Exhibit 10.1

 
SILVER POINT FINANCE, L.L.C.
 
                                                                     October 18,
2007
 
$400,000,000 Exit Facility
Commitment Letter
 
Interstate Bakeries Corporation
Interstate Brands Corporation
12 East Armour Boulevard
Kansas City, MO 64111
 
Attention:  Randall Vance, Chief Financial Officer
 
Ladies and Gentlemen:
 
You have advised Silver Point Finance, L.L.C. and its affiliated investment
funds (“Silver Point” or the “Commitment Parties”) that Interstate Bakeries
Corporation (“IBC”), Interstate Brands Corporation (“Brands”) and their direct
and indirect subsidiaries (collectively, the “Debtors”), commenced voluntary
cases under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy
Code”) in the United States Bankruptcy Court for the Western District of
Missouri (the “Bankruptcy Court”), Case Nos. 04-45814 (the “Cases”).  You have
further advised the Commitment Parties that you expect that the Debtors will be
reorganized pursuant to a plan of reorganization (the “Plan of Reorganization”),
to be filed in the Cases, consistent with the terms set forth on Exhibit A
hereto and endorsed pursuant to Annex I (the “Plan Term Sheet”) and in form and
substance acceptable to, and with the support of, JPMorgan Chase Bank, N.A.,
McDonnell Investment Management LLC, Quadrangle Master Funding Ltd and Silver
Point, which collectively hold not less than 48% of the aggregate Prepetition
Debt1 outstanding under the Amended and Restated Credit Agreement dated April
24, 2002 (together with related collateral documents and letters of credit
issued thereunder, the “Prepetition Credit Agreement”) among IBC, Brands, the
lenders and financial institutions from time to time parties thereto and
JPMorgan Chase Bank, N.A. as administrative agent (the “Prepetition
Agent”).  You have further advised the Commitment Parties that reorganized IBC
and reorganized Brands (collectively, the “Borrowers”) are seeking an exit
facility in the aggregate amount of up to $400,000,000 to consummate the Plan of
Reorganization and for working capital and general corporate purposes of the
Borrowers and their subsidiaries.  The consummation of the Plan of
Reorganization, including the entering into and funding of the Credit
Facilities, and all related transactions contemplated by the Plan of
Reorganization and this commitment letter (this “Commitment Letter”) are
hereinafter collectively referred to as the “Transaction”).

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1
For the purposes of this Commitment Letter, the exhibits and annexes hereto, and
the Fee Letter, the “Prepetition Debt” shall mean the aggregate claims against,
and obligations owed by, the Debtors to the Prepetition Agent and all lenders
and financial institutions party to the Prepetition Credit Agreement.

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2

In connection with the Transaction, you have requested that the Commitment
Parties agree to structure, arrange and syndicate senior credit facilities in an
aggregate amount of up to $400,000,000 (the “Aggregate Commitment”), comprised
of a $120,000,000 senior secured revolving credit facility (the “Revolving
Credit Facility”), a $60,000,000 senior secured term loan facility (the “Term
Loan Facility”) and a $220,000,000 letter of credit facility (the “Letter of
Credit Facility”, together with the Revolving Credit Facility and the Term Loan
Facility, the “Credit Facilities”), and that the Commitment Parties jointly and
severally commit to provide 100% of the Aggregate Commitment.
 
The Commitment Parties are pleased to advise you that they are willing to act as
the lead bookrunners and lead arrangers (the “Lead Arrangers”) for the Credit
Facilities.  The Commitment Parties are also pleased to advise you of their
commitment to provide 100% of the Aggregate Commitment upon the terms and
subject to the conditions set forth or referred to in this Commitment Letter and
in the Summary of Terms and Conditions attached hereto as Exhibit B (the “Exit
Facility Term Sheet”).  You agree that, as a condition to the commitments and
agreements hereunder, no other agents, co-agents or arrangers will be appointed,
no other titles will be awarded and no compensation (other than that expressly
contemplated by the Exit Facility Term Sheet and the Fee Letter referred to
below) will be paid in connection with the Credit Facilities unless you and we
shall so agree.
 
We intend to syndicate the Credit Facilities to a group of lenders (together
with the Commitment Parties, the “Lenders”) identified by us.  We intend to
commence syndication efforts promptly following the approval of a disclosure
statement with respect to the Plan of Reorganization, and you agree actively to
assist us in completing a syndication satisfactory to us.  Such assistance shall
include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from the existing banking relationships
of the Borrowers, (b) direct contact between senior management and advisors of
the Borrowers and the proposed Lenders, (c) as set forth in the next paragraph,
assistance from the Borrowers in the preparation of materials to be used in
connection with the syndication (collectively, with the Exit Facility Term
Sheet, the “Information Materials”) and (d) the hosting, with us and senior
management of the Borrowers, of one or more meetings of prospective Lenders.
 
You will assist us in preparing Information Materials, including Confidential
Information Memoranda, for distribution to prospective Lenders.  If requested,
you also will assist us in preparing an additional version of the Information
Materials (the “Public-Side Version”) to be used by prospective Lenders’
public-side employees and representatives (“Public-Siders”) who do not wish to
receive material non-public information (within the meaning of United States
federal securities laws) with respect to the Borrowers, their affiliates and any
of their securities (“MNPI”) and who may be engaged in investment and other
market related activities with respect to any such entities’ securities or
loans.  Before distribution of any Information Materials, you agree to execute
and deliver to us (i) a letter in which you authorize distribution of the
Information Materials to a prospective Lender’s employees willing to receive
MNPI (“Private-Siders”) and (ii) a separate letter in which you authorize
distribution of the Public-Side Version to Public-Siders and represent that no
MNPI is contained therein.
 
You agree that the following documents may be distributed to both Private-Siders
and Public-Siders, unless you advise the Lead Arrangers in writing (including by
email) within a reasonable time prior to their intended distribution that such
materials should only be distributed to Private-Siders:  (a) administrative
materials prepared by the Commitment Parties for prospective Lenders (such as a
lender meeting invitation, lender allocation, if any, and funding and closing
memoranda), (b) notification of changes in the terms of the Credit Facilities
and (c) other materials intended for prospective Lenders after the initial
distribution of Information Materials.  If you advise us that any of the
foregoing should be distributed only to Private-Siders, then Public-Siders will
not receive such materials without further discussions with you.

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3

 
You hereby authorize the Commitment Parties to distribute drafts of definitive
documentation with respect to the Credit Facilities to Private-Siders and
Public-Siders.
 
The Lead Arrangers will manage, in consultation with you, all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocation of the commitments
among the Lenders and the amount and distribution of fees among the
Lenders.  The Lead Arrangers will have no responsibility other than to arrange
the syndication as set forth herein and in no event shall be subject to any
fiduciary or other implied duties.  Additionally, you acknowledge and agree that
the Lead Arrangers are not advising you as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction.  You shall consult with
your own advisors concerning such matters and shall be responsible for making
your own independent investigation and appraisal of the transactions
contemplated hereby, and the Lead Arrangers shall have no responsibility or
liability to you with respect thereto.
 
To assist us in our syndication efforts, you agree promptly to prepare and
provide to us all information with respect to the Borrowers and their
subsidiaries, the Transaction and the other transactions contemplated hereby,
including all financial information and projections (the “Projections”), as we
may reasonably request in connection with the arrangement and syndication of the
Credit Facilities.  You hereby represent and covenant that (a) all information
other than the Projections (the “Information”) that has been or will be made
available to us by you or any of your representatives is or will be, when taken
together, when furnished, complete and correct in all material respects and does
not or will not, when furnished, contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to us by you or any of your representatives have been or will be
prepared in good faith based upon reasonable assumptions at the time made.  You
understand that in arranging and syndicating the Credit Facilities we may use
and rely on the Information and Projections without independent verification
thereof.  You further agree to notify us promptly if the Information or
Projections cease to satisfy the above standards and to update the Information
or the Projections to the extent necessary to satisfy such standard.
 
As consideration for the commitments and agreements of the Commitment Parties
hereunder, you agree to cause to be paid the nonrefundable fees described in the
Fee Letter dated the date hereof and delivered herewith (the “Fee Letter”).
 
Each Commitment Party’s commitments and agreements hereunder are subject to:
 
 
a.
except to the extent disclosed by the Borrowers in any filing made by the
Borrowers with the Securities and Exchange Commission prior to the date hereof,
there not occurring or becoming known to such Commitment Party any events,
developments or circumstances that individually or in the aggregate have had or
could reasonably be expected to have a material adverse effect on the business,
operations, property, condition (financial or otherwise) or prospects of the
Borrowers and their subsidiaries, taken as a whole;

 
 
b.
not later than October 18, 2007, approval by the Debtors’ boards of directors of
this Commitment Letter and its Exhibits, and the Fee Letter;

 
 
c.
not later than November 8, 2007, entry of an order by the Bankruptcy Court in
the Cases, in form and substance acceptable to each of the Commitment Parties
(the “Fee Order”), authorizing the Debtors to pay the fees and expenses set
forth herein and in the Fee Letter and

 

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4

otherwise authorizing the Debtors to accept, and incur their obligations under,
this Commitment Letter and the Fee Letter, which order shall specifically
provide that the right to receive all amounts due and owing to each of the
Commitment Parties, including the fees as set forth herein and in the Fee Letter
and reimbursement of all reasonable costs and expenses incurred in connection
with the transactions contemplated herein and as set forth herein and in the Fee
Letter, shall be entitled to priority as administrative expense claims under
Sections 503(b)(1) and 507(a)(1) of the Bankruptcy Code, whether or not the
Credit Facilities are consummated;
 
 
d.
not later than November 15, 2007, filing in the Cases the Plan of Reorganization
and accompany disclosure statement (the “Disclosure Statement”) in form and
substance acceptable to the Lead Arrangers;

 
 
e.
the payment of the fees and expenses set forth herein and in the Fee Letter in
accordance with the terms hereof and thereof;

 
 
f.
there not having occurred a dismissal or conversion of any of the Cases to
proceedings under Chapter 7 of the Bankruptcy Code or the appointment of a
Chapter 11 trustee;

 
 
g.
not later than November 29, 2007, the Debtors shall have filed a motion seeking
approval of an amendment to the post-petition credit facility (the “DIP
Facility”) that provides for an extension of the maturity date (the “DIP
Facility Amendment”);

 
 
h.
not later than December 21, 2007, entry of orders by the Bankruptcy Court in the
Cases, in form and substance acceptable to each of the Commitment Parties,
approving (i) the Disclosure Statement (the “Disclosure Statement Order”) and
(ii) the DIP Facility Amendment;

 
 
i.
not later than February 21, 2008, entry of an order by the Bankruptcy Court in
the Cases, in form and substance acceptable to each of the Commitment Parties
(the “Confirmation Order”) confirming the Plan of Reorganization;

 
 
j.
not later than March 4, 2008, the Confirmation Order shall have become a final
order, in full force and effect without reversal or modification, not subject to
a pending motion for reversal, modification or stay, no notice of appeal shall
then be pending and the period for appealing the Confirmation Order shall have
lapsed;

 
 
k.
the Debtors have not filed or supported any other plan of reorganization or
liquidation other than the Plan of Reorganization;

 
 
l.
not later than March 7, 2008, the effective date of the Plan of Reorganization
and closing of the Credit Facilities (the “Closing Date”); and

 
 
m.
the other conditions set forth or referred to in the Exit Facility Term Sheet.

 
The terms and conditions of the commitments hereunder and of the Credit
Facilities are not limited to those set forth herein and in the Exit Facility
Term Sheet.  Those matters that are not covered by the provisions hereof and of
the Exit Facility Term Sheet are subject to the approval and agreement of the
Commitment Parties and the Borrowers.  This Commitment Letter shall remain in
full force and effect unless one of the conditions set forth above to the
obligations of the parties is not satisfied.

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5

 
You agree (a) to indemnify and hold harmless the Commitment Parties, their
affiliates and their respective directors, employees, advisors, attorneys and
agents (each, an “indemnified person”) from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the Credit
Facilities, the use of the proceeds thereof, the Transaction or any related
transaction or any claim, litigation, investigation or proceeding relating to
any of the foregoing, regardless of whether any indemnified person is a party
thereto, and to reimburse each indemnified person upon demand for any legal or
other expenses incurred in connection with investigating or defending any of the
foregoing, provided that the foregoing indemnity will not, as to any indemnified
person, apply to (i) losses, claims, damages, liabilities or related expenses to
the extent they are found by a final, non-appealable judgment of a court to
arise from the willful misconduct or gross negligence of such indemnified person
or (ii) without limiting the effectiveness of indemnification provisions set
forth in the Prepetition Credit Agreement, any and all expenses, losses, claims,
damages or liabilities that relate to litigation regarding any matter relating
to either the Prepetition Debt or any other claims that the indemnified persons
hold against the Debtors, including, without limitation expenses, losses, claims
damages or liabilities relating to the extent, validity, priority or amount of
such debt and/or claims, and (b) to reimburse each Commitment Party and its
affiliates on demand for all reasonable out-of-pocket expenses (including due
diligence expenses, syndication expenses, consultant’s fees and expenses, travel
expenses, and reasonable fees, charges and disbursements of counsel) incurred in
connection with the Credit Facilities and any related documentation (including
this Commitment Letter, the exhibits hereto, and the definitive financing
documentation) or the administration, amendment, modification or waiver
thereof.  No indemnified person or you shall be liable for any damages arising
from the use by others of Information or other materials obtained through
electronic, telecommunications or other information transmission systems, nor
shall any indemnified person ever be liable for any special, indirect,
consequential or punitive damages in connection with the Credit Facilities (such
special, indirect, consequential or punitive damages, the “Special Damages”),
except, in each case, to the extent any such damages are found by a final,
non-appealable judgment of a court to arise from the gross negligence or willful
misconduct of such indemnified person or you, or such indemnified person’s or
your affiliates, directors, employees, advisors or agents.
 
You acknowledge that each Commitment Party and its affiliates (the term
“Commitment Party” as used below in this paragraph being understood to include
such affiliates) may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect
of which you may have conflicting interests regarding the transactions described
herein (including without limitation, the Plan of Reorganization) and
otherwise.  No Commitment Party will use confidential information obtained from
you, any of your affiliates or any of your representatives, by virtue of the
transactions contemplated hereby or its other relationships with you in
connection with the performance by such Commitment Party of services for other
companies, and no Commitment Party will furnish any such information to other
companies.  You also acknowledge that no Commitment Party has any obligation to
use in connection with the transactions contemplated hereby, or to furnish to
you, confidential information obtained from other companies. You further
acknowledge that each of the Commitment Parties may from time to time effect
transactions, for its own or its affiliates’ account or the account of
customers, and hold positions in loans, securities or options on loans or
securities of the Borrowers and their affiliates and of other companies that may
be the subject of the transactions contemplated by this Commitment Letter.  For
the avoidance of doubt, no Commitment Party shall propose, participate in or
fund a chapter 11 plan of reorganization or asset sale under Section 363 of the
Bankruptcy Code or otherwise take any actions in the Cases inconsistent with
this Commitment Letter while this Commitment Letter is in effect.
 
Each Commitment Party may employ the services of its affiliates in providing
certain services hereunder and, in connection with the provision of such
services, may exchange with such affiliates information concerning you and the
other companies that may be the subject of the transactions contemplated by this
Commitment Letter, and, to the extent so employed, such affiliates shall be
entitled to the benefits afforded such Commitment Party hereunder.

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6

 
 
Neither this Commitment Letter nor the Fee Letter shall be assignable by you
without the prior written consent of each Commitment Party (and any purported
assignment without such consent shall be null and void).  This Commitment Letter
is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto and the indemnified persons.  This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by you and each Commitment Party.  This Commitment Letter may be
executed in any number of counterparts, each of which shall be an original, and
all of which, when taken together, shall constitute one agreement.  Delivery of
an executed signature page of this Commitment Letter by facsimile transmission
shall be effective as delivery of a manually executed counterpart hereof.  This
Commitment Letter and the Fee Letter are the only agreements that have been
entered into among us with respect to the Credit Facilities and set forth the
entire understanding of the parties with respect thereto.
 
This Commitment Letter shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.  You consent to the
nonexclusive jurisdiction and venue of the Bankruptcy Court, and in the event
that such Court declines to exercise jurisdiction or there is reason to believe
that it would decline to exercise jurisdiction, to the nonexclusive jurisdiction
and venue of the state or federal courts located in the City of New
York.  Subject to the foregoing, each party hereto irrevocably waives, to the
fullest extent permitted by applicable law, (a) any objection that it may now or
hereafter have to the laying of venue of any such legal proceeding in the state
or federal courts located in the City of New York and (b) any right it may have
to a trial by jury in any suit, action, proceeding, claim or counterclaim
brought by or on behalf of any party related to or arising out of this
Commitment Letter, the Exit Facility Term Sheet, the transactions contemplated
hereby or the performance of services hereunder.
 
The compensation, reimbursement and indemnification provisions contained herein
and in the Fee Letter and any other provision herein or therein which by its
terms expressly survives the termination of this Commitment Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or the commitments hereunder.
 
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof by returning to us executed counterparts hereof
and of the Fee Letter not later than 9:00 a.m., New York City time, on October
18, 2007.  This offer will automatically expire at such time if we have not
received such executed counterparts in accordance with the preceding sentence.

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We are pleased to have been given the opportunity to assist you in connection
with this important financing.
 

 
Very truly yours,
         
SILVER POINT FINANCE, L.L.C.
                   
By:
 /s/ Michael Gatto      
Name: Michael Gatto
     
Title:   Authorized Signatory
                 

 

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Accepted and agreed to as of
the date first written above by:

 
INTERSTATE BAKERIES CORPORATION
     
By:
/s/ J. Randall Vance    
Name:   J. Randall Vance
   
Title:     Senior Vice President
            Chief Financial Officer & Treasurer
             
INTERSTATE BRANDS CORPORATION
           
By:
/s/ J. Randall Vance    
Name:  J. Randall Vance
   
Title:    Senior Vice President
           Chief Financial Officer & Treasurer
                   

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ANNEX I

Reference is made to the $400,000,000 Exit Facility Commitment Letter, dated
October 18, 2007, among the Commitment Parties, IBC and Brands (the “Commitment
Letter”; undefined terms used herein shall have the meaning set forth in the
Commitment Letter) to which this Annex I is attached.  Each signatory below or
to a counterpart hereof (each a “Plan Supporter”) represents that the principal
amount of funded Prepetition Debt held by it is set forth below1 and hereby
agrees that it (a) shall support the Plan of Reorganization and Disclosure
Statement, (b) shall not support any other plan of reorganization or liquidation
filed in the Cases and (c) shall not sell, assign, transfer, syndicate,
participate or otherwise dispose of its holdings of Prepetition Debt (except to
another Plan Supporter or any transferee that becomes a Plan Supporter in
connection with such transaction) so long as:

(i) the Commitment Letter is in full force and effect;

(ii) except to the extent otherwise agreed by Plan Supporters whose Prepetition
Debt constitutes not less than 50% of the aggregate Prepetition Debt of all Plan
Supporters, the Debtors have not failed to satisfy any of the conditions
outlined on pages 3 and 4 of the Commitment Letter; and

(iii) the Plan of Reorganization and the Disclosure Statement accurately reflect
the Transactions and the terms and conditions outlined in the Plan Term Sheet,
do not contain provisions otherwise inconsistent with the Plan Term Sheet and
are otherwise in form and substance acceptable to the Commitment Parties, the
Prepetition Agent and the Plan Supporter.

Accepted and agreed to as of
the date first written above by:

[SIGNATURE PAGES ATTACHED]
 

 
1
As reflected on Plan Supporter’s books and records; not reconciled to the
Prepetition Agent’s register.

 

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2

 
SILVER POINT CAPITAL, L.P., as manager for the investment funds it manages that
are holders of $72,315,881.63 of principal amount of funded Prepetition Debt
representing 16.06% of the aggregate principal amount of funded Prepetition Debt
outstanding

 
By:
  /s/ Michael Gatto        
Name:  Michael Gatto
       
Title:    Authorized Signatory
 

 

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3

JPMORGAN CHASE BANK, N.A.
Holder of $4,505,295.00 of principal amount of funded Prepetition Debt
representing 1.0% of the aggregate principal amount of funded Prepetition Debt
outstanding

 
By:
 /s/ Susan E. Atkins         
Name:  Susan E. Atkins
       
Title:     Managing Director
 

MCDONNEL LOAN OPPORTUNITY LTD.
 
By:  MCDONNELL INVESTMENT MANAGEMENT LLC, as Investment Manager
       Holder of $78,246,999.61 of principal amount of funded Prepetition Debt
representing
       17.37% of the aggregate principal amount of funded Prepetition Debt
outstanding

 
By:
/s/ James R. Fellows         
Name:  James R. Fellows
       
Title:     Managing Director
 

QUADRANGLE MASTER FUNDING LTD
Holder of $63,865,612.00 of principal amount of funded Prepetition Debt
representing 14.2% of the aggregate principal amount of funded Prepetition Debt
outstanding

 
By:
 /s/ Michael A. Weinstock        
Name:  Michael A. Weinstock
       
Title:     Managing Principal
 

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Commitment Letter Exhibit A
 

 
INTERSTATE BAKERIES CORPORATION
SUMMARY OF TERMS FOR PLAN OF REORGANIZATION (THE “PLAN TERM SHEET”)
 
THIS SUMMARY IS NOT AN OFFER WITH RESPECT TO ANY SECURITIES OR SOLICITATION OF
ACCEPTANCES OF A CHAPTER 11 PLAN PURSUANT TO SECTION 1125 OF THE BANKRUPTCY
CODE.  ANY SUCH OFFER OR SOLICITATION WILL BE MADE ONLY IN COMPLIANCE WITH ALL
APPLICABLE SECURITIES LAWS AND PROVISIONS OF THE BANKRUPTCY CODE.  THIS OUTLINE
IS BEING PROVIDED IN FURTHERANCE OF SETTLEMENT DISCUSSIONS AND IS ENTITLED TO
PROTECTION PURSUANT TO FED. R. EVID. 408 AND ANY SIMILAR RULE OF EVIDENCE.  THE
TRANSACTIONS DESCRIBED IN THIS OUTLINE ARE SUBJECT IN ALL RESPECTS TO, AMONG
OTHER THINGS, DEFINITIVE DOCUMENTATION, INCLUDING THE PLAN OF REORGANIZATION,
DISCLOSURE STATEMENT AND RELATED DOCUMENTS.
 

 
I.
 
Exit Facility1
         
Committed Amount:
$400 million ((i) $120 million revolver, (ii) $60 million term loan and (iii)
$220 million LC facility)
         Term: 4 years for term loan; 5 years for revolver and LC facility      
 
Use of Proceeds:
To fund Plan of Reorganization consummation requirements and for general
corporate purposes.        
Interest Rate:
Revolver: LIBOR + 425 bps or Base Rate + 325 bps
Term Loans: LIBOR + 450 bps or Base Rate + 350 bps
        LC Fee:  425 bps        
 Security:
Guaranteed by the Company, including its direct and indirect subsidiaries,
secured by a first priority lien on substantially all of the Company’s property,
subject to a materiality threshold to be agreed.
       
Commitment Fee:
250 bps on the Committed Amount, half of which will be payable upon the
Bankruptcy Court’s entry of the Fee Order and half of which will be payable upon
closing of the Exit Facility.

 

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1
Capitalized terms used but not defined herein have the meanings ascribed to such
terms, as applicable, in (i) the
Commitment Letter to which this document is Exhibit A, (ii) the Exit Facility
Term Sheet that is Exhibit B to the
Commitment Letter or (iii) the Exit Facility Fee Letter that is executed
contemporaneously with the Commitment Letter.
 
 

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Unused Fee:
50 bps
       
 Make-Whole:
 
As described in the Exit Facility Term Sheet, applicable to Revolver and Term
Loans.          Alternative Exit Facility:  The Company may deliver a commitment
for a replacement exit facility (the “Alternative Exit Facility Commitment”), in
a form acceptable to the Commitment Parties, up until 30 days prior to the
Effective Date.  Within five (5) days following receipt of an Alternative Exit
Facility Commitment, the Commitment Parties may notify the Company of a proposal
to modify terms of the Exit Facility to be at least as favorable as terms
(interest rates, fees and other material terms) set forth in the Alternative
Exit Facility Commitment.  If the Commitment Parties and the Company do not
agree to an amendment to the Commitment Letter with terms substantially
consistent with, or improved from, the Alternative Exit Facility Commitment,
then the Debtors may enter into the Alternative Exit Facility Commitment and, in
such case, the Commitment Fee shall be adjusted as set forth in the Fee Letter.

 
 
II.
New 2nd Lien Notes

 
 
Amount:
$250 million

 
 
Term:
5 years

 
 
Use of Proceeds:
To fund, in part, Plan of Reorganization distributions to the Prepetition
Lenders.

 
 
Interest Rate & Fees:
LIBOR + 725 bps

 
 
Security:
Guaranteed by the Company, including its direct and indirect subsidiaries,
secured by a second priority lien on the collateral securing the Exit Facility.

 
 
Make-Whole:
During year one, no call and Traditional Make-Whole (defined below)
applies.  During years two through four, subject to terms and conditions
analogous to those of the Exit Facility Make-Whole, the lesser of (x) the
Traditional Make-Whole and (y)(i) 103 for year two, (ii) 102 for year three, and
(iii) 101 for year four.

 
Traditional Make-Whole: in connection with any prepayment or repayment prior to
stated maturity (including payment or repayment of the New 2nd Lien Notes
following acceleration, whether by action of the holders or by operation of
law), in
 

2

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addition to any principal repaid or prepaid, an amount equal to the sum of the
remaining scheduled payments of interest on the principal amount of New 2nd Lien
Notes to be prepaid or repaid, discounted to its present value as of the date of
prepayment or repayment at the applicable LIBOR rate plus 50 basis points, plus
accrued and unpaid interest on the principal amount being prepaid or repaid to
the date of such payment.
 
III.
Convertible Secured Notes

 
 
Amount:
$165 million (or such other amount as equals the funded Prepetition Debt less
(x) the aggregate amount of the New 2nd Lien Notes and (y) the conversion to
Common Stock (Class A) and/or repayment of $35 million of Prepetition Debt as
set forth below).

 
 
Term:
10 years

 
 
Use of Proceeds:
To fund, in part, Plan of Reorganization distributions to the Prepetition
Lenders.

 
 
Interest Rate:
8% PIK.  Interest may be paid in cash after the third anniversary of the
Effective Date if the Company’s pro forma fixed charged coverage ratio
(calculated as the ratio of (x) LTM EBITDA to (y) the sum of the following
amounts projected to be paid over the next 12 month period: interest expense for
all debt including the Convertible Secured Note plus mandatory prepayments and
scheduled amortization of indebtedness plus projected capital expenditures plus
cash taxes) is greater than 1.5 to 1.0.

 
 
Amortization:
To be paid at the rate of 5% per quarter beginning in year 6.

 
 
Security:
Guaranteed by the Company, including its direct and indirect subsidiaries,
secured by a third priority lien on the collateral securing the Exit Facility.

 
 
Optional Prepayment:
None.

 
 
Conversion:
Before any accretion from PIK Interest, convertible at any time into 61.11% of
the equity (Class B shares of Common Stock) subject to dilution from
management/director equity issued under the Long Term Incentive Plan at the
option of the holders of the Convertible Secured Notes.

 
 
The Company may require the conversion of all, but not less than all, of the
outstanding Convertible Secured Notes (i) on

 

3

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or after the fifth anniversary of the Effective Date of the Plan of
Reorganization into Common Stock at the conversion price so long as a minimum
volume of Common Stock (volume threshold to be agreed) trades at 150% of the
conversion price for 30 consecutive trading days prior to such conversion (the
“Conversion Threshold”) or, in the event that the Common Stock is not listed on
a nationally-recognized securities exchange, then the parties shall provide for
a mechanism for determining the value of the Common Stock and whether the
Conversion Threshold has been achieved and (ii) in connection with the
occurrence of a change in control or certain liquidity transactions on terms to
be mutually agreed.
 
 
Voting:
The Convertible Secured Notes will not have voting rights.

 
 
Make-Whole:
In the event of a conversion under clause (ii) of “Conversion” outlined above, a
traditional convertible make-whole to capture the lost option value remaining.

 
In connection with any repayment, redemption or prepayment prior to stated
maturity not otherwise provided in clause (i) and (ii) of “Conversion” outlined
above (including repayment, redemption or prepayment of the Convertible Secured
Notes following acceleration, whether by action of the holders or by operation
of law), in addition to any principal repaid, redeemed or prepaid, a traditional
convertible make-whole as outlined above plus an amount equal to the present
value of all remaining interest payments on the principal amount of
the Convertible Secured Notes (including any accretion to the original principal
by operation of PIK interest) repaid, redeemed or prepaid from the date of such
repayment, redemption or prepayment through the stated maturity date of the
Convertible Secured Notes computed using a discount rate equal to applicable US
Treasury rate plus 50 bps, plus accrued and unpaid interest on the principal
amount (including any accretion to the original principal by operation of PIK
interest) being repaid, redeemed or prepaid to the date of such payment.
 
IV.
Equity/Common Stock

 
The Company will have two classes of Common Stock.  Class A will have
supermajority voting rights, with votes per share to be calculated so that the
Prepetition Lenders will maintain majority control with primary equity issued on
the Effective Date (either 33.33% of equity or a reduced percentage after giving
effect to any reductions from rights offering proceeds outlined below).  Class B
will have one vote per share.  Upon disposition by a holder, Class A shares

4

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will convert into Class B shares with one vote per share.  Class A and Class B
shall be combined into a single class if none of the Convertible Secured Notes
are outstanding.
 
Subject to reduction from the proceeds of the Rights Offering outlined below,
33.33% of the equity (Class A shares of Common Stock) will be issued on the
Effective Date to the Prepetition Lenders in exchange for conversion of $35
million of Prepetition Debt (12.96% on a diluted basis after conversion of
Convertible Secured Notes).  66.67% of the equity (Class B shares of Common
Stock) will be issued on the Effective Date to the general unsecured creditors
(the “Unsecured Creditors”) (25.93% on a diluted basis after conversion of
Convertible Secured Notes).
 
The Common Stock (including Class B shares reserved, but not issued on the
Effective Date, or to be issued on conversion of the Convertible Secured Notes)
shall be subject to dilution from management/director equity interests issued
under the Long Term Incentive Plan.
 
V.
Rights Offering

 
The Debtors will make available to Unsecured Creditors a rights offering,
entitling such creditors to subscribe, at the reorganization value, for $50
million of shares of Common Stock (Class B).  To the extent not fully subscribed
by Unsecured Creditors, the rights will be available to holders of Prepetition
Debt.  The first $17.5 million of proceeds to be distributed to the Prepetition
Lenders on the Effective Date in lieu of shares of Common Stock having an
equivalent value.  Any proceeds above $17.5 million shall be retained by the
reorganized Debtors for general corporate purposes.  The Rights Offering will be
conducted on customary documentation containing terms to be mutually agreed upon
not less than seven (7) days prior to the Disclosure Statement Hearing.
 
VI.
Management Pool

 
Prior to confirmation of the Plan of Reorganization but not before the Debtors
file the Disclosure Statement, the Debtors shall establish a management
incentive plan for senior management and selected employees and the board of
directors that will serve after the Effective Date, providing incentive
compensation in the form of equity interests in reorganized IBC (the “Long Term
Incentive Plan”).  The Long Term Incentive Plan shall be subject to the consent
of the Lead Arrangers and the Prepetition Agent and, except in instances where
an executive’s employment agreement provides for an incentive award as of the
Effective Date, shall be implemented as soon as practicable after the Effective
Date upon ratification by the post-Effective Date board of directors.  Common
Stock reserved for issuance in conjunction with the Long Term Incentive Plan
shall be Class B shares and shall be protected against dilution from the
exercise of the Convertible Secured Notes.
 
VII.
Distributions to Prepetition Lenders

 
On the Effective Date, in addition to the benefits outlined in Section XII
below, in full satisfaction and discharge of the Prepetition Debt, (i) the
issuing lender under the Prepetition Credit Agreement shall receive a
back-to-back letter of credit with respect to all letters of credit outstanding
under the Prepetition Credit Agreement and (ii) on account of the Prepetition
Debt (including any claim for default rate interest), the Prepetition Lenders
shall

5

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receive the New 2nd Lien Notes, the Convertible Secured Notes and the Common
Stock in the amounts set forth above.  Nothing herein (x) relieves the
obligation of the Debtors to make the payments required under the Final Order
approving the DIP Facility and (y) shall be deemed consent by the Prepetition
Agent or the Prepetition Lenders for any treatment of the Prepetition Debt under
any plan of reorganization or liquidation proposed in connection with an
Alternative Transaction.
 
VIII.
Distributions to Unsecured Creditors

 
On the Plan Effective Date, Unsecured Creditors shall receive distributions of
Common Stock and shall have had the right to subscribe to the Rights Offering
all as described above.
 
IX.
Claims Treatment

 
Administrative Claims and Priority Claims to be paid in full.
 
Secured Tax Claims, Other Secured Claims and Intercompany Claims to be
unimpaired.
 
Claims of Prepetition Lenders and General Unsecured Claims to be impaired;
distributions outlined above.  Equity Interests to be impaired, with no
distribution to holders of Equity Interests.
 
X.
Other Key Terms

 
Composition of Board to consist of (i) four representatives of the Prepetition
Lenders, (ii) one representative of the General Unsecured Creditors, (iii) one
independent director selected by majority vote of the Prepetition Lenders, and
(iv) the Chief Executive Officer of the Company, the choice of whom shall be
acceptable to the Prepetition Lenders.
 
Terms of Plan of Reorganization, Disclosure Statement and related documentation
(including without limitation release/exculpation/indemnification provisions,
confirmation order, emergence documentation, intercreditor arrangements) to be
in form and substance acceptable to the Lead Arrangers and the Prepetition
Agent.
 
XI.
Conditions

 
The Exit Financing is subject to (a) ratification of union deals necessary to
implement the Company’s business plan, (b) Plan of Reorganization, Disclosure
Statement and related documentation (outlined above) satisfactory to the
Prepetition Lenders, (c) achievement of the milestones outlined in the
Commitment Letter and (d) other customary documentation and closing conditions.
 
The aggregate amount of all Alternative Exit Facility Commitments plus the Exit
Facility shall not exceed $400 million.

6

--------------------------------------------------------------------------------

 
XII.
Other

 
The Plan of Reorganization shall provide for general mutual releases and
exculpation by the Debtors and the reorganized Debtors for the benefit of (i)
all individuals who served as directors and officers of the Debtors at any time
during the period the Cases have been pending through the Closing Date
(collectively, the “Directors and Officers”, (ii) JPMorgan Chase Bank, N.A. and
its affiliates, (iii) the holders of Prepetition Debt and (iv) advisors,
attorneys and consultants to each of the foregoing and to the official
committees appointed in these cases.  The terms of the releases and exculpation
shall be in form and substance customary for transactions of this type, shall
include a release of, and exculpation in favor of the JPMorgan Chase Bank, N.A.
and the lenders under the Prepetition Credit Agreement from, all claims asserted
by the Debtors in the First Amended and Restated Complaint to Avoid and Recover
Certain Transfers and for Judgment (Ad. Pro. 06-04192) and shall be mutually
agreed by the Debtors, the Creditors’ Committee and the Administrative Agent.

In addition, reorganized Debtors shall assume (i) all existing indemnification
obligations under the Prepetition Credit Agreement and other prepetition
agreements with JPMorgan Chase Bank, N.A.  or any of the lenders under the
Prepetition Credit Agreement and (ii) indemnification obligations in favor of
the Directors and Officers (whether in the Debtors’ bylaws, contracts or
otherwise) and (iii) shall include provision for purchase of director and
officer liability insurance for the directors and officers of the reorganized
Debtors and, in addition, for any directors and officers who will not be in
service of the reorganized Debtors after the Effective Date which coverage shall
be in form, amount and structure satisfactory to the Debtors in their reasonable
business judgment.

In addition to negotiation and ratification of union agreements necessary to
implement the Company’s enhanced business plan, the Plan of Reorganization shall
also contain standard conditions to the effectiveness, which shall be in form
and substance acceptable to the Lead Arrangers and the Prepetition Agent.

7

--------------------------------------------------------------------------------

Commitment Letter Exhibit B
INTERSTATE BAKERIES CORPORATION
INTERSTATE BRANDS CORPORATION
 
Summary of Terms and Conditions for
Exit Loan Facility
in the Amount of $400,000,000
 
Interstate Bakeries Corporation (“IBC”, as reorganized, “Reorganized IBC”),
Interstate Brands Corporation (“Brands”, as reorganized, “Reorganized Brands”)
and their direct and indirect subsidiaries (collectively, the “Debtors”) have
commenced voluntary cases (the “Cases”) under Chapter 11 of Title 11 of the
United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court
for the Western District of Missouri (the “Bankruptcy Court”).   The Debtors
will be reorganized pursuant to the proposed plan of reorganization (the “Plan
of Reorganization”) in form and substance acceptable to the lenders (the
“Prepetition Lenders”) under the Amended and Restated Credit Agreement dated
April 4, 2002 (the “Prepetition Credit Agreement”) and consistent with the term
sheet attached to the Commitment Letter as Exhibit A.  The distributions to be
made under the Plan of Reorganization, including repayment of amounts
outstanding under the DIP Facility, will be financed from the Debtors’ available
cash and borrowings under the $400,000,000 exit facility (the “Exit
Facility”).  Set forth below are the terms and conditions for the Exit Facility
which would be available upon the Closing Date (defined below), which is assumed
to be the effective date of the Plan of Reorganization (the “Effective Date”).
 
Borrower:
Reorganized IBC and Reorganized Brands (the “Borrowers”).
 
 
Guarantors:
Each of the Borrowers’ direct and indirect, existing1 and future, subsidiaries
(each a “Guarantor” and collectively the “Guarantors”, and, together with the
Borrowers, the “Loan Parties”).
 
 
Lead Arrangers
and Bookrunners:
 
Silver Point Finance, L.L.C. and its affiliated investment funds (collectively,
the “Lead Arrangers”).
 
Administrative Agent
and Collateral Agent:
 
TBD, subject to the reasonable approval of the Debtors (the “Administrative
Agent”).
 
Lenders:
A syndicate of certain of the Prepetition Lenders and other financial
institutions reasonably acceptable to the Borrowers and the Lead Arrangers (the
“Lenders”).
 
 
REVOLVING
CREDIT FACILITY
 
   
Type and Amount:
A five-year revolving facility (the “Revolving Facility”; the commitments
thereunder, the “Revolving Commitments”) in the amount of $120,000,000 (the
loans thereunder, together with (unless the context otherwise requires) the
Swingline Loans referred to below, the “Revolving Loans”).

 
______________
1       Excluding Mrs. Cubbinson Foods, Inc.
 

--------------------------------------------------------------------------------

2

 
 
 
Purpose:
The Revolving Facility shall be available (a) to repay any loans or other
amounts outstanding under the DIP Facility, (b) to fund the ongoing working
capital requirements of the Borrowers and their subsidiaries and (c)
administrative expenses not to exceed an amount to be agreed.
 
Swingline Loans:
Up to a sublimit of the Revolving Facility to be agreed shall be available for
swingline loans (the “Swingline Loans”) from a Lender to be determined (in such
capacity, the “Swingline Lender”) on same-day notice.  Any Swingline Loans will
reduce availability under the Revolving Facility on a dollar-for-dollar
basis.  Each Lender under the Revolving Facility shall be unconditionally and
irrevocably required to purchase, under certain circumstances, a pro rata
participation in each Swingline Loan.
 
LETTER OF CREDIT
FACILITY
 
 
Type and Amount:
A five-year revolving letter of credit facility (the “Letter of Credit
Facility”; the commitments thereunder, the “Letter of Credit Commitments”) in
the amount of $220,000,000 for the issuance of letters of credit (the “Letters
of Credit”) by a Lender reasonably acceptable to the Borrowers (in such
capacity, the “Issuing Lender”) (the loans thereunder, the “Letter of Credit
Loans”).  No Letter of Credit shall have an expiration date after the earlier of
(a) one year after the date of issuance and (b) five days prior to the
Termination Date, provided that any Letter of Credit with a one-year tenor may
provide for the renewal thereof for additional one-year periods (which shall in
no event extend beyond the date referred to in clause (b) above).  The issuing
lender under the Prepetition Credit Agreement shall receive on the Closing Date
a back-to-back letter of credit from the Issuing Lender with respect to
prepetition letters of credit so deemed.
 
Drawings under any Letter of Credit shall be reimbursed by the Borrowers
(whether with their own funds or with the proceeds of Swingline Loans) on the
following business day.  To the extent that the Borrowers do not so reimburse
the Issuing Lender, the Lenders under the Letter of Credit Facility shall be
irrevocably and unconditionally obligated to fund participations in the
reimbursement obligation on a pro rata basis.
 
Purpose:
The Letter of Credit Facility shall be available (a) to replace or back-stop any
outstanding and undrawn letters of credit under the DIP Facility and the
Prepetition Credit Agreement and (b) for issuance of new Letters of Credit.
 
Fee:
A fee of 4.25% per annum of the amount of issued and outstanding Letters of
Credit shall be payable monthly in arrears.

--------------------------------------------------------------------------------

3

TERM LOAN FACILITY
 
Commitment:
A four-year term loan facility (the loans made thereunder, the “Term Loans”) in
the amount of $60,000,000.  The Term Loans shall be repayable in installments to
be agreed upon.
 
 
Purpose:
The proceeds of the Term Loans shall be available (a) to repay any loans or
other amounts outstanding under the DIP Facility, (b) to pay administrative
expense claims and other amounts necessary to consummate the Plan of
Reorganization and (c) to fund the ongoing working capital requirements of the
Borrowers and their subsidiaries.
 
 
Availability:
The Term Loans shall be made in a single drawing on the Effective Date.
 
 
Amortization
TBD.
 
 
GENERAL PROVISIONS2
 
 
Availability:
The Revolving Facility and the Letter of Credit Facility, subject to the
then-current Borrowing Base (as defined below), shall be available on a
revolving basis during the period commencing on the Closing Date and ending on
the date that is four years after the Closing Date (the “Termination Date”).
 
Maturity:
The Termination Date.
 
Interest Rate:
Revolver/LC Facility: LIBOR plus 4.25% per annum, or Base Rate plus 3.25% per
annum, payable monthly in arrears.
 
Term loans: LIBOR plus 4.50% per annum, or Base Rate plus 3.50% per annum,
payable monthly in arrears.
 
Default rate shall be 2.00% above the applicable interest rate.
 
LC Fee:
4.25% per annum
 
Unused Fee:
A rate per annum equal to .50% on the average daily unused portion of the
Revolving Commitments and Letter of Credit Commitments, payable monthly in
arrears.
 
Borrowing Base:
The amount from time to time available under the Revolving Facility and the
Letter of Credit Facility shall not exceed the lesser of (i) the sum of the
Revolving Commitments and the Letter of Credit Commitments and (ii) the sum (the
“Borrowing Base”) of the following components, in each case subject to advance
rates and customary reserves (such reserves to be determined by the
Administrative Agent from time to time as is customary for asset based
facilities of this type) to be mutually agreed among the Lead Arrangers and the
Borrowers: eligible accounts

 

--------------------------------------------------------------------------------

 2    The General Provisions are applicable to the Revolving Facility, the
Letter of Credit Facility and the Term Loans.

--------------------------------------------------------------------------------

4

 
receivable, inventory and real property.  The Borrowing Base will be computed at
least monthly by the Borrowers and a Borrowing Base certificate presenting the
Borrowers’ computation will be delivered to the Administrative Agent promptly,
but in no event later than the 25th day of the following fiscal period.
 
Priority and Liens:
The obligations of each Loan Party in respect of the Exit Facility shall be
secured by a perfected first priority lien on, and security interest in, all
intangible and tangible assets of the Loan Parties (including, without
limitation, intellectual property, real property having a value above an amount
to be agreed and all of the capital stock of Brands and each of its direct and
indirect subsidiaries (limited, in the case of foreign subsidiaries, to 66% of
the capital stock of first tier foreign subsidiaries to the extent a pledge of a
greater percentage could reasonably be expected to result in adverse tax
consequences)), except for those assets as to which the Lead Arrangers shall
determine in their sole discretion that the cost of obtaining a security
interest therein are excessive in relation to the value of the security to be
afforded thereby (collectively, the “Collateral”).  The Exit Facility shall be
secured by a first priority lien on all Collateral.
 
Optional Prepayments and
Commitment Reductions;
Make-Whole Payment:
Revolving Commitments, Letter of Credit Loans and Term Loans may be
terminated/prepaid by the Borrowers at any time in minimum amounts to be agreed
upon and in a manner to be agreed upon; providedthat prepayment, repayment or
early termination or reduction of any of the obligations under the Exit Facility
in conjunction with the Borrowers’ repayment, termination or permanent reduction
of the Exit Facility (but excluding the mandatory prepayments of Term Loans
outlined below) will obligate the Borrowers to promptly pay the Make-Whole
Amount to the Lenders.
 
“Make-Whole Amount” means, at any time, an amount, in addition to any principal
repaid or prepaid, equal to the present value at such time of all interest
payments on the principal amount of the Revolving Loans, Letter of Credit Loans
and Term Loans repaid or prepaid or deemed repaid or prepaid through the
Termination Date computed using a discount rate equal to the then current one
month LIBOR Rate plus 50 bps.   For purposes of this calculation:  (i) such
interest payments shall be determined based on the then current one month LIBOR
Rate plus the Applicable Margin and for the period through the Termination Date
and (ii) the outstanding principal amount of the Revolving Loans and the Letter
of Credit Loans shall be deemed to be the principal amount of the Revolving
Commitments and the Letter of Credit Commitments so permanently reduced or
terminated (the “Reduced Amount”).  Notwithstanding the foregoing, if at the
date of the termination of the Exit Facility, no Default or Event of Default has
occurred, the Make-Whole Amount shall be an amount equal to the lesser of (a)
the amount calculated as provided above and (b) the product of the Reduced
Amount plus all Term Loans repaid multiplied by (i) 103% on or prior to the
first anniversary of the date of the consummation of the Exit Facility (the
“Closing”); (ii) 102% after the first anniversary of the Closing and on or prior
to the second anniversary of the Closing; (iii) 101% after the second
anniversary of the Closing and on or prior to the third anniversary of the

5

--------------------------------------------------------------------------------

 
Closing; and (iv) 100% after the third anniversary of the Closing and on or
prior to the Termination  Date.
 
Optional termination of Revolving Commitments and Letter of Credit Commitments
may not be reborrowed.
 
Mandatory Prepayment and
Commitment Reductions:
Usual and customary for financings of this type, including net cash proceeds
from asset sales in excess of an annual and aggregate basket to be agreed.  In
the case of net cash proceeds from the sale of assets from the Southern
California shut-down described on a schedule as of the Closing Date, the
Borrowers shall be permitted to retain a portion of such proceeds, in an amount
to be agreed, and the remaining proceeds shall be applied as described below;
provided that the Borrowers shall not be obligated to pay the Make-Whole Amount
in connection with such repayment or in connection with the first $50 million of
asset sale proceeds (not to include the Southern California assets) during the
term of the facility.
 
Mandatory prepayments from asset sales shall be applied first, to the Term Loans
(on a pro-rata basis to all remaining scheduled amortization payments thereof,
if any) and second, if the aggregate face amount of Letters of Credit
outstanding exceeds $100 million, to cash collateralize Letters of Credit in
excess of $100 million.
 
Conditions of Initial
Extension of Credit:
The availability of the Exit Facility shall be conditioned upon the satisfaction
of conditions precedent usual for facilities and transactions of this type
including, without limitation, the following conditions (the date on which such
conditions are satisfied, the “Closing Date”):
 
 
(a)
The Bankruptcy Court shall have entered an order confirming the Plan of
Reorganization, which order (i) shall be in form and substance reasonably
satisfactory to the Lead Arrangers and (ii) shall be in full force and effect
and shall not have been reversed or modified (except for immaterial
modifications that do not affect the Lenders) and shall not be stayed or subject
to a motion to stay, and the period for appealing the order shall have
elapsed.  No provision of the Plan of Reorganization shall have been amended,
supplemented or otherwise modified (except for immaterial modifications that do
not affect the Lenders) in any respect without the prior written consent of the
Lead Arrangers.  The Effective Date shall have occurred (and all conditions
precedent thereto as set forth in the Plan of Reorganization shall have been
satisfied).  The documentation to effect the Plan of Reorganization, including
amendments to collective bargaining agreements necessary to effectuate the
Borrowers’ five year “enhanced” business plan, shall be in form and substance
satisfactory to the Lead Arrangers and no provision of such documentation shall
have been waived, amended, supplemented or otherwise modified without the
written consent of the Lead Arrangers.
 
 
(b)
The Lead Arrangers shall have received satisfactory evidence that all
obligations under the DIP Facility shall have been repaid

 

--------------------------------------------------------------------------------

6

 
 

   
in full in cash and all commitments thereunder shall have been terminated and
all liens and security interests related thereto shall have been terminated or
released.
 
 
(c)
The Lead Arrangers shall have received satisfactory evidence that a mutually
agreeable number of collective bargaining agreements have been amended and
ratified, as appropriate, for the Borrowers to implement the five year
“enhanced” business plan.
 
 
(d)
The following categories of claims (if any) shall be allowed or allowable in an
aggregate amount to be agreed: administrative claims (including, without
limitation, professional fees and claims arising from the assumption of
executory contracts or unexpired leases, but excluding administrative claims
incurred and paid in the ordinary course); priority claims; secured claims;
convenience claims; and PACA/PASA trust claims.
 
On-Going Conditions:
The making of each extension of credit shall be conditioned upon (a) the
accuracy in all material respects of all representations and warranties and (b)
there being no default or event of default in existence at the time of, or after
giving effect to the making of, such extension of credit.
 
Representations
and Warranties:
Usual and customary for financings of this type (with customary exceptions and
materiality thresholds to be mutually agreed) including, without limitation,
financial statements (including pro forma financial statements); absence of
undisclosed liabilities; no material adverse change; corporate existence;
compliance with law; corporate power and authority; enforceability of credit
documentation; no conflict with law or contractual obligations; no material
litigation; no default; ownership of property; liens; intellectual property;
taxes; Federal Reserve regulations; labor matters; ERISA (with exceptions for
the ABA pension plan as currently provided in the DIP Facility); Investment
Company Act and other regulations; subsidiaries; use of proceeds; environmental
matters; accuracy of disclosure; creation and perfection of security interests;
solvency; Regulation H; and delivery of certain documents.
 
Affirmative Covenants:
Usual and customary for financings of this type (with customary exceptions and
materiality thresholds to be mutually agreed) including, without limitation,
delivery of period, quarterly and annual financial statements, reports,
accountants’ letters, projections, monthly borrowing base certificates,
officers’ certificates and other information reasonably requested by the
Lenders; payment of taxes and other obligations; continuation of business and
maintenance of existence and material rights and privileges; compliance with
laws and material contractual obligations; maintenance of property and
insurance; maintenance of books and records; right of the Lenders to inspect
property and books and records; notices of defaults, litigation and other
material events; compliance with environmental laws; further assurances
(including, without limitation, with respect to security interests in
after-acquired property); and agreement to obtain interest rate protection.

--------------------------------------------------------------------------------

7

Financial Covenants:
Usual and customary for financings of this type, including, without limitation,
minimum EBITDA and maximum leverage.
 
Negative Covenants:
Usual and customary for financings of this type (with customary exceptions and
materiality thresholds to be mutually agreed) including, without limitation,
limitations on: indebtedness (including guarantee obligations); liens; mergers,
consolidations, liquidations and dissolutions; sales of assets; dividends and
other payments in respect of capital stock; capital expenditures; acquisitions,
investments, loans and advances; prepayments and modifications of documentation
governing junior securities; transactions with affiliates; sale-leasebacks;
changes in fiscal year; hedging arrangements; negative pledge clauses and
clauses restricting subsidiary distributions; and changes in lines of business.
 
Events of Default:
Usual and customary for financings of this type (with customary exceptions and
materiality thresholds to be mutually agreed) including, without limitation,
nonpayment of principal when due; nonpayment of interest, fees or other amounts
after a grace period to be agreed upon; material inaccuracy of a representation
or warranty when made; violation of a covenant (subject, in the case of certain
affirmative covenants, to a grace period to be agreed upon); cross-default to
material indebtedness; bankruptcy events; labor events; certain ERISA events
(including incurrence of withdrawal liability in excess of an amount to be
determined, with exceptions for the ABA pension plan as currently provided in
the DIP Facility); material judgments (in excess of insurance); actual or
asserted invalidity of any guarantee or security document; and a change of
control (the definition of which is to be agreed upon).
 
Assignments and Participations:
Usual and customary for financings of this type (including Borrowers’ consent
rights which consent shall not be unreasonably withheld; provided however that
if a Default or Event of Default shall have occurred or be continuing, the
Borrowers shall not have any consent rights).
 
Voting:
Usual and customary for financings of this type.
 
Governing Law:
New York.