Document:

exv10w4

Exhibit
10.4

SILVER POINT FINANCE, LLC

MONARCH MASTER FUNDING LTD

September 12, 2008

$339,000,000 New Money Term Loan

Commitment Letter

Interstate Bakeries Corporation

Interstate Brands Corporation

12 East Armour Boulevard

Kansas City, MO 64111

Attention: Randall Vance, Chief Financial Officer

Ladies and Gentlemen:

     You have advised Silver Point Finance, LLC (acting individually or through one or more of its
affiliates) (“Silver Point”) and Monarch Master Funding Ltd (acting individually or through
one or more of its affiliates) (“Monarch” and, together with Silver Point, the
“Commitment Parties”) that you expect Interstate Bakeries Corporation (“IBC”),
Interstate Brands Corporation (“Brands”) and their direct and indirect subsidiaries
(collectively, the “Debtors”), each the subject of a voluntary case under chapter 11 of
title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”), in
the United States Bankruptcy Court for the Western District of Missouri (the “Bankruptcy
Court”), Case Nos. 04-45814 (the “Cases”), will be reorganized pursuant to a Joint Plan
of Reorganization (as described in more detail below, the “Plan”) consistent with the terms
set forth on Exhibit A (the “Plan Term Sheet”) attached to this commitment letter (this
commitment letter, together with the exhibits and annexes attached hereto and as amended, restated,
modified or otherwise supplemented from time to time in accordance with the terms hereof, this
“Commitment Letter”). Pursuant to that certain commitment letter, dated September 12,
2008, IBC Investors I, LLC (“Investors”) has committed to make equity and debt investments
in IBC in accordance with the terms set forth therein (such commitment letter, together with the
exhibits and annexes attached thereto and as amended, restated, modified or otherwise supplemented
from time to time in accordance with the terms thereof, the “Equity Commitment Letter”).
You have further advised the Commitment Parties that IBC, as reorganized pursuant to the Plan
(“Reorganized IBC”), and Brands, as reorganized pursuant to the Plan (collectively with
Reorganized IBC, the “Borrowers” or the “Reorganized Company”), are seeking to
obtain a secured term loan facility in the aggregate amount of $339,000,000, subject to increase in
accordance with the terms of this Commitment Letter (the “Term Loan Facility”), with the
proceeds thereof to be used to consummate the Plan and for working capital and general corporate
purposes of the Borrowers and their subsidiaries. The consummation of the Plan, including the
entering into and funding of the Term Loan Facility, and all related transactions contemplated by
the Plan and this Commitment Letter are hereinafter collectively referred to as the
“Transaction.”

     In connection with the Transaction, you have requested that Silver Point agree to structure,
arrange and syndicate the Term Loan Facility. You have further requested that the Term Loan
Facility be in an aggregate amount of $339,000,000, which amount may be increased (a) in the sole

 

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discretion of the Commitment Parties, as provided in Exhibit J to the Equity Commitment Letter
as in effect on the date hereof and/or to effect the satisfaction of condition 15(b) of the Equity
Commitment Letter as in effect on the date hereof and/or (b) in accordance with Annex A to Exhibit
B to this Commitment Letter (such amount, the “Aggregate Commitment”), and that the
Commitment Parties commit to provide the Aggregate Commitment.

     Silver Point is pleased to advise you that it is willing to act as the lead syndication agent,
lead bookrunner and lead arranger (the “Lead Arranger”) for the Term Loan Facility. In
addition, Silver Point is pleased to advise you of its commitment to provide 57.0% of the Aggregate
Commitment and Monarch is please to advise you of its commitment to provide 43.0% of the Aggregate
Commitment, in each case on a several, and not joint, basis, upon the terms and subject to the
conditions set forth or referred to in this Commitment Letter and in the Summary of Terms and
Conditions attached hereto as Exhibit B (the “Term Loan Facility Term Sheet”). You agree
that, as a condition to the commitment and agreements of the Commitment Parties hereunder, no other
agents, co-agents or arrangers will be appointed and no other titles will be awarded, without the
consent of Silver Point (such consent not to be unreasonably withheld) and no compensation (other
than that expressly contemplated by the Term Loan Facility Term Sheet and the Fee Letter referred
to below) will be paid in connection with the Term Loan Facility unless you and we shall so agree.

     We intend to syndicate the Term Loan Facility to McDonnell Investment Management and/or its
affiliates and related funds (collectively, “McDonnell”), as well as other lenders
identified by us and reasonably acceptable to you (together with the Commitment Parties, the
“Lenders”). We intend to commence syndication efforts promptly following Bankruptcy Court
approval of the Disclosure Statement (as defined below) with respect to the Plan, and you agree to
use commercially reasonable efforts to take all actions that we may reasonably request to actively
assist us in completing a syndication reasonably satisfactory to us. Such assistance shall include
(a) your using commercially reasonable efforts to ensure that the syndication efforts benefit
materially from the existing banking relationships of the Borrowers and Investors and its
affiliates, (b) direct contact between senior management and advisors of the Borrowers and the
proposed Lenders and your using commercially reasonable efforts to provide direct contact with
Investors and its affiliates and their advisors, (c) as set forth in the next paragraph, assistance
from the Borrowers (and your using commercially reasonable efforts to cause Investors and its
affiliates to provide assistance) in the preparation of materials, to the extent reasonably
available, regarding the Borrowers, their subsidiaries and the Term Loan Facility, to be used in
connection with the syndication (collectively, with the Term Loan Facility Term Sheet, the
“Information Materials”) and (d) the hosting, with us and senior management of the
Borrowers (and your using commercially reasonable efforts to cause Investors and its affiliates to
participate in the hosting), of one or more meetings of prospective Lenders. In connection with a
syndication of the commitment hereunder to provide the Term Loan Facility, the rights and
obligations of the Commitment Parties may be assigned, in whole or in part, by the Commitment
Parties to McDonnell or to any proposed Lender reasonably acceptable to you; provided,
however, that except as set forth below, no such assignment shall release the Commitment
Parties from their obligations to fund their respective portions of the Aggregate Commitment;
provided, further, however, that to the extent any portion of the Aggregate
Commitment is assigned to McDonnell, upon such assignment, the Commitment Parties shall be relieved
from their obligations to provide such portion of the Aggregate Commitment, and the obligation to
provide such portion of the Aggregate Commitment shall be novated. Each of the Commitment Parties
acknowledges and agrees that its commitment hereunder is not conditioned upon a successful
syndication.

     You will assist us in preparing Information Materials, including Confidential Information
Memoranda, for distribution to prospective Lenders. If requested, you also will assist us in
preparing an additional version of the Information Materials (the “Public-Side Version”) to
be used by prospective Lenders’ public-side employees and representatives (“Public-Siders”)
who do not wish to receive material

 

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non-public information (within the meaning of United States federal securities laws) with
respect to the Borrowers, their subsidiaries and any of their securities (“MNPI”) and who
may be engaged in investment and other market related activities with respect to any such entities’
securities or loans. Before distribution of any Information Materials, you agree to execute and
deliver to us (i) a letter in which you authorize distribution of the Information Materials to a
prospective Lender’s employees willing to receive MNPI (“Private-Siders”) and (ii) a
separate letter in which you authorize distribution of the Public-Side Version to Public-Siders and
represent that no MNPI is contained therein.

     You agree that the following documents may be distributed to both Private-Siders and
Public-Siders, unless you advise the Lead Arranger in writing (including by email) within a
reasonable time prior to their intended distribution that such materials should only be distributed
to Private-Siders: (a) administrative materials of a customary nature prepared by the Lead
Arranger for prospective Lenders (such as a lender meeting invitation, lender allocation, if any,
and funding and closing memoranda) that do not contain any MNPI, (b) notification of changes in the
terms of the Term Loan Facility and (c) publicly available filings made by you after the date
hereof with the Securities and Exchange Commission. If you advise us that any of the foregoing
should be distributed only to Private-Siders, then Public-Siders will not receive such materials
without further discussions with you.

     You hereby authorize the Lead Arranger to distribute drafts of definitive documentation with
respect to the Term Loan Facility to Private-Siders and Public-Siders.

     The Lead Arranger will manage, in consultation with you, all aspects of the syndication,
including decisions as to the selection of institutions (which shall be reasonably acceptable to
you, other than McDonnell, whom you hereby acknowledge as being acceptable to you for this purpose)
to be approached and when they will be approached, when their commitments will be accepted, which
institutions will participate, the allocation of the commitments among the Lenders and the amount
and distribution of fees among the Lenders. The Lead Arranger will have no responsibility other
than to arrange the syndication as set forth herein and in no event shall be subject to any
fiduciary or other implied duties. Additionally, you acknowledge and agree that the Commitment
Parties are not advising you as to any legal, tax, investment, accounting or regulatory matters in
any jurisdiction. You shall consult with your own advisors concerning such matters and shall be
responsible for making your own independent investigation and appraisal of the transactions
contemplated hereby, and the Commitment Parties shall have no responsibility or liability to you
with respect thereto.

     IBC hereby represents and covenants that (a) all information, other than financial information
and projections (the “Projections”) and general economic or specific industry information
developed by, and obtained from, third party sources that has been or will be made available to the
Commitment Parties by IBC or any of its representatives, when taken together as a whole, is and
will be, when furnished, 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 the Commitment Parties by IBC or any of its representatives have been and will be
prepared in good faith based upon assumptions that are believed to be reasonable at the time made.

     As consideration for the commitment and agreements of the Commitment Parties hereunder, you
agree to cause to be paid the nonrefundable fees described in the Fee Letter dated September 12,
2008 and delivered herewith (as amended, restated, modified or otherwise supplemented from time to
time in accordance with the terms thereof, the “Fee Letter”).

 

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     Each Commitment Party’s commitment and agreements 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 Equity Commitment
Letter (including the exhibits thereto) and the ABL Facility Commitment Papers (as defined in the
Equity Commitment Letter as in effect on the date hereof);

     2. not later than September 30, 2008, entry of an order (the “Fee Order”) by the
Bankruptcy Court in the Cases, in form and substance reasonably satisfactory to the Commitment
Parties, (a) approving this Commitment Letter, the Fee Letter, the Equity Commitment Letter
(including the exhibits thereto) and related fee letter and the ABL 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 the Commitment Parties and their 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, on a pari passu basis
with the administrative claims of Investors with respect to fees, costs and expenses arising under
the Equity Commitment Letter and related fee letter, under Sections 503(b)(1) and 507(a)(1) of the
Bankruptcy Code, whether or not the Term Loan Facility, the Transaction or any other transaction
contemplated herein is consummated and (c) otherwise authorizing the Debtors to execute, perform
and incur their obligations under this Commitment Letter, the Fee Letter, the Equity Commitment
Letter (including the exhibits thereto) and related fee letter and the ABL Facility Commitment
Papers;

     3. (a) the negotiation and execution by Investors and IBC by not later than September 26, 2008
of the Investment Agreement referred to in the Equity Commitment Letter and other documentation for
the Investment (as defined in the Equity Commitment Letter as in effect on the date hereof), in
each case on terms consistent with the Equity Commitment Letter as in effect on the date hereof
(including Exhibit I thereto) and otherwise reasonably satisfactory to the Commitment Parties, (b)
not later than October 20, 2008, entry of the Investment Agreement Order (as defined in the Equity
Commitment Letter as in effect on the date hereof) by the Bankruptcy Court in the Cases, in form
and substance reasonably satisfactory to the Commitment Parties, authorizing IBC to execute and to
incur and perform its obligations under the Investment Agreement and such other documentation for
the Investment, (c) no provision of the Equity Commitment Letter (as in effect on the date hereof),
the Investment Agreement or the other definitive documentation for the Investment having been
waived, amended, supplemented or otherwise modified by any party thereto in a manner that could
reasonably be expected to be adverse in any material respect to the interests of the Commitment
Parties without the consent of the Commitment Parties, (d) all conditions to closing under the
Investment Agreement having 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 Commitment Parties, the
Commitment Parties shall have consented to such waiver) on or prior to the Effective Date, and (e)
Investors having made the Investment on the Effective Date in accordance with the terms of the
Investment Agreement; provided, that the parties hereto acknowledge and agree that, for the
purposes of clauses (c) and (d) above, any amendment, supplement or other modification (or any
waiver of a condition that effects a modification) of the amount, form or terms of the New Common
Stock, New Convertible Debt and Warrants (as each such term is defined in the Equity Commitment
Letter as in effect on the date hereof) shall be deemed to be adverse in a material respect to the
interests of the Commitment Parties;

     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 the Commitment
Parties,

 

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and a disclosure statement accompanying the Plan in form and substance reasonably satisfactory
to the Commitment Parties (the “Disclosure Statement”);

     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 the Commitment Parties, 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 any respect in a manner adverse to the Commitment Parties
without the consent of the Commitment Parties 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 the Commitment Parties, 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 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 Term Loan Facility 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, condition (financial or otherwise) or prospects of Reorganized
IBC and its direct and indirect subsidiaries, taken as a whole, or adverse to the Commitment
Parties, in each case as determined by the Commitment Parties;

     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 in accordance with 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 the Commitment Parties, 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 13
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 to the Equity Commitment Letter as in effect on the date hereof),
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 the definitive
documentation for the ABL Facility referred to in the Equity Commitment Letter (the “ABL
Facility”), on terms consistent with the term sheet for such ABL Facility attached to the
Equity Commitment Letter as in effect on the date hereof and otherwise reasonably satisfactory to
the Commitment Parties, (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

 

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could reasonably be expected to be adverse in any material respect to the interests of the
Commitment Parties without the consent of the Commitment Parties, (c) all conditions to borrowing
under the ABL Facility having 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 Commitment
Parties, the Commitment Parties shall have consented to such waiver) on or prior to the Effective
Date, and (d) on the Effective Date (A) 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 (B) the ABL Facility being in full force and effect;

     13. all letters of credit outstanding under the Prepetition Credit Agreement (as defined
below) or the DIP Facility as of the Effective Date to remain in place (or to 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 reasonably satisfactory to the
Commitment Parties;

     14. (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 the Commitment Parties on the
date hereof, there not occurring or becoming known to the Commitment Parties 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 Reorganized IBC 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; and

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

     The terms of the commitments hereunder and of the Term Loan Facility are not limited to those
set forth herein and in the Term Loan Facility Term Sheet. Those matters that are not covered by
the provisions hereof and of the Term Loan Facility Term Sheet shall be consistent with the Term
Loan Facility Term Sheet and shall be subject to the approval and agreement of the Commitment
Parties and the Borrowers, it being agreed and understood that there shall be no conditions
precedent to the closing or the initial funding of the Term Loan Facility, or representations,
warranties, covenants or events of default other than those expressly set forth in this Commitment
Letter and the Term Loan Facility Term Sheet.

     You agree to indemnify and hold harmless the Commitment Parties, each of their affiliates and
each of their and their affiliates’ respective officers, directors, partners, shareholders,
trustees, controlling persons, employees, agents, advisors, attorneys and representatives (each, an
“Indemnified Party”) from and against any and all claims, damages, losses, liabilities and
related reasonable out-of-pocket costs and expenses (including, without limitation, reasonable fees
and disbursements of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or relating to the
Transactions, this Commitment Letter or the transactions contemplated hereby, any use made or
proposed to be made with the proceeds of the Term Loan Facility, or any claim, litigation,
investigation or proceeding relating to any of the foregoing, regardless of whether any Indemnified
Party is a party thereto, and you shall reimburse each Indemnified Party on demand for all
reasonable legal and other expenses incurred by it in connection with investigating, preparing to
defend or defending, or providing evidence in or preparing to serve or serving as witness with
respect to, any lawsuit, investigation, claim or other proceeding relating to any of the foregoing
(including, without limitation, in connection with the enforcement of the indemnification

 

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obligations set forth herein), irrespective of whether the transactions contemplated hereby
are consummated, except to the extent such claim, damage, loss, liability, or expense is found in 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 its or its
affiliates’ respective officers, directors, partners, shareholders, trustees, controlling persons,
employees, agents, advisors, attorneys or representatives. Without limiting the indemnification
provisions set forth in the Amended and Restated Credit Agreement dated April 24, 2002 (together
with all related collateral documents and letters of credit issued thereunder and as each may be
amended, restated, modified or otherwise supplemented from time to time, the “Prepetition
Credit Agreement”) among IBC, Brands, the lenders from time to time parties thereto and
JPMorgan Chase Bank, N.A., as administrative agent (in such capacity, the “Prepetition
Agent”), the indemnification provisions of this Commitment Letter shall not apply to any claim,
damage, loss, liability, or expense to the extent relating to litigation regarding any matter
relating to the claims or obligations in respect of the Prepetition Credit Agreement owed by the
Debtors to the Prepetition Agent and the lenders party to the Prepetition Credit Agreement.

     If any Indemnified Party shall receive an indemnification payment in respect of any claim,
damage, loss, liability or expense pursuant to the preceding paragraph and such claim, damage,
loss, liability 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 its or its affiliates’ respective officers, directors, partners,
shareholders, trustees, controlling persons, employees, agents, advisors, attorneys or
representatives, 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. In no event, however, shall any Indemnified Party be liable to you or any of
your affiliates on any theory of liability for any special, indirect, consequential or punitive
damages.

     You further agree that, without the prior written consent of the Commitment Parties, you will
not enter into any settlement of any lawsuit, claim or other proceeding arising out of the
Transactions, this Commitment Letter or the transactions contemplated hereby unless such settlement
(i) includes an explicit and unconditional release from the party bringing such lawsuit, claim or
other 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 to you or any of your affiliates for any damages arising from the
use by unauthorized persons of any information made available to the Commitment Parties by you or
any of your representatives through electronic, telecommunications or other information
transmission systems that is intercepted by such persons.

     You acknowledge that each Commitment Party and its affiliates (the term “Commitment
Party” as used below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial advisory services)
to other companies in respect of which you may have conflicting interests regarding the
transactions described herein (including without limitation, the Plan) and otherwise. No
Commitment Party will use confidential information obtained from you, any of your affiliates or any
of your representatives, by virtue of the transactions contemplated hereby or its other
relationships with you in connection with the performance by such Commitment Party of services for
other companies, and no Commitment Party will furnish any such information to other companies. You
also acknowledge that no Commitment Party has any obligation to use in connection with the
transactions contemplated hereby, or to furnish to you, confidential information obtained from
other companies. You further acknowledge that each of the Commitment Parties may from time to time
effect transactions, for its own or its affiliates’ account or the account of customers, and hold
positions in loans, securities or options on loans or securities of the Borrowers and

 

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their affiliates and of other companies that may be the subject of the transactions
contemplated by this Commitment Letter.

     Each Commitment Party may employ the services of its affiliates in providing certain services
hereunder and, in connection with the provision of such services, may exchange with such affiliates
information concerning you and the other companies that may be the subject of the transactions
contemplated by this Commitment Letter, and, to the extent so employed, such affiliates shall be
entitled to the benefits afforded such Commitment Party hereunder.

     Neither this Commitment Letter nor the Fee Letter shall be assignable by you without the prior
written consent of each Commitment Party (and any purported assignment without such consent shall
be null and void). This Commitment Letter is intended to be solely for the benefit of the parties
hereto and is not intended to confer any benefits upon, or create any rights in favor of, any
person other than the parties hereto and the Indemnified Parties. This Commitment Letter may not
be amended or waived except by an instrument in writing signed by you and each Commitment Party.
This Commitment Letter may be executed in any number of counterparts, each of which shall be an
original, and all of which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile or electronic transmission shall be
effective as delivery of a manually executed counterpart hereof. This Commitment Letter and the
Fee Letter are the only agreements that have been entered into among us with respect to the Term
Loan Facility 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. The parties hereto consent 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.

     This Commitment Letter and the Commitment Parties’ commitments hereunder shall terminate at
any time upon written notice from the Commitment Parties to IBC in the event that any of the
conditions set forth in this Commitment Letter becomes incapable of being satisfied (unless such
condition has been waived by the Commitment Parties in their sole discretion); provided, that in
the case of any failure to satisfy paragraph 2, 3(b), 4, 7 or 8 above, the Debtors shall
automatically receive a five (5) day extension of 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.

     The compensation, reimbursement and indemnification provisions contained herein and in the Fee
Letter and any other provision herein or therein which by its terms expressly survives the
termination of this Commitment Letter shall remain in full force and effect regardless of whether
definitive financing documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or the commitment of the Commitment Parties hereunder,
provided that the compensation, reimbursement and indemnification provisions contained
herein shall be superseded by the provisions of the Credit Documentation (as defined in the Term
Loan Facility Term Sheet) upon the effectiveness thereof.

 

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     If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms hereof by returning to us executed counterparts hereof and of the Fee Letter not later than
5:00 p.m., New York City time, on September 12, 2008. This offer will automatically expire at such
time if we have not received such executed counterparts in accordance with the preceding sentence.
Unless extended in writing by the Commitment Parties, the commitments contained herein shall
automatically expire at 5:00 p.m., New York City time, on February 9, 2009.

 

 

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

	 	 	 	 	 
	 	Very truly yours,

SILVER POINT FINANCE, LLC

 	 
	 	By:  	/s/ Michael Gatto	 
	 	 	Name:  	Michael Gatto 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	MONARCH MASTER FUNDING LTD

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

[New Money Term Loan Commitment Letter]

 

 

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

INTERSTATE BAKERIES CORPORATION

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

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

[New Money Term Loan Commitment Letter]

 

 

Commitment Letter Exhibit B

INTERSTATE BAKERIES CORPORATION

INTERSTATE
BRANDS CORPORATION

Summary of Terms and Conditions for

New Money Term Loan Facility

in the Amount of $339,000,000

     Interstate Bakeries Corporation (“IBC”, as reorganized, “Reorganized IBC”), Interstate Brands
Corporation (“Brands,” as reorganized, “Reorganized Brands”) and their direct and indirect
subsidiaries (collectively, the “Debtors”), each the subject of a voluntary case (the “Cases”)
under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy
Code”) in the United States Bankruptcy Court for the Western District of Missouri (the “Bankruptcy
Court”), will be reorganized pursuant to a proposed plan of reorganization (the “Plan”) consistent
with the Plan Term Sheet (as defined in the Commitment Letter). Certain distributions to be made
under the Plan, including but not limited to repayment of amounts outstanding under the DIP
Facility, will be financed from borrowings under the $339,000,000 term loan facility, which amount
may be increased (a) in the sole discretion of the Commitment Parties, as provided in Exhibit J to
the Equity Commitment Letter as in effect on the date of the Commitment Letter and/or to effect the
satisfaction of condition 15(b) set forth in the Equity Commitment Letter as in effect on the date
of the Commitment Letter and (b) in accordance with Annex A hereto (the “Term Loan Facility”). Set
forth below is a summary of the principal terms and conditions of the Term Loan Facility (and the
documentation related thereto) which would be available upon the Effective Date (defined below).
Capitalized terms used and not otherwise defined herein have the meanings, as applicable, set forth
in (i) the commitment letter to which this summary of terms and conditions is attached and of which
it forms a part (the “Commitment Letter”), (ii) the Plan Term Sheet, or (iii) the Fee Letter that
is executed contemporaneously with the Commitment Letter.

	 	 	 	 	 
	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”).
	 
	 	 	 	 
	 

	 	Lead Arranger
and Bookrunner:
	 	Silver Point Finance, LLC (acting individually or
through one or more of its affiliates) (collectively,
the “Lead Arranger”).
	 
	 	 	 	 
	 

	 	Administrative Agent:
	 	Silver Point Finance, LLC (the “Administrative Agent”).
	 
	 	 	 	 
	 

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

 

 

	 	 	 	 	 
	 

	 	Lenders:
	 	A syndicate of lenders, including the Commitment
Parties, McDonnell and other financial institutions
reasonably acceptable to the Lead Arranger and, so long
as no payment Default or other Event of Default has
occurred and is continuing, the Borrowers (the
“Lenders”).
	 
	 	 	 	 
	II.

	 	Term Loan
Facility
	 	A five-year term loan facility (the “Term Loan
Facility”) in an aggregate principal amount equal to
$339.0 million (which amount may be increased(a) in
the sole discretion of the Commitment Parties, as
provided in Exhibit J to the Equity Commitment
Letter as in effect on the date of the Commitment
Letter and/or to effect the satisfaction of
condition 15(b) set forth in the Equity Commitment
Letter as in effect on the date of the Commitment
Letter and (b) in accordance with Annex A hereto)
(the loans thereunder, the “Term Loans”). The
principal amount of the Term Loans shall be
repayable on the fifth anniversary of the Effective
Date (the “Maturity Date”) on which date the unpaid
balance of the Term Loan Facility and any accrued
interest shall be due and payable in full.
	 
	 	 	 	 
	 

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

	 	Purpose
	 	The proceeds of the Term Loans shall be available (a) to
repay any loans or other amounts outstanding under the DIP
Facility, (b) to provide cash collateral to support letters
of credit outstanding under the DIP Facility and the
Prepetition Credit Agreement as of the Effective Date (the
“Outstanding L/Cs”) and renewals and replacements of such
Outstanding L/Cs (other than letters of credit issued under
the ABL Facility or any refinancing or replacement of the ABL
Facility), (c) to pay administrative expense claims and other
amounts necessary to consummate the Plan and (d) to fund the
ongoing working capital requirements and general corporate
purposes of the Borrowers and their subsidiaries.
	 
	 	 	 	 
	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
	 	The Borrowers may, upon prior written notice,
prepay the 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 Prepayments
	 	An amount equal to (i) 100% of the net cash
proceeds received by the Borrowers or any of their subsidiaries from the issuance of 

2

 

	 	 	 	 	 
	 

	 	 	 	
indebtedness after the Effective Date, other
than customary exceptions for indebtedness
permitted to be incurred under the definitive
documentation with respect to the 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
of which shall be deposited in a segregated cash
collateral account, subject to a first lien
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 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 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 first lien control
agreement in favor of the Collateral Agent
(subject to the proviso at the end of this
sentence), subject to full withdrawal and
reinvestment rights (so long as no payment
Default or bankruptcy Event of Default then
exists) and (iv) 100% of any cash collateral (x)
held by the letter of credit issuing bank in
support of any Outstanding L/C that is cancelled
or terminated in accordance with its terms,
without the need for renewal or replacement
thereof or (y) that is released by the letter of
credit issuing bank upon a reduction in the face
amount of any Outstanding L/C, that exceeds
$10,000,000 in the aggregate for clauses (x) and
(y) during the term of the Term Loan Facility
(such excess amounts of released cash
collateral, the “L/C Collateral Trigger
Amounts”), provided that any L/C Collateral
Trigger Amount shall be held in a segregated
cash collateral

3

 

	 	 	 	 	 
	 

	 	 	 	account, subject to a first lien
control agreement in favor of the Collateral
Agent (subject to the proviso at the end of this
sentence) for a period of 390 days and shall be
required to be applied to prepay the Loans if
such L/C Collateral Trigger Amount is not
required to support any renewal of, or
replacement for, any Outstanding L/C or any
increase in the face amount of any Outstanding
L/C during such 390-day period, in which case
such cash collateral shall be delivered to the
letter of credit issuing bank (for the avoidance
of doubt, such cash collateral shall not support
letters of credit issued under the ABL Facility
or any refinancing or replacement of the ABL
Facility except to the extent that such facility
may be secured by a permitted junior lien
thereon); provided that if the Borrowers are
unable to obtain a first lien control agreement
for a cash collateral account as described in
clause (ii), (iii) 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 first 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 Term Loan Facility
shall be secured by (a) a perfected
first priority security interest in
substantially all of its assets
other than Borrowing Base Assets
(defined below), including
equipment, intellectual property,
owned real property (subject to a
materiality threshold to be agreed),
investment property, the bank or
securities accounts in which the
cash collateral supporting
Outstanding L/Cs or renewals or
replacements thereof is held
(including all cash, securities and
other funds on deposit therein,
subject only to the senior lien of
the letter of credit issuing bank
and permitted junior liens),
intercompany notes, material
leasehold interests acquired after
the Effective Date, licenses,
permits, capital stock owned by any
Loan Party (limited in the case of
foreign subsidiaries, to 100% of
nonvoting capital stock and 65% of
the voting capital stock of first
tier foreign subsidiaries) and
proceeds of the foregoing
(collectively, the “Term Priority
Collateral”) and (b) a perfected
second priority (subject to
permitted liens) security interest
in the following assets owned by
such Loan Party (the “Borrowing Base
Assets”): (i) accounts and other
receivables for goods sold or leased
or services rendered whether or not
earned

4

 

	 	 	 	 	 
	 

	 	 	 	(“Receivables”); (ii)
inventory of any kind wherever
located (“Inventory”); (iii)
instruments, chattel paper and other
contracts evidencing, or substituted
for, any Receivable; (iv)
guarantees, letters of credit,
security and other credit
enhancements for the Receivables;
(v) documents of title for any
Inventory; (vi) claims and causes of
action in any way relating to any of
the Receivables or Inventory; (vii)
bank accounts into which any
proceeds of Receivables or Inventory
are deposited (including all cash
and other funds on deposit therein),
except in each case for any bank
accounts and any cash or other funds
that constitute identifiable
proceeds of Term Priority
Collateral; (viii) books and records
relating to any of the foregoing;
and (ix) substitutions,
replacements, accessions, products
or proceeds (including, without
limitation, insurance proceeds) of
any of the foregoing (the Borrowing
Base Assets, together with the Term
Priority Collateral, the
“Collateral”); provided, that it
shall not be a Default or Event of
Default if the Borrowers are not
able to provide a mortgage with
respect to a material leasehold
interest acquired after the
Effective Date if such mortgage
would require third party consent
that the Borrowers are not able to
obtain after using commercially
reasonable efforts to do so.
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding anything to the
contrary contained herein, (a) the
Collateral shall exclude (i) pledges
and security interests prohibited or
(to the extent) limited by law,
licenses or agreements (other than
prohibitions overridden by the UCC)
and assets subject to capital
leases, other financing leases,
project financings or purchase money
indebtedness; (ii) leasehold
interests existing on the Effective
Date (to the extent that mortgages
would be required); and (iii) assets
as to which the Administrative Agent
shall reasonably determine in
consultation with the Borrowers that
the costs of obtaining such a
security interest are excessive in
relation to the value of the
security to be afforded thereby and
(b) security interests in (i) motor
vehicles and other assets subject to
certificates of title shall not be
required to be perfected unless the
Required Lenders so elect while an
Event of Default has occurred and is
continuing and (ii) letter-of-credit
rights that are not supporting
obligations shall not be required to
be perfected by control if the
Borrowers are not able to provide
control after using commercially
reasonable efforts to do so. The
Loan Parties will be required to use
commercially reasonable efforts to
obtain collateral access agreements
reasonably satisfactory to the
Administrative Agent with respect to
leased locations at which material
Collateral is located to be agreed.
	 
	 	 	 	 
	 

	 	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 Commitment
Parties.

5

 

	 	 	 
	V. Certain Conditions

	 	The availability of the 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 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 Commitment Parties, the Commitment
Parties shall have provided their 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 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 Commitment Parties that the Commitment Parties 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 Commitment Parties shall reasonably request
with respect to the Term Loan Facility, in each case, reflecting and consistent
with the terms and conditions set forth herein and in the Commitment Letter, as
applicable, and otherwise in form and substance reasonably satisfactory to the
Commitment Parties.

	 	 	 
	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

6

 

	 	 	 
	 

	 	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 45 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; 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 requested by a
Lender to

7

 

	 	 	 
	 

	 	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 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

8

 

	 	 	 
	 

	 	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
Commitment Parties) 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.
	 
	 	 
	 

	 	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 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 EBITDA,
a “Specified Equity Contribution”),
provided that (a) the amount of any
Specified 

9

 

	 	 	 
	 

	 	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).

10

 

	 	 	 
	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
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 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
Term Loans shall have
consented thereto.
	 
	 	 
	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 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 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 Term Loans in
accordance with applicable
law shall be permitted
without restriction.
Promissory notes shall be
issued under the Term Loan
Facility

11

 

	 	 	 
	 

	 	only upon
request.
	 
	 	 
	Expenses and Indemnification

	 	The Borrowers shall pay
(i) all reasonable
out-of-pocket expenses of
the Administrative Agent
and the Commitment Parties
associated with the
syndication of the 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 and
the Commitment Parties,
plus, if necessary, one
local counsel in each
applicable jurisdiction,
except in the case of an
actual or reasonably
likely conflict of
interest), (ii) all
reasonable out-of-pocket
expenses of McDonnell
associated with the
syndication of the Term
Loan Facility and the
preparation, negotiation,
execution and delivery of
the Credit Documentation
(including, without
limitation, the reasonable
fees, disbursements and
other charges of a single
counsel for McDonnell),
provided that the
aggregate amount of
expenses of McDonnell
required to be reimbursed
under the Fee Letter and
this clause (ii) shall not
exceed $100,000,
(iii) reasonable
out-of-pocket expenses of
having the Term Loans
rated by one or more
rating agencies in an
aggregate amount of up to
$25,000, and (iv) 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 proposed use of
proceeds thereof (except
to the extent resulting
from the 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

12

 

	 	 	 
	 

	 	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 (i) protecting
the Lenders against
increased costs or loss of
yield resulting from the
unavailability of LIBOR
and 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) and (ii)
indemnifying the Lenders
for breakage costs
(excluding lost profits)
in connection with, among
other things, prepayment
of a LIBOR Rate borrowing
other than on the last day
of an interest period.
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.

13

 

Annex A

Interest and Certain Fees

	 	 	 
	Interest Rate Options

	 	Borrowers may elect that the Term Loans
comprising each borrowing bear interest at a rate
per annum equal to:
	 
	 	 
	 

	 	(i) the Base Rate plus the Applicable Margin; or
	 
	 	 
	 

	 	(ii) the LIBOR Rate plus the Applicable Margin.
	 
	 	 
	 

	 	As used herein:
	 
	 	 
	 

	 	The “Base Rate” means the higher of (i) the prime
lending rate as publicly announced from time to
time by JPMorgan Chase Bank, N.A. (the “Prime
Rate”), and (ii) the federal funds effective rate
from time to time plus 0.50%.
	 
	 	 
	 

	 	The “LIBOR Rate” means the rate per annum at
which dollar deposits are offered to major banks
in the London interbank market for the relevant
interest period as published by the British
Banker’s Association, and currently appears on
Reuters Screen LIBOR01 Page, as of 11:00 a.m.
(London time) two business days prior to the
first day of such interest period, adjusted by
the reserve percentage prescribed by governmental
authorities. The LIBOR Rate shall be available
for interest periods of 1, 2 or 3 (or, if
available to all Lenders, 6) months. For
purposes of Term Loan Facility, LIBOR shall not
be less than 2.70%.
	 
	 	 
	 

	 	“Applicable Margin” means 7.25% in the case of
Base Rate Loans under the Term Loan Facility and
8.25% in the case of LIBOR Rate Loans under the
Term Loan Facility.
	 
	 	 
	Interest Payments

	 	In the case of Term Loans bearing interest based
upon the Base Rate (“Base Rate Loans”), quarterly
in arrears and (a) payable in cash or (b) at the
Borrowers’ election, (i) payable in cash in an
amount equal to the Cash Amount (as defined
below) with (ii) an amount equal to the
Capitalization Amount (as defined below)
capitalized as principal.
	 
	 	 
	 

	 	In the case of Term Loans bearing interest based
upon the LIBOR Rate (“LIBOR Rate Loans”), on the
last day of each relevant interest period but in
any event at least quarterly, and (a) payable in
cash or (b) at the Borrowers’ election, (i)
payable in cash in an amount equal to the Cash
Amount with (ii) an amount equal to the

 

 

	 	 	 
	 

	 	Capitalization Amount capitalized as principal.
	 
	 	 
	 

	 	For purposes hereof, “Capitalization Amount”
means, with respect to any interest payment, the
product obtained by multiplying (a) the amount of
the interest payment due on the relevant interest
payment date by (b) the Capitalization Percentage
for such interest payment date. “Capitalization
Percentage” means, with respect to any interest
payment date, (x) if the aggregate principal
amount of Term Loans outstanding on the
applicable interest payment date is greater than
$320,000,000, a fraction (1) the numerator of
which is the amount by which the aggregate
principal amount of Term Loans then outstanding
exceeds $320,000,000 and (2) the denominator of
which is the aggregate principal amount of Term
Loans then outstanding or (y) if the aggregate
principal amount of Term Loans outstanding on the
applicable interest payment date is less than or
equal to $320,000,000, zero. The “Cash Amount”
means, with respect to any interest payment, the
difference equal to (A) the amount of the
interest payment due on the relevant interest
payment date minus (B) the Capitalization Amount.
	 
	 	 
	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
Term Loan Facility shall bear interest at 2.0%
above the rate otherwise applicable thereto
payable in cash. To the extent that the Required
Lenders so request upon the occurrence and during
the continuance of an Event of Default, Loans may
not be continued as or converted to LIBOR Rate
Loans.
	 
	 	 
	Rate and Fee Basis

	 	All per annum rates shall be calculated on the
basis of a year of 360 days or, in the case of
Base Rate Loans, 365/366 days, and the actual
number of days elapsed.

 

 

	 	 	 
	Early Termination Fees

	 	All optional prepayments and the mandatory
prepayment described in clause (i) of Section III
herein of the 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 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; (ii) 2.0% 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; and
(iii) 1.0% for all such prepayments made on or
after the third anniversary of the Effective Date
and prior to the fourth anniversary of the
Effective Date.
	 
	 	 
	Backstop Fee

	 	$16,800,000, payable in accordance with the terms
of the Fee Letter.
	 
	 	 
	Incremental Facility
Fee

	 	If the aggregate principal amount of Term Loans
funded on the Effective Date exceeds
$336,000,000, the Lenders shall be entitled to an
incremental facility fee equal to 5.00% of the
amount of such excess, which amount shall be
added to the aggregate outstanding principal
amount of the Loans on the Effective Date, but
shall not be required to be funded by the
Lenders.
	 
	 	 
	Equity of Reorganized
IBC

	 	On the Effective Date, each Lender shall receive
its pro rata share of (i) 4,420,000 shares of new
common stock of Reorganized IBC (the terms of
which shall be consistent with the Plan Term
Sheet and otherwise reasonably satisfactory to
the Commitment Parties) and (ii) the Series B
Warrants and Series C Warrants issued by
Reorganized IBC (the terms of which shall be
consistent with Exhibit D to the Equity
Commitment Letter as in effect on the date of the
Commitment Letter and otherwise reasonably
satisfactory to the Commitment Parties). Each
Lender may assign its right to receive such
common stock and/or warrants on the Effective
Date to an affiliate of such Lender whose
identity has been disclosed to IBC Investors I,
LLC in writing prior to the date of the Equity
Commitment Letter or to any other affiliate of
such Lender reasonably acceptable to IBC
Investors I, LLC.exv10w5

Exhibit 10.5

	 	 	 
	SILVER POINT FINANCE, LLC
	 	MONARCH MASTER FUNDING LTD
	2 Greenwich Plaza
	 	535 Madison Avenue
	Greenwich, CT 06830
	 	New York, NY 10022

September 12, 2008

New Money Term Loan Fee Letter

Interstate Bakeries Corporation

Interstate Brands Corporation

12 East Armour Boulevard

Kansas City, MO 64111

Attention: Randall Vance, Chief Financial Officer

Ladies and Gentlemen:

     Reference is made to the Commitment Letter dated as of September 12, 2008 (including the
exhibits and annexes attached thereto and as amended, restated, supplemented or otherwise modified
from time to time, the “Commitment Letter”) among us and you. Capitalized terms used but
not defined herein are used with the meanings assigned to them in the Commitment Letter (including
the exhibits and annexes thereto, as applicable). This letter agreement is the Fee Letter referred
to in the Commitment Letter.

     As consideration for the agreements and commitments under the Commitment Letter, Interstate
Bakeries Corporation (“IBC”) agrees to pay or cause to be paid to the Commitment Parties a
backstop fee in an amount equal to $16,800,000 (the “Backstop Fee”), which Backstop Fee
shall be due and payable in cash upon the earlier to occur of (x) the Effective Date and (y) so
long as the Commitment Parties have not previously breached any of their material obligations under
the Commitment Letter and have not terminated the Commitment Letter for a reason other than another
party’s breach of their obligations under this Fee Letter, the Commitment Letter, the Equity
Commitment Letter or the Investment Agreement, the consummation by any of the Debtors on or prior
to February 6, 2010 of a transaction or series of transactions on terms that are more favorable
from a financial point of view to the Debtors’ constituents than would be obtained through the
consummation of the Term Loan Facility and the Transaction.

     In addition, IBC agrees to reimburse the reasonable out-of-pocket costs and expenses of the
Commitment Parties and McDonnell in connection with (a) the preparation and negotiation of the
Commitment Letter (including all exhibits thereto) and this Fee Letter and procurement of the Fee
Order and (b) the negotiation, documentation, procurement of Bankruptcy Court approval and
consummation of the Transaction and other reasonable out-of-pocket fees and expenses incurred by
the Commitment Parties since March 1, 2008, in the case of each of clauses (a) and (b), including
the reasonable fees and expenses of their respective and shared counsel and other advisors;
provided that the aggregate amount of fees, costs and expenses of McDonnell required to be
reimbursed under this letter and in accordance with

 

2

the provision captioned “Expenses and Reimbursement” in Exhibit B to the Commitment Letter
shall not exceed $100,000 (collectively the “Expenses”). Upon the entry of the Fee Order
by the Bankruptcy Court, all Expenses incurred prior thereto shall become due and payable by IBC.
Upon the earliest to occur of (A) the Effective Date, (B) the termination of the Commitment Letter
and the Commitment Parties’ commitments thereunder prior to the Effective Date as a result of any
of the conditions set forth in the Commitment Letter becoming incapable of being satisfied, (C) the
consummation of a transaction described in clause (y) of the second paragraph of this letter
agreement and (D) the date IBC terminates the Equity Commitment Letter or the Investment Agreement
in connection with a Superior Proposal (as defined in the Equity Commitment Letter), all Expenses
(other than those that have been reimbursed by IBC pursuant to the immediately preceding sentence)
shall become due and payable by IBC.

     In addition, you agree to pay or cause to be paid to the Administrative Agent an annual
administration fee in an amount per year to be reasonably agreed by the parties hereto in
accordance with the market for such fees in similar transactions, which fee shall be payable on the
Effective Date (if the Effective Date occurs) and, thereafter, annually in advance on each
anniversary thereof prior to the maturity or early termination of the Term Loan Facility and the
payment in full of all amounts owing thereunder.

     You agree that, once paid, the fees and reimbursement of costs and expenses or any part
thereof payable hereunder or under the Commitment Letter shall not be refundable under any
circumstances, regardless of whether the transactions or borrowings contemplated by the Commitment
Letter are consummated. All fees and reimbursement of costs and expenses payable hereunder and
under the Commitment Letter shall be paid in immediately available funds. You agree that we, in
our sole discretion, may share all or a portion of any of the fees or reimbursement of costs and
expenses payable pursuant to this Fee Letter or the Commitment Letter with any of the other
Lenders.

     It is understood and agreed that this Fee Letter shall not constitute or give rise to any
commitment or obligation to provide any financing; such an obligation will arise only to the extent
provided in the Commitment Letter if accepted in accordance with its terms. This Fee Letter may
not be amended or any provision hereof waived or modified except by an instrument in writing signed
by you and each Commitment Party. This Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York. Each party hereto hereby 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 the Commitment Letter, this 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. This Fee
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 Fee Letter by facsimile or electronic transmission shall be effective as
delivery of a manually executed counterpart.

     Please confirm that the foregoing is our mutual understanding by signing and returning to us
an executed counterpart of this Fee Letter.

 

 

	 	 	 	 	 
	 	Very truly yours,

SILVER POINT FINANCE, LLC

 	 
	 	By:  	/s/ Michael Gatto	 
	 	 	Name:  	Michael Gatto 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	MONARCH MASTER FUNDING LTD

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

[New Money Term Loan Fee Letter]

 

 

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

	 	 	 	 	 
	INTERSTATE BAKERIES CORPORATION

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

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

[New Money Term Loan Fee Letter]

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