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