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:   March 31, 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, Suite 200, Kansas City, Missouri        64116
 (Address of principal executive office)                     (Zip Code)

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


- --------------------------------------------------------------------------------

             (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 [ ]

     The number of shares outstanding as of May 14, 2003 of the Registrant's
Class A Convertible Common Stock was 17,815,379 and there were no shares
outstanding of the Class B Common Stock.


                                     Page 1

                         American Italian Pasta Company
                                    Form 10-Q
                          Quarter Ended March 31, 2003


                                Table of Contents


Part I - Financial Information                                              Page

     Item 1.    Consolidated Financial Statements (unaudited)

                Consolidated Balance Sheets at March 31, 2003 and
                September 30, 2002.                                            3

                Consolidated Statements of Income for the three
                months ended March 31, 2003 and 2002.                          4

                Consolidated Statements of Income for the six
                months ended March 31, 2003 and 2002.                          5

                Consolidated Statements of Stockholders' Equity
                for the six months ended March 31, 2003.                       6

                Consolidated Statements of Comprehensive Income
                for the three months ended March 31, 2003 and 2002.            7

                Consolidated Statements of Comprehensive Income
                for the six months ended March 31, 2003 and 2002.              8

                Consolidated Statements of Cash Flows for the
                six months ended March 31, 2003 and 2002.                      9

                Notes to Consolidated Financial Statements                    10

     Item 2.    Management's Discussion and Analysis of
                Financial Condition and Results of Operations                 13

     Item 3.    Quantitative and Qualitative Disclosures About
                Market Risk                                                   22

     Item 4.    Controls and Procedures                                       22

Part II - Other Information

     Item 1.    Legal Proceedings                                             22

     Item 2.    Changes in Securities                                         22

     Item 3.    Defaults Upon Senior Securities                               22

     Item 4.    Submission of Matters to a Vote of Security Holders           23

     Item 5.    Other Information                                             23

     Item 6.    Exhibits and Reports on Form 8-K                              23


Signature Page                                                                24


                                     Page 2

                         PART I - FINANCIAL INFORMATION
             Item 1 - Consolidated Financial Statements (Unaudited)

                         AMERICAN ITALIAN PASTA COMPANY
                           Consolidated Balance Sheets

                                               March 31,           September 30,
                                                 2003                   2002
                                                       (In thousands)
                                                         (Unaudited)
Assets
Current assets:
   Cash and temporary investments              $  5,396             $  8,247
   Trade and other receivables                   43,070               46,463
   Prepaid expenses and deposits                 12,878               11,282
   Inventory                                     60,605               49,720
   Deferred income taxes                          2,420                2,420
                                               --------             --------
Total current assets                            124,369              118,132
Property, plant and equipment:
     Land and improvements                       13,593               11,061
   Buildings                                    130,457              111,041
     Plant and mill equipment                   351,397              312,092
   Furniture, fixtures and equipment             24,894               15,509
                                               --------             --------
                                                520,341              449,703
     Accumulated depreciation                  (110,748)             (99,607)
                                               --------             --------
                                                409,593              350,096
     Construction in progress                    10,303               45,844
                                               --------             --------
Total property, plant and equipment             419,896              395,940
Intangible assets                               178,504              119,360
Other assets                                      8,652                7,177
                                               --------             --------
Total assets                                   $731,421             $640,609
                                               ========             ========

Liabilities and stockholders' equity
Current liabilities:
     Accounts payable                          $ 39,114             $ 21,320
     Accrued expenses                            14,242               11,359
     Income tax payable                           1,150                1,585
     Current maturities of long-term debt         4,627                4,279
                                               --------             --------
Total current liabilities                        59,133               38,543
Long-term debt                                  310,122              258,193
Deferred income taxes                            52,043               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                 220,129              213,671
     Treasury stock                             (46,513)             (34,394)
     Unearned compensation                         (677)                (940)
     Retained earnings                          139,655              121,862
   Accumulated other comprehensive loss          (2,491)              (3,113)
                                               --------             --------
Total stockholders' equity                      310,123              297,106
                                               --------             --------
Total liabilities and stockholders' equity     $731,421             $640,609
                                               ========             ========


          See accompanying notes to consolidated financial statements.


                                     Page 3

                         AMERICAN ITALIAN PASTA COMPANY

                        Consolidated Statements of Income

                                                       Three Months Ended
                                                            March 31,
                                                   2003                  2002
                                                         (In thousands)
                                                           (Unaudited)

Revenues                                         $110,652                $94,843
Cost of goods sold                                 75,371                 61,126
                                                 --------                -------
Gross profit                                       35,281                 33,717
Selling and marketing expense                      12,743                 12,845
General and administrative expense                  3,545                  3,209
Provision for acquisition expenses                  3,511                     --
                                                 --------                -------
Operating profit                                   15,482                 17,663
Interest expense, net                               2,249                  2,422
                                                 --------                -------
Income before income tax expense                   13,233                 15,241
Income tax expense                                  4,363                  5,182
                                                 --------                -------
Net income                                       $  8,870                $10,059
                                                 ========                =======

Earnings Per Common Share:
  Net income per common share                        $.50                   $.56
                                                 ========                =======

  Weighted-average common shares outstanding       17,727                 17,835
                                                 ========                =======

Earnings Per Common Share - Assuming Dilution:
  Net income per common share assuming dilution      $.48                   $.54
                                                 ========                =======

  Weighted-average common shares outstanding       18,421                 18,653
                                                 ========                =======



          See accompanying notes to consolidated financial statements.


                                     Page 4

                         AMERICAN ITALIAN PASTA COMPANY

                        Consolidated Statements of Income

                                                           Six Months Ended
                                                               March 31,
                                                         2003             2002
                                                            (In thousands)
                                                              (Unaudited)

Revenues                                               $217,688         $186,846
Cost of goods sold                                      148,830          120,285
                                                       --------         --------
Gross profit                                             68,858           66,561
Selling and marketing expense                            26,336           26,641
General and administrative expense                        6,357            6,186
Provision for acquisition and plant start-up expenses     4,939               --
                                                       --------         --------
Operating profit                                         31,226           33,734
Interest expense, net                                     4,676            4,978
                                                       --------         --------
Income before income tax expense                         26,550           28,756
Income tax expense                                        8,757            9,845
                                                       --------         --------
Net income                                              $17,793          $18,911
                                                       ========         ========

Earnings Per Common Share:
  Net income per common share                             $1.00            $1.06
                                                       ========         ========

  Weighted-average common shares outstanding             17,781           17,764
                                                       ========         ========

Earnings Per Common Share - Assuming Dilution:
  Net income per common share assuming dilution            $.97            $1.02
                                                       ========         ========

  Weighted-average common shares outstanding             18,423           18,605
                                                       ========         ========


          See accompanying notes to consolidated financial statements.


                                     Page 5

                         AMERICAN ITALIAN PASTA COMPANY

                 Consolidated Statements of Stockholders' Equity


                                                               Six months ended March
                                                                      31, 2003
                                                             ---------------------------
                                                                   (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, (net)                                                   152
                                                                       ---------
  Balance, end of period                                                  19,829
                                                                       =========

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                                                        6,458
                                                                       ---------
  Balance, end of period                                               $ 220,129
                                                                       =========

Treasury Stock
  Balance, beginning of period                                         $ (34,394)
  Purchase of treasury stock                                             (12,119)
                                                                       ---------
  Balance, end of period                                               $ (46,513)
                                                                       =========

Unearned Compensation
 Balance, beginning of period                                          $    (940)
 Cancellation of common stock                                                250
 Earned compensation                                                         133
 Issuance of common stock                                                   (120)
                                                                       ---------
 Balance, end of period                                                $    (677)
                                                                       =========

Other Comprehensive Income (Loss)
  Foreign currency translation adjustment
    Balance, beginning of period                                       $  (1,611)
    Change during the period                                               2,023
                                                                       ---------
    Balance, end of period                                                   412

  Interest rate swaps fair value adjustment
    Balance, beginning of period                                          (1,502)
    Change during the period                                              (1,401)
                                                                       ---------
    Balance, end of period                                                (2,903)
                                                                       ---------

  Total accumulated other comprehensive loss                           $  (2,491)
                                                                       =========

Retained Earnings
  Balance, beginning of period                                         $ 121,862
  Net income                                                              17,793
                                                                       ---------
  Balance, end of period                                               $ 139,655
                                                                       =========

Total Stockholders' Equity                                             $ 310,123
                                                                       =========


          See accompanying notes to consolidated financial statements.


                                     Page 6

                         AMERICAN ITALIAN PASTA COMPANY

                 Consolidated Statements of Comprehensive Income


                                                   Three months ended March 31,
                                                      2003             2002
                                                          (In thousands)
                                                           (unaudited)


Net income                                          $8,870           $10,059

Other comprehensive income (loss)

  Net unrealized gain (losses) on qualifying cash
  flow hedges (net of income tax benefit (expense) of
  $334 and ($107), respectively)                      (675)              336

  Foreign currency translation adjustment
  (net of income tax benefit (expense) of
  ($329) and $0, respectively)                         668                (2)
                                                    ------           -------

  Total other comprehensive income (loss)               (7)              334
                                                    ------           -------

  Comprehensive income                              $8,863           $10,393
                                                    ======           =======



          See accompanying notes to consolidated financial statements.


                                     Page 7

                         AMERICAN ITALIAN PASTA COMPANY

                 Consolidated Statements of Comprehensive Income


                                                   Six months ended March 31,
                                                      2003             2002
                                                          (In thousands)
                                                           (unaudited)


Net income                                         $17,793           $18,911

Other comprehensive income (loss)

  Net unrealized losses on qualifying cash
  flow hedges (net of income tax benefit of
  $690 and $27, respectively)                       (1,401)              (53)

  Foreign currency translation adjustment
  (net of income tax benefit (expense) of
  ($996) and $40, respectively)                      2,023               (78)
                                                   -------           -------

  Total other comprehensive income (loss)              622              (131)
                                                   -------           -------

  Comprehensive income                             $18,415           $18,780
                                                   =======           =======


          See accompanying notes to consolidated financial statements.


                                     Page 8

                         AMERICAN ITALIAN PASTA COMPANY

                      Consolidated Statements of Cash Flows

                                                            Six Months Ended
                                                                March 31,
                                                        2003               2002
                                                             (In thousands)
                                                               (Unaudited)
Operating activities:
Net income                                            $17,793            $18,911
Adjustments to reconcile net income to net cash
provided by operations:
    Depreciation and amortization                      11,743              9,984
    Deferred income tax expense                         7,246              4,959
    Changes in operating assets and liabilities:
           Trade and other receivables                  3,624              1,137
           Prepaid expenses and deposits               (1,987)             1,687
           Inventory                                   (7,563)            (9,453)
           Accounts payable and accrued expenses       14,048             (4,349)
           Income tax payable                            (288)             4,132
           Other                                       (1,809)              (551)
                                                      -------            -------
Net cash provided by operating activities              42,807             26,457

Investing activities:
Purchase of pasta brands                              (54,234)            (1,209)
Additions to property, plant and equipment            (25,856)           (29,593)
                                                      -------            -------
Net cash used in investing activities                 (80,090)           (30,802)

Financing activities:
Additions to deferred debt issuance costs              (1,106)                --
Proceeds from issuance of debt                         62,988                979
Principal payments on debt and capital lease
     Obligations                                      (16,880)              (789)
Proceeds from issuance of common stock, net of
     issuance costs                                     1,229              3,668
Purchase of treasury stock                            (12,119)                --
                                                      -------            -------
Net cash provided by financing activities              34,112              3,858
Effect of exchange rate changes on cash                   320                (71)
                                                      -------            -------
Net decrease in cash and temporary investments         (2,851)              (558)

Cash and temporary investments at beginning of period   8,247              5,284
                                                      -------            -------
Cash and temporary investments at end of period       $ 5,396            $ 4,726
                                                      =======            =======


          See accompanying notes to consolidated financial statements.


                                     Page 9

                         AMERICAN ITALIAN PASTA COMPANY
                   Notes to Consolidated Financial Statements

                                 March 31, 2003


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 six-month period ended March 31, 2003
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 year 2003 included 14 weeks of activity and
fiscal 2002 included thirteen weeks of activity and are included in the
six-month periods ended March 31, 2003 and 2002.

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:

                                              March 31,            September 30,
                                                2003                   2002
                                                      (In thousands)
 Finished goods                               $46,107                 $38,881
 Raw materials, packaging materials and
 work-in-process                               14,498                  10,839
                                              -------                 -------
                                              $60,605                 $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                                 (45,521)
          Granted                                   392,000
          Canceled/Expired                          (45,952)
                                                  ---------
     Outstanding at March 31, 2003                2,966,348
                                                  =========


                                    Page 10

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 694,000 and 642,000 shares for the three-month and six-month periods
ended March 31, 2003, respectively, and 818,000 and 841,000 shares for the
three-month and six-month periods ended March 31, 2002, respectively.

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 Statement of Financial Accounting Standards (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):


                                    Six months ended March 31
                                    2003                 2002

Net income, as reported          $ 17,793              $ 18,911
Deduct: Total stock-based
   employee compensation
   expense determined under
   fair value based method
   for all awards, net of
   related tax effects             (3,250)               (1,385)
                                 --------              --------

Pro forma net income             $ 14,543              $ 17,526
                                 ========              ========

Earnings per share:
   Basic - as reported           $   1.00              $   1.06
                                 ========              ========
   Basic - pro forma             $    .82              $    .99
                                 ========              ========

   Diluted - as reported         $    .97              $   1.02
                                 ========              ========
   Diluted - pro forma           $    .79              $    .94
                                 ========              ========


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.


                                    Page 11

The Company recognizes the receipts from the Department of Commerce 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 two 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 in 2002, 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.

On January 31, 2003, the Company purchased the Golden Grain/Mission pasta brand
plus inventory from PepsiCo for approximately $46 million. No significant
manufacturing assets were included in the transaction. Additional costs
associated with this acquisition may be incurred.

On February 27, 2003, the Company purchased the Mrs. Leeper's specialty pasta
business for 100,000 shares of AIPC common stock plus a cash earn out tied to
sale and profit growth over the next three years.


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 366,398
shares for $12,119,000, at prices ranging from $32.52 to $34.45 per share during
the six months ended March 31, 2003.


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.


                                    Page 12

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
75% and 76% of our total revenue for the six months ended March 31, 2003 and
2002, 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 25% and 24% of our total revenue for the
six months ended March 31, 2003 and 2002, 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 as the branded portion of sales mix
continues to expand. Selling prices of our branded products are significantly
higher than selling prices in our other business units including private label.
This results in higher


                                    Page 13

revenues, gross profits, and gross margin percentages than our non-branded
business. 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,
which is set to renew this year, 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, 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 increased substantially in both fiscal years 2002
and 2001, in line with the significant expansion of our retail business through
branded acquisitions. These costs constituted 11.5% and 12.1% of revenues for
the three and six months ended March 31, 2003, respectively. We do not expect
significant further 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.

As noted, in November 2000, we purchased the Mueller's(R) pasta brand from
Bestfoods. In July 2001, we purchased seven pasta brands from Borden Foods. In
September 2002, we purchased the Lensi brand and in October 2002 we purchased
the Martha Gooch(R) and LaRosa(R) brands. In addition, we purchased the Golden
Grain/Mission pasta brand and Mrs. Leeper's pasta brand in January 2003 and
February 2003, respectively. As discussed below, the timing of these brand
acquisitions had an impact on the period-to-period comparisons.


                                    Page 14

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.

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


                                    Page 15

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 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 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
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


                                    Page 16

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.


Second quarter fiscal 2003 compared to second quarter fiscal 2002.

     Revenues. Total revenues increased $15.8 million, or 16.7%, to $110.7
million for the three-month period ended March 31, 2003, from $94.8 million for
the three-month period ended March 31, 2002. The increase for the three-month
period ended March 31, 2003 was primarily due to volume growth of 14.7% over the
prior year period. Revenue growth exceeded volume growth due primarily to higher
selling prices related to durum pass throughs and recent brand acquisitions,
offset by a reduction in the payments received from the U.S. government under
the Continued Dumping and Subsidy Offset Act of 2000, and changes in sales mix.
(See Note 3 to the Consolidated Financial Statements)

     Revenues for the Retail market increased $12.0 million, or 17.0%, to $82.9
million for the three-month period ended March 31, 2003, from $70.9 million for
the three-month period ended March 31, 2002. The increase primarily reflects
volume growth of 13.8%. Revenue growth exceeded volume growth due primarily to
higher selling prices related to durum pass throughs and recent brand
acquisitions, offset by 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.

     Revenues for the Institutional market increased $3.8 million, or 15.7%, to
$27.7 million for the three-month period ended March 31, 2003, from $23.9
million for the three-month period ended March 31, 2002. This increase was
primarily a result of volume growth of 17.5%. Revenue growth lagged volume
growth due primarily to changes in sales mix, offset by higher selling prices
related to durum pass throughs.

     Gross Profit. Gross profit increased $1.6 million, or 4.6% to $35.3 million
for the three-month period ended March 31, 2003, from $33.7 million for the
three-month period ended March 31, 2002. This increase was primarily
attributable to revenue growth associated with increased volumes and higher
selling prices. These increases were partially offset by higher raw material
costs, principally durum wheat. Gross profit as a percentage of revenues
decreased to 31.9% for the three-month period ended March 31, 2003 from 35.6%


                                    Page 17

for the three-month period ended March 31, 2002. The decrease in gross profit as
a percentage 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 $0.1
million, or 0.8%, to $12.7 million for the three-month period ended March 31,
2003, from $12.8 million for the three-month period ended March 31, 2002.
Selling and marketing expense as a percentage of revenues decreased to 11.5% for
the three-month period ended March 31, 2003, from 13.5% for the comparable prior
year period. The lower selling and marketing expense as a percentage of sales is
attributable primarily to higher rates of revenue growth for our businesses
which require less selling and marketing support, and the leverage benefits of
controlling our overhead costs.

     General and Administrative Expense. General and administrative expenses
increased $0.3 million, or 10.5%, to $3.5 million for the three-month period
ended March 31, 2003 from $3.2 million for the three-month period ended March
31, 2002. General and administrative expense as a percentage of revenues
decreased to 3.2% for the three-month period ended March 31, 2003 from 3.4% for
the comparable prior year period.

     Provision for Acquisition Expenses. The provision for acquisition expenses
of $3.5 million for the quarter ended March 31, 2003 consisted of incremental
costs associated with the brand acquisitions and were incurred primarily for
purchased product premiums during the transition, incremental logistic costs,
employee incentives, and transition support.

     Operating Profit. Operating profit for the three-month period ended March
31, 2003, was $15.5 million, a decrease of $2.2 million or 12.3% from the $17.7
million reported for the three-month period ended March 31, 2002. Included in
operating profit is the impact of the $3.5 million charge for incremental costs
associated with the acquisitions. Operating profit decreased as a percentage of
revenues to 14.0% for the three-month period ended March 31, 2003, from 18.6%
for the three-month period ended March 31, 2002 as a result of the factors
discussed above.

     Interest Expense. Interest expense for the three-month period ended March
31, 2003, was $2.2 million, decreasing $0.2 million or 7.1% from the $2.4
million reported for the three-month period ended March 31, 2002. Interest
expense decreased from a year ago despite higher average debt, due to lower
interest rates. Additionally, the interest on debt associated with the Arizona
facility was capitalized to the project during the quarter. Interest will no
longer be capitalized to this project since it was placed in service in the
current quarter. Therefore, higher interest expense is expected for the
remainder of fiscal 2003.

     Income Tax. Income tax expense for the three-month period ended March 31,
2003, was $4.4 million, compared to $5.2 million reported for the three-month
period ended March 31, 2002, and reflects effective income tax rates of
approximately 33.0% and 34.0%, respectively.

     Net Income. Net income for the three-month period ended March 31, 2003, was
$8.9 million, decreasing $1.2 million or 11.8% from the $10.1 million reported
for the three-month period ended March 31, 2002. Included in net income is the
impact of the $3.5 million ($2.3 million after tax) charge for incremental costs
associated with the acquisitions. Diluted earnings per common share were $0.48
per share for the three-month period ended March 31, 2003 compared to $0.54 per
share for the three-month period ended March 31, 2002. Included in the diluted
earnings per common share is the ($0.13) per share


                                    Page 18

effect of incremental costs associated with the acquisitions. Net income as a
percentage of the net revenues was 8.0% versus 10.6% in the prior year.


Six months fiscal 2003 compared to six months fiscal 2002.

     Revenues. Revenues increased $30.8 million, or 16.5%, to $217.7 million for
the six-month period ended March 31, 2003, from $186.8 million for the six-month
period ended March 31, 2002. The increase for the six-month period ended March
31, 2002 was primarily due to volume growth of 17.6% over the prior year period.
Revenue growth lagged volume growth due primarily to changes in sales mix and a
reduction in payments received from the U.S. government under the Continued
Dumping and Subsidy Offset Act of 2000, offset by recent branded acquisitions
and higher selling prices related to durum pass throughs. (see Note 3 to the
Consolidated Financial Statements)

     Revenues for the Retail market increased $22.5 million, or 15.8%, to $164.2
million for the six-month period ended March 31, 2003, from $141.7 million for
the six-month period ended March 31, 2002. The increase primarily reflects
volume growth of 16.6%, higher selling prices related to durum pass throughs and
the impact of recent brand acquisitions, offset by 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.

     Revenues for the Institutional market increased $8.4 million, or 18.6%, to
$53.5 million for the six-month period ended March 31, 2003, from $45.1 million
for the six-month period ended March 31, 2002. This increase was primarily due
to volume growth of 19.6% and higher selling prices related to durum pass
throughs, offset by changes in sales mix.

     Gross Profit. Gross profit increased $2.3 million, or 3.5%, to $68.9
million for the six-month period ended March 31, 2003, from $66.6 million for
the six-month period ended March 31, 2002. This increase was primarily due to
revenue growth associated with increased volumes and higher selling prices.
These increases were partially offset by higher raw material costs, principally
durum wheat. Gross profit as a percentage of revenues decreased to 31.6% for the
six-month period ended March 31, 2003, from 35.6% for the six-month period ended
March 31, 2002. The decrease in gross profit as a percentage of revenues relates
to the lower net revenue impact of the Continued Dumping and 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 $0.3
million, or 1.1%, to $26.3 million for the six-month period ended March 31,
2003, from $26.6 million for the six-month period ended March 31, 2002. Selling
and marketing expense as a percentage of revenues decreased to 12.1% for the
six-month period ended March 31, 2003, from 14.3% for the comparable prior year
period. The lower selling and marketing expense as a percentage of revenues is
attributable primarily to higher rates of revenue growth for our businesses
which require less selling and marketing support, and the leverage benefits of
controlling our overhead costs.

     General and Administrative Expense. General and administrative expense
increased $0.2 million, or 2.8%, to $6.4 million for the six-month period ended
March 31, 2003, from $6.2 million for the comparable prior period, and decreased
as a percentage of revenues at 2.9% and 3.3% for the six-month periods ended
March 31, 2003 and 2002, respectively.

     Provision for Acquisition and Plant Start-up Expenses. The provision for
acquisition and plant start-up expenses of $4.9 million for the six-month


                                    Page 19

period ended March 31, 2003 consisted of incremental costs associated with the
brand acquisitions and plant start-up costs related to the Arizona facility.

     Operating Profit. Operating profit for the six-month period ended March 31,
2003, was $31.2 million, a decrease of $2.5 million or 7.4% from the $33.7
million reported for the six-month period ended March 31, 2002. Included in
operating profit is the impact of the $4.9 million charge for incremental costs
associated with the acquisitions and plant start-up expenses. Operating profit
decreased as a percentage of revenues to 14.3% for the six-month period ended
March 31, 2003, from 18.1% for the six-month period ended March 31, 2002 as a
result of the factors discussed above.

     Interest Expense. Interest expense for the six-month period ended March 31,
2003, was $4.7 million, decreasing $0.3 million or 6.1% from the $5.0 million
reported for the six-month period ended March 31, 2002. Interest expense
decreased from a year ago despite higher average debt, due to lower interest
rates. Additionally, the interest on debt associated with the Arizona facility
was capitalized to the project during the quarter. Interest will no longer be
capitalized to this project since it was placed in service in the current
quarter. Therefore, higher interest expense is expected for the remainder of
fiscal 2003.

     Income Tax. Income tax expense for the six-month period ended March 31,
2003, was $8.8 million, decreasing $1.1 million from the $9.8 million reported
for the six-month period ended March 31, 2002, and reflects effective income tax
rates of approximately 33.0% and 34.2%, respectively.

     Net Income. Net income for the six-month period ended March 31, 2003, was
$17.8 million, decreasing $1.1 million or approximately 5.9% from the $18.9
million reported for the six months ended March 31, 2002. Included in net income
is the impact of the $4.9 million ($3.3 million after tax) charge for
incremental costs associated with the acquisitions and plant start-up costs.
Diluted earnings per common share were $0.97 per share for the six-month period
ended March 31, 2003 compared to $1.02 per share for the six-month period ended
March 31, 2002. Included in the diluted earnings per common share is the ($0.18)
per share effect of costs related to acquisition and plant start-up costs. Net
income as a percentage of net revenues was 8.2% versus 10.1% in the prior year.


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
$5.4 million, and working capital totaled $65.2 million at March 31, 2003.

     Our net cash provided by operating activities totaled $42.8 million for the
six-month period ended March 31, 2003 compared to $26.5 million for the
six-month period ended March 31, 2002.

     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 $25.9 million
for the six-month period ended March 31, 2003 compared to $29.6 million in the
comparable prior year period. In addition to the new Arizona facility, we plan
to spend approximately $15 million in the remainder of fiscal year 2003,
primarily for cost saving, maintenance and capacity expansion projects.

     Net cash provided by financing activities was $34.1 million for the
six-month period ended March 31, 2003 compared to $3.9 million for the six-month
period ended March 31, 2002. The net borrowings of $46.1 million in fiscal 2003
relates to the purchase of the Golden Grain/Mission pasta brand and the


                                    Page 20

purchase of treasury stock. We have purchased 346,398 shares of company stock
for $12.1 million in the six months ended March 31, 2003. 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.


    Selected
   Contractual
 Obligations at
 March 31, 2003             Payments Due by Period
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       Total    Less than      1-3 years     4-5 years    After
                                  1 year                                 5 years
- --------------------------------------------------------------------------------
                                           (in thousands)

Long term debt       $313,753     $4,197        $119,556      $190,000       $--

Capital lease
obligations               996        430             566            --        --

Unconditional durum
purchase
obligations            34,034     26,824           7,210            --        --

Total contractual
cash
obligations          $348,783    $31,451        $127,332      $190,000       $--


     We have current commitments for $34.0 million in durum purchases for fiscal
years 2003 and 2004. Additionally, we have approximately $25.0 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 borrowings 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.


                                    Page 21

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 March 31, 2003. The estimated fair value of the interest
rate swap agreements of ($4.4 million) is the amount we would be required to pay
to terminate the swap agreements at March 31, 2003. 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 $0.7 million for the quarter ended March 31, 2003. 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.

     The functional currency for our Italy operation is the Euro. At March 31,
2003, long-term debt includes obligations of 37.5 million Euros ($40.3 million)
under a credit facility which bears interest at a variable rate based upon the
Euribor rate.


Item 4. CONTROLS AND PROCEDURES

     Within 90 days prior to the filing of this report, Mr. Webster, our CEO,
and Mr. Schmidgall, our CFO, evaluated our disclosure controls and procedures
and, based on this evaluation, 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 May 14, 2003.


PART II - OTHER INFORMATION

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


Item 2. Changes in Securities
- -------------------------------
Not applicable


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


                                    Page 22

Item 4. Submission of Matters to a Vote of Security Holders
- -------------------------------
The Annual Meeting of Shareholders was held on February 6, 2003.

                  There were two matters submitted to a vote of security
                  holders. The first matter was for the election of directors.
                  Each of the persons named in the Proxy Statement as a nominee
                  for director was elected. Following are the voting results on
                  each of the nominees for director:

                      Election of Directors       Votes For       Votes Withheld
                         Horst Schroeder          16,478,732           98,300
                         Mark C. Demetree         15,572,218        1,004,814
                         Timothy S. Webster       16,492,883           84,149
                         James Heeter             16,154,149          422,883

                  The following directors continued in office:

                      Serving Until 2004              Serving Until 2005
                         Tim Pollak                      Jonathan E. Baum
                         William R. Patterson            Robert H. Niehaus
                                                         Richard C. Thompson

                  The second matter was the ratification of the Board of
                  Directors' selection of Ernst & Young LLP to serve as the
                  Company's independent auditors for the fiscal year 2003. The
                  shareholders cast 16,013,470 votes in the affirmative and
                  543,961 votes in the negative and shareholders holding 19,601
                  votes abstained from voting on the ratification of Ernst &
                  Young LLP as the Company's independent auditors for the fiscal
                  year 2003.


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


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

               10.1 Employment Agreement by and between American Italian Pasta
                    Company and Horst W. Schroeder dated January 14, 2003.

               10.2 Asset Purchase and Sale Agreement by and among American
                    Italian Pasta Company, PepsiCo Puerto Rico, Inc. and Golden
                    Grain Company dated January 28, 2003.

               10.3 Asset Purchase Agreement by and between American Italian
                    Pasta Company, Mrs. Leeper's, Inc. and Edwin J. Muscat and
                    Michelle M. Muscat dated February 27, 2003.

               10.4 Form of Stock Option Award Agreement for Stock Option Awards
                    Pursuant to the Company's 2000 Equity Incentive Plan.

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

          (b)  Reports on Form 8-K.

               None


                                    Page 23

                                   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



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



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


                                    Page 24

                                  EXHIBIT INDEX


Exhibit No.              Description
- -----------              -----------------------------------

   10.                   Material Contracts

   10.1                  Employment Agreement by and between American Italian
                         Pasta Company and Horst W. Schroeder dated January 14,
                         2003.

   10.2                  Asset Purchase and Sale Agreement by and among American
                         Italian Pasta Company, PepsiCo Puerto Rico, Inc. and
                         Golden Grain Company dated January 28, 2003.

   10.3                  Asset Purchase Agreement by and between American
                         Italian Pasta Company, Mrs. Leeper's, Inc. and Edwin J.
                         Muscat and Michelle M. Muscat dated February 27, 2003.

   10.4                  Form of Stock Option Award Agreement for Stock Option
                         Awards Pursuant to the Company's 2000 Equity Incentive
                         Plan.

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



                                    Page 25

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


                                    Page 26

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


                                    Page 27

EX-10

                                                                    EXHIBIT 10.1


                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as
of January 14, 2003, ("Effective Date") by and between AMERICAN ITALIAN PASTA
COMPANY, a Delaware corporation (the "Company") and HORST W. SCHROEDER ("Mr.
Schroeder").

         WITNESSETH:

         WHEREAS, the Company and Mr. Schroeder are parties to an Employment
Agreement dated as of September 30, 1997 (the "1997 Employment Agreement") and
the parties desire, as of the Effective Date, to terminate and supersede the
1997 Employment Agreement in its entirety;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:

     1. Term. The Company hereby employs Mr. Schroeder for an initial term
commencing on the Effective Date, and terminating three (3) years from the
Effective Date; unless the initial term is extended or renewed by mutual
agreement in writing of the parties hereto or this Agreement is earlier
terminated pursuant to Section 5 hereof (collectively the "Term"). In the event
one of the parties wishes to extend or renew the Term it will so notify the
other party at least ninety (90) days prior to the date on which the Agreement
would otherwise terminate so that the parties may enter into discussions
regarding such renewal or extension.

     2. Position and Responsibilities. Mr. Schroeder will serve as a Director
and the Chairman of the Board of the Company and render such advice and services
to the Company during the Term as may be reasonably required by the Company in
accordance with this Agreement, including but not limited to the following:

          a. Serve on all key committees of the Board of Directors, except as
     may be prohibited, deemed inadvisable or as may create adverse consequences
     to the Company or its employees under applicable securities laws, tax laws,
     stock exchange regulations, or any other applicable law, rule or
     regulation, as determined by the Company's legal counsel.

          b. Counsel and assist the Company's management in the development,
     implementation and control of the Company's business objectives and
     strategies to further the profitable growth of the Company.

          c. Assist in developing and implementing operational and marketing
     strategies which will support the Company's business growth plan.

          d. Assist and counsel the Company's management in all matters related
     to the implementation of the Company's business plan.

     The Company agrees to give reasonable advance notice to Mr. Schroeder
regarding the anticipated timing and duration of the services needed and
understands and agrees that in no event shall Mr. Schroeder's physical presence
be required to render services to the Company for more than an aggregate of
fifty (50) days in each calendar year during the Term. It is expressly
understood and agreed by the parties hereto that any request for services in
addition to the foregoing limitations shall be subject to Mr. Schroeder's
availability. In rendering his services to the Company, Mr. Schroeder shall
report directly to the Company's Board of Directors.

     3. Compensation.

          a. Base Compensation. As base compensation ("Base Compensation"), the
     Company shall pay Mr. Schroeder $4,000.00 per day ("the Daily Rate") for
     each day of service rendered to the Company; provided, however, that in the
     event Mr. Schroeder is willing and able to render services but the Company
     does not request services which aggregate thirty (30) days for any given
     calendar year, then, the Company shall pay Mr. Schroeder for a minimum of
     thirty (30) days in said calendar year. Within a reasonable time after the
     end of each calendar quarter, Mr. Schroeder will provide the Company a
     written statement describing the services rendered during the said calendar
     quarter and within fifteen (15) days after receipt of said written
     statement, the Company shall pay Mr. Schroeder for said services. In the
     event the Company does not request at least thirty (30) days of service
     from Mr. Schroeder during a given calendar year, then, on or before the
     last business day of said calendar year, the Company shall pay Mr.
     Schroeder an amount equal to the Daily Rate times the number of days fewer
     than thirty for which services were not rendered because they were not
     requested by the Company.

          b. Bonuses. During the Term of this Agreement, Mr. Schroeder will be
     entitled to participate in an equitable manner with other senior executive
     employees of the Company in discretionary bonuses authorized and declared
     from time to time by the Board of Directors or its Compensation Committee.
     In addition, Mr. Schroeder will be entitled to participate in the Company's
     1996 Salaried Employee Bonus Plan (the "Bonus Plan") attached hereto as
     Exhibit A, as the same may be amended, modified or terminated. The "norm
     bonus" under the Bonus Plan will be in an amount equal to 67% of Mr.
     Schroeder's Base Compensation and the Bonus Plan will have a "target bonus"
     equal to up to 100% of Mr. Schroeder's Base Compensation.

          c. Withholdings. All payments due under this Agreement will be subject
     to the required and customary employment tax and income tax withholdings.

     4. Expense Reimbursement. The Company shall reimburse Mr. Schroeder for
necessary and reasonable business expenses incurred in connection with the
performance of duties hereunder. Mr. Schroeder shall provide an invoice to the
Company for such expenses at the end of the quarter in which such expenses were
incurred. The Company shall, subject to its normal review and approval policies
and procedures, pay such invoice of Mr. Schroeder not later than on the due date
stated therein which date shall not be less than fifteen (15) days after the
date such invoice was provided to the Company.


                                       2

     5. Termination.

          a. Death or Disability. If Mr. Schroeder is prevented from providing
     the services or performing the assignments herein contemplated due to his
     illness, incapacity or injury for a period of sixty (60) consecutive days
     or sixty (60) days in the aggregate in any six (6) month period
     ("Disability") or his death, the Company may terminate this Agreement
     immediately by giving written notice to such effect. Upon the death or
     Disability of Mr. Schroeder, the Company shall pay to him or his designated
     beneficiary or estate all amounts due and unpaid for services rendered
     prior to his death or Disability.

          b. Termination of Employment by Company for Cause. The Company may
     also terminate this Agreement for "Cause" (as defined below). Upon
     termination for Cause, the Company will pay to Mr. Schroeder all amounts
     due and unpaid for services rendered prior to termination. The Term shall
     be terminated effective the date of such termination for Cause and, except
     as provided in the foregoing sentence, no further amounts shall be payable
     hereunder. For purposes of this Agreement, "Cause" shall mean termination
     of Mr. Schroeder's employment because, in the Company's good faith belief,
     (i) Mr. Schroeder willfully and continually failed substantially to perform
     his duties under the Agreement (other than as a result of Disability), (ii)
     Mr. Schroeder failed to comply with any of the material terms of this
     Agreement, including, but not limited to, Sections 6 and 7 hereof, (iii)
     Mr. Schroeder committed an act or acts that constituted a misdemeanor
     (other than a minor traffic violation) or a felony under the law of the
     United States (including any subdivision thereof) or any country to which
     he is assigned (including any subdivision thereof), including, but not
     limited to, his conviction for or plea of guilty or no contest ("nolo
     contendre") to any such misdemeanor or felony, (iv) Mr. Schroeder committed
     an act or acts in violation of the Company's policies and/or practices
     applicable to its senior level executive officers, (v) Mr. Schroeder
     willfully acted, or willfully failed to act, in a manner that was injurious
     to the financial condition or business reputation of the Company or any of
     its subsidiaries or affiliates, (vi) Mr. Schroeder acted in a manner that
     is unbecoming of his position, regardless of whether such action or
     inaction occurs in the course of the performance of his duties, or (vii)
     Mr. Schroeder was subject to any fine, censure, or sanction of any kind,
     permanent or temporary, issued by the Securities and Exchange Commission or
     the New York Stock Exchange.

          c. Termination of Employment by Mr. Schroeder for Good Reason. Mr.
     Schroeder may resign and terminate this Agreement for "Good Reason" by
     giving written notice to the Company. For purposes of this Agreement, "Good
     Reason" shall mean any of the following reasons: (i) the Company willfully
     fails to pay an amount due under this Agreement after Mr. Schroeder has
     provided written notice to the Company of such failure; (ii) the occurrence
     without Mr. Schroeder's written consent of a Change of Control (defined as
     any person or group (as defined in Section 13(d)(3) of the Securities
     Exchange Act of 1934, as amended, acquiring beneficial ownership of more
     than 50% of Company's then outstanding Common Stock or 51% or more of the
     combined voting power of the Company's then outstanding securities entitled
     to vote for the election of the


                                       3

     Company's Directors); or (iii) there occurs a significant strategic
     disagreement between Mr. Schroeder and a majority of the members of the
     Board of Directors of the Company involving: (a) the CEO position or (b)
     removal by the Company of Mr. Schroeder as Chairman of Board of Directors
     other than for Cause.

     If Mr. Schroeder terminates this Agreement for Good Reason, Mr. Schroeder
shall no longer be obligated to provide any services to the Company and shall be
entitled to receive a prompt payment of all amounts due for service rendered but
not yet paid, and an amount equal to: (ii) the unpaid balance due for the
remainder of the Term; and (iii) an additional payment equal to $2,000
multiplied by the number of days of service remaining under the Term (but in no
event shall such number of days of service exceed thirty (30) days for any
calendar year during the Term). As an example and solely for purposes of
illustration: If Mr. Schroeder terminates employment for Good Reason after
rendering ten (10) days of service in 2003, the Company will pay Mr. Schroeder
the additional sum of $120,000 (the sum of $4,000 x 20 days, and $2,000 x 20
days for 2003), plus an additional sum for each additional year remaining under
the Term of this Agreement, calculated based upon the formula set forth in this
paragraph and based upon a minimum of thirty (30) days of service in each year.

     Furthermore, upon termination of this Agreement for Good Reason by Mr.
Schroeder, the unvested portion of the Options granted pursuant to the Plans
shall accelerate and become immediately vested ("Options" and "Plans" are
defined in Section 12(b)).

     6. Non-Competition. During, and for the two year period following
termination of the Term Mr. Schroeder will not, without the prior written
consent of the Board, directly or indirectly be or remain employed or retained
by, or consult with or render any services for any person, firm, partnership,
joint venture, limited liability company, association, corporation or other
business organization, entity or enterprise engaged in any business, which is
competitive with the business in which the Company or any of its subsidiaries or
affiliates is engaged at any time during the Term, it being expressly understood
and agreed by the Company that (i) the foregoing limitation shall not prohibit
or otherwise constrain or apply to Mr. Schroeder's provision of consulting and
other business advisory services to any affiliate of Morgan Stanley, Dean
Witter, Discover & Co., and (ii) to the extent consistent with the foregoing,
Mr. Schroeder may provide consulting services to other clients which do not
compete, directly or through one or more subsidiaries or affiliates, in any way
with any business in which the Company or any of its affiliates or subsidiaries
is engaged provided such services do not interfere with the services to be
provided hereunder.

     7. Confidentiality. During and after the Term, Mr. Schroeder will not
disclose or use for his own benefit or purposes or the benefit or purposes of
any other person, firm, partnership, joint venture, limited liability company,
association, corporation or other business organization, entity or enterprise
other than the Company and any of its subsidiaries or affiliates, any trade
secrets, information, data, or other confidential information relating to
customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company; provided that the foregoing
shall not apply to information which is not unique to the Company or which is


                                       4

generally known to the industry or the public other than as a result of Mr.
Schroeder's breach of this Agreement. Mr. Schroeder agrees that upon termination
of the Term for any reason, he will return to the Company immediately all
memoranda, books, manuals, training materials, records, computer software,
papers, plans, information, letters and other data, and all copies thereof or
therefrom, in any way relating to the business of the Company and its
affiliates, except that Mr. Schroeder may retain personal notes, notebook and
diaries. Mr. Schroeder further agrees that he will not retain or use for his
account at any time any trade names, trademark or other proprietary business
designation used or owned in connection with the business of the Company or its
affiliates.

     8. Specific Performance; Other Actions. Mr. Schroeder acknowledges and
agrees that the Company's remedies at law for a breach or threatened breach of
any of the provisions of Section 6 or Section 7 would be inadequate and, in
recognition of this fact, Mr. Schroeder agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.

     9. Employee Benefit. The Company agrees to seek to have Mr. Schroeder
included and covered by the Company's medical and other employee benefit plans
to the extent he satisfies the eligibility requirements of the applicable plans
and insurers.

     10. Indemnity; Fees and Expenses. The Company agrees to hold harmless Mr.
Schroeder for all acts or decisions made by him in good faith related to his
performance of services hereunder. The Company agrees to pay any and all
reasonable legal fees and related expenses incurred by Mr. Schroeder in
connection with entering into and performing services under this Agreement. The
Company will use its reasonable best efforts to obtain coverage for Mr.
Schroeder under any insurance policy now in force or hereinafter obtained during
the term of this Agreement covering the Company against liability from claims or
causes of action which arise as a result of or with respect to this Agreement ;
provided, however, it is understood by each of the parties hereto that the
Company is not required to maintain insurance coverage for its officers and
Directors. If, however, the Company obtains such insurance coverage and Mr.
Schroeder services as a director or officer of the Company, Mr. Schroeder will
be included as an insured party in his capacity as such.

     11. Equity Compensation.

          a. Upon the Effective Date of this Agreement, the Company shall grant
     Mr. Schroeder additional options to acquire 75,000 additional shares of the
     Company's common stock (the "Additional Options"). The exercise price of
     the Additional Options shall be the closing price of the Company's common
     stock on the Effective Date and one-third of the options will vest on each
     anniversary of the grant date. The Additional Options will be exercisable
     over a ten-year period following each portion of the Additional Option's
     respective vesting dates.


                                       5

          b. Upon the Effective Date, the Company will grant Mr. Schroeder 3,500
     shares of restricted stock, to vest one-third on each anniversary of the
     grant date, with such other restrictions as the Company shall impose.

          12. Miscellaneous.

          a. Governing Law. This Agreement shall be governed by and construed in
     accordance with the laws of the State of Missouri.

          b. Entire Agreement; Amendments. This Agreement supersedes any and all
     prior understandings and agreements between the parties with respect to the
     subject matter referred to herein, it being understood that all Option
     Agreements granting Options (the "Option Agreements") to Mr. Schroeder
     pursuant to the Company's option plans (collectively, the "Plans") shall
     remain in full force and effect. This Agreement contains the entire
     understanding of the parties with respect to the Company's employment of
     Mr. Schroeder. Except as provided in the Plans and the Option Agreements,
     there are no restrictions, agreements, promises, warranties, covenants or
     undertakings between the parties with respect to the subject matter herein
     other than those expressly set forth herein. This Agreement may not be
     altered, modified or amended except by written instrument signed by each of
     the parties hereto.

          c. No Waiver. The failure of a party to insist upon strict adherence
     to any term of this Agreement on any occasion shall not be considered a
     waiver of such party's rights or deprive such party of the right thereafter
     to insist upon strict adherence to that term or any other term of this
     Agreement.

          d. Severability. If any one or more of the provisions of this
     Agreement are or become invalid, illegal or unenforceable in any respect,
     the validity, legality and enforceability of the remaining provisions of
     this Agreement shall not be affected thereby.

          e. Assignment. This Agreement may not be assigned by Mr. Schroeder
     except with respect to his rights to receive payments under Section 3
     hereof and may be assigned by the Company only with the consent of Mr.
     Schroeder; provided that no such assignment by the Company shall relieve
     the Company of any liability hereunder, whether accrued before or after
     such assignment.

          f. Arbitration. Any dispute between the parties to this Agreement
     arising from or relating to the terms of this Agreement or any dispute
     between the Company and Mr. Schroeder shall be submitted to arbitration in
     Missouri under the auspices of the American Arbitration Association.

          g. Successors; Binding Agreement. The Company shall seek to cause any
     successor (whether direct or indirect, by purchase, merger, consolidation
     or otherwise) to all or substantially all of the business and/or the assets
     of the Company to expressly assume and agree to perform this Agreement in
     the same manner and to the same extent that the Company would be required
     to perform it if no such succession had taken place. This Agreement shall
     inure to the benefit of and be binding upon the parties hereto and their
     respective heirs, representatives, successors and assigns.

          h. Notice. For the purposes of this Agreement, notices and all other
     communications (including invoices) provided for in the Agreement shall be
     in writing and shall be deemed to have been duly given when delivered or
     mailed by United States registered mail, return receipt requested, postage
     prepaid, addressed to the respective addresses set forth on the execution
     page of this Agreement; provided that all notices to the Company shall be
     directed to the attention of the Secretary, or to such other address as
     either party may have furnished to the other in writing in accordance
     herewith, except that notice of change of address shall be effective only
     upon receipt.

          i. Headings. The headings used in this Agreement are for convenience
     only and shall not affect the meaning of or be used to interpret any
     provisions herein.

          j. Counterparts. This Agreement may be signed in counterparts, each of
     which shall be an original, with the same effect as if the signatures
     thereto and hereto were upon the same instrument.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

         THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.


                                      AMERICAN ITALIAN PASTA COMPANY


                                      /s/ Timothy S. Webster
                                      --------------------------------------------
                                      Name:    Timothy S. Webster
                                               President
                                               1000 Italian Way
                                               Excelsior Springs, Missouri 64024


                                      HORST W. SCHROEDER



                                      /s/ Horst W. Schroeder
                                      --------------------------------------------
                                               31 Battery Road
                                               Hilton Head, South Carolina 29928

EX-10

                                                                    EXHIBIT 10.4


                         AMERICAN ITALIAN PASTA COMPANY
                           2000 EQUITY INCENTIVE PLAN
                   NON-QUALIFIED STOCK OPTION AWARD AGREEMENT


     This Stock Option Award Agreement (the "Award Agreement"),  made this _____
day of  ______________,  200___  evidences the grant, by American  Italian Pasta
Company,  (the  "Company"),  of a stock  option to  ______________________  (the
"Grantee") on the date hereof (the "Date of Grant").  By accepting the Award and
executing this Award Agreement, the Grantee agrees to be bound by the provisions
hereof and of the American Italian Pasta Company 2000 Equity Incentive Plan (the
"Plan").  Capitalized  terms not defined  herein  shall have the same meaning as
used in the Plan.

     1.   Shares Optioned and Option Price.  The Grantee shall have an option to
purchase  __________ shares of the Company's Common Stock,  $0.01 par value (the
"Shares"),  at an exercise price of $___________  for each share (the "Option"),
subject to the terms and conditions of this Award Agreement and of the Plan, the
provisions of which are  incorporated  herein by this  reference.  The Option is
not, nor is it intended to be, an Incentive Stock Option as described in section
422 of the Internal Revenue Code of 1986.

     2.   Exercise Period. The Option may be exercised,  from time to time, with
respect to the following  number of Shares subject to this Option:  (i) prior to
the first anniversary of the Date of Grant,  none of such Shares;  (ii) from and
after the first anniversary of the Date of Grant,  _____% of such Shares;  (iii)
from and  after the  second  anniversary  of the Date of  Grant,  _____% of such
Shares (less any Shares as to which this Option shall have been exercised  prior
to such second  anniversary);  (iv) from and after the third  anniversary of the
date of Grant,  _____% of such  Shares  (less any Shares as to which this Option
shall have been exercised prior to such third  anniversary);  (v) from and after
the fourth  anniversary  of the Date of Grant,  _____% of such Shares  (less any
Shares as to which this Option  shall have been  exercised  prior to such fourth
anniversary),  and (vi)  from and after  the  fifth  anniversary  of the Date of
Grant, _____% of such Shares (less any Shares as to which this Option shall have
been exercised  prior to such fifth  anniversary.  Provided,  however,  that the
Grantee's  right to exercise the Option shall terminate on the earliest to occur
of the following dates:

     (a)  the tenth anniversary of the Date of Grant;

     (b)  the first  anniversary  of the date of the  Grantee's  Termination  of
          Service on account of Retirement, Disability or death;

     (c)  the date three months following the date of the Grantee's  Termination
          of Service for any reason other than Retirement,  Disability, death or
          for Cause (the "Termination Date");  provided,  however, the Committee
          may, in its sole discretion, allow the Grantee to exercise this option
          at a later date following the Termination Date; and

     (d)  immediately upon a Termination of Service for Cause.

Provided further that,  during any period in which exercise is allowed following
the date of the Grantee's Termination of Service for any reason, that portion of
the Shares that was not exercisable on the date of the Grantee's  Termination of
Service shall not become exercisable.

     3.   Restriction on Exercise.  Notwithstanding the foregoing  provisions of
paragraph 2 or any other provision of this Award  Agreement,  the Committee,  in
its sole  discretion,  may,  only with respect to any  unvested  portion of this
Option,  reduce  the  number of Shares  subject  to the Option or may cancel the
Option in its  entirety if the Grantee  (a) takes  other  employment  or renders
services to others without the written  consent of the Company;  or (b) conducts
himself or herself in a manner that the Committee, in its sole discretion, deems
has adversely  affected or may adversely affect the Company.  Except as provided
in the last sentence of this paragraph,  the Grantee will not be entitled to any
remuneration or compensation  whatsoever for the loss of all or a portion of the
Grantee's  Option if the number of Shares  subject to the  Grantee's  Option are
reduced,  or if the Grantee's  Option is canceled in its  entirety,  pursuant to
this  paragraph.  If at the time this  Option was  granted  the  Grantee and the
Company  acknowledged  in writing that this Option was being  granted in lieu of
other specifically  described  compensation to the Grantee,  then, to the extent
that pursuant to this  paragraph the number of Shares  subject to this Option is
reduced or this Option is canceled,  then,  the Company shall pay to the Grantee
the proportionate amount of such forgone compensation represented by the reduced
number of Shares or cancellation of this Option.

     4.   Reload Option.

     (a)  Subject to Section  4(b)  below,  in  addition  to the Option  granted
          hereby (the "Underlying Option"),  the Company will grant to Grantee a
          reload  option  (the  "Reload   Option")  if  the  Grantee  (i)  is  a
          Participant when Grantee  exercises all or a portion of the Underlying
          Option or all or a portion of a Reload Option granted hereunder,  (ii)
          has not received a Reload Option pursuant to any other option exercise
          within the six (6) months prior to the exercise of all or a portion of
          the  Underlying  Option,  and (iii) pays the  Exercise  Price for such
          Shares or any  required  tax  withholding  with respect to such Shares
          with  Shares  that have been held by the  Grantee for at least six (6)
          months (the  "Tendered  Shares").  The Reload  Option  shall grant the
          right to purchase Shares of Common Stock equal in number to the number
          of Tendered Shares. The date on which the Tendered Shares are tendered
          to the Company is the Reload  Grant Date.  The  Exercise  Price of the
          Reload  Option is the Fair  Market  Value of the  Common  Stock on the
          Reload  Grant Date.  The Reload  Option may be  exercised  at any time
          during the remaining term of the Underlying Option (subject to earlier
          termination  as  provided  in the  Plan or in this  Award  Agreement).
          Except as provided in this Section 4, the Reload  Option is subject to
          all of the other terms and provisions of this Award Agreement.

     (b)  No Reload Option will be granted hereunder and no Reload Option may be
          exercised  if, at the time of such  proposed  grant or  exercise,  all
          Shares  reserved  for  issuance  under  the  Plan are the  subject  of
          outstanding  Options.  Any rights of the Grantee  with respect to such
          Reload  Option  shall be  automatically  void at such


                                       2

time. No Reload  Option shall be granted in  connection  with the exercise of an
Option that has been transferred by the initial Grantee.

     5.   Method of  Exercise.  To the  extent  that the  Option is  exercisable
hereunder,  it may be  exercised  in full or in part by the  Grantee  or, in the
event of the  Grantee's  death,  by the person or persons to whom the Option was
transferred  by will or the laws of descent and  distribution,  by delivering or
mailing written notice of the exercise and full payment of the purchase price to
the Secretary of the Company and any applicable  withholding  taxes. The written
notice shall be signed by each person  entitled to exercise the Option and shall
specify the address and social  security  number of each  person.  If any person
other than the Grantee purports to be entitled to exercise all or any portion of
the Option,  the written notice shall be accompanied by proof,  satisfactory  to
the Secretary of the Company,  of that entitlement.  The written notice shall be
accompanied by full payment made by any one or more of the following  means: (a)
cash, personal check or electronic funds,  transfer;  (b) shares of Stock with a
Fair Market Value on the effective  date of such exercise  equal to the Exercise
Price  and owned by the  Grantee  for at least six (6)  months  (or such  longer
period  as is  determined  by the  Company  required  by  applicable  accounting
standards to avoid a charge to the  Company's  earnings) or shares of Stock that
were  purchased on the open market;  or (c)  pursuant to  procedures  previously
approved by the Company,  through the sale of the Shares acquired on exercise of
this  Option  through a  broker-dealer  to whom the  Grantee  has  submitted  an
irrevocable notice of exercise and irrevocable  instructions to deliver promptly
to the Company the amount of sale or loan  proceeds  sufficient  to pay for such
Shares,  together  with,  if requested  by the  Company,  the amount of federal,
state, local or foreign withholding taxes payable by reason of such exercise.

Payment may also be made in such other manner as may be permitted by the Plan at
the time of exercise,  subject to approval by the Committee.  The written notice
will be  effective  and the  Option  shall be  deemed  exercised  to the  extent
specified  in the  notice on the date that the  written  notice  (together  with
required accompaniments) is received by the Secretary of the Company at its then
executive offices during regular business hours.

     6.   Issue of Shares Upon Exercise. As soon as practicable after receipt of
an effective  written  notice of exercise and full payment of the purchase price
as provided in paragraph 4, the Secretary of the Company  shall cause  ownership
of the  appropriate  number of Shares to be transferred to the person or persons
exercising the Option by having a certificate or  certificates  for those Shares
registered in the name of such person or persons and shall have each certificate
delivered to the  appropriate  person.  Notwithstanding  the  foregoing,  if the
Company or a Subsidiary requires  reimbursement of any tax required by law to be
withheld  with  respect to Shares  received  upon  exercise  of an  Option,  the
Secretary  shall not  transfer  ownership  of those  Shares  until the  required
payment is made.

     7.   Transferability of Options. The Grantee may transfer the Option to (i)
the  spouse,  children,  or  grandchildren  of the  Grantee  ("Immediate  Family
Members"),  (ii) a trust or trusts for the exclusive  benefits of such Immediate
Family  Members,  or (iii) a partnership in which such Immediate  Family Members
are the only partners,  provided that (a) there may be no consideration  for any
such transfer and (b)  subsequent  transfers of the Option shall be  prohibited,
except by will or the laws of descent and distribution.  Following transfer, the
Option  shall  continue to be subject to the same terms and  conditions  as were
applicable immediately prior to


                                       3

transfer,  provided  that for the  purposes  of the  Award  Agreement,  the term
"Grantee" shall be deemed to refer to the transferee. The event of a Termination
of Service  shall  continue to be applied with respect to the original  Grantee,
following  which the Option shall be exercisable  by the transferee  only to the
extent, and for the periods, specified in Paragraph 2. Neither the Committee nor
the Company  shall have any  obligation  to provide  notice to a  transferee  of
termination of the Option under the terms of this Award Agreement.

          7.1  Transferees of Stockholders. The Company shall not be required to
          transfer any Shares on its books which shall have been sold,  assigned
          or otherwise  transferred in violation of this Award Agreement,  or to
          treat as owner of such shares of stock, or to accord the right to vote
          as such owner or to pay  dividends to, any person or  organization  to
          which any such  Shares  shall have been sold,  assigned  or  otherwise
          transferred,  from and after any sale,  assignment  or transfer of any
          Share made in  violation  of this Award  Agreement.  Any  transfer  in
          violation  of the terms of this Award  Agreement  shall be deemed null
          and void.

     8.   Authorized  Leave. For purposes hereof, an authorized leave of absence
(authorized  by the Company or a Subsidiary to the Grantee in writing) shall not
be deemed a Termination of Service hereunder.

     9.   Taxes. The Grantee will be solely  responsible for any Federal,  state
or local income taxes imposed in  connection  with the exercise of the Option or
the delivery of Shares incident thereto,  and the Grantee authorizes the Company
or any  Subsidiary  to make any  withholding  for taxes which the Company  deems
necessary or proper in connection therewith, from any amounts due to the Grantee
by the Company.  Subject to approval by the  Committee,  the Grantee may satisfy
such withholding  obligations,  in whole or in part, by (a) electing to have the
Company withhold  otherwise  deliverable Shares or (b) delivering to the Company
Shares  then owned by Grantee  having a Fair  Market  Value  equal to the amount
required to be withheld.

     10.  No Conflict.  In the event of a conflict  between this Award Agreement
and the Plan, the provisions of the Plan shall govern.

     11.  Governing  Law.  This Award  shall be  governed  under the laws of the
State of Delaware.

     12.  Change in Control.  The effect of a Change of Control  shall be as set
forth in the Plan. Change as determined by the Committee.

                                       AMERICAN ITALIAN PASTA COMPANY


                                       By:______________________________________
                                       Name:     Timothy S. Webster
                                       Title:    President & CEO


                                       4

ACKNOWLEDGMENT

The undersigned Grantee acknowledges that he or she understands and agrees to be
bound by each of the terms and conditions of this Award Agreement.

_________________________________              _________________________________
Printed Name                                   Signature


                                               Date:____________________________


                                       5

EX-10

                            ASSET PURCHASE AGREEMENT

          THIS AGREEMENT (the "Agreement") is entered into as of February 27,
2003, by and between AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation
("Buyer"), MRS. LEEPER'S, INC., a California corporation ("MLI"), and EDWIN J.
MUSCAT, an individual, and MICHELLE M. MUSCAT, an individual (collectively,
"Muscats"). MLI and Muscats are hereinafter collectively referred to as
"Seller."

         WHEREAS, Seller owns various items of personal and intellectual
property, as more fully defined in Section 2.1, used in the manufacture,
marketing and sale of various brands of pasta (the "Business"); and

         WHEREAS, Seller desires to sell the Assets 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.

         "Brands" means those brands listed on Schedule 1.1.

         "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 Confidentiality
Agreement among MLI and Buyer dated February 14, 2003.

         "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, business prospects, or condition (financial
or otherwise) of the Business or the Assets or a material adverse effect on the
ability of Buyer or Seller to execute, deliver or perform this Agreement or any
of the other agreements and documents contemplated by this Agreement.

         "Net Names" shall mean all right, title and interest in and to the
domain name www.mrsleeperspasta.com, any registered or unregistered trademarks,
service marks, copyrights or other intellectual property or proprietary rights
based on or related to such domain name, all registrations for such domain name
and all goodwill pertaining to such domain name.

         "Ordinary Course of Business" means the ordinary course of business of
the Business consistent with industry-standard 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 ss.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
          ------------                                      ------------------------
          2004 Revenue Projection                           ss.3.2(a)(i)
          2005 Revenue Projection                           ss.3.2(b)(i)
          2006 Revenue Projection                           ss.3.2(c)(i)
          2006 Target Profit                                ss.3.2(c)(ii)
          Acceleration Event                                ss. 3.2 (d)
          Additional Consideration                          ss. 3.2
          Arbitrator                                        ss. 11.3
          Assets                                            ss. 2.1
          Assumed Liabilities                               ss. 2.3
          Broker                                            ss. 3.6(a)
          Business                                            Recitals
          Buyer Indemnification Claim                       ss. 10.2
          Closing                                           ss. 4.1
          Closing Date                                      ss. 4.1
          Common Stock                                      ss. 3.1
          Contracts                                         ss. 2.1(d)
          Customer Lists                                    ss. 2.1(c)
          Effective Time                                    ss. 4.4


                                       2

          Defined Term                                      Section in which Defined
          ------------                                      ------------------------

          Employment Agreements                             ss. 4.2(l)
          Excluded Assets                                   ss. 2.2
          Files                                             ss. 2.1
          Financial Statements                              ss. 5.16
          Indemnification Claim                             ss.10.4
          Indemnification Claim Notice                      ss. 10.4
          Intangible Personal Property                      ss. 5.9
          Intellectual Property                             ss. 2.1(a)
          Inventory                                         ss. 2.1(b)
          Materially Reduced                                ss. 5.15
          Other Intangible Rights                           ss. 2.1(g)
          Permits                                           ss. 2.1(f)
          Plan                                              ss. 2.2(b)
          Procedures                                        ss. 11.2
          Profit Level                                      ss. 3.2(d)
          PUR                                               ss. 3.2(d)
          Purchase Price                                    ss. 3.1
          Repurchase Notification                           ss. 3.6(a)
          Refunds                                           ss. 2.l(h)
          Remaining Shares                                  ss. 3.6
          Retained Liabilities                              ss. 2.4
          Seller Indemnification Claim                      ss. 10.3
          Subsequent Contracts                              ss. 6.8
          Trade Loading                                     ss. 6.2(a)(iv)
          UPC Codes                                         ss. 2.1(g)

          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.

                                   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 the assets described in clauses (a) through (i) below (the "Assets").


                                       3

               (a) (i) all trademarks,  trade names, service marks,  copyrights,
          patents, trade secrets,  recipes, logos, marketing materials,  designs
          (including all trade dress and packaging  artwork and logos  presently
          or  historically  used in promoting the Brands and the physical plates
          or screens used to make, manufacture or press the same),  confidential
          or proprietary information and other intellectual property (regardless
          of  whether   registered  or  pending  to  be   registered   with  any
          Governmental Authority) used in the Business including those set forth
          on  Schedule  2.1(a),  and all  goodwill  associated  with each of the
          foregoing (the "Intellectual Property"), and (ii) all Net Names;

               (b) all finished goods inventories of the Business with more than
          ninety  (90)  days  shelf  life  remaining  as of  the  Closing  Date,
          regardless of where stored or warehoused, including those set forth on
          Schedule 2.1(b) (the "Inventory");

               (c) all  lists of  current  and past  customers  and  prospective
          customers  of the  Business,  including  those set  forth on  Schedule
          2.1(c) (the "Customer Lists");

               (d) all agreements,  contracts, contract rights,  understandings,
          commitments  and   arrangements  of  Seller   (regardless  of  whether
          prepaid),  whether  oral  or  written,  that  are  (i)  identified  or
          summarized  on Schedule  2.1(d);  (ii) 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(d); (iii) customer and shelf space contracts  (regardless
          of whether pre-paid)  identified or summarized on Schedule 2.1(d); and
          (iv) supplier  contracts  identified or summarized on Schedule 2.1(d);
          (collectively, the "Contracts");

               (e)  all   rights   and   interest   of  Seller  in  and  to  all
          authorizations,  licenses, permits, variances,  exemptions,  consents,
          certificates,  approvals and orders necessary to own the Assets and to
          conduct the Business issued to Seller by any  Governmental  Authority,
          including   those  listed  on  Schedule  2.1(e)   (collectively,   the
          "Permits");

               (f) all of Seller's  other rights and  property  interests of any
          nature  which are used in the  operation  of the  Business,  including
          rights to use existing  customer service  telephone  numbers,  and the
          rights to all of Seller's  Uniform Product Codes  exclusively  used in
          the Business  (the "UPC  Codes"),  including  those listed on Schedule
          2.1(f) (collectively, the "Other Intangible Rights");

               (g) any and all refunds,  rebates or other payments, or the right
          to  receive  any of the  foregoing,  related to the  operation  of the
          Business (the "Refunds"); and

               (h) all goodwill and ongoing business and customer  relationships
          of Seller associated with the Business.

         The obligation of Seller to deliver any Intellectual Property, Customer
         List, Contract, Book or Record, Permit, Other Intangible Right, Refunds
         or other asset or document set forth above includes an obligation to
         deliver all files, data, records of correspondence, analysis, reports,
         etc. related thereto (collectively, the "Files"), including any File
         stored on any media regardless of form, including paper files,
         print-outs, computer disks, magnetic tapes, CD's, and the like.
         Notwithstanding the foregoing, Seller is permitted to


                                       4

          keep copies of  Contracts  for which the  originals  are  delivered to
          Buyer  necessary for audit or other business  purposes so long as such
          Contracts  are  maintained  in  a  manner   consistent  with  Seller's
          confidentiality and other obligations contained in the Confidentiality
          Agreement.

     Section 2.2  Excluded  Assets.  Notwithstanding  anything  to the  contrary
contained  in  Section  2.1,  the  following   rights,   properties  and  assets
(collectively, the "Excluded Assets") will not be included in the Assets:

               (a)  Current  Assets  and  Cash.  All  cash,  accounts  and notes
          receivable,  and securities of Seller regardless of whether related to
          the Business;

               (b) Employees and Benefit Plans.  Any (i)  employment  contracts,
          (ii) benefit plans (within the meanings of the Employee Retirement and
          Income  Security Act) sponsored by Seller or an Affiliate of Seller or
          to which  Seller or an  Affiliate  of Seller  contributes  or has ever
          contributed  on behalf of its  employees (a "Plan"),  (iii) any of the
          assets  thereof,   and  (iv)  any  other  employee   benefit  plan  or
          arrangement  and the assets thereof,  if any,  maintained by Seller or
          any Affiliate of Seller;

               (c)  Non-Business  Assets.  All assets of Seller not  customarily
          used in or related to the Business.

               (d) Real  Property.  Any and all real  property and  improvements
          owned by Seller.

               (e)  Equipment  and  Personal  Property.  Any and all  machinery,
          equipment,  furniture,  tools, spare parts,  maintenance equipment and
          supplies,  and other items of personal  property of Seller (other than
          the Inventory);

               (f) Raw  Materials and  Packaging.  Any and all raw materials and
          packaging materials inventories of Seller;

               (g) Other Excluded Assets.  Any right,  property or asset that is
          described on Schedule 2.2(g);

               (h)  Insurance.  Any and all  insurance  policies  maintained  by
          Seller, and any and all rights and recoveries thereunder; and

               (i)  Excluded  Contracts.  Any  and  all  agreements,  contracts,
          contract  rights,  understandings,  commitments  and  arrangements  of
          Seller, whether oral or written, other than the Contracts.

     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 such  contracts  are listed on Schedule  2.1(d)
and only to the  extent  that  such  obligations  (A)  arise  from and after the
Closing or (B) are related to promotional activities (such as advertising, trade
deals, and the like) that occur after the Closing, (ii) any open purchase orders
delivered to  suppliers  related to the Business for which the goods or services
being  purchased by Seller relate

                                       5

          exclusively  to the  Business  and are  delivered  to Buyer  after the
          Closing but only to the extent those  contracts are listed on Schedule
          2.1(d),  (iii) those open  purchase  orders  received  from  customers
          related to the Business  that have not been  fulfilled and paid for as
          of  Closing  but only to the  extent  those  contracts  are  listed on
          Schedule  2.1(d),  (iv) customer and shelf space contracts but only to
          the extent those contracts are listed on Schedule 2.1(d); (v) supplier
          contracts  but  only to the  extent  those  contracts  are  listed  on
          Schedule 2.1(d); and (vi) all liabilities and obligations with respect
          to (A) any trade deals related to the Business which have been offered
          to the trade but not  reimbursed  by Sellers prior to the Closing Date
          (including,  without  limitation,   off-invoice  allowances,  billback
          allowances,  in-ad  coupons and lump sum  allowances)  but only to the
          extent those trade deals are listed or summarized on Schedule  2.1(d),
          and (B) any and all coupons related to the Business which are redeemed
          or  reimbursed  on or after the  Closing  Date but only to the  extent
          those  coupons  are  listed or  summarized  on  Schedule  2.1(d)  (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.  In  determining  the
          portion of any items with respect to (i)(A),  above,  that are Assumed
          Liabilities, the allocation of pre-Closing and post-Closing cost shall
          be made on the  basis of the  volume  of the  affected  products  sold
          during  the  promotional  event in each  such  period,  or,  if volume
          analysis is not practical,  then on such other cost allocation  method
          as the parties may agree.

     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;

               (b) all  obligations or liabilities of Seller or any Affiliate of
          Seller in  respect  of trade  payables,  other  accounts  payable  and
          accrued expenses;

               (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;



                                       6

               (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) all  obligations or liabilities of Seller or any Affiliate of
          Seller  resulting  from,  caused by or  arising  out of,  directly  or
          indirectly,  the operation of the Business,  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;

               (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; and

               (i) any and all obligations or liabilities  that Sellers may have
          to any third person arising out of or in connection with such person's
          employment with,  investment in or relationship to any of the Sellers,
          or  arising  out  of or in  connection  with  the  execution  of  this
          Agreement  and  the  consummation  of  the  transactions  contemplated
          hereby.

                                  ARTICLE III
                            PURCHASE PRICE OF ASSETS

     Section 3.1 Purchase Price. Subject to the terms and conditions provided in
this Agreement,  at the Closing, Buyer shall issue to Seller 100,000 shares (the
"Shares") of Class A Convertible  Common  Stock,  par value $.001 per share (the
"Common Stock"), of the Buyer (the "Purchase Price").

     Section 3.2 Additional  Consideration.  In addition to the Purchase  Price,
subject to the terms and conditions provided in this Agreement,  Buyer shall pay
to Seller by wire transfer the amounts determined in accordance with clauses (a)
through  (e) below on such dates as set forth in clauses  (a)  through (e) below
(the "Additional Consideration").

               (a) First Payment.

                    (i) During Buyer's fiscal year 2003 fourth quarter Buyer and
               Muscats will meet to develop the projected  business plan for the
               Business  for the 2004  fiscal  year  (October  1,  2003  through
               September 30, 2004),  including  projected Net Sales for the 2004
               fiscal year (the "2004 Net Sales  Projection").  For  purposes of
               this  Agreement,  "Net Sales" shall mean gross sales less returns
               and  allowances.  In the event Buyer and Muscats  cannot agree by
               November 1, 2003 on the 2004


                                       7

               projected Net Sales, the 2004 Net Sales Projection will be deemed
               for  purposes  of this  Agreement  to be equal to the  actual Net
               Sales of the  Business  for the period  October  1, 2002  through
               September 30, 2003.

                    (ii) If the  Business  achieved  a Net  Profit  (as  defined
               below) of at least  $291,667 for the period March 1, 2003 through
               September 30, 2003 (the "2003 Target Net  Profits"),  on November
               10, 2003,  Buyer will wire  transfer to Seller an amount equal to
               ten  percent  (10%) of the 2004 Net Sales  Projection  (the "2004
               Payment").  If the  Business  achieves  a Net Profit of more than
               $145,833  but less than  $291,667  for the  period  March 1, 2003
               through  September 30, 2003, the 2004 Payment shall be reduced by
               a percentage equal to the difference  between the 2003 Target Net
               Profits and the actual Net  Profits for the period  March 1, 2003
               through  September  30,  2003  divided  by the  2003  Target  Net
               Profits,  and if the  Business  does not achieve a Net Profit for
               the period March 1, 2003 through  September 30, 2003 of more than
               $145,833,  then no payment  shall be made to Sellers  pursuant to
               this Section  3.2(a)(ii).  For purposes of this  Agreement,  "Net
               Profit"   shall  be  defined   pursuant  to  generally   accepted
               accounting  principles  with the  acknowledgment  that only those
               expenses  directly  incurred by the  Business  shall reduce total
               revenue.

               (b) Second Payment.

                    (i) During Buyer's fiscal year 2004 fourth quarter Buyer and
               Muscats will meet to develop the projected  business plan for the
               Business  for the 2005  fiscal  year  (October  1,  2004  through
               September 30, 2005),  including  projected Net Sales for the 2005
               fiscal year (the "2005 Revenue  Projection").  In the event Buyer
               and  Muscats  cannot  agree  by  November  1,  2004  on the  2005
               projected Net Sales, the 2005 Net Sales Projection will be deemed
               for  purposes  of this  Agreement  to be equal to the  actual Net
               Sales of the  Business  for the period  October  1, 2003  through
               September 30, 2004.

                    (ii) If the  Business  achieved  a Net  Profit  of at  least
               $750,000  for the period  October 1, 2003 through  September  30,
               2004 (the "2004 Target Net Profits"),  on November 1, 2004, Buyer
               will wire transfer to Seller an amount equal to ten percent (10%)
               of the 2005 Net Sales  Projection  (the "2005  Payment").  If the
               Business  achieves  a Net Profit of more than  $375,000  but less
               than  $750,000 for the period  October 1, 2003 through  September
               30, 2004, the 2005 Payment shall be reduced by a percentage equal
               to the  difference  between  the 2004  Target Net Profits and the
               actual  Net  Profits  for the  period  October  1,  2003  through
               September 30, 2004 divided by the 2004 Target Net Profits, and if
               the Business does not achieve a Net Profit for the period October
               1, 2003 through  September 30, 2004 of more than $375,000 then no
               payment  shall  be  made  to  Seller  pursuant  to  this  Section
               3.2(b)(ii).




                                       8

               (c) Third Payment.

                    (i) During Buyer's fiscal year 2005 fourth quarter Buyer and
               Muscats will meet to develop the projected  business plan for the
               Business  for the 2006  fiscal  year  (October  1,  2005  through
               September 30, 2006),  including  projected Net Sales for the 2006
               fiscal year (the "2006 Net Sales Projection"). In the event Buyer
               and  Muscats  cannot  agree  by  November  1,  2005  on the  2006
               projected Net Sales, the 2006 Net Sales Projection will be deemed
               for  purposes  of this  Agreement  to be equal to the  actual Net
               Sales of the  Business  for the period  October  1, 2004  through
               September 30, 2005.

                    (ii) If the  Business  achieved  a Net  Profit  of at  least
               $1,000,000 for the period  October 1, 2004 through  September 30,
               2005 (the "2005 Target Net Profits"), on December 15, 2005, Buyer
               will wire transfer to Seller an amount equal to ten percent (10%)
               of the 2006 Net Sales  Projection  (the "2005  Payment").  If the
               Business  achieves  a Net Profit of more than  $500,000  but less
               than $1,000,000 for the period October 1, 2004 through  September
               30, 2005, the 2005 Payment shall be reduced by a percentage equal
               to the  difference  between  the 2005  Target Net Profits and the
               actual  Net  Profits  for the  period  October  1,  2004  through
               September 30, 2005 divided by the 2005 Target Net Profits, and if
               the Business does not achieve a Net Profit for the period October
               1, 2004 through September 30, 2005 of more than $500,000, then no
               payment  shall  be  made  to  Seller  pursuant  to  this  Section
               3.2(c)(ii).

               (d)  Except  as  set  forth  in  Section  3.2(e),   all  payments
          contemplated  under  Section  3.2  shall  be due  irrespective  of the
          continued employment of the Muscats under the Employment Agreements.

               (e)  Notwithstanding  anything to the contrary in Sections 3.2(a)
          through  (d), in the event the  employment  of both  Muscats  with the
          Buyer (or its  successor) is  terminated  without Cause (as defined in
          Section 7.3 of the  Employment  Agreements)  after a Change in Control
          (as  defined  in  Section  9.3  of  the  Employment   Agreements)  (an
          "Acceleration Event"), Seller and Buyer agree as follows:

                    (i) In the event an Acceleration Event occurs prior to or on
               September 30, 2003,  Buyer shall wire transfer to Seller,  within
               thirty  (30)  days of the  termination  of both  Muscats  without
               Cause, an amount equal to $1,800,000,  and Buyer's  obligation to
               pay Seller,  and Seller's right to receive  payment,  pursuant to
               Sections 3.2(a) through (c) shall terminate.

                    (ii)  In  the  event  an  Acceleration  Event  occurs  after
               September 30, 2003, but prior to or on September 30, 2004,  Buyer
               shall wire  transfer  to Seller,  within  thirty (30) days of the
               termination  of both Muscats  without  Cause,  an amount equal to
               $1,300,000,  and Buyer's  obligation to pay Seller,  and Seller's
               right to receive  payment,  pursuant to  Sections  3.2(b) and (c)
               shall terminate.


                                       9

                    (iii)  In the  event  an  Acceleration  Event  occurs  after
               September 30, 2004, but prior to or on September 30, 2005,  Buyer
               shall wire  transfer  to Seller  within  thirty  (30) days of the
               termination  of both Muscats  without  Cause,  an amount equal to
               $700,000,  and Buyer's  obligation  to pay Seller,  and  Seller's
               right to  receive  payment,  pursuant  to  Section  3.2(c)  shall
               terminate.

                    (iv)  In  the  event  an  Acceleration  Event  occurs  after
               September 30, 2005, Buyer shall not be obligated to wire transfer
               any amount to Seller under this Section 3.2(e).

     Section 3.3 Payment for Packaging Material. If and to the extent that Buyer
receives any credit  pursuant to the Bushel 42 Agreement  (as defined in Section
4.2(m)) for any  packaging  materials  or raw  materials  delivered by Seller to
Bushel 42 (as defined in Section 4.2(m)),  Buyer shall remit to Seller an amount
equal to such  credit  within  thirty  (30) days of  receiving  such credit from
Bushel 42.

     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 60 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  determined
under this Section.

     Section  3.5  Registration.   After  the  Closing,   Seller  will  use  its
commercially  reasonable efforts to register the Shares with the SEC by filing a
Form S-3 registration  statement (or successor  registration form adopted by the
SEC which permits  inclusion or  incorporation  of  substantial  information  by
reference  to other  documents  filed by Buyer with the SEC) (the  "Registration
Statement")  and shall  provide  evidence  of the  effectiveness  of the same to
Seller;  provided,  however, that if Buyer, in its sole and absolute discretion,
determines that filing the Registration  Statement would be detrimental to Buyer
it may defer  filing of the  Registration  Statement  for up to sixty  (60) days
until such time as Buyer  determines that such a filing would not be detrimental
to  Buyer.  If  after  the  Registration  Statement  becomes  effective,   Buyer
determines,  in its sole and  absolute  discretion,  that sales  pursuant to the
prospectus, included in such Registration Statement, should be suspended for any
reason,  Buyer shall so notify Seller and Seller shall immediately cease selling
Shares  pursuant to such  prospectus  and shall not sell any  additional  Shares
pursuant to such  prospectus  until Buyer delivers to Seller written notice that
it may again  sell the  Shares.  If Seller is  permitted  to sell the  Shares in
accordance with federal  securities laws without  registration  thereunder,  the
Buyer in its sole and  absolute  discretion  may cease its  efforts  to file the
Registration  Statement with the SEC or, if the Registration  Statement has been
filed with,  or  declared  effective  by, the SEC,  withdraw  such  Registration
Statement and have no further obligation to register the Shares under applicable
securities  laws.  Seller shall cooperate with Buyer in preparing and filing the
Registration Statement,  including providing any information Buyer requests, and
shall comply with all applicable  securities laws in connection with the sale of
such Shares.


                                       10

     Section 3.6 Repurchase Requirements.

          (a) If within the thirty-six  (36) month period  following the Closing
     Date the Common Stock has not been publicly  traded for at least $50.00 per
     share during a period when Seller is permitted to sell the Shares  pursuant
     to a  Registration  Statement  that  has  been  declared  effective  by the
     Securities and Exchange  Commission or otherwise in accordance with federal
     securities laws without registration thereunder,  Seller may, no later than
     fourteen  (14) days  after the  thirty-six  (36) month  anniversary  of the
     Closing Date, provide Buyer with a written notification requesting Buyer to
     purchase the Remaining  Shares  (defined  below) at a price equal to $50.00
     per share  ("Repurchase  Notification").  Within  thirty  (30)  days  after
     receipt of the Repurchase Notification,  Buyer shall elect, in its sole and
     absolute  discretion,  to either (i) repurchase  the Remaining  Shares from
     Seller at a price equal to $50.00 per share,  or (ii)  request  that Seller
     sell the Remaining  Shares on the open market through a broker  selected by
     Buyer in its sole and  absolute  discretion  (the  "Broker").  In the event
     Buyer  requests  Seller to sell the  Remaining  Shares  on the open  market
     through the Broker,  Seller shall, within thirty (30) days after receipt of
     such  request  from  Buyer,  sell the  Remaining  Shares on the open market
     through the  Broker,  and Buyer  shall pay Seller the  difference,  if any,
     between (x) $50.00 multiplied by the number of Remaining Shares and (y) the
     aggregate market price at which such Remaining Shares were sold.

          (b) Buyer's obligations under this Section 3.6 shall terminate if: (i)
     Seller does not receive the Repurchase  Notification  within  fourteen (14)
     days after the three year  anniversary of the Closing Date;  (ii) there are
     no Remaining Shares on the date Buyer receives the Repurchase Notification;
     (iii) Buyer  requests  that Seller  sell the  Remaining  Shares on the open
     market  through  the Broker and Seller does not sell the  Remaining  Shares
     through the Broker;  or (iv) Buyer  requests that Seller sell the Remaining
     Shares on the open market  through the Broker and Seller does not  instruct
     the  Broker to sell the  Remaining  Shares  within  thirty  (30) days after
     receiving such request from Buyer.

          (c) The stock prices under  either  party's  options or rights in this
     Section  3.6  shall  be  adjusted  as   appropriate   to  account  for  any
     recapitalization  of Buyer,  including any stock splits,  stock  dividends,
     stock recombinations or otherwise.

          (d) For  purposes  of this  Agreement,  "Remaining  Shares"  shall  be
     defined to be the Shares that:  (i) Seller has not  transferred,  assigned,
     sold or otherwise disposed of prior to the third anniversary of the Closing
     Date; and (ii) Seller has record  ownership of as of the third  anniversary
     of the Closing Date.

                                   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 February ___,
2003 (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.


                                       11

     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) A Domain Name  Assignment  Agreement,  duly  executed by Buyer and
     Seller, in the form attached hereto as Exhibit 4.2(c);

          (d) 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;

          (e) A Cross  Receipt,  duly executed by Buyer and Seller,  in the form
     attached hereto as Exhibit 4.2(e);

          (f) A certified  copy of duly  adopted  resolutions  of MLI's Board of
     Directors and shareholders  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;

          (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, including, without limitation, those consents and approvals
     required to be obtained pursuant to Section 5.6 of this Agreement;

          (i) A certificate of good standing for MLI dated no more than ten (10)
     days prior to the Closing Date;

          (j) Originals of all Contracts in Seller's possession;

          (k)  An  Employment  Agreement  duly  executed  by Ed  Muscat,  and an
     Employment  Agreement  duly executed by Michelle  Muscat,  each in the form
     attached   hereto  as  Exhibit  4.2(1)   (collectively,   the   "Employment
     Agreements"); and

          (l) An Amendment to the Agreement  between  Heartland  Durum  Growers,
     Cooperative,  a North  Dakota  Farm  Cooperative  (d/b/a  Bushel  42  Pasta
     Company) ("Bushel 42"), and Mrs. Leeper's, Inc. (the "Bushel 42 Agreement")
     signed by MLI and Bushel 42 (the "Bushel 42 Amendment").

                                       12

     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 Domain Name  Assignment  Agreement,  duly  executed by Buyer and
     Seller, in the form attached hereto as Exhibit 4.2(c);

          (d) A Cross  Receipt,  duly executed by Buyer and Seller,  in the form
     attached hereto as Exhibit 4.2(e);

          (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) Duly executed  copies of the  Employment  Agreements for Ed Muscat
     and Michelle Muscat, in the form attached hereto as Exhibit 4.2(l).

     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. MLI is duly organized, validly existing, and in good
standing  under  the laws of the  State of  California  and is  qualified  to do
business and is in good standing in 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.  Except  as set forth on
Schedule 5.3, the execution, delivery and performance of this Agreement will not
(i)  violate  or  result  in a  breach  of any  term  of  MLI's  Certificate  of
Incorporation  or Bylaws,  (ii)  result in a breach


                                       13

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 MLI'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 of all of the Assets to Buyer in accordance  with this  Agreement.  The
Board of  Directors  of MLI and the  shareholders  of MLI have  taken all action
required by law and by MLI's  Certificate of Incorporation and Bylaws to approve
the  execution,  delivery  and  performance  of this  Agreement  and  the  other
agreements  executed in connection herewith by Seller and the transfer of 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.

     Section 5.7  Inventory.  All items of Inventory  (i) are suitable for human
consumption and are  merchantable for sale in the Ordinary Course of Business as
first quality goods at normal  mark-ups,  (ii) are valued at the lower of actual
cost or market, (iii) are the property of Seller and (iv) have a remaining shelf
life in excess of ninety (90) days.  All Inventory  complies with all applicable
federal, state and municipal laws, regulations and rules.

     Section 5.8 Contracts. The Contracts have been entered into in the Ordinary
Course  of  Business  and  contain  commercially  reasonable  terms.  Except  as
specifically   provided  on  Schedule  5.8,   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 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 exists that with notice or the 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.


                                       14

Except  as  set  forth  on  Schedule  5.8,  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(d) has been made available to Buyer and
such Schedule  contains an accurate and reasonably  detailed summary of all oral
contracts.

     Section 5.9 Intangible Personal Property.

          (a)  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.  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.

          (b) Schedule  5.9(b) contains a complete and accurate list and summary
     description  of all Net Names.  All Net Names have been  registered  in the
     name of Seller and are in compliance with all formal legal requirements. No
     Net Name has been or is now involved in any ICANN  proceeding  or any other
     dispute,  opposition,  invalidation  or  cancellation  proceeding  and,  to
     Seller's  knowledge,  no such action is threatened  with respect to any Net
     Name. To Seller's knowledge, there is no domain name application pending of
     any  other  person  which  would or  would  potentially  interfere  with or
     infringe any Net Name.  No Net Name is  infringed  or has been  challenged,
     interfered  with or  threatened  in any way.  No Net Name  infringes  upon,
     interferes  with,  or is alleged to  infringe  upon or  interfere  with the
     trademark, copyright or domain name of any other person.

     Section  5.10  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 5.11  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 5.12  Litigation  and Compliance  with Law.  Except as set forth on
Schedule 5.12, 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  the  Business  or any of  the  Assets,  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


                                       15

Business or the Assets, and the use,  operation,  ownership,  or transfer of the
Business or the Assets does not  constitute a default or  violation  thereunder.
The operations of the Business and the condition of the Assets do not violate in
any material respect any federal, state, or municipal law, regulation or rule.

     Section  5.13  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 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 5.14  Licensure.  The Permits listed on Schedule  2.1(f) are all of
the  material  governmental  permits  and  licenses  necessary  to  operate  the
Business.  Seller is in compliance  with all  requirements  and  limitations set
forth in the Permits.  The Permits are now in full force and effect,  and except
as set forth on Schedule 5.14, upon transfer to Buyer at Closing will be in full
force and effect.

     Section 5.15  Customers.  Schedule 5.15 lists the top ten (10) customers of
the Business and the  cumulative  sales of the products of the Business to those
customers for the 2002 fiscal year.  Since October 1, 2002 none of the customers
listed on Schedule  5.15 has ceased to do business with Seller and since October
1, 2002 Seller has not received any notice that any customer  listed on Schedule
5.15 intends to terminate  its business  with Seller.  In addition,  none of the
customers listed on Schedule 5.15 has Materially  Reduced (as defined below) its
business with Seller.  For purposes of this Section 5.15,  "Materially  Reduced"
shall mean that the sales  attributed  to such  customer  have  decreased in the
twelve (12)  months  ended  January 31, 2003  compared to the twelve (12) months
ended  January 31, 2002 by more than 20%.  Seller has no reason to believe  that
there will be any adverse change in any  relationships  with any customer listed
on Schedule 5.15,  either as a result of the  consummation  of the  transactions
contemplated by this Agreement or otherwise.

     Section 5.16 Books and Records; Disclosure. The books and records of Seller
relating to the Business are in all material respects complete and correct, have
been  maintained  in  accordance  with good  business  practices and the matters
contained  therein are  accurately  reflected,  to the extent  required,  on the
financial  statements  and  projections  of the Business  provided to Buyer (the
"Financial  Statements").  The  Financial  Statements  have been  maintained  in
accordance  with  generally  accepted  accounting  principles.  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


                                       16

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 5.17 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 5.18 Shareholders.  All of the outstanding  capital stock of MLI is
owned on the date of this Agreement, beneficially and of record, by the Muscats,
and will be so owned by the Muscats on the Closing Date.

     Section 5.19 Securities Laws Matters. Each of the Sellers is an "accredited
investor"  as  defined  under  the  Securities  Act of  1933,  as  amended  (the
"Securities  Act"). Each of the Sellers is acquiring the Shares hereunder solely
for  investment  purposes for his, her or its own account and not with a view to
resale or  distribution  except in accordance  with all  applicable  federal and
state securities laws and  regulations.  Each of the Sellers agrees that he, she
or it will not directly or indirectly offer, transfer, sell, pledge, hypothecate
or otherwise dispose of any of the Shares (or solicit any offer to buy, purchase
or otherwise acquire, or take a pledge of, any such shares) except in compliance
with all applicable federal and state securities laws and regulations.

                                   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

                                       17

          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;

               (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 5.15.

          (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


                                       18


          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 Business  and shall  furnish to Buyer such
additional  financial and  operating  data and other  information  as Seller may
possess and as Buyer may reasonably request.

     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), the Business, or any interest, legal, equitable or
beneficial, in any of the above.

     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.  If any  Asset is
     identified after Closing that should have been transferred to Buyer as part
     of this Agreement, Seller shall promptly transfer such Asset to Buyer.


                                       19

          (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  Business  ("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.

     Section 6.10 Pasta  Products.  MLI will not  manufacture,  market,  sell or
distribute any branded retail dry pasta  product,  alone or in combination  with
any other product, for a period of five years from the date hereof.

     Section 6.11 Insurance. Seller shall continue to maintain product liability
insurance for all periods  through the Effective  Time and for a one year period
thereafter and shall as of the Closing add Buyer as an additional named insured.

                                  ARTICLE VII
     REPRESENTATIONS AND WARRANTIES OF BUYER u 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
not be a Material Adverse Event.

     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.

                                       20

     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.

     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.  Except as set forth on Schedule 7.5, 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

                                       21


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.

                                   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) Buyer shall have obtained, either from Seller or directly from the
     issuing authority, the Permits;

          (g) There shall be no claims,  actions or suits  pending or threatened
     regarding the Assets or the Business or that  otherwise  would  restrict or
     prohibit Buyer or Seller from  consummating the  transactions  contemplated
     herein;

          (h) Seller shall have  obtained and  delivered to Buyer all  necessary
     consents to transfer the Assets and assign the Contracts to Buyer; and

          (i) Buyer  shall have  completed  to its  satisfaction  any review and
     investigation of the Assets and the Business.

     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;

          (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.  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.  The waiver of
any closing  condition  related to such breach by the party  intended to benefit
therefrom  shall not 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;


                                       23

          (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  Assertion  of 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  Set-Off  Right.  The Buyer shall have the right from time to
time to set-off  against the Additional  Consideration  the entire amount of any
Buyer  Indemnification  Claim by notifying  Seller it is reducing or eliminating
any payments which may otherwise be due pursuant to Sections  3.2(a),  (b), (c),
(d) or (e) or Section 3.6.

                                   ARTICLE XI
                               DISPUTE RESOLUTION

     Section  11.1  Negotiation.  The  parties  shall  attempt  in good faith to
resolve any dispute  arising  out of or relating to this  Agreement  promptly by
negotiations  between  executives who have authority to settle the  controversy.
Any party may give the other party written notice of any dispute not resolved in
the normal course of business.  Within  twenty (20) days after  delivery of that
notice,  executives of both parties shall meet at a mutually acceptable time and
place,  and thereafter as often as they reasonably  deem necessary,  to exchange
relevant  information  and to attempt to resolve the dispute.  If the matter has
not been  resolved  within  sixty (60) days of the  disputing  party's  original
notice, or if the parties fail to meet within twenty (20) days, either party may
submit the controversy or claim to binding arbitration.  If a party's negotiator

                                       24

intends  to be  accompanied  at a meeting  by an  attorney,  the  other  party's
negotiator  shall be given at least  three  (3)  working  days'  notice  of such
intention and may also be accompanied by an attorney.  All negotiations pursuant
to this  clause  are  confidential  and  shall  be  treated  as  compromise  and
settlement  negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.

     Section 11.2 Arbitration; Claims Covered; Conclusive Determination.  Claims
not settled by negotiation  pursuant to Section 11.1 hereof 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
Phoenix,  Arizona.  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  Article  XI, 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 and shall be
final and binding upon all parties.

     Section 11.3 Arbitration  Procedures;  Survival. The parties agree that the
procedures  and  provisions  set forth in this  Section  11.3 shall apply to any
arbitration under this Agreement.  This Agreement to arbitrate shall survive the
termination of this Agreement.

          (a) The  Arbitrator.  Within  thirty (30) days after a party submits a
     dispute to arbitration,  the parties shall select a single  arbitrator (the
     "Arbitrator")  in accordance with the Procedures.  The Arbitrator shall not
     be liable to either party in connection with the proceeding.  Neither party
     shall  sue,  join,  subpoena,  or  in  any  manner  otherwise  involve  the
     Arbitrator in any action or proceeding.

          (b) Discovery.  For a period of sixty (60) days after the selection of
     an  arbitrator,  the parties shall  cooperate in the voluntary  exchange of
     relevant   documents  and   information   in  the  most   expeditious   and
     cost-effective  manner  possible.  In  addition,  each party shall have the
     right to pose such  interrogatories and to take such depositions as allowed
     by the Arbitrator.

          (c)  Designation  of  Witnesses.  At least twenty (20) days before the
     arbitration,  the parties must exchange  lists of witnesses,  including any
     expert, and copies of all exhibits intended to be used at the arbitration.

          (d) Subpoenas.  Each party shall have the right to subpoena  witnesses
     and  documents  for the  arbitration,  and the  Arbitrator  is empowered to
     subpoena  witnesses  or  documents  to the extent  permitted  in a judicial
     proceeding,  upon his or her  initiative or the request of a party.  Unless
     the Arbitrator  directs  otherwise,  the party requesting the production of
     witnesses or proof shall bear the costs of production.

          (e) Arbitration Procedures.

               (i) Hearing.  The arbitration  hearing shall be conducted no more
          than  ninety  (90) days after the  selection  of the  Arbitrator.  The
          Arbitrator  shall  afford  each party a full and fair  opportunity  to
          present  relevant  proof,  to call and cross examine  witnesses and to
          present  argument.  The  Arbitrator  shall not be bound by any  formal
          rules  of

                                       25

          evidence with the exception of the  applicable law with respect to the
          attorney-client and work-product privileges.

               (ii) Powers of the Arbitrator.

                         (A) The Arbitrator  shall apply the  substantive law of
                    the State of Missouri  to this  Agreement.  The  Arbitrator,
                    shall  have  exclusive  authority  to  resolve  any  dispute
                    relating  to  the  breach,  interpretation,   applicability,
                    enforceability,  or formation of this Agreement,  including,
                    but not  limited  to, any claim that all or any part of this
                    Agreement is void or voidable.

                         (B) The Arbitrator shall have  jurisdiction to hear and
                    rule on  discovery  and  subpoena  disputes  and  any  other
                    prehearing  disputes and is  authorized  to hold  prehearing
                    conferences  by  telephone  or in person  as the  Arbitrator
                    deems necessary.

               (iii) Record of  Proceedings  and  Post-Hearing  Briefs.  A court
          reporter shall provide a stenographic  record of proceedings,  and the
          expense shall be apportioned as set forth in paragraph (e)(iv). Either
          party, upon request at the close of the hearing,  shall be given leave
          to file a post-hearing  brief.  The time for filing such a brief shall
          be set by the Arbitrator.

               (iv) The Award.  Within twenty (20) days after the  conclusion of
          the  hearing,  the  Arbitrator  shall  render an award and  opinion in
          writing that shall be dated and which shall contain  findings of fact,
          conclusions  of law, and rationale for the  disposition of any and all
          issues  raised  by  the  parties.   Unless   applicable  law  provides
          otherwise,  the  award  shall  be based  solely  on the  evidence  and
          authorities  presented to the Arbitrator,  the applicable law, and the
          provisions of this Agreement.

               (v) 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 necessary
          to seek enforcement of the arbitration  award, or (c) as may otherwise
          be required by a  Governmental  Authority or the rules of the New York
          Stock Exchange.

          (f) Enforcement and Collateral Proceedings.

               (i)  Either  party may bring an action in any court of  competent
          jurisdiction to compel  arbitration  under this Agreement,  to enforce
          any prehearing  orders or subpoenas  issued by the Arbitrator,  and to
          enforce an arbitration award.

               (ii) The parties  agree not to commence or pursue any  litigation
          or administrative  proceeding on any claim,  dispute, or issue subject
          to a proceeding under Section  11.3(f)(i),  and the parties also agree
          to discontinue  any such  proceeding  which is commenced  after, or is
          pending  at,  the  time  of  submission  of a claim  under  a  Section
          11.3(f)(i) proceeding.


                                       26

                                  ARTICLE XII
                                  MISCELLANEOUS

     Section 12.1 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):

                If to Buyer:    American Italian Pasta Company
                                4100 N. Mulberry, Suite 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:   Mrs. Leeper's, Inc.
                                Michelle Muscat
                                Ed Muscat
                                14949 Eastvale Road
                                Poway, California  92064
                                Telecopy:  (858) 486-5115

                with a copy to: BMB Bruno Skorhelm LLP
                                Certified Public Accountants & Consultants
                                402 West Broadway, Suite 1140
                                San Diego, California  92101
                                Attn: Nicola Bruno
                                Telecopy: (619) 699-5853

or to such other address as Buyer or Seller shall have last designated by notice
to the other party.

     Section 12.2 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 12.3 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.


                                       27

     Section 12.4 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 12.5 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 12.6 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 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 12.7 Equitable Relief; Remedies Cumulative; Interest. Seller hereby
acknowledges  that  irreparable  injury  will  result to Buyer in the event of a
breach of this  Agreement  by Seller.  It is therefore  agreed  that,  if Seller
breaches  this  Agreement,  Buyer  shall be  entitled,  in addition to any other
remedies  and damages  available:  (i) to seek 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) to seek to compel 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 12.8 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). Seller  acknowledges and agrees that from and after the Effective Time,
     Buyer will be entitled  to  possession  of all  documents,  books,  records
     (including Tax records),  agreements,  and financial data directly relating
     to the Business.


                                       28

          (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.  Seller will refer all customer inquiries relating to
     the Business 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 12.9 Entire Agreement;  Amendment. This Agreement, the Exhibits and
Schedules  attached  hereto,  the  Confidentiality  Agreement and the Employment
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 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 12.10  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 12.11 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 Buyer,  at its sole  election,  if the Closing  shall not
          have occurred on or before March 1, 2003;

               (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.

          (c) If the  conditions  to Closing  set forth in Section 9.2 have been
     satisfied  and Buyer elects not to complete the  transactions  contemplated
     hereby, then upon written


                                       29

     demand of Seller, Buyer shall pay Seller $100,000 and shall have no further
     liability or obligation to Seller.

     Section 12.12 Public  Announcements.  Buyer and Seller will coordinate with
each  other  regarding  the  initial  public  announcement  of the  transactions
contemplated  by this Agreement and, except to the extent required by law or the
rules of any stock exchange,  refrain from issuing any press release,  publicity
statement or other public notice relating to this Agreement or the  transactions
contemplated hereby without providing the other party reasonable  opportunity to
review and comment thereon.

              [The remainder of this page is intentionally blank.]









                                       30

IN WITNESS  WHEREOF,  the parties  hereto have executed this Agreement as of the
date first set forth above.

         Mrs. Leeper's, Inc.

         By:      /s/ Michelle Muscat
            -------------------------------------
         Name:    Michelle Muscat
              -----------------------------------
         Title:   President
               ----------------------------------


         By:    /s/ Edwin J. Muscat
           --------------------------------------
              Edwin J. Muscat, individually


         By:    /s/ Michelle M. Muscat
            -------------------------------------
               Michelle M. Muscat, individually


         American Italian Pasta Company

         By:      /s/ David E. Watson
            -----------------------------------------

         Name:       David E. Watson
              ---------------------------------------

         Title:   Executive Vice President
               --------------------------------------
                  Operations and Corporate Development
               ---------------------------------------




                                       31

                                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....................................3

         Section 2.1       Assets................................................3

         Section 2.2       Excluded Assets.......................................5

         Section 2.3       Assumed Liabilities...................................5

         Section 2.4       Retained Liabilities..................................6


ARTICLE III       PURCHASE PRICE OF ASSETS.......................................7

         Section 3.1       Purchase Price........................................7

         Section 3.2       Additional Consideration..............................7

         Section 3.3       Payment for Packaging Material.......................10

         Section 3.4       Allocation of Purchase Price.........................10

         Section 3.5       Registration.........................................10

         Section 3.6       Repurchase Requirements..............................11


ARTICLE IV        CLOSING.......................................................11

         Section 4.1       Date, Time and Place of Closing......................11

         Section 4.2       Deliveries by Seller at Closing......................12

         Section 4.3       Deliveries by Buyer at Closing.......................13

         Section 4.4       Effective Time.......................................13


ARTICLE V         REPRESENTATIONS AND WARRANTIES OF SELLER......................13

         Section 5.1       Existence............................................13

         Section 5.2       Power and Authority..................................13

         Section 5.3       Execution and Delivery Permitted.....................13

         Section 5.4       Consents.............................................14

         Section 5.5       Affiliate Contracts..................................14

         Section 5.6       Ownership of Assets..................................14

         Section 5.7       Inventory............................................14

         Section 5.8       Contracts............................................14

         Section 5.9       Intangible Personal Property.........................15

         Section 5.10      Binding Effect.......................................15

         Section 5.11      Documents Sufficient.................................15

         Section 5.12      Litigation and Compliance with Law...................15

         Section 5.13      Taxes................................................16

         Section 5.14      Licensure............................................16

         Section 5.15      Customers............................................16

         Section 5.16      Books and Records; Disclosure........................16

         Section 5.17      Brokers Fees.........................................17

         Section 5.18      Shareholders.........................................17

         Section 5.19      Securities Laws Matters..............................17


ARTICLE VI        COVENANTS OF SELLER...........................................17

         Section 6.1       Performance of Contracts and Retained Liabilities....17

         Section 6.2       Conduct of Business..................................17

         Section 6.3       Access to Information................................19

         Section 6.4       No Sale Negotiations.................................19

         Section 6.5       Confidentiality......................................19

         Section 6.6       Reporting Requirements...............................19

         Section 6.7       Cooperation; Other Actions...........................19

         Section 6.8       Subsequent Contracts.................................20

         Section 6.9       Transfer and Sales Tax...............................20

         Section 6.10      Pasta Products.......................................20

         Section 6.11      Insurance............................................20


ARTICLE VII       REPRESENTATIONS AND WARRANTIES OF BUYER.......................20

         Section 7.1       Corporate Existence..................................20

         Section 7.2       Corporate Power and Authority........................20

         Section 7.3       Execution and Delivery Permitted.....................21

         Section 7.4       Binding Effect.......................................21

         Section 7.5       Consents.............................................21

         Section 7.6       Brokers Fees.........................................21


ARTICLE VIII         COVENANTS OF BUYER.........................................21

         Section 8.1       Buyer Performance....................................21



                                       ii

         Section 8.2       Confidentiality......................................21

         Section 8.3       Other Actions........................................21

         Section 8.4       Notification of Certain Matters......................21


ARTICLE IX        CONDITIONS TO CLOSING.........................................22

         Section 9.1       Buyer's Conditions to Closing........................22

         Section 9.2       Seller's Conditions to Closing.......................22


ARTICLE X         SURVIVAL AND INDEMNIFICATION..................................23

         Section 10.1      Survival of Representations, Warranties and
                           Covenants............................................23

         Section 10.2      Indemnification by Seller............................23

         Section 10.3      Indemnification by Buyer.............................23

         Section 10.4      Assertion of Claims..................................24

         Section 10.5      Third Party Claim Indemnification Procedure..........24

         Section 10.6      Set-Off Right........................................24


ARTICLE XI        DISPUTE RESOLUTION............................................24

         Section 11.1      Negotiation..........................................24

         Section 11.2      Arbitration; Claims Covered; Conclusive Determination25

         Section 11.3      Arbitration Procedures; Survival.....................25


ARTICLE XiI       MISCELLANEOUS.................................................27

         Section 12.1      Notices..............................................27

         Section 12.2      Applicable Law.......................................27

         Section 12.3      Benefit and Assignment...............................27

         Section 12.4      No Third Party Beneficiary...........................28

         Section 12.5      Expenses.............................................28

         Section 12.6      Waiver...............................................28

         Section 12.7      Equitable Relief; Remedies Cumulative; Interest......28

         Section 12.8      Further Actions; Transition..........................28

         Section 12.9      Entire Agreement; Amendment..........................29

         Section 12.10     Counterparts.........................................29

         Section 12.11     Termination..........................................29

         Section 12.12     Public Announcements.................................30


                                      iii

                         AMERICAN ITALIAN PASTA COMPANY

                                       AND

                               MRS. LEEPER'S, INC.

                            ASSET PURCHASE AGREEMENT



                                FEBRUARY 27, 2003


 

EX-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 March 31, 2003, 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
Date:  May 14, 2003                        President and Chief Executive Officer



Date:  May 14, 2003                        /s/ Warren Schmidgall
                                           -------------------------------------
                                           Warren Schmidgall
                                           Executive Vice President and Chief
                                           Financial Officer