IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

IN RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No.COMPANY SECURITIES ) 05-CV-0725-W-ODSLITIGATION )

STIPULATION OF SETTLEMENTWITH 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.' 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.

1. 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 ofKansas 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.

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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.

1. 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

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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.

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III. DISCOVERY, INVESTIGATION, AND RESEARCH CONDUCTED BY LEADCOUNSEL

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.

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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 ANDSETTLEMENT

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

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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:

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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,

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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;

(1) "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 Plaintiffs

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;

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(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;

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(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

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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

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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;

(11) "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;

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(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 doesnot know or suspect to exist in his favor at the time of executingthe release, which if known by him must have materially affectedhis 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

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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

agrees 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

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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

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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:

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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 Plaintiffs Counsel will receive 50% of the

increase;

(iii) greater than $13.50 per share - members of the Class and StubPeriod Class or Plaintiff's Counsel will receive no further benefitof 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

Plaintiffs 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 beentitled to the Settlement Securities (i) less shares worth 50% ofthe incremental value resulting from the stock price's exceeding

$10.75; (ii) less the number of securities awarded to Plaintiff'sCounsel by the Court in the Settlement Securities Fee and ExpenseAward. In this case, 1,396,276 shares (1,458,333 - ((0.5 x $1.00 x1,458,333)/$11.75)), less the number of securities awarded to

Plaintiffs Counsel by the Court in the Settlement Securities Feeand 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 beentitled to the Settlement Securities (i) less shares worth 50% ofthe incremental value resulting from the $2.75 of the stock price'sgain between $10.75 and $13.50; (ii) less 100% of the incrementalvalue resulting from the stock price's gain above $13.50; (iii) lessthe number of securities awarded to Plaintiffs Counsel by theCourt in the Settlement Securities Fee and Expense Award;provided that the value of the securities awarded to Plaintiff'sCounsel on the Fee Award Valuation Date and the securitiesawarded 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

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$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 Plaintiffs 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

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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 AfterEntry 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 the

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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 Plaintiffs 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

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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 Plaintiffs 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 Settlement

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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)(1), 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

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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

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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

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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

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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.

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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 Plaintiffs 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 ANDSUPERVISION 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

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 EXPENSESAND 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)).

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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 Plaintiffs 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 Stipulation

34

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 Plaintiffs 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 Plaintiffs 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: (C 26 l07 POMERAI;?

By:l1 V {e^Stanley M. Grossman, Esq,Marc I. Gross, Esq.Daniel L. Berger, Esq.Jason C. Cowart, Esq,100 Park Avenue, 26th FloorNew York, New York 10017Telephone : (212) 661-1100Facsimile : (212) 661-8665

POMERANTZ HAUDEK BLOCK GROSS &GROSSMAN LLPPatrick V. Dahlstrom, Esq.Leigh Handelman, Esq.One North LaSalle Street, Suite 2225Chicago, Illinois 60602-3908Telephone: (312) 377-1181Facsimile: (312) 377-1184

Attorneys for Lead PlaintiffIron Workers Local 40,361 and 417 Union Security Funds, Individuallyand On BehalfofAll Others Similarly Situated

41

DATED: 10 u i DAVIS POLK & WARDWELL

By: ^ ^^̂ ?̂J`^Jame .R . WindelsEdmund Polubinski III450 Lexington AvenueNew York, New York 10017Telephone: (212) 450-4000Facsimile : (212) 450-3800

DATED: BLACKWELL SANDERS PEPER MARTIN LLP

By:Michael Thompson4801 Main Street , Suite 1000Kansas City, Missouri 64112Telephone: (816) 983-8000Facsimile: (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: BRYAN CAVE

By:Fred L. SgroiW. Perry BrandtChristopher C. Javillonar1200 Main Street, Suite 3500Kansas City, Missouri 64105Telephone: (816) 374-3200Facsimile: (816) 374-3300

Attorneys for Defendant Timothy Webster

42

DATED: DAVIS POLK & WARDWELL

By:James H.R. WindelsEdmund Polubinski III4S0 Lexington AvenueNew York, New York 10017Telephone: (212) 450-4000Facsimile: (212) 450-3800

DATED: I O l0 0 BLACKWELL SANDERS PEPER MARTIN LLP

BY- rMichael Thompson4801 Main Street, Suite 1000Kansas City, Missouri 64112Telephone : (816) 983-8000Facsimile: (816) 983-8080

Attorneysfor Defendants American Italian PastaCompany, Walter N George, Jerry H. Dear,Vlliam k Patterson, James A. Heeter, andJonathan E. Baum

BATED: BRYAN CAVE

By:Fred L. SgroiW. Perry BrandtChristopher C. Javillonar1200 Main Street, Suite 3500Kansas City, Missouri 64105Telephone: (816) 374-3200Facsimile: (816) 374-3300

Attorneysfor Defendant Timothy Webster

42

DATED: DAVIS POLK & WARDWELL

By:James H.R. WindelsEdmund Polubinski III450 Lexington AvenueNew York, New York 10017Telephone: (212) 450-4000Facsimile: (212) 450-3800

DATED: BLACKWELL SANDERS PEPER MARTIN LLP

By,Michael Thompson4801 Main Street, Suite 1000Kansas City, Missouri 64112Telephone: (816) 983-8000Facsimile: (816) 983-8080

Attorneys.for Defendants American Italian PastaCompany, Walter N. George, Jerry H. Dear,William R. Patterson, James A. Heeter, andJonathan E. Baum

DATED : p 2G n BRYAN CAVE

ri

FL.Fred S ro

W. Perry BrandtChristopher C. Javillonar1200 Main Street , Suite 3500Kansas City , Missouri 64105Telephone: (816) 374-3200Facsimile: (816) 374-3300

Attorneysfor Defendant Timothy Webster

42

DATED : ( Z 407 LATHROP & GAGE, L.C.

DATED:

By:Jean P Bradshaw, II2345 nd Avenue, Suite 2800Kansas City, Missouri 64108-2684Telephone : (816) 292-2000Facsimile : (816) 292-2001

Attorneysfor Defendant Warren B, Schmidgall

BERKOWITZ OLIVER WILLIAMS SHAW &EISENBRANDT LLP

By:

James L. EisenbrandtDavid F. OliverNick J. Kurt2600 Grand Boulevard, Suite 1200Kansas City, Mssouri 64108Telephone: (816) 561-7007Facsimile: (816) 561-1888

Attorneys for Defendant George D. Shadid

DATED: ROUSE HENDRICKS GERMAN MAY PC

ByCharles W. GermanWilliam D. BeilBrandon J.B. Boulware1010 Walnut Street, Suite 400Kansas City, Missouri 64106Telephone: (816) 471-7700Facsimile: (816) 471-2221

Attorneysfor Defendant Horst W. Schroeder

43

DATED: LATHROP & GAGE, L.C.

By:Jean Paul Bradshaw, II2345 Grand Avenue, Suite 2800Kansas City, Missouri 64108-2684Telephone: (816) 292-2000Facsimile : (816) 292-2001

Attorneys for Defendant Warren B. Schmidgall

DATED: BERKOWITZ OLIVER WILLIAMS SHAW &EISENBRAN T LP

/By.

James L. Eisenbrandt.David F. OliverNick J. Kurt2600 Grand Boulevard, Suite 1200Kansas City, Mssouri 64108Telephone: (816) 561-7007Facsimile: (816) 561-1888

Attorneys for Defendant George D. Shadid

DATED: ROUSE HENDRICKS GERMAN MAY PC

ByCharles W. GermanWilliam D. BeilBrandon J.B. Boulware1010 Walnut Street, Suite 400Kansas City, Missouri 64106Telephone: (816) 471-7700Facsimile: (816) 471-2221

Attorneys for Defendant Horst W. Schroeder

43

DATED: LATHROP & GAGE, L.C.

By:Jean Paul Bradshaw, II2345 Grand Avenue, Suite 2800Kansas City, Missouri 64108-2684Telephone: (816) 292-2000Facsimile: (816) 292-2001

Attorneys for Defendant Warren B. Schmidgall

DATED: BERKOWITZ OLIVER WILLIAMS SHAW &EISENBRANDT LLP

By:

James L. EisenbrandtDavid F. OliverNick J. Kurt2600 Grand Boulevard, Suite 1200Kansas City, Mssouri 64108Telephone: (816) 561-7007Facsimile: (816) 561-1888

Attorneys for Defendant George D. Shadid

DATED: OCY- a2GU ROUSE HENDRICKS GERM AY PC

By 0--f)Charles W. GermanWilliam D. BeilBrandon J.B. Boulware1010 Walnut Street, Suite 400Kansas City, Missouri 64106Telephone : (816) 471-7700Facsimile: (816) 471-2221

Attorneys for Defendant Horst W. Schroeder

43

EXHIBIT A

IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

IN RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No.COMPANY SECURITIES ) 05-CV-0725-W-ODSLITIGATION )

ORDER PRELIMINARILY APPROVING PARTIAL SETTLEMENTAND SCHEDULING SETTLEMENT HEARING

The Court received the Stipulation of Settlement, dated as of October 26,

2007 (the "Stipulation" or "Partial Settlement"), which was entered into by Lead Plaintiff

and all Defendants other than defendant Ernst and Young, LLP. The Court has reviewed

the Stipulation and its attached exhibits. Based upon the materials submitted, and good

cause appearing,

IT IS HEREBY FOUND, CONCLUDED AND ORDERED as follows:

1. The Court, for purposes of this Preliminary Order, adopts all defined terms

as set forth in the Stipulation, and incorporates them herein by reference as if fully set

forth.

2. The Court preliminarily approves: (a) the Partial Settlement of the Action

as set forth in the Stipulation; and (b) the proposed Plan of Allocation described in the

Notice.

3. By Order dated March 26, 2007, the Court certified the following class: all

purchasers of the common stock of AIPC on or after January 23, 2002, who held shares

of common stock of AIPC on August 9, 2005 (the "Class")

4. The Court hereby excludes from the Class the Defendants and their

corporate affiliates, current or former officers or directors, successors, heirs, assigns,

executors, personal representatives, marital communities, and immediate family

members.

5. The Court also herby certifies the following additional class, for

settlement purposes only: 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 (the

"Stub Period Class").

6. Excluded from the Stub Period Class shall be the Defendants and their

corporate affiliates, current or former officers or directors, successors, heirs, assigns,

executors, personal representatives, marital communities, and immediate family

members.

7. The Court finds that each element for certification of the Stub Period Class

pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure is met, i.e., (i) members

of the Stub Period Class are so numerous as to make joinder impracticable; (ii) the claims

of the Lead Plaintiff are typical of the claims of the Stub Period Class it seeks to

represent; (iii) the interests of the members of the Stub Period Class will be, and have

been, fairly and adequately represented by the Lead Plaintiff and Lead Counsel in this

litigation; (iv) a class action is superior to other available methods for the fair and

efficient adjudication of this litigation; (v) common questions of law and fact exist as to

all members of the Stub Period Class; and (vi) such common questions predominate over

any questions solely affecting individual members of the Stub Period Class.

2

8. Pursuant to Rule 23(c)(1)(B), the Court determines that the claims of the

Stub Period Class include whether Defendants issued false and misleading statements

during the Stub Period.

9. The Court approves as to form and content , and for distribution to

members of the Class and Stub Period Class, the Notice of Pendency and Proposed

Partial Settlement of Class Action (the "Notice"), substantially in the form of Exhibit A

attached hereto, a Proof of Claim and Release, substantially in the form of Exhibit B

attached hereto and; and a Summary Notice of Pendency and Proposed Partial Settlement of

Class Action ("Summary Notice"), substantially in the form of Exhibit C attached hereto.

Lead Counsel are authorized to act on behalf of the Class and Stub Period Class with

respect to all acts required by, or which may be given pursuant to, the Stipulation or such

other acts which are reasonably necessary to consummate the proposed settlement set

forth in the Stipulation.

10. Lead Counsel is hereby authorized to retain the firm of A.B. Data, Ltd., as

Settlement Administrator of the Partial Settlement, to supervise and administer the notice

and claim procedures.

11. The Court will hold a Settlement Hearing on at in

the Charles Evans Whittaker Courthouse, 400 E. 9th Street, Kansas City, Missouri, 64106 to:

(i) determine whether the Partial Settlement should be finally approved as fair, reasonable,

adequate and in the best interests of the Class and Stub Period Class, (ii) determine

whether the proposed Plan of Allocation is fair, reasonable, adequate and in the best

interests of the Class and Stub Period Class, (iii) determine whether a Judgment

3

substantially in the form attached as Exhibit C to the Stipulation should be entered

dismissing all claims in the Action against the Released Parties with prejudice, (iv) rule

upon an application by Lead Counsel for an award of attorneys' fees and reimbursement of

expenses, establishment of a litigation fund to defray deposition and expert related

expenses associated with the continued litigation against Ernst on behalf of the Class,

reimbursement of expenses for the Lead Plaintiff, and a Compensatory Award to Lead

Plaintiff, and (v) consider any other matters that may properly be brought before the Court

in connection with the Partial Settlement.

12. Notice of the Partial Settlement and the Settlement Hearing shall be given by

the Settlement Administrator to members of the Class and Stub Period Class who can be

identified through reasonable effort (i) by mailing a copy of the Notice via first class

postage pre-paid mail no later than ten (10) days following entry of this Order, and (ii) by

publishing a copy of the Summary Notice in The Wall Street Journal no later than

twenty-four (24) days following entry of this Order. Brokerage firms and other nominees

for beneficial owners of AIPC common stock who receive the Notice are ordered to

forward promptly a copy of the Notice to the beneficial owners of those securities.

13. The costs of such Notice will be paid out of the Settlement Administration

Account.

14. The Court finds and concludes, with respect to both the form of the Notice

given and the procedure used to give notice, that the Notice provided for in this Order is

the best notice reasonably practicable under the circumstances, fully satisfies the

requirements of Rule 23 of the Federal Rules of Civil Procedure, Section 2113(a)(7) of the

4

Securities Exchange Act (the "Exchange Act"), as amended by the Private Securities

Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. § 78u-4(a)(7), the Constitution

of the United States, and any other applicable law, and constitutes due and sufficient notice

to all persons entitled to receive notice.

15. The Settlement Hearing may be adjourned by the Court without notice to

the members of the Class and Stub Period Class. The Court may consider modifications

of the Partial Settlement (with the consent of the Lead Plaintiff and the Settling

Defendants) without further notice to the members of the Class and Stub Period Class.

16. Lead Counsel shall file papers in support of the Partial Settlement, Plan of

Allocation, and requests for an award of Attorneys Fees, reimbursement of expenses,

establishment of a litigation fund to defray deposition and expert related expenses

associated with the continued litigation against Ernst on behalf of the Class, and a Lead

Plaintiff Compensatory Award no later than . Such papers, along with a

copy of the Stipulation of Settlement, shall be posted at www.pomlaw.com.

17. Any member of the Class or the Stub Period Class may request to be

excluded from the Class or Stub Period Class , respectively . The request for exclusion

must be received by the Settlement Administrator by , must be in writing, and

must include the following information : ( i) the person ' s name, address , telephone number,

(ii) the dates, number of shares , and prices at which that the person requesting exclusion

purchased and sold AIPC common stock during the Class Period and the Stub Period, and

documentation thereof, and ( iii) whether such person desires to be excluded from the

Class, the Stub Period Class, or both . The request to be excluded must be mailed by first

5

class postage pre-paid mail (or delivered by hand or overnight delivery service) as

specified in the Notice. Any person who requests exclusion in accordance with the terms

stated in this Order shall not be a member of the Class and/or Stub Period Class, shall not

be bound by the terms of the Partial Settlement, and shall have no right to participate in

the distribution of the Partial Settlement proceeds.

18. Any member of the Class or Stub Period Class who does not submit a

request to be excluded in the manner stated in this Order shall be deemed to have waived

his, her or its right to be excluded.

19. Any member of the Class or Stub Period Class who does not request

exclusion from the Class or Stub Period Class in the manner required by this Order may

object to the Partial Settlement, Plan of Allocation, and/or the request by Lead Counsel

for attorneys' fees and reimbursement of expenses, the establishment of a litigation fund

to defray deposition and expert related expenses associated with the continued litigation

against Ernst on behalf of the Class, and the Compensatory Award to Lead Plaintiff, and

may otherwise request to be heard in person or by counsel concerning any matter

properly before the Court at the Settlement Hearing. The objection, statement or request

to be heard at the Settlement Hearing must be received no later than , must be

in writing, and must include the following information: (i) the person's name, address and

telephone number, (ii) the dates, number of shares and prices at which the person purchased

and sold AIPC during the Class Period or Stub Period, and documentation thereof, (iii) a

detailed statement of the basis for the person's objections to or comments upon the Partial

Settlement, the request for attorneys' fees and reimbursement of expenses, or any other

matter before the Court, and (iv) any supporting papers, including all documents and

6

writings that the person desires the Court to consider. The objection, statement or request

to be heard at the Settlement Hearing must be filed with the Clerk of the Court and must be

delivered by hand, overnight delivery, or first class mail to the counsel for the parties

identified in the Notice at the same time that the objection, statement or request to be heard

is filed with the Clerk of the Court. Any person filing an objection may be deposed prior to

the Settlement Hearing by Lead Counsel. Responses to any such objections shall be filed

by Lead Counsel by

20. Any member of the Class or Stub Period Class who does not file an

objection in the manner stated in this Order, shall be deemed to have waived his, her or

its right to object to the Partial Settlement, Plan of Allocation, the request for attorneys'

fees and reimbursement of expenses, the establishment of a litigation fund to defray

deposition and expert related expenses associated with the continued litigation against

Ernst on behalf of the Class, the Compensatory Award to Lead Plaintiff, or otherwise be

heard concerning such matters, and shall forever be barred from objecting to such matters,

or otherwise being heard concerning such matters, in this or any other proceeding.

21. The Proof of Claim and Release, substantially in the form set forth in

Exhibit B hereto, shall be made available to each identified member of the Class and Stub

Period Class under the conditions set forth in the Notice.

22. Any member of the Class or Stub Period Class who does not submit a

request to be excluded, and who wants to participate in the Partial Settlement, shall

complete and submit a Proof of Claim and Release in accordance with the instructions

contained therein . Unless the Court orders otherwise, all Proofs of Claim and Releases

7

must be submitted no later than Any member of the Class or Stub Period

Class for whom a timely and valid Proof of Claim and Release has not been submitted

within the time provided for shall, unless otherwise ordered by the Court, be barred from

sharing in the distribution of the proceeds of the Partial Settlement, but shall nonetheless

be bound by the terms of the Judgment.

23. Lead Plaintiff may alter the Plan of Allocation (subject to Court approval)

without any further notice to members of the Class or Stub Period Class, unless such

members expressly request notice of alteration of the plan by submitting such request to

the Settlement Administrator no later than

24. This Order, the Partial Settlement, and any of their terms, and all

negotiations, discussions and proceedings in connection with this Order and the Partial

Settlement, shall not constitute any evidence, or an admission by any of the Settling

Defendants or Released Parties (as those terms are defined in the Stipulation), that any acts

of wrongdoing have been committed and shall not be deemed to create any inference that

there is any liability on the part of any of the Settling Defendants or Released Parties.

This Order, the Partial Settlement, and any of their terms, and all negotiations, discussions

and proceedings in connection with this Order and the Partial Settlement, shall not be

offered or received in evidence or used for any other purpose in this or any other civil,

criminal, regulatory or administrative proceeding in any court, administrative agency,

arbitration forum, or other tribunal other than as may be necessary to enforce the terms of

this Order and/or the Partial Settlement.

8

25. In the event that the Partial Settlement fails to become effective in

accordance with its terms, or if the Judgment is not entered or is reversed, vacated, or

materially modified on appeal, this Order (except for this Paragraph) shall be null and

void, the Partial Settlement shall be deemed terminated pursuant to the terms of the

Partial Settlement, and the parties shall return to their positions as provided for in the

Partial Settlement.

Dated: , 2007

Kansas City, Missouri

SO ORDERED.

ORTIE D. SMITH, JUDGEUNITED STATES DISTRICT COURT

9

EXHIBIT B

IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

IN RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No.COMPANY SECURITIES ) 05-CV-0725-W-ODSLITIGATION

NOTICE OF PENDENCY AND PROPOSED PARTIAL SETTLEMENT OF CLASSACTION

TO: All persons who purchased American Italian Pasta Company ("AIPC") common stock

between January 23, 2002 and August 9, 2005 (the "Class), or between August 10, 2005 and

August 17, 2005 (the "Stub Period Class").

YOU ARE HEREBY NOTIFIED, pursuant to Rule 23 of the Federal Rules of Civil

Procedure ("Rule 23 ") and an Order of the United States District Court for the

Western District of Missouri (the "Court") of the pendency of a class action lawsuit on

behalf of the Class and Stub Period Class.

YOU ARE ALSO HEREBY NOTIFIED , pursuant to Rule 23 and an Order of the

Court, that there is a proposed partial settlement of certain claims in the lawsuit

against certain defendants . This partial settlement is on behalf of members of the Class

and the Stub Period Class . You could get a payment from the proposed settlement

described below.

A Federal Court authorized this Notice. This is not a solicitation from a lawyer.

This Notice explains important rights you may have. Your legal rights are affected whether or notyou act. Please read this notice carefully!

COVER PAGE REQUIRED BY FEDERAL LAW

1. Statement of Class Member 's Recovery: This Notice has been sent to you pursuant

to an order ofthe Court in the class action bearing the caption In re American Italian Pasta Company

Securities Litigation, No. 05-CV-0725-W-ODS (the "Action"). One ofthe purposes ofthis Notice is

to inform you of the proposed Partial Settlement of the Action with certain defendants for

approximately $25,000,000 ("Partial Settlement Amount"), comprised of $11,000,000 in cash, plus

certain interest, and $14,000,000 (subject to certain potential adjustments described below) worth of

AIPC common stock. This Notice describes the rights you may have in connection with the Partial

Settlement, what steps you may take in relation to the Partial Settlement, and provides information

about the hearing that will be held by the Court to consider the fairness, reasonableness, and adequacy

ofthe Partial Settlement. In order to receive financial proceeds from the Partial Settlement, you will

need to file a Proof of Claim and Release form, which is attached hereto.

2. Reasons for the Partial Settlement with Certain Defendants : The PartialSettlement resolves claims against AIPC and certain of its current and former officers and directors("Settling Defendants") regarding alleged violations ofthe federal securities laws. It does not resolveclaims against AIPC's independent auditor, Ernst & Young, LLP. By entering into the PartialSettlement, the Settling Defendants do not admit any allegations of wrongdoing. In light of theamount ofthe Partial Settlement and the immediacy ofrecovery to the members ofthe Class and StubPeriod Class, Lead Plaintiff believes that the proposed Partial Settlement is fair, reasonable andadequate, and in the best interests of the Class and the Stub Period Class. The Partial Settlementprovides a substantial benefit, namely $25,000,000 in cash and common stock, less the various

deductions and subject to certain potential adjustments described in this Notice, as compared to therisk that a similar, smaller, or no recovery would be achieved after a trial and appeals, possibly yearsin the future, in which the Settling Defendants would have the opportunity to assert substantialdefenses to the claims brought against them.

3. Statement of Average Amount of Damage Per Share : Lead Plaintiff and the

Settling Defendants do not agree on the average amount of damages per share that would be

recoverable if Lead Plaintiff were to have prevailed on each claim alleged. The issues on which the

parties disagree include: (1) the appropriate economic model for determining the amount by which

AIPC's common stock was allegedly artificially inflated (if at all); (2) the amount by which AIPC

common stock was allegedly artificially inflated (if at all); (3) the various market forces influencing

the trading price of AIPC common stock; (4) the extent to which external factors, such as general

market conditions, influenced the trading price ofAIPC common stock; and (5) the extent to which

the various matters that Lead Plaintiff alleged were false or misleading influenced (if at all) the

trading price of AIPC common stock.

4. In the opinion of Lead Plaintiff's Counsel, the Partial Settlement represents a

significant portion of the damages that would likely be awarded by a jury. More importantly, the

Partial Settlement represents a very significant portion of the damages that would likely be collected

from Settling Defendants, given the Company's limited resources to satisfy any potential judgment

and limited insurance coverage.

5. Lead Plaintiffs damages expert estimates that approximately 23.4 million shares ofAIPC common stock traded, and were damaged, during the Class and Stub Periods. Assuming thatthe owners of all affected AIPC shares elect to participate in the Partial Settlement, the averagerecovery per share could be $1.07, before deduction of any fees, expenses, costs, and awardsdescribed herein. The actual amount disbursed to members of the Class and Stub Period Class whoparticipate in the Partial Settlement may be more or less than this figure.

6. Statement of Attorney Fees and Expenses : Lead Plaintiff's Counsel has not

received any payment for its services in conducting this litigation on behalf ofLead Plaintiff and the

members of the Class and Stub Period Class, nor has it been reimbursed for its out-of-pocket

expenditures. Ifthe Partial Settlement is approved by the Court, such counsel will apply to the Court

for attorneys' fees not to exceed 25% ofthe Partial Settlement Amount (if awarded, such a fee would

approximate the aggregate lodestar ofplaintiffs' counsel to date), and reimbursement ofexpenses not

to exceed $1,250,000. Lead Plaintiff's Counsel will also request that $750,000 be set aside to

establish a litigation fund to defray deposition and expert related expenses associated with the

continued litigation against Ernst on behalf of the Class. Such fees and expenses shall be paid from

the Partial Settlement Amount. If the amount requested by counsel is approved by the Court, theaverage cost would be approximately $0.35 per damaged share. In addition, a Compensatory Awardfor the time and expenses incurred by Lead Plaintiff will be sought, not to exceed $40,000.

7. Identification of Lead Plaintiffs Counsel : For further information regarding thisPartial Settlement you may contact Marc I. Gross, Esq., Pomerantz Haudek Block Grossman & Gross

2

LLP, 100 Park Avenue, New York, NY 10017-5516, www.pomlaw.com . DO NOT CONTACTTHE COURT.

[END OF COVER PAG

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The only way to get a payment.

Get no payment. This is the only option thatallows you to ever be part of any other lawsuitagainst the Defendants with respect to the claimsin this case.Write to the Court and explain why you do notlike the Partial Settlement.You will be notified if the plan of allocation ofthe Partial Settlement is modified in any manner,including by Court order.Ask to speak in Court about the fairness of thePartial Settlement.Get no payment. Give up your rights.

Alternatively, submit a claim.

WHAT THIS NOTICE CONTAINS

Why did I get this Notice ? ........................

What is this Case about? What has happened so far?

How do I know if I am part of the Class or if I can participate in

the Partial Settlement? .............................................................

......................... Page 4

......................... Page 6

What rights do I have as a Member of the Class or the Stub Period Class?.....

.............. Page 8

.............. Page 9

Are the claims against Ernst, brought on behalf of the Class, affected by the proposedPartial Settlement? ..... ................................................................................................... Page 11

What recovery does the Partial Settlement provide? ............................................................ Page 11

Why is there a Partial Settlement? ........................................................................................ Page 13

What might happen if there was no Partial Settlement? ....................................................... Page 13

The Mediator's Statement Regarding the Partial Settlement ................................................ Page 15

How much will my payment be? What is the Plan of Allocation? ...................................... Page 15

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How do I participate in the Partial Settlement? What do I need to do? ............................... Page 19

What rights am I giving up by agreeing to the Partial Settlement? ...................................... Page 19

What payments are the attorneys for the Class and the Lead Plaintiffseeking for their work in this case? ................................................................................. Page 20

Are there other conditions that may affect the Partial Settlement or an award therefrom?.. Page 21

When and where will the Court decide whether to approve the Partial Settlementand related matters? Do I have to come to the Hearing? May I speak atthe Hearing if I don't like the Partial Settlement or the other mattersreferenced in this Notice? ................................................................................................. Page 21

What if I am a broker, bank or other nominee which bought shares,on someone else's behalf? ................................................................................................ Page 22

Can I see the Court file? Who should I contact if I have questions ? ................................... Page 23

WHY DID I GET THIS NOTICE?

8. A class action is a lawsuit in which one of more persons sues on behalf of all otherpersons who have similar claims.

9. On January 19, 2006, a complaint was filed in the United States District Court for the

Western District of Missouri (the "Court") against defendants American Italian Pasta Company

("AIPC" or the "Company"), Timothy S. Webster, Horst W. Schroeder, George D. Shadid, Warren B.

Schmidgall, Walter N. George, Jerry H. Dear, James E. Heeter, William R. Patterson, Johathan E.

Baum, and Ernst & Young, LLP ("Ernst") (all defendants other than Ernst are collectively referred to

as the "A1PC Defendants;" all defendants are collectively referred to as "Defendants"). This

complaint alleged that Defendants issued false and misleading statements, in violation of Sections

10(b) and 20(a) of the Securities Exchange Act of 1934.

10. On March 26, 2007, the Court certified this lawsuit as a class action on behalf of all

persons who purchased AIPC common stock on or after January 23, 2002, and who continued to hold

such shares on August 9, 2005 (the "Class").

11. On October 26, 2007, the Lead Plaintiff in this case entered into a proposed partial

settlement ("Partial Settlement") with the AIPC Defendants (the "Settling Defendants").

12. On , the Court granted preliminary approval of the proposed PartialSettlement. The Court also expanded the definition of those who may participate in the Partial

Settlement to include all members ofthe Class, as well as those who purchased AIPC stock on or after

August 10, 2005 and who continued to hold such shares on August 17, 2005 (the "Stub PeriodClass").

13. Although the proposed Partial Settlement seeks to resolve the claims against theSettling Defendants, the claims asserted against defendant Ernst will continue to be litigated on behalfof the Class (but not the Stub Period Class) regardless of whether the proposed settlement is

4

approved

14. YOU RECEIVED THIS NOTICE BECAUSE YOU HAVE A RIGHT TOKNOW THAT A CLASS ACTION HAS BEEN CERTIFIED AND THAT, IF YOU FITWITHIN THE DEFINITION OF THE CLASS OR THE STUB PERIOD CLASS, YOU WILLBE DEEMED PART OF THE CLASS OR THE STUB PERIOD CLASS UNLESS YOUEXPRESSLY EXCLUDE YOURSELF FROM IT IN WRITING PURSUANT TO THEINSTRUCTIONS BELOW. THIS NOTICE IS ALSO TO INFORM YOU OF THE NATUREOF THE ACTION AND OF YOUR RIGHTS IN CONNECTION WITH IT.

15. YOU ALSO RECEIVED THIS NOTICE BECAUSE, IF YOU ARE AMEMBER OF THE CLASS OR THE STUB PERIOD CLASS YOU HAVE A RIGHT TOKNOW ABOUT A PROPOSED PARTIAL SETTLEMENT WITH THE SETTLINGDEFENDANTS, BEFORE THE COURT DECIDES WHETHER TO APPROVE IT.

16. In that regard , the Notice explains your legal rights as a member of the Class

and the Stub Period Class, what benefits are available , who is eligible for them, and how to get

them. This Notice also provides information about a hearing to be held by the Court to

consider the fairness , reasonableness , and adequacy of the proposed Partial Settlement, to

consider the application by Lead Plaintiffs Counsel for attorney fees, reimbursement of

litigation expenses , and the establishment of a litigation fund to defray deposition and expert

related expenses associated with the continued litigation against Ernst on behalf of the Class,

and the application of Lead Plaintiff for a Compensatory Award.

17. If the Court approves the proposed Partial Settlement, and after any objections andappeals are resolved, a Settlement Administrator approved by the Court will make payments from the

fund created by the Partial Settlement to eligible claimants pursuant to a plan of allocation ("Plan ofAllocation").

18. The Settlement Hearing will be held on , at before the Honorable

Ortie D. Smith, United States District Judge, at the United States Courthouse, Charles EvansWhittaker Courthouse, 400 E. 9th Street, Kansas City, Missouri, 64106 (the "Settlement Hearing"). Thepurpose of the Settlement Hearing will be to determine:

5

a. Whether the Partial Settlement should be approved as fair, reasonable,adequate, and in the best interests of the Class and Stub Period Class;

b. Whether the Plan of Allocation is fair, reasonable, adequate, and in the bestinterests of the Class and Stub Period Class;

c. Whether the application by Lead Plaintiff's Counsel for an award of

attorneys' fees and expenses, the establishment of a litigation fund to defray

deposition and expert related expenses associated with the continued

litigation against Ernst on behalf of the Class, and a Compensatory Award to

Lead Plaintiff should be approved; and

Whether the Action should be dismissed with prejudice as against the Settling

Defendants.

The Court may adjourn or continue the Settlement Hearing without further notice to members of

the Class or Stub Period Class. The issuance of this Notice is not an expression of the Court's

opinion on the merits of any claim in the lawsuit, and the Court still has to decide whether to

approve the Partial Settlement. If the Court approves the Partial Settlement, payments will be

made after appeals are resolved and after the completion of all claims processing. Please be

patient.

WHAT IS THIS CASE ABOUT? WHAT HAS HAPPENED SO FAR?

Background

19. AIPC, which is headquartered in Kansas City, Missouri , is the largest producer and

marketer of dry pasta in North America.

20. 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" dating back to fiscal year 2000.

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-downsassociated with promotional allowances, and approximately $10 million in reserves and write-downsassociated with inventory.

21. On August 10, 2005, the price of AIPC' s common stock fell from $20.94 to $13.28per share . Following various reports indicating that certain AIPC representatives had either resignedor been terminated , on August 17, 2005, AIPC' s stock price fell again to $ 11.16 per share.

22. On October 27, 2005, AIPC announced that it would restate its financial statementsfor fiscal years 2002 -2004, as well as the first two quarters of fiscal year 2005.

23. Beginning in August 2005, putative class and derivative actions were filed againstDefendants in the United States District Court for the Western District of Missouri, alleging claims

6

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 ofthe City ofKansas City, Missouri Trust v. Patterson , 05-1139-CV-W-

ODS.

24. 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-725-W-ODS (the "Action").

25. On December 19, 2005, the Iron Workers Local 40, 361 and 417 Union Security

Funds ("Iron Workers Funds" or "Lead Plaintiff') was appointed Lead Plaintiff to prosecute all class

and derivative claims, and Pomerantz Haudek Block Grossman & Gross LLP was appointed sole

Lead Plaintiffs Counsel ("Lead Plaintiff's Counsel") of all class and derivative claims.

26. Following the appointment , Lead Plaintiffs 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 (the "SEC "); and analysis of publicly available trading

information.

27. An Amended Complaint for Class and Derivative Claims 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 ("Federal Securities Claims").

28. With respect to the derivative claims, Lead Plaintiff asserted, among other things, that

the Individual Defendants breached fiduciary duties owed to the Company.

29. The named defendants to the Federal Securities 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) (collectively the

"AIPC Defendants" or "Settling Defendants"); and Ernst & Young LLP ("Ernst"), the Company'sindependent auditor (Ernst and the AIPC Defendants are collectively the "Defendants").

30. With respect to the Federal Securities Claims asserted against the AIPC Defendants,Lead Plaintiff alleged that these defendants made false statements with scienter on various datesbeginning on January 23, 2002 and continuing through May 11, 2005. With respect to the FederalSecurities Claims asserted against Defendant Ernst, the CAC alleged that Ernst issued false auditopinion letters, with scienter, on December 20, 2002, December 30, 2003 and December 15, 2004.

7

31. On June 19, 2006, the Court denied motions by certain Defendants to dismiss the

Federal Securities Claims (except against David B. Potter), but dismissed the derivative claims for

failure to make a pre-suit demand. Other derivative lawsuits not consolidated with the Action are

currently pending.

32. On March 26, 2007, the Court certified the Federal Securities Claims as a class actionon behalf of all persons who purchased AIPC stock on or after January 23, 2002 and who continued tohold such shares on August 9, 2005 (the "Class").

33. Discovery was underway at the time that certain parties entered into settlement

negotiations. A trial date is set for September, 2008. Proceedings with respect to Ernst remain

pending.

Settlement Negotiations and Mediation

34. In early 2007, Lead Plaintiffs Counsel and counsel for AIPC engaged in numerous

telephone calls concerning the possibility of a partial settlement.

35. Thereafter , Lead Plaintiff and AIPC agreed to mediation . Gary V. McGowan (the"Mediator"), who is widely recognized to be one of the nation ' s leading mediators , was selected tofacilitate the negotiations.

36. Prior to the first mediation conference, Lead Plaintiff's 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 the parties' respective views about the strengths and weaknesses ofthe claims alleged, andhighlighted the critical issues that would determine whether a settlement was possible.

37. At the first mediation conference, Lead Plaintiffs 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 partial settlement was reached on July 2, 2007. Settlement

negotiations continued after that date until the signing ofthe Stipulation of Settlement on October 26,

2007 (the "Stipulation"). Pursuant to the Stipulation, all Federal Securities Claims asserted against

the AIPC Defendants will be resolved in exchange for the consideration discussed below.

Discovery, Investigation , and Research Conducted by Lead Plaintiff's Counsel

38. Prior to commencement of the mediation, Lead Plaintiffs Counsel conductedsignificant discovery and investigation during the prosecution of the Action. This discovery andinvestigation included: (1) review and analysis of over 1.2 million pages of documents produced inthis Action; (2) review and analysis of anonymous letters sent to Ernst during the Class Period; (3)interviews with various individuals, including former AIPC employees; (4) consultations withaccounting experts knowledgeable about the type of accounting and financial statement issues alleged;

(5) consultations with damages experts; (6) review ofAIPC's public filings, annual reports, and otherpublic statements; (7) research of the applicable law with respect to the claims asserted in the Action

8

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.

2008.39. The litigation against Ernst is continuing. A trial is presently scheduled for September

HOW DO I KNOW IF I AM PART OF THE CLASS OR STUB PERIOD CLASS ORIF I CAN PARTICIPATE IN THE PARTIAL SETTLEMENT?

RECEIPT OF THIS NOTICE DOES NOT NECESSARILY MEAN THATYOU ARE A MEMBER OF THE CLASS OR STUB PERIOD CLASS ORTHAT YOU CAN PARTICIPATE IN THE PARTIAL SETTLEMENT.

40. Lead Plaintiff originally sought certification of the Federal Securities 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 17, 2005. However, by order of the Court dated March 26,

2007, the Court determined that persons who purchased shares of AIPC from August 10, 2005

through August 17, 2005 (the "Stub Period Class") were on a different footing than those who

purchased on or after January 23, 2002 and who continued to hold such shares on August 9, 2005 (the

"Class").

41. Thus, the Court did not include the Stub Period in the definition of the Class, which

was limited to those who purchased common stock of AIPC on or after January 23, 2002, and held

shares of the common stock of American Italian Pasta Company on August 9, 2005.

42. As part of the Partial Settlement, Lead Plaintiff and the Settling Defendants agreedthat the Partial Settlement would include members of the Class and the Stub Period Class. This isbecause: (1) members of the Stub Period Class have the right to challenge, on appeal, the Court'soriginal decision to exclude them from the Class and the right to initiate individual securities fraudactions against the Settling Defendants; and (2) members of the Class and Stub Period Class share incommon the issue of whether the August 9, 2005 disclosure was a partial or full disclosure of theSettling Defendants' alleged wrongdoing.

43. By order of the Court dated [ ], the Court agreed to expand the group

ofpeople who may participate in the Partial Settlement and certified the Stub Period Class. Thus, youmay participate in the Partial Settlement ifyou purchased common stock of AIPC on or after January23, 2002, and held shares of the common stock of American Italian Pasta Company on August 9,2005 (i.e., you are a member of the Class); or purchased AIPC common stock on or after August 10,2005 and continued to hold such shares as ofAugust 17, 2005 (i.e., you are a member ofthe StubPeriod Class). Excluded from the Class and Stub Period Class are the Defendants and their corporateaffiliates; any current or former officers or directors of AIPC; or successors, heirs, assigns, executors,personal representatives, marital communities and immediate family members.

9

44. You are not a member of the Class or Stub Period Class if both your purchase andsale ofAIPC common stock occurred before August 9, 2005 with respect to the Class, or August 17,2005 with respect to the Stub Period Class.

45. All members of the Class and the Stub Period Class are eligible to participate in thePartial Settlement. However, the continuing class action against Ernst will not be pursued on behalfof the Stub Period Class, but only on behalf of the Class.

WHAT RIGHTS DO I HAVE AS A MEMBER OF THE CLASS OR THE STUBPERIOD CLASS?

46. YOU NEED NOT TAKE ANY ACTION TO BE A MEMBER OF THE CLASS

OR THE STUB PERIOD CLASS. If you take no action in response to this Notice, you will

automatically be considered to be a member of the Class and/or the Stub Period Class, to the extent

you fit within the definitions outlined above.

47. It is important to note, however, that your legal rights will be affected by remaining inthe Class and/or the Stub Period Class; specifically, you will not be able to sue, continue to sue, or bepart of any other lawsuit against the Defendants relating to the issues arising in the Action. It alsomeans that any judgment that is subsequently entered in the Action, or orders of the Court, will beapplicable to you and will, therefore, be legally binding.

48. Thus, by remaining in the Class and/or the Stub Period Class, you will be subject tothe Judgment contemplated by the Partial Settlement and you will be bound by the release ofReleasedClaims contained therein. Similarly, by remaining in the Class, you will be bound by anyjudgment ororder that is entered with respect to the ongoing claims against Ernst (as discussed above, the claimsagainst Ernst are not being pursued on behalf of the Stub Period Class).

49. Asa member of the Class and/or Stub Period Class, however, you are entitled to sharein any recovery obtained in this Action based upon a plan of allocation that will be approved by theCourt. Thus, by remaining in the Class and/or Stub Period Class, you are entitled to share in therecovery from the Partial Settlement as described in this Notice. Similarly, by remaining in the Class,you will be entitled to share in a recovery if one is obtained with respect to the ongoing claims againstErnst (as discussed above, the claims against Ernst are not being pursued on behalf ofthe Stub PeriodClass).

50. Asa member of the Class and/or Stub Period you are also entitled to notice and theopportunity to file an objection with the Court if you do not agree with all or part of a proposedsettlement. Thus, this Notice describes the way in which you can object to the proposed PartialSettlement. Similarly, you will be entitled to receive notice if there is a settlement of the claimsagainst Ernst (as discussed above, the claims against Ernst are not being pursued on behalf ofthe StubPeriod Class).

Excluding Yourself from the Class and the Stub Period

10

51. IF YOU DO NOT WISH TO PARTICIPATE IN THE CLASS AND/OR THESTUB PERIOD CLASS, THEN YOU MUST IMMEDIATELY TAKE SPECIFIC STEPS TO

EXCLUDE YOURSELF. In addition, ifyou are currently prosecuting your own action arising out of

the claims asserted herein and you wish to continue to do so, or ifyou have not yet filed an individual

action but intend to do so, then you must also take specific steps to exclude yourself from the Class

and/or the Stub Period Class. This process is also commonly referred to as "opting out." Ifyou ask to

be excluded, you will not receive any payment that may arise from this Action, whether by judgment

or settlement, and you cannot file objections. However, you will not be legally bound by anything that

happens in this Action, and you may be able to sue (or continue to sue) the Defendants at your own

expense at a future time.

52. For example, if the Partial Settlement is approved, members of the Class and Stub

Period Class who have not requested exclusion will be allowed to participate in the Partial Settlement

but they will have to release all Released Claims, even if they bring, or have a pending, litigation,

arbitration or other proceeding against the Released Parties relating to the Released Claims.

53. YOU CANNOT REMAIN IN THE CLASS WITH RESPECT TO THE

PARTIAL SETTLEMENT BUT EXCUDE YOURSELF WITH RESPECT TO THE

ONGOING CLAIMS AGAINST ERNST, OR VICE VERSA. A request for exclusion from the

Class will apply to all claims brought on behalf of the Class against all Defendants.

54. YOU MAY, HOWEVER, REMAIN IN THE CLASS BUT EXCLUDE

YOURSELF FROM THE STUB PERIOD CLASS, OR VICE VERSA, IF YOU ARE A

MEMBER OF BOTH CLASSES. Thus, if you are a member of the Class and the Stub Period

Class, but do not wish to participate in one or the other , you must specify which class you seek

to exclude yourself from

55. In order to be excluded from the Class and/or the Stub Period Class, you must mail awritten request to the Settlement Administrator at the following address: American Italian PastaCompany Securities Litigation, EXCLUSIONS, Settlement Administrator, c/o A.B. Data, Ltd., Post

Office Box 170500, Milwaukee, WI 53217. The request for exclusion must: (1) state your name,

address, and telephone number; (2) provide documentation reflecting all purchases and sales ofAIPC common stock during the Class Period and Stub Period, including the dates, the number ofshares of AIPC common stock, and price paid or received per share for each such purchase or sale;and (3) state whether you wish to be excluded from the Class, the Stub Period Class, or both.

56. TO BE VALID, A REQUEST FOR EXCLUSION MUST STATE ALL OF THEFOREGOING INFORMATION. YOUR EXCLUSION REQUEST MUST BE RECEIVED ONOR BEFORE

ARE THE CLAIMS AGAINST ERNST, BROUGHT ON BEHALF OF THE CLASS,AFFECTED BY THE PROPOSED PARTIAL SETTLEMENT?

57. The claims asserted against defendant Ernst will continue to be litigated on behalf ofthe Class regardless of whether the proposed Partial Settlement is approved or rejected.

11

58. As previously indicated, the Court denied Ernst's motion to dismiss the claimsasserted against it and certified those claims as a class action. Discovery is ongoing and a trial date onthe claims against Ernst is scheduled for September 2008.

59. Please Note: the claims against Ernst are only being brought on behalf ofthose Classmembers who purchased shares of AIPC stock after December 20, 2002. This is because December20, 2002 was the date that Ernst issued its first audit opinion, during the Class Period, which LeadPlaintiff alleges to have been false. Since that is the first alleged false statement Ernst made duringthe Class Period, Federal securities law precludes those who purchased prior to that date fromrecovering on the claims alleged against Ernst.

WHAT RECOVERY DOES THE PARTIAL SETTLEMENT PROVIDE?

60. The Partial Settlement requires the Settling Defendants to provide the Class and Stub

Period Class with approximately $25,000,000 ("Partial Settlement Amount"), comprised of

$11,000,000 in cash, plus interest accrued, as well as $14,000,000 worth of AIPC common stock,

subject to certain Downside Protection, Upside Allocation and Buy Out Protection Provisions set

forth below to settle the Federal Securities Claims brought against them. Attorney fees and expenses,

notification costs, expenses related to the ongoing litigation of claims against defendant Ernst, a

compensatory award to the Lead Plaintiff, and claims administration costs will be deducted from the

Partial Settlement Amount. The Partial Settlement Amount minus these fees, costs, expenses and

awards shall be distributed to the Class and Stub Period Class (the "Distribution Amount").

61. When calculating the number of shares to be issued byAIPC to Plaintiffs Counsel as

part of an attorneys' fee award, or to Class or Stub Class Members as part ofthe Distribution Amount,such number shall be determined based upon a share price of $9.60 per share. This calculation,

however, is subject to the Downside Protection, Upside Allocation and Buy Out Protection provisions

set forth in the Stipulation as described below.

Downside Protection

62. Pursuant to the "Downside Protection " provisions , if the average closing price ofAIPC shares on the ten (10) trading days prior to the Distribution Date is less than $ 9.60 per share, butgreater than $ 6.50 per share ("Downside Protection Price"), this loss in value shall be borne by AIPC,and the number of shares to be issued shall be increased accordingly . In the event that the actual

average closing price is less than $6.50 per share, however, the number of shares to be issued shall,nonetheless , be based on a $6 . 50 per share price. For further information on this provision, please seeParagraph 17 of the Stipulation.

63. If at any point following entry of the Judgment, but prior to entry of the Order ofDistribution, the average closing price ofAIPC shares on four (4) consecutive trading days is less than$7.00 per share, Lead Plaintiff may inform AIPC that it wishes immediately to take possession of theSettlement Securities.

12

64. Upon receipt of such shares, and upon the advice, consent and supervision of LeadPlaintiff and Lead Plaintiffs Counsel, and to the extent practicable, the Settlement Administrator maysell portions of, or the entirety of, the Settlement Securities. The proceeds of such sales shall bedeposited with the balance of the Settlement Cash.

65. Lead Plaintiffs Counsel may retain an investment advisor to assist its determinationofwhether and when to sell such shares. The reasonable costs of such an advisor shall be paid out ofthe Settlement Cash. Such an investment advisor shall have no role in the sale of such shares.

66. No Person, including any Class and Stub Period Class Member, shall have any claim

against anyone (including but not limited to the Settlement Administrator, Settling Defendants,

AIPC's Insurance Carriers, Lead Plaintiff, or Lead Plaintiffs Counsel) arising out of or relating to the

sale of, or failure to sell, any of the Settlement Securities.

Upside Protection

67. Pursuant to the "Upside Protection" provisions, if the average closing price ofAIPC

shares on the ten (10) trading days prior to the Distribution Date is greater than $9.60 per share, this

appreciation in share value shall be allocated between AIPC and members of the Class and Stub

Period Class, for purposes of calculating the number of shares to be issued, as follows:

a. between $9.60 and $10.75 per share -the Class and Stub Period Class will receive 100% of

the increase;

b. between $10.76 and $13.50 per share - the Class and Stub Period Class shall be entitled to50% of the increase;

greater than $13.50 per share - the Class and Stub Period Class will receive no further benefitof the increase.

68. For further information on this provision, please see Paragraph 13-15 of theStipulation.

Buyout Protection

69. Pursuant to the "Buy Out Protection" provisions, in the event that a public offer to

purchase a majority of outstanding AIPC shares is made, the number of shares to be issued to theClass and Stub Period Class shall be based upon the price at which such public offer is consummated.

If AIPC cannot issue such shares, the Company will substitute cash in lieu of such securities at thevalue of such public offer to purchase shares. For further information on this provision, please seeParagraph 24 of the Stipulation.

WHY IS THERE A PARTIAL SETTLEMENT?

70. Under the proposed Partial Settlement, the Court will not decide in favor of either theLead Plaintiff or the Settling Defendants. By agreeing to a Partial Settlement, both the Lead Plaintiff

13

and the Settling Defendants avoid the costs and risk of a trial, and the Class and Stub Period ClassMembers are compensated.

71. In light of the amount of the Partial Settlement and the immediacy of recovery to the

Class and Stub Period Class, Lead Plaintiff believes that the proposed Partial Settlement is fair,

reasonable and adequate, and in the best interests of Class and Stub Period Class Members. The

Partial Settlement provides a substantial benefit, namely at least $25,000,000 in cash and securities, as

compared to the risk that a similar, smaller, or no recovery would be achieved after a trial and appeals,

possibly years in the future, in which the Settling Defendants would have the opportunity to assert

substantial defenses to the claims asserted against them.

WHAT MIGHT HAPPEN IF THERE WAS NO PARTIAL SETTLEMENT?

72. If there were no Partial Settlement and Lead Plaintiff failed to establish any essential

legal or factual element of its claims, neither Lead Plaintiff nor the Class or Stub Period Class would

recover anything. Also, if the Settling Defendants were successful in proving any of their defenses,

the Class and Stub Period Class likely would recover substantially less than the amount provided in

the Partial Settlement, or nothing at all.

Lead Plaintiff's Assessment of the Settlement

73. Lead Plaintiffbelieves that the claims against the Settling Defendants 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 beartificially inflated during the Class Period and the Stub Class Period by the issuance of materially

false statements and by omitting to state material information concerning AIPC. Lead Plaintiffs

Counsel also believes that it could prove that, as a result ofthis misconduct, members ofthe Class and

Stub Class were injured.

74. 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. Lead Plaintiff

is also mindful of the inherent problems of proof under, and possible defenses to, the federalsecurities law violations asserted, including the defenses asserted by the Settling Defendants duringthe litigation, in motions on the pleadings, in settlement negotiations, and in the mediationproceedings.

75. Perhaps most importantly, Lead Plaintiff understands that AIPC has limited resourcesto satisfy any potential judgment; has limited insurance coverage, which has been and will continue tobe significantly diminished by continuation of this Action; and has had its common stock de-listedfrom the New York Stock Exchange.

76. In light of the foregoing, Lead Plaintiff believes that the Partial Settlement conferssubstantial benefits upon the Class and Stub Period Class. Based on its evaluation, Lead Plaintiff andLead Plaintiff's Counsel have determined that the Partial Settlement is in the best interests ofthe Lead

14

Plaintiff and the Class and Stub Period Class.

Settling Defendants' Assessment of the Claims and Settlement

77. The Settling Defendants vigorously dispute that Lead Plaintiff would prevail at trial in

this Action on the claims it asserted. The Settling Defendants vigorously dispute, among other things,

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 or the Class and Stub Period Class were harmed by the conduct

alleged.

78. 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 ofthe burden ofprotracted 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.

79. 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 the

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.

80. Neither this Partial Settlement nor Stipulation, nor any of its terms or provisions, norany of the negotiations or proceedings connected with it, shall be construed as an admission orconcession by any of the Settling Defendants of the merit or truth of any of the allegations orwrongdoing of any kind on the part of any of the Settling Defendants, or of any infirmity in thedefenses that the Settling Defendants have or could have asserted in this Action.

THE MEDIATOR'S STATEMENT REGARDING THE PARTIAL SETTLEMENT

81. Ina statement dated October 25, 2007, submitted in support of the Partial Settlementand available at www.pomlaw.com., the Mediator stated:

The proposed Settlement is the result of vigorous arm's length

negotiation by both sides. Based on my extensive discussions withthe mediating parties, and the information made available to me, it ismy opinion that the settlement was negotiated in good faith and that itis a fair and reasonable resolution of the Action.

15

HOW MUCH WILL MY PAYMENT BE? - WHAT IS THE PLAN OFALLOCATION?

82. Your share of the recovery (if any) will depend on the number of valid Claim Forms

that Class and Stub Period Class Members send in ("Authorized Claimants"), when and for what price

Authorized Claimants purchased and/or sold their shares ofAIPC common stock, how many shares of

AIPC common you bought , and when you bought and sold your shares.

83. To receive cash and stock from the Distribution Amount, Class and Stub Period Class

Members must complete the attached Proof of Claim and Release form ("Claim Form") and mail it

and all required documentation to the Settlement Administrator postmarked on or before

Class and Stub Period Class Members who do not submit acceptable Claim Forms

will not share in the Distribution Amount. Class and Stub Period Class Members who do not submit

either a request for exclusion or an acceptable Claim Form will nevertheless be bound by the Partial

Settlement and the Judgment of the Court dismissing the claims against the Settling Defendants.

Allocation to Class and Stub Period Class Members

84. The Settlement Administrator shall determine each Authorized Claimant's pro rata

share of the Distribution Amount based upon each Authorized Claimant's Recognized Loss. The

Recognized Loss formula set forth below is not intended to be an estimate of the amount that a Class

Member or Stub Period Class Member might have been able to recover after a trial; nor is it an

estimate of the amount that will be paid to Authorized Claimants pursuant to the Partial Settlement.

The Recognized Loss formula is simply the basis upon which the Distribution Amount will beproportionately distributed to Authorized Claimants.

85. Lead Plaintiffs damages expert analyzed the market price reaction to certain

disclosures that occurred during the Class Period and Stub Period, which corrected for Defendants'

alleged misrepresentations. Recognized Losses are based on the price declines following thosedisclosures.

86. Lead Plaintiffs damages expert believes that Defendants ' allegedly false statementsartificially inflated the price of AIPC' s stock by at least $ 8.45 per share. The Plan of Allocationassumes that this is a cap on Recognized Losses.

87. Based upon work performed by Lead Plaintiff's damages expert, Lead Plaintiff'sCounsel believes that, at trial, it could likely prove that Defendants' alleged misconduct caused atleast $8.45 in recoverable damages. These damages include: (a) a $7.70 stock price decline thatoccurred on August 10, 2005, the first trading day after the August 9, 2005 announcement; and (b) a$0.75 stock price decline that occurred on August 17, 2005.

88. Class Members (who by definition purchased AIPC common stock prior to August 9,2005 ) are in a different position than Stub Period Class Members (who by definition purchased stockafter August 9, 2005 ). The Court held that " investors (and the market) knew on August 9 thatfinancial information previously disseminated by Defendants was suspect and should not be relied

16

upon." Order and Opinion Granting in Part and Denying in part Plaintiffs Motion for Class

Certification, dated March 26, 2007, at 7. In light of this holding, Lead Plaintiff's Counsel believes

that members of the Stub Period Class would have a much more difficult time proving their claims

than members ofthe Class. They would have to prevail on appeal to reverse the Court's decision not

to include their claims as part of the certified Class or otherwise obtain class certification of such

claims. Moreover, proofofreliance, loss causation and damages would be more difficult. As a result,

under the Plan of Allocation, damages for members of the Stub Period Class will be discounted by

90%, resulting in a Recognized Loss of $0.075 per share for shares sold or retained, on or after,

August 17, 2005.

Formula for Calculating Recognized Losses

89. Recognized Losses cannot be greater than the difference (the "Actual Loss") between

the price paid for any given share of AIPC common stock and the closing price of such AIPC

common stock on August 10, 2005 (with respect to the Class) and August 17, 2005 (with respect to

the Stub Period Class).

9, 2005:90. For shares of common stock purchased from January 23, 2002 through August

a. and sold on or before August 9, 2005, the Recognized Loss is $0.00 per share (because

persons who purchased and sold prior to August 9, 2005 are not members of the Class);

b. and sold from August 10-16, 2005, the Recognized Loss is $7.70 per share, so long as the

Actual Loss with respect to such shares is greater than this amount;

c. and retained or sold, on or after, August 17, 2005, the Recognized Loss is $8.45 per share, so

long as the Actual Loss with respect to such shares is greater than this amount.

16, 2005:91. For shares of common stock purchased from August 10, 2005 through August

a. and sold on or before August 16, 2005, the Recognized Loss is $0.00 per share (because

persons who purchased and sold prior to August 17, 2005 are not members of the StubPeriod Class);

b. and retained or sold, on or after, August 17, 2005, the Recognized Loss is $0.075 per share(for the reasons explained above), so long as the Actual Loss with respect to such shares isgreater than this amount.

92. To the extent that the Distribution Amount is sufficient, each Authorized Claimantwill receive an amount equal to the Authorized Claimant's Recognized Loss, as defined above. If,however, the Distribution Amount is not sufficient to permit such payment, then each AuthorizedClaimant shall be paid their pro rata share ofthe Distribution Amount based on the percentage of theDistribution Amount that each Authorized Claimant's Recognized Loss bears to the entireDistribution Amount. Payment in this manner shall be deemed conclusive against all AuthorizedClaimants.

17

93. No distribution will be made on a claim where the Authorized Claimant's pro rata

share of the Distribution Amount is less then $15.00.

94. Class and Stub Period Class Members will receive cash and stock ifthey file a timely

and valid claim. The proportion of cash and stock received pursuant to this Partial Settlement will be

the same as the proportion of cash and stock included in the Partial Settlement Amount. Thus,

because cash constitutes 44% of the Partial Settlement Amount, and common stock constitutes 56%

of Partial Settlement Amount, distributions to Authorized Claimants will be made on the basis of a

44% cash and 56% common stock allocation.

95. The AIPC common stock that will be distributed will be exempt from registration. If

for some reason at the time of distribution, AIPC common stock is not exempt from registration or

qualification under applicable "Blue Sky" laws of particular states, Lead Plaintiff's Counsel, with

Court approval, may make adjustments to the Plan of Allocation (through reallocation of cash) in

order to equalize the value of the amounts distributed to residents of those particular states.

General Provisions for Plan of Allocation:

96. In processing claims, the first-in, first-out basis ("FIFO") will be applied to

acquisitions, purchases, and sales starting with the opening position (if any) at the outset of the

relevant class period.

97. The date of purchase or sale is the "contract" or "trade" date, and not the "settlement"date

98. Brokerage commissions, fees and taxes should be excluded from the purchase or sale

price of AIPC common stock.

99. Members of the Class and Stub Period Class who do not file acceptable Proofs of

Claim will not share in the Distribution Amount, yet will nevertheless be bound by the Court's

Judgment and the Partial Settlement.

100. Shares ofAIPC common stock acquired during the Class Period or Stub Class Period

by means of a gift, inheritance or operation of law, do not qualify as the purchase of such shares onthe date of such acquisition. If, however, such stock was purchased by the donor, descendent ortransferor, then, unless the donor, descendent or transferor submits a Claim Form with respect to theshares, the recipient's Recognized Losses will be computed by using the closing price of such stock onthe original date of purchase and not the date of transfer.

101. Payments pursuant to the Plan of Allocation, as approved by the Court, will beconclusive against all Authorized Claimants. No person shall have any claim against Lead Plaintiff,

Lead Plaintiff's Counsel, the Settlement Administrator, or any other agent designated by LeadPlaintiff's Counsel, based on a distribution made substantially in accordance with the Stipulation andthe Plan of Allocation or further Orders of the Court. Settling Defendants, and their counsel, shallhave no responsibility for, interest in, or liability whatsoever with respect to any allocation,management, disposition, computation, or distribution of the Partial Settlement Amount.

18

102. The Court has reserved jurisdiction to allow, disallow or adjust the claim of anyClass

Member or Stub Class Member on equitable grounds.

Alteration of the Plan of Allocation

103. Lead Plaintiffmay alter the Plan ofAllocation (subject to Court approval) without any

further notice to Class or Stub Period Class Members, unless such Members expressly request notice

of alteration of the Plan. Therefore, in order to receive such notice, you must send a request no later

than , to the Settlement Administrator at the address set forth below.

104. The Court also may modify the Plan ofAllocation without further notice to the Classor Stub Period Class.

HOW DO I PARTICIPATE IN THE PARTIAL SETTLEMENT? WHAT DO I NEEDTO DO?

105. If you fall within the definition of the Class or Stub Period Class as defined above,you will remain a Class Member or Stub Period Class Member unless you elect to be excluded. Ifyoudo not request to be excluded, you will be bound by any judgment entered in the Action whether ornot you file a Claim Form, including the dismissal with prejudice of any Released Claims against theSettling Defendants you may possess under Federal law, or the law of any state.

106. If you wish to remain a Member of the Class or Stub Period Class you need donothing (other than timely file a Claim Form and Release if you wish to participate in the distributionof funds from the Partial Settlement). Your interests will be represented by Lead Plaintiffs Counsel.If you choose, you may enter an appearance individually or through your own counsel at your ownexpense.

107. TO PARTICIPATE IN THE DISTRIBUTION FROM THE PARTIAL

SETTLEMENT YOU MUST TIMELY REQUEST, COMPLETE AND RETURN THE

ATTACHED CLAIM FORM.

108.If you need an additional copy of the Claim Form, it may be obtained by either

downloading a copy from the Settlement Administrator's website at

www.abdatalawserve.com/cases.php ; by calling the Settlement Administrator at (866) 778-9469; or

by sending a letter requesting a copy to the Settlement Administrator at the following address:American Italian Pasta Company Securities Litigation, Settlement Administrator, c/o A.B. Data, Ltd.,

Post Office Box 170500, Milwaukee, WI 53217. Unless the Court orders otherwise, if you do nottimely submit a valid Claim Form, you will be barred from receiving any payments from the Partial

Settlement, but will in all other respects be bound by the provisions of the Stipulation and theJudgment.

WHAT RIGHTS AM I GIVING UP BY AGREEING TO THE PARTIAL

SETTLEMENT?

19

109. If the Partial Settlement is approved, the Court will enter a Judgment. The Judgment

will dismiss the claims against the Settling Defendants with prejudice and provide that Lead Plaintiff

and all other Class and Stub Class Period Members, except those who validly and timely request to be

excluded, shall upon the entry of the Judgment be deemed to have, and by operation of the Judgment

shall have, fully, finally, and forever released, relinquished and discharged the Released Claims.

110. It is expressly understood, however, that the Release shall not include derivativeclaims and/or causes of action asserted against any of the Settling Defendants in the various derivativeactions now pending. It will also not release claims against Ernst, which Lead Plaintiff will continueto litigate.

111. The definitions relevant to the Release are as follows:

"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;

"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;

"Judgment" shall mean ajudgment and order approving the Settlement and dismissing the ReleasedClaims as against the Settling Defendants with prejudice;

"Legal Proceeding" means any action pending as of the date of execution of the Stipulation againstDefendants in any federal court, state court or arbitration.

"Released Parties" shall mean each and every one of the following: Settling Defendants and allentities owned, affiliated or controlled by them, all current and former AIPC directors and officersand 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;

"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 Plaintiff, the Class, the Stub Period Class, or any member ofthe Class or Stub Period Class against the Released Parties which are in any way based upon orrelated to (a) the purchase or acquisition ofAIPC common stock by any member of the Class duringthe Class Period (whether on the open market or otherwise), or by any member of the Stub PeriodClass 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 superviseAIPC officers or employees which were or could have been alleged in the Action, (c) the facts whichwere alleged in any papers filed in the Action, and/or (d) the administration of the Net SettlementFund or Plan of Allocation. Released Claims shall not include claims alleged in the PendingShareholder Derivative Actions;

20

"Settling Defendants" shall mean all Defendants other than Ernst;

"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 have stipulated and agreed 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 Judgment shall have

waived any and all provisions, rights and benefits conferred by any law ofthe United States or ofany

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 Classor Stub Period Class may hereafter discover facts in addition to or different from those which he, sheor 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 agrees that the Lead Plaintiff does settle and release, and eachmember of the Class or Stub Period Class shall be deemed to have, and upon the Effective Date andby operation of the Judgment shall have, fully, finally, and forever settled and released any and allReleased 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 oflaw 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 subsequentdiscovery or existence of such different or additional facts. The Settling Parties acknowledge thatthe foregoing waiver was bargained for and a key element of the Settlement of which this release is apart.

112. All other capitalized terms not otherwise defined herein shall have the same meaningas set forth in the Stipulation. In order to obtain a copy of the Stipulation, please see ¶¶ 125-28.

WHAT PAYMENTS ARE THE ATTORNEYS FOR THE CLASS AND THE LEADPLAINTIFF SEEKING FOR THEIR

WORK IN THIS CASE?

21

113. Lead Plaintiffs Counsel has not received any payment for its services in pursuing this

lawsuit on behalf of the Class and Stub Period Class, nor have they been reimbursed for their

considerable out-of-pocket expenses. Lead Plaintiff's Counsel intends to apply to the Court for an

award of attorney fees on behalf of all plaintiffs' counsel not to exceed 25% of the Partial Settlement

Amount (if awarded, such a fee would approximate the aggregate lodestar of plaintiffs' counsel to

date). Any fees awarded by the Court will be paid to Lead Plaintiffs Counsel in the same form as the

consideration received by the Class and Stub Period Class, i.e., 44% cash and 56% stock. Any award

of stock will be subject to the same provisions governing Downside Protection, Buyout Protection and

Upside Allocation described above.

114. In addition, Lead Plaintiffs Counsel intends to apply for reimbursement oflitigation

expenses advanced in connection with the Action in an amount not to exceed $1,250,000. Lead

Plaintiffs Counsel will also request that the Court authorize that $750,000 be used to establish a

litigation fund to defray deposition and expert related expenses associated with the continued

litigation against Ernst on behalf of the Class. Any expenses awarded to Lead Plaintiffs Counsel

shall be paid in cash from the Partial Settlement Amount. If the application for attorney fees and

reimbursement of litigation expenses is approved by the Court, the average cost per share would be

approximately $0.35 per share.

115. Representatives ofLead Plaintiff and its investment advisors have incurred costs andexpenses associated with their service as Class Representative including the provision of depositiontestimony, production of documents and attendance at mediation sessions. Lead Plaintiff has notreceived any compensation for such services which benefited the Class and Stub Period Class, nor hasit been reimbursed for its out-of-pocket expenses. As a result, Lead Plaintiffs Counsel intends toapply to the Court for a Compensatory Award for Lead Plaintiff not to exceed $40,000. If thisapplication is approved by the Court, the average cost per share would be less than $0.01 per share.Such a Compensatory Award for Lead Plaintiff will be paid out of the Partial Settlement Amount.

116. You may review the briefs and motions related to these requests atwww.pomlaw.com, on or after

ARE THERE OTHER CONDITIONS THAT MAY AFFECT THE PARTIALSETTLEMENT OR AN AWARD THEREFROM?

117. The Partial Settlement is conditioned upon the occurrence of certain events. Thoseevents include, among other things: (1) entry of the Judgment by the Court, as provided for in theStipulation; (2) expiration of the time to appeal from the Judgment, or if an appeal is taken, a finalresolution of the appeal in favor of the Judgment; (3) the lack of requests for exclusions from theSettlement a certain number of eligible Class or Stub Class Members, or alternatively, SettlingDefendants lack of exercise of their right to terminate the Settlement in the event that number isreached. In addition, if the price of AIPC common stock falls below $6.50 per share over ten (10)consecutive trading days prior to approval ofthe Partial Settlement, AIPC must make up any shortfallor Lead Plaintiff may terminate the Partial Settlement. If, for any reason, any one of the conditionsdescribed in the Stipulation is not met, that Stipulation might be terminated and, if terminated, willbecome null and void, and the parties to that Stipulation will be restored to their respective positions

22

as of July 2, 2007.

WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE THEPARTIAL SETTLEMENT AND RELATED MATTERS? DO I HAVE TO COME TOTHE HEARING? MAY I SPEAK AT THE HEARING IF I DON'T LIKE THE PARTIALSETTLEMENT OR OTHER MATTERS REFERENCED IN THIS NOTICE?

If you do not wish to object to the proposed Partial Settlement, the Plan of Allocation,

or the application for attorney fees and reimbursement of litigation expenses, or the proposed

Compensatory Award to the Lead Plaintiff, you need not attend the Settlement Hearing

scheduled for

118. Any Class or Stub Period Class Member who has not validly and timely requested to

be excluded, and who objects to any aspect of the Partial Settlement, the Plan of Allocation, the

application for attorneys' fees, costs and expenses, or the request for a Compensatory Award to Lead

Plaintiff, may appear and be heard at the Settlement Hearing.

119. Any such Person must submit a written notice of objection, which must be received

on or before . to each of the following: CLERK OF THE COURT, Western District of

Missouri, Charles Evans Whittaker Courthouse, 400 E. 9"' Street, Kansas City, Missouri, 64106;

POMERANTZ HAUDEK BLOCK GROSSMAN & GROSS LLP, Marc Gross, Esq., 100 Park

Avenue, New York, New York 10017-5517 (Lead Plaintiffs Counsel); DAVIS POLK &

WARDWELL, James H.R. Windels, Esq., 450 Lexington Avenue, New York, New York 10017

(Counsel for AIPC).

120. The notice of objection must demonstrate the objecting Person's membership in the

Class or Stub Period Class, including documentation reflecting the number of AIPC shares

purchased and sold during the relevant period , and contain a statement of the reasons for

objection. Only members who have submitted written notices of objection and related

documentation in this manner will be entitled to be heard at the Settlement Hearing, unless the Court

orders otherwise. By filing an objection, the objector consents to being deposed in his or her district ofresidence prior to the Settlement Hearing.

121. The Settlement Hearing may be delayed from time to time by the Court withoutfurther written notice to the Class or Stub Period Class. If you intend to attend the Partial SettlementHearing, you should confirm the date and time with Lead Plaintiffs Counsel.

122. Unless otherwise ordered by the Court, any Class or Stub Period Class Member whodoes not object in the manner described herein will be deemed to have waived any objection and shallbe forever foreclosed from making any objection to the proposed Partial Settlement, the application

for attorney fees and reimbursement of litigation expenses, the establishment of a litigation fund todefray deposition and expert related expenses associated with the ongoing litigation against Ernst, theproposed Plan of Allocation, or the Compensatory Award to Lead Plaintiff. Class and Stub PeriodClass Members do not need to appear at the hearing or take any other action to indicate their approval.

23

WHAT IF I AM A BROKER, BANK OR OTHER NOMINEE WHICH BOUGHTSHARES ON SOMEONE ELSE'S BEHALF?

123. If you hold any AIPC common stock purchased during the Class Period or Stub

Period as nominee for a beneficial owner, then, within ten (10) days after you receive this Notice, you

must either: (1) provide a list of the names and addresses of such beneficial owners to the Settlement

Administrator, preferably on computer-generated mailing labels or, electronically in MS Word or

WordPerfect files (label size Avery 5162), or in an MS Excel data table, setting forth (a)

title/registration, (b) street address, (c) city/state/zip; or (2) send a copy of this Notice and the Claim

Form by first class mail to all such beneficial owners, providing written confirmation to the

Settlement Administrator of having done so. If you choose to mail the Notice yourself, you may

obtain (without cost to you) as many additional copies of these documents as you will need to

complete the mailing by either downloading a copy from the Settlement Administrator's website at

www.abdatalawserve.com/cases.php ; by calling the Settlement Administrator at (866) 778-9469; or

by sending a letter requesting a copy to the Settlement Administrator at the following address:

American Italian Pasta Company Securities Litigation, Settlement Administrator, c/o A.B. Data, Ltd.,

Post Office Box 170500, Milwaukee, WI 53217.

124. Regardless of whether you choose to complete the mailing yourself or elect to have

the mailing performed for you, you may obtain reimbursement of reasonable administrative costs

actually incurred in connection with forwarding the Notice and which would not have been incurred

but for the obligation to forward the Notice, after submission of appropriate documentation.

CAN I SEE THE COURT FILE?WHO SHOULD I CONTACT IF I HAVE QUESTIONS?

125. This Notice is a summary and does not describe all of the details of the Action or the

proposed settlement. For full details of the matters discussed in this Notice, you may desire to reviewall of the documents that have been filed with the Court, the Consolidated Amended Class ActionComplaint, the Stipulation, the Notice, the Claim Form, and Preliminary Order of Approval, thepapers filed in support of the Partial Settlement, the applications for an award of attorneys' fees and

expenses for Lead Plaintiffs Counsel, and the application for a compensatory award for LeadPlaintiff. These documents may be inspected during business hours, at the office of the Clerk of the

Court, United States Courthouse, Western District of Missouri, Charles Evans Whittaker Courthouse,

400 E. 9th Street, Kansas City, Missouri, 64106.

126. You may also review many of these documents at www.pomlaw.com, on or after

127. If you have any questions about the Partial Settlement or claims procedure, you maycontact Lead Plaintiff ' s Counsel by writing: POMERANTZ HAUDEK BLOCK GROSSMAN &GROSS LLP, Attn: Carolyn Moskowitz , 100 Park Avenue, New York, NY 10017-5517.

128. If you need additional copies of this Notice, or if you have a question about filing aclaim, you may contact the Settlement Administrator, as set forth in Paragraph 108 above.

24

DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE.

DATED

BY ORDER OF THE UNITED STATES DISTRICT COURTWESTERN DISTRICT OF MISSOURI

25

EXHIBIT C

IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

N RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No.;OMPANY SECURITIES ) 05-CV-0725-W-ODS.ITIGATION )

PROOF OF CLAIM AND RELEASE

A. To recover from the Net Settlement Fund as a member ofthe Class and/or Stub Period Class,

based on your claims in the action entitled In re American Italian Pasta Company Securities

Litigation, No. 05-CV-725-W-ODS, and all lawsuits consolidated under that caption (the

"Action"), which are being partially settled as part of the Partial Settlement discussed in the

Notice of Pendency and Proposed Partial Settlement of Class Action ("Notice"), you must

complete and sign this Proof of Claim and Release. If you fail to execute and submit a

timely, properly completed and addressed Proof of Claim and Release, your claim may be

rejected and you may be precluded from any recovery in connection with the Partial

Settlement.

B. Pursuant to an Order in this Action dated March 26, 2007, and as indicated in the Order of

Preliminary Approval dated , the Class is defined as: all purchasers of American

Italian Pasta Corporation ("AIPC") common stock on or after January 23, 2002, who held

shares of common stock ofAmerican Italian Pasta Company on August 9, 2005. Excluded

from the Class shall be the Defendants and their corporate affiliates , current or former

officers or directors of AIPC, successors , heirs, assigns , executors, personal

representatives , marital communities , and immediate family members.

C. Pursuant to the Order of Preliminary Approval dated , the Stub Period Class isdefined as : all purchasers of AIPC common stock on or after August 10, 2005, who held

shares of AIPC common stock on August 17, 2005. Excluded from the Stub Period Class

shall be the Defendants and their corporate affiliates, current or former officers or directors

ofAIPC, successors, heirs, assigns, executors, personal representatives, marital communities,and immediate family members.

D. You may only participate in the Partial Settlement if you are a member of the Class orStub Period Class. If you are such a member, and wish to participate , you mustcomplete and return this form as specified below.

E. Submission of this Proof of Claim and Release , however , does not assure that you willshare in the Net Settlement Fund.

F. You must mail your completed and signed Proof and Claim and Release to the SettlementAdministrator postmarked on or before , - , 2008, addressed as follows:

American Italian Pasta Company Securities LitigationSettlement Administrator

c/o A.B. Data, Ltd.Post Office Box 170500Milwaukee, WI 53217

G. If you are NOT a Member of the Class or the Stub Period Class, DO NOT submit aProof of Claim and Release form.

H. If you are a member ofthe Class or the Stub Period Class and you have not timely requestedexclusion, you will be bound by the terms of the Judgment entered in the ActionWHETHER OR NOT YOU SUBMIT A PROOF OF CLAIM AND RELEASE.

II. CLAIMANT IDENTIFICATION INSTRUCTIONS

A. If you purchased or acquired AIPC common stock during the Class Period or Stub Periodand held the shares in your name, you are the beneficial owner as well as the record owner.

Page 2 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

^alvu Ul OLUU

Period and the shares were registered in the name of a third party, such as a nominee orbrokerage firm, you are the beneficial owner of these shares, but the third party is the recordowner of these shares.

B. Use Section IV of this form entitled "Claimant Identification" to identify each owner of

record ( "Nominee" ), if different from the beneficial owner of AIPC common stock that

forms the basis of this claim. THE ACTUAL BENEFICIAL OWNER ORTHE LEGAL

REPRESENTATIVE OF SUCH OWNER OF THE AIPC COMMON STOCKUPON

WHICH THIS CLAIM IS BASED MUST SUBMIT THIS PROOF OF CLAIM AND

RELEASE. Legal representatives MUST include proof of authority to sign on behalf ofthebeneficial owner in accordance with Section II, Paragraph C below.

C. All joint beneficial owners must sign this claim. Executors, administrators, guardians,conservators and trustees must complete and sign this claim on behalf ofpersons representedby them and their authority must accompany this claim and their titles or capacities must bestated.

D. The Taxpayer Identification Number ("TIN"), consisting of a valid Social Security Numberfor individuals or Employer Identification Number for business entities, trusts, estates, etc.,and telephone number of one of the beneficial owner(s) may be used in verifying this claim.

E. If you would like to use the Correspondence Address for the distribution of check(s) andstock certificate(s), please mark that section as the address for all distributions; you need notfill out the (Optional) Distribution Address if you wish to use the Correspondence Addressfor all distributions. If you would like your distribution check and/or stock certificate(s) sentto an address other than the Correspondence Address, please select the appropriate optionunder (Optional) Distribution Address and fill in that portion of the form; you will still needto fill in the Correspondence Address section.

FAILURE TO PROVIDE THE FOREGOING INFORMATION COULD DELAYVERIFICATION OF YOUR CLAIM OR RESULT IN REJECTION OF YOUR CLAIM.

III. TRANSACTION SCHEDULE INSTRUCTIONS

A. Use Section V of this form entitled "SCHEDULE OF TRANSACTIONS IN AIPCCOMMON STOCK" to supply all required details of your transaction (s) in AIPC commonstock . If you need more space , attach separate , numbered sheets giving all of the requiredinformation in substantially the same format . Print or type the beneficial owner' s name atthe top of each additional sheet.

B. On the schedules , provide all of the requested information with respect to all acquisitions,including free receipts , purchases and sales, including free deliveries , of AIPC commonstock.

C. Failure to report all transactions called for may result in the rejection of your claim.

D. Shares of AIPC common stock acquired during the Class Period or Stub Period by means ofa gift, inheritance or operation of law, do not qualify as the purchase of such shares on thedate of such acquisition. If, however, such stock was purchased during the Class Period orStub Period by the donor, decedent or transferor, then, as long as the original purchaser doesnot submit a Proof of Claim and Release with respect to the shares, the recipient will be

Page 3 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

- -.,., - -1 _.U 1\tJiV aJG W111 UG

computed by using the price of such stock on the original date of purchase.

E. In processing claims, the First-In, First-Out ("FIFO") basis will be applied to acquisitions,

purchases and sales starting with the opening position (if any) at the outset of the relevant

class period.

F. List each acquisition, purchase and sale separately and in chronological order, by trade date(as distinguished from the "settlement" date), beginning with the earliest. You mustaccurately provide the month, day and year of each such transaction you list.

G. The price per share paid or received, shall be exclusive of all commissions, taxes, fees andother charges.

H. The date of covering a short sale is deemed to be the date of purchase of AIPC commonstock. The date of a short sale is deemed to be the date of sale of AIPC common stock.

1. You must include with your ProofofClaim and Release copies ofbrokerage confirmations,

monthly statements or other documentation of your transactions in AIPC common stock inorder for your claim to be valid. If such documents are not available, please call theSettlement Helpline toll-free at (866) 778-9469 for additional assistance. Failure to providethis documentation could delay verification of your claim or result in rejection of your claim.

J. If your trading activity during the Class Period or Stub Period exceeds 50 transactions, youmust provide, in an electronic file, all purchase and sale information required in the Scheduleof Transactions. For a copy of instructions and parameters concerning such a submission,you may download the Electronic Claim Filing Guidelines and an Electronic Claims Filing

Template from the Settlement Administrator's website at: abdatalawserve.com/cases.php oryou may call toll-free (866) 778-9469 for additional assistance. Please be advised that anyclaimant filing electronically must provide and maintain an up-to-date e-mail address withthe Settlement Administrator and please be aware that further communication may beinitiated by e-mail.

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2008FOR INTERNAL USE ONLY

IN RE AMERICAN ITALIAN PASTACOMPANY SECURITIES LITIGATION

No. 05-CV-725-W-ODS

Please print or type

and state as follows:(if applicable)

CLAIMANT IDENTIFICATION,ST NAME (CLAIMANT) FIRST NAME (CLAIMANT)

3t Name (Beneficial Owner if different from Claimant) First Name (Beneficial Owner)

;t Name (Co-Beneficial Owner) First Name (Co-Beneficial Owner)

mpany/Other Entity (If Claimant is Not an Individual)

stee/Nominee/Other

ount Number (If Claimant is Not an Individual ) Trust/Other Date (If Applicable)

Check here to use Correspondence Address for Distribution of Checks and Stock Certificatesrespondence Address Line 1 ........

respondence Address Line 2 (if needed)

State Zip Code

stribution Address Line 1

stribution Address Line 2 (if needed)

ty State Zip Code

reign Province Foreign Zip Code Foreign Country .. .. .... ..

lephone Number (Day) Telephone Number (Night)

........

neficial Owner's Employer Identification Number or Social Security Number

.. ... _...nail Address

)ENTITY OF CLAIMANTIndividual '- Joint Owners Estate Corporation Trust Partnership Private Pension Fund

Other (specify, describe on separate sheet) IRA, Keogh or other type of Individual Retirement Plan (indicate

type of plan, mailing address, and name of current custodian ) Legal Representative

EGAL REPRESENTATIVES OF CLAIMANTS MUST ATTACH POWER OF ATTORNEY OR OTHERINSTRUMENT SHOWING AUTHORITY TO ACT AS A LEGAL REPRESENTATIVE

lividuals or Entities excluded from participating in the Settlement include: Defendants Ernst, AIPC, TimothyWebster, Horst W. Schroeder, George D. Shadid, Warren B. Schmidgal], Walter George, Jerry Dear, James E.eter, William R. Patterson, Johathan E. Baum and their corporate affiliates, current or former officers or,ctors, successors, heirs, assigns, executors, personal representatives, marital communities, and immediatelily members.

Check here if the claimant or beneficial owner is excluded from the Class and/or StubPeriod Class.Check here if the claimant or beneficial owner was an officer, director or partner ofAmerican Italian Pasta Company from January 23, 2002, through August 17, 2005,inclusive. If so, please state position(s) held and dates ofemployment:

Check here if the claimant or beneficial owner acquired AIPC common stock throughthe AIPC employee benefit plan.

;CT DEPOSIT - If you prefer the cash portion of your recovery to be directly deposited into your bankrnt, check here

Page 6 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

lement,k by CHECKING ACCOUNT SAVINGS ACCOUNT

)sit: CLAIMANT'S ACCOUNT NAME MATCHES SUBMITTED DOCUMENTATION(MUST MATCH) Y N

CHEDULE OF TRANSACTIONS IN AIPC COMMON STOCK

re to provide proof of all purchases, sales, opening and closing positions will impede proper processing of yourr. Please include proper documentation with your Proof ofClaim and Release as described in detail in Section III,;raph I above.

IEGINNING HOLDINGS:se state the total number of shares of AIPC common stockyou owned. as of the close of business on January 22, 2002,

or short positions.

ONE, CHECK HERE

URCHASES:

rately list each and every purchase and/or acquisition of AIPC commonduring the period between January 23, 2002 , through August 17, 2005,sive.

(s) of original purchaseor acquisition

.ist chronologically

DD YYYY

Number of sharespurchased

Proof enclosed?

;Y ;N

IF NONE, CHECKHERE ^

Original purchase price pershare

(excluding commissions,taxes & fees.)

Proof ofpurchase

enclosed

Page 7 of 13QUESTIONS? CALL (866) 778 -9469 OR VISIT ABDATALAWSERVE.COM

$

..... ...... .......

.......

.. N.... ...... . Y

N

YOU REQUIRE ADDITIONAL SPACE, ATTACH EXTRA SCHEDULES IN THE SAME FORMAT ASABOVE. PRINT THE BENEFICIAL OWNER'S FULL NAME ON EACH ADDITIONAL PAGE.

SALES:parately list each and every sale ofAIPC common stock during the period between

HERENONE, CHECK

nuary 23, 2002 , through August 17, 2005.

Date(s) of sales Number of shares sold Sale price per share Proof ofList chronologically (excluding commissions , taxes & sale

iM DD YYYY fees) enclosed

Page 8 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

..... .. .... ..... N......... ..

YN

Y

N

-N

..^^ Y

Ny

N

1 1 $Y

N

......

/ I $N

YOU REQUIRE ADDITIONAL SPACE, ATTACH EXTRA SCHEDULES IN THE SAME FORMAT ASABOVE. PRINT THE BENEFICIAL OWNER'S FULL NAME ON EACH ADDITIONAL PAGE.

UNSOLD HOLDINGS: Proof enclosed?

'lease state the number of shares of AIPC common stock ty N

hat you held as of the close of trading on August 17, 2005

long or short positions.

NONE, CHECK HERE

YOU MUST ALSO READ AND SIGN THE RELEASE ON PAGE

SUBMISSION TO JURISDICTION OF COURT AND ACKNOWLEDGMENTS

I (We) submit this Proof of Claim and Release under the terms of the Stipulation of Settlement described inNotice. I (We) also submit to the jurisdiction of the United States District Court for the Western District ofsouri with respect to my (our) claims as a member of the Class and/or Stub Period Class and for purposes of)rcing the release set forth herein. I (We) further acknowledge that I (we) will be bound by and subject to theis of any Judgment that may be entered in the Action. I (We) agree to furnish additional information to thelement Administrator to support this claim if requested to do so. I (We) have not submitted any other claim,ring the same purchases, sales or holdings of AIPC common stock during the Class Period and/or Stub Period

Page 9 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

RELEASE

A. I (We) hereby acknowledge full and complete satisfaction of, and do hereby fully, finally and

forever settle , release , relinquish , and discharge each and all of the Released Parties from all

Released Claims , as those terms are defined below.

B. Definitions for Release:

1. "Defendants" shall mean American Italian Pasta Corporation ("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 and Young LLP ("Ernst");

2. "Effective Date" shall mean the first date by which all ofthe events and conditions specified in

¶ 67 of the Stipulation have been met and have occurred;

3. "Net Settlement Fund" shall mean the Net Settlement Cash and the Net Settlement Securities

(as those terms are defined in the Stipulation), as adjusted pursuant to the upside allocation and

downside protection formulas set forth in the Stipulation;

4. "Pending Shareholder Derivative Actions" shall mean the following action filed in the Western

District ofMissouri: 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;

5. "Plan of Allocation" shall mean a plan or formula of allocation of the Net Settlement Funddescribed in the Notice;

6. "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 ofthe Lead Plaintiff, the Class, the Stub Period Class, orany member of the Class or Stub Period Class against the Released Parties which are in any waybased upon or related to (a) the purchase or acquisition ofAIPC common stock by any member ofthe 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) thefacts, transactions, events, occurrences, acts, disclosures, statements, omissions or failures to actand/or to supervise AIPC officers or employees which were or could have been alleged in theAction, (c) the facts which were alleged in any papers filed in the Action, and/or (d) theadministration ofthe Net Settlement Fund or Plan ofAllocation. Released Claims shall not includeclaims alleged in the Pending Shareholder Derivative Actions;

7. "Released Parties" shall mean each and every one ofthe following: Settling Defendants and allentities owned, affiliated or controlled by them, all current and former AIPC directors and officersand 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;

8. "Settling Defendants" shall mean all Defendants other than Ernst;

9. "Unknown Claims" shall mean any Released Claims which the Lead Plaintiff or any member ofthe Class or Stub Period Class does not know or suspect to exist in his, her or its favor at the time ofthe release of the Released Parties which, ifknown by him, her or it, might have affected his, her orits settlement with and release of the Released Parties, or might have affected his, her or its decisionnot to object to, or opt out of, this Settlement. With respect to any and all Released Claims, the

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waives and relinquishes, and the members of the Class and Stub Period Class shall be deemed tohave, and by operation of the Judgment shall have expressly waived and relinquished, to the fullestextent 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 Plaintiffexpressly waives and the members ofthe Class or Stub Period Class shallbe deemed to have waived, and upon the Effective Date and by operation of the Judgmentshall have waived any and all provisions, rights and benefits conferred by any law of theUnited States or of any state or territory of the United States, or principle of common law,which is similar, comparable or equivalent to § 1542 ofthe California Civil Code. The LeadPlaintiff and the members of the Class or Stub Period Class may hereafter discover facts inaddition to or different from those which he, she or it now knows or believes to be true withrespect to the subject matter of the Released Claims, but each of them hereby stipulates andagrees that the Lead Plaintiff does settle and release, and each member of the Class or StubPeriod Class shall be deemed to have, and upon the Effective Date and by operation of theJudgment shall have, fully, finally, and forever settled and released any and all ReleasedClaims, known or unknown, suspected or unsuspected, contingent or non-contingent,whether or not concealed or hidden, which now exist, or heretofore have existed upon anytheory of law or equity now existing or coming into existence in the future, including, but notlimited to, all Released Claims that are in any way based on or related to conduct which isnegligent, intentional, with or without malice, or a breach of any duty, law or rule, withoutregard to the subsequent discovery or existence of such different or additional facts. TheSettling Parties acknowledge that the foregoing waiver was bargained for and a key elementof the Settlement of which this release is a part.

10. All other capitalized terms not otherwise defined herein shall have the same meaning as setforth in the Notice which accompanies this Proof of Claim and Release.

C. This release shall be of no force or effect unless and until the Court approves the Stipulation ofSettlement and the Effective Date has occurred.

D. I (We) hereby warrant and represent that I (we) have not assigned or transferred or purported toassign or transfer, voluntarily or involuntarily, any matter released pursuant to this release or anyother part or portion thereof.

E. I (We) hereby warrant and represent that I (we) have included all information about the acquisition,purchase and sales transactions in AIPC common stock that are referenced above in Section V.

F. I (We) hereby warrant and represent that I (we) am (are) not excluded from the Settlement Class orStub Period Class as defined herein and in the Notice.

CERTIFICATION AND SUBSTITUTE FORM W-9

uest for Taxpayer Identification Number

;r Taxpayer Identification Number ("TIN") below for the Beneficial Owner(s). For individuals, this is your Socialirity Number ("SSN"). The Internal Revenue Service ("IRS") requires such TIN. If you fail to provide this-oration, your claim may be rejected.

Page 11 of 13QUESTIONS? CALL (866) 778 -9469 OR VISIT ABDATALAWSERVE.COM

iployer Identification Number (`BIN" for estates, trusts, corporations, etc.) Social Security Number ("SSN" forlividuals)

'e) certify that I am (we are) NOT subject to backup withholding under the provisions of Section 3406 (a)(1)(c)ie Internal Revenue Code because: (a) I am (we are) exempt from backup withholding; or (b) I (we) have noti notified by the IRS that I am (we are) subject to backup withholding as a result of a failure to report all interestividends; or (c) the IRS has notified me (us) that I am (we are) no longer subject to backup withholding.

TE: If the IRS has notified you that you are subject to backup withholding, please strike out the language

t you are not subject to backup withholding in the certification above.

Instructions for Substitute Form W-9

1. If your account is held jointly, BOTH parties must sign the form above.

2. If you have a joint account, only the Social Security Number associated with that account is required tobe provided.

3. You may contact the In re American Italian Pasta Compnay Securities Litigation Helpline at(866) 778-9469 with any questions you may have or if you need additional assistance filling out this

Proof of Claim and Release.

DER THE PENALTIES OF PERJURY, I (WE) CERTIFY THATALL OF THE INFORMATION PROVIDEDME (US) ON THIS FORM IS TRUE, CORRECT AND COMPLETE.

de) have read the foregoing Proofof Claim and Release and certify that all ofthe information contained herein,

the supporting documents attached hereto, is true, correct and complete to the best of my (our) knowledge,rmation and belief, and that this form was executed on the day of , 20_ in

(City), State/Country

Signature of Claimant

Print your name here

Signature of Joint Claimant, if any

Print your name here

Signature of person signing on behalf of Claimant

Page 12 of 13QUESTIONS? CALL (866) 778-9469 OR VISIT ABDATALAWSERVE.COM

Print your name here

Capacity ofperson signing on behalf of Claimant, if otherthan an individual , e.g., Executor, President , Custodian, etc.

ACCURATE CLAIMS PROCESSING TAKES ASIGNIFICANT AMOUNT OF TIME.THANK YOU FOR YOUR PATIENCE.

-minder Checklist:

1. Please sign the above Release and Certification.

3. Remember to attach only copies of acceptable supporting documentation, a complete list of which canbe found on the Settlement Administrator's website.

4. Please do not highlight any portion of the Proof of Claim and Release or any supporting documents.

4. Do not send original stock certificates.

5. Keep copies of the completed Proof of Claim and Release and documentation for your own records.

6. If you desire an acknowledgment of receipt of your Proof of Claim and Release, please send it CertifiedMail, Return Receipt Requested, or its equivalent. You will bear all risks of delay or non-delivery ofyour claim.

7. If your address changes in the future, or if these documents were sent to an old or incorrect address,please send us written notification of your new address.

8. If you have any questions or concerns regarding your claim, please contact the SettlementAdministrator at:

American Italian Pasta Company Securities LitigationSettlement Administrator

c/o A.B. Data, Ltd.Post Office Box 170500Milwaukee , WI 53217

Page 13 of 13QUESTIONS? CALL ( 866) 778-9469 OR VISIT ABDATALAWSERVE.COM

EXHIBIT D

IN THE UNITED STATES DISTRICT COURT FOR THEWESTERN DISTRICT OF MISSOURI

WESTERN DIVISION

IN RE AMERICAN ITALIAN PASTA ) Consolidated Civil Action No.COMPANY SECURITIES ) 05-CV-0725-W-ODSLITIGATION )

JUDGMENT AND ORDER OF DISMISSAL

This matter came on for hearing on and upon the application

of Lead Plaintiff and all Defendants other than defendant Ernst and Young, LLP (the

"Settling Parties") for approval of the Partial Settlement set forth in the Stipulation of

Settlement with Defendant American Italian Pasta Company and Individual Defendants

(the "Stipulation") dated as of October 26, 2007. Due and adequate notice having been

given to the Class and Stub Period Class, and the Court having considered the

Stipulation, all papers filed and proceedings held herein and all oral and written comments

received regarding the proposed Partial Settlement, and having reviewed the entire record

in the action, and good cause appearing therefore;

IT IS HEREBY ORDERED, ADJUDGED AND DECREED THAT:

1. The Court, for purposes of this Judgment and Order of Dismissal

with prejudice (the "Judgment"), adopts all defined terms as set forth in the Stipulation,

and incorporates them herein by reference as if fully set forth.

2. The Court has jurisdiction over the subject matter of this Action,

Lead Plaintiff, Class Members, Stub Period Class Members, and Settling Defendants.

3. The Court finds that the distribution of the Notice of Pendency and

Proposed Partial Settlement of Class Action (the "Notice") and publication of the

Summary Notice of Pendency and Proposed Partial Settlement of Class Action ("Summary

Notice") was effected in accordance with the Order Preliminarily Approving Partial

Settlement and Scheduling Settlement Hearing, dated (the "Preliminary Order of

Approval"), and (i) constituted the best notice practicable under the circumstances to all

persons within the definition of the Class and Stub Period Class; (ii) that this notice was

reasonably calculated, under the circumstances, to apprise Class Members and Stub Period

Class Members of: the pendency of the Action, the effect of the Stipulation, the release of

rights contained in the Stipulation, the right to obtain exclusion from the Class or Stub

Period Class, and the right to appear at the Settlement Hearing; and (iii) that this notice

fully met the requirements of Rule 23 of the Federal Rules of Civil Procedure, due process,

the United States Constitution, the Private Securities Litigation Reform Act of 1995, and

any other applicable law.

4. Pursuant to and in accordance with the requirements of Rules 23 of

the Federal Rules of Civil Procedure, the Court approves the Settlement set forth in the

Stipulation, including specifically, without limitation, the amount of the Settlement, which

totals $25,000,000 in cash and securities subject to the adjustments and protections set forth

in the Stipulation; the Releases set forth therein; and the dismissal, with prejudice, of all the

Released Claims against the Released Parties set forth herein as fair, just, reasonable and

adequate. The Settling Parties are directed to perform in accordance with the terms set

forth in the Stipulation.

5. Pursuant to § 3(a)(10) of the Securities Act, the Settlement

Securities being issued pursuant to the Settlement do not constitute "restricted securities."

6. Except as to any claim of those persons (identified in Exhibit A

hereto) who have validly and timely requested exclusion from the Class or the Stub

Period Class, all of the Released Claims are hereby dismissed with prejudice. The

2

Settling Parties shall bear their own costs and expenses, except as otherwise expressly

provided in the Settlement Agreement. Regardless of whether or not a Member of the

Class or Stub Period Class receives any distributions from the Settlement or executes and

delivers the Proof of Claim and Release provided for in the Stipulation, each and all Class

Members and Stub Period Class Members who have not validly and timely requested

exclusion, on behalf of themselves and their respective predecessors, successors and

assigns, is hereby deemed to have fully, finally, and forever released, relinquished and

discharged all of the Released Parties from the Released Claims.

a. For purposes of this Order, and as defined in the

Stipulation , the term "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 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.

3

b. For purposes of this Order, and as defined in the

Stipulation, the term "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.

7. By operation of this Judgment, Lead Plaintiff, Class Members, Stub

Period Class Members, and Lead Counsel are fully, finally and forever released and

discharged from all claims, including Unknown Claims, that any of the Released Parties

have, had or may have that arise out of, relate to or are based in any way upon the

institution , prosecution, assertion or resolution of this Action or the Released Claims.

8. In accordance with 15 U.S.C. § 78u-(f)(7)(A) and (B), the Court

finds that the Stipulation represents a good faith settlement of all Released Claims of all

Class Members and Stub Period Class Members sufficient to discharge Settling

Defendants and the Released Parties of all Released Claims of Class Members and Stub

Period Class Members. In order to effectuate such settlement, the Court hereby enters the

following bar:

(i) Ernst is hereby permanently barred, enjoined and restrainedfrom commencing, prosecuting, or asserting any claim for indemnity orcontribution against the Released Parties (or any other claim against the ReleasedParties where the injury to Ernst is Ernst's liability to Class Members or StubPeriod Class Members, including any amounts the Ernst has paid or agreed to pay(whether in cash or any other form of consideration) to the Class Members orStub Period Class Members in settlement), arising out of the claims or allegationsin the Action, whether arising under state, federal or foreign law as claims, cross-claims, counterclaims, or third-party claims, in the Action, in this Court, in anyfederal or state court, or in any other court, arbitration proceeding, administrativeagency, or other forum in the United States, Canada or elsewhere;

4

(ii) Each of the Released Parties is hereby permanently barred,

enjoined and restrained from commencing, prosecuting, or asserting any claim for

indemnity or contribution against Ernst (or any other claim against Ernst where

the injury to the Released Party is Ernst's liability to the Class Members or Stub

Period Class Members, including any amounts the Released Party has paid or

agreed to pay (whether in cash or any other form of consideration) to the ClassMembers or Stub Period Class Members in settlement), arising out of the claims

or allegations in the Action, whether arising under state, federal or foreign law as

claims, cross-claims, counterclaims, or third-party claims, in the Action, in thisCourt, in any federal or state court, or in any other court, arbitration proceeding,administrative agency, or other forum in the United States, Canada or elsewhere;

(iii) In accordance with Section 4(a)(7)(B) of the Reform Act,

15 U.S.C. § 78u-4(f)(7)(B), any final verdict or judgment that may be obtained by

or on behalf the Class Members or Stub Period Class Members against Ernst shall

be reduced by the greater of (a) an amount that corresponds to the percentage of

responsibility of the Settling Defendants for the claims asserted by or on behalf of

the Class Members or Stub Period Class Members, or (b) the value of the

consideration paid by or on behalf of the Settling Defendants to the Class

Members or Stub Period Class Members in connection with the Stipulation of

Settlement.

9. Only those Class Members and Stub Period Class Members filing

valid and timely Proofs of Claim and Release shall be entitled to receive any distributions

from the Partial Settlement. The Proofs of Claim and Release to be executed by the Class

Members and Stub Period Class Members shall contain a release whereby all Released

Parties will be released from all Released Claims. The Proof of Claim and Release shall

be substantially in the form and content of Exhibit B to the Preliminary Order of

Approval. All Class Members and Stub Period Class Members, who have not validly and

timely requested exclusion, shall be bound by the releases whether or not they submit a

valid and timely Proof of Claim and Release.

10. Neither the Settling Defendants, nor their counsel, shall have any

responsibility for, interest in, or liability whatsoever with respect to: (a) the provisions of

the Notice, locating Class Members and Stub Period Class Members, soliciting Partial

Settlement claims or claims administration; (b) the investment, management or distribution

S

of the Settlement Distribution Account; (c) the design, administration or implementation of

the Plan of Allocation; (d) the determination or administration of taxes; or (e) any expenses,

costs, or losses incurred in connection with (a), (b), (c), or (d). No person shall have any

claim of any kind against Settling Defendants, or their counsel, with respect to the matters

set forth in this paragraph.

11. The Court finds and concludes 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. No such party

or their respective counsel violated any of the requirements of Rule 11 of the Federal

Rules of Civil Procedure with respect to any of the complaints filed in this Action, any

responsive pleadings to any of the above complaints or any motion with respect to any of

the above complaints. The Court further finds that Lead Plaintiff and Lead Counsel

adequately represented the Class Members and Stub Period Class Members for purposes

of entering into and implementing the Settlement.

12. All Class Members and Stub Period Class Members who have not

validly and timely requested exclusion are hereby permanently barred and enjoined from

filing, commencing, prosecuting, intervening in, participating in, or receiving any

benefits or other relief from, any other lawsuit, arbitration or other proceeding or order in

any jurisdiction that is based upon any Released Claims, including, but not limited to, any

claim that is based upon, arises out of or relates to the Action or the transactions and

occurrences referred to in the Amended Complaint for Class and Derivative Claims. All

Class Members and Stub Period Class Members are likewise barred and enjoined from

organizing any Plaintiff Releasees for purposes of pursuing as a purported class action

(including by seeking to amend a pending complaint to include Class or Stub Period

6

Class allegations, or by seeking Class or Stub Period Class certification in a pending

action) any lawsuit that is based upon any Released Claims, including, but not limited to,

any claim that is based upon, arises out of or relates to the Action or the transactions and

occurrences referred to in the Amended Complaint for Class and Derivative Claims.

13. The Plan of Allocation set forth in the Notice is hereby approved

as fair, reasonable and equitable.

14. The Settlement Administrator and Lead Counsel shall take all

necessary steps and employ their best efforts to ensure that the proposed Order of

Distribution is filed with the Court as quickly as possible, but in no event later than 45

days after the deadline for the submission of claims.

15. Lead Counsel is hereby awarded _% of the Settlement Cash and

Settlement Securities in fees for services rendered in connection with prosecution of this

litigation, and $ from the Settlement Cash as reimbursement for expenses, to be

paid consistent with Paragraphs 57-63 of the Stipulation.

16. Lead Plaintiff is granted $ from the Settlement Cash to be

set aside and used to defray only deposition and expert related expenses associated with

the continued litigation against Ernst on behalf of the Class.

17. Pursuant to Paragraph 27A(2)(b)(4) of the Private Securities

Litigation Reform Act of 1995, Lead Plaintiff is hereby granted a Compensatory Award

of $ from the Settlement Cash, to be paid consistent with Paragraphs 57-63 of the

Stipulation.

18. The Court reserves exclusive and continuing jurisdiction over this

Action, the Lead Plaintiff, the Class, the Stub Period Class and the Released Parties for

the purposes of: (1) supervising the implementation, enforcement, construction, and

7

interpretation of the Stipulation, the Plan of Allocation, and this Judgment; (2) supervising

the distribution of the Settlement Amount.

19. The Court authorizes the Settling Parties, without further approval

from the Court, to agree to and adopt such amendments, modifications and expansions of

the Stipulation and all exhibits attached thereto as (i) are not materially inconsistent with

this Judgment and (ii) do not materially limit the rights of Class Members or Stub Period

Class Members under the Stipulation.

20. Neither the Stipulation nor the Settlement contained therein, nor

any act performed or document executed pursuant to or in furtherance of the Stipulation

or the Settlement: (i) is or may be deemed to be or may be used as an admission of, or

evidence of, the validity of any Released Claim, or of any wrongdoing or liability of the

Released Parties; or (ii) is or may be deemed to be or may be used as an admission of, or

evidence of, any fault or omission of any Released Party in any civil, criminal or

administrative proceeding in any court, administrative agency or other tribunal. Released

Parties may file the Stipulation and/or the Judgment from this action in any other action

that may be brought against them in order to support a defense or counterclaim based on

principles of resjudicata, collateral estoppel, release, good faith Settlement, judgment bar

or reduction or any theory of claim preclusion or issue preclusion or similar defense or

counterclaim.

21. Nothing in this Judgment shall preclude any action to enforce the

terms of the Stipulation.

22. There is no just reason for delay in the entry of this Order and

immediate entry by the Clerk of the Court is expressly directed pursuant to Rule 54(b) of

the Federal Rules of Civil Procedure.

8

Dated:

Kansas City, Missouri

SO ORDERED.

ORTIE D. SMITH, JUDGEUNITED STATES DISTRICT COURT