Document:

exv10w56

Exhibit 10.56

EXECUTION COPY

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT, dated as of September 12, 2008 (this “Agreement”), between American
Railcar Industries, Inc., a Delaware corporation (the “Company”) and Mr. Dale Davies (the
“Employee”).

1. Employment

(a) Upon the terms and conditions hereinafter set forth, the Company hereby agrees to employ the
Employee and the Employee hereby agrees to become so employed. During the Term of Employment (as
hereinafter defined), the Employee shall be employed in the position of Senior Vice President,
Chief Financial Officer and Treasurer of the Company, reporting to James J. Unger, Chief Executive
Officer of the Company and the Board of Directors of the Company (the “Board”), and as an officer
of subsidiaries of the Company as specified and directed by the Board from time to time, and shall
perform such duties, consistent with such status and position, as are specified from time to time
by, and shall serve in such capacities at the pleasure of, the Company and the Board, subject to
the terms hereof.

(b) During the Term of Employment (as hereinafter defined), the Employee shall devote all of his
professional attention, on a full time basis, to the business and affairs of the Company and shall
use his best efforts to advance the best interest of the Company and shall comply with all of the
policies of the Company, including, without limitation, such policies with respect to legal
compliance, conflicts of interest, confidentiality and business ethics as are from time to time in
effect.

(c) During the Term of Employment, the Employee shall not directly or indirectly render services
to, or otherwise act in a business or professional capacity on behalf of or for the benefit of, any
other “Person” (as defined below) as an employee, advisor, member of a board or similar governing
body, independent contractor, agent, consultant, representative or otherwise, whether or not
compensated. “Person” or “person”, as used in this Agreement, means any individual, partnership,
limited partnership, corporation, limited liability company, trust, estate, cooperative,
association, organization, proprietorship, firm, joint venture, joint stock company, syndicate,
company, committee, government or governmental subdivision or agency, or other entity.

2. Term

The employment period shall commence as of September 1, 2008 (the “Effective Date”) and shall
continue through September 1, 2011 (the “Expiration Date”) (such period being referred to herein as
the “Term of Employment.”

 

 

3. Compensation

For all services to be performed by the Employee under this Agreement, during the Term of
Employment, the Employee shall be compensated in the following manner:

	 	(a)	 	Base Compensation

The Company will pay the Employee a salary (the “Base Salary”) at an annual rate of $185,000 per
full 365-day year. The Base Salary shall be payable in accordance with the normal payroll practice
of the Company. The Base Salary will be reviewed periodically by the Board of Directors as is
customary with other officers. Following such review, the Board of Directors may, at its absolute
and sole discretion, increase (but shall not be required to increase) the Base Salary or other
benefits.

	 	(b)	 	Bonus Compensation

The Company will pay the Employee an annual bonus for each calendar year of employment ending on or
after December 31, 2008, calculated based on the achievement of objective performance targets for
the Company to be set by the Board (or a committee thereof) not later than March 31 for each such
calendar year, of up to 50% of Base Salary, if such performance targets are met. The compensation
payable as contemplated in the preceding sentence of this section 3(b) is referred to herein as
“Bonus Compensation”. The Bonus Compensation in respect of any calendar year shall be paid no
later than March 15 of the following calendar year or such later day as permissible under Section
409A of the Internal Revenue Code of 1986, as amended from time to time, (the “Code”) and the
guidance issued thereunder from time to time, but in any event no later than promptly following
completion of the audited financial statements of the Company for the calendar year in question
(such date, the “Bonus Payment Date”).

	 	(c)	 	Taxes

 

 

All amounts paid to the Employee under or pursuant to this Agreement, including, without
limitation, the Base Salary and any Bonus Compensation, if any, any other compensation or benefits,
whether in cash or in kind, shall be subject to normal federal, state and, if applicable, local or
foreign tax withholding and deductions imposed by any one or more federal, state, local and or
foreign governments, or pursuant to any foreign or domestic applicable law, rule or regulation.

4. Benefits.

During the Term of Employment, and in addition to any benefits and perquisites to which the
Employee is otherwise entitled pursuant to this Agreement, the Employee shall be entitled to
receive healthcare, group term life insurance, group long-term disability insurance, 401(k)
participation, vacation, and other similar employee benefits at least equal to those currently or
subsequently received by other senior employees of the Company as such may be provided by the
Company in its sole and absolute discretion from time to time. In addition, during the Term of
Employment, the Employee shall be entitled to reimbursement for the reasonable use of an automobile
on terms consistent to those received by other senior employees of the Company.

5. Termination

This Agreement shall terminate (subject to Section 9(f) below) and the Term of Employment and the
employment of Employee hereunder shall end, on the first to occur of any of the following (each a
“Termination Event”):

	 	(a)	 	The Expiration Date;
	 
	 	(b)	 	The: (i) death of the Employee or (ii) reasonable determination of the Board,
which determination shall be reached in consultation with appropriate medical
professionals, that the Employee has become physically or mentally incapacitated so as
to be unable to perform the essential functions of Employee’s duties to the Company for
60 consecutive days, even with reasonable accommodation, (the “Disability);
	 
	 	(c)	 	The discharge of the Employee by the Company with or without Cause; or
	 
	 	(d)	 	the resignation of the Employee for Good Reason (without limiting the effect of
such resignation, the Employee agrees to provide the Company not less than 30 days
prior written notice of such resignation.

The Company may discharge the Employee at any time, for any reason or no reason, with or without
Cause. As used herein, “Cause” is defined as the Employee’s: (i) failure to perform substantially
the duties of the Senior Vice President, Chief Financial Officer andTreasurer of the Company (other
than any such failure resulting from incapacity due to Disability), (ii) charged with any crime
other than traffic violations, (iii) engagement in an act of fraud or of willful dishonesty towards
the Company, (iv) material breach of this Agreement, (v) willful misconduct or gross negligence in
the performance of Employee’s duties hereunder, or (vi) violation of a federal or state securities
law or regulation. As used herein, “Good Reason” means the occurrence of any one or more of the

 

 

following events without the express consent of the Employee: (i) a material breach by Company of
its obligations under this Agreement, (ii) a material diminution in Employee’s position of duties
of Senior Vice President, Chief Financial Officer and Treasurer of the Company as set forth in this
Agreement, (iii) any reduction in Employee’s Base Salary or benefits, or (iv) any relocation of
Employee’s assigned workplace to an area outside of the greater St. Louis metropolitan area. A
Good Reason shall not exist until the Company has first failed to cure such failure or breach
within thirty days of having been given written notice of such failure or breach by the Employee.
To the extent the Employee is discharged or resigns, or is otherwise terminated or is deemed
terminated, in each case as provided herein, from his position with the Company, he shall be and be
deemed to have ceased his employment in the same manner with all of the subsidiaries of the
Company.

6. Effect of Termination

In the event of termination of the Employee’s employment hereunder, all rights of the Employee
under this Agreement, including all rights to compensation, shall end and the Employee shall only
be entitled to be paid the amounts set forth in this Section 6 below; provided,
that, the obligations of the Company to make any payment required pursuant to this Section
6 (other than (x) any amounts of the Employee’s Base Salary previously earned and accrued and (y)
in accordance with the Company’s policy, unreimbursed business expenses of the Employee, ((x) and
(y) collectively, the “Accrued Obligations”), but with the exception of the Accrued Obligations
being payable under clause (c) below), is conditioned upon (i) execution and delivery by the
Employee to the Company of a settlement and release agreement in favor of the Company, its
affiliates and their respective officers, directors, employees, agents and equity holders in
respect of the Employee’s employment with the Company and the termination thereof in form
substantially as set forth in Exhibit A, attached hereto, and (ii) such agreement, once executed by
the Employee and delivered to the Company, becomes irrevocable, enforceable and final under the
applicable law.

	 	(a)	 	In the event that the Employee’s employment is terminated for the reason set
forth in Section 5(a) above (i.e., Expiration Date), then, in lieu of any other
payments of any kind (including without limitation, any severance payments), the
Employee shall be entitled to receive, within thirty (30) days following the date on
which the Termination Event in question occurred (the “Clause (a) Termination Date”)
(or, in the case of any Bonus Compensation, as soon as practicable following the
calculation thereof):

	 	(i)	 	the Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (a) Termination Date; and
	 
	 	(ii)	 	any amounts of Bonus Compensation earned and due in respect of a
completed calendar year, which remains unpaid to the Employee as of the Clause
(a) Termination Date.

	 	(b)	 	In the event that the Employee’s employment is terminated for the reason set
forth in Section 5(b) above (i.e., death or Disability), then, in lieu of any other
payments of any kind (including without limitation, any severance payments), the
Employee shall

 

 

	 	 	 	be entitled to receive, within thirty (30) days following the date on which the
Termination Event in question occurred (the “Clause (b) Termination Date”) (or, in
the case of any Bonus Compensation, as soon as practicable following the calculation
thereof):

	 	(i)	 	the Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (b) Termination Date;
	 
	 	(ii)	 	any amounts of Bonus Compensation earned and due with respect to
a completed calendar year, which remains unpaid to the Employee as of the Clause
(b) Termination Date; and
	 
	 	(iii)	 	a pro-rated portion of the Bonus Compensation computed as set
forth below.

	 	(c)	 	In the event that the Employee’s employment is terminated due to the discharge
of the Employee by the Company without Cause (which the Company is free to do at any
time in its sole and absolute discretion) or the Employee’s termination of this
Agreement for Good Reason, then, in lieu of any other payments of any kind (including,
without limitation, any severance payments), the Employee shall be entitled to receive,
within thirty (30) days following the date on which the Termination Event in question
occurred (the “Clause (c) or (d) Termination Date”) (other than in the case of (iv),
which shall be paid in accordance with normal payroll practice of the Company or, in
the case of any Bonus Compensation, as soon as practicable following the calculation
thereof):

	 	(i)	 	the Employee’s Accrued Obligations, due and unpaid to the
Employee from the Company as of the Clause (c) or (d) Termination Date;
	 
	 	(ii)	 	any amounts of Bonus Compensation earned and due with respect to
a completed calendar year, which remains unpaid to the Employee as of the Clause
(c) or (d) Termination Date;
	 
	 	(iii)	 	a pro-rated portion of the Bonus Compensation computed as set
forth below; and
	 
	 	(iv)	 	a continuation of the payment, in accordance with the normal
payroll practice of the Company, of amounts of Base Salary that the Employee
would have earned through the Expiration Date had he continued to be employed by
the Company through the Expiration Date.

	 	(d)	 	In the event of any termination of the Employee’s employment, the Employee
shall be under no obligation to seek other employment, but in the event the Employee
becomes employed following any such termination, the Company shall be entitled to an
offset of the payments paid or to be paid under clause (iv) of Section 6(c) above, on
account of any remuneration or other benefit attributable to any subsequent

 

 

	 	 	 	employment that the Employee may obtain. The Employee shall correctly disclose to
the Company all such remuneration or other benefit, and if there is a written
employment agreement in connection therewith, provide the Company with a copy
thereof.
	 
	 	(e)	 	For the purpose of this Section 6, any Bonus Compensation shall be deemed to be
earned and to become due and payable with respect to any calendar year only if the Term
of Employment has continued through December 31, of such year and, with respect to the
amounts, if any, of such Bonus Compensation for any year, shall be determined based
upon the level of attainment of the applicable performance targets for such year. In
the event that, pursuant to the terms of this Section 6, the Employee is entitled to
receive any pro rated Bonus Compensation, such pro ration shall be determined following
December 31 of the calendar year in which the Employee ceases to be employed hereunder,
but shall be paid no later than the following Bonus Payment Date, and shall be
calculated by multiplying the Bonus Compensation that would have been deemed earned and
to become due and payable in accordance with the terms of this Agreement with respect
to the calendar year in which the Employee ceases to be employed hereunder if the Term
of Employment had continued through December 31 of such year as determined based upon
the applicable performance targets for such year, by a fraction, the numerator of which
is the number of days from (and including) January 1 of such year through (and
including) the last day of employment hereunder, and the denominator of which is 365.

7. Non-Disclosure

During the Term of Employment and at all times thereafter, the Employee shall hold in a fiduciary
capacity for the benefit of the Company and each of its affiliates, all secret or confidential
information, knowledge or data, including, without limitation, trade secrets, sources of supplies
and materials, customer lists and their identity, designs, production and design techniques and
methods, identity of investments, identity of contemplated investments, business opportunities,
valuation models and methodologies, processes, technologies, and any other intellectual property
relating to the business of the Company or its affiliates, and their respective businesses, (i)
obtained by the Employee during the Employee’s employment by the Company and any of the
subsidiaries of the Company and (ii) not otherwise in the public domain, (“Confidential
Information”). The Employee also agrees to keep confidential and not disclose any personal
information regarding any controlling Person of the Company, including Carl C. Icahn, or any of its
or his affiliates and their employees, and any member of the immediate family of any such Person
(and all such personal information shall be deemed “Confidential Information” for the purposes of
this Agreement). The Employee shall not, without the prior written consent of the Company (acting
at the direction of the Board): (i) except to the extent compelled pursuant to the order of a court
or other body having jurisdiction over such matter or based upon the advice of counsel that such
disclosure is legally required, communicate or divulge any Confidential Information to anyone other
than the Company and those designated by the Company; or (ii) use any Confidential Information for
any purpose other than the performance of his duties pursuant to this Agreement. The Employee will
assist the Company or its designee, at the Company’s expense, in obtaining a protective order,
other appropriate remedy or other reliable

 

 

assurance that confidential treatment will be accorded any Confidential Information disclosed
pursuant to the terms of this Agreement.

All processes, know-how, technologies, trade-secrets information, intellectual property and
inventions (collectively, “Inventions”) conceived, developed, invented, made or found by the
Employee, alone or with others, during the Term of Employment and out of the performance of his
duties and responsibilities hereunder, whether or not patentable and whether or not on the
Company’s or any of its subsidiaries’ time or with the use of the Company’s or any of its
subsidiaries’ facilities or materials, shall be the property of the Company or its respective
subsidiary, as the case may be, and shall be promptly and fully disclosed by the Employee to the
Company. The Employee shall perform all necessary acts (including, without limitations, executing
and delivering any confirmatory assignments, power of attorney, documents, or instruments requested
by the Company or any of its subsidiaries) to vest title to any such Invention in the Company or
the applicable subsidiary and to enable the Company or the applicable subsidiary, at their expense,
to secure and maintain domestic and/or foreign patents or any other rights for such Inventions.

All right, title and interest in all copyrightable material that the Employee shall conceive or
originate individually or jointly or commonly with others, and that arise during the term of his
employment with the Company and out of the performance of his duties and responsibilities under
this Agreement, shall be the property of the Company and are hereby assigned by the Employee to the
Company, along with ownership of any and all copyrights in the copyrightable material. Upon
request and without further compensation therefor, but at no expense to the Employee, the Employee
shall execute any and all papers and perform all other acts necessary to assist the Company to
obtain and register copyrights on such materials in any and all countries. Where applicable, works
of authorship created by the Employee for the Company in performing his duties and responsibilities
hereunder shall be considered “works made for hire,” as defined in the U.S. Copyright Act.

8. Non-Compete and Non-Solicitation

	 	(a)	 	In addition to, and not in limitation of, all of the other terms and provisions
of this Agreement, the Employee agrees that during the Term of Employment, the Employee
will comply with the provisions of Section 1 above.
	 
	 	(b)	 	Unless the Employee’s employment is terminated by the Company without Cause,
for the later of (i) a period of one (1) year following the last day of the Term of
Employment or (ii) the period during which the Company continues to pay Base Salary to
the Employee after termination of employment under Section 6(c)(iv), the Employee will
not, either directly or indirectly, as principal, agent, owner, employee, director,
partner, investor, shareholder (other than solely as a holder of not more than 1% of
the issued and outstanding shares of any public corporation), consultant, advisor or
otherwise howsoever own, operate, carry on or engage in the operation of or have any
financial interest in or provide, directly or indirectly, financial assistance to or
lend money to or guarantee the debts or obligations of any Person carrying on or
engaged in any business that is similar to or competitive with the business conducted
by the Company or any of its subsidiaries during or on the date of termination of

 

 

	 	 	 	Employee’s employment. The business of manufacturing, selling and/or distributing
railcars and railcar parts and other related products shall be and be deemed to be
“competitive” with the business conducted by the Company for the purposes hereof.
	 
	 	(c)	 	The Employee covenants and agrees with the Company and its subsidiaries that,
during the Term of Employment and for the later of (i) one (1) year following the last
day of the Term of Employment or (ii) the period during which the Company continues to
pay Base Salary to the Employee under Section 6(c)(iv) thereafter, the Employee shall
not directly, or indirectly, for himself or for any other Person:

	 	(i)	 	solicit, interfere with or endeavor to entice away from the
Company or any of its subsidiaries or affiliates, any customer, client or any
Person in the habit of dealing with any of the foregoing;
	 
	 	(ii)	 	attempt to direct or solicit any customer or client away from the
Company or any of its subsidiaries or affiliates;
	 
	 	(iii)	 	interfere with, entice away or otherwise attempt to obtain the
withdrawal of any employee of the Company or any of its subsidiaries or
affiliates; or
	 
	 	(iv)	 	advise any Person not to do business with the Company or any of
its subsidiaries or affiliates.

The Employee represents to and agrees with the Company that the enforcement of the restrictions
contained in Section 7 and Section 8 (the Non-Disclosure and Non-Compete and Non-Solicitation
sections respectively) would not be unduly burdensome to the Employee and that such restrictions
are reasonably necessary to protect the legitimate interests of the Company. The Employee agrees
that the remedy of damages for any breach by the Employee of the provisions of either of these
sections may be inadequate and that the Company shall be entitled to injunctive relief, without
posting any bond. This section constitutes an independent and separable covenant that shall be
enforceable notwithstanding any right or remedy that the Company may have under any other provision
of this Agreement or otherwise.

9. Miscellaneous

	 	(a)	 	This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all previous written, and all
previous or contemporaneous oral negotiations, understandings, arrangements, and
agreements, and may be amended, modified or changed only by a written instrument
executed by the Employee and the Company.
	 
	 	(b)	 	This Agreement and all of the provisions hereof shall inure to the benefit of
and be binding upon the legal representative, heirs, distributees, successors (whether
by merger, operation of law or otherwise) and assigns of the parties hereto; provided,
however, that the Employee may not delegate any of the Employee’s duties

 

 

	 	 	 	hereunder, and may not assign any of the Employee’s rights hereunder, and any such
purported or attempted assignment or delegation shall be null and void and of no
legal effect. In the event the Company assigns this Agreement and its successor
assumes the Company’s obligations hereunder in writing or by operation of law, (i)
the Company shall be released from all of its obligations hereunder, and (ii) all of
the references to the Company, and to the Board, shall be deemed to be references to
the Company’s successor and to the governing body of such successor, respectively.
The Company and all of its future or current subsidiaries shall be and be deemed to
be third-party beneficiaries of this Agreement.
	 
	 	(c)	 	This Agreement will be interpreted and the rights of the parties determined in
accordance with the laws of the United States applicable thereto and the internal laws
of the State of New York.
	 
	 	(d)	 	The Employee covenants and represents that (i) he is not a party to any
contract, commitment, restrictive covenant or agreement, nor is he subject to, or bound
by, any order, judgment, decree, law, statute, ordinance, rule, regulation or other
restriction of any kind or character, which would prevent or restrict his from entering
into and performing his obligations under this Agreement, (ii) he is free to enter into
the arrangements contemplated herein, (iii) he is not subject to any agreement or
obligation that would limit his ability to act on behalf of the Company or any of its
subsidiaries, and (iv) his termination of his existing employment, his entry into the
employment contemplated herein and his performance of his duties in respect thereof,
will not violate or conflict with any agreement or obligation to which he is subject.
Employee has delivered to the Company true and complete copies of any currently
effective employment agreement, non-competitive agreement or similar agreement to which
Employee is subject.
	 
	 	(e)	 	The Employee acknowledges that he has had the assistance of legal counsel in
reviewing and negotiating this Agreement.
	 
	 	(f)	 	This Agreement and all of its provisions (other than the provisions of Section
5, Section 6, Section 7, Section 8, and Section 9 hereof, which shall survive
termination) shall terminate upon the Employee ceasing to be an employee of the Company
for any reason.
	 
	 	(g)	 	All notices and other communications hereunder shall be in writing; shall be
delivered by hand delivery to the other party or mailed by registered or certified
mail, return receipt requested, postage prepaid or by a nationally recognized courier
service such as Federal Express; shall be deemed delivered upon actual receipt; and
shall be addressed as follows:
	 
	 	 	 	If to the Company:
	 
	 	 	 	American Railcar Industries, Inc.

 

 

	 	 	 	100 Clark Street

St. Charles, Missouri 63301

Facsimile:       (636) 940-6044

Attention:       James J. Unger, President and Chief Executive Officer
	 
	 	 	 	If to the Employee:
	 
	 	 	 	At the last known principal residence address reflected in the payroll records of the
Company, or to such other address as either party shall have furnished to the other
in writing in accordance herewith.

[Signature Page Follows]

 

 

	 	 	 	 	 
	AMERICAN RAILCAR INDUSTRIES, INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/ JAMES J. UNGER 	 	 
	 

	 	 

Name: James J. Unger
	 	 
	 

	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	EMPLOYEE:	 	 
	 
	 	 	 	 
	By:
	 	/s/ DALE DAVIES 	 	 
	 

	 	 

     Dale Davies
	 	 
	 
	 	 	 	 
	Date: September 12, 2008	 	 

[Signature page to Dale Davies Employment Agreement]

 

 

[FORM OF RELEASE]

Exhibit A

GENERAL RELEASE OF ALL CLAIMS

     This General Release of All Claims is made in consideration of severance payments and other
benefits provided to the undersigned employee under the Employment Agreement with American Railcar
Industries, Inc., a Delaware corporation (the “Company”), dated as of September 12, 2008
(“Employment Agreement”). Unless otherwise defined herein, the terms defined in the Employment
Agreement shall have the same defined meaning in this General Release.

     1. For valuable consideration to be paid to Employee, upon expiration of the seven day
revocation period provided in Section 10 herein, in lump sum or as salary continuation as provided
for in Section 6 of the Employment Agreement and to which he is not contractually entitled to
absent the execution of this General Release, the adequacy of which is hereby acknowledged, the
undersigned (“Employee”), for himself, his spouse, heirs, administrators, children,
representatives, executors, successors, assigns, and all other persons claiming through Employee,
if any (collectively, “Releasers”), does hereby release, waive, and forever discharge the Company
and the Company’s subsidiaries, parents, affiliates, related organizations, employees, officers,
directors, shareholders, attorneys, successors, and assigns as well as all Related Parties
(collectively, the “Releasees”) from, and does fully waive any obligations of Releasees to
Releasers for, any and all liability, actions, charges, causes of action, demands, damages, or
claims for relief, remuneration, sums of money, accounts or expenses (including, without
limitation, attorneys’ fees and costs) of any kind whatsoever (collectively, the “Released
Claims”), whether known or unknown or contingent or absolute, which heretofore has been or which
hereafter may be suffered or sustained, directly or indirectly, by Releasers in consequence of,
arising out of, or in any way relating to Employee’s employment with the Company or any of its
affiliates and the termination of Employee’s employment including the payment of Employee’s Accrued
Obligations under Section 6 of the Employment Agreement. The foregoing release and discharge,
waiver and covenant not to sue includes, but is not limited to, all claims, and any obligations or
causes of action arising from such claims, under common law including any state or federal
discrimination, fair employment practices or any other employment-related statute or regulation (as
they may have been amended through the date of this agreement) prohibiting discrimination or
harassment based upon any protected status including, without limitation, race, color, religion,
national origin, age, gender, marital status, disability, handicap, veteran status or sexual
orientation. Without limitation, specifically included in this paragraph are any claims arising
under the Federal Rehabilitation Act of 1973, Age Discrimination in Employment Act of 1967, as
amended (“ADEA”), the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of
1964, as amended by the Civil Rights Act of 1991, the Equal Pay Act, the Americans With
Disabilities Act, the National Labor Relations Act, the Fair Labor Standards Act, the Employee
Retirement Income Security Act of 1974, the Family Medical Leave Act of 1993, the Consolidated
Omnibus Budget Reconciliation Act of 1985, and any similar state statutes. The foregoing release
and discharge also expressly includes any Released Claims under any state or federal common law
theory, including, without limitation wrongful or retaliatory discharge, breach of express or
implied contract, promissory estoppel, unjust enrichment, breach of covenant of good faith and fair
dealing, violation of

Confidential

 

 

public policy, defamation, interference with contractual relations, intentional or negligent
infliction of emotional distress, invasion of privacy, misrepresentation, deceit, fraud or
negligence. This also includes a release by Employee of any Released Claims for alleged physical
or personal injury, emotional distress relating to or arising out of Employee’s employment with the
Company or the termination of that employment; and any Released Claims under the WARN Act or any
similar law, which requires, among other things, that advance notice be given of certain work force
reductions. This release and waiver applies to any Released Claims or rights that may arise after
the date Employee signs this General Release.

     2. Excluded from this General Release are any claims which cannot be waived by law, including
but not limited to the right to participate in an investigation conducted by certain government
agencies. Employee does, however, waive Employee’s right to any monetary recovery should any
agency (such as the Equal Employment Opportunity Commission) pursue any claims on Employee’s
behalf. Employee represents and warrants that Employee has not filed any complaint, charge, or
lawsuit against the Releasees with any government agency or any court. Also excluded from this
General Release are any amounts due and payable under Section 6 other than Employee’s Accrued
Obligations.

     3. Employee agrees never to sue Releasees in any forum for any Released Claims covered by the
above waiver and release language, except that Employee may bring a claim under the ADEA to
challenge this General Release. If Employee violates this General Release by suing Releasees,
other than under the ADEA or as otherwise set forth in Section 1 hereof, Employee shall be liable
to the Company for its attorneys’ fees and other litigation costs incurred in defending against
such a suit. Nothing in this General Release is intended to reflect any party’s belief that
Employee’s waiver of claims under ADEA is invalid or unenforceable, it being the interest of the
parties that such claims are waived.

     4. Employee acknowledges and recites that:

     (a) Employee has executed this General Release knowingly and voluntarily;

     (b) Employee has read and understands this General Release in its entirety;

     (c) Employee has been advised and directed orally and in writing (and this subparagraph (c)
constitutes such written direction) to seek legal counsel and any other advice he wishes with
respect to the terms of this General Release before executing it;

     (d) Employee’s execution of this General Release has not been forced by any employee or agent
of the Company, and Employee has had an opportunity to negotiate the terms of this General Release
and that the agreements and obligations herein are made voluntarily, knowingly and without duress,
and that neither the Company nor its agents have made any representation inconsistent with the
General Release; and

     (e) Employee has been offered 21 calendar days after receipt of this General Release to
consider its terms before executing it.

     6. This General Release shall be governed by the internal laws (and not the choice of laws) of
the State of New York, except for the application of pre-emptive Federal law.

Confidential

 

 

     7. Employee represents that he has returned all property belonging to the Company including,
without limitation, keys, access cards, computer software and any other equipment or property.
Employee further represents that he has delivered to the Company all documents or materials of any
nature belonging to it, whether an original or copies of any kind, including any trade secrets or
proprietary information.

     8. Employee agrees to keep confidential the existence of this General Release, as well as all
of its terms and conditions and not to disclose to any person or entity the existence, terms and
conditions of this General Release except to his attorney, financial advisors and/or members of his
immediate family provided they agree to keep confidential the existence, terms and conditions of
this General Release. In the event that Employee believes that he is compelled by law to divulge
the existence, terms or conditions of this General Release in a manner prohibited by the preceding
sentence, he agrees to notify Company (by notifying counsel to the Company) of the basis for the
belief before actually divulging such information. Employee hereby confirms that as of the date of
signing this General Release, he has not disclosed the existence, terms or conditions of this
General Release, except as provided for herein.

     9. Employee represents that he has been provided notice of his right to elect continuation of
medical benefits under COBRA and that he is not entitled to any other benefits under the Company’s
employee benefit plans except as provided for therein or under Section 6 of the Employment
Agreement.

     10. Employee shall have 7 days from the date hereof to revoke this General Release by
providing written notice of the revocation to the Company, as provided in Section 9 of the
Employment Agreement, in which event this General Release shall be unenforceable and null and void.

[Signature Page Follows]

Confidential

 

 

     PLEASE READ THIS GENERAL RELEASE CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.

EMPLOYEE:

                                                            

Dale Davies

Date:                     , 20                    

Confidentialexv10w1

Exhibit 10.1

IBC INVESTORS I, LLC

September 12, 2008

Interstate Bakeries Corporation

12 East Armour Boulevard

Kansas City, MO 64111

			
	Attention:	 	Mr. Michael Anderson, Chairman of the Board

Mr. Craig Jung, Chief Executive Officer

Commitment Letter

Gentlemen:

          Interstate Bakeries Corporation (“IBC”) has advised IBC Investors I, LLC (“Investors”) that
IBC and its direct and indirect subsidiaries (collectively, the “Debtors”) have 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 No.
04-45814 (the “Cases”). IBC has further advised Investors that it expects that the Debtors will be
reorganized pursuant to a Joint Plan of Reorganization (the “Plan”) to be filed in the Cases, which
Plan will reflect the terms outlined in Exhibit A hereto and be endorsed pursuant to Annex I hereto
by Silver Point Finance, LLC, Monarch Alternative Capital L.P. and McDonnell Investment Management
LLC and their respective affiliates and managed funds (collectively, the “Prepetition Investors”),
which collectively hold not less than 53.8% of the aggregate Prepetition Debt1
outstanding under the Amended and Restated Credit Agreement, dated April 24, 2002 (together with
the related collateral documents and letters of credit issued thereunder, the “Prepetition Credit
Agreement”), among IBC, Interstate Brands Corporation, the lenders and financial institutions from
time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent (in such
capacity, the “Prepetition Agent”). The consummation of the Plan and all related transactions
contemplated by the Plan, including the transactions contemplated by this commitment letter
(including the exhibits and annexes attached hereto, and as amended, restated, supplemented or
otherwise modified from time to time in accordance with this commitment letter, the “Commitment
Letter”) are hereinafter collectively referred to as the “Transaction”.

          In connection with the Transaction, IBC has advised Investors that, upon the closing of the
Transaction and the effective date of the Plan (such date, the “Effective Date”), IBC, as
reorganized pursuant to the Plan (as so reorganized, the “Reorganized Company”), will, among other
things, issue (1)

 

			
	1	 	For purposes of this Commitment Letter, “Prepetition
Debt” means 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.

 

 

shares of new common stock of the Reorganized Company (“New Common Stock”) as more fully
described on Exhibits A and B hereto, (2) new senior secured convertible debt (“New Convertible
Debt”) in the aggregate principal amount of $171,600,000 and with the terms set forth on Exhibit C
hereto and (3) warrants to purchase New Common Stock (“Warrants”) with the terms set forth on
Exhibit D hereto. Upon consummation of the Plan, IBC and each holder of New Common Stock will be
required to enter into a governance agreement (the “Governance Agreement”) with the terms set forth
on Exhibit E hereto.

          In connection with the foregoing, Investors is pleased to advise IBC of Investors’ commitment
to purchase, on the Effective Date, (1) 4,420,000 shares of New Common Stock for a purchase price
of $44,200,000 and (2) New Convertible Debt in the principal amount of $85,800,000 for a purchase
price of $85,800,000, in each case on the terms and subject to the conditions set forth or referred
to in this Commitment Letter. The purchase by Investors of New Common Stock and New Convertible
Debt pursuant to its commitments above is hereinafter referred to as the “Investment”. In
consideration of the Investment, on the Effective Date the Reorganized Company will issue to
Investors Warrants reflecting the terms set forth on Exhibit D hereto.

          As consideration for Investors’ commitments hereunder, IBC agrees to pay or caused to be paid
to Investors and its affiliates the nonrefundable fees and reimbursement of costs and expenses
described in the fee letter dated the date hereof and delivered herewith (as amended, restated,
supplemented or otherwise modified from time to time in accordance with the terms thereof, the
“Fee Letter”).

          By executing this Commitment letter, IBC represents and covenants to Investors that (a) all
information, other than financial information and projections (the “Projections”), that has been or
will be made available to Investors by IBC or any of its representatives is and will be, when taken
together as a whole, 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 misleading in light
of the circumstances under which such statements are made and (b) the Projections that have been or
will be prepared and made available to Investors by IBC or any of its representatives have been and
will be prepared in good faith based upon reasonable assumptions at the time made. Additionally,
IBC acknowledges and agrees that Investors is not advising IBC or any other Debtor or any creditor
or equityholder of any thereof as to any legal, tax, investment, accounting or regulatory matters
in any jurisdiction. IBC shall consult with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and appraisal of the Investment, the
Transaction and the other transactions contemplated hereby, and Investors shall have no
responsibility or liability to IBC or any other Debtor or any creditor or equityholder of any
thereof with respect thereto.

          Investors’ commitments hereunder are subject to:

          1. not later than September 12, 2008 (the “Required Board Approval Date”), approval by the
Debtors’ boards of directors of this Commitment Letter, the Fee Letter, the commitment letter
(including the exhibits thereto) and the fee letter for the ABL Facility in the form attached as
Exhibit F hereto (such commitment letter (including the exhibits thereto) and fee letter,
collectively, the “ABL Facility Commitment Papers”) and the commitment letter (including the
exhibits thereto) and the fee letter for the Term Loan Facility in the form attached as Exhibit G
hereto (such commitment letter (including the exhibits thereto) and the fee letter, collectively,
the “Term Loan Facility Commitment Papers”);

          2. not later than September 30, 2008, entry of an order (the “Fee Order”) by the

2

 

Bankruptcy Court in the Cases, in form and substance satisfactory to Investors, (a) approving this
Commitment Letter, the Fee Letter, the ABL Facility Commitment Papers and the Term Loan Facility
Commitment Papers, (b) authorizing the Debtors to pay the fees and reimbursement of costs and
expenses set forth herein and in the Fee Letter in accordance with the terms hereof and thereof,
with the order specifically providing that all amounts due and owing to Investors and its
affiliates, including the fees and reimbursement of costs and expenses as set forth herein and in
the Fee Letter, shall be entitled to priority as administrative expense claims (senior to all other
administrative claims, except junior to the claims of the lenders and the administrative agent
under the DIP Facility (as defined below) and equal in priority with the amounts due and owing to
the Commitment Parties (as defined in the Term Loan Facility Commitment Papers) and their
affiliates under the Term Loan Facility Commitment Papers) under Sections 503(b)(1) and 507(a)(2)
of the Bankruptcy Code, whether or not the Investment, the Transaction or any other transaction
contemplated herein is consummated and (c) otherwise authorizing the Debtors to execute and to
incur and perform their obligations under this Commitment Letter, the Fee Letter, the ABL Facility
Commitment Papers and the Term Loan Facility Commitment Papers;

          3. (a) the negotiation and execution by Investors and IBC by not later than September 26, 2008
of an investment agreement reflecting the terms and conditions set forth in this Commitment Letter
(including in Exhibit I hereto) and other customary terms (the “Investment Agreement”), and other
documentation for the Investment reflecting the terms and conditions set forth in this Commitment
Letter and other customary terms, in each case in form and substance reasonably satisfactory to
Investors and (b) not later than October 20, 2008, entry of an order (the “Investment Agreement
Order”) by the Bankruptcy Court in the Cases, in form and substance reasonably satisfactory to
Investors, authorizing IBC to execute and to incur and perform its obligations under the Investment
Agreement and such other documentation for the Investment;

          4 not later than September 30, 2008, filing in the Cases the Plan reflecting the terms
outlined in Exhibit A hereto, not containing terms that are inconsistent with those outlined in
Exhibit A hereto and otherwise in form and substance reasonably satisfactory to Investors, and a
disclosure statement accompanying the Plan (the “Disclosure Statement”) in form and substance
reasonably satisfactory to Investors;

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

          6. there not having occurred a dismissal or conversion of any Case to a case under Chapter 7
of the Bankruptcy Code or the appointment of a Chapter 11 trustee in any Case;

          7. not later than November 21, 2008, entry of an order by the Bankruptcy Court in the Cases,
in form and substance reasonably satisfactory to Investors, approving the Disclosure Statement;

          8. (a) no provision of the Plan (as filed with the Bankruptcy Court) having been amended,
supplemented or otherwise modified in a manner that is not in form and substance reasonably
satisfactory to Investors and (b) not later than January 15, 2009, entry of an order (the
“Confirmation Order”) by the Bankruptcy Court in the Cases, in form and substance reasonably
satisfactory to Investors, confirming the Plan;

          9. the Confirmation Order having become a final order, in full force and effect without
reversal, modification or stay, not subject to a pending motion for reconsideration, revocation,
reversal, modification, stay or appeal and the period for an appeal having expired;
provided, however, that

3

 

if the Confirmation Order has not become a final order because a notice of appeal has
been timely filed and the parties are not stayed or enjoined from consummating the Investment or
the Transaction, the condition set forth in this paragraph 9 shall be deemed satisfied unless the
effect of the appeal could reasonably be expected to be adverse to the business, operations,
property, condition (financial or otherwise) or prospects of the Reorganized Company and its direct
and indirect subsidiaries, taken as a whole, or adverse to Investors, in each case as determined by
Investors;

          10. (a) there not having been any event or condition which constitutes an event of default, or
which upon notice, lapse of time, or both would become an event of default, under the Debtors’
existing debtor-in-possession financing (as amended pursuant to paragraph 11 below, the “DIP
Facility”) that has not been waived in accordance with the terms of the DIP Facility without any
fees being paid or payable by any Debtor in connection therewith, and (b) evidence, in form and
substance reasonably satisfactory to Investors, that all obligations under the DIP Facility (other
than letters of credit issued but undrawn thereunder that are to remain outstanding on and after
the Effective Date in accordance with the terms set forth in paragraph 20 below) have been repaid
in full, all commitments under the DIP Facility have been terminated and all liens and security
interests related to the DIP Facility have been terminated or released;

          11. the Debtors having filed a motion seeking approval of an amendment to the DIP Facility in
the form attached as Exhibit L hereto, and entry of an order by the Bankruptcy Court in the Cases
granting such motion prior to the maturity date of the DIP Facility;

          12. (a) the Debtors and the ABL Facility lenders having entered into definitive documentation
for the ABL Facility reflecting the terms of the ABL Facility Commitment Papers, in form and
substance reasonably satisfactory to Investors, and the syndication (without taking into account
the exercise of any flex provisions) of the commitments and loans, and the identity of each lender,
under the ABL Facility being reasonably satisfactory to Investors, (b) no provision of the ABL
Facility Commitment Papers or the definitive documentation for the ABL Facility having been waived,
amended, supplemented or otherwise modified by any party thereto in a manner that is not in form
and substance satisfactory to Investors, (c) with respect to any matter to which any Debtor has
consultation rights under the ABL Facility Commitment Papers, such Debtor having involved Investors
substantially in any consultation process related thereto, and with respect to any matter to which
any Debtor has consent or approval rights under the ABL Facility Commitment Papers, such Debtor
having first obtained the consent or approval of Investors (such consent or approval not to be
unreasonably withheld) before providing its consent or approval under the ABL Facility Commitment
Papers with respect thereto, (d) all conditions to borrowing under the ABL Facility having been
satisfied or waived (with any such waiver to be in form and substance satisfactory to Investors) on
or prior to the Effective Date, and (e) on the Effective Date (1) there not being any event or
condition which constitutes an event of default, or which upon notice, lapse of time, or both would
become an event of default, under the ABL Facility and (2) the ABL Facility being in full force and
effect;

          13. (a) the Debtors and the Term Loan Facility lenders having entered into definitive
documentation for the Term Loan Facility reflecting the terms of the Term Loan Facility Commitment
Papers, in form and substance reasonably satisfactory to Investors, and the syndication of the
commitments and loans, and the identity of each lender, under the Term Loan Facility being
reasonably satisfactory to Investors, (b) no provision of the Term Loan Facility Commitment Papers
or the definitive documentation for the Term Loan Facility having been waived, amended,
supplemented or otherwise modified by any party thereto in a manner that is not in form and
substance satisfactory to Investors, (c) with respect to any matter to which any Debtor has
consultation rights under the Term Loan Facility Commitment Papers, such Debtor having involved
Investors substantially in any consultation process

4

 

related thereto, and with respect to any matter to which any Debtor has consent or approval
rights under the Term Loan Facility Commitment Papers, such Debtor having first obtained the
consent or approval of Investors (such consent or approval not to be unreasonably withheld) before
providing its consent or approval under the Term Loan Facility Commitment Papers with respect
thereto, (d) all loans under the Term Loan Facility having been funded on the Effective Date, and
(e) on the Effective Date (1) there not being any event or condition which constitutes an event of
default, or which upon notice, lapse of time, or both would become an event of default, under the
Term Loan Facility and (2) the Term Loan Facility being in full force and effect;

          14. ratification of agreements between the Debtors and each of the International Brotherhood
of Teamsters, the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union,
the Retail, Wholesale and Department Store Union and the United Auto Workers Union to implement
modifications to collective bargaining agreements necessary to effect all of the concessions and
work rule changes necessary to implement “path to market” and the Reorganized Company’s business
plan, in form and substance reasonably satisfactory to Investors;

          15. either (a) entry of an order by the Bankruptcy Court in the Cases, in form and substance
satisfactory to Investors, determining that, if and to the extent that a court of competent
jurisdiction determines that any of the Debtors has any current or future liability to, under or in
connection with the ABA pension plan based on the Debtors’ (or their employees’) participation
prior to the Effective Date in such pension plan, such liability is a general unsecured
pre-petition claim against the relevant Debtor, and such order becoming a final order, in full
force and effect without reversal, modification or stay, not subject to a pending motion for
reconsideration, revocation, reversal, modification, stay or appeal and the period for an appeal
having expired, or (b) Investors shall otherwise be satisfied that any of the Debtors’ or the
Reorganized Company’s or its direct and indirect subsidiaries’ current or future liability (whether
on- or off-balance sheet, contingent or otherwise) to, under or in connection with the ABA pension
plan based on the Debtors’ (or their employees’) participation prior to the Effective Date in such
pension plan shall not result in any post-confirmation payment by, or any other cost to, the
Reorganized Company or any of its direct or indirect subsidiaries;

          16. (a) except to the extent disclosed by IBC in any filing made by IBC with the Securities
and Exchange Commission prior to the date hereof or in writing to Investors on the date hereof,
there not occurring or becoming known to Investors any events, developments, conditions or
circumstances (each, an “Event”) 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 IBC and its direct and indirect subsidiaries,
taken as a whole (or the Reorganized Company and its direct and indirect subsidiaries, taken as a
whole), and (b) other than sales of real property relating to the Debtors’ exit from the bread
business in the southern California region, no material assets of the Debtors having been sold or
agreed to be sold from and after the date hereof;

          17. the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 having expired or been terminated, and all other consents, licenses, declarations, filings
with or other requirements of any governmental or regulatory entity required to consummate the
Investment or the Transaction having been obtained, filed or satisfied;

          18. the Debtors not having filed or supported any plan of reorganization or liquidation, other
than the Plan, or any motion or motions to sell, or agree to sell, any material assets of Debtors,
other than sales of real property relating to the Debtors’ exit from the bread business in the
southern California region;

5

 

          19. on the Effective Date, the Debtors, on a consolidated basis, shall satisfy the conditions
set forth on Exhibit J, subject to the right to cure any failure of this condition in accordance
with Exhibit J;

          20. all letters of credit outstanding under the Prepetition Credit Agreement or the DIP
Facility as of the Effective Date to remain in place (or be replaced by equivalent letters of
credit) on and after the Effective Date pursuant to cash collateral or other arrangements by the
Debtors that are in form and substance satisfactory to Investors;

          21. on the Effective Date, the Reorganized Company shall be eligible to deregister under the
Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the
Securities and Exchange Commission thereunder; and

          22. the Effective Date and closing of the Transaction having occurred not later than February
9, 2009.

          Investors and, by executing this Commitment Letter, IBC agree to negotiate with each other in
good faith the terms of the Investment Agreement, the Governance Agreement and the Plan. IBC
agrees that it will, and will cause each of the other Debtors to, provide to Investors access to
IBC and the management personnel of the Debtors and all information with respect to the Debtors,
the Investment, the Transaction or any related transaction as Investors may reasonably request.
Upon the execution by Investors and IBC of the Investment Agreement, Ripplewood Partners II, L.P.
and IBC shall execute and deliver an equity contribution agreement in the form attached as Exhibit
K hereto.

          This Commitment Letter and Investors’ commitments hereunder shall terminate at any time upon
written notice from Investors to IBC in the event that any of the conditions set forth above
becomes incapable of being satisfied (unless such condition has been waived by Investors in its
sole discretion); provided, however, that, in the case of any failure to satisfy
the condition set forth in paragraph 2, 3(b), 4, 7 or 8 above, the Debtors shall automatically
receive a five-day extension on the applicable deadline if the Debtors failed to satisfy the
applicable condition by the deadline stated therein notwithstanding the Debtors’ reasonable, good
faith efforts to satisfy the applicable condition.

          By executing this Commitment Letter, IBC agrees that it will not, nor will it authorize or
permit any other Debtor to, nor will it authorize or permit any officer, director or employee of,
or authorize any investment banker, attorney or other advisor, agent or representative
(collectively, “Representatives”) of, IBC or any other Debtor to, and will instruct the
Representatives of IBC and any other Debtor not to and will otherwise use its reasonable best
efforts to cause the Representatives of IBC and any other Debtor not to, directly or indirectly
solicit, initiate or knowingly encourage any proposal by a third party to enter into and consummate
any agreement for a Chapter 11 plan for any of the Debtors (other than the Plan) or any other
transaction or series of transactions (including one or more sales under Section 363 of the
Bankruptcy Code) (such proposal, an “Alternative Proposal”), enter into any agreement with respect
to any Alternative Proposal, or directly or indirectly participate in any discussions or
negotiations regarding, or furnish to any person any information with respect to, or take any other
action to knowingly facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Alternative Proposal; provided, however,
that after the entry of the Investment Agreement Order by the Bankruptcy Court, IBC may furnish
information with respect to the Debtors to any person making an unsolicited bona fide written
Alternative Proposal that did not result from a violation of this sentence (subject to entry of a
customary confidentiality agreement between IBC and such person). After the entry of the
Investment Agreement Order by the Bankruptcy Court and upon written notice from IBC to Investors,
IBC may terminate this Commitment Letter and
Investors’

6

 

commitments hereunder in connection with an unsolicited bona fide written
Alternative Proposal that did not result from a violation of the immediately preceding sentence and
with terms that the board of directors of IBC determines in good faith, after having consulted with
its outside legal counsel and its independent financial advisors, (a) to be more favorable from a
financial point of view to the Debtors’ constituents than would be obtained through the
consummation of the Investment and the Transaction, taking into account all the terms and
conditions of such Alternative Proposal as well as all the terms and conditions of the Investment
and the Transaction (including any proposal by Investors to amend the terms and conditions of the
Investment and the Transaction in effect as of the date of such determination), and (b) is
reasonably capable of being completed, taking into account all financial, regulatory, labor
relations, legal and other aspects of such Alternative Proposal (such Alternative Proposal, a
“Superior Proposal”); provided, however, that prior to notifying Investors of the
termination of this Commitment Letter and Investors’
commitments hereunder pursuant to this
paragraph, (1) IBC shall have given Investors written notice of the terms of such Alternative
Proposal (including the identity of the person making such Alternative Proposal) and of the
determination by the board of directors of IBC that such Alternative Proposal constitutes a
Superior Proposal, (2) at least five business days after Investors has received the notice referred
to in clause (1) above, and taking into account any revised proposal made by Investors since
receipt of the notice referred to in clause (1) above, the board of directors of IBC again has
determined in good faith, after consultation with its outside legal counsel and its independent
financial advisors, that such Alternative Proposal remains a Superior Proposal, and (3) IBC has
previously paid all amounts due under the Fee Letter as a result of the termination of this
Commitment Letter.

          By executing this Commitment Letter, IBC agrees, subject to the provisions of this paragraph
below, to indemnify and hold harmless Investors and its affiliates and their respective members,
managers, trustees, general and limited partners, controlling persons, securityholders, officers,
directors, employees, affiliates, advisors, agents, attorneys and representatives (each, an
“indemnified party”) from and against any and all losses, claims, damages, liabilities and expenses
(including fees and disbursements of counsel), joint or several, to which any such indemnified
party may become subject arising out of or in connection with or relating to this Commitment
Letter, the Fee Letter, the Investment Agreement, the Investment, any use made or proposed to be
made with 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 IBC
or any indemnified party shall have initiated the foregoing or shall be a party thereto, and to
reimburse each indemnified party upon demand for any legal or other expenses reasonably incurred in
connection with investigating or defending any of the foregoing (including in connection with the
enforcement of the indemnification obligations set forth herein), irrespective of whether any of
the transactions contemplated hereby are consummated; provided, however, that the
foregoing indemnity will not, as to any indemnified party, apply to losses, claims, damages,
liabilities or related expenses to the extent they are found by a final, non-appealable judgment of
a court of competent jurisdiction to have resulted from the willful misconduct or gross negligence
of such indemnified party. In no event shall any indemnified party be liable to IBC or any other
Debtor or any creditor or equityholder of any thereof on any theory of liability for any special,
indirect, consequential or punitive damages.

          By executing this Commitment Letter, IBC further agrees that, without the prior written
consent of Investors, none of the Debtors will enter into any settlement of any claim, litigation,
investigation or proceeding arising out of or in connection with or relating to this Commitment
Letter, the Fee Letter, the Investment Agreement, the Investment, any use made or proposed to be
made with the proceeds thereof, the Transaction or any related transaction unless such settlement
(i) includes an explicit and unconditional release, from the party bringing such claim, litigation,
investigation or proceeding, of all indemnified parties and (ii) does not include a statement as to
or an admission of fault, culpability, or
a failure to act by or on behalf of any indemnified party. No indemnified party shall be
liable for any

7

 

damages arising from the use by unauthorized persons of any information made
available to any indemnified party by any Debtor or any representative thereof through electronic,
telecommunications or other information transmission systems that is intercepted by such
unauthorized persons.

          None of this Commitment Letter, Investors’ commitments hereunder or the Fee Letter shall be
assignable by IBC without the prior written consent of Investors, and any attempted assignment
without such consent shall be void. Any and all obligations of Investors hereunder may be
performed, and any and all of its rights hereunder may be exercised, by or through any of its
affiliates. Investors may assign any portion of any of its commitments hereunder to one or more
non-affiliates; provided, however, that such assignment shall not relieve Investors
of its obligations hereunder. This Commitment Letter may not be amended or any provision hereof
waived or modified except by an instrument in writing signed by Investors and IBC. 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 counterpart of
a signature page of this Commitment Letter by facsimile or electronic transmission shall be
effective as delivery of a manually executed counterpart. 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
parties. This Commitment Letter and the Fee Letter are the only agreements that have been entered
into among the parties hereto with respect to the Investment and the Transaction and set forth the
entire understanding of the parties with respect thereto.

          This Commitment Letter shall be governed by, and construed in accordance with, the laws of the
State of New York. IBC consents to the nonexclusive jurisdiction and venue of the Bankruptcy
Court, and in the event that the Bankruptcy Court does not have or declines to exercise
jurisdiction or there is reason to believe that it would not have or would decline to exercise
jurisdiction, to the nonexclusive jurisdiction and venue of the state or federal courts located in
the City of New York in the Borough of Manhattan. Subject to the foregoing, each party hereto
irrevocably waives, to the fullest extent permitted by applicable law, (a) any right it may have to
a trial by jury in any legal proceeding related to or arising out of this Commitment Letter, the
Fee Letter or the transactions contemplated hereby or thereby (whether based on contract, tort or
any other theory) and (b) any objection that it may now or hereafter have to the laying of venue of
any such legal proceeding in the Bankruptcy Court or the state or federal courts located in the
City of New York in the Borough of Manhattan.

          For the avoidance of doubt, references to “the parties hereto” in this Commitment Letter shall
refer to Investors and IBC (on behalf of itself and the other Debtors) only.

8

 

          If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms hereof and of the Fee Letter by signing in the appropriate space below and in the Fee Letter
and returning to Investors the enclosed duplicate originals of this Commitment Letter and the Fee
Letter not later than 5:00 p.m., New York City time, on September 12, 2008, failing which the
commitments of Investors hereunder will expire at such time. The compensation, reimbursement and
indemnification provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive documentation shall be executed and delivered in connection
with the Investment or any other transactions related thereto and notwithstanding the termination
of this Commitment Letter or the commitments of Investors hereunder.

Very truly yours,

IBC INVESTORS I, LLC,

by   
/s/
Christopher Minnetian

        Name: Christopher Minnetian

        Title: Authorized Signatory

Accepted and agreed to as of

the date first above written:

INTERSTATE BAKERIES CORPORATION,

on behalf of itself and the other Debtors,

by  
/s/ Craig
D. Jung

        Name: Craig D. Jung

        Title: Chief Executive Officer

 

 

Annex I

     Reference is made to the Commitment Letter, dated September 12, 2008, between Investors and
IBC (including the exhibits and annexes attached thereto and as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof, the “Commitment Letter”;
capitalized terms used but undefined herein shall have the meanings set forth in the Commitment
Letter), to which this Annex I is attached. Each signatory below or to a counterpart hereof, on
behalf of itself and its affiliates and managed funds (each, a “Plan Supporter”) represents that
the principal amount of funded Prepetition Debt held by it is set forth below2 and
hereby agrees that it (a) shall support the Plan and the Disclosure Statement, (b) shall not
support any other plan of reorganization or liquidation or any other proposal that is inconsistent
with the Plan and (c) shall not sell, assign, transfer, syndicate, participate or otherwise dispose
of its holdings of Prepetition Debt, in each case so long as:

          (i) the Commitment Letter is in full force and effect, and the Investment Agreement is
executed by Investors and IBC by not later than September 26, 2008 and is in full force and effect;

          (ii) the Plan, the Disclosure Statement and all material instruments and agreements
implementing the transactions contemplated by the Plan reflect the terms and conditions outlined in
the Plan Term Sheet, do not contain any terms that are inconsistent with those outlined in the Plan
Term Sheet and are otherwise in form and substance reasonably satisfactory to the Prepetition
Investors, and no provision of the Plan (as filed with the Bankruptcy Court) has been amended,
supplemented or otherwise modified in a manner that is not in form and substance reasonably
satisfactory to the Prepetition Investors; and

          (iii) the Effective Date and closing of the Transaction occurs not later than February 9,
2009.

     Each Plan Supporter hereby agrees that the commitment letter, dated as of October 18, 2007 and
amended and restated as of November 6, 2007, among Silver Point Finance, LLC, IBC and Interstate
Brands Corporation, was terminated effective March 14, 2008 in accordance with its terms, as
confirmed by the letter, dated as of March 17, 2008, from Silver Point Finance, LLC to IBC and
Interstate Brands Corporation, and that no person is entitled to any further payment under the
foregoing commitment letter (other than with respect to indemnification thereunder, as to which
there are no pending claims) or the fee letter, dated as of October 18, 2007 and amended and
restated as of November 6, 2007, among Silver Point Finance, LLC, IBC and Interstate Brands
Corporation.

     In consideration of the agreements contained herein and the Commitment Letter, IBC hereby
indemnifies and holds harmless the undersigned Plan Supporter to the same extent, and on the same
terms, as the indemnification and agreement to hold harmless provided for an indemnified party in
the Commitment Letter.

Accepted and agreed to as of

the date first written above by:

[SIGNATURE PAGES ATTACHED]

 

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

10

 

	 	 	 	 	 
	 	INTERSTATE BAKERIES CORPORATION,

on behalf of itself and the other Debtors,

 	 
	 	By:  	/s/ Craig D. Jung
 	 
	 	 	Name:  	Craig D. Jung 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

	 	 	 	 	 
	MCDONNELL LOAN OPPORTUNITY LTD.

By: MCDONNELL INVESTMENT MANAGEMENT

LLC, as Investment Manager

Holder of $50,030,589.86 of principal amount of

funded Prepetition Debt representing 11.11% of the

aggregate principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ James R. Fellows
 	 	 
	 	Name:  	James R. Fellows 	 	 
	 	Title:  	Managing Director 	 	 
	 
	MONARCH MASTER FUNDING LTD.

Holder of $79,200,000 of principal amount of funded

Prepetition Debt representing 17.59% of the aggregate

principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ Michael Weinstock
 	 	 
	 	Name:  	Michael Weinstock 	 	 
	 	Title:  	Director 	 	 

11

 

	 	 	 	 	 
	FIELD POINT IV, LTD.

as manager for the investment funds it manages that are

holders of $13,905,493.32 of principal amount of

funded Prepetition Debt representing 3.1% of the

aggregate principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ Frederick H. Fogel
 	 	 
	 	Name:  	Frederick H. Fogel 	 	 
	 	Title:  	Authorized Signatory 	 	 
	 
	GRAND CENTRAL ASSET TRUST SIL,

as manager for the investment funds it manages that are

holders of $61,027,917.15 of principal amount of

funded Prepetition Debt representing 13.6% of the

aggregate principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ Roy  Hykal
 	 	 
	 	Name:  	Roy Hykal 	 	 
	 	Title:  	Attorney-in-Fact 	 	 
	 
	SIL LOAN FUNDING LLC

as manager for the investment funds it manages that are

holders of $7,671,264.62 of principal amount of funded

Prepetition Debt representing 1.7% of the aggregate

principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ David Balmert
 	 	 
	 	Name:  	David Balmert 	 	 
	 	Title:  	Attorney In Kind 	 	 

12

 

	 	 	 	 	 
	SIL 2 LOAN FUNDING LLC

as manager for the investment funds it manages that are

holders of $1,432,376.09 of principal amount of funded

Prepetition Debt representing 0.3% of the aggregate

principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ David Balmert
 	 	 
	 	Name:  	David Balmert 	 	 
	 	Title:  	Attorney In Kind 	 	 
	 
	SPCP GROUP

as manager for the investment funds it manages that are

holders of $15,804,395.13 of principal amount of

funded Prepetition Debt representing 3.5% of the

aggregate principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ Frederick H. Fogel
 	 	 
	 	Name:  	Frederick H. Fogel 	 	 
	 	Title:  	Authorizing Signatory 	 	 
	 
	TRS THEBE LLC 	 	 
	By:  	DEUTSCHE BANK TRUST COMPANY OF AMERICAS, ITS SOLE MEMBER
 	 	 
	By:  	DB SERVICES NEW JERSEY, INC.
 	 	 

	 	 	 	 	 
	as manager for the investment funds it manages that are

holders of $13,101,222.60 of principal amount of

funded Prepetition Debt representing 2.9% of the

aggregate principal amount of funded Prepetition Debt

outstanding

 	 	 
	By:  	/s/ Alice L. Wagner
 	 	 
	 	Name:  	Alice L. Wagner 	 	 
	 	Title:  	Vice President 	 	 
	 
	 	 	 
	By:  	           /s/ Edward Schaffer
 	 	 
	 	Name:  	Edward Schaffer 	 	 
	 	Title:  	Vice President 	 	 
	 

13

 

Exhibit A

INTERSTATE BAKERIES CORPORATION

SUMMARY OF PLAN TERMS

(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, DISCLOSURE STATEMENT AND RELATED DOCUMENTS.

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit A is attached.

	1.	 	Asset-Based Revolving Credit Facility (“ABL Facility”)

	 	 	 	 	 
	 
	 	Committed Amount:	 	$125,000,000.
	 
	 	 	 	 
	 
	 	Term:	 	5 years.
	 
	 	 	 	 
	 
	 	Use  of Proceeds:	 	The ABL Facility will be undrawn as of the Effective Date and
	 
	 	 	 	available for general corporate purposes.
	 
	 	 	 	 
	 
	 	Other Terms:	 	As set forth in the commitment letter, dated September 12, 2008, among
	 
	 	 	 	IBC, Interstate Brands Corporation and General Electric Capital Corporation, a copy of
	 
	 	 	 	which is attached to the Commitment Letter as Exhibit F.

	2.	 	Term Loan Facility (“Term Loan Facility”)

	 	 	 	 	 
	 
	 	Principal Amount:	 	$339,000,000.
	 
	 	 	 	 
	 
	 	Term:	 	5 years, bullet.
	 
	 	 	 	 
	 
	 	Other Terms:	 	As set forth in the commitment letter, dated September 12, 2008, among
	 
	 	 	 	IBC, Interstate Brands Corporation and Silver Point Finance, LLC and its affiliates, a
	 
	 	 	 	copy of which is attached to the Commitment Letter as Exhibit G.  The principal amount
	 
	 	 	 	of the Term Loan Facility may be increased in accordance with the terms set forth in
	 
	 	 	 	Exhibit J hereto.

A-1

 

	3.	 	New 3rd Lien Notes (“New 3rd Lien Notes”)

	 	 	 	 	 
	 
	 	Principal Amount:	 	$147,300,000.
	 
	 	 	 	 
	 
	 	Term:	 	6 years, bullet.
	 
	 	 	 	 
	 
	 	Other Terms:	 	As set forth in Exhibit H to the Commitment Letter.  The principal
	 
	 	 	 	amount of the New 3rd Lien Notes may be decreased in accordance with the terms set
	 
	 	 	 	forth in Exhibit J hereto.

	4.	 	New Convertible Debt

	 	 	 	 	 
	 
	 	Principal Amount:	 	$171,600,000.
	 
	 	 	 	 
	 
	 	Term:	 	10 years, bullet.
	 
	 	 	 	 
	 
	 	Other Terms:	 	As set forth in Exhibit C to the Commitment Letter.

	5.	 	New Common Stock
	 
	 	 	On the Effective Date, the Reorganized Company will issue shares of New Common Stock as more
fully described in Exhibit B to the Commitment Letter. The New Common Stock will be subject
to dilution from conversions of New Convertible Debt, exercises of Warrants and stock
options, restricted stock and stock appreciation rights issued to directors, officers and
employees of the Reorganized Company under the Long Term Incentive Plan (as defined below)
and the employee equity sharing plans to be established in accordance with the collective
bargaining agreements to be entered into in connection with the Transaction.
	 
	6.	 	Warrants
	 
	 	 	On the Effective Date, the Reorganized Company will issue Warrants to Investors and the
lenders party to the Term Loan Facility (the “Term Loan Facility Lenders”), in each case
reflecting the terms set forth in Exhibit D to the Commitment Letter. Each Term Loan
Facility Lender may assign its right to receive Warrants on the Effective Date to an
affiliate of such Term Loan Facility Lender whose identity has been disclosed to Investors
in writing prior to the date of the Commitment Letter or to any other affiliate of such Term
Loan Facility Lender reasonably acceptable to Investors (each such affiliate, a “Permitted
Affiliate”).
	 
	7.	 	Management Pool
	 
	 	 	Prior to confirmation of the Plan, the Plan (or an exhibit thereto) and the Confirmation
Order shall provide for approval of a management incentive plan for senior management and
selected employees and directors of the Reorganized Company, which management incentive plan
shall provide incentive compensation in the form of stock options and restricted stock in
the Reorganized Company (the “Long Term Incentive Plan”). The Long Term Incentive Plan
shall be effective as of the Effective Date, and any grant or award made under the Long Term
Incentive Plan shall not be subject to amendment by the Reorganized Company in a manner
adverse to the recipient thereof without such recipient’s prior written consent.

A-2

 

	 	 	The Debtors shall describe in the Plan (or an exhibit thereto), no later than the
confirmation of the Plan, the terms of employment agreements that are to be assumed or
entered into by the Debtors or the Reorganized Company, in each case to be effective as of
the Effective Date (including the CEO Employment Agreement (as defined below), the
“Executive Employment Agreements”). The Long Term Incentive Plan and the Executive
Employment Agreements shall be in form and substance satisfactory to Investors, and the
establishment of the Long Term Incentive Plan and the assumption or entry into the Executive
Employment Agreements as provided for in the Plan (or an exhibit thereto) shall be subject
to the consent of Investors prior to confirmation of the Plan. Except as provided for in
the CEO Employment Agreement, which shall cover the terms of Craig Jung’s participation in
the Long Term Incentive Plan, stock options and restricted stock reserved for issuance in
connection with the Long Term Incentive Plan shall be protected against dilution from
conversions of New Convertible Debt (other than conversions of any New Convertible Debt
issued as “PIK” interest on other New Convertible Debt) and exercises of Series C Warrants,
but shall be diluted upon exercises of Series A Warrants, Series B Warrants and stock
appreciation rights issued to employees of the Reorganized Company under the employee equity
sharing plans to be established in accordance with the collective bargaining agreements to
be entered into in connection with the Transaction. The Debtors shall assume the employment
agreement of Craig Jung (the “CEO Employment Agreement”), and enter into or assume the other
Executive Employment Agreements, in each case to be approved in the Confirmation Order and
effective as of the Effective Date and for purposes of these agreements, the term “Emergence
Date” shall be synonymous with the term “Effective Date” hereunder.
	 
	 	 	For the avoidance of doubt, with the exception of the requirement that the Debtors assume
the CEO Employment Agreement, entry into or assumption of any employment agreement shall not
be a condition precedent to Investors’ commitments under the Commitment Letter or the
Investment Agreement.
	 
	8.	 	Governance Agreement
	 
	 	 	Each holder of New Common Stock (including those receiving shares of New Common Stock upon
conversion of any New Convertible Debt or exercise of any Warrant) will be required to enter
into a Governance Agreement reflecting the terms set forth on Exhibit E to the Commitment
Letter.
	 
	9.	 	Distributions to Senior Secured Creditors
	 
	 	 	On the Effective Date, in full satisfaction and discharge of the Prepetition Debt (including
any claim for default rate interest), holders of Prepetition Debt (the “Senior Secured
Creditors”) will receive distributions of New 3rd Lien Notes and New Convertible Debt, in
each case as more fully described in the Commitment Letter. Nothing herein relieves the
obligations of the Debtors to make all payments required under the final order approving the
DIP Facility, including adequate protection payments.
	 
	10.	 	Distributions to Unsecured Creditors
	 
	 	 	On the Effective Date, all general unsecured prepetition claims against the Debtors will be
discharged and extinguished in accordance with the provisions of the Plan and the Bankruptcy
Code, and no distribution will be made under the Plan to the holders of such claims (such
holders, the “Unsecured Creditors”).

A-3

 

	11.	 	Claims Treatment
	 
	 	 	Each Administrative Claim and Priority Claim to be paid in full on the latest to occur of
(1) the Effective Date, (2) the date that such claim becomes an allowed claim and (3) the
date that such claim becomes payable under any agreement between the applicable Debtor and
the holder of such claim.
	 
	 	 	Secured Tax Claims and Other Secured Claims to be unimpaired.
	 
	 	 	Intercompany Claims to be treated as set forth in IBC’s currently filed plan of
reorganization.
	 
	 	 	Claims of the Senior Secured Creditors to be impaired as described in the Commitment Letter.
	 
	 	 	Claims of the Unsecured Creditors to be impaired, with no distribution to be made under the
Plan to the Unsecured Creditors.
	 
	 	 	All existing equity interests of IBC to be impaired, with no distribution to be made under
the Plan to holders thereof, and all such existing equity interests of IBC (including all
equity interests and rights thereto under IBC’s Rights Agreement with UMB Bank, N.A., as
rights agent, and all warrants, conversion rights, rights of first refusal and other rights,
contractual or otherwise, to acquire or receive any equity interests in IBC) shall be deemed
cancelled as of the Effective Date.
	 
	12.	 	Conditions
	 
	 	 	The Investment is subject to the conditions set forth in the Commitment Letter.
	 
	13.	 	Other
	 
	 	 	The Plan shall provide for general mutual releases and exculpation by the Debtors, the
estate and the reorganized Debtors for the benefit of (1) all individuals who served as
directors and officers of the Debtors at any time during the period the Cases have been
pending through the Effective Date (collectively, the “Directors and Officers”), (2) the
Plan Supporters, the lenders and agent under the DIP Facility, the Prepetition Agent and the
Senior Secured Creditors and their respective affiliates (including, but not limited to, 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)), (3) Investors and its
affiliates and (4) the advisors, attorneys and consultants to each of the foregoing. The
terms of such general mutual releases and exculpation shall be in form and substance
customary for transactions of this type and mutually agreed to by the Debtors, the Plan
Supporters, the lenders under the DIP Facility, the agent under the DIP Facility, the
Prepetition Agent, the Senior Secured Creditors and Investors. In addition, the Plan shall
provide for the allowance in full as prepetition claims of all the Prepetition Debt.
	 
	 	 	In addition, the reorganized Debtors shall assume all existing indemnification obligations
of the Debtors in favor of the Directors and Officers (whether in the Debtors’ bylaws,
contracts or otherwise), and the Plan shall include provisions for the purchase of director
and officer liability insurance for the directors and officers of the reorganized Debtors
and, in addition, director and officer liability insurance tail coverage for any directors
and officers of the Debtors who were serving as such immediately before the Effective Date,
which insurance coverage shall be in form, amount and structure reasonably satisfactory to
the Debtors and Investors.

A-4

 

	 	 	Except as otherwise explicitly provided in the Plan, all property comprising the Debtors’
estates (including any avoidance claims and other causes of action) shall revest in each of the
Debtors and, ultimately, in the reorganized Debtors, free and clear of all claims, liens,
charges, encumbrances, rights and interests of creditors and equityholders. Other than as
set forth in this Section 13, the reorganized Debtors, in their sole and absolute
discretion, will determine whether to bring, settle, release or compromise any avoidance
claims or other causes of actions (or decline to do any of the foregoing). The reorganized
Debtors may prosecute (or decline to prosecute) such litigation claims in accordance with
the best interests of the reorganized Debtors or any successors holding such rights of
action.
	 
	 	 	The Debtor corporations shall not be substantively consolidated.

A-5

 

Exhibit B

INTERSTATE BAKERIES CORPORATION

NEW COMMON STOCK

Summary of Principal Terms and Conditions

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit B is attached.

	 	 	 
	Issuer:

	 	The Reorganized Company.
	 
	 	 
	New Common Stock:

	 	On the Effective Date, the Reorganized Company
will issue New Common Stock to (1) Investors and
(2) the Term Loan Facility Lenders (or their
Permitted Affiliates).
	 
	 	 
	 

	 	On the Effective Date, the Reorganized Company
will also issue restricted stock to Craig Jung in
accordance with the terms of his employment
agreement.
	 
	 	 
	Amount:

	 	There will be 8,840,000 shares of New Common Stock
issued and outstanding as of the Effective Date
(before giving effect to any dilution from the
conversion of New Convertible Debt or the exercise
of Warrants or stock options, restricted stock or
stock appreciation rights issued to directors,
officers or other employees of the Reorganized
Company), with (1) 4,420,000 shares of New Common
Stock to be purchased by Investors for cash at an
aggregate purchase price of $44,200,000 and (2)
4,420,000 shares of New Common Stock to be
distributed to the Term Loan Facility Lenders (or
their Permitted Affiliates), pro rata in
accordance with the relative amounts of their
loans funded under the Term Loan Facility.
	 
	 	 
	Governance Agreement:

	 	As a condition to receiving shares of New Common
Stock, holders of New Common Stock will be
required to enter into a Governance Agreement
reflecting the terms set forth on Exhibit E to
this Commitment Letter.
	 
	 	 
	State of Incorporation:

	 	State of Delaware.

B-1

 

Exhibit C

INTERSTATE BAKERIES CORPORATION

NEW CONVERTIBLE DEBT

Summary of Principal Terms and Conditions

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit C is attached.

	 	 	 
	Issuer:

	 	The Reorganized Company.
	 
	 	 
	New Convertible Debt:

	 	Pursuant to the Plan, on the Effective Date the
Reorganized Company will issue New Convertible Debt
to Investors and the Senior Secured Creditors.
	 
	 	 
	Principal Amount:

	 	$171,600,000 in aggregate principal amount, to be
allocated as follows:
	 
	 	 
	 

	 	•     $85,800,000 to Investors, to be purchased
by Investors for cash at an aggregate purchase
price of $85,800,000; and

	 
	 	 
	 

	 	•     $85,800,000 to the Senior Secured
Creditors, in partial satisfaction and discharge of
the Prepetition Debt and allocated pro rata among
the Senior Secured Creditors in accordance with the
relative amounts of their Prepetition Debt.

	 
	 	 
	Term:

	 	10 years, bullet.
	 
	 	 
	Interest:

	 	Interest on the New Convertible Debt will be at the
rate of 5.0% per annum, payable semi-annually by
the Reorganized Company. Interest payments will be
made at each interest payment date by the
Reorganized Company, at its election, either (1) in
cash (to the extent permitted under other debt
facilities, if any) or (2) in the form of “PIK”
notes representing additional New Convertible Debt
in the amount of interest payable at such interest
payment date.
	 
	Conversion Price:

	 	Holders of New Convertible Debt may at any time and
at each holder’s option convert all or a portion of
such New Convertible Debt into 
	 
	 	 

C-1

 

	 	 	 
	 

	 	shares of New Common
Stock at the conversion price of one share of New
Common Stock for each $10.00 principal amount of
New Convertible Debt (the “Conversion Price”).
	 
	 	 
	Mandatory Conversion:

	 	Upon an initial public offering of the Reorganized
Company, the Reorganized Company may, at its
option, convert all New Convertible Debt then
outstanding into shares of New Common Stock at the
Conversion Price.
	 
	 	 
	 

	 	In the event Investors exercises its Drag-Along
Rights under the Governance Agreement, all New
Convertible Debt then outstanding held by all
holders will automatically convert into shares of
New Common Stock at the Conversion Price.
	 
	 	 
	Anti-Dilution:

	 	Subject to the right of the holders of New
Convertible Debt to exercise preemptive rights as
provided in the Governance Agreement on an
as-converted basis, customary proportional
anti-dilution adjustments in the event of a
combination, subdivision or reclassification of
shares of New Common Stock or any dividend payment
with respect to New Common Stock in the form of
additional shares of New Common Stock.
	 
	 	 
	Change of Control Put:

	 	 The Reorganized Company shall be required to make
an offer to purchase all outstanding New
Convertible Debt at par within 30 days after the
occurrence of a Change in Control (to be defined).
	 
	 	 
	Security:

	 	Guaranteed by the direct and indirect, existing and
future, wholly owned domestic subsidiaries of the
Reorganized Company and Interstate Brands
Corporation (subject to exceptions for immaterial
subsidiaries to be agreed) and secured by a
perfected fourth priority security interest in the
Term Priority Collateral and the Borrowing Base
Assets (each as defined in Exhibit G to the
Commitment Letter as in effect on the date hereof).
	 
	 	 
	Optional Prepayment:

	 	The Reorganized Company may prepay all or any
portion of New Convertible Debt at any time at a
price of (1) prior to the first anniversary of the
Effective Date, 102.5% of the principal amount to
be prepaid and (2) on and after the

C-2

 

	 	 	 
	 

	 	first anniversary of the Effective Date, 101% of the
principal amount to be prepaid. Any such optional
prepayment of New Convertible Debt shall be made on
a pro rata basis among all holders of New
Convertible Debt. Upon notice of a proposed
optional prepayment, holders of New Convertible
Debt may convert the portion of New Convertible
Debt proposed to be prepaid prior to the date set
forth for such optional prepayment.
	 
	 	 
	Voting Rights:

	 	None.
	 
	 	 
	Governance Agreement:

	 	Each holder of New Convertible Debt will be
required to enter into the Governance Agreement as
a condition to receiving shares of New Common Stock
issuable upon conversion of such holder’s New
Convertible Debt (unless such holder is already a
party thereto).
	 
	 	 
	Registration Rights:

	 	None.
	 
	 	 
	Indenture:

	 	To contain customary provisions consistent with the
terms of this Commitment Letter.
	 
	 	 
	Transfer Restrictions:

	 	 So long as the Governance Agreement has not been
terminated in accordance with the terms thereof,
all transfers of New Convertible Debt are subject
to the prior consent of Investors in its sole
discretion; provided, however, that the New
Convertible Debt shall be freely transferable among
the Senior Secured Creditors and their affiliates
(with the transferability to affiliates subject to
the prior consent of Investors, which consent shall
not be unreasonably withheld), subject to (a) the
Reorganized Company being provided advance written
notice of the consummation and terms of such
transfer and (b) absolute written assurances of
confidentiality among the parties to such transfer
and the Reorganized Company (subject to disclosure
required by law).
	 
	 	 
	Governing Law:

	 	State of New York.

C-3

 

Exhibit D

INTERSTATE BAKERIES CORPORATION

WARRANTS

Summary of Principal Terms and Conditions

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit D is attached.

	 	 	 
	Issuer:

	 	The Reorganized Company.
	 
	 	 
	Warrants:

	 	On the Effective Date, the Reorganized
Company will issue to Investors Series A
Warrants (“Series A Warrants”) that will
entitle holders of Series A Warrants to
receive, upon the exercise of all Series
A Warrants at the exercise price
described below, 15% of the fully diluted
equity interests of the Reorganized
Company (calculated on the Effective Date
and assuming the conversion of all New
Convertible Debt and the exercise of all
Warrants and stock options, restricted
stock and stock appreciation rights
issued to directors, officers or other
employees of the Reorganized Company).
	 
	 	 
	 

	 	On the Effective Date, the Reorganized
Company will issue to the Term Loan
Facility Lenders (or their Permitted
Affiliates) Series B Warrants (“Series B
Warrants”) that will entitle holders of
Series B Warrants to receive, upon the
exercise of all Series B Warrants at the
exercise price described below, 1.917% of
the fully diluted equity interests of the
Reorganized Company (calculated on the
Effective Date and assuming the
conversion of all New Convertible Debt
and the exercise of all Warrants and
stock options, restricted stock and stock
appreciation rights issued to directors,
officers or other employees of the
Reorganized Company). The Series B
Warrants will be allocated pro rata among
the Term Loan Facility Lenders (or their
Permitted Affiliates) in accordance with
the relative amounts of their loans
funded under the Term Loan Facility.
	 
	 	 
	 

	 	On the Effective Date, the Reorganized
Company will issue to the Term Loan
Facility

D-1

 

	 	 	 
	 

	 	Lenders (or their Permitted
Affiliates) Series C Warrants (“Series C
Warrants” and, together with Series A
Warrants and Series B Warrants,
“Warrants”) that will entitle holders of
Series C Warrants to receive, upon the
exercise of all Series C Warrants at the
exercise price described below, 2.837% of
the fully diluted equity interests of the
Reorganized Company (calculated on the
Effective Date and assuming the
conversion of all New Convertible Debt
and the exercise of all Warrants and
stock options, restricted stock and stock
appreciation rights issued to directors,
officers or other employees of the
Reorganized Company). The Series C
Warrants will be allocated pro rata among
the Term Loan Facility Lenders (or their
Permitted Affiliates) in accordance with
the relative amounts of their loans
funded under the Term Loan Facility.
	 
	 	 
	Warrants Exercise Prices:

	 	The price per share of New Common Stock
to be paid on the exercise of a Series A
Warrant or a Series B Warrant will be
$12.50.
	 
	 	 
	 

	 	The price per share of New Common Stock
to be paid on the exercise of a Series C
Warrant will be $10.00.
	 
	 	 
	Warrant Term and Exercisability:

	 	 Each Warrant will be exercisable in whole
or in part, in cash or by cashless
exercise, at any time prior to the date
that is ten years from the date of
issuance.
	 
	 	 
	Anti-Dilution:

	 	Subject to the right of the holders of
Warrants to exercise preemptive rights as
provided in the Governance Agreement on
an as-exercised basis, customary
proportional anti-dilution adjustments in
the event of a combination, subdivision
or reclassification of shares of New
Common Stock or any dividend payment with
respect to New Common Stock in the form
of additional shares of New Common Stock.
	 
	 	 
	Exercise Under Certain Events:

	 	Upon either (1) an initial public
offering of the Reorganized Company or
(2) the exercise by Investors of its
Drag-Along Rights under the Governance
Agreement, each Warrant held by any
holder of Warrants must either be
exercised at the applicable exercise
price specified above prior to the date
of the initial public offering or

D-2

 

	 	 	 
	 

	 	the closing of the underlying transaction, as
applicable, or otherwise it shall be
automatically extinguished without any
payment or future rights on such date.
	 
	 	 
	Governance Agreement:

	 	Each holder of Warrants will be required
to enter into the Governance Agreement as
a condition to receiving shares of New
Common Stock issuable upon exercise of
such holder’s Warrants (unless such
holder is already a party thereto).
	 
	 	 
	Registration Rights:

	 	None.
	 
	 	 
	Transfer Restrictions:

	 	So long as the Governance Agreement has
not been terminated in accordance with
the terms thereof, all transfers of
Warrants are subject to the prior consent
of Investors in its sole discretion;
provided, however, that the Warrants
shall be freely transferable among the
Senior Secured Creditors and their
affiliates (with the transferability to
affiliates subject to the prior consent
of Investors, which consent shall not be
unreasonably withheld), subject to (a)
the Reorganized Company being provided
advance written notice of the
consummation and terms of such transfer
and (b) absolute written assurances of
confidentiality among the parties to such
transfer and the Reorganized Company
(subject to disclosure required by law).
	 
	 	 
	Governing Law:

	 	State of New York.

D-3

 

Exhibit E

INTERSTATE BAKERIES CORPORATION

GOVERNANCE AGREEMENT

Summary of Principal Terms1

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit E is attached.

	 	 	 
	Governance Agreement:

	 	All holders of New Common Stock are required to
enter into, and be subject to, the Governance
Agreement. Upon the conversion of any New
Convertible Debt or the exercise of any Warrant,
holders of shares of New Common Stock to be issued
pursuant to such conversion or exercise shall, as a
condition to receiving such shares of New Common
Stock, enter into the Governance Agreement (unless
already a party thereto).
	 
	 	 
	Board of Directors:

	 	The Board of Directors of the Reorganized Company
shall consist of 8 directors to be elected by
Investors. Initially the Board of Directors of the
Reorganized Company will be composed as follows:
	 
	 	 
	 

	 	•     5 directors to be selected by Investors;

	 
	 	 
	 

	 	•     2 directors to be selected by the
Prepetition Investors and reasonably satisfactory
to Investors; and

	 
	 	 
	 

	 	•     1 director to be the Chief Executive
Officer of the Reorganized Company.

	 
	Tag-Along Rights:

	 	All holders of shares of New Common Stock
(including shares of New Common Stock issued upon
any conversion of New Convertible Debt or exercise
of Warrant, which conversion or exercise may be
conditioned on the closing of the transaction
giving rise to the tag-along right) will have a
tag-along right on transfers of shares of New
Common Stock by Investors or its affiliates (other
than transfers among Investors and its affiliates)
in an amount in excess of $10,000,000 in value.

 

			
	1	 	In connection with the Governance Agreement, the
charter and bylaws of the Reorganized Company will be amended as required by
the Bankruptcy Code and shall be in form and substance satisfactory to
Investors.

E-1

 

	 	 	 
	Drag-Along Rights:

	 	In the event of a sale or other disposition of New
Common Stock (other than to an affiliate) by
Investors representing at least 50% of the New
Common Stock held by Investors at such time,
Investors shall have the right to require each
other holder of New Common Stock to sell or
otherwise dispose of a proportionate amount of such
other holder’s New Common Stock for the same
consideration per share of New Common Stock to be
received by Investors.
	 
	 	 
	Preemptive Rights:

	 	Each holder of New Common Stock shall have a
customary right of first refusal on any issuance by
the Reorganized Company of equity securities
(including New Convertible Debt and other
securities convertible into or exercisable for
equity securities); provided, however, such
preemptive right shall not apply to any equity
securities issued:
	 
	 	 
	 

	 	•     to officers, directors and employees of the
Reorganized Company pursuant to a stock option,
bonus or other equity plan approved by the Board of
Directors;

	 
	 	 
	 

	 	•     to any person in connection with an
acquisition, amalgamation, merger or
reorganization;

	 
	 	 
	 

	 	•     in connection with an initial public
offering of the Reorganized Company; and

	 
	 	 
	 

	 	•     as a stock dividend or upon any stock split
or other pro-rata subdivision or combination of the
equity securities.

	 
	 	 
	Right of First Offer:

	 	Except in the case of a transaction pursuant to
which the rights described above under the heading
“Tag-Along Rights” or “Drag-Along Rights” are
applicable, Investors shall have a right of first
offer on all transfers (other than affiliate
transfers and transfers by any Senior Secured
Creditor to another Senior Secured Creditor) of New
Common Stock by any holder thereof.

E-2

 

	 	 	 
	Registration Rights:

	 	With respect to New Common Stock held by Senior
Secured Creditors or Term Loan Facility Lenders
(including New Common Stock issued upon conversion
of New Convertible Debt or exercise of Warrants),
on or after the date that is 180 days after an
initial public offering by the Reorganized Company,
the Senior Secured Creditors and the Term Loan
Facility Lenders shall collectively have two demand
registration rights (subject to customary lock-up
restrictions in connection with another offering);
provided, however, that the Senior Secured
Creditors and the Term Loan Facility Lenders shall
collectively not exercise more than one demand
registration right within any 12-month period.
	 
	 	 
	 

	 	Investors shall have demand registration rights,
exercisable at any time.
	 
	 	 
	 

	 	In addition, holders of New Common Stock shall have
customary piggyback registration rights after an
initial public offering by the Reorganized Company.

The registration rights provisions will provide for
customary indemnities and underwriting and
cooperation requirements.
	 
	 	 
	Proxies:

	 	Holders of New Common Stock will grant proxies to
Investors to vote such holder’s New Common Stock as
Investors, in its sole discretion, shall determine.
Without the consent of the holders of a majority
of shares of New Common Stock that are not held by
Investors at such time, (1) the Reorganized Company
shall not make any amendment to the charter or
bylaws of the Reorganized Company that would
materially adversely affect the rights of
non-Investors holders of New Common Stock and (2)
no reorganized Debtor shall enter into any
transaction (other than any transaction in which
all holders of New Common Stock are entitled to
participate, such as those described under the
heading “Preemptive Rights”) with Investors, other
than the management agreement to be entered into
between Investors and the Reorganized Company and
the payment of fees, costs and expenses thereunder,
the Investment and the Transaction.

E-3

 

	 	 	 
	Information Rights:

	 	Prior to an initial public offering of the
Reorganized Company, the Reorganized Company will
provide holders of New Convertible Debt, holders of
Warrants and holders of New Common Stock with all
reporting provided to the lenders under the Term
Loan Facility in accordance with the definitive
documentation for the Term Loan Facility as in
effect on the Effective Date.
	 
	 	 
	Management Agreement:

	 	The Reorganized Company and Investors will enter
into a management agreement pursuant to which the
Reorganized Company will pay to Investors (1) a
management fee equal to $3,000,000 per annum and
(2) the out-of-pocket costs and expenses incurred
by Investors in connection with the services
provided by Investors thereunder.
	 
	 	 
	Transfer Restrictions:

	 	All transfers of New Common Stock are subject to
the prior consent of Investors in its sole
discretion; provided, however, that the New Common
Stock shall be freely transferable among the Senior
Secured Creditors and their affiliates (with the
transferability to affiliates subject to the prior
consent of Investors, which consent shall not be
unreasonably withheld), subject to (a) the
Reorganized Company being provided advance written
notice of the consummation and terms of such
transfer and (b) absolute written assurances of
confidentiality among the parties to such transfer
and the Reorganized Company (subject to disclosure
required by law).
	 
	 	 
	Termination:

	 	The Governance Agreement will terminate when
Investors and its affiliates collectively hold less
than 10% of the shares of New Common Stock then
outstanding.
	 
	 	 
	Governing Law:

	 	State of Delaware.

E-4

 

Exhibit F

Filed as a separate exhibit herewith

 

 

Exhibit G

Filed as a separate exhibit herewith

 

 

Exhibit H

INTERSTATE BAKERIES CORPORATION

NEW THIRD LIEN TERM LOANS

Summary of Principal Terms and Conditions

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit H is attached.

	 	 	 	 	 
	I.

	 	Parties	 	 
	 
	 	 	 	 
	 

	 	Borrowers:
	 	Reorganized IBC and Reorganized Brands (the “Borrowers”).
	 
	 	 	 	 
	 

	 	Guarantors:
	 	Each of the Borrowers’ direct and indirect, existing and
future, wholly owned domestic subsidiaries, subject to
exceptions for immaterial subsidiaries to be agreed
(each a “Guarantor” and collectively the “Guarantors,”
and, together with the Borrowers, the “Loan Parties”).
	 
	 	 	 	 
	 

	 	Administrative Agent:
	 	TBD (the “Administrative Agent”).
	 
	 	 	 	 
	 

	 	Collateral Agent:
	 	A collateral trustee reasonably satisfactory to the
Administrative Agent and the Borrowers.
	 
	 	 	 	 
	 

	 	Initial Lenders:
	 	The Senior Secured Creditors (together with their
permitted assignees, the “Lenders”).
	 
	II.

	 	Third Lien Term Loan

Facility
	 	A six-year term loan facility (the
“Third Lien Term Loan Facility”) in
an aggregate principal amount equal
to $147.3 million (which amount may
be decreased in accordance with
Exhibit J to the Commitment Letter
as in effect on the date hereof
and/or on a dollar for dollar basis
to the extent that the amount of the
Senior Lien Term Loan Facility (as
defined below) is increased to
effect the satisfaction of condition
15(b) of the Commitment Letter as in
effect on the date hereof) (the
loans thereunder, the “Third Lien
Term Loans”). The principal amount
of the Third Lien Term Loans shall
be repayable on the sixth
anniversary of the Effective Date
(the “Maturity Date”) on which date
the unpaid balance of the Third Lien
Term Loan Facility and any accrued
interest shall be due and payable in
full.
	 
	 	 	 	 
	 

	 	Availability
	 	The Third Lien Term Loans shall be made in a single drawing
on the Effective Date.
	 
	 	 	 	 
	 

	 	Purpose
	 	The Third Lien Term Loans shall be issued to the Senior
Secured Creditors pursuant to the Plan on the Effective Date
to satisfy, in part, the Prepetition Debt.

H-1

 

	 	 	 	 	 
	III.

	 	Certain Payment Provisions	 	 
	 
	 

	 	Fees, Early Termination
Fees and Interest Rates
	 	As set forth on Annex A and in the Fee Letter.
	 
	 	 	 	 
	 

	 	Optional Prepayments
and Commitment
Reductions
	 	Subject to the terms of the Intercreditor
Agreement (as defined below), the Borrowers may,
upon prior written notice, prepay the Third Lien
Term Loans, in whole at any time or in part from
time to time. Any optional prepayments shall be
subject to the Early Termination Fees described
in Annex I, including, during the first year
after the Effective Date, the make-whole amount
referred to therein for any optional prepayments.
	 
	 	 	 	 
	 

	 	Mandatory Prepayment
	 	Subject to the terms of the Intercreditor
Agreement and after the obligations under the
Term Loan Facility (including any permitted
refinancing or replacement thereof, the “Senior
Lien Term Loan Facility”) have been paid in full
(except in the case of clause (iii) below), an
amount equal to (i) 100% of the net cash proceeds
received by the Borrowers or any of their
subsidiaries from the issuance of indebtedness
after the Effective Date, other than customary
exceptions for indebtedness permitted to be
incurred under the definitive documentation with
respect to the Third Lien Term Loan Facility (the
“Credit Documentation”), (ii) 100% of the net
cash proceeds received from the sale or other
disposition of all or any part of the assets of
the Borrowers or any other Loan Party after the
Effective Date (other than (w) sales of real
estate owned in Southern California as of the
Effective Date, (x) sales of inventory in the
ordinary course of business, (y) sales of other
assets in the ordinary course of business subject
to a cap to be agreed and (z) other exceptions to
be agreed), up to $100.0 million (less the
aggregate amount of such net cash proceeds that
were reinvested while the Senior Term Loan
Facility was outstanding) of which shall be
deposited in a segregated cash collateral
account, subject to a control agreement in favor
of the Collateral Agent (subject to the proviso
at the end of this sentence) and shall be subject
to full withdrawal and reinvestment rights (so
long as no payment Default or bankruptcy Event of
Default then exists) for amounts reinvested
within 365 days after receipt in long term (as
determined in accordance with GAAP) assets useful
in a permitted business of the Borrowers or the
other Loan Parties, provided that to the extent
such amounts are committed pursuant to a written
agreement to be so reinvested within such 365 day
period, such reinvestment period for such amounts
shall be extended for 180 days, (iii) 100% of the
net cash proceeds in excess of $20,000,000 in the
aggregate from the sale or other disposition of
sales of real estate owned in Southern California
as of the Effective Date and (iv) 100% of all
casualty and condemnation proceeds received by
the Borrowers or any other Loan Party after the
Effective Date, subject to exceptions to be
agreed and full reinvestment rights (so long as
no payment 

H-2

 

	 	 	 	 	 
	 

	 	 	 	Default or bankruptcy Event of Default
then exists) for amounts reinvested within 365
days after receipt in long term (as determined in
accordance with GAAP) assets useful in a
permitted business of the Borrowers or the other
Loan Parties, provided that (A) to the extent
such amounts are committed pursuant to a written
agreement to be so reinvested within such 365 day
period, such reinvestment period for such amounts
shall be extended for 180 days and (B) casualty
and condemnation proceeds that exceed $10 million
in the aggregate shall be deposited in a
segregated cash collateral account to be
established within a reasonable period after the
Effective Date to be agreed, subject to a control
agreement in favor of the Collateral Agent
(subject to the proviso at the end of this
sentence), and shall be subject to full
withdrawal and reinvestment rights (so long as no  payment Default or bankruptcy Event of Default
then exists); provided that if the Borrowers are
unable to obtain a control agreement for a cash
collateral account as described in clause (ii) or
(iv) above after using commercially reasonable
efforts (which commercially reasonable efforts
shall include initiating discussions and
negotiating with the banks where the blocked
accounts under the ABL Facility are to be
established to obtain control agreements on
substantially similar terms in favor of the
Collateral Agent) to do so, it shall not be a
Default or Event of Default so long as such funds
are held in a segregated securities account in
which the Collateral Agent has a third priority
security interest that is perfected by filing of
a UCC-1 financing statement. Application of such
mandatory prepayments shall be as set forth in
the Credit Documentation. Mandatory prepayments
pursuant to clauses (ii), (iii) and (iv) above
shall be applied without prepayment penalty.
Mandatory prepayments pursuant to clause (i)
above shall be subject to the Early Termination
Fees described in Annex I.
	 
	IV.

	 	Collateral
	 	The obligations of each Loan Party
in respect of the Third Lien Term
Loan Facility shall be secured by
(a) a perfected third priority
(subject to first priority liens
securing the Senior Lien Term Loan
Facility and second priority liens
securing the ABL Facility) security
interest in the Term Priority
Collateral (as defined in Exhibit G
to the Commitment Letter as in
effect on the date hereof) and (b) a
perfected third priority (subject to
first priority liens securing the
ABL Facility and second priority
liens securing the Senior Lien Term
Loan Facility) security interest in
the Borrowing Base Assets (as
defined in Exhibit G to the
Commitment Letter as in effect on
the date hereof).
	 
	 	 	 	 
	 

	 	Intercreditor Agreement:	 	 The lien priority, relative rights
and other creditors’ rights issues
in respect of the Collateral will be
set forth in one or more
intercreditor agreements on terms
and conditions reasonably
satisfactory to the Administrative
Agent.

H-3

 

	 	 	 	 	 
	V.

	 	Certain Conditions	 	 
	 
	 	 	 	 
	 

	 	 	 	The availability of the Third Lien Term Loan Facility is subject to the
satisfaction or waiver of the conditions set forth in the Commitment Letter and
the following conditions (the date of such satisfaction or waiver of all such
conditions and the initial funding of the Third Lien Term Loans on the
effective date of the Plan, the “Effective Date”):
	 
	 	 	 	 
	 

	 	 	 	(a) The effective date of the Plan shall have occurred (and all conditions
precedent thereto as set forth in the Plan shall have been satisfied or waived,
provided that if such waiver could reasonably be expected to be adverse in any
material respect to the interests of the Lenders, the Administrative Agent
shall have provided its prior written consent to such waiver).
	 
	 	 	 	 
	 

	 	 	 	(b) As of the Effective Date, the representations and warranties contained
in the Credit Documentation shall be true and correct in all material respects.
	 
	 	 	 	 
	 

	 	 	 	(c) As of the Effective Date, no event shall have occurred and be
continuing or would result from the extension of Third Lien Term Loans that
would constitute a Default or an Event of Default.
	 
	 	 	 	 
	 

	 	 	 	(d) Each of the Borrowers shall have provided the documentation and other
information to the Lenders that the Lenders are required to obtain under the
Patriot Act.
	 
	 	 	 	 
	 

	 	 	 	(e) Negotiation, execution and delivery of definitive Credit Documentation,
including, without limitation, guarantees, security documents, mortgages,
evidence of insurance, customary opinions, certificates and other closing
documentation and deliveries as the Administrative Agent shall reasonably
request with respect to the Third Lien Term Loan Facility, in each case,
reflecting and consistent with the terms and conditions set forth herein, as
applicable, and otherwise in form and substance reasonably satisfactory to the
Administrative Agent.
	 
	VI.

	 	Certain Documentation
	 	Matters The Credit Documentation shall contain the
following representations,
warranties, affirmative
and negative covenants,
and events of default
relating to the Loan
Parties and their
subsidiaries (subject to
exceptions, materiality
thresholds, baskets, grace
periods and carve-outs to
be agreed upon):
	 
	 	 	 	 
	 

	 	Representations and Warranties
	 	 Valid existence,
organization, requisite
power and authority, good
standing, qualification to
do business, compliance
with law and regulations
(including terrorism laws
and FCPA), power to
execute, due
authorization, execution
and enforceability of the
Credit Documentation (no
conflict with
organizational

H-4

 

	 	 	 	 	 
	 

	 	 	 	documents,
material agreements or
material applicable law),
capital stock and
ownership of the
subsidiaries, necessary
consents obtained, binding
obligation, accuracy of
financial statements,
projections, payment of
taxes, accuracy in all
material respects of
disclosure taken as a
whole, solvency of the
Loan Parties on a
consolidated basis on the
Effective Date, absence of
material litigation,
compliance with margin
regulations, no defaults
(other than in respect of
indebtedness), schedule of
collective bargaining
agreements in effect on
the Effective Date,
perfected security
interest in collateral
upon Effective Date,
inapplicability of
Investment Company Act,
insurance, labor matters,
ERISA and employee benefit
plans, permits and
licenses, environmental
matters, ownership of real
and personal property,
intellectual property, and
Regulation H.
	 
	 	 	 	 
	 

	 	Affirmative Covenants
	 	Delivery of quarterly
financial statements and
compliance certificates
within 45 days after the
end of each fiscal
quarter; annual audited
financial statements for
fiscal year ending May
2009 to be provided on or
before the date that is
365 days after the end of
fiscal year ending May
2009, and thereafter,
annual audited financial
statements to be delivered
within 270 days of fiscal
year end; delivery of
monthly financial data
generated by the
Borrowers’ internal
accounting systems for use
by senior and financial
management of the
Borrowers within 30 days
after the end of each
fiscal month; delivery of
compliance certificates;
delivery of an annual
budget within 90 days
after the beginning of
each fiscal year; delivery
of all reports provided
under the ABL Facility and
the Senior Lien Term Loan
Facility; delivery of
copies of amendments,
modifications and waivers
to, notices of default
under, and certain other
information and reports
delivered under, the ABL
Facility and other
indebtedness secured by
senior and subordinated
liens on the Collateral;
written notices with
respect to known defaults,
ERISA events, material
environmental matters and
material litigation;
written notices of
termination, material
amendment or entry into
collective bargaining
agreements; written
notice of any change in
any Loan Party’s corporate
name, identity, corporate
structure or federal
taxpayer identification
number; written notice of
knowledge of (a) any lien
against any material
portion of the Collateral
(other than permitted
liens) and (b) any loss,
damage or destruction of
any material portion of
the Collateral; delivery
of all periodic reports,
proxy statements and
registration statements
publicly filed with the
Securities and Exchange
Commission (notice of
EDGAR filing shall be
sufficient for delivery of
applicable reports);
preservation of corporate
existence, compliance with
material applicable laws
and regulations (including
environmental laws and
regulations); payment of
taxes and other
obligations (other than
indebtedness); maintenance
of properties, permits and
customary insurance;
access to books and
records and inspection
rights for the
Administrative Agent (and
Lenders during an Event of
Default); further
assurances (including
delivery of information

H-5

 

	 	 	 	 	 
	 

	 	 	 	requested by a Lender to
comply with the Patriot
Act and provision of
additional collateral and
guaranties consistent with
the paragraph above
entitled “Collateral”).
	 
	 	 	 	 
	 

	 	 	 	The Borrowers shall use
commercially reasonable
efforts to obtain, within
365 days following the
Effective Date, interest
rate protection agreements
on terms reasonably
satisfactory to the
Borrowers in effect for
the three years following
the Effective Date
covering a notional amount
that results in at least
50% of the aggregate
principal amount of the
Borrowers’ consolidated
long-term indebtedness
(other than the ABL
Facility) being
effectively subject to a
fixed rate or maximum
interest rate.
	 
	 	 	 	 
	 

	 	Negative Covenants
	 	Limitations on
indebtedness (including
guaranties and speculative
hedging transactions),
liens, negative pledge
clauses, investments
(including loans), asset
dispositions, restricted
junior payments in respect
of capital stock
(including dividends,
redemptions and
repurchases), prepayments,
redemptions or repurchases
of subordinated or junior
indebtedness (in right of
payment or lien
priority)(for the
avoidance of doubt,
subject to the provisions
of the Intercreditor
Agreement with regard to
Term Priority Collateral
and the proceeds thereof,
there shall be no
limitation on prepayments
of indebtedness under the
ABL Facility), fundamental
changes (including
mergers, consolidations,
disposition of assets or
acquisitions), changes in
nature of business, sales
and lease backs,
transactions with
shareholders and
affiliates, third party
restrictions on subsidiary
distributions, amendments
or waivers with respect to
subordinated indebtedness,
the ABL Facility, the
Senior Lien Term Loan
Facility and other
indebtedness secured by
senior and subordinated
liens on the Collateral
and organizational
documents (in each case in
a manner that is adverse
in any material respect to
the Lenders), changes in
fiscal year, compliance
with margin regulations
and issuance of
disqualified capital
stock.
	 
	 	 	 	 
	 

	 	 	 	The negative covenants
will permit, among other
things, (i) payment of
management fees (which
will accrue from the
Effective Date and may be
payable quarterly in
advance) in an amount of
up to $1,000,000 per
quarter, provided no
payment Default or other
Event of Default has
occurred and is continuing
(but which may accrue and
be payable when such
Default or Event of
Default is cured), and
payments of out-of-pocket
expenses incurred by
Ripplewood Holdings L.L.C.
or its affiliates in
connection with the
provision of such
management services,
(ii) payment of financial
advisory fees and
reasonable out-of-pocket
expenses relating to
acquisitions in amounts to
be agreed, provided no
Default or Event of
Default has occurred and
is continuing, (iii)
repurchases of equity
securities from employees
up to an amount to be
agreed, (iv) payment of
amounts to be agreed to
IBC Investors I, LLC
necessary to pay taxes or
tax distributions,
operating expenses and
other specified
obligations

H-6

 

	 	 	 	 	 
	 

	 	 	 	to be agreed,
provided no payment
Default or other Event of
Default has occurred and
is continuing, and (v)
making of restricted
payments, investments and
prepayments of
subordinated debt in each
case with the proceeds of
equity issuances by, or
capital contributions to,
Reorganized IBC, which
proceeds have not been
previously so applied or
applied to an equity cure
and provided that no
payment Default or other
Event of Default has
occurred and is
continuing.
	 
	 

	 	Financial Covenants
	 	To but excluding the last
day of the first full
fiscal quarter ending
after the third
anniversary of the
Effective Date, incurrence
covenants tested to the
extent of incurrence of
additional indebtedness
(with carve outs to allow
for (i) loans borrowed and
letters of credit issued
pursuant to the ABL
Facility, and any
refinancing or replacement
thereof, in an aggregate
amount not to exceed the
inventory and receivables
borrowing base (before
application of advance
rates or blocks) in effect
from time to time, (ii)
any refinancings, renewals
or replacements of the
Outstanding L/Cs and (iii)
other additional
exceptions to be agreed).
Commencing with the end of
the first full fiscal
quarter after the third
anniversary of the
Effective Date, maximum
secured debt (excluding
the New Convertible Debt
(as defined in the Equity
Commitment Letter)) to
EBITDA ratio (to be tested
quarterly on a
consolidated basis) and,
commencing with the end of
the first full fiscal year
after the third
anniversary of the
Effective Date, maximum
capital expenditures,
financial covenants shall
apply, in each case,
tested at a cushion of 20%
to IBC’s five-year
business plan (as
determined by IBC
Investors I, LLC and
subject to review and
agreement by the
Administrative Agent) from
the end of the first full
fiscal quarter after the
third anniversary of the
Effective Date through the
fourth anniversary of the
Effective Date and,
thereafter tested at
cushion of 15% to IBC’s
five-year business plan
(with benchmark amounts
for the sixth year to be
mutually agreed).
	 
	 	 	 	 
	 

	 	 	 	For purposes of
determining compliance
with the financial
covenants, if equity
contributions are made to
Reorganized IBC during a
fiscal quarter or on or
prior to the date that is
20 days after the date
financial statements are
required to be delivered
for such fiscal period,
the proceeds of which are
promptly applied to prepay
loans under the Third Lien
Term Loan Facility, then
such prepayment of
indebtedness shall be
deemed to have occurred
prior to the end of such
fiscal period. In
addition, equity
contributions made to
Reorganized IBC during a
fiscal quarter or on or
prior to the day that is
20 days after the day on
which financial statements
are required to be
delivered for such fiscal
quarter will, at the
request of the Borrowers,
be included in the
calculation of
consolidated EBITDA for
the purposes of
determining compliance
with financial covenants
at the end of such fiscal
quarter and applicable
subsequent periods (any
such equity contribution
so included in the
calculation of
consolidated

H-7

 

	 	 	 	 	 
	 

	 	 	 	EBITDA, a
“Specified Equity
Contribution”), provided
that (a) the amount of any
Specified Equity
Contribution shall not be
greater than the amount
required to cause the
Borrowers to be in
compliance with the
financial covenants, (b)
Specified Equity
Contributions shall be
disregarded for purposes
of determining
availability under baskets
dependent on equity
issuances or
contributions, (c) a
Specified Equity
Contribution may be made
with respect to only one
fiscal quarter in each
four fiscal quarter period
and (d) any prepayment of
indebtedness made with a
Specified Equity
Contribution shall be
disregarded for purposes
of compliance with the
financial covenants at any
time such Specified Equity
Contribution is included
in the calculation of
consolidated EBITDA.
	 
	 	 	 	 
	 

	 	Events of Default
	 	Nonpayment of principal
when due; nonpayment of
interest, fees or other
amounts after a grace
period of 30 days;
material inaccuracy of a
representation or warranty
when made; violation of
financial covenants,
negative covenants and the
following affirmative
covenants: use of
proceeds, delivery of
notices of known defaults
and maintenance of
existence of the Loan
Parties; violation of
other affirmative
covenants after grace
period of 30 days after
notice thereof from the
Administrative Agent
(provided that if the
Borrowers shall fail to
provide notice of a known
default, the 30 day grace
period with respect to the
underlying default shall
commence upon the earlier
to occur of a responsible
officer of any Borrower
obtaining knowledge of
such underlying default
and notice thereof from
the Administrative Agent);
cross default to material
indebtedness; bankruptcy
events; certain ERISA
events (with exceptions to
be agreed); material
unsatisfied and unstayed
judgments (in excess of
insurance); actual or
asserted invalidity of any
guarantee or any material
provision of any
intercreditor agreement,
or security document with
respect to a material
portion of the Collateral
(in each case, other than
by reason of the action or
inaction of the
Administrative Agent or
the Lenders); and a change
of control (the definition
of which is to be agreed
upon).

H-8

 

	 	 	 	 	 
	 

	 	Requisite Lenders
	 	Amendments and waivers
with respect to the Credit
Documentation shall
require the approval of
Lenders holding more than
50% of the aggregate
principal amount of the
Third Lien Term Loans (the
“Required Lenders”),
except that (a) the
consent of each Lender
directly affected thereby
shall be required with
respect to (i) reductions
in the amount or
extensions of the final
maturity of any Third Lien
Term Loan, (ii) reductions
in the stated rate of
interest or any fee or
extensions of any due date
thereof and
(iii) increases in the
amount or extensions of
the expiry date of any
Lender’s commitment; (b)
the consent of 100% of the
Lenders shall be required
with respect to (i)
reductions of any of the
voting percentages,
changes to pro rata
sharing provisions or
changes to application of
repayments or prepayments
(it being understood that
waivers of mandatory
prepayments shall be
permitted with the consent
of the Required Lenders)
and (ii) releases of all
or substantially all of
the Guarantors or all or
substantially all of the
Collateral; and (c) the
consent of the
Administrative Agent and
the Collateral Agent, as
applicable, for changes to
the agency provisions.
	 
	 	 	 	 
	 

	 	 	 	The Credit Documentation
will include customary
provisions for replacing
non-consenting Lenders in
connection with amendments
and waivers requiring the
consent of all Lenders or
of all Lenders directly
affected thereby so long
as Lenders holding more
than 50% of the aggregate
principal amount of the
Third Lien Term Loans
shall have consented
thereto.

H-9

 

	 	 	 	 	 
	 

	 	Assignments and
Participations
	 	Lenders will be permitted
to make assignments in a
minimum amount of $1
million (unless such
assignment is of a
Lender’s entire interest
in the Third Lien Term
Loan Facility) to other
financial institutions
acceptable to the
Administrative Agent and,
so long as no payment
Default or other Event of
Default has occurred and
is continuing, the
Borrowers, which
acceptances shall not be
unreasonably withheld or
delayed; provided however,
that the approval of the
Administrative Agent and
the Borrowers shall not be
required in connection
with assignments to other
Lenders (or to affiliates
or approved funds of
Lenders). Each Lender
shall be permitted to
grant participations in
its rights and obligations
under the Third Lien Term
Loan Facility, or any part
thereof, to any person or
entity without the consent
of the Administrative
Agent or the Loan Parties.
Participants shall have
the same benefits as the
Lenders with respect to
yield protection and
increased cost provisions
(except a participant
shall not be entitled to
any greater amount than
the relevant Lender would
have received if no
participation had been
sold). Voting rights of
participants shall be
limited to certain matters
with respect to which the
affirmative vote of all
Lenders would be required
as described under
“Requisite Lenders” above.
Pledges of Third Lien
Term Loans in accordance
with applicable law shall
be permitted without
restriction. Promissory
notes shall be issued
under the Third Lien Term
Loan Facility only upon
request.
	 
	 	 	 	 
	 

	 	Expenses and
Indemnification
	 	The Borrowers shall pay
(i) all reasonable
out-of-pocket expenses of
the Administrative Agent
associated with the
syndication of the Third
Lien Term Loan Facility
and the preparation,
negotiation, execution,
delivery and
administration of the
Credit Documentation and
any amendment or waiver
with respect thereto
(including, without
limitation, the reasonable
fees, disbursements and
other charges of a single
counsel for the
Administrative Agent,
plus, if necessary, one
local counsel in each
applicable jurisdiction),
(ii) reasonable
out-of-pocket expenses of
having the Third Lien Term
Loans rated by one or more
rating agencies in an
aggregate amount of up to
$25,000, and (iii) all
out-of-pocket expenses of
the Administrative Agent
and the Lenders
(including, without
limitation, the fees,
disbursements and other
charges of a single
counsel for the
Administrative Agent and
the Lenders, plus, if
necessary, one local
counsel in each applicable
jurisdiction, except in
the case of an actual or
reasonably likely conflict
of interest) in connection
with the enforcement of
the Credit Documentation.
	 
	 	 	 	 
	 

	 	 	 	The Administrative Agent
and the Lenders (and their
affiliates and their
respective officers,
directors, employees,
advisors and agents) will
be indemnified and held
harmless against, any
loss, liability or related
reasonable out-of-pocket
cost or expense
(including, without
limitation, reasonable
fees and disbursements of
counsel), in each case
arising out of or in
connection with or
relating to the financing
contemplated hereby or the
use or the

H-10

 

	 	 	 	 	 
	 

	 	 	 	proposed use of
proceeds thereof (except
to the extent resulting
from the bad faith, gross
negligence or willful
misconduct of the
indemnified party or any
of its affiliates or its
or any of its affiliates’
officers, directors,
employees, advisors or
agents).
	 
	 	 	 	 
	 

	 	 	 	If any indemnified party
shall receive an
indemnification payment in
respect of any loss,
liability, cost or expense
pursuant to the preceding
paragraph and such loss,
liability, cost or expense
is found by a final
non-appealable judgment by
a court of competent
jurisdiction to have
resulted from the gross
negligence or willful
misconduct of such
indemnified party or any
of its affiliates or any
of its or its affiliates’
respective officers,
directors, employees,
advisors or agents, then
such indemnified party
shall refund the amount
received by it in respect
of such indemnification in
excess of that amount to
which it is entitled under
the terms of the preceding
paragraph
	 
	 	 	 	 
	 

	 	Yield Protection,
Taxes and Other
Deductions
	 	The Credit Documentation
shall contain customary
provisions protecting the
Lenders against changes in
reserve, tax, capital
adequacy and other
requirements of law and
from changes in
withholding taxes or
imposition of or changes
in other taxes (subject in
each case to a 180 day
limit on claims and a
right of the Borrowers to
replace any Lender making
such a claim). All
payments are to be free
and clear of any present
or future taxes,
withholdings or other
deductions whatsoever
unless withholding taxes
arise under current law to
a non-US Lender.
	 
	 	 	 	 
	 

	 	Governing Law and
Forum
	 	State of New York.

H-11

 

Annex A

Interest and Certain Fees

	 	 	 
	Interest Rate

	 	The Third Lien Term Loans shall bear interest at a
rate per annum equal to the rate set forth in the
table below for the applicable loan year:
	 
	 	 
	 

	 	Loan Year
	 

	 	Interest Rate
	 
	 	 
	 

	 	               1-3
	 

	 	                8.0%
	 

	 	      4 11.0% if paid in kind
	 

	 	                or
	 

	 	           10.0% if paid in cash
	 

	 	5-6      13.0% if paid in kind
	 

	 	or
	 

	 	12.0% if paid in cash
	 
	 	 
	Interest Payments

	 	Interest on the Third Lien Term Loans (i) for years
1 through 3, shall be capitalized as principal
quarterly in arrears and (ii) for years 4 through
6, shall either be paid in cash or capitalized as
principal, in each case quarterly in arrears, as
elected by the Borrowers prior to the commencement
of the applicable quarterly period.
	 
	 	 
	Default Rate

	 	At any time when a payment Event of Default or a
bankruptcy Event of Default has occurred and is
continuing,, all amounts outstanding under the
Third Lien Term Loan Facility shall bear interest
at 2.0% above the rate for paid in kind interest
otherwise then applicable thereto, payable in cash.
	 
	 	 
	Rate and Fee Basis

	 	All per annum rates shall be calculated on the
basis of a year of 365/366 days, and the actual
number of days elapsed.

H-12

 

	 	 	 
	Early Termination Fees

	 	All optional prepayments and the mandatory
prepayment described in clause (i) of Section III
herein of the Third Lien Term Loans shall, in
addition to the principal being prepaid, include
the payment of (a) the make-whole amount (to be
defined) for any prepayments made prior to the
first anniversary of the Effective Date and (b) the
product of all Third Lien Term Loans repaid
multiplied by (i) 3.0% for all such prepayments
made on or after the first anniversary of the
Effective Date and prior to the second anniversary
of the Effective Date; and (ii) 1.0% for all such
prepayments made on or after the second anniversary
of the Effective Date and prior to the third
anniversary of the Effective Date.

H-13

 

Exhibit I

INTERSTATE BAKERIES CORPORATION

INVESTMENT AGREEMENT

Summary of Principal Terms

 

Unless otherwise provided herein, capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Commitment Letter to which this Exhibit I is attached.

	 	 	 
	Transaction:

	 	On the Effective Date, the
Reorganized Company will
issue to, and Investors will
purchase, shares of New
Common Stock and New
Convertible Debt reflecting
the terms set forth in the
Commitment Letter. In
addition, on the Effective
Date, the Reorganized Company
will issue to Investors
Warrants reflecting the terms
set forth in the Commitment
Letter.
	 
	 	 
	Representations and Warranties of IBC:

	 	Customary for transactions of
this type, including, with
respect to IBC and each of
its direct and indirect
subsidiaries: organization
and standing; delivery of
books and records; securities
being validly issued, fully
paid and nonassessable;
capital structure; authority;
execution and delivery;
enforceability; no conflicts;
consents; SEC filings;
financial statements; no
undisclosed material
liabilities; title and
interests to assets; real
property; intellectual
property; material contracts;
inventory; receivables;
permits; insurance; taxes;
absence of legal proceedings;
employee benefits plans;
employee and labor matters;
environmental matters;
disclosure and projections;
brokers’ fees; compliance
with securities laws; and
private offering.
	 
	 	 
	Representations and Warranties of Investors:

	 	Organization and standing;
authority; execution and
delivery; enforceability; no
conflicts; consents; absence
of legal proceedings; and
compliance with securities
laws.
	 
	Covenants:

	 	Customary for transactions of
this type, including, with
respect to IBC and each of
its direct and indirect
subsidiaries: interim conduct
of the business; no
solicitation (with customary
exceptions); access to
information; reasonable
efforts and cooperation;
fees, costs and expenses
	 
	 	 

I-1

 

	 	 	 
	

	 	
(consistent with the terms
set forth in the Commitment
Letter and Fee Letter);
brokers or finder; employee,
labor and benefit plan
matters; tax matters;
supplemental disclosure;
publicity; bankruptcy-related
covenants (including on the
assumption and rejection of
contracts, liabilities and
other obligations and notices
related thereto); and further
assurances.
	 
	 	 
	Conditions to the Closing:

	 	Customary for transactions of
this type, including
antitrust and other
governmental approvals and
required consents; no
injunctions or restraints;
absence of proceedings;
accuracy of representations
and warranties; performance
of covenants; adoption of
amended and restated
certificate of incorporation
(or comparable organizational
document) and bylaws of each
reorganized Debtor, each in
form and substance
satisfactory to Investors;
execution of the Governance
Agreement; no material
adverse changes; and
satisfaction of all
conditions precedent set
forth in the Commitment
Letter and the Fee Letter.
	 
	 	 
	Termination:

	 	Customary for transactions of
this type consistent with the
terms of this Commitment
Letter.
	 
	 	 
	Indemnity:

	 	None.
	 
	 	 
	Governing Law:

	 	State of Delaware.

I-2

 

Exhibit J

Section 1: Subject to Section 5(a), for the Debtors on a consolidated basis, the sum of (a)
the aggregate amount of outstanding obligations under the DIP Facility (including all principal,
interest, fees and other obligations, but excluding the undrawn amounts of any letters of credit),
plus (b) the Asset Sale Adjustment, plus (c) the Capital Expenditures Adjustment,
minus (d) Cash, minus (e) the sum of all amounts paid by the Debtors to Investors
prior to the Effective Date as the Equity Commitment Fee, the Debt Commitment Fee and the Investors
Transaction Expenses, each as defined in the Fee Letter, minus (f) the sum of all amounts
paid by the Debtors to the Commitment Parties (as defined in the Term Loan Facility Commitment
Papers) prior to the Effective Date as the Expenses (as defined in the Term Loan Facility
Commitment Papers), and minus (g) the sum of all amounts paid by the Debtors to the
Commitment Parties (as defined in the ABL Facility Commitment Papers) prior to the Effective Date
as reimbursement of expenses (such sum, the “Adjusted Net Debt Amount”), shall not exceed
$113,000,000 (the “Adjusted Net Debt Amount Target”). The Adjusted Net Debt Amount shall be
calculated as of the close of business on the day immediately prior to the Effective Date (except
with respect to the portion of Cash that is plant depository cash (as reflected in the Debtors’
general ledger), which shall be calculated as of the close of business on the day that is three
days prior to the Effective Date), or at such later time prior to the Effective Date for which more
updated information is available. The Debtors shall provide Investors on or prior to the Effective
Date with a statement, certified by the chief financial officer of IBC, setting forth the Debtors’
calculation of the Adjusted Net Debt Amount in accordance with this Section 1.

Section 2: Subject to Section 5(a), as of the close of business on the day immediately
prior to the Effective Date, the aggregate undrawn amount with respect to letters of credit issued
under the Prepetition Credit Agreement or the DIP Facility (such aggregate undrawn amount, the
“Undrawn L/C Amount”) shall not exceed $236,000,000 (the “Undrawn L/C Amount Target”).

Section 3: Subject to Section 5(b), as of the close of business on the day immediately
prior to the Effective Date, the aggregate amount of (i) all administrative and priority claims
against the Debtors (including reclamation claims, priority tax claims, the unpaid fees and
expenses (including holdbacks) of professionals (but excluding ordinary course professionals)
retained in the Cases that were incurred prior to the Effective Date, claims for cure with respect
to assumed unexpired leases and executory contracts, earned and unpaid amounts related to the key
employee retention plan, and amounts due pursuant to employment agreements, but excluding (A)
liabilities incurred by the Debtors in the ordinary course of operating the business prior to the
Effective Date (including employee wage, benefit and workers’ compensation claims), (B) amounts
under the DIP Facility as described in clause (a) of Section 1 and (C) amounts to be paid by the
Debtors on or after the Effective Date (x) to Investors as the Equity Commitment Fee, the Debt
Commitment Fee and the Investment Transaction Expenses (each as defined in the Fee Letter), (y) to
the Commitment Parties (as defined in the Term Loan Facility Commitment Papers) as the Backstop Fee
and the Expenses (each as defined in the Term Loan Facility Commitment Papers) and (z) to the ABL
Facility lenders as fees and expenses pursuant to the ABL Facility Commitment Papers), (ii) all
secured claims against the Debtors arising prior to September 22, 2004 (other than claims under
capital leases to be assumed by the Reorganized Company or any of its subsidiaries and claims of
the Senior Secured Creditors in their capacity as such) and (iii) all fees and expenses payable by
the Reorganized Company or any of its subsidiaries that will be incurred after the Effective Date
and that are related to the administration of the Cases (but excluding post-closing fees and
expenses related to the consummation of the Transaction) (collectively, the “Identified Claims”)
shall not exceed $28,000,000 (the “Identified Claims Threshold”). To the extent that the amount
of an Identified Claim cannot be determined with certainty as of the close of business on the day
immediately prior to the Effective Date, the amount of such Identified Claim, for purposes of
calculating whether the Identified
Claims Threshold has been exceeded, shall be based on an estimate prepared in good faith by the
Debtors and acceptable to Investors.

J-1 

 

Section 4: At all times prior to the Effective Date, the Debtors shall conduct their
business in the ordinary course in substantially the same manner as previously conducted. In
particular, the Debtors shall not extend the payment dates of any payables to any of the vendors
listed in Schedule 1 to this Exhibit J without Investors’ prior consent in its sole discretion.
Prior to the Effective Date, the Debtors shall also work with Investors in good faith to determine
the procedure for measuring plant depository cash for purposes of this Exhibit J.

Section 5 (a): Notwithstanding the foregoing, if the sum of (1) the excess, if any, of the
Adjusted Net Debt Amount over the Adjusted Net Debt Amount Target, plus (2) the excess, if
any, of the Undrawn L/C Amount over the Undrawn L/C Amount Target, is less than $10,000,000 (the
“Cushion”), the conditions set forth in Sections 1 and 2 of this Exhibit J shall be deemed
satisfied by the Debtors. After giving effect to the Cushion, to the extent that any of the
conditions set forth in Section 1 or 2 of this Exhibit J is still not satisfied by the Debtors, the
Debtors, subject to the consent of the Commitment Parties (as defined in the Term Loan Facility
Commitment Papers), shall be permitted to satisfy such condition on the Effective Date (after first
giving effect to the Cushion) by increasing the amount of the Term Loan Facility (with a
corresponding reduction in the amount of the New 3rd Lien Notes on a dollar-for-dollar basis) and
treating such increase in the amount of the Term Loan Facility as additional Cash or a reduction in
the Undrawn L/C Amount, as the case may be, for purposes of satisfying such condition (but each
dollar applied to one condition may not be applied to the other condition for this purpose);
provided, however, that such increase in the amount of the Term Loan Facility
pursuant to this paragraph shall in no event exceed $64,000,000.

Section 5(b): Additionally, to the extent that the condition set forth in Section 3 of
this Exhibit J is not satisfied by the Debtors, the Debtors, subject to the consent of the
Commitment Parties (as defined in the Term Loan Facility Commitment Papers), shall be permitted to
satisfy such condition on the Effective Date by increasing the amount of the Term Loan Facility
(with a corresponding reduction in the amount of the New 3rd Lien Notes on a dollar-for-dollar
basis) and treating such increase in the amount of the Term Loan Facility as a reduction in the
aggregate amount of the Identified Claims for purposes of satisfying such condition.

Section 5(c): Any increase in the amount of the Term Loan Facility pursuant to Section
5(a) will not be applicable for purposes of Section 5(b), and any increase in the amount of the
Term Loan Facility pursuant to Section 5(b) will not be applicable for purposes of Section 5(a).

Defined Terms:

“Asset Sale Adjustment” means an amount equal to the aggregate Net Cash Proceeds actually received
after September 11, 2008 by the Debtors in connection with the consummation of sales of real
property.

“Capital Expenditures Adjustment” means an amount equal to (x) the product of (1) $20,000,000 and
(2) a fraction, the numerator being the number of days from and including June 1, 2008 to and
excluding the Effective Date and the denominator being the number of days from and including June
1, 2008 to and including January 10, 2009, minus (y) the aggregate amount of actual capital
expenditures of the Debtors for the period from and including June 1, 2008 to and excluding the
Effective Date; provided, however, that the Capital Expenditures Adjustment shall
in no event be less than zero.

“Cash” means the sum of (a) unrestricted cash, plus (b) restricted cash, but only to
the extent that such
restricted cash is converting into unrestricted cash on the Effective Date or is otherwise being
used to pay

J-2 

 

off amounts outstanding under the DIP Facility on the Effective Date, plus (c)
cash in the Rabbi Trust / Supplemental Executive Retirement Plan, but only to the extent that such
cash is converting into unrestricted cash within 30 days of the Effective Date, as determined by
Investors, and minus (d) the portion of the aggregate amount with respect to all issued and
uncashed checks that has been accounted for as a liability on the Debtors’ general ledger (it being
understood that the remaining portion of the aggregate amount with respect to all issued and
uncashed checks that has not been accounted for as a liability on the Debtors’ general ledger has
already been deducted from the amount of unrestricted cash on the Debtor’s general ledger), in each
case as accounted for in the Debtors’ general ledger in accordance with U.S. generally accepted
accounting principles and consistent with the Debtors’ past practice for external financial
reporting.

“Net Cash Proceeds” mean, in respect of any sale of real property, the proceeds of such sale after
the payment of or reservation for expenses that are directly related to such sale, including taxes
payable, brokerage commissions, professional expenses, and other typical real property transaction
costs that are directly related to such sale; provided, however, that Net Cash
Proceeds shall in no event be less than zero.

J-3 

 

Schedule 1 to Exhibit J

	 	 	 	 	 
	Vendors	 	 	 
	Cereal Foods
	 	 	 	 
	Cargill, Inc.
	 	 	 	 
	Perfect Commerce
	 	 	 	 
	ComData
	 	 	 	 
	ADM, Inc.
	 	 	 	 
	United Sugar
	 	 	 	 
	Bartlett Milling
	 	 	 	 
	Malnove
	 	 	 	 
	Conagra
	 	 	 	 
	Petro Card
	 	 	 	 
	Conagra
	 	 	 	 
	Petro Card
	 	 	 	 
	Caravan Ingredients
	 	 	 	 
	General Mills
	 	 	 	 
	Sonstegard
	 	 	 	 
	Blommer Chocolate
	 	 	 	 
	South Chicago Packing
	 	 	 	 
	Loders Croklaan
	 	 	 	 
	Hoogwegt
	 	 	 	 
	Manildra Milling
	 	 	 	 
	 
	 	 	 	 

J-4 

 

Exhibit K

EQUITY CONTRIBUTION AGREEMENT

          Equity Contribution Agreement, dated as of [          ], 2008 (this “Equity Contribution
Agreement”), between Ripplewood Partners II, L.P., a Delaware limited partnership (the
“Contributor”), and Interstate Bakeries Corporation, a Delaware corporation (the
“Company”). Any terms used but not defined herein have the meaning assigned to those terms
in the Investment Agreement (as defined below).

          1. Equity Contribution Agreement. To induce the Company to enter into an Investment
Agreement, dated as of [          ], 2008 (including the exhibits attached thereto and as amended,
restated, supplemented or otherwise modified from time to time in accordance with its terms, the
“Investment Agreement”), by and between IBC Investors I, LLC, a Delaware corporation
(“Parent”), and the Company, pursuant to which Parent agrees to, among other things,
purchase shares of New Common Stock and New Convertible Debt, and the Company agrees to issue
Series A Warrants to Parent, in each case on the terms and subject to the conditions set forth or
referred to in the Investment Agreement, the Contributor hereby unconditionally and irrevocably
commits to the Company, on the terms and conditions set forth or referred to herein, to make an
equity contribution to Parent in cash to the extent of the payment obligations due from Parent from
time to time under the Investment Agreement, including any Parent obligation to pay damages for a
breach by Parent of the Investment Agreement (the “Obligations”); provided,
however, that the maximum amount payable by the Contributor under this Equity Contribution
Agreement shall in no event exceed $130,000,000 (the “Cap”; the Obligations, as limited by
the Cap, the “Covered Obligations”), it being understood that the Company will not seek to
enforce this Equity Contribution Agreement without giving effect to the Cap. It is understood and
agreed that, in lieu of requiring the Contributor to make an equity contribution to Parent in cash,
at the election of the Company, the Contributor will be required to pay directly to the Company the
full amount of the Covered Obligations that is due and payable hereunder, in which event such
payments shall be credited and applied towards the Covered Obligations and the obligations of the
Contributor under this Equity Contribution Agreement (and of Parent under the Investment Agreement)
shall be deemed satisfied to the extent of such payments.

          2. Nature of Equity Contribution Agreement. This Equity Contribution Agreement is an
unconditional promise to contribute or to pay up to a specified amount on the terms and conditions
set forth or referred to herein and is not a guarantee of payment or collection. In the event that
any payment to the Company in respect of the Obligations is rescinded or must otherwise be returned
for any reason whatsoever, the Contributor shall remain liable hereunder with respect to the
Covered Obligations as if such payment had not been made; provided, however, that
the aggregate payments hereunder by the Contributor to all persons shall not in any event exceed
the Cap.

          3. Changes in Obligations, Certain Waivers. The Contributor agrees that the Company
may at any time and from time to time, without notice to or further consent of the Contributor,
extend the time of payment of any of the Obligations, and may also make any agreement with Parent
for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part,
or for any modification of the terms thereof or of any agreement between the Company and Parent,
without in any way impairing or affecting the Contributor’s

K-1 

 

 2

obligations under this Equity Contribution Agreement. The Contributor agrees that the
obligations of the Contributor hereunder shall not be released or discharged, in whole or in part,
or otherwise affected by (a) the failure of the Company to assert any claim or demand or to enforce
any right or remedy against Parent or any other person interested in the transactions contemplated
by the Investment Agreement; (b) any change in the time, place or manner of payment of any of the
Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification
of any of the terms or provisions of the Investment Agreement or any other agreement evidencing,
securing or otherwise executed in connection with any of the Obligations (including the
Contributor’s commitment letter to Parent); (c) any change in the corporate existence, structure or
ownership of Parent; (d) any insolvency, bankruptcy, reorganization or other similar proceeding for
Parent; (e) the existence of any claim, set-off, right of recoupment or other right that the
Contributor may have at any time against Parent or the Company, whether in connection with the
Obligations or otherwise; (f) the adequacy of any other means the Company may have of obtaining
payment of any of the Obligations; or (g) any assignment by Parent to any other person of its
obligations under the Investment Agreement. To the fullest extent permitted by law, the
Contributor hereby expressly waives any and all rights or defenses arising by reason of any law
which would otherwise require any election of remedies by the Company. The Contributor waives
promptness, diligence, notice of the acceptance of this Equity Contribution Agreement and of the
Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and
protest, notice of any Obligation incurred and all other notices of any kind (except for notices to
be provided to Parent and its counsel in accordance with the Investment Agreement), all defenses
that may be available by virtue of any valuation, stay, moratorium law or other similar law now or
hereafter in effect, any right to require the marshalling of assets of Parent or any other person
interested in the transactions contemplated by the Investment Agreement, and all suretyship
defenses generally (other than fraud or willful misconduct by the Company or any of its Affiliates,
defenses to the payment of the Obligations that are available to Parent under the Investment
Agreement (which shall be available to the Contributor under this Equity Contribution Agreement) or
breach by the Company of this Equity Contribution Agreement). The Contributor acknowledges that it
will receive substantial direct and indirect benefits from the transactions contemplated by the
Investment Agreement and that the waivers set forth in this Equity Contribution Agreement are
knowingly made in contemplation of such benefits.

          The Company hereby covenants and agrees that it shall not institute, and shall cause its
Affiliates not to institute, any proceeding or bring any other claim arising under, or in
connection with, the Investment Agreement or the transactions contemplated thereby, against any
former, current or future director, officer, employee, agent, advisor, attorney, representative,
affiliate, general or limited partner, securityholder, member, manager, trustee or controlling
person of the Contributor (or any of their successors or assigns) or any affiliate thereof, or
against any former, current or future director, officer, employee, agent, advisor, attorney,
representative, affiliate, general or limited partner, securityholder, member, manager, trustee or
controlling person of any of the foregoing (or any of their successors or assigns) or any affiliate
thereof. The Contributor hereby unconditionally and irrevocably agrees not to exercise any rights
that it may now have or hereafter acquire against Parent that arise from the existence, payment,
performance, or enforcement of the Contributor’s Covered Obligations under or in respect of this
Equity Contribution Agreement or any other agreement in connection therewith, including any right
of subrogation, reimbursement, exoneration, contribution or indemnification

K-2 

 

 3

and any right to participate in any claim or remedy of the Company against Parent, whether or
not such claim, remedy or right arises in equity or under contract, statute or common law,
including the right to take or receive from Parent, directly or indirectly, in cash or other
property or by set-off or right of recoupment or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Covered Obligations shall have
been satisfied in full. If any amount shall be paid to the Contributor in violation of the
immediately preceding sentence at any time prior to the satisfaction in full of the Covered
Obligations, such amount shall be received and held in trust for the benefit of the Company, shall
be segregated from other property and funds of the Contributor and shall forthwith be paid or
delivered to the Company in the same form as so received (with any necessary endorsement or
assignment) to be credited and applied to the Covered Obligations, in accordance with the terms and
conditions set forth or referred to in the Investment Agreement, whether matured or unmatured, or
to be held as collateral for any Covered Obligations thereafter arising. Notwithstanding anything
to the contrary contained in this Equity Contribution Agreement, the Company hereby agrees that to
the extent Parent is relieved by the Company of any of its obligations under the Investment
Agreement, the Contributor shall be similarly relieved of its obligations under this Equity
Contribution Agreement.

          4. No Waiver; Cumulative Rights. No failure on the part of the Company to exercise,
and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise by the Company of any right, remedy or power hereunder
preclude any other or future exercise of any right, remedy or power. Each and every right, remedy
and power hereby granted to the Company or allowed it by law or other agreement shall be cumulative
and not exclusive of any other and may be exercised by the Company at any time or from time to
time.

          5. Representations and Warranties. The Contributor hereby represents and warrants
that:

          (a) the execution, delivery and performance by the Contributor of this Equity
Contribution Agreement have been duly authorized by all necessary action on the part of the
Contributor and do not conflict with any provision of (i) the Contributor’s partnership
agreement or similar organizational documents, (ii) any contract or agreement to which the
Contributor is a party or by which any of its properties or assets is bound or (iii) any
law, regulation, rule, decree, order or judgment applicable to the Contributor or its
properties or assets, other than, in the case of clauses (ii) and (iii) above, any such
items that, individually or in the aggregate, could not reasonably be expected to have a
material adverse effect on the ability of the Contributor to perform its obligations under
this Equity Contribution Agreement;

          (b) no consent, approval or authorization of, or registration, declaration or filing
with, any governmental authority is required to be obtained or made by or with respect to
the Contributor in connection with the execution, delivery and performance of this Equity
Contribution Agreement, other than such items that, individually or in the aggregate, could
not reasonably be expected to have a material adverse effect on the ability of the
Contributor to perform its obligations under this Equity Contribution Agreement;

K-3 

 

 4

          (c) this Equity Contribution Agreement constitutes a legal, valid and binding
obligation of the Contributor, enforceable against the Contributor in accordance with its
terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and
(ii) general equitable principles (whether considered in a proceeding in equity or at law);
and

          (d) the Contributor has, and will for so long as this Equity Contribution Agreement
shall remain in effect in accordance with Section 8 hereof continue to have, the financial
capacity to pay and perform its obligations under this Equity Contribution Agreement.

          6. No Assignment. Neither the Contributor nor the Company may assign its rights,
interests or obligations hereunder to any other person (except by operation of law) without the
prior written consent of the Company (in the case of an assignment by the Contributor) or the
Contributor (in the case of an assignment by the Company). Notwithstanding the preceding sentence,
the Contributor may assign all or a portion of its obligations hereunder to one or more other
persons; provided, however, that no such assignment under this sentence shall
relieve the Contributor of its obligations hereunder.

          7. Notices. All notices, requests, claims, demands and other communications hereunder
must be in writing and will be deemed given upon receipt by the parties at the following address
(or in each case at such other address for a party as may be specified by such party in like
notice):

          If to the Contributor:

c/o Ripplewood Holdings L.L.C.

One Rockefeller Plaza, 32nd Floor

New York, NY 10020

Attention: Christopher Minnetian, Esq.

          with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019

Attention: Peter S. Wilson, Esq.

          If to the Company:

12 East Armour Boulevard

Kansas City, MO 64111

Attention: Kent Magill, Esq.

K-4 

 

 5

          With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

333 West Wacker Drive

Chicago, IL 60606

Attention: J. Eric Ivester, Esq.

          8. Continuing Obligation. This Equity Contribution Agreement shall remain in full
force and effect and shall be binding on the Contributor, its successors and assigns until all of
the Covered Obligations have been satisfied in full. Notwithstanding the foregoing, this Equity
Contribution Agreement shall terminate and the Contributor shall have no further obligations under
this Equity Contribution Agreement as of the earliest of (i) the Closing, (ii) six months following
the termination of the Investment Agreement in accordance with its terms prior to the Closing (the
“Six Month Anniversary”); provided, however, that, in the case of this
clause (ii), if any suit, action or proceeding arising from this Equity Contribution Agreement has
been commenced in any court of competent jurisdiction prior to the Six Month Anniversary, then this
Equity Contribution Agreement shall survive the Six Month Anniversary solely with respect to such
suit, action or proceeding until final determination thereof by such court, and (iii) contribution
by the Contributor to Parent (or, at the election of the Company, payment by the Contributor to the
Company) pursuant hereto of an aggregate amount equal to the Cap. In the event that the Company or
any of its Affiliates asserts in any litigation relating to this Equity Contribution Agreement that
either the provisions of Section 1 hereof limiting the Contributor’s monetary obligations to the
Cap or the provisions of Section 9 hereof are illegal, invalid or unenforceable in whole or in
part, (x) the obligations of the Contributor under this Equity Contribution Agreement shall
terminate immediately and thereupon be null and void and (y) if the Contributor has previously made
any payments under this Equity Contribution Agreement, it shall be entitled to have such payments
refunded by the Company.

          9. No Recourse. The Company acknowledges that Parent’s assets are of a de minimis
value and that no funds are expected to be contributed to Parent unless and until the Closing
occurs. Notwithstanding anything that may be expressed or implied in this Equity Contribution
Agreement, the Investment Agreement or any document or instrument in connection herewith or
therewith or otherwise, and notwithstanding the fact that the Contributor is a partnership, by its
acceptance of the benefits of this Equity Contribution Agreement, the Company acknowledges and
agrees that (i) it has no right of recovery against, and no personal liability shall attach to, the
former, current or future directors, officers, employees, agents, advisors, attorneys,
representatives, affiliates, general or limited partners, securityholders, members, managers,
trustees or controlling persons of the Contributor or Parent (or any of their successors or
assigns) or any affiliate thereof or any former, current or future director, officer, employee,
agent, advisor, attorney, representative, affiliate, general or limited partner, securityholder,
member, manager, trustee or controlling person of any of the foregoing (or any of their successors
or assigns) or any affiliate thereof (collectively, the “Contributor Affiliates”), through
the Contributor, Parent or otherwise, whether by or through attempted piercing of the corporate
veil, by or through a claim by or on behalf of Parent against the Contributor or any of the
Contributor Affiliates, including under the Contributor’s commitment letter to Parent, by or
through the Investment Agreement, by the enforcement of any judgment or assessment or by any legal
or equitable proceeding, by virtue of any statute, regulation or applicable law, or otherwise,

K-5 

 

 6

except for its rights to require the Contributor (but not any of the Contributor Affiliates
(including any general partner or managing member)) to make a contribution to Parent (or, at the
election of the Contributor, payment to the Company) up to the amount of the Covered Obligations
under and to the extent provided in this Equity Contribution Agreement, (ii) recourse against the
Contributor to cause the Contributor to make a contribution to Parent (or, at the election of the
Contributor, payment to the Company) required under this Equity Contribution Agreement shall be the
sole and exclusive remedy of the Company and all of its Affiliates, securityholders and creditors
against the Contributor and the Contributor Affiliates in respect of any liabilities or obligations
arising under, or in connection with, this Equity Contribution Agreement, the Investment Agreement
or the transactions contemplated hereby or thereby and (iii) in no event will Parent, the
Contributor or any Contributor Affiliates be subject to liability in the aggregate in excess of the
Cap for all losses and damages arising under, or in connection with, this Equity Contribution
Agreement, the Investment Agreement and the transactions contemplated hereby and thereby. Nothing
set forth in this Equity Contribution Agreement shall be construed to confer or give to Parent or
any other person (including any holder of any claim or interest in the Company, any Affiliate of
the Company or any person acting in a representative capacity) other than the Company and the
Contributor any rights or remedies against any person other than the Company and the Contributor as
expressly set forth herein, and except that the Contributor Affiliates shall also have the right to
enforce the provisions of this Equity Contribution Agreement.

          10. Governing Law. This Equity Contribution Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof. In addition, each of
the parties hereto (a) consents to and submits itself to the exclusive jurisdiction of the United
States District Court for the Southern District of New York or, in the event that such court does
not have or declines to exercise jurisdiction, to the exclusive jurisdiction of the state courts of
the State of New York located in the City of New York, Borough of Manhattan, in the event any
dispute arises out of this Equity Contribution Agreement, (b) agrees that it will not attempt to
deny or defeat such exclusive jurisdiction by motion or other request for leave from such court and
(c) agrees that it will not bring any action relating to this Equity Contribution Agreement in any
court other than the United States District Court for the Southern District of New York or, in the
event that such court does not have or declines to exercise jurisdiction, in the state courts of
the State of New York located in the City of New York, Borough of Manhattan.

          11. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS EQUITY
CONTRIBUTION AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

          12. Entire Agreement; Counterparts. This Equity Contribution Agreement constitutes
the entire agreement with respect to the subject matter hereof and supersedes any and all prior
discussions, negotiations, proposals, undertakings and agreements, whether written or oral, among
Parent and the Contributor and any of their Affiliates, on the one hand, and the

K-6 

 

 7

Company and any of its Affiliates, on the other hand, except for the Investment Agreement.
This Equity Contribution Agreement may be executed in one or more counterparts, all of which will
be considered one and the same agreement and will become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.

          13. Effectiveness of Equity Contribution Agreement. This Equity Contribution
Agreement shall be of no force and effect, and shall not become effective, unless and until the
occurrence of both (a) entry of the Investment Agreement Order by the Bankruptcy Court and (b)
payment by the Company of all fees due and payable to Parent upon entry of the Investment Agreement
Order by the Bankruptcy Court in accordance with the fee letter, dated September 12, 2008, between
the Company and Parent.

K-7 

 

          IN WITNESS WHEREOF, the Contributor and the Company has each caused this Equity Contribution
Agreement to be executed and delivered as of the date first written above by its respective officer
thereunto duly authorized.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	RIPPLEWOOD PARTNERS II, L.P.,	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	by	 	RIPPLEWOOD PARTNERS II, GP, L.P.,	 	 
	 	 	 	 	 	 	as its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	by	 	RP II GP, LLC, as its General Partner	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	by	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

Name:
	 	 
	 

	 	 	 	 	 	 	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	INTERSTATE BAKERIES CORPORATION,	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	by	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 	 	 

K-8 

 

Exhibit L

 

 

IN THE UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF MISSOURI

KANSAS CITY DIVISION

	 	 	 	 	 
	
 

	 	x
	 	 
	 	 	
:	 	 
	In re:

	 	:
	 	Chapter 11
	 

	 	:	 	 
	INTERSTATE BAKERIES

	 	:
	 	Case No. 04-45814 (JWV)
	CORPORATION, et al.,

	 	:	 	 
	 

	 	:
	 	Jointly Administered
	Debtors.

	 	:	 	 
	 

	 	:	 	 
	 

	 	:	 	 
	
 

	 	x	 	 

ORDER AUTHORIZING THE DEBTORS TO

(I) AMEND POST-PETITION FINANCING FACILITY, (II) CONTINUE

USING CASH COLLATERAL, (III) CONTINUE GRANTING ADEQUATE

PROTECTION TO PRE-PETITION SECURED PARTIES, AND (IV)

CONTINUE GRANTING LIENS, SECURITY INTERESTS AND

SUPERPRIORTY CLAIMS TO POST-PETITION LENDERS

(Related to Docket No. 11262)

     Upon the motion (the “Motion”),1 dated September 9, 2008, of Interstate
Bakeries Corporation (“Interstate Bakeries” or the “Company”) and eight2
of its subsidiaries and affiliates, debtors and debtors-in-possession (collectively, the
“Debtors”) in the above-captioned jointly-administered cases (the “Cases”),
pursuant to sections 105, 361, 362, 363, 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1) and 364(e) of
title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), and
Rules 2002, 4001 and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”), seeking, among other things, an order of this Court

 

			
	1	 	Capitalized terms used herein but not defined herein
shall have the meaning ascribed to such terms in the Motion.
	 
	2	 	The following subsidiaries’ and affiliates’ chapter 11
cases are jointly administered with Interstate Bakeries’ chapter 11 case:
Armour and Main Redevelopment Corporation; Baker’s Inn Quality Baked Goods,
LLC; IBC Sales Corporation; IBC Services, LLC; IBC Trucking, LLC; Interstate
Brands Corporation; New England Bakery Distributors, L.L.C., and Mrs.
Cubbison’s Foods, Inc.

 

 

authorizing the Debtors to (I) enter into the First Amendment to Second Amended DIP Facility (the
“First Amendment,” attached hereto as Exhibit A) which, among other things, extends
the maturity date under the Debtors’ post-petition debtor-in-possession financing facility from
September 30, 2008 to February 9, 2009, increases the aggregate principal amount of commitments
thereunder from approximately $250 million to approximately $328,995,998.02 million, and modifies
certain covenants set forth in the Second Amended DIP Facility, (II) continue using cash
collateral, (III) continue granting adequate protection to the Pre-Petition Secured Parties and
(IV) continue granting liens, security interests and superpriority claims to the Post-Petition
Lenders; due and appropriate notice of the Motion and the relief requested therein having been
served by the Debtors on all appropriate parties in accordance with Bankruptcy Rule 4001(c); upon
all of the pleadings filed with this Court; upon the record made at the hearings on each of the DIP
Orders and the hearing on the Motion including, without limitation, the evidence introduced at the
hearing on the Motion; and after due deliberation and consideration, and good and sufficient cause
appearing therefor;

     IT IS FOUND, DETERMINED, ORDERED AND ADJUDGED, that:

     1. The Motion is GRANTED.

     2. This Court has core jurisdiction over the Cases, the Motion, and the parties and property
affected under this Order pursuant to 28 U.S.C. §§ 157(b) and 1334. Venue is proper before this
Court pursuant to 11 U.S.C. §§ 1408 and 1409.

     3. Under the circumstances, the notice given by the Debtors of the Motion and the hearing
thereon constitutes due and sufficient notice thereof and complies with Bankruptcy Rules 4001(b)
and (c).

     4. Good cause has been shown for the entry of this Order.

2

 

     5. The Debtors are authorized to enter into the First Amendment and to execute all documents
and instruments related thereto and the terms of the First Amendment are hereby approved.

     6. All of the fees set forth in Sections 2.2, 2.19, 2.20 and 2.21 of the DIP Credit Agreement
(as defined in the First Amendment), to the extent required under the DIP Credit Agreement (as
modified by the First Amendment), in Section 3.5 of the First Amendment, and in the Fee Letter are
hereby approved and reaffirmed.

     7. Any credit extended and loans made to the Debtors pursuant to the Second Amended DIP
Facility, as amended by the First Amendment, shall be deemed to have been extended by the
Post-Petition Lenders and their affiliates in good faith, as that term is used in section 364(e) of
the Bankruptcy Code and in express reliance upon the protections offered by section 364(e) of the
Bankruptcy Code, and shall be entitled to the full protection of section 364(e) of the Bankruptcy
Code in the event that this Order or any provision hereof is vacated, reversed or modified, on
appeal or otherwise.

     8. The terms of the DIP Financing Orders are incorporated herein and made a part of this
Order. Except to the extent modified in this Order, the DIP Financing Orders remain in full force
and effect. All factual findings contained in the DIP Financing Orders shall remain fully
applicable, except to the extent specifically modified herein. In the event of any inconsistency
among the provisions of this Order, the DIP Financing Orders and the definitive documents related
to the Second Amended DIP Facility (as amended by the First Amendment), the provisions of this
Order shall govern.

     9. The Court shall retain jurisdiction to hear and determine all matters arising from the
implementation of this Order.

3

 

	Dated:		 Kansas City, Missouri

                    , 2008

 

UNITED STATES BANKRUPTCY JUDGE

4

 

Exhibit A

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