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Producers of the World's
Finest Pasta
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March 21, 2007
Xxxxx X. Xxxxxxx
Managing Director
Xxxxxxx & Marsal, LLC
000 Xxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Re: Letter Agreement of September 28, 2005, as amended
Dear Xxx:
This letter (the "Second Amendment") addresses various matters related to
the engagement letter dated September 28, 2005, as amended March 10, 2006, (the
"Letter") between Xxxxxxx & Marsal, LLC ("A&M") and American Italian Pasta
Company (the "Company"). Upon execution hereof by each of the parties below,
this Second Amendment will further amend the Letter.
Paragraph 1(a)(iii) of the Letter states that the staffing levels, after
the Phase One Review (as defined herein), will be agreed with the Company's
board of directors (the "Board") or its designees. A&M acknowledges and agrees
that the staffing levels, committed personnel and related fees for the remainder
of calendar year 2007 will be managed by A&M to minimize the expense to AIPC and
in any event will not exceed $225,000.00 per month.
Paragraph 2(a) of the Letter states that the billing rates of Xx. Xxxxxxx
and the other A&M personnel "shall be subject to adjustment annually on January
1, to the extent that the Company and A&M agree." The current billing rate for
Xx. Xxxxxxx is $600 per hour. The current hourly billing rates for other A&M
personnel, by position held at A&M, are Director: $375-500; Associate: $275-375;
and Analyst: $200-275. The Company and A&M agree to maintain these same billing
rates for all of these positions during calendar year 2007.
In addition, A&M and the Company agree that A&M will be eligible for
certain incentive compensation related to the achievement of the financial
results by the Company as described below. In no event will any incentive
compensation be due A&M unless the Company's fiscal year 2005 Annual Report on
Form 10-K has been filed with the SEC, and with Xx. Xxxxxxx signing such Report
and all included certifications as principal executive officer of the Company,
or making himself available to sign such Report and all included certifications
as principal executive officer of the Company.
The incentive compensation will be based on both (1) the extent to which
the Company achieves FY 2007 EBITDA and cash flow targets (both as defined for
purposes of the Company's executive incentive plan for FY 2007) and (2) the date
through which A&M continues to be engaged by the Company.
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American Italian Pasta Company
Briarcliff One, 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000
Phone: 000.000.0000 Toll-free 000.000.0000 Fax: 000.000.0000
The Initial Incentive Payment will be calculated as shown in the following
table:
Initial Incentive Payment Calculation
EBITDA Measure Incentive Payment Range
[redacted] $0
[redacted] $292,000 - $400,000 *
[redacted] $400,000 - $520,000 *
[redacted] $520,000
Cash Flow Measure Incentive Payment Range
[redacted] $0
[redacted] $292,000 - $400,000 *
[redacted] $400,000 - $520,000 *
[redacted] $520,000
* simple pro-ration
Once the Initial Incentive Payment is determined following the completion
of the Company's 2007 fiscal year, the Final Incentive Payment Amount will be
determined by multiplying the Initial Incentive Payment by a percentage
determined by the date through which A&M continues to be engaged hereunder, as
follows:
Percentage Multiplier = A / B where
A = The number of business days from January 2, 2007 through the date on
which A&M's engagement ends; and
B = 250, which is the agreed number of business days in calendar year 2007.
[paragraph redacted]
If the foregoing is acceptable to you, please sign this letter to
acknowledge your agreement with its terms.
Sincerely,
American Italian Pasta Company
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Chairman
Accepted and Agreed:
Xxxxxxx & Marsal, LLC
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Managing Director
