ibc_ex10-1.htm


     

    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”).

    

      

    

      
      
        	
                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.

              


      

      


        
          
            
            

          

          
            
            

            
              

              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.


    
      
        
        

      

      
        
        

        
          

          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

            


    

     

    
      
        
        

      

      
        
        

        
          

          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.


    
      
        
        

      

      
        
        

        
          

          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.

    
      
        
        

      

      
        
        

        
          

          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.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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

            	 
	 	 	 	 
	 	 	 	 


    

    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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

            	 
	 	 	 
	 	 	 
	 	 	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              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.

              


      

    

     

    
      
        
        

      

      
        
        

        
          

          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

            	 


    

    


     


    
      
        
        

      

      
        
        

        
          

          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

            	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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.


      

       

    

    
      

    

    
      
        	
                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.

                  

                

              	
                 

              	
                 

              


      

      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        



    

    
      	
               

            	
              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

        
          

        

      

      
        
        

      

    


    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

        
          

        

      

      
        
        

      

    


    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

        
          

        

      

      
        
        

      

    


    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

        
          

        

      

      
        
        

      

    


    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.