10-K

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

                                    FORM 10-K


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

                 For the fiscal year ended:   September 27, 2002

                                       OR

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

                        For the transition period from             to

                        Commission file number: 001-13403


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


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


         4100 N. Mulberry Drive, Suite 200, Kansas City, Missouri 64116
              (Address of principal executive office and Zip Code)


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

           Securities registered pursuant to Section 12(b) of the Act:


Title of each class                      Name of each exchange on which registered
Class A Convertible Common Stock:
$.001 par value per share                         New York Stock Exchange

        Securities registered pursuant to section 12(g) of the Act: None

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

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

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

         As of December 10, 2002 the aggregate market value of the Registrant's
Class A Convertible Common Stock held by non-affiliates (using the New York
Stock Exchange's closing price) was approximately $631,599,650.

         The number of shares outstanding as of December 10, 2002 of the
Registrant's Class A Convertible Common Stock was 17,700,855 and there were no
shares outstanding of the Class B Common Stock.


                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's Definitive Proxy Statement for the 2002
Annual Meeting of Stockholders are incorporated by reference into Part III of
this Report. The Definitive Proxy Statement will be filed no later than 120 days
after September 27, 2002.




                                       2

Introduction and Certain Cautionary Statements
- ----------------------------------------------

         American Italian Pasta Company's ("we" or the "Company") fiscal year
end is the last Friday of September or the first Friday of October. This results
in a 52- or 53-week year depending on the calendar. Our first three fiscal
quarters end on the Friday last preceding December 31, March 31, and June 30 or
the first Friday of the following month of each quarter. Fiscal 2003 will be 53
weeks and end on October 3, 2003. For purposes of this Annual Report on Form
10-K (this "Annual Report"), all fiscal years are described as having ended on
September 30.

         The discussion set forth below, as well as other portions of this
Annual Report, contains statements concerning potential future events. Such
forward-looking statements are based upon assumptions by our management, as of
the date of this Annual Report, including assumptions about risks and
uncertainties faced by us. Readers can identify these forward-looking statements
by their use of such verbs as expects, anticipates, believes or similar verbs or
conjugations of such verbs. If any of our assumptions prove incorrect or should
unanticipated circumstances arise, our actual results could materially differ
from those anticipated by such forward-looking statements. The differences could
be caused by a number of factors or combination of factors including, but not
limited to, those factors described below under "Risk Factors." Readers are
strongly encouraged to consider those factors when evaluating any such
forward-looking statement. We will not update any forward-looking statements in
this Annual Report to reflect future events or developments.

         We hold a number of federally registered and common law trademarks,
which are used throughout this Annual Report. We have registered the following
marks, among others, with the U.S. Patent and Trademark Office: AIPC, American
Italian Pasta Company, Pasta LaBella, Montalcino, Calabria, Heartland,
Mueller's, Anthony's, Globe/A-1, Luxury, Mrs. Grass, Pennsylvania Dutch, R & F,
and Ronco.


                                  RISK FACTORS

         You should carefully consider the risks described below, as well as the
other information included or incorporated by reference in this prospectus,
before making an investment in our common stock. The risks described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently believe to be immaterial may also impair our
business operations. If any of the following risks occur, our business,
financial condition or operating results could be materially harmed. In such an
event, the trading price of our common stock could decline, and you may lose all
or part of your investment.

Our business is dependent on several major customers.

         Historically, a limited number of customers have accounted for a
substantial portion of our revenues. During fiscal 2002, 2001 and 2000, Sysco
accounted for approximately 11%, 13% and 15% of our revenues, respectively, and
Wal*Mart, Inc. (including Sam's Wholesale Club) accounted for approximately 13%,
12% and 15% of our revenues, respectively, over the same periods. We expect that
we will continue to rely on a limited number of major customers for a
substantial portion of our revenues in the future.

         We have a mutually exclusive supply contract with Sysco (the "Sysco
Agreement") that is effective through June 2003, with a renewal option at
Sysco's discretion for an additional three-year period. The Sysco Agreement may
be terminated by Sysco upon certain events, including a substantial casualty to
or condemnation of our Missouri plant. Under the Sysco Agreement, we are
restricted from supplying pasta products to foodservice businesses other than
Sysco without Sysco's consent.

         We do not have supply contracts with a substantial number of our
customers, including Wal-Mart and Sam's Wholesale Club. We depend on our
customers to sell our products and to assist us in promoting customer acceptance
of, and creating demand for,

                                       3

our products. If our relationship with one or more of our major customers
changes or ends, our sales could suffer, which could have a material adverse
effect on our business, financial condition and results of operations.

The market for pasta products is highly competitive, and we face competition
from many established domestic and foreign producers. We may not be able to
compete effectively with these producers.

         The markets in which we operate are highly competitive. We compete
against numerous well-established national, regional, local and foreign
companies in the procurement of raw materials, the development of new pasta
products and product lines, the improvement and expansion of previously
introduced pasta products and product lines and the production, marketing and
distribution of pasta products. Competition for pasta products is based
primarily on product quality and taste, pricing, packaging, and customer service
capabilities. Our ability to be an effective competitor will depend on our
ability to compete on the basis of these characteristics. We believe that we
currently compete favorably with respect to these factors. However, we cannot
assure you that we will continue to be able to do so in the future. Some of our
competitors have longer operating histories, significantly greater brand
recognition and greater production capacity and financial and other resources
than we do. Our direct competitors include large multi-national companies such
as New World Pasta LLC and Barilla (an Italian-owned company with manufacturing
facilities in the U.S.), regional U.S. producers such as Dakota Growers Pasta
Company, Philadelphia Macaroni Co. Inc. and A. Zerega's Sons, Inc., each an
independent producer. We also compete against food processors such as Kraft
Foods, General Mills, Inc., ConAgra, Campbell Soup Company and Stouffers Corp.,
that produce pasta internally as an ingredient for use in food products. We also
compete with Italian producers such as De Cecco. We cannot assure you that our
customers will continue to buy our products or that we will be able to compete
effectively with all of these competitors.

         In 2001 we commenced operations in Italy to produce pasta to sell in
the U.S., the United Kingdom and continental Europe. Competition in these
international markets is also intense and comes primarily from major Italian
pasta companies such as De Cecco and Barilla, and from several small, locally
recognized producers. We have significantly more experience in U.S. markets than
in European markets and there is no assurance we will be able to achieve a
significant presence in those markets.

If aggregate production capacity in the U.S. pasta industry increases, we may
have to adopt a more aggressive pricing strategy, which would negatively affect
our results of operation.

         Our competitive environment depends on the relationship between
aggregate industry production capacity and aggregate market demand for pasta
products. Increases in production capacity above market demand could have a
material adverse effect on our business, financial condition and results of
operations. Over the past three years, our new plant in Arizona is the only new
pasta manufacturing facility completed in the U.S. and several smaller
facilities have been closed, resulting in a net contraction of North American
pasta production. However, if pasta production capacity were to expand in the
future as a result of, for example, a new competitor entering the market or an
existing competitor adding additional manufacturing capacity, it may increase
competition and supply of products which could lead to more aggressive pricing
strategies, potentially causing pressure on profit margins or reduced market
shares with a material adverse effect on our business, financial condition and
results of operations.

If existing anti-dumping measures imposed against certain foreign imports
terminate, we will face increased competition from foreign companies that are
subsidized by their governments and could sell their products at significantly
lower prices than us, which could negatively affect our profit margins or market
shares.


         Domestic pasta prices are also influenced by competition from foreign
pasta producers and, as such, by the trade policies of both the U.S. government
and foreign governments. Several foreign producers, based principally in Italy
and Turkey, have aggressively targeted the U.S. pasta market in recent years. In
1996, a U.S. Department


                                       4

of Commerce ("Commerce") investigation revealed that several Italian and Turkish
producers were engaging in unfair trade practices by selling pasta at less than
fair value in the U.S. markets and benefiting from subsidies from their
respective governments. Effective July 1996, Commerce imposed anti-dumping and
countervailing duties on Italian and Turkish imports (the "Anti-dumping Order").
The Anti-dumping Order was extended for five years through 2006. While such
duties may enable us and our domestic competitors to compete more favorably
against Italian and Turkish producers in the U.S. pasta market, there can be no
assurance that these duties will be maintained for any length of time, or that
these or other foreign producers will not sell competing products in the United
States at prices lower than ours. During fiscal 2002, we received payments from
the U.S. government under the Anti-dumping Order in an aggregate amount of
approximately $7.6 million. We cannot assure you that we will continue to
receive such payments in the future. Furthermore, bulk imported pasta and pasta
produced in the U.S. by foreign firms are generally not subject to anti-dumping
and countervailing duties. If foreign pasta producers enter the U.S. market by
establishing production facilities in the United States, this would further
increase competition in the U.S. pasta market. If we are unable to compete
effectively with these competitors, it could have a material adverse effect on
our business, financial condition and results of operations.

We may experience difficulty in managing our growth.

         We have experienced rapid growth and we expect to continue significant
growth in the future. Successful management of any such future growth will
require us to continue to invest in and enhance our operational, financial and
management information resources and systems, accurately forecast and meet sales
demand, accurately forecast retail sales, control overhead and attract, train,
motivate and manage our employees effectively. There can be no assurance that we
will continue to grow or that we will be effective in managing our future
growth. Any failure to effectively manage growth could be detrimental to our
goals of increasing revenues and market share and could have a material adverse
effect on our business, financial condition and results of operations.

We may not be able to sustain our historical growth rate.

         We have grown our revenues and unit volumes rapidly over the last
several years. This growth has come primarily from gaining market share at the
expense of our competitors and expansion through acquisitions. There can be no
assurance that we will be able to continue to grow our business at the rates we
have experienced in the past.

The purchase of the Mueller's® pasta brand and the seven brands acquired from
Borden Foods moves us into the branded retail pasta business where we have
relatively limited experience.

         Our purchase of the Mueller's® pasta brand in November of 2000, and
several pasta brands from Borden in July of 2001, and other smaller acquisitions
in 2002, significantly increases our investments in the branded retail market, a
market in which we had relatively little direct experience prior to the
acquisitions. Retail pasta sales are subject to intense competition, changes in
consumer preferences, the effects of changing prices for raw materials and local
economic conditions. The success of our branded business will be dependent upon
our ability to manage the brands successfully (including implementing effective
marketing and trade promotion programs), to anticipate and respond to new
consumer trends and to maintain key customer relationships in order to compete
effectively with lower priced products in a consolidating environment. Because
we have limited experience in this market, we cannot assure you that we will be
able to successfully manage the branded retail pasta business we acquired. If we
are unable to effectively manage this business, it could have a material adverse
effect on our business, financial condition and results of operations. In
addition, as a result of these acquisitions, we are now marketing our own brands
of pasta and therefore, in some cases, competing with our customers' private
label brand manufactured by us. This competition may have an adverse effect on
our relationships with these customers.



                                       5

Our business is completely dependent upon dry pasta as our only product line.

         We focus exclusively on producing and selling dry pasta. We expect to
continue to receive substantially all of our revenues from the wholesale and
retail sale of pasta and pasta-related products. In addition, our pasta
production equipment is highly specialized and is not adaptable to the
production of non-pasta food products. From time to time, consumer preference
for pasta and other grain-based foods has been affected by dietary changes which
de-emphasize carbohydrates and starches. Because of our product concentration,
any decline in consumer demand or preference for dry pasta, or any other factor
that adversely affects the pasta market, could have a more significant adverse
effect on our business, financial condition and results of operations than on
pasta producers that also produce other products.

Cost increases or crop shortages in durum wheat or cost increases in packaging
materials could adversely affect us.

         The principal raw material in our products is durum wheat. During
fiscal 2002 and 2001, the cost of durum wheat represented in excess of 30% of
our total cost of goods sold. Durum wheat is used almost exclusively in pasta
production and is a narrowly traded, cash-only commodity crop. We attempt to
minimize the effects of durum wheat cost fluctuations through forward purchase
contracts with suppliers and agreements with many of our customers that include
cost adjustment provisions. Our commodity procurement and pricing practices are
intended to reduce the risk of durum wheat cost increases on our profitability,
but by doing so we may temporarily affect our ability to benefit from possible
durum wheat cost decreases. The supply and price of durum wheat is subject to
market conditions and is influenced by several factors beyond our control,
including general economic conditions, natural disasters and weather conditions,
competition, and governmental programs and regulations. Currently, there is an
ongoing investigation by the International Trade Commission (ITC) and the
Department of Commerce on alleged dumping of Canadian durum wheat into the U.S.
market. Preliminary and final determinations are expected by March and summer
2003, respectively. If tariffs are imposed on Canadian durum imports, the supply
and cost of durum wheat may be adversely affected. The supply and cost of durum
wheat may also be adversely affected by insects and plant diseases. We also rely
on the supply of plastic, corrugated and other packaging materials, which
fluctuate in price due to market conditions beyond our control. During fiscal
2002 and 2001, the cost of packaging materials represented less than 10% of our
total cost of goods sold.

         The costs of durum wheat and packaging materials have varied widely in
recent years and future changes in such costs may cause our results of
operations and our operating margins to fluctuate significantly. Increases in
the cost of durum wheat or packaging materials could have a material adverse
effect on our operating profit and margins unless and until we are able to pass
the increased cost along to our customers. Historically, changes in sale prices
of our pasta products have lagged changes in our materials costs. Competitive
pressures may also limit our ability to raise prices in response to increased
raw or packaging material costs. Accordingly, there can be no assurance as to
whether, or the extent to which, we will be able to offset durum wheat or
packaging material cost increases with increased product prices.

The costs associated with any strategic acquisitions we make may outweigh the
benefits we expect to receive from the acquired business or assets.

         Since November 2000, we have completed two brand acquisitions for
aggregate consideration of approximately $119.4 million. During the same period,
we looked at other acquisition opportunities and we expect to continue doing so
in the future. As we complete these acquisitions, we must then integrate the
acquired assets or business into our existing operations. This integration
process may result in unforeseen difficulties and could require significant time
and attention from our management that would otherwise be directed at developing
our existing business. In addition, we could discover undisclosed liabilities
resulting from any acquisitions that we may become responsible for. Further, we
cannot be certain that the benefits that we anticipate from these acquisitions
will develop. For example, we cannot assure you that our acquisition of the
Mueller's® pasta brand or the seven pasta brands we acquired from Borden Foods
or the


                                       6

integration of those brands into our existing business will be successful, will
yield the expected benefits to us or will not adversely affect our business.

We may acquire additional pasta brands or other pasta-related businesses,
products or processes. If we cannot do so cost-effectively, our business and
financial results may be adversely affected.

         Our future growth depends in part on our acquisition of additional
pasta brands or other pasta-related businesses, products or processes. There is
no assurance that we will be able to find suitable acquisitions available for
purchase or that we will be able to make acquisitions at favorable prices. In
addition, if we do successfully identify and complete acquisitions in the
future, the acquisitions may involve the following risks:

     o    increases in our debt and contingent liabilities;

     o    entering geographic markets in which we have little or no direct prior
          experience;

     o    unanticipated or undiscovered legal liabilities or other obligations
          of acquired businesses; and

     o    the integration of acquired businesses into our existing business may
          not be successful.

We may acquire one or more additional complementary businesses other than the
production of pasta. Operating more than one type of business presents many
significant risks that could, individually or together, have a material adverse
effect on our business and financial results.

         We may expand beyond our current single-product business. To do so, we
may acquire an established operating business or we may invest in another
complementary business in its early development. Our success in acquiring or
investing in other businesses is subject to the following risks:

     o    we do not have a history of operating, and may not be able to
          successfully operate, another business that has different operating
          dynamics, competition, customers and suppliers from our existing
          business;

     o    we may not be able to hire and train experienced and dedicated
          operating personnel; and

     o    our management resources will be placed under additional burdens.

We must manage our production and inventory levels in order to operate cost
effectively.

         Most of our customers use, to some extent, inventory management systems
that track sales of particular products and rely on reorders being rapidly
filled by suppliers to meet consumer demand rather than on large inventories
being maintained by retailers. Although these systems reduce a retailer's
investment in inventory, they increase pressure on suppliers like us to fill
orders promptly and thereby shift a portion of the retailer's inventory
management cost to the supplier. This results in our carrying extra inventory to
meet customers demands. Our production of excess inventory to meet anticipated
retailer demand could result in markdowns and increased inventory carrying
costs. In addition, if we underestimate the demand for our products, we may be
unable to provide adequate supplies of pasta products to retailers in a timely
fashion, and may consequently lose sales.


                                       7

Because we produce food products, we may be subject to product liability claims
and have costs related to product recalls.

         We may need to recall some of our products if they become adulterated
or misbranded. We may also be liable if the consumption of any of our products
causes injury. Although we have never been involved in a product liability
lawsuit, the sale of food products for human consumption involves the risk of
injury to consumers as a result of tampering by unauthorized third parties,
product contamination or spoilage, including the presence of foreign objects,
substances, chemicals, aflatoxin and other agents, or residues introduced during
the growing, storage, handling or transportation phases. As a result of these
issues, we are subject to U.S. Food & Drug Administration inspection and
regulations and we believe our facilities comply in all material respects with
all applicable laws and regulations, but there can be no assurance that we will
not be subject to claims or lawsuits for injuries related to the consumption of
our products. In addition, we often indemnify our customers against product
liability claims related to our products and for the costs related to product
recalls. We carry insurance against these matters and we believe that we would
have claims against our suppliers in situations where their products were the
cause of the recall or product liability claims. However, there can be no
assurance that our insurance coverage would be adequate or that we would be able
to recover against our suppliers. The cost of commercially available insurance
has increased significantly and there can be no assurance that such insurance
will be available in the future at prices that we can afford. In addition,
although we have never incurred significant costs related to any product
recalls, because we often indemnify our customers for costs related to product
recalls, we could be subject to such expenses and any significant expenses not
covered by insurance would negatively impact our operating results. A widespread
product recall or a significant product liability judgment against us could
cause products to be unavailable for a period of time and a loss of consumer
confidence in our food products and could have a material adverse effect on our
business.

Our success is dependent on the efforts of several key executives.

         Our operations and prospects depend in large part on the performance of
our senior management team. The loss of the services of one or more members of
our senior management team could have a material adverse effect on our ability
to manage our growth and develop our existing business and could have a material
adverse effect on our business, financial condition and results of operations.
No assurance can be given that we would be able to find qualified replacements
for any of these individuals if their services were no longer available. We do
not currently maintain key person life insurance on any of our key employees. We
do, however, have employment agreements with Timothy Webster, Horst Schroeder,
David Watson, David Potter, Warren Schmidgall, Jerry Dear and Walt George.

Our business could be subject to technological obsolescence.

         We believe that one of our current competitive advantages is our
state-of-the-art production equipment, which reduces our production costs and
provides a cost advantage when compared to production facilities using less
advanced equipment. If other pasta producers acquire similar or more advanced
equipment that provides greater efficiencies, our current competitive advantage
might be diminished or eliminated, potentially causing pressure on profit
margins or reducing our market shares. Erosion of this advantage could have a
material adverse effect on our business, financial condition and results of
operations.

Disruptions in transportation of raw materials or finished products or increases
in transportation costs could adversely affect our financial results.

         Durum wheat is shipped to our production facilities in Missouri and
South Carolina directly from North Dakota, Montana and Canada under long-term
rail contracts. Under these agreements, we are obligated to transport specified
wheat volumes and, in the event we do not, we must reimburse the carrier for
certain of its costs. We have always greatly exceeded these volume obligations.
We also have a rail contract to ship semolina, milled and processed at the
Missouri facility, to our South Carolina facility.


                                       8

An extended interruption in our ability to ship durum wheat by railroad to the
Missouri or South Carolina plants, or semolina to our South Carolina facility,
could cause us to incur significantly higher costs and longer lead times
associated with the distribution of our pasta to our customers. If we are unable
to provide adequate supplies of pasta products to our customers in a timely
fashion due to such delays, we may subsequently lose sales. This could have a
material adverse effect on our business, financial condition and results of
operations. For example, in 1994 we experienced a significant interruption in
railroad shipments due to a railroad strike. While we would attempt to find
alternative transportation if we were to experience another interruption due to
a strike or other event, such as a natural disaster, there can be no assurance
that we would be able to do so in a timely and cost-effective manner.

Our international expansion efforts may not be successful.

         We completed the construction of a pasta-producing facility in Italy in
2000. Prior to opening this plant, we had no experience in operating or
distributing products on an international basis. We also do not have the same
competitive advantages in these overseas markets that we do in the U.S. We
cannot assure you that our international efforts will be successful. We expect
to incur significant costs in:

     o    establishing international distribution networks;

     o    complying with local regulations;

     o    overseeing the distribution of products in foreign markets; and

     o    modifying our business and accounting processing system for each
          international market we enter.

         If our international revenues are inadequate to offset the expense of
establishing and maintaining foreign operations, our business and results of
operations could be harmed. In addition, there are several risks inherent in
doing business on an international level. These risks include:

     o    export and import restrictions;

     o    tariffs and other trade barriers;

     o    difficulties in staffing and managing foreign operations;

     o    fluctuations in currency exchange rates and inflation risks;

     o    seasonal fluctuations in business activity in other parts of the
          world;

     o    changes in a specific country's or region's political or economic
          conditions, particularly in emerging markets;

     o    potentially adverse tax consequences; and

     o    difficulty in securing or transporting raw materials or transporting
          finished product.

         Any of these risks could adversely impact the success of our
international operations, which could cause our results to fluctuate and our
stock price to decline.

         During fiscal 2002 less than 10% of our revenues were attributable to
our international operations.


                                       9

Our business requires substantial capital and we carry a significant amount of
debt that restricts our operating and financial flexibility.

         Our business requires a substantial capital investment, which we
currently finance, and expect to continue to finance, through third-party
lenders. As of September 30, 2002, we had approximately $262.5 million aggregate
amount of debt outstanding, representing approximately 47% of total
capitalization. The amount of debt we carry and the terms of our indebtedness
could adversely affect us in several ways, including:

     o    our ability to obtain additional financing in the future for working
          capital, capital expenditures, and general corporate purposes,
          including strategic acquisitions, may be impaired;

     o    our ability to use operating cash flow in other areas of our business
          may be limited because a substantial portion of our cash flow from
          operations may have to be dedicated to the payment of the principal of
          and interest on our indebtedness;

     o    the terms of such indebtedness may restrict our ability to pay
          dividends;

     o    we may be more highly leveraged than many of our competitors, which
          may place us at a competitive disadvantage; and

     o    the level of debt we carry could restrict our corporate activities,
          including our ability to respond to competitive market conditions, to
          provide for capital expenditures beyond those permitted by our loan
          agreements, or to take advantage of acquisition opportunities and grow
          our business.

         We have used, and may continue to use, interest rate protection
agreements covering our variable rate debt to limit our exposure to variable
rates. There can be no assurance, however, that we will be able to enter into
such agreements or that such agreements will not adversely affect our financial
performance.

         In the event that we fail to comply with the covenants in our current
or any future loan agreements, there could be an event of default under the
applicable instrument, which could in turn cause a cross default to other debt
instruments. As a result, all amounts outstanding under our various current or
any future debt instruments may become immediately due and payable.

         If interest rates were to significantly increase or if we are unable to
generate sufficient cash flow from operations in the future, we may not be able
to service our debt and may have to refinance all or a portion of our debt,
obtain additional financing or sell assets to repay such debt. We cannot assure
you that we will be able to effect such refinancing, additional financing or
asset sales on favorable terms or at all.

Our competitive position could be adversely impacted if we are unable to protect
our intellectual property.

         Our brand trademarks are important to our success and our competitive
position. In addition, we have several patents on unique pasta shapes. Our
actions to establish and protect our brand trademarks and other proprietary
rights may be inadequate to prevent imitation of our products by others.
Moreover, we may face claims by a third party that we violate their intellectual
property rights. Any litigation or claims against us, whether or not successful,
could result in substantial cost, divert management's time and attention from
our core business, and harm our reputation.



                                       10

Our operations are subject to significant government and environmental laws and
regulations.

         We are subject to various laws and regulations administered by federal,
state, and other governmental agencies relating to the operation of our
production facilities, the production, packaging, labeling and marketing of our
products and pollution control, including air emissions. Our production
facilities are subject to inspection by the U.S. Food and Drug Administration,
Occupational Safety and Health Administration, and the various state agencies.
Any determination by the FDA or such other agencies that our facilities are not
in compliance with applicable regulations could interfere with the continued
manufacture and distribution of the affected products, up to the entire output
of the facility or facilities involved, and, in some cases, might also require
the recall of previously distributed products. Any such determination could have
a material adverse effect on our business, financial condition and results of
operations. Under environmental laws, we are exposed to liability primarily as
an owner and operator of real property, and as such, we may be responsible for
the clean-up or other remediation of contaminated property. Environmental laws
and regulations can change rapidly and we may become subject to more stringent
environmental laws and regulations in the future that may be retroactively
applied to earlier events. In addition, compliance with more stringent
environmental laws and regulations could involve significant capital
investments.

We do not expect to pay dividends in the foreseeable future.

         We anticipate that future earnings will be used principally to support
operations and finance the growth of our business. Thus, we do not intend to pay
cash dividends on our common stock in the foreseeable future. Payment of
dividends is also restricted by provisions in our credit facility. If our
lenders permit us to declare dividends, the dividend amounts, if any, will be
determined by our board. Our board will consider a number of factors, including
our financial condition, capital requirements, funds generated from operations,
future business prospects, applicable contractual restrictions and any other
factors our board may deem relevant.

A write-off of our intangible assets would affect our results of operations and
could cause our stock price to decline.

         Our total assets reflect substantial intangible assets. At September
30, 2002, intangible assets totaled $119.4 million compared to $297.1 million of
stockholders' equity. The intangibles represent brand and trademarks resulting
primarily from our acquisitions of the Mueller's® brand and the seven pasta
brands from Borden Foods. At each balance sheet date, we assess whether there
has been an impairment in the value of our intangible assets. If future
operating performance of one or more of our acquired brands were to fall
significantly below current or expected levels, we could reflect, under current
applicable accounting rules, a non-cash charge to operating earnings for
impairment of intangible assets. Any determination requiring the write-off of a
significant portion of our intangible assets would have a material negative
effect on our results of operations and total capitalization. This could cause
our stock price to decline. As of September 30, 2002, we have determined that no
impairment existed.

Terrorist attacks or acts of war may seriously harm our business.

         Terrorist attacks or acts of war may cause damage or disruption to our
Company, our employees, our facilities, our suppliers or our customers, which
could significantly impact our revenues, costs and expenses and financial
condition. The terrorist attacks that took place in the United States on
September 11, 2001 were unprecedented events that have created many economic and
political uncertainties. The long-term effects on our Company of the September
11, 2001 attacks are unknown. The potential for future terrorist attacks, the
national and international responses to terrorist attacks, and other acts of war
or hostility may cause greater uncertainty and cause our business to suffer in
ways that we currently cannot predict.



                                       11

                                     PART I

ITEM 1.  BUSINESS.

General
- -------

         American Italian Pasta Company is the largest producer and one of the
fastest-growing marketers of dry pasta in North America. We commenced operations
in 1988 with the North American introduction of new, highly-efficient durum
wheat milling and pasta production technology. We believe that our singular
focus on pasta, vertically-integrated facilities, continued technological
improvements and development of a highly-skilled workforce enables us to produce
high-quality pasta at costs below those of many of our competitors. We believe
that the combination of our cost structure, the age of competitive production
capacity and our key customer relationships create significant opportunities for
continued growth. During the fiscal year ended September 30, 2002, we had
revenue of $380.8 million and net income of $41.3 million.

         We produce more than 175 dry pasta shapes in vertically-integrated
milling, production and distribution facilities, strategically located in
Excelsior Springs, Missouri, Columbia, South Carolina, Kenosha, Wisconsin, and
Verolanuova, Italy. We are building our fifth plant in Tolleson, Arizona. The
construction of the Missouri plant in 1988 represented the first use in North
America of a vertically-integrated, high-capacity pasta plant using Italian
milling and pasta production technology. We believe that this plant continues to
be among the most efficient and highly-automated pasta facilities in North
America. The South Carolina plant, which commenced operations in 1995, produces
only pasta shapes conducive to high-volume production and employs a
highly-skilled, self-managed work force. We believe that the South Carolina
plant is the most efficient retail pasta facility in North America in terms of
productivity and conversion cost per pound. The Wisconsin plant, which commenced
operations in 1999, produces industrial pasta for the ingredient business
segment. We believe the Wisconsin plant is the only pasta production facility in
North America which is singularly focused on serving the rapidly growing
ingredient pasta segment. We also believe the Kenosha plant is the most
efficient ingredient pasta plant in North America in terms of productivity and
conversion cost per pound. The Italy plant, which commenced operations in 2001,
serves private label, foodservice, and ingredient markets in continental Europe
and the United States. The Arizona plant, which will commence operations in
fiscal 2003, will serve both retail and institutional customers, and is
strategically located to serve western U.S. markets.

         The Company is incorporated in Delaware, our executive offices are
located at 4100 N. Mulberry Drive, Suite 200, Kansas City, Missouri 64116, and
our telephone number is (816)584-5000. Our web site is located at
http://www.aipc.com. Information contained in our web site is not a part of this
Annual Report.


Recent Developments
- -------------------

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

         In November 2002, the Board of Directors authorized up to $20 million
to implement a common stock repurchase program. During November 2002, we
purchased 323,398 shares for $10,634,000, at prices ranging from $32.52 to
$33.00 per share.

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

                                       12

the original credit facility. The original terms of the facility remain
generally the same.


Products and Brands
- -------------------

         Our product line, comprising over 3,500 items or stock-keeping units
("SKUs"), includes long goods such as spaghetti, linguine, fettuccine, angel
hair and lasagna, and short goods such as elbow macaroni, mostaccioli, rigatoni,
rotini, ziti and egg noodles. In many instances, we produce pasta to our
customers' specifications. We make over 175 different shapes and sizes of pasta
products in over 190 package configurations, including bulk packages for
institutional customers and smaller individually-wrapped packages for retail
consumers. We contract with third parties for the production of certain
specialized pasta shapes, such as stuffing shells and manicotti, which are
necessary to offer customers a full range of pasta products. Purchased pasta
represented less than 1% of our total unit volume in fiscal period 2002.

         We believe that our state-of-the-art, Italian pasta production
equipment is capable of producing the highest quality pasta. Our products are
produced to satisfy the specifications of our customers as well as our own
product specifications, which we believe are among the highest in the industry.
Our pasta is distinguished by a rich, natural "wheaty" taste and a consistently
smooth and firm ("al dente") texture with a minimum amount of white spots or
dark specks. We evaluate the quality of our products in two ways. We conduct
internal laboratory evaluation against competitive products on physical
characteristics, including color, speck count, shape and consistency, and
cooking performance, including starch release, protein content and texture, and
our customers perform competitive product comparisons on a regular basis.

         Our U.S. production facilities are inspected twice each year by the
American Institute of Baking ("AIB"), the leading United States baking, food
processing and allied industries evaluation agency for sanitation and food
safety. Our plants consistently achieve the AIB's highest "Superior" rating. We
also implemented a comprehensive Hazard Analysis Critical Control Point
("HACCP") program in 1994 to continuously monitor and improve the safety,
quality and cost-effectiveness of the Company's facilities and products. We
believe that having an AIB rating of "Superior" and meeting HACCP standards have
helped us attract new business and strengthen existing customer relationships.

         Our Italian plant is our first ISO 9002 certified production facility.
Similar to the U.S., the facility is inspected by a European representative
similar to AIB, EFSIS, one of the recognized European Food Safety Bodies. Our
facility received the "Higher Level" certification from EFSIS, the only European
pasta plant to receive this accreditation. In addition, we have implemented
HACCP and Food Safety Programs consistent with the U.S. facilities.


Marketing and Distribution
- --------------------------

         We actively sell and market our products through approximately 30
employees and approximately 70 food brokers and distributors throughout the
United States, Canada and Mexico. Our senior management is directly involved in
the selling process in all customer markets. Our over-arching sales and
marketing strategy is to provide superior quality, a complete product offering,
competitive pricing and superior customer service to attract new customers and
grow existing customers' pasta sales. In the retail segment, we additionally
provide a focused mass approach supplying consumer preferred regional brands,
private label brands and Italian imports in distinctive packaging. The Company
works with our retailer partners to develop marketing and promotional programs
specifically tailored to stimulating pasta consumption in their market. We have
established a significant market presence in North America by developing
strategic customer relationships with food industry leaders that have
substantial pasta requirements. We have a long-term supply agreement with Sysco,
the nation's largest marketer and distributor of food service products. We are
also the primary supplier of pasta to Sam's Wholesale Club ("Sam's Club"), the
largest club store chain in the United States, and we supply private label and
branded pasta to 18 of the 20


                                       13

largest grocery retailers in the United States, including Kroger, Albertson's,
Ahold, Wal-Mart, Winn Dixie, Publix, Delhaize America, A &2 P, and H.E. Butt. We
also have long-term supply agreements with several private label customers, and
have developed supply relationships with leading food processors, such as
ConAgra, General Mills and Kraft Foods, which use our pasta as an ingredient in
their branded food products.

         Our product offering has expanded to offer "Made in Italy" pasta from
our Italian facility. This facility serves both the North American and European
markets with Private Label, Industrial and Food Service products.

         One of our core strengths has been the development of strong customer
relationships and the establishment of a reputation as a technical and service
expert in the pasta field. As part of our overall customer development strategy,
we use our category management expertise to assist customers in their
distribution and supply management decisions regarding pasta and new products.
Our category management experts use on-line A.C. Nielsen's supermarket data to
recommend pricing, SKU assortment and shelf space allocation to both private
label and branded customers. Our representatives also assist food processors in
incorporating our pasta as an ingredient in their customers' food products. We
regularly sponsor a "Pasta Technology Forum" which is a training and development
program for our customers' production and new product personnel. In addition to
technical education, we provide dedicated technical support to our institutional
customers by making recommendations regarding the processing of pasta in their
facilities. We believe that these value-added activities provide customers with
a better appreciation and awareness of our products.

         We consistently demonstrate our commitment to customer service through
the development of enhanced customer service programs. Examples of these
programs include our creation of an Efficient Customer Response ("ECR") model
which uses Electronic Data Interchange ("EDI") and vendor replenishment programs
to assist key customers, and category management services for our private label
and branded customers. These programs also enable us to more accurately forecast
production and sales demand, enabling higher utilization of production
capacities and lower average unit costs.

         Our four primary distribution centers in North America are
strategically located in South Carolina, Wisconsin, Missouri and Southern
California to serve the national market. Additionally, we use public warehouses
to facilitate the warehousing and distribution of our products. Our South
Carolina and Missouri distribution centers are integrated with our production
facilities, and in fiscal 2003 we will close our Southern California warehouse
and integrate it with our new Arizona manufacturing facility. Finished products
are automatically conveyed via enclosed case conveying systems from the
production facilities to the distribution centers for automated palletization
and storage until shipping. The combination of integrated facilities and
multiple distribution centers enables us to realize significant distribution
cost savings and provides lead time, fill rate and inventory management
advantages to our customers. The operation of the Missouri and South Carolina
distribution centers is outsourced under a long-term agreement with Lanter
Company, a firm specializing in warehouse and logistics management services.

         Our European facility uses two public warehouses to serve the European
market (located in the U.K. and Germany) and the U.S. distribution centers for
our U.S. import business.

         Most of our customers use inventory management systems which track
sales of particular products and rely on reorders being rapidly filled by
suppliers. We work with our customers to forecast consumer demand which allows
us to cost-effectively produce inventory stocks to the forecasted demand levels.

                                       14

Pasta Production
- ----------------

         Pasta's primary ingredient is semolina, which is extracted from durum
wheat through a milling process. Durum wheat is used exclusively for pasta.
Durum wheat used in United States pasta production generally originates from
Canada, North Dakota, Montana, Arizona and California. Durum wheat used in
Europe generally originates from Italy, France, Spain, Canada, U.S., Greece and
Syria. Each variety of durum wheat has its own unique set of protein, gluten
content, moisture, density, color and other attributes which affect the quality
and other characteristics of the semolina. We blend semolina from different
wheat varieties as needed to meet customer specifications.

         Our ability to produce high-quality pasta generally begins with
purchasing durum wheat directly from farmers and grower-owned cooperatives in
Canada, North Dakota, Montana, Arizona and California. This purchasing method
ensures that the extracted semolina meets our specifications. We have several
sources for durum wheat and are not dependent on any one supplier or sourcing
area. As a result, we believe that we have adequate sources of supply for durum
wheat. We occasionally buy and sell semolina to balance our milling and
production requirements. We are one of only two major producers of pasta in
North America that own vertically integrated milling and production facilities.

         Durum wheat is a cash crop whose average monthly market price
fluctuates. Until February 1998 durum wheat did not have a related futures
market to hedge against such price fluctuations. As of February 12, 1998, durum
futures began trading on the Minneapolis grain exchange. Because in our view,
these futures contracts have limited liquidity and other less desirable quality
specifications we have not used them as a durum cost hedge. We manage our durum
wheat cost risk through cost pass-through mechanisms and other arrangements with
our customers and advance purchase contracts for durum wheat which are generally
less than twelve months' duration.

         Durum wheat is shipped to our production facilities in Missouri and
South Carolina directly from North Dakota, Montana and Canada under long-term
rail contracts with our most significant rail carriers, the Canadian Pacific
Rail System and Norfolk Southern. Under these agreements, we are obligated to
transport specified wheat volumes. If we do not meet the volumes, we must
reimburse the carrier for certain of its costs. Currently, we are in compliance
with such volume obligations.

         We purchase the raw material requirements (including semolina and
semolina/flour blends) for our Kenosha, Wisconsin facility from Horizon Milling,
LLC (a joint venture between Harvest States and Cargill) under the terms of a
long-term supply agreement. We believe the quality of the purchased raw
materials is consistent with our internally milled products. We also believe the
terms of the supply agreement are favorable versus other market options.

         We will purchase the raw material requirements (including semolina and
semolina/flour blends) for our Tolleson, Arizona facility from Bay State Milling
Company under the terms of a long-term supply agreement. We also believe the
terms of the Bay State Milling Company supply agreement are favorable versus
other market options.

         In Europe, we purchase our semolina requirements from Italian mills to
meet our specific quality and customer needs.

         We purchase our packaging supplies, including poly-cellophane,
paperboard cartons, boxes and totes from third parties. We believe we have
adequate sources of packaging supplies.


                                       15

Trademarks and Patents
- ----------------------

         We hold a number of federally registered and common law trademarks
which we consider to be of considerable value and importance to our business
including AIPC American Italian Pasta Company, American Italian, Mueller's, and
Pasta LaBella. The Company has registered the AIPC, American Italian Pasta
Company, Pasta LaBella, Montalcino, Calabria, Heartland, Mueller's, Anthony's,
Globe/A-1, Luxury, Mrs. Grass, Pennsylvania Dutch, R & F, and Ronco.

Dependence on Major Customers
- -----------------------------

         Historically, a limited number of customers have accounted for a
substantial portion of our revenues. During the fiscal years ended September 30,
2002, 2001 and 2000, Sysco accounted for approximately 11%, 13% and 15%,
respectively, and sales to Wal*Mart, Inc. (including Sam's Wholesale Club)
accounted for approximately 13%, 12% and 15%, respectively, of our revenues.
During fiscal 2000, sales to Bestfoods accounted for approximately 23% of our
revenues. With our acquisition of the Mueller's brand on November 14, 2000, we
no longer have revenues arising from transactions with Bestfoods. We expect to
continue to rely on a limited number of major customers for a substantial
portion of our revenues in the future. We have an exclusive supply contract with
Sysco (the "Sysco Agreement") through June 2003, with a renewal option by Sysco
for one additional three-year period. We do not have long-term supply contracts
with a substantial number of our other customers, including Wal*Mart and Sam's
Club. Accordingly, we are dependent upon our other customers to sell our
products and to assist us in promoting market acceptance of, and creating demand
for, our products. An adverse change in, or termination or expiration without
renewal of, our relationships with or the financial viability of one or more of
our major customers could have a material adverse effect on our business,
financial condition and results of operations.

         Pursuant to the Sysco Agreement, we are the primary supplier of pasta
for Sysco and have the exclusive right to supply pasta to Sysco for sale under
Sysco's brand names. Sysco, which operates from approximately 65 operating
companies and distribution facilities nationwide, provides products and services
to approximately 350,000 restaurants, hotels, schools, hospitals, and other
institutions, as well as the U.S. government. Sysco exercised its option to
renew its agreement for an additional three years through June 30, 2003, and has
an option to renew the agreement for one additional three-year period. Our
products are sold to Sysco on a cost-plus basis, with annual adjustments based
on the prior year's costs. Under the Sysco Agreement, we may not supply pasta
products to any business other than Sysco in the United States, Mexico or Canada
that operates as, or sells to, institutions and businesses which provide food
for consumption away from home (i.e. food service businesses) without Sysco's
prior consent. The Sysco Agreement may be terminated by Sysco upon certain
events, including a substantial casualty to or condemnation of our Missouri
plant. We are currently discussing certain contract modifications with Sysco in
connection with its exercise of this extension option.


Competition
- -----------

         We operate in a highly competitive environment against numerous
well-established national, regional and foreign companies, and many smaller
companies. Our competitors include both independent pasta producers and pasta
divisions and subsidiaries of large food products companies. We compete in the
procurement of raw materials, the development of new products and product lines,
the improvement and expansion of previously introduced products and product
lines and the production, marketing and distribution of these products. Some of
these companies have longer operating histories, significantly greater brand
recognition and financial and other resources. Our products compete with a broad
range of food products, both in the retail and institutional customer markets.
Competition in these markets generally is based on product quality and taste,
pricing, packaging and customer service and logistics capabilities. We believe
that we currently compete favorably with respect to these factors.



                                       16

         Our direct competitors include large multi-national companies such as
New World Pasta LLC, and Barilla (an Italian-owned company with manufacturing
facilities in the U.S.), regional U.S. producers of retail and institutional
pasta such as Dakota Growers Pasta Company, Philadelphia Macaroni Co. Inc. and
A. Zerega's Sons, Inc., each an independent producer, and foreign companies such
as Italian pasta producers De Cecco. We also compete against food processors
such as Kraft Foods, General Mills, Inc., ConAgra, Campbell Soup Company and
Stouffers Corp., that produce pasta internally as an ingredient for use in their
food products. For sales in Europe, our Italian plant competes with Barilla and
other small regional pasta producers.

         Our competitive environment depends to a significant extent on the
aggregate industry capacity relative to aggregate demand for pasta products.
Over the past years, the North American pasta production capacity has
contracted. Borden completed the sale of its pasta business during 2001. AIPC
bought seven Borden pasta brands, while New World Pasta purchased the remainder
of the Borden brands and all of the Borden manufacturing facilities.
Subsequently, New World Pasta announced that it is closing three of its North
American pasta manufacturing facilities. AIPC management estimates the closing
of these plants represents a 200 million lb. reduction in the North American
pasta production capacity.

         Several foreign producers, based principally in Italy and Turkey,
aggressively targeted the U.S. pasta market in the mid-nineties. In 1996, a U.S.
Department of Commerce investigation revealed that several Italian and Turkish
producers were engaging in unfair trade practices by selling pasta at less than
fair value in the U.S. markets and benefiting from subsidies from their
respective governments. Effective July 1996, the U.S. International Trade
Commission of the Department of Commerce ("Commerce"), imposed anti-dumping and
countervailing duties on Italian and Turkish imports ("the 1996 Anti-dumping
Order"). The Anti-dumping Order was extended five years through 2006.
Accordingly, all Italian and Turkish producers, (including our Italian
subsidiary), are assessed duties of 15% on U.S. imports, subject to review by
Department of Commerce. Once reviewed by Commerce, an importer's duties may
increase or decrease depending on Commerce findings. Such duties enable us and
our domestic competitors to compete more favorably against Italian and Turkish
producers in the U.S. pasta market. Bulk imported pasta and pasta produced in
the U.S. by foreign firms are generally not subject to such anti-dumping and
countervailing duties. Foreign pasta producers generally may avoid such duties
by importing bulk pasta into the United States and repackaging it in U.S.
facilities for distribution. A leading branded Italian producer, Barilla,
completed a pasta production plant in Ames, Iowa in 1999.


Pasta Industry and Markets
- --------------------------

         Although we have sales in the competitive European markets, the
majority of revenues in fiscal 2002 were for sales in North America.

         North American pasta consumption is estimated to have been between 4.0
to 4.5 billion pounds in 2002. The pasta industry consists of two primary
customer markets: (i) Retail, which includes grocery stores, club stores and
mass merchants that sell branded and private label pasta to consumers; and (ii)
Institutional, which includes both food service distributors that supply
restaurants, hotels, schools and hospitals, as well as food processors that use
pasta as a food ingredient.

         Pasta is a staple of the North American diet. It is widely recognized
that pasta is an inexpensive, convenient and nutritious food. The U.S.
Department of Agriculture places pasta on the foundation level of its pyramid of
recommended food groups. Products such as flavored pasta, prepared sauces, boxed
pasta dinners, and both frozen and shelf-stable prepared pasta entrees support
consumers' lifestyle demands for convenient at-home meals. Pasta continues to
grow in popularity in restaurants as Americans continue to dine away from home
more frequently.

         Customer Markets - Retail. The U.S. retail market includes traditional
grocery retailers and fast-growing club store and mass merchants, such as
Wal*Mart. AIPC is the leading producer of retail dry pasta in the U.S. with a
market share of 33.5% for the year



                                       17

ended September 30, 2002 (per A.C. Nielsen on pound basis). The second largest
purveyor of pasta is New World Pasta with a 26% market share, while Barilla is
third at 11%. AIPC's strategy is to provide our retailer partners with a full
portfolio of pasta alternatives from consumer preferred regional brands to high
margin store brands to "Made in Italy" imported products, all delivered within
the highest quality standards and with exceptional customer service. This
strategy appears to be working for the Company and our retail partners as AIPC's
market share grew from 31.5% in the first fiscal quarter to 35.2% in the fourth
fiscal quarter.

         Customer Markets - Institutional. The Institutional market includes
both food service distributors that supply restaurants, hotels, schools and
hospitals, as well as food processors that use pasta as a food ingredient.
Traditional food service customers include businesses and organizations, such as
Sysco and US Food service, Inc., that sell products to restaurants, healthcare
facilities, schools, hotels and industrial caterers. Most food service
distributors obtain their supply of pasta from third party producers like us.
The food service market is highly-fragmented and is served by numerous regional
and local food distributors, including both "traditional" food service customers
and chain restaurant customers. Sysco, the nation's largest food service
marketer and distributor of food service products and one of the nation's
largest commercial purchasers of pasta products, serves approximately 10% of the
food service customers in the United States and has more than double the
revenues of the next largest food service distributor.

         The Institutional market also includes sales to food processors who use
pasta as an ingredient in their food products such as frozen dinner entrees and
side dishes, dry side dish mixes, canned soups and single-serve meals. Large
food processors that use pasta as a food ingredient include Kraft Foods,
Stouffers Corp., Campbell Soup Company, ConAgra, Inc., and General Mills. The
consistency and quality of the color, starch release, texture, cooking
consistency, and gluten and protein content of pasta produced for food
processors is crucial to their products' success. As a result, food processors
have stringent specifications for these attributes.

         The size of the Institutional market is affected by the number of food
processors that elect to produce pasta internally rather than outsourcing their
production. Historically, most pasta used by food processors was manufactured
internally for use in food processors' own products. We believe, however, that
an increasing number of food processors may discontinue the internal production
of their own pasta and outsource their production to efficient producers
including us.


Government Regulation; Environmental Matters
- --------------------------------------------

         We are subject to various laws and regulations relating to the
operation of our production facilities, the production, packaging, labeling and
marketing of our products and pollution control, including air emissions, which
are administered by federal, state, and other governmental agencies. Our
production facilities are subject to inspection by the U.S. Food and Drug
Administration and Occupational Safety and Health Administration, and the
various state agencies.


Employees
- ---------

         As of September 30, 2002, we employed 627 full-time persons worldwide,
of whom 124 were exempt, 62 salaried non-exempt, 190 manufacturing non-exempt,
and 251 manufacturing hourly employees. Our U.S. employees are not represented
by any labor unions. We consider our employee relations to be excellent.


ITEM 2.  PROPERTIES.

         Production Facilities. Our pasta production plants are located near
Kansas City in Excelsior Springs, Missouri, Columbia, South Carolina, Kenosha,
Wisconsin, and Verolanuova, Italy. Our U.S. facilities are strategically located
to support North American distribution

                                       18

of our products and benefit from the rail and interstate highway infrastructure.
At September 30, 2002, our U.S. facilities had combined annual milling and
production capacity of approximately 1.0 billion pounds of durum semolina and
approximately 1.0 billion pounds of pasta.

         During the fiscal year ended September 30, 2002, we began construction
of our fifth plant in Tolleson, Arizona, which will add capacity of
approximately 100 million pounds of pasta, and will serve the western markets.

         Distribution Centers. We own the distribution centers adjoining our
Missouri, South Carolina, Wisconsin, and Arizona plants. In addition, we lease
space in public warehouses located in California, Missouri, Texas, and Indiana.


ITEM 3.  LEGAL PROCEEDINGS.

         We are not a party to any litigation, and we know of no litigation
threatened against us which, if commenced and adversely determined, we expect
would likely have a material adverse effect upon our business or financial
condition.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         We did not submit any matters to the vote of our stockholders during
the fourth quarter of the most recent fiscal year.


EXECUTIVE OFFICERS OF THE REGISTRANT

         Pursuant to General Instruction G(3) of Form 10-K and instruction 3 to
paragraph (b) of Item 401 of Regulation S-K, the following list is included as
an unnumbered Item in Part I of this Annual Report in lieu of being included in
our Definitive Proxy Statement which will be filed no later than 120 days after
September 30, 2002. All executive officers are elected annually and serve at the
discretion of the Board of Directors. We have employment agreements with all of
these listed below and certain other of our executive officers.

         The following table sets forth certain information about each of our
executive officers as of September 30, 2002.

NAME                                AGE     POSITION
- ----                                ---     --------
Horst W. Schroeder.......           61      Chairman of the Board of Directors
Timothy S. Webster.......           40      President and Chief Executive Officer; Director
David E. Watson..........           47      Executive Vice President -
                                            Operations - Corporate Development
David B. Potter..........           43      Executive Vice President -
                                            Procurement and Industrial Markets
Warren B. Schmidgall.....           52      Executive Vice President and
                                            Chief Financial Officer
Jerry H. Dear............           55      Executive Vice President -
                                            Store Brands, Wal*Mart, Special Channels
Keith A. Conard..........           41      Executive Vice President - Sales and Marketing
Walter N. George.........           46      Senior Vice President - Supply Chain and Logistics


         Horst W. Schroeder has served as the Chairman of the Board of Directors
since June 1991, and as a Director since August 1990. Since 1990, Mr. Schroeder
has been President of HWS & Associates, Inc., a Hilton Head, South Carolina
management consulting firm owned by Mr. Schroeder. Prior to founding HWS &
Associates, Mr. Schroeder served the Kellogg Company, a manufacturer and
marketer of ready-to-eat and other convenience food products, in various
capacities for more than 20 years, most recently as President and Chief


                                       19

Operating Officer. He was a manager of PSF Holdings, L.L.C. and served as
Chairman of the Board of its wholly-owned subsidiary, Premium Standard Farms,
Inc., a vertically-integrated pork producer, from 1996 to May 1998.

         Timothy S. Webster has served as our President since June 1991, as
President and Chief Executive Officer of the Company since May 1992, and as a
Director since June 1989. Mr. Webster joined us in April 1989, and served as
Chief Financial Officer from May 1989 to December 1990 and as Chief Operating
Officer from December 1990 to June 1991.

         David E. Watson joined us in June 1994 as Senior Vice President and
Chief Financial Officer. He was promoted to Executive Vice President and Chief
Financial Officer in June, 1997. He was promoted to Executive Vice President -
Operations Support and Technology in July 1998. He was promoted to Executive
Vice President - Operations and Corporate Development in October 2000. Prior to
joining us, Mr. Watson spent 18 years with the accounting firm of Arthur
Andersen & Co., most recently as partner-in-charge of its Kansas City and Omaha
Business Consulting Group practice. Mr. Watson is a certified public accountant.

         David B. Potter joined us in 1993 as our Director of Procurement. He
was named Vice President in 1994 and Senior Vice President - Procurement in June
1997. He was promoted to Executive Vice President and General Manager -
Industrial Markets in July 1998. He was promoted to Executive Vice President -
Procurement and Industrial Markets in October 2002. Before joining us, Mr.
Potter had worked in numerous areas of Hallmark Cards and its subsidiary,
Graphics International Trading Company, from 1981 to 1993, most recently as
Business Logistics Manager.

         Warren B. Schmidgall joined us in October 1998 as Senior Vice President
and Chief Financial Officer. He was promoted to Executive Vice President and
Chief Financial Officer in January 2000. Prior to that, Mr. Schmidgall worked in
various executive positions at Hill's Pet Nutrition, Inc. from February 1980 to
October 1998, including Chief Financial Officer and Executive Vice President of
Operations.

         Jerry H. Dear joined us in 1993 as a Business Development Manager. He
was named Vice President - Retail Sales in 1995, Senior Vice President - Retail
Markets in February 1998, and Executive Vice President - Retail Markets in
January 2000. Before joining us, Mr. Dear had worked at Pillsbury from 1983 to
1993, most recently as a Region Business Manager.

         Keith A. Conard joined us in September 2001 as Executive Vice President
- - Sales and Marketing. Prior to joining AIPC, Mr. Conard worked at Borden Foods
as Vice President of Sales and Customer Marketing and at Campbell Soup Company
in a variety of sales and marketing assignments.

         Walter N. George joined us in January 2001 as Senior Vice President -
Supply Chain and Logistics. Prior to joining AIPC, Mr. George was Vice President
of Supply Chain for Hill's Pet Nutrition.



                                       20

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         Our Class A Convertible Common Stock, par value $0.001 per share (the
"common stock") is traded on the New York Stock Exchange under the symbol "PLB".

         The range of the high and low prices per share of the common stock for
fiscal 2002 and 2001 was as follows:

                             Year Ended                    Year Ended
                          September 30, 2002            September 30, 2001
                         High              Low         High              Low
                         ----              ---         ----              ---

First Quarter          $47.00           $35.02      $29.4375          $17.9375
Second Quarter         $46.74           $39.65      $36.25            $26.75
Third Quarter          $52.56           $43.75      $46.75            $31.00
Fourth Quarter         $51.85           $32.45      $48.15            $38.28


         As of December 10, 2002, there were 6,932 holders of the common stock.
No shares of the Company's Class B Convertible Common Stock, par value $0.001
per share (the "Class B common stock") are outstanding on the date of this
Annual Report.

         We have not declared or paid any dividends on our common stock to date
and do not anticipate paying any such dividends in the foreseeable future. We
intend to retain earnings for the foreseeable future to provide funds for the
operation and expansion of our business and for the repayment of indebtedness.
Our current credit facility contains certain provisions which effectively limit
the payment of dividends. Future borrowing agreements may also contain
limitations on the payment of dividends. Any determination to pay dividends in
the future will be at the discretion of our Board of Directors and will depend
upon our financial condition, capital requirements, results of operations and
other factors, including any contractual or statutory restrictions. We have no
restricted retained earnings at September 30, 2002.


ITEM 6.  SELECTED FINANCIAL DATA.

         The selected statement of income data for the fiscal years ended
September 30, 2002, 2001 and 2000 and the selected balance sheet data as of
September 30, 2002 and 2001 are derived from our Consolidated Financial
Statements including the Notes thereto audited by Ernst & Young LLP, independent
auditors, appearing elsewhere in this Annual Report. The selected statement of
income data for the fiscal years ended September 30, 1999 and 1998, and the
selected balance sheet data as of September 30, 2000, 1999 and 1998, have been
derived from our financial statements not included herein, which have been
audited by Ernst & Young LLP. The selected financial data set forth below should
be read in conjunction with, and is qualified by reference to, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our Consolidated Financial Statements, including the Notes thereto, appearing
elsewhere in this Annual Report.

                                       21

                                                                                       FISCAL YEARS ENDED
                                                                                          SEPTEMBER 30,
                                                                 2002          2001          2000           1999           1998
                                                            ------------- ------------- ------------- -------------- --------------


                                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
   STATEMENT OF INCOME DATA:
   Revenues(1)                                                 $380,799      $310,789      $248,795       $220,149       $189,390
   Cost of goods sold                                           249,000       213,086       178,810        160,449        140,110
   Plant expansion costs(2)                                          --            --            --            130          1,606
                                                            -----------   -----------   -----------   ------------   ------------
   Gross profit                                                 131,799        97,703        69,985         59,570         47,674
   Selling and marketing expense                                 48,013        30,844        16,065         14,855         12,984
   General and administrative expense                            11,801        10,278         6,263          5,580          4,948
   Provision for acquisition expenses (3)                            --         5,537            --             --             --
                                                            -----------   -----------   -----------   ------------   ------------
   Operating profit                                              71,985        51,044        47,657         39,135         29,742
   Interest expense, net                                          9,315         8,491         4,777          2,098          1,539
                                                            -----------   -----------   -----------   ------------   ------------
   Income before income tax expense and
       extraordinary loss                                        62,670        42,553        42,880         37,037         28,203
   Income tax expense                                            21,371        14,680        15,426         13,519         10,557
   Extraordinary loss, net of income taxes (4)                       --        (1,543)           --             --         (2,332)
                                                            -----------   -----------   -----------   ------------   ------------
   Net income                                                   $41,299       $26,330       $27,454        $23,518        $15,314
                                                            ===========   ===========   ===========   ============   ============

   Net income per
      common share (basic):
      Before extraordinary item                                   $2.31         $1.60         $1.53          $1.30          $1.03
      Extraordinary item                                             --          (.09)           --             --          (0.14)
                                                            -----------   -----------   -----------   ------------   ------------
      Total                                                       $2.31         $1.51         $1.53          $1.30          $0.89
                                                            ===========   ===========   ===========   ============   ============

   Weighted average common shares outstanding                    17,879        17,404        17,895         18,108         17,223
                                                            ===========   ===========   ===========   ============   ============

   Net income per
      common share assuming dilution:
      Before extraordinary item                                   $2.21         $1.53         $1.50          $1.26          $0.98
      Extraordinary item                                             --          (.08)           --             --          (0.13)
                                                            -----------   -----------   -----------   ------------   ------------
      Total                                                       $2.21         $1.45         $1.50          $1.26          $0.85
                                                            ===========   ===========   ===========   ============   ============

   Weighted average common shares outstanding                    18,695        18,186        18,298         18,621         17,937
                                                            ===========   ===========   ===========   ============   ============

   BALANCE SHEET DATA
      (AT END OF PERIOD):
   Cash and temporary investments                                $8,247        $5,284        $6,677         $3,088         $5,442
   Working capital                                               79,589        53,781        46,941         29,222         23,242
   Current ratio                                                   306%          221%          304%           212%            89%
   Net property, plant & equipment                              395,940       339,162       311,668        266,124        205,607
   Total assets                                                 640,609       560,143       383,771        322,222        259,381
   Long-term debt, less current maturities                      258,193       236,783       138,502         81,467         48,519
   Stockholders' equity                                         297,106       245,192       198,404        201,730        176,784
   Total Debt/Total Capitalization                                  47%           49%           41%            29%            22%


         (1) On October 28, 2000, the U.S. Government enacted the "Continued
Dumping and Subsidy Offset Act of 2000" which provides that assessed
anti-dumping and subsidy duties liquidated by the Department of Commerce after
October 1, 2000 will be distributed to affected domestic producers. Accordingly,
in late December 2001, AIPC received payment from the Department of Commerce of
$7.6 million as our calculated share, based on tariffs liquidated by the
government from October 1, 2000 to September 30, 2001 on Italian and Turkish
imported pasta. The intent of the Act, according to Congressional records, is
that any funds received pursuant to the Continued Dumping and Subsidy Offset Act
would be used, prospectively, by affected domestic producers to invest in
personnel and make other investments as necessary to remain competitive and
regain lost market share from the previously "dumped" imports. In accordance
with the intent of the Act, we implemented incremental spending programs,
including slotting fees to expand distribution, adding

                                       22

personnel and increased promotions. After considering the incremental
expenditures, most of which were recorded as a reduction of gross revenue, the
net revenue impact of the dumping and subsidy offset payment was approximately
$3.7 million. Revenue was recognized over the balance of the year to match it
with the incremental expenditures. The earning per share impact was
approximately $.03 in the first quarter, and $.02 per quarter thereafter, for a
total of $.09. There was no such revenue recognized in prior years.

         (2) Plant expansion costs include incremental direct and indirect
manufacturing and distribution costs which are incurred as a result of
construction, commissioning and start-up of new capital assets. These costs are
expensed as incurred but are unrelated to current production and, therefore, are
reported as a separate line item in the statement of income.

         (3) Provision for acquisition expenses include incremental costs
associated with the Mueller's brand acquisition ($1.8 million) and the
acquisition of the seven brands from Borden Foods ($3.7 million).

         (4) Represents losses due to early extinguishment of long-term debt,
net of income taxes.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.


Introduction and Certain Cautionary Statements
- ----------------------------------------------

         The following discussion and analysis of our financial condition and
results of operations focuses on and is intended to clarify the results of our
operations, certain changes in our financial position, liquidity, capital
structure and business developments for the periods covered by the consolidated
financial statements included in this Annual Report. This discussion should be
read in conjunction with, and is qualified by reference to, the other related
information including, but not limited to, the audited consolidated financial
statements (including the notes thereto and the independent auditor's report
thereon), the description of our business, all as set forth in this Annual
Report, as well as the risk factors discussed above (the "Risk Factors").

         As previously noted, the discussion set forth below, as well as other
portions of this Annual Report, contains statements concerning potential future
events. Readers can identify these forward-looking statements by their use of
such verbs as expects, anticipates, believes or similar verbs or conjugations of
such verbs. If any of our assumptions on which the statements are based prove
incorrect or should unanticipated circumstances arise, our actual results could
materially differ from those anticipated by such forward-looking statements. The
differences could be caused by a number of factors or combination of factors
including, but not limited to, the Risk Factors. Readers are strongly encouraged
to consider those factors when evaluating any such forward-looking statement. We
will not update any forward-looking statements in this Annual Report.

         Our fiscal year end is the last Friday of September or the first Friday
of October. This results in a 52- or 53-week year depending on the calendar. Our
first three fiscal quarters end on the Friday last preceding December 31, March
31, and June 30 or the first Friday of the following month of each quarter. For
purposes of this Form 10-K, our fiscal years are described as having ended on
September 30. The 2002, 2001, and 2000 fiscal years were 52-week years.



                                       23

Results of Operations
- ---------------------

         The following table sets forth certain data from our statements of
income, expressed as a percentage of revenues, for each of the periods
presented.


                                                                            FISCAL YEARS ENDED
                                                                              SEPTEMBER 30,


                                                                      2002         2001         2000
                                                                      ----         ----         ----

       Revenues:
          Retail                                                     74.1%        71.9%        71.5%
          Institutional                                              25.9%        28.1%        28.5%
                                                                    ------      -------       ------
       Total revenues                                               100.0%       100.0%       100.0%
                                                                    ------       ------       ------
       Cost of goods sold                                             65.4         68.6         71.9
                                                                    ------      -------       ------

       Gross profit                                                   34.6         31.4         28.1

       Selling and marketing expense                                  12.6          9.9          6.5

       General and administrative expense                              3.1          3.3          2.5
       Provision for acquisition expenses                               --          1.8           --
                                                                    ------      -------       ------

       Operating profit                                               18.9         16.4         19.1
       Interest expense, net                                           2.5          2.7          1.9
       Income tax expense                                              5.6          4.7          6.2
       Extraordinary loss, net of income tax                            --          0.5           --
                                                                    ------      -------       ------

       Net income                                                    10.8%         8.5%        11.0%
                                                                   =======      =======      =======

       Net income excluding provision for acquisition expense          N/A        10.1%          N/A
                                                                   =======      =======      =======

                                       24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

         We generate revenues in two customer markets: retail and institutional.
Retail market revenues include the revenues from sales of our pasta products to
customers who resell the pasta in retail channels. These revenues represented
74.1% and 71.9% of our total revenue for the years ended September 30, 2002 and
2001, respectively, and include sales to club stores and grocery retailers, and
encompass sales of our private label and branded products. Institutional market
revenues include revenues from product sales to customers who use our pasta as
an ingredient in food products or who resell our pasta in the foodservice
market. It also includes revenues from opportunistic sales to government
agencies and other customers that we pursue periodically when capacity is
available to increase production volumes and thereby lower average unit costs.
The institutional market represented 25.9% and 28.1% of our total revenue for
the years ended September 30, 2002 and 2001, respectively. Average sales prices
in the retail and institutional markets vary depending on customer-specific
packaging and raw material requirements, product manufacturing complexity and
other service requirements. Average retail and institutional prices will also
vary due to changes in the relative share of customer revenues and item specific
sales volumes (i.e., product sales mix). Generally, average retail sales prices
are higher than institutional sales prices. We anticipate continued changes to
historical income statement patterns resulting from the Mueller's(R) brand
acquisition in November 2000, the acquisition of seven pasta brands from Borden
Foods in July 2001, and subsequent smaller acquisitions in September and October
2002. Selling prices of our branded products are significantly higher than
selling prices in our other business units including private label. This is
expected to result in higher revenues, gross profits, and gross margin
percentages. Revenues are reported net of cash discounts, pricing allowances and
product returns.

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

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

         Our capital asset strategy is to achieve low-cost production through
vertical integration and investment in the most current pasta-making assets and
technologies. The manufacturing- and distribution-related capital assets that
have been or will be acquired to support this strategy are depreciated over
their respective economic lives. Because of


                                       25

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

         Selling and marketing costs have increased substantially over the last
two years in line with the significant expansion of our retail business. These
costs increased 198.9% from fiscal year 2000 through fiscal year 2002, and
constituted 12.6% of revenues for the year ended September 30, 2002. We do not
expect continued rapid growth in our selling and marketing expenditures because
we have substantially completed the development of the selling and marketing
infrastructure needed to support our branded businesses. We expect selling and
marketing expense to exceed 10% of revenues for the foreseeable future.

         As noted, in November 2000, we purchased the Mueller's® pasta brand
from Bestfoods. In July 2001, we purchased seven pasta brands from Borden Foods.
In addition, we purchased Lensi and Gooch in September and October 2002,
respectively. As discussed below, the timing of these brand acquisitions had an
impact on the period to period comparisons.

Critical Accounting Policies

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

         Impairment Testing of Intangible Assets. In June 2001, the FASB issued
Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and
Other Intangible Assets." The provisions of SFAS No. 142, which we adopted on
October 1, 2001, require us to discontinue the amortization of the cost of
intangible assets with indefinite lives and to perform certain fair value based
tests of the carrying value of indefinite lived intangible assets. SFAS No. 142
requires this testing to be performed at least annually and more frequently
should events or changes in circumstances indicate that the carrying amount of
an asset may not be fully recoverable. These impairment tests are impacted by
judgments as to future cash flows and brand performance. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the
assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to


                                       26

sell. Future events could cause our management to conclude that impairment
indicators exist and that the value of intangible assets are impaired.

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

         Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 and has been determined as if we had accounted for our
employee stock options under the fair value method of SFAS No. 123. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions: risk-free
interest rate of 2.0% for fiscal 2002 and 4.5% for fiscal 2001 and 2000;
dividend yields of zero; volatility factors of the expected market price of our
common stock of .408 for fiscal 2002, .358 for fiscal 2001, and .483 for fiscal
2000; and a weighted-average expected life of the options of one to five years.

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

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

                                                 2002          2001         2000
                                                 ----          ----         ----

         Pro forma net income                 $38,302       $23,924      $25,543
         Pro forma earnings per share:
                  Basic                         $2.14         $1.37        $1.43
                  Diluted                       $2.05         $1.32        $1.40


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

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

         Allowance for Doubtful Accounts - Methodology. We evaluate the
collectibility of our accounts receivable based on a combination of factors. In
circumstances where we are aware of a specific customer's inability to meet its
financial obligations to us (e.g.


                                       27

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

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

         To hedge foreign currency risks, we use futures contracts. The fair
values of these instruments are determined from market quotes. In addition, we
use some over-the-counter forward contracts in hedging these risks. These
forward contracts are valued in a manner similar to that used by the market to
value exchange-traded contracts; that is, using standard valuation formulas with
assumptions about future foreign currency exchange rates derived from existing
exchange rates, and interest rates observed in the market. To hedge interest
rate risk, an interest rate swap is used in which we pay a variable rate and
receive a fixed rate. This instrument is valued using the market standard
methodology of netting the discounted future fixed cash receipts and the
discounted expected variable cash payments. The variable cash payments are based
on an expectation of future interest rates derived from observed market interest
rate curves. We have not changed our methods of calculating these fair values or
developing the underlying assumptions. The values of these derivatives will
change over time as cash receipts and payments are made and as market conditions
change. Our derivative instruments are not subject to multiples or leverage on
the underlying commodity or price index. Information about the fair values,
notional amounts, and contractual terms of these instruments can be found in
Note 1 to our consolidated financial statements and the section titled
"Quantitative and Qualitative Disclosures About Market Risk."

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

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



                                       28

 FISCAL YEAR ENDED SEPTEMBER 30, 2002 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
2001

         Revenues. Revenues increased $70.0 million, or 22.5%, to $380.8 million
for the fiscal year ended September 30, 2002, from $310.8 million for the fiscal
year ended September 30, 2001. The revenue increase was primarily due to volume
growth of 20.1% over the prior year, and higher per unit selling prices
primarily associated with the branded product line pasta acquisitions. In
addition, we benefited from a U.S. government dumping and subsidy offset
payment, with $7.6 million recorded as gross retail revenue in the year. In
accordance with the intent of the Act, we implemented incremental spending
programs, including slotting fees to expand distribution, adding personnel and
increased promotions. After considering the incremental expenditures, most of
which were recorded as a reduction of gross revenue, the net revenue impact of
the dumping and subsidy offset payment was approximately $3.7 million. Revenue
was recognized over the balance of the year to match it with the incremental
expenditures. The earnings per share impact was approximately $.03 in the first
quarter, and $.02 per quarter thereafter, for a total of $.09. Volume growth was
led by the July 2001 acquisition of seven pasta brands from Borden Foods, and by
private label (24.1%) and ingredient (13.2%). We expect increases in revenue in
fiscal 2003 primarily due to growth with existing customers, new customer
accounts and higher revenues resulting from durum pass-throughs as the cost of
durum wheat has increased significantly in recent months. We also expect
potential revenue increases from branded acquisitions which have not been
finalized.

         Revenues for the Retail market increased $58.6 million, or 26.2%, to
$282.2 million for the fiscal year ended September 30, 2002, from $223.6 million
for the fiscal year ended September 30, 2001. The increase primarily reflects
volume growth of 23.2% over the prior year, including the benefit of the brands
acquired in July 2001 and the benefit of the dumping and subsidy offset payment,
and higher per unit selling prices associated with the branded product line
pasta acquisitions.

         Revenues for the Institutional market increased $11.4 million, or
13.1%, to $98.6 million for the fiscal year ended September 30, 2002, from $87.1
million for the fiscal year ended September 30, 2001. This increase was
primarily a result of volume growth of 12.7% over the prior year.

         Gross Profit. Gross profit increased $34.1 million, or 34.9%, to $131.8
million for the fiscal year ended September 30, 2002, from $97.7 million for the
fiscal year ended September 30, 2001. Gross profit increased generally as a
result of the volume and revenue gains referenced above. Gross profit as a
percentage of revenues increased to 34.6% for the fiscal year ended September
30, 2002 from 31.4% for the fiscal year ended September 30, 2001. The increase
in gross profit as a percentage of revenues relates primarily to incremental
gross profit on branded products subsequent to the acquisitions and lower
operating costs as a percentage of revenues. For the fiscal year 2003, we expect
increases in gross profit due to volume growth, but expect decreases in gross
profit percentage due to the recent increase in the cost of durum wheat.

         Selling and Marketing Expense. Selling and marketing expense increased
$17.2 million, or 55.7%, to $48.0 million for the fiscal year ended September
30, 2002, from $30.8 million reported for the fiscal year ended September 30,
2001. Selling and marketing expense as a percentage of revenues increased to
12.6% for the fiscal year ended September 30, 2002, from 9.9% for the comparable
prior period. This increase was primarily due to higher marketing costs
associated with higher retail revenues, as well as the incremental marketing and
personnel costs associated with the branded pasta acquisitions. For the fiscal
year 2003, we are expecting selling and marketing expenses to be greater than
the 10% of revenues but lower than the percentage in 2002.

         General and Administrative Expense. General and administrative expense
increased $1.5 million, or 14.8%, to $11.8 million for the fiscal year ended
September 30, 2002, from $10.3 million reported for the comparable period last
year. General and administrative expense as a percentage of revenues decreased
to 3.1% from 3.3%. The majority of the decrease relates to intangible
amortization costs associated with the Mueller's brand acquisition which were
expensed in fiscal 2001, but were no longer incurred in fiscal 2002 as a result
of the adoption of SFAS No. 142.


                                       29

         Provision for Acquisition Expenses. For the year ended September 30,
2001, the provision for acquisition expenses of $5.5 million consisted of
incremental costs associated with the Mueller's brand acquisition ($1.8 million)
and the acquisition of the seven brands from Borden Foods ($3.7 million).

         Operating Profit. Operating profit for the fiscal year ended September
30, 2002, was $72.0 million, an increase of 41.0% over the $51.0 million
reported for the fiscal year ended September 30, 2001. Operating profit
increased as a percentage of revenues to 18.9% for the fiscal year ended
September 30, 2002, from 16.4% for the fiscal year ended September 30, 2001, as
a result of the factors discussed above. Operating profit as a percentage of net
revenues, excluding the provision for acquisition expenses, was 18.2% for the
fiscal year ended September 30, 2001.

         Interest Expense. Interest expense for the fiscal year ended September
30, 2002, was $9.3 million, increasing 9.7% from the $8.5 million reported for
the fiscal year ended September 30, 2001. The effect of higher borrowings
associated with the fiscal 2001 brand acquisitions and capital expenditures was
offset by lower interest rates in the current period.

         Income Tax Expense. Income tax for the fiscal year ended September 30,
2002, was $21.4 million, increasing $6.7 million from the $14.7 million reported
for the fiscal year ended September 30, 2001, and reflects effective income tax
rates of approximately 34.1% and 34.5%, respectively. For the fiscal year 2003,
our effective income tax rate will be approximately 33%.

         Extraordinary Item. During the year ended September 30, 2001, we
incurred a $1.5 million (net of tax) extraordinary loss in conjunction with the
July 2001 extinguishment of our previous line of credit following our completion
of a new $300 million credit agreement. There was no such item in the current
year.

         Net Income. Net income for the fiscal year ended September 30, 2002,
was $41.3 million, increasing from the $26.3 million reported for the fiscal
year ended September 30, 2001. Excluding the impact of the $5.5 million
provision for acquisition expense, net income for the prior year totaled $30.0
million. Net income per common share-assuming dilution was $2.21 in fiscal 2002
compared to $1.45 per share for the fiscal year ended September 30, 2001.
Excluding the impact of the $5.5 million charge for non-recurring acquisition
costs and the extraordinary item, diluted earnings per common share was $1.73 in
the prior year. Net income as a percentage of net revenue was 10.8% versus 8.5%
in the prior year or 10.1% before the provision for acquisition expense.


                                       30

 FISCAL YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
2000

         Revenues. Revenues increased $62.0 million, or 24.9%, to $310.8 million
for the fiscal year ended September 30, 2001, from $248.8 million for the fiscal
year ended September 30, 2000. The revenue increase was primarily due to volume
growth of 16.0% over the prior year, and higher per unit selling prices
primarily associated with the branded product line pasta acquisitions. Volume
growth was led by private label (26.8%) and ingredient (35.4%).

         Revenues for the Retail market increased $46.1 million, or 25.9%, to
$223.6 million for the fiscal year ended September 30, 2001, from $177.6 million
for the fiscal year ended September 30, 2000. The increase primarily reflects
volume growth of 10.4% over the prior year, and higher per unit selling prices
associated with the branded product line pasta acquisitions.

         Revenues for the Institutional market increased $15.9 million, or
22.4%, to $87.1 million for the fiscal year ended September 30, 2001, from $71.2
million for the fiscal year ended September 30, 2000. This increase was
primarily a result of volume growth of 17.4% over the prior year and higher
average selling prices.

         Gross Profit. Gross profit increased $27.7 million, or 39.6%, to $97.7
million for the fiscal year ended September 30, 2001, from $70.0 million for the
fiscal year ended September 30, 2000. Gross profit increased generally as a
result of the volume and revenue gains referenced above. Gross profit as a
percentage of revenues increased to 31.4% for the fiscal year ended September
30, 2001 from 28.1% for the fiscal year ended September 30, 2000. The increase
in gross profit as a percentage of revenues relates to incremental gross profit
on branded products subsequent to the brand acquisitions.

         Selling and Marketing Expense. Selling and marketing expense increased
$14.8 million, or 92.0%, to $30.8 million for the fiscal year ended September
30, 2001, from $16.1 million reported for the fiscal year ended September 30,
2000. Selling and marketing expense as a percentage of revenues increased to
9.9% for the fiscal year ended September 30, 2001, from 6.5% for the comparable
prior period. This increase was primarily due to higher marketing costs
associated with higher retail revenues, as well as the incremental marketing and
personnel costs associated with the Mueller's brand acquisition.

         General and Administrative Expense. General and administrative expense
increased $4.0 million, or 64.1%, to $10.3 million for the fiscal year ended
September 30, 2001, from $6.3 million reported for the comparable period last
year. General and administrative expense as a percentage of revenues increased
to 3.3% from 2.5%. The majority of the increase relates to incremental personnel
and intangible amortization costs associated with the Mueller's brand
acquisition.

         Provision for Acquisition Expenses. The provision for acquisition
expenses of $5.5 million for the year consisted of incremental costs associated
with the Mueller's brand acquisition ($1.8 million) and the acquisition of the
seven brands from Borden Foods ($3.7 million).

         Operating Profit. Operating profit for the fiscal year ended September
30, 2001, was $51.0 million, an increase of 7.1% over the $47.7 million reported
for the fiscal year ended September 30, 2000. Operating profit decreased as a
percentage of revenues to 16.4% for the fiscal year ended September 30, 2001,
from 19.1% for the fiscal year ended September 30, 2000, as a result of the
factors discussed above. Excluding the $5.5 million charge for incremental
acquisition expenses, operating profit was $56.6 million, an $8.9 million or
18.7% increase over that reported in the prior year. Operating profit as a
percentage of net revenues, excluding the non-recurring charge, was 18.2% versus
19.1% in the prior year.

         Interest Expense. Interest expense for the fiscal year ended September
30, 2001, was $8.5 million, increasing 77.7% from the $4.8 million reported for
the fiscal year ended September 30, 2000. The increase related to borrowings
associated with the brand

                                       31

acquisitions, our stock repurchase program, and capital expenditures. These
increases were partially offset by cash flow from operations.

         Income Tax Expense. Income tax for the fiscal year ended September 30,
2001, was $14.7 million, decreasing $.7 million from the $15.4 million reported
for the fiscal year ended September 30, 2000, and reflects effective income tax
rates of approximately 34.5% and 36.0%, respectively.

         Extraordinary Item. During the year ended September 30, 2001, we
incurred a $1.5 million (net of tax) extraordinary loss in conjunction with the
July 2001 extinguishment of our previous line of credit following our completion
of a new $300 million credit agreement. There was no such item in the prior
year.

         Net Income. Net income for the fiscal year ended September 30, 2001,
was $26.3 million, decreasing from the $27.5 million reported for the fiscal
year ended September 30, 2000. Excluding the impact of the $5.5 million charge
for unusual incremental acquisition costs, net income for the year totaled $30.0
million, an increase of $2.5 million or 9.1% over the prior year. Net income per
common share-assuming dilution was $1.45 in fiscal 2001 compared to $1.50 per
share for the fiscal year ended September 30, 2000. Excluding the impact of the
$5.5 million charge for non-recurring acquisition costs and the extraordinary
item, diluted earnings per common share was $1.73, and net income as a
percentage of net revenue was 10.1% versus 11.0% in the prior year.



                                       32

Liquidity and Capital Resources
- -------------------------------

         Our primary sources of liquidity are cash provided by operations and
borrowings under our credit facility. Cash and temporary investments totaled
$8.2 million and net working capital totaled $79.6 million at September 30,
2002. At September 30, 2001, cash and temporary cash investments totaled $5.3
million and working capital totaled $53.8 million. The $25.8 million increase in
working capital in fiscal year 2002 was financed with the existing credit
facility and cash generated by operations.

         Our net cash provided by operating activities totaled $57.5 million for
the fiscal year ended September 30, 2002 compared to $44.2 million for the
fiscal year ended September 30, 2001 and $38.9 million for the fiscal year ended
September 30, 2000. The increases are primarily related to increases in net
income before non-cash charges, offset by increases in net working capital
requirements.

         Cash flow used in investing activities principally relates to our
branded product acquisitions and investments in production, distribution,
milling and management information system assets. Capital expenditures, were
$72.8 million for the fiscal year ended September 30, 2002, $39.3 million for
the year ended September 30, 2001 and $57.7 million for the fiscal year ended
September 30, 2000.

         Net cash provided by financing activities was $24.7 million for the
fiscal year ended September 30, 2002 compared to $91.7 million for the fiscal
year ended September 30, 2001, and $21.1 million for the fiscal year ended
September 30, 2000. The $24.7 million in fiscal 2002 is primarily a result of
$60.1 million proceeds from issuance of debt, offset by $41.4 million principal
payment on debt and capital lease obligations. The $91.7 million in fiscal 2001
is primarily a result of $244.6 million proceeds from issuance of debt (net of
$3.0 million deferred issuance costs) offset by $152.6 million principal payment
on debt and capital lease obligations. The $21.1 million in fiscal 2000 is
primarily a result of $57.3 million proceeds from issuance of debt, offset by
$31.3 million used to purchase treasury stock.

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

         On July 16, 2001, we secured a new five-year, $300 million revolving
credit facility to replace the previous $190 million facility. The revolver
includes $100 million of dual currency availability in Euros or U.S. dollars to
finance our international business in Italy.

         Our credit agreement contains restrictive covenants which include,
among other things, financial covenants requiring minimum and cumulative
earnings levels and limitations on the payment of dividends, stock purchases and
our ability to enter into certain contractual arrangements. We do not expect
these limitations to have a material effect on business or results of
operations. We are in compliance with all financial covenants contained in the
credit agreement.

         At September 30, 2002, the three-month LIBOR rate was 1.80625%, the
three-month Euribor rate was 3.30%, and our weighted average bank debt borrowing
rate was 3.32%.

         We utilize interest rate swap agreements and foreign exchange contracts
to manage interest rate and foreign currency exposures. The principal objective
of such financial derivative contracts is to moderate the effect of fluctuations
in interest rates and foreign exchange rates. We, as a matter of policy, do not
speculate in financial markets and therefore do not hold these contracts for
trading purposes. We utilize what are considered simple instruments, such as
forward foreign exchange contracts and non-leveraged interest rate swaps, to
accomplish our objectives.

         At this time, the current and projected borrowings under our credit
facility do not exceed the facility's available commitment. The facility matures
on October 2, 2006. We anticipate that any borrowings outstanding at that time
will be satisfied with funds from operations or will be refinanced. We have no
other material commitments.

                                       33

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

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


Contractual Obligations                                               Payments Due by Period
                                         -----------------------------------------------------------------------
                                                             Less than                                   After
                                                  Total        1 year     1-3 years       4-5 years     5 years
                                         -----------------------------------------------------------------------
Long term debt                                  $261,533       $3,894      $67,639        $190,000        $--

Capital lease obligations                            996          430          566              --         --

Unconditional durum  purchase
obligations                                       17,000       17,000           --              --         --
                                                --------      -------      -------        --------      -------

Total contractual cash
   obligations                                  $279,529      $21,324      $68,205        $190,000        $--
                                                ========      =======      =======        ========      =======


Recently Issued Accounting Pronouncements
- -----------------------------------------

         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which is effective for fiscal
years beginning after December 15, 2001. This new standard, when in effect, will
supersede SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and
for the Long-Lived Assets to Be Disposed Of", providing one accounting model for
the review of asset impairment. SFAS No. 144 retains much of the recognition and
measurement provisions of SFAS No. 121, but removes goodwill from its scope. It
also requires long-lived assets to be disposed of other than by sale to be
considered as held and used until disposed of, requiring the depreciable life to
be adjusted as an accounting change. Criteria to classify long-lived assets to
be disposed of by sale has changed from SFAS No. 121, but these costs will
continue to be reported at the lower of their carrying amount or fair value less
cost to sell, and will cease to be depreciated.

         SFAS No. 144 will also supercede the section of APB No. 30 which
prescribes reporting for the effects of a disposal of a segment of a business.
This statement retains the basic presentation provisions of the opinion, but
requires losses on a disposal or discontinued operation to be recognized as
incurred. It also broadens the definition of a discontinued operation to include
a component of an entity.

         In July 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." The objective of this statement is to provide
accounting guidance for legal obligations associated with the retirement of
long-lived assets by requiring the fair value of a liability for the asset
retirement obligation to be recognized in the period in which it is incurred.
When the liability is initially recognized, the asset retirement costs should
also be capitalized by increasing the carrying amount of the related long-lived
asset. The liability is then accreted to its present value each period and the
capitalized costs are depreciated over the useful life of the associated asset.
This statement is effective for fiscal years beginning after June 15, 2002.

         We do not expect the adoption of these new pronouncements to have a
material impact on our consolidated financial statements.



                                       34

Other Matters
- -------------

         None.


Effect of Inflation
- -------------------

         During the last three fiscal periods, inflation has not had a material
effect on our business. We have experienced increases in our cost of borrowing
and raw materials, though generally not related to inflation. In general, we
have increased the majority of customer sales prices to recover significant raw
material cost increases. However, these changes in prices have historically
lagged price increases in our raw material costs.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Our principal exposure to market risk associated with financial
instruments relates to interest rate risk associated with variable rate
borrowings and foreign currency exchange rate risk associated with borrowings
denominated in foreign currency. We occasionally utilize simple derivative
instruments such as interest rate swaps to manage our mix of fixed and floating
rate debt. We had various fixed interest rate swap agreements with notional
amounts of $145 million outstanding at September 30, 2002. The estimated fair
value of the interest rate swap agreements of $(2,275,000) is the amount we
would be required to pay to terminate the swap agreements at September 30, 2002.
If interest rates for our long-term debt under our credit facility had averaged
10% more and the full amount available under our credit facility had been
outstanding for the entire year, our interest expense would have increased, and
income before taxes would have decreased by $0.5 million for the year ended
September 30, 2002. We hedge our net investment in our foreign subsidiaries with
euro borrowings under our credit facility. Changes in the U.S. dollar equivalent
of euro-based borrowings is recorded as a component of the net translation
adjustment in the consolidated statement of stockholder's equity.

         The functional currency for our Italy operation is the Euro. At
September 30, 2002, long-term debt includes obligations of 37.5 million Euros
($36.7 million) under a credit facility which bears interest at a variable rate
based upon the Euribor rate.

                                       35

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         AMERICAN ITALIAN PASTA COMPANY

               Index to Audited Consolidated Financial Statements

                                                                               Page
                                                                               ----

Report of Independent Auditors                                                   37

Consolidated Balance Sheets at September 30, 2002 and 2001                       38

Consolidated Statements of Income for the years ended
  September 30, 2002, 2001 and 2000                                              39

Consolidated Statements of Stockholders' Equity for the years ended
  September 30, 2002, 2001 and 2000                                              40

Consolidated Statements of Comprehensive Income for the years ended
  September 30, 2002, 2001 and 2000                                              41

Consolidated Statements of Cash Flows for the years ended
  September 30, 2002, 2001 and 2000                                              42

Notes to Consolidated Financial Statements                                       43

                                       36

                         Report of Independent Auditors

The Board of Directors
American Italian Pasta Company

         We have audited the accompanying consolidated balance sheets of
American Italian Pasta Company (the Company) as of September 30, 2002 and 2001,
and the related consolidated statements of income, stockholders' equity,
comprehensive income, and cash flows for each of the three years in the period
ended September 30, 2002. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
American Italian Pasta Company at September 30, 2002 and 2001, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended September 30, 2002, in conformity with accounting
principles generally accepted in the United States.



                                       /s/ ERNST & YOUNG LLP

Kansas City, Missouri
October 30, 2002




                                       37

                         AMERICAN ITALIAN PASTA COMPANY

                           Consolidated Balance Sheets

                                                               September 30,    September 30,
                                                                  2002              2001
                                                                  ----              ----
                                                                       (In thousands)
Assets
Current assets:
   Cash and temporary investments                              $   8,247         $   5,284
   Trade and other receivables                                    46,463            37,546
   Prepaid expenses and deposits                                  11,282             8,024
   Inventory                                                      49,720            43,866
   Deferred income taxes (Note 3)                                  2,420             3,565
                                                               ---------         ---------
Total current assets                                             118,132            98,285
Property, plant and equipment:
   Land and improvements                                          11,061             8,123
   Buildings                                                     103,052            99,548
   Plant and mill equipment                                      321,527           269,751
   Furniture, fixtures and equipment                              14,063            10,957
                                                               ---------         ---------
                                                                 449,703           388,379
   Accumulated depreciation                                      (99,607)          (80,453)
                                                               ---------         ---------
                                                                 350,096           307,926
   Construction in progress                                       45,844            31,236
                                                               ---------         ---------
Total property, plant and equipment                              395,940           339,162
Intangible assets                                                119,360           116,707
Other assets                                                       7,177             5,989
                                                               ---------         ---------
Total assets                                                   $ 640,609         $ 560,143
                                                               =========         =========

Liabilities and stockholders' equity

Current liabilities:
     Accounts payable                                          $  21,320         $  22,416
     Accrued expenses                                             11,359            19,652
     Income tax payable                                            1,585               877
     Current maturities of long-term debt (Note 2)                 4,279             1,559
                                                               ---------         ---------
Total current liabilities                                         38,543            44,504
Long-term debt (Note 2)                                          258,193           236,783
Deferred income taxes (Note 3)                                    46,767            33,664
Commitments and contingencies (Note 4)
Stockholders' equity: (Notes 6, 9 & 11)
   Preferred stock, $.001 par value:
         Authorized shares - 10,000,000                               --                --
     Class A common stock, $.001 par value:
         Authorized shares - 75,000,000                               20                19
     Class B common stock, $.001 par value:
          Authorized shares - 25,000,000                              --                --
     Additional paid-in capital                                  213,671           202,674
     Treasury stock at cost                                      (34,394)          (34,394)
     Notes receivable from officers                                   --               (61)
     Unearned compensation                                          (940)             (223)
     Retained earnings                                           121,862            80,563
     Accumulated other comprehensive loss                         (3,113)           (3,386)
                                                               ---------         ---------
Total stockholders' equity                                       297,106           245,192
                                                               ---------         ---------
Total liabilities and stockholders' equity                     $ 640,609         $ 560,143
                                                               =========         =========

          See accompanying notes to consolidated financial statements.


                                       38

                         AMERICAN ITALIAN PASTA COMPANY

                        Consolidated Statements of Income

                                                                     Year ended           Year ended            Year ended
                                                                    September 30,        September 30,        September 30,
                                                                        2002                 2001                 2000
                                                                        ----                 ----                 ----
                                                                            (In thousands, except per share amounts)

Revenues (Notes 1 & 5)                                                $ 380,799           $ 310,789            $ 248,795
Cost of goods sold                                                      249,000             213,086              178,810
                                                                      ---------           ---------            ---------
Gross profit                                                            131,799              97,703               69,985
Selling and marketing expense                                            48,013              30,844               16,065
General and administrative expense                                       11,801              10,278                6,263
Provision for acquisition expenses                                           --               5,537                   --
                                                                      ---------           ---------            ---------
Operating profit                                                         71,985              51,044               47,657
Interest expense, net                                                     9,315               8,491                4,777
                                                                      ---------           ---------            ---------
Income before income tax expense and
    extraordinary item                                                   62,670              42,553               42,880
Income tax expense (Note 3)                                              21,371              14,680               15,426
                                                                      ---------           ---------            ---------
Income before extraordinary item                                         41,299              27,873               27,454
Extraordinary item:
    Loss due to early extinguishment of
    long-term debt, net of income taxes                                      --              (1,543)                  --
                                                                      ---------          ----------           ----------
Net income                                                            $  41,299           $  26,330            $  27,454
                                                                      =========          ==========           ==========

Net income per common share:
Before extraordinary item                                             $    2.31           $    1.60            $    1.53
Extraordinary item                                                           --                (.09)                  --
                                                                      ---------           ---------            ---------
Total                                                                 $    2.31           $    1.51            $    1.53
                                                                      =========           =========            =========

Weighted-average common shares outstanding                               17,879              17,404               17,895
                                                                      =========           =========            =========

Net income per common share assuming
dilution:
Before extraordinary item                                             $    2.21           $    1.53            $    1.50
Extraordinary item                                                           --                (.08)                  --
                                                                      ---------           ---------            ---------
Total                                                                 $    2.21           $    1.45            $    1.50
                                                                      =========           =========            =========

Weighted-average common shares outstanding                               18,695              18,186               18,298
                                                                      =========           =========            =========


          See accompanying notes to consolidated financial statements.

                                       39

                                               AMERICAN ITALIAN PASTA COMPANY

                                       Consolidated Statements of Stockholders' Equity


                                                                       Year ended         Year ended         Year ended
                                                                      September 30,      September 30,      September 30,
                                                                          2002               2001               2000
                                                                    ------------------ ------------------ ------------------
                                                                                    (In thousands)

Class A Common Shares
  Balance, beginning of year                                               19,218            18,363            18,177
  Issuance of shares of Class A Common stock to
    option holders & other issuances                                          459               855               186
                                                                        ---------         ---------         ---------
  Balance, end of year                                                     19,677            19,218            18,363
                                                                        =========         =========         =========

Class A Common Stock
  Balance, beginning of year                                            $      19         $      18         $      18
  Issuance of shares of Class A Common stock to
   option holders & other issuances                                             1                 1                --
                                                                        ---------         ---------         ---------
  Balance, end of year                                                  $      20         $      19         $      18
                                                                        =========         =========         =========

Additional Paid-in Capital
  Balance, beginning of year                                            $ 202,674         $ 177,725         $ 175,030
  Issuance of shares of Class A Common stock to option holders
    & other issuances                                                       6,612            24,032             1,332
  Tax benefit from stock compensation                                       4,385               917             1,363
                                                                        ---------         ---------         ---------
  Balance, end of year                                                  $ 213,671         $ 202,674         $ 177,725
                                                                        =========         =========         =========

Treasury Stock
  Balance, beginning of year                                            $ (34,394)        $ (31,362)        $     (26)
  Purchase of treasury stock                                                   --            (3,032)          (31,336)
                                                                        ---------         ---------         ---------
  Balance, end of year                                                  $ (34,394)        $ (34,394)        $ (31,362)
                                                                        =========         =========         =========

Notes Receivable from Officers
  Balance, beginning of year                                            $     (61)        $     (61)        $     (71)
  Paydown of notes receivable from officers                                    61                --                10
                                                                        ---------         ---------         ---------
  Balance, end of year                                                  $      --         $     (61)        $     (61)
                                                                        =========         =========         =========

Unearned Compensation
  Balance, beginning of year                                            $    (223)        $      --         $      --
  Issuance of common stock                                                   (890)             (223)               --
  Earned compensation                                                         173                --                --
                                                                        ---------         ---------         ---------
  Balance, end of year                                                  $    (940)        $    (223)          $    --
                                                                        =========         =========         =========

Other Comprehensive Loss
  Foreign currency translation adjustment
    Balance, beginning of year                                          $  (2,957)        $  (2,149)        $      --
    Change during the period                                                1,346              (808)           (2,149)
                                                                        ---------         ---------         ---------
    Balance, end of year                                                   (1,611)           (2,957)           (2,149)
                                                                        ---------         ---------         ---------

  Interest rate swaps fair value adjustment
    Balance, beginning of year                                               (429)               --                --
    Change during the period                                               (1,073)              429                --
                                                                        ---------         ---------         ---------
    Balance, end of year                                                   (1,502)             (429)               --
                                                                        ---------         ---------         ---------

  Total accumulated other comprehensive loss                            $  (3,113)        $  (3,386)        $  (2,149)
                                                                        =========         =========         =========

Retained Earnings
  Balance, beginning of year                                            $  80,563         $  54,233         $  26,779
  Net income                                                               41,299            26,330            27,454
                                                                        ---------         ---------         ---------
  Balance, end of year                                                    121,862            80,563            54,233
                                                                        ---------         ---------         ---------

Total Stockholders' Equity                                              $ 297,106         $ 245,192         $ 198,404
                                                                        =========         =========         =========


          See accompanying notes to consolidated financial statements.


                                       40

                                               AMERICAN ITALIAN PASTA COMPANY

                                       Consolidated Statements of Comprehensive Income


                                                                  Year ended         Year ended         Year ended
                                                                 September 30,      September 30,      September 30,
                                                                     2002               2001               2000
                                                               ------------------ ------------------ ------------------
                                                                                   (In thousands)


       Net income                                                    $41,299            $26,330           $27,454

       Other comprehensive income (loss)

          Net unrealized losses on qualifying cash
           flow hedges (net of income tax benefit of
           $553,000 and $146,000, respectively)                       (1,073)              (429)               --

          Foreign currency translation adjustment
           (net of income tax benefit (expense) of
           ($693,000), $416,000 and $1,107,000,
           respectively)                                               1,346               (808)           (2,149)
                                                                     -------            --------          -------

          Total other comprehensive income (loss)                        273             (1,237)           (2,149)
                                                                     -------            --------          -------

          Comprehensive income                                       $41,572            $25,093           $25,305
                                                                     =======            =======           =======













          See accompanying notes to consolidated financial statements.


                                       41

                         AMERICAN ITALIAN PASTA COMPANY

                      Consolidated Statements of Cash Flows

                                                                            Year ended             Year ended            Year ended
                                                                           September 30,          September 30,         September 30,
                                                                               2002                   2001                   2000
                                                                               ----                   ----                   ----

                                                                                                          (In thousands)
Operating activities:
Net income                                                                   $41,299                $26,330                $27,454
Adjustments to reconcile net income to net cash
  provided by operations:
     Depreciation and amortization                                            20,791                 17,513                 15,906
     Deferred income tax expense                                              17,059                  9,817                  8,958
     Extraordinary loss due to early extinguishment of
       long-term debt                                                             --                  1,543                     --
Changes in operating assets and liabilities:
     Trade and other receivables                                              (9,117)               (11,479)                (5,478)
     Prepaid expenses and deposits                                            (2,836)                (3,598)                  (472)
     Inventory                                                                (5,710)                (3,175)                (3,180)
     Accounts payable and accrued expenses                                    (7,888)                 7,984                 (3,635)
     Income taxes                                                              5,122                  1,977                  2,205
     Other                                                                    (1,195)                (2,665)                (2,864)
                                                                             --------               --------                -------
Net cash provided by operating activities                                     57,525                 44,247                 38,894
Investing activities:
Purchase of pasta brands                                                      (3,973)               (96,454)                    --
Additions to property, plant and equipment                                   (72,773)               (39,275)               (57,706)
Other                                                                         (2,000)                    --                     --
                                                                             --------               --------                -------
Net cash used in investing activities                                        (78,746)              (135,729)               (57,706)
Financing activities:
Additions to deferred debt issuance costs                                         --                 (3,034)                  (791)
Proceeds from issuance of debt                                                60,055                247,593                 57,304
Principal payments on debt and capital lease
  obligations                                                                (41,368)              (152,598)                (5,452)
Proceeds from issuance of common stock, net of
  issuance costs                                                               5,699                  2,812                  1,330
Purchases of treasury stock                                                       --                 (3,032)               (31,336)
Other                                                                            264                     --                     10
                                                                             --------               --------                -------
Net cash provided by financing activities                                     24,650                 91,741                 21,065
Effect of exchange rate changes on cash                                         (466)                (1,652)                 1,336
                                                                             --------               --------                -------
Net increase (decrease) in cash and temporary
  investments                                                                  2,963                 (1,393)                 3,589
Cash and temporary investments at beginning of year                            5,284                  6,677                  3,088
                                                                             --------               --------                -------
Cash and temporary investments at end of year                                 $8,247                 $5,284                 $6,677
                                                                             ========               ========                =======


          See accompanying notes to consolidated financial statements.

                                       42

                         AMERICAN ITALIAN PASTA COMPANY

                   Notes to Consolidated Financial Statements
                               September 30, 2002

1.       Summary of Significant Accounting Policies

Nature of Business

         American Italian Pasta Company (the Company) is a Delaware corporation
which began operations in 1988. The Company is the largest producer and marketer
of pasta products in the United States and has manufacturing and distribution
facilities located in Excelsior Springs, Missouri, Columbia, South Carolina,
Kenosha, Wisconsin, and Verolanuova, Italy.

Principles of Consolidation

         The consolidated financial statements include the accounts of the
Company and all majority owned subsidiaries.

Fiscal Year End

         The Company's fiscal year ends on the last Friday of September or the
first Friday of October, resulting in a 52- or 53-week year depending on the
calendar. The Company's first three quarters end on the Friday last preceding
December 31, March 31 and June 30 or the first Friday of the following month of
each quarter. For purposes of the financial statements and notes thereto, the
Company's fiscal year is described as having ended on September 30.

Revenue Recognition

         Sales of the Company's products, including pricing terms, are final
upon shipment of the goods, except for certain supply contracts where the
requirements have been met for recognizing revenue upon completion of
production.

Foreign Currency

         The Company's functional currency is the U.S. dollar. Accordingly,
assets and liabilities of the Company's foreign operations are remeasured at
year-end exchange rates or historical rates depending on their nature; income
and expenses are remeasured at the weighted-average exchange rates for the year.
Foreign currency gains and losses resulting from transactions are included in
consolidated operations in the year of occurrence.

Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Risks and Uncertainties

         The Company grants credit to certain customers who meet the Company's
pre-established credit requirements. Generally, the Company does not require
collateral when trade credit is granted to customers. Credit losses are provided
for in the financial statements and consistently have been within management's
expectations. The allowance for doubtful accounts at September 30, 2002 and 2001
was $1,054,000 and $847,000, respectively. At September 30, 2002 and 2001,
approximately 17% and 16%, respectively, of accounts receivable were due from
three customers.

                                       43

         Pasta is made from semolina milled from durum wheat, a class of hard
amber wheat purchased by the Company from certain parts of the world. The
Company mills the wheat into semolina at both the Excelsior Springs and Columbia
plants. Durum wheat is a narrowly traded commodity crop. The Company attempts to
minimize the effect of durum wheat cost fluctuations through forward purchase
contracts and raw material cost-based pricing agreements with many of its
customers. The Company's commodity procurement and pricing practices are
intended to reduce the risk of durum wheat cost increases on profitability, but
also may temporarily affect the timing of the Company's ability to benefit from
possible durum wheat cost decreases for such contracted quantities.

Derivative Instruments

         Financial Accounting Standards Board Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities (Statement 133), requires
companies to recognize all of their derivative instruments as either assets or
liabilities in the balance sheet at fair value. The accounting for changes in
the fair value (i.e., gains or losses) of a derivative instrument depends on
whether it has been designated and qualifies as part of a hedging relationship
and further, on the type of hedging relationship. For those derivative
instruments that are designated and qualify as hedging instruments, a company
must designate the hedging instrument, based upon the exposure being hedged, as
either a fair value hedge, cash flow hedge or a hedge of a net investment in a
foreign operation.

         For derivative instruments that are designated and qualify as a fair
value hedge (i.e., hedging the exposure to changes in the fair value of an asset
or a liability or an identified portion thereof that is attributable to a
particular risk), the gain or loss on the derivative instrument as well as the
offsetting loss or gain on the hedged item attributable to the hedged risk are
recognized in current earnings during the period of the change in fair values.
For derivative instruments that are designated and qualify as a cash flow hedge
(i.e., hedging the exposure to variability in expected future cash flows that is
attributable to a particular risk), the effective portion of the gain or loss on
the derivative instrument is reported as a component of other comprehensive
income and reclassified into earnings in the same period or periods during which
the hedged transaction affects earnings. The remaining gain or loss on the
derivative instrument in excess of the cumulative change in the present value of
future cash flows of the hedged item, if any, is recognized in current earnings
during the period of change. For derivative instruments that are designated and
qualify as a hedge of a net investment in a foreign currency, the gain or loss
is reported in other comprehensive income as part of the cumulative translation
adjustment to the extent it is effective. For derivative instruments not
designated as hedging instruments, the gain or loss is recognized in current
earnings during the period of change.

         Cash Flow Hedging Strategy

         To protect against increases in the value of forecasted foreign
currency cash outflows for the purchase of product from Italy for sale in the
United States, the Company has instituted a Euro cash flow hedging program. The
Company hedges portions of its forecasted purchases in Euros with forward
contracts. If the dollar weakens against the Euro, the increased cost of future
Euro-denominated purchases is offset by gains in the value of the forward
contracts designated as hedges. Conversely, if the dollar strengthens, the
decreased cost of future Euro-denominated purchases is offset by losses in the
value of the forward contracts.

         The Company has entered into interest rate swap agreements that
effectively convert a portion of its floating-rate debt to a fixed-rate basis
for the next four years, thus reducing the impact of interest rate changes on
future interest expense. Approximately 55% ($145 million) of the Company's
outstanding debt was designated as the hedged items to interest rate swap
agreements at September 30, 2002.

         During the year ended September 30, 2002, the Company reclassified
($1,223,000) of net gains (losses) from other accumulated comprehensive income
to current earnings.

         At September 30, 2002, the Company expects to reclassify ($1,180,000)
of net gains (losses) on derivative instruments from accumulated other
comprehensive income to earnings


                                       44

during the next twelve months due to actual export sales and the payment of
variable interest associated with the floating rate debt.

         Hedge of Net Investment in Foreign Operations

         The Company uses foreign denominated variable-rate debt to protect the
value of its investments in its foreign subsidiaries in Italy. Realized and
unrealized gains and losses from these hedges are not included in the income
statement, but are shown in the cumulative translation adjustment account
included in other comprehensive income, with the related amounts due to or from
counterparties included in other liabilities or other assets.

Financial Instruments

         The carrying value of the Company's financial instruments, including
cash and temporary investments, accounts receivable, accounts payable and
long-term debt, as reported in the accompanying consolidated balance sheets at
September 30, 2002 and 2001, approximates fair value. The estimated fair value
of the interest rate swap agreement outstanding at September 30, 2002 of
($2,275,000) is the amount the Company would be required to pay to terminate the
swap agreement at September 30, 2002.

Cash and Temporary Investments

         Cash and temporary investments include cash on hand, amounts due from
banks and highly liquid marketable securities with maturities of three months or
less at the date of purchase.

Inventories

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

                                                             September 30, 2002       September 30, 2001
                                                             ------------------       ------------------
                                                                             (In thousands)
   Finished goods                                                   $38,881                 $33,134
   Raw materials, packaging materials and
    work-in-process                                                  10,839                  10,732
                                                                    -------                 -------
                                                                    $49,720                 $43,866
                                                                    =======                 =======


Property, Plant and Equipment

         Capital additions, improvements and major renewals are classified as
property, plant and equipment and are recorded at cost. Depreciation is
calculated for financial statement purposes using the straight-line method over
the estimated useful life of the related asset for each year as follows:

                                                               Number of
                                                                Years
                                                                -----

          Land improvements                                       40
          Buildings                                               30
          Plant and mill equipment                                20
          Packaging equipment                                     10
          Furniture, fixtures and equipment                        5


         The Company capitalizes interest costs associated with the construction
and installation of plant and equipment. During the years ended September 30,
2002, 2001 and 2000, approximately $1,898,000, $2,567,000 and $2,086,000,
respectively, of interest cost was capitalized.


                                       45

Intangible Assets

         During the fiscal year ended September 30, 2001, the Company acquired
the Mueller's brand from Bestfoods, Inc. for $44.4 million, consisting of $23.8
million in cash and 686,666 shares of common stock valued at $30 per share. The
purchase price was allocated to trademarks, brand name, and inventory. These
intangibles were assigned a life of forty years, and accordingly, the Company
recognized approximately $1.0 million of amortization expense during the year
ended September 30, 2001. Effective October 1, 2001, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, and assigned an indefinite life to trademarks and brand name
and, as such, will no longer incur amortization expense related to these assets.

         In addition, during the fiscal year ended September 30, 2001, the
Company acquired seven pasta brands from Borden, Inc., including Anthony's®,
Globe/A-1®, Luxury®, Mrs. Grass®, Pennsylvania Dutch®, R&F®, and
Ronco®. The purchase price in the Borden transaction was $72.6 million and has
been allocated to trademarks, brand name, and inventory. The Company believes
these assets have an indefinite life and, as the transaction occurred after July
1, 2001, is not amortizing the amounts, in accordance with SFAS No. 142,
Goodwill and Other Intangible Assets.

         These intangible assets are reviewed at least annually for impairment
by comparing the Company's best estimate of fair value with the carrying amount
of the intangible.

Other Assets

         Other assets consist of the following:

                                                  September 30,           September 30,
                                                      2002                     2001
                                                      ----                     ----
                                                             (In thousands)

Package design costs                                $7,598                    $6,393
Deferred debt issuance costs                         3,034                     3,034
Other                                                3,145                     1,414
                                                   -------                    ------
                                                    13,777                    10,841
Accumulated amortization                            (6,600)                   (4,852)
                                                   -------                    ------
                                                    $7,177                    $5,989
                                                    ======                    ======

         Package design costs relate to certain incremental third party costs to
design artwork and produce die plates and negatives necessary to manufacture and
print packaging materials according to the Company's and customers'
specification. These costs are amortized ratably over a two to five year period.
In the event that product packaging is discontinued prior to the end of the
amortization period, the respective package design costs are written off.
Package design costs, net of accumulated amortization, were $2,636,000 and
$2,573,000 at September 30, 2002 and 2001, respectively.

Income Taxes

         The Company accounts for income taxes in accordance with the method
prescribed by SFAS No. 109, "Accounting for Income Taxes." Under this method,
deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities, and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse.

                                       46

Stock Options

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

Advertising Costs

         Advertising and promotion costs are expensed as incurred.

Shipping and Handling Costs

         Costs incurred related to shipping and handling are included in cost of
goods sold in the Company's consolidated statements of income.

Net Income Per Common Share

         Net income per common share is calculated using the weighted-average
number of common shares and, in the case of diluted net income per share, common
equivalent shares, to the extent dilutive, outstanding during the periods.

         Dilutive securities, consisting of options (see Note 6), included in
the calculation of diluted weighted average common shares were 816,000 shares in
fiscal 2002, 782,000 shares in fiscal 2001 and 403,000 shares in fiscal 2000.

Continued Dumping and Subsidy Offset Act of 2000

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

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

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

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

                                       47

2.       Long-Term Debt

         On July 16, 2001, the Company secured a new five-year $300 million
revolving credit facility to replace the Company's previous $190 million
facility. The revolver includes a $100 million dual currency availability in
Euros or U.S. dollars to finance the Company's international business in Italy.
The credit facility matures on October 2, 2006. Available borrowings under the
credit facility were $42,361,000 at September 30, 2002.

         The principal maturity terms of the new $300 million, long-term
revolving credit facility are as follows:

                                                         Amount                   Date
                                                         ------                   ----
                                                     (in thousands)

         Scheduled Commitment Reduction                   $25,000           October 1, 2002
         Scheduled Commitment Reduction                    25,000           October 1, 2003
         Scheduled Commitment Reduction                    30,000           October 1, 2004
         Scheduled Commitment Reduction                    30,000           October 1, 2005
         Final Maturity                                   190,000           October 2, 2006
                                                          -------
                                                         $300,000
                                                         ========


         Interest is charged at LIBOR/Euribor plus an applicable margin based on
a sliding scale of the ratio of the Company's total indebtedness divided by
earnings before interest, taxes, depreciation and amortization (EBITDA). In
addition, a commitment fee is charged on the unused facility balance based on
the sliding scale of the Company's total indebtedness divided by EBITDA. The
stated interest plus the commitment fee is classified as interest expense.

         In 2001, the Company redeemed, prior to scheduled maturities, $147.4
million of debt with interest rates ranging from 4.7% to 6.4%. This resulted in
a $1.5 million after-tax extraordinary loss for the Company.

         Long-term debt consists of the following:

                                                            September 30,            September 30,
                                                                2002                     2001
                                                                ----                     ----
                                                                      (In thousands)
Term loans under credit facility                             $257,639                 $223,722
Capital lease, 12-year term with three,
  five-year renewal options, at an
  imputed interest rate of 7.2%                                    --                    3,991
Capital lease, 15-year term with three,
  five-year renewal options, at an
  imputed interest rate of 8.5%                                    --                    2,816
Capital lease, 12-year term with three,
  five-year renewal options, at an
  imputed interest rate of 8.5%                                    --                    6,308
Capital lease, eight-year term at
  an imputed interest rate of 8.5%                                 --                    1,037
Short term notes payable                                        3,894                       --
Other                                                             939                      468
                                                              -------                  -------
                                                              262,472                  238,342
Less current portion                                            4,279                    1,559
                                                              -------                  -------
                                                             $258,193                 $236,783
                                                             ========                 ========


                                       48

         Annual maturities of long-term debt and capital lease obligations for
each of the next five years ended September 30, are as follows:

                                                                            Long-Term        Capital Leases
         Year                                                                 Debt              and Other                 Total
         ----                                                                 ----              ---------                 -----
                                                                                           (In thousands)
         2003                                                                $3,894                  $430
         2004                                                                 7,639                   484
         2005                                                                30,000                    82
         2006                                                                30,000                    --
         2007                                                               190,000                    --
         Thereafter                                                              --                    --
                                                                            -------               -------
                                                                            261,533                   996                $262,529
         Less imputed interest                                                   --                    57                      57
                                                                            -------               -------                --------
         Present value of net minimum payments                              261,533                   939                 262,472
         Less current portion                                                 3,894                   385                   4,279
                                                                            -------               -------                --------
         Long-term obligations                                             $257,639                  $554                $258,193
                                                                           ========                  ====                ========

         The revolving credit facility contains various restrictive covenants
which include, among other things, financial covenants requiring minimum and
cumulative earnings levels and limitations on the payment of dividends,
purchases of Company stock, and the Company's ability to enter into certain
contractual arrangements. The Company was in compliance with the restrictive
covenants as of September 30, 2002. The facility is unsecured.

         The Company leases certain assets under capital lease agreements. At
September 30, 2001, the cost of these assets was $20,202,000, and related
accumulated amortization was $3,897,000. The costs of these assets were not
material to the consolidated financial statements at September 30, 2002.


3.       Income Taxes

         The Company has AMT credit carryforwards of $7,918,000 and $9,537,000
at September 30, 2002 and 2001, respectively, with no expiration date.
Management believes it is more likely than not that deferred tax assets
associated with these items will be realized through the generation of future
taxable income and available tax planning strategies.

         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities are as follows:


                                                                       September 30,         September 30,
                                                                            2002                  2001
                                                                            ----                  ----
                                                                                 (In thousands)
Deferred tax assets:
      AMT credit and Foreign net operating loss carryforwards              $8,828                $9,537
      Inventory valuation                                                     782                 2,176
      Other comprehensive income/loss components                            2,688                  (123)
      Other                                                                 2,020                 1,280
                                                                          -------                ------
Total deferred tax assets                                                  14,318                12,870
Deferred tax liabilities:
      Book basis of tangible assets greater than tax                       49,653                40,454
      Book basis of intangible assets greater than tax                      9,012                 2,515
                                                                          -------                ------
Total deferred tax liabilities                                             58,665                42,969
                                                                          -------                ------
Net deferred tax liabilities                                             $(44,347)             $(30,099)
                                                                         ========              ========

                                       49

Significant components of the provision for income taxes are as follows:

                                      Year ended               Year ended             Year ended
                                     September 30,            September 30,          September 30,
                                         2002                      2001                  2000
                                         ----                      ----                  ----
                                                           (In thousands)
Current income tax expense             $ 5,655                   $ 5,098               $ 6,468
Deferred tax expense                    15,716                     9,582                 8,958
                                       -------                   -------               -------
Total income tax expense               $21,371                   $14,680               $15,426
                                       =======                   =======               =======

         The reconciliation of income tax computed at the U.S. statutory tax
rate to income tax expense is as follows:

                                                                  Year ended              Year ended             Year ended
                                                                 September 30,           September 30,          September 30,
                                                                     2002                    2001                   2000
                                                                     ----                    ----                   ----
                                                                                        (In thousands)
Income before income taxes                                          $62,670                $42,553                $42,880
U.S. statutory tax rate                                              x 35%                  x 35%                   x 35%
                                                                    -------                -------                 ------
Federal income tax expense
  at U.S. statutory rate                                             21,935                 14,893                 15,008
State income tax expense,
  net of federal tax effect                                             526                    261                    643
Foreign tax rate differential                                          (530)                  (308)                    --
Foreign tax incentives                                                 (498)                    --                     --
Other, net                                                              (62)                  (166)                  (225)
                                                                    -------                -------                 ------
Total income tax expense                                            $21,371                $14,680                $15,426
                                                                    =======                =======                =======


 Income tax benefit allocated to other items was as follows:

                                                                 Year ended             Year ended                Year ended
                                                                September 30,          September 30,             September 30,
                                                                    2002                   2001                      2000
                                                                    ----                   ----                      ----
                                                                                       (In thousands)
Extraordinary item                                                   $ --                 $(812)                      $ --

Stock option arrangements (1)                                      (4,385)                 (917)                    (1,363)

(1) This amount has been recorded directly to "Additional Paid-In Capital".


4.       Commitments and Contingencies

         The Company had durum wheat purchase commitments totaling approximately
$17 million and $24 million at September 30, 2002 and 2001, respectively.

         Under agreements with its primary rail carriers, the Company is
obligated to transport specified wheat volumes. In the event the specified
transportation volumes are not met, the Company is required to reimburse certain
rail carrier costs. The Company is in compliance with the volume obligations at
September 30, 2002.


5.       Major Customers

         Sales to a certain customer during the years ended September 30, 2002,
2001 and 2000 represented 11%, 13% and 15% of revenues, respectively. Sales to a
second customer during the years ended September 30, 2002, 2001 and 2000
represented 13%, 12% and 15% of revenues, respectively. Sales to a third
customer during fiscal 2000 were 23% of revenues. With the Company's acquisition
of the Mueller's brand on November 14, 2000, the Company no longer has revenues
arising from transactions with this major customer.


                                       50

6.       Stock Option Plan

         In October 1992, a stock option plan was established that authorizes
the granting of options to purchase up to 1,201,880 shares of the Company's
common stock by certain officers and key employees. In October 1993, an
additional plan was established that authorizes the granting of options to
purchase up to 82,783 shares of the Company's common stock. In October 1997, a
third stock option plan was established that authorizes the granting of options
to purchase up to 2,000,000 shares of the Company's common stock by certain
officers and key employees. In December 2000, a fourth stock option plan was
established that authorizes the granting of options to purchase up to 1,000,000
shares of the Company's common stock by certain officers and key employees. The
stock options expire 10 years from the date of grant and become exercisable over
the next one to five years in varying amounts depending on the terms of the
individual option agreements.

         Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS No.
123. The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rates of 2.0% for fiscal 2002 and 4.5% for
fiscal 2001 and 2000; dividend yields of zero; volatility factors of the
expected market price of the Company's common stock of .408 for fiscal 2002, .358
for fiscal 2001 and .483 for fiscal 2000; and a weighted-average expected life
of the option of one to five years.

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

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


                                                      2002          2001         2000
                                                      ----          ----         ----

Pro forma net income                                $38,302       $23,924      $25,543
Pro forma earnings per share:
   Basic                                              $2.14         $1.37        $1.43
   Diluted                                            $2.05         $1.32        $1.40



                                       51

A summary of the Company's stock option activity, and related information is as
follows:

                                                                                             Weighted
                                                                                             Average
                                                  Number of             Option Price         Exercise
                                                   Shares               Per Share             Price        Exercisable
                                                 -----------             ---------            ------       -----------
Outstanding at September 30, 1999                 1,944,708              $4.92-$30.00         $15.06        1,044,066
     Exercised                                     (178,508)             $4.92-$25.00          $6.66
     Granted                                        863,697            $16.375-$25.00         $22.29
     Canceled/Expired                               (41,373)           $12.23-$27.875         $23.87
                                                 ----------
Outstanding at September 30, 2000                 2,588,524              $4.92-$30.00         $17.91        1,445,693
     Exercised                                     (139,369)             $4.92-$32.00         $18.22
     Granted                                        204,900            $18.375-$45.30         $36.04
     Canceled/Expired                               (23,191)            $18.00-$26.75         $24.42
                                                 ----------
Outstanding at September 30, 2001                 2,630,864              $4.92-$45.30         $19.25        1,679,454
     Exercised                                     (427,966)             $4.92-$29.95         $12.49
     Granted                                        521,490             $34.62-$48.30         $40.72
     Canceled/Expired                               (58,567)            $18.00-$45.30         $25.78
                                                  ---------
Outstanding at September 30, 2002                 2,665,821              $4.92-$48.30         $24.39        1,680,274
                                                  =========


         The following table summarizes outstanding and exercisable options at
September 30, 2002:

                                          Options Outstanding                          Options Exercisable
                                          -------------------                          -------------------
                                   Number            Weighted Average         Number           Weighted Average
Exercise Prices                  Outstanding          Exercise Price        Exercisable         Exercise Price
- ---------------                  -----------         ---------------        -----------        ---------------
$  4.92                                  734              $ 4.92                    734              $ 4.92
$  7.02                               84,622              $ 7.02                 84,622              $ 7.02
$ 12.23                              228,567             $ 12.23                228,567              $12.23
$ 16.375-16.625                       46,000             $ 16.57                 19,000              $16.57
$ 18.00-18.50                      1,039,933             $ 18.11                832,247              $18.08
$ 22.375-26.50                       515,445             $ 24.65                334,358              $24.72
$ 26.69-30.00                        100,700             $ 28.63                 48,850              $29.05
$ 31.30-38.00                        303,820             $ 36.38                 52,630               36.54
$ 39.30-$48.30                       346,000             $ 44.45                 79,266               43.83


7.       Employee Benefit Plans

         The Company has a defined contribution plan organized under Section
401(k) of the Internal Revenue Code covering substantially all employees. The
plan allows all qualifying employees to contribute up to the tax deferred
contribution limit allowable by the Internal Revenue Service. The Company will
match 50% of the employee contributions up to a maximum employee contribution of
6% of the employee's salary and may contribute additional amounts to the plan as
determined annually by the Board of Directors. Employer contributions related to
the plan totaled $577,000, $976,000, and $450,000 for the years ended September
30, 2002, 2001 and 2000, respectively.

         The Company sponsors an Employee Stock Purchase Plan (ESPP) which
offers all employees the election to purchase AIPC common stock at a price equal
to 90% of the market value on the first or last day of the calendar quarter,
whichever is less. At September 30, 2002, 2001, and 2000, authorized shares
under this plan were 50,000.


                                       52

8.    Supplemental Cash Flow Information

                                                            Year ended           Year ended       Year ended
                                                           September 30,         September 30,    September 30,
                                                              2002                  2001              2000
                                                              ----                  ----              ----
                                                                               (In thousands)
Supplemental disclosure of cash
flow information:
     Cash paid for interest                                  $ 11,899             $ 10,158          $ 6,389
                                                             ========             ========          =======
     Cash paid for income taxes                              $  $ 789             $  2,992          $ 4,462
                                                             ========             ========          =======
     Warehouse acquired in
       exchange for capital lease                            $     --             $     --          $ 6,800
                                                             ========             ========          =======
     Mueller's brand acquired in   exchange for
     common stock                                            $     --             $ 20,600          $    --
                                                             ========             ========          =======


9.       Stock Repurchase Plan

         On March 20, 2000, the Company's Board of Directors authorized up to
$25 million to implement a common stock repurchase program of up to one million
shares during the next twelve months.

         On July 14, 2000, the Company's Board of Directors authorized an
increase to its share repurchase programs to cover a total of 1.5 million
shares, and allocated an additional $10 million to make these purchases.

         During the year ended September 30, 2001, the Company purchased 154,849
shares for $3,032,000, at $19.58 per share. During the year ended September 30,
2000, the Company purchased 1,500,000 shares, for approximately $31,336,000, at
prices ranging from $16.57 to $25.94 per share. Total shares held in treasury as
of September 30, 2001 and 2000, were 1,654,981 and 1,500,132, respectively.


10.      Board of Directors Remuneration Policy

         The Company provides outside directors with an annual retainer amount
in common stock equal to $20,000 per director, as well as a cash payment of
$5,000. The issuance occurs immediately following the annual meeting of the
stockholders. These shares are not registered and are restricted for a
twelve-month period.


11.      Unearned Compensation

         In September 2002 and 2001, the Company issued 20,629 and 5,504 shares
of restricted stock to certain officers of the Company. The Company recorded the
fair value of the awards at the market price on the grant date. The value of the
awards was recorded as unearned compensation. The awards contained either a
cliff or straight line vesting provision and therefore expense will be
recognized on a straight-line basis over the vesting period. The unearned
compensation is classified as a reduction to stockholder's equity in the
accompanying consolidated balance sheet at September 30, 2002.

                                       53

12.      Quarterly Financial Data - Unaudited

   (In thousands, except per share data)
                                                                                First               Second              Third              Fourth
                                                                               Quarter              Quarter            Quarter             Quarter
                                                                               -------              -------            -------             -------
                       Year ended September 30, 2002
                            Revenues                                           $ 92,003           $ 94,843            $ 91,773            $102,180
                            Gross profit                                         32,844             33,717              32,490              32,748
                            Operating profit                                     16,071             17,663              18,838              19,413
                            Net income                                            8,852             10,059              11,007              11,381
                            Basic net income per
                                common share                                       0.50               0.56                0.61                0.63
                            Net income per common share
                                --assuming dilution                                0.48               0.54                0.59                0.61

                       Year ended September 30, 2001
                            Revenues                                           $ 66,404           $ 75,030            $ 77,300            $ 92,055
                            Gross profit                                         19,090             23,388              25,282              29,943
                            Operating profit                                      9,541             13,804              15,134              12,566
                            Net income                                            5,249              7,690               8,491               4,901
                            Basic net income per
                                common share                                       0.31               0.44                0.49                0.28
                            Net income per common share
                                --assuming dilution                                0.30               0.42                0.46                0.27

         The above quarterly financial data is unaudited, but in the opinion of
management, all adjustments necessary for a fair presentation of the selected
data for these interim periods presented have been included.


13.      Subsequent Events - Unaudited

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

         In November 2002, the Company's Board of Directors authorized up to $20
million to implement a common stock repurchase program. The Company purchased
323,398 shares for $10,634,000, at prices ranging from $32.52 to $33.00 per
share.

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


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

         Not applicable.




                                       54

                                    PART III

         AIPC has incorporated by reference certain responses to the Items of
this Part III pursuant to Rule 12b-23 under the Exchange Act and General
Instruction G(3) to Form 10-K. AIPC's definitive proxy statement for the 2002
annual meeting of stockholders (the "Definitive Proxy Statement") will be filed
no later than 120 days after September 27, 2002.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         (a)      Directors of the Company

         The information set forth in response to Item 401 of Regulation S-K
under the heading "Proposal 1 - Election of Three Directors" and "The Board of
Directors" in AIPC's Definitive Proxy Statement is incorporated herein by
reference in partial response to this Item 10.

         (b)      Executive Officers of the Company

         The information set forth in response to Item 401 of Regulation S-K
under "Executive Officers of the Registrant" an unnumbered Item in Part 1
(immediately following Item 4 Submission of Matters to a Vote of Security
Holders) of this Form 10-K is incorporated herein by reference in partial
response to this Item 10.

         The information set forth in response to Item 405 of Regulation S-K
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in
AIPC's Definitive Proxy Statement is incorporated herein by reference in partial
response to this Item 10.


ITEM 11. EXECUTIVE COMPENSATION.

         The information set forth in response to Item 402 of Regulation S-K
under "Management Compensation" in AIPC's Definitive Proxy Statement, (other
than The Compensation Committee Report on Executive Compensation) is
incorporated by reference in response to this Item 11.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The information set forth in response to Item 201(d) (Equity
Compensation Plan table) and Item 403 of Regulation S-K under the heading "Stock
Beneficially Owned by Directors, Nominees and Certain Executive Officers" in our
Definitive Proxy Statement is hereby incorporated by reference in response to
this Item 12.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         The information set forth in response to Item 404 of Regulation S-K
under the heading "Certain Relationships and Related Transactions" in our
Definitive Proxy Statement is incorporated herein by reference in response to
this Item 13.


ITEM 14.          CONTROLS AND PROCEDURES

         During November and early December 2002, the Company conducted a review
of its disclosure controls and procedures. Based on their evaluation of these
controls and procedures as of December 11, 2002, Mr. Webster, our CEO, and Mr.
Schmidgall, our CFO, concluded that the Company's disclosure controls and
procedures were appropriate and effective in causing information required to be
disclosed in our reports filed under the Securities Exchange Act of 1934 to be
recorded, processed, summarized and reported within the required time periods.
There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls since December 11, 2002.


                                       55

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

         (a) The following items are filed as a part of the report:

                  1.       The Company's consolidated financial statements
                           prepared in accordance with Regulation S-X, including
                           the consolidated statements of income, cash flows,
                           stockholders' equity, and comprehensive income for
                           the three fiscal periods ended September 30, 2002,
                           September 30, 2001 and September 30, 2000 and the
                           consolidated balance sheets as of September 30, 2002
                           and 2001, and related notes and the independent
                           auditor's report thereon are included under Item 8 of
                           this Annual Report.

                  2. No financial statement schedules are required to be
included in this Annual Report by the Securities and Exchange Commission's
regulations.

                  3. The list of exhibits following the signature page of this
Annual Report is incorporated by reference herein in partial response to this
Item.

         (b) Reports on Form 8-K.

                  None.









                                       56

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                   AMERICAN ITALIAN PASTA COMPANY

                                   By:      /s/Timothy S. Webster
                                            ------------------------------------
                                            Timothy S. Webster
                                            President and Chief Executive Officer

Date December 18, 2002

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

                        POWER OF ATTORNEY AND SIGNATURES

         Each of the undersigned hereby severally constitute and appoint Timothy
S. Webster and Warren B. Schmidgall, and each of them singly, with power of
substitution and resubstitution, as his true and lawful attorneys, with full
power to them and each of them singly, to sign for us in our names in the
capacities indicted below, all amendments to this Annual Report on Form 10-K and
generally to do all things in our names and on our behalf in such capacities to
enable American Italian Pasta Company to comply with the provisions of the
Securities Exchange Act of 1934, and all requirements of the Securities and
Exchange Commission with respect to this Annual Report on Form 10-K.

`/s/Horst W. Schroeder                  Chairman of the                December 18, 2002
- ------------------------------------    Board of Directors

/s/Timothy S. Webster                   President, Chief                December 18, 2002
- ------------------------------------    Executive Officer and Director
                                        (Principal Executive Officer)

/s/Warren B. Schmidgall                 Executive Vice                  December 18, 2002
- ------------------------------------    President-Chief Financial Officer,
                                        (Principal Financial and Accounting Officer)

/s/Robert H. Niehaus                   Director                         December 18, 2002
- ------------------------------------

/s/Richard C. Thompson                 Director                         December 18, 2002
- ------------------------------------

/s/Jonathan E. Baum                    Director                         December 18, 2002
- ------------------------------------

/s/Tim M. Pollak                       Director                         December 18, 2002
- ------------------------------------

/s/ Mark C. Demetree                   Director                         December 18, 2002
- ------------------------------------

/s/ William R. Patterson               Director                         December 18, 2002
- ------------------------------------

/s/James A. Heeter                     Director                         December 18, 2002
- -------------------------------------





                                       57

                                 CERTIFICATIONS*
I, Timothy S. Webster, certify that:

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

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

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

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

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

               b.   Evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this annual report (the "Evaluation
                    Date"); and

               c.   Presented in this annual report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

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

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

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

6.            The registrant's other certifying officers and I have indicated in
              this annual report whether there were significant changes in
              internal controls or in other factors that could significantly
              affect internal controls subsequent to the date of our most recent
              evaluation, including any corrective actions with regard to
              significant deficiencies and material weaknesses.


Date: December 18, 2002


                                         /s/Timothy S. Webster
                                         ---------------------------------------
                                         Timothy S. Webster
                                         President and Chief Executive Officer




                                       58

I, Warren B. Schmidgall, certify that:

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

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

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

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

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

               b.   Evaluated the effectiveness of the registrant's disclosure
                    controls and procedures as of a date within 90 days prior to
                    the filing date of this annual report (the "Evaluation
                    Date"); and

               c.   Presented in this annual report our conclusions about the
                    effectiveness of the disclosure controls and procedures
                    based on our evaluation as of the Evaluation Date;

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

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

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

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether there were significant changes in internal controls
         or in other factors that could significantly affect internal controls
         subsequent to the date of our most recent evaluation, including any
         corrective actions with regard to significant deficiencies and material
         weaknesses.


Date: December 18, 2002


                                          /s/Warren B. Schmidgall
                                          -------------------------------------
                                          Warren B. Schmidgall
                                          Executive VP and Chief Financial Officer







                                       59

           SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
            PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH
        HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

Not applicable.
















                                       60

EXHIBIT INDEX


Exhibit
Number   Description
- -------  -----------


(3)      Articles and By-Laws

          3.1  The Company's amended and restated Certificate of Incorporation
               dated October 7, 1997, which is attached as Exhibit 3.1 to the
               Company's registration statement on Form S-1, as amended
               (Commission file no. 333-32827) (the "IPO Registration
               Statement"), is incorporated by reference herein as Exhibit 3.1.

          3.2  The Company's amended and restated Bylaws dated October 7, 1997,
               which is attached as Exhibit 3.2 to the IPO Registration
               Statement, are incorporated by reference herein as Exhibit 3.2.

(4)     Instruments Defining the Rights of Security Holders, Including Indentures

          4.1  The specimen certificate representing the Company's Class A
               Convertible Common Stock, par value $0.001 per share, which is
               attached as Exhibit 4.1 to the IPO Registration Statement, are
               incorporated by reference herein as Exhibit 4.1.

          4.2  The specimen certificate representing the Company's Class B
               Convertible Common Stock, par value $0.001 per share, which is
               attached as Exhibit 4.2 to the IPO Registration Statement, are
               incorporated by reference herein as Exhibit 4.2.

          4.3  Section 7.1 of the Company's amended and restated Certificate of
               Incorporation, which is incorporated herein as Exhibit 3.1, is
               incorporated by reference herein as Exhibit 4.3.

          4.4  Article II of the Company's amended and restated Bylaws, which is
               incorporated herein as Exhibit 3.2, is incorporated by reference
               herein as Exhibit 4.4.

          4.5  Sections 1, 2, 3, 4 of Article III of the Company's amended and
               restated Bylaws, which is incorporated herein as Exhibit 3.2, is
               incorporated by reference herein as Exhibit 4.5.

          4.6  Article VII of the Company's amended and restated Bylaws, which
               is incorporated herein as Exhibit 3.2, is incorporated by
               reference herein as Exhibit 4.6.

          4.7  Article IX of the Company's amended and restated Bylaws, which is
               incorporated herein as Exhibit 3.2, is incorporated by reference
               herein as Exhibit 4.7.

          4.8  Credit Agreement, dated July 16, 2001, among American Italian
               Pasta Company, Financial Institutions, Firstar Bank, N.A., as
               Syndication Agent, Bank One, NA, as Documentation Agent, Credit
               Agricole Indosuez, Fleet National Bank, Keybank National
               Association, Cooperative Centrale Raiffeisen-Boerenleenbank B.A.,
               "Rabobank Nederland", New York Branch, Wachovia Bank, N.A., and
               Wells Fargo Bank, N.A., as Co-Agents, and Bank of America, N.A.,
               as Administrative Agent, Bank of America Securities LLC, Sole
               Lead Arranger and Sole Book Manager, which is attached as Exhibit
               10.4 to the Company's quarterly report dated August 13, 2001 on
               Form 10-Q (Commission File No. 001-13403), is incorporated by
               reference herein as Exhibit 4.8.


                                       61

          4.9  Shareholders Rights Agreement, dated December 3, 1998, between
               American Italian Pasta Company and UMB Bank, N.A. as Rights
               Agent, which is attached as Exhibit 1 to the Company's
               Registration Statement dated December 14, 1998 on Form 8-A12B
               (Commission File No. 001-13403), is incorporated by reference
               herein as Exhibit 4.9.

(10)      Material Contracts

          10.1 Board of Directors Remuneration Policy, which is attached as
               Exhibit 10.1 to the Company's Annual Report on Form 10-K405 for
               the fiscal year ended October 2, 1998 (Commission file no.
               001-13403), is incorporated by reference herein as Exhibit 10.1.

          10.2 N/A

          10.3 Amended and Restated Supply Agreement dated October 29, 1992, as
               amended July 1, 1997, between the Company and Sysco Corporation,
               which is attached as Exhibit 10.3 to the IPO Registration
               Statement, is incorporated by reference herein as Exhibit 10.3.

          10.4 N/A

          10.5* Employment Agreement between the Company and Timothy S. Webster
                dated May 30, 2002, which is attached as Exhibit 10 to the
                Company's quarterly report on Form 10-Q for the period ending
                June 30, 2002, is incorporated by reference herein as Exhibit
                10.5.

          10.6.1* Employment Agreement dated September 30, 1997 between the
                  Company and Horst W. Schroeder, which is attached as Exhibit 10.5
                  to the IPO Registration Statement, is incorporated by reference
                  herein as Exhibit 10.6.1.

          10.6.2* First Amendment to Employment Agreement between the Registrant
                  and Horst W. Schroeder dated October 1, 1999, which is attached
                  as Exhibit 10.1 to the Company's Current Report on Form 8-K dated
                  November 17, 1999, is incorporated by reference herein as Exhibit
                  10.6.2.

          10.7.1* Employment Agreement dated September 1, 2002 between the
                  Company and David E. Watson.

          10.7.2  N/A

          10.8.1  N/A

          10.8.2  N/A

          10.9.1* Employment Agreement dated September 1, 2002 between the
                  Company and David B. Potter.

          10.9.2  N/A

          10.9.3  N/A

          10.10* Employment Agreement dated September 1, 2002 between the
                 Company and Warren B. Schmidgall.

          10.11 Letter Agreement between the Registrant and HWS &
                Associates, Inc. dated October 1, 1999, which is attached as
                Exhibit 10.6 to the Company's Current Report on Form 8-K
                (Commission File no. 001-13403), dated November 17, 1999, is
                incorporated by reference herein as Exhibit 10.11.

          10.12 N/A

                                       62

          10.13* Employment Agreement dated September 1, 2002 between the
                 Company and Walter George.

          10.14* American Italian Pasta Company 1992 Stock Option Plan, which is
                 attached as Exhibit 10.10 to the IPO Registration Statement, is
                 incorporated by reference herein as Exhibit 10.14.

          10.15* American Italian Pasta Company 1993 Non-Qualified Stock Option
                 Plan, which is attached as Exhibit 10.11 to the IPO Registration
                 Statement, is incorporated by reference herein as Exhibit 10.15.

          10.16* 1996 Salaried Bonus Plan, which is attached as Exhibit 10.13 to
                 the IPO Registration Statement, is incorporated by reference
                 herein as Exhibit 10.16.

          10.17.1* 1997 Equity Incentive Plan, which is attached as Exhibit
                   10.14 to the IPO Registration Statement, is incorporated by
                   reference herein as Exhibit 10.17.1.

          10.17.2* First amendment to 1997 Equity Incentive Plan, which is
                   attached as Exhibit 10.1 to the Company's July 31, 1998 Form 10-Q
                   (Commission file no. 001-13403), is incorporated by reference
                   here in as Exhibit 10.17.2.

          10.17.3* American Italian Pasta Company 2000 Equity Incentive Plan, as
                   amended, which is attached as Exhibit 10.5 to the Company's
                   quarterly report dated August 13, 2001 on Form 10-Q (Commission
                   File No. 001-13403), is incorporated by reference herein as
                   Exhibit 10.17.3.

          18.18 Product Supply and Pasta Production Cooperation Agreement dated
                May 7, 1998 between the Registrant and Harvest States
                Cooperatives which   is attached as Exhibit 10.2 to the
                Company's July 31, 1998 Form 10-Q Commission file no. 001-13403),
                is incorporated by reference herein as Exhibit 10.18.

          10.19 N/A

          10.20 N/A

          10.21 N/A

          10.22 Flour Purchase Agreement by and between American Italian Pasta
                Company and Bay State Milling Company dated August 7, 2002. (We
                have omitted certain information from the Agreement and filed it
                separately with the Securities and Exchange Commission pursuant
                to our request for confidential treatment under Rule 24b-2. We
                have identified the omitted confidential information by the
                following statement, "Confidential portions of material have been
                omitted and filed separately with the Securities and Exchange
                Commission," as indicated throughout the document with an
                asterisk in brackets ([*])).

          10.23* Employment Agreement dated September 1, 2002 between the
                 Company and Jerry H. Dear.

          10.24* Form of Stock Option Award Agreement for Stock Option Awards
                 granted pursuant to the Company's 2000 Equity Incentive Plan.

          10.25* Form of Restricted Stock Agreement for Restricted Stock Awards
                 granted pursuant to the Company's 2000 Equity Incentive Plan.

                                       63

     (21) Subsidiaries of the registrant

     List of subsidiaries is attached hereto as Exhibit 21.

     (23) Consent of Ernst & Young LLP

     (24) Power of Attorney

          The power of attorney is set forth on the signature page of this
          Annual Report.

     (99) Additional Exhibits

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


* Represents a management contract or a compensatory plan or arrangement.





                                       64

EX-10

                         AMERICAN ITALIAN PASTA COMPANY

                              EMPLOYMENT AGREEMENT



          THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective September
1, 2002 is by and between American Italian Pasta Company ("Employer"), and David
E. Watson, an individual ("Employee") (collectively "the parties") and
supersedes any and all prior oral or written agreements between the parties with
respect to the subject matter hereof.

                                   WITNESSETH:

          WHEREAS, Employer is engaged in the business of durum wheat milling
and pasta product production/marketing; and

          WHEREAS, in connection with such business, Employer desires to
employ Employee in the capacity of Executive Vice President - Operations &
Corporate Development; and

         WHEREAS, Employee desires to be employed by Employer in the aforesaid
capacities.

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

          1. Term of Employment. Subject to the provisions of Section 7 hereof,
the term of Employee's employment under this Agreement (the "Employment Term")
will commence as of the date hereof (the "Effective Date") and terminate on
September 30, 2005. The provisions of Sections 4, 5 and 6, below, will survive
and continue to be enforceable regardless of any termination of this Agreement.

          2. Duties of Employee.

               2.1 In accepting such employment, Employee shall undertake and
          assume the responsibility of performing for and on behalf of Employer
          such duties as shall be assigned to Employee by Employer at any time
          and from time to time and in accordance with all of Employer's
          policies, practices and procedures. It is understood and agreed that
          Employee's principal duties on behalf of Employer at the date of
          execution hereof are and shall be Executive Vice President -
          Operations & Corporate Development, and it is further understood and
          agreed that any modification in or expansion of Employee's duties
          hereunder shall not, unless specifically agreed to by Employee and
          Employer in a duly-executed amendment of this Agreement in accordance
          with Section 10.6 hereof, result in any modification in Employee's
          compensation referred to in Section 3 hereof.

               2.2 Employee will to the reasonable satisfaction of Employer at
          all times faithfully, industriously, and to the best of Employee's
          ability, experience, and talents perform all of the duties that may be
          required of and from Employee pursuant to the express and implicit
          terms hereof.

               2.3 Employee shall devote substantially all of Employee's
          professional time, attention, knowledge, and skills solely to the
          business and interests of Employer; provided, however, that Employee
          shall be entitled annually to three (3) weeks vacation, and Employer
          shall be entitled to all of the benefits, profits, and other issues
          arising from or incident to all professional work, services, and
          advice of Employee.

          3. Compensation. Employer shall pay Employee, and Employee shall
accept from Employer, in payment for Employee's services rendered to Employer
hereunder an annual base salary ("Base Salary") equal to two hundred twenty
thousand dollars ($220,000). Such Base Salary shall be paid in equal bi-weekly
installments and, in the sole discretion of Employer, shall be subject to annual
merit increase reviews.

               3.1 Bonuses. During the term of this Agreement, Employee will be
          eligible to participate in and bonuses may be awarded to Employee at
          the discretion of the Board of Directors in accordance with the terms
          of Employer's 1998 Salaried Bonus Plan (the "Bonus Plan"), as the same
          may be amended, modified, or terminated from time to time.

               3.2 Reimbursement of Business Expenses. Employer agrees to
          reimburse Employee for reasonable travel, entertainment, and other
          business expenses incurred in the performance of Employee's duties
          hereunder in accordance with Employer's policies on terms no less
          favorable than those policies in effect immediately prior to the date
          hereof.

               3.3 Benefits. Employee shall be entitled to participate in an
          equitable manner with other senior executive employees of Employer in
          all welfare benefit, incentive compensation, or other plans or
          arrangements authorized, adopted, and maintained from time to time by
          Employer, including, without limitation, the following: automobile
          allowance, profit sharing plan, medical reimbursement plan, group life
          insurance plan, medical and dental insurance plan, and long-term
          disability income plan, if in effect with Employer.

          4. Non-Competition, Nonsolicitation and Nondisparagement.

               4.1 Employee acknowledges and recognizes the highly competitive
          nature of the business of Employer and its affiliates and accordingly
          agrees as follows: during the Employment Term and until the date that
          is eighteen (18) months after the date that Employee ceases employment
          with Employer for any reason (the Employment Term and such period
          hereinafter referred to as the "Noncompetition Period"), Employee will
          not, in any area in the world where Employer conducts business,
          directly or indirectly own, manage, operate, control, be employed by,
          consult with, or be connected in any manner with the ownership (other
          than passive investments of not more than one percent of the
          outstanding shares of, or any other equity interest in, any company or
          entity listed or traded on a national securities exchange or in an
          over-the-counter securities market), management, operation, or control
          of any business engaged in the production and/or marketing of pasta
          products for human consumption. Notwithstanding any provision of this
          Agreement to the contrary, if Employee is employed by Employer, then
          any breach of the provisions of this Section 4.1 shall permit Employer
          to terminate the employment of Employee for Cause (as defined below),
          and, whether or not Employee is employed by Employer, from and after
          any breach by Employee of the provisions



                                      -2-

          of this Section 4.1, then Employer shall cease to have any obligations
          to make payments to Employee under this Agreement.

               4.2 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any employee of Employer or
          any of its affiliates to engage in any activity in which Employee is
          prohibited from engaging by Section 4.1 hereof or to terminate
          Employee's or her employment with Employer or any of its affiliates,
          will not directly or indirectly assist or attempt to assist others in
          engaging in any of the activities in which Employee is prohibited from
          engaging by Section 4.1 hereof, and will not directly or indirectly
          employ or offer employment to any person who was employed by Employer
          or any of its affiliates unless such person shall have ceased to be
          employed by Employer or any of its affiliates for a period of at least
          12 months.

               4.3 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any customer or supplier of
          Employer or any of its affiliates to move, reduce or not increase its
          trade or business with Employer or any of its affiliates.

               4.4 Employee acknowledges and agrees that disparaging or critical
          statements made by Employee about Employer or its board members,
          officers or employees would be uniquely detrimental to the interests
          of both parties. Therefore, during the Noncompetition Period, Employee
          agrees to refrain from making any disparaging or critical statements
          about Employer or its board members, officers or employees.

               4.5 Employee acknowledges that the restrictions contained in
          Sections 4.1, 4.2, 4.3 and 4.4 are reasonable and appropriate.
          However, in the event that a court of competent jurisdiction
          determines that such restrictions are not reasonable and therefore
          unenforceable, the parties agree that such court may modify the
          restrictions in order for, but only to the least extent necessary for,
          the restrictions to be enforced by such court. In the event such court
          finds that any such restriction cannot be modified so as to make it
          enforceable, such restriction may be deleted by such court and the
          enforceability of all other restrictions will be unaffected by such
          deletion.

          5. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee has been and will be making use of,
acquiring, and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports, and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, Employee covenants and agrees
Employee shall not, at any time during or after the Employment Term, directly or
indirectly disclose, divulge, or use for Employee's own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation, or other business organization, entity, or enterprise
other than Employer and any of its subsidiaries or affiliates any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of



                                      -3-

Employer generally or of any subsidiary or affiliate of Employer, provided,
however, that the foregoing shall not apply to information that is not unique to
Employer or that is generally known to the industry or the public other than as
a result of breach of this covenant. Employee agrees that, upon termination of
Employee's employment with Employer for any reason, Employee will return to
Employer immediately all memoranda, books, manuals, training materials, records,
computer software, papers, plans, contracts, agreements, information, letters,
and other data, and all copies thereof or therefrom, in any way relating to the
business of Employer and its affiliates, except that Employee may retain
personal notes, notebooks, and diaries. Employee further agrees that Employee
will not retain or use for Employee's account at any time any trade names,
trademark, or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.

          6. Specific Performance and Survival.

               6.1 Employee acknowledges and agrees that Employer's remedies at
          law for a breach or threatened breach of any of the provisions of
          Section 4 hereof or Section 5 hereof would be inadequate and, in
          recognition of this fact, Employee agrees that, in the event of such a
          breach or threatened breach, in addition to any remedies at law,
          Employer, without posting any bond, shall be entitled to obtain
          equitable relief in the form of specific performance, temporary
          restraining order, temporary or permanent injunction, or any other
          equitable remedy that may then be available.

               6.2 The parties agree that the terms of Sections 4, 5 and 6 are
          independent of and separable from the other provisions of this
          Agreement and that the termination of this Agreement for any reason
          will not affect the continued existence and enforceability of Sections
          4, 5 and 6. Those Sections will survive and continue to be fully
          binding on and enforceable against Employee and Employer after any
          termination of this Agreement.

          7. Termination of Employment.

               7.1 Termination without Cause; Resignation for Good Reason.

                    7.1.1 General. (a) Subject to the provisions of Sections
               7.1.2 and 7.1.3 hereof, if Employee's employment is terminated by
               Employer without Cause, as defined in Section 7.3, or if Employee
               resigns from Employee's employment for Good Reason, as defined in
               Section 7.4, then Employer shall pay Employee severance in the
               amount of (i) Employee's accrued unpaid Base Salary to the date
               of termination or resignation and any bonus earned but not paid
               as of that date, and (ii) continuation of Employee's annual Base
               Salary, as adjusted under Section 3, as of the date of
               termination or resignation for a period of twelve (12) months
               following the date of termination or resignation (such period
               being referred to hereinafter as the "Severance Period"). In
               addition, if at the time of such termination or resignation
               Employee has completed ten (10) years of uninterrupted service
               with Employer, the severance will include a payment in the amount
               of 50% of the prorated Normal Bonus level to which Employee would
               have been entitled had Employee remained employed through the
               then applicable bonus period. The Normal Bonus level will be
               calculated at the end of the bonus period and is subject to all
               adjustments and reductions determined by the Board of Directors
               and made applicable to all bonus plan participants. To the extent
               such calculation results in a bonus to be paid, that amount

                                      -4-

               will be prorated for the number of weeks of the bonus period
               occurring prior to the week in which the termination or
               resignation occurred. The Base Salary shall be payable in equal
               bi-weekly installments during the Severance Period, and any bonus
               shall be payable at the conclusion of the Severance Period.

                         (b) During the Severance Period and for a period of six
                    (6) months thereafter, Employee shall also be eligible to
                    participate on the same terms and conditions as in effect
                    immediately prior to such termination or resignation in all
                    health, medical, supplemental medical, and life insurance
                    plans or programs provided to Employee by Employer pursuant
                    to Section 3.7 hereof ("Employee Welfare Plans") at the time
                    of such termination or resignation and which are provided by
                    Employer to its employees following the date of such
                    termination or resignation; provided, however, that
                    Employee's eligibility to participate in these Employee
                    Welfare Plans shall end at such time as Employee becomes
                    eligible to receive coverage under comparable programs of a
                    subsequent employer and further provided that if Employee
                    participates in the Employee Welfare Plans for a period of
                    eighteen (18) months from the date of termination or
                    resignation, then Employee's COBRA rights shall commence at
                    the end of such eighteen (18) month period. If, during the
                    Severance Period, Employee is precluded from participating
                    in any Employee Welfare Plan by its terms or applicable law,
                    then Employer will provide Employee with benefits that are
                    reasonably equivalent to those Employee would have received
                    under such plan had Employee been eligible to participate
                    therein. Anything to the contrary herein notwithstanding,
                    Employer shall have no obligation to continue to maintain
                    any Employee Welfare Plan during the Severance Period solely
                    as a result of this Agreement. As an example and solely for
                    purposes of illustration: If Employer were to terminate its
                    dental insurance plan prior to or during the Severance
                    Period, then Employer would have no obligation to maintain
                    such plan or provide to Employee individual dental insurance
                    to satisfy its obligations under this Section 7.1.1.

                    7.1.2 Mitigation. Employee will be required to mitigate the
               amount of any payment provided for in Section 7.1.1 hereof by
               seeking other employment, and the amount of any such payment will
               be reduced by any compensation earned by Employee as the result
               of Employee's employment by another employer or acting as a
               consultant or in any other self-employed capacity subsequent to
               termination of Employee's employment with Employer.

                    7.1.3 Death During Severance Period. If Employee dies during
               the Severance Period, then the Severance Period shall immediately
               cease, Employer shall not be obligated to make any further
               payments pursuant to this Section 7, and the provisions of
               Section 8.1 hereof shall apply as though Employee's death had
               occurred immediately prior to termination of Employee's
               employment hereunder.

                    7.1.4 Date of Termination. The date of termination of
               employment without Cause shall be the date specified in a written
               notice of termination to Employee which in no case shall be more
               than 30 days following the date of notice. The date of
               resignation for Good Reason shall be the date specified in the
               written notice of resignation from Employee to Employer which in
               no case shall be more than 30 days following the date of notice.




                                      -5-

               7.2 Termination for Cause; Resignation Without Good Reason.

                    7.2.1 General. If Employee's employment hereunder is
               terminated by Employer for Cause, or if Employee resigns from
               Employee's employment hereunder other than for Good Reason (a
               "Voluntary Termination"), then Employee shall be entitled only to
               payment of Employee's Base Salary, as adjusted under Section 3,
               earned through and including the date of termination or
               resignation. Employee shall have no further right to receive any
               other compensation or to participate in any other plan,
               arrangement, or benefit, after such termination for Cause or
               Voluntary Termination.

                    7.2.2 Date of Termination. Subject to Section 7.3
               hereof, the date of termination for Cause shall be the date of
               receipt by Employee of notice such termination. The date of
               Voluntary Termination shall be the date of receipt by Employer of
               the notice of resignation.

               7.3 Cause. Terminate for "Cause" means termination of
          Employee's employment because, in Employer's good faith belief, (i)
          Employee willfully and continually failed substantially to perform
          Employee's duties under the Agreement (other than as a result of
          Permanent Disability, as defined below), (ii) Employee failed to
          comply with any of the material term(s) of this Agreement, including,
          but not limited to, Sections 4 and 5 hereof, (iii) Employee committed
          an act or acts that constituted a misdemeanor (other than a minor
          traffic violation) or a felony under the law of the United States
          (including any subdivision thereof) or any country to which Employee
          is assigned (including any subdivision thereof), including, but not
          limited to, Employee's conviction for or plea of guilty or no contest
          ("nolo contrendre") to any such misdemeanor or felony, (iv) Employee
          committed an act or acts in violation of Employer's policies and/or
          practices applicable to employees at the level of Employee within
          Employer's organization, (v) Employee willfully acted, or willfully
          failed to act, in a manner that was injurious to the financial
          condition or business reputation of Employer or any of its
          subsidiaries or affiliates, (iv) Employee acted in a manner that is
          unbecoming of Employee's position with Employer, regardless of whether
          such action or inaction occurs in the course of the performance of
          Employee's duties with Employer, or (v) Employee was subject to any
          fine, censure, or sanction of any kind, permanent or temporary, issued
          by the Securities and Exchange Commission or the New York Stock
          Exchange.

               7.4 Good Reason. For purposes of this Agreement, "Good
          Reason" means any of the following actions taken by Employer without
          Employee's prior written consent: (i) the continued failure of
          Employer to pay compensation due to Employee under this Agreement,
          which failure is uncorrected for a period of 15 days following receipt
          by Employer of written notice thereof from Employee; (ii) a material
          diminution in Employee's position, authority, duties, or
          responsibilities, excluding for this purpose an isolated,
          insubstantial, or inadvertent action not taken in bad faith and that
          is remedied by Employer promptly after receipt of written notice
          thereof given by Employee; provided, however, that a
          mere change of Employee's title shall not constitute Good Reason so
          long as Employee continues to perform duties, functions, and
          responsibilities substantially equivalent to those performed by
          Employee prior to such change of title; (iii) Employer's material
          failure or refusal to comply with the provisions of this Agreement,
          which failure or refusal to comply is uncorrected for a period of 15
          days following receipt by Employer of written notice thereof from
          Employee. It is expressly understood and


                                      -6-

          agreed by the parties hereto that Employer's failure to deliver a
          notification extending the Initial Employment Term as referred to in
          Section 1 hereof shall not constitute a termination without Cause.

               7.5 Conditions to Severance Payments. Employer's
          obligation to make any severance payments due hereunder or to provide
          any benefits to Employee after any termination or resignation
          hereunder (other than COBRA benefits) is expressly conditioned on
          Employee complying in full with the obligations under Sections 4, 5
          and 6. In the event Employee does not fully comply with such
          obligations or in the event any such obligations are determined by any
          court to be unenforceable to any extent, Employer shall be relieved of
          all obligations to provide any severance or post-termination benefits.

          8. Death or Permanent Disability.

               8.1 Death. If Employee's employment hereunder is
          terminated by death, then Employer shall, within 90 days of the date
          of death, make a lump sum payment to Employee's estate (or other
          beneficiary designated by Employee in writing) equal to all Base
          Salary and bonuses, if any, earned and accrued through the date of
          death. Thereafter, Employer shall have no further obligation to
          Employee under the Agreement.

               8.2 Permanent Disability. If Employee becomes physically or
          mentally disabled while employed by Employer under this Agreement so
          that Employee is--with or without reasonable accommodation--unable to
          render the services provided for by this Agreement for a period of six
          consecutive months or for shorter periods aggregating six months
          during any 24-month period, or so that Employee has a Disability (as
          defined under Employer's then-current disability policy), then
          Employer may, at any time after the last day of the six consecutive
          months of disability, the day on which the shorter periods of
          disability equal an aggregate of six months, or the day on which
          Employee is determined to have a Disability, terminate Employee's
          employment hereunder for "Permanent Disability" by written notice to
          Employee. Following such termination, Employee shall be entitled to
          receive from Employer (i) all Base Salary and bonuses, if any, accrued
          through the date of termination and (ii) any other benefits payable
          under Employer's then-current disability policy, but all other rights
          of Employee hereunder shall terminate as of the date of Employee's
          termination.

          9. Change of Control.

               9.1 Notwithstanding anything to the contrary contained herein, if
          Employer terminates Employee without Cause upon or within six months
          following a Change of Control (as defined below), then Employer shall
          pay Employee Employee's accrued unpaid Base Salary to the date of
          termination and any bonus earned but not paid and shall continue to
          pay Employee Employee's annual Base Salary as of the date such
          termination occurs for a period of one (1) year following the date of
          termination as severance pay (such period being referred to
          hereinafter as the "Change of Control Severance Period") and bonus for
          the year in which the termination occurs (calculated as if the Normal
          Bonus for that year is earned). Any severance payable pursuant to this
          Section 9.1 will be in substitution for and not in addition to any
          severance that might be payable pursuant to Section 7 hereof. To the
          extent Employer makes payments pursuant to this Section 9.1, it will
          have no additional obligations under Section 7 hereof. The


                                       -7-

          Base Salary shall be payable in bi-weekly payments during the Change
          of Control Severance Period, and the bonus shall be paid at the
          conclusion of the Change of Control Severance Period.

               9.2 Upon a Change in Control, all options to purchase stock of
          Employer held by Employee, to the extent not then exercisable, will
          immediately become fully vested and exercisable and all restrictions
          on any stock grants will immediately be removed.

               9.3 For purposes of this Agreement, "Change of Control" means any
          one of the following:

                    (a) any person or group (as defined in Section 13(d)(3) of
               the Securities Exchange Act of 1934, as amended (the "Exchange
               Act")) acquiring beneficial ownership of more than 50% of
               Employer's then outstanding Common Stock or 51 % or more of the
               combined voting power of Employer's then outstanding securities
               entitled generally to vote for the election of Employer's
               Directors;

                    (b) the consummation of the merger or consolidation of
               Employer with any other corporation, other than a merger with a
               wholly-owned subsidiary, the sale of substantially all of the
               assets of Employer, or the liquidation or dissolution of
               Employer, unless, in the case of a merger or consolidation, (x)
               the Directors in office immediately prior to such merger or
               consolidation will constitute at least majority of the Board of
               Directors of the surviving corporation of such merger or
               consolidation and any parent (as such term is defined in Rule
               12b-2 under the Exchange Act) of such corporation, or (y) the
               voting securities of Employer outstanding immediately prior
               thereto represent (either by remaining outstanding or by being
               converted into voting securities of the surviving entity) more
               than 66 2/3% of the combined voting power of the voting
               securities of Employer or such surviving entity and are owned by
               all or substantially all of the persons who were the holders of
               the voting securities of Employer immediately prior to the
               transaction in substantially the same proportions as such holders
               owned such voting securities immediately prior to the
               transaction; or

                    (c) Continuing Directors (as defined below) no longer
               constitute at least a majority of the Board or a similar body of
               any successor to Employer. For purposes of this Agreement,
               "Continuing Directors" means any individual who either (i) is a
               member of Employer's Board of Directors on the Effective Date,
               (ii) who becomes a director after the Effective Date whose
               election or nomination for election by Employer's shareholders,
               was approved by a vote of at least a majority of the Continuing
               Directors (either by a specific vote or by approval of the proxy
               statement of Employer in which such person is named as nominee
               for director, without objection to such nomination), or (iii) is
               designated by any party pursuant to its rights under Section 2.1
               of Employer's Amended and Restated Shareholders' Agreement dated
               as of October 4, 1997, as amended.

               9.4 Excess Parachute Payments. If any payment or the receipt of
          any benefit under this Agreement shall be deemed to constitute an
          "excess parachute payment" as such term is described in Section 280G
          of the Internal Revenue Code of 1986, as amended (the "Code"), so as
          to result in the loss of a deduction to Employer under Code Section
          280G or in the imposition of an excise tax on the Employee under Code
          Section 4999, or any successor sections thereto, then the amounts
          payable or the benefits provided under this Agreement shall be reduced
          to the

                                      -8-

          minimum extent necessary so that no such deduction will be lost by
          Employer and no such excise tax will be imposed on the Employee.
          Employer, in its sole discretion, shall determine whether or not an
          "excess parachute payment" would otherwise occur and shall determine
          the amount and method of the foregoing reduction.

          10. Miscellaneous.

               10.1 Assignment of Employee Benefits. Absent the prior written
          consent of Employer, and subject to will and the laws of descent and
          distribution, Employee shall have no right to exchange, convert,
          encumber, or dispose of the rights of Employee to receive benefits and
          payments under this Agreement, which payments, benefits, and rights
          thereto are non-assignable and non-transferable.

               10.2 Burden and Benefit. This Agreement shall be binding upon,
          and shall inure to the benefit of, Employer and Employee, their
          respective heirs, personal, and legal representatives, successors, and
          assigns.

               10.3 Governing Law. In view of the fact that the principal office
          of Employer is located in the State of Missouri, the parties
          understand and agree that the construction and interpretation of this
          Agreement shall at all times and in all respects be governed by the
          laws of the State of Missouri, that the state and federal courts
          situated in the State of Missouri shall have exclusive jurisdiction
          over any claims arising under or in relation to this Agreement, and
          that the parties consent to personal jurisdiction in such state and
          federal courts.

               10.4 Headings. The headings of the Sections of this Agreement are
          for reference only and not to limit, expand, or otherwise affect the
          contents of this Agreement.

               10.5 Entire Agreement; Modification. Except as to Employer's
          Stock Option Plans, any instrument relating to an Option granted
          thereunder and written agreements signed by both of the parties hereto
          from time to time after the date hereof, this Agreement contains the
          entire agreement and understanding by and between Employer and
          Employee with respect to the subject matter hereof, and any
          representations, promises, agreements, or understandings, written or
          oral, not herein contained shall be of no force or effect. No change,
          waiver, or modification of any provision of this Agreement shall be
          valid or binding unless the same is in writing and duly executed by
          both parties and no evidence of any waiver or modification shall be
          offered or received in evidence of any proceeding, arbitration, or
          litigation between the parties hereto arising out of or affecting this
          Agreement, or the rights or obligations of the parties hereunder,
          unless such waiver or modification is in writing, duly executed as
          aforesaid, and the parties further agree that the provisions of this
          Section 10.6 may not be waived except as set forth herein.

               10.6 Waiver of Breach. The waiver by Employer of a breach of any
          provision of this Agreement by Employee shall not operate or be
          construed as a waiver of any subsequent breach by Employee.

               10.7 Notice. For the purpose of this Agreement, notices and all
          other communications provided for in the Agreement shall be in writing
          and shall be deemed to have been duly given when delivered or mailed
          by United States registered mail, return receipt


                                      -9-

          requested, postage prepaid, addressed to the respective addresses set
          forth on the execution page of this Agreement, provided, however, that
          all notices to Employer shall be directed to the attention of the
          Board of Directors of Employer with a copy to the Secretary of
          Employer, or to such other address as either party may have furnished
          to the other in writing in accordance herewith, except that notice of
          change of address shall be effective only upon receipt.

               10.8 Withholding Taxes. Employer may withhold from any amounts
          payable under this Agreement such federal, state, and local taxes as
          may be required to be withheld pursuant to any applicable law or
          regulation.

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

          IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first hereof written.


                                    EMPLOYEE:



                                     Signature: /s/ David E. Watson
                                                --------------------------------
                                     Printed Name:  David E. Watson
                                     Address:       6708 NW Monticello
                                                    Kansas City, MO  64152


                                     AMERICAN ITALIAN PASTA COMPANY



                                     By:  /s/ Timothy S. Webster
                                         ---------------------------------------
                                     Printed Name: Timothy S. Webster
                                     Address:      4100 North Mulberry Drive
                                                   Suite 200
                                                   Kansas City MO 64116-0696




                                      -10-

EX-10

                         AMERICAN ITALIAN PASTA COMPANY

                              EMPLOYMENT AGREEMENT



          THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective September
1, 2002 is by and between American Italian Pasta Company ("Employer"), and David
B. Potter, an individual ("Employee") (collectively "the parties") and
supersedes any and all prior oral or written agreements between the parties with
respect to the subject matter hereof.

                                   WITNESSETH:

          WHEREAS, Employer is engaged in the business of durum wheat milling
and pasta product production/marketing; and

         WHEREAS, in connection with such business, Employer desires to employ
Employee in the capacity of Executive Vice President - Procurement & Industrial
Markets; and

         WHEREAS, Employee desires to be employed by Employer in the aforesaid
capacities.

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

          1. Term of Employment. Subject to the provisions of Section 7 hereof,
the term of Employee's employment under this Agreement (the "Employment Term")
will commence as of the date hereof (the "Effective Date") and terminate on
September 30, 2005. The provisions of Sections 4, 5 and 6, below, will survive
and continue to be enforceable regardless of any termination of this Agreement.

          2. Duties of Employee.

          2.1 In accepting such employment, Employee shall undertake and assume
     the responsibility of performing for and on behalf of Employer such duties
     as shall be assigned to Employee by Employer at any time and from time to
     time and in accordance with all of Employer's policies, practices and
     procedures. It is understood and agreed that Employee's principal duties on
     behalf of Employer at the date of execution hereof are and shall be
     Executive Vice President - Procurement & Industrial Markets, and it is
     further understood and agreed that any modification in or expansion of
     Employee's duties hereunder shall not, unless specifically agreed to by
     Employee and Employer in a duly-executed amendment of this Agreement in
     accordance with Section 10.6 hereof, result in any modification in
     Employee's compensation referred to in Section 3 hereof.

          2.2 Employee will to the reasonable satisfaction of Employer at all
     times faithfully, industriously, and to the best of Employee's ability,
     experience, and talents perform all of the duties that may be required of
     and from Employee pursuant to the express and implicit terms hereof.

          2.3 Employee shall devote substantially all of Employee's professional
     time, attention, knowledge, and skills solely to the business and interests
     of Employer; provided, however, that Employee shall be entitled annually to
     three (3) weeks vacation, and Employer shall be entitled to all of the
     benefits, profits, and other issues arising from or incident to all
     professional work, services, and advice of Employee.

          3. Compensation. Employer shall pay Employee, and Employee shall
accept from Employer, in payment for Employee's services rendered to Employer
hereunder an annual base salary ("Base Salary") equal to one hundred seventy six
thousand eight hundred dollars ($176,800). Such Base Salary shall be paid in
equal bi-weekly installments and, in the sole discretion of Employer, shall be
subject to annual merit increase reviews.

          3.1 Bonuses. During the term of this Agreement, Employee will be
     eligible to participate in and bonuses may be awarded to Employee at the
     discretion of the Board of Directors in accordance with the terms of
     Employer's 1998 Salaried Bonus Plan (the "Bonus Plan"), as the same may be
     amended, modified, or terminated from time to time.

          3.2 Reimbursement of Business Expenses. Employer agrees to reimburse
     Employee for reasonable travel, entertainment, and other business expenses
     incurred in the performance of Employee's duties hereunder in accordance
     with Employer's policies on terms no less favorable than those policies in
     effect immediately prior to the date hereof.

          3.3 Benefits. Employee shall be entitled to participate in an
     equitable manner with other senior executive employees of Employer in all
     welfare benefit, incentive compensation, or other plans or arrangements
     authorized, adopted, and maintained from time to time by Employer,
     including, without limitation, the following: automobile allowance, profit
     sharing plan, medical reimbursement plan, group life insurance plan,
     medical and dental insurance plan, and long-term disability income plan, if
     in effect with Employer.

          4. Non-Competition, Nonsolicitation and Nondisparagement.

          4.1 Employee acknowledges and recognizes the highly competitive nature
     of the business of Employer and its affiliates and accordingly agrees as
     follows: during the Employment Term and until the date that is eighteen
     (18) months after the date that Employee ceases employment with Employer
     for any reason (the Employment Term and such period hereinafter referred to
     as the "Noncompetition Period"), Employee will not, in any area in the
     world where Employer conducts business, directly or indirectly own, manage,
     operate, control, be employed by, consult with, or be connected in any
     manner with the ownership (other than passive investments of not more than
     one percent of the outstanding shares of, or any other equity interest in,
     any company or entity listed or traded on a national securities exchange or
     in an over-the-counter securities market), management, operation, or
     control of any business engaged in the production and/or marketing of pasta
     products for human consumption. Notwithstanding any provision of this
     Agreement to the contrary, if Employee is employed by Employer, then any
     breach of the provisions of this Section 4.1 shall permit Employer to
     terminate the employment of Employee for Cause (as defined below), and,
     whether or not Employee is employed by Employer, from and after any breach
     by Employee of the provisions


                                      -2-

     of this Section 4.1, then Employer shall cease to have any obligations to
     make payments to Employee under this Agreement.

          4.2 During the Noncompetition Period, Employee will not directly or
     indirectly induce or attempt to induce any employee of Employer or any of
     its affiliates to engage in any activity in which Employee is prohibited
     from engaging by Section 4.1 hereof or to terminate Employee's or her
     employment with Employer or any of its affiliates, will not directly or
     indirectly assist or attempt to assist others in engaging in any of the
     activities in which Employee is prohibited from engaging by Section 4.1
     hereof, and will not directly or indirectly employ or offer employment to
     any person who was employed by Employer or any of its affiliates unless
     such person shall have ceased to be employed by Employer or any of its
     affiliates for a period of at least 12 months.

          4.3 During the Noncompetition Period, Employee will not directly or
     indirectly induce or attempt to induce any customer or supplier of Employer
     or any of its affiliates to move, reduce or not increase its trade or
     business with Employer or any of its affiliates.

          4.4 Employee acknowledges and agrees that disparaging or critical
     statements made by Employee about Employer or its board members, officers
     or employees would be uniquely detrimental to the interests of both
     parties. Therefore, during the Noncompetition Period, Employee agrees to
     refrain from making any disparaging or critical statements about Employer
     or its board members, officers or employees.

          4.5 Employee acknowledges that the restrictions contained in Sections
     4.1, 4.2, 4.3 and 4.4 are reasonable and appropriate. However, in the event
     that a court of competent jurisdiction determines that such restrictions
     are not reasonable and therefore unenforceable, the parties agree that such
     court may modify the restrictions in order for, but only to the least
     extent necessary for, the restrictions to be enforced by such court. In the
     event such court finds that any such restriction cannot be modified so as
     to make it enforceable, such restriction may be deleted by such court and
     the enforceability of all other restrictions will be unaffected by such
     deletion.

          5. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee has been and will be making use of,
acquiring, and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports, and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, Employee covenants and agrees
Employee shall not, at any time during or after the Employment Term, directly or
indirectly disclose, divulge, or use for Employee's own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation, or other business organization, entity, or enterprise
other than Employer and any of its subsidiaries or affiliates any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of


                                      -3-

Employer generally or of any subsidiary or affiliate of Employer, provided,
however, that the foregoing shall not apply to information that is not unique to
Employer or that is generally known to the industry or the public other than as
a result of breach of this covenant. Employee agrees that, upon termination of
Employee's employment with Employer for any reason, Employee will return to
Employer immediately all memoranda, books, manuals, training materials, records,
computer software, papers, plans, contracts, agreements, information, letters,
and other data, and all copies thereof or therefrom, in any way relating to the
business of Employer and its affiliates, except that Employee may retain
personal notes, notebooks, and diaries. Employee further agrees that Employee
will not retain or use for Employee's account at any time any trade names,
trademark, or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.

          6. Specific Performance and Survival.

          6.1 Employee acknowledges and agrees that Employer's remedies at law
     for a breach or threatened breach of any of the provisions of Section 4
     hereof or Section 5 hereof would be inadequate and, in recognition of this
     fact, Employee agrees that, in the event of such a breach or threatened
     breach, in addition to any remedies at law, Employer, without posting any
     bond, shall be entitled to obtain equitable relief in the form of specific
     performance, temporary restraining order, temporary or permanent
     injunction, or any other equitable remedy that may then be available.

          6.2 The parties agree that the terms of Sections 4, 5 and 6 are
     independent of and separable from the other provisions of this Agreement
     and that the termination of this Agreement for any reason will not affect
     the continued existence and enforceability of Sections 4, 5 and 6. Those
     Sections will survive and continue to be fully binding on and enforceable
     against Employee and Employer after any termination of this Agreement.

          7. Termination of Employment

          7.1 Termination without Cause; Resignation for Good Reason.

               7.1.1 General. (a) Subject to the provisions of Sections 7.1.2
          and 7.1.3 hereof, if Employee's employment is terminated by Employer
          without Cause, as defined in Section 7.3, or if Employee resigns from
          Employee's employment for Good Reason, as defined in Section 7.4, then
          Employer shall pay Employee severance in the amount of (i) Employee's
          accrued unpaid Base Salary to the date of termination or resignation
          and any bonus earned but not paid as of that date, and (ii)
          continuation of Employee's annual Base Salary, as adjusted under
          Section 3, as of the date of termination or resignation for a period
          of twelve (12) months following the date of termination or resignation
          (such period being referred to hereinafter as the "Severance Period").
          In addition, if at the time of such termination or resignation
          Employee has completed ten (10) years of uninterrupted service with
          Employer, the severance will include a payment in the amount of 50% of
          the prorated Normal Bonus level to which Employee would have been
          entitled had Employee remained employed through the then applicable
          bonus period. The Normal Bonus level will be calculated at the end of
          the bonus period and is subject to all adjustments and reductions
          determined by the Board of Directors and made applicable to all bonus
          plan participants. To the extent such calculation results in a bonus
          to be paid, that amount

                                      -4-

          will be prorated for the number of weeks of the bonus period occurring
          prior to the week in which the termination or resignation occurred.
          The Base Salary shall be payable in equal bi-weekly installments
          during the Severance Period, and any bonus shall be payable at the
          conclusion of the Severance Period.

                    (b) During the Severance Period and for a period of six (6)
               months thereafter, Employee shall also be eligible to participate
               on the same terms and conditions as in effect immediately prior
               to such termination or resignation in all health, medical,
               supplemental medical, and life insurance plans or programs
               provided to Employee by Employer pursuant to Section 3.7 hereof
               ("Employee Welfare Plans") at the time of such termination or
               resignation and which are provided by Employer to its employees
               following the date of such termination or resignation; provided,
               however, that Employee's eligibility to participate in these
               Employee Welfare Plans shall end at such time as Employee becomes
               eligible to receive coverage under comparable programs of a
               subsequent employer and further provided that if Employee
               participates in the Employee Welfare Plans for a period of
               eighteen (18) months from the date of termination or resignation,
               then Employee's COBRA rights shall commence at the end of such
               eighteen (18) month period. If, during the Severance Period,
               Employee is precluded from participating in any Employee Welfare
               Plan by its terms or applicable law, then Employer will provide
               Employee with benefits that are reasonably equivalent to those
               Employee would have received under such plan had Employee been
               eligible to participate therein. Anything to the contrary herein
               notwithstanding, Employer shall have no obligation to continue to
               maintain any Employee Welfare Plan during the Severance Period
               solely as a result of this Agreement. As an example and solely
               for purposes of illustration: If Employer were to terminate its
               dental insurance plan prior to or during the Severance Period,
               then Employer would have no obligation to maintain such plan or
               provide to Employee individual dental insurance to satisfy its
               obligations under this Section 7.1.1.

               7.1.2 Mitigation. Employee will be required to mitigate the
          amount of any payment provided for in Section 7.1.1 hereof by seeking
          other employment, and the amount of any such payment will be reduced
          by any compensation earned by Employee as the result of Employee's
          employment by another employer or acting as a consultant or in any
          other self-employed capacity subsequent to termination of Employee's
          employment with Employer.

               7.1.3 Death During Severance Period. If Employee dies during the
          Severance Period, then the Severance Period shall immediately cease,
          Employer shall not be obligated to make any further payments pursuant
          to this Section 7, and the provisions of Section 8.1 hereof shall
          apply as though Employee's death had occurred immediately prior to
          termination of Employee's employment hereunder.

               7.1.4 Date of Termination. The date of termination of employment
          without Cause shall be the date specified in a written notice of
          termination to Employee which in no case shall be more than 30 days
          following the date of notice. The date of resignation for Good Reason
          shall be the date specified in the written notice of resignation from
          Employee to Employer which in no case shall be more than 30 days
          following the date of notice.


                                      -5-

          7.2 Termination for Cause; Resignation Without Good Reason.

               7.2.1 General. If Employee's employment hereunder is terminated
          by Employer for Cause, or if Employee resigns from Employee's
          employment hereunder other than for Good Reason (a "Voluntary
          Termination"), then Employee shall be entitled only to payment of
          Employee's Base Salary, as adjusted under Section 3, earned through
          and including the date of termination or resignation. Employee shall
          have no further right to receive any other compensation or to
          participate in any other plan, arrangement, or benefit, after such
          termination for Cause or Voluntary Termination.

               7.2.2 Date of Termination. Subject to Section 7.3 hereof, the
          date of termination for Cause shall be the date of receipt by Employee
          of notice such termination. The date of Voluntary Termination shall be
          the date of receipt by Employer of the notice of resignation.

          7.3 Cause. Terminate for "Cause" means termination of Employee's
     employment because, in Employer's good faith belief, (i) Employee willfully
     and continually failed substantially to perform Employee's duties under the
     Agreement (other than as a result of Permanent Disability, as defined
     below), (ii) Employee failed to comply with any of the material term(s) of
     this Agreement, including, but not limited to, Sections 4 and 5 hereof,
     (iii) Employee committed an act or acts that constituted a misdemeanor
     (other than a minor traffic violation) or a felony under the law of the
     United States (including any subdivision thereof) or any country to which
     Employee is assigned (including any subdivision thereof), including, but
     not limited to, Employee's conviction for or plea of guilty or no contest
     ("nolo contrendre") to any such misdemeanor or felony, (iv) Employee
     committed an act or acts in violation of Employer's policies and/or
     practices applicable to employees at the level of Employee within
     Employer's organization, (v) Employee willfully acted, or willfully failed
     to act, in a manner that was injurious to the financial condition or
     business reputation of Employer or any of its subsidiaries or affiliates,
     (iv) Employee acted in a manner that is unbecoming of Employee's position
     with Employer, regardless of whether such action or inaction occurs in the
     course of the performance of Employee's duties with Employer, or (v)
     Employee was subject to any fine, censure, or sanction of any kind,
     permanent or temporary, issued by the Securities and Exchange Commission or
     the New York Stock Exchange.

          7.4 Good Reason. For purposes of this Agreement, "Good Reason" means
     any of the following actions taken by Employer without Employee's prior
     written consent: (i) the continued failure of Employer to pay compensation
     due to Employee under this Agreement, which failure is uncorrected for a
     period of 15 days following receipt by Employer of written notice thereof
     from Employee; (ii) a material diminution in Employee's position,
     authority, duties, or responsibilities, excluding for this purpose an
     isolated, insubstantial, or inadvertent action not taken in bad faith and
     that is remedied by Employer promptly after receipt of written notice
     thereof given by Employee; provided, however, that a mere change of
     Employee's title shall not constitute Good Reason so long as Employee
     continues to perform duties, functions, and responsibilities substantially
     equivalent to those performed by Employee prior to such change of title;
     (iii) Employer's material failure or refusal to comply with the provisions
     of this Agreement, which failure or refusal to comply is uncorrected for a
     period of 15 days following receipt by Employer of written notice thereof
     from Employee. It is expressly understood and

                                      -6-

     agreed by the parties hereto that Employer's failure to deliver a
     notification extending the Initial Employment Term as referred to in
     Section 1 hereof shall not constitute a termination without Cause.

          7.5 Conditions to Severance Payments. Employer's obligation to make
     any severance payments due hereunder or to provide any benefits to Employee
     after any termination or resignation hereunder (other than COBRA benefits)
     is expressly conditioned on Employee complying in full with the obligations
     under Sections 4, 5 and 6. In the event Employee does not fully comply with
     such obligations or in the event any such obligations are determined by any
     court to be unenforceable to any extent, Employer shall be relieved of all
     obligations to provide any severance or post-termination benefits.

          8. Death or Permanent Disability.

          8.1 Death. If Employee's employment hereunder is terminated by death,
     then Employer shall, within 90 days of the date of death, make a lump sum
     payment to Employee's estate (or other beneficiary designated by Employee
     in writing) equal to all Base Salary and bonuses, if any, earned and
     accrued through the date of death. Thereafter, Employer shall have no
     further obligation to Employee under the Agreement.

          8.2 Permanent Disability. If Employee becomes physically or mentally
     disabled while employed by Employer under this Agreement so that Employee
     is--with or without reasonable accommodation--unable to render the services
     provided for by this Agreement for a period of six consecutive months or
     for shorter periods aggregating six months during any 24-month period, or
     so that Employee has a Disability (as defined under Employer's then-current
     disability policy), then Employer may, at any time after the last day of
     the six consecutive months of disability, the day on which the shorter
     periods of disability equal an aggregate of six months, or the day on which
     Employee is determined to have a Disability, terminate Employee's
     employment hereunder for "Permanent Disability" by written notice to
     Employee. Following such termination, Employee shall be entitled to receive
     from Employer (i) all Base Salary and bonuses, if any, accrued through the
     date of termination and (ii) any other benefits payable under Employer's
     then-current disability policy, but all other rights of Employee hereunder
     shall terminate as of the date of Employee's termination.

          9. Change of Control.

          9.1 Notwithstanding anything to the contrary contained herein, if
     Employer terminates Employee without Cause upon or within six months
     following a Change of Control (as defined below), then Employer shall pay
     Employee Employee's accrued unpaid Base Salary to the date of termination
     and any bonus earned but not paid and shall continue to pay Employee
     Employee's annual Base Salary as of the date such termination occurs for a
     period of one (1) year following the date of termination as severance pay
     (such period being referred to hereinafter as the "Change of Control
     Severance Period") and bonus for the year in which the termination occurs
     (calculated as if the Normal Bonus for that year is earned). Any severance
     payable pursuant to this Section 9.1 will be in substitution for and not in
     addition to any severance that might be payable pursuant to Section 7
     hereof. To the extent Employer makes payments pursuant to this Section 9.1,
     it will have no additional obligations under Section 7 hereof. The


                                      -7-

     Base Salary shall be payable in bi-weekly payments during the Change of
     Control Severance Period, and the bonus shall be paid at the conclusion of
     the Change of Control Severance Period.

          9.2 Upon a Change in Control, all options to purchase stock of
     Employer held by Employee, to the extent not then exercisable, will
     immediately become fully vested and exercisable and all restrictions on any
     stock grants will immediately be removed.

          9.3 For purposes of this Agreement, "Change of Control" means any one
     of the following:

               (a) any person or group (as defined in Section 13(d)(3) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"))
          acquiring beneficial ownership of more than 50% of Employer's then
          outstanding Common Stock or 51 % or more of the combined voting power
          of Employer's then outstanding securities entitled generally to vote
          for the election of Employer's Directors;

               (b) the consummation of the merger or consolidation of Employer
          with any other corporation, other than a merger with a wholly-owned
          subsidiary, the sale of substantially all of the assets of Employer,
          or the liquidation or dissolution of Employer, unless, in the case of
          a merger or consolidation, (x) the Directors in office immediately
          prior to such merger or consolidation will constitute at least
          majority of the Board of Directors of the surviving corporation of
          such merger or consolidation and any parent (as such term is defined
          in Rule 12b-2 under the Exchange Act) of such corporation, or (y) the
          voting securities of Employer outstanding immediately prior thereto
          represent (either by remaining outstanding or by being converted into
          voting securities of the surviving entity) more than 66 2/3% of the
          combined voting power of the voting securities of Employer or such
          surviving entity and are owned by all or substantially all of the
          persons who were the holders of the voting securities of Employer
          immediately prior to the transaction in substantially the same
          proportions as such holders owned such voting securities immediately
          prior to the transaction; or

               (c) Continuing Directors (as defined below) no longer constitute
          at least a majority of the Board or a similar body of any successor to
          Employer. For purposes of this Agreement, "Continuing Directors" means
          any individual who either (i) is a member of Employer's Board of
          Directors on the Effective Date, (ii) who becomes a director after the
          Effective Date whose election or nomination for election by Employer's
          shareholders, was approved by a vote of at least a majority of the
          Continuing Directors (either by a specific vote or by approval of the
          proxy statement of Employer in which such person is named as nominee
          for director, without objection to such nomination), or (iii) is
          designated by any party pursuant to its rights under Section 2.1 of
          Employer's Amended and Restated Shareholders' Agreement dated as of
          October 4, 1997, as amended.

          9.4 Excess Parachute Payments. If any payment or the receipt of any
     benefit under this Agreement shall be deemed to constitute an "excess
     parachute payment" as such term is described in Section 280G of the
     Internal Revenue Code of 1986, as amended (the "Code"), so as to result in
     the loss of a deduction to Employer under Code Section 280G or in the
     imposition of an excise tax on the Employee under Code Section 4999, or any
     successor sections thereto, then the amounts payable or the benefits
     provided under this Agreement shall be reduced to the

                                      -8-

     minimum extent necessary so that no such deduction will be lost by Employer
     and no such excise tax will be imposed on the Employee. Employer, in its
     sole discretion, shall determine whether or not an "excess parachute
     payment" would otherwise occur and shall determine the amount and method of
     the foregoing reduction.

          10. Miscellaneous.

          10.1 Assignment of Employee Benefits. Absent the prior written consent
     of Employer, and subject to will and the laws of descent and distribution,
     Employee shall have no right to exchange, convert, encumber, or dispose of
     the rights of Employee to receive benefits and payments under this
     Agreement, which payments, benefits, and rights thereto are non-assignable
     and non-transferable.

          10.2 Burden and Benefit. This Agreement shall be binding upon, and
     shall inure to the benefit of, Employer and Employee, their respective
     heirs, personal, and legal representatives, successors, and assigns.

          10.3 Governing Law. In view of the fact that the principal office of
     Employer is located in the State of Missouri, the parties understand and
     agree that the construction and interpretation of this Agreement shall at
     all times and in all respects be governed by the laws of the State of
     Missouri, that the state and federal courts situated in the State of
     Missouri shall have exclusive jurisdiction over any claims arising under or
     in relation to this Agreement, and that the parties consent to personal
     jurisdiction in such state and federal courts.

          10.4 Headings. The headings of the Sections of this Agreement are for
     reference only and not to limit, expand, or otherwise affect the contents
     of this Agreement.

          10.5 Entire Agreement; Modification. Except as to Employer's Stock
     Option Plans, any instrument relating to an Option granted thereunder and
     written agreements signed by both of the parties hereto from time to time
     after the date hereof, this Agreement contains the entire agreement and
     understanding by and between Employer and Employee with respect to the
     subject matter hereof, and any representations, promises, agreements, or
     understandings, written or oral, not herein contained shall be of no force
     or effect. No change, waiver, or modification of any provision of this
     Agreement shall be valid or binding unless the same is in writing and duly
     executed by both parties and no evidence of any waiver or modification
     shall be offered or received in evidence of any proceeding, arbitration, or
     litigation between the parties hereto arising out of or affecting this
     Agreement, or the rights or obligations of the parties hereunder, unless
     such waiver or modification is in writing, duly executed as aforesaid, and
     the parties further agree that the provisions of this Section 10.6 may not
     be waived except as set forth herein.

          10.6 Waiver of Breach. The waiver by Employer of a breach of any
     provision of this Agreement by Employee shall not operate or be construed
     as a waiver of any subsequent breach by Employee.

          10.7 Notice. For the purpose of this Agreement, notices and all other
     communications provided for in the Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by United States
     registered mail, return receipt


                                      -9-

     requested, postage prepaid, addressed to the respective addresses set forth
     on the execution page of this Agreement, provided, however, that all
     notices to Employer shall be directed to the attention of the Board of
     Directors of Employer with a copy to the Secretary of Employer, or to such
     other address as either party may have furnished to the other in writing in
     accordance herewith, except that notice of change of address shall be
     effective only upon receipt.

          10.8 Withholding Taxes. Employer may withhold from any amounts payable
     under this Agreement such federal, state, and local taxes as may be
     required to be withheld pursuant to any applicable law or regulation.

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

          IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first hereof written.


                                    EMPLOYEE:



                                     Signature: /s/ David B. Potter
                                                --------------------------------
                                     Printed Name: David B. Potter
                                     Address:      8400 Allman
                                                   Lenexa, KS  66219



                                     AMERICAN ITALIAN PASTA COMPANY



                                     By:   /s/ Timothy S. Webster
                                         ---------------------------------------
                                     Printed Name: Timothy S. Webster
                                     Address:      4100 North Mulberry Drive
                                                   Suite 200
                                                   Kansas City MO 64116-0696





                                      -10-

EX-10

                         AMERICAN ITALIAN PASTA COMPANY

                              EMPLOYMENT AGREEMENT



          THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective September
1, 2002 is by and between American Italian Pasta Company ("Employer"), and
Warren B. Schmidgall, an individual ("Employee") (collectively "the parties")
and supersedes any and all prior oral or written agreements between the parties
with respect to the subject matter hereof.

                                   WITNESSETH:

          WHEREAS, Employer is engaged in the business of durum wheat
milling and pasta product production/marketing; and

          WHEREAS, in connection with such business, Employer desires to
employ Employee in the capacity of Executive Vice President and Chief Financial
Officer; and

          WHEREAS, Employee desires to be employed by Employer in the
aforesaid capacities.

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

          1. Term of Employment. Subject to the provisions of Section 7 hereof,
the term of Employee's employment under this Agreement (the "Employment Term")
will commence as of the date hereof (the "Effective Date") and terminate on
September 30, 2005. The provisions of Sections 4, 5 and 6, below, will survive
and continue to be enforceable regardless of any termination of this Agreement.

          2. Duties of Employee.

          2.1 In accepting such employment, Employee shall undertake and assume
     the responsibility of performing for and on behalf of Employer such duties
     as shall be assigned to Employee by Employer at any time and from time to
     time and in accordance with all of Employer's policies, practices and
     procedures. It is understood and agreed that Employee's principal duties on
     behalf of Employer at the date of execution hereof are and shall be
     Executive Vice President and Chief Financial Officer and it is further
     understood and agreed that any modification in or expansion of Employee's
     duties hereunder shall not, unless specifically agreed to by Employee and
     Employer in a duly-executed amendment of this Agreement in accordance with
     Section 10.6 hereof, result in any modification in Employee's compensation
     referred to in Section 3 hereof.

          2.2 Employee will to the reasonable satisfaction of Employer at all
     times faithfully, industriously, and to the best of Employee's ability,
     experience, and talents perform all of the duties that may be required of
     and from Employee pursuant to the express and implicit terms hereof.

          2.3 Employee shall devote substantially all of Employee's professional
     time, attention, knowledge, and skills solely to the business and interests
     of Employer; provided, however, that Employee shall be entitled annually to
     three (3) weeks vacation, and Employer shall be entitled to all of the
     benefits, profits, and other issues arising from or incident to all
     professional work, services, and advice of Employee.

          3. Compensation. Employer shall pay Employee, and Employee shall
accept from Employer, in payment for Employee's services rendered to Employer
hereunder an annual base salary ("Base Salary") equal to two hundred fifteen
thousand dollars ($215,000). Such Base Salary shall be paid in equal bi-weekly
installments and, in the sole discretion of Employer, shall be subject to annual
merit increase reviews.

          3.1 Bonuses. During the term of this Agreement, Employee will be
     eligible to participate in and bonuses may be awarded to Employee at the
     discretion of the Board of Directors in accordance with the terms of
     Employer's 1998 Salaried Bonus Plan (the "Bonus Plan"), as the same may be
     amended, modified, or terminated from time to time.

          3.2 Reimbursement of Business Expenses. Employer agrees to reimburse
     Employee for reasonable travel, entertainment, and other business expenses
     incurred in the performance of Employee's duties hereunder in accordance
     with Employer's policies on terms no less favorable than those policies in
     effect immediately prior to the date hereof.

          3.3 Benefits. Employee shall be entitled to participate in an
     equitable manner with other senior executive employees of Employer in all
     welfare benefit, incentive compensation, or other plans or arrangements
     authorized, adopted, and maintained from time to time by Employer,
     including, without limitation, the following: automobile allowance, profit
     sharing plan, medical reimbursement plan, group life insurance plan,
     medical and dental insurance plan, and long-term disability income plan, if
     in effect with Employer.

          4. Non-Competition, Nonsolicitation and Nondisparagement.

          4.1 Employee acknowledges and recognizes the highly competitive nature
     of the business of Employer and its affiliates and accordingly agrees as
     follows: during the Employment Term and until the date that is eighteen
     (18) months after the date that Employee ceases employment with Employer
     for any reason (the Employment Term and such period hereinafter referred to
     as the "Noncompetition Period"), Employee will not, in any area in the
     world where Employer conducts business, directly or indirectly own, manage,
     operate, control, be employed by, consult with, or be connected in any
     manner with the ownership (other than passive investments of not more than
     one percent of the outstanding shares of, or any other equity interest in,
     any company or entity listed or traded on a national securities exchange or
     in an over-the-counter securities market), management, operation, or
     control of any business engaged in the production and/or marketing of pasta
     products for human consumption. Notwithstanding any provision of this
     Agreement to the contrary, if Employee is employed by Employer, then any
     breach of the provisions of this Section 4.1 shall permit Employer to
     terminate the employment of Employee for Cause (as defined below), and,
     whether or not Employee is employed by Employer, from and after any breach
     by Employee of the provisions


                                      -2-

     of this Section 4.1, then Employer shall cease to have any obligations to
     make payments to Employee under this Agreement.

          4.2 During the Noncompetition Period, Employee will not directly or
     indirectly induce or attempt to induce any employee of Employer or any of
     its affiliates to engage in any activity in which Employee is prohibited
     from engaging by Section 4.1 hereof or to terminate Employee's or her
     employment with Employer or any of its affiliates, will not directly or
     indirectly assist or attempt to assist others in engaging in any of the
     activities in which Employee is prohibited from engaging by Section 4.1
     hereof, and will not directly or indirectly employ or offer employment to
     any person who was employed by Employer or any of its affiliates unless
     such person shall have ceased to be employed by Employer or any of its
     affiliates for a period of at least 12 months.

          4.3 During the Noncompetition Period, Employee will not directly or
     indirectly induce or attempt to induce any customer or supplier of Employer
     or any of its affiliates to move, reduce or not increase its trade or
     business with Employer or any of its affiliates.

          4.4 Employee acknowledges and agrees that disparaging or critical
     statements made by Employee about Employer or its board members, officers
     or employees would be uniquely detrimental to the interests of both
     parties. Therefore, during the Noncompetition Period, Employee agrees to
     refrain from making any disparaging or critical statements about Employer
     or its board members, officers or employees.

          4.5 Employee acknowledges that the restrictions contained in Sections
     4.1, 4.2, 4.3 and 4.4 are reasonable and appropriate. However, in the event
     that a court of competent jurisdiction determines that such restrictions
     are not reasonable and therefore unenforceable, the parties agree that such
     court may modify the restrictions in order for, but only to the least
     extent necessary for, the restrictions to be enforced by such court. In the
     event such court finds that any such restriction cannot be modified so as
     to make it enforceable, such restriction may be deleted by such court and
     the enforceability of all other restrictions will be unaffected by such
     deletion.

          5. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee has been and will be making use of,
acquiring, and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports, and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, Employee covenants and agrees
Employee shall not, at any time during or after the Employment Term, directly or
indirectly disclose, divulge, or use for Employee's own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation, or other business organization, entity, or enterprise
other than Employer and any of its subsidiaries or affiliates any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of


                                      -3-

Employer generally or of any subsidiary or affiliate of Employer, provided,
however, that the foregoing shall not apply to information that is not unique to
Employer or that is generally known to the industry or the public other than as
a result of breach of this covenant. Employee agrees that, upon termination of
Employee's employment with Employer for any reason, Employee will return to
Employer immediately all memoranda, books, manuals, training materials, records,
computer software, papers, plans, contracts, agreements, information, letters,
and other data, and all copies thereof or therefrom, in any way relating to the
business of Employer and its affiliates, except that Employee may retain
personal notes, notebooks, and diaries. Employee further agrees that Employee
will not retain or use for Employee's account at any time any trade names,
trademark, or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.

          6. Specific Performance and Survival.

          6.1 Employee acknowledges and agrees that Employer's remedies at law
     for a breach or threatened breach of any of the provisions of Section 4
     hereof or Section 5 hereof would be inadequate and, in recognition of this
     fact, Employee agrees that, in the event of such a breach or threatened
     breach, in addition to any remedies at law, Employer, without posting any
     bond, shall be entitled to obtain equitable relief in the form of specific
     performance, temporary restraining order, temporary or permanent
     injunction, or any other equitable remedy that may then be available.

          6.2 The parties agree that the terms of Sections 4, 5 and 6 are
     independent of and separable from the other provisions of this Agreement
     and that the termination of this Agreement for any reason will not affect
     the continued existence and enforceability of Sections 4, 5 and 6. Those
     Sections will survive and continue to be fully binding on and enforceable
     against Employee and Employer after any termination of this Agreement.

          7. Termination of Employment.

          7.1 Termination without Cause; Resignation for Good Reason.

          7.1.1 General. (a) Subject to the provisions of Sections 7.1.2 and
     7.1.3 hereof, if Employee's employment is terminated by Employer without
     Cause, as defined in Section 7.3, or if Employee resigns from Employee's
     employment for Good Reason, as defined in Section 7.4, then Employer shall
     pay Employee severance in the amount of (i) Employee's accrued unpaid Base
     Salary to the date of termination or resignation and any bonus earned but
     not paid as of that date, and (ii) continuation of Employee's annual Base
     Salary, as adjusted under Section 3, as of the date of termination or
     resignation for a period of twelve (12) months following the date of
     termination or resignation (such period being referred to hereinafter as
     the "Severance Period"). In addition, if at the time of such termination or
     resignation Employee has completed ten (10) years of uninterrupted service
     with Employer, the severance will include a payment in the amount of 50% of
     the prorated Normal Bonus level to which Employee would have been entitled
     had Employee remained employed through the then applicable bonus period.
     The Normal Bonus level will be calculated at the end of the bonus period
     and is subject to all adjustments and reductions determined by the Board of
     Directors and made applicable to all bonus plan participants. To the extent
     such calculation results in a bonus to be paid, that amount

                                      -4-

     will be prorated for the number of weeks of the bonus period occurring
     prior to the week in which the termination or resignation occurred. The
     Base Salary shall be payable in equal bi-weekly installments during the
     Severance Period, and any bonus shall be payable at the conclusion of the
     Severance Period.

               (b) During the Severance Period and for a period of six (6)
          months thereafter, Employee shall also be eligible to participate on
          the same terms and conditions as in effect immediately prior to such
          termination or resignation in all health, medical, supplemental
          medical, and life insurance plans or programs provided to Employee by
          Employer pursuant to Section 3.7 hereof ("Employee Welfare Plans") at
          the time of such termination or resignation and which are provided by
          Employer to its employees following the date of such termination or
          resignation; provided, however, that Employee's eligibility to
          participate in these Employee Welfare Plans shall end at such time as
          Employee becomes eligible to receive coverage under comparable
          programs of a subsequent employer and further provided that if
          Employee participates in the Employee Welfare Plans for a period of
          eighteen (18) months from the date of termination or resignation, then
          Employee's COBRA rights shall commence at the end of such eighteen
          (18) month period. If, during the Severance Period, Employee is
          precluded from participating in any Employee Welfare Plan by its terms
          or applicable law, then Employer will provide Employee with benefits
          that are reasonably equivalent to those Employee would have received
          under such plan had Employee been eligible to participate therein.
          Anything to the contrary herein notwithstanding, Employer shall have
          no obligation to continue to maintain any Employee Welfare Plan during
          the Severance Period solely as a result of this Agreement. As an
          example and solely for purposes of illustration: If Employer were to
          terminate its dental insurance plan prior to or during the Severance
          Period, then Employer would have no obligation to maintain such plan
          or provide to Employee individual dental insurance to satisfy its
          obligations under this Section 7.1.1.

               7.1.2 Mitigation. Employee will be required to mitigate the
          amount of any payment provided for in Section 7.1.1 hereof by seeking
          other employment, and the amount of any such payment will be reduced
          by any compensation earned by Employee as the result of Employee's
          employment by another employer or acting as a consultant or in any
          other self-employed capacity subsequent to termination of Employee's
          employment with Employer.

               7.1.3 Death During Severance Period. If Employee dies during the
          Severance Period, then the Severance Period shall immediately cease,
          Employer shall not be obligated to make any further payments pursuant
          to this Section 7, and the provisions of Section 8.1 hereof shall
          apply as though Employee's death had occurred immediately prior to
          termination of Employee's employment hereunder.

               7.1.4 Date of Termination. The date of termination of employment
          without Cause shall be the date specified in a written notice of
          termination to Employee which in no case shall be more than 30 days
          following the date of notice. The date of resignation for Good Reason
          shall be the date specified in the written notice of resignation from
          Employee to Employer which in no case shall be more than 30 days
          following the date of notice.

                                      -5-

          7.2 Termination for Cause; Resignation Without Good Reason.

          7.2.1 General. If Employee's employment hereunder is terminated by
     Employer for Cause, or if Employee resigns from Employee's employment
     hereunder other than for Good Reason (a "Voluntary Termination"), then
     Employee shall be entitled only to payment of Employee's Base Salary, as
     adjusted under Section 3, earned through and including the date of
     termination or resignation. Employee shall have no further right to receive
     any other compensation or to participate in any other plan, arrangement, or
     benefit, after such termination for Cause or Voluntary Termination.

          7.2.2 Date of Termination. Subject to Section 7.3 hereof, the date of
     termination for Cause shall be the date of receipt by Employee of notice
     such termination. The date of Voluntary Termination shall be the date of
     receipt by Employer of the notice of resignation.

          7.3 Cause. Terminate for "Cause" means termination of Employee's
     employment because, in Employer's good faith belief, (i) Employee willfully
     and continually failed substantially to perform Employee's duties under the
     Agreement (other than as a result of Permanent Disability, as defined
     below), (ii) Employee failed to comply with any of the material term(s) of
     this Agreement, including, but not limited to, Sections 4 and 5 hereof,
     (iii) Employee committed an act or acts that constituted a misdemeanor
     (other than a minor traffic violation) or a felony under the law of the
     United States (including any subdivision thereof) or any country to which
     Employee is assigned (including any subdivision thereof), including, but
     not limited to, Employee's conviction for or plea of guilty or no contest
     ("nolo contrendre") to any such misdemeanor or felony, (iv) Employee
     committed an act or acts in violation of Employer's policies and/or
     practices applicable to employees at the level of Employee within
     Employer's organization, (v) Employee willfully acted, or willfully failed
     to act, in a manner that was injurious to the financial condition or
     business reputation of Employer or any of its subsidiaries or affiliates,
     (iv) Employee acted in a manner that is unbecoming of Employee's position
     with Employer, regardless of whether such action or inaction occurs in the
     course of the performance of Employee's duties with Employer, or (v)
     Employee was subject to any fine, censure, or sanction of any kind,
     permanent or temporary, issued by the Securities and Exchange Commission or
     the New York Stock Exchange.

          7.4 Good Reason. For purposes of this Agreement, "Good Reason" means
     any of the following actions taken by Employer without Employee's prior
     written consent: (i) the continued failure of Employer to pay compensation
     due to Employee under this Agreement, which failure is uncorrected for a
     period of 15 days following receipt by Employer of written notice thereof
     from Employee; (ii) a material diminution in Employee's position,
     authority, duties, or responsibilities, excluding for this purpose an
     isolated, insubstantial, or inadvertent action not taken in bad faith and
     that is remedied by Employer promptly after receipt of written notice
     thereof given by Employee; provided, however, that a mere change of
     Employee's title shall not constitute Good Reason so long as Employee
     continues to perform duties, functions, and responsibilities substantially
     equivalent to those performed by Employee prior to such change of title;
     (iii) Employer's material failure or refusal to comply with the provisions
     of this Agreement, which failure or refusal to comply is uncorrected for a
     period of 15 days following receipt by Employer of written notice thereof
     from Employee. It is expressly understood and

                                      -6-

     agreed by the parties hereto that Employer's failure to deliver a
     notification extending the Initial Employment Term as referred to in
     Section 1 hereof shall not constitute a termination without Cause.

          7.5 Conditions to Severance Payments. Employer's obligation to make
any severance payments due hereunder or to provide any benefits to Employee
after any termination or resignation hereunder (other than COBRA benefits) is
expressly conditioned on Employee complying in full with the obligations under
Sections 4, 5 and 6. In the event Employee does not fully comply with such
obligations or in the event any such obligations are determined by any court to
be unenforceable to any extent, Employer shall be relieved of all obligations to
provide any severance or post-termination benefits.

          8. Death or Permanent Disability.

          8.1 Death. If Employee's employment hereunder is terminated by death,
     then Employer shall, within 90 days of the date of death, make a lump sum
     payment to Employee's estate (or other beneficiary designated by Employee
     in writing) equal to all Base Salary and bonuses, if any, earned and
     accrued through the date of death. Thereafter, Employer shall have no
     further obligation to Employee under the Agreement.

          8.2 Permanent Disability. If Employee becomes physically or mentally
     disabled while employed by Employer under this Agreement so that Employee
     is--with or without reasonable accommodation--unable to render the services
     provided for by this Agreement for a period of six consecutive months or
     for shorter periods aggregating six months during any 24-month period, or
     so that Employee has a Disability (as defined under Employer's then-current
     disability policy), then Employer may, at any time after the last day of
     the six consecutive months of disability, the day on which the shorter
     periods of disability equal an aggregate of six months, or the day on which
     Employee is determined to have a Disability, terminate Employee's
     employment hereunder for "Permanent Disability" by written notice to
     Employee. Following such termination, Employee shall be entitled to receive
     from Employer (i) all Base Salary and bonuses, if any, accrued through the
     date of termination and (ii) any other benefits payable under Employer's
     then-current disability policy, but all other rights of Employee hereunder
     shall terminate as of the date of Employee's termination.

          9. Change of Control.

          9.1 Notwithstanding anything to the contrary contained herein, if
     Employer terminates Employee without Cause upon or within six months
     following a Change of Control (as defined below), then Employer shall pay
     Employee Employee's accrued unpaid Base Salary to the date of termination
     and any bonus earned but not paid and shall continue to pay Employee
     Employee's annual Base Salary as of the date such termination occurs for a
     period of one (1) year following the date of termination as severance pay
     (such period being referred to hereinafter as the "Change of Control
     Severance Period") and bonus for the year in which the termination occurs
     (calculated as if the Normal Bonus for that year is earned). Any severance
     payable pursuant to this Section 9.1 will be in substitution for and not in
     addition to any severance that might be payable pursuant to Section 7
     hereof. To the extent Employer makes payments pursuant to this Section 9.1,
     it will have no additional obligations under Section 7 hereof. The


                                      -7-

     Base Salary shall be payable in bi-weekly payments during the Change of
     Control Severance Period, and the bonus shall be paid at the conclusion of
     the Change of Control Severance Period.

          9.2 Upon a Change in Control, all options to purchase stock of
     Employer held by Employee, to the extent not then exercisable, will
     immediately become fully vested and exercisable and all restrictions on any
     stock grants will immediately be removed.

          9.3 For purposes of this Agreement, "Change of Control" means any one
     of the following:

               (a) any person or group (as defined in Section 13(d)(3) of the
          Securities Exchange Act of 1934, as amended (the "Exchange Act"))
          acquiring beneficial ownership of more than 50% of Employer's then
          outstanding Common Stock or 51 % or more of the combined voting power
          of Employer's then outstanding securities entitled generally to vote
          for the election of Employer's Directors;

               (b) the consummation of the merger or consolidation of Employer
          with any other corporation, other than a merger with a wholly-owned
          subsidiary, the sale of substantially all of the assets of Employer,
          or the liquidation or dissolution of Employer, unless, in the case of
          a merger or consolidation, (x) the Directors in office immediately
          prior to such merger or consolidation will constitute at least
          majority of the Board of Directors of the surviving corporation of
          such merger or consolidation and any parent (as such term is defined
          in Rule 12b-2 under the Exchange Act) of such corporation, or (y) the
          voting securities of Employer outstanding immediately prior thereto
          represent (either by remaining outstanding or by being converted into
          voting securities of the surviving entity) more than 66 2/3% of the
          combined voting power of the voting securities of Employer or such
          surviving entity and are owned by all or substantially all of the
          persons who were the holders of the voting securities of Employer
          immediately prior to the transaction in substantially the same
          proportions as such holders owned such voting securities immediately
          prior to the transaction; or

               (c) Continuing Directors (as defined below) no longer constitute
          at least a majority of the Board or a similar body of any successor to
          Employer. For purposes of this Agreement, "Continuing Directors" means
          any individual who either (i) is a member of Employer's Board of
          Directors on the Effective Date, (ii) who becomes a director after the
          Effective Date whose election or nomination for election by Employer's
          shareholders, was approved by a vote of at least a majority of the
          Continuing Directors (either by a specific vote or by approval of the
          proxy statement of Employer in which such person is named as nominee
          for director, without objection to such nomination), or (iii) is
          designated by any party pursuant to its rights under Section 2.1 of
          Employer's Amended and Restated Shareholders' Agreement dated as of
          October 4, 1997, as amended.

          9.4 Excess Parachute Payments. If any payment or the receipt of any
     benefit under this Agreement shall be deemed to constitute an "excess
     parachute payment" as such term is described in Section 280G of the
     Internal Revenue Code of 1986, as amended (the "Code"), so as to result in
     the loss of a deduction to Employer under Code Section 280G or in the
     imposition of an excise tax on the Employee under Code Section 4999, or any
     successor sections thereto, then the amounts payable or the benefits
     provided under this Agreement shall be reduced to the


                                      -8-

     minimum extent necessary so that no such deduction will be lost by Employer
     and no such excise tax will be imposed on the Employee. Employer, in its
     sole discretion, shall determine whether or not an "excess parachute
     payment" would otherwise occur and shall determine the amount and method of
     the foregoing reduction.

          10. Miscellaneous.

          10.1 Assignment of Employee Benefits. Absent the prior written consent
     of Employer, and subject to will and the laws of descent and distribution,
     Employee shall have no right to exchange, convert, encumber, or dispose of
     the rights of Employee to receive benefits and payments under this
     Agreement, which payments, benefits, and rights thereto are non-assignable
     and non-transferable.

          10.2 Burden and Benefit. This Agreement shall be binding upon, and
     shall inure to the benefit of, Employer and Employee, their respective
     heirs, personal, and legal representatives, successors, and assigns.

          10.3 Governing Law. In view of the fact that the principal office of
     Employer is located in the State of Missouri, the parties understand and
     agree that the construction and interpretation of this Agreement shall at
     all times and in all respects be governed by the laws of the State of
     Missouri, that the state and federal courts situated in the State of
     Missouri shall have exclusive jurisdiction over any claims arising under or
     in relation to this Agreement, and that the parties consent to personal
     jurisdiction in such state and federal courts.

          10.4 Headings. The headings of the Sections of this Agreement are for
     reference only and not to limit, expand, or otherwise affect the contents
     of this Agreement.

          10.5 Entire Agreement; Modification. Except as to Employer's Stock
     Option Plans, any instrument relating to an Option granted thereunder and
     written agreements signed by both of the parties hereto from time to time
     after the date hereof, this Agreement contains the entire agreement and
     understanding by and between Employer and Employee with respect to the
     subject matter hereof, and any representations, promises, agreements, or
     understandings, written or oral, not herein contained shall be of no force
     or effect. No change, waiver, or modification of any provision of this
     Agreement shall be valid or binding unless the same is in writing and duly
     executed by both parties and no evidence of any waiver or modification
     shall be offered or received in evidence of any proceeding, arbitration, or
     litigation between the parties hereto arising out of or affecting this
     Agreement, or the rights or obligations of the parties hereunder, unless
     such waiver or modification is in writing, duly executed as aforesaid, and
     the parties further agree that the provisions of this Section 10.6 may not
     be waived except as set forth herein.

          10.6 Waiver of Breach. The waiver by Employer of a breach of any
     provision of this Agreement by Employee shall not operate or be construed
     as a waiver of any subsequent breach by Employee.

          10.7 Notice. For the purpose of this Agreement, notices and all other
     communications provided for in the Agreement shall be in writing and shall
     be deemed to have been duly given when delivered or mailed by United States
     registered mail, return receipt


                                      -9-

     requested, postage prepaid, addressed to the respective addresses set forth
     on the execution page of this Agreement, provided, however, that all
     notices to Employer shall be directed to the attention of the Board of
     Directors of Employer with a copy to the Secretary of Employer, or to such
     other address as either party may have furnished to the other in writing in
     accordance herewith, except that notice of change of address shall be
     effective only upon receipt.

          10.8 Withholding Taxes. Employer may withhold from any amounts payable
     under this Agreement such federal, state, and local taxes as may be
     required to be withheld pursuant to any applicable law or regulation.

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

          IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first hereof written.


                                    EMPLOYEE:



                                     Signature:  /s/ Warren B. Schmidgall
                                                --------------------------------
                                     Printed Name:  Warren B. Schmidgall
                                     Address:       3630 SW Canterbury
                                                    Topeka, KS  66610



                                     AMERICAN ITALIAN PASTA COMPANY



                                     By:  /s/ Timothy S. Webster
                                         ---------------------------------------
                                     Printed Name: Timothy S. Webster
                                     Address:      4100 North Mulberry Drive
                                                   Suite 200
                                                   Kansas City MO 64116-0696





                                      -10-

EX-10

                         AMERICAN ITALIAN PASTA COMPANY

                              EMPLOYMENT AGREEMENT



        THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective September 1,
2002 is by and between American Italian Pasta Company ("Employer"), and Walter
N. George, an individual ("Employee") (collectively "the parties") and
supersedes any and all prior oral or written agreements between the parties with
respect to the subject matter hereof.

                                   WITNESSETH:

          WHEREAS, Employer is engaged in the business of durum wheat
milling and pasta product production/marketing; and

          WHEREAS, in connection with such business, Employer desires to employ
Employee in the capacity of Senior Vice President - Supply Chain & Logistics; and

          WHEREAS, Employee desires to be employed by Employer in the aforesaid
capacities.

          NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

          1. Term of Employment. Subject to the provisions of Section 7
hereof, the term of Employee's employment under this Agreement (the "Employment
Term") will commence as of the date hereof (the "Effective Date") and terminate
on September 30, 2005. The provisions of Sections 4, 5 and 6, below, will
survive and continue to be enforceable regardless of any termination of this
Agreement.

          2. Duties of Employee.

               2.1 In accepting such employment, Employee shall undertake and
          assume the responsibility of performing for and on behalf of Employer
          such duties as shall be assigned to Employee by Employer at any time
          and from time to time and in accordance with all of Employer's
          policies, practices and procedures. It is understood and agreed that
          Employee's principal duties on behalf of Employer at the date of
          execution hereof are and shall be Senior Vice President - Supply Chain
          & Logistics and it is further understood and agreed that any
          modification in or expansion of Employee's duties hereunder shall not,
          unless specifically agreed to by Employee and Employer in a
          duly-executed amendment of this Agreement in accordance with Section
          10.6 hereof, result in any modification in Employee's compensation
          referred to in Section 3 hereof.

               2.2 Employee will to the reasonable satisfaction of Employer at
          all times faithfully, industriously, and to the best of Employee's
          ability, experience, and talents perform all of the duties that may be
          required of and from Employee pursuant to the express and implicit
          terms hereof.

               2.3 Employee shall devote substantially all of Employee's
          professional time, attention, knowledge, and skills solely to the
          business and interests of Employer; provided, however, that Employee
          shall be entitled annually to three (3) weeks vacation, and Employer
          shall be entitled to all of the benefits, profits, and other issues
          arising from or incident to all professional work, services, and
          advice of Employee.

          3. Compensation. Employer shall pay Employee, and Employee shall
accept from Employer, in payment for Employee's services rendered to Employer
hereunder an annual base salary ("Base Salary") equal to one hundred ninety
thousand dollars ($190,000). Such Base Salary shall be paid in equal bi-weekly
installments and, in the sole discretion of Employer, shall be subject to annual
merit increase reviews.

               3.1 Bonuses. During the term of this Agreement, Employee will be
          eligible to participate in and bonuses may be awarded to Employee at
          the discretion of the Board of Directors in accordance with the terms
          of Employer's 1998 Salaried Bonus Plan (the "Bonus Plan"), as the same
          may be amended, modified, or terminated from time to time.

               3.2 Reimbursement of Business Expenses. Employer agrees to
          reimburse Employee for reasonable travel, entertainment, and other
          business expenses incurred in the performance of Employee's duties
          hereunder in accordance with Employer's policies on terms no less
          favorable than those policies in effect immediately prior to the date
          hereof.

               3.3 Benefits. Employee shall be entitled to participate in an
          equitable manner with other senior executive employees of Employer in
          all welfare benefit, incentive compensation, or other plans or
          arrangements authorized, adopted, and maintained from time to time by
          Employer, including, without limitation, the following: automobile
          allowance, profit sharing plan, medical reimbursement plan, group life
          insurance plan, medical and dental insurance plan, and long-term
          disability income plan, if in effect with Employer.

          4. Non-Competition, Nonsolicitation and Nondisparagement.

               4.1 Employee acknowledges and recognizes the highly competitive
          nature of the business of Employer and its affiliates and accordingly
          agrees as follows: during the Employment Term and until the date that
          is eighteen (18) months after the date that Employee ceases employment
          with Employer for any reason (the Employment Term and such period
          hereinafter referred to as the "Noncompetition Period"), Employee will
          not, in any area in the world where Employer conducts business,
          directly or indirectly own, manage, operate, control, be employed by,
          consult with, or be connected in any manner with the ownership (other
          than passive investments of not more than one percent of the
          outstanding shares of, or any other equity interest in, any company or
          entity listed or traded on a national securities exchange or in an
          over-the-counter securities market), management, operation, or control
          of any business engaged in the production and/or marketing of pasta
          products for human consumption. Notwithstanding any provision of this
          Agreement to the contrary, if Employee is employed by Employer, then
          any breach of the provisions of this Section 4.1 shall permit Employer
          to terminate the employment of Employee for Cause (as defined below),
          and, whether or not Employee is employed by Employer, from and after
          any breach by Employee of the provisions

                                      -2-

          of this Section 4.1, then Employer shall cease to have any obligations
          to make payments to Employee under this Agreement.

               4.2 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any employee of Employer or
          any of its affiliates to engage in any activity in which Employee is
          prohibited from engaging by Section 4.1 hereof or to terminate
          Employee's or her employment with Employer or any of its affiliates,
          will not directly or indirectly assist or attempt to assist others in
          engaging in any of the activities in which Employee is prohibited from
          engaging by Section 4.1 hereof, and will not directly or indirectly
          employ or offer employment to any person who was employed by Employer
          or any of its affiliates unless such person shall have ceased to be
          employed by Employer or any of its affiliates for a period of at least
          12 months.

               4.3 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any customer or supplier of
          Employer or any of its affiliates to move, reduce or not increase its
          trade or business with Employer or any of its affiliates.

               4.4 Employee acknowledges and agrees that disparaging or critical
          statements made by Employee about Employer or its board members,
          officers or employees would be uniquely detrimental to the interests
          of both parties. Therefore, during the Noncompetition Period, Employee
          agrees to refrain from making any disparaging or critical statements
          about Employer or its board members, officers or employees.

               4.5 Employee acknowledges that the restrictions contained in
          Sections 4.1, 4.2, 4.3 and 4.4 are reasonable and appropriate.
          However, in the event that a court of competent jurisdiction
          determines that such restrictions are not reasonable and therefore
          unenforceable, the parties agree that such court may modify the
          restrictions in order for, but only to the least extent necessary for,
          the restrictions to be enforced by such court. In the event such court
          finds that any such restriction cannot be modified so as to make it
          enforceable, such restriction may be deleted by such court and the
          enforceability of all other restrictions will be unaffected by such
          deletion.

          5. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee has been and will be making use of,
acquiring, and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports, and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, Employee covenants and agrees
Employee shall not, at any time during or after the Employment Term, directly or
indirectly disclose, divulge, or use for Employee's own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation, or other business organization, entity, or enterprise
other than Employer and any of its subsidiaries or affiliates any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of

                                      -3-

Employer generally or of any subsidiary or affiliate of Employer, provided,
however, that the foregoing shall not apply to information that is not unique to
Employer or that is generally known to the industry or the public other than as
a result of breach of this covenant. Employee agrees that, upon termination of
Employee's employment with Employer for any reason, Employee will return to
Employer immediately all memoranda, books, manuals, training materials, records,
computer software, papers, plans, contracts, agreements, information, letters,
and other data, and all copies thereof or therefrom, in any way relating to the
business of Employer and its affiliates, except that Employee may retain
personal notes, notebooks, and diaries. Employee further agrees that Employee
will not retain or use for Employee's account at any time any trade names,
trademark, or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.

          6. Specific Performance and Survival.

               6.1 Employee acknowledges and agrees that Employer's remedies at
          law for a breach or threatened breach of any of the provisions of
          Section 4 hereof or Section 5 hereof would be inadequate and, in
          recognition of this fact, Employee agrees that, in the event of such a
          breach or threatened breach, in addition to any remedies at law,
          Employer, without posting any bond, shall be entitled to obtain
          equitable relief in the form of specific performance, temporary
          restraining order, temporary or permanent injunction, or any other
          equitable remedy that may then be available.

               6.2 The parties agree that the terms of Sections 4, 5 and 6 are
          independent of and separable from the other provisions of this
          Agreement and that the termination of this Agreement for any reason
          will not affect the continued existence and enforceability of Sections
          4, 5 and 6. Those Sections will survive and continue to be fully
          binding on and enforceable against Employee and Employer after any
          termination of this Agreement.

          7. Termination of Employment

               7.1 Termination without Cause; Resignation for Good Reason.

                    7.1.1 General. (a) Subject to the provisions of Sections
               7.1.2 and 7.1.3 hereof, if Employee's employment is terminated by
               Employer without Cause, as defined in Section 7.3, or if Employee
               resigns from Employee's employment for Good Reason, as defined in
               Section 7.4, then Employer shall pay Employee severance in the
               amount of (i) Employee's accrued unpaid Base Salary to the date
               of termination or resignation and any bonus earned but not paid
               as of that date, and (ii) continuation of Employee's annual Base
               Salary, as adjusted under Section 3, as of the date of
               termination or resignation for a period of twelve (12) months
               following the date of termination or resignation (such period
               being referred to hereinafter as the "Severance Period"). In
               addition, if at the time of such termination or resignation
               Employee has completed ten (10) years of uninterrupted service
               with Employer, the severance will include a payment in the amount
               of 50% of the prorated Normal Bonus level to which Employee would
               have been entitled had Employee remained employed through the
               then applicable bonus period. The Normal Bonus level will be
               calculated at the end of the bonus period and is subject to all
               adjustments and reductions determined by the Board of Directors
               and made applicable to all bonus plan participants. To the extent
               such calculation results in a bonus to be paid, that amount


                                      -4-

               will be prorated for the number of weeks of the bonus period
               occurring prior to the week in which the termination or
               resignation occurred. The Base Salary shall be payable in equal
               bi-weekly installments during the Severance Period, and any bonus
               shall be payable at the conclusion of the Severance Period.

                         (b) During the Severance Period and for a period of six
                    (6) months thereafter, Employee shall also be eligible to
                    participate on the same terms and conditions as in effect
                    immediately prior to such termination or resignation in all
                    health, medical, supplemental medical, and life insurance
                    plans or programs provided to Employee by Employer pursuant
                    to Section 3.7 hereof ("Employee Welfare Plans") at the time
                    of such termination or resignation and which are provided by
                    Employer to its employees following the date of such
                    termination or resignation; provided, however, that
                    Employee's eligibility to participate in these Employee
                    Welfare Plans shall end at such time as Employee becomes
                    eligible to receive coverage under comparable programs of a
                    subsequent employer and further provided that if Employee
                    participates in the Employee Welfare Plans for a period of
                    eighteen (18) months from the date of termination or
                    resignation, then Employee's COBRA rights shall commence at
                    the end of such eighteen (18) month period. If, during the
                    Severance Period, Employee is precluded from participating
                    in any Employee Welfare Plan by its terms or applicable law,
                    then Employer will provide Employee with benefits that are
                    reasonably equivalent to those Employee would have received
                    under such plan had Employee been eligible to participate
                    therein. Anything to the contrary herein notwithstanding,
                    Employer shall have no obligation to continue to maintain
                    any Employee Welfare Plan during the Severance Period solely
                    as a result of this Agreement. As an example and solely for
                    purposes of illustration: If Employer were to terminate its
                    dental insurance plan prior to or during the Severance
                    Period, then Employer would have no obligation to maintain
                    such plan or provide to Employee individual dental insurance
                    to satisfy its obligations under this Section 7.1.1.

                    7.1.2 Mitigation. Employee will be required to mitigate the
               amount of any payment provided for in Section 7.1.1 hereof by
               seeking other employment, and the amount of any such payment will
               be reduced by any compensation earned by Employee as the result
               of Employee's employment by another employer or acting as a
               consultant or in any other self-employed capacity subsequent to
               termination of Employee's employment with Employer.

                    7.1.3 Death During Severance Period. If Employee dies during
               the Severance Period, then the Severance Period shall immediately
               cease, Employer shall not be obligated to make any further
               payments pursuant to this Section 7, and the provisions of
               Section 8.1 hereof shall apply as though Employee's death had
               occurred immediately prior to termination of Employee's
               employment hereunder.

                    7.1.4 Date of Termination. The date of termination of
               employment without Cause shall be the date specified in a written
               notice of termination to Employee which in no case shall be more
               than 30 days following the date of notice. The date of
               resignation for Good Reason shall be the date specified in the
               written notice of resignation from Employee to Employer which in
               no case shall be more than 30 days following the date of notice.


                                      -5-

               7.2 Termination for Cause; Resignation Without Good Reason.

                    7.2.1 General. If Employee's employment hereunder is
               terminated by Employer for Cause, or if Employee resigns from
               Employee's employment hereunder other than for Good Reason (a
               "Voluntary Termination"), then Employee shall be entitled only to
               payment of Employee's Base Salary, as adjusted under Section 3,
               earned through and including the date of termination or
               resignation. Employee shall have no further right to receive any
               other compensation or to participate in any other plan,
               arrangement, or benefit, after such termination for Cause or
               Voluntary Termination.

                    7.2.2 Date of Termination. Subject to Section 7.3 hereof,
               the date of termination for Cause shall be the date of receipt by
               Employee of notice such termination. The date of Voluntary
               Termination shall be the date of receipt by Employer of the
               notice of resignation.

               7.3 Cause. Terminate for "Cause" means termination of
          Employee's employment because, in Employer's good faith belief, (i)
          Employee willfully and continually failed substantially to perform
          Employee's duties under the Agreement (other than as a result of
          Permanent Disability, as defined below), (ii) Employee failed to
          comply with any of the material term(s) of this Agreement, including,
          but not limited to, Sections 4 and 5 hereof, (iii) Employee committed
          an act or acts that constituted a misdemeanor (other than a minor
          traffic violation) or a felony under the law of the United States
          (including any subdivision thereof) or any country to which Employee
          is assigned (including any subdivision thereof), including, but not
          limited to, Employee's conviction for or plea of guilty or no contest
          ("nolo contrendre") to any such misdemeanor or felony, (iv) Employee
          committed an act or acts in violation of Employer's policies and/or
          practices applicable to employees at the level of Employee within
          Employer's organization, (v) Employee willfully acted, or willfully
          failed to act, in a manner that was injurious to the financial
          condition or business reputation of Employer or any of its
          subsidiaries or affiliates, (iv) Employee acted in a manner that is
          unbecoming of Employee's position with Employer, regardless of whether
          such action or inaction occurs in the course of the performance of
          Employee's duties with Employer, or (v) Employee was subject to any
          fine, censure, or sanction of any kind, permanent or temporary, issued
          by the Securities and Exchange Commission or the New York Stock
          Exchange.

               7.4 Good Reason. For purposes of this Agreement, "Good
          Reason" means any of the following actions taken by Employer without
          Employee's prior written consent: (i) the continued failure of
          Employer to pay compensation due to Employee under this Agreement,
          which failure is uncorrected for a period of 15 days following receipt
          by Employer of written notice thereof from Employee; (ii) a material
          diminution in Employee's position, authority, duties, or
          responsibilities, excluding for this purpose an isolated,
          insubstantial, or inadvertent action not taken in bad faith and that
          is remedied by Employer promptly after receipt of written notice
          thereof given by Employee; provided, however, that a
          mere change of Employee's title shall not constitute Good Reason so
          long as Employee continues to perform duties, functions, and
          responsibilities substantially equivalent to those performed by
          Employee prior to such change of title; (iii) Employer's material
          failure or refusal to comply with the provisions of this Agreement,
          which failure or refusal to comply is uncorrected for a period of 15
          days following receipt by Employer of written notice thereof from
          Employee. It is expressly understood and

                                      -6-

          agreed by the parties hereto that Employer's failure to deliver a
          notification extending the Initial Employment Term as referred to in
          Section 1 hereof shall not constitute a termination without Cause.

               7.5 Conditions to Severance Payments. Employer's obligation to
          make any severance payments due hereunder or to provide any benefits
          to Employee after any termination or resignation hereunder (other than
          COBRA benefits) is expressly conditioned on Employee complying in full
          with the obligations under Sections 4, 5 and 6. In the event Employee
          does not fully comply with such obligations or in the event any such
          obligations are determined by any court to be unenforceable to any
          extent, Employer shall be relieved of all obligations to provide any
          severance or post-termination benefits.

          8. Death or Permanent Disability.

               8.1 Death. If Employee's employment hereunder is terminated by
          death, then Employer shall, within 90 days of the date of death, make
          a lump sum payment to Employee's estate (or other beneficiary
          designated by Employee in writing) equal to all Base Salary and
          bonuses, if any, earned and accrued through the date of death.
          Thereafter, Employer shall have no further obligation to Employee
          under the Agreement.

               8.2 Permanent Disability. If Employee becomes physically or
          mentally disabled while employed by Employer under this Agreement so
          that Employee is--with or without reasonable accommodation--unable to
          render the services provided for by this Agreement for a period of six
          consecutive months or for shorter periods aggregating six months
          during any 24-month period, or so that Employee has a Disability (as
          defined under Employer's then-current disability policy), then
          Employer may, at any time after the last day of the six consecutive
          months of disability, the day on which the shorter periods of
          disability equal an aggregate of six months, or the day on which
          Employee is determined to have a Disability, terminate Employee's
          employment hereunder for "Permanent Disability" by written notice to
          Employee. Following such termination, Employee shall be entitled to
          receive from Employer (i) all Base Salary and bonuses, if any, accrued
          through the date of termination and (ii) any other benefits payable
          under Employer's then-current disability policy, but all other rights
          of Employee hereunder shall terminate as of the date of Employee's
          termination.

          9. Change of Control.

               9.1 Notwithstanding anything to the contrary contained herein, if
          Employer terminates Employee without Cause upon or within six months
          following a Change of Control (as defined below), then Employer shall
          pay Employee Employee's accrued unpaid Base Salary to the date of
          termination and any bonus earned but not paid and shall continue to
          pay Employee Employee's annual Base Salary as of the date such
          termination occurs for a period of one (1) year following the date of
          termination as severance pay (such period being referred to
          hereinafter as the "Change of Control Severance Period") and bonus for
          the year in which the termination occurs (calculated as if the Normal
          Bonus for that year is earned). Any severance payable pursuant to this
          Section 9.1 will be in substitution for and not in addition to any
          severance that might be payable pursuant to Section 7 hereof. To the
          extent Employer makes payments pursuant to this Section 9.1, it will
          have no additional obligations under Section 7 hereof. The



                                      -7-

          Base Salary shall be payable in bi-weekly payments during the Change
          of Control Severance Period, and the bonus shall be paid at the
          conclusion of the Change of Control Severance Period.

               9.2 Upon a Change in Control, all options to purchase stock of
          Employer held by Employee, to the extent not then exercisable, will
          immediately become fully vested and exercisable and all restrictions
          on any stock grants will immediately be removed.

               9.3 For purposes of this Agreement, "Change of Control" means any
          one of the following:

                    (a) any person or group (as defined in Section 13(d)(3) of
               the Securities Exchange Act of 1934, as amended (the "Exchange
               Act")) acquiring beneficial ownership of more than 50% of
               Employer's then outstanding Common Stock or 51 % or more of the
               combined voting power of Employer's then outstanding securities
               entitled generally to vote for the election of Employer's
               Directors;

                    (b) the consummation of the merger or consolidation of
               Employer with any other corporation, other than a merger with a
               wholly-owned subsidiary, the sale of substantially all of the
               assets of Employer, or the liquidation or dissolution of
               Employer, unless, in the case of a merger or consolidation, (x)
               the Directors in office immediately prior to such merger or
               consolidation will constitute at least majority of the Board of
               Directors of the surviving corporation of such merger or
               consolidation and any parent (as such term is defined in Rule
               12b-2 under the Exchange Act) of such corporation, or (y) the
               voting securities of Employer outstanding immediately prior
               thereto represent (either by remaining outstanding or by being
               converted into voting securities of the surviving entity) more
               than 66 2/3% of the combined voting power of the voting
               securities of Employer or such surviving entity and are owned by
               all or substantially all of the persons who were the holders of
               the voting securities of Employer immediately prior to the
               transaction in substantially the same proportions as such holders
               owned such voting securities immediately prior to the
               transaction; or

                    (c) Continuing Directors (as defined below) no longer
               constitute at least a majority of the Board or a similar body of
               any successor to Employer. For purposes of this Agreement,
               "Continuing Directors" means any individual who either (i) is a
               member of Employer's Board of Directors on the Effective Date,
               (ii) who becomes a director after the Effective Date whose
               election or nomination for election by Employer's shareholders,
               was approved by a vote of at least a majority of the Continuing
               Directors (either by a specific vote or by approval of the proxy
               statement of Employer in which such person is named as nominee
               for director, without objection to such nomination), or (iii) is
               designated by any party pursuant to its rights under Section 2.1
               of Employer's Amended and Restated Shareholders' Agreement dated
               as of October 4, 1997, as amended.

               9.4 Excess Parachute Payments. If any payment or the receipt of
          any benefit under this Agreement shall be deemed to constitute an
          "excess parachute payment" as such term is described in Section 280G
          of the Internal Revenue Code of 1986, as amended (the "Code"), so as
          to result in the loss of a deduction to Employer under Code Section
          280G or in the imposition of an excise tax on the Employee under Code
          Section 4999, or any successor sections thereto, then the amounts
          payable or the benefits provided under this Agreement shall be reduced
          to the

                                      -8-

          minimum extent necessary so that no such deduction will be lost by
          Employer and no such excise tax will be imposed on the Employee.
          Employer, in its sole discretion, shall determine whether or not an
          "excess parachute payment" would otherwise occur and shall determine
          the amount and method of the foregoing reduction.

          10. Miscellaneous.

               10.1 Assignment of Employee Benefits. Absent the prior written
          consent of Employer, and subject to will and the laws of descent and
          distribution, Employee shall have no right to exchange, convert,
          encumber, or dispose of the rights of Employee to receive benefits and
          payments under this Agreement, which payments, benefits, and rights
          thereto are non-assignable and non-transferable.

               10.2 Burden and Benefit. This Agreement shall be binding upon,
          and shall inure to the benefit of, Employer and Employee, their
          respective heirs, personal, and legal representatives, successors, and
          assigns.

               10.3 Governing Law. In view of the fact that the principal office
          of Employer is located in the State of Missouri, the parties
          understand and agree that the construction and interpretation of this
          Agreement shall at all times and in all respects be governed by the
          laws of the State of Missouri, that the state and federal courts
          situated in the State of Missouri shall have exclusive jurisdiction
          over any claims arising under or in relation to this Agreement, and
          that the parties consent to personal jurisdiction in such state and
          federal courts.

               10.4 Headings. The headings of the Sections of this Agreement are
          for reference only and not to limit, expand, or otherwise affect the
          contents of this Agreement.

               10.5 Entire Agreement; Modification. Except as to Employer's
          Stock Option Plans, any instrument relating to an Option granted
          thereunder and written agreements signed by both of the parties hereto
          from time to time after the date hereof, this Agreement contains the
          entire agreement and understanding by and between Employer and
          Employee with respect to the subject matter hereof, and any
          representations, promises, agreements, or understandings, written or
          oral, not herein contained shall be of no force or effect. No change,
          waiver, or modification of any provision of this Agreement shall be
          valid or binding unless the same is in writing and duly executed by
          both parties and no evidence of any waiver or modification shall be
          offered or received in evidence of any proceeding, arbitration, or
          litigation between the parties hereto arising out of or affecting this
          Agreement, or the rights or obligations of the parties hereunder,
          unless such waiver or modification is in writing, duly executed as
          aforesaid, and the parties further agree that the provisions of this
          Section 10.6 may not be waived except as set forth herein.

               10.6 Waiver of Breach. The waiver by Employer of a breach of any
          provision of this Agreement by Employee shall not operate or be
          construed as a waiver of any subsequent breach by Employee.

               10.7 Notice. For the purpose of this Agreement, notices and all
          other communications provided for in the Agreement shall be in writing
          and shall be deemed to have been duly given when delivered or mailed
          by United States registered mail, return receipt


                                   -9-

          requested, postage prepaid, addressed to the respective addresses set
          forth on the execution page of this Agreement, provided, however, that
          all notices to Employer shall be directed to the attention of the
          Board of Directors of Employer with a copy to the Secretary of
          Employer, or to such other address as either party may have furnished
          to the other in writing in accordance herewith, except that notice of
          change of address shall be effective only upon receipt.

               10.8 Withholding Taxes. Employer may withhold from any amounts
          payable under this Agreement such federal, state, and local taxes as
          may be required to be withheld pursuant to any applicable law or
          regulation.

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

          IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first hereof written.


                                    EMPLOYEE:



                                    Signature:     /s/ Walter N. George
                                               ---------------------------------
                                    Printed Name:  Walter N. George
                                    Address:       7138 Robins Drive
                                                   Topeka, KS 66610



                                    AMERICAN ITALIAN PASTA COMPANY



                                    By:            /s/ Timothy S. Webster
                                        ----------------------------------------
                                    Printed Name:  Timothy S. Webster
                                    Address:       4100 North Mulberry Drive
                                                   Suite 200
                                                   Kansas City, MO 64116-0696

EX-10

CONFIDENTIAL PORTIONS OF MATERIAL HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. THE REDACTED MATERIAL HAS BEEN INDICATED
WITH AN ASTERISK IN BRACKETS ([*]).


                            FLOUR PURCHASE AGREEMENT


                           dated as of August 7, 2002

                                 by and between

                            Bay State Milling Company

                                       and

                         American Italian Pasta Company

                                TABLE OF CONTENTS


                                                                                     Page


ARTICLE I REQUIREMENTS................................................................. 1
         Section 1.1.      Pasta Plant..................................................1
         Section 1.2.      Sale of Goods................................................1
         Section 1.3.      Production Schedule..........................................2
         Section 1.4.      Restriction on Sale of Flour by Bay State....................2

ARTICLE II PRICING, PAYMENT AND DELIVERY................................................2
         Section 2.1.      Purchase Price; Extraction Rates and Milling Conversion......2
         Section 2.2.      Payment......................................................5
         Section 2.3.      Flour Delivery...............................................5

ARTICLE III PRODUCTION AND QUALITY......................................................5
         Section 3.1.      Flour Quality................................................5
         Section 3.2.      Flour Sampling...............................................6
         Section 3.3.      Quality Control..............................................6
         Section 3.4.      Mill Sanitation..............................................6
         Section 3.5.      Recall.......................................................7
         Section 3.6.      Meetings.....................................................7

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AIPC.......................................7
         Section 4.1.      Corporate Existence and Power................................7
         Section 4.2.      Corporate Authorization......................................8
         Section 4.3.      Governmental Authorization...................................8
         Section 4.4.      SEC Filings..................................................8
         Section 4.5.      No Undisclosed Liabilities...................................8

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BAY STATE...................................9
         Section 5.1.      Corporate Existence and Power................................9
         Section 5.2.      Corporate Authorization......................................9
         Section 5.3.      Governmental Authorization...................................9
         Section 5.4.      No Undisclosed Liabilities...................................9
         Section 5.5.      Expansion Space.............................................10

ARTICLE VI PASTA PLANT AND MILL EXPANSION..............................................10
         Section 6.1.      Pasta Plant Production Expansion............................10
         Section 6.2.      Mill Improvements...........................................10

ARTICLE VII INVENTORY..................................................................11
         Section 7.1.      Wheat Purchasing............................................11
         Section 7.2.      Wheat Inventory.............................................12
         Section 7.3.      Off-Site Storage............................................12


                                       i

ARTICLE VIII RIGHT OF FIRST REFUSAL AND SALE OF PASTA PLANT............................13
         Section 8.1.      AIPC Right of First Refusal.................................13
         Section 8.2.      Sale of the Mill............................................13
         Section 8.3.      Sale of the Pasta Plant.....................................13

ARTICLE IX COVENANTS...................................................................14
         Section 9.1.      Confidentiality.............................................14
         Section 9.2.      Inspections.................................................14
         Section 9.3.      Insurance and Indemnification...............................15
         Section 9.4.      General Cooperation.........................................15
         Section 9.5.      Other Opportunities.........................................16
         Section 9.6.      Marketing Payment...........................................16
         Section 9.7.      Noncompetition..............................................16
         Section 9.8.      Financial Statements........................................17

ARTICLE X TERM AND TERMINATION.........................................................17
         Section 10.1.     Term     ...................................................17
         Section 10.2.     Material Default............................................17
         Section 10.3.     Termination.................................................18
         Section 10.4.     Effect of Termination.......................................18
         Section 10.5.     Interparty Communication....................................19

ARTICLE XI MISCELLANEOUS...............................................................19
         Section 11.1.     Notices.....................................................19
         Section 11.2.     Force Majeure...............................................20
         Section 11.3.     Amendments; No Waivers......................................20
         Section 11.4.     Successors and Assigns......................................21
         Section 11.5.     Governing Law...............................................21
         Section 11.6.     Arbitration; Jurisdiction...................................21
         Section 11.7.     Counterparts; Effectiveness.................................22
         Section 11.8.     Entire Agreement............................................22
         Section 11.9.     Relationship of Parties.....................................22
         Section 11.10.    Captions 22
         Section 11.11.    Severability................................................22


Schedules:
Schedule A        Flours
Schedule B        Pricing Formulas
Schedule C        Wire Instructions
Schedule D        Mill Purchase Price
Schedule E        Wheat Specifications
Schedule F        Wheat Purchasing Procedures

                             FLOUR SUPPLY AGREEMENT


         FLOUR SUPPLY AGREEMENT dated as of August 7, 2002 by and between Bay
State Milling Company, a Minnesota corporation ("Bay State"), and American
Italian Pasta Company, a Delaware corporation, and its affiliates (together,
"AIPC").

                                   WITNESSETH:

         WHEREAS, AIPC desires to purchase from Bay State at least 80% of the
requirements of semolina and other durum flour products for AIPC's pasta
production plant to be located in Tolleson, Arizona (the "Pasta Plant"); and

         WHEREAS, Bay State desires to sell to AIPC semolina and other durum
flour products produced at Bay State's flour mill located in Tolleson, Arizona
(the "Mill").

         NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, the parties agree as follows:


                                   ARTICLE I
                                  REQUIREMENTS

     Section 1.1. Pasta Plant. In the event that AIPC constructs its pasta
production facility in a location within the State of Arizona not adjacent to
the Mill, or discontinues its operations at the pasta production plant located
adjacent to the Mill and commences pasta production at another facility located
within the State of Arizona, such pasta production facility shall be deemed to
be the "Pasta Plant" for purposes of this Agreement and AIPC shall continue to
be subject to the terms and conditions set forth in this Agreement with respect
to its requirements for such facility.

     Section 1.2. Sale of Goods: Bay State shall sell to AIPC, and AIPC shall
purchase from Bay State at least eighty percent (80%) of AIPC's entire
requirement of durum flours for the Pasta Plant during each year of the term of
this Agreement, subject to the minimum volume requirements provided for in this
Section 1.2. Schedule A hereto, as such schedule may be amended by the parties
from time to time, lists the durum flours (the "Flours") that may be ordered by
AIPC for the Pasta Plant during the term of this Agreement. Notwithstanding the
foregoing, in no event shall the aggregate amount of Flours purchased by AIPC
and sold by Bay State in any Fiscal Year (as defined below) during the term of
this Agreement be less than 50 million pounds (the "Minimum Volume
Requirement"); provided, however, that AIPC shall not be subject to the Minimum
Volume Requirement during the period commencing on the date hereof and ending on
September 30, 2003 (the "Start-Up Period"). A "Fiscal Year" means each one-year
period commencing on October 1 and ending on September 30 during the term of
this Agreement. In the event that the aggregate amount of Flours purchased by
AIPC during any Fiscal Year beginning after the Start-Up Period, is less than
the Minimum Volume Requirement, AIPC shall pay to Bay State, not more than
thirty (30) days after the last day of such Fiscal Year, an amount equal to the
product of (i) the excess, expressed in hundredweights ("cwts"), of (A)




                                     2

the Minimum Volume Requirement over (B) the actual number of pounds of Flours
purchased by AIPC during such Fiscal Year, multiplied by (ii) the milling
conversion in effect with respect to such Fiscal Year. The parties acknowledge
and agree that if AIPC does not commence or discontinues its pasta production
operations at the Pasta Plant and does not commence such operations at another
facility deemed to be the Pasta Plant pursuant to Section 1.1 above, then AIPC
shall pay to Bay State a liquidated damage payment equal to the Minimum Volume
Requirement multiplied by the milling conversion rate, as determined pursuant to
Section 2.1(c), in effect from time to time until the earlier of (i) the end of
the term of this Agreement, (ii) the date on which AIPC commences operations at
another facility deemed to be the Pasta Plant pursuant to Section 1.1 above and
(iii) the date on which Bay State enters into a supply arrangement at the Mill
on substantially the same terms provided in this Agreement; provided, however,
that to the extent that Bay State is able to sell flour produced at the Mill to
third parties in replacement of the volume of flour that was contracted to be
sold to AIPC under this Agreement (and Bay State hereby agrees to use its
commercially reasonable efforts to maximize such replacement sales), Bay State's
net profit (which shall equal Bay State's cash receipts less the cost of raw
materials and variable operating costs) in respect of such flour sold by Bay
State to third parties shall be subtracted from the liquidated damage payment to
be made by AIPC.

     Section 1.3. Production Schedule.

          (a) Monthly Forecast. On or before the 20th day of each month, AIPC
     will provide Bay State with a written production schedule setting forth
     AIPC's estimated flour requirements for the following month (the "Monthly
     Forecast"). Bay State acknowledges and agrees, however, that (i) the
     Monthly Forecast is not binding on AIPC, (ii) AIPC may modify the Monthly
     Forecast and (iii) AIPC will only be obligated to purchase Flours pursuant
     to AIPC's written purchase requisitions (the "Purchase Requisitions")
     submitted by AIPC to Bay State.

          (b) Weekly Forecast. On or before the Thursday of each week during the
     term of this Agreement, AIPC will provide Bay State with a written
     production schedule listing AIPC's estimated requirements by specific Flour
     for the following week (the "Production Schedule"). Bay State acknowledges
     and agrees, however, that (i) the Production Schedule is not binding on
     AIPC, (ii) AIPC may modify the weekly Production Schedule and (iii) AIPC
     will only be obligated to purchase Flours pursuant to AIPC's Purchase
     Requisitions submitted by AIPC to Bay State.

     Section 1.4. Restriction on Sale of Flour by Bay State. Bay State hereby
agrees not to sell or otherwise transfer any of the Flours produced at the Mill
to any third party unless and until Bay State shall have first satisfied AIPC's
requirements at the Pasta Plant as specified in the Purchase Requisitions
received by Bay State.


                                   ARTICLE II
                          PRICING, PAYMENT AND DELIVERY

     Section 2.1. Purchase Price; Extraction Rates and Milling Conversion.
Subject to the provisions of Section 2.3(a), the purchase price of the Flours
shall be calculated in

                                       2

accordance with the formulas set forth on Schedule B. In calculating the
purchase price of any Flours, the following terms shall apply:

          (a) All purchase prices shall be calculated on the basis of the (i)
     actual costs of the wheat grain, including any cost incurred by Bay State
     to transport the wheat grain to the Mill, (ii) actual costs of purchased
     product enrichment material and (iii) by-product sales values in effect at
     the time of determination of the selling price of the semolina and (iv) the
     milling conversion, which shall be comprised of (A) the operating costs,
     including manufacturing costs and overhead, of the Mill and (B) the profit
     to be earned on the sale of the Flours to AIPC.

          (b) In calculating the purchase price, the actual flour extraction
     rates and moisture gains achieved in the milling of the wheat, as
     determined on a quarterly basis in accordance with the terms of this
     subsection (b), will be used; provided, that the aggregate flour extraction
     rate in any quarter shall not be less than 78%, consisting of 72% semolina
     and 6% clear flours. The flour extraction rates and moisture gains for each
     quarter during the term of this Agreement shall be determined by Bay State
     and AIPC not more than ten (10) days after each December 31, March 31, June
     30 and September 30 during the term of this Agreement based on the
     extraction rates and moisture gains actually achieved during the
     three-month period then ended; provided, however that for the first three
     months of the Start-Up Period the extraction rates shall be 74% semolina,
     2% 1st Clear flour, 2% 2nd Clear flour, 4% reddog and 18% millfeed and
     moisture gains shall be calculated at 4%. Bay State and AIPC shall
     cooperate to maximize yields and efficiencies of the milling process in an
     effort to achieve an aggregate flour extraction rate of at least 80%,
     consisting of 75% semolina, 2% 1st Clear flour and 3% 2nd Clear flour;
     provided, that AIPC will not be obligated to pay any costs or make any
     investments of such efforts. Bay State's obligation to meet the extraction
     rates set forth in this subsection (b) shall be subject to the provisions
     of Section 11.2. Notwithstanding the foregoing, if AIPC is unable to
     procure wheat which complies with the quality specifications provided in
     Schedule E, then the parties will equitably adjust the extraction rates
     provided in this section to conform to the characteristics of the available
     wheat.

          (c) The milling conversion shall be fixed at the commencement of each
     Fiscal Year, and subject to adjustment during each Fiscal Year, during the
     term of this Agreement in accordance with the following provisions:

               (i) For the Start-Up Period and the first two (2) Fiscal Years
          following the Start-Up Period, the "milling conversion" shall be fixed
          as follows:

                    (A) if the quantity of Flours to be purchased during a
               Fiscal Year is equal to or greater than [*] pounds and less than
               [*] pounds, the milling conversion shall be [*] for such Fiscal
               Year; and

                    (B) if the quantity of Flours to be purchased during a
               Fiscal Year is equal to or greater than [*] pounds and AIPC has
               complied with the requirements of Section 6.2, the milling
               conversion shall be [*] for such Fiscal Year.


                                        3

               (ii) For the third Fiscal Year of the term of this Agreement and
          for each Fiscal Year of the term of this Agreement thereafter (the
          "Remaining Term"), the mill operating costs component (which component
          totals [*] and consists of the following costs: durum mill processing,
          operating supplies, maintenance, elevator operations, power and
          utility costs, durum laboratory and sampling, and specific durum
          administrative costs) of the milling conversions set forth in
          paragraphs (A) and (B) of paragraph (i) above shall be subject to
          yearly adjustment based on changes in the Producer Price Index for the
          industry in the SIC Code 2041 (Flour and other Grain Mill Flours) (the
          "Producer Price Index"), which adjustment shall equal the lesser of
          (i) the actual percentage increase in the Producer Price Index for the
          previous Fiscal Year and (ii) [*]. For each Fiscal Year during the
          Remaining Term, the amount of the adjustment on the [*] mill operating
          costs component, as determined in accordance with the previous
          sentence, shall be added to the milling conversions set forth in
          paragraphs (A) and (B) of paragraph (i) above and the result shall be
          the applicable milling conversions for such Fiscal Year.

               (iii) The parties shall fix the milling conversion for each
          Fiscal Year at the annual meeting for the preceding Fiscal Year held
          pursuant to Section 3.6(c) and the milling conversion shall be fixed
          based upon AIPC's purchase volume during the previous Fiscal Year,
          AIPC's projected volume requirements for the coming Fiscal Year and
          the adjustment to the milling conversion provided for in paragraph
          (ii) above.

               (iv) If the milling conversion for any Fiscal Year has been fixed
          at the conversion price applicable for annual volume purchases equal
          to or greater than [*] pounds and less than [*] pounds, the milling
          conversion shall be reduced to [*] following any three consecutive
          month period in which the amount of Flours purchased by AIPC reaches a
          minimum of [*] pounds per month and shall remain at [*] thereafter for
          so long as the purchase volume for the immediately preceding
          three-month period does not fall below the minimum amount necessary to
          satisfy the annual requirement of [*] pounds set forth in paragraph
          (i)(B) above.

          (d) The weight of the Flours delivered to AIPC and used in the pricing
     calculation shall be determined at the time of delivery to AIPC at the
     Pasta Plant and agreed by the parties. At or before 8:00 a.m. (Arizona
     time) on each business day, AIPC shall deliver to Bay State copies of the
     weight receipts from its receiving scale for all Flours delivered to the
     Pasta Plant during the preceding day. AIPC shall provide Bay State access
     to the Pasta Plant to inspect the scaling equipment located at the Pasta
     Plant and deliver to Bay State such evidence of the accuracy of such
     equipment, including, but not limited to, copies of inspection
     certificates, as Bay State may reasonably request. Bay State anticipates
     moisture losses to be incurred in the delivery of the Flours to AIPC by
     pipeline transfer, and to the extent that variances in the weight of the
     Flours, as determined by reference to Bay State's transfer scales and
     moisture level readings as compared to AIPC's receiving scales and moisture
     level readings, can be attributed to losses in moisture, then the amount of
     such moisture loss will be included in the measurement of moisture gains
     and flour extraction rates set forth in subsection (b) above and the
     Schedule B pricing formula. AIPC shall provide Bay State with access to
     AIPC's records for the Pasta Plant for the purpose of monitoring and
     coordinating delivery of and payment for the Flours.


                                       4

          (e) In connection with the determination of the purchase price, AIPC
     shall have the right to review the books, records and other data relating
     solely to the operation of the Mill in order to accurately calculate
     appropriate adjustments.

     Section 2.2. Payment. AIPC shall make payment to Bay State in cash on
Tuesday of each week by wire transfer of immediately available funds in
accordance with the wire instructions set forth on Schedule C. Payments made
pursuant to the previous sentence will pay all unpaid invoices received by AIPC
on or prior to the Friday of the previous week. Bay State will deliver invoices
to AIPC each business day covering deliveries made to the Pasta Plant during the
previous business day and priced based upon the weight receipts from AIPC's
receiving scale at the Pasta Plant and in accordance with and applied against,
the earliest dated open Flour Sales Contract, issued pursuant to Section 7.1,
then in effect. Bay State shall, upon receipt of written request from AIPC,
provide AIPC with access to AIPC's order and account balance information in Bay
State's computer system for ease of communication of order and invoicing
information.

     Section 2.3. Flour Delivery.

          (a) Delivery by truck or railroad. Except as provided in subsection
     (b) below, sale and delivery of any Flour purchased by AIPC shall be FOB
     the Mill. If Bay State is required to deliver the Flours to the Pasta Plant
     by any means other than a pipeline between the Mill and the Pasta Plant,
     and the inability to use the pipeline is not primarily due to an act or
     omission of Bay State, Bay State shall arrange for delivery and AIPC shall
     pay all costs of such delivery. Any delivery costs payable by AIPC in
     accordance with this Section 2.3 are in addition to the purchase price of
     the Flours as calculated in accordance with the terms of Section 2.1 and
     the formulas in Schedule B.

          (b) Delivery by pipeline. If the Pasta Plant is located in close
     enough proximity to the Mill to permit the Flours to be delivered to the
     Pasta Plant by a pipeline, Bay State will construct such pipeline and the
     costs of constructing the pipeline shall be paid by Bay State. Bay State
     shall acquire all equipment, and pay for the installation of such
     equipment, required to enable the delivery of the Flours through the
     pipeline to the point of first receipt at the Pasta Plant. Bay State will
     work with engineers chosen by AIPC to ensure the construction of an
     efficient pipeline with proper connection for receiving the Flours at the
     Pasta Plant. Bay State shall maintain the pipeline in good working
     condition (subject to reasonable wear and tear) during the term of this
     Agreement. The cost incurred by Bay State to construct and maintain the
     pipeline shall be treated as a capital investment in the Mill and shall be
     included in the calculation of the purchase price of the Mill in accordance
     with the formula set forth on Schedule D, as the same may be amended from
     time to time. If the Flours are delivered by pipeline, the delivery shall
     be FOB the Pasta Plant.

                                  ARTICLE III
                             PRODUCTION AND QUALITY

     Section 3.1. Flour Quality: All Flour purchased by AIPC pursuant to this
Agreement shall be merchantable, fit for its intended use, meet all applicable
federal and state quality

                                       5

standards and will comply with the specifications set forth on Schedule A
(collectively, the "Product Specifications"). In order to meet the flour
extraction rates and moisture gains set forth in Section 2.1(b) and in the
Schedule B pricing formulas, all wheat used by Bay State for purposes of
producing flour pursuant to this Arrangement must comply with the wheat
specifications set forth in Schedule E. The wheat specifications set forth in
Schedule E and extraction rates set forth in Section 2.1(b) may be modified from
time to time, upon receipt of written consent from AIPC, which consent shall not
be unreasonably withheld, based upon crop and market conditions. Bay State may
reject any incoming product used to produce the Flours, from whatever source, if
such product does not meet, or would prevent Bay State from producing flour that
meets, the Product Specifications, and any such rejection, and any delay in
delivery of any Flour resulting from such rejection, shall not result in
liability of Bay State or constitute, by itself, a failure by Bay State to
perform its obligations under this Agreement.

     Section 3.2. Flour Sampling.

          (a) Prior to any shipment of Flour to the Pasta Plant, Bay State will
     take and analyze a retainer sample of each load of Flour to be shipped to
     AIPC and issue a Certificate of Analysis ("COA") by fax, electronic
     transmission, or other means of immediate delivery, to the Pasta Plant.

          (b) If the results of the analysis of the retainer sample, which
     results will be reflected in the COA, indicate that the tested Flour is in
     conformity with the specifications for the Flour to be shipped set forth in
     Schedule A, as such schedule may be amended by the parties from time to
     time, then Bay State shall deliver the Flour in accordance with the
     instructions set forth in the applicable Purchase Requisition. Bay State
     will retain each retainer sample at the Mill for a period of six (6)
     months.

          (c) Notwithstanding the results of the retainer sample, AIPC shall
     have the right to reject, pursuant to the rights granted in Article 2 of
     the Uniform Commercial Code, any Flour that does not conform to the
     specifications set forth in Schedule A.

     Section 3.3. Quality Control. Bay State shall maintain at the Mill such
systems for good manufacturing practices and the assurance of product quality as
comply with Bay State's corporate quality policies and procedures. Such systems
shall be administered by Bay State's Quality Assurance Manager and Plant
Manager, and managed by Bay State's Corporate Vice Presidents of Production and
Quality Assurance. Procedures will include, but not be limited to, periodic
in-process ingredient sampling and testing, and monitoring of mill critical
control points.

     Section 3.4. Mill Sanitation. Bay State will maintain the sanitation of the
Mill in accordance with industry standards, subject to the additional
requirements of this Section 3.4. At a minimum, Bay State will arrange for
annual American Institute of Baking ("AIB") inspections of the Mill and maintain
a minimum AIB score of 800. Bay State hereby agrees to maintain a Hazard
Analysis Critical Control Points ("HACCP") program and to provide copies of the
required HACCP documentation to AIPC upon reasonable request.


                                       6

     Section 3.5. Recall. If any shipment of Flour does not meet the Product
Specifications or if there is a mandatory or voluntary recall of any Flour or
any product incorporating the Flour arising directly from Bay State's
performance or nonperformance of its obligations in connection with the Flours
supplied by Bay State, Bay State shall pay all reasonable costs associated with
remedying its failure to satisfy such Product Specifications or facts,
circumstances or events giving rise to such recall in accordance with AIPC's
recall program as in effect on the date hereof.

     Section 3.6. Meetings.

          (a) Weekly Meetings. The facility managers of the Pasta Plant and the
     Mill, and such other officers and/or employees of each party as the parties
     deem appropriate, shall meet not less frequently than weekly, on such date
     and at such time and place as may be mutually agreed by the facility
     managers, to discuss issues related to the parties' obligations and
     performance under this Agreement, including, but not limited to,
     cooperation, performance, and coordination with respect to the obligations
     of the parties, and to agree on operational activities such as mill and
     plant scheduling, timing for deliveries, and quality and efficiency
     objectives.

          (b) Quarterly Meetings. The Executive Vice President of Bay State and
     the Executive Vice President, Procurement and Industrial Markets of AIPC,
     and such other officers and/or employees of each party as the parties deem
     appropriate, shall meet quarterly during the term of this Agreement to
     discuss purchase volumes, AIPC's requirements, and any other matter deemed
     by the parties relevant to the performance of the parties' obligations
     under this Agreement. The quarterly meetings shall be held on such date and
     at such time and such place or by conference telephone as may be mutually
     agreed by the parties. Notwithstanding the foregoing, either the Executive
     Vice President of Bay State or the Executive Vice President, Procurement
     and Industrial Markets of AIPC may call a meeting of the parties at any
     time to discuss specific business matters that may arise from time to time.

          (c) Year-End Meeting. The Executive Vice President of Bay State and
     the Executive Vice President, Procurement and Industrial Markets of AIPC,
     and such other officers and/or employees of each party as such party may
     deem appropriate, shall meet prior to the end of the Start-Up Period and
     each Fiscal Year to discuss annual requirements forecasts and the pricing
     of the Flours for the coming Fiscal Year, including fixing the milling
     conversion for the next Fiscal Year, and any other matter deemed by the
     parties to be relevant to the parties' performance of their obligations
     under this Agreement and appropriate for discussion at such meeting. The
     annual meeting shall be held on such date and at such time and place as may
     be mutually agreed by the parties; provided, however, that the annual
     meeting shall be held during the month of September of each year.



                                       7

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES of AIPC

     AIPC hereby represents and warrants to Bay State that:

     Section 4.1. Corporate Existence and Power. AIPC is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business at the Pasta Plant as now contemplated, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations (a
"Material Adverse Effect") on AIPC.

     Section 4.2. Corporate Authorization

          (a) AIPC has full authority and corporate power to enter into this
     Agreement and to execute and deliver this Agreement and to perform its
     obligations under this Agreement, the transactions contemplated hereby and
     thereby.

          (b) The execution, delivery and performance by AIPC of this Agreement
     have been duly authorized by all necessary action of AIPC and no other
     action on the part of AIPC is required in connection therewith.

          (c) This Agreement constitutes a valid and binding obligation of AIPC
     enforceable in accordance with its terms.

     Section 4.3. Governmental Authorization. The execution, delivery and
performance by AIPC of this Agreement and the consummation by AIPC of this
Agreement and the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or authority
other than any actions or filings the absence of which would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
AIPC or materially to impair the ability of AIPC to consummate this Agreement
and the transactions contemplated hereby.

     Section 4.4. SEC Filings. AIPC has delivered to Bay State (i) its annual
report on Form 10-K for the year ended September 30, 2001 and (ii) its quarterly
report on Form 10-Q for the quarter ended December 28, 2001.

     Section 4.5. No Undisclosed Liabilities.

          (a) There are no liabilities or obligations of AIPC of any kind
     whatsoever, whether accrued, contingent, absolute, determined, determinable
     or otherwise, that would materially impair AIPC's ability to perform its
     obligations under this Agreement, and there is no known existing condition,
     situation or set of circumstances that could reasonably be expected to
     result in such a liability or obligation, other than liabilities or
     obligations disclosed and provided for in the balance sheet of the Company
     as of December 28, 2001 and the footnotes thereto (the "AIPC Balance
     Sheet") or in the notes thereto, a copy of which has been delivered to Bay
     State.

                                       8

          (b) There have not been any liabilities or obligations of AIPC
     incurred in the ordinary course of business consistent with past practices
     since the date of the AIPC Balance Sheet that could reasonably be expected
     to, individually or in the aggregate, materially impair AIPC's ability to
     perform its obligations under this Agreement.

                                   ARTICLE V
                   REPRESENTATIONS AND WARRANTIES OF BAY STATE

     Bay State hereby represents and warrants to AIPC that:

     Section 5.1. Corporate Existence and Power. Bay State is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota and has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business at the Mill as now contemplated, except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on Bay State.

     Section 5.2. Corporate Authorization

          (a) Bay State has full authority and corporate power to enter into
     this Agreement and to execute and deliver this Agreement and to perform its
     obligations under this Agreement, the transactions contemplated hereby and
     thereby.

          (b) The execution, delivery and performance by Bay State of this
     Agreement have been duly authorized by all necessary action of Bay State
     and no other action on the part of Bay State is required in connection
     therewith.

          (c) This Agreement constitutes a valid and binding obligation of Bay
     State enforceable in accordance with its terms.

     Section 5.3. Governmental Authorization. The execution, delivery and
performance by Bay State of this Agreement and the consummation by Bay State of
this Agreement, and the transactions contemplated hereby require no action by or
in respect of, or filing with, any governmental body, agency, official or
authority, domestic, foreign or supranational, other than any actions or filings
the absence of which would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on Bay State or materially to impair
the ability of Bay State to consummate this Agreement and the transactions
contemplated hereby.


     Section 5.4. No Undisclosed Liabilities.

          (a) There are no liabilities or obligations of Bay State of any kind
     whatsoever, whether accrued, contingent, absolute, determined, determinable
     or otherwise, that would materially impair Bay State's ability to perform
     its obligations under this Agreement and there is no known existing
     condition, situation or set of circumstances that could reasonably be
     expected to result in such a liability or obligation, other than
     liabilities or obligations disclosed and


                                       9

     provided for in the unaudited balance sheet of the Company as of March 31,
     2002 (the "Bay State Balance Sheet"), a copy of which has been delivered to
     AIPC.

          (b) There have not been any liabilities or obligations of Bay State
     incurred in the ordinary course of business consistent with past practices
     since the date of the Bay State Balance Sheet that could reasonably be
     expected to, individually or in the aggregate, materially impair Bay
     State's ability to perform its obligations under this Agreement.

     Section 5.5. Expansion Space. The Mill site includes sufficient space to
allow Bay State to make such improvements to the Mill as are necessary to (i)
expand the Mill to increase its production capacity to up to [*] pounds of Flour
annually and (ii) to build a grain elevator and truck pit with a capacity of not
less than [*] bushels.

                                   ARTICLE VI
                         PASTA PLANT AND MILL EXPANSION

     Section 6.1. Pasta Plant Production Expansion. The parties acknowledge and
agree that AIPC may increase its flour requirements at the Pasta Plant during
the term of this Agreement and, provided that all conditions precedent set forth
in Section 6.2 and covenants of AIPC under this Agreement are satisfied, Bay
State agrees to increase its production capacity at the Mill in order to meet
AIPC's flour requirements at the Pasta Plant in accordance with the provisions
of Section 6.2. AIPC anticipates an expansion of the production at the Pasta
Plant during the Initial Term (as defined in Section 10.1) that may result in an
increase in AIPC's flour requirements at the Pasta Plant to [*] pounds of flour
annually. The parties acknowledge and agree that the production at the Pasta
Plant may be further expanded such that AIPC's requirements during the term of
this Agreement may exceed [*] pounds of flour annually.

     Section 6.2. Mill Improvements

          (a) In the event that AIPC increases its flour requirements at the
     Pasta Plant as provided in Section 6.1, Bay State shall make, upon the
     consent of AIPC as to placement and land use, which consent shall not be
     unreasonably withheld or delayed, all improvements to the Mill that Bay
     State deems necessary to continue to meet AIPC's flour requirements at the
     Pasta Plant pursuant to the terms of this Agreement; provided, however,
     that:

               (i) at such time as AIPC has increased the production
          capabilities of the Pasta Plant such that its product requirements are
          equal to or in excess of [*] pounds annually, and Bay State has
          completed all necessary improvements to the Mill to accommodate AIPC's
          increased demand for Flours, AIPC shall purchase at least [*] pounds
          of Flours annually from Bay State pursuant to this Agreement;

               (ii) if AIPC anticipates that its annual requirements for Flours
          will increase above [*] pounds annually, then AIPC shall provide Bay
          State with written notice of its additional flour requirements at
          least twelve (12) months prior to such increased need in order to
          allow Bay State sufficient time to complete any necessary milling
          expansion; and

                                       10

               (iii) if AIPC anticipates that its annual requirements for Flours
          will increase above [*] pounds annually, then Bay State shall not be
          obligated to make additional improvements to the Mill pursuant to the
          terms of this Section 6.2; rather, the parties shall discuss and agree
          the terms of such expansion of production capacity at the Pasta Plant
          and any improvements to be made to the Mill in connection with such
          expansion.

          (b) If AIPC has not responded to a Bay State proposal relating to
     improvements to the Mill delivered to AIPC in accordance with subsection
     (a) above on or prior to the day which is ten (10) business days following
     receipt by AIPC of such proposal, AIPC shall be deemed to have consented to
     such proposal.

          (c) In connection with any improvements made to the Mill in accordance
     with this Section 6.2, the Initial Term shall be adjusted as provided in
     the proviso of the first sentence of Section 10.1.

          (d) If Bay State is not able to complete improvements being made to
     the Mill in accordance with the provisions of subsection (a) above in time
     to satisfy AIPC's additional flour requirements, Bay State shall, provided
     that AIPC has complied with the requirements of this Section 6.2, arrange
     for the supply of additional Flours sufficient to meet AIPC's flour
     requirements at the Pasta Plant, at Bay State's expense, until such time as
     Bay State is capable of satisfying AIPC's flour requirements at the Pasta
     Plant directly from the Mill.

          (e) In the event that (i) Bay State completes any milling expansion
     that includes building and equipping one or more additional durum milling
     units and requiring the investment of an amount in excess of [*], and (ii)
     AIPC's annual flour requirement at the Pasta Plant subsequently falls below
     [*] of the then combined durum milling units' aggregate capacity, the
     milling conversion set forth in Section 2.1(c) shall be increased by [*].
     This adjustment of the milling conversion will remain in full force and
     effect until such time as AIPC's annual flour requirement exceeds [*] of
     the combined milling units' capacity for a period of three consecutive
     months after which the milling conversion shall return to the price fixed
     in accordance with the provisions of Section 2.1(c); provided, however,
     that if AIPC's annual flour requirement remains below [*] of the combined
     durum milling units' capacity during any consecutive two years following
     completion of the milling expansions described in this subsection (e), then
     the milling conversion will be increased by an additional [*], for a total
     increase of [*] (the "Conversion Increase"), and the Conversion Increase
     shall remain in effect until such time as AIPC's annual flour requirement
     at the Pasta Plant increases to at least the minimum monthly purchase
     volume necessary to satisfy the annual requirement of [*] of the combined
     durum milling units' capacity level for a period of three consecutive
     months.


                                       11

                                  ARTICLE VII
                                  INVENTORY

     Section 7.1. Wheat Purchasing.

          (a) AIPC will purchase, in accordance with the procedures set forth in
     Schedule F, all durum wheat for use in the production of Flour at the Mill
     for sale to AIPC. AIPC will execute, subject to Bay State's consent, which
     consent shall not be unreasonably withheld, wheat purchase contracts (each
     a "Wheat Purchase Contract") with individual wheat vendors. Each Wheat
     Purchase Contract will contain all the usual and customary terms and
     conditions for wheat purchases of this type, as set forth in Schedule F,
     including quantities, delivery methods and dates, pricing and discount or
     premium factors, and payment terms. AIPC will also notify the contracting
     vendor that AIPC's performance obligations under the Wheat Purchase
     Contract are to be assigned to Bay State. AIPC shall execute an assignment
     notice, in substantially the form set forth as Exhibit A, and AIPC shall
     provide a copy of the assignment notice to the vendor. Each assigned Wheat
     Purchase Contract will be forwarded to Bay State and Bay State will confirm
     the order directly with the vendor and such confirmation shall be deemed to
     be Bay State's acceptance of the assignment of AIPC's performance
     obligations under such Wheat Purchase Contract. Bay State shall deliver to
     AIPC a statement setting forth the actual grades of , and net prices (after
     discounts and premiums, if any) paid for, the wheat received by Bay State
     under each assigned Wheat Purchase Contract.

          (b) Upon its acceptance of the assignment of any Wheat Purchase
     Contract, Bay State will (i) take all actions to administer and secure
     performance of each purchase, by arranging delivery, verifying receipts and
     product specifications, inventorying and arranging for production, and
     effecting payment directly to the vendor based upon the terms and
     conditions in the Wheat Purchase Contract and (ii) issue a Flour sales
     contract to AIPC for the respective quantities and delivery periods of the
     Flours to be sold to AIPC at the selling prices calculated in accordance
     with the terms of this Agreement. All Purchase Requisitions shall be issued
     against, and reference, the relevant Flour sales contract.

          (c) The parties hereby acknowledge that the more detailed purchasing
     procedures set forth in Schedule F are intended to facilitate efficient
     communication and cooperation in the purchase of wheat pursuant to this
     Section 7.1, as well as the efficient production of the Flour pursuant to
     this Agreement.

     Section 7.2. Wheat Inventory. Bay State shall maintain, at no additional
cost to AIPC, an inventory of [*] of durum wheat at the Mill for the exclusive
use by AIPC. All durum wheat maintained for the exclusive use of AIPC shall be
segregated from the remainder of Bay State's wheat inventory and shall not be
stored in the grain elevators currently used to store Bay State's wheat
inventory. Bay State shall charge AIPC, and AIPC shall pay, the storage and
interest costs, at prevailing market rates, for any wheat inventory stored at
the Mill for the use of AIPC in excess of such [*]. The parties acknowledge
that, as of the date hereof, the market rate in the State of Arizona for storage
of wheat is [*] and this rate shall be the rate in effect through September 30,
2004 for all wheat inventory stored at the Mill for use by AIPC. Bay State shall
construct a separate grain elevator (the "New Elevator") and truck pit with a
capacity of at least [*] for AIPC's use. Construction of the New Elevator shall
be completed on or prior to

                                       12

November 1, 2002; provided, that all conditions precedent and covenants of AIPC
set forth in this Agreement have been satisfied at the time construction
commences. The New Elevator shall be connected to the Mill. The cost incurred by
Bay State to construct the New Elevator shall be treated as a capital investment
in the Mill and shall be included in the calculation of the purchase price of
the Mill in accordance with the formula set forth on Schedule D.

     Section 7.3. Off-Site Storage. In the event that parties deem it necessary
to store wheat committed to or owned by AIPC, in excess of the storage capacity
of the New Elevator, in a third party storage facility, all costs of such third
party storage, including financing costs, storage fees, loading in and loading
out fees and additional freight costs, shall be paid by AIPC, unless such costs
are included in the respective Wheat Purchase Contract.


                                  ARTICLE VIII
                 RIGHT OF FIRST REFUSAL AND SALE OF PASTA PLANT

     Section 8.1. AIPC Right of First Refusal. AIPC shall have the
option (the "AIPC Option") to purchase the Mill, at a purchase price determined
in accordance with the formula set forth on Schedule D. The land and capital
improvements comprising the Mill are described in Schedule D. The AIPC option
shall be exercised pursuant to and in accordance with the following provisions:

          (a) AIPC shall have the right upon the occurrence of a Material
     Default (as defined in Section 10.2(a)) by Bay State and subject to Bay
     State's right to cure such Material Default or to make provision to comply
     with the requirements of the applicable covenant pursuant to the provisions
     of Section 10.3 (each, an "Option Event"), to either (i) terminate this
     Agreement pursuant to the provisions of Section 10.3 or (ii) exercise the
     AIPC Option.

          (b) Bay State shall promptly notify AIPC of the occurrence of an
     Option Event and otherwise comply with the provisions of this Section 8.1
     (such notice, the "Option Notice"). In addition, AIPC may notify Bay State
     of the occurrence of an Option Event, and such notice will likewise be
     deemed an Option Notice. Subject to Section 8.1(c) below, the Option Notice
     shall constitute an irrevocable offer to sell the Mill to AIPC.

          (c) On or prior to the date which is thirty (30) days after AIPC's or
     Bay State's receipt of the Option Notice (the "Option Period"), AIPC may
     elect to accept the offer to purchase the Mill and shall give written
     notice of such election (the "AIPC Acceptance Notice") to Bay State. The
     Acceptance Notice shall constitute a valid, legally binding and enforceable
     agreement for the sale and purchase of the Mill.

     Section 8.2. Sale of the Mill. In the event that Bay State enters into an
agreement to sell the Mill to a third party, as a condition to the sale of the
Mill to a third party, the purchaser shall be assigned and shall assume,
expressly by written instrument, the obligations of Bay State under this
Agreement or, alternatively, shall execute a written flour supply agreement with
AIPC on terms and conditions substantially similar to those set forth in this
Agreement and having a minimum term equivalent to the then remaining term of
this Agreement.


                                       13

     Section 8.3. Sale of the Pasta Plant. In the event that AIPC enters into an
agreement to sell the Pasta Plant to a third party, the purchaser of the Pasta
Plant shall, as a condition to the sale of the Pasta Plant, be assigned and
shall assume, expressly by written instrument, the obligations of AIPC under
this Agreement or, alternatively, execute a written flour supply agreement with
Bay State on terms and conditions substantially similar to those set forth in
this Agreement and having a minimum term equivalent to the then remaining term
of this Agreement.


                                   ARTICLE IX
                                  COVENANTS

     Section 9.1. Confidentiality. Each party hereby agrees to hold, and use its
best efforts to cause its respective officers, directors, employees,
consultants, agents and representatives (collectively, "Representatives") to
hold, in confidence, unless compelled to disclose by judicial or administrative
process or by other requirements of law, all confidential documents and
information, whether written or oral, including, without limitation, financial
statements, concerning the business and business process of the other party
furnished, whether before or after the date of this Agreement, to such receiving
party in connection with this Agreement and the consummation of the transactions
contemplated hereby, except to the extent that such information can be shown by
such receiving party to have been (i) at the time of disclosure or thereafter,
generally available to or known by the public other than as a result of a
disclosure by the such receiving party or any of its Representatives; (ii)
available to such receiving party on a nonconfidential basis from a source other
than the disclosing party or any of its Representatives, provided that such
source is not bound by a confidentiality agreement with, or other contractual,
legal or fiduciary obligation to, the disclosing party; or (iii) later lawfully
acquired by such receiving party from sources other than the disclosing party;
provided, that the receiving party may disclose such information to its
Representatives in connection with this Agreement and the consummation of the
transactions contemplated hereby so long as such Representatives are informed by
the receiving party of the confidential nature of such information and are
directed by the receiving party to treat such information confidentially.
Notwithstanding the foregoing, the receiving party may disclose such
confidential information of the disclosing party to (i) a lender in connection
with a financing transaction undertaken by the receiving party; or (ii) a
prospective buyer of either Bay State's or AIPC's interests in connection with
the Mill, the Pasta Plant or this Agreement; provided, that such lender or
prospective buyer agrees in writing, prior to the disclosure of such
confidential information, to keep such information confidential. The obligation
of the receiving party to hold any such information in confidence shall be
satisfied if such party exercises the same care with respect to such information
as it would take to preserve the confidentiality of its own similar information.
If this Agreement is terminated, the receiving party will, and will use its best
efforts to cause its Representatives to, deliver to the disclosing party, upon
request, all documents and other materials, and all copies thereof, obtained by
the receiving party or on its behalf from the disclosing party in connection
with this Agreement and the consummation of the transactions contemplated hereby
that are subject to such confidence.

     Section 9.2. Inspections. Each party and its representatives or invitees
shall be permitted reasonable access, upon written notice to the other party, to
the Mill or the Pasta Plant,

                                       14

as applicable, for marketing purposes and for the purpose of observing all
aspects of the other party's operations, including manufacturing techniques,
quality control, sanitation procedures and testing procedures. Each party shall
maintain and make available to the other party's representatives all relevant
testing and equipment records. AIPC's representatives shall also be permitted
upon request to Bay State to inspect the Flours after manufacture and prior to
delivery to AIPC; provided, that such inspections shall in no way delay or in
any manner interfere with Bay State's production or delivery schedules.

     Section 9.3. Insurance and Indemnification.

          (a) During the term of this Agreement, Bay State shall maintain
     liability insurance of at least $10,000,000, with a deductible not to
     exceed $500,000. AIPC shall maintain liability insurance of at least
     $10,000,000 with a deductible not to exceed $500,000. The insurance
     policies obtained by each party pursuant to the previous two sentences
     shall provide for coverages reasonably required, prudent and/or customary
     in the industry for each party's respective business. Bay State and AIPC
     shall also carry contingent business interruption coverage providing for a
     minimum of 12 months of coverage. On the date hereof, Bay State and AIPC
     shall furnish each other with certificates of insurance evidencing such
     coverages. The insurance policies obtained by each party pursuant to the
     terms of this Section 9.4 shall provide that such policy shall not be
     cancelled, reduced in amount or otherwise materially altered or amended
     without at least thirty (30) day prior written notice to Bay State and
     AIPC.

          (b) Each party hereto (the "Indemnitor") shall indemnify and hold
     harmless the other party (the "Indemnitee") from and against any and all
     actions, suits, claims, proceedings and any judgments, losses, damages,
     fines, costs and expenses, including reasonable attorneys' fees, resulting
     therefrom that may be brought or commenced by any person or entity against
     the Indemnitee for the recovery of damages for the injury, illness or death
     of any person or damage to any property to the extent that such damages
     arise out of (i) the delivery, sale, resale, labeling, use or consumption
     of any food incorporating the Flour delivered to AIPC or (ii) any actual
     breach of the Agreement by the Indemnitor.

     Section 9.4. General Cooperation

          (a) At the year-end meetings held pursuant to Section 3.6(c) Bay State
     and AIPC shall discuss and implement procedures or agreements to the extent
     commercially and financially reasonable for both parties, with respect to
     the following: (i) opportunities for business referrals from Bay State to
     AIPC for the purchase of AIPC products; (ii) short term and long term goals
     of AIPC and Bay State with respect to the Mill and the Pasta Plant and how
     the goals impact both parties' businesses; (iii) coordinating durum grain
     procurement processes, transportation and shipment of raw materials and
     finished products, cost improvement and optimization of resources for both
     parties; and (iv) sharing resources including without limitation, grain
     market analyses. In addition, Bay State and AIPC agree to evaluate new
     processes and technologies, as they become available, that may lead to
     improvements in Mill operations and reductions in operating costs and
     overhead. In the event AIPC desires Bay State to implement new procedures
     or technology ("Improvements") to improve the quality or reduce the cost of
     Flour to AIPC, the parties agree to negotiate in good faith to amend this
     Agreement to share equitably the costs and resulting benefits of the
     Improvements. If Bay State refuses to


                                       15

     permit AIPC to implement the Improvements at AIPC's cost, AIPC may
     terminate this Agreement upon ninety (90) days prior written notice to Bay
     State.

          (b) During an expansion, if any, the parties shall meet at least
     quarterly to discuss the status and progress for completion of the
     expansion, estimated completion dates and AIPC's Flour needs upon the
     completion of the expansion.

          (c) AIPC and Bay State also agree to coordinate and cooperate with
     respect to maintenance and fumigation of the Mill and the Pasta Plant so as
     to protect the health and safety of persons at both facilities and minimize
     interference with each other's operations.

     Section 9.5. Other Opportunities. Bay State will not enter into an
agreement with, solicit, initiate or encourage any other pasta company or other
third party (an "AIPC Competitor") to construct a pasta production facility
adjacent to or in the vicinity of another Bay State facility until Bay State has
first given AIPC the opportunity to match the competitor's offer to Bay State.
AIPC shall have a period of thirty (30) days from receipt of written notice of
the competitor's offer to sign a letter of intent with Bay State to match such
offer. The parties shall negotiate the terms of the letter of intent in good
faith. If the parties are unable to reach agreement on the terms of the letter
of intent within such thirty (30) day period, Bay State shall have the right to
enter into an agreement with the AIPC Competitor on terms substantially similar
to such offer.

     Section 9.6. Marketing Payment. In recognition of the benefit to Bay State
of the immediate Flour demand associated with access to pasta customers
available due to AIPC's strong market position and the start-up costs and
efforts of AIPC expended in purchasing and reopening the Borden facility, Bay
State hereby agrees to make a one-time payment to AIPC of [*] on the date hereof
(the "Marketing Fee"). The Marketing Fee shall be paid to AIPC in cash by wire
transfer of immediately available funds in accordance with the wire instructions
set forth in Schedule C hereto.


     Section 9.7. Noncompetition

          (a) AIPC agrees that during the term of this Agreement, neither it nor
     its affiliates shall engage, either directly or indirectly, as a principal
     or for its own account or solely or jointly with others, or as stockholders
     in any corporation or joint stock association, in any business that
     competes with Bay State's baking flour milling business or its durum wheat
     milling business, in either case, within the State of Arizona; provided,
     that nothing herein shall prohibit the purchase by AIPC of baking flours,
     if necessary, from a supplier other than Bay State.

          (b) Bay State agrees that during the term of this Agreement, neither
     it nor its affiliates shall engage, either directly or indirectly, as a
     principal or for its own account or solely or jointly with others, or as
     stockholders in any corporation or joint stock association, in any business
     that competes with AIPC's pasta production business (the "AIPC Competitive
     Business") within the State of Arizona; provided, that nothing herein shall
     prohibit Bay State from selling flour produced at the Mill to a third party
     engaged in the AIPC Competitive Business in accordance with the terms of
     Section 1.4.


                                       16

          (c) It is the intention of the parties that if any of the restrictions
     or covenants contained herein is held to cover a geographic area or to be
     for a length of time which is not permitted by applicable law, or in any
     way construed to be too broad or to any extent invalid, such provision
     shall not be construed to be null, void and of no effect, but to the extent
     such provision would be valid or enforceable under applicable law, a court
     of competent jurisdiction shall construe and interpret or reform this
     Section 9.8 to provide for a covenant having the maximum enforceable
     geographic area, time period and other provisions (not greater than those
     contained herein) as shall be valid and enforceable under such applicable
     law.

     Section 9.8. Financial Statements. All financial statements delivered by
any party pursuant to this Agreement shall be prepared in conformity with
generally accepted accounting principles.

                                   ARTICLE X
                              TERM AND TERMINATION

Section 10.1. Term. The initial term of this Agreement shall commence on the
date hereof and shall continue until and including September 30, 2012 (the
"Initial Term") and, thereafter, this Agreement shall automatically renew for
additional five-year terms unless either of the parties shall have delivered
written notice of termination to the other party not less than two (2) years
prior to the expiration of any term; provided, however, that in the event the
production capacity of the Mill is expanded in accordance with the provisions of
Section 6.2, a new Initial Term of 10 years shall commence on the date on which
Bay State commences capital improvements at the Mill that would require Bay
State to invest, in the aggregate, at least $2.5 million in (a) new capital
equipment to increase the Mill's production capacity in accordance with the
provisions of Section 6.2 or (b) Improvements in accordance with Section 9.4.

     Section 10.2. Material Default.

          (a) The following shall be deemed a "Material Default" on Bay State's
     part:

               (i) The entry by a court having jurisdiction in the premises of a
          decree or order for relief in respect of Bay State in an involuntary
          case under any bankruptcy laws and such decree or order shall remain
          unstayed and in effect for a period of sixty (60) consecutive days, or
          the commencement by Bay State of a voluntary proceeding under any
          bankruptcy laws;

               (ii) An assignment of this Agreement by Bay State in violation of
          Section 11.5;

               (iii) Bay State's failure to make improvements to the Mill in
          accordance with the provisions of Section 6.2;

               (iv) Bay State's failure to observe and perform the covenants set
          forth in Sections 3.1, 3.2 and 3.3 such that the obligations of these
          Sections have not been satisfied for a period of not less than thirty
          (30) days; or


                                       17

               (v) Bay State's failure to observe and perform the covenant set
          forth in Section 3.4 such that the obligation of this Section has not
          been satisfied for a period of not less than sixty (60) days.

          (b) The following shall be deemed a "Material Default" on AIPC's part:

               (i) AIPC's failure to pay Bay State's invoices in accordance with
          the provisions of Section 2.2;

               (ii) AIPC's failure to purchase eighty percent (80%) of its flour
          requirements at the Pasta Plant from Bay State as set forth in Section
          1.2;

               (iii) The entry by a court having jurisdiction in the premises of
          a decree or order for relief in respect of AIPC in an involuntary case
          under any bankruptcy laws and such decree or order shall remain
          unstayed and in effect for a period of sixty (60) consecutive days, or
          the commencement by AIPC of a voluntary proceeding under any
          bankruptcy laws; or

               (iv) An assignment of this Agreement by AIPC in violation of
          Section 11.4.

               Upon the occurrence of any Material Default, the nondefaulting
          party shall provide a notice (a "Material Default Notice") to the
          defaulting party describing in reasonable detail the Material Default.

     Section 10.3. Termination. This Agreement may be terminated at any time:

          (a) by mutual written agreement of Bay State and AIPC;

          (b) in the event of a Material Default by either party, the other
     party may terminate this Agreement upon written notice, and such
     termination shall be effective, upon delivery of notice in the case of a
     Material Default specified in Sections 10.2(a)(i) and (ii) and Sections
     10(b)(iii) and (iv). The defaulting party shall have (i) in the case of a
     Material Default specified in Section 10.2(a)(iii) or Section 10.2(b)(ii),
     ninety (90) days from receipt of such notice to cure such Material Default
     or to make provision to comply with such requirements; (ii) in the case of
     a Material Default specified in Section 10.2(a)(iv) and (v), forty-five
     (45) business days from receipt of such notice to cure such default or make
     provision to comply with such covenant; and (iii) in the case of a Material
     Default specified in Section 10.2(b)(i), ten (10) days to cure such
     Material Default;

          (c) in the event of Indemnitor's failure to perform the covenant set
     forth in Section 9.3(b) within ninety (90) days following the date on which
     the Indemnitor's liability and obligation pursuant to Section 9.3(b) has
     been determined by final adjudication, the Indemnitee may terminate this
     Agreement upon written notice; or

          (d) by AIPC in accordance with the provisions of Section 9.4.

                                       18

          The party desiring to terminate this Agreement pursuant to this
     Section 10.3 (other than pursuant to Section 10.3(a)) shall give written
     notice of such termination to the other party.

     Section 10.4. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.4 or 10.3 , this Agreement shall become void and of no
effect without liability of any party (or any stockholder, director, officer,
employee, agent, consultant or representative of such party) to the other party
hereto, provided that, if such termination shall result from the willful (i)
failure of either party to fulfill a condition to the performance of the
obligations of the other party or (ii) failure of either party to perform a
covenant hereof, such party shall be fully liable for any and all liabilities
and damages incurred or suffered by the other party as a result of such failure.
The provisions of Sections 9.1, 11.5 and 11.6 shall survive any termination
hereof pursuant to Section 9.4 or 10.3.


     Section 10.5. Interparty Communication. If either party experiences or
anticipates any difficulty or difference of opinion in respect of any aspect of
this Agreement, it shall inform the other party of that fact with information
relevant to the same, and the parties shall communicate with each other with a
view to resolving the matter amicably and fairly. If any difficulty or
difference of opinion is not resolved in this fashion, either party may, by
written notice to the other, convene a meeting of the most senior operational
executives of the parties, and said executives shall meet as soon as practicable
following such notice and, in any event not later than ten (10) business days
following said notice. At least five (5) business days prior to such meeting,
the parties shall exchange with each other, in writing, their view of the matter
and considerations and facts relevant thereto to facilitate a meaningful
discussion by the senior executives. All communications addressed by the parties
to the other party and related to the purposes of this Agreement shall be
directed to that parties' addresses as set forth in Section 11.1.

                                   ARTICLE XI
                                  MISCELLANEOUS

     Section 11.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,

         if to AIPC, to:

         American Italian Pasta Company
         4100 N. Mulberry Drive, Suite 200
         Kansas City, MO  64116
         Attention:  Executive Vice President, Procurement and Industrial Markets
         Fax:  (816) 584-5100


                                       19

         with a copy to:

         Blackwell Sanders Peper Martin
         Two Pershing Square
         2300 Main Street
         Suite 1000
         Kansas City, MO  64108
         Attention:  James M. Ash, Esq.
         Fax:  (816) 983-8080

         if to Bay State, to:

         Bay State Milling Company
         100 Congress Street
         Quincy, MA  02169
         Attention:  Executive Vice President
         Fax:  (617) 472-7010

         with a copy to:

         Goodwin Procter LLP
         Exchange Place
         Boston, MA  02109
         Attention:  Stuart M. Cable, P.C.
         Fax:  (617) 523-1231

or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. local time, and
such day is a business day, in the place of receipt. Otherwise, any such notice,
request or communication shall be deemed not to have been received until the
next succeeding business day in the place of receipt.

     Section 11.2. Force Majeure. If either party is unable to perform any
obligation under this Agreement by reason of any of the following events (each,
a "Force Majeure Event"): (i) fire, explosion, natural disaster or act of God;
(ii) epidemic; any nuclear, biological, chemical or similar attack; any other
public or safety emergency; any act of terrorism; and any action reasonably
taken in response to the foregoing; (iii) strike or other labor dispute or
action; (iv) any act of war or of a public enemy, or riot or civil insurrection;
any sabotage, whether industrial or governmental; (v) any disruption in
transportation, communications, electric power or other utilities, or other
vital infrastructure; or any means of disrupting or damaging internet or other
computer networks or facilities; (vi) any action taken in response to any of the
foregoing events by any civil or military authority; or (vii) any other cause
beyond the control of the party affected, then the party so affected shall, upon
giving written notice to the other party, be excused from such performance to
the limited extent of such inability to perform, provided that the party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of such inability, and shall resume performance under this Agreement with all
reasonable dispatch

                                       20

whenever such causes are removed. Until such time as the affected party resumes
performance in accordance with the provisions of this Section 11.2, the party
entitled to the benefit of performance by such affected party may secure
performance of such affected party's obligations from third parties. Each party
shall use commercially reasonable efforts to obtain insurance for the benefit of
the other party related to these Force Majeure Events.

     Section 11.3. Amendments; No Waivers

          (a) Any provision of this Agreement may be amended or waived, but only
     if, such amendment or waiver is in writing and is signed, in the case of an
     amendment, by each party to this Agreement or, in the case of a waiver, by
     each party against whom the waiver is to be effective.

          (b) No failure or delay by any party in exercising any right, power or
     privilege hereunder shall operate as a waiver thereof nor shall any single
     or partial exercise thereof preclude any other or further exercise thereof
     or the exercise of any other right, power or privilege. The rights and
     remedies herein provided shall be cumulative and not exclusive of any
     rights or remedies provided by law.

     Section 11.4. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement,
whether by operation of law, or by merger, consolidation, sale of assets, change
of control or otherwise, without the prior written consent of each other party
hereto.

     Section 11.5. Governing Law. This Agreement and all disputes, actions or
proceedings arising out of or relating to the breach, termination negotiation,
or validity hereof and/or the rights or obligations of the parties arising out
of or relating to this Agreement, the transactions contemplated hereby, any
agreement, instrument or document executed and delivered in connection with such
transactions or the breach, termination, negotiation, or validity hereof shall
be governed by and construed in accordance with the internal laws of the State
of Missouri, without regard to its conflict of laws provisions. Each of the
parties hereto hereby irrevocably and unconditionally consents to (i) the
jurisdiction of the Center for Public Resources to resolve any such dispute,
action or proceeding (except with respect to any equitable remedy to which a
party is entitled), (ii) the State of Arizona as the site of the arbitration
proceedings, and (iii) the jurisdiction of the courts of the State of Arizona
and the United States District Court for the District of Arizona in Phoenix,
Arizona for the purpose of enforcing the arbitration provisions of Section 11.6
and pursuing any injunctive relief. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any such dispute, action or proceeding before the Center for Public Resources
based on a lack of personal jurisdiction or the laying of venue. Each of the
parties hereto further agrees that service of process, summons, notice or
document by U.S. registered mail to such party's address set forth in Section
11.1 hereof shall be effective service of process for any such dispute, action
or proceeding brought against such party in any such court.


                                       21

     Section 11.6. Arbitration; Jurisdiction. Any dispute arising out of or
relating to this Agreement or the breach, termination negotiation, or validity
hereof and/or the rights or obligations of the parties arising out of or
relating to this Agreement, the transactions contemplated hereby, any agreement,
instrument or document executed and delivered in connection with such
transactions or the breach, termination, negotiation, or validity hereof (a
"Claim") shall be finally settled by binding arbitration conducted expeditiously
in accordance with the Center for Public Resources Rules for Nonadministered
Arbitration of Business Disputes (the "CPR Rules") and such decision shall not
be subject to judicial review. The Center for Public Resources shall appoint a
neutral advisor from its National CPR Panel, which advisor shall be a retired
judge or justice with substantial experience in resolving complex business
disputes. The arbitration shall be governed by the United States Arbitration
Act, 9 U.S.C. ss.ss.1-16, and judgment upon the award rendered by the
arbitrators may be entered by any court having jurisdiction thereof.

     Such proceedings shall be administered by one neutral advisor in accordance
with the CPR Rules as he/she deems appropriate; provided, however, such neutral
advisor shall render his or her opinion not more than ten (10) days following
any hearing.

     The decision of the neutral adviser shall be in written form. The neutral
adviser shall not have power or authority to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive or
consequential damages or other similar damages, and each party hereby
irrevocably waives any claim to damages other than actual damages.

     Notwithstanding anything to the contrary contained herein, the provisions
of this Section 11.6 shall not apply with respect to any matter or dispute as to
which a party seeks injunctive relief.

     Section 11.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any person other than the parties hereto and their
respective successors and assigns.

     Section 11.8. Entire Agreement. This Agreement supersedes all prior
communications, representations, agreements and understandings, whether oral and
written, between the parties with respect to the subject matter of this
Agreement, including, without limitation, that certain letter agreement dated
March 28, 2002 (the "Letter Agreement") and any printed terms and conditions
which may appear on AIPC's purchase orders to the extent such terms are
different from or inconsistent herewith, and constitutes the entire agreement
between the parties with respect to the subject matter covered herein.
Notwithstanding the foregoing, the terms of the agreement between the parties as
set forth in Section 9 of the Letter Agreement with respect to access to, and
egress from, the Pasta Plant property by means of Bay State's entrance road from
99th Avenue shall be set forth in and governed by the Roadway Access Easement,
Maintenance and Cost Sharing Agreement dated of even date herewith by and
between the parties.

                                       22

     Section 11.9. Relationship of Parties. Neither party shall act or represent
or hold itself out as having authority to act as an agent or partner of the
other party, or in any way bind or commit the other party to any obligations.
Nothing contained in this Agreement shall be construed as creating a
partnership, joint venture, agency, trust or other association of any kind, each
party being individually responsible only for its obligations as set forth in
this Agreement.

     Section 11.10. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof

     Section 11.11. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Upon such a determination, the parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby be
consummated as originally contemplated to the fullest extent possible.

                                  [END OF TEXT]

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.


                                         AMERICAN ITALIAN PASTA COMPANY



                                         By:      /s/ David Potter
                                             ----------------------------------------
                                         Name:    David Potter
                                         Title:   Executive Vice President
                                                  Procurement and Industrial Markets



                                         BAY STATE MILLING COMPANY



                                         By:      /s/ John Hillman
                                             ----------------------------------------
                                         Name:    John Hillman
                                         Title:   Executive Vice President

                                    EXHIBIT A

                               Form of Assignment



                         American Italian Pasta Company
                             4100 N. Mulberry Drive
                                    Suite 200
                              Kansas City, MO 64116



To:      ____________________________

         ____________________________

         ____________________________


Kindly note that American Italian Pasta Company Purchase Order No.
________________ dated ______________________ for _________________________
_______________________________________ durum grain has been assigned to Bay
State Milling Company, 707 Grain Exchange Building, P.O. Box 15184, Minneapolis,
MN 55415.


Bay State Milling Company has, effective with the date of this Assignment,
assumed the responsibilities of the Purchaser with respect to performance of its
obligations under the Purchase Order, and will confirm this assignment directly
with you.

If you have any questions, relative to the Purchase Order or this Assignment,
please contact Bay State at (612) 332-0555.

                         American Italian Pasta Company


                         Signed by:        ___________________________

                         Name:             ___________________________

                         Title:            ___________________________

                         Date:             ___________________________

                                   SCHEDULE A

               (This Schedule A may be amended from time to time)

                                     Flours


1.       Semolina (fine grind) [specifications attached].

2.       A blend of 60% semolina and 40% durum 1st Clear flour.

3.       Durum flour 1st Clear [specifications attached].

4.       Other Durum flours and flour blends, the specifications for which are
         to be agreed from time to time.

5.       AIPC agrees to use its commercially reasonable efforts to "balance the
         mill" by purchasing the naturally occurring yields of semolina and
         durum flour 1st Clear products, whether separately or as blended
         products.

                     SCHEDULE A - RAW MATERIAL SPECIFICATION

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

 Specification Number:  RM.101                              Revision No.:  C
    AIPC Product Name:  Semolina                           Revision Date:  03/09/1999
                        (Blue Blend, Fine Grind)      Nature of Revision:  Description

                                                              Supersedes:  B, 3/4/99
Approval:                Kevin Doehring
(AIPC QA Director)                                       Revision Author:  Reecie Hale
- ---------------------------------------------------------------------------------------

Description: Made by grinding AIPC Coarse Grind Semolina (Raw Material No. 100
    made of ground 100% US Hard Amber Durum Wheat and/or Canadian Western Amber
    Durum Wheat, enriched according to Title 21 CFR Part 139 (for macaroni and
    noodle products).

Ingredient Statement:  Enriched Durum Wheat Semolina [Durum Wheat, Niacin, Ferrous Sulfate (Iron), Thiamine
    Mononitrate, Riboflavin, Folic Acid].

[*]

KOSHER STATUS

Manufactured in accordance with and certified by the Orthodox Union, New York,
NY.

REGULATORY REQUIREMENTS

This product shall be prepared, processed, packaged and held under prudent
sanitary conditions, being free of extraneous and deleterious material in
accordance with good commercial food manufacturing practices and the Defect
Action Levels (DAL) established by the FDA for macaroni products, Title 21 CFR
Part 110.

Pesticide residues in this product shall meet the current requirements of the
Code of Federal Regulations found in Title 21, Articles 139.110 and 139.115.

All articles of food comprising each package, shipment, delivery, or consignment
made to the customer will be in compliance with the Federal Food, Drug and
Cosmetic Act of 1938 as amended and all applicable regulations thereunder.

HANDLING AND STORAGE RECOMMENDATIONS

Recommended shelf life - 60 days maximum.
Product should be shipped and stored at temperatures between 32 to 90 degrees F
to ensure shelf life.

REMARKS/SPECIAL INSTRUCTIONS

Products and ingredients shall be obtained from approved food plant suppliers
only. No shipments are to be furnished from co-packers or other non-approved
locations without first informing the customer in writing. COA required on all
shipments/transfers.

                           RAW MATERIAL SPECIFICATION

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

Specification Number:  RM.107                     Revision No.:  C
   AIPC Product Name:  Durum Flour               Revision Date:  08/20/2001
                       1st Clear            Nature of Revision:  Mill processing modification

                                                    Supersedes:  B, 3/4/99

Approval:              Kevin Doehring
(AIPC QA Director)                             Revision Author:  Reecie Hale
- ---------------------------------------------------------------------------------------------

Description: Made by grinding 100% US Hard Amber Durum Wheat and/or Canadian
    Western Amber Durum Wheat, enriched according to Title 21 CFR Part 139 (for
    macaroni and noodle products).

Ingredient Statement:  Enriched Durum Wheat Flour [Durum Wheat Flour, Niacin, Ferrous Sulfate (Iron),
    Thiamine Mononitrate, Riboflavin, Folic Acid].

[*]

KOSHER STATUS

Manufactured in accordance with and certified by the Orthodox Union, New York,
NY.

REGULATORY REQUIREMENTS

This product shall be prepared, processed, packaged and held under prudent
sanitary conditions, being free of extraneous and deleterious material in
accordance with good commercial food manufacturing practices and the Defect
Action Levels (DAL) established by the FDA for macaroni products, Title 21 CFR
Part 110.

Pesticide residues in this product shall meet the current requirements of the
Code of Federal Regulations found in Title 21, Articles 139.110 and 139.115.

All articles of food comprising each package, shipment, delivery, or consignment
made to the customer will be in compliance with the Federal Food, Drug and
Cosmetic Act of 1938 as amended and all applicable regulations thereunder.

HANDLING AND STORAGE RECOMMENDATIONS

Recommended shelf life - 30 days maximum.
Product should be shipped and stored at temperatures between 32 to 90 degrees F
to ensure shelf life.

                                   SCHEDULE B

                                Pricing Formulas


A.   The price for semolina is equal to the computation of the following
     components:

     1.   100 lbs. of 100% U.S. hard amber durum wheat on the basis of the
          specifications set forth in Schedule E priced delivered to the Mill
          (as-is basis).

     2.   Deduct the grain value of the moisture gains percentage.

     3.   Deduct the sales value of Durum flour 1st Clear.

     4.   Deduct the sales value of Durum flour 2nd Clear.

     5.   Deduct the sales value of Durum reddog by-product.

     6.   Deduct the sales value of middlings by-product.

     The  result is the net wheat grain cost for semolina.

     Invoiced pricing will be in 1-cwt (100 lb.) units and will have the
     following components added to the wheat grain costs for semolina:

     1.   Applicable enrichments and/or treatments required by the
          specifications for the Flours as set forth on Schedule A.

     2.   Mill operating costs, overhead, and profit (the "milling conversion"
          cost).

Pricing Example

         [*]

If the milling extractions are: 75% semolina, 2% 1st Clear, 3% 2nd Clear, 4%
reddog, and 16% middlings and the semolina is delivered to AIPC via pipeline,
then based upon these extractions, together with the above prices and costs, the
selling price of semolina would be computed as follows:


         [*]

B.   Durum Flour 1st Clear. If sold separately, durum 1st Clear flour will be
     sold FOB the Mill at the same price per cwt. as it is credited in the
     formula pricing structure for semolina. i.e. in this example, for [*]. AIPC
     will determine the pricing of the 1st Clear flour products based upon
     market values in effect at the time of sale and such pricing will be used
     to determine the credit for the 1st Clear by-product in the pricing of the
     semolina.

C.   Other durum flour, or durum blends not specifically identified here, will
     be mutually agreed to at the time of sale, and based upon actual costs in
     effect at the time of sale.

The actual milling extractions and grain moisture gains will be measured and
analyzed on a quarterly basis, the results of which will determine the pricing
formula to be utilized during the next quarter as provided in Section 2.1(b) and
(d).

                                   SCHEDULE C

                                Wire Instructions

For wire transfers to Bay State:

         [*]

For wire transfers to AIPC:

         [*]

                                   SCHEDULE D

               (This Schedule D may be amended from time to time)

                               Mill Purchase Price


Computation of the purchase price of the Mill shall be as follows:


Current durum mill asset value                                                  $              [*]

Add      Applicable Capital Investments

         --       Flour conveying pipeline.
         --       Durum grain storage and unloading/receiving pit.
         --       Mutually agreed milling expansions.
         --       Other improvement/modification capital investment expenses



Deduct   Accumulated depreciation expense on Applicable Capital Investments

         Net Book Value of Total Assets
                                                                                ------------------

         Future purchase price of the Mill Assets
         (Net Book Value x.85)                                                  $
                                                                                ==================

NOTE:

1.   The land area to be included in the purchase price of the Mill is as
     depicted in the attached plot plan. However, if AIPC chooses to exercise
     its option to purchase the Mill in accordance with Section 8.1, the parties
     will discuss the siting of the elevator and its land area at that time to
     determine if an alternate siting or arrangement might be more beneficial to
     both AIPC and Bay State.

2.   The current durum mill asset value will not be subject to depreciation,
     such that the Net Book Value will not fall below [*].

3.   Depreciation on Applicable Capital Investments will be calculated under the
     federal rules for grain and grain mill products, which is Section 20.1 of
     the Class Life Asset Depreciation Range System (CLADR).

4.   Bay State agrees to use its best efforts to maintain the Mill and any
     improvements in a proficient manner for efficient operations and in
     accordance with good manufacturing practices, replacing equipment as
     necessary.

5.   Bay State will make all appropriate and customary representations and
     warranties with respect to the Mill and the real property pursuant to a
     customary purchase agreement and such purchase agreement shall contain a
     legal description of the Mill, including all

     expansions and additions made thereto, and shall require Bay State to
     obtain a title survey and provide all appropriate warranties of title with
     respect to the Mill.

6.   In connection with the determination of the Mill purchase price, AIPC shall
     be entitled to review Bay State's books and records with respect to any
     capital assets added to the Mill and included in the purchase price
     calculation set forth in this Schedule D.

                                   SCHEDULE E

                              Wheat Specifications


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

DOC. NUMBER:      1.0122BSM         BAY STATE MILLING COMPANY      MATERIAL:  HARD DURUM
                                                                              WHEAT GRAIN
REVISION DATE:         03/07/02     PRODUCT SPECIFICATIONS                     "DESERT"
REPLACES:              03/06/02
PREPARED BY:              RLM       QUINCY, MA 02169

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

[*]

                                   SCHEDULE F

               (This Schedule F may be amended from time to time)

                           Wheat Purchasing Procedures

o    American Italian Pasta Company (AIPC) will purchase the durum wheat to be
     used-by Bay State Milling Company (Bay State) for the manufacture of
     semolina and durum products for use at AIPC's Tolleson, AZ plant. The durum
     wheat will be purchased in conformance with the commodity specifications
     for "DESERT DURUM" and contract terms detailed in Figures 1 and 3. ("DESERT
     DURUM" has been trademarked with the U.S. patent office under the ownership
     of the Arizona Grain Research and Promotion Council and California wheat
     Commission. Only durum wheat produced in the states of Arizona and
     California can use the DESERT DURUM trademark.) If durum wheat purchases do
     not meet the prescribed commodity specifications and contract terms in
     Figure 1 but the durum is of acceptable quality for milling, AIPC agrees to
     adjust the pricing formula to account for any difference between actual
     mill yield and the yield guaranteed in the pricing formula.

o    For purposes of this contract, "acceptable quality for milling" is defined
     as wheat that meets the commodity specifications for non-DESERT DURUM
     detailed in Figure 2. Exception(s) to the definition "acceptable quality
     for milling" will be discussed and any acceptable exception will be
     confirmed in writing between the two parties. Wheat will be rejected if it
     does not meet the commodity specifications in Figures 1-3, or is a
     confirmed exception. BAY STATE will bear no liability for such rejection
     regardless of the outcome of any official grade or third party testament.
     All BAY STATE decisions concerning grain quality and acceptability are
     final.

o    BAY STATE will accept assignment of each purchase contract issued by AIPC,
     however BAY STATE will not accept the assignment of purchase contracts
     inconsistent with the terms of Figures 1-3 nor will BAY STATE be liable for
     performance of such contracts without prior agreement. Both AIPC and BAY
     STATE will be responsible for advising seller of the assignment. BAY STATE
     will not unload grain for the account of AIPC without a contract.

o    AIPC and BAY STATE will work together to insure that wheat purchases are as
     homogenous as possible and that BAY STATE's elevator does not have to
     segregate inventories in a manner that limits the overall capacity and
     operation of the elevator. Furthermore, BAY STATE will endeavor to meet
     AIPC's grain storage requirements, however if BAY STATE elevator capacity
     is constrained due to segregation requirements or aggregate inventory
     levels any handling/storage/transportation charges thereby incurred will be
     borne by AIPC. BAY STATE will not be liable for any grain, and attendant
     charges, that cannot be unloaded due to storage constraints if AIPC and/or
     the seller have been notified by BAY STATE.

o    BAY STATE will market all mill by-products. The selling prices for such
     by-products and the quantities sold will be the basis for calculating
     millfeed credits in the pricing formula.

     BAY STATE will confer with AIPC on a regular schedule regarding
     offering/selling prices and marketing strategies.

o    All grading and weighing fees will be the responsibility of the seller
     unless AIPC agrees to bear such charges. Each conveyance is to be
     individually graded for settlement purposes unless otherwise agreed.

o    Grain payments are to be made by check and postmarked within seven business
     days of grain delivery to BAY STATE, Tolleson, AZ, and receipt of all
     necessary documents. Any exceptions to be mutually agreed upon by AIPC and
     BAY STATE.

                                    FIGURE I
                                  DESERT DURUM
                            COMMODITY SPECIFICATIONS
                                       AND
                                 CONTRACT TERMS

    GUARANTEED SOUND MILLING QUALITY WHEAT, FREE OF OBJECTIONABLE ODORS, FREE
     OF -INSECTS AND/OR INSECT PARTICLES, FREE OF FOREIGN OBJECTS, DRY, AND
       VITREOUS. THE COMMODITY COMPLIES WITH ALL USDA GRADING REGULATIONS,
   CONTAINS NO DELETERIOUS OR BANNED SUBSTANCES, AND COMPLIES WITH THE FEDERAL
   FOOD, DRUG AND COSMETIC ACT AND APPLICABLE STATE STATUTES AND REGULATIONS.

[*]

                                    FIGURE 2
                                NON-DESERT DURUM
                            COMMODITY SPECIFICATIONS
                                       AND
                                 CONTRACT TERMS

    GUARANTEED-SOUND MILLING QUALITY WHEAT, FREE OF OBJECTIONABLE ODORS, FREE
      OF INSECTS AND/OR INSECT PARTICLES, FREE OF FOREIGN OBJECTS, DRY, AND
       VITREOUS. THE COMMODITY COMPLIES WITH ALL USDA GRADING REGULATIONS,
   CONTAINS NO DELETERIOUS OR BANNED SUBSTANCES, AND COMPLIES WITH THE FEDERAL
   FOOD, DRUG AND COSMETIC ACT AND APPLICABLE STATE STATUTES AND REGULATIONS.

[*]

                                    FIGURE 3
                          GENERAL TERMS AND CONDITIONS

1.   Commodity purchased must be a sound milling quality grain, free from any
     objectionable odors, free from insects, free from foreign objects, dry,
     vitreous and capable of producing acceptable milling yields and product
     characteristics. Commodity must not pose any food safety or quarantine risk
     to the buyer. Further, this grain shall comply with all United States
     Department of Agriculture regulations, contain no banned or deleterious
     substances and comply in all respects with the Federal Food, Drug and
     Cosmetic Act and any regulations promulgated thereunder and all applicable
     state and local statutes and regulations. If commodities are adulterated
     under any applicable laws, or the commodity or its shipment is in violation
     of any provision of this Contract, Seller shall be in breach and Buyer may
     take advantage of any and all remedies given under the terms and conditions
     of this Contract or under federal, state, and local law.

2.   Grain cars, trucks or other conveyance applied against this Contract must
     be thoroughly emptied and cleaned prior to loading and not previously used
     to haul any unsafe or toxic materials (garbage, chemicals, fertilizers,
     etc.). All hatches and gates should be sealed and seals recorded at origin.
     Seller shall make seal records available upon request.

3.   The grade or protein of grain delivered hereunder shall be uniformly
     (evenly) loaded by quality and protein. Unless otherwise specified in this
     Contract, official inspection shall include only official grading factors
     included in the regulations promulgated under the United States Grain
     Standards Act.

4.   Seller warrants that all grain to be delivered hereunder will have been
     grown in the continental United States unless a clause providing for grain
     not grown in the continental United States has been made a part of the
     terms of this Contract and a statement thereof shown on the face of this
     Contract.

5.   Seller guarantees that no commodity covered by this Contract shall be
     adulterated or misbranded or is an article or commodity which may not be
     introduced into interstate commerce under the provisions of the Federal
     Food, Drug and Cosmetic Act and the regulations promulgated thereunder.

6.   Seller warrants that the grain to be delivered hereunder will be delivered
     free and clear of any and all liens and encumbrances and the claims of any
     third parties, including but not limited to any lien in favor of the United
     States for a farm marketing excess penalty.

7.   Each car or other shipping unit must be loaded with at least the minimum
     weight required by the railroad tariff governing its movement for the rail
     carload rate or other applicable tariff or rules applicable to the shipping
     of the grain subject to this Contract. Seller shall promptly pay any excess
     freight due to under-loading. Cars or other shipping units are not to be
     overloaded. Any damages, claims, or expenses incidental to an overloaded
     car or other shipping unit is the sole responsibility of the Seller,
     regardless of whom is in control of the car or other shipping unit.

8.   Buyer is an equal-opportunity-employer, and is a government contractor.
     Therefore, this Contract is subject to the rules and regulations imposed
     upon contractors and subcontractors pursuant to 41 C.F.R. Chapter 60 and
     any similar successor legislation and any regulations promulgated
     thereunder. Unless this Contract is exempt by any regulations issued by the
     Secretary of Labor, there is incorporated herein by reference: the equal
     opportunity clause contained in 41 C.F.R. Section 60-1.4; the affirmative
     action clause contained in 41 C.F.R. Section 60-250.4 relating to the
     employment of disabled veterans and veterans of the Vietnam Era; and the
     affirmative action clause contained in 41 C.F.R. Section 60-741.4 relating
     to the employment of handicapped persons.

9.   Buyer expressly reserves its right to cause the liquidation of this
     Contract because of (a) the insolvency of the other party, (b) the
     commencement of a case under the Federal Bankruptcy Code 11 U.S.C. 101 et
     seq. and any similar successor legislation thereto (the "Code"), (c) the
     voluntary or involuntary appointment of a receiver, custodian, trustee,
     conservator, liquidator or similar official for it or any substantial part
     of its property under the Code, state law, or otherwise or (d) any and all
     other defaults of the terms and conditions specified herein either directly
     or by reference thereof.

10.  Without limiting Buyer's pursuit of any and all other rights and remedies
     available to it and without regards to the provisions in Section 11 hereof,
     it is expressly agreed that this Contract is subject to the Buyer's right
     to set off any mutual debts and claims against Seller under or in
     connection with this Contract, as well as any and all other commodity
     contracts and forward contracts between the parties, as provided in Section
     362(b)(6) of the Code and any similar successor legislation thereto.

11.  If grain is fumigated, use only federally or Buyer-approved fumigants
     according to label directions. A fumigated grain car, truck or other
     conveyance is to be properly placarded and handled in accordance with label
     instructions and applicable federal, state, and local statutes and
     regulations.

12.  Whether or not Buyer is an active member of any of the following
     associations, and to the extent not inconsistent with the terms and
     conditions stated herein, this Contract shall be governed by and construed
     in accordance with the rules and regulations of the exchange, board, or
     association(s) designated on the face of this Contract, or, if none is
     designated, then the applicable Trade Rules of the National Grain and Feed
     Association in effect on the date hereof and the Uniform Commercial Code
     (to the extent not in conflict with the applicable Rules). Whether or not
     an active member of any of the previously referenced associations, Buyer
     acknowledges that it understands the provisions of such rules and
     regulations, as applicable, which shall be the basis of any arbitration of
     any controversies hereunder.

13.  This Contract is subject to reciprocal margin calls. The party giving
     margins may require that such amount be held in escrow.

14.  Alteration of terms: none of the above terms and conditions of this
     Contract may be added to, modified, superseded, or otherwise altered except
     with the written consent of an authorized representative of Buyer. Receipt
     of this Contract by the Seller, without immediate

     notice to Buyer of error, is an acknowledgment of acceptance of all
     conditions hereof.

Form 292, Amended November 1999

EX-10

                         AMERICAN ITALIAN PASTA COMPANY

                              EMPLOYMENT AGREEMENT



         THIS EMPLOYMENT AGREEMENT(this "Agreement"), effective September 1,
2002 is by and between American Italian Pasta Company ("Employer"), and Jerry H.
Dear, an individual ("Employee") (collectively "the parties") and supersedes any
and all prior oral or written agreements between the parties with respect to the
subject matter hereof.

                                   WITNESSETH:

         WHEREAS, Employer is engaged in the business of durum wheat milling
and pasta product production/marketing; and

         WHEREAS, in connection with such business, Employer desires to employ
Employee in the capacity of Executive Vice President - Store Brands, Wal*Mart,
Special Channels; and

         WHEREAS, Employee desires to be employed by Employer in the aforesaid
capacities.

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

          1. Term of Employment. Subject to the provisions of Section 7 hereof,
     the term of Employee's employment under this Agreement (the "Employment
     Term") will commence as of the date hereof (the "Effective Date") and
     terminate on September 30, 2005. The provisions of Sections 4, 5 and 6,
     below, will survive and continue to be enforceable regardless of any
     termination of this Agreement.

          2. Duties of Employee.

               2.1 In accepting such employment, Employee shall undertake and
          assume the responsibility of performing for and on behalf of Employer
          such duties as shall be assigned to Employee by Employer at any time
          and from time to time and in accordance with all of Employer's
          policies, practices and procedures. It is understood and agreed that
          Employee's principal duties on behalf of Employer at the date of
          execution hereof are and shall be Executive Vice President - Store
          Brands, Wal*Mart, Special Channels and it is further understood and
          agreed that any modification in or expansion of Employee's duties
          hereunder shall not, unless specifically agreed to by Employee and
          Employer in a duly-executed amendment of this Agreement in accordance
          with Section 10.6 hereof, result in any modification in Employee's
          compensation referred to in Section 3 hereof.

               2.2 Employee will to the reasonable satisfaction of Employer at
          all times faithfully, industriously, and to the best of Employee's
          ability, experience, and talents perform all of the duties that may be
          required of and from Employee pursuant to the express and implicit
          terms hereof.

               2.3 Employee shall devote substantially all of Employee's
          professional time, attention, knowledge, and skills solely to the
          business and interests of Employer; provided, however, that Employee
          shall be entitled annually to three (3) weeks vacation, and Employer
          shall be entitled to all of the benefits, profits, and other issues
          arising from or incident to all professional work, services, and
          advice of Employee.

          3. Compensation. Employer shall pay Employee, and Employee shall
accept from Employer, in payment for Employee's services rendered to Employer
hereunder an annual base salary ("Base Salary") equal to one hundred eighty
three thousand six hundred dollars ($183,600). Such Base Salary shall be paid in
equal bi-weekly installments and, in the sole discretion of Employer, shall be
subject to annual merit increase reviews.

               3.1 Bonuses. During the term of this Agreement, Employee will be
          eligible to participate in and bonuses may be awarded to Employee at
          the discretion of the Board of Directors in accordance with the terms
          of Employer's 1998 Salaried Bonus Plan (the "Bonus Plan"), as the same
          may be amended, modified, or terminated from time to time.

               3.2 Reimbursement of Business Expenses. Employer agrees to
          reimburse Employee for reasonable travel, entertainment, and other
          business expenses incurred in the performance of Employee's duties
          hereunder in accordance with Employer's policies on terms no less
          favorable than those policies in effect immediately prior to the date
          hereof.

               3.3 Benefits. Employee shall be entitled to participate in an
          equitable manner with other senior executive employees of Employer in
          all welfare benefit, incentive compensation, or other plans or
          arrangements authorized, adopted, and maintained from time to time by
          Employer, including, without limitation, the following: automobile
          allowance, profit sharing plan, medical reimbursement plan, group life
          insurance plan, medical and dental insurance plan, and long-term
          disability income plan, if in effect with Employer.

          4. Non-Competition, Nonsolicitation and Nondisparagement.

               4.1 Employee acknowledges and recognizes the highly competitive
          nature of the business of Employer and its affiliates and accordingly
          agrees as follows: during the Employment Term and until the date that
          is eighteen (18) months after the date that Employee ceases employment
          with Employer for any reason (the Employment Term and such period
          hereinafter referred to as the "Noncompetition Period"), Employee will
          not, in any area in the world where Employer conducts business,
          directly or indirectly own, manage, operate, control, be employed by,
          consult with, or be connected in any manner with the ownership (other
          than passive investments of not more than one percent of the
          outstanding shares of, or any other equity interest in, any company or
          entity listed or traded on a national securities exchange or in an
          over-the-counter securities market), management, operation, or control
          of any business engaged in the production and/or marketing of pasta
          products for human consumption. Notwithstanding any provision of this
          Agreement to the contrary, if Employee is employed by Employer, then
          any breach of the provisions of this Section 4.1 shall permit Employer
          to terminate the employment of Employee for Cause (as defined below),
          and, whether or not Employee is employed by Employer, from and after
          any breach by Employee of the provisions



                                      -2-

          of this Section 4.1, then Employer shall cease to have any obligations
          to make payments to Employee under this Agreement.

               4.2 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any employee of Employer or
          any of its affiliates to engage in any activity in which Employee is
          prohibited from engaging by Section 4.1 hereof or to terminate
          Employee's or her employment with Employer or any of its affiliates,
          will not directly or indirectly assist or attempt to assist others in
          engaging in any of the activities in which Employee is prohibited from
          engaging by Section 4.1 hereof, and will not directly or indirectly
          employ or offer employment to any person who was employed by Employer
          or any of its affiliates unless such person shall have ceased to be
          employed by Employer or any of its affiliates for a period of at least
          12 months.

               4.3 During the Noncompetition Period, Employee will not directly
          or indirectly induce or attempt to induce any customer or supplier of
          Employer or any of its affiliates to move, reduce or not increase its
          trade or business with Employer or any of its affiliates.

               4.4 Employee acknowledges and agrees that disparaging or critical
          statements made by Employee about Employer or its board members,
          officers or employees would be uniquely detrimental to the interests
          of both parties. Therefore, during the Noncompetition Period, Employee
          agrees to refrain from making any disparaging or critical statements
          about Employer or its board members, officers or employees.

               4.5 Employee acknowledges that the restrictions contained in
          Sections 4.1, 4.2, 4.3 and 4.4 are reasonable and appropriate.
          However, in the event that a court of competent jurisdiction
          determines that such restrictions are not reasonable and therefore
          unenforceable, the parties agree that such court may modify the
          restrictions in order for, but only to the least extent necessary for,
          the restrictions to be enforced by such court. In the event such court
          finds that any such restriction cannot be modified so as to make it
          enforceable, such restriction may be deleted by such court and the
          enforceability of all other restrictions will be unaffected by such
          deletion.

          5. Confidentiality. Employee acknowledges that, in and as a result of
Employee's employment by Employer, Employee has been and will be making use of,
acquiring, and/or adding to confidential information of a special and unique
nature and value relating to such matters as Employer's trade secrets, systems,
procedures, manuals, confidential reports, and lists of customers and/or other
services rendered by Employer, the equipment and methods used and preferred by
Employer's customers, and the prices paid by such customers. As a material
inducement to Employer to enter into this Agreement, and to pay to Employee the
compensation referred to in Section 3 hereof, Employee covenants and agrees
Employee shall not, at any time during or after the Employment Term, directly or
indirectly disclose, divulge, or use for Employee's own benefit or purposes or
the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation, or other business organization, entity, or enterprise
other than Employer and any of its subsidiaries or affiliates any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, prices, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of

                                      -3-

Employer generally or of any subsidiary or affiliate of Employer, provided,
however, that the foregoing shall not apply to information that is not unique to
Employer or that is generally known to the industry or the public other than as
a result of breach of this covenant. Employee agrees that, upon termination of
Employee's employment with Employer for any reason, Employee will return to
Employer immediately all memoranda, books, manuals, training materials, records,
computer software, papers, plans, contracts, agreements, information, letters,
and other data, and all copies thereof or therefrom, in any way relating to the
business of Employer and its affiliates, except that Employee may retain
personal notes, notebooks, and diaries. Employee further agrees that Employee
will not retain or use for Employee's account at any time any trade names,
trademark, or other proprietary business designation used or owned in connection
with the business of Employer or its affiliates.

          6. Specific Performance and Survival.

               6.1 Employee acknowledges and agrees that Employer's remedies at
          law for a breach or threatened breach of any of the provisions of
          Section 4 hereof or Section 5 hereof would be inadequate and, in
          recognition of this fact, Employee agrees that, in the event of such a
          breach or threatened breach, in addition to any remedies at law,
          Employer, without posting any bond, shall be entitled to obtain
          equitable relief in the form of specific performance, temporary
          restraining order, temporary or permanent injunction, or any other
          equitable remedy that may then be available.

               6.2 The parties agree that the terms of Sections 4, 5 and 6 are
          independent of and separable from the other provisions of this
          Agreement and that the termination of this Agreement for any reason
          will not affect the continued existence and enforceability of Sections
          4, 5 and 6. Those Sections will survive and continue to be fully
          binding on and enforceable against Employee and Employer after any
          termination of this Agreement.

          7. Termination of Employment

               7.1 Termination without Cause; Resignation for Good Reason.

                    7.1.1 General. (a) Subject to the provisions of Sections
               7.1.2 and 7.1.3 hereof, if Employee's employment is terminated by
               Employer without Cause, as defined in Section 7.3, or if Employee
               resigns from Employee's employment for Good Reason, as defined in
               Section 7.4, then Employer shall pay Employee severance in the
               amount of (i) Employee's accrued unpaid Base Salary to the date
               of termination or resignation and any bonus earned but not paid
               as of that date, and (ii) continuation of Employee's annual Base
               Salary, as adjusted under Section 3, as of the date of
               termination or resignation for a period of twelve (12) months
               following the date of termination or resignation (such period
               being referred to hereinafter as the "Severance Period"). In
               addition, if at the time of such termination or resignation
               Employee has completed ten (10) years of uninterrupted service
               with Employer, the severance will include a payment in the amount
               of 50% of the prorated Normal Bonus level to which Employee would
               have been entitled had Employee remained employed through the
               then applicable bonus period. The Normal Bonus level will be
               calculated at the end of the bonus period and is subject to all
               adjustments and reductions determined by the Board of Directors
               and made applicable to all bonus plan participants. To the extent
               such calculation results in a bonus to be paid, that amount


                                      -4-

               will be prorated for the number of weeks of the bonus period
               occurring prior to the week in which the termination or
               resignation occurred. The Base Salary shall be payable in equal
               bi-weekly installments during the Severance Period, and any bonus
               shall be payable at the conclusion of the Severance Period.

                         (b) During the Severance Period and for a period of six
                    (6) months thereafter, Employee shall also be eligible to
                    participate on the same terms and conditions as in effect
                    immediately prior to such termination or resignation in all
                    health, medical, supplemental medical, and life insurance
                    plans or programs provided to Employee by Employer pursuant
                    to Section 3.7 hereof ("Employee Welfare Plans") at the time
                    of such termination or resignation and which are provided by
                    Employer to its employees following the date of such
                    termination or resignation; provided, however, that
                    Employee's eligibility to participate in these Employee
                    Welfare Plans shall end at such time as Employee becomes
                    eligible to receive coverage under comparable programs of a
                    subsequent employer and further provided that if Employee
                    participates in the Employee Welfare Plans for a period of
                    eighteen (18) months from the date of termination or
                    resignation, then Employee's COBRA rights shall commence at
                    the end of such eighteen (18) month period. If, during the
                    Severance Period, Employee is precluded from participating
                    in any Employee Welfare Plan by its terms or applicable law,
                    then Employer will provide Employee with benefits that are
                    reasonably equivalent to those Employee would have received
                    under such plan had Employee been eligible to participate
                    therein. Anything to the contrary herein notwithstanding,
                    Employer shall have no obligation to continue to maintain
                    any Employee Welfare Plan during the Severance Period solely
                    as a result of this Agreement. As an example and solely for
                    purposes of illustration: If Employer were to terminate its
                    dental insurance plan prior to or during the Severance
                    Period, then Employer would have no obligation to maintain
                    such plan or provide to Employee individual dental insurance
                    to satisfy its obligations under this Section 7.1.1.

                    7.1.2 Mitigation. Employee will be required to
               mitigate the amount of any payment provided for in Section 7.1.1
               hereof by seeking other employment, and the amount of any such
               payment will be reduced by any compensation earned by Employee as
               the result of Employee's employment by another employer or acting
               as a consultant or in any other self-employed capacity subsequent
               to termination of Employee's employment with Employer.

                    7.1.3 Death During Severance Period. If Employee dies
               during the Severance Period, then the Severance Period shall
               immediately cease, Employer shall not be obligated to make any
               further payments pursuant to this Section 7, and the provisions
               of Section 8.1 hereof shall apply as though Employee's death had
               occurred immediately prior to termination of Employee's
               employment hereunder.

                    7.1.4 Date of Termination. The date of termination of
               employment without Cause shall be the date specified in a written
               notice of termination to Employee which in no case shall be more
               than 30 days following the date of notice. The date of
               resignation for Good Reason shall be the date specified in the
               written notice of resignation from Employee to Employer which in
               no case shall be more than 30 days following the date of notice.


                                      -5-

               7.2 Termination for Cause; Resignation Without Good Reason.

                    7.2.1 General. If Employee's employment hereunder is
               terminated by Employer for Cause, or if Employee resigns from
               Employee's employment hereunder other than for Good Reason (a
               "Voluntary Termination"), then Employee shall be entitled only to
               payment of Employee's Base Salary, as adjusted under Section 3,
               earned through and including the date of termination or
               resignation. Employee shall have no further right to receive any
               other compensation or to participate in any other plan,
               arrangement, or benefit, after such termination for Cause or
               Voluntary Termination.

                    7.2.2 Date of Termination. Subject to Section 7.3
               hereof, the date of termination for Cause shall be the date of
               receipt by Employee of notice such termination. The date of
               Voluntary Termination shall be the date of receipt by Employer of
               the notice of resignation.

               7.3 Cause. Terminate for "Cause" means termination of
          Employee's employment because, in Employer's good faith belief, (i)
          Employee willfully and continually failed substantially to perform
          Employee's duties under the Agreement (other than as a result of
          Permanent Disability, as defined below), (ii) Employee failed to
          comply with any of the material term(s) of this Agreement, including,
          but not limited to, Sections 4 and 5 hereof, (iii) Employee committed
          an act or acts that constituted a misdemeanor (other than a minor
          traffic violation) or a felony under the law of the United States
          (including any subdivision thereof) or any country to which Employee
          is assigned (including any subdivision thereof), including, but not
          limited to, Employee's conviction for or plea of guilty or no contest
          ("nolo contrendre") to any such misdemeanor or felony, (iv) Employee
          committed an act or acts in violation of Employer's policies and/or
          practices applicable to employees at the level of Employee within
          Employer's organization, (v) Employee willfully acted, or willfully
          failed to act, in a manner that was injurious to the financial
          condition or business reputation of Employer or any of its
          subsidiaries or affiliates, (iv) Employee acted in a manner that is
          unbecoming of Employee's position with Employer, regardless of whether
          such action or inaction occurs in the course of the performance of
          Employee's duties with Employer, or (v) Employee was subject to any
          fine, censure, or sanction of any kind, permanent or temporary, issued
          by the Securities and Exchange Commission or the New York Stock
          Exchange.

               7.4 Good Reason. For purposes of this Agreement, "Good
          Reason" means any of the following actions taken by Employer without
          Employee's prior written consent: (i) the continued failure of
          Employer to pay compensation due to Employee under this Agreement,
          which failure is uncorrected for a period of 15 days following receipt
          by Employer of written notice thereof from Employee; (ii) a material
          diminution in Employee's position, authority, duties, or
          responsibilities, excluding for this purpose an isolated,
          insubstantial, or inadvertent action not taken in bad faith and that
          is remedied by Employer promptly after receipt of written notice
          thereof given by Employee; provided, however, that a
          mere change of Employee's title shall not constitute Good Reason so
          long as Employee continues to perform duties, functions, and
          responsibilities substantially equivalent to those performed by
          Employee prior to such change of title; (iii) Employer's material
          failure or refusal to comply with the provisions of this Agreement,
          which failure or refusal to comply is uncorrected for a period of 15
          days following receipt by Employer of written notice thereof from
          Employee. It is expressly understood and

                                      -6-

          agreed by the parties hereto that Employer's failure to deliver a
          notification extending the Initial Employment Term as referred to in
          Section 1 hereof shall not constitute a termination without Cause.

               7.5 Conditions to Severance Payments. Employer's
          obligation to make any severance payments due hereunder or to provide
          any benefits to Employee after any termination or resignation
          hereunder (other than COBRA benefits) is expressly conditioned on
          Employee complying in full with the obligations under Sections 4, 5
          and 6. In the event Employee does not fully comply with such
          obligations or in the event any such obligations are determined by any
          court to be unenforceable to any extent, Employer shall be relieved of
          all obligations to provide any severance or post-termination benefits.

          8. Death or Permanent Disability.

               8.1 Death. If Employee's employment hereunder is terminated by
          death, then Employer shall, within 90 days of the date of death, make
          a lump sum payment to Employee's estate (or other beneficiary
          designated by Employee in writing) equal to all Base Salary and
          bonuses, if any, earned and accrued through the date of death.
          Thereafter, Employer shall have no further obligation to Employee
          under the Agreement.

               8.2 Permanent Disability. If Employee becomes physically or
          mentally disabled while employed by Employer under this Agreement so
          that Employee is--with or without reasonable accommodation--unable to
          render the services provided for by this Agreement for a period of six
          consecutive months or for shorter periods aggregating six months
          during any 24-month period, or so that Employee has a Disability (as
          defined under Employer's then-current disability policy), then
          Employer may, at any time after the last day of the six consecutive
          months of disability, the day on which the shorter periods of
          disability equal an aggregate of six months, or the day on which
          Employee is determined to have a Disability, terminate Employee's
          employment hereunder for "Permanent Disability" by written notice to
          Employee. Following such termination, Employee shall be entitled to
          receive from Employer (i) all Base Salary and bonuses, if any, accrued
          through the date of termination and (ii) any other benefits payable
          under Employer's then-current disability policy, but all other rights
          of Employee hereunder shall terminate as of the date of Employee's
          termination.

          9. Change of Control.

               9.1 Notwithstanding anything to the contrary contained herein, if
          Employer terminates Employee without Cause upon or within six months
          following a Change of Control (as defined below), then Employer shall
          pay Employee Employee's accrued unpaid Base Salary to the date of
          termination and any bonus earned but not paid and shall continue to
          pay Employee Employee's annual Base Salary as of the date such
          termination occurs for a period of one (1) year following the date of
          termination as severance pay (such period being referred to
          hereinafter as the "Change of Control Severance Period") and bonus for
          the year in which the termination occurs (calculated as if the Normal
          Bonus for that year is earned). Any severance payable pursuant to this
          Section 9.1 will be in substitution for and not in addition to any
          severance that might be payable pursuant to Section 7 hereof. To the
          extent Employer makes payments pursuant to this Section 9.1, it will
          have no additional obligations under Section 7 hereof. The

                                      -7-

          Base Salary shall be payable in bi-weekly payments during the Change
          of Control Severance Period, and the bonus shall be paid at the
          conclusion of the Change of Control Severance Period.

               9.2 Upon a Change in Control, all options to purchase stock of
          Employer held by Employee, to the extent not then exercisable, will
          immediately become fully vested and exercisable and all restrictions
          on any stock grants will immediately be removed.

               9.3 For purposes of this Agreement, "Change of Control" means any
          one of the following:

                    (a) any person or group (as defined in Section 13(d)(3) of
               the Securities Exchange Act of 1934, as amended (the "Exchange
               Act")) acquiring beneficial ownership of more than 50% of
               Employer's then outstanding Common Stock or 51 % or more of the
               combined voting power of Employer's then outstanding securities
               entitled generally to vote for the election of Employer's
               Directors;

                    (b) the consummation of the merger or consolidation of
               Employer with any other corporation, other than a merger with a
               wholly-owned subsidiary, the sale of substantially all of the
               assets of Employer, or the liquidation or dissolution of
               Employer, unless, in the case of a merger or consolidation, (x)
               the Directors in office immediately prior to such merger or
               consolidation will constitute at least majority of the Board of
               Directors of the surviving corporation of such merger or
               consolidation and any parent (as such term is defined in Rule
               12b-2 under the Exchange Act) of such corporation, or (y) the
               voting securities of Employer outstanding immediately prior
               thereto represent (either by remaining outstanding or by being
               converted into voting securities of the surviving entity) more
               than 66 2/3% of the combined voting power of the voting
               securities of Employer or such surviving entity and are owned by
               all or substantially all of the persons who were the holders of
               the voting securities of Employer immediately prior to the
               transaction in substantially the same proportions as such holders
               owned such voting securities immediately prior to the
               transaction; or

                    (c) Continuing Directors (as defined below) no longer
               constitute at least a majority of the Board or a similar body of
               any successor to Employer. For purposes of this Agreement,
               "Continuing Directors" means any individual who either (i) is a
               member of Employer's Board of Directors on the Effective Date,
               (ii) who becomes a director after the Effective Date whose
               election or nomination for election by Employer's shareholders,
               was approved by a vote of at least a majority of the Continuing
               Directors (either by a specific vote or by approval of the proxy
               statement of Employer in which such person is named as nominee
               for director, without objection to such nomination), or (iii) is
               designated by any party pursuant to its rights under Section 2.1
               of Employer's Amended and Restated Shareholders' Agreement dated
               as of October 4, 1997, as amended.

               9.4 Excess Parachute Payments. If any payment or the
          receipt of any benefit under this Agreement shall be deemed to
          constitute an "excess parachute payment" as such term is described in
          Section 280G of the Internal Revenue Code of 1986, as amended (the
          "Code"), so as to result in the loss of a deduction to Employer under
          Code Section 280G or in the imposition of an excise tax on the
          Employee under Code Section 4999, or any successor sections thereto,
          then the amounts payable or the benefits provided under this Agreement
          shall be reduced to the

                                      -8-

          minimum extent necessary so that no such deduction will be lost by
          Employer and no such excise tax will be imposed on the Employee.
          Employer, in its sole discretion, shall determine whether or not an
          "excess parachute payment" would otherwise occur and shall determine
          the amount and method of the foregoing reduction.

          10. Miscellaneous.

               10.1 Assignment of Employee Benefits. Absent the prior written
          consent of Employer, and subject to will and the laws of descent and
          distribution, Employee shall have no right to exchange, convert,
          encumber, or dispose of the rights of Employee to receive benefits and
          payments under this Agreement, which payments, benefits, and rights
          thereto are non-assignable and non-transferable.

               10.2 Burden and Benefit. This Agreement shall be binding upon,
          and shall inure to the benefit of, Employer and Employee, their
          respective heirs, personal, and legal representatives, successors, and
          assigns.

               10.3 Governing Law. In view of the fact that the principal office
          of Employer is located in the State of Missouri, the parties
          understand and agree that the construction and interpretation of this
          Agreement shall at all times and in all respects be governed by the
          laws of the State of Missouri, that the state and federal courts
          situated in the State of Missouri shall have exclusive jurisdiction
          over any claims arising under or in relation to this Agreement, and
          that the parties consent to personal jurisdiction in such state and
          federal courts.

               10.4 Headings. The headings of the Sections of this Agreement are
          for reference only and not to limit, expand, or otherwise affect the
          contents of this Agreement.

               10.5 Entire Agreement; Modification. Except as to Employer's
          Stock Option Plans, any instrument relating to an Option granted
          thereunder and written agreements signed by both of the parties hereto
          from time to time after the date hereof, this Agreement contains the
          entire agreement and understanding by and between Employer and
          Employee with respect to the subject matter hereof, and any
          representations, promises, agreements, or understandings, written or
          oral, not herein contained shall be of no force or effect. No change,
          waiver, or modification of any provision of this Agreement shall be
          valid or binding unless the same is in writing and duly executed by
          both parties and no evidence of any waiver or modification shall be
          offered or received in evidence of any proceeding, arbitration, or
          litigation between the parties hereto arising out of or affecting this
          Agreement, or the rights or obligations of the parties hereunder,
          unless such waiver or modification is in writing, duly executed as
          aforesaid, and the parties further agree that the provisions of this
          Section 10.6 may not be waived except as set forth herein.

               10.6 Waiver of Breach. The waiver by Employer of a breach of any
          provision of this Agreement by Employee shall not operate or be
          construed as a waiver of any subsequent breach by Employee.

               10.7 Notice. For the purpose of this Agreement, notices and all
          other communications provided for in the Agreement shall be in writing
          and shall be deemed to have been duly given when delivered or mailed
          by United States registered mail, return receipt

                                      -9-

          requested, postage prepaid, addressed to the respective addresses set
          forth on the execution page of this Agreement, provided, however, that
          all notices to Employer shall be directed to the attention of the
          Board of Directors of Employer with a copy to the Secretary of
          Employer, or to such other address as either party may have furnished
          to the other in writing in accordance herewith, except that notice of
          change of address shall be effective only upon receipt.

               10.8 Withholding Taxes. Employer may withhold from any amounts
          payable under this Agreement such federal, state, and local taxes as
          may be required to be withheld pursuant to any applicable law or
          regulation.

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

          IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement as of the day and year first hereof written.


                                    EMPLOYEE:



                                    Signature:     /s/ Jerry H. Dear
                                               ---------------------------------
                                    Printed Name:  Jerry H. Dear
                                    Address:       6550 NW Monticello Drive
                                                   Kansas City, MO 64152



                                     AMERICAN ITALIAN PASTA COMPANY



                                     By:           /s/ Warren Schmidgall
                                         ---------------------------------------
                                     Printed Name: Warren Schmidgall
                                     Address:      4100 North Mulberry Drive
                                                   Suite 200
                                                   Kansas City, MO 64116-0696





                                      -10-

EX-10

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


     This Stock Option Award Agreement (the "Award Agreement"), made this ___
day of ________, 20__ evidences the grant, by American Italian Pasta Company,
(the "Company"), of a stock option to _____________ (the "Grantee") on the date
hereof (the "Date of Grant"). By accepting the Award and executing this Award
Agreement, the Grantee agrees to be bound by the provisions hereof and of the
American Italian Pasta Company 2000 Equity Incentive Plan, as amended (the
"Plan"). Capitalized terms not defined herein shall have the same meaning as
used in the Plan.

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

     2. Exercise Period. The Option may be exercised, from time to time, with
respect to the following number of Shares subject to this Option: (i) prior to
the first anniversary of the Date of Grant, ____% of such Shares; (ii) from and
after the first anniversary of the Date of Grant, ___% of such Shares (less any
Shares as to which this Option shall have been exercised prior to such first
anniversary); (iii) from and after the second anniversary of the Date of Grant,
___% of such Shares (less any Shares as to which this Option shall have been
exercised prior to such second anniversary); (iv) from and after the third
anniversary of the date of Grant, ___% of such Shares (less any Shares as to
which this Option shall have been exercised prior to such third anniversary);
and (v) from and after the fourth anniversary of the Date of Grant, ___% of such
Shares (less any Shares as to which this Option shall have been exercised prior
to such fourth anniversary). Provided, however, that the Grantee's right to
exercise the Option shall terminate on the earliest to occur of the following
dates:

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

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

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

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

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

     3. Restriction on Exercise. Notwithstanding the foregoing provisions of
paragraph 2 or any other provision of this Award Agreement, the Committee, in
its sole discretion, may, only with respect to any unvested portion of this
Option, reduce the number of Shares subject to the Option or may cancel the
Option in its entirety if the Grantee (a) takes other employment or renders
services to others without the written consent of the Company; or (b) conducts
himself or herself in a manner that the Committee, in its sole discretion, deems
has adversely affected or may adversely affect the Company. Except as provided
in the last sentence of this paragraph, the Grantee will not be entitled to any
remuneration or compensation whatsoever for the loss of all or a portion of the
Grantee's Option if the number of Shares subject to the Grantee's Option are
reduced, or if the Grantee's Option is canceled in its entirety, pursuant to
this paragraph.

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

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

     5. Issue of Shares Upon Exercise. As soon as practicable after receipt of
an effective written notice of exercise and full payment of the purchase price
as provided in paragraph 4, the Secretary of the Company shall cause ownership
of the appropriate number of Shares to be transferred to the person or persons
exercising the Option by having a certificate or certificates for those Shares
registered in the name of such person or persons and shall have each


                                       2

certificate delivered to the appropriate person. Notwithstanding the foregoing,
if the Company or a Subsidiary requires reimbursement of any tax required by law
to be withheld with respect to Shares received upon exercise of an Option, the
Secretary shall not transfer ownership of those Shares until the required
payment is made.

     6. Transferability of Options. The Grantee may transfer the Option to (i)
the spouse, children, or grandchildren of the Grantee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefits of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members
are the only partners, provided that (a) there may be no consideration for any
such transfer and (b) subsequent transfers of the Option shall be prohibited,
except by will or the laws of descent and distribution. Following transfer, the
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for the purposes of the
Award Agreement, the term "Grantee" shall be deemed to refer to the transferee.
The event of a Termination of Service shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods, specified in Paragraph 2.
Neither the Committee nor the Company shall have any obligation to provide
notice to a transferee of termination of the Option under the terms of this
Award Agreement.

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

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

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

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

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


                                       3

     11. Change in Control. The effect of a Change of Control shall be as set
forth in the Plan.

                                 AMERICAN ITALIAN PASTA COMPANY


                                 By:
                                    --------------------------------------------
                                 Name:
                                      ------------------------------------------
                                 Title:
                                       -----------------------------------------






ACKNOWLEDGMENT

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



- -------------------------------              -----------------------------------
         Printed Name                                 Signature


                                             Date:
                                                    ----------------------------




                                       4

EX-10

                                                                   Exhibit 10.25


                         AMERICAN ITALIAN PASTA COMPANY
                           RESTRICTED STOCK AGREEMENT


     This Restricted Stock Agreement (the "Agreement") is made this ____ day of
_________, 20__ to ___________ (the "Grantee") and evidences the grant by
American Italian Pasta Company, a Delaware corporation (the "Company") of a
Restricted Stock Award (the "Award") to the Grantee on the date hereof (the
"Date of Grant"). By accepting the Award, the Grantee agrees to be bound in
accordance with the provisions of the American Italian Pasta Company 2000 Equity
Incentive Plan, as amended (the "Plan"). Defined terms used herein shall have
the same meaning as used in the Plan.

     1. Shares Awarded and Restrictions on Shares. The Grantee is hereby awarded
________ shares (the "Restricted Shares") of the Company's Class A Convertible
Common Stock, $.001 par value, subject to forfeiture and to the restriction on
the rights of sale and transfer set forth in this document and further subject
to the terms and conditions of the Plan, the provisions of which are hereby
incorporated in this document by reference.

     2. Sale or Transfer Restrictions. Except as set forth in paragraph 6 below,
all Restricted Shares shall be held by the Grantee without the rights of sale or
transfer, and subject to forfeiture as provided in paragraph 3 below, until such
restrictions shall lapse in accordance with the following schedule:

      Number of Shares                   Restrictions Lapse
      ___________                        _____ Anniversary of this Agreement
      ___________                        _____ Anniversary of this Agreement
      ___________                        _____ Anniversary of this Agreement

     3. Employment Requirement. Except as provided in paragraph 6 below, in the
event of Grantee's Termination of Service prior to the date specified in
paragraph 2 above, the Restricted Shares will be forfeited by the Grantee and
become the property of the Company.

     4. Issuance of Restricted Shares. Restricted Shares will be issued in a
nominee account with the Grantee being named the beneficial owner, except that
the nominee shall be instructed to follow the sale and transfer requirements set
forth in the Plan and this Award. When the prohibited sale and transfer
restrictions lapse under paragraph 2 above, with respect to the Restricted
Shares, provided the Restricted Shares have not been forfeited under paragraph 3
above, the Company shall prepare and deliver to the Grantee a stock certificate
for the Restricted Shares.

     5. Voting and Other Rights of Restricted Shares. Upon the issuance of the
Restricted Shares, the Grantee shall have all of the rights of a stockholder of
the Company, including the right to receive dividends and to vote the Restricted
Shares until such shares may have been forfeited to the Company as provided in
paragraph 3 above. Notwithstanding the foregoing, in the event of any stock
dividend, stock split, division of shares or other corporate structure change
which results in the issuance of additional shares with respect to Restricted
Shares, such shares shall be held by the Company and shall become Restricted
Shares.

     6. Acceleration of Release of Restrictions. The forfeiture and prohibited
sale and transfer restrictions on the Restricted Shares shall immediately lapse
on the earliest of the following:

          (a)  The Grantee's date of death;

          (b)  The Disability of the Grantee;

          (c)  A Change in Control; or

          (d)  The normal or early retirement of the Grantee under the terms of
               the retirement plan maintained by the Company or any Subsidiary
               in which the Grantee participates, or if no such plan is
               maintained, the Grantee's reaching age 65.

     7. Taxes. The Grantee will be solely responsible for any federal, state or
local income taxes imposed in connection with the granting of the Restricted
Shares or the delivery of such shares pursuant thereto, and the Grantee
authorizes the Company or any Subsidiary to make any withholding for taxes which
the Company or any Subsidiary deems necessary or proper in connection therewith.
Upon recognition of income by the Grantee with respect to the Award hereunder,
the Company shall withhold taxes pursuant to Section 11 of the Plan.

     8. Changes in Circumstances. It is expressly understood and agreed that the
Grantee assumes all risks incident to any change hereafter in the applicable
laws or regulations or incident to any change in the market value of the
Restricted Shares after the date hereof.

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

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

                              AMERICAN ITALIAN PASTA COMPANY



                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------


                                 ACKNOWLEDGMENT

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



- -----------------------------------------
Grantee





                                       2

EX-21

Exhibit 21


List of Subsidiaries                          State or Jurisdiction of Incorporation


American Italian Pasta Company                Delaware

AIPC Wisconsin, Limited Partnership           Wisconsin

AIPC Sales Co                                 Missouri

IAPC UK Limited                               United Kingdom

IAPC Holding UK Limited                       United Kingdom

Pasta Lensi, S.r.l.                           Italy

IAPC BV                                       Netherlands

IAPC CV                                       Netherlands

AIPC Finance, Inc.                            Delaware

AIPC South Carolina, Inc.                     South Carolina

AIPC Missouri, LLC                            Missouri

IPC Arizona, LL                                Arizona

EX-23

                                                                      Exhibit 23


                         Consent of Independent Auditors


We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-52315) pertaining to the 1992 Stock Option Plan, 1993 Nonqualified
Stock Option Plan and 1997 Equity Incentive Plan, the Registration Statement
(Form S-8 No. 333-57411) pertaining to the Employee Stock Purchase Plan and the
Registration Statement (Form S-8 No. 333-58778) pertaining to the 2000 Equity
Incentive Plan of American Italian Pasta Company of our report dated October 30,
2002, with respect to the consolidated financial statements of American Italian
Pasta Company included in the Annual Report (Form 10-K) for the year ended
September 27, 2002.




                                       /s/ Ernst & Young LLP

Kansas City, Missouri
December 17, 2002

EX-99

                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


         In connection with the Annual Report of American Italian Pasta Company
(the "Company") on Form 10-K for the annual period ended September 27, 2002, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned, in the capacities and dates indicated below, hereby
certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that, to our knowledge: (1) The Report fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and (2) The information contained in the Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.


                                               /s/Timothy S. Webster
                                               --------------------------------------
                                               Timothy S. Webster
                                               President and Chief Executive Officer

December 18, 2002



                                               /s/Warren B. Schmidgall
                                               ---------------------------------------
                                               Warren B. Schmidgall
                                               Executive VP and Chief Financial Officer

December 18, 2002