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Form of Custody Agreement & Power of Attorney

This is an actual contract by American Italian Pasta.

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Sectors: Food, Beverages and Tobacco
Governing Law: Missouri, View Missouri State Laws
Effective Date: October 07, 1997
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SN&R DRAFT 10/7/97 10:41 A.M. THOMPSON HOLDINGS, L.P.
(Name of Selling Stockholder)


CUSTODY AGREEMENT AND POWER OF ATTORNEY
FOR SALE OF CLASS A COMMON STOCK OF
AMERICAN ITALIAN PASTA COMPANY


October 7, 1997


Mr. Timothy S. Webster Mr. David E. Watson as Attorneys-in-Fact c/o American Italian Pasta Company 1000 Italian Way Excelsior Springs, Missouri 64024


Republic New York Securities Corporation as Custodian c/o Ms. Carmen Terrana 452 Fifth Avenue New York, New York 10018


Ladies and Gentlemen:


After the conversion of all outstanding shares of the common stock, no par value per share (the "Old Common"), of American Italian Pasta Company, a Delaware corporation (the "Company"), and the Class A common stock, par value $.01 per share of the Company (with the Old Common collectively, the "Old Common Stock") into shares of the Class A Convertible Common Stock, par value $.001 per share (the "New Common Stock") of the Company pursuant to a proposed recapitalization (the "Recapitalization"), the Company proposes to issue and sell, and the undersigned and certain other stockholders of the Company (the undersigned and such other stockholders hereinafter collectively referred to as the "Selling Stockholders") propose to sell, shares of New Common Stock to a group of U.S. underwriters (the "U.S. Underwriters"), for whom Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated, Goldman, Sachs & Co. and George K. Baum & Company are acting as representatives (the "U.S. Representatives") and to a group of international underwriters (the "International Underwriters, together with the U.S. Underwriters, the "Underwriters") for whom Morgan Stanley & Co. International Limited, BT Alex. Brown International, Goldman Sachs International and George K. Baum & Company are acting as representatives (the "International Representatives," together with the U.S. Representatives, the "Representatives"), for distribution to the public in an initial public offering (the "Offering") as contemplated by a registration statement on Form S-1, File No. 333-32827 (the "Registration Statement"), in amounts, at a price and on terms to be set forth in an underwriting agreement (the "Underwriting Agreement") to be executed by and among the Company, the Selling Stockholders and the Representatives. In addition, solely for the purpose of covering over-allotments, if any, the Company and/or certain Selling Stockholders propose 2


to sell to the Underwriters, in amounts, at a price and upon terms to be set forth in the Underwriting Agreement, additional shares of New Common Stock.


It is understood that at this time there is no commitment on the part of the Underwriters to purchase any shares of New Common Stock and there are no assurances that the Offering will take place or that the undersigned will be offered an opportunity to sell any shares of New Common Stock even if the Offering does take place.


The undersigned, by executing and delivering this irrevocable Custody Agreement and Power of Attorney (this "Agreement"), confirms its willingness to sell the maximum number of shares of New Common Stock (collectively, the "New Shares") as set forth on Schedule I hereto (and subject to any conditions set forth therein) to the Underwriters.


The undersigned acknowledges receipt of (i) a draft dated October 7, 1997 of the Underwriting Agreement (such draft, the "Draft Underwriting Agreement"); and (ii) a conformed copy (without exhibits) of the Registration Statement and all amendments thereto through the date of execution hereof. The undersigned understands that the Underwriting Agreement is subject to revision prior to execution, with such changes as the Attorneys-in-Fact deem appropriate (including with respect to the number of New Shares to be sold by the undersigned), and that the Registration Statement has not yet become effective under the Securities Act of 1933 (the "Securities Act") and is subject to amendment.


1. Appointment and Powers of Attorneys-in-Fact


a. The undersigned irrevocably constitutes and appoints
Timothy S. Webster and David E. Watson (the "Attorneys-in-Fact"), and
each of them, its agent and attorney-in-fact, with full power of
substitution, with respect to all matters arising in connection with the
offering and sale of the New Shares (subject to the limitations set
forth below) including, but not limited to, the power and authority on
behalf of the undersigned to do or cause to be done any of the
following:


i. negotiate, determine and agree upon (a) the price at
which the New Shares will be initially offered to the public by
the Underwriters pursuant to the Underwriting Agreement; (b) the
underwriting discount with respect to the New Shares, not to
exceed 7%; and (c) the price at which the New Shares will be sold
to the Underwriters by the undersigned pursuant to the
Underwriting Agreement; provided that any such underwriting
discount and price at which the New Shares will be sold to the
Underwriters will be the same as the price at which shares of New
Common Stock are sold to the Underwriters by the Company;


ii. negotiate, execute and deliver the Underwriting
Agreement, substantially in the form of the Draft Underwriting
Agreement, which provides for, among other things,
indemnification of the Underwriters by the undersigned for
certain liabilities and including such insertions, changes,
additions or deletions as the Attorneys-in-Fact in their sole
discretion deem appropriate, such approval to be conclusively
evidenced by


- 2 - 3


the execution and delivery of the Underwriting Agreement by an
Attorney-in-Fact, including the making of all representations and
agreements provided in the Underwriting Agreement to be made by,
and the exercise of all authority thereunder vested in, the
undersigned; provided, however, that the provisions of the
Underwriting Agreement corresponding to Sections 2, 6 and 9 of
the Draft Underwriting Agreement shall not in any material
respect be less favorable to the undersigned or its counsel than
such provisions of the Draft Underwriting Agreement;


iii. sell, assign, transfer and deliver the New Shares to
the Underwriters pursuant to the Underwriting Agreement and
deliver to the Underwriters or instruct the Custodian (as defined
below) to deliver certificates for the New Shares so sold;


iv. take any and all steps deemed necessary or desirable
by the Attorneys-in-Fact in connection with the registration of
the New Shares under the Securities Act, the Securities Exchange
Act of 1934 (the "Exchange Act"), and under the securities or
"blue sky" laws of various states and jurisdictions, including,
without limitation, the giving or making of such undertakings,
representations and agreements and the taking of such other steps
as the Attorneys-in-Fact may deem necessary or advisable;


v. instruct the Company and the Custodian on all
matters pertaining to the sale of the New Shares and delivery of
certificates therefor;


vi. provide, in accordance with the Underwriting
Agreement, for the payment of underwriting discounts and
commissions and transfer taxes, if any, and any other costs or
expenses allocable to or payable by the undersigned in connection
with the offering and sale of the undersigned's New Shares, in
each case as directed in writing by the Attorneys-in-Fact;
provided that this Agreement shall not create any obligation to
pay any such other costs or expenses; and further provided that
this clause (vi) shall not affect any agreement which the Company
and the undersigned may make for the allocation or sharing of
such costs or expenses;


vii. otherwise take all actions and do all things deemed
necessary or advisable or desirable by the Attorneys-in-Fact in
their discretion in connection with the registration of the New
Shares, including the execution and delivery of any documents,
and generally act for and in the name of the undersigned with
respect to the sale of the New Shares to the Underwriters and the
reoffering of the New Shares by the Underwriters as fully as
could the undersigned if then personally present and acting;


viii. to accept payment for the New Shares being sold by
the undersigned, to give receipt for such payment, and to remit
such payment to Republic National Bank of New York ("RNB") in
accordance with its written instructions; and


ix. to return to RNB in accordance with its written
instructions any certificates for any shares of New Common Stock
issued in respect of the Old Shares


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(as defined below) pursuant to the Recapitalization, but not sold
or to be sold to the Underwriters pursuant to the Underwriting
Agreement.


b. Each Attorney-in-Fact may act alone in exercising the
rights and powers conferred on the Attorneys-in-Fact by this Agreement,
and the act of any Attorney-in-Fact shall be the act of the
Attorneys-in-Fact. Each Attorney-in-Fact may determine, in his sole and
absolute discretion, the time or times when, the purposes for which, and
the manner in which, any power herein conferred upon the
Attorneys-in-Fact shall be exercised.


c. The Custodian, the Representatives, the Company and all
other persons dealing with the Attorneys-in-Fact as such may rely and
act upon any writing believed in good faith to be signed by one or more
of the Attorneys-in-Fact.


d. The Attorneys-in-Fact shall not receive any compensation
for their services rendered hereunder.


e. The undersigned acknowledges that the powers of attorney
granted pursuant to this Agreement are granted to secure the
undersigned's performance of this Agreement and the Underwriting
Agreement and therefore are coupled with an interest and are
irrevocable.


2. Appointment of Custodian; Deposit of Shares


a. In connection with and to facilitate the sale of the New
Shares to the Underwriters, the undersigned appoints Republic New York
Securities Corporation as custodian (the "Custodian"), and authorizes
RNB to deposit with the Custodian one or more certificates for shares of
Old Common Stock as set forth on Schedule II hereto (such shares
collectively, the "Old Shares") which, after giving effect to the
Recapitalization, will represent not less than the maximum number of New
Shares to be sold by the undersigned to the Underwriters as set forth
on Schedule I hereto. Each such certificate so deposited is in
negotiable and proper deliverable form accompanied by two or more duly
executed stock powers in blank, bearing the signature of the undersigned
thereon and a medallion guarantee of such signature by an Eligible
Guarantor Institution, as defined by Exchange Act Rule 17Ad-15. The
undersigned authorizes and directs the Custodian, subject to the
instructions of the Attorneys-in-Fact, (a) to hold in custody the
certificate or certificates for the Old Shares deposited herewith and
any related stock powers; (b) to deliver such certificate or
certificates and related stock powers to or at the direction of the
Attorneys-in-Fact in accordance with the terms of the Underwriting
Agreement; (c) to instruct UMB Bank, n.a., in its capacity as Transfer
Agent and Registrar for the New Common Stock, to issue certificates for
all of the New Shares and to deliver such certificates to the Custodian
in exchange for all of such Old Shares; and (d) to return to RNB one or
more new certificates for the shares of New Common Stock issuable
pursuant to the Recapitalization in respect of the Old Shares but which
are not sold or to be sold pursuant to the Underwriting Agreement.


- 4 - 5


b. Until the New Shares have been delivered to the
Underwriters against payment therefor in accordance with the
Underwriting Agreement, the undersigned will retain all rights of
ownership with respect to the Old Shares deposited hereunder (together
with any shares of New Common Stock issuable in respect thereof pursuant
to the Recapitalization), including the right to vote and to receive all
dividends and payment thereon, except the right to retain custody of or
dispose of such shares, which right is subject to this Agreement and,
from and after its execution, the Underwriting Agreement.


c. In taking any action requested or directed by the
Representatives under the terms of this Agreement, the Custodian will be
entitled to rely upon a writing which it believes in good faith to have
been signed by a representative of Morgan Stanley & Co. Incorporated,
with evidence of authority reasonably satisfactory to the Custodian.


d. The Custodian may consult with legal counsel in the event
of any dispute or questions as to the construction of any of the
provisions hereof or its duties hereunder, and it shall incur no
liability and shall be fully protected in acting in accordance with the
opinion and instructions of such counsel.


e. In the event of any disagreement between the undersigned or
the person or persons named in the instructions in this Agreement, or
any other person, resulting in adverse claims and demands being made in
connection with or for any certificates, papers, money or property
involved herein, or affected hereby, the Custodian shall be entitled to
refuse to comply with any demand or claim (and in so refusing to make
any delivery or other disposition of any money, papers or property
involved or affected hereby, the Custodian shall not be or become liable
to the Company, the undersigned, the Underwriters or to any person named
in such instructions for its refusal to comply with such conflicting or
adverse demands) until:


(i) The rights of all of the adverse claimants shall
have been fully and finally adjudicated by a court assuming and
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