         Dollars and $ mean lawful money of the United States of America.

         Effective Date means July 16, 2001.

         Environmental Laws means all laws relating to environmental, health,
safety and land use matters applicable to any property.

         Equity Issuance means the issuance of equity securities or interests by
the Company or any Subsidiary (other than issuances of equity securities or
interests by any Subsidiary to the Company or any other Subsidiary).


                                      -6-

         ERISA means the Employee Retirement Income Security Act of 1974 and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of ERISA
also refer to any successor sections.

         ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

         ERISA Event means (a) a Reportable Event with respect to a Pension
Plan, (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA, (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Sections 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan, (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.

         Euro means the single currency of the participating member states of
the European Union.

         Eurocurrency Loan means any Revolving Loan or Term Loan which bears
interest at a rate determined by reference to the Eurocurrency Rate (Reserve
Adjusted).

         Eurocurrency Office means, with respect to any Lender, the office or
offices of such Lender which shall be making or maintaining the Eurocurrency
Loans of such Lender hereunder or, if applicable, such other office or offices
through which such Lender determines the Eurocurrency Rate. A Eurocurrency
Office of any Lender may be, at the option of such Lender, either a domestic or
foreign office.

         Eurocurrency Rate means, with respect to any Eurocurrency Loan for any
Interest Period, (i) the rate per annum (rounded upward, if necessary, to the
nearest 1/100 of 1%) equal to the rate determined by the Administrative Agent to
be the offered rate which appears on the page of the Telerate Screen which
displays an average British Bankers Association Interest Settlement Rate (such
page currently being page number 3750) for deposits (for delivery two Business
Days prior to the beginning of such Interest Period) in the applicable currency
with a term equivalent to the applicable Interest Period, determined as of
approximately 11:00 a.m., London time, on such date of determination, or (ii) if
the rate referenced in the preceding clause (i) does not appear on such page or
service or if such page or service shall cease to be available, the rate per
annum (rounded upward, if necessary, to the nearest five decimal places) equal
to the rate determined by the Administrative Agent to be the offered rate on
such other page or other service


                                      -7-

which displays an average British Bankers Association Interest Settlement Rate
for deposits (for delivery two Business Days prior to the beginning of such
Interest Period) in the applicable currency with a term equivalent to such
Interest Period determined as of approximately 11:00 a.m., London time, on such
date of determination, or (iii) if the rates referenced in the preceding clauses
(i) and (ii) are not available, the rate per annum equal to the offered
quotation rate (rounded upward, if necessary, to the nearest five decimal
places) to first class banks in the London interbank market by the
Administrative Agent for deposits (for delivery two Business Days prior to the
beginning of such Interest Period) of amounts in same day funds comparable to
the principal amount of the Eurocurrency Loan of Bank of America included in the
Eurocurrency borrowing for which the Eurocurrency Rate is then being determined
with a maturity comparable to such Interest Period as of approximately 11:00
a.m., London time, on such date of determination.

         Eurocurrency Rate (Reserve Adjusted) means, with respect to any
Eurocurrency Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/10,000 of 1%) determined pursuant to the following
formula:

                   Eurocurrency Rate     =      Eurocurrency Rate
                  (Reserve Adjusted)            1-Eurocurrency
                                                Reserve Percentage

         Eurocurrency Reserve Percentage means, with respect to any Eurocurrency
Loan for any Interest Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the percentage in effect on each
day of such Interest Period, as prescribed by the FRB, for determining the
aggregate maximum reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D of the FRB or any other then applicable regulation of
the FRB which prescribes reserve requirements applicable to "Eurocurrency
Liabilities" as presently defined in such Regulation D.

         Eurodollar Loan means a Eurocurrency Loan denominated in Dollars.

         Event of Default means any of the events described in Section 12.1.

         Existing Credit Facility means the Credit Agreement dated as of October
30, 1992, amended and restated as of July 1, 1994, as further amended and
restated as of February 26, 1996, as further amended and restated as of April
11, 1997, as further amended and restated as of October 17, 1997 and as further
amended and restated as of April 26, 2000 among the Company, various financial
institutions and Bankers Trust Company, as agent.

         Existing Euro Loans - see Section 11.1.

         Existing Letter of Credit means letter of credit numbered S040375
issued for the account of the Company by Bank of America (as successor to
Boatmen's First National Bank).

         Federal Funds Rate means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)" or, if for any relevant day such rate is not so published


                                      -8-

on any such preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Administrative Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
City time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Administrative Agent.

         First Amendment Effective Date means the date of effectiveness of the
First Amendment to this Agreement.

         Fiscal Quarter means a fiscal quarter of a Fiscal Year.

         Fiscal Year means the fiscal year of the Company and its Subsidiaries,
which shall be a 52-week or 53-week period, as applicable, ending on or about
September 30 of each year. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 2001") refer to the
Fiscal Year ending on or about September 30 of such calendar year.

         Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of (a) the result of (i) Consolidated EBITDA for such Computation Period
less (ii) depreciation for such Computation Period less (iii) cash income tax
expense for such Computation Period less (iv) cash dividends paid by the Company
during such Computation Period to (b) the sum of (i) Interest Expense to the
extent payable in cash during such Computation Period plus (ii) the amount of
all reductions of the Aggregate Revolving Commitment Amount required to be made
on any Commitment Reduction Date during such Computation Period plus (iii) the
actual aggregate amount of all scheduled principal payments on Debt (other than
Debt hereunder) required to be made (and actually made) by the Company and its
Subsidiaries during such Computation Period; provided that in calculating
Interest Expense for any Computation Period, any Debt incurred or assumed in
connection with the acquisition of any Person (or division or similar business
unit) shall be assumed to have been incurred or assumed on the first day of such
period (with a corresponding increase in Interest Expense) and any Debt assumed
by any Person (other than the Company or any Subsidiary) in connection with the
disposition of any Person (or division or similar business unit) disposed of by
the Company or any Subsidiary during such period shall be assumed to have been
repaid on the first day of such period (with a corresponding decrease in
Interest Expense).

         Foreign Subsidiary means any Subsidiary which (a) is organized under
the laws of a jurisdiction other than the United States of America or any state
or territory thereof and (b) does substantially all of its business (other than
export sales to the United States) outside of the United States of America or
any state or territory thereof.

         FRB means the Board of Governors of the Federal Reserve System and any
successor thereto.

         Funded Debt means all Debt of the Company and its Subsidiaries
determined on a consolidated basis, excluding (i) contingent obligations in
respect of undrawn letters of credit and Guaranty Obligations (except, in each
case, to the extent constituting Guaranty Obligations in respect of Debt of a
Person other than the Company or any Subsidiary) and (ii) Hedging Obligations.


                                      -9-

         GAAP means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

         Golden Grain Acquisition means the acquisition by the Company of
certain assets from PepsiCo. as more fully described in the memorandum dated
November 7, 2002 from the Arranger to the Lenders.

         Governmental Authority means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.

         Group - see Section 2.2.1.

         Guarantor means each Subsidiary that is a party to the Guaranty.

         Guaranty means the Guaranty executed by certain Subsidiaries of the
Company in favor of the Administrative Agent and the Lenders, substantially in
the form of Exhibit D.

         Guaranty Obligation means, as to any Person, any obligation, contingent
or otherwise, of such Person guarantying or having the economic effect of
guarantying any Debt or other obligation payable or performable by another
Person (the "primary obligor") in any manner, whether directly or indirectly,
and including any obligation of such Person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Debt or other obligation
of the payment or performance of such Debt or other obligation, (iii) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Debt or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligees in respect of such Debt or
other obligation of the payment or performance thereof or to protect such
obligees against loss in respect thereof (in whole or in part); provided that
the term "Guaranty Obligation" shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guaranty Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guaranty Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guarantying Person in good faith.

         Hazardous Material means any hazardous, toxic or dangerous substance or
material defined as such in (or for purposes of) the Comprehensive Environmental
Response, Compensation and Liability Act, any so-called "Superfund" or
"Superlien" law or any other Federal, state or local statute, law, ordinance,
code, regulation or order, or any other requirement


                                      -10-

of any Governmental Authority regulating, relating to, or imposing liability
for, or standards of conduct concerning, any hazardous, toxic or dangerous
waste, substance or material as now or any time hereafter in effect and
applicable to any real property owned by or leased to the Company or any
Subsidiary or on which the Company or any Subsidiary carries on any of its
operations (provided that no such state or local statute, law, ordinance, code,
regulation, order or other requirement shall be deemed to have extraterritorial
application).

         Hedging Agreement means any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, foreign
exchange agreement, forward rate agreement or other agreement designed to
protect a Person against fluctuations in interest rates, currency exchange rates
or commodity prices.

         Hedging Obligations means, with respect to any Person, all liabilities
of such Person under Hedging Agreements.

         Indemnified Liabilities - see Section 14.10.

         Indemnified Person - see Section 14.10.

         Interest Expense means for any period the consolidated interest expense
of the Company and its Subsidiaries for such period.

         Interest Period means, as to any Eurocurrency Loan, the period
commencing on the date such Loan is borrowed (or, in the case of a Eurodollar
Loan, converted from a Base Rate Loan), or on the expiration of the immediately
preceding Interest Period for such Loan, as applicable, and ending on the date
one, two, three, six or, if available to all Lenders, twelve months thereafter
as selected by the Company in its related notice of borrowing, conversion or
continuation, as the case may be; provided that:

                  (i) if any Interest Period would otherwise end on a day that
         is not a Business Day, such Interest Period shall be extended to the
         immediately following Business Day, unless the result of such extension
         would be to carry such Interest Period into another calendar month, in
         which event such Interest Period shall end on the preceding Business
         Day;

                  (ii) any Interest Period that begins on the last Business Day
         of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of the calendar month at the
         end of such Interest Period;

                  (iii) no Interest Period for any Revolving Loan shall extend
         beyond the scheduled Revolving Termination Date;

                  (iv) no Interest Period for a tranche of Term Loans shall
         extend beyond the scheduled maturity date of the Term Loans; and

                  (v) the Company may not select any Interest Period which would
         extend beyond any Commitment Reduction Date if, after giving effect to
         such selection, the


                                      -11-

         aggregate principal amount of all Eurocurrency Loans having Interest
         Periods ending after such date plus the aggregate Stated Amount of all
         Letters of Credit scheduled to remain outstanding after such date
         (assuming no drawings are made thereunder) would exceed the Aggregate
         Revolving Commitment Amount scheduled to be in effect after giving
         effect to the reduction on such date.

         Investment means, with respect to any Person, (a) any loan or advance
made by such Person to any other Person (excluding (i) advances to, and deposits
with, contractors and suppliers and (ii) trade accounts payable, in each case in
the ordinary course of business consistent with the past practice of the Company
and its Subsidiaries) and (b) any ownership or similar interest held by such
Person in any other Person. The amount of any Investment shall be the original
principal or capital amount thereof less all returns of principal or equity
thereon (and without adjustment by reason of the financial condition of such
other Person) and shall, if made by the transfer or exchange of property other
than cash, be deemed to have been made in an original principal or capital
amount equal to the fair market value of such property.

         IRS means the United States Internal Revenue Service.

         Issuer means Bank of America in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer under Section 13.9.

         LC Fee Rate - see Schedule 1.1(b).

         Lender - see the Preamble. References to the "Lenders" shall include
(a) the Issuer and (b) the Swing Line Lender; for purposes of clarification
only, to the extent that Bank of America (or any successor Issuer or Swing Line
Lender) may have rights or obligations in addition to those of the other Lenders
due to its status as Issuer or Swing Line Lender, its status as such will be
specifically referenced.

         Letter of Credit - see Section 2.1.2.

         Letter of Credit Application means a letter of credit application in
the form then used by the Issuer for the type of letter of credit requested.

         Leverage Ratio means, for any Computation Period, the ratio of (a)
Funded Debt as of the last day of such Computation Period to (b) Consolidated
EBITDA for such Computation Period.

         Lien means, when used with respect to any Person, any interest granted
by such Person in any real or personal property, asset or other right owned or
being purchased or acquired by such Person which secures payment or performance
of any obligation and shall include any mortgage, lien, encumbrance, charge,
assignment by way of security or other security interest of any kind, whether
arising by contract, as a matter of law, by judicial process or otherwise.

         Loan means a Revolving Loan, a Term Loan or a Swing Line Loan.

         Loan Documents means this Agreement, the Guaranty, the Collateral
Documents, the Notes and the Letter of Credit Applications.


                                      -12-

         Margin Stock means "margin stock" as defined in Regulation U of the
FRB.

         Material Adverse Effect means, relative to any event or occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental proceeding), a material adverse effect on (a) the
business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries taken
as a whole or (b) the ability of the Company or any Guarantor to timely and
fully perform any of its payment or other material obligations under this
Agreement or any other Loan Document to which it is a party.

         Membership Interest Pledge Agreement means the Membership Interest
Pledge Agreement among the Company, various Subsidiaries and the Administrative
Agent, substantially in the form of Exhibit J.

         Multiemployer Plan means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
three calendar years, has made or been obligated to make contributions.

         Net Cash Proceeds means:

         (a) with respect to any Asset Sale, the aggregate cash proceeds
(including cash proceeds received by way of deferred payment of principal
pursuant to a note, installment receivable or otherwise, but only as and when
received) received by the Company or any Subsidiary pursuant to such Asset Sale,
net of (i) the direct costs relating to such Asset Sale (including sales
commissions and legal, accounting and investment banking fees), (ii) taxes paid
or payable as a result thereof (after taking into account any available tax
credit or deduction and any tax sharing arrangement), (iii) amounts required to
be applied to the repayment of any Debt secured by a Lien on the asset subject
to such Asset Sale, (iv) in the case of the sale of the stock of any Subsidiary,
any Debt of such Subsidiary which is required to be repaid as a result of or in
connection with such sale (other than the Loans) and (v) any reserve for
adjustment in respect of the sale price of such asset (until such amount is
available to the Company or the applicable Subsidiary); and

         (b) with respect to any Debt Issuance or Equity Issuance, the aggregate
cash proceeds received by the Company or any Subsidiary pursuant to such
issuance, net of the direct costs relating to such issuance (including filing
costs, sales and underwriter's commissions and legal, accounting and investment
banking fees).

         Non-Use Fee Rate - see Schedule 1.1(b).

         Note - see Section 3.2.

         Overnight Rate means, for any day, the rate of interest per annum at
which overnight deposits in the applicable currency, in an amount approximately
equal to the amount with respect to which such rate is being determined, would
be offered for such day by the relevant branch of Bank of America to major banks
in the applicable London interbank market. The Overnight


                                      -13-

Rate for any day which is not a Business Day shall be the Overnight Rate for the
preceding Business Day.

         Participant - see Section 14.6.2.

         PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.

         Pension Plan means any "employee pension benefit plan" (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Company or
any ERISA Affiliate or to which the Company or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer plan
(as described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding five plan years.

         Percentage means, for any Lender, the percentage set forth opposite
such Lender's name on Schedule 1.1(a) under the heading "Percentage", as
adjusted by any assignment pursuant to Section 14.6.1; provided that if and so
long as any Lender fails to fund any participation in any Letter of Credit or
Swing Line Loan when required by Section 2.3.2 or 2.4.3, such Lender's
Percentage shall be deemed for purposes of this definition to be reduced to the
extent of the defaulted amount and the Percentage of the Issuer or the Swing
Line Lender, as applicable, shall be deemed for purposes of this definition to
be increased to such extent.

         Permitted Acquisition means any Acquisition by the Company or any
Subsidiary with respect to which each of the following requirements shall have
been satisfied:

         (a) the assets to be acquired are for use, or the Person to be acquired
is, in the same or a similar line of business as the Company and its
Subsidiaries;

         (b) in the case of the Acquisition of a Person, such Acquisition has
been approved and recommended by the board of directors or other governing body
of such Person;

         (c) no Event of Default or Unmatured Event of Default shall exist on
the date of such Acquisition, either before and after giving effect to such
Acquisition;

         (d) the Company is in pro forma compliance with all financial covenants
set forth in Section 10.6 after giving effect to such Acquisition;

         (e) if the cash consideration for such Acquisition is more than
$5,000,000, the Company shall have delivered to the Administrative Agent, not
less than 10 Business Days prior to the closing of such Acquisition, a
certificate demonstrating (i) compliance with clause (d) above and (ii) that the
Leverage Ratio on a pro forma basis after giving effect to such Acquisition will
be at least 0.25 to 1.0 less than the applicable level set forth in Section
10.6.2 for the Computation Period ending on the last day of the Fiscal Quarter
in which such Acquisition occurs;

         (f) if the cash consideration for such Acquisition is more than
$30,000,000, the Required Lenders shall have approved such Acquisition; and


                                      -14-

         (g) if, after giving effect to such Acquisition, the cash consideration
for all Acquisitions completed on or after the Effective Date (excluding the
Borden Brands Acquisition) will for the first time exceed $100,000,000, the
Required Lenders shall have approved such Acquisition.

         Permitted Restricted Payments - see Section 10.10.

         Person means any natural person, corporation, company, partnership,
limited liability company, trust, association, governmental authority or unit,
or any other entity, whether acting in an individual, fiduciary or other
capacity.

         Plan means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by the Company or any ERISA Affiliate.

         Pledge Agreement means the Pledge Agreement among the Company, various
Subsidiaries and the Administrative Agent, substantially in the form of Exhibit
E.

         Reportable Event means any of the events set forth in Section 4043(c)
of ERISA, other than events for which the 30 day notice period has been waived.

         Required Lenders means Lenders having Percentages aggregating 51% or
more.

         Revolving Commitment means, as to any Lender, (a) such Lender's
commitment to make Revolving Loans and to participate in Swing Line Loans and in
Letters of Credit in an aggregate amount not exceeding the amount set forth for
such Lender on Schedule 1.1(a), as adjusted from time to time in accordance with
the terms hereof, or (b) such amount as so adjusted.

         Revolving Lender means any Lender which has a Revolving Commitment or,
after the termination of the Revolving Commitments, is the holder of any
Revolving Loan or any participation in a Swing Line Loan or a Letter of Credit.

         Revolving Loan - see Section 2.1.1.

         Revolving Percentage means, for any Lender, the percentage which (a)
the Revolving Commitment of such Lender (or, after termination of the Revolving
Commitments, the principal amount of such Lender's Revolving Loans) is of (b)
the aggregate amount of the Revolving Commitments (or after termination of the
Revolving Commitments, the aggregate principal amount of all Revolving Loans);
provided that if and so long as any Revolving Lender fails to fund any
participation in any Letter of Credit or Swing Line Loan when required by
Section 2.3.2 or 2.4.3, such Lender's Revolving Percentage shall be deemed for
purposes of this definition to be reduced to the extent of the defaulted amount
and the Revolving Percentage of the Issuer or the Swing Line Lender, as
applicable, shall be deemed for purposes of this definition to be increased to
such extent.

         Revolving Reduction Percentage means, as of the date of receipt of any
Applicable Asset Sale Proceeds or Applicable Debt Issuance Proceeds, the
percentage which (a) the Aggregate Revolving Commitment Amount on such date is
of (b) the sum of the Aggregate Revolving Commitment Amount plus the outstanding
principal amount of all Term Loans on such date.


                                      -15-

         Revolving Termination Date means October 2, 2006 or such earlier date
on which the Revolving Commitments terminate pursuant to Section 6 or 12.

         SEC means the Securities and Exchange Commission.

         Signing Date means the date on which this Agreement has been executed
and delivered by all of the initial parties hereto.

         Spot Rate for a currency means the rate quoted by Bank of America as
the spot rate for the purchase by Bank of America of such currency with another
currency in accordance with its customary procedures at approximately 11:00
a.m., Chicago time, on the date two Business Days prior to the date as of which
the foreign exchange computation is made.

         Stated Amount means, with respect to any Letter of Credit at any date
of determination, the sum of the maximum Dollar Equivalent amount available to
be drawn thereunder at any time during the remaining term of such Letter of
Credit under any and all circumstances plus the aggregate Dollar Equivalent
amount of all unreimbursed payments and disbursements previously made under such
Letter of Credit.

         Subsidiary of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of stock or other equity interests having ordinary voting power for the
election of the board of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a "Subsidiary" shall refer to a Subsidiary of the Company.

         Swing Line Lender means Bank of America in its capacity as swing line
lender hereunder, together with any replacement swing line lender arising under
Section 13.9.

         Swing Line Loan - see Section 2.4.1.

         Taxes means any present or future income, excise or stamp taxes and any
other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority, excluding franchise taxes and taxes
imposed on or measured by the gross or net income or receipts of the
Administrative Agent or any Lender.

         TARGET Day means a day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer system (or any successor) is open for
business.

         Term Lender means (a) during the period from the First Amendment
Effective Date to the date of the making of the Term Loans, any Lender that has
an amount (other than zero) under the heading "Term Commitment" in Schedule
1.1(a); and (b) thereafter, any Lender that is the holder of a Term Loan.

         Term Loan - see Section 2.1.3.


                                      -16-

         Term Percentage means, as to any Term Lender, the percentage which (a)
the principal amount of such Term Lender's Term Loan is of (b) the aggregate
principal amount of all Term Loans. The Term Percentage of each Term Lender as
of the First Amendment Effective Date is set forth across from such Term
Lender's name on Schedule 1.1(a) under the heading "Term Percentage".

         Term Prepayment Percentage means, as of the date of receipt of any
Applicable Asset Sale Proceeds or Applicable Debt Issuance Proceeds, the
percentage which (a) the outstanding principal amount of all Term Loans on such
date is of (b) the sum of the Aggregate Revolving Commitment Amount plus the
outstanding principal amount of all Term Loans on such date.

         Type of Loan or Borrowing refers to the interest rate basis for a
Revolving Loan or a Term Loan or a borrowing of Revolving Loans or a tranche of
Term Loans. The "Types" of Loans or borrowings are Eurocurrency Loans or
borrowings and Base Rate Loans or borrowings.

         Unfunded Pension Liability means the excess of a Pension Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

         Unmatured Event of Default means any event which if it continues
uncured will, with lapse of time or notice or lapse of time and notice,
constitute an Event of Default.

         Wholly-Owned Subsidiary means a Subsidiary of which the Company and/or
its Subsidiaries own, directly or indirectly, all of the outstanding shares of
capital stock (other than directors' qualifying shares) or other equity
interests.

          1.2  Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the terms defined.

          (b)  (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.

               (ii) The term "including" is not limiting and means "including
          without limitation."

               (iii) In the computation of periods of time from a specified date
          to a later specified date, the word "from" means "from and including",
          the words "to" and "until" each mean "to but excluding" and the word
          "through" means "to and including."

               (iv) For the purposes of calculating interest and non-use fees,
          the principal of a Loan shall be deemed to be outstanding on the date
          a Loan is made but not on the date paid so long as it is paid by the
          time required by Section 7.1 (and is not paid on the date it is made).

          (c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments


                                      -17-

and other modifications are not prohibited by the terms of any Loan Document and
(ii) references to any statute or regulation are to be construed as including
all statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting such statute or regulation.

          (d) The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement.

          (e) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms.

          1.3 Accounting Principles. Unless the context otherwise clearly
requires, all accounting terms not expressly defined herein shall be construed,
and all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied; provided that if the Company
notifies the Administrative Agent that the Company wishes to amend any covenant
in Section 10.6 to eliminate the effect of any change in GAAP on the operation
of such covenant (or if the Administrative Agent notifies the Company that the
Required Lenders wish to amend any covenant in Section 10.6 for such purpose),
then the Company's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Company and the Required Lenders.

          SECTION 2 COMMITMENTS OF THE LENDERS; BORROWING PROCEDURES; LETTER OF
CREDIT PROCEDURES.

          2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Lenders, severally and for itself alone, agrees to make
loans to, and to issue or participate in letters of credit for the account of,
the Company as follows:

          2.1.1 Revolving Loans. Each Revolving Lender agrees to make loans to
the Company on a revolving basis (collectively "Revolving Loans" and
individually each a "Revolving Loan") from time to time before the Revolving
Termination Date in such Revolving Lender's Revolving Percentage of such
aggregate amounts as the Company may from time to time request from all
Revolving Lenders.

          2.1.2 Letter of Credit Commitment. (a) The Issuer will issue letters
of credit, in each case containing such terms and conditions as are permitted by
this Agreement and are otherwise reasonably satisfactory to the Issuer
(collectively with the Existing Letter of Credit, the "Letters of Credit" and
individually each a "Letter of Credit"), at the request of and for the account
of the Company (or jointly for the account of the Company and a Subsidiary) from
time to time before the Revolving Termination Date; and (b) as more fully set
forth in Section 2.3, each Lender agrees to purchase a participation in each
Letter of Credit.

          2.1.3 Term Loans. Each Term Lender will make a single term loan (each
a "Term Loan") on the Term Loan Funding Date (as defined in the First Amendment
to this Agreement)


                                      -18-

in such Term Lender's Term Percentage of $100,000,000. Amounts repaid with
respect to Term Loans may not be reborrowed.

          2.1.4 Commitment Limits. Notwithstanding any other provision of this
Agreement, (a) the Aggregate Revolving Outstandings shall not at any time exceed
the Aggregate Revolving Commitment Amount, (b) the Stated Amount of all Letters
of Credit shall not at any time exceed $20,000,000 and (c) the aggregate
outstanding Dollar Equivalent principal amount of all Eurocurrency Loans
denominated in a currency other than Dollars shall not exceed at any time
$100,000,000.

          2.1.5 Valuation of Certain Eurocurrency Loans and Certain Letters of
Credit. The Administrative Agent will determine the Dollar Equivalent amount of
each Eurocurrency Loan and each Letter of Credit denominated in a currency other
than Dollars on each Computation Date, and such determination shall be
conclusive absent demonstrable error.

          2.2  Loan Procedures.

          2.2.1 Various Types of Loans. Each Revolving Loan shall be either a
Base Rate Loan or a Eurocurrency Loan, and each Term Loan may be divided into
one or more tranches which are either Base Rate Loans or Eurodollar Loans, as
the Company shall specify in the related notice of borrowing or conversion
pursuant to Section2.2.2 or 2.2.3. Eurocurrency Loans having the
same Interest Period are sometimes called a "Group" or collectively
"Groups". Base Rate Loans and Eurocurrency Loans may be outstanding at
the same time; provided that (i) not more than 18 different Groups of
Eurocurrency Loans shall be outstanding at any one time and (ii) the aggregate
principal amount of each Group of Eurocurrency Loans shall at all times be a
Dollar Equivalent of at least $1,000,000 and an integral multiple of 100,000
units of the applicable currency. All borrowings, conversions and repayments of
Loans shall be effected so that each Revolving Lender will have a pro rata share
(according to its Revolving Percentage) of all Types and Groups of Revolving
Loans, and all borrowings, conversions and repayments of Term Loans shall be
effected so that each Term Lender will have a pro rata share (according to its
Term Percentage) of all Types and Groups of tranches of Term Loans.

          2.2.2 Borrowing Procedures. The Company shall give written or
telephonic (followed promptly by written confirmation thereof) notice to the
Administrative Agent of each proposed borrowing not later than 10:00 a.m.,
Chicago time, (a) in the case of a Base Rate borrowing, on the proposed date of
such borrowing, (b) in the case of a Eurodollar borrowing, at least three
Business Days prior to the proposed date of such borrowing, and (c) in the case
of a Eurocurrency borrowing in a currency other than Dollars, at least four
Business Days prior to the proposed date of such borrowing. Each such notice
shall be effective upon receipt by the Administrative Agent, shall be
irrevocable, and shall specify the date, amount and Type of borrowing and, in
the case of a Eurocurrency borrowing, the initial Interest Period therefor and
the applicable currency thereof. Promptly upon receipt of such notice, the
Administrative Agent shall advise each Lender thereof. Not later than 1:00 p.m.,
Chicago time, on the date of a proposed borrowing, each Lender shall provide the
Administrative Agent at the office specified by the Administrative Agent with
(a) in the case of a Eurocurrency borrowing in a currency other than Dollars,
the applicable currency in immediately available funds, or (b) in the case of a
Base Rate borrowing or a Eurodollar borrowing, Dollars in immediately available
funds, in each case


                                      -19-

in the amount equal to such Lender's Applicable Percentage of such borrowing
and, so long as the Administrative Agent has not received written notice that
the conditions precedent set forth in Section 11 with respect to such borrowing
have not been satisfied, the Administrative Agent shall promptly pay over the
requested amount to the Company. Each borrowing of Revolving Loans shall be on a
Business Day. Each Base Rate borrowing shall be in an aggregate amount of
$1,000,000 or an integral multiple thereof. Each other borrowing shall be in the
applicable amount required for a Group pursuant to Section 2.2.1.

          2.2.3 Conversion and Continuation Procedures. (a) Subject to the
provisions of Section 2.2.1, the Company may, upon irrevocable written notice to
the Administrative Agent in accordance with clause (b) below:

               (i)  elect, as of any Business Day, to convert any outstanding
          Base Rate Loan into a Eurodollar Loan or any outstanding Eurodollar
          Loan into a Base Rate Loan; or

               (ii) elect, as of the last day of the applicable Interest Period,
          to continue any Group of Eurocurrency Loans having an Interest Period
          expiring on such day (or any part thereof in the applicable amount
          required for a Group pursuant to Section 2.2.1) for a new Interest
          Period in the same currency.

          (b) The Company shall give written or telephonic (followed promptly by
written confirmation thereof) notice to the Administrative Agent of each
proposed conversion or continuation not later than 10:00 a.m., Chicago time, (i)
in the case of conversion of Eurodollar Loans into Base Rate Loans, on the
proposed date of such conversion, (ii) in the case of a conversion of Base Rate
Loans into or continuation of Eurodollar Loans, at least three Business Days
prior to the proposed date of such conversion or continuation, and (iii) in the
case of continuation of Eurocurrency Loans in a currency other than Dollars, at
least four Business Days prior to the proposed date of such continuation,
specifying in each case:

               (1)  the proposed date of conversion or continuation;

               (2) the aggregate amount of the Loans to be converted or
          continued;

               (3) the Type of Loans resulting from the proposed conversion or
          continuation; and

               (4) in the case of a continuation of Eurocurrency Loans
          denominated in a currency other than Dollars or conversion into, or
          continuation of, Eurodollar Loans, the duration of the requested
          Interest Period therefor.

          (c) If upon expiration of any Interest Period applicable to
Eurocurrency Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Eurocurrency Loans, the Company shall be deemed
to have elected to continue such Eurocurrency Loans for a one-month Interest
Period.

          (d) The Administrative Agent will promptly notify each Lender of its
receipt of a notice of conversion or continuation pursuant to this Section 2.2.3
or, if no timely notice is provided by the Company, of the details of any
automatic continuation or conversion.


                                      -20-

          (e) Unless the Required Lenders otherwise consent, during the
existence of any Event of Default or Unmatured Event of Default, the Company may
not elect to have a Loan converted into or continued as a Eurodollar Loan.

          2.3  Letter of Credit Procedures.

          2.3.1 Issuance of Letters of Credit. The Company shall give written
notice to the Administrative Agent of the proposed issuance (which, for purposes
of this Agreement shall, whenever appropriate, include any increase in the
amount available to be drawn under or extension of the term of any Letter of
Credit) of each Letter of Credit on a Business Day which is at least three
Business Days (or such lesser period as the Issuer may agree) prior to the
proposed date of issuance of such Letter of Credit; provided that the Company
shall not be required to give written notice of the extension of the term of a
Letter of Credit which has an "evergreen" or automatic renewal provision. Each
such notice shall be accompanied by a Letter of Credit Application, duly
executed by the Company and in all respects reasonably satisfactory to the
Issuer, together with such other documentation as the Issuer may reasonably
request in support thereof, it being understood that (a) each Letter of Credit
Application shall specify, among other things, the date on which the proposed
Letter of Credit is to be issued, the expiration date of such Letter of Credit
(which shall not be later than 22 days prior to the scheduled Revolving
Termination Date), the face amount of such Letter of Credit, the currency in
which such Letter of Credit is to be denominated (which shall be an Available
Currency), the name and address of the beneficiary of such Letter of Credit and
whether such Letter of Credit is to be transferable in whole or in part; and (b)
the Company shall not request, and the Issuer shall not issue, any Letter of
Credit if the aggregate Stated Amount of all Letters of Credit having expiration
dates after any Commitment Reduction Date plus the aggregate principal amount of
all Eurocurrency Loans having Interest Periods ending after such date would
exceed the Aggregate Revolving Commitment Amount scheduled to be in effect after
giving effect to the reduction on such date. Subject to the satisfaction of the
conditions precedent set forth in Section 11 with respect to the issuance of
such Letter of Credit, the Issuer shall issue such Letter of Credit on the
requested issuance date. With respect to any Letter of Credit which contains any
"evergreen" or automatic renewal provision, each Revolving Lender shall be
deemed to have consented to any such extension or renewal unless such Revolving
Lender shall have provided to the Administrative Agent, not less than 30 days
prior to the last date on which the Issuer can in accordance with the terms of
the applicable Letter of Credit decline to extend or renew such Letter of
Credit, written notice that it declines to consent to any extension or renewal.

          2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuer shall be deemed to have sold and
transferred to each other Revolving Lender, and each other Revolving Lender
shall be deemed irrevocably and unconditionally to have purchased and received
from the Issuer without recourse or warranty, an undivided interest and
participation, to the extent of such other Lender's Revolving Percentage, in
such Letter of Credit and the Company's reimbursement obligations with respect
thereto. For the purposes of this Agreement, the unparticipated portion of each
Letter of Credit shall be deemed to be the Issuer's "participation" therein. The
Administrative Agent hereby agrees, upon request of any Lender, to deliver to
such Lender a list of all outstanding Letters of Credit, together with such
information related thereto as such Lender may reasonably request.


                                      -21-

          2.3.3 Reimbursement Obligations. The Company unconditionally and
irrevocably agrees to reimburse the Issuer for each payment or disbursement made
by the Issuer under any Letter of Credit honoring any demand for payment made by
the beneficiary thereunder, in each case on the date that such payment or
disbursement is made and in the currency of such payment or disbursement. Any
amount not reimbursed on the date of such payment or disbursement shall bear
interest from and including the date of such payment or disbursement to but not
including the date that the Issuer is reimbursed by the Company therefor,
payable on demand, at a rate per annum equal to (x) in the case of any amount
denominated in Dollars, the Base Rate from time to time in effect plus the
Applicable Base Rate Margin plus the Applicable Eurocurrency Margin plus,
beginning on the first Business Day after demand by the Issuer, 2%, or (y) in
the case of any amount denominated in any other currency, at the Overnight Rate
from time to time in effect plus the Applicable Eurocurrency Margin plus,
beginning on the first Business Day after demand by the Issuer, 2%. The Issuer
shall notify the Company whenever any demand for payment is made under any
Letter of Credit by the beneficiary thereunder; provided that the failure of the
Issuer to so notify the Company shall not affect the rights of the Issuer or the
Lenders in any manner whatsoever.

          2.3.4 Limitation on the Issuer's Obligations. In determining whether
to pay under any Letter of Credit, the Issuer shall not have any obligation to
the Company or any Lender other than to confirm that all documents required to
be delivered under such Letter of Credit appear to have been delivered and
appear to comply on their face with the requirements of such Letter of Credit.
Any action taken or omitted to be taken by the Issuer under or in connection
with any Letter of Credit, if taken or omitted in the absence of gross
negligence and willful misconduct, shall not impose upon the Issuer any
liability to the Company or any Lender and shall not reduce or impair the
Company's reimbursement obligations set forth in Section 2.3.3 or the
obligations of the Revolving Lenders pursuant to Section 2.3.5.

          2.3.5 Funding by Revolving Lenders to the Issuer. If the Issuer makes
any payment or disbursement under any Letter of Credit and the Company has not
reimbursed the Issuer in full for such payment or disbursement by 12:00 noon,
Chicago time, on the date of such payment or disbursement, or if any
reimbursement received by the Issuer from the Company is or must be returned or
rescinded upon or during any bankruptcy or reorganization of the Company or
otherwise, each other Revolving Lender shall be obligated to pay to the Issuer,
in full or partial payment of the purchase price of its participation in such
Letter of Credit, its pro rata share (according to its Revolving Percentage) of
such payment or disbursement (but no such payment shall diminish the obligations
of the Company under Section 2.3.3), and the Administrative Agent shall promptly
notify each other Revolving Lender thereof. Each other Revolving Lender
irrevocably and unconditionally agrees, severally and for itself alone, to so
pay to the Administrative Agent in immediately available funds for the Issuer's
account the amount of such other Revolving Lender's Revolving Percentage of such
payment or disbursement.

         If and to the extent any Revolving Lender shall not have made the
amount referred to above available to the Administrative Agent by 2:00 p.m.,
Chicago time, on the Business Day on which such Revolving Lender receives notice
from the Administrative Agent of such payment or disbursement, such Revolving
Lender agrees to pay interest on such amount to the Administrative Agent for the
Issuer's account forthwith on demand for each day from and including the date
such amount was to have been delivered to the Administrative Agent to but


                                      -22-

excluding the date such amount is paid, at a rate per annum equal to (a) in the
case of any amount denominated in Dollars, (i) for the first three days after
demand, the Federal Funds Rate from time to time in effect and (ii) thereafter,
the Base Rate from time to time in effect and (b) in the case of any amount
denominated in any other currency, the Overnight Rate from time to time in
effect plus, beginning on the third day after demand, 2%. Any Revolving Lender's
failure to make available to the Administrative Agent its Revolving Percentage
of any such payment or disbursement shall not relieve any other Revolving Lender
of its obligation hereunder to make available to the Administrative Agent such
other Revolving Lender's Revolving Percentage of such payment, but no Revolving
Lender shall be responsible for the failure of any other Revolving Lender to
make available to the Administrative Agent such other Revolving Lender's
Revolving Percentage of any such payment or disbursement.

          2.4  Swing Line Loans.

          2.4.1 Swing Line Loans. Subject to the terms and conditions of this
Agreement, the Swing Line Lender may from time to time, in its discretion, make
loans to the Company (collectively "Swing Line Loans" and individually each a
"Swing Line Loan") in accordance with this Section 2.4 in an aggregate principal
amount not at any time exceeding $20,000,000; provided that the Aggregate
Revolving Outstandings shall not at any time exceed the Aggregate Revolving
Commitment Amount. Amounts borrowed under this Section 2.4 may be borrowed,
repaid and (subject to the agreement of the Swing Line Lender) reborrowed until
the Revolving Termination Date.

          2.4.2 Swing Line Loan Procedures. The Company shall give written or
telephonic notice to the Administrative Agent (which shall promptly inform the
Swing Line Lender) of each proposed Swing Line Loan not later than 12:00 noon,
Chicago time, on the proposed date of such Swing Line Loan. Each such notice
shall be effective upon receipt by the Administrative Agent and shall specify
the date and amount of such Swing Line Loan, which shall be $500,000 or a higher
integral multiple of $100,000. So long as the Swing Line Lender has not received
written notice that the conditions precedent set forth in Section 11 with
respect to the making of such Swing Line Loan have not been satisfied, the Swing
Line Lender may make the requested Swing Line Loan. If the Swing Line Lender
agrees to make the requested Swing Line Loan, the Swing Line Lender shall pay
over the requested amount to the Company on the requested borrowing date.
Concurrently with the making of any Swing Line Loan, the Swing Line Lender shall
be deemed to have sold and transferred, and each other Revolving Lender shall be
deemed to have purchased and received from the Swing Line Lender, an undivided
interest and participation to the extent of such Revolving Lender's Revolving
Percentage in such Swing Line Loan (but such participation shall remain unfunded
until required to be funded pursuant to Section 2.4.3).

          2.4.3 Refunding of, or Funding of Participations in, Swing Line Loans.
The Swing Line Lender may at any time, in its sole discretion, on behalf of the
Company (which hereby irrevocably authorizes the Swing Line Lender to act on its
behalf for such purpose) deliver a notice to the Administrative Agent requesting
that each Revolving Lender (including the Swing Line Lender in its individual
capacity) make a Revolving Loan (which shall be a Base Rate Loan) in such
Revolving Lender's Revolving Percentage of the aggregate amount of Swing Line
Loans outstanding on such date for the purpose of repaying all Swing Line Loans
(and, upon receipt of the proceeds of such Loans, the Administrative Agent shall
apply such proceeds to



                                      -23-

repay Swing Line Loans); provided that if the conditions precedent to a
borrowing of Revolving Loans are not then satisfied or for any other reason the
Revolving Lenders may not then make Revolving Loans, then instead of making
Revolving Loans each Revolving Lender (other than the Swing Line Lender) shall
become immediately obligated to fund its participation in all outstanding Swing
Line Loans and shall pay to the Administrative Agent for the account of the
Swing Line Lender an amount equal to such Revolving Lender's Revolving
Percentage of such Swing Line Loans. If and to the extent any Revolving Lender
shall not have made such amount available to the Administrative Agent by 2:00
p.m., Chicago time, on the Business Day on which such Revolving Lender receives
notice from the Administrative Agent of its obligation to fund its participation
in Swing Line Loans, such Revolving Lender agrees to pay interest on such amount
to the Administrative Agent for the Swing Line Lender's account forthwith on
demand for each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Base Rate from time to time in effect.
Any Revolving Lender's failure to make available to the Administrative Agent its
Revolving Percentage of the amount of all outstanding Swing Line Loans shall not
relieve any other Revolving Lender of its obligation hereunder to make available
to the Administrative Agent such other Revolving Lender's Revolving Percentage
of such amount, but no Lender shall be responsible for the failure of any other
Revolving Lender to make available to the Administrative Agent such other
Revolving Lender's Revolving Percentage of any such amount. The Swing Line
Lender shall promptly notify the Company of any notice given to the
Administrative Agent pursuant to the first sentence of this Section 2.4.3, but
any failure to so notify the Company shall not affect the effectiveness of such
notice or impose any liability on the Swing Line Lender or any other Person.

          2.4.4 Repayment of Participations. Upon (and only upon) receipt by the
Administrative Agent for the account of the Swing Line Lender of immediately
available funds from or on behalf of the Company (a) in reimbursement of any
Swing Line Loan with respect to which a Revolving Lender has paid the
Administrative Agent for the account of the Swing Line Lender the amount of such
Revolving Lender's participation therein or (b) in payment of any interest on a
Swing Line Loan (to the extent attributable to the period on or after the date
such Revolving Lender funded its participation therein), the Administrative
Agent will pay to such Revolving Lender its pro rata share (according to its
Revolving Percentage) thereof (and the Swing Line Lender shall receive the
amount otherwise payable to any Revolving Lender which did not so pay the
Administrative Agent the amount of such Revolving Lender's participation in such
Swing Line Loan).

          2.5 Participation Obligations Unconditional. (a) Each Revolving
Lender's obligation to make available to the Administrative Agent for the
account of the Swing Line Lender the amount of its participation interest in any
Swing Line Loan as provided in Section 2.4.3 shall be absolute and unconditional
and shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Lender may
have against the Swing Line Lender or any other Person, (ii) the occurrence or
continuance of an Event of Default or Unmatured Event of Default, (iii) any
adverse change in the condition (financial or otherwise) of the Company or any
Subsidiary, (iv) any termination of the Revolving Commitments or (v) any other
circumstance, happening or event whatsoever.


                                      -24-

          (b) Notwithstanding the provisions of clause (a) above, no Revolving
Lender shall be required to purchase a participation interest in any Swing Line
Loan if, prior to the making by the Swing Line Lender of such Swing Line Loan,
the Swing Line Lender received written notice from such Revolving Lender
specifying that one or more of the conditions precedent to the making of such
Swing Line Loan were not satisfied and, in fact, such conditions precedent were
not satisfied at the time of the making of such Swing Line Loan.

          2.6 Warranty. Each notice of borrowing pursuant to Section 2.2, each
request for a Swing Line Loan pursuant to Section 2.4.2 and the delivery of each
Letter of Credit Application pursuant to Section 2.3 shall automatically
constitute a warranty by the Company to the Administrative Agent and each
Revolving Lender to the effect that on the date of the requested borrowing or
Swing Line Loan or the issuance of the requested Letter of Credit, as the case
may be, (a) the warranties of the Company contained in Section 9 shall be true
and correct in all material respects as of such requested date as though made on
the date thereof (except to the extent that any warranty relates to an earlier
date, in which case such warranty shall be true and correct as of such earlier
date) and (b) no Event of Default or Unmatured Event of Default shall have then
occurred and be continuing or will result therefrom.

          2.7 Conditions. Notwithstanding any other provision of this Agreement,
(a) no Lender shall be obligated to make any Loan, (b) no Lender shall be
obligated to convert into, or permit the continuation at the end of the
applicable Interest Period of, any Eurodollar Loan and (c) the Issuer shall not
be obligated to issue any Letter of Credit if, in any such case, an Event of
Default or Unmatured Event of Default exists or would result therefrom.

          2.8 Commitments Several. The failure of any Lender to make a requested
Revolving Loan or Term Loan on any date shall not relieve any other Lender of
its obligation (if any) to make a Revolving Loan or Term Loan on such date, but
no Lender shall be responsible for the failure of any other Lender to make any
Revolving Loan or Term Loan to be made by such other Lender.

          SECTION 3 LOAN ACCOUNTS AND NOTES.

          3.1 Loan Account. The Loans made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be rebuttable presumptive evidence of
the amount of the Loans made by the Lenders to the Company, and the interest and
payments thereon. Any failure so to record or any error in so recording shall
not, however, limit or otherwise affect the obligation of the Company hereunder
to pay all amounts owing with respect to each Loan.

          3.2 Notes. Upon the request of any Lender made through the
Administrative Agent (and, in the case of Eurocurrency Loans, so long as the
issuance of such Note shall not result in the imposition of any stamp,
withholding or other tax), the Loans made by such Lender to the Company may be
evidenced by a promissory note (individually each a "Note" and collectively for
all Lenders the "Notes") substantially in the form of Exhibit A instead of loan
accounts. Each such Lender may record on the schedules annexed to the applicable
Note the date and amount of each applicable Loan made by it and the amount of
each payment of principal made


                                      -25-

by the Company with respect thereto, and such Lender's record shall be
conclusive absent demonstrable error; provided that the failure of a Lender to
make, or an error in making, a notation on any Note with respect to any Loan
shall not limit or otherwise affect the obligation of the Company to repay each
Loan together with interest thereon.

          SECTION 4 INTEREST.

          4.1 Interest Rates. (a) The Company promises to pay interest on the
unpaid principal amount of each Revolving Loan and Term Loan, for the period
commencing on the date of such Loan until such Loan is paid in full, (i) at all
times such Loan is a Base Rate Loan, at a rate per annum equal to the Base Rate
from time to time in effect plus the Applicable Base Rate Margin; and (ii) at
all times such Revolving Loan is a Eurocurrency Loan, at a rate per annum equal
to the sum of the Eurocurrency Rate (Reserve Adjusted) applicable to each
Interest Period for such Loan plus the Applicable Eurocurrency Margin from time
to time in effect.

          (b) The Company promises to pay interest on the unpaid principal
amount of each Swing Line Loan, for the period commencing on the date of such
Swing Line Loan until such Swing Line Loan is paid in full, at a rate per annum
equal to the Base Rate from time to time in effect plus the Applicable Base Rate
Margin from time to time in effect.

          (c) Notwithstanding any other provision of this Agreement, at the
request of the Required Lenders at any time an Event of Default exists, the
interest rate applicable to each Loan shall be increased by 2% for so long as
such Event of Default continues or, notwithstanding Section 14.1, until the
Required Lenders otherwise notify the Administrative Agent in writing.

          4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan
and Swing Line Loan shall be payable on the last day of each calendar quarter
and at maturity. Accrued interest on each Eurocurrency Loan shall be payable on
the last day of each Interest Period relating to such Revolving Loan (and, in
the case of each Eurocurrency Loan with an Interest Period in excess of three
months, on each three-month anniversary of the first day of such Interest
Period) and at maturity. After maturity, accrued interest on all Loans shall be
payable on demand.

          4.3 Setting and Notice of Certain Rates. The applicable Eurocurrency
Rate for each Interest Period shall be determined by the Administrative Agent in
accordance with the terms of this Agreement, and notice thereof shall be given
by the Administrative Agent promptly to the Company and each Lender. Each
determination of the applicable Eurocurrency Rate by the Administrative Agent
shall be conclusive and binding upon the parties hereto, in the absence of
demonstrable error. The Administrative Agent shall, upon written request of the
Company or any Lender, deliver to such Person a statement showing the
computations used by the Administrative Agent in determining any applicable
Eurocurrency Rate.

          4.4 Computation of Interest. Interest on any Loan bearing interest
based upon Bank of America's prime rate or denominated in British Pounds
Sterling shall be computed for the actual number of days elapsed on the basis of
a year of 365 or 366 days, as applicable. All other interest shall be computed
for the actual number of days elapsed on the basis of a year of 360 days.


                                      -26-

          SECTION 5 FEES.

          5.1 Non-Use Fees. (a) The Company agrees to pay to the Administrative
Agent for the account of each Revolving Lender a non-use fee for the period from
the Signing Date to the Revolving Termination Date at a rate per annum equal to
the Non-Use Fee Rate on the amount equal to (i) the Revolving Commitment of such
Revolving Lender minus (ii) the sum of the Dollar Equivalent principal amount of
the outstanding Revolving Loans of such Revolving Lender plus such Revolving
Lender's Revolving Percentage of the Stated Amount of all outstanding Letters of
Credit.

          (b) Non-use fees shall be payable in arrears on the last day of each
calendar quarter and on the Revolving Termination Date for any period then
ending for which such non-use fees shall not have been theretofore paid. Non-use
fees shall be computed for the actual number of days elapsed on the basis of a
year of 360 days. Solely for the purposes of calculating non-use fees, Swing
Line Loans shall not constitute usage of the Aggregate Revolving Commitment
Amount.

          5.2  Letter of Credit Fees.

          (a) The Company agrees to pay to the Administrative Agent for the
account of the Revolving Lenders pro rata according to their respective
Revolving Percentages a letter of credit fee for each Letter of Credit at a rate
per annum equal to the applicable LC Fee Rate (computed for the actual number of
days elapsed on the basis of a year of 360 days) multiplied by the Dollar
Equivalent amount available to be drawn under such Letter of Credit, payable in
arrears on the last day of each calendar quarter and on the Revolving
Termination Date (and, with respect to any Letter of Credit which remains
outstanding after the Revolving Termination Date, thereafter on demand) for the
period from the date of the issuance of such Letter of Credit to the date such
payment is due or, if earlier, the date on which such Letter of Credit expired
or was terminated.

          (b) In addition, with respect to each Letter of Credit, the Company
agrees to pay to the Issuer (i) such fees and expenses as the Issuer customarily
requires in connection with the issuance, negotiation, processing and/or
administration of letters of credit in similar situations and (ii) a fronting
fee in an amount separately agreed to by the Company and the Issuer.

          5.3 Administrative Agent's and Arranger's Fees. The Company agrees to
pay to the Administrative Agent and the Arranger such fees at such times and in
such amounts as are mutually agreed upon by the Company and the Administrative
Agent and the Arranger, respectively.

          SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENTS;
PREPAYMENTS.

          6.1 Reduction or Termination of the Revolving Commitments.

          6.1.1 Scheduled Reductions of the Aggregate Revolving Commitment
Amount. The Aggregate Revolving Commitment Amount shall be reduced on each of
the following dates (each a "Commitment Reduction Date") by the amount set forth
opposite such Commitment Reduction Date:


                                      -27-

         Commitment Reduction Date                     Amount of Reduction
         First day of Fiscal Year 2003                     $25,000,000
         First day of Fiscal Year 2004                     $25,000,000
         First day of Fiscal Year 2005                     $30,000,000
         First day of Fiscal Year 2006                     $30,000,000.

          6.1.2 Mandatory Reductions of the Aggregate Revolving Commitment
Amount. Concurrently with the receipt by the Company or any Subsidiary of any
Applicable Revolving Proceeds, the Aggregate Revolving Commitment Amount shall
be reduced by an amount equal to the excess of all Applicable Revolving Proceeds
received since the First Amendment Effective Date over all reductions of the
Aggregate Revolving Commitment Amount made pursuant to this Section 6.1.2 since
the First Amendment Effective Date (rounded down, if necessary, to an integral
multiple of $500,000). No reduction of the Aggregate Revolving Commitment Amount
pursuant to this Section 6.1.2 shall reduce the amount of any reduction of the
Aggregate Revolving Commitment Amount scheduled to be made on any Commitment
Reduction Date pursuant to Section 6.1.1.

          6.1.3 Voluntary Reduction of Commitments. The Company may from time to
time on at least five Business Days' prior written notice received by the
Administrative Agent (which shall promptly advise each Lender thereof)
permanently reduce the Aggregate Revolving Commitment Amount to an amount not
less than the Aggregate Revolving Outstandings; provided that any such reduction
shall be in the amount of $5,000,000 or an integral multiple thereof. The
Company may at any time on like notice terminate the Revolving Commitments upon
payment in full of all Loans and all other obligations of the Company hereunder
and the cash collateralization in full, pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and the Issuer, of
all obligations arising with respect to the Letters of Credit.

          6.1.4 All Reductions Pro Rata. All reductions of the Revolving
Commitments shall be pro rata among the Lenders according to their respective
Revolving Percentages.

          6.2 Prepayments.

          6.2.1 Mandatory Prepayments of Revolving Loans Resulting from
Commitment Reductions. On each date on which the Aggregate Revolving Commitment
Amount is reduced pursuant to Section 6.1.1 or 6.1.2, the Company shall prepay
Revolving Loans in the amount necessary (if any) so that the Aggregate Revolving
Outstandings will not exceed the Aggregate Revolving Commitment Amount as
reduced on such date.

          6.2.2 Mandatory Prepayments of Revolving Loans Resulting from Currency
Fluctuations. If on any Computation Date the Administrative Agent determines
that the Aggregate Revolving Outstandings exceed the Aggregate Revolving
Commitment Amount due to a change in applicable rates of exchange between
Dollars and any applicable currency, then (i) the Administrative Agent shall
promptly notify the Company and (ii) the Company shall promptly (subject to the
notice requirements of Section 6.2.5) prepay Revolving Loans in an


                                      -28-

amount so that the Aggregate Revolving Outstandings are equal to or less than
the Aggregate Revolving Commitment Amount; provided that no prepayment shall be
required under this clause (ii) on any day which is a Computation Date solely
because it is the last Business Day of a month unless the Aggregate Revolving
Outstandings exceed the Aggregate Commitment Amount by a Dollar Equivalent
amount of $500,000 or more.

          6.2.3 Mandatory Prepayments of the Term Loans. Concurrently with the
receipt by the Company or any Subsidiary of any Applicable Term Proceeds, the
Company shall prepay Term Loans by an amount equal to the excess of all such
Applicable Term Proceeds received since the First Amendment Effective Date over
all prepayments of the Term Loans made pursuant to this Section 6.2.3 since the
First Amendment Effective Date (rounded down, if necessary, to an integral
multiple of $500,000).

          6.2.4 Voluntary Prepayments. Subject to Section 6.2.5, the Company may
from time to time prepay Loans in whole or in part, without premium or penalty.

          6.2.5 All Prepayments. The Company shall give the Administrative Agent
(which shall promptly advise each Lender or, in the case of prepayment of Swing
Line Loans, the Swing Line Lender) notice of each prepayment not later than (a)
10:00 a.m., Chicago time, on the date of a prepayment of Base Rate Loans, (b)
12:00 noon, Chicago time, on the date of a prepayment of a Swing Line Loan and
(c) 3:00 p.m., Chicago time, on the third Business Day preceding the day of a
prepayment of Eurocurrency Loans, in each case specifying the Loans to be
prepaid and the day (which shall be a Business Day) and amount of such
prepayment. Each partial prepayment of Revolving Loans pursuant to Section 6.2.4
shall be in a Dollar Equivalent principal amount of at least $1,000,000 and an
integral multiple of 100,000 units of the applicable currency. Each partial
prepayment of Term Loans pursuant to Section 6.2.4 shall be in a principal
amount of $1,000,000 or a higher integral multiple of $100,000. Each partial
prepayment of Swing Line Loans shall be in a principal amount of $500,000 or a
higher integral multiple of $100,000. After giving effect to any partial
prepayment, the aggregate principal amount of each Group of Eurocurrency Loans
shall be in a Dollar Equivalent principal amount of at least $1,000,000 and an
integral multiple of 100,000 units of the applicable currency. Any prepayment of
a Eurocurrency Loan shall include accrued interest to the date of prepayment on
the principal amount being repaid and, if made on a day other than the last day
of an Interest Period therefor, shall be subject to Section 8.4.

          6.2.6 Application of Prepayments. All prepayments of Revolving Loans
shall be applied pro rata to the Revolving Loans of the Revolving Lenders in
accordance with their Revolving Percentages; and all prepayments of Term Loans
shall be applied pro rata to the Term Loans of the Term Lenders in accordance
with their Term Percentages.

          6.3 Repayment of Loans. The Term Loans shall be repaid in full on
October 2, 2006 and all Revolving Loans and Swing Line Loans shall be repaid in
full on the Revolving Termination Date.

          SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.


                                      -29-

          7.1 Making of Payments. All payments of principal of or interest on
the Notes, and of all non-use fees and Letter of Credit fees, shall be made by
the Company to the Administrative Agent in immediately available funds and in
the applicable currency at the Agent's Payment Office not later than 12:00 noon,
Chicago time, on the date due, and funds received after that hour shall be
deemed to have been received by the Administrative Agent on the next following
Business Day. The Company hereby authorizes Bank of America to charge any demand
deposit account maintained with Bank of America for the amount of any such
payment to be made by the Company on the due date therefor and to pay such
amount to the Administrative Agent, but Bank of America's failure to so charge
any such account shall in no way affect the obligation of the Company to make
any such payment. The Administrative Agent shall promptly remit to each Lender
its share (if any) of all such payments received in collected funds by the
Administrative Agent for the account of such Lender.

         All payments under Sections 8.1 and 8.4 shall be made by the Company to
the Administrative Agent at the Agent's Payment Office for the account of the
Lender entitled thereto.

          7.2 Application of Certain Payments. Each payment of principal shall
be applied to such Loans as the Company shall direct by notice to be received by
the Administrative Agent on or before the date of such payment or, in the
absence of such notice, as the Administrative Agent shall determine in its
discretion. Concurrently with each remittance to any Lender of its share of any
such payment, the Administrative Agent shall advise such Lender as to the
application of such payment.

          7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of non-use fees or Letter of Credit fees, falls
due on a day which is not a Business Day, then such due date shall be extended
to the next following Business Day (unless, in the case of a Eurocurrency Loan,
such next following Business Day is the first Business Day of a calendar month,
in which case such due date shall be the immediately preceding Business Day) and
additional interest (in the case of principal) or fees, as the case may be,
shall accrue and be payable for the period of any such extension.

          7.4 Setoff. The Company agrees that the Administrative Agent and each
Lender have all rights of set-off and bankers' lien provided by applicable law,
and in addition thereto, the Company agrees that at any time any payment or
other amount owing by the Company under this Agreement is then due to the
Administrative Agent or any Lender, the Administrative Agent and each Lender may
apply to the payment of such payment or other amount any and all balances,
credits, deposits, accounts or moneys of the Company then or thereafter with the
Administrative Agent or such Lender.

          7.5 Proration of Payments. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset or
otherwise) on account of principal of or interest on any Loan (or on account of
its participation in any Credit Extension) in excess of its pro rata share of
payments and other recoveries obtained by all Lenders on account of principal of
and interest on Loans (or such participations) then held by them (other than in
respect of an Affected Loan or any payment to the Swing Line Lender in respect
of a Swing Line Loan, or as a result of replacement of a Lender pursuant to
Section 8.7), such Lender shall


                                      -30-

purchase from the other Lenders such participation in the Loans (or
sub-participations in Credit Extensions) held by them as shall be necessary to
cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.

          7.6 Taxes with respect to Payments by the Company. (a) All payments
by the Company hereunder to the Administrative Agent or any Lender shall be made
free and clear of and without deduction for any present or future Taxes. If any
deduction or withholding from any payment to be made by the Company hereunder is
required in respect of any Taxes in respect of payments to the Administrative
Agent or any Lender, then the Company will:

               (i) pay directly to the relevant authority the full amount
          required to be so withheld or deducted;

               (ii) promptly forward to the Administrative Agent an official
          receipt or other documentation satisfactory to the Administrative
          Agent evidencing such payment to such authority; and

               (iii) except to the extent that such deduction or withholding
          results from the breach by any Lender of its agreement contained in
          clause (b) below, or would not be required if such Person's
          representation and warranty contained in clause (c) below were true,
          pay such additional amounts as may be necessary in order that the net
          amount received by such Lender after such deduction or withholding
          (including any required deduction or withholding on such additional
          amounts) shall equal the amount such Person would have received had no
          such deduction or withholding been made.

Moreover, if any Taxes are directly asserted against the Administrative Agent or
any Lender with respect to any payment received by the Administrative Agent or
such Lender from the Company hereunder, the Administrative Agent or such Lender
may pay such Taxes and the Company will, within 10 days after demand by the
Administrative Agent or such Lender (which demand shall be accompanied by a
statement setting forth in reasonable detail the basis for and a calculation of
the amount of such demand, a copy of which shall be furnished to the
Administrative Agent), pay such additional amount (including any penalty,
interest and expense) as is necessary in order that the net amount received by
such Person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such Person would have received had
such Taxes not been asserted (except to the extent that such Taxes (including
any penalty, interest and expense and any Taxes on any such additional amount)
result from such Person's gross negligence or willful misconduct or from the
breach by such Person of its agreement contained in clause (b) below or would
not be asserted if such Person's representation and warranty contained in clause
(c) below were true). For purposes of this Section 7.6, a distribution hereunder
by the Administrative Agent or any Lender to or for the account of any Lender of
any amount received from the Company shall be deemed a payment by the Company.

          (b) Each Lender agrees (to the extent it is permitted to do so under
applicable law) to execute and deliver to the Administrative Agent and the
Company such documents as may be


                                      -31-

necessary or appropriate from time to time in order to properly claim any
available exemption (whether partial or complete) from withholding and deduction
of any Taxes which are levied or imposed by a Governmental Authority in respect
of payments by the Company hereunder to (or for the benefit of) such Lender.

          (c) Each Lender represents and warrants to the Company and the
Administrative Agent that, as of the date of this Agreement (or in the case of
any Assignee which is a Lender, as of the effective date of the assignment to
such Assignee, or in the case of any transfer of any rights under a Loan from a
Lender to an Affiliate of such Lender or from one office to another of a Lender,
as of the effective date of such transfer), it is entitled to receive payments
hereunder from the Company without deduction or withholding for or on account of
any Taxes which are levied or imposed by any Governmental Authority.

          (d) Notwithstanding the foregoing provisions of this Section 7.6, if
any Lender fails to notify the Company of any event or circumstance which will
entitle such Lender to compensation pursuant to this Section 7.6 within 120 days
after such Lender obtains knowledge of such event or circumstance, then such
Lender shall not be entitled to compensation from the Company for any amount
arising prior to the date which is 120 days before the date on which such Lender
notifies the Company of such event or circumstance.

          SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EUROCURRENCY LOANS.

          8.1 Increased Costs. (a) If, after the Effective Date, the adoption
of any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration of any
applicable law, rule or regulation by any Governmental Authority charged with
the interpretation or administration thereof, or compliance by any Lender (or
any Eurocurrency Office of such Lender) with any request or directive (whether
or not having the force of law) of any such Governmental Authority:

               (i) shall subject any Lender (or any Eurocurrency Office of such
          Lender) to any tax, duty or other charge with respect to its
          Eurocurrency Loans, its Note or its obligation to make Eurocurrency
          Loans, or shall change the basis of taxation of payments to any Lender
          of the principal of or interest on its Eurocurrency Loans or any other
          amount due under this Agreement in respect of its Eurocurrency Loans
          or its obligation to make Eurocurrency Loans (except for (x) franchise
          taxes and taxes imposed on or measured by the gross or net income or
          receipts of such Lender or its applicable Eurocurrency Office, (y) any
          Taxes referred to in Section 7.6 and (z) any tax, duty or other charge
          to the extent resulting from such Lender's gross negligence or willful
          misconduct); or

               (ii) shall impose, modify or deem applicable any reserve
          (including any reserve imposed by the FRB, but excluding any reserve
          included in the determination of interest rates pursuant to Section
          4), special deposit or similar requirement against assets of, deposits
          with or for the account of, or credit extended by any Lender (or any
          Eurocurrency Office of such Lender); or


                                      -32-

               (iii) shall impose on any Lender (or its applicable Eurocurrency
          Office) any other condition affecting its Eurocurrency Loans, its Note
          or its obligation to make Eurocurrency Loans;

and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D of the FRB, to impose a cost on) such Lender (or any
Eurocurrency Office of such Lender) of making or maintaining any Eurocurrency
Loan, or to reduce the amount of any sum received or receivable by such Lender
(or its applicable Eurocurrency Office) under this Agreement or under its Note
with respect thereto, then within 10 days after demand by such Lender (which
demand shall be accompanied by a statement setting forth in reasonable detail
the basis for and a calculation of the amount of such demand, a copy of which
shall be furnished to the Administrative Agent), the Company shall pay directly
to such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or such reduction.

          (b) If any Lender shall reasonably determine that any change in, or
the adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration of any
such law, rule or regulation by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender (or any
Eurocurrency Office of such Lender) or any Person controlling such Lender with
any request or directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, has or would have the effect
of reducing the rate of return on such Lender's or such controlling Person's
capital as a consequence of such Lender's obligations hereunder (including such
Lender's Commitment) to a level below that which such Lender or such controlling
Person could have achieved but for such change, adoption, phase-in or compliance
(taking into consideration such Lender's or such controlling Person's policies
with respect to capital adequacy) by an amount deemed by such Lender or such
controlling Person to be material, then from time to time, within 10 days after
demand by such Lender (which demand shall be accompanied by a statement setting
forth in reasonable detail the basis for and a calculation of the amount of such
demand, a copy of which shall be furnished to the Administrative Agent), the
Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender or such controlling Person for such reduction.

          (c) Notwithstanding the foregoing provisions of this Section 8.1, if
any Lender fails to notify the Company of any event or circumstance which will
entitle such Lender to compensation pursuant to this Section 8.1 within 120 days
after such Lender obtains knowledge of such event or circumstance, then such
Lender shall not be entitled to compensation from the Company for any amount
arising prior to the date which is 120 days before the date on which such Lender
notifies the Company of such event or circumstance.

          8.2 Basis for Determining Eurocurrency Interest Rate Inadequate or
Unfair. If with respect to any Interest Period:

          (a) the Administrative Agent reasonably determines (which
determination shall be binding and conclusive on the Company) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the applicable Eurocurrency Rate; or


                                      -33-

          (b) Lenders having an aggregate Revolving Percentage or Term
Percentage, as applicable, of 40% or more advise the Administrative Agent that
the Eurocurrency Rate (Reserve Adjusted) as determined by the Administrative
Agent will not adequately and fairly reflect the cost to such Lenders of
maintaining or funding the applicable Loans for such Interest Period (taking
into account any amount to which such Lenders may be entitled under Section
8.1), or that the making or funding of Eurocurrency Loans has become
impracticable as a result of an event occurring after the date of this Agreement
which in the opinion of such Lenders materially affects such Loans,

then the Administrative Agent shall promptly notify the other parties thereof
and, so long as such circumstances shall continue, (i) no Revolving Lender or
Term Lender, as applicable, shall be under any obligation to make, continue or
convert into Eurocurrency Loans in the currency so affected, (ii) if the Loans
so affected are Eurodollar Loans, on the last day of the current Interest Period
therefor, such Loans shall, unless then repaid in full, automatically convert to
Base Rate Loans, and (iii) if the Loans so affected are Eurocurrency Loans
denominated in a currency other than Dollars, on the last day of the current
Interest Period for each Eurocurrency Loan in such currency, such Loans shall be
repaid in full.

          8.3 Changes in Law Rendering Eurocurrency Loans Unlawful. If any
change in (including the adoption of any new) applicable laws or regulations, or
any change in the interpretation of applicable laws or regulations by any
Governmental Authority or other regulatory body charged with the administration
thereof, should make it (or in the good faith judgment of any Lender cause a
substantial question as to whether it is) unlawful for any Lender to make,
maintain or fund Eurocurrency Loans in any currency, then such Lender shall
promptly notify each of the other parties hereto and, so long as such
circumstances shall continue, (a) in the case of Eurodollar Loans, (i) such
Lender shall have no obligation to make, continue or convert into Eurodollar
Loans (but shall make Base Rate Loans concurrently with the making or
continuation of or conversion into Eurodollar Loans by the applicable Lenders
which are not so affected, in each case in an amount equal to such Lender's
Applicable Percentage of all Eurodollar Loans which would be made, continued or
converted into at such time in the absence of such circumstances), and (ii) on
the last day of the current Interest Period for each Eurodollar Loan of such
Lender (or, in any event, if such Lender so requests, on such earlier date as
may be required by the relevant law, regulation or interpretation), such
Eurodollar Loan shall, unless then repaid in full, automatically convert to a
Base Rate Loan; and (b) in the case of Eurocurrency Loans denominated in a
currency other than Dollars, (i) such Lender shall have no obligation to make or
continue such Eurocurrency Loans in the currency so affected (but, if permitted
by applicable law, shall make Eurodollar Loans concurrently with the making or
continuation of Eurocurrency Loans in the applicable currency affected by the
Lenders which are not so affected, in each case in an amount equal to such
Lender's Applicable Percentage of the Dollar Equivalent amount of the
Eurocurrency Loans in the currency so affected which would be made or continued
at such time in the absence of such circumstances) and (ii) on the last day of
the current Interest Period for each Eurocurrency Loan by such Lender in the
currency so affected (or, in any event, if such Lender so requests, on such
earlier date as may be required by the relevant law, regulation or
interpretation), such Eurocurrency Loan shall be repaid in full (subject to the
Company's right to borrow Eurocurrency Loans in other currencies in accordance
with, and upon satisfaction of the conditions of, this Agreement). Each Base
Rate Loan made by a Lender which, but for the circumstances described in the
foregoing sentence, would be a


                                      -34-

Eurocurrency Loan, and each Eurodollar Loan which, but for the circumstances
described in the foregoing sentence, would be a Eurocurrency Loan in another
currency (any such Base Rate Loan or Eurocurrency Loan, an "Affected Loan"),
shall, notwithstanding any other provision of this Agreement, remain outstanding
for the same period (and be continued for such Interest Periods) as the Group of
Eurocurrency Loans of which such Affected Loan would be a part absent such
circumstances.

          8.4 Funding Losses. The Company hereby agrees that, upon demand by any
Lender (which demand shall be accompanied by a statement setting forth the basis
for the calculations of the amount being claimed, a copy of which shall be
furnished to the Administrative Agent), the Company will indemnify such Lender
against any net loss or expense which such Lender may sustain or incur
(including any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any Eurocurrency Loan), as reasonably determined by such Lender, as a
result of (a) any payment or prepayment or conversion of any Eurocurrency Loan
of such Lender on a date other than the last day of an Interest Period for such
Loan (including any conversion pursuant to Section 8.3) or (b) any failure of
the Company to borrow, convert or continue any Loan on a date specified therefor
in a notice of borrowing, conversion or continuation pursuant to this Agreement.
For this purpose, all notices to the Administrative Agent pursuant to this
Agreement shall be deemed to be irrevocable.

          8.5 Right of Lenders to Fund through Other Offices. Each Lender may,
if it so elects, fulfill its commitment as to any Eurocurrency Loan by causing a
foreign branch or affiliate of such Lender to make such Loan; provided that in
such event for the purposes of this Agreement such Loan shall be deemed to have
been made by such Lender and the obligation of the Company to repay such Loan
shall nevertheless be to such Lender and shall be deemed held by it, to the
extent of such Loan, for the account of such branch or affiliate.

          8.6 Discretion of Lenders as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Lender shall be entitled to
fund and maintain its funding of all or any part of its Loans in any manner it
sees fit, it being understood, however, that for the purposes of Section 8.4 all
determinations hereunder shall be made as if such Lender had actually funded and
maintained each Eurocurrency Loan during each Interest Period for such Loan
through the purchase of deposits having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the Eurocurrency Rate for
such Interest Period.

          8.7 Mitigation of Circumstances; Replacement of Affected Lender. (a)
Each Lender shall promptly notify the Company and the Administrative Agent of
any event of which it has knowledge which will result in, and will use
reasonable commercial efforts available to it (and not, in such Lender's good
faith judgment, otherwise disadvantageous to such Lender) to mitigate or avoid,
(i) any obligation by the Company to pay any amount pursuant to Section 7.6 or
8.1 or (ii) the occurrence of any circumstances of the nature described in
Section 8.2 or 8.3 (and, if any Lender has given notice of any such event
described in clause (i) or (ii) above and thereafter such event ceases to exist,
such Lender shall promptly so notify the Company and the Administrative Agent).
Without limiting the foregoing, each Lender will designate a different
Eurocurrency Office if such designation will avoid (or reduce the cost to the
Company of) any


                                      -35-

event described in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Lender's judgment, be otherwise disadvantageous to
such Lender.

          (b) At any time any Lender is an Affected Lender, the Company may
replace such Affected Lender (and any affiliate thereof) as a party to this
Agreement with one or more other banks or financial institutions reasonably
satisfactory to the Administrative Agent, such banks or financial institutions
to have Commitments in an aggregate amount equal to the amount previously held
by the Affected Lender (provided that the amount of the Commitment held by each
such bank or financial institution shall be reasonably satisfactory to the
Administrative Agent); and upon notice from the Company, such Affected Lender
(and any affiliate thereof) shall assign pursuant to an Assignment Agreement,
and without recourse or warranty, its Commitment, its Loans, its Notes, its
participation in Letters of Credit and Swing Line Loans and all of its other
rights and obligations hereunder to such replacement banks or other financial
institutions for a purchase price equal to the sum of the principal amount of
the Loans so assigned, all accrued and unpaid interest thereon, its ratable
share of all accrued and unpaid non-use fees and Letter of Credit fees and all
other obligations owed to such Affected Lender (or any affiliate thereof)
hereunder and, concurrently therewith, the Company shall pay to such Affected
Lender any amount payable under Section 8.4 as a result of such Affected Lender
(or any affiliate thereof) receiving payment of any Eurocurrency Loan prior to
the end of an Interest Period therefor.

          8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to Section 7.6, 8.1, 8.2,
8.3 or 8.4 shall be conclusive absent demonstrable error. Lenders may use
reasonable averaging and attribution methods in determining compensation under
Sections 8.1 and 8.4, and the provisions of such Sections shall survive the
expiration or termination of the Commitments, the repayment of the Loans and all
other obligations of the Company hereunder, the expiration or termination of the
Letters of Credit and the termination of this Agreement.

          SECTION 9 WARRANTIES.

          To induce the Administrative Agent and the Lenders to enter into this
Agreement and to induce the Lenders to make Credit Extensions hereunder, the
Company warrants to the Administrative Agent and the Lenders that:

          9.1 Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
each Subsidiary is duly organized, validly existing and, to the extent such
concept is applicable, in good standing under the jurisdiction of its
organization, each of the Company and each Subsidiary is duly qualified to do
business in each jurisdiction where the nature of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect, and each of the Company and each Subsidiary has
full power and authority to own its property and conduct its business as
presently conducted by it.

          9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each other Loan Document to which it is a party,
the borrowings hereunder, the execution and delivery by each Guarantor of each
Loan Document to which it is a party and the


                                      -36-

performance by each of the Company and each Guarantor of its obligations under
each Loan Document to which it is a party are within the powers of the Company
and each Guarantor, have been duly authorized by all necessary action on the
part of the Company and each Guarantor (including any necessary shareholder
action), have received all necessary governmental approval (if any shall be
required), and do not and will not (a) violate any provision of law or any
order, decree or judgment of any court or other Governmental Authority which is
binding on the Company or any Guarantor, (b) contravene or conflict with, or
result in a breach of, any provision of the articles or certificate of
incorporation, bylaws or other organizational documents of the Company or any
Guarantor or of any agreement, indenture, instrument or other document which is
binding on the Company, any Guarantor or any other Subsidiary or (c) result
in, or require, the creation or imposition of any Lien on any property of the
Company, any Guarantor or any other Subsidiary.

          9.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which the Company is a party is, or upon the execution and
delivery thereof will be, the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
that enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in
equity or at law); and each Loan Document to which any Guarantor is a party is,
or upon the execution and delivery thereof will be, the legal, valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except that enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law).

          9.4 Financial Information. The audited consolidated financial
statements of the Company and its Subsidiaries for Fiscal Years 1999 and 2000,
the unaudited consolidated financial statements of the Company and its
Subsidiaries for the Fiscal Quarters ended December 29, 2000 and March 31, 2001
and the preliminary unaudited consolidated financial statements of the Company
and its Subsidiaries for the Fiscal Quarter ended June 29, 2001, copies of which
have been delivered to each Lender, have been prepared in accordance with GAAP
in all material respects and present fairly the consolidated financial condition
of the Company and its Subsidiaries taken as a whole as at such date and the
results of their operations for the periods then ended (subject, in the case of
unaudited statements, for the absence of footnotes and to normal year-end audit
adjustments).

          9.5 No Material Adverse Change. Since September 30, 2001, no events
have occurred which, individually or in the aggregate, have had or are
reasonably likely to have a Material Adverse Effect.

          9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental proceeding is
pending or, to the Company's knowledge, threatened against the Company or any
Subsidiary which is reasonably likely to have a Material Adverse Effect except
as set forth in Schedule 9.6. Other than any liability incident to such
litigation or proceedings, neither the Company nor any Subsidiary has any
material contingent


                                      -37-

liabilities which are not provided for or disclosed in the financial statements
referred to in Section 9.4 or listed in Schedule 9.6.

          9.7 Ownership of Properties; Liens. The Company and its Subsidiaries
own good and marketable title to, or a valid leasehold interest in, all of their
respective properties and assets, real and personal, tangible and intangible, of
any nature whatsoever (including patents, trademarks, trade names, service marks
and copyrights), free and clear of all Liens, charges and claims (including
infringement claims with respect to patents, trademarks, copyrights and the
like) except as permitted pursuant to Section 10.8.

          9.8 Subsidiaries. The Company has no Subsidiaries except those listed
in Schedule 9.8.

          9.9 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with all applicable provisions of ERISA, the Code and other Federal or
state laws. Each Plan that is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with
respect thereto and, to the knowledge of the Company, nothing has occurred which
would prevent, or cause the loss of, such qualification. Each of the Company and
each ERISA Affiliate has made all required contributions to each Plan subject to
Section 412 of the Code, and no application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code has been made
with respect to any Plan.

          (b) There are no pending or, to the knowledge of the Company,
threatened claims, actions or lawsuits, or actions by any Governmental
Authority, with respect to any Plan that could reasonably be expected to have a
Material Adverse Effect. There has been no prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan that has resulted
or could reasonably be expected to result in a Material Adverse Effect.

          (c) (i) No ERISA Event has occurred or is reasonably expected to
occur, (ii) no Pension Plan has any Unfunded Pension Liability, (iii) neither
the Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA), (iv)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such liability) under
Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, and (v)
neither the Company nor any ERISA Affiliate has engaged in a transaction that
could be subject to Sections 4069 or 4212(c) of ERISA.

          9.10 Investment Company Act. Neither the Company nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940.

          9.11 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935.


                                      -38-

          9.12 Regulation U. The Company is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying Margin Stock.

          9.13 Taxes. Each of the Company and each Subsidiary has filed all U.S.
federal tax returns and all other material tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except for any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.

          9.14 Environmental Compliance. (a) The Company and each of its
Subsidiaries are in compliance in all material respects with all applicable
Environmental Laws. There are no material past, pending or, to the best
knowledge of the Company, threatened claims under any Environmental Law against
the Company or any of its Subsidiaries or any real property at any time owned,
leased or operated by the Company or any of its Subsidiaries. There are no
facts, circumstances, conditions or occurrences with respect to any real
property at any time owned, leased or operated by the Company or any of its
Subsidiaries that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          (b) No Hazardous Materials have at any time been generated, released
     on or from, used, treated or stored on, or transported to or from any real
     property at any time owned, leased or operated by the Company or any of its
     Subsidiaries except in material compliance with Environmental Laws.

          9.15 Information. All written information heretofore or
contemporaneously herewith furnished by the Company or any Subsidiary to the
Administrative Agent or any Lender for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of the Company or any Subsidiary
to the Administrative Agent or any Lender pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date as of
which such information is dated or certified, and none of such information is or
will be incomplete by omitting to state any material fact necessary to make such
information not misleading.

          9.16 Golden Grain Acquisition. (a) If it occurs, the Golden Grain
Acquisition will comply in all material respects with all applicable legal
requirements, and all necessary governmental, regulatory, shareholder and other
consents and approvals required for the consummation of the Golden Grain
Acquisition will have been duly obtained and in full force and effect.

          (b) If it occurs, the consummation by the Company of the Golden Grain
Acquisition will not violate any statute or regulation of the United States or
any other applicable jurisdiction, or any order, judgment or decree of any court
or other Governmental Authority, or result in a breach of, or constitute a
default under, any material agreement, indenture, instrument or other document,
or any judgment, order or decree, affecting the Company or any of its
Subsidiaries (including any entity which will be a Subsidiary after giving
effect to the Golden Grain Acquisition).


                                      -39-

          SECTION 10 COVENANTS.

          Until the expiration or termination of the Commitments and thereafter
until all obligations of the Company hereunder and under the other Loan
Documents are paid in full and all Letters of Credit have been terminated, the
Company agrees that, unless at any time the Required Lenders shall otherwise
expressly consent in writing, it will:

          10.1 Reports, Certificates and Other Information. Furnish to the
Administrative Agent and each Lender:

          10.1.1 Audit Report. Promptly when available and in any event within
90 days after the close of each Fiscal Year, a copy of the annual audit report
of the Company and its Subsidiaries for such Fiscal Year, including therein
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such Fiscal Year and consolidated statements of earnings and cash flow of the
Company and its Subsidiaries for such Fiscal Year, which audit report shall be
without qualification as to going concern or scope and shall be prepared by
Ernst & Young LLP or other independent auditors of recognized standing selected
by the Company and reasonably acceptable to the Required Lenders, together with
(a) a written statement from such auditors to the effect that in making the
audit necessary for the signing of such audit report by such accountants, they
have not become aware of any Event of Default or Unmatured Event of Default that
has occurred and is continuing under Section 10.6, 10.7, 10.10, 10.11 or 10.12,
insofar as such Sections relate to accounting matters or require computations to
be made which are ordinarily made by accountants or, if they have become aware
of any such event, describing it in reasonable detail and (b) a certificate of
the chief financial officer or the chief executive officer of the Company
certifying that such financial statements fairly present the financial condition
and results of operations of the Company and its Subsidiaries as of the dates
and periods indicated.

          10.1.2 Quarterly Reports. Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last Fiscal
Quarter) of each Fiscal Year, consolidated balance sheets of the Company and its
Subsidiaries as of the end of such Fiscal Quarter and consolidated statements of
earnings and consolidated statements of cash flow for such Fiscal Quarter and
for the period beginning with the first day of such Fiscal Year and ending on
the last day of such Fiscal Quarter, together with a certificate of the chief
financial officer or the chief executive officer of the Company certifying that
such financial statements fairly present the financial condition and results of
operations of the Company and its Subsidiaries as of the dates and periods
indicated, subject to the absence of footnotes and to normal year-end audit
adjustments.

          10.1.3 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and of each set
of quarterly statements pursuant to Section 10.1.2, a duly completed certificate
in the form of Exhibit F, with appropriate insertions, dated the date of such
annual report or such quarterly statement and signed by the chief financial
officer or the chief executive officer of the Company, containing a computation
of each of the financial ratios and restrictions set forth in this Section 10
and to the effect that such officer has not become aware of any Event of Default
or Unmatured Event of Default that has


                                      -40-

occurred and is continuing or, if there is any such event, describing it and the
steps, if any, being taken to cure it.

          10.1.4 Reports to SEC and to Shareholders. Within five days of the
filing or sending thereof, a copy of any annual, periodic or special report or
registration statement (inclusive of exhibits thereto) filed with the SEC or any
securities exchange and any report, proxy statement or other communication to
the Company's shareholders generally.

          10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the same and
the steps being taken by the Company or the Subsidiary affected thereby with
respect thereto: (a) the occurrence of an Event of Default or an Unmatured
Event of Default; (b) any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to the
Administrative Agent and the Lenders which has been instituted or, to the
knowledge of the Company, is threatened against the Company or any Subsidiary or
to which any of the properties of any thereof is subject which has had or is
reasonably likely to have a Material Adverse Effect; (c) any material adverse
development which occurs in any litigation, arbitration or governmental
investigation or proceeding previously disclosed pursuant to clause (b); (d)
any ERISA Event; and (e) the occurrence of any other event or circumstance
(including any violation of any Environmental Law) and which has had or is
reasonably likely to have a Material Adverse Effect.

          10.1.6 Subsidiaries. Promptly upon the occurrence thereof, a written
report of any change in the list of its Subsidiaries.

          10.1.7 Management Reports. Promptly upon the request of the
Administrative Agent or any Lender, copies of all detailed financial and
management reports submitted to the Company by independent auditors in
connection with each annual or interim audit made by such auditors of the books
of the Company.

          10.1.8 Projections. As soon as practicable and in any event within 90
days after the commencement of each Fiscal Year, a consolidated plan and
financial forecast for such Fiscal Year, including (a) a forecasted
consolidated balance sheet and a consolidated statement of cash flow of the
Company for such Fiscal Year and (b) forecasted consolidated statements of
income and cash flows of the Company for each month of such Fiscal Year.

          10.1.9 Other Information. From time to time such other information
concerning the Company and its Subsidiaries as any Lender or the Administrative
Agent may reasonably request.

          10.2 Books, Records and Inspections. (i) Keep, and cause each
Subsidiary to keep, its books and records in accordance with sound business
practices sufficient to allow the Company to prepare its financial statements in
accordance with GAAP; (ii) permit, and cause each Subsidiary to permit, on
reasonable notice and at reasonable times and intervals (or at any time without
notice during the existence of an Event of Default), any Lender or the
Administrative Agent or any representative thereof to inspect the properties and
operations of the Company and of such Subsidiary; and (iii) permit, and cause
each Subsidiary to permit, on reasonable notice


                                      -41-

and at reasonable times and intervals (or at any time without notice during the
existence of an Event of Default), any Lender or the Administrative Agent or any
representative thereof to visit any or all of its offices, to discuss its
financial matters with its officers and its independent auditors (and the
Company hereby authorizes such independent auditors to discuss such financial
matters with any Lender or the Administrative Agent or any representative
thereof), and to examine (and, photocopy extracts from) any of its books or
other corporate records. The Company agrees to pay the fees and out-of-pocket
expenses of the Company's auditors incurred in connection with any reasonable
exercise of the rights of the Administrative Agent and the Lenders pursuant to
this Section.

          10.3 Insurance. Maintain, and cause each Subsidiary to maintain, with
reputable, financially sound insurance companies, insurance to such extent and
against such hazards and liabilities as is customarily maintained by companies
similarly situated (and, in any event, such insurance as may be required by any
law or governmental regulation or any court order or decree) and, upon request
of the Administrative Agent or any Lender, furnish to the Administrative Agent
or such Lender a certificate setting forth in reasonable detail the nature and
extent of all insurance maintained by the Company and its Subsidiaries.

          10.4 Compliance with Laws; Payment of Taxes. (a) Comply, and cause
each Subsidiary to comply, in all material respects with all material applicable
laws (including ERISA and Environmental Laws), rules, regulations, decrees,
orders, judgments, licenses and permits; and (b) pay, and cause each
Subsidiary to pay, prior to delinquency all taxes and other governmental charges
against it or any of its property; provided that the foregoing shall not require
the Company or any Subsidiary to pay any such tax or charge so long as it shall
contest the validity thereof in good faith by appropriate proceedings and shall
set aside on its books adequate reserves with respect thereto.

          10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.12) cause each Subsidiary to maintain and preserve, (a)
its existence and, to the extent applicable, good standing in the jurisdiction
of its organization and (b) its qualification and, to the extent applicable,
good standing as a foreign entity in each jurisdiction where the nature of its
business makes such qualification necessary (except in those instances in which
the failure to be qualified or in good standing would not (i) if cured,
foreclose access to the courts of such jurisdiction in respect of events
occurring prior to such cure or (ii) be reasonably likely to result in a
Material Adverse Effect).

          10.6 Financial Covenants.

          10.6.1 Minimum Fixed Charge Coverage Ratio. Not permit the Fixed
Charge Coverage Ratio for any Computation Period to be less than the applicable
ratio set forth below for such Computation Period:

      Computation Period Ending              Minimum Fixed Charge Coverage Ratio

Last day of Fiscal Year 2001 through                     1.10 to 1
     last day of Fiscal Year 2003

       During Fiscal Year 2004                            1.15 to 1


                                      -42-

       During Fiscal Year 2005                            1.20 to 1

              Thereafter                                  1.25 to 1.

          10.6.2 Maximum Leverage Ratio. Not permit the Leverage Ratio for any
Computation Period to exceed the applicable ratio set forth below for such
Computation Period:

                 Computation Period Ending                          Maximum Leverage Ratio
Last day of Fiscal Year 2001 through last day of third Fiscal               3.50 to 1
                 Quarter of Fiscal Year 2003
Last day of Fiscal Year 2003 through last day of first Fiscal               3.25 to 1
                 Quarter of Fiscal Year 2004
Last day of second Fiscal Quarter of Fiscal Year 2004                       3.00 to 1
Last day of third Fiscal Quarter of Fiscal Year 2004                        2.75 to 1
Last day of Fiscal Year 2004 through last day of third Fiscal               2.50 to 1
                 Quarter of Fiscal Year 2005
                         Thereafter                                         2.25 to 1;

provided that upon receipt by the Administrative Agent of a Covenant Change
Notice, the Maximum Leverage Ratio shall be reduced by (a) 0.50 for each
Computation Period ending on or before the last day of the first Fiscal Quarter
of 2004 and (b) 0.25 to 1 for the Computation Period ending on the last day of
the second Fiscal Quarter of 2004.

          10.6.3 Minimum Consolidated Net Worth. Not at any time permit
Consolidated Net Worth to be less than the result of (a) $225,000,000 plus
(b) 75% of Consolidated Net Income earned in each Fiscal Quarter ending after
July 1, 2001 (with no deduction for a net loss in any such Fiscal Quarter) plus
(c) 75% of the Net Cash Proceeds of any Equity Issuance after the Effective
Date minus (d) 100% of the aggregate amount of Permitted Restricted Payments
made by the Company and its Subsidiaries since the Effective Date.

          10.6.4 Minimum Consolidated EBITDA. Not permit Consolidated EBITDA for
any Computation Period to be less than (a) for any Computation Period ending
on or before the last day of Fiscal Year 2002, $70,000,000 and (b) for any
Computation Period ending thereafter, the total of (i) the greater of (x) the
amount of Consolidated EBITDA required by this Section 10.6.4 for the
Computation Period ending on the last day of the Fiscal Year most recently ended
prior to the last day of such Computation Period (the "Prior Fiscal Year") and
(y) the Specified Amount (as defined below) plus (ii) the Specified Percentage
of any increase (or minus the Specified Percentage of any decrease) to
Consolidated EBITDA for such Computation Period resulting from the inclusion or
exclusion of any pro forma amounts pursuant to the proviso to the definition of
Consolidated EBITDA for any Acquisition or disposition consummated during such
Computation Period but after the last day of the Prior Fiscal Year. For purposes
of the foregoing, (A) "Specified Amount" means (I) for any Computation Period
ending in Fiscal Year 2003, 90% of Consolidated EBITDA for Fiscal Year 2002,
(II) for any Computation Period ending in Fiscal Year 2004, 85% of Consolidated
EBITDA for Fiscal Year 2003, (III) for any Computation Period ending thereafter,
80% of Consolidated EBITDA for the Prior Fiscal Year; and (B) "Specified
Percentage" means 90% during Fiscal Year 2003, 85% during Fiscal Year 2004 and
80% during any Fiscal Year thereafter.


                                      -43-

          10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except (a) obligations
arising under the Loan Documents; (b) Debt in respect of Capital Leases or
hereafter incurred in connection with Liens permitted by Section 10.8(e);
provided that the aggregate amount of all such Debt shall not at any time exceed
a Dollar Equivalent amount of $30,000,000; (c) Debt of Subsidiaries to the
Company or to other Subsidiaries; (d) Hedging Obligations incurred by the
Company or any Subsidiary to hedge bona fide business risks (and not for
speculation); (e) Guaranty Obligations in respect of any obligation of the
Company or any Subsidiary not prohibited under this Agreement; (f) Debt to be
Repaid; provided that all Debt to be Repaid shall be repaid on or before the
Effective Date; (g) Debt of the Company which has no scheduled amortization
prior to the 91st day after the scheduled Revolving Termination Date; provided
that (i) to the extent the holders of such Debt have the benefit of the guaranty
of, or the pledge of stock of, any Subsidiary, such holders shall have entered
into intercreditor arrangements with the Administrative Agent pursuant to
documentation reasonably satisfactory to the Required Lenders and (ii) the Net
Cash Proceeds of the issuance of any such Debt shall be applied to reduce the
Aggregate Revolving Commitment Amount and/or prepay Term Loans to the extent
required herein; and (h) other Debt not at any time exceeding a Dollar
Equivalent amount of $15,000,000.

          10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or rights of
whatsoever nature (whether now owned or hereafter acquired), except (a) Liens
for taxes or other governmental charges not at the time delinquent or thereafter
payable without penalty or being contested in good faith by appropriate
proceedings and, in each case, for which it maintains adequate reserves; (b)
Liens arising in the ordinary course of business (such as (i) Liens of carriers,
warehousemen, mechanics, landlords and materialmen and similar Liens and (ii)
Liens incurred in connection with worker's compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA) or in connection with surety bonds (other than bonds relating to
litigation), bids, performance bonds and similar obligations) for sums not
overdue or being contested in good faith by appropriate proceedings and not
involving any deposits or advances or borrowed money or the deferred purchase
price of property or services, and, in each case, for which it maintains
adequate reserves; (c) Liens identified on Schedule 10.8; provided that the
Company causes the release of all Liens identified in the footnotes on such
Schedule 10.8 within the applicable time period specified thereon; (d) Liens
arising under Capital Leases on the property leased to the extent permitted by
Section 10.7(b); (e) purchase money security interests on any property
securing Debt incurred for the purpose of financing all or any part of the cost
of acquiring such property; provided that any such Lien attaches to such
property within 60 days of the acquisition thereof and such Lien attaches solely
to the property so acquired or, in the case of a Lien in favor of a vendor, all
property purchased by the Company or the applicable Subsidiary from such vendor;
(f) attachments, judgments and other similar Liens, for sums not exceeding a
Dollar Equivalent amount of $2,500,000 arising in connection with court
proceedings; provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings; (g) easements, rights of way,
restrictions, minor defects or irregularities in title and other similar Liens
not interfering in any material respect with the ordinary conduct of the
business of the Company and its Subsidiaries taken as a whole; (h) Liens
securing obligations of a Subsidiary to the Company or to a Wholly-Owned
Subsidiary; (i) leases or subleases granted by the Company or any Subsidiary
in the ordinary course of its business; (j) extensions, renewals


                                      -44-

or replacements of any Lien permitted by the foregoing provisions of this
Section 10.8, but only if the principal amount of any Debt secured thereby
immediately prior to such extension, renewal or replacement is not increased and
such Lien is not extended to any other property; (k) Liens arising under the
Collateral Documents; and (l) other Liens, in addition to Liens permitted by
clauses (a) through (k), securing obligations not at any time exceeding a Dollar
Equivalent amount of $5,000,000.

          10.9 Business. Not, and not permit any Subsidiary to, enter into any
material business other than the businesses in which the Company and its
Subsidiaries are engaged on the date of this Agreement and reasonable extensions
thereof.

          10.10 Restricted Payments. Not, and not permit any Subsidiary to,
(a) declare or pay any dividend or distribution on any of its capital stock,
(b) purchase or redeem any capital stock of the Company or any Subsidiary (or
any warrants, options or other rights in respect thereof), (c) make any
other distribution to shareholders of the Company or any Subsidiary, (d) pay
any management fees or similar fees to any of its shareholders (other than
payments for the fair market value of services rendered), (e) prepay,
purchase, defease or redeem any subordinated Debt or (f) set aside funds for
any of the foregoing; provided that (i) any Subsidiary may declare and pay
dividends, or make other distributions, to the Company or to a Wholly-Owned
Subsidiary, (ii) the Company may declare and pay dividends, or make other
distributions, payable solely in the Company's common stock, and (iii) so long
as no Event of Default or Unmatured Event of Default exists or would result
therefrom, the Company may purchase, redeem or otherwise acquire shares of its
capital stock or warrants or options to acquire any such shares, or pay cash
dividends on its capital stock, in each case so long as the aggregate amount of
all purchases, redemptions, other acquisitions and cash dividends made pursuant
to this clause (iii) (collectively "Permitted Restricted Payments") during the
term of this Agreement shall not exceed $15,000,000; provided that such amount
shall be increased to $40,000,000 on the earlier of (A) June 26, 2004 and (B)
the date on which the Administrative Agent receives a Covenant Change Notice.

          10.11 Investments. Not, and not permit any Subsidiary to, make, incur,
assume or suffer to exist any Investment in any other Person, except (a)
Investments existing on the Effective Date and identified in Schedule 10.11;
(b) Cash Equivalent Investments; (c) Investments by the Company in its
Subsidiaries or by any Subsidiary in any other Subsidiary in the form of
contributions to capital or loans or advances; (d) loans or advances or
capital contributions made by any Subsidiary to the Company; (e) advances
made to employees for travel and similar expenses in the normal course of
business; (f) the Golden Grain Acquisition; (g) Investments made to
consummate Permitted Acquisitions; (h) Investments arising in connection
with Hedging Agreements entered into to hedge bona fide business risks (and not
for speculation); and (i) other Investments not to exceed at any time
$5,000,000 in the aggregate.

          10.12 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of any
class of, or any partnership, limited liability company or joint venture
interest in, any other Person, or, except in the ordinary course of its
business, sell, transfer, convey or lease any of its assets, or sell or assign
with or without recourse any receivables, except for (i) any such merger or
consolidation, sale, transfer, conveyance, lease or assignment


                                      -45-

of or by any Wholly-Owned Subsidiary into the Company or into, with or to any
Wholly-Owned Subsidiary; (ii) any such purchase or other acquisition by the
Company or any Wholly-Owned Subsidiary of the assets or stock of any
Wholly-Owned Subsidiary; (iii) any merger or consolidation to effect, or any
acquisition which constitutes, an Investment permitted by Section 10.11 or a
Permitted Acquisition; (iv) the Golden Grain Acquisition; and (v) the sale or
disposal of assets by the Company and its Subsidiaries so long as the aggregate
book value of such assets sold during any Fiscal Year does not exceed
$5,000,000.

          10.13 Use of Proceeds. (a) Use the proceeds of the Revolving Loans
and Swing Line Loans to refinance existing Debt, for working capital, for
capital expenditures and for other general corporate purposes (including
Permitted Acquisitions); (b) use the proceeds of the Term Loans (i) to
consummate acquisitions permitted hereunder and (ii) to repay Revolving Loans;
and (c) not use or permit any proceeds of any Loan to be used, either
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying" any Margin Stock.

          10.14 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would be violated or
breached by any borrowing, or the obtaining of any Letter of Credit, by the
Company hereunder or by the performance by the Company or any Subsidiary of any
of its obligations hereunder or under any other Loan Document.

          10.15 Transactions with Affiliates. Not, and not permit any Subsidiary
to, enter into or permit to exist any transaction, arrangement or contract with
any of its Affiliates (other than the Company and its Subsidiaries) which is on
terms which are less favorable than are obtainable from a Person which is not
one of its Affiliates other than transactions, arrangements or contracts
providing for (a) the payment by the Company of reasonable and customary
fees to and expenses of members of its Board of Directors, (b) the payment
by the Company or any Subsidiary of Permitted Restricted Payments or (c) the
making of Investments by the Company or any Subsidiary permitted by this
Agreement.

          10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Plan in compliance with all applicable requirements of law and
regulations.

          10.17 Environmental Laws. (a) Comply, and cause each Subsidiary to
comply, in a reasonable and cost-effective manner, with any valid judicial or
administrative order requiring the performance at any real property owned,
operated or leased by the Company or any Subsidiary of activities in response to
the release or threatened release of a Hazardous Material except for the period
of time that the Company or such Subsidiary is diligently in good faith
contesting such order, (b) notify the Administrative Agent within 30 days
after the receipt of any written claim, demand, proceeding, action or notice of
liability by any Person arising out of or relating to the release or threatened
release of a Hazardous Material and (c) notify the Administrative Agent within
30 days after any release, threatened release or disposal of Hazardous Material
reported to any Governmental Authority at any real property owned, operated or
leased by the Company or any Subsidiary.


                                      -46-

          10.18 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase of
materials, supplies or other property or services if such contract requires that
payment be made by it regardless of whether or not delivery is ever made of such
materials, supplies or other property or services.

          10.19 Further Assurances. Take, and cause each Subsidiary to take,
such actions as are necessary, or as the Administrative Agent (or the Required
Lenders acting through the Administrative Agent) may reasonably request, from
time to time (including the execution and delivery of guaranties, pledge
agreements, financing statements, and other documents, the filing of any of the
foregoing, the delivery of stock certificates and other collateral with respect
to which perfection is obtained by possession and stock powers or other
documents related thereto, and the delivery of opinions of counsel with respect
to any of such documents) to ensure that (i) the obligations of the Company
hereunder and under the other Loan Documents and any Hedging Obligations of the
Company owing to any Lender or any Affiliate of any Lender are guaranteed by all
Subsidiaries (other than Foreign Subsidiaries) of the Company and secured by
pledge of the stock or other equity interests of all Subsidiaries of the
Company; provided that (a) neither the Company nor any domestic Subsidiary
shall be required to pledge more than 65% of the stock of any Foreign
Subsidiary; (b) AIPC Sales Co. will not be required to complete the pledge
of its equity interest in IAPC CV until September 14, 2001 and (c) no
Foreign Subsidiary shall be required to pledge the stock of any other Foreign
Subsidiary.

          10.20 Transfers to Foreign Subsidiaries. Not, and not permit any
Guarantor to, sell, transfer, or convey balance sheet assets (other than cash)
with an aggregate net book value in excess of $3,000,000 to Foreign Subsidiaries
after the Signing Date.

          SECTION 11 CONDITIONS PRECEDENT.

          The obligation of each Lender to make any Credit Extension is subject
to the following conditions precedent:

          11.1 Initial Credit Extension. The obligation of each Lender to make
its initial Loan or of the Issuer to issue the initial Letter of Credit
hereunder (whichever first occurs) is subject to the conditions precedent that
(a) each of the conditions precedent specified in Section 11.2 and, if
applicable, 11.3 shall have been satisfied, (b) the Administrative Agent
shall have received all amounts which are then due and payable pursuant to
Section 5, and (c) the Administrative Agent shall have received (i)
evidence that the Company has terminated the commitments under the Existing
Credit Facility, that all obligations under the Existing Credit Facility (other
than (x) the Existing Letter of Credit and (y) loans which are denominated in
Euros ("Existing Euro Loans") and which, in the aggregate, do not exceed a
Dollar Equivalent amount of $70,000,000), that arrangements have been made to
pay all Existing Euro Loans not later than the Business Day following the
Effective Date and that all collateral securing the Existing Credit Facility has
been (or concurrently with the payment of the Existing Euro Loans will be)
released, (ii) evidence that the Borden Brands Acquisition will be completed
concurrently with the initial Credit Extension on the terms set forth in the
Borden Brands Purchase Agreement (without giving effect to any material
amendment or other modification thereto after June 1, 2001 unless such amendment
or modification has been approved in writing by the Administrative Agent) and
(iii) all of the following, each duly executed and dated the date of the initial
Credit Extension (or such earlier


                                      -47-

date as shall be satisfactory to the Administrative Agent), in form and
substance satisfactory to the Administrative Agent, and each (except for the
Notes, of which only the originals shall be signed) in sufficient number of
signed counterparts to provide one for the Administrative Agent and each Lender:

          11.1.1 Agreement and Notes. Counterparts of this Agreement executed by
each of the parties hereto (it being understood that the Administrative Agent
may rely on a facsimile copy of the applicable signature page of this Agreement
in determining whether any party hereto has executed and delivered a counterpart
hereof) and a Note for each Lender which has requested a Note.

          11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of the Company and each Guarantor authorizing or ratifying the
execution, delivery and performance by such Person of the Loan Documents to
which such Person is a party.

          11.1.3 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate officer) of the
Company and each Guarantor certifying the names of the officer or officers of
such Person authorized to sign the Loan Documents to which such Person is a
party, together with a sample of the true signature of each such officer (it
being understood that the Administrative Agent and each Lender may conclusively
rely on each such certificate until formally advised by a like certificate of
any changes therein).

          11.1.4 Opinion of Counsel for the Company. The opinion of Blackwell
Sanders Peper Martin LLP, counsel to the Company and the Guarantors,
substantially in the form of Exhibit G.

          11.1.5 Guaranty. The Guaranty executed by each Subsidiary that is not
a Foreign Subsidiary.

          11.1.6 Pledge Agreement. The Pledge Agreement executed by the Company
and each applicable Subsidiary, together with all stock certificates and other
documents required to be delivered pursuant thereto.

          11.1.7 Collateral Partnership Assignment. Collateral Assignments of
Partnership Interests executed by the Company and AIPC Sales Co.

          11.1.8 Membership Interest Pledge Agreement. The Membership Interest
Pledge Agreement executed by the Company and AIPC Finance, Inc.

          11.1.9 Financing Statements. Uniform Commercial Code financing
statements executed by the Company, AIPC Sales Co. and AIPC Finance, Inc. with
respect to the collateral pledged pursuant to the Pledge Agreement, the
Membership Interest Pledge Agreement and/or the Collateral Partnership
Assignment, as applicable.

          11.1.10 Borden Brands Acquisition Documents. A certified copy of the
Borden Brands Purchase Agreement and all material documents related thereto.

          11.1.11 Other. Such other documents as the Administrative Agent or any
Lender may reasonably request.


                                      -48-

          11.2 All Credit Extensions. The obligation of each Lender to make any
Credit Extension is subject to the following further conditions precedent that:

          11.2.1 No Default. (a) No Event of Default or Unmatured Event of
Default has occurred and is continuing or will result from the making of such
Credit Extension and (b) the warranties of the Company contained in Section 9
(excluding, except in the case of the initial Credit Extension, (i) the second
sentence of Section 9.6 and (ii) Section 9.8) are true and correct in all
material respects as of the date of the making of such requested Credit
Extension, with the same effect as though made on such date (except to the
extent that any warranty relates to an earlier date, in which case such warranty
shall be true and correct as of such earlier date).

          11.2.2 Confirmatory Certificate. If requested by the Administrative
Agent or any Lender, the Administrative Agent shall have received (in sufficient
counterparts to provide one to each Lender) a certificate dated the date of the
making of such Credit Extension and signed by a duly authorized representative
of the Company as to the matters set out in Section 11.2.1 (it being understood
that each request by the Company for the making of a Credit Extension shall be
deemed to constitute a representation and warranty that the conditions precedent
set forth in Section 11.2.1 will be satisfied at the time of the making of such
Credit Extension), together with such other documents as the Administrative
Agent may reasonably request in support thereof.

          SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.

          12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:

          12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for five days,
in the payment when due of any interest, fee, reimbursement obligation with
respect to any Letter of Credit or other amount payable by the Company hereunder
or under any other Loan Document.

          12.1.2 Non-Payment of Other Debt. Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an aggregate
Dollar Equivalent amount (for all Debt so affected) exceeding $2,500,000 and
such default shall (c) consist of the failure to pay such Debt when due (subject
to any applicable grace period), whether by acceleration or otherwise, or (d)
accelerate the maturity of such Debt or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Debt to become
due and payable prior to its expressed maturity.

          12.1.3 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; the Company or any Subsidiary
applies for, consents to, or acquiesces in the appointment of a trustee,
receiver, receiver and manager, administrator, liquidator, provisional
liquidator or other custodian for the Company or such Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors or, in the
absence of such application, consent or acquiescence, a trustee, receiver,
receiver and manager, administrator, liquidator, provisional liquidator or other
custodian is appointed for the Company or any Subsidiary or for a substantial
part of the property of any thereof and is not discharged within 60 days; any
bankruptcy,


                                      -49-

reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation proceeding
(except the voluntary dissolution, not under any bankruptcy or insolvency law,
of a Subsidiary), is commenced in respect of the Company or any Subsidiary, and
if such case or proceeding is not commenced by the Company or such Subsidiary,
it is consented to or acquiesced in by the Company or such Subsidiary, or
remains for 60 days undismissed; or the Company or any Subsidiary takes any
corporate action to authorize, or in furtherance of, any of the foregoing.

          12.1.4 Non-Compliance with Provisions of This Agreement. Failure by
the Company to comply with or to perform any covenant set forth in Section
10.1.5, Sections 10.6 through 10.8 or Sections 10.10 through 10.14; or failure
by the Company to comply with or to perform any other provision of this
Agreement (and not constituting an Event of Default under any of the other
provisions of this Section 12) and continuance of such failure for 30 days after
notice thereof to the Company from the Administrative Agent or any Lender.

          12.1.5 Warranties. Any warranty made by the Company herein is false or
misleading in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by the Company to the
Administrative Agent or any Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified.

          12.1.6 ERISA. (i) An ERISA Event occurs with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $1,000,000,
or (ii) the Company or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $1,000,000.

          12.1.7 Judgments. Final judgments which exceed an aggregate Dollar
Equivalent amount of $2,500,000 shall be rendered against the Company or any
Subsidiary and shall not have been discharged or vacated or had execution
thereof stayed pending appeal within 30 days after entry or filing of such
judgments.

          12.1.8 Change in Control.  A Change in Control shall occur.

          12.1.9 Invalidity of Loan Documents. (a) The Guaranty shall cease to
be in full force and effect with respect to any Guarantor (other than as a
result of such Guarantor ceasing to be a Subsidiary of the Company as a result
of a transaction permitted hereby), any Guarantor shall fail (subject to any
applicable grace period) to comply with or to perform any applicable provision
of the Guaranty, or any Guarantor (or any Person by, through or on behalf of
such Guarantor) shall contest in any manner the validity, binding nature or
enforceability of the Guaranty with respect to such Guarantor.

          (b) Any Collateral Document shall cease to be in full force and effect
with respect to the Company or any Guarantor (other than as a result of such
Guarantor ceasing to be a Subsidiary of the Company as a result of a transaction
permitted hereby), the Company or any


                                      -50-

Guarantor shall fail (subject to any applicable grace period) to comply with or
to perform any applicable provision of any Collateral Document to which such
entity is a party, or the Company or any Guarantor (or any Person by, through or
on behalf of the Company or such Guarantor) shall contest in any manner the
validity, binding nature or enforceability of any Collateral Document.

          12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.3 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Notes and all other obligations
hereunder shall become immediately due and payable and the Company shall become
immediately obligated to deliver to the Administrative Agent cash collateral in
a Dollar Equivalent amount equal to the outstanding face amount of all Letters
of Credit, all without presentment, demand, protest or notice of any kind; and
in the case of any other Event of Default, the Administrative Agent shall, upon
written request of the Required Lenders, declare the Commitments (if they have
not theretofore terminated) to be terminated and/or declare all Notes and all
other obligations hereunder to be due and payable and/or demand that the Company
immediately deliver to the Administrative Agent cash collateral in a Dollar
Equivalent amount equal to the outstanding face amount of all Letters of Credit,
whereupon the Commitments (if they have not theretofore terminated) shall
immediately terminate and/or all Notes and all other obligations hereunder shall
become immediately due and payable and/or the Company shall immediately become
obligated to deliver to the Administrative Agent cash collateral in a Dollar
Equivalent amount equal to the face amount of all Letters of Credit, all without
presentment, demand, protest or notice of any kind. Notwithstanding the
foregoing, the effect as an Event of Default of any event described in Section
12.1.1 or 12.1.3 may be waived by the written concurrence of all of the Lenders,
and the effect as an Event of Default of any other event described in this
Section 12 may be waived by the written concurrence of the Required Lenders. Any
cash collateral delivered hereunder shall be held by the Administrative Agent
and applied to obligations arising in connection with any drawing under a Letter
of Credit. After the expiration or termination of all Letters of Credit, such
cash collateral shall be applied by the Administrative Agent to any remaining
obligations of the Company hereunder and any excess shall be delivered to the
Company or as a court of competent jurisdiction may direct.

          SECTION 13 THE ADMINISTRATIVE AGENT.

          13.1 Appointment and Authorization. (a) Each Lender hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement,
each other Loan Document and each other document executed by the Company in
connection with this Agreement and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement, any
other Loan Document or any other document executed by the Company in connection
with this Agreement, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere in
this Agreement, in any other Loan Document or any other document executed by the
Company in connection with this Agreement, the Administrative Agent shall not
have any duties or responsibilities except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement, any other Loan Document or any


                                      -51-

other document executed by the Company in connection with this Agreement or
otherwise exist against the Administrative Agent.

          (b) The Issuer shall act on behalf of the Lenders with respect to all
Letters of Credit and the documents associated therewith until such time and
except for so long as the Administrative Agent may agree at the request of the
Lenders to act for the Issuer with respect thereto; provided that the Issuer
shall have all of the benefits and immunities (i) provided to the Administrative
Agent in this Section 13 with respect to any acts taken or omissions suffered by
the Issuer in connection with Letters of Credit issued or proposed to be issued
by it and the Letter of Credit Applications and related documents as fully as if
the term "Administrative Agent", as used in this Section 13, included the Issuer
with respect to such acts or omissions and (ii) as additionally provided in this
Agreement with respect to the Issuer.

          13.2 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement, any other Loan Document or any other document
executed by the Company in connection with this Agreement by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

          13.3 Liability of Administrative Agent. None of the Agent-Related
Persons shall (i) be liable to any Lender for any action taken or omitted to
be taken by any of them under or in connection with this Agreement, any other
Loan Document or any other document executed by the Company in connection with
this Agreement or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement, any other Loan Document or any other document executed by the Company
or any Subsidiary or Affiliate of the Company in connection with this Agreement,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, any other Loan Document or any other document executed by the
Company in connection with this Agreement, or for any failure of the Company or
any other party to any such document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company or any
Affiliate thereof. No Agent-Related Person shall be under any obligation to any
Lender or participant to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any Affiliate thereof.

          13.4 Reliance by Administrative Agent. (a) The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent


                                      -52-

or made by the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent accountants and other
experts selected by the Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement,
any other Loan Document, or any other document executed by the Company in
connection with this Agreement unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement, any other Loan Document or any other document executed by the
Company in connection with this Agreement in accordance with a request or
consent of the Required Lenders and such request and any action taken or failure
to act pursuant thereto shall be binding upon all of the Lenders. Where this
Agreement expressly permits or prohibits an action unless the Required Lenders
otherwise determine, the Administrative Agent shall, and in all other instances,
the Administrative Agent may, but shall not be required to, initiate any
solicitation for the consent or a vote of the Lenders.

          (b) For purposes of determining compliance with the conditions
specified in Section 11, each Lender that has executed this Agreement shall be
deemed (absent timely written notice from such Lender to the contrary) to have
consented to, approved or accepted or to be satisfied with each document or
other matter either sent by the Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to such Lender.

          13.5 Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Event of Default or
Unmatured Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Administrative Agent for
the account of the Lenders unless the Administrative Agent shall have received
written notice from a Lender or the Company referring to this Agreement,
describing such Event of Default or Unmatured Event of Default and stating that
such notice is a "notice of default". The Administrative Agent will notify the
Lenders of its receipt of any such notice. The Administrative Agent shall take
such action with respect to such Event of Default or Unmatured Event of Default
as may be requested by the Required Lenders in accordance with Section 12;
provided that, unless and until the Administrative Agent has received any such
request, the Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Event of
Default or Unmatured Event of Default as it shall deem advisable or in the best
interest of the Lenders.

          13.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to the Administrative Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company and its Subsidiaries, and
all applicable bank regulatory laws relating to the transactions


                                      -53-

contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Company hereunder. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement, the other Loan Documents and any other
documents executed by the Company in connection with this Agreement, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the Administrative
Agent, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of the Company or any of its Subsidiaries which may come into
the possession of any of the Agent-Related Persons.

          13.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata
according to their respective Applicable Percentages, from and against any and
all Indemnified Liabilities; provided that no Lender shall be liable for the
payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting from such Person's bad faith, gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Administrative
Agent in connection with the preparation, negotiation, execution, closing,
delivery, ongoing administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Loan Document, any other document executed by the Company in connection with
this Agreement, or any document contemplated by or referred to herein, to the
extent that the Administrative Agent is not reimbursed for such expenses by or
on behalf of the Company. The undertaking in this Section shall survive the
expiration or termination of the Commitments, the repayment of the Loans and all
other obligations of the Company hereunder, the expiration or termination of the
Letters of Credit, the termination of this Agreement and the resignation or
replacement of the Administrative Agent.

          13.8 Administrative Agent in Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and Affiliates as though the
Administrative Agent were not the Administrative Agent, the Issuer or the Swing
Line Lender hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, the Administrative Agent
or its Affiliates may receive information regarding the Company or its
Subsidiaries or Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary or
Affiliate) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to them. With respect to their respective
Loans (if any), the Administrative Agent and its Affiliates shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though Bank of America were not the Administrative


                                      -54-

Agent, the Issuer and the Swing Line Lender hereunder, and the terms "Lender"
and "Lenders" include Bank of America (and any applicable Affiliate thereof) in
such capacity, as applicable.

          13.9 Successor Administrative Agent. The Administrative Agent may, and
at the request of the Required Lenders shall, resign as Administrative Agent
upon 30 days' notice to the Lenders and the Company. If the Administrative Agent
resigns under this Agreement, the Required Lenders shall appoint from among the
Lenders a successor administrative agent for the Lenders. If no successor
administrative agent is appointed prior to the effective date of the resignation
of the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor administrative agent
from among the Lenders. Upon the acceptance of its appointment as successor
administrative agent hereunder, such successor administrative agent shall
succeed to all the rights, powers and duties of the retiring Administrative
Agent and the term "Administrative Agent" shall mean such successor
administrative agent and the retiring Administrative Agent's appointment, powers
and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 13, Section 14.6 and Section 14.10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor administrative agent
has accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
administrative agent as provided for above. Notwithstanding the foregoing,
however, Bank of America shall not be required to resign as the Administrative
Agent at the request of the Required Lenders unless Bank of America shall also
simultaneously be replaced as "Issuer" and as "Swing Line Lender" hereunder
pursuant to documentation in form and substance reasonably satisfactory to Bank
of America.

          13.10 Other Agents. No Lender identified on the signature pages of
this Agreement or any related document as the "Syndication Agent,"
"Documentation Agent" or "Co-Agent" shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. Without limiting the foregoing, no Lender so
identified as the "Syndication Agent," "Documentation Agent" or "Co-Agent" shall
have or be deemed to have any fiduciary relationship with any Lender. Each
Lender acknowledges that it has not relied, and will not rely, on any of the
Lenders so identified in deciding to enter into this Agreement or in taking or
not taking action hereunder.

          13.11 Non-Receipt of Funds by the Administrative Agent. Unless the
Company or a Lender, as the case may be, notifies the Administrative Agent prior
to the date on which it is scheduled to make payment to the Administrative Agent
of (a) in the case of a Lender, the proceeds of a Loan or (b) in the case of the
Company, a payment of principal, interest or fees for the account of any Lender,
that it does not intend to make such payment, the Administrative Agent may
assume that such payment has been made. The Administrative Agent may, but shall
not be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. If such Lender or the Company, as
the case may be, has not in fact made such payment to the Administrative Agent,
the recipient of such payment shall, on demand by the Administrative Agent,
repay to the Administrative Agent the amount so made


                                      -55-

available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Rate for such day for the first three days and, thereafter, the
interest rate applicable to the relevant Loan or (ii) in the case of payment by
the Company, the interest rate applicable to the relevant Loan (or, to the
extent permitted by applicable law, (x) in the case of interest payable in
Dollars and fees, the Base Rate plus the Applicable Base Rate Margin, and (y) in
the case of interest payable in any other currency, the Overnight Rate plus the
Applicable Eurocurrency Margin).

          SECTION 14 GENERAL.

          14.1 Waiver; Amendments. No delay on the part of the Administrative
Agent or any Lender in the exercise of any right, power or remedy shall operate
as a waiver thereof, nor shall any single or partial exercise by any of them of
any right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
Notes shall in any event be effective unless the same shall be in writing and
signed and delivered by the Administrative Agent and signed and delivered by
Lenders having an aggregate Percentage of not less than the aggregate Percentage
expressly designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or the Notes, by the Required
Lenders, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No amendment, modification, waiver or consent shall (i) extend any
Commitment Reduction Date or reduce the amount of the scheduled reduction on any
such date or extend the date fixed for any scheduled payment of any principal of
or interest on the Loans, any reimbursement obligation in respect of any Letter
of Credit, any fees payable hereunder or any amount payable pursuant to Section
7.6 or Section 8, (ii) reduce the principal amount of any Loan, the rate of
interest thereon, any fees payable hereunder or any amount payable pursuant to
Section 7.6 or Section 8, (iii) release the Guaranty (other than with respect to a
Guarantor which ceases to be a Subsidiary as a result of a transaction permitted
hereunder) or all or substantially all of the collateral granted under the
Collateral Documents, or (iv) change the aggregate Percentage required to effect
an amendment, modification, waiver or consent without, in each case, the consent
of each Lender affected thereby. No amendment, modification, waiver or consent
shall extend the term of or increase the amount of any Commitment of any Lender
without the consent of such Lender. No provision of Section 13 shall be amended,
modified or waived without the consent of the Administrative Agent. No provision
affecting the rights and duties of the Issuer under this Agreement or any Letter
of Credit Application or relating to any Letter of Credit issued or to be issued
by it shall be amended, modified or waived without the consent of the Issuer. No
provision affecting the rights and duties of the Swing Line Lender under this
Agreement shall be amended, modified or waived without the consent of the Swing
Line Lender.

          14.2 Notices. (a) General. Unless otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including by facsimile transmission) and mailed, faxed or delivered to the
address, facsimile number or (subject to subsection (c) below) electronic mail
address specified for notices on Schedule 14.2 or, in the case of the Company,
the Administrative Agent, the Issuer or the Swing Line Lender, to such


                                      -56-

other address as shall be designated by such party in a notice to the other
parties, and in the case of any other party, to such other address as shall be
designated by such party in a notice to the Company, the Administrative Agent,
the Issuer and the Swing Line Lender. All such notices and other communications
shall be deemed to be given or made upon the earlier to occur of (i) actual
receipt by the intended recipient and (ii) (1) if delivered by hand or by
courier, when signed for by the intended recipient, (2) if delivered by mail,
four Business Days after deposit in the mails, postage prepaid, (3) if delivered
by facsimile, when sent and receipt has been confirmed by telephone, and (4) if
delivered by electronic mail (which form of delivery is subject to the
provisions of subsection (c) below), when delivered; provided that notices and
other communications to the Administrative Agent, the Issuer and the Swing Line
Lender pursuant to Sections 2 and 6 shall not be effective until actually
received by such Person. Any notice or other communication permitted to be
given, made or confirmed by telephone hereunder shall be given, made or
confirmed by means of a telephone call to the intended recipient at the number
specified on Schedule 14.2 or such other telephone number as shall have been
specified pursuant to the procedures above, it being understood that a voicemail
message shall not be effective as a notice, communication or confirmation
hereunder.

          (b) Effectiveness of Facsimile Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile. The effectiveness of
any such documents and signatures shall, subject to applicable law, have the
same force and effect as manually-signed originals and shall be binding on the
Company, the Administrative Agent and the Lenders. The Administrative Agent may
also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided that the failure to request or
deliver the same shall not limit the effectiveness of any facsimile document or
signature.

          (c) Limited Use of Electronic Mail. Electronic mail and internet and
intranet websites may be used only to distribute routine communications, such as
financial statements and other information, and to distribute Loan Documents for
execution by the parties thereto, and shall not constitute effective notice for
any other purpose.

          (d) Reliance by Administrative Agent and Lenders. The Administrative
Agent and the Lenders shall be entitled to rely and act upon any notices
(including telephonic notices of borrowing, conversion and continuation)
purportedly given by or on behalf of the Company even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein or (ii) the terms thereof,
as understood by the recipient, varied from any confirmation thereof. The
Company shall indemnify each Agent-Related Person and each Lender from all
losses, costs, expenses and liabilities resulting from the reliance by such
Person on each notice purportedly given by or on behalf of the Company, except
to the extent resulting from the gross negligence or willful misconduct of the
applicable Indemnified Person. All telephonic notices to and other
communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such
recording.

          14.3 Payments Set Aside. To the extent that the Company makes a
payment to the Administrative Agent or the Lenders, or the Administrative Agent
or the Lenders exercise their right of set-off, and such payment or the proceeds
of such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required


                                      -57-

(including pursuant to any settlement entered into by the Administrative Agent
or such Lender in its discretion) to be repaid to a trustee, receiver or any
other party, in connection with any insolvency proceeding or otherwise, then (a)
to the extent of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect
as if such payment had not been made or such set-off had not occurred, and (b)
each Lender severally agrees to pay to the Administrative Agent upon demand its
pro rata share of any amount so recovered from or repaid by the Administrative
Agent.

          14.4 Costs, Expenses and Taxes. The Company agrees to pay on demand
all reasonable out-of-pocket costs and expenses of the Administrative Agent and
the Arranger (including Attorney Costs) in connection with the preparation,
negotiation, execution, closing, delivery and ongoing administration of this
Agreement, the other Loan Documents and all other documents provided for herein
or delivered or to be delivered hereunder or in connection herewith (including
any amendment, supplement or waiver to any Loan Document), and all reasonable
out-of-pocket costs and expenses (including Attorney Costs) incurred by the
Administrative Agent and each Lender after an Event of Default in connection
with the enforcement of this Agreement, the other Loan Documents or any such
other documents. In addition, the Company agrees to pay, and to save the
Administrative Agent, the Arranger and the Lenders harmless from all liability
for, any stamp or other taxes which may be payable in connection with the
execution and delivery of this Agreement, the borrowings hereunder, the issuance
of the Notes or the execution and delivery of any other Loan Document or any
other document provided for herein or delivered or to be delivered hereunder or
in connection herewith. All obligations provided for in this Section 14.4 shall
survive the expiration or termination of the Commitments, the repayment of the
Loans and all other obligations of the Company hereunder, the expiration or
termination of the Letters of Credit and the termination of this Agreement.

          14.5 Successors and Assigns. This Agreement shall be binding upon the
Company, the Lenders and the Administrative Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the
Lenders and the Administrative Agent and the permitted successors and assigns of
the Lenders and the Administrative Agent.

          14.6 Assignments; Participations.

          14.6.1 Assignments. Any Lender may, with the prior written consents of
the Company (which consent shall not be unreasonably delayed or withheld and
shall not be required if an Event of Default exists) and the Administrative
Agent, at any time assign and delegate to one or more commercial banks or other
Persons (any Person to whom such an assignment and delegation is to be made
being herein called an "Assignee") all or any fraction of such Lender's
Commitment and such Lender's Loans and other rights and obligations hereunder in
respect thereof (which assignment and delegation shall be of a constant, and not
a varying, percentage of the assigning Lender's Commitment and Loans and other
rights and obligations), in each case in a minimum aggregate amount equal to the
lesser of (a) the assigning Lender's remaining Commitment and (b) $1,000,000;
provided that (i) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be obligated to
pay any greater amount under Section 7.6 or Section 8 to the Assignee than the
Company is then obligated to pay to the assigning Lender under such Sections,
(ii) the consent of the Company


                                      -58-

shall not be required in the case of an assignment from a Lender to an Affiliate
of such Lender, and (iii) the Company and the Administrative Agent shall be
entitled to continue to deal solely and directly with such Lender in connection
with the interests so assigned and delegated to an Assignee until the date when
all of the following conditions shall have been met:

               (x) five Business Days (or such lesser period of time as the
          Administrative Agent and the assigning Lender shall agree) shall have
          passed after written notice of such assignment and delegation,
          together with payment instructions, addresses and related information
          with respect to such Assignee, shall have been given to the Company
          and the Administrative Agent by such assigning Lender and the
          Assignee;

               (y) the assigning Lender and the Assignee shall have executed and
          delivered to the Company and the Administrative Agent an assignment
          agreement substantially in the form of Exhibit H (an "Assignment
          Agreement"), together with any documents required to be delivered
          thereunder, which Assignment Agreement shall have been accepted by the
          Administrative Agent; and

               (z) the assigning Lender or the Assignee shall have paid the
          Administrative Agent a processing fee of $3,500.

From and after the date on which the conditions described above have been met,
(x) such Assignee shall have all rights and obligations hereunder in respect of
the interests so assigned (and, if such Assignee was not previously a Lender
hereunder, shall automatically become a party hereto), (y) the assigning Lender,
to the extent that rights and obligations hereunder have been assigned and
delegated by it pursuant to such Assignment Agreement, shall be released from
its obligations hereunder and (z) upon the distribution by the Administrative
Agent to the Company and the Lenders of a new Schedule 1.1(a) which reflects
such assignment and delegation, Schedule 1.1(a) hereto shall be deemed to be
automatically amended in the form of such new Schedule 1.1(a). Within five
Business Days after the effectiveness of any assignment and delegation to an
Assignee which was not previously a party hereto, the Company shall execute and
deliver to the Administrative Agent (for delivery to such Assignee) a new Note
dated the effective date of such assignment. If any assigning Lender assigns all
of its rights and obligations hereunder, such assigning Lender shall mark its
Note or Notes "canceled" and deliver such Note or Notes to the Company. Any
attempted assignment and delegation not made in accordance with this Section
14.6.1 shall be null and void.

          Notwithstanding the foregoing provisions of this Section 14.6.1 or any
other provision of this Agreement, any Lender may at any time assign all or any
portion of its Loans and its Note to a Federal Reserve Bank, to the Farm Credit
Funding Corp. or to any other entity organized under the Farm Credit Act of 1971
(but no such assignment shall release any Lender from any of its obligations
hereunder).

          14.6.2 Participations. Any Lender may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan owing to
such Lender, the Note held by such Lender, the Commitment of such Lender, the
participation interest of such Lender in any Letter of Credit or any other
interest of such Lender hereunder (any Person purchasing any such participating
interest being called a "Participant"). In the event of a sale by a Lender of a


                                      -59-

participating interest to a Participant, (x) such Lender shall remain the holder
of its Note for all purposes of this Agreement, (y) the Company and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations hereunder and (z) all
amounts payable by the Company shall be determined as if such Lender had not
sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except
with respect to any of the events described in the third sentence of Section
14.1. Each Lender agrees to incorporate the requirements of the preceding
sentence into each participation agreement which such Lender enters into with
any Participant. The Company agrees that if amounts outstanding under this
Agreement and the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement and
any Note and with respect to any Letter of Credit to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement or such Note; provided that such right of setoff shall be subject
to the obligation of each Participant to share with the Lenders, and the Lenders
agree to share with each Participant, as provided in Section 7.5. The Company
also agrees that each Participant shall be entitled to the benefits of Section
7.6 and Section 8 as if it were a Lender (provided that no Participant shall
receive any greater compensation pursuant to Section 7.6 or Section 8 than would
have been paid to the participating Lender if no participation had been sold).

          14.6.3 Designation of SPVs.

          (a) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender") may grant to a special purpose funding vehicle (an
"SPV", identified as such in writing from time to time by such Granting Lender
to the Administrative Agent and the Company) the option to fund all or any part
of any Loan that such Granting Lender would otherwise be obligated to fund
pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPV to fund any Loan, (ii) if an SPV elects not to exercise
such option or otherwise fails to fund all or any part of such Loan, the
Granting Lender shall be obligated to fund such Loan pursuant to the terms
hereof, (iii) no SPV shall exercise any voting rights pursuant to Section 14.1
(such voting rights to be exercised instead by such Granting Lender) and (iv)
with respect to notices, payments and other matters hereunder, the Company, the
Administrative Agent and the Lenders shall not be obligated to deal with an SPV,
but may limit their communications and other dealings relevant to such SPV to
the applicable Granting Lender. The funding of any Loan hereunder by an SPV
hereunder shall utilize the Commitment of the Granting Lender to the same extent
that, and as if, such Loan were funded by such Granting Lender.

          (b) As to any Loans or portion thereof made by it, each SPV shall have
all the rights that its applicable Granting Lender making such Loan or portion
thereof would have had under this Agreement; provided, however, that each SPV
shall have granted to its Granting Lender an irrevocable power of attorney to
deliver and receive all communications and notices under this Agreement (and any
related documents) and to exercise on such SPV's behalf, all of such SPV's
voting rights under this Agreement. No additional Note shall be required to
evidence the Loan or portion thereof made by an SPV; and the related Granting
Lender shall be deemed to hold its Note as agent for such SPV to the extent of
the Loan or portion thereof funded by such SPV. In


                                      -60-

addition, any payments for the account of any SPV shall be paid to its Granting
Lender as agent for such SPV.

          (c) Each party hereto hereby agrees that no SPV shall be liable for
any indemnity or payment under this Agreement for which a Lender would otherwise
be liable for so long as, and to the extent, the Granting Lender provides such
indemnity or makes such payment. In furtherance of the foregoing, each party
hereto hereby agrees (which agreements shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPV, it will not institute against, or join any other person in
instituting against, such SPV any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
state thereof.

          (d) In addition, notwithstanding anything to the contrary contained in
this Agreement, any SPV may (i) at any time and without paying any processing
fee therefor, assign or participate all or a portion of its interest in any Loan
to the Granting Lender or to any financial institutions providing liquidity
and/or credit support to or for the account of such SPV to support the funding
or maintenance of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancements to such
SPV. This Section 14.6.3 may not be amended without the written consent of any
Granting Lender affected thereby.

          14.7 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Administrative Agent
and the Lenders expressed herein or in any other Loan Document shall be in
addition to and not in limitation of those provided by applicable law.

          14.8 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts and
each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.

          14.9 Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due hereunder or under any other
Loan Document in one currency into another currency, the rate of exchange used
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the first currency with such other currency
on the Business Day preceding that on which final judgment is given. The
obligation of the Company in respect of any such sum due from it to the
Administrative Agent or any Lender hereunder or under any other Loan Document
shall, notwithstanding any judgment in a currency (the "Judgment Currency")
other than that in which such sum is denominated in accordance with the
applicable provisions of this Agreement (the "Agreement Currency"), be


                                      -61-

discharged only to the extent that on the Business Day following receipt by the
Administrative Agent or such Lender of any sum adjudged to be so due in the
Judgment Currency, the Administrative Agent or such Lender may in accordance
with normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Administrative Agent or such Lender in the Agreement
Currency, the Company agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Administrative Agent or such Lender against such
loss. If the amount of the Agreement Currency so purchased is greater than the
sum originally due to the Administrative Agent or such Lender in such currency,
the Administrative Agent or such Lender agrees to return the amount of any
excess to the Company (or to any other Person who may be entitled thereto under
applicable law).

          14.10 Indemnification by the Company; Exculpation. Whether or not the
transactions contemplated hereby are consummated, the Company shall indemnify
and hold the Agent-Related Persons and each Lender and each of their respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby or thereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any bankruptcy or
insolvency proceeding or any appellate proceeding) related to or arising out of
this Agreement or the Loans or Letters of Credit or the use of the proceeds
thereof, or related to any transactions entered into in connection herewith,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities"); provided that the Company shall
not have any obligation hereunder to any Indemnified Person with respect to (a)
Indemnified Liabilities resulting from the bad faith, gross negligence or
willful misconduct of such Indemnified Person or (b) any taxes for which the
Company is not liable pursuant to the provisions of Section 7.6. The Company
agrees that none of the Indemnified Persons shall be liable to the Company for
any action taken or omitted to be taken by any of them under or in connection
with this Agreement, any other Loan Document or any other document executed by
the Company in connection with this Agreement or the transactions contemplated
hereby (except to the extent resulting from its own gross negligence or willful
misconduct or a breach of the express terms of this Agreement), and the Company
further agrees that in no event shall any Indemnified Person be liable to the
Company for any punitive or exemplary damages as a result of any such action
taken or omitted. All obligations and agreements in this Section 14.10 shall
survive the expiration or termination of the Commitments, the repayment of the
Loans and all other obligations of the Company hereunder, the expiration or
termination of the Letters of Credit, and the termination of this Agreement.

          14.11 Economic and Monetary Union in the European Community.

          (a) If, as a result of the implementation of the European economic and
monetary union ("EMU"), any currency available for borrowing under this
Agreement (a "national currency") and the Euro are at the same time both
recognized by the central bank or comparable


                                      -62-

Governmental Authority of the state issuing such currency as lawful currency of
such state, then any amount borrowed hereunder by the Company in such national
currency shall be payable in such national currency and any amount borrowed
hereunder in the Euro shall be payable in the Euro. After the European Central
Lender and/or the comparable Governmental Authority ceases to recognize any
national currency, then the amount so payable shall be determined by
redenominating or converting such national currency into the Euro at the
exchange rate officially fixed by the European Central Lender for the purpose of
implementing the EMU. Prior to the occurrence of the event or events described
above, each amount payable hereunder in any such national currency will, except
as otherwise provided herein, continue to be payable only in that national
currency.

          (b) The Company shall from time to time, at the request of any Lender,
pay to such Lender the amount of any losses, damages, liabilities, claims,
reduction in yield, additional expense or increased cost incurred by, or of any
reduction in any amount payable to or in the effective return on its capital to,
or any decrease or delay in the payment of interest or other return foregone by,
such Lender or any of its Affiliates as a result of any political, tax,
liquidity, currency exchange or market risk resulting from the introduction of,
changeover to or operation of the Euro in any applicable nation or Eurocurrency
market.

          (c) In addition, this Agreement will be amended to the extent
determined by the applicable Lender and the Administrative Agent (acting
reasonably and in consultation with the Company) to be necessary to reflect such
implementation of the EMU and change in currency and to put the Lenders and the
Company in the same position, so far as possible, that they would have been in
if such implementation and change in currency had not occurred. Except as
provided in the foregoing provisions of this Section 14.11, no such
implementation or change in currency nor any economic consequences resulting
therefrom shall (i) give rise to any right to terminate prematurely, contest,
cancel, rescind, alter, modify or renegotiate the provisions of this Agreement
or (ii) discharge, excuse or otherwise affect the performance of any obligation
of the Company under this Agreement or any Note.

          14.12 Confidentiality. The Administrative Agent, the Issuer and the
Lenders shall hold all non-public information obtained pursuant to the
requirements of this Agreement in accordance with their customary procedures for
handling confidential information of this nature and in accordance with safe and
sound banking practices and, in any event, may make disclosure on the same
confidential basis as provided for herein that is reasonably required by any
actual or bona fide potential transferee or participant in connection with the
contemplated transfer of any Loan or participation therein or in any Letter of
Credit or as required or requested by any governmental agency or representative
thereof or pursuant to legal process; provided that, unless specifically
prohibited by applicable law or court order, each of the Administrative Agent
and each Lender shall notify the Company of any request by any governmental
agency or representative thereof (other than any such request in connection with
an examination of the financial condition of the Administrative Agent or such
Lender by such governmental agency) for disclosure of any such non-public
information prior to disclosure of such information.

          14.13 No Third Parties Benefitted. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Lenders, the
Administrative Agent, the Agent-Related Persons and the Indemnified Persons, and
their permitted successors and assigns,


                                      -63-

and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.

          14.14 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE ADMINISTRATIVE AGENT'S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. EACH OF THE
ADMINISTRATIVE AGENT, THE COMPANY AND EACH LENDER HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT 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.

          14.15 Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENT, THE
COMPANY, THE ISSUER AND EACH LENDER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP
EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

          14.16 MISSOURI STATUTORY NOTICE. The Following notice is given to
comply with Mo. Rev. Stat. Section 432.045:

ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS


                                      -64-

THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE
MAY LATER AGREE IN WRITING TO MODIFY IT.

          14.17 Entire Agreement. This Agreement, together with the other Loan
Documents (and any fee letter between the Company and the Administrative Agent
and/or the Arranger), embodies the entire agreement and understanding among the
Company, the Lenders, the Issuer and the Administrative Agent, and supersedes
all prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and thereof.

                       [SIGNATURES BEGIN ON THE NEXT PAGE]


                                      -65-

          Delivered as of the day and year first above written.

                                       AMERICAN ITALIAN PASTA COMPANY



                                       By:______________________________
                                       Title: Executive Vice President/Chief
                                       Financial Officer


                                      S-1

                                       BANK OF AMERICA, N.A., as Administrative
                                       Agent



                                       By:________________________________
                                       Title: Vice President


                                      S-2

                                       BANK OF AMERICA, N.A., as a Lender



                                       By______________________________
                                       Title: Senior Vice President


                                      S-3

                                       BANK ONE, NA, with its main office in
                                       Chicago, IL, as Documentation Agent and
                                       as a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-4

                                       U.S. BANK NATIONAL
                                       ASSOCIATION, as Syndication
                                       Agent and as a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-5

                                       ING CAPITAL LLC



                                       By:    ______________________________
                                       Title: ______________________________

                                       By:    ______________________________
                                       Title: ______________________________


                                      S-6

                                       FLEET NATIONAL BANK, as Co-Agent and as
                                       a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-7

                                       KEYBANK NATIONAL ASSOCIATION, as Co-Agent
                                       and as a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-8

                                       COOPERATIEVE CENTRALE RAIFFEISEN-
                                       BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
                                       NEW YORK BRANCH, as Co-Agent and as a
                                       Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                       By:    ______________________________
                                       Title: ______________________________


                                      S-9

                                       WACHOVIA BANK, NATIONAL ASSOCIATION



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-10

                                       WELLS FARGO BANK, N.A., as Co-Agent and
                                       as a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-11

                                       BANCA NAZIONALE DEL LAVORO S.P.A.



                                       By:    ______________________________
                                       Title: ______________________________


                                       By:    ______________________________
                                       Title: ______________________________


                                      S-12

                                       THE BANK OF NEW YORK



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-13

                                       COMERICA BANK



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-14

                                       COMMERCE BANK, N.A.



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-15

                                       SUNTRUST BANK, as Co-Agent and as a Lender



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-16

                                       UNICREDITO ITALIANO



                                       By:    ______________________________
                                       Title: ______________________________

                                       By:    ______________________________
                                       Title: ______________________________


                                      S-17

                                       UMB BANK, N.A.




                                       By:    ______________________________
                                       Title: ______________________________


                                      S-18

                                       COBANK, ACB



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-19

                                       AGSTAR FINANCIAL SERVICES, PCA DBA FARM
                                       CREDIT SERVICES COMMERCIAL FINANCE GROUP



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-20

                                       AGFIRST, FCB



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-21

                                       FARM CREDIT BANK OF WICHITA



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-22

                                       FARM CREDIT SERVICES OF AMERICA, PCA



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-23

                                       GREENSTONE FARM CREDIT SERVICES, FLCA



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-24

                                       NORTHWEST FARM CREDIT SERVICES, PCA



                                       By:    ______________________________
                                       Title: ______________________________


                                      S-25

                                 SCHEDULE 1.1(a)
                      LENDERS, COMMITMENTS AND PERCENTAGES

- --------------------------- --------------- -------------- --------------- -------------- --------------
Name of Lender                 Amount of       Revolving         Term           Term        Percentage
                               Revolving       Percentage     Commitment     Percentage
                               Commitment
- --------------------------- --------------- -------------- --------------- -------------- --------------
Bank of America, N.A.        $26,583,333.30   9.666666667%           $0.00   0.000000000%   7.088888889%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Bank One, NA                 $24,750,000.00   9.000000000%   $3,000,000.00   3.000000000%   7.400000000%
- --------------------------- --------------- -------------- --------------- -------------- --------------
U.S. Bank National           $24,750,000.00   9.000000000%   $2,000,000.00   2.000000000%   7.133333333%
Association
- --------------------------- --------------- -------------- --------------- -------------- --------------
SunTrust Bank                $22,916,666.67   8.333333333%   $3,000,000.00   3.000000000%   6.911111111%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Wells Fargo Bank, N.A.       $20,166,666.67   7.333333333%   $3,000,000.00   3.000000000%   6.177777778%
- --------------------------- --------------- -------------- --------------- -------------- --------------
KeyBank National             $20,166,666.67   7.333333333%   $4,000,000.00   4.000000000%   6.444444444%
Association
- --------------------------- --------------- -------------- --------------- -------------- --------------
Cooperatieve Centrale        $20,166,666.67   7.333333333%   $3,000,000.00   3.000000000%   6.177777778%
Raiffeisen-Boerenleenbank
B.A., "Rabobank
Nederland", New York
Branch
- --------------------------- --------------- -------------- --------------- -------------- --------------
Fleet National Bank          $20,166,666.67   7.333333333%           $0.00   0.000000000%   5.377777778%
- --------------------------- --------------- -------------- --------------- -------------- --------------
ING Capital LLC              $11,000,000.00   4.000000000%   $3,000,000.00   3.000000000%   3.733333333%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Comerica Bank                $9,166,666.67    3.333333333%   $3,000,000.00   3.000000000%   3.244444444%
- --------------------------- --------------- -------------- --------------- -------------- --------------
The Bank of New York         $13,750,000.00   5.000000000%   $2,000,000.00   2.000000000%   4.200000000%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Banca Nazionale Del          $13,750,000.00   5.000000000%   $2,000,000.00   2.000000000%   4.200000000%
Lavoro S.p.A.
- --------------------------- --------------- -------------- --------------- -------------- --------------
UMB Bank, N.A.                $9,166,666.67   3.333333333%   $2,000,000.00   2.000000000%   2.977777778%
- --------------------------- --------------- -------------- --------------- -------------- --------------
CoBANK, ACB                           $0.00   0.000000000%   $8,000,000.00   8.000000000%   2.133333333%
- --------------------------- --------------- -------------- --------------- -------------- --------------
AgStar Financial Services,            $0.00   0.000000000%  $12,000,000.00  12.000000000%   3.200000000%
PCA dba Farm Credit
Services Commercial
Finance Group
- --------------------------- --------------- -------------- --------------- -------------- --------------
AgFirst, FCB                          $0.00   0.000000000%  $10,000,000.00  10.000000000%   2.666666667%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Farm Credit Bank of                   $0.00   0.000000000%  $10,000,000.00  10.000000000%   2.666666667%
Wichita
- --------------------------- --------------- -------------- --------------- -------------- --------------
Farm Credit Services of               $0.00   0.000000000%  $10,000,000.00  10.000000000%   2.666666667%
America, PCA
- --------------------------- --------------- -------------- --------------- -------------- --------------
Greenstone Farm Credit                $0.00   0.000000000%  $10,000,000.00  10.000000000%   2.666666667%
Services, FLCA
- --------------------------- --------------- -------------- --------------- -------------- --------------
Northwest Farm Credit                 $0.00   0.000000000%  $10,000,000.00  10.000000000%   2.666666667%
Services, PCA
- --------------------------- --------------- -------------- --------------- -------------- --------------
Commerce Bank, N.A.           $9,166,666.67   3.333333333%           $0.00   0.000000000%   2.444444444%
- --------------------------- --------------- -------------- --------------- -------------- --------------
UniCredito Italiano           $9,166,666.67   3.333333333%           $0.00   0.000000000%   2.444444444%
- --------------------------- --------------- -------------- --------------- -------------- --------------
Wachovia Bank, National      $20,166,666.67   7.333333333%           $0.00   0.000000000%   5.377777778%
Association
- --------------------------- --------------- -------------- --------------- -------------- --------------
TOTALS                      $275,000,000.00 100.000000000% $100,000,000.00 100.000000000% 100.000000000%
- --------------------------- --------------- -------------- --------------- -------------- --------------

                                 SCHEDULE 1.1(b)

                                PRICING SCHEDULE

     The Applicable Eurocurrency Margin, the Applicable Base Rate Margin, the
Non-Use Fee Rate and the LC Fee Rate shall be determined based on the applicable
Leverage Ratio as set forth below.

Level         Applicable Eurocurrency       Applicable Base     Non-Use Fee Rate
               Margin/LC Fee Rate for         Rate Margin
                 Letters of Credit
Level I                0.625%                   0.000%               0.150%
Level II               0.750%                   0.000%               0.175%
Level III              0.875%                   0.000%               0.200%
Level IV               1.000%                   0.000%               0.225%
Level V                1.250%                   0.000%               0.275%
Level VI               1.625%                   0.375%               0.350%
Level VII              2.000%                   0.750%               0.400%

     Level I applies when the Leverage Ratio is less than or equal to 1.00 to 1.

     Level II applies when the Leverage Ratio is greater than 1.00 to 1 but less
than or equal to 1.50 to 1.

     Level III applies when the Leverage Ratio is greater than 1.50 to 1 but
less than or equal to 2.00 to 1.

     Level IV applies when the Leverage Ratio is greater than 2.00 to 1 but less
than or equal to 2.50 to 1.

     Level V applies when the Leverage Ratio is greater than 2.50 to 1 but less
than or equal to 3.00 to 1.

     Level VI applies when the Leverage Ratio is greater than 3.00 to 1 but less
than or equal to 3.25 to 1.

     Level VII applies when the Leverage Ratio is greater than 3.25 to 1.

     Initially, the applicable Level shall be Level V. Beginning with September
28, 2001, the applicable Level shall be adjusted, to the extent applicable, 45
days (or, in the case of the last Fiscal Quarter of any Fiscal Year, 90 days)
after the end of each Fiscal Quarter based on the Leverage Ratio as of the last
day of such Fiscal Quarter; provided that if the Company fails to deliver the
financial statements required by Section 10.1.1 or 10.1.2, as applicable, by the
due date therefor, Level VII (or, after receipt by the Administrative Agent of a
Covenant Change Notice, Level VI) shall apply from such due date until such
financial statements are delivered; and provided, further, that if, pursuant to
proviso to the definition thereof, Consolidated EBITDA increases or decreases on
a pro forma basis as the result of an Acquisition or disposition, then the
applicable Level shall be immediately adjusted, if applicable, on the date on
which such

Acquisition or disposition is consummated (giving effect to such increase or
decrease in Consolidated EBITDA and any change in the amount of Funded Debt then
outstanding). Any adjustment to a Level shall apply immediately for all
outstanding Loans and Letters of Credit.

                                  SCHEDULE 14.2
                              ADDRESSES FOR NOTICES

AMERICAN ITALIAN PASTA COMPANY

4100 North Mulberry Drive
Suite 200
Kansas City, MO 64116
Attention: Chief Financial Officer
Telephone: (816) 584-4636
Facsimile: (816) 584-5736

BANK OF AMERICA, N.A.

For notices of borrowing and payments:

901 Main Street
Dallas, TX
Attention: Monica Barnes
Telephone: (214) 209-9289
Facsimile: (314) 290-9442

For notices regarding Standby Letters of Credit:

Trade Operations - Los Angeles
333 S. Beaudry Avenue, 23rd Floor
Mail Code CA9-703-19-23
Los Angeles, CA 90017-1466
Attention: Ben Cortes
Telephone: (213) 345-5230
Facsimile: (213) 345-6710

For notices regarding Commercial Letters of Credit:

Trade Operations - Los Angeles
333 S. Beaudry Avenue, 23rd Floor
Mail Code CA9-703-19-15
Los Angeles, CA 90017-1466
Attention: Frantz Bellevue
Telephone: (213) 345-6616
Facsimile: (213) 345-9665

For all other administrative matters:

231 South LaSalle Street
Chicago, IL 60697
Mail Code IL1-231-08-30
Attention: David A. Johanson
Telephone: (312) 828-7933
Facsimile: (877) 207-0485
Email: David.Johanson@bankofamerica.com

For all other notices:

1200 Main St.
MO8-060-12-12
Kansas City, MO 64105-1702
Attention: Thomas R. Mahoney
Telephone: (816) 979-7921
Facsimile: (861) 979-7561
Email: Tom.Mahoney@bankofamerica.com

BANK ONE, NA (Main Office Chicago)

For notices of borrowing and payments:

401 W. Main Street
Louisville, KY 40202
Attention: Jenny Fox
Telephone: (502) 566-8373
Facsimile: (502) 566-8994

For all other notices:

111 E. Wisconsin Avenue
P.O. Box 2033
Milwaukee, WI 53201
Attention: Cindy L. Wavrunek
Telephone: (414) 765-2109
Facsimile: (414) 765-2176
Email: cindy_l_wavrunek@bankone.com

U.S. BANK NATIONAL ASSOCIATION

For notices of borrowing and payments:

1850 Osborn Avenue
Oshkosh, WI 54902
Attention: Connie Sweeney
Telephone: (920) 426-7604
Facsimile: (920) 426-7993

For all other notices:

1101 Walnut, 7th Floor
Kansas City, MO 64106
Attention: John P. Mills
Telephone: (816) 871-2174
Facsimile: (816) 871-2226
Email: john.p.mills@usbank.com

ING CAPITAL LLC

For notices of borrowing and payments:

1325 Avenue of the Ameircas
New York, NY 10019
Attention: Eileen Barrios
Telephone: (646) 424-8232
Facsimile: (646) 424-8253
Email: Eileen.barrios@americas.ing.com

For all other notices:

Attention: Bill Redmond
Telephone: (646) 424-6639
Facsimile: (646) 424-6390
Email: Bill.redmond@americas.ing.com

FLEET NATIONAL BANK

For notices of borrowing and payments:

100 Federal Street
Mail Code MA DE 10008H
Boston, MA 02110
Attention: Michael Butler
Telephone: (617) 434-5777
Facsimile: (617) 434-9933
Email: michael_c_butler@fleet.com

For all other notices:

100 Federal Street
Mail Code MA DE 10008H
Boston, MA 02110
Attention: Lori H. Jou
Telephone: (617) 434-3898
Facsimile: (617) 434-0637
Email: lori_h_jou@fleet.com

KEYBANK NATIONAL ASSOCIATION

For notices of borrowing and payments:

127 Public Square
Cleveland, OH 44114
Attention: Kathy Koenig
Telephone: (216) 689-4228
Facsimile: (216) 689-4981

For all other notices:

127 Public Square
Cleveland, OH 44114
Attention: David J. Wechter
Telephone: (216) 689-4442
Facsimile: (216) 689-4981

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH

For notices of borrowing and payments:

10 Exchange Place, 16th Floor
Jersey City, NJ 07302
Attention: Clemencia Stewart
Telephone: (201) 499-5245
Facsimile: (201) 499-5328

For all other notices:

300 S. Wacker Drive
Suite 3500
Chicago, IL 60606
Attention: Tom Kelly
Telephone: (312) 408-8222
Facsimile: (312) 408-8240

WACHOVIA BANK, NATIONAL ASSOCIATION

For notices of borrowing and payments:

191 Peachtree Street
Atlanta, GA 30303-1757
Attention: Yolanda Pearison
Telephone: (404) 332-4295
Facsimile: (404) 332-6898
Email: Yolanda.pearison@wachovia.com

For all other notices:

191 Peachtree Street
Atlanta, GA 30303-1757
Attention: Andrew B. Deskins
Telephone: (404) 332-1213
Facsimile: (404) 332-4136
Email: Andrew.deskins@wachovia.com

WELLS FARGO BANK, N.A.

For notices of borrowing and payments:

1740 Broadway
Denver, CO 80274
Attention: James Carpinelli
Telephone: (303) 863-5357
Facsimile: (303) 863-2729
Email: James.A.Carpinelli@wellsfargo.com

For all other notices:

4100 N. Mulberry
Suite 105
Kansas City, MO 64116
Attention: Peter Arendt
Telephone: (816) 506-5334
Facsimile: (816) 587-9537
Email: arendtph@wellsfargo.com

BANCA NAZIONALE DEL LAVORO S.P.A.

For notices of borrowing and payments:

25 West 51st Street
New York, NY 10019
Attention: Anna Hernandez
Telephone: (212) 314-0679
Facsimile:(212) 314-0244

For all other notices:

25 West 51st Street
New York, NY 10019
Attention: Franco Di Mario
Telephone: (212) 314-0239
Facsimile: (212) 765-2978
Email: Franco.Dimario@BNLmail.com

THE BANK OF NEW YORK

For notices of borrowing and payments:

1 Wall Street
New York, NY 10286
Attention: Millie Hall
Telephone: (212) 635-6687
Facsimile: (212) 635-7923

For all other notices:

1 Wall Street
New York, NY 10286
Attention: John-Paul Marotta
Telephone: (212) 635-8204
Facsimile: (212) 635-1208

COMERICA BANK

For notices of borrowing and payments:

500 Woodward Avenue
Detroit, MI 48226
Attention: Stepahnie Williams
Telephone: (313) 222-3904
Facsimile: (312) 222-9516
Email: stepahnie_c_williams@comerica.com

For all other notices:

500 Woodward Avenue
Detroit, MI 48226
Attention: Neran Shaya
Telephone: (313) 222-3070
Facsimile: (312) 222-9516
Email: neran_shaya@comerica.com

COMMERCE BANK, N.A.

For notices of borrowing and payments:

1000 Walnut Street
BB17-3
Kansas City, MO 64106
Attention: Diane Jones
Telephone: (816) 234-2702
Facsimile: (816) 234-7891

For all other notices:

1000 Walnut Street
BB17-3
Kansas City, MO 64106
Attention: Lance Holden
Telephone: (816) 234-21935
Facsimile: (816) 234-7290
Email: lance.holden@commercebank.com

SUNTRUST BANK

For notices of borrowing and payments:

303 Peachtree Street, NE
10th Floor
MC 1941
Atlanta, GA 30308
Attention: Michelle Wood-Welch
Telephone: (404) 588-8038
Facsimile: (404) 230-1940
Email: michelle.wood@suntrust.com

For all other notices:

303 Peachtree Street, NE
3rd Floor, MC 1905
Atlanta, GA 30308
Attention: Dana Cain
Telephone: (404) 532-0260
Facsimile: (404) 230-5305
Email: dana.cain@suntrust.com

UNICREDITO ITALIANO GROUP

For notices of borrowing and payments:

375 Park Avenue
New York, NY 10152
Attention: Angie Blanco
Telephone: (212) 546-9616/9615
Facsimile: (212) 546-9675

For all other notices:

375 Park Avenue
New York, NY 10152
Attention: Christopher J. Eldin
Telephone: (212) 546-9611
Facsimile: (212) 546-9665
Email: NewYorkBranch@Gruppocredit.it

UMB BANK, N.A.

For notices of borrowing and payments:

928 Grand Avenue
Kansas City, MO 64106
Attention: Vaughnda Ritchie
Telephone: (816) 860-7019
Facsimile: (816) 860-7796
Email: vaughnda.ritchie@umb.com

For all other notices:

1010 Grand Avenue
Kansas City, MO 64106
Attention: David Proffitt
Telephone: (816) 860-7935
Facsimile: (816) 860-7143
Email: david.proffitt@umb.com

COBANK, ACB

For notices of borrowing and payments:

5500 South Quebec Street
Greenwood Village, CO 80111
Attention: Deann Sullivan
Telephone: (303) 740-4315
Facsimile: (303) 740-4021

For all other notices:

5500 South Quebec Street
Greenwood Village, CO 80111
Attention:  Rick Dill
Telephone: (303) 740-4197
Facsimile: (303) 740-4002

AGSTAR FINANCIAL SERVICES, PCA DBA FARM
CREDIT SERVICES COMMERCIAL FINANCE GROUP

For notices of borrowing and payments:

1921 Premier Drive
P.O. Box 4249
Mankato, MN 56002
Attention: Karen Doyen
Telephone: (507) 345-5626
Facsimile: (507) 344-5081
Email: kdoyen@agstar.com

For all other notices:

Interchange Tower, Suite 850
600 S. Highway 169
Minneapolis, MN 55426
Attention:  James Grafing
Telephone: (952) 513-0326 ext. 303
Facsimile: (952) 513-9956
Email: jgrafin@farmcredit.com

AGFIRST, FCB

For notices of borrowing and payments:

1401 Hampton Street
Columbia, SC 29202
Attention: Robin Morris
Telephone: (800) 845-1745, ext. 448
Facsimile: (803) 256-7139
Email: rmorris@agfirst.com

For all other notices:

1401 Hampton Street
Columbia, SC 29202
Attention:  Bruce Fortner
Telephone: (800) 845-1745, ext. 457
Facsimile: (803) 254-4219
Email: jburnside@agfirst.com

FARM CREDIT BANK OF WICHITA

For notices of borrowing and payments:

245 N. Waco
Wichita, KS 67202
Attention: Sandra Lahar
Telephone: (316) 266-5172
Facsimile: (316) 291-5085
Email: sandra.lahar@usagbank.com

For all other notices:

245 N. Waco
Wichita, KS 67202
Attention:  Greg Somerholder
Telephone: (316) 266-5283
Facsimile: (316) 291-5011
Email: greg.somerholder@usagbank.com

FARM CREDIT SERVICES OF AMERICA, PCA

For notices of borrowing and payments:

5015 S. 118th Street
Omaha, NE 68137
Attention: Sue Bement
Telephone:  (402) 348-3284
Facsimile: (402) 348-3324
Email: Bements@fcsamerica.com

For all other notices:

5015 S. 118th Street
Omaha, NE 68137
Attention:  Steve Moore
Telephone: (402) 348-3339
Facsimile: (402) 348-3324
Email: Moores@fcsamerica.com

NORTHWEST FARM CREDIT SERVICES, PCA

For notices of borrowing and payments:

1700 South Assembly Street
Spokane, WA 99224
Attention: Technical Accounting
Telephone: (800) 216-4535
Facsimile: (509) 340-5364
Email: tech_acctg@farm-credit.com

For all other notices:

1700 South Assembly Street
Spokane, WA 99224
Attention:  Jim D. Allen
Telephone: (509) 340-5555
Facsimile: (509) 340-5503
Email: participations@farm-credit.com

GREENSTONE FARM CREDIT SERVICES, FLCA

For notices of borrowing and payments:

1760 Abbey Road, Suite 200
East Lansing, MI 48823
Attention: Kelly Wilkes
Telephone: (517) 318-4119
Facsimile: (517) 318-1240
Email: kwilkes@greenstonefcs.com

Attention: Addie Pritchard
Telephone: (517) 318-4139
Facsimile: (517) 318-1240
Email: apritch@greenstonefcs.com

For all other notices:

1760 Abbey Road, Suite 200
East Lansing, MI 48823
Attention:  Al Compton
Telephone: (517) 318-4128
Facsimile: (517) 318-1240
Email: acompto@greenstonefcs.com

Attention:  Laura Roessler
Telephone: (517) 318-4158
Facsimile: (517) 318-1240
Email: lroessl@greenstonefcs.com

EX-10

                                                                    Exhibit 10.1




                         AMERICAN ITALIAN PASTA COMPANY

                                       AND

                                GOOCH FOODS, INC.

                                       AND

                         ARCHER-DANIELS-MIDLAND COMPANY

                            ASSET PURCHASE AGREEMENT



                               SEPTEMBER 30, 2002

                                                                  EXECUTION COPY

                                TABLE OF CONTENTS

                                                                        Page No.

ARTICLE I.  DEFINITIONS AND INTERPRETATIONS....................................1

   SECTION 1.1.  DEFINED TERMS.................................................1

   SECTION 1.2.  TERMS DEFINED IN THE AGREEMENT................................2

   SECTION 1.3.  INTERPRETATIONS...............................................3


ARTICLE II.  PURCHASE AND SALE OF ASSETS.......................................4

   SECTION 2.1.  ASSETS........................................................4

   SECTION 2.2.  EXCLUDED ASSETS...............................................5

   SECTION 2.3.  ASSUMED LIABILITIES...........................................5

   SECTION 2.4.  RETAINED LIABILITIES..........................................5


ARTICLE III.  PURCHASE PRICE OF ASSETS.........................................6

   SECTION 3.1.  PURCHASE PRICE................................................6

   SECTION 3.2.  ADJUSTMENTS TO PURCHASE PRICE.................................6

   SECTION 3.3.  CLAIMS........................................................7

   SECTION 3.4.  ALLOCATION OF PURCHASE PRICE..................................7


ARTICLE IV.  CLOSING...........................................................7

   SECTION 4.1.  DATE, TIME AND PLACE OF CLOSING...............................7

   SECTION 4.2.  DELIVERIES BY SELLER AT CLOSING...............................8

   SECTION 4.3.  DELIVERIES BY BUYER AT CLOSING................................9

   SECTION 4.4.  EFFECTIVE TIME................................................9


ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF SELLER...........................9

   SECTION 5.1.  EXISTENCE.....................................................9

   SECTION 5.2.  POWER AND AUTHORITY..........................................10

   SECTION 5.3.  EXECUTION AND DELIVERY PERMITTED.............................10

   SECTION 5.4.  CONSENTS.....................................................10

   SECTION 5.5.  AFFILIATE CONTRACTS..........................................10

   SECTION 5.6.  OWNERSHIP OF ASSETS..........................................10

   SECTION 5.7.  CONTRACTS....................................................10

   SECTION 5.8.  INTANGIBLE PERSONAL PROPERTY.................................11


                                       i

   SECTION 5.9.  BINDING EFFECT...............................................11

   SECTION 5.10.  DOCUMENTS SUFFICIENT........................................11

   SECTION 5.11.  LITIGATION AND COMPLIANCE WITH LAW..........................11

   SECTION 5.12.  TAXES.......................................................11

   SECTION 5.13.  PERMITS.....................................................12

   SECTION 5.14.  CUSTOMERS...................................................12

   SECTION 5.15.  BOOKS AND RECORDS; DISCLOSURE...............................12

   SECTION 5.16.  BROKERS FEES................................................12

   SECTION 5.17.  INVENTORY...................................................12

   SECTION 5.18.  DISCLAIMER..................................................12


ARTICLE VI.  COVENANTS OF SELLER..............................................13

   SECTION 6.1.  PERFORMANCE OF CONTRACTS AND RETAINED LIABILITIES............13

   SECTION 6.2.  CONDUCT OF BUSINESS..........................................13

   SECTION 6.3.  ACCESS TO INFORMATION........................................14

   SECTION 6.4.  NO SALE NEGOTIATIONS.........................................14

   SECTION 6.5.  CONFIDENTIALITY..............................................15

   SECTION 6.6.  REPORTING REQUIREMENTS.......................................15

   SECTION 6.7.  COOPERATION OTHER ACTIONS....................................15

   SECTION 6.8.  SUBSEQUENT CONTRACTS.........................................15

   SECTION 6.9.  TRANSFER AND SALES TAX.......................................15

   SECTION 6.10.  PASTA PRODUCTS..............................................16

   SECTION 6.11.  INSURANCE...................................................16

   SECTION 6.12.  SUPPLY OF SOY PROTEIN.......................................16

   SECTION 6.13.  SOY 7 LICENSE...............................................16


ARTICLE VII.  REPRESENTATIONS AND WARRANTIES OF BUYER.........................16

   SECTION 7.1.  CORPORATE EXISTENCE..........................................16

   SECTION 7.2.  CORPORATE POWER AND AUTHORITY................................16

   SECTION 7.3.  EXECUTION AND DELIVERY PERMITTED.............................16

   SECTION 7.4.  BINDING EFFECT...............................................17

   SECTION 7.5.  CONSENTS.....................................................17

   SECTION 7.6.  BROKERS FEES.................................................17


ARTICLE VIII.  COVENANTS OF BUYER.............................................17


                                       ii

   SECTION 8.1.  BUYER PERFORMANCE............................................17

   SECTION 8.2.  CONFIDENTIALITY..............................................17

   SECTION 8.3.  OTHER ACTIONS................................................17

   SECTION 8.4.  NOTIFICATION OF CERTAIN MATTERS..............................17

   SECTION 8.5.  POST CLOSING IDENTIFICATION..................................17


ARTICLE IX.  CONDITIONS TO CLOSING............................................18

   SECTION 9.1.  BUYER'S CONDITIONS TO CLOSING................................18

   SECTION 9.2.  SELLER'S CONDITIONS TO CLOSING...............................18


ARTICLE X.  SURVIVAL AND INDEMNIFICATION......................................19

   SECTION 10.1.  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.......19

   SECTION 10.2.  INDEMNIFICATION BY SELLER...................................19

   SECTION 10.3.  INDEMNIFICATION BY BUYER....................................19

   SECTION 10.4.  TIME TO ASSERT CLAIMS.......................................20

   SECTION 10.5.  THIRD PARTY CLAIM INDEMNIFICATION PROCEDURE.................20

   SECTION 10.6.  LIMITATIONS ON INDEMNIFICATION..............................20


ARTICLE XI.  DISPUTE RESOLUTION...............................................21

   SECTION 11.1.  GENERAL.....................................................21

   SECTION 11.2.  NEGOTIATION.................................................21

   SECTION 11.3.  ARBITRATION; CLAIMS COVERED; CONCLUSIVE DETERMINATION.......21

   SECTION 11.4.  ARBITRATION PROCEDURES; SURVIVAL............................21

   SECTION 11.5.  CONFIDENTIALITY.............................................21


ARTICLE XII.  SETTLEMENT AND RELEASE..........................................22

   SECTION 12.1.  CONTRACT MANUFACTURING AGREEMENT AMENDMENT..................22

   SECTION 12.2.  SETTLEMENT AND RELEASE......................................22


ARTICLE XIII.  MISCELLANEOUS..................................................22

   SECTION 13.1.  NOTICES.....................................................22

   SECTION 13.2.  APPLICABLE LAW..............................................23

   SECTION 13.3.  BENEFIT AND ASSIGNMENT......................................23

   SECTION 13.4.  NO THIRD PARTY BENEFICIARY..................................23

   SECTION 13.5.  EXPENSES....................................................23

   SECTION 13.6.  WAIVER......................................................23


                                      iii

   SECTION 13.7.  EQUITABLE RELIEF; REMEDIES CUMULATIVE; INTEREST.............24

   SECTION 13.8.  FURTHER ACTIONS; TRANSITION.................................24

   SECTION 13.9.  ENTIRE AGREEMENT; AMENDMENT.................................24

   SECTION 13.10.  COUNTERPARTS...............................................25

   SECTION 13.11.  TERMINATION................................................25

   SECTION 13.12.  PUBLIC ANNOUNCEMENTS.......................................25


                                       iv

                               TABLE OF SCHEDULES


Schedule 2.1 (a)           Intellectual Property
Schedule 2.1 (c)           Material Contracts
Schedule 2.1 (d)           UPC's
Schedule 3.4               Purchase Price Allocation
Schedule 5.4               ADM Required Consents
Schedule 5.5               Affiliate Contracts
Schedule 5.7               Material Contracts Requiring Consent to Assign
Schedule 5.11              Litigation Matters
Schedule 11.4              Arbitration Procedures
Schedule 13.12             Press Release

                                TABLE OF EXHIBITS


Exhibit 4.2(a)             Bill of Sale
Exhibit 4.2(b)             Assignment and Assumption Agreement
Exhibit 4.2(d)             Cross Receipt
Exhibit 4.2(i)             Transition Agreement
Exhibit 6.12               Protein Purchase Agreement
Exhibit 6.13               Soy 7 License
Exhibit 12.1               Contract Manufacturing Agreement Amendment

                                                                  EXECUTION COPY

                            ASSET PURCHASE AGREEMENT

     THIS AGREEMENT (the  "Agreement") is entered into as of September 30, 2002,
by  and  among  GOOCH  FOODS,  INC.,  a  Delaware  corporation  ("Gooch"),   and
ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation ("ADM"; and together with
Gooch,  "Seller"),  and AMERICAN ITALIAN PASTA COMPANY,  a Delaware  corporation
("Buyer").

     WHEREAS,  Seller owns various items of personal and intellectual  property,
as more fully  defined in Section  2.1,  used in the  marketing  and sale of the
Branded Products (the "Business"); and

     WHEREAS,  Seller desires to sell the Assets (as defined below) to Buyer and
Buyer  desires to purchase the Assets from Seller in exchange for cash and other
valuable consideration.

     NOW,   THEREFORE,   in  consideration  of  the  foregoing  and  the  mutual
agreements,  covenants,  representations,  warranties  and  promises  set  forth
herein, the parties hereto agree as follows:

                                   ARTICLE I.
                         DEFINITIONS AND INTERPRETATIONS

     Section 1.1. Defined Terms. Capitalized terms not otherwise defined in this
Agreement shall each have the meaning given in this Section 1.1.

"Affiliate" means any Person that controls, is controlled by, or is under common
control with, a Person.

"Branded  Products" means potato,  dinner and pasta products,  but not including
soy enriched pasta products, marketed and sold using the Brands.

"Brands" means the LaRosa and Martha Gooch brands.

"Code"  means the Internal  Revenue Code of 1986,  as amended from time to time,
and any successor thereto and any regulations promulgated thereunder.

"Confidentiality  Agreement" means that certain Secrecy Agreement by and between
Gooch and the Buyer dated as of August 16, 2002.

"Contract  Manufacturing  Agreement" means that certain  Contract  Manufacturing
Agreement by and between Gooch and Buyer dated as of December 1, 2000.

"Governmental Authority" means any federal, state, local or foreign governmental
or regulatory or administrative  department,  court, commission,  board, bureau,
agency, authority or instrumentality.

"Lien" means any mortgage,  pledge,  lien, charge,  claim,  option,  conditional
sale,  deed of trust,  security  interest or other  encumbrance,  restriction or
limitation of any nature whatsoever.

"Material  Adverse Event" means an event that causes or is reasonably  likely to
lead to or result in a material  adverse effect on, or a material adverse change
in, the operations or condition  (financial or otherwise) of the Business or the
Assets and that will result or is  reasonably  likely to result in an obligation
or liability in excess of $250,000,  or a material adverse effect on the ability
of Seller to  execute,  deliver or perform  this  Agreement  or any of the other
agreements and documents contemplated by this Agreement.

"Ordinary  Course of  Business"  means the  ordinary  course of  business of the
Business  consistent  with past custom and practice  (including  with respect to
quantity,  frequency, expense level, personnel resources,  promotional and sales
activity, etc.).

"Person" means an individual, a partnership,  a corporation, a limited liability
company,  an association,  a joint stock company,  a trust, a joint venture,  an
unincorporated  organization,  a  Governmental  Authority  or any other  type of
entity.

"Tax" or "Taxes" means any and all taxes,  fees,  duties,  tariffs,  imposts and
other  charges  of any kind  imposed  by any  Governmental  Authority  or taxing
authority,  including:  federal, state, local or foreign income, gross receipts,
windfall profits,  property, motor vehicle, ad valorem, value added, production,
sales, use, license, excise, franchise, capital, transfer, recordation, payroll,
employment,  severance,  stamp,  occupation,  premium,  environmental (including
taxes  under  Code  s.59A),  customs  duties,  social  security  (or  similar),
unemployment,  disability,  withholding,  alternative  or add-on minimum tax, or
other tax or governmental assessment,  together with any interest, additions, or
penalties with respect  thereto and any interest in respect of such additions or
penalties, whether disputed or not.

     Section  1.2. Terms  Defined in the  Agreement.  In  addition to the defined
terms in Section  1.1,  the  following  is a list of defined  terms used in this
Agreement and a reference to the Section in which such term is defined:

         Defined Term                             Section in which Defined
         ADM                                      Recitals
         Agreed Amount                            s. 2.3
         Arbitrator                               Schedule 11.4
         Assets                                   s. 2.1
         Assumed Liabilities                      s. 2.3
         Business                                 Recitals
         Buyer Indemnification Claim              s. 10.2
         Cash Amount                              s. 3.1
         Claim Notice                             s. 11.2
         Claiming Party                           s. 11.2
         Claims                                   s. 11.1
         Closing                                  s. 4.1
         Closing Date                             s. 4.1
         Closing Date Balance Sheet               s. 3.2
         Contract Manufacturing
         Agreement Amendment                      s. 12.1


                                       2

         Contracts                                s. 2.1(c)
         Customer Claims                          s. 3.3(a)
         Customer Lists                           s. 2.1(b)
         Effective Time                           s. 4.4
         Excluded Assets                          s. 2.2
         Financial Statements                     s. 5.15
         Gooch                                    Recitals
         Indemnification Claim                    s. 10.4
         Indemnification Claim Notice             s. 10.4
         Intangible Personal Property             s. 5.8
         Intellectual Property                    s. 2.1(a)
         Intentional Claims                       s. 10.6(d)
         Inventory                                s. 2.1(e)
         Inventory Purchase Amount                s. 3.2
         Other Intangible Rights                  s. 2.1(d)
         Paying Party                             s. 3.3(a)
         Post-Closing Claims                      s. 3.3(a)
         Procedures                               s. 11.3
         Promotional Payable Claims               s. 3.3
         Promotional Payables                     s. 2.3
         Protein Supply Agreement                 s. 6.12
         Purchase Price                           s. 3.1
         Receiving Party                          s. 3.3(a)
         Released Parties                         s. 12.2
         Retained Liabilities                     s. 2.4
         Selected Inventory                       s. 2.1(e)
         Seller Indemnification Claim             s. 10.3
         Soy 7 License Agreement                  s. 6.13
         Submitted Claims                         s. 3.3(a)
         Subsequent Contracts                     s. 6.8
         Trade Loading                            s. 6.2(a)(iv)
         Unintentional Claims                     s. 10.6(c)
         UPC Codes                                s. 2.1(d)

     Section 1.3. Interpretations.  Words used in this Agreement,  regardless of
the gender and number specifically used, shall be construed to include any other
gender and any other number as the context requires. Use of the word "including"
throughout  this Agreement  shall mean "including but not limited to." Except as
otherwise provided in this Agreement in a particular  instance, a reference to a
Section,  Article, Schedule or Exhibit is a reference to a Section or Article of
this  Agreement  or a Schedule  or  Exhibit  attached  hereto,  each of which is
incorporated  into this Agreement by reference.  The terms  "hereof,"  "herein,"
"this  Agreement"  and other  like  terms  refer to this  Agreement  as a whole,
including  the  Schedules  and Exhibits  hereto,  all  certificates  and closing
documents  delivered  herewith,  and not solely to any  particular  part of this
Agreement.  The titles of the sections of this Agreement are for  convenience of
reference only, and are not to be considered in construing this Agreement.


                                       3

                                  ARTICLE II.
                           PURCHASE AND SALE OF ASSETS

     Section 2.1. Assets.  Subject to the terms and conditions set forth in this
Agreement,  Seller  shall at the  Closing  sell,  transfer,  convey,  assign and
deliver  to Buyer free and clear of all Liens,  and Buyer  shall at the  Closing
purchase and accept from Seller,  all of Seller's  right,  title and interest in
and to those assets,  whether  tangible or  intangible,  specifically  set forth
below (the "Assets"):

          (a)  all  trademarks,   trade  names,   copyrights,   recipes,  logos,
     marketing  materials,  designs used  exclusively  with the Branded Products
     (including all trade dress and packaging  artwork and logos  presently,  or
     within  five (5) years  from the date of  Closing,  used in  promoting  the
     Brands and the  physical  plates or screens  used to make,  manufacture  or
     press  the  same),  confidential  and  proprietary  information  and  other
     intellectual   property   (regardless  of  whether   registered   with  any
     Governmental  Authority)  exclusively  used in connection  with the Branded
     Products,  including those set forth on Schedule  2.1(a),  and all goodwill
     associated with each of the foregoing (the "Intellectual Property");

          (b) all lists of current and past  customers  of the Branded  Products
     for two years prior to the Closing,  which list shall  include the business
     address and shipping address for such customers (the "Customer Lists");

          (c)  all  agreements,   contracts,  contract  rights,  understandings,
     commitments  and  arrangements  of Seller  (regardless of whether  prepaid)
     related  exclusively to the Branded Products,  whether oral or written (the
     "Contracts"), including (i) the material Contracts identified or summarized
     on Schedule 2.1(c);  (ii) any and all material purchase orders delivered to
     suppliers, identified or summarized on Schedule 2.1(c), for which the goods
     or services  being  purchased by Seller relate  exclusively  to the Branded
     Products  and are  delivered  to Buyer  after  Closing;  (iii)  any and all
     material  open  customer  purchase  orders taken in the Ordinary  Course of
     Business  that have not been  fulfilled and paid for as of the Closing Date
     identified  or summarized on Schedule  2.1(c);  (iv) material  customer and
     shelf  space  contracts  (regardless  of whether  pre-paid)  identified  or
     summarized  on  Schedule  2.1(c);   and  (v)  material  supplier  contracts
     identified  or  summarized  on Schedule  2.1(c).  A Contract will be deemed
     material if the  Contract is for the purchase or sale of goods or services,
     or otherwise creates an obligation or liability,  in an aggregate amount of
     more than $25,000.00;

          (d) all of Seller's  rights to all of Seller's  Uniform  Product Codes
     exclusively  used for the Branded  Products  (the "UPC  Codes"),  including
     those  listed on  Schedule  2.1 (d)  (collectively,  the "Other  Intangible
     Rights"); and

          (e) all  Branded  Product  inventories  (the  "Inventory")  located at
     Buyer's  Excelsior  Springs,  Missouri plant or any other location owned or
     controlled by Buyer, and determined by Buyer in its reasonable  judgment to
     be within  date,  merchantable  and  suitable  for human  consumption  (the
     "Selected Inventory").


                                       4

     Section 2.2. Excluded Assets.  All other assets of Seller,  whether or not
related to the Business,  not  specifically  included in the Assets set forth in
Section 2.1  (collectively,  the "Excluded  Assets") will not be included in the
Assets.

     Section 2.3. Assumed Liabilities.  As of the Closing, Buyer will assume and
agree to  discharge  and  perform  (i) all of  Seller's  obligations  under  the
Contracts, but only to the extent that such obligations arise from and after the
Closing,  and with  respect to  material  Contracts,  are set forth on  Schedule
2.1(c),  (ii)  Seller's  obligations  for marketing  and  promotional  expenses,
including coupons, discounts and the like offered by Seller prior to the Closing
but not yet paid  ("Promotional  Payables"),  but only to the  extent  that such
Promotional  Payables do not exceed  $1,000,000.00  ("Agreed  Amount")  and were
incurred in the Ordinary  Course of  Business,  and (iii)  Seller's  wheat price
increase  reserve  payable to Buyer, if any, in the amount of up to $500,000.00,
(collectively,  the  "Assumed  Liabilities").  "Assumed  Liabilities"  does  not
include  and Buyer  shall not assume any  liability  for any  tortious  or other
wrongful action,  breach of contract, or nonperformance of any duty by Seller at
any time before or after the Closing.

     Section 2.4. Retained  Liabilities.  Notwithstanding  anything contained in
this Agreement to the contrary,  Buyer does not assume or agree to pay, satisfy,
discharge  or  perform,  and will not be deemed by virtue of the  execution  and
delivery of this Agreement or any document  delivered at the Closing pursuant to
this  Agreement,  or  as a  result  of  the  consummation  of  the  transactions
contemplated  by this  Agreement,  to have  assumed,  or to have  agreed to pay,
satisfy,  discharge or perform,  any liability,  obligation or  indebtedness  of
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities.  Seller shall  retain and pay,  satisfy,  discharge  and perform in
accordance with the terms thereof,  all  liabilities and obligations  other than
the Assumed Liabilities (the "Retained  Liabilities").  Without limitation,  the
Retained Liabilities shall include:

          (a) all  obligations  or  liabilities  of Seller or any  Affiliate  of
     Seller in respect of the  Contracts  arising  from or  attributable  to the
     period before  Closing,  except with respect to Promotional  Payables up to
     the Agreed Amount;

          (b) all  obligations  or  liabilities  of Seller or any  Affiliate  of
     Seller in respect of trade  payables,  other  accounts  payable and accrued
     expenses,  except  with  respect to  Promotional  Payables up to the Agreed
     Amount;

          (c) all  obligations  or  liabilities  of Seller or any  Affiliate  of
     Seller that relate to any of the Excluded Assets;

          (d) all  obligations  or  liabilities  of Seller or any  Affiliate  of
     Seller  that relate to Taxes  arising  from or  attributable  to the period
     before Closing;

          (e)  all  obligations  or  liabilities  for  any  legal,   accounting,
     investment  banking,  brokerage  or similar  fees or  expenses  incurred by
     Seller or any Affiliate of Seller in  connection  with,  resulting  from or
     attributable to the transactions contemplated by this Agreement;


                                       5

          (f) all  obligations  or  liabilities  of Seller or any  Affiliate  of
     Seller for any borrowed money,  and all obligations or liabilities  arising
     under any letter of credit or guaranty issued in connection therewith;

          (g) except for the Assumed Liabilities, all obligations or liabilities
     of Seller or any Affiliate of Seller  resulting from,  caused by or arising
     out of, directly or indirectly,  the conduct of the Business by Seller,  or
     the  ownership  or lease of any of the Assets or any  properties  or assets
     previously used in the Business at any time prior to the Closing, including
     such of the  foregoing  as  constitute,  may  constitute  or are alleged to
     constitute  a tort,  or  violation  of any legal  requirement,  contract or
     agreement by which Seller is bound; and

          (h) all  obligations  in respect of  present  or former  employees  or
     independent contractors of Seller or any Affiliate of Seller, including (i)
     claims for severance,  unemployment compensation or insurance, any employee
     benefits or other compensation or damages by or on behalf of any present or
     former employees or independent contractors of Seller or by or on behalf of
     any  Governmental  Authority  in respect of present or former  employees or
     independent  contractors of Seller; (ii) all liabilities and obligations of
     Seller or any  Affiliate  of  Seller  with  respect  to  present  or former
     employees or  independent  contractors  of Seller under any Plan; and (iii)
     all liabilities and obligations  with respect to physical,  mental or other
     health conditions of present or former employees or independent contractors
     of Seller.

                                  ARTICLE III.
                            PURCHASE PRICE OF ASSETS

     Section 3.1. Purchase Price.  Subject to the terms and conditions  provided
in this  Agreement,  Buyer  shall pay to  Seller  the  amount of  $5,000,000.00,
adjusted as set forth in Section 3.2 (the "Cash  Amount" and  together  with the
Assumed  Liabilities,  the "Purchase Price").  Buyer shall pay to Seller by wire
transfer  $1,000,000.00 upon the execution of this Agreement as earnest money to
be  credited  against the  Purchase  Price at the  Closing.  Buyer shall pay the
remaining  Purchase  Price to Seller by wire  transfer at the Closing.  All wire
transfers  made by Buyer to Seller shall be sent to Hickory  Point Bank & Trust,
ABA 0711-24805,  Account # 01 4982. If Buyer  terminates this Agreement prior to
Closing pursuant to Section 13.11(a)(i), (ii) or (iii), or if the conditions set
forth  Section  9.1(f),  (g) or (h) are not met and Buyer fails to complete  the
Closing as a result  thereof,  then in either case Seller  shall return to Buyer
the earnest money paid without interest.  In all other cases where the Agreement
is  terminated  or the parties  fail to complete  the  Closing,  Seller shall be
entitled to retain the earnest  money paid,  and pursue any remedies that may be
available pursuant to this Agreement, in law or at equity.

     Section 3.2.  Adjustments to Purchase  Price.  On the Closing Date,  Seller
shall deliver to Buyer a balance sheet setting  forth,  among other things,  the
Seller's liability for Promotional Payables as of the Closing Date (the "Closing
Date  Balance  Sheet").  To the extent  that the  Promotional  Payables  on such
Closing Date Balance Sheet exceed the Agreed Amount, the Purchase Price shall be
reduced by reducing the Cash Amount on a  dollar-for-dollar  basis. In addition,
the Purchase  Price shall be  increased,  by  increasing  the Cash Amount by the
Inventory


                                       6

Purchase  Amount.   The  Inventory   Purchase  Amount  shall  be  determined  by
multiplying  the number of cases of Selected  Inventory  by Seller's  documented
average cost per case.

     Section 3.3. Claims.

          (a) Claim  Payment.  The  parties  acknowledge  that after the Closing
     Buyer may receive claims for or be subject to offsets related to claims for
     Promotional Payables in excess of the Agreed Amount  ("Promotional  Payable
     Claims")  and that Seller may  receive  claims  from,  or be  subjected  to
     offsets by customers  that relate to matters for which Buyer is responsible
     under this Agreement  ("Customer Claims")  (Promotional  Payable Claims and
     Customer Claims being referred to herein as "Post-Closing  Claims"). In the
     event a party (the "Receiving Party") receives  Post-Closing Claims, it may
     submit  such  claims to the other  party (the  "Paying  Party") on a weekly
     basis, with any documentation  related to the Post-Closing  Claims received
     by the Receiving Party ("Submitted Claims"), and the Paying Party shall pay
     the Receiving Party, by wire transfer,  the amount of such Submitted Claims
     on the third  business  day  following  the date on which it  received  the
     Submitted Claims.  If such payment is not made timely,  the Receiving Party
     will be entitled to interest thereon at the rate of 18% per annum.

          (b)  Monthly  True-up.  A  Paying  Party  may,  after  the end of each
     calendar  month,  conduct an audit of the books and  records of a Receiving
     Party to confirm the existence of all Submitted  Claims and the accuracy of
     the  calculation of the Submitted  Claims and Receiving  Party will provide
     Paying Party and its agents  reasonable access to its books and records for
     this purpose.  In the event a Paying Party  reasonably  determines  that it
     overpaid  a  Submitted  Claim,  the  Receiving  Party  will  reimburse  the
     overpayment  by wire  transfer  on the third  business  day  following  the
     receipt by it of written notice of overpayment.

          (c) Time Limit.  The provisions of Section 3.3 shall terminate on June
     30, 2003.

     Section 3.4. Allocation of Purchase Price. Seller and Buyer shall allocate
the Purchase Price among the Assets in accordance with Section 1060 of the Code.
Such allocation shall be established by mutual agreement of Seller and Buyer and
shall be  attached  to this  Agreement  as  Schedule  3.4  within 30 days  after
Closing.  The  allocations  will be used by Buyer  and  Seller  as the basis for
reporting  asset values and other items for  purposes of all  required  returns,
statements and reports with respect to taxes,  including any reports required to
be filed  under  Section  1060(b)  of the Code.  Seller  and Buyer  agree not to
assert,  in connection with any audit or other proceeding with respect to Taxes,
any asset values or other items  inconsistent  with the allocations set forth in
Schedule 3.4.

                                  ARTICLE IV.
                                    CLOSING

     Section  4.1. Date,  Time and Place of Closing.  The  consummation  of the
transactions  contemplated  hereby  (the  "Closing")  shall be held on the first
Monday (or if such Monday is not a business  day, the first  Tuesday)  following
the date on which all conditions to Closing in Article


                                       7

IX have been  satisfied or waived at a time mutually  acceptable to the parties,
but in any event not later than  October  31,  2002 (the  "Closing  Date").  The
Closing shall take place at the offices of Blackwell Sanders Peper Martin,  LLP,
2300 Main Street, Suite 1000, Kansas City, Missouri 64108 or at such other place
as the parties agree.

     Section 4.2. Deliveries by Seller at Closing. At the Closing,  Seller shall
convey,  transfer,  assign,  and deliver all of its right, title and interest in
and  possession  of the  Assets to Buyer,  and shall  also  deliver to Buyer the
following:

          (a) A Bill of Sale,  duly  executed  by Seller,  in the form  attached
     hereto as Exhibit 4.2(a);

          (b) An Assignment and Assumption Agreement, duly executed by Buyer and
     Seller, in the form attached hereto as Exhibit 4.2(b);

          (c) Such other instruments of conveyance,  assignment and transfer, in
     form and  substance  satisfactory  to  Buyer,  as  appropriate  to  convey,
     transfer  and assign to, and to vest in,  Buyer,  good,  clear,  record and
     marketable title to the Assets,  including a consent or assignment  related
     to the UPC Codes;

          (d) A Cross  Receipt,  duly executed by Buyer and Seller,  in the form
     attached hereto as Exhibit 4.2(d);

          (e) A certified  copy of duly  adopted  resolutions  of ADM's Board of
     Directors   authorizing   ADM's   representative  to  execute  and  deliver
     agreements of the nature of this Agreement, and a certificate of incumbency
     certifying that the individual signing documents on behalf of ADM holds one
     of the offices set forth in the above-referenced resolution;

          (f) A certified copy of duly adopted  resolutions of Seller's Board of
     Directors  authorizing,  approving  and  consenting  to the  execution  and
     delivery  of  this  Agreement,  to the  consummation  of  the  transactions
     contemplated  herein,  and to the  performance  of the agreements set forth
     herein;

          (g) A certificate of a duly authorized  officer of Seller stating that
     the  representations and warranties of Seller in this Agreement are true as
     of the Closing;

          (h) The waiver, release, consent, certificate or other document of any
     Person  that is  necessary  to  consummate  the  transactions  contemplated
     hereby,  and to  make  the  warranties  and  representations  made  in this
     Agreement true;

          (i) A duly  executed  copy  of a  Transition  Agreement,  in the  form
     attached hereto as Exhibit 4.2(i);

          (j) Originals of all Contracts in Seller's possession;

          (k) A duly  executed  copy  of the  Contract  Manufacturing  Agreement
     Amendment;



                                       8

          (l) A duly executed copy of the Soy 7 License Agreement;

          (m) A duly executed copy of the Protein Purchase Agreement; and

          (n) The Customer List.

     Section 4.3. Deliveries by Buyer at Closing.  Buyer shall deliver to Seller
at Closing:

          (a) The Purchase Price;

          (b) An Assignment and Assumption Agreement, duly executed by Buyer and
     Seller, in the form attached hereto as Exhibit 4.2(b);

          (c) A Cross  Receipt,  duly executed by Buyer and Seller,  in the form
     attached hereto as Exhibit 4.2(d);

          (d) A certified  copy of duly adopted  resolutions of Buyer's Board of
     Directors  authorizing,  approving,  and  consenting  to the  execution and
     delivery  of  this  Agreement,  to the  consummation  of  the  transactions
     contemplated herein, and to performance of the agreements set forth herein;

          (e) A certificate of a duly  authorized  officer of Buyer stating that
     the  representations  and warranties of Buyer in this Agreement are true as
     of the Closing;

          (f) A duly  executed  copy  of a  Transition  Agreement,  in the  form
     attached hereto as Exhibit 4.2(i);

          (g) A duly  executed  copy  of the  Contract  Manufacturing  Agreement
     Amendment;

          (h) A duly executed copy of the Soy 7 License Agreement; and

          (i) A duly executed copy of the Protein Purchase Agreement.

     Section  4.4. Effective  Time.  The  effective  time  of the  transactions
contemplated  by the  Agreement  shall be deemed to be as of 12:01  a.m.  on the
Closing Date (the "Effective Time"). Provided the Closing occurs, Buyer shall be
entitled to possession of, and to exercise all rights arising under,  the Assets
as of the  Effective  Time.  The risk of loss or damage  to the  Assets by fire,
storm,  flood,  theft,  or other casualty or cause shall be in all respects upon
Seller prior to the Effective Time and upon Buyer thereafter.

                                   ARTICLE V.
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     As an  inducement to Buyer to enter this  Agreement  and to consummate  the
transactions  contemplated  hereby,  Seller  represents and warrants to Buyer as
follows:

     Section 5.1. Existence. Seller is duly organized,  validly existing, and in
good  standing  under the laws of the State of Delaware  and is  qualified to do
business and is in good standing in


                                       9

all  jurisdictions  in  which  it is  required  to be so  qualified  and in good
standing as a result of its operation of the Business,  except where the failure
to be so qualified or in good standing would not be a Material Adverse Event.

     Section  5.2. Power and  Authority.  Seller  has all  requisite  power and
authority to own its properties and assets,  including the Assets,  and to carry
on the Business as now conducted.  Seller has all requisite  corporate power and
authority to execute and deliver this  Agreement,  to perform the agreements and
covenants  of  Seller  set  forth  in  this  Agreement  and  to  consummate  the
transactions   contemplated  by  this   Agreement,   including  the  conveyance,
assignment and transfer of the Assets.

     Section 5.3. Execution and Delivery Permitted. The execution,  delivery and
performance  of this Agreement will not (i) violate or result in a breach of any
term of Seller's Certificate of Incorporation or Bylaws, (ii) result in a breach
of or constitute a default under any term in any agreement or other  instrument,
including any Contract, to which Seller is a party, (iii) violate any law or any
order, rule or regulation  applicable to Seller,  of any Governmental  Authority
having  jurisdiction over Seller, its properties or the Assets or (iv) result in
the creation or  imposition  of any Lien upon any of the Assets.  The Seller has
taken all action  required by law and by Seller's  Certificate of  Incorporation
and  Bylaws  to  authorize  the  execution,  delivery  and  performance  of this
Agreement and the other agreements executed in connection herewith by Seller and
the transfer all of the Assets to Buyer in accordance with this Agreement.

     Section 5.4. Consents.  Except as set forth on Schedule 5.4, the execution,
delivery and performance of this Agreement and the other agreements  executed in
connection  herewith,  and  the  consummation  by  Seller  of  the  transactions
contemplated  hereby and thereby do not require  any filing  with,  notice to or
consent,  waiver or approval of any third party,  including  but not limited to,
any Governmental Authority or entity other than any disclosure of this Agreement
required by applicable securities laws, regulations and rules.

     Section  5.5. Affiliate  Contracts.  Except as set forth in  Schedule  5.5
(including as to any oral matters an accurate and  reasonably  detailed  summary
thereof),  there are no contracts,  agreements,  commitments,  understandings or
arrangements  affecting  or relating to the  Business or the Assets to which any
Affiliate of Seller is a party or by which any such Affiliate is bound.

     Section  5.6. Ownership  of Assets.  Seller  has sole and good,  clear and
marketable  title to the  Assets,  which title will be  transferred  to Buyer at
Closing,  free  and  clear of all  Liens.  Seller  has the  full,  absolute  and
unrestricted right to assign,  transfer and convey to Buyer the Assets,  subject
only to such consents and approvals as listed on Schedule  5.4,  which  consents
and  approvals  Seller  shall  deliver  to Buyer  at  Closing.  To the  Seller's
knowledge,  the  Assets  constitute  all of the  intellectual  property  (except
software),  customer  lists,  contracts,  inventory  and Uniform  Product  Codes
necessary  to conduct  the  marketing  and sale of the  Branded  Products in the
Ordinary Course of Business.

     Section  5.7. Contracts.  The  Contracts  have  been  entered  into in the
Ordinary Course of Business.  Except as  specifically  provided on Schedule 5.7,
Seller has full, absolute and unrestricted right to assign,  transfer and convey
to  Buyer  the  Contracts.  Each  Contract  is in  full  force  and  effect  and
constitutes the legal, valid, binding and enforceable obligation of the parties


                                       10

thereto.  Seller and the other  parties  thereto are current in all  obligations
under each Contract. There have been no events of default, and no state of facts
exist that with notice or passage of time, or both, would constitute an event of
default by Seller under any Contract. To the Seller's knowledge, there have been
no events  of  default,  and no state of facts  exists  that with  notice or the
passage  of time,  or both,  would  constitute  an event of  default  under  any
contract by any party other than  Seller.  Except as set forth on Schedule  5.7,
the  consummation  of the  transactions  contemplated by this Agreement will not
(and will not give any Person a right to)  terminate or modify any rights of, or
accelerate or increase any  obligation of Seller under any Contract.  A true and
complete copy of every written  Contract listed on Schedule 2.1(c) has been made
available  to Buyer  and such  Schedule  contains  an  accurate  and  reasonably
detailed summary of all oral contracts.

     Section 5.8. Intangible Personal Property. Seller has full right, title and
interest in and to the Intellectual  Property, the Customer Lists, and the Other
Intangible Rights (collectively,  the "Intangible Personal Property"). Seller is
not (i) a licensor or licensee in respect of any Intangible Personal Property or
(ii)  obligated  to make any  royalty  or other  payments  with  respect  to any
Intangible Personal Property.  To Seller's  knowledge,  Seller is not infringing
upon or otherwise acting adversely to the intangible  personal property owned by
any other  Person,  and there is no notice,  claim or action by any such  Person
pending with respect thereto.

     Section  5.9. Binding  Effect.  This  Agreement  and each other  agreement
required to be executed and  delivered by Seller in  connection  herewith,  when
executed  and  delivered,  will be the legal,  valid and binding  obligation  of
Seller,  enforceable  against  Seller in  accordance  with its terms,  except as
enforceability  may be limited  by (i)  applicable  bankruptcy,  reorganization,
insolvency,  moratorium and similar laws affecting the enforcement of creditors'
rights generally,  and (ii) general equitable principles  (regardless of whether
enforceability is considered in a proceeding in equity or at law).

     Section 5.10. Documents  Sufficient.  The documents delivered by Seller to
Buyer  pursuant to Article IV of this  Agreement  will be valid,  sufficient and
effective  to  completely  transfer  to Buyer all of Seller's  right,  title and
interest in and to all of the Assets, free and clear of all Liens.

     Section 5.11. Litigation and Compliance  with Law.  Except as set forth on
Schedule 5.11, there are no suits,  actions,  claims,  demands,  investigations,
complaints,  or other  proceedings of any nature whatsoever in law or in equity,
that are pending or, to the knowledge of Seller, threatened against Seller, that
affect any of the Assets or the Branded Products,  by or before any Governmental
Authority.  Seller is not in default  or  violation  with  respect to any order,
writ,  injunction,  garnishment,  levy, or decree of any Governmental  Authority
applicable  to the  Assets  or the  Branded  Products,  and the use,  operation,
ownership,  or transfer of the Assets does not constitute a default or violation
thereunder.  Neither  the  condition  of the  Assets  nor the  Branded  Products
violates  in  any  material  respect  any  federal,  state,  or  municipal  law,
regulation or rule.

     Section  5.12. Taxes.  Seller has timely  filed (or will timely  file) all
federal,  state,  local and other Tax  returns  and  reports  of  whatever  kind
pertaining to the Assets or the Business and


                                       11

required to be filed by Seller for all periods up to and  including  the Closing
Date.  Seller has paid (or will  timely  pay) all Taxes that are due and payable
(or that relate to any period up to and including the Closing Date) or for which
assessments  relating to any period up to and  including  the Closing  Date have
been  levied,  the  nonpayment  of which  could  result  in a Lien on any of the
Assets. There are no audits, suits, actions, claims, investigations,  inquiries,
or proceedings pending or, to the knowledge of Seller, threatened against Seller
with respect to any Taxes,  nor are any such matters under  discussion  with any
Governmental Authority as they relate to the Business or the Assets.

     Section 5.13. Permits. To the Seller's knowledge, there are no governmental
permits or licenses necessary to operate the Business.

     Section  5.14. Customers.  Since  August 1, 2002,  to Seller's  knowledge,
Seller has not  received  any notice from any of its top twenty  (20)  customers
purchasing  Branded  Products  from  Seller  that any such  customer  intends to
terminate,  or to reduce by more than 50% on an annual  basis,  its purchases of
Branded Products from Seller.

     Section  5.15. Books and  Records;  Disclosure.  The books and  records of
Seller  relating to the  Business  are in all  material  respects  complete  and
correct and have been maintained in accordance with good business practices. The
financial statements of the Business provided to Buyer accurately present in all
material  respects  the  results of  operations  and  financial  position of the
Business  for  the  periods  and  at  the  times   indicated   (the   "Financial
Statements").  The Financial  Statements  have been  maintained  and prepared in
accordance  with generally  accepted  accounting  principles.  As of the Closing
Date,  the  Closing  Date  Balance  Sheet will be accurate  and  complete in all
material respects.  None of (i) the Financial  Statements,  (ii) the information
concerning  the  Assets,  Business  or  Seller  delivered  to  Buyer,  (iii) the
representations  and  warranties  made by Seller in this  Agreement  or (iv) the
statements  made by or on  behalf  of Seller  in any  certificate,  document  or
Schedule  delivered  or to be  delivered  in  connection  with  the  transaction
contemplated by this Agreement, contains or will contain any untrue statement of
material  fact,  and there is no omission of any material fact necessary to make
such  representation or warranty or any such statement not misleading,  in light
of the  circumstances  in which they are made. The items listed in the Schedules
attached to this Agreement constitute all of the matters required to be shown on
such Schedules.

     Section 5.16.  Brokers  Fees.  Seller has no liability or obligation to pay
any brokerage or finders fees or  commissions  with respect to the  transactions
contemplated herein.

     Section 5.17. Inventory. As of the Closing, the Selected Inventory shall be
merchantable,  suitable for human  consumption,  comply with all applicable law,
and bear no  name,  mark or  other  designation  that  knowingly  infringes  the
intellectual property rights of any other party.

     Section 5.18. Disclaimer.  Except as to the warranties expressly set forth
in this Article V, Seller makes no representations or warranties relative to the
Assets  whatsoever.  Unless  expressly  granted in this Article V, SELLER HEREBY
DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTY OF


                                       12

MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

                                  ARTICLE VI.
                               COVENANTS OF SELLER

     Seller covenants and agrees as follows:

     Section 6.1.  Performance  of Contracts  and Retained  Liabilities.  Seller
shall,  from the date  hereof  through  the  Closing,  continue  to  faithfully,
diligently  and promptly  perform each and every  obligation of Seller,  if any,
under each of the Contracts and pay and satisfy each Retained Liability.

     Section 6.2. Conduct of Business. From the date hereof through the Closing,
Seller shall  operate the  Business in  accordance  with the Ordinary  Course of
Business and with at least as much  attention and support as is currently  being
provided, using its best efforts to preserve and maintain its relationships with
suppliers and customers and to preserve its current level of sales volume, shelf
space and  historical  operating  margins.  Seller shall pay all bills and debts
incurred by it and related to the  operation  of the  Business  promptly as they
become due.  Seller shall  consult in advance with Buyer on all decisions not in
the Ordinary Course of Business relating to the, Assets or the Business.

          (a) In particular, and without limiting the foregoing, with respect to
     the Business, Seller shall:

               (i)  continue to conduct marketing,  product pricing, promotional
                    and  advertising   activities   consistent  with  historical
                    practices;

               (ii) maintain  the sales force in a manner  consistent  with past
                    practices,  including,  but not limited to,  maintaining the
                    number of active salespersons assigned to the Business,  and
                    maintain  the levels of and the payment of bonus,  incentive
                    and other compensation;

               (iii)continue  to  purchase  and  maintain  inventories  in  such
                    quantities  and quality as necessary to operate the Business
                    in the Ordinary Course of Business;

               (iv) refrain from shipping  manufactured  pasta ahead of normally
                    maintained   schedules   or  shipping   dates  or  otherwise
                    accelerating  sales or the amount of Inventory  less than 90
                    days old in a manner not in the Ordinary  Course of Business
                    ("Trade  Loading"),  or permitting or tolerating any brokers
                    or  other  representatives  of  Seller  to  engage  in Trade
                    Loading;

               (v)  continue  all  customer  service and  fulfillment  levels at
                    historical   levels  and   maintain   all  shelf  space  and
                    promotional  displays at least at the levels in existence as
                    of the date hereof,


                                       13

               (vi) continue to operate  the  Business  in  compliance  with all
                    applicable  local,  state and federal laws and  regulations;
                    and

               (vii)notify   Buyer   within   48  hours   of  any   termination,
                    cancellation,  limitation of, or any adverse modification of
                    or change in, any, Contract or any business  relationship of
                    Seller with any customer described in Section 5.14.

          (b)  Further,  Seller  shall not,  without the express  prior  written
     approval of Buyer:

               (i)  change in any  material  manner the  ownership of the Assets
                    (other  than  inventories  sold in the  Ordinary  Course  of
                    Business);

               (ii) terminate or decrease the rate of  compensation  or benefits
                    of,  any   salesperson   responsible  for  the  sale  and/or
                    distribution of products within the Business;

               (iii) mortgage, pledge or subject to Lien any of the Assets;

               (iv) enter into or commit to enter into any  Contract  other than
                    in  the  Ordinary   Course  of  Business  or  any  contract,
                    agreement  or  commitment  that would be  required to be set
                    forth on Schedule 5.5 hereto; or

               (v)  other than in the  Ordinary  Course of  Business,  cancel or
                    terminate  or  consent  to or  accept  any  cancellation  or
                    termination of any Contract,  amend or otherwise  modify any
                    of the  material  terms or  provisions  or give any consent,
                    waiver or approval with respect to any  Contract,  waive any
                    breach of any material terms or provisions or take any other
                    action in connection with any Contract that would materially
                    impair the  interests or rights of Seller to be  transferred
                    to Buyer hereunder.

     Section 6.3. Access to Information. Seller shall afford Buyer, its counsel,
financial  advisors,  auditors and other authorized  representatives  reasonable
access for any  purpose  consistent  with this  Agreement  from the date  hereof
through the Closing or termination of this  Agreement,  whichever  occurs first,
during normal business hours, to the offices, properties,  books, and records of
Seller related to the Assets and the Branded Products and shall furnish to Buyer
such additional financial and operating data and other information as Seller may
possess  and as Buyer may  reasonably  request  related  to the  Assets  and the
Branded Products.

     Section  6.4. No Sale  Negotiations.  Seller and its  representatives  and
agents shall not solicit,  entertain or engage in any negotiations,  discussions
or contact with any party other than Buyer,  with respect to the sale,  transfer
or other  disposition  of any of the Assets (other than the sale of Inventory in
the  Ordinary  Course  of  Business),  or  any  interest,  legal,  equitable  or
beneficial, in the above.


                                       14

     Section  6.5. Confidentiality.  Seller  will  hold,  and  will  cause  its
directors,  officers,  employees,  accountants,  counsel, financial advisors and
other representatives and Affiliates to hold, any nonpublic information of Buyer
in confidence to the extent required by, and in accordance  with, the provisions
of the Confidentiality Agreement.

     Section  6.6. Reporting  Requirements.  From the date  hereof  through the
Closing, Seller shall promptly notify Buyer of:

          (a) Any (i) Material Adverse Event, (ii) any fact that, if known as of
     the date of this  Agreement,  would have been  required to be  disclosed to
     Buyer,  (iii) event that causes any  representation  or warranty  contained
     herein to be untrue or  inaccurate in any respect or (iv) event that causes
     any covenant, condition or agreement of Seller hereunder not to be complied
     with or satisfied in any respect;

          (b) all claims, actions,  charges, orders or other directives that, if
     adversely determined, would cause a Material Adverse Event; and

          (c) such other  information  respecting the Assets or the  operations,
     business prospects or condition (financial or otherwise) of the Business as
     Buyer may from time to time reasonably request.

     Section 6.7. Cooperation Other Actions.

          (a)  Seller  will use its best  efforts  to  facilitate  and cause the
     consummation of the transactions contemplated hereby and to obtain from all
     Persons,  and take all other  actions  with  respect  to, all  consents  or
     approvals  required  on  the  part  of  such  party  with  respect  to  the
     consummation of the transactions contemplated hereby.

          (b) From the date hereof  through the  Closing,  Seller shall not take
     any action that would,  or that would  reasonably be expected to, result in
     any of the conditions to the transactions  contemplated hereby set forth in
     Sections  9.1 and 9.2 hereof not being  satisfied,  or in the  satisfaction
     thereof being delayed.

     Section  6.8.  Subsequent  Contracts.  From the  date  hereof  through  the
Closing,  Seller  shall (i)  include in any  agreements  entered  into by Seller
relating  in  any  way to  the  Assets  or  the  Branded  Products  ("Subsequent
Contracts")  a  provision  permitting  the  assignment  of any  such  Subsequent
Contract to Buyer and providing that upon such  assignment,  Buyer shall succeed
to all of Seller's rights,  title and interests  thereunder and (ii) ensure that
no Subsequent  Contract  contains any provision which would limit in any way the
rights, title and interest of Seller in the Assets.

     Section 6.9. Transfer and Sales Tax.  Notwithstanding any provisions of law
imposing the burden of such taxes on Seller or Buyer, as the case may be, Seller
shall be responsible  for and shall pay (a) all sales,  use and transfer  taxes,
and (b) all  governmental  charges,  if any, upon the sale or transfer of any of
the  Assets  hereunder.  If Seller  shall  fail to pay such  amounts on a timely
basis, Buyer may pay such amounts to the appropriate  Governmental  Authority or
authorities,  and Seller shall promptly  reimburse Buyer for any amounts so paid
by Buyer.


                                       15

     Section 6.10. Pasta Products.  Commencing on the Closing and for so long as
the  Contract  Manufacturing  Agreement,  as amended  pursuant to Section  12.1,
remains in effect between the parties,  Seller or Seller's  Affiliates  will not
manufacture,  market,  sell or distribute  any branded retail dry pasta product,
alone or in combination  with any other product,  unless such branded retail dry
pasta product is manufactured by Buyer.

     Section  6.11. Insurance.   Seller  shall  continue  to  maintain  product
liability insurance for all periods through the Effective Time.

     Section  6.12.  Supply of Soy  Protein.  Buyer  shall  purchase  all of its
requirements for soy protein exclusively from Seller for a period of three years
pursuant to the terms and conditions of the Protein Purchase  Agreement,  in the
form of Exhibit 6.12 hereto.

     Section 6.13. Soy 7 License.  Seller shall grant to Buyer a  non-exclusive
license  to use the Soy 7 marks  in  conjunction  with  the  manufacture,  sale,
marketing  and  use of dry  pasta,  on the  terms  and  conditions  of the Soy 7
License,  in the form of Exhibit 6.13 hereto,  which shall include a 2(cent) per
pound royalty and the obligation to purchase soy isolate from Seller on products
bearing the Soy 7 marks.

                                  ARTICLE VII.
                     REPRESENTATIONS AND WARRANTIES OF BUYER

     As an inducement  to Seller to enter into this  Agreement and to consummate
the transactions contemplated hereby, Buyer represents and warrants to Seller as
follows:

     Section 7.1. Corporate  Existence.  Buyer is a corporation duly organized,
validly  existing and in good  standing  under the laws of the State of Delaware
and is qualified to do business and is in good standing in all  jurisdictions in
which it is  required to be so  qualified  as a result of the  operation  of its
business,  except where the failure to be so qualified or in good standing would
have a material adverse effect on the Buyer.

     Section  7.2. Corporate  Power  and  Authority.  Buyer  has all  requisite
corporate power and authority to own its properties and assets,  and to carry on
the business in which it is now engaged. Buyer has all requisite corporate power
and authority to execute and deliver this  Agreement,  to perform the agreements
and  covenants  of Buyer  set  forth in this  Agreement  and to  consummate  the
transactions contemplated by this Agreement.

     Section 7.3. Execution and Delivery Permitted. The execution,  delivery and
performance  of this Agreement will not (i) violate or result in a breach of any
term of Buyer's  Certificate of Incorporation or Bylaws; (ii) result in a breach
of or constitute a default  under any term in any agreement or other  instrument
to which  Buyer  is a party;  or (iii)  violate  any law or any  order,  rule or
regulation   applicable  to  Buyer,  of  any   Governmental   Authority   having
jurisdiction  over  Buyer or its  properties.  The Buyer  has  taken all  action
required  by law,  and by Buyer's  Certificate  of  Incorporation  and Bylaws to
authorize the  execution,  delivery and  performance  of this  Agreement and the
other  agreements  executed in connection  herewith by Buyer and the purchase of
the Assets from Seller in accordance with this Agreement.


                                       16

     Section  7.4.  Binding  Effect.  This  Agreement  and each other  agreement
required to be executed and  delivered  by Buyer in  connection  herewith,  when
executed  and  delivered,  will be the legal,  valid and binding  obligation  of
Buyer,  enforceable  against  Buyer in  accordance  with its  terms,  except  as
enforceability  may be limited  by (i)  applicable  bankruptcy,  reorganization,
insolvency,  moratorium and similar laws affecting the enforcement of creditors'
rights generally,  and (ii) general equitable principles  (regardless of whether
enforceability is considered in a proceeding in equity or at law).

     Section 7.5. Consents.  The  execution,  delivery and  performance of this
Agreement  and the other  agreements  executed in connection  herewith,  and the
consummation by Buyer of the transactions contemplated hereby and thereby do not
require any filing with,  notice to or consent,  waiver or approval of any third
party,  including but not limited to, any Governmental  Authority other than any
disclosure of this Agreement required by applicable securities laws, regulations
and rules.

     Section 7.6.  Brokers Fees. Buyer has no liability or obligation to pay any
brokerage  or finders  fees or  commissions  with  respect  to the  transactions
contemplated herein.

                                 ARTICLE VIII.
                               COVENANTS OF BUYER

     Section 8.1. Buyer Performance. Buyer hereby covenants and agrees to accept
conveyance of the Assets, and to assume and perform the Assumed Liabilities.

     Section  8.2. Confidentiality.   Buyer  will  hold,  and  will  cause  its
respective  directors,  officers,  employees,  accountants,  counsel,  financial
advisors  and  other  representatives  and  affiliates  to  hold  any  nonpublic
information  of the  Seller in  confidence  to the  extent  required  by, and in
accordance with, the provisions of the Confidentiality Agreement.

     Section 8.3. Other  Actions.  From the date hereof to the  Closing,  Buyer
shall not take any action that would,  or that would  reasonably be expected to,
result in any of the  conditions to Closing set forth in Sections 9.1 or 9.2 not
being satisfied, or in the satisfaction thereof being delayed.

     Section  8.4. Notification  of  Certain  Matters.  From  the  date of this
Agreement  through  the  Closing,  Buyer  shall  promptly  notify  Seller of the
occurrence  of any fact or event that would  reasonably be expected (i) to cause
any representation or warranty of Buyer contained in this Agreement to be untrue
in any material respect or (ii) to cause any covenant, condition or agreement of
Buyer hereunder not to be complied with or satisfied in any material respect.

     Section 8.5. Post Closing Identification.  Buyer shall ensure that products
produced  after the Effective  Time and any coupons or other  promotional  items
issued after the Effective Time are distinguishable from products produced prior
to the Effective  Time and coupons and other  promotional  items issued prior to
the Effective Time.


                                       17

                                  ARTICLE IX.
                              CONDITIONS TO CLOSING

     Section  9.1.  Buyer's  Conditions  to Closing.  The  obligations  of Buyer
hereunder are subject to satisfaction of each of the following  conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:

          (a) All representations and warranties of Seller in this Agreement and
     each  Schedule  hereto shall be true on and as of the Closing as if made as
     of the Closing,  and Seller shall have  delivered to Buyer a certificate to
     such effect dated as of the Closing Date;

          (b) There shall be no Material  Adverse  Event from the date hereof to
     the Closing Date;

          (c)  Seller  shall  have  performed  and  complied  with  all  of  its
     obligations under this Agreement which are to be performed or complied with
     by Seller prior to or on the Closing Date;

          (d) Seller  shall be willing  and able to deliver all of the items and
     documents  required  to be  delivered  by it pursuant to Article IV of this
     Agreement;

          (e) The  form and  substance  of the  documents  delivered  by  Seller
     pursuant to this  Agreement  shall be  reasonably  acceptable  to Buyer and
     Buyer's counsel;

          (f) There shall be no claims,  actions or suits  pending or threatened
     regarding  the Assets other than those  disclosed in Schedule  5.11 or that
     otherwise would restrict or prohibit Buyer or Seller from  consummating the
     transactions contemplated herein;

          (g) Seller shall have  obtained and  delivered to Buyer all  necessary
     consents to transfer the Assets and assign the Contracts to Buyer; and

          (h) During Buyer's review and investigation of the Assets, Buyer shall
     not have discovered (i) any material  misrepresentations  or omissions with
     respect to the  disclosures  previously  made to Buyer,  in the  context of
     negotiations of the transactions contemplated herein, concerning the Assets
     or the Branded Products; or (ii) any obligations or liabilities, contingent
     or otherwise,  which do or reasonably could materially  affect the value of
     any of the Assets in an amount in excess of $250,000.

     Section 9.2. Seller's  Conditions to Closing.  The  obligations  of Seller
hereunder are subject to satisfaction of each of the following  conditions at or
before Closing, the occurrence of which may, at the option of Seller, be waived:

          (a) All  representations  and  warranties  of Buyer in this  Agreement
     shall be true on and as of the  Closing as if made as of the  Closing,  and
     Buyer shall have  delivered to Seller a certificate to such effect dated as
     of the Closing Date;


                                       18

          (b)  Buyer  shall  have   performed  and  complied  with  all  of  its
     obligations under this Agreement which are to be performed or complied with
     by Buyer prior to or on the Closing Date;

          (c) Buyer  shall be willing  and able to deliver  all of the items and
     documents  required  to  be  delivered  by it  under  Article  IV  of  this
     Agreement; and

          (d) The  form  and  substance  of the  documents  delivered  by  Buyer
     pursuant to this  Agreement  shall be  reasonably  acceptable to Seller and
     Seller's counsel.

                                   ARTICLE X.
                          SURVIVAL AND INDEMNIFICATION

     Section 10.1. Survival of Representations,  Warranties and Covenants.  The
representations,   warranties,   covenants,   agreements   and   indemnification
obligations of the parties contained in this Agreement shall survive the Closing
until  June  30,   2003.   The  parties   shall  be  entitled  to  rely  on  the
representations  and  warranties  contained  herein,   notwithstanding  any  due
diligence  investigation  conducted by the parties. If, as the result of any due
diligence  investigation  or  otherwise,  a  party  learns  of a  breach  of any
representation  or  warranty,  such  party  shall  promptly  inform the other in
writing of such breach. Either party's knowledge prior to Closing of a breach of
a representation,  warranty, covenant or agreement contained herein by the other
party shall not modify the  representations,  warranties covenants or agreements
of any party  contained  herein or waive or impair  such  party's  right to seek
indemnification for such breach after Closing.

     Section  10.2. Indemnification  by  Seller.   Seller  agrees  to  defend,
indemnify,  and  hold  harmless  Buyer  and  its  officers,  directors,  agents,
employees, and Affiliates against and in respect of any and all loss, liability,
lien, damage, cost and expense (each, a "Buyer Indemnification  Claim") incurred
or resulting from:

          (a) except for Assumed Liabilities,  any matter or event of any nature
     whatsoever  relating to Seller or the  ownership or operation of the Assets
     or the Business that occurred  prior to the Closing,  and without  limiting
     the generality of the  foregoing,  such matters or events shall include all
     Retained Liabilities and all Excluded Assets;

          (b) any misrepresentation or breach of warranty made by Seller in this
     Agreement or in any document,  certificate or Schedule delivered hereunder;
     or

          (c) any  non-fulfillment  of any covenant or agreement by Seller under
     this  Agreement or any  liability  related to  noncompliance  with any bulk
     sales laws.

     Section 10.3. Indemnification by Buyer. Buyer agrees to defend, indemnify,
and hold harmless  Seller and its  officers,  directors,  agents,  employees and
Affiliates against and in respect of any and all loss, liability,  lien, damage,
costs and expense (each a "Seller  Indemnification Claim") incurred or resulting
from:

          (a) the  ownership or operation of the Assets or the Business from and
     after the Closing or the nonperformance of Assumed Liabilities;


                                       19

          (b) any  misrepresentation or breach of warranty made by Buyer in this
     Agreement or in any document,  certificate or Schedule delivered hereunder;
     or

          (c) any  non-fulfillment  of any  covenant or agreement by Buyer under
     this Agreement.

     Section 10.4. Time to Assert Claims.  Any Buyer  Indemnification  Claims or
Seller  Indemnification Claims made pursuant to this Article must be asserted by
providing written notice to the party against which the Indemnification Claim is
made  reasonably  promptly after the asserting party becomes aware of such Claim
(the  "Indemnification  Claim  Notice").  The right of a party to be indemnified
hereunder  shall not be adversely  affected by such party's failure to give such
Indemnification Claim Notice unless, and then only to the extent that, the party
against  which the  Indemnification  Claim is made is  prejudiced  thereby.  The
parties shall resolve disputes between them regarding  Indemnification Claims in
accordance with Article XI. The term "Indemnification  Claim" shall mean a Buyer
Indemnification Claim or a Seller Indemnification Claim, as appropriate.

     Section 10.5. Third Party Claim Indemnification  Procedure.  An indemnified
person shall  promptly  notify the  indemnifying  party of the  existence of any
Indemnification  Claim  resulting  from a claim made by a third  party and shall
give the  indemnifying  party  the  opportunity  to  defend  the same at its own
expense and with counsel of its own  selection,  provided that such  indemnified
person  shall at all  times  also  have the  right to  participate  fully in the
defense of the  Indemnification  Claim at its own expense.  If the  indemnifying
party shall,  within twenty (20) days after such notice, fail to acknowledge its
indemnification  obligation  hereunder in writing or  thereafter  fail to defend
such  Indemnification  Claim  adequately and  reasonably,  and such  indemnified
person is entitled  to such  defense,  such  indemnified  person  shall have the
right, but not the obligation, to undertake the defense of, and to compromise or
settle (exercising  reasonable business judgment) such Indemnification  Claim on
behalf,  for the  account,  and the sole risk and expense,  of the  indemnifying
party.

     Section 10.6. Limitations on Indemnification.

          (a) Notwithstanding  anything to the contrary,  the indemnifying party
     shall not be liable for an Indemnification Claim under this Article for:

               (i)  any  Indemnification  Claim,  unless and until the aggregate
                    amount  of all such  Indemnification  Claims  otherwise  due
                    exceeds an accumulated total of One Hundred Thousand Dollars
                    ($100,000.00); or

               (ii) any Indemnification Claim to the extent arising directly out
                    of   the   acts   or   omissions   of  the   party   seeking
                    indemnification.

          (b) The maximum aggregate amount of all Indemnification Claims (except
     for those  set  forth in  subsection  (c)  below)  for which a party may be
     responsible  or  otherwise  liable  (whether for  indemnification,  breach,
     default  or  otherwise)   under  this  Article  and  this   Agreement  (the
     "Unintentional   Claims")   shall  be  the  sum  of  One  Million   Dollars
     ($1,000,000.00).


                                       20

          (c) The maximum aggregate amount of all  Indemnification  Claims based
     upon intentional misrepresentation, fraud or willful misconduct for which a
     party may be responsible or otherwise liable (whether for  indemnification,
     breach,  default or otherwise)  under this Article and this  Agreement (the
     "Intentional   Claims")   shall  be  the  sum  of  Five   Million   Dollars
     ($5,000,000.00).

          (d) The  maximum  aggregate  amount of all  Unintentional  Claims  and
     Intentional  Claims  combined  shall  be the  sum of Five  Million  Dollars
     ($5,000,000.00).

                                  ARTICLE XI.
                               DISPUTE RESOLUTION

     Section 11.1. General. All disputes between the parties arising under or in
connection with this Agreement,  including Indemnification Claims (as more fully
described below,  "Claims"),  shall be resolved in accordance with the following
procedures.

     Section  11.2. Negotiation.  A party with a Claim (the  "Claiming  Party")
shall  give  reasonably  prompt  notice  (the  "Claim  Notice")  to  the  other,
specifically  identifying the issue and amount in dispute.  Senior executives of
the parties or their representatives shall negotiate in good faith to attempt to
resolve the Claim in the absence of attorneys and other  non-employer  advisors.
During this process, either party may request that an independent third party be
used to  mediate  the  dispute.  If the  parties  do not  resolve  the  Claim by
negotiation  within 60 days after receipt of the Claim Notice,  either party may
submit the Claim for binding arbitration.

     Section 11.3. Arbitration; Claims Covered; Conclusive Determination. Claims
not settled by negotiation  shall be resolved by arbitration in accordance  with
the American Arbitration  Association  procedures for Commercial Arbitration and
any supplemental rules deemed appropriate by the arbitrator (the  "Procedures").
The arbitration shall be conducted in the city of Kansas City, Missouri.  Claims
by either party for injunctive or other equitable relief, for unfair competition
and  the  use  or  unauthorized   disclosure  of  trade  secrets,   confidential
information,  or  intellectual  property,  are not  covered by this  Section and
either  party  may seek  and  obtain  relief  for  such  Claims  from a court of
competent  jurisdiction.  The  decision  of the  arbitrator  may be entered as a
judgment in any court of competent  jurisdiction  thereof.  Any  arbitral  award
shall be a conclusive  determination  of the matter,  final and binding upon all
parties.

     Section 11.4. Arbitration Procedures;  Survival. The parties agree that the
procedures  and  provisions  set  forth  in  Schedule  11.4  shall  apply to any
arbitration  under this Section.  This Agreement to arbitrate  shall survive the
termination of this Agreement.

     Section 11.5. Confidentiality.  All aspects of the proceedings provided for
by this Agreement,  including the exchange of information during discovery,  any
hearings,  and the record of the proceedings,  are confidential and shall not be
open to the public,  except (a) to the extent the  parties  agree  otherwise  in
writing,  (b) as may be appropriate in any  subsequent  proceedings  between the
parties, or (c) as may otherwise be required by a Governmental  Authority or the
rules of the New York Stock Exchange.


                                       21

                                  ARTICLE XII.
                             SETTLEMENT AND RELEASE

     Section 12.1. Contract  Manufacturing  Agreement  Amendment.  From the date
hereof through Closing, the parties shall continue to perform under the Contract
Manufacturing Agreement. As of the Closing, the Contract Manufacturing Agreement
shall  be  amended  pursuant  to  the  terms  and  conditions  of  the  Contract
Manufacturing Agreement Amendment, in the form of Exhibit 12.1 hereof.

     Section 12.2. Settlement and Release.  Except as otherwise provided in this
Section  12.2,  as of the Closing  each of Buyer and Seller,  for itself and its
Affiliates,   successors   and   assigns,   does  hereby   fully,   finally  and
unconditionally release and forever discharge the other, the others' Affiliates,
agents,  attorneys,  employees,  directors and officers,  and all successors and
assigns,  and  representatives  of  each  of the  foregoing  (collectively,  the
"Released  Parties")  and agrees to  indemnify  and hold  harmless  the Released
Parties, from any and all debts, claims, obligations, damages, costs, attorneys'
fees, suits, demands, liabilities, actions, proceedings and causes of action, in
each case whether known or unknown,  contingent or fixed, direct or indirect and
of  whatever  nature or  description  and  whether  in law or in  equity,  under
contract,  tort,  statute or otherwise,  which each has heretofore had or now or
hereafter can, shall or may have against the Released Parties arising from acts,
claims  or  events  related  to or  arising  out of the  Contract  Manufacturing
Agreement  prior to the Closing and any performance or  nonperformance  prior to
the Closing thereunder.  Notwithstanding  the foregoing,  this Section in no way
pertains to the following:

          (a) this Agreement,  the other agreements  executed in connection with
     this Agreement and the transactions contemplated by this Agreement;

          (b) the obligations of Seller to pay the production  invoices of Buyer
     under the Contract  Manufacturing  Agreement for pasta produced through the
     Closing;

          (c) Seller's obligations under any of the Retained Liabilities; or

          (d) the ongoing obligations of the parties set forth in Section 12.1.

                                 ARTICLE XIII.
                                 MISCELLANEOUS

     Section 13.1. Notices.  Except as otherwise expressly provided, all notices
or other communications required or permitted under this Agreement shall be made
in writing and shall be deemed given (i) upon delivery,  if sent by (A) personal
delivery or (B) courier (e.g., overnight delivery), (ii) 3 days after being sent
by certified  mail,  return receipt  requested,  postage and  registration  fees
prepaid  and  correctly  addressed  to a party as set forth  below or (iii) upon
sending,  if sent by  telecopy  to a party at the number  listed  below for such
party (with a telecopy  machine  generated  confirmation  sheet  retained by the
sender):


                                       22

                  If to Buyer:          American Italian Pasta Company
                                        4100 N. Mulberry, Ste. 200
                                        Kansas City, Missouri 64116
                                        Attn: Timothy S. Webster
                                        Telecopy: (816) 584-5362

                  with a copy to:       Blackwell Sanders Peper Martin LLP
                                        2300 Main Street, Suite 1000
                                        Kansas City, Missouri 64108
                                        Attn: James M. Ash
                                        Telecopy: (816)983-8080

                  If to Seller:         Archer-Daniels-Midland Company
                                        4666 Faries Parkway
                                        Decatur, Illinois 62526
                                        Attn: President, ADM Natural Health & Nutrition Division
                                        Telecopy: 217-451-6196

                  with a copy to:       Archer-Daniels-Midland Company
                                        4666 Faries Parkway
                                        Decatur, Illinois 62526
                                        Attn: General Counsel
                                        Telecopy: 217-451-6196

or to such other address as Buyer or Seller shall have last designated by notice
to the other party.

     Section  13.2. Applicable  Law.  This  Agreement,   and  the  rights  and
obligations  of the  parties  hereto,  shall be governed  by and  determined  in
accordance with the laws of the State of Missouri,  without giving effect to the
choice or conflicts of law provisions thereof.

     Section 13.3. Benefit and Assignment. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective  successors
and permitted  assigns.  Neither this Agreement nor any rights  hereunder may be
assigned or transferred,  and no duties may be delegated,  by Seller without the
prior  written  consent of Buyer.  Buyer may assign or  transfer  its rights and
delegate its duties hereunder to any Affiliate of Buyer.

     Section 13.4. No Third Party Beneficiary. This Agreement is for the benefit
of, and may be  enforced  only by, the parties  who are  signatories  hereto and
their respective successors and permitted assigns. This Agreement is not for the
benefit of, and may not be enforced by, any third party.

     Section 13.5. Expenses.  Except as otherwise  provided in this  Agreement,
each party hereto shall pay its own expenses  incurred in  connection  with this
Agreement  and in the  preparation  for  and  consummation  of the  transactions
provided for herein.

     Section 13.6. Waiver.  Except as otherwise  provided in this Agreement,  no
delay or failure on the part of any party hereto in exercising any right,  power
or  privilege  under this  Agreement or under any other  instrument  or document
given in connection with or pursuant to


                                       23

this Agreement  shall impair any such right,  power or privilege or be construed
as a waiver of any  default or any  acquiescence  therein.  No single or partial
exercise  of any such  right,  power or  privilege  shall  preclude  the further
exercise of such right, power or privilege,  or the exercise of any other right,
power or  privilege.  No waiver shall be valid  against any party hereto  unless
made in writing and signed by the party against whom  enforcement of such waiver
is sought and then only to the extent expressly specified therein.

     Section 13.7. Equitable  Relief;  Remedies  Cumulative;  Interest.  Seller
hereby  acknowledges that irreparable injury may result to Buyer in the event of
a breach of this  Agreement to Seller.  It is therefore  agreed that,  if Seller
breaches this  Agreement,  Buyer may seek, in addition to any other remedies and
damages  available:  (i) an injunction to restrain the violation thereof by such
party, or its shareholders,  directors, agents, servants, employers or employees
of such party,  and all Persons  acting for or with such party and (ii) specific
performance  of the terms and  conditions  of this  Agreement.  All  rights  and
remedies  granted in this Agreement or available under law or at equity shall be
deemed concurrent and cumulative,  and not alternative or exclusive remedies, to
the full extent permitted by law and this Agreement.  Any party may proceed with
any number of remedies at the same time or in any order. The exercise of any one
right or remedy  shall not be deemed a waiver or release  of any other  right or
remedy. The parties waive any right they may have to require,  or any obligation
on the part of,  another party to post a bond in  connection  with any equitable
remedies.  Except as otherwise provided herein,  each party shall be entitled to
interest on any  amounts  owed by and not timely paid by the other from the date
such amount was first due to be paid until the date of actual payment thereof at
the prime rate of Citibank,  N.A.,  as  published  from time to time in The Wall
Street Journal.

     Section 13.8. Further Actions; Transition.

          (a) If at any time after the Closing any further  action is  necessary
     or desirable to carry out the purposes of this  Agreement,  each party will
     take such further  action  (including  the  execution  and delivery of such
     further  instruments  and  documents)  as the other  party  reasonably  may
     request,  all at the sole cost and expense of the requesting  party (unless
     the requesting party is entitled to indemnification  therefor under Article
     X).

          (b) Seller  shall not take any action  that is designed or intended to
     have the effect of  discouraging  any customer,  supplier or other business
     associate of Seller from  establishing  or  maintaining  the same  business
     relationships  with Buyer  after the Closing as it  maintained  with Seller
     prior to the Closing relating to the Assets. Seller will refer all customer
     inquiries  relating  to the  Branded  Products  to Buyer from and after the
     Closing.

          (c) In the event that Buyer or Seller receives funds after the Closing
     which belong to or are property  payable to the other,  the receiving party
     shall  promptly  endorse  over  or  otherwise  pay to the  other  all  such
     erroneously received funds.

     Section 13.9. Entire Agreement; Amendment. This Agreement, the Exhibits and
Schedules attached hereto and the  Confidentiality  Agreement contain the entire
Agreement of the parties  hereto with respect to the  transactions  contemplated
hereby  and  supersede  any  and  all  prior   agreements,   arrangements,   and
understandings between the parties. No inducements


                                       24

contrary to the terms of this Agreement exist. No waiver of any term, provision,
or condition of this Agreement,  whether by conduct or otherwise,  in any one or
more instances shall be construed as a further or continuing  waiver of any such
term,  provision or condition or any other term,  provision or condition of this
Agreement.  This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.

     Section 13.10. Counterparts.  This Agreement may be executed in one or more
counterparts,  each of which  shall  constitute  an  original,  but all of which
together shall constitute a single agreement.

     Section 13.11. Termination.

          (a) This Agreement may be terminated prior to the Closing as follows

               (i)  At any time by the mutual consent of Seller and Buyer;

               (ii) By either party, at its sole election,  if the Closing shall
                    not have occurred on or before October 31, 2003, unless such
                    party  has  taken  action  (or  failed  to take  action)  in
                    violation  of this  Agreement  and which caused delay in the
                    Closing;

               (iii)By  Buyer  upon a  material  breach  of any  representation,
                    warranty,  covenant or  agreement  on the part of Seller set
                    forth in this Agreement; or

               (iv) By Seller  upon a  material  breach  of any  representation,
                    warranty,  covenant  or  agreement  on the part of Buyer set
                    forth in this Agreement.

          (b) In the event of the  termination  of this  Agreement  pursuant  to
     subparagraph  (iii) or (iv) above because Seller or Buyer,  as the case may
     be,  shall have  willingly or in bad faith failed to satisfy a condition to
     the  Closing,  the other party shall be entitled to pursue,  exercise,  and
     enforce any and all remedies,  rights,  powers, and privileges available to
     it at law or in equity.

     Section 13.12. Public Announcements.  Buyer and Seller will coordinate with
each other  regarding the content and timing of the initial public  announcement
of,  the  transactions   contemplated  by  this  Agreement.   Buyer  and  Seller
acknowledge  and  consent  that each may issue a press  release  concerning  the
transactions  contemplated  by this  Agreement  so long  as such  press  release
contains substantially the same information as set forth on Schedule 13.12.

              [The remainder of this page is intentionally blank.]


                                       25

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first set forth above.

Archer-Daniels-Midland Company            Gooch Foods, Inc.


By:     /s/ John D. Rice                     By:     /s/ David J. Smith
   -----------------------------------          -----------------------------------
Name:   John D. Rice                         Name:   David J. Smith
Title:  Senior Vice President                Title:  Vice President




American Italian Pasta Company



By:
   ------------------------------------
    David E. Watson
    Executive Vice President -
    Operations and Corporate Development


                                       26

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first set forth above.

Archer-Daniels-Midland Company            Gooch Foods, Inc.


By:                                          By:
    -----------------------------------         -----------------------------------

Name:                                        Name:
    -----------------------------------         -----------------------------------

Title:                                       Title:
    -----------------------------------         -----------------------------------




American Italian Pasta Company



By:  /s/ David E. Watson
    -----------------------------------
    David E. Watson
    Executive Vice President -
    Operations and Corporate Development


                                       26

EX-99

                                                                    Exhibit 99


                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


     In connection with the Quarterly Report of American Italian Pasta Company
(the "Company") on Form 10-Q for the quarterly period ended December 31, 2002,
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned, in the capacities and dates indicated below, hereby
certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that, to our knowledge: (1) The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.



                                         /s/ Timothy S. Webster
                                       -----------------------------------------
                                       Timothy S. Webster
                                       President and Chief Executive Officer



                                         /s/ Warren Schmidgall
                                       -----------------------------------------
                                       Warren Schmidgall
                                       Executive Vice President and Chief
                                       Financial Officer


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