Stipulation of Settlement Between American Italian Pasta Company and Class Action Plaintiffs

 Exhibit 10.1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION - ------------------------------------ ) IN RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No. COMPANY SECURITIES ) 05-CV-0725-W-ODS LITIGATION ) ) - ------------------------------------ STIPULATION OF SETTLEMENT WITH DEFENDANT AMERICAN ITALIAN PASTA COMPANY AND INDIVIDUAL DEFENDANTS This Stipulation of Settlement (the "Stipulation"), dated as of October 26, 2007, is made and entered into among the following parties to the above-entitled action, through their respective counsel of record: (1) the Lead Plaintiff, on behalf of itself and each of the members of the Class and Stub Period Class; and (2) the Settling Defendants.¹ The Settlement set forth in this Stipulation is intended by the Settling Parties to fully, finally and forever resolve, discharge and settle the Released Claims, upon and subject to the terms and conditions hereof. I. BACKGROUND, THE CLASS ACTION, AND MOTION PRACTICE A. American Italian Pasta Company ("AIPC" or the "Company"), which is headquartered in Kansas City, Missouri, is the largest producer and marketer of dry pasta in North America. ________________________________ ¹ Capitalized terms are defined below at ¶ 1. 

 B. On August 9, 2005, AIPC announced it would delay the filing of financial results for its fiscal third quarter and announced that the Company's audit committee was "conducting an internal investigation of certain accounting procedures and practices." AIPC also announced that it intended to record in the third quarter adjustments totaling $60.7 million, which included $36.7 million in asset impairment charges, $6.6 million in expenses and write-downs associated with promotional allowances, and approximately $10 million in reserves and write-downs associated with inventory. C. On August 10, 2005, the price of AIPC's common stock fell from $20.94 to $13.28 per share. On August 17, 2005, AIPC's stock price fell again to $11.16 per share. D. On October 27, 2005, AIPC announced that it would restate its financial statements for fiscal years 2002-2004, as well as the first two quarters of fiscal year 2005. E. Beginning in August 2005, putative class and derivative actions were filed against Defendants in the United States District Court for the Western District of Missouri, alleging claims under the federal securities laws and/or derivative claims. These actions included: Stengle v. American Italian Pasta Co., 05-725-CV-W-ODS; Brody v. American Italian Pasta Co., 05-730-CV-W-ODS; Clark v. American Italian Pasta Co., 05-769-CV-W-ODS; Rothstein v. Webster, 05-909-CV-W-ODS; Fasth v. Webster, 05-928-CV-W-ODS; Corallo v. Webster, 05-996-CV-W-ODS; and Firefighter's Pension System of the City of Kansas City, Missouri Trust v. Patterson, 05-1139-CV-W-ODS. F. By order dated December 19, 2005, all of the putative class and derivative actions were consolidated into a single action and captioned In re American Italian Pasta Company Securities Litigation, No. 05-CV-0725-W-ODS. 2 

 G. On December 19, 2005, the Iron Workers Local 40, 361 and 417 Union Security Funds was appointed Lead Plaintiff to prosecute all class and derivative claims, and Pomerantz Haudek Block Grossman & Gross LLP was appointed sole Lead Counsel of all class and derivative claims. H. Following the appointment, Lead Counsel began an exhaustive investigation of the facts that gave rise to the August 9 announcement. This investigation included numerous interviews of former AIPC employees and other witnesses; review of correspondence sent by an anonymous letter writer relating to the facts at issue; review of public filings with the United States Securities and Exchange Commission; and analysis of publicly available trading information. I. A consolidated amended complaint was filed on January 19, 2006, alleging both class and derivative claims. With respect to the class claims, Lead Plaintiff asserted that Defendants issued false and misleading statements starting on January 23, 2002 and continuing through August 17, 2005, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. With respect to the derivative claims, it was asserted, among other things, that the Individual Defendants breached fiduciary duties owed to the Company. J. The named defendants to the class claims were AIPC, certain of its current and former senior officers and directors (Timothy S. Webster, Horst W. Schroeder, George D. Shadid, Warren B. Schmidgall, Walter N. George, Jerry H. Dear, and David B. Potter); members of its audit committee (James A. Heeter, William R. Patterson, and Jonathan E. Baum); and Ernst, the Company's outside auditor. K. On June 19, 2006, the Court denied motions by certain of the Defendants to dismiss the class claims (except against David B. Potter), but dismissed the derivative claims for 3 

 failure to make a pre-suit demand. Other derivative lawsuits not consolidated with the Action are currently pending. L. On March 26, 2007, the Court certified the class claims as a class action on behalf of all persons who purchased AIPC stock on or after January 23, 2002 and who continued to hold such shares on August 9, 2005. M. Discovery was underway at the time the Settling Parties entered into settlement negotiations. A trial date is set for September 2008. Proceedings with respect to Ernst remain pending. II. SETTLEMENT NEGOTIATIONS AND MEDIATION A. In early 2007, Lead Counsel and counsel for AIPC engaged in numerous telephone calls concerning the possibility of settlement. B. Thereafter, Lead Plaintiff and AIPC agreed to mediation. Gary V. McGowan, who is widely recognized to be one of the nation's leading mediators, was selected to facilitate the negotiations. C. Prior to the first mediation conference, Lead Counsel and counsel for AIPC prepared and submitted comprehensive mediation statements to the Mediator. These statements provided comprehensive overviews of the factual and legal issues implicated by the litigation, presented their respective views about the strengths and weaknesses of the claims alleged, and highlighted the critical issues that would determine whether a settlement was possible. D. At the first mediation conference, Lead Counsel and counsel for AIPC made oral presentations. Thereafter, the Mediator facilitated arms-length negotiations. Additional conferences, and two more mediation sessions, were necessary before an agreement in principal on certain economic terms of a potential settlement was reached on July 2, 2007. Settlement negotiations continued after that date until the signing of this Stipulation. 4 

 III. DISCOVERY, INVESTIGATION, AND RESEARCH CONDUCTED BY LEAD COUNSEL A. Prior to commencement of the mediation, Lead Counsel conducted significant discovery and investigation during the prosecution of the Action. This discovery and investigation included: (1) review and analysis of over 1.2 million pages of documents produced in this Action; (2) obtaining and reviewing anonymous letters sent to AIPC's auditors during the Class Period; (3) interviews with various individuals, including former AIPC employees; (4) consultations with accounting experts knowledgeable about the type of accounting and financial statement issues alleged here; (5) consultations with damages experts; (6) review of AIPC's public filings, annual reports, and other public statements; (7) research of the applicable law with respect to the claims asserted in the Action and the potential defenses thereto; (8) responding to and propounding interrogatories; (9) a deposition pursuant to Federal Rule of Civil Procedure 30(b)(6) on the Company's document collection and retention processes; and (10) depositions of Lead Plaintiff and related parties in connection with the class certification motion. IV. LEAD PLAINTIFF'S ASSESSMENT OF THE CLAIMS AND SETTLEMENT A. Lead Plaintiff believes that the claims in the Action have merit and that the evidence developed to date supports those claims. Lead Plaintiff believes it could demonstrate at trial that the Settling Defendants caused the price of AIPC common stock to be artificially inflated during the Class Period and Stub Period by the issuance of materially false statements and by omitting to state material information concerning AIPC and that as a result, Lead Plaintiff and members of the Class and Stub Period Class were injured. B. However, Lead Plaintiff recognizes and acknowledges the expense and length of continued proceedings, trial, and appeals. Lead Plaintiff also has taken into account the uncertain outcome and the risk of any litigation, especially in complex actions such as this one. 5 

 Lead Plaintiff is also mindful of the inherent problems of proof under and possible defenses to the federal securities law violations asserted, including the defenses asserted by Defendants during the litigation, in motions on the pleadings, in settlement negotiations, and in the mediation proceedings. C. Perhaps most importantly, Lead Plaintiff understands that AIPC has limited resources to satisfy any potential judgment; has limited insurance coverage, which has been and will continue to be significantly diminished by continuation of this Action; and has had its common stock de-listed from the New York Stock Exchange. D. In light of the foregoing, Lead Plaintiff believes that the Settlement confers substantial benefits upon the Class and Stub Period Class. Based on its evaluation, Lead Plaintiff and Lead Counsel have determined that the Settlement is in the best interests of the Lead Plaintiff and the Class and Stub Period Class. V. SETTLING DEFENDANTS' ASSESSMENT OF THE CLAIMS AND SETTLEMENT A. The Settling Defendants vigorously dispute that Lead Plaintiff would prevail at trial in this Action on the claims it asserts. The Settling Defendants vigorously dispute, inter alia, that Lead Plaintiff would succeed in proving the allegations in the amended complaint that the prices of AIPC stock were artificially inflated by reasons of alleged misrepresentations, non-disclosures or otherwise, and that the Lead Plaintiff and members of the Class or Stub Period Class were harmed by the conduct alleged. B. Nonetheless, the Settling Defendants have concluded that further conduct of the Action would be protracted and expensive, and that it is desirable that the Action be fully and finally settled in the manner and upon the terms and conditions set forth in this Stipulation in order to limit further expense, inconvenience and distraction, to dispose of the burden of 6 

 protracted litigation, and to permit the operation of the Company's business without further distraction and diversion of the Company's executive personnel with respect to matters at issue in the Action. The Settling Defendants also have taken into account the uncertainty and risks inherent in any litigation, especially in complex cases like this litigation. C. The Settling Defendants have, therefore, determined that it is desirable and beneficial to them that the Action be settled in the manner and upon the terms and conditions set forth in this Stipulation. The Settling Defendants enter into this Stipulation and Settlement without in any way acknowledging any fault, liability, or wrongdoing of any kind. There has been no adverse determination by any court against any of the Settling Defendants on the merits of the claims asserted by the Lead Plaintiff. D. Neither this Settlement nor Stipulation, nor any of its terms or provisions, nor any of the negotiations or proceedings connected with it, shall be construed as an admission or concession by any of the Settling Defendants of the merit or truth of any of the allegations or wrongdoing of any kind on the part of any of the Settling Defendants, or of any infirmity in the defenses that the Settling Defendants have or could have asserted in this Action. VI. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the Lead Plaintiff (for itself and the members of the Class and Stub Period Class), and the Settling Defendants, by and through their respective counsel of record, that, subject to the approval of the Court, the Action and the Released Claims shall be finally and fully compromised, settled, and released, and the Action shall be dismissed with prejudice, upon and subject to the terms and conditions of the Stipulation, as follows: 7 

 CERTAIN DEFINITIONS 1. As used in this Stipulation, the following terms shall have the following meanings: (a) "Action" shall mean In re American Italian Pasta Company Securities Litigation, No. 05-CV-0725-W-ODS, and all lawsuits consolidated under that caption. (b) "AIPC" or the "Company" shall mean defendant American Italian Pasta Company, as well as all of its predecessors, successors, present and former parents, subsidiaries, divisions, and related or affiliated entities; (c) "AIPC's Insurance Carriers" shall mean Federal Insurance Company, Fireman's Fund Insurance Company, and AXIS Reinsurance Company; (d) "Authorized Claimant" shall mean any member of the Class or Stub Period Class whose claim for recovery has been allowed pursuant to the terms of the Stipulation and the Plan of Allocation; (e) "Claimant" shall mean any member of the Class or Stub Period Class who files a Proof of Claim and Release in such form and manner, and within such time, as the Court shall prescribe; (f) "Claimants' Final Valuation Date" shall mean the date that the Order of Distribution is entered; (g) "Class Members," all of whom together shall comprise the "Class," shall mean all purchasers of the common stock of AIPC on or after January 23, 2002, who held shares of the common stock of AIPC on August 9, 2005 ("Class Period"). Excluded from the Class shall be the Defendants and their corporate affiliates, current or former officers or directors, successors, heirs, assigns, executors, personal representatives, marital communities, 8 

 and immediate family members; (h) "Compensatory Award to Lead Plaintiff" shall mean the amount awarded by the Court pursuant to § 27A(2)(b)(4) of the Private Securities Litigation Reform Act in compensation for the time incurred by Lead Plaintiff, its agents and attorneys in connection with this litigation for the benefit of the Class and Stub Period Class; (i) "Court" shall mean the United States District Court for the Western District of Missouri; (j) "Defendants" shall mean AIPC, Timothy S. Webster, Horst W. Schroeder, George D. Shadid, Warren B. Schmidgall, Walter N. George, Jerry H. Dear, James A. Heeter, William R. Patterson, Jonathan E. Baum, and Ernst; (k) "Downside Protection Price" shall mean $6.50, unless adjusted downward at AIPC's election pursuant to ¶ 19 below; (l) "Ernst" shall mean Ernst & Young LLP; (m) "Effective Date" shall mean the first date by which all of the events and conditions specified below at ¶ 67 have occurred and been met; (n) "Fee and Expense Award Order" shall mean an order by the Court awarding any attorneys' fees and expenses (the "Fee and Expense Award") to Plaintiff's Counsel; (o) "Fee Award Final Valuation Date" shall mean the date of the later of entry of (i) the Fee and Expense Award Order, or (ii) the Judgment; (p) "Final" shall mean that an order or judgment is no longer subject to further appeal or review, whether by exhaustion of any possible appeal, lapse of time or otherwise; 9 

 (q) "Final Approval Date" shall mean the date of entry of the Judgment; (r) "Individual Defendants" shall mean Timothy S. Webster, Horst W. Schroeder, George D. Shadid, Warren B. Schmidgall, Walter N. George, Jerry H. Dear, James A. Heeter, William R. Patterson, and Jonathan E. Baum; (s) "Judgment" shall mean a judgment and order approving the Settlement and dismissing the Released Claims as against the Settling Defendants with prejudice; (t) "Lead Counsel" shall mean Pomerantz Haudek Block Grossman & Gross LLP; (u) "Lead Plaintiff" shall mean Iron Workers Local 40, 361 and 417 Union Security Funds; (v) "Mediator" shall mean Gary V. McGowan; (w) "Net Settlement Cash" shall mean $11,000,000 plus interest, less the cash portion of the Fee and Expense Award, Settlement Administration Costs, and the Compensatory Award to Lead Plaintiff; (x) "Net Settlement Fund" shall mean the Net Settlement Cash and the Net Settlement Securities, as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 below; (y) "Net Settlement Securities" shall mean the 1,458,333 shares of AIPC common stock, prior to any adjustment for upside allocation or downside protection as set forth in ¶¶ 13-17 below, less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award; (z) "Non-Settling Defendant" shall mean Ernst; 10 

 (aa) "Order of Distribution" shall mean the order authorizing distribution of the Net Settlement Securities, as adjusted pursuant to ¶¶ 13-17 below, and the Net Settlement Cash; (bb) "Pending Shareholder Derivative Actions" shall mean the following action filed in the Western District of Missouri: Chaiet v. Allen, Case No. 06-744-CV-W-ODS, and the following action filed in the Circuit Court of Jackson County, Missouri: Haag v. Webster, Case No. 05-CV-33137; (cc) "Person" shall mean an individual, corporation (including all divisions and subsidiaries), partnership, limited partnership, association, joint stock company, estate, legal representative, trust, unincorporated association, government or any political subdivision or agency thereof, and any business or legal entity and their spouses, heirs, predecessors, successors, representatives, and assigns; (dd) "Plaintiff's Counsel" shall mean Lead Counsel and other firms that perform services that benefited the Class and/or Stub Period Class. (ee) "Plan of Allocation" shall mean a plan or formula of allocation of the Net Settlement Fund which shall be described in the "Notice of Pendency and Proposed Partial Settlement of Class Action" to be sent to members of the Class and Stub Period Class in connection with the Settlement whereby the Net Settlement Fund shall be distributed to Authorized Claimants, as set forth below. Any Plan of Allocation is not part of the Stipulation; (ff) "Released Claims" shall collectively mean all claims (including Unknown Claims) demands, rights, liabilities and causes of action of every nature and description whatsoever, known or unknown, including violations of any local, state, federal, or foreign statutes, rules, regulations, common law, or other law, by or on behalf of the Lead 11 

 Plaintiff, the Class, the Stub Period Class, or any member of the Class or Stub Period Class against the Released Parties which are in any way based upon or related to (a) the purchase or acquisition of AIPC common stock by any member of the Class during the Class Period (whether on the open market or otherwise), or by any member of the Stub Period Class during the Stub Period (whether on the open market or otherwise), (b) the facts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to act and/or to supervise AIPC officers or employees which were or could have been alleged in the Action, (c) the facts which were alleged in any papers filed in the Action, and/or (d) the administration of the Net Settlement Fund or Plan of Allocation. Released Claims shall not include claims alleged in the Pending Shareholder Derivative Actions; (gg) "Released Parties" shall mean each and every one of the following: Settling Defendants and all entities owned, affiliated or controlled by them, all current and former AIPC directors and officers and each of their respective agents, employees, consultants, insurers, attorneys, advisors, successors, heirs, assigns, executors, personal representatives, marital communities and immediate families. However, Released Parties does not include Ernst; (hh) "Settlement" shall mean the settlement of this Action with Settling Defendants provided for by this Stipulation and the attached exhibits; (ii) "Settlement Administrator" shall mean the firm selected by Lead Counsel and approved by the Court to, among other things, send a mailed notice to members of the Class and Stub Period Class, arrange for publication of notice, and process claims filed upon the Settlement; (jj) "Settlement Administration Account" shall mean an interest bearing account to be maintained by the Settlement Administrator to pay for all Settlement 12 

 Administration Costs; (kk) "Settlement Administration Costs" shall mean the costs of notice and publication of the proposed Settlement, administration of the Settlement, any taxes, penalties or interest or tax preparation fees, and all other costs related to the administration of the Settlement; (ll) "Settlement Cash" shall mean $11,000,000; (mm) "Settlement Distribution Account" shall mean an interest bearing account to be maintained by the Settlement Administrator for distribution of the Net Settlement Cash to Authorized Claimants and the cash portion of the Fee and Expense Award to Plaintiff's Counsel; (nn) "Settlement Securities" shall mean the 1,458,333 shares of AIPC common stock, prior to any adjustment for upside allocation or downside protection as set forth in ¶¶ 13-17 below; (oo) "Settlement Securities Fee and Expense Award" shall mean the number of shares of AIPC common stock that are equal in value to 56% of the fee portion of the Fee and Expense Award, as adjusted for upside allocation or downside protection in the manner set forth in ¶¶ 13-17 below; (pp) "Settling Defendants" shall mean all Defendants other than Ernst; (qq) "Settling Parties" shall mean, collectively, each of the Settling Defendants and the Lead Plaintiff on behalf of itself and members of the Class and Stub Period Class; (rr) "Stipulation" shall mean this Stipulation of Settlement with Defendant American Italian Pasta Company and Individual Defendants, dated October 22, 2007; 13 

 (ss) "Stub Period Class Members," all of whom together shall comprise the "Stub Period Class," shall mean all purchasers of the common stock of AIPC on or after August 10, 2005, who held shares of the common stock of AIPC on August 17, 2005 ("Stub Period"). Excluded from the Stub Period Class shall be the Defendants and their corporate affiliates, current or former officers or director, successors, heirs, assigns, executors, personal representatives, marital communities, and immediate family members; (tt) "Termination Price" shall mean the average closing price of AIPC shares over the ten (10) consecutive trading day time period identified by Lead Plaintiff in any notice to terminate the Settlement under the terms of ¶ 18 below. (uu) "Unknown Claims" shall mean any Released Claims which the Lead Plaintiff or any member of the Class or Stub Period Class does not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties which, if known by him, her or it, might have affected his, her or its settlement with and release of the Released Parties, or might have affected his, her or its decision not to object to, or opt out of, this Settlement. With respect to any and all Released Claims, the Settling Parties stipulate and agree that, upon the Effective Date, the Lead Plaintiff expressly waives and relinquishes, and the members of the Class and Stub Period Class shall be deemed to have, and by operation of the Judgment shall have expressly waived and relinquished, to the fullest extent permitted by law, the provisions, rights, and benefits of § 1542 of the California Civil Code, which provides: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. The Lead Plaintiff expressly waives and the members of the Class or Stub Period Class shall be deemed to have waived, and upon the Effective Date and by operation of the 14 

 Judgment shall have waived any and all provisions, rights and benefits conferred by any law of the United States or of any state or territory of the United States, or principle of common law, which is similar, comparable or equivalent to § 1542 of the California Civil Code. The Lead Plaintiff and the members of the Class or Stub Period Class may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but each of them hereby stipulates and agree that the Lead Plaintiff does settle and release, and each member of the Class or Stub Period Class shall be deemed to have, and upon the Effective Date and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, all Released Claims that are in any way based on or related to conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling Parties acknowledge that the foregoing waiver was bargained for and a key element of the Settlement of which this release is a part. (vv) "Valuation Price" shall mean the average closing price for AIPC shares on the ten (10) trading days preceding either the Fee Award Final Valuation Date or the Claimants' Final Valuation Date. THE SETTLEMENT CONSIDERATION 2. In full and final settlement of all Released Claims against the Settling Defendants, Settling Defendants agree to pay $25,000,000, comprised of $11,000,000 in cash 15 

 and $14,000,000 in AIPC common stock as follows. SETTLEMENT CASH 3. The cash portion of the Settlement is $11,000,000. 4. Within ten (10) business days after execution of this Stipulation, Settling Defendants shall cause $150,000 of the Settlement Cash to be transferred by wire into the Settlement Administration Account. 5. Within ten (10) business days after entry of an order of preliminary approval of the Settlement with Settling Defendants, Settling Defendants shall cause $10,850,000 in cash, and accrued interest thereon as otherwise agreed to by AIPC's Insurance Carriers, to be transferred by wire into the Settlement Distribution Account. 6. All monies in the Settlement Distribution Account shall be invested in 90 day instruments backed by the full faith and credit of the United States government or fully insured by the United States government and shall be reinvested as they mature in similar instruments at the current market rates. 7. Settlement Administration Costs shall be paid out of the Settlement Administration Account, without further order of the Court, and to the extent necessary from the Settlement Distribution Account upon consent of AIPC or upon order of the Court. 8. In the event that the Settlement does not become effective, or the Settlement does not become Final, all monies held in the Settlement Administration Account and the Settlement Distribution Account (less any amount necessary to pay outstanding Settlement Administration Costs) shall be returned to those of AIPC's Insurance Carriers who contributed any Settlement Cash within seven (7) business days. Lead Plaintiff, the members of the Class and the Stub Period Class, the Settlement Administrator, and the Lead Counsel shall have no 16 

 personal responsibility for the Settlement Administrator's Costs. Under no other circumstances shall any monies held in the Settlement Administration Account or the Settlement Distribution Account revert to the Settling Defendants or AIPC's Insurance Carriers, except as otherwise expressly provided in this paragraph. 9. Subsequent to the Judgment becoming Final, any remaining proceeds in the Settlement Administration Account shall be transferred to the Settlement Distribution Account after which all of the Settlement Administration Costs shall be paid out of that account. SETTLEMENT SECURITIES 10. The common stock portion of the Settlement is the Settlement Securities, as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 below. 11. For purposes of the provisions set forth in ¶¶ 13-24 below, the closing price of AIPC shares shall be the closing price as reported on Pink Sheets Electronic OTC Markets (www.pinksheets.com; symbol AITP). 12. The amount of the Settlement Securities shall be appropriately adjusted to account for any stock splits, stock consolidations, stock dividends, return of capital, extraordinary distributions, or recapitalizations. Upside Allocation 13. To the extent that, at the time of the Fee Award Final Valuation Date or the Claimants' Final Valuation Date, the average closing price of AIPC shares over the ten (10) preceding trading days (the "Valuation Price") exceeds $9.60 per share, this additional value in excess of $9.60 per share shall be allocated among the members of the Class and Stub Period Class and AIPC (in the case of the Net Settlement Securities) or among Plaintiff's Counsel and AIPC (in the case of the Settlement Securities Fee and Expense Award) as follows: 17 

 14. In the event that the Valuation Price is: (i) between $9.60 and $10.75 per share - the members of the Class and Stub Period Class or Plaintiff's Counsel will receive 100% of the increase; (ii) between $10.76 and $13.50 per share - members of the Class and Stub Period Class or Plaintiff's Counsel will receive 50% of the increase; (iii) greater than $13.50 per share - members of the Class and Stub Period Class or Plaintiff's Counsel will receive no further benefit of the increase. 15. By way of example: (i) If on the Claimants' Final Valuation Date, the Valuation Price is $10.75, the members of the Class and Stub Period Class will be entitled to all of the Net Settlement Securities, i.e., the Settlement Securities (1,458,333), less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award; (ii) If on the Claimants' Final Valuation Date, the Valuation Price is $11.75, the members of the Class and Stub Period Class will be entitled to the Settlement Securities (i) less shares worth 50% of the incremental value resulting from the stock price's exceeding $10.75; (ii) less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award. In this case, 1,396,276 shares (1,458,333 - ((0.5 x $1.00 x 1,458,333)/$11.75)), less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award. (iii) If on Claimants' Final Valuation Date, the Valuation Price is $14.75, the members of the Class and Stub Period Class will be entitled to the Settlement Securities (i) less shares worth 50% of the incremental value resulting from the $2.75 of the stock price's gain between $10.75 and $13.50; (ii) less 100% of the incremental value resulting from the stock price's gain above $13.50; (iii) less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award; provided that the value of the securities awarded to Plaintiff's Counsel on the Fee Award Valuation Date and the securities awarded to the Class and Stub Period Class on the Claimants' Final Valuation Date shall not in the aggregate exceed $17,682,292. In this case, 1,198,800 shares (1,458,333 - ((0.5 x 18 

 $2.75 x 1,458,333)/$14.75) - ((1 x $1.25 x 1,458,333)/$14.75)), less the number of securities awarded to Plaintiff's Counsel by the Court in the Settlement Securities Fee and Expense Award; provided that the value of the securities awarded to Plaintiff's Counsel on the Fee Award Valuation Date and the securities awarded to the Class and Stub Period Class on the Claimants' Final Valuation Date shall not in the aggregate exceed $17,682,292.  Downside Protection 16. In the event that the average closing price of AIPC shares over the ten (10) trading days preceding the Fee Award Final Valuation Date is less than $9.60 per share but equal to or greater than the Downside Protection Price, AIPC shall issue a sufficient number of AIPC shares to generate a Settlement Securities Fee and Expense Award equal to 56% of the fee portion of the total Fee and Expense Award. In the event that the average closing price of AIPC shares over the ten (10) trading days preceding the Fee Award Final Valuation Date is less than the Downside Protection Price, the number of shares to be issued by AIPC under this paragraph 16 shall be determined as if the average closing price of AIPC shares over the ten (10) trading days preceding the Fee Award Final Valuation Date were equal to the Downside Protection Price. 17. In the event that the average closing price of AIPC shares over the ten (10) trading days preceding the Claimants' Final Valuation Date is less than $9.60 per share but equal to or greater than the Downside Protection Price, AIPC shall issue a sufficient number of AIPC shares to achieve $14,000,000, less the value of the Settlement Securities Fee and Expense Award on the Fee Award Final Valuation Date, prior to any upside allocation pursuant to ¶¶ 13-15 above. In the event that the average closing price of AIPC shares over the ten (10) trading days preceding the Claimants' Final Valuation Date is less than the Downside Protection Price, the number of shares to be issued by AIPC under this paragraph 17 shall be determined as if the 19 

 average closing price of AIPC shares over the ten (10) trading days preceding the Claimants' Final Valuation Date were equal to the Downside Protection Price. Lead Plaintiff's Right to Terminate the Settlement Prior to Entry of the Judgment 18. If at any time prior to entry of the Judgment, the average closing price of AIPC shares over ten (10) consecutive trading days is less than $6.50 per share, Lead Plaintiff shall have the right to terminate the Settlement. Such termination shall take place five (5) business days after written notice of the intention to terminate by Lead Counsel has been hand delivered to James H.R. Windels of Davis Polk & Wardwell, counsel for AIPC. In the written notice of the intention to terminate, Lead Counsel shall state the precise ten (10) consecutive trading day time period and the average price of AIPC shares over that time period (the "Termination Price") that it believes entitle Lead Plaintiff to terminate the Settlement under the terms of this paragraph. 19. However, such termination shall not take place if AIPC agrees to reduce the Downside Protection Price to the Termination Price. Lead Plaintiff's Right To Accelerate Delivery of the Settlement Securities After Entry of the Judgment 20. If at any point following entry of the Judgment, but prior to entry of the Order of Distribution, the average closing price of AIPC shares over four (4) consecutive trading days is less than $7.00 per share, Lead Plaintiff may demand in writing immediate delivery of the Settlement Securities or Net Settlement Securities. 21. To the extent reasonably practicable and if permitted by applicable federal and state law and regulation, within seven (7) business days of receiving a request pursuant to the prior paragraph, AIPC shall transfer the Settlement Securities or Net Settlement Securities to the Settlement Administrator. If additional time is needed for said transfer, AIPC shall state 20 

 the reasons therefore in writing, and Lead Counsel shall grant a reasonable extension of time. Thereafter, upon the advice, consent and supervision of Lead Plaintiff and Lead Counsel, and to the extent practicable, the Settlement Administrator may sell portions of, or the entirety of, the Settlement Securities. The proceeds of such sales shall be deposited in the Settlement Distribution Account, and invested in a manner consistent with ¶ 31 below. 22. Lead Counsel may retain an investment advisor to assist its determination of whether and when to sell such shares. The reasonable costs of such an advisor shall be borne by the Settlement Distribution Account. Such an investment advisor shall have no role in the sale of such shares. 23. No Person, including any member of the Class or Stub Period Class, shall have any claim against anyone (including but not limited to the Settlement Administrator, AIPC, Settling Defendants, AIPC's Insurance Carriers, Lead Plaintiff, or Lead Counsel) arising out of or relating to the sale of, or failure to sell, any of the Settlement Securities. Buy-Out Protection 24. The Settling Parties agree that Plaintiff's Counsel and members of the Class and Stub Period Class will be issued the Settlement Securities or the Net Settlement Securities, as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 above, in the event that any Person consummates a public offer to purchase a majority of outstanding AIPC shares, including but not limited to a tender offer. The Valuation Price in such an event shall be the price at which such public offer to purchase AIPC shares is consummated. If AIPC cannot issue the Settlement Shares at the time of the consummation of the public offer or on the Final Approval Date (whichever is later), the Company will substitute cash in lieu of the Settlement Shares at the value of such public offer to purchase shares. This obligation must be transferable to any Person publicly offering to purchase AIPC shares if the 21 

 Company is unable to pay the cash. ISSUANCE OF THE SETTLEMENT SECURITIES To Claimants 25. Unless the "right to accelerate" set forth in ¶¶ 20-23 above has been exercised, within three (3) business days of the Claimants' Final Valuation Date (i.e., entry of the Order of Distribution), the Settling Parties shall compute the number of Net Settlement Securities to be issued consistent with the upside allocation and downside protection formulas set forth in ¶¶ 13-17 above. 26. Within ten (10) business days of the Order of Distribution becoming Final or as soon thereafter as practicable under applicable law and regulation, and after receiving written instructions from Lead Counsel, AIPC shall arrange for transfer of the Net Settlement Securities, as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 above, directly to Authorized Claimants by causing its transfer agent to issue certificates evidencing such shares of AIPC common stock registered in the respective names of the Authorized Claimants (or, if acceptable to AIPC and Lead Counsel, through "book-entry" registration of such shares of AIPC common stock) to such Authorized Claimants. To Plaintiff's Counsel 27. AIPC shall, within ten (10) business days of the later of (i) the date that the Judgment becomes Final, or (ii) the date the Fee and Expense Award Order becomes Final, or as soon thereafter as practicable under applicable law and regulation, arrange for transfer of the Settlement Securities Fee and Expense Award to Lead Counsel or to such Plaintiff's Counsel as designated by Lead Counsel. General Provisions Regarding Settlement Securities 28. AIPC will insure that, under federal securities laws, the Net 22 

 Settlement Securities and Settlement Securities Fee and Expense Award (both as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 above), when transferred, are freely tradable and unrestricted by their respective recipients. 29. AIPC shall, at its own expense, either register such securities or confirm in writing prior to transfer that it has received the written opinion of counsel substantially to the effect that the issuance and delivery of such securities are exempt from registration under the Securities Act of 1933, 15 U.S.C. Section 77c(a)(l), as amended, pursuant to Section 3(a)(10) thereunder. In the event that, on Claimants' Final Valuation Date, the Net Settlement Securities are not exempt from registration or qualification under the applicable "Blue Sky" laws of one or more states, appropriate adjustments (by reallocation of cash) may be made by Lead Counsel (subject to Court approval) to account for those Authorized Claimants who reside in such states to equalize the value of their distribution under the Plan of Allocation; however, said appropriate adjustments shall not increase or decrease Settling Defendants' contribution to the Settlement. 30. The reasonable costs and expenses of such issuance, physical delivery and extraordinary or expedited services, if any, of the transfer agent shall be paid by AIPC. Nothing herein shall require AIPC or its transfer agent to distribute shares to any Authorized Claimant or any other Person who, in the opinion of AIPC's legal counsel, resides in states where the Settlement Securities are not exempt from registration or qualification under applicable "Blue Sky" laws. ADMINISTRATION OF THE SETTLEMENT CONSIDERATION 31. The Settlement Administrator shall invest monies held in the Settlement Distribution Account in 90 day instruments backed by the full faith and credit of the United States Government or fully insured by the United States Government or an agency thereof and 23 

 shall reinvest the proceeds of these instruments as they mature in similar instruments at the current market rates. 32. The Settlement Administrator shall not disburse the Settlement Cash except as provided in the Stipulation, or by an order of the Court (provided said order is consistent with the terms of the Stipulation), or with the written agreement of counsel for the Settling Defendants and Lead Counsel. 33. Subject to such further order and direction by the Court as may be necessary, the Settlement Administrator is authorized to execute such transactions on behalf of the members of the Class and Stub Period Class as are consistent with the terms of the Stipulation. 34. All funds held by the Settlement Administrator shall be deemed and considered to be in custodia legis of the Court, and shall remain subject to the jurisdiction of the Court, until such time as such funds shall be distributed pursuant to the Stipulation and/or further order(s) of the Court consistent with the terms of the Stipulation. 35. All costs and expenses associated with the Settlement, including but not limited to any taxes, administrative costs, and costs of providing notice of the proposed Settlement to the members of the Class and Stub Period Class, shall be paid from the cash portion of the Settlement, and in no event shall any of the Settling Defendants, Lead Plaintiff, members of the Class or Stub Period Class, or their counsel bear any responsibility for any such costs or expenses, except that AIPC shall bear all costs associated with the issuance of the Settlement Securities. TAXES 36. The Settling Parties and the Settlement Administrator agree to treat the 24 

 Settlement Cash as being at all times a "qualified settlement fund" within the meaning of Treas. Reg. Section 1.468B-1. In addition, the Settlement Administrator and, as required, AIPC and the AIPC Insurance Carriers contributing any settlement consideration shall jointly and timely make the "relation-back election" (as defined in Treas. Reg. Section 1.468B-1) back to the earliest permitted date. Such election shall be made in compliance with the procedures and requirements contained in such regulations. It shall be the responsibility of the Settlement Administrator to timely and properly prepare, and deliver the necessary documentation for signature by all necessary parties, and thereafter to cause the appropriate filing to occur. 37. For the purposes of Section 468B of the Internal Revenue Code of 1986, and Treas. Reg. Section 1.468B, the "administrator" shall be the Settlement Administrator. The Settlement Administrator shall timely and properly file all informational and other tax returns necessary or advisable with respect to the monies held in the Settlement Administration Account and the Settlement Distribution Account (including, without limitation, the returns described in Treas. Reg. Section 1.468B-2(l)). Such returns (as well as the election described above) shall be consistent with and in all events shall reflect that all taxes (including any estimated taxes, interest or penalties) on the income earned by the monies held in the Settlement Administration Account and the Settlement Distribution Account shall be paid out of the Settlement Administration Account and the Settlement Distribution Account as provided herein. 38. All (i) taxes (including any estimated taxes, interest or penalties) arising with respect to the income earned by the monies held in the Settlement Administration Account and the Settlement Distribution Account ("Taxes"), and (ii) expenses and costs incurred in connection with the operation and implementation of administering this Settlement (including, without limitation, expenses of tax attorneys and/or accountants and mailing and distribution 25 

 costs and expenses relating to filing (or failing to file) the returns described herein) ("Tax Expenses"), shall be paid out of the Settlement Cash; in all events the Released Parties shall not have any liability or responsibility for the Taxes, the Tax Expenses, or the filing of any tax returns or other documents with the Internal Revenue Service or any other state or local taxing authority. The Settlement Administrator shall indemnify and hold the Released Parties harmless for Taxes and Tax Expenses (including, without limitation, Taxes payable by reason of any such indemnification). Further, Taxes and Tax Expenses shall be treated as, and considered to be, a cost of administration of the Settlement and shall be timely paid by the Settlement Administrator out of the Settlement Administration Fund or the Settlement Distribution Fund without prior order from the Court, and the Settlement Administrator shall be obligated (notwithstanding anything herein to the contrary) to withhold from distribution to Authorized Claimants any funds necessary to pay such amounts (as well as any amounts that may be required to be withheld under Treas. Reg. Section 1.468B-2(1)(2)); the Released Parties are not responsible and shall have no liability therefor, or for any reporting requirements that may relate thereto. The Settling Parties hereto agree to cooperate with the Settlement Administrator, each other, and their tax attorneys and accountants to the extent reasonably necessary to carry out this provision. CERTIFICATION OF THE STUB PERIOD CLASS 39. In connection with the request for preliminary approval, the Settling Parties shall jointly seek Court approval to certify, for this Settlement only, the claims asserted in this Action against the Settling Defendants as a class action on behalf of the Stub Period Class. 40. Certification of the Stub Period Class shall be binding only with respect to the Settlement set forth in the Stipulation. In the event that this Stipulation is terminated or cancelled or that the Effective Date does not occur for any reason, the stipulated certification of 26 

 the Stub Period Class shall be vacated and the Action shall proceed as though the Stub Period Class had never been certified. Except to effectuate the Settlement, neither the Settling Parties, their respective counsel, nor any member of the Stub Period Class shall cite, present as evidence or legal precedent, rely upon, make reference to or otherwise make any use whatsoever of this stipulated certification of the Stub Period Class, in this Action or in any other proceeding. NOTICE ORDER AND SETTLEMENT HEARING 41. Promptly after execution of the Stipulation, but in no event later than ten (10) business days after the Stipulation is signed (unless such time is extended by the written agreement of Lead Counsel and counsel for the Settling Defendants), the Settling Parties shall submit the Stipulation, together with its exhibits, to the Court, and shall jointly apply for entry of an order (the "Notice Order"), substantially in the form and content of Exhibit A hereto, certifying the Stub Period Class, preliminarily approving the Settlement, and approving the mailing and publication of a Notice of Pendency and Proposed Partial Settlement of Class Action ("Notice"), substantially in the form and content of Exhibit B hereto. 42. As soon as practicable after execution of the Stipulation, AIPC shall arrange for delivery of an electronic version of its transfer records (in a manner consistent with the instructions of the Settlement Administrator) reflecting all owners of AIPC shares during the Class Period and Stub Period. 43. The Settling Parties shall request that, after notice is given, the Court hold a hearing (the "Settlement Hearing") and finally approve this Settlement as set forth herein. At or after the Settlement Hearing, Lead Counsel also will request that the Court approve the proposed Plan of Allocation, the Fee and Expense Application, and the Compensatory Award to Lead Plaintiff. 27 

 ENTRY OF JUDGMENT AND DISCHARGE OF ALL CONTRIBUTION CLAIMS 44. The Settling Parties agree to the entry of a Judgment substantially in the form and content of Exhibit C. 45. The Judgment proposed to the Court shall include a bar order consistent with the terms of 15 U.S.C. § 78u-4(f)(7)(A) & (B). Provided, however, that nothing in the Judgment or this Stipulation shall release, bar, enjoin, or otherwise restrain any claim between AIPC and any current or former AIPC employee regarding indemnification, advancement, and/or recoupment of fees, costs, and expenses. RELEASES 46. Upon the Effective Date, the Lead Plaintiff shall release, relinquish and discharge, and each of the members of the Class and Stub Period Class (other than those who validly and timely request exclusion in accordance with the provisions of the Notice Order and the Notice given pursuant thereto) shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished and discharged each and all of the Released Parties from all Released Claims (including Unknown Claims), whether or not such member of the Class or Stub Period Class executes and delivers the Proof of Claim and Release. Claims for violation of this Stipulation (including any exhibits) are preserved. 47. Upon the Effective Date, each of the Settling Defendants shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever released, relinquished and discharged the Lead Plaintiff, the members of the Class and Stub Period Class (other than those who validly and timely request exclusion in accordance with the provisions of the Notice Order and the Notice given pursuant thereto), Lead Counsel and Plaintiff's Counsel from any claims, including Unknown Claims, arising out of, relating to, or in connection with the 28 

 commencement, prosecution, assertion or resolution of the Action or the Released Claims. Claims for violation of this Stipulation (including any exhibits) are preserved. 48. Except as otherwise expressly provided for in this Stipulation, the Settling Parties shall each bear their own respective attorneys' fees, expenses and costs incurred in connection with the conduct and settlement of the Action, and the preparation, implementation and performance of the terms of this Stipulation. 49. Only those members of the Class and Stub Period Class filing valid and timely Proofs of Claim and Release shall be entitled to participate in the Settlement and receive any distributions from the Net Settlement Fund. The Proofs of Claim and Release to be executed by members of the Class and Stub Period Class shall release all Released Claims against the Released Parties, shall be attached to the Notice, and shall be in substantially the form and content set forth in Exhibit D hereto. All members of the Class and Stub Period Class shall be bound by the releases set forth herein and therein whether or not they submit a valid and timely Proof of Claim and Release. DISCOVERY 50. AIPC agrees to reasonably cooperate with the Lead Plaintiff in connection with any continuing litigation of the Action after final approval of the Settlement, including (a) producing documents and/or testimony of AIPC witnesses in the Action as reasonably requested by Lead Counsel; and (b) making its officers, directors and employees available to testify at trial pursuant to the request of Lead Counsel without subpoena or process. ADMINISTRATION AND CALCULATION OF CLAIMS, FINAL AWARDS AND SUPERVISION AND DISTRIBUTION OF SETTLEMENT FUNDS 51. Lead Counsel, or its authorized agents, acting on behalf of the Class and Stub Period Class shall formulate a Plan of Allocation of the Net Settlement Fund to the 29 

 members of the Class and Stub Period Class, subject to the approval of the Court. The Settlement Administrator, subject to the supervision, direction and approval of the Court, shall administer and calculate the claims submitted by members of the Class and Stub Period Class, and shall oversee distribution of that portion of the Net Settlement Fund that is finally awarded by the Court to Authorized Claimants. The Settling Parties expressly agree that any change, modification, or alteration to the Plan of Allocation by the Court shall not be grounds for termination of the Settlement. 52. The proceeds of the Settlement Administration and Distribution Accounts shall be applied as follows: (a) To pay all costs and expenses reasonably and actually incurred in connection with providing notice to the members of the Class and Stub Period Class, including locating members of the Class and Stub Period Class, soliciting Class and Stub Period Class claims, assisting with the filing of claims, administering and distributing the Net Settlement Fund to members of the Class and Stub Period Class, processing Proofs of Claim and Release and paying fees and costs, if any; (b) To pay any Fee and Expense Award; (c) To finance other expenses, as requested by Lead Plaintiff and ordered by the Court; (d) To pay any Compensatory Award to Lead Plaintiff; and (e) To distribute, following the Effective Date, the Net Settlement Cash to Authorized Claimants as allowed by the Stipulation, the Plan of Allocation or the Court. 53. After entry of the Order of Distribution, the Net Settlement Fund shall be distributed to Authorized Claimants, subject to and in accordance with the following: 30 

 (a) Within ninety (90) days after the mailing of the Notice or such other time as may be set by the Court, each Person claiming to be an Authorized Claimant shall be required to obtain and submit to the Settlement Administrator a separate completed Proof of Claim and Release substantially in the form and content of Exhibit D hereto, signed under penalty of perjury and supported by such documents as specified in the Proof of Claim and Release and as are reasonably available to the Authorized Claimant; (b) Except as otherwise ordered by the Court, all members of the Class and Stub Period Class who fail to timely submit a valid Proof of Claim and Release within such period, or such other period as may be ordered by the Court, or who have not already done so, shall be forever barred from receiving any payments of money or stock pursuant to the Stipulation and the Settlement set forth herein, but will in all other respects be subject to and bound by the provisions of the Stipulation, the Settlement and releases contained herein, and the Judgment; (c) The Net Settlement Fund shall be distributed to the Authorized Claimants in accordance with and subject to the Plan of Allocation to be described in the Notice mailed to members of the Class and Stub Period Class. The proposed Plan of Allocation shall not be a part of the Stipulation. 54. The Released Parties shall have no responsibility for, interest in, or liability whatsoever with respect to: (a) the investment or distribution of the Settlement Cash and Securities; (b) the Plan of Allocation or any other act described in this ¶ 54 or any of its subparagraphs; (c) the determination or administration of taxes; or (d) any losses incurred in connection with subparagraphs (a), (b) or (c) of this paragraph. No Person shall have any claim of any kind against the Released Parties with respect to the matters set forth in this paragraph or 31 

 any of its subparagraphs. 55. No Person shall have any claim against the Lead Plaintiff or Lead Counsel, or any Settlement Administrator, or other agent designated by Lead Counsel, based on the distributions made substantially in accordance with the Stipulation and the Settlement contained herein, the Plan of Allocation or further orders of the Court. 56. It is understood and agreed by the Settling Parties that any proposed Plan of Allocation, including, without limitation, any adjustments to an Authorized Claimant's claim set forth therein, is not a material part of the Stipulation and is to be considered by the Court separately from the Court's consideration of the fairness, reasonableness and adequacy of the Settlement set forth in the Stipulation, and any order or proceedings relating to the Plan of Allocation shall not operate to terminate or cancel the Stipulation or affect the finality of the Court's Judgment approving the Stipulation and the Settlement set forth herein, including, but not limited to, the release, discharge, and relinquishment of the Released Claims against the Released Parties, or any other orders entered pursuant to the Stipulation. LEAD COUNSEL'S ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES AND LEAD PLAINTIFF'S COMPENSATORY AWARD 57. Lead Plaintiff or Lead Counsel may submit an application or applications for an order (the "Fee and Expense Application") for distributions to them from the Settlement Cash and Settlement Securities for: (i) an award of attorneys' fees plus (a) reimbursement of all expenses and costs, including the fees of any experts or consultants, incurred in connection with prosecuting the Action and (b) interest on such attorneys' fees, costs and expenses at the same rate and for the same periods as earned by the Settlement Distribution Account (until paid), as may be awarded by the Court; (ii) the financing of other expenses; and (iii) grant of a Compensatory Award to Lead Plaintiff by the Court (as described in ¶ 1(h)). 32 

 58. Within five (5) business days after entry of the later of (i) the Judgment, or (ii) the Fee and Expense Award Order, notwithstanding the potential for any appeal from the Judgment and notwithstanding any objection to or appeal from the award of attorneys' fees and costs, 44% of the fee portion of such Award, and 100% of the expense portion of such Award, shall be transferred in cash from the Settlement Distribution Account to Lead Counsel. To the extent that the cash portion of the Fee Award is distributed to Plaintiff's Counsel other than Lead Counsel, a letter of credit for the distributed amount shall be provided to Lead Counsel. 59. Consistent with and subject to the provisions contained above concerning the Settlement Securities, AIPC shall, within ten (10) business days of the later of (i) the date that the Judgment becomes Final, or (ii) the date that the Fee and Expense Award Order becomes Final, or as soon thereafter as practicable under applicable law and regulation, arrange for transfer of the Settlement Securities Fee and Expense Award to Lead Counsel or to such Plaintiff's Counsel as designated by Lead Counsel. 60. Lead Counsel shall be authorized by the Court to allocate the Fee and Expense Award among all counsel representing Lead Plaintiff and the Class for any work performed by such counsel that was authorized by Lead Counsel and contributed to the effective litigation of the Action. 61. In the event that the Stipulation and the Settlement set forth herein do not become Final for any reason, or the Judgment or the Fee and Expense Award Order is reversed or modified on appeal, and in the event that the Fee and Expense Award has been paid to any extent, then Lead Counsel and respective Plaintiff's Counsel shall within five (5) business days from the event which precludes the Effective Date from occurring or such reversal or modification, refund to the Settlement Distribution Account the fees, expenses, costs and interest 33 

 previously paid to it, including accrued interest on any such amount at the average rate earned from the time of withdrawal until the date of refund; and, in the case of the Settlement Securities Fee and Expense Award, Lead Counsel and respective Plaintiff's Counsel shall return to AIPC all then-unsold shares of the Settlement Securities Fee and Expense Award, together with an amount equal to the proceeds of any shares of AIPC stock that were sold, including accrued interest on any such amount at the average rate earned from the time of sale until the date of the refund. The Lead Counsel and Plaintiff's Counsel, as a condition of receiving such fees and expenses, on behalf of itself and each partner and/or shareholder of it, agrees that the law firm and its partners and/or shareholders are subject to the jurisdiction of the Court for the purpose of enforcing this ¶ 61 of the Stipulation. 62. The Released Parties shall have no responsibility for, and no liability whatsoever with respect to, any fee and expense award to Lead Counsel or Plaintiff's Counsel, or to any other Person who may assert some claim thereto, except as provided herein. 63. The procedure for and the allowance or disallowance by the Court of the Fee and Expense Application and Compensatory Award to Lead Plaintiff are not part of the Settlement set forth in the Stipulation, and are to be considered by the Court separately from the Court's consideration of the fairness, reasonableness and adequacy of the Settlement set forth in the Stipulation. Any order or proceedings relating to the Fee and Expense Application and Compensatory Award to Lead Plaintiff, or any appeal from any order relating thereto, shall not operate to terminate or cancel the Stipulation, or affect or delay the finality of the Judgment approving the Stipulation and the Settlement of the Action set forth herein. CONDITIONS OF SETTLEMENT, EFFECT OF DISAPPROVAL, CANCELLATION OR TERMINATION 64. AIPC shall have the option to terminate the Settlement and this 34 

 Stipulation in the event that members of the Class and Stub Period Class who collectively purchased in excess of 3% of the securities purchased by all members of the Class and Stub Period Class during the Class Period and Stub Period properly elect to exclude themselves in accordance with the requirements for requesting exclusion provided in the Notice Order and the Notice given pursuant thereto. Lead Counsel and AIPC's counsel shall request jointly that the deadline for submitting exclusions from the Class and Stub Period Class be at least ten (10) business days prior to the Settlement Hearing. Copies of all requests for exclusion from the Class and Stub Period Class received by the Settlement Administrator (or other person designated to receive exclusion requests) shall be provided to AIPC's counsel no later than five (5) business days prior to the Settlement Hearing. If the 3% threshold is reached, AIPC shall have until 5:00 p.m. EST on the third business day before the Settlement Hearing to inform Lead Counsel, in writing, that it elects to exercise its option to terminate. 65. AIPC shall also have the option to terminate the Settlement and this Stipulation in the event that Lead Plaintiff has not abided by, in any material respect, the terms of this Stipulation. 66. In addition to the termination rights that may otherwise be provided in this Stipulation, and specifically in addition to the termination rights provided by ¶ 18-19 of this Stipulation, Lead Plaintiff shall have the option to terminate the Settlement and this Stipulation in the event that any of the following conditions is not met: (a) The transfer of $150,000 into the Settlement Administration Account within ten (10) business days after execution of this Stipulation; (b) The transfer into the Settlement Distribution Account of $10,850,000 plus accrued interest following entry of an order giving preliminary settlement 35 

 approval, no later than ten (10) business days following entry of such order; (c) The issuance of the Net Settlement Securities, as adjusted pursuant to the upside allocation and downside protection formulas set forth in ¶¶ 13-17 above, no later than ten (10) business days after the Order of Distribution or as soon thereafter as practicable under applicable law and regulation, as required by ¶¶ 25-26 above; and (d) The issuance of the Settlement Securities pursuant to section 3(a)(10) of the Securities Act of 1933 and the Settlement Securities do not constitute "restricted securities;" (e) The Settling Defendants have not abided by, in any material respect, the terms of this Stipulation. 67. Unless otherwise agreed by Lead Counsel and counsel for Settling Defendants in writing, and in addition to the events that trigger termination of the Settlement and this Stipulation that are set forth in this Stipulation, the Settlement and the Stipulation shall be terminated in the event that any of the following conditions is not met: (a) The Court has entered an order granting preliminary approval of the settlement and certified the Stub Period Class, as set forth in ¶ 41 and ¶¶ 39-40 above; (b) The Court has entered a Judgment, substantially in the form and content of Exhibit C and independent of the Court's determination of any award of attorneys' fees and expenses or Compensatory Award to Lead Plaintiff, granting final approval of the Settlement and dismissing all Released Claims with prejudice and without costs to any party; and (c) The Judgment has become Final. 68. In the event the Stipulation shall terminate, or be canceled, or shall not become effective for any reason, within ten (10) business days after written notification of such 36 

 event is sent by counsel for Settling Defendants or Lead Plaintiff to the Settlement Administrator: (1) the Settlement Administration and Distribution Accounts (including accrued interest), less expenses and any costs which have been disbursed or accrued, and less any Taxes and Tax Expenses paid or incurred pursuant to ¶ 35 above, shall be refunded by the Settlement Administrator to AIPC's Insurance Carriers in proportion to their respective contributions thereto; (2) AIPC's obligation to cause securities to be issued pursuant to any provision in the Stipulation shall be extinguished. In such event, any tax refund owing to the Settlement Administration and Distribution Accounts shall also be refunded and paid to AIPC's Insurance Carriers in proportion to their respective contributions thereto. At the request of AIPC, the Settlement Administrator or its designee shall apply for any such refund and pay the proceeds, less the cost of obtaining the tax refund, to AIPC's Insurance Carriers. 69. In the event that the Stipulation is not approved by the Court, or the Settlement set forth in the Stipulation is terminated or fails to become effective in accordance with its terms, this Stipulation and all negotiations and proceedings relating hereto shall be without prejudice to any or all Settling Parties who shall be restored to their respective positions in the Action as of July 2, 2007. In such event, the terms and provisions of the Stipulation, with the exception of ¶¶ 8 and 68, shall have no further force and effect with respect to the Settling Parties and shall not be used in the Action or in any other proceeding for any purpose, and any Judgment or Order entered by the Court in accordance with the terms of the Stipulation shall be treated as vacated, nunc pro tunc. 70. If a case is commenced in respect to AIPC or any of AIPC's Insurance Carriers under Title 11 of the United States Code (Bankruptcy), or a trustee, receiver or conservator is appointed under any similar law, and in the event of the entry of an order of a 37 

 court of competent jurisdiction determining the transfer of the Settlement Cash, or any portion thereof, by or on behalf of AIPC or any of AIPC's Insurance Carriers to be a preference, voidable transfer, fraudulent conveyance or similar transaction, then at Lead Plaintiff's option, this Settlement, and the releases given and Judgment entered in favor of all Settling Defendants pursuant to this Stipulation, shall be null and void. 71. Neither a modification nor a reversal on appeal of (a) any Plan of Allocation, (b) any amount of attorneys' fees, costs, expenses and interest to Lead Counsel and/or Plaintiff's Counsel, or (c) any Compensatory Award to Lead Plaintiff, as described in ¶ 1(h), shall constitute a condition to the Effective Date or grounds for cancellation and termination of the Stipulation. MISCELLANEOUS PROVISIONS 72. The Settling Parties (a) acknowledge that it is their intent to consummate this Settlement and Stipulation; and (b) agree to cooperate to the extent necessary to effectuate and implement all terms and conditions of the Stipulation and to exercise their best efforts to accomplish the foregoing terms and conditions of the Stipulation. 73. The Settling Parties agree that during the course of this Action, the Settling Defendants, Lead Plaintiff, and their respective counsel complied with the requirements of Rule 11 of the Federal Rules of Civil Procedure. 74. The Stipulation or Settlement shall not be deemed, or offered or received in evidence as a presumption, a concession, or an admission of any fault, liability or wrongdoing by any party, except as required to enforce the Settlement. They shall not be offered or received in evidence or otherwise used by any person in this or any other action or proceeding, whether civil, criminal, or administrative. The Settlement and any provisions contained herein, are subject 38 

 to the "settlement privilege" set forth in Federal Rule of Evidence 408. The Settlement and any provisions contained herein, shall not be deemed, or offered or received in evidence as a presumption, a concession, or an admission of any fault, liability or wrongdoing by any party, except as required to enforce the Settlement. They shall not be offered or received in evidence or otherwise used by any person in this or any other action or proceeding, whether civil, criminal, or administrative. 75. All of the Exhibits to the Stipulation are material and integral parts hereof and are fully incorporated herein by this reference. 76. The waiver by one party of any breach of this Stipulation by any other party shall not be deemed a waiver of any other prior or subsequent breach of this Stipulation. 77. The Stipulation may be amended or modified, as is necessary to effect the terms of the Settlement, only by a written instrument signed by or on behalf of all Settling Parties or their successors-in-interest. 78. The Stipulation and the Exhibits attached hereto constitute the entire agreement among the Parties hereto; in particular, it is understood and agreed that there are no collateral or oral agreements between the Settling Parties that are not expressed in this Stipulation and its Exhibits. The Lead Plaintiff and the Settling Defendants expressly warrant that, in entering into this Stipulation, they relied solely upon their own knowledge and investigation, and not upon any promise, representation, warranty, or other statement by any party or any person representing any party to this Stipulation, not expressly contained in this Stipulation and its Exhibits. Except as otherwise provided herein, each party shall bear its own costs. 79. Lead Counsel, on behalf of the Class and Stub Period Class, is expressly 39 

 authorized by the Lead Plaintiff to take all appropriate action required or permitted to be taken by the Class and Stub Period Class pursuant to the Stipulation to effectuate its terms and also is expressly authorized to enter into any modifications or amendments to the Stipulation on behalf of the Class and Stub Period Class which it deems appropriate. 80. Each counsel or other Person executing the Stipulation or any of its Exhibits on behalf of any party hereto hereby warrants that such person has the full authority to do so. All orders and agreements entered during the course of the Action relative to the confidentiality of information shall survive this Stipulation. 81. The Stipulation may be executed by facsimile and in one or more counterparts. All executed counterparts and each of them shall be deemed to be one and the same instrument. Counsel for the Parties to the Stipulation shall exchange among themselves original signed counterparts, and a complete set of original executed counterparts shall be filed with the Court. 82. The Stipulation shall be binding upon, and inure to the benefit of, the successors and assigns of the Settling Parties hereto. 83. The Court shall retain jurisdiction with respect to implementation and enforcement of the terms of the Stipulation, and all Settling Parties hereto and their counsel submit to the jurisdiction of the Court for purposes of implementing and enforcing the Settlement embodied in the Stipulation. 84. The Stipulation and the Exhibits hereto shall be considered to have been negotiated, executed and delivered, and to be wholly performed, in the State of Missouri, and the rights and obligations of the parties to the Stipulation shall be construed and enforced in accordance with, and governed by, the laws of the State of Missouri without giving effect to that 40 

 state's choice of law principles. IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be executed, by their duly authorized attorneys, as of October 26, 2007. DATED: 10/26/07 POMERANTZ HAUDEK BLOCK GROSSMAN & GROSS LLP By: /s/ Marc I. Gross ------------------------------------- Stanley M. Grossman, Esq. Marc I. Gross, Esq. Daniel L. Berger, Esq. Jason C. Cowart, Esq. 100 Park Avenue, 26th Floor New York, New York 10017 Telephone: (212) 661-1100 Facsimile: (212) 661-8665 POMERANTZ HAUDEK BLOCK GROSS & GROSSMAN LLP Patrick V. Dahlstrom, Esq. Leigh Handelman, Esq. One North LaSalle Street, Suite 2225 Chicago, Illinois 60602-3908 Telephone: (312) 377-1181 Facsimile: (312) 377-1184 Attorneys for Lead Plaintiff Iron Workers Local 40, 361 and 417 Union Security Funds, Individually and On Behalf of All Others Similarly Situated 41 

 DATED: 10/26/07 DAVIS POLK & WARDWELL By: /s/ James H.R. Windels ------------------------------------- James H.R. Windels Edmund Polubinski III 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 Facsimile: (212) 450-3800 DATED: 10/26/07 BLACKWELL SANDERS PEPER MARTIN LLP By: /s/ Michael Thompson ------------------------------------- Michael Thompson 4801 Main Street, Suite 1000 Kansas City, Missouri 64112 Telephone: (816) 983-8000 Facsimile: (816) 983-8080 Attorneys for Defendants American Italian Pasta Company, Walter N. George, Jerry H. Dear, William R. Patterson, James A. Heeter, and Jonathan E. Baum DATED: 10/26/07 BRYAN CAVE By: /s/ Christopher C. Javillonar ------------------------------------- Fred L. Sgroi W. Perry Brandt Christopher C. Javillonar 1200 Main Street, Suite 3500 Kansas City, Missouri 64105 Telephone: (816) 374-3200 Facsimile: (816) 374-3300 Attorneys for Defendant Timothy Webster 42 

 DATED: 10/26/2007 LATHROP & GAGE, L.C. By: /s/ Jean Paul Bradshaw II ------------------------------------- Jean Paul Bradshaw, II 2345 Grand Avenue, Suite 2800 Kansas City, Missouri 64108-2684 Telephone: (816) 292-2000 Facsimile: (816) 292-2001 Attorneys for Defendant Warren B. Schmidgall DATED: 10/26/07 BERKOWITZ OLIVER WILLIAMS SHAW & EISENBRANDT LLP By: /s/ James L. Eisenbradt ------------------------------------- James L. Eisenbrandt David F. Oliver Nick J. Kurt 2600 Grand Boulevard, Suite 1200 Kansas City, Mssouri 64108 Telephone: (816) 561-7007 Facsimile: (816) 561-1888 Attorneys for Defendant George D. Shadid DATED: Oct. 26, 2007 ROUSE HENDRICKS GERMAN MAY PC By /s/ William D. Beil ------------------------------------- Charles W. German William D. Beil Brandon J.B. Boulware 1010 Walnut Street, Suite 400 Kansas City, Missouri 64106 Telephone: (816) 471-7700 Facsimile: (816) 471-2221 Attorneys for Defendant Horst W. Schroeder 43