Document:

Jeni Agreement

This Deed of Agreement is made this 19th day of February 2008 BETWEEN the Official Liquidator of Bonte Gold Mines Limited, Joseph Kofi Harlley of Registrar General's Department, Victoriaborg, Post Office Box 118, Accra (hereinafter called the "Assignor' which expression shall where the context so requires or admits include his successors and assigns) of the one part AND Keegan Resources (Ghana) Limited, acting by Daniel T. (Dan) McCoy of No. 2 Second Close, Airport Residential Area, Post Office Box CT6153, Accra, (hereinafter called "the Assignee" which expression shall where the context so admits or require include its successors and assigns) of the other part.

WHEREAS

A.

The Government of (he Republic of Ghana (the "Government') granted a thirty- year mining tease in March 1990 and registered as No LVB 1557/90 (the Jeni Mining Lease'') to Jeni River Development Company Limited to conduct mining operations at the Bonte/Jeni Area covering an area of 52.75 sq. km and more particularly described in the Jeni Mining Lease as attached hereto as Appendix A

B.

The Jeni Mining Lease was in 1997 assigned to Jeni Gold Mining Limited by Jeni River Development Company Limited with the approval of the Minister of Mines.

C.

Jeni River Development Company Limited and Jeni Mining Company Limited were wholly owned subsidiaries of Akrokeri Ashanti Goldmines Inc; also the parent company of Bonte Gold Mines Limited.

D.

On the application of its majority shareholder, Akrokeri-Ashanti Gold Mines Inc., the High Court presided over by Her Lordship Cecilia Sowah on 25 March 2004 placed Bonte Gold Mines Limited into official liquidation.

E.

Pursuant to Section 7 of the Bodies Corporate (Official Liquidation) Act. 1963 (Act 180), (he Registrar of Companies, was appointed as Official Liquidator for the orderly winding up of Bonte Gold Mines Limited.

F.

The Jeni Concession was abandoned by Jeni Gold Mining Limited, a subsidiary of Akrokeri-Ashanti Gold Mines Inc.

G.

Upon Jeni Gold Mining Limited abandoning the Jeni Concession, the Minister of Lands. Forestry and Mines granted the Assignor the right to effect this assignment in order that the environmental degradation caused on the

Concessions held by the subsidiaries of Akrokeri-Ashanti Gold Mines Inc may be remedied

G.

The Assignee has offered to acquire the unexpired residue of the mining lease from the Assignor and the Assignor has agreed to grant the Assignee the sole and exclusive right to acquire same by way of assignment upon and subject to the following terms and conditions.

1.

DEFINITIONS AND INTERPRETATIONS

(a)

"Approval" means the Ministers approval.

(b)

Area of interest" means the area as set out and described in the schedule to this agreement.

(c)

"Jeni Mining Lease" means the mining lease granted by the Government to Jeni River Development Company Limited on 22 March 1990 and assigned to Jeni Gold Mining Limited in 1997 and attached to this agreement as appendix A.

(d)

"Government" means the Government of the Republic of Ghana.

(e)

"Law' means any constitution, law, statute, decree, rule, regulation, judicial act or decision, judgment, order, proclamation, directive, executive order or sovereign act of the Government that regulates, controls or relates to mining operations or activities in Ghana.

(f)

"Mining Assets" means the mining lease and concession together with the immovable assets ceded, assigned or made available by the Official Liquidator that are located on the area as set out and described in the schedule to this agreement.

(g)

"Minister" means the Minister of Lands, Forestry and Mines.

(h)

“Parties” means the Official Liquidator and Keegan Resources (Ghana) Limited.

 (i)

“Production Royalty' means the net smelter returns royalty defined by the applicable mining law of Ghana.

INTERPRETATIONS 

In this Agreement:

a)

the index and the headings to the clauses shall be deemed to have been included for purposes of convenience only and shall not govern the interpretation hereof;

b)

unless the context indicates otherwise. a reference to:

i)

the singular shall be deemed to include a reference to the plural and vice versa.

ii)

any one gender shall be deemed to include a reference to the other two genders;

iii)

a natural person shall be deemed to include a reference to a body corporate.

NOW THEREFORE THE PARTIES HERETO AGREE AS FOLLOWS:

2.

SCOPE AND DURATION OF THE AGREEMENT

2.1

This Agreement shall comprise:

a)

the assignment of the rights under Jeni Mining Lease to the Assignee.

b)

the cession to the Assignee of the Mining Assets for its mining operations on the following basis:

i)

the assumption by the Assignee of the responsibility for the operation of Assignor's existing Jeni Mining Lease from the effective date.

ii)

The Jeni Mining Lease shall form part of this agreement and the terms and conditions contained therein shall apply mutandis to this agreement provided that if any provision contained in this agreement conflicts with any provision contained within the Jeni Mining Lease, the provisions of the Jeni Mining Lease shall prevail or govern; and

3.

CONSIDERATION

3.1

As consideration for this assignment the Assignee shall pay fifty thousand United States Dollars (US$ 50,000.00) to the Minerals Commission and fifty thousand United States Dollars (US$ 50,000.00) to the Assignor.

4.

DEVELOPMENT PLAN FOR JENI CATCHMENT AREA

4.1

The Assignee undertakes to develop the Jeni Catchment Area as contained in the Development Plan to be submitted to the Assignor and the Minerals Commission.

4.2

The Assignor may terminate this agreement in the event that the Assignee fails to comply with its obligations under the immediate preceding provision.

5.

PRODUCTION ROYALTY

5.1

The Production Royalty will become payable on the Jeni Mining Lease upon the commencement of Commercial Production in respect of the lease. Each calendar quarter, the Assignee shall be obliged to pay and the Assignor shall be entitled to receive a Production Royalty equal to zero point five percent (0.5%) of the total revenue of minerals obtained from its mining operations.

5.2

Within 60 days after the end of the first full Calendar Quarter in which the Production Royalty is payable and each Calendar Quarter thereafter the Assignee shall:

(a)

pay or cause to be paid to the Assignor an amount equal to the Production Royalty to which the Assignor is entitled hereunder; and

(b)

deliver to the Assignor a statement from the refiner of the gold produced from the mine which produces gold from the Jeni Mining Lease (the "Mine") confirming the total number of ounces of gold from the Mine

5.3

Adjustments and Verification

a)

Payment of the Production Royalty by the Assignee shall not prejudice the right of the Assignee to adjust any statement supporting the payment; provided. however, that all statements presented to the Assignor by the Assignee for any Calendar Quarter shall conclusively be presumed to be true and correct upon the expiration of 12 months following the end of the Calendar Quarter to which the statement relates, unless within that 12- month period the Assignee gives notice to the Assignor claiming an adjustment to the statement which will be reflected in subsequent payment of the Production Royalty to the Assignor.

b)

The Assignee shall not adjust any statement in favour of itself more than 12 months following the end of the Calendar Quarter to which the statement relates.

c)

The Assignor shall, upon 30 days' advance notice to the Assignee, have the right to request that the Assignee have its independent external auditors provide their audit certificate for the statement or adjusted statement. as it may relate to the Agreement and the calculation of the Production Royalty.

d)

The cost of the audit certificate shall be solely for the Assignor's account unless the audit certificate discloses material error in the calculation of the Production Royalty, in which case the Assignee shall reimburse the Assignor the cost of the audit certificate. Without limiting the generality of the foregoing, a discrepancy of at least one percent in the calculation of the Production Royalty shall be deemed to be the threshold for what constitutes a material error.

6.

ENVIRONMENTAL AND OTHER OBLIGATIONS 

6.1

The Assignee shall be responsible for any environmental requirements under the laws of Ghana arising out of its operations from the effective date of this agreement including (without limitation) the posting of a reclamation bond.

6.2

Subject to the provisions of this Agreement the Assignor indemnifies and holds the Assignee harmless against all liabilities arising out of the operations on the Jeni Mining Lease prior to this assignment.

6.3

The provisions of the immediately preceding sub-paragraph shall not be construed to relieve the Assignee of its obligation to develop the Jeni Catchment Area as provided for under paragraph 4.1 of this agreement.

6.4

The Assignee undertakes to include plans for the remediation of the existing environmental disturbance created at the Jeni Catchment Area in its mining plan when submitted to Government.

. .

6.4

The Assignee shall not conduct small-scale mining operations.

6.5

The Assignee shall comply with the work programme as approved by the Minerals Commission.

7.

APPLICABLE LAW

7.1

The validity, interpretation and performance of this agreement shall be governed by the Laws of the Republic of Ghana and the Assignee shall at all times be subject to any restrictions that may be required by any law in Ghana or by any regulatory authority.

8.

ARBITRATION 

8.1

Any dispute. controversy or claim arising under, out of, or relating to this contract and any subsequent amendments of this contract, including, without limitation, its formation. validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be referred to and finally determined by arbitration in accordance with the provisions of the Arbitration Act, 1961, Act 38. The Arbitrat tribunal shall consist of three arbitrators. Each party shall appoint one arbitrator and the third arbitrator who shall be the chairman, shall be appointed by both parties. The place of arbitration shall he Accra. The language to be used in the arbitral proceedings shall be English. The dispute, controversy or claim shall be decided in accordance with the laws of Ghana.

9.

NOTICES

9.1

Ali notices, consents, demands or communication intended for any party pursuant to this agreement shall be made in writing and shall if:

a)

delivered by hand be deemed to have been duly received by the addressee on the date of delivery:

b)

posted by prepaid registered post be deemed to have been received by the addressee on he 14th (fourteenth) day following the date of such posting and

i)

transmitted by facsimile shall he deemed to have been received by the addressee 24 hours after the date and time contained in the facsimile confirmation receipt.

9.2

Notwithstanding anything to the contrary contained in this agreement, a written notice or communication actually received by one of the parties from another including by way of facsimile transmission shall be adequate written notice or communication to such party.

9.3

The parties choose the following addresses as their respective addresses for ail purposes hereof

1.

The Official Liquidator

Bonte Gold Mines Limited in Official Liquidation 

Registrar General's Department

P O. Box 118

Accra

2.

The Managing Director

Keegan Resources (Ghana) Limited

Physical Address:

#6 Templesi Lane, Airport Residential Area. Accra

Postal Address:

P O Box CT6153. Accra.

Fax 

+233 21 777 345ex10-1.htm

    Exhibit
10.1

    

    

    

    EXECUTION
COPY

     

    

     

    INVESTMENT
AGREEMENT

     

    Dated
as of September 26, 2008,

     

    Between

     

    INTERSTATE
BAKERIES CORPORATION

     

    and

     

    IBC
INVESTORS I, LLC

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    TABLE
OF CONTENTS

     

    Page

    
      
        	
                ARTICLE
      I

                 

                Purchase
      and Sale; Issuance of Series A Warrants; Closing

              
	 
      	 
      	 
      
	
                SECTION
      1.01.

              	
                Purchase
      and Sale of Shares and New Convertible Debt

              	
                2

              
	
                SECTION
      1.02.

              	
                Issuance
      of Series A Warrants

              	
                2

              
	
                SECTION
      1.03.

              	
                Closing

              	
                2

              
	
                SECTION
      1.04.

              	
                Transactions
      To Be Effected at the Closing

              	
                2

              
	 
      	 
      	 
      
	
                ARTICLE
      II

                 

                Representations
      and Warranties of the Company

              
	 
      
	
                SECTION
      2.01.

              	
                Organization,
      Standing and Power

              	
                3

              
	
                SECTION
      2.02.

              	
                Issuance
      of Securities

              	
                4

              
	
                SECTION
      2.03.

              	
                Capital
      Structure

              	
                4

              
	
                SECTION
      2.04.

              	
                Authority;
      Execution and Delivery; Enforceability

              	
                6

              
	
                SECTION
      2.05.

              	
                No
      Conflicts; Consents

              	
                7

              
	
                SECTION
      2.06.

              	
                SEC
      Documents; Undisclosed Liabilities

              	
                7

              
	
                SECTION
      2.07.

              	
                Absence
      of Certain Changes or Events

              	
                10

              
	
                SECTION
      2.08.

              	
                Assets
      Other than Real Property and Intellectual Property
    Interests

              	
                11

              
	
                SECTION
      2.09.

              	
                Real
      Property

              	
                11

              
	
                SECTION
      2.10.

              	
                Intellectual
      Property

              	
                12

              
	
                SECTION
      2.11.

              	
                Assets
      Generally

              	
                14

              
	
                SECTION
      2.12.

              	
                Inventory

              	
                14

              
	
                SECTION
      2.13.

              	
                Receivables

              	
                14

              
	
                SECTION
      2.14.

              	
                Permits

              	
                15

              
	
                SECTION
      2.15.

              	
                Insurance

              	
                15

              
	
                SECTION
      2.16.

              	
                Taxes

              	
                15

              
	
                SECTION
      2.17.

              	
                Absence
      of Changes in Benefit Plans

              	
                18

              
	
                SECTION
      2.18.

              	
                ERISA
      Compliance; Excess Parachute Payments

              	
                18

              
	
                SECTION
      2.19.

              	
                Litigation

              	
                22

              
	
                SECTION
      2.20.

              	
                Compliance
      with Applicable Laws

              	
                22

              
	
                SECTION
      2.21.

              	
                Labor
      Matters

              	
                22

              
	
                SECTION
      2.22.

              	
                Contracts

              	
                22

              
	
                SECTION
      2.23.

              	
                Environmental
      Matters

              	
                23

              
	
                SECTION
      2.24.

              	
                Brokers;
      Schedule of Fees and Expenses

              	
                25

              
	
                SECTION
      2.25.

              	
                Effect
      of Transaction

              	
                25

              
	
                SECTION
      2.26.

              	
                Disclosure

              	
                25

              
	
                SECTION
      2.27.

              	
                Private
      Offering

              	
                25

              
	
                SECTION
      2.28.

              	
                No
      Reliance on Investor

              	
                26

              

      

       

       

       

      
        
          
          

        

        
          i

          
            

          

        

        
          
          

        

      

       

       

       

      
        	
                ARTICLE
      III

                 

                Representations
      and Warranties of Investor

              
	 
      	 
      	 
      
	
                SECTION
      3.01.

              	
                Organization,
      Standing and Power

              	
                26

              
	
                SECTION
      3.02.

              	
                Authority;
      Execution and Delivery; Enforceability

              	
                26

              
	
                SECTION
      3.03.

              	
                No
      Conflicts; Consents

              	
                27

              
	
                SECTION
      3.04.

              	
                Litigation

              	
                27

              
	
                SECTION
      3.05.

              	
                Securities
      Act

              	
                27

              
	
                SECTION
      3.06.

              	
                Brokers;
      Schedule of Fees and Expenses

              	
                27

              
	 
      	 
      	 
      
	
                ARTICLE
      IV

                 

                Covenants

              
	 
      	 
      	 
      
	
                SECTION
      4.01.

              	
                Conduct
      of Business

              	
                28

              
	
                SECTION
      4.02.

              	
                No
      Solicitation

              	
                31

              
	
                SECTION
      4.03.

              	
                Access
      to Information

              	
                33

              
	
                SECTION
      4.04.

              	
                Antitrust
      Approval

              	
                33

              
	
                SECTION
      4.05.

              	
                Financing

              	
                34

              
	
                SECTION
      4.06.

              	
                Commercially
      Reasonable Efforts

              	
                34

              
	
                SECTION
      4.07.

              	
                Employees

              	
                35

              
	
                SECTION
      4.08.

              	
                Tax
      Matters

              	
                35

              
	
                SECTION
      4.09.

              	
                Supplemental
      Disclosure

              	
                36

              
	
                SECTION
      4.10.

              	
                Fees
      and Expenses

              	
                36

              
	
                SECTION
      4.11.

              	
                Public
      Announcements

              	
                36

              
	
                SECTION
      4.12.

              	
                Resignation
      of Directors of the Company

              	
                36

              
	
                SECTION
      4.13.

              	
                Further
      Assurances

              	
                37

              
	
                SECTION
      4.14.

              	
                Bankruptcy
      Matters

              	
                37

              
	 
      	 
      	 
      
	
                ARTICLE
      V

                 

                Conditions
      Precedent

              
	 
      	 
      	 
      
	
                SECTION
      5.01.

              	
                Conditions
      to Each Party’s Obligation

              	
                39

              
	
                SECTION
      5.02.

              	
                Conditions
      to Obligation of Investor

              	
                39

              
	 
      	 
      	 
      
	
                ARTICLE
      VI

                 

                Termination,
      Amendment and Waiver

              
	 
      	 
      	 
      
	
                SECTION
      6.01.

              	
                Termination

              	
                45

              
	
                SECTION
      6.02.

              	
                Effect
      of Termination

              	
                46

              
	
                SECTION
      6.03.

              	
                Amendments
      and Waivers

              	
                46

              
	 
      	 
      	 
      

      

       

       

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

       

       

       

      
        	
                ARTICLE
      VII

                 

                General
      Provisions

              
	 
      	 
      	 
      
	
                SECTION
      7.01.

              	
                Nonsurvival
      of Representations and Warranties

              	
                46

              
	
                SECTION
      7.02.

              	
                Assignment

              	
                46

              
	
                SECTION
      7.03.

              	
                No
      Third-Party Beneficiaries

              	
                47

              
	
                SECTION
      7.04.

              	
                Notices

              	
                47

              
	
                SECTION
      7.05.

              	
                Interpretation;
      Exhibits and Schedules; Certain Definitions

              	
                48

              
	
                SECTION
      7.06.

              	
                Counterparts

              	
                51

              
	
                SECTION
      7.07.

              	
                Entire
      Agreement

              	
                51

              
	
                SECTION
      7.08.

              	
                Severability

              	
                51

              
	
                SECTION
      7.09.

              	
                Consent
      to Jurisdiction

              	
                52

              
	
                SECTION
      7.10.

              	
                Governing
      Law

              	
                52

              
	
                SECTION
      7.11.

              	
                Waiver
      of Jury Trial

              	
                52

              
	
                SECTION
      7.12.

              	
                No
      Recourse

              	
                52

              

      

    

     

     

    
      Exhibit
A        Form of Warrants

      Exhibit
B        Form of Stockholders’
Agreement

      Exhibit
C        Form of Amended Company
Charter

    

     

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

     

     

    
       

      
        	 	  

                    INVESTMENT
      AGREEMENT (this “Agreement”)
      dated as
      of September 26, 2008, between INTERSTATE BAKERIES CORPORATION,
      a Delaware corporation (the “Company”), and
      IBC
      INVESTORS I, LLC, a Delaware limited liability company (“Investor”).

              

      

    

     

    WHEREAS,
the Company and the Company 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”);

     

    WHEREAS,
the Company has advised Investor that it expects that the Debtors will be
reorganized (the “Reorganization”)
pursuant to a joint plan of reorganization (the “Plan”) to be filed in
the Cases pursuant to Section 4.14(a);

     

    WHEREAS,
in connection with the Reorganization, Investor desires to purchase from the
Company, as reorganized pursuant to the Reorganization (as so reorganized, the
“Reorganized
Company”), and the Company desires to sell to Investor, upon the terms
and subject to the conditions set forth in this Agreement, (1) 4,420,000
shares (the “Shares”) of the
common stock, par value $0.01 per share, of the Reorganized Company (the “New Common Stock”)
and (2) senior secured convertible debt of the Reorganized Company (the
“New Convertible
Debt”) in the aggregate principal amount of $85,800,000, to be issued
under an indenture (the “New Convertible Debt
Indenture”) and with the terms set forth in Exhibit C to the
Investor Commitment Letter;

     

    WHEREAS,
in consideration of the Acquisition (as defined in Section 1.01), the
Company desires to issue to Investor, upon the terms and subject to the
conditions set forth in this Agreement, Series A Warrants of the
Reorganized Company (the “Series A
Warrants”) in the form attached as Exhibit A hereto;

     

    WHEREAS,
to induce the Company to enter into this Agreement, simultaneously with the
execution of this Agreement the Company and Ripplewood Partners II, L.P. (the
“Contributor”)
are entering into an Equity Contribution Agreement, dated as of the date hereof
(the “Equity
Contribution Agreement”); and

     

    WHEREAS,
at the Closing (as defined in Section 1.03), the Reorganized Company and each
holder of New Common Stock will enter into a stockholders’ agreement (the “Stockholders’
Agreement”) in the form attached as Exhibit B hereto;

     

    NOW,
THEREFORE, in consideration of the mutual covenants, agreements, representations
and warranties contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    ARTICLE
I

     

    Purchase and Sale; Issuance
of Series A Warrants; Closing

     

    SECTION
1.01.  Purchase and Sale of Shares
and New Convertible Debt.  On the terms and subject to the
conditions set forth in this Agreement, at the Closing the Reorganized Company
will issue, sell and deliver to Investor, and Investor will purchase from the
Reorganized Company, (a) the Shares for an aggregate purchase price equal
to $44,200,000 (the “Shares Purchase
Price”) and (b) New Convertible Debt in the aggregate principal
amount of $85,800,000 for an aggregate purchase price equal to $85,800,000 (the
“New Convertible Debt
Purchase Price” and, together with the Shares Purchase Price, the “Purchase Price”), in
each case payable as set forth below in Section 1.03.  The
purchase and sale of the Shares and the New Convertible Debt are referred to in
this Agreement collectively as the “Acquisition”.

     

    SECTION
1.02.  Issuance of Series A
Warrants.  In consideration of the Acquisition, at the Closing
the Reorganized Company will issue and deliver to Investor the Series A
Warrants.  The Acquisition, together with the issuance and delivery of
the Series A Warrants, are referred to in this Agreement collectively as
the “Transaction”.

     

    SECTION
1.03.  Closing.  The
closing of the Transaction (the “Closing”) will take
place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue,
New York, New York 10019 at 10:00 a.m. on the second business day following the
satisfaction (or, to the extent permitted by Law, the waiver by all parties) of
the conditions set forth in Section 5.01, or, if on such day any condition
set forth in Section 5.02 (other than those conditions that by their nature
cannot be satisfied until the Closing, but subject to the satisfaction or waiver
of such conditions) has not been satisfied (or, to the extent permitted by Law,
waived by Investor), as soon as practicable after all the conditions set forth
in Article V have been satisfied (or, to the extent permitted by Law,
waived by the parties entitled to the benefits thereof), or at such other place,
time and date as may be agreed between the Company and Investor.  The
date on which the Closing occurs is referred to in this Agreement as the “Closing Date”, which
Closing Date shall also be the effective date of the Plan.

     

    SECTION
1.04.  Transactions To Be Effected
at the Closing.  At the Closing:

     

    (a)  The
Reorganized Company will deliver to Investor (i) certificates representing
the Shares, duly issued by the Reorganized Company and registered in the name of
Investor, (ii) notes representing New Convertible Debt in the aggregate
principal amount of $85,800,000, duly issued by the Reorganized Company under
the New Convertible Debt Indenture and registered in the name of Investor,
(iii) the Series A Warrants, duly issued by the Reorganized Company and
registered in the name of Investor, (iv) counterparts of the Stockholders’
Agreement executed by the Reorganized Company and each person (other than
Investor) to whom shares of New Common Stock are to be issued on the Closing
Date (it being understood that the issuance of shares of New Common Stock to a
person is conditioned on the receipt of an executed counterpart 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    of
the Stockholders’ Agreement from such person) and (v) the Reorganized
Company’s Closing Certificate (as defined in Section 5.02(b));
and

     

    (b)  Investor
shall deliver to the Reorganized Company (i) the Purchase Price by wire
transfer of immediately available funds to the account designated by the Company
(which account shall be designated by the Company not less than one day prior to
the Closing Date) and (ii) a counterpart of the Stockholders’ Agreement
executed by Investor.

     

    ARTICLE
II

     

    Representations and
Warranties

    of the
Company

     

    The
Company hereby represents and warrants to Investor that, except as set forth
(1) in the disclosure letter, dated as of the date of this Agreement, from
the Company to Investor (the “Company Disclosure
Letter”) (which Company Disclosure Letter sets forth items of disclosure
with specific reference to the particular Section or subsection of this
Agreement to which the information in the Company Disclosure Letter relates;
provided, however, that any
information set forth in one Section of the Company Disclosure Letter shall be
deemed to apply to each other Section or subsection thereof to which its
relevance is readily apparent on its face) or (2) in the Company’s Annual
Report on Form 10-K for the fiscal year ended May 31, 2008, filed with the
Securities and Exchange Commission (the “SEC”) on September
15, 2008 (the “Company
2008 10-K”), but excluding under this clause (2) any risk factor
disclosures or other cautionary, predictive and forward looking disclosures
contained in any such document under the heading “Risk Factors” or
“Forward-Looking
Statements” or under any other heading:

     

    SECTION
2.01.  Organization, Standing and
Power.  Each of the Company and each Company Subsidiary
(a) is duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and (b) has full corporate (or
limited liability company) power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals (“Permits”) necessary
to enable it to own, lease or otherwise hold its properties and assets and to
conduct its business as presently conducted, other than such Permits the lack of
which, individually or in the aggregate, have not had and could not reasonably
be expected to have a Company Material Adverse Effect.  Each of the
Company and each Company Subsidiary is duly qualified to do business in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing or holding of its properties makes such qualification necessary, except
such jurisdictions where the failure to be so qualified or in good standing,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect.  The Company has
made available to Investor true and complete copies of the restated certificate
of incorporation of the Company, as amended to the date of this Agreement (as so
amended, the “Company
Charter”), the restated by-laws of the Company, as amended to the date of
this Agreement (as so amended, the “Company By-laws”),
and the comparable charter and

     

     

    
      
        
        

      

      
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    organizational
documents of each Company Subsidiary, in each case as amended to the date of
this Agreement.

     

    SECTION
2.02.  Issuance of
Securities.  (a) The Shares, the New Convertible Debt and
the Series A Warrants to be issued to Investor, when issued and delivered
as provided herein, (b) the New Convertible Debt to be issued to holders of
the Prepetition Debt, when issued and delivered as provided in the Plan, and
(c) the Term Loan Lender Shares, the Series B Warrants and the Series C
Warrants to be issued to the lenders under the Term Loan Facility, when issued
and delivered as provided in the Plan, will each have been duly and validly
authorized and will be duly and validly issued and delivered.  Upon
issuance, the Shares, the Term Loan Lender Shares, the New Convertible Debt and
the Warrants will be fully paid and non-assessable and, other than as provided
in the Stockholders’ Agreement, free of preemptive or similar
rights.  The shares of New Common Stock issuable upon conversion of
the New Convertible Debt or exercise of the Warrants, upon issuance, will have
been duly and validly authorized and will be duly and validly issued, fully paid
and non-assessable and, other than as provided in the Stockholders’ Agreement,
free of preemptive or similar rights.

     

    SECTION
2.03.  Capital
Structure.  (a)  As of the Closing, the authorized
capital stock of the Reorganized Company will consist solely of
(i) 60,000,000 shares of New Common Stock, of which 8,840,000 shares will
be issued and outstanding (excluding any shares of New Common Stock to be issued
under the Long Term Incentive Plan with Investor’s consent), and
(ii) 1,000,000 shares of the preferred stock, par value $0.01 per share, of
the Reorganized Company, of which no shares will be issued and
outstanding.  As of the Closing there will be no shares of capital
stock or other equity interests of the Reorganized Company issued, reserved for
issuance or outstanding, other than the Shares, the Term Loan Lender Shares,
shares of New Common Stock reserved for issuance upon conversion of the New
Convertible Debt and exercise of the Warrants and shares of New Common Stock
issued or to be issued or reserved for issuance under the Long Term Incentive
Plan.  Other than as provided in the Stockholders’ Agreement and other
than rights that will be discharged by the Confirmation Order, the Shares, the
Term Loan Lender Shares, the New Convertible Debt and the Warrants, when issued,
will not be subject to or issued in violation of any purchase option, call
option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of the Delaware General Corporation Law, the
Company Charter, the Company By-laws, the Amended Company Charter (as defined in
Section 5.02(e)), the Amended Company By-laws (as defined in
Section 5.02(e)) or any Contract to which the Company, the Reorganized
Company or any Company Subsidiary is a party or otherwise bound.

     

    (b)  Section 2.03(b)
of the Company Disclosure Letter sets forth for each Company Subsidiary the
amount of its authorized capital stock (or other equity interests), the amount
of its outstanding capital stock and the record and beneficial owners of its
outstanding capital stock (or other equity interests).  As of the date
hereof the Company, and as of the Closing the Reorganized Company, directly or
indirectly, has and will have good and valid title to the outstanding capital
stock (or other equity interests) of each Company Subsidiary set forth as
beneficially owned by the Company in Section 2.03(b)

     

     

    
      
        
        

      

      
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    of
the Company Disclosure Letter, free and clear of all Liens.  Except as
set forth in Section 2.03(b) of the Company Disclosure Letter, there are no
shares of capital stock or other equity interests of any Company Subsidiary
issued, reserved for issuance or outstanding.  All the outstanding
shares of capital stock (or other equity interests) of each Company Subsidiary
have been duly authorized and validly issued and are fully paid and
nonassessable and, except as set forth in Section 2.03(b) of the Company
Disclosure Letter, are owned by the Company, by another Company Subsidiary or by
the Company and another Company Subsidiary, free and clear of all
Liens.  All of the $4.80 Dividend Cumulative Preferred Stock of
Interstate Brands Corporation will be discharged by the Confirmation
Order.  The Debtors include all Company Subsidiaries, and there are no
Company Subsidiaries other than those that are the Debtors.

     

    (c)  There
are not any bonds, debentures, notes or other indebtedness of the Company, the
Reorganized Company or any Company Subsidiary having the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which either holders of voting capital stock of
the Company or holders of New Common Stock may vote (“Voting Company Debt”)
or on any matter on which holders of voting capital stock of any Company
Subsidiary may vote (“Voting Subsidiary
Debt”).  Except for issuances of securities by the Reorganized
Company as contemplated by this Agreement or the Plan, and except for the Rights
that will be discharged by the Confirmation Order, as of the date of this
Agreement there are not any options, restricted shares, warrants, rights,
convertible or exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, other stock based rights,
commitments, Contracts, arrangements or undertakings of any kind to which the
Company, the Reorganized Company or any Company Subsidiary is a party or by
which any of them is bound (A) obligating the Company, the Reorganized Company
or any Company Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity interests
in, or any security convertible into or exercisable or exchangeable for any
shares of capital stock or other equity interests in, the Company, the
Reorganized Company or any Company Subsidiary, or any Voting Company Debt or
Voting Subsidiary Debt, (B) obligating the Company, the Reorganized Company or
any Company Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, unit, commitment, Contract, arrangement or
undertaking or (C) that give any person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of the voting capital stock of the Company, the New Common
Stock or the voting capital stock of any Company Subsidiary (such options,
restricted shares, warrants, rights, convertible or exchangeable securities,
“phantom” stock rights, stock appreciation rights, stock-based performance
units, other stock based rights, commitments, Contracts, arrangements or
undertakings of any kind, collectively, “Rights”).  Except
for the New Convertible Debt, the Warrants, the shares of New Common Stock to be
issued or reserved for issuance under the Long Term Incentive Plan and the stock
appreciation rights to be issued to employees of the Company and the Company
Subsidiaries under the employee equity sharing plans to be established in
accordance with the collective bargaining agreements to be entered into in
connection with the Reorganization, as of the Closing there will not be any
Rights.  Except for obligations that will be discharged by the
Confirmation Order, there are no outstanding contractual obligations of the
Company 

     

     

    
      
        
        

      

      
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    or
any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company, the Reorganized Company or any Company
Subsidiary.

     

    (d)  Except
for its interests in the Company Subsidiaries and other immaterial interests
held as a result of a prior bankruptcy distribution by a third party to the
Company, the Company does not own, directly or indirectly, any capital stock,
membership interest, partnership interest, joint venture interest or other
equity interest in any person.

     

    SECTION
2.04.  Authority; Execution and
Delivery; Enforceability.  (a)  Subject to entry by
the Bankruptcy Court of the Fee Order, the Investment Agreement Order, the
Disclosure Statement Approval Order and the Confirmation Order, the Company has
all requisite corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements to which it is, or is specified to be, a
party and to consummate the Transaction, the Reorganization and the other
transactions contemplated hereby and thereby.  The execution and
delivery by the Company of this Agreement and the execution by the Company or
the Reorganized Company of the Ancillary Agreements to which it is, or is
specified to be, a party and the consummation by the Company of the Transaction,
the Reorganization and the other transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of the
Company.  The Company has duly executed and delivered this Agreement
and, prior to the Closing, the Company or the Reorganized Company will have duly
executed and delivered each Ancillary Agreement to which it is, or is specified
to be, a party, and, assuming the due authorization, execution and delivery by
each of the other parties hereto and thereto, this Agreement constitutes, and
each Ancillary Agreement to which it is, or is specified to be, a party will
after the Closing constitute, the legal, valid and binding obligation of the
Company and the Reorganized Company, enforceable against the Company and the
Reorganized Company in accordance with its terms, subject to entry by the
Bankruptcy Court of the Fee Order, the Investment Agreement Order, the
Disclosure Statement Approval Order and the Confirmation Order.

     

    (b)  No
vote or approval by any stockholder or equityholder of the Company or any
Company Subsidiary is required in connection with (i) the execution and delivery
by the Company of this Agreement or any Ancillary Agreement to which it is, or
is specified to be, a party or (ii) the consummation of the Transaction, the
Reorganization and the other transactions contemplated hereby and
thereby.

     

    (c)  The
board of directors of the Company (the “Company Board”) has
duly authorized and approved the Investor Commitment Papers, the ABL Facility
Commitment Papers and the Term Loan Facility Commitment Papers.

     

    (d)  The
Bankruptcy Court has entered an order in the Cases approving the amendment to
the DIP Facility in the form attached as Exhibit L to the Investor Commitment
Letter, and such order is in full force and effect without reversal,
modification or stay and is not subject to a pending motion for reconsideration,
revocation, reversal, modification, stay or appeal.

     

     

    
      
        
        

      

      
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    SECTION
2.05.  No
Conflicts; Consents.  (a)  The execution and delivery
by the Company of this Agreement do not, the execution and delivery by the
Company or the Reorganized Company of each Ancillary Agreement to which it is,
or is specified to be, a party will not, and the consummation of the
Transaction, the Reorganization and the other transactions contemplated hereby
and thereby and compliance by the Company and the Reorganized Company with the
terms hereof and thereof will not, conflict with, or result in any violation of
or default (with or without the lapse of time or the giving of notice, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or increase, add to,
accelerate or guarantee rights or entitlements of any person under, or result in
the creation of any Lien upon any of the properties or assets of the Company,
the Reorganized Company or any Company Subsidiary under, any provision of (i)
the Company Charter, the Company By-laws, the Amended Company Charter, the
Amended Company By-laws or the comparable charter or organizational documents of
any Company Subsidiary, (ii) any Contract to which the Company, the Reorganized
Company or any Company Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) subject to the filings and other matters
referred to in Section 2.05(b), any judgment, order or decree (“Judgment”) or
statute, law (including common law), ordinance, rule or regulation (“Law”) applicable to
the Company, the Reorganized Company or any Company Subsidiary or their
respective properties or assets, other than (x) any such item that would be
discharged by the Confirmation Order or (y) in the case of clauses (ii)
and (iii) above, any such item that, individually or in the aggregate, has
not had and could not reasonably be expected to have a Company Material Adverse
Effect.

     

    (b)  No
consent, approval, license, permit, order or authorization (“Consent”) of, or
registration, declaration or filing with, any Federal, state, local or foreign
government or any court of competent jurisdiction, administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign (a “Governmental
Entity”), is required to be obtained or made by or with respect to the
Company, the Reorganized Company or any Company Subsidiary in connection with
(A) the execution, delivery and performance of this Agreement or any
Ancillary Agreement or the consummation of the Transaction, the Reorganization
or the other transactions contemplated hereby and thereby or (B) the
ownership by Investor of the Shares, the New Convertible Debt or the
Series A Warrant following the Closing, other than (i) compliance with
and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR
Act”), (ii) the entry by the Bankruptcy Court of the Fee Order, the
Investment Agreement Order, the Disclosure Statement Approval Order and the
Confirmation Order, (iii) the filing by the Company with the SEC of such
reports under Section 13 of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), as may be required in connection with this Agreement, the
Ancillary Agreements, the Transaction and the other transactions contemplated
hereby and thereby, (iv) the filing of the Amended Company Charter with the
Secretary of State of the State of Delaware and (v) such other items that are
immaterial.

     

    SECTION
2.06.  SEC
Documents; Undisclosed Liabilities.  (a)  The Company
has filed all reports, schedules, forms, statements and other documents required

     

     

    
      
        
        

      

      
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    to
be filed by the Company with the SEC since June 3, 2007 (such reports,
schedules, forms, statements and other documents, the “Company SEC
Documents”).

     

    (b)  As
of its respective date, each Company SEC Document complied in all material
respects with the requirements of the Securities Act of 1933, as amended (the
“Securities
Act”), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company SEC
Document, and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.  Each of the consolidated financial
statements of the Company included in the Company SEC Documents (including the
related notes and schedules thereto) complied at the time it was filed as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, had been
prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”)
(except, in the case of unaudited statements, as permitted by the rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly presented
the consolidated financial position of the Company and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations, cash flows and stockholders’ equity for the periods shown (subject,
in the case of unaudited statements, to normal year-end audit
adjustments).

     

    (c)  Except
as set forth on the consolidated balance sheet of the Company and its
consolidated subsidiaries (the “Balance Sheet”) or in
the notes thereto in the most recent consolidated financial statements of the
Company included in the Company SEC Documents filed by the Company and publicly
available prior to the date of this Agreement (such Company SEC Documents, the
“Filed Company SEC
Documents”) or incurred since the date of the Balance Sheet in the
ordinary course of business consistent with past practice, neither the Company
nor any Company Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent, on- or off-balance sheet or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes thereto and that, individually
or in the aggregate, has had or could reasonably be expected to have a Company
Material Adverse Effect.

     

    (d)  With
respect to each Company SEC Document that is a report on Form 10-K or 10-Q or an
amendment thereto:

     

    (i)  the
chief executive officer and chief financial officer of the Company (the “Certifying Company
Officers”) reviewed such report or amendment prior to its filing with the
SEC;

     

    (ii)  based
on the knowledge of the Certifying Company Officers, such report or amendment,
at the time such report or amendment was filed, did not contain any untrue
statement of any material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which

     

    
      
        
        

      

      
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    such
statements were made, not misleading with respect to the period covered by such
report or amendment;

     

    (iii)  based
on the knowledge of the Certifying Company Officers, the financial statements,
and other financial information included in such report or amendment, as of the
time such report or amendment was filed, fairly presented in all material
respects the financial condition, result of operations and cash flows of the
Company and its consolidated subsidiaries as of, and for, the periods presented
in such report or amendment;

     

    (iv)  the
Certifying Company Officers were responsible for establishing and maintaining
disclosure controls and procedures (as such terms are defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) and internal control over financial
reporting (as such terms are defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) for the Company and, at the time such report or amendment was
filed, had: (A) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under their supervision, to
ensure that material information relating to the Company, including its
consolidated subsidiaries, was made known to them by others within those
entities, particularly during the period in which such report or amendment was
being prepared; (B) designed such internal control over financial reporting, or
caused such internal control over financial reporting to be designed under their
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; (C)
evaluated the effectiveness of the Company’s disclosure controls and procedures
and presented in such report or amendment their conclusions about the
effectiveness of the Company’s disclosure controls and procedures, as of the end
of the period covered by such report or amendment based on such evaluation; and
(D) disclosed in such report or amendment any change in the Company’s internal
control over financial reporting that occurred during its last fiscal quarter,
in the case of a Form 10-Q or amendment thereto, or its fourth fiscal quarter,
in the case of an annual report or amendment thereto, that materially affected,
or was reasonably likely to materially affect, the Company’s internal control
over financial reporting; and

     

    (v)  the
Certifying Company Officers disclosed, based on their most recent evaluation of
internal control over financial reporting as of the time such report or
amendment was filed, to the Company’s auditors and the audit committee of the
Company Board: (A) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting which were
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information at the time such report or amendment
was filed; and (B) any fraud, whether or not material, that involved management
or other employees who had a significant role in the Company’s internal control
over financial reporting at the time such report or amendment was
filed.

     

     

    
      
        
        

      

      
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    (e)  The
effectiveness of any additional SEC disclosure requirement that, as of the date
of this Agreement, has been formally proposed that is not yet in effect, is not
expected by the Company to lead to any material change in the Company’s
disclosures as set forth in the Filed Company SEC Documents.

     

    (f)  None
of the Company Subsidiaries is, or at any time since May 29. 2004 has been,
subject to the reporting requirements of Sections 13(a) and 15(d) of the
Exchange Act.

     

    (g)  The
Company is in compliance with the applicable requirements of the Sarbanes-Oxley
Act of 2002 (including the rules and regulations promulgated thereunder) except
as has not had and could not reasonably be expected to have a Company Material
Adverse Effect.

     

    SECTION
2.07.  Absence of Certain Changes
or Events.  (a)  Since September 12, 2008, there has
not occurred any event, development, condition or circumstance that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect.

     

    (b)  Since
May 31, 2008, the Company has conducted its business only in the ordinary course
consistent with past practice, and during such period there has not
been:

     

    (i)  any
damage, destruction or loss, whether or not covered by insurance, that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect;

     

    (ii)  any
change in financial accounting methods, principles or practices by the Company
or any Company Subsidiary materially affecting the consolidated assets,
liabilities or results of operations of the Company and its consolidated
subsidiaries, except insofar as may have been required by a change in
GAAP;

     

    (iii)  any
material elections with respect to Taxes by the Company or any Company
Subsidiary, any change in any material method of accounting for Tax purposes by
the Company or any Company Subsidiary or any settlement or compromise by the
Company or any Company Subsidiary of any material Tax liability or
refund;

     

    (iv)  any
sale, lease, license, mortgage, sale and leaseback or any other disposal of any
of the assets of the Company or any Company Subsidiary or any interests therein
(including securitization or factoring arrangements) except for sales of
(A) inventory in the ordinary course of business consistent with past
practice, (B) real property as set forth in Section 2.07(b)(iv) of the
Company Disclosure Letter and (C) other immaterial assets; or

     

    (v)  any
revaluation by the Company or any Company Subsidiary of any of the assets of the
Company or any Company Subsidiary that is material to the Company and the
Company Subsidiaries, taken as a whole.

     

     

    
      
        
        

      

      
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    SECTION
2.08.  Assets Other than Real
Property and Intellectual Property
Interests.  (a)  The Company or a Company Subsidiary
has good and valid title to all the assets reflected on the Balance Sheet or
thereafter acquired, other than those disposed of since the date of the Balance
Sheet in the ordinary course of business consistent with past practice, in each
case free and clear of all Liens except (i) mechanics’, carriers’,
workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary
course of business with respect to obligations that are not delinquent,
(ii) Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business, (iii) liens for Taxes that are not yet due and payable
or are being contested in good faith by appropriate proceedings and for which
adequate reserves, in accordance with GAAP, have been established,
(iv) Liens that secure debt that is reflected as a liability on the Balance
Sheet or Liens the existence of which is referred to in the notes to the Balance
Sheet (which Liens in this clause (iv) will be fully discharged as of the
Closing) and (v) other imperfections of title or encumbrances, if any,
that, individually or in the aggregate, do not materially impair, and could not
reasonably be expected materially to impair, the continued use and operation of
the assets to which they relate in the conduct of the business of the Company
and the Company Subsidiaries as presently conducted and as currently proposed by
the Company to be conducted (the Liens described in clauses (i) through
(iii) and (v) above, together with the Liens referred to in clauses (ii)
through (v) of Section 2.09(a), are referred to collectively as “Permitted Liens”).

     

    (b)  This
Section 2.08 does not relate to real property or interests in real
property, such items being the subject of Section 2.09, or to Intellectual
Property, such items being the subject of Section 2.10.

     

    SECTION
2.09.  Real
Property.  (a)  The Company or a Company Subsidiary
has good and insurable fee title to all real property and interests in real
property owned in fee by the Company or such Company Subsidiary (individually,
an “Owned
Property”) and good and marketable title to the leasehold estates in all
real property and interests in real property leased by the Company or such
Company Subsidiary (individually, a “Leased Property”; an
Owned Property or a Leased Property being sometimes referred to herein,
individually, as a “Company Property”),
in each case free and clear of all Liens, except (i) Liens described in clauses
(i), (iii) and (iv) of Section 2.08(a), (ii) recorded or unrecorded easements,
covenants, rights of way, conditions, restrictions, options to purchase and/or
rights of first offer or refusal or other pre-emptive rights to purchase all or
any portion of a Company Property and other, similar matters, imperfections of
title and encumbrances which do not secure debt, (iii) any conditions that would
be shown by a current, accurate survey or physical inspection of any Company
Property, (iv) zoning, building and other similar laws, ordinances or government
regulations, and (v) Liens that have been placed by any developer, landlord or
other third party on property over which the Company or any Company Subsidiary
has easement rights or on any Leased Property and subordination or similar
agreements relating thereto, provided that none of
the foregoing items (ii) through (v), individually or in the aggregate,
materially impair, or could reasonably be expected to materially impair, the
conduct of the business of the Company and the Company Subsidiaries as presently
conducted and as currently proposed by the Company to be conducted.

     

     

    
      
        
        

      

      
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    (b)  There
is no condemnation or other proceeding in eminent domain pending or, to the
knowledge of the Company, threatened against any Owned Property that could
materially impair, or could reasonably be expected to materially impair, the
continued use and operation of the Owned Property to which it relates in the
conduct of the business of the Company and the Company Subsidiaries as presently
conducted and as currently proposed by the Company to be conducted.

     

    (c)  Each
lease and sublease, or the resulting tenancy, for Leased Property (individually,
a “Lease”) is
legal, valid and binding and is in full force and effect and, as of the date of
execution hereof, the Company or a Company Subsidiary is in possession of such
Leased Property.  Since the filing of the Cases, the Company and the
Company Subsidiaries have performed all of their respective obligations under
each Lease in all material respects, except with respect to obligations that the
Company or a Company Subsidiary is prohibited from performing pursuant to the
automatic stay in connection with the Cases.  To the knowledge of the
Company, each other party named in a Lease has performed all of its obligations
under such Lease in all material respects.  Neither the Company nor
any Company Subsidiary has collaterally assigned or granted any other security
interest in such Lease or any interest therein.  Neither the Company
nor any Company Subsidiary has leased, subleased or otherwise granted to any
third party the right to use or occupy any portion of any Company Property
except for leases or subleases that do not materially impair, and could not
reasonably be expected to materially impair, the continued use and operation of
the Company Property to which they relate in the conduct of the business of the
Company and the Company Subsidiaries as presently conducted and as currently
proposed by the Company to be conducted.

     

    SECTION
2.10.  Intellectual
Property.  (a)  The Company or a Company Subsidiary
(i) owns and possesses all right, title and interests in and to all owned
Company Intellectual Property, free and clear of any Lien or other restriction
(other than Liens securing obligations under the DIP Facility, which Liens will
be fully discharged as of the Closing, and other than licenses granted for
limited purposes in the ordinary course of business) or (ii) (A) has a
valid right to use all Key Company Intellectual Property in connection with the
conduct of the business of the Company and the Company Subsidiaries as presently
conducted and as currently proposed by the Company to be conducted and
(B) except as, individually or in the aggregate, has not had and could not
reasonably be expected to have a Company Material Adverse Effect, has a valid
right to use any other part or aspect of the Company Intellectual Property in
connection with the conduct of the Business of the Company and the Company
Subsidiaries as presently conducted and as currently proposed by the Company to
be conducted.

     

    (b)  No
portion of the Key Company Intellectual Property is or during the three-year
period prior to the date of this Agreement has been subject to any adverse
order, judgment, injunction, decree, ruling or charge.

     

    (c)  (i) No
action, suit, proceeding, interference, opposition, reexamination, hearing,
written claim or written demand is pending or, to the knowledge of the Company,
is or during the three-year period prior to the date of this Agreement has been
threatened against the Company or any Company Subsidiary which challenges any

     

     

    
      
        
        

      

      
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    aspect
of the validity, enforceability, ownership, authorship, inventorship or use of
any portion of the Key Company Intellectual Property and (ii) no material
action, suit, proceeding, interference, opposition, reexamination, hearing,
written claim or written demand is pending or, to the knowledge of the Company,
is or during the three-year period prior to the date of this Agreement has been
threatened against the Company or any Company Subsidiary which challenges any
aspect of the validity, enforceability, ownership, authorship, inventorship or
use of any other part or aspect of the Company Intellectual
Property.

     

    (d)  The
Company and the Company Subsidiaries have taken commercially reasonable actions
in accordance with normal industry practice to protect, maintain and preserve
the owned Company Intellectual Property and to maintain the confidentiality of
the Company’s and the Company Subsidiaries’ trade secrets and other confidential
owned Company Intellectual Property.

     

    (e)  The
issued patents, registered trademarks and registered copyrights, and the
applications for patents, trademarks and copyrights, that are owned Company
Intellectual Property have been duly filed in, registered with or issued or
granted by the appropriate Governmental Entity, and have been prosecuted and
maintained in accordance with the rules and regulations of those Governmental
Entities.

     

    (f)  To
the knowledge of the Company, (i) no person is infringing the Key Company
Intellectual Property and (ii) except as, individually or in the aggregate,
has not had and could not reasonably be expected to have a Company Material
Adverse Effect, no person is infringing any other part or aspect of the Company
Intellectual Property.

     

    (g)  (i) The
use by the Company or any Company Subsidiary of the Key Company Intellectual
Property, or any portion thereof, does not violate, infringe or misappropriate
the Intellectual Property of any person and (ii) except as, individually or
in the aggregate, has not had and could not reasonably be expected to have a
Company Material Adverse Effect, the use by the Company or any Company
Subsidiary of any other part or aspect of the Company Intellectual Property does
not violate, infringe or misappropriate the Intellectual Property of any
person.

     

    (h)  During
the three year period prior to the date of this Agreement, neither the Company
nor any Company Subsidiary has received written or oral notice of any material
pending or threatened claims alleging violation, infringement or
misappropriation of the Intellectual Property of any person.

     

    (i)  Neither
the Company nor any Company Subsidiary is a party to any license or other
agreement or contract that concerns Intellectual Property, as to which the
Company or any Company Subsidiary is in breach or default, or as to which the
execution of this Agreement would give rise to a right of termination of any
other party, in each case except as, individually or in the aggregate, has not
had and could not reasonably be expected to have a Company Material Adverse
Effect.

     

    (j)  Definitions.  As
used in this Agreement:

     

     

    
      
        
        

      

      
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    (1)           “Intellectual
Property” means any and all domestic and foreign intellectual property,
including any and all (A) patents, patent applications and patent disclosures,
together with all reissues, continuations, continuations-in-part, divisionals,
revisions, extensions and reexaminations thereof, (B) trademarks, service
marks, logos, trade names, corporate names, domain names, trade dress, including
all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (C) copyrights and copyrightable works
and all applications, registrations and renewals in connection therewith,
(D) trade secrets and confidential or proprietary business information,
whether or not subject to statutory registration (including confidential or
proprietary research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, methods, schematics,
technology, technical data, designs, drawings, flowcharts, block diagrams,
specifications, customer and supplier lists, pricing and cost information and
business and marketing plans and proposals), and (E) proprietary rights in and
to computer software (including source code, databases and related
documentation).

     

    (2)           “Company Intellectual
Property” means any and all Intellectual Property used in the conduct of
the business of the Company and the Company Subsidiaries as presently conducted
and as currently proposed by the Company to be conducted.

     

    (3)           “Key Company Intellectual
Property” means that portion of the Company Intellectual Property that
concern or relates to any of the following brands: DING DONGS, DRAKE’S, DOLLY
MADISON, HO HOS, HOME PRIDE, HOSTESS, MERITA, NATURE’S PRIDE, SUZY Q’S, TWINKIES
and WONDER.

     

    SECTION
2.11.  Assets
Generally.  The assets owned or leased by the Company and the
Company Subsidiaries, or which they otherwise have the right to use, are
sufficient to operate the business of the Company and the Company Subsidiaries
as presently conducted and as currently proposed by the Company to be
conducted.

     

    SECTION
2.12.  Inventory.  The
inventory of the Company and the Company Subsidiaries is generally of a quality
and quantity usable and salable at customary gross margins and with customary
markdowns consistent in all material respects with past practice in the ordinary
course of business and is reflected on the Balance Sheet and in the books and
records of the Company in accordance with GAAP.  Since the date of the
Balance Sheet, there have not been any write-downs of the value of, or
establishment of any reserves against, any inventory of the Company and the
Company Subsidiaries except for write-downs and reserves in the ordinary course
of business consistent with past practice.

     

    SECTION
2.13.  Receivables.  All
the accounts receivable of the Company and the Company Subsidiaries
(a) represent actual indebtedness incurred by the applicable account
debtors and (b) have arisen from bona fide transactions in the ordinary
course of the business of the Company and the Company
Subsidiaries.  To the knowledge of the Company, all such accounts
receivable are good and collectible at the aggregate recorded amounts thereof,
net of any applicable reserves for doubtful accounts reflected 

     

     

    
      
        
        

      

      
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    on
the Balance Sheet.  Since the date of the Balance Sheet, there have
not been any write-offs as uncollectible of any customer accounts receivable of
the Company or any Company Subsidiary, except for write-offs in the ordinary
course of the business of the Company and the Company Subsidiaries consistent
with past practice.

     

    SECTION
2.14.  Permits.  The
Company and the Company Subsidiaries (a) possess all material Permits
necessary or advisable to own or hold under lease and operate their respective
assets and to conduct the business of the Company and the Company Subsidiaries
as presently conducted and as currently proposed to be conducted, which material
Permits are valid and in good standing, and (b) have complied in all
material respects with all terms and conditions of such material
Permits.  Since June 3, 2006, there has occurred no violation of,
default (with or without the lapse of time or the giving of notice, or both)
under, or event giving to others any right of suspension, modification,
revocation or nonrenewal of, any such material Permit.  There is no
event which, to the knowledge of the Company, has resulted or could reasonably
be expected to result in the suspension, modification, revocation or nonrenewal
of any such material Permit.  Since June 3, 2006, none of the Company
and any Company Subsidiary has received notice of any suit, action, proceeding
or investigation (a “Proceeding”) relating
to the suspension, modification, revocation or nonrenewal of any such material
Permits, and none of such material Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution and delivery
of this Agreement or any of the Ancillary Agreements or the consummation of the
Transaction, the Reorganization or the other transactions contemplated hereby or
thereby.

     

    SECTION
2.15.  Insurance.  The
Company and the Company Subsidiaries maintain policies of fire and casualty,
liability, workers’ compensation and other forms of insurance in such amounts,
with such deductibles and against such risks and losses as are, in the Company’s
judgment, reasonable for the business and assets of the Company and the Company
Subsidiaries.  All such policies are in full force and effect, all
premiums due and payable thereon have been paid (other than retroactive or
retrospective premium adjustments that are not yet, but may be, required to be
paid with respect to any period ending prior to the Closing Date), and no
written notice of cancellation or termination has been received with respect to
any such policy which has not been replaced on substantially similar terms prior
to the date of such cancellation.  The activities and operations of
the Company and the Company Subsidiaries have been conducted in a manner so as
to conform in all material respects to all applicable provisions of such
insurance policies.  None of the Company and any Company Subsidiary
has been refused any insurance with respect to its assets or operations by any
such insurance carrier to which it has applied for any such insurance or with
which it has carried insurance since June 3, 2006, other than insurance
which the Company or any Company Subsidiary has been able to replace in the
ordinary course of business.  Except for claims arising in the
ordinary course of business, there are no pending or, to the knowledge of the
Company, threatened material claims under any such insurance
policy.

     

    SECTION
2.16.  Taxes.  (a)  As
used in this Agreement:

     

    “Code” means the
Internal Revenue Code of 1986, as amended.

     

     

    
      
        
        

      

      
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    “Taxes” means all (i)
Federal, state, local and foreign taxes, assessments, duties or similar charges
of any kind whatsoever, including all corporate franchise, income, sales, use,
ad valorem, receipts, value added, profits, license, withholding, employment,
excise, property, net worth, capital gains, transfer, stamp, documentary, social
security, payroll, environmental, alternative minimum, occupation, recapture and
other taxes, and including any interest, penalties and additions imposed with
respect to such amounts; (ii) liability for the payment of any amounts of the
type described in clause (i) as a result of being a member of an
affiliated, consolidated, combined, unitary or aggregate group or a transferee
or successor; and (iii) liability for the payment of any amounts as a result of
an express or implied obligation to indemnify any other person with respect to
the payment of any amounts of the type described in clause (i) or
(ii).

     

    “Taxing Authority”
means any Federal, state, local or foreign governmental body (including any
subdivision, agency or commission thereof), or any quasi-governmental body, in
each case, exercising regulatory authority in respect of Taxes.

     

    “Tax Return” means all
returns, declarations of estimated tax payments, reports, estimates, information
returns and statements, including any related or supporting information with
respect to any of the foregoing, filed or to be filed with any Taxing Authority
in connection with the determination, assessment, collection or administration
of any Taxes.

     

    (b)  The
Company and each Company Subsidiary has timely filed, or has caused to be timely
filed on its behalf, all material Tax Returns required to be filed by or on
behalf of the Company and each Company Subsidiary in the manner prescribed by
applicable Law, and all such Tax Returns are complete and
correct.  The Company and each Company Subsidiary has timely paid (or
the Company has paid on each such Company Subsidiary’s behalf) all material
Taxes due and payable (other than Taxes being contested in good faith by
appropriate proceedings for which adequate reserves, in accordance with GAAP,
have been established), and, in accordance with GAAP, the most recent financial
statements contained in the Filed Company SEC Documents reflect an adequate
reserve (excluding any reserve for deferred Taxes) for all material accrued
Taxes that are not yet due and payable by the Company and each Company
Subsidiary for all taxable periods and portions thereof through the date of such
financial statements.

     

    (c)  Neither
the Company nor any Company Subsidiary has joined for any taxable period in the
filing of any affiliated, aggregate, consolidated, combined or unitary tax
return, other than Tax Returns for the affiliated, aggregate, consolidated,
combined or unitary group of which the Company is the common
parent.

     

    (d)  No
Tax Return of the Company or any Company Subsidiary is under audit or
examination by any Taxing Authority, and no written or unwritten notice of such
an audit or examination has been received by the Company or any Company
Subsidiary.  Each assessed deficiency resulting from any audit or
examination relating to Taxes by any Taxing Authority has been timely paid and
there is no assessed deficiency, refund litigation, proposed adjustment or
matter in controversy with respect to any material 

     

     

    
      
        
        

      

      
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    Taxes
due and owing by the Company or any Company Subsidiary.  The Federal
income Tax Returns of the Company and each Company Subsidiary have been examined
by the Internal Revenue Service for all years through June 3, 2006 and the
relevant statute of limitations has closed for all years through May 29,
2004.

     

    (e)  Other
than agreements and documents filed in connection with the Cases, there is no
agreement or other document currently in force extending, or having the effect
of extending, the period of assessment or collection of any material Taxes of
the Company or any Company Subsidiary, and no power of attorney with respect to
any such Taxes has been executed or filed with any Taxing Authority by or on
behalf of the Company or any Company Subsidiary, other than powers of attorney
that are not currently in force.

     

    (f)  No
material Liens for Taxes exist with respect to any assets or properties of the
Company or any Company Subsidiary, except for statutory liens for Taxes not yet
due and payable or for Taxes that are being contested in good faith by
appropriate proceedings and for which adequate reserves, in accordance with
GAAP, have been established.

     

    (g)  Neither
the Company nor any Company Subsidiary is a party to or bound by any Tax sharing
agreement, Tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing Authority), other
than any such agreements among the Company and the Company
Subsidiaries.

     

    (h)  The
Company and each Company Subsidiary has complied with all material rules and
regulations related to Tax information reporting and the payment and withholding
of Taxes.

     

    (i)  Within
the two-year period ending on the Closing Date, neither the Company nor any
Company Subsidiary has constituted either a “distributing corporation” or a
“controlled corporation” as such terms are defined in Section 355 of the
Code in a distribution of stock qualifying or intended to qualify for tax-free
treatment (in whole or in part) under Section 355(a) or 361 of the
Code.

     

    (j)  No
material claim that has not been resolved has ever been made by any Taxing
Authority in a jurisdiction where the Company or any Company Subsidiary does not
file a Tax Return and where it is, or may be, subject to an amount of Tax by
that jurisdiction.

     

    (k)  Neither
the Company nor any Company Subsidiary will be required to include in a taxable
period ending after the Closing Date taxable income attributable to income that
accrued in a prior taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting, the long-term
contract method of accounting, the cash method of accounting or Section 481
of the Code or comparable provisions of state, local or foreign Tax Law, or any
other change in method of accounting.

     

     

    
      
        
        

      

      
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    (l)  Neither
the Company nor any Company Subsidiary has participated in any “listed
transaction” as defined in Treasury Regulation
Section 1.6011-4(b)(2).

     

    SECTION
2.17.  Absence of Changes in
Benefit Plans.  From May 31, 2008 to the date of this
Agreement, neither the Company nor any Company Subsidiary has terminated,
adopted, amended, modified or agreed to terminate, adopt, amend or modify (or
announced an intention to terminate, adopt, amend or modify), in any material
respect, any material Company Benefit Plan, including any change, in any
material respect, with respect to a material Company Pension Plan in any
actuarial or other assumption used to calculate funding obligations or in the
manner in which contributions are made or the basis on which such contributions
are determined except as required by applicable Law.

     

    SECTION
2.18.  ERISA
Compliance; Excess Parachute Payments.  

     

    (a)  Section 2.18(a)
of the Company Disclosure Letter contains a complete and correct list of each
material Company Benefit Plan, material Company Benefit Agreement and Company
Multiemployer Plan.  Each material Company Benefit Plan and material
Company Benefit Agreement has been administered in all material respects in
compliance with its terms and applicable Law and the terms of any applicable
collective bargaining agreements.  The Company has made available to
Investor complete and correct copies (or in the case of any unwritten material
Company Benefit Plan or material Company Benefit Agreement, a description
thereof) of (i) each material Company Benefit Plan and material Company Benefit
Agreement, (ii) the two most recent annual reports required to be filed with any
Governmental Entity, with respect to each material Company Benefit Plan
(including reports filed on Form 5500 with accompanying schedules and
attachments), (iii) the most recent summary plan description for each material
Company Benefit Plan for which a summary plan description is required under
applicable Law, (iv) each trust agreement and group annuity contract and other
material documents relating to the funding or payment of benefits under any
material Company Benefit Plan, (v) the most recent determination or
qualification letter issued by any Governmental Entity for each Company Pension
Plan intended to qualify for favorable tax treatment, as well as a complete and
correct copy of each pending application for a determination or qualification
letter, if applicable, and a complete and correct list of all material
amendments to any Company Pension Plan as to which a favorable determination
letter has not yet been received and (vi) the two most recent actuarial
valuations for each Company Benefit Plan for which such valuations are
required.

     

    (b)  The
Company has received determination letters from the Internal Revenue Service for
all Company Pension Plans intended to be tax qualified to the effect that such
Company Pension Plans are qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the knowledge of the Company, has revocation
been threatened, nor has any such Company Pension Plan been amended or failed to
be amended since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification or
materially increase its costs.

     

     

    
      
        
        

      

      
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    (c)  Neither
the Company nor any other person or entity that, together with the Company or
any Company Subsidiary, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code or any other applicable Law (a
“Commonly Controlled
Entity”) has sponsored, maintained or contributed to, or been obligated
to maintain or contribute to, or has any liability under, any Company Pension
Plan that is subject to Title IV of ERISA or Section 412 of the Code or is
otherwise a defined benefit pension plan.  Except as set forth on the
Balance Sheet or in the notes thereto in the Filed Company SEC Documents, no
Company Pension Plan had, as of the respective last annual valuation date for
each such Company Pension Plan, a material “unfunded benefit liability” (as
defined in Section 4001(a)(18) of ERISA), and there has been no material
adverse change in the financial condition of any Company Pension Plan since its
last such annual valuation date.  No liability under Title IV of ERISA
or Section 412 of the Code (other than for premiums to the Pension Benefit
Guaranty Corporation) has been or is expected to be incurred by the Company or
any Company Subsidiary with respect to any ongoing, frozen or terminated
“single-employer” plan (as defined in Section 4001(a)(15) of ERISA),
currently or formerly maintained by any of them or by any Commonly Controlled
Entity.  None of the Company Pension Plans has failed to satisfy the
minimum funding standards (as described in Section 302 of ERISA or
Section 412 of the Code), whether or not waived, nor has any waiver of the
minimum funding standards of Section 302 of ERISA or Section 412 of
the Code been requested.  None of the Company, any Company Subsidiary,
any employee of the Company or any Company Subsidiary or any of the Company
Benefit Plans, including the Company Pension Plans, or any trusts created
thereunder or any trustee, administrator or other fiduciary of any Company
Benefit Plan or trust created thereunder, or any agents of the foregoing, has
engaged in a non-exempt “prohibited transaction” (as described in
Section 406 of ERISA or Section 4975 of the Code) that would be
reasonably expected to subject the Company, any Company Subsidiary or any
officer of the Company or any Company Subsidiary or any of the Company Benefit
Plans, or, to the knowledge of the Company, any trusts created thereunder or any
trustee or administrator of any Company Benefit Plan or trust created
thereunder, to any material tax or material penalty on prohibited transactions
imposed by such Section 4975 of the Code or to the sanctions imposed under
Title I of ERISA or to any other material liability for breach of fiduciary duty
under ERISA or any other applicable law.  In addition, (i) no
Company Pension Plan or related trust has been terminated during the last five
years and (ii) there has been no “reportable event” (as defined in
Section 4043 of ERISA, other than an event for which the 30-day notice
period is waived) with respect to any Company Pension Plan since June 3,
2007.  No Multiemployer Plan to which the Company contributes or has
contributed (a “Company Multiemployer
Plan”) has asserted that any of the Company, a Company Subsidiary or a
Commonly Controlled Entity has incurred any material liability that has not been
satisfied in full as a result of a “complete withdrawal” or a “partial
withdrawal” (as each such term is defined in Sections 4203 and 4205,
respectively, of ERISA) during the past four years from any such Company
Multiemployer Plan.

     

    (d)  With
respect to any material Company Benefit Plan that is an employee welfare benefit
plan, whether or not subject to ERISA, (i) each such material Company Benefit
Plan is either funded through an insurance company contract and is not a
“welfare benefits fund” (as defined in Section 419(e) of the Code) or is
unfunded and 

     

     

    
      
        
        

      

      
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    (ii)
no such material Company Benefit Plan provides benefits after termination of
employment, except where the cost thereof is borne entirely by the former
employee (or his eligible dependents or beneficiaries) or as required by
Section 4980B(f) of the Code.

     

    (e)  No
amount or other entitlement currently in effect that could be received (whether
in cash or property or the vesting of property) as a result of the Transaction,
the Reorganization or the other transactions contemplated hereby (alone or in
combination with any other event) by any person who is a “disqualified
individual” (as defined in Treasury Regulation Section 1.280G-1) (each, a
“Disqualified
Individual”) with respect to the Company would be an “excess parachute
payment” (as defined in Section 280G(b)(1) of the Code) and no such
Disqualified Individual is entitled to receive any additional payment (e.g., any
tax gross-up or any other payment) from the Company, the Reorganized Company,
any Company Subsidiary in the event that the excise tax required by
Section 4999(a) of the Code is imposed on such Disqualified
Individual.  No person is entitled to receive any additional payment
(e.g., any tax gross-up or any other payment) from the Company, the Reorganized
Company, any Company Subsidiary or any other person in the event that the
additional tax required by Section 409A of the Code is imposed on a
person.

     

    (f) The
execution and delivery by the Company of this Agreement or any Ancillary
Agreement do not, and the consummation of the Transaction, the Reorganization
and the other transactions contemplated hereby and thereby will not (either
alone or in combination with any other event) (i) entitle any Employee to any
compensation, severance, termination, change in control or other benefits, (ii)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of any compensation, severance or other
benefits under, or increase the amount payable or trigger any other material
obligation pursuant to, any Company Benefit Plan or Company Benefit Agreement,
(iii) trigger the forgiveness of indebtedness owed by any Employee to the
Company or any of its Affiliates or (iv) result in any breach or violation of,
or a default (with or without the lapse of time or the giving of notice, or
both) under, any Company Benefit Plan or Company Benefit Agreement.

     

    (g) Neither
the Company nor any Company Subsidiary has received notice of, and, to the
knowledge of the Company, there are no, (i) pending termination proceedings or
other suits, claims (except claims for benefits payable in the normal operation
of the Company Benefit Plans and Company Benefit Agreements), actions or
proceedings against or involving or asserting any rights or claims to benefits
under any Company Benefit Plan or Company Benefit Agreement or (ii) pending
investigations (other than routine inquiries) by any Governmental Entity with
respect to any Company Benefit Plan or Company Benefit Agreement.  All
contributions, premiums and benefit payments under or in connection with the
Company Benefit Plans or Company Benefit Agreements that are required to have
been made by the Company or any Company Subsidiary have been timely made,
accrued or reserved for, except where such failure, individually or in the
aggregate, has not had and could not reasonably be expected to have a Company
Material Adverse Effect.

     

     

    
      
        
        

      

      
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    (h  Neither
the Company nor any Company Subsidiary has any liability or obligations,
including under or on account of a material Company Benefit Plan or material
Company Benefit Agreement, arising out of the hiring of persons to provide
services to the Company or any Company Subsidiary and treating such persons as
consultants or independent contractors and not as employees of the Company or
any Company Subsidiary, except for any such liabilities or obligations that,
individually or in the aggregate, has not resulted and could not reasonably be
expected to result in a material liability of the Company and the Company
Subsidiaries, taken as a whole.

     

    (i)
 As used in this Agreement:

     

    “Company Benefit
Plans” means all bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock appreciation,
restricted stock, stock repurchase rights, stock option, “phantom” stock,
“phantom” stock rights, performance, retirement, thrift, savings, stock bonus,
cafeteria, paid time off, perquisite, fringe benefit, vacation, change in
control, retention, severance, disability, death benefit, hospitalization,
medical and other welfare benefits and other plans, programs, arrangements and
understandings, whether oral or written, formal or informal, funded or unfunded
(whether or not legally binding), maintained, contributed to or required to be
maintained or contributed to by the Company or any Company Subsidiary, in each
case providing benefits to any Employee and whether or not subject to
Law.  Company Benefit Plans shall not include (A) any Company
Multiemployer Plan or (B) the American Bakers Association Retirement
Plan.

     

    “Company Benefit
Agreements” means all (A) employment, deferred compensation, severance,
change in control, termination, employee benefit, loan (other than Employee
loans under any Company Pension Plan that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code),
indemnification, retention, stock repurchase, stock option, consulting and
similar agreements, commitments and obligations between the Company or any
Company Subsidiary, on the one hand, and any Employee, on the other hand, (B)
agreements between the Company or any Company Subsidiary, on the one hand, and
any Employee, on the other hand, the benefits of which are contingent, or the
terms of which are altered, upon the occurrence of transactions involving the
Company or any Company Subsidiary of the nature contemplated by this Agreement
and (C) trust or insurance Contracts and other agreements to fund or otherwise
secure payment of any compensation or benefits to be provided to any
Employee.

     

    “Company Pension Plan”
means any Company Benefit Plan that is an “employee pension benefit plan” (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”)), whether or
not subject to ERISA.

     

    “Employee” means any
current or former director, officer, employee or independent contractor of the
Company or any Company Subsidiary.

     

     

    
      
        
        

      

      
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    “Multiemployer Plan”
means a “multiemployer plan” within the meaning of Section 4001(a)(3) of
ERISA.

     

    SECTION
2.19.  Litigation.  Other
than the pendency of the Cases, there are no Proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Company Subsidiary (and, to the knowledge of the Company, there is no basis for
any such Proceeding) that, individually or in the aggregate, has had or could
reasonably be expected to have a Company Material Adverse Effect, nor are there
any Judgments outstanding against the Company or any Company Subsidiary that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect.

     

    SECTION
2.20.  Compliance with Applicable
Laws.  The Company and the Company Subsidiaries and their
operations are in compliance with all applicable Laws, including those governing
occupational health and safety, except for such failure to be in compliance as,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect.  Neither the
Company nor any Company Subsidiary has received any written communication during
the two years prior to the date of this Agreement from a Governmental Entity
that alleges that the Company or a Company Subsidiary is not in compliance in
any material respect with any applicable Law.  This Section 2.20
does not relate to matters with respect to (a) Taxes, which are the subject of
Section 2.16, (b) ERISA, which are the subject of Section 2.18 or (c)
Environmental Laws, which are the subject of Section 2.23.

     

    SECTION
2.21.  Labor
Matters.  Since June 3, 2007, neither the Company nor any
Company Subsidiary has experienced any labor strikes, requests for
representation, work slowdowns or stoppages and, to the knowledge of the
Company, there is currently no such action threatened against or affecting the
Company or any Company Subsidiary.  There is no unfair labor practice
charge or complaint against the Company or any Company Subsidiary pending or, to
the knowledge of the Company, threatened, in each case, before the National
Labor Relations Board or any comparable Federal, state, provincial or foreign
agency or authority that, individually or in the aggregate, has resulted or
could reasonably be expected to result in a material liability of the Company
and the Company Subsidiaries, taken as a whole.  No grievance or
arbitration proceeding arising out of a collective bargaining agreement is
pending or, to the knowledge of the Company, threatened against the Company or
any Company Subsidiary that, individually or in the aggregate, has resulted or
could reasonably be expected to result in a material liability of the Company
and the Company Subsidiaries, taken as a whole.

     

    SECTION
2.22.  Contracts.  Except
with respect to licenses and other agreements relating to Intellectual Property
(which are the subject of Section 2.10) or Company Benefit Plans or Company
Benefit Agreements (which are the subject of Section 2.18), as of the date
of this Agreement, (a) neither the Company nor any of the Company Subsidiaries
is a party to, and none of their respective properties or other assets is
subject to, any Contract that is material to the business, operations, property,
condition (financial or otherwise) or prospects of the Company and the Company
Subsidiaries, 

     

     

    
      
        
        

      

      
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    taken
as a whole, or of a nature required to be filed as an exhibit to a report or
filing under the Securities Act or the Exchange Act and the rules and
regulations promulgated thereunder and is not so filed, and (b) none of the
Company, any of the Company Subsidiaries or, to the knowledge of the Company,
any other party thereto is in violation of or in default under (nor to the
knowledge of the Company does there exist any condition which upon the passage
of time or the giving of notice or both would cause such a violation of or
default under) any Contract, to which it is a party or by which it or any of its
properties or other assets is bound, except for violations or defaults that,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Company Material Adverse Effect.  None of the
Company or any of the Company Subsidiaries has entered into any written or oral
Contract with any Affiliate of the Company that is currently in effect other
than Company Benefit Agreements and agreements between the Company and any
Company Subsidiary or between Company Subsidiaries.  None of the
Company or any of the Company Subsidiaries is a party to or otherwise bound by
any agreement or covenant (A) restricting the Company’s or any of its
Affiliates’ ability to compete or restricting in any respect the research,
development, distribution, sale, supply, license or marketing of products or
services of the Company or any of its Affiliates, except with respect to
licenses and other agreements relating to Intellectual Property (which are the
subject of Section 2.10), (B) containing a right of first refusal, right of
first negotiation or right of first offer for any material asset or business,
except with respect to licenses and other agreements relating to Intellectual
Property (which are the subject of Section 2.10) or (C) containing any
indemnity obligations to third parties, in the case of clauses (A) through (C),
that is material to the Company and the Company Subsidiaries, taken as a
whole.

     

    SECTION
2.23.  Environmental
Matters.  Except for such matters that, individually or in the
aggregate, have not had and could not reasonably be expected to have a Company
Material Adverse Effect:

     

    (a)  the
Company and each of the Company Subsidiaries are in compliance with all
Environmental Laws, and neither the Company nor any of the Company Subsidiaries
has received any written (i) communication that alleges that the Company or any
of the Company Subsidiaries is in violation of, or has liability under, any
Environmental Law or (ii) request for information from a Governmental Entity
regarding clean up liability under or compliance with any Environmental
Law;

     

    (b)  there
are no Environmental Claims pending or, to the knowledge of the Company,
threatened against the Company or any of the Company Subsidiaries;

     

    (c)  neither
the Company nor any of the Company Subsidiaries has entered into or agreed to,
or, to the knowledge of the Company, is subject to, any Judgment that remains
outstanding for the investigation or remediation of Hazardous Materials or
compliance with the requirements of any Environmental Law;

     

    (d)  there
has been no Release (other than any Release to the extent the Company or any of
the Company Subsidiaries has received regulatory closure or certification of
completion, or the Governmental Entity with jurisdiction over the Release

     

     

    
      
        
        

      

      
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    has
informed the Company or any of the Company Subsidiaries that no further
investigation or cleanup by the Company or any of the Company Subsidiaries is
required, pursuant to Environmental Law) of or exposure to any Hazardous
Material that could reasonably be expected to form the basis of any
Environmental Claim against the Company or any of the Company
Subsidiaries;

     

    (e)  (i)
there is no known or suspected friable asbestos-containing materials at, on,
under or about property owned, operated or leased by the Company or any Company
Subsidiary for which the Company or any Company Subsidiary is liable and which
currently requires abatement or containment under applicable Environmental Laws
and (ii) to the knowledge of the Company, neither the Company nor any Company
Subsidiary has sold, distributed or manufactured any products containing
asbestos in the past that could reasonably be expected to form an Environmental
Claim against the Company or any Company Subsidiary; and

     

    (f)  neither
the Company nor any of the Company Subsidiaries has retained or assumed, either
contractually or, to the knowledge of the Company, by operation of law,
liability under Environmental Law that have formed (to the extent any such
Environmental Claim remains outstanding) or, to the knowledge of the Company,
could reasonably be expected to form the basis of any Environmental Claim
against the Company or any of the Company Subsidiaries.

     

    (g)  Definitions.  As
used in this Agreement:

     

    (1)           “Environmental Claim”
means administrative, regulatory or judicial actions, suits, demands,
directives, claims, liens, Judgments, investigations, proceedings or written
notices of noncompliance or violation by or from any person alleging liability
(including liability or responsibility for the costs of enforcement proceedings,
investigations, cleanup, governmental response, removal or remediation, natural
resources damages, property damages, personal injuries, medical monitoring,
penalties, contribution, indemnification and injunctive relief) arising out of,
based on or resulting from (x) the presence or Release of, or exposure to, any
Hazardous Materials; or (y) the failure to comply with any Environmental
Law;

     

    (2)           “Environmental Laws”
means all applicable Federal, state, local and foreign Laws, and Judgments
issued, promulgated or entered into by any Governmental Entity governing or
regulating pollution, natural resources or protection of endangered or
threatened species, human health, the climate or the environment (including
ambient air, surface water, groundwater, land surface or subsurface
strata);

     

    (3)           “Hazardous Materials”
means (x) any petroleum or petroleum products, radioactive materials or wastes,
asbestos, urea formaldehyde foam insulation and polychlorinated biphenyls; and
(y) any other chemical, material, substance or waste that is prohibited, limited
or regulated as hazardous, toxic, infectious or words of similar import, or
which can reasonably be expected to give rise to liability, under any
Environmental Law; and

     

    
      
        
        

      

      
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    (4)           “Release” means any
actual or threatened release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into or
through the environment (including ambient air, surface water, groundwater, land
surface or subsurface strata) or within any building, structure, facility or
fixture.

     

    SECTION
2.24.  Brokers; Schedule of Fees
and Expenses.  No broker, investment banker, financial advisor
or other person, other than Miller Buckfire & Co., LLC
and Alvarez and Marsal North America, LLC, the fees and expenses of which will
be paid by the Company or the Reorganized Company, is entitled to any broker’s,
finder’s, financial advisor’s or other similar fee or commission in connection
with the Transaction and the Reorganization based upon arrangements made by or
on behalf of the Company.  The Company has furnished to Investor a
true and complete copy of all agreements between the Company and each of
Miller Buckfire & Co., LLC and Alvarez and Marsal North
America, LLC, relating to the Transaction and the Reorganization.

     

    SECTION
2.25.  Effect of
Transaction.  No management employee, client, customer or other
person having a material business relationship with the Company or any Company
Subsidiary has changed, or informed the Company or any Company Subsidiary that
such person intends to change, such relationship because of the Transaction, the
Reorganization or any other transaction contemplated hereby.

     

    SECTION
2.26.  Disclosure.  All
information, other than financial information and projections (the “Projections”), that
has been or will be made available to Investor by the Company 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.  The Projections that have been or will be prepared and made
available to Investor by the Company or any of its Representatives have been and
will be prepared in good faith based upon reasonable assumptions at the time
made, and the Company does not have any knowledge of any fact or information
that would lead it to believe that such assumptions are incorrect or misleading
in any material respect.

     

    SECTION
2.27.  Private
Offering.  None of the Company, any Company Subsidiary, their
Affiliates and their Representatives has issued, sold or offered any security of
the Company to any person under circumstances that would cause the issuance of
the Shares, the Term Loan Lender Shares, the New Convertible Debt or the
Warrants to be subject to the registration requirements of the Securities
Act.  None of the Company, any Company Subsidiary, their Affiliates
and their Representatives will offer the Shares, the Term Loan Lender Shares,
the New Convertible Debt or the Warrants or any part thereof or any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, anyone so as to make the issuance and sale of the Shares, the Term
Loan Lender Shares, the New Convertible Debt or the Warrants subject to the
registration requirements of the Securities Act.  Assuming the
representations of Investor 

     

     

    
      
        
        

      

      
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    contained
in Section 3.05 are true and correct, the sale of the Shares and the New
Convertible Debt and the issuance of the Series A Warrant to Investor
hereunder are exempt from the registration and prospectus delivery requirements
of the Securities Act.

     

    SECTION
2.28.  No
Reliance on Investor.   None of the Debtors is being
advised (and the Company acknowledges and agrees that none of the creditors and
equityholders of any Debtor is being advised) by Investor as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction.  The
Company has consulted with its own advisors concerning such matters and is
responsible for making its own independent investigation and appraisal of the
Transaction, the Reorganization and the other transactions contemplated hereby
and thereby, and Investor has no responsibility or liability to any Debtor (and
the Company acknowledges and agrees that Investor has no responsibility or
liability to any creditor or equityholder of any Debtor) with respect
thereto.

     

    ARTICLE
III

     

    Representations and
Warranties of Investor

     

    Investor
hereby represents and warrants to the Company that:

     

    SECTION
3.01.  Organization, Standing and
Power.  Investor is duly organized, validly existing and in
good standing under the laws of the State of Delaware and has full limited
liability company power and authority and possesses all Permits necessary to
enable it to own, lease or otherwise hold its properties and assets and to
conduct its business as presently conducted, other than such Permits the lack of
which, individually or in the aggregate, have not had and could not reasonably
be expected to have an Investor Material Adverse Effect.

     

    SECTION
3.02.  Authority; Execution and
Delivery; Enforceability.  Investor has all requisite limited
liability company power and authority to execute and deliver this Agreement and
the Ancillary Agreements to which it is, or is specified to be, a party and to
consummate the Transaction and the other transactions contemplated hereby and
thereby.  The execution and delivery by Investor of this Agreement and
the Ancillary Agreements to which it is, or is specified to be, a party and the
consummation by Investor of the Transaction and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
limited liability company action on the part of Investor.  Investor
has duly executed and delivered this Agreement and prior to the Closing will
have duly executed and delivered each Ancillary Agreement to which it is, or is
specified to be, a party, and, assuming the due authorization, execution and
delivery by each of the other parties hereto and thereto, this Agreement
constitutes, and each Ancillary Agreement to which it is, or is specified to be,
a party will after the Closing constitute, its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the
rights of creditors generally and the availability of equitable
remedies.

     

     

    
      
        
        

      

      
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    SECTION
3.03.  No
Conflicts; Consents.  (a)  The execution and delivery
by Investor of this Agreement do not, the execution and delivery by Investor of
each Ancillary Agreement to which it is, or is specified to be, a party will
not, and the consummation of the Transaction and the other transactions
contemplated hereby and thereby and compliance by Investor with the terms hereof
and thereof will not, conflict with, or result in any violation of or default
(with or without the lapse of time or the giving of notice, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or increase, add to,
accelerate or guarantee rights or entitlements of any person under, or result in
the creation of any Lien upon any of the properties or assets of Investor under,
any provision of (i) the certificate of formation or limited liability
company governing instruments of Investor, (ii) any Contract to which
Investor is a party or by which any of its properties or assets is bound or
(iii) subject to the filings and other matters referred to in
Section 3.03(b), any Judgment or Law applicable to Investor or its
properties or assets other than, in the case of clauses (ii) and (iii) above,
any such item that, individually or in the aggregate, has not had and could not
reasonably be expected to have an Investor Material Adverse Effect.

     

    (b)  No
Consent of or registration, declaration or filing with, any Governmental Entity
is required to be obtained or made by or with respect to Investor in connection
with the execution, delivery and performance of this Agreement or any Ancillary
Agreement or the consummation of the Transaction or the other transactions
contemplated hereby and thereby, other than (i) compliance with and filings
under the HSR Act, (ii) the entry by the Bankruptcy Court of the Fee Order, the
Investment Agreement Order, the Disclosure Statement Approval Order, the
Confirmation Order and any other order by the Bankruptcy Court that may be
required in connection with the Plan and the Reorganization and (iii) such
other item that, individually or in the aggregate, has not had and could not
reasonably be expected to have an Investor Material Adverse Effect.

     

    SECTION
3.04.  Litigation.  As
of the date of this Agreement, there are no Proceedings pending or, to the
knowledge of Investor, threatened against or affecting Investor relating to the
Transaction, the Reorganization or any of the transactions contemplated hereby
and thereby.

     

    SECTION
3.05.  Securities
Act.  The Shares and the New Convertible Debt purchased by
Investor pursuant to this Agreement, and the Series A Warrants issued to
Investor pursuant to this Agreement, are being acquired for investment only and
not with a view to any public distribution thereof.  Investor
acknowledges that the sale of the Shares and the New Convertible Debt, and the
issuance of the Series A Warrants, to Investor is not registered under the
Securities Act and, as a result, Investor may not offer to sell or sell the
Shares, the New Convertible Debt or the Series A Warrants so acquired by it
without complying with the registration requirements of the Securities Act or an
exception therefrom.

     

    SECTION
3.06.  Brokers; Schedule of Fees
and Expenses.  No broker, investment banker, financial advisor
or other person, other than persons the fees and expenses of which will be paid
by Investor, is entitled to any broker’s, finder’s, financial

     

     

    
      
        
        

      

      
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    advisor’s
or other similar fee or commission in connection with the Transaction and the
Reorganization based upon arrangements made by or on behalf of
Investor.

     

    ARTICLE
IV

     

    Covenants

     

    SECTION
4.01.  Conduct of
Business.  (a) Except for matters set forth in
Section 4.01(a) of the Company Disclosure Letter or otherwise expressly
permitted by this Agreement or the Plan, from the date of this Agreement to the
Closing, the Company will, and will cause each Company Subsidiary to, conduct
its business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, and use commercially reasonable efforts to
preserve intact its current business organization, keep available the services
of its current officers and employees and keep its relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with the Company or any Company Subsidiary to the end that its goodwill
and ongoing business will be unimpaired at the Closing.  In addition,
and without limiting the generality of the foregoing, except for matters set
forth in Section 4.01(a) of the Company Disclosure Letter or otherwise
expressly permitted or required by this Agreement or the Plan, the Company will
not, and will not permit any Company Subsidiary to, do any of the following
without the prior written consent of Investor:

     

    (i)  amend
its certificate of incorporation, by-laws or other comparable charter or
organizational documents, other than in accordance with this
Agreement;

     

    (ii)  declare,
set aside or pay any dividend or make any other distribution to its equity
holders, whether or not upon or in respect of any shares of its capital stock or
other equity interest;

     

    (iii)  redeem
or otherwise acquire any shares of its capital stock or other equity interest or
issue, deliver, sell or grant any capital stock or other equity interest or any
Voting Company Debt, Voting Subsidiary Debt or Rights;

     

    (iv)  acquire
or agree to acquire (A) by merging or consolidating with, or by purchasing
an equity interest in or portion of the assets of, or by any other manner, any
business or any corporation, partnership, joint venture, association or other
business organization or division thereof or (B) any other assets except,
with respect to this clause (B), (1) purchases in the ordinary course of
business consistent with past practice and (2) capital expenditures in
accordance with the Company’s capital expenditures budget as set forth in
Section 4.01(a)(iv) of the Company Disclosure Letter (the “Company CapEx
Budget”);

     

    (v)  except
as required under applicable Law or the terms of any Company Benefit Plan or
Company Benefit Agreement in effect on the date of this Agreement,
(A) grant to any Employee any loan or increase in any kind of 

     

     

    
      
        
        

      

      
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      compensation,
benefits, perquisites, fringe benefits or any bonus or award, except for grants
or increases in any of the foregoing that are made in the ordinary course of
business consistent with past practice, (B) grant to any Employee any
severance, retention, change in control or termination pay or benefits, or pay
any bonus to any Employee, (C) enter into any employment, change in
control, loan, retention, consulting, indemnification, severance, termination or
similar agreement with any Employee, (D) take any action to secure the
payment of compensation or benefits under any Company Benefit Plan or Company
Benefit Agreement except in the ordinary course of business consistent with past
practice, (E) establish, adopt, enter into, terminate or amend any
collective bargaining agreement or other labor union Contract, Company Benefit
Plan or Company Benefit Agreement, (F) pay or provide to any Employee any
benefit not provided for under a Company Benefit Plan or Company Benefit
Agreement as in effect on the date of this Agreement, other than the payment of
base compensation in the ordinary course of business consistent with past
practice, (G) grant any incentive awards under any Company Benefit
Agreement or Company Benefit Plan (including in respect of “phantom” stock,
“phantom” stock options, stock appreciation rights, “phantom” stock rights,
deferred stock units, performance stock units or other stock based or stock
related awards or the removal or modification of any restrictions in any Company
Benefit Agreement or Company Benefit Plan or awards made thereunder) or
(H) take any action to accelerate any rights or benefits, including vesting
and payment, or make any material determinations, under any Company Benefit Plan
or Company Benefit Agreement or awards made thereunder;

    

     

    (vi)  make
any change in financial accounting methods, principles or practices materially
affecting the reported consolidated assets, liabilities or results of operations
of the Company, except insofar as may have been required by a change in GAAP or
applicable Law;

     

    (vii)  sell
(or agree to sell), lease (as lessor), license, abandon, cancel or otherwise
dispose of or subject to any Lien any properties or assets, except
(w) sales of real property as set forth in Section 4.01(a)(vii) of the
Company Disclosure Letter, (x) licenses granted for limited purposes in the
ordinary course of business consistent with past practice to use Company
Intellectual Property, (y) sales of inventory in the ordinary course of
business consistent with past practice and (z) sales of other immaterial
assets;

     

    (viii)  (A)
incur any indebtedness for borrowed money or guarantee any such indebtedness of
another person (other than any such indebtedness or guarantees among the Company
and the direct or indirect wholly owned Company Subsidiaries or among the direct
or indirect wholly owned Company Subsidiaries), issue or sell any debt
securities or warrants or other rights to acquire any debt securities of the
Company or any Company Subsidiary, guarantee any debt securities of another
person, enter into any “keep well” or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, 

     

     

    
      
        
        

      

      
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    except
for borrowings under the Company’s debtor-in-possession credit facility as in
effect as of the date of this Agreement (the “DIP Facility”)
(including borrowings resulting from reimbursement obligations under letters of
credit issued under the DIP Facility) incurred in the ordinary course of
business consistent with past practice, or (B) make any loans, advances or
capital contributions to, or investments in, any other person, other than to or
in the Company or any direct or indirect wholly owned Company
Subsidiary;

     

    (ix)  make
or agree to make any capital expenditure or expenditures, except for capital
expenditures in accordance with the Company CapEx Budget;

     

    (x)  make
or change any material Tax election or method of accounting for Tax purposes or
settle or compromise any material Tax liability or refund;

     

    (xi)  (A)
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or as required in accordance with their terms, of
liabilities to the extent reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements of the Company included in the
Filed Company SEC Documents or incurred since the date of the Balance Sheet in
the ordinary course of business consistent with past practice, (B) cancel any
material indebtedness (individually or in the aggregate) or waive any claims or
rights of substantial value or (C) waive the benefits of, or agree to modify in
any manner, any confidentiality or similar agreement to which the Company or any
Company Subsidiary is a party;

     

    (xii)  (A)
accelerate orders or sales, or offer any special terms, discounts or purchase
programs (including by providing credit terms) to customers or suppliers, other
than in the ordinary course of business consistent with past practice,
(B) accelerate the collection of any receivables or (C) defer payables
to any of the vendors listed in Schedule 1 to Exhibit J to the Investor
Commitment Letter;

     

    (xiii)  other
than those that are subject to a pleading filed in the Bankruptcy Court prior to
the date hereof, assume or reject any material Contract;

     

    (xiv)  other
than in the ordinary course of business consistent with past practice or
amendments of Leases in connection with the ongoing lease amendment process
pursuant to that certain Real Estate Consulting and Advisory Services Agreement,
dated as of September 6, 2007 by and between DJM Asset Management, LLC and
IBC Sales Corporation, enter into, amend or terminate any Contract;

     

    (xv)  adopt
or authorize a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any Company Subsidiary;

     

     

    
      
        
        

      

      
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    (xvi)  fail
to maintain in full force and effect insurance policies covering the Company and
the Company Subsidiaries and their respective properties, assets and businesses
in a form and amount consistent with the current insurance program applicable to
the Company and any Company Subsidiary; or

     

    (xvii)  authorize
any of, or commit or agree to take any of, the foregoing actions.

     

    (b)  Other
Actions.  The Company will not, and will not permit any of the
Company Subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any condition to the Transaction set forth in Article V
not being satisfied.

     

    (c)  Advice of
Changes.  The Company will promptly advise Investor orally and
in writing of any event, development, condition or circumstance that,
individually or in the aggregate, has had or could reasonably be expected to
have a Company Material Adverse Effect.

     

    (d)  Consultation.  Subject
to applicable Law, in connection with the continuing operation of the business
of the Company and the Company Subsidiaries between the date of this Agreement
and the Closing, the Company will use commercially reasonable efforts to consult
in good faith on a regular basis with the Representatives of Investor and report
all material operational developments and the status of ongoing operations
pursuant to procedures reasonably requested by Investor or its
Representatives.

     

    (e)  Other Affirmative
Covenants.  Until the Closing, the Company will, and will cause
each Company Subsidiary to:

     

    (i)  maintain
its assets in the manner and condition required to permit the business of the
Company and the Company Subsidiaries to be conducted immediately following the
Closing in all material respects as it is currently being
conducted;

     

    (ii)  to
the extent permitted under the terms of the DIP Facility, upon any damage,
destruction or loss to any material asset, apply any and all insurance proceeds
received with respect thereto to the prompt repair, replacement and restoration
thereof to the condition of such asset before such event or, if required, to
such other (better) condition as may be required by applicable Law;
and

     

    (iii)  (A)
maintain its level and quality of inventory and supplies, raw materials and
spare parts and (B) pay all accrued expenses, in each case in the ordinary
course in a manner consistent with its practices in place as of the date of the
Balance Sheet.

     

    SECTION
4.02.  No
Solicitation.  (a)  The Company will not, nor will it
authorize or permit any Company Subsidiary to, nor will it authorize or permit
any officer, director or employee of, or authorize any investment banker,
attorney or other 

     

     

    
      
        
        

      

      
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    advisor,
agent or representative (collectively, “Representatives”) of,
the Company or any Company Subsidiary to, and will instruct the Representatives,
the Company and any Company Subsidiary not to and will otherwise use its
reasonable best efforts to cause the Representatives, the Company and any
Company Subsidiary not to, (i) directly or indirectly solicit, initiate or
knowingly encourage any Alternative Proposal, (ii) enter into any agreement
with respect to any Alternative Proposal or (iii) 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, the Company
may, in response to an unsolicited bona fide written Alternative Proposal that
did not result from a breach of this Section 4.02(a) or the ninth paragraph
of the Investor Commitment Letter, (x) furnish information with respect to
the Company and the Company Subsidiaries to the person making such Alternative
Proposal and its Representatives pursuant to a customary confidentiality
agreement not less restrictive of the other party than the confidentiality
agreement, dated August, 2007, between Ripplewood Holdings L.L.C. and the
Company (the “Confidentiality
Agreement”) and (y) participate in discussions or negotiations
regarding such Alternative Proposal with the person making such Alternative
Proposal and its Representatives.  The Company must promptly provide
to Investor any non-public information concerning the Company or any Company
Subsidiary that is provided to such person or its Representatives which was not
previously provided to Investor.

     

    (b)  Prior
to the termination of this Agreement in accordance with the terms hereof,
neither the Company Board nor any committee thereof may (i) approve any letter
of intent, agreement in principle, acquisition agreement or similar agreement
relating to any Alternative Proposal or (ii) approve, file or support any plan
of reorganization or liquidation, other than the Plan.

     

    (c)  The
Company promptly after its awareness of the receipt or delivery thereof, and in
any case within 24 hours thereafter, will advise Investor orally and in writing
of any Alternative Proposal or any inquiry with respect to, or that could
reasonably be expected to lead to, any Alternative Proposal, the identity of the
person making such Alternative Proposal or inquiry and the material terms of any
such Alternative Proposal or inquiry.   The Company will (i) keep
Investor reasonably informed of the status (including any change to the terms
thereof) of any such Alternative Proposal or inquiry and (ii) provide to
Investor, as soon as practicable after receipt or delivery thereof, and in any
case within 24 hours, copies of all correspondence and other written material
sent or provided to the Company from any third party in connection with any
Alternative Proposal or sent or provided by the Company to any third party in
connection with any Alternative Proposal (unless such correspondence or written
material has previously been provided to Investor).

     

    (d)  For
purposes of this Agreement:

     

    “Alternative Proposal”
means 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 

     

     

    
      
        
        

      

      
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    the
Plan) or any other transaction or series of transactions (including one or more
sales under Section 363 of the Bankruptcy Code).

     

    “Superior Proposal”
means any Alternative Proposal that does not result from a breach of Section
4.02(a) or the ninth paragraph of the Investor Commitment Letter and with terms
that the Company Board determines in good faith, after consultation with the
Company’s outside legal counsel and independent financial advisors, (i) to
be more favorable from a financial point of view to the Debtors’ constituents
than would be obtained through the consummation of the Acquisition and the
Reorganization, taking into account all the terms and conditions of such
Alternative Proposal as well as all the terms and conditions of the Acquisition
and the Reorganization (including any proposal by Investor to amend the terms
and conditions of the Acquisition or the Reorganization in effect as of the date
of such determination), and (ii) is reasonably capable of being completed,
taking into account all financial, regulatory, labor relations, legal and other
aspects of such Alternative Proposal; provided, however, that the
Company Board may not so determine that any such Alternative Proposal is a
Superior Proposal prior to (x) the entry of the Investment Agreement Order
by the Bankruptcy Court and (y) the time that is five days after the time
at which the Company has complied in all respects with Section 4.02(c) with
respect to such Alternative Proposal.

     

    SECTION
4.03.  Access to
Information.  Subject to applicable Law, including with regard
to employee privacy rights, the Company will, and will cause each of the Company
Subsidiaries to, provide Investor and its Representatives reasonable access
during the period prior to the Closing to the Company, the Company Subsidiaries
and all the personnel, properties, books, contracts, commitments, Tax Returns
and records of the Company and the Company Subsidiaries, and, during such period
the Company will, and will cause each of the Company Subsidiaries to, furnish
promptly to Investor (a) a copy of each report, schedule, statement and
other document filed by it during such period pursuant to the requirements of
Federal or state securities laws or in the Cases and (b) all other
information concerning the Company, any Company Subsidiary, the Transaction, the
Reorganization or any other transaction contemplated hereby or thereby as
Investor may reasonably request.  Any information furnished to
Investor and its Representatives by the Company or any Company Subsidiary
pursuant to this Section 4.03 shall be treated as “Evaluation Material” under
the Confidentiality Agreement (subject to the exclusions provided in the
Confidentiality Agreement).

     

    SECTION
4.04.  Antitrust
Approval.  Each of Investor and the Company will, within 15
days following the Investment Agreement Order, file with the United States
Federal Trade Commission and the United States Department of Justice the
notification and report form, if any, required to be filed by it for the
Transaction and the other transactions contemplated hereby pursuant to the HSR
Act.  Any such notification and report form will be in substantial
compliance with the requirements of the HSR Act.  Each of Investor and
the Company will furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission that is necessary under the HSR Act.

     

     

    
      
        
        

      

      
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    SECTION
4.05.  Financing.  The
Company and the Company Subsidiaries will use their reasonable best efforts to
consummate the Financing on the terms and conditions set forth in the ABL
Facility Commitment Papers and the Term Loan Facility Commitment Papers,
including using reasonable best efforts to (a) enter into definitive
documentation for the Financing consistent with the terms and conditions set
forth in the ABL Facility Commitment Papers and the Term Loan Facility
Commitment Papers and (b) satisfy all conditions to the Financing set forth in
the ABL Facility Commitment Papers, the Term Loan Facility Commitment Papers and
such definitive documentation for the Financing that are to be satisfied by the
Company and the Company Subsidiaries.  The Company and the Company
Subsidiaries will comply with all of their obligations under the ABL Facility
Commitment Papers and the Term Loan Facility Commitment Papers, and will enforce
all of their rights under the ABL Facility Commitment Papers and the Term Loan
Facility Commitment Papers.  The Company will keep Investor informed
of the status of its efforts to obtain the proceeds of the Financing, and will
give Investor prompt notice of any breach by any party to the ABL Facility
Commitment Papers, the Term Loan Facility Commitment Papers or any of the
definitive documentation for the Financing or any purported termination of the
ABL Facility Commitment Papers, the Term Loan Facility Commitment Papers or any
of the definitive documentation for the Financing.  The Company will
not, without the prior written consent of Investor, (x) waive, amend, supplement
or modify, or permit any waiver, amendment, supplement or modification to, the
ABL Facility Commitment Papers, the Term Loan Facility Commitment Papers or any
of the definitive documentation for the Financing, or (y) terminate, or take any
action that would permit the termination of, the ABL Facility Commitment Papers,
the Term Loan Facility Commitment Papers or any of the definitive documentation
for the Financing.   With respect to any matter to which the
Company or any Company Subsidiary has consultation rights under the ABL Facility
Commitment Papers or the Term Loan Facility Commitment Papers, the Company or
such Company Subsidiary will involve Investor substantially in any consultation
process related thereto, and with respect to any matter to which the Company or
any Company Subsidiary has consent or approval rights under the ABL Facility
Commitment Papers or the Term Loan Facility Commitment Papers, the Company or
such Company Subsidiary will have first obtained the consent or approval of
Investor (such consent or approval not to be unreasonably withheld) before
providing its consent or approval under the ABL Facility Commitment Papers or
the Term Loan Facility Commitment Papers, as applicable, with respect
thereto.  Investor will use commercially reasonable efforts to assist
the Company in negotiating the definitive documentation for the Financing
consistent with the terms and conditions set forth in the ABL Facility
Commitment Papers and the Term Loan Facility Commitment Papers.

     

    SECTION
4.06.  Commercially Reasonable
Efforts.  Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties hereto will use its commercially
reasonable efforts to (i) obtain all necessary actions or nonactions, waivers
and Consents from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity
and (ii) obtain all necessary material Consents or waivers from third
parties.  In connection with and without limiting the 

     

     

    
      
        
        

      

      
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    foregoing,
the Company will use its commercially reasonable efforts to (1) ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Transaction, the Reorganization, any other transactions
contemplated hereby, this Agreement or any Ancillary Agreement, (2) if any
state takeover statute or similar statute or regulation becomes applicable to
the Transaction, the Reorganization, any other transactions contemplated hereby,
this Agreement or any Ancillary Agreement, ensure that the Transaction, the
Reorganization and the other transactions contemplated hereby may be consummated
as promptly as practicable on the terms contemplated by this Agreement and the
Ancillary Agreements and otherwise minimize the effect of such statute or
regulation on the Transaction, the Reorganization and the other transactions
contemplated hereby and (3) defend any Proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
Transaction, the Reorganization and the other transactions contemplated hereby
and thereby, including seeking to have vacated or reversed any Judgment entered
by any court or other Governmental Entity that would restrain, prevent or delay
the Closing; provided, however, that with
respect to this clause (3), (x) at the Company’s request, Investor will use
commercially reasonable efforts to assist the Company in connection with any
such Proceedings, (y) Investor will have the right to participate in any such
Proceedings and (z) the Company will not settle any such Proceedings without the
prior written consent of Investor.

     

    SECTION
4.07.  Employees.  The
Company will, and will cause the Company Subsidiaries to, use commercially
reasonable efforts to enter into modification agreements with each of (a) the
International Brotherhood of Teamsters, (b) the Bakery, Confectionery, Tobacco
Workers and Grain Millers’ International Union, (c) the Retail, Wholesale and
Department Store Union and (d) the United Auto Workers Union, in each case with
terms that are consistent with the concessions and work rule changes necessary
to implement “path to market” and the Plan and that permit the consummation of
the Transaction, the Reorganization and the other transactions contemplated
hereby and thereby and in form and substance reasonably satisfactory to
Investor.  The Company and the Company Subsidiaries will use their
commercially reasonable efforts to facilitate the ratification of such
modification agreements by the relevant local unions.  Investor will
use commercially reasonable efforts to assist the Company in negotiating such
modification agreements.

     

    SECTION
4.08.  Tax
Matters.   (a)  During the period from the date
of this Agreement to the Closing, the Company and each Company Subsidiary will
(i) promptly notify Investor of any Proceeding or audit that is or could
reasonably be expected to be material to the Company and the Company
Subsidiaries, taken as a whole, that is or becomes pending against or with
respect to the Company or any Company Subsidiary in respect of any Tax and (ii)
not settle or compromise any such Proceeding or audit without Investor’s prior
written consent.

     

    (b)  Prior to filing any
Federal income Tax Return after the execution of this Agreement, the Company and
each Company Subsidiary shall provide a draft of each such Tax Return to
Investor in order to provide Investor with the opportunity to review and comment
on such Tax Returns.  Any such Tax Returns will be filed in accordance
with past practice.

     

     

    
      
        
        

      

      
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    SECTION
4.09.  Supplemental
Disclosure.  The Company will have the continuing obligation
until the Closing promptly to supplement or amend the Company Disclosure Letter
with respect to any matter hereafter arising or discovered that, if existing or
known at the date of this Agreement, would have been required to be set forth or
described in the Company Disclosure Letter; provided, however, that no
supplement or amendment to such Company Disclosure Letter will have any effect
for the purpose of determining the satisfaction of the conditions set forth in
Section 5.02(a).

     

    SECTION
4.10.  Fees
and Expenses.  (a)  Except as provided in this
Section 4.10, all fees and expenses incurred in connection with the
Transaction, the Reorganization and the other transactions contemplated hereby
will be paid by the party incurring such fees or expenses, whether or not the
Transaction or the Reorganization is consummated.

     

    (b)  The
Company will pay to Investor the Equity Commitment Fee, the Debt Commitment Fee
and the Investors Transaction Expenses (each as defined in the Investor Fee
Letter) in accordance with the terms set forth in the Investor Fee
Letter.

     

    (c)  Any
Equity Commitment Fee, Debt Commitment Fee or Investors Transaction Expenses
(each as defined in the Investor Fee Letter) payable pursuant to the Investor
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 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 Transaction, the Reorganization or any
other transaction contemplated hereby is consummated.

     

    SECTION
4.11.  Public
Announcements.  Each of Investor and the Company will use its
commercially reasonable efforts to consult with each other before issuing, and,
to the extent reasonably feasible, provide each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the Transaction, the Reorganization and the other transactions contemplated
hereby and will not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
Law.

     

    SECTION
4.12.  Resignation of Directors of
the Company.  As to each person serving as a member of the
Company Board immediately prior to the Closing, either (a) the Company will
cause each such member of the Company Board to execute and deliver a letter
prior to the Closing, which will not be revoked or amended prior to the Closing,
effectuating his or her resignation as a member of the Company Board effective
immediately prior to the Closing or (b) the Plan will effectuate the removal or
replacement of such person as a member of the Company Board effective
immediately prior to the Closing.

     

     

    
      
        
        

      

      
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    SECTION
4.13.  Further
Assurances.  (a)  From time to time, as and when
requested by any party, each party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments and will take, or
cause to be taken, all such further or other actions, as such other party may
reasonably deem necessary or desirable to consummate the Transaction, the
Reorganization and the other transactions contemplated hereby.

     

    (b)  The Company will give
prompt notice to Investor, and Investor will give prompt notice to the Company,
of (i) any representation or warranty made by it contained in this Agreement
that is qualified as to materiality becoming untrue or inaccurate in any respect
or any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect or (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement; provided, however, that no such
notification will affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.

     

    SECTION
4.14.  Bankruptcy
Matters.  (a)  Prior to September 30, 2008, the
Company will file in the Cases (i) the Plan, which Plan will be consistent with
the terms outlined in Exhibit A to the Investor Commitment Letter, will not
contain terms that are inconsistent with those outlined in Exhibit A to the
Investor Commitment Letter and will otherwise be in form and substance
reasonably satisfactory to Investor and the Prepetition Investors, and (ii) a
disclosure statement accompanying the Plan (the “Disclosure
Statement”), which Disclosure Statement will be in form and substance
reasonably satisfactory to Investor and the Prepetition
Investors.  The Company will not amend, supplement or otherwise modify
any provision of the Plan or the Disclosure Statement (each as filed with the
Bankruptcy Court) in a manner that is not in form and substance reasonably
satisfactory to Investor.  The Company has furnished to Investor a
draft of each of the Plan and the Disclosure Statement prior to the date of this
Agreement.

     

    (b)  The
Company agrees to use its commercially reasonable efforts to have identified for
Investor the prepetition executory contracts and unexpired leases that it
believes should be assumed prior to the commencement of the hearing to consider
approval of the Disclosure Statement.  Within five days after entry of
the Disclosure Statement Approval Order, the Company will serve each
counterparty to a Contract designated for assumption by Investor a notice, in
form and substance reasonably satisfactory to Investor, setting forth the amount
necessary to cure any defaults of the Company or any Company Subsidiary under
such Contract to the extent required by Section 365 of the Bankruptcy Code (the
“Cure
Amount”).  The Company will seek to have the Disclosure
Statement Approval Order require each counterparty to file and serve any
objection to such Cure Amount by no later than the date that objections to
confirmation of the Plan are required to be filed and served under the
Disclosure Statement Approval Order, and will provide notice of such deadline to
each such counterparty.

     

    (c)   The
Company will obtain an order from the Bankruptcy Court setting a deadline by
which each holder of an administrative expense claim must file a proof of

     

     

    
      
        
        

      

      
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    claim
setting forth the amount and basis for such administrative claim, which deadline
will not be later than 30 days after the Closing Date; provided, however, that such
administrative claims bar date shall not apply to holders of a claim (i) for
professional fees or expenses, (ii) for reclamation claims, (iii) for key
employee retention payments, (iv) for administrative expense claims payable by
the Company or any of its subsidiaries in the ordinary course of business or (v)
that previously has been filed or allowed in the Cases.  The Company
will obtain an order from the Bankruptcy Court setting a deadline not later than
45 days after the Closing Date by which each holder of an administrative expense
claim for professional fees and expenses must file an application for allowance
of the fees and expenses.

     

    (d)  Each
of the Company and each Company Subsidiary will not seek or consent to the
dismissal of any Case, will not convert any Case to a case under Chapter 7 of
the Bankruptcy Code and will not seek or consent to the appointment of a Chapter
11 trustee in any Case.

     

    (e)  The
Company will file with the Bankruptcy Court, promptly following the execution of
this Agreement, a motion seeking the approval of this Agreement and such other
documentation for the Transaction, and authorizing the Company to execute and to
incur and perform its obligations under this Agreement and such other
documentation for the Transaction, in form and substance reasonably satisfactory
to Investor, for approval by the Bankruptcy Court (the “Investment Agreement
Motion”).  The Company will attach a complete and correct copy
of this Agreement (including all Exhibits hereto, except for information in the
Exhibits the disclosure of which is prohibited by Law) to the Investment
Agreement Motion.

     

    (f)  The
Company will file all pleadings with the Bankruptcy Court as are necessary or
appropriate to secure entry of the Fee Order, the Investment Agreement Order,
the Disclosure Statement Approval Order and the Confirmation Order, will serve
all parties entitled to notice of such pleadings under applicable provisions of
the Bankruptcy Code and all related rules, and will diligently pursue the
issuance of such orders (including by presenting all evidence necessary to
support the Investment Agreement Motion, the approval of the Fee Order and the
Disclosure Statement and the confirmation of the Plan, responding to objections
and discovery requests made by any party in interest and taking all such other
actions as may be necessary to obtain the issuance of the Fee Order, the
Investment Agreement Order, the Disclosure Statement Approval Order and the
Confirmation Order).  The Company will oppose and seek the dismissal
of any appeal (including a petition for certiorari, motion for rehearing,
reargument, reconsideration or revocation) of the Fee Order, the Investment
Agreement Order, the Disclosure Statement Approval Order or the Confirmation
Order.  The Company will use its commercially reasonable efforts to
provide Investor at least three days in advance of filing (i) a draft of any
motion, order, amendment, supplement or other pleading that the Company proposes
to file with the Bankruptcy Court seeking approval of this Agreement and the
entry of the Fee Order, the Investment Agreement Order, the Disclosure Statement
Approval Order and the Confirmation Order and (ii) any other motion, order,
amendment, supplement or other pleading that the Company proposes to file with
any other court in connection with an appeal (including a petition

     

     

    
      
        
        

      

      
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    for
certiorari, motion for rehearing, reargument, reconsideration or revocation) of
the Fee Order, the Investment Agreement Order, the Disclosure Statement Approval
Order or the Confirmation Order.  The Company will use its
commercially reasonable efforts to cooperate with Investor with respect to all
such motions, orders, amendments, supplements or other pleadings, and, subject
to the judgment of the Company’s counsel, incorporate the comments of Investor
or its counsel into such motion, order, amendment, supplement, motion or other
pleading.  Nothing herein will impair, limit or otherwise affect the
right of Investor to file any motion, order, amendment, supplement or other
pleading in connection with the Company’s efforts to seek entry of the Fee
Order, the Investment Agreement Order, the Disclosure Statement Approval Order
or the Confirmation Order, or any appeal (including a petition for certiorari,
motion for rehearing, reargument, reconsideration or revocation)
thereof.

     

    (g)  The
Company will keep Investor informed of any material developments with respect to
proceedings in the Bankruptcy Court relating to the Cases.

     

     

    ARTICLE
V

     

    Conditions
Precedent

     

    SECTION
5.01.  Conditions to Each Party’s
Obligation.  The obligations of Investor and the Company to
effect the Transaction are subject to the satisfaction (or waiver by Investor
and the Company) on or prior to the Closing of the following
conditions:

     

    (a)  Confirmation
Order.  The Bankruptcy Court shall have entered an order (the
“Confirmation
Order”) in the Cases confirming the Plan.

     

    (b)  No Injunctions or
Restraints.  No restraining order, preliminary or permanent
injunction or other judgment, decree, ruling or order issued by any court of
competent jurisdiction or statute, law, rule, other legal restraint or
prohibition (collectively, “Restraints”) shall be
in effect preventing the consummation of the Transaction, the Reorganization or
the other transactions contemplated hereby.

     

    SECTION
5.02.  Conditions to Obligation of
Investor.  The obligation of Investor to effect the Transaction
is subject to the satisfaction (or waiver by Investor) on or prior to the
Closing of the following conditions:

     

    (a)  Representations and
Warranties.  The representations and warranties of the Company
in this Agreement shall be true and correct (without giving effect to any
qualifications or limitations as to materiality or Company Material Adverse
Effect set forth therein) as of the date hereof and as of the Closing Date as
though made on the Closing Date, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct on and as of such
earlier date (without giving effect to any qualifications or limitations as to
materiality or Company Material Adverse Effect set forth therein), except, in
each case, where the failure of such representations and warranties to be so
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    individually
or in the aggregate, has not had and could not reasonably be expected to have a
Company Material Adverse Effect.  Investor shall have received a
certificate signed on behalf of the Company by each of the chief executive
officer and the chief financial officer of the Company to such
effect.

     

    (b)  Performance of Obligations
of the Company.  The Company shall have performed or complied
in all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Company prior to or on the day
of the Closing, and Investor shall have received a certificate signed on behalf
of the Company by each of the chief executive officer and the chief financial
officer of the Company to such effect (such certificate, together with the
certificate to be delivered in accordance with Section 5.02(a), the “Reorganized Company’s
Closing Certificate”).

     

    (c)  Governmental
Approvals.  The waiting period under the HSR Act applicable to
the Transaction shall have expired or been terminated.  All other
Consents of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity required to consummate the Transaction, the
Reorganization and the other transactions contemplated hereby shall have been
obtained, filed or satisfied.

     

    (d)  Absence of
Proceedings.  Except for Proceedings with respect to the
Confirmation Order the effect of which is as described in the proviso in
Section 5.02(q), there shall not be pending any Proceeding before any
Governmental Entity, or threatened by any Governmental Entity,
(i) challenging or seeking to restrain or prohibit the Transaction, the
Reorganization or any other transaction contemplated hereby or seeking to obtain
from Investor in connection with the Transaction, the Reorganization or any
other transaction contemplated hereby any damages that are material in relation
to the Company and the Company Subsidiaries, taken as a whole, (ii) seeking
to prohibit or limit the ownership or operation by Investor of any material
portion of the business or assets of the Company and the Company Subsidiaries,
taken as a whole, or to compel Investor, the Company or any Company Subsidiary
to dispose of or hold separate any material portion of the business or assets of
the Company and the Company Subsidiaries, taken as a whole, in each case as a
result of the Transaction, the Reorganization or any of the other transactions
contemplated hereby, (iii) seeking to impose limitations on ability of
Investor to acquire or hold, or exercise full rights of ownership of, the
Shares, the New Convertible Debt or the Series A Warrants, including the right
to vote the Shares on all matters properly presented to the stockholders of the
Company or (iv) seeking to prohibit Investor from effectively controlling
in any material respect the business or operations of the Company and the
Company Subsidiaries, taken as a whole; provided, however, that
Investor has complied with clause (x) in Section 4.06.

     

    (e)  Certificate of Incorporation
and Bylaws of the Company.  The Company shall have (i) amended,
and filed with the Secretary of State of the State of Delaware, its certificate
of incorporation in the form attached as Exhibit E hereto (as so amended,
the “Amended Company
Charter”), and (ii) amended its by-laws in form and substance reasonably
satisfactory to Investor (as so amended, the “Amended Company
By-laws”), which Amended Company Charter and Amended Company By-laws
shall 

     

     

    
      
        
        

      

      
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    become
the certificate of incorporation and by-laws of the Reorganized Company as of
and after the Closing.

     

    (f)  Stockholders’
Agreement.  The Reorganized Company and each holder of New
Common Stock as of the Closing shall have entered into the Stockholders’
Agreement (it being understood that the issuance of shares of New Common Stock
to a person is conditioned on the receipt of an executed counterpart of the
Stockholders’ Agreement from such person), and the Stockholders’ Agreement shall
become effective as of and after the Closing and shall be the legal, valid and
binding obligation of the Reorganized Company, enforceable against the
Reorganized Company in accordance with its terms.

     

    (g)  New Convertible Debt
Indenture.  The Company shall have entered into the New
Convertible Debt Indenture, which shall be the legal, valid and binding
obligation of the Company and the Reorganized Company, enforceable against the
Company and the Reorganized Company in accordance with its terms.

     

    (h)  Absence of Company Material
Adverse Effect.  Except to the extent disclosed in the Company
2008 10-K (other than any risk factor disclosures or other cautionary,
predictive and forward looking disclosures contained in any such document under
the heading “Risk
Factors” or “Forward-Looking
Statements” or under any other heading) or in writing to Investor on
September 12, 2008, since September 12, 2008, (i) there shall not have
occurred or become known to Investor any events, developments, conditions or
circumstances that, individually or in the aggregate, have had or could
reasonably be expected to have a Company Material Adverse Effect and
(ii) other than sales of real property as set forth on Section 4.01(a)(vii)
of the Company Disclosure Letter, no material assets of the Company or any
Company Subsidiary shall have been sold or agreed to be sold from and after
September 12, 2008.

     

    (i)  Fee
Order.  Not later than September 30, 2008, the Bankruptcy Court
shall have entered an order (the “Fee Order”) in the
Cases, in form and substance satisfactory to Investor, (i) approving the
Investor Commitment Papers, the ABL Facility Commitment Papers and the Term Loan
Facility Commitment Papers, (ii) authorizing the Debtors to pay the fees and
reimbursement of costs and expenses set forth in the Investor Commitment Papers
in accordance with the terms thereof, with the order specifically providing that
all amounts due and owing to Investor and its affiliates, including the fees and
reimbursement of costs and expenses as set forth in the Investor Commitment
Papers, 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 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 Transaction, the Reorganization or any other
transaction contemplated hereby is consummated and (c) otherwise
authorizing the Debtors to execute and to incur and perform their obligations
under the Investor Commitment Papers, the ABL Facility Commitment Papers and the
Term Loan Facility Commitment Papers.

     

     

    
      
        
        

      

      
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    (j)  Investment Agreement
Order. Not later than October 20, 2008, the Bankruptcy Court shall have
entered an order (the “Investment Agreement
Order”) in the Cases, in form and substance reasonably satisfactory to
Investor, authorizing the Company to execute and to incur and perform its
obligations under this Agreement and the other documentation for the
Transaction.

     

    (k)  Filing of the Plan and the
Disclosure Statement.  Not later than September 30, 2008, the
Company shall have filed in the Cases the Plan reflecting the terms outlined in
Exhibit A to the Investor Commitment Letter, not containing terms that are
inconsistent with those outlined in Exhibit A to the Investor Commitment
Letter and otherwise in form and substance reasonably satisfactory to Investor,
and a disclosure statement accompanying the Plan (the “Disclosure
Statement”) in form and substance reasonably satisfactory to
Investor.

     

    (l)  Payment of Fees and
Expenses.  The Company shall have paid the fees and
reimbursement of costs and expenses set forth in the Investor Fee Letter in
accordance with the terms thereof.

     

    (m)  No Conversion of
Cases.  There shall not have 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.

     

    (n)  Disclosure Statement
Approval Order.  Not later than November 21, 2008, the
Bankruptcy Court shall have entered an order (the “Disclosure Statement
Approval Order”) in the Cases, in form and substance reasonably
satisfactory to Investor, approving the Disclosure Statement.

     

    (o)  No Modification of the
Plan.  No provision of the Plan (as filed with the Bankruptcy
Court) shall have been amended, supplemented or otherwise modified in a manner
that is not in form and substance reasonably satisfactory to
Investor.

     

    (p)  Confirmation
Order.  The Bankruptcy Court shall have entered the
Confirmation Order in the Cases not later than January 15, 2009, which
Confirmation Order shall be in form and substance reasonably satisfactory to
Investor.

     

    (q)  Final
Order.  The Confirmation Order shall have 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 shall have 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 Transaction or the Reorganization, the condition set forth in this Section
5.02(q) 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 Investor,
in each case as determined by Investor.

     

     

    
      
        
        

      

      
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    (r)  The DIP
Facility.  (i) There shall not have 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 DIP Facility that has not been
waived in accordance with the terms of the DIP Facility without any fees being
paid or payable by the Company or any Company Subsidiary in connection therewith
and (ii) Investor shall have received evidence, in form and substance reasonably
satisfactory to Investor, 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 Closing in accordance with Section 5.02(y))
have been repaid in full, all commitments under the DIP Facility have been
terminated and all Liens related to the DIP Facility have been terminated or
released.

     

    (s)  ABL
Facility.  (i) The Company, the Company Subsidiaries and the
ABL Facility lenders shall have entered into definitive documentation for the
ABL Facility reflecting the terms of the ABL Facility Commitment Papers, in form
and substance reasonably satisfactory to Investor, 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 shall have been
reasonably satisfactory to Investor, (ii) no provision of the ABL Facility
Commitment Papers or the definitive documentation for the ABL Facility shall
have been waived, amended, supplemented or otherwise modified by any party
thereto in a manner that is not in form and substance satisfactory to Investor,
(iii) with respect to any matter to which the Company or any Company Subsidiary
has consultation rights under the ABL Facility Commitment Papers, the Company or
such Company Subsidiary shall have involved Investor substantially in any
consultation process related thereto, and with respect to any matter to which
the Company or any Company Subsidiary has consent or approval rights under the
ABL Facility Commitment Papers, the Company or such Company Subsidiary shall
have first obtained the consent or approval of Investor (such consent or
approval not to be unreasonably withheld) before providing its consent or
approval under the ABL Facility Commitment Papers with respect thereto, (iv) all
conditions to borrowing under the ABL Facility shall have been satisfied or
waived (with any such waiver to be in form and substance satisfactory to
Investor) on or prior to the Closing, and (v) on the Closing (A) there shall not
be 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 shall be in full force and
effect.

     

    (t)  Term Loan
Facility.  (i) The Company, the Company Subsidiaries and the
Term Loan Facility lenders shall have 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 Investor, and the
syndication of the commitments and loans, and the identity of each lender, under
the Term Loan Facility shall have been reasonably satisfactory to Investor, (ii)
no provision of the Term Loan Facility Commitment Papers or the definitive
documentation for the Term Loan Facility shall have been waived, amended,
supplemented or otherwise modified by any party thereto in a manner that is not
in form and substance satisfactory to Investor, (iii) with respect to any matter
to which the Company or any Company Subsidiary has consultation rights under the
Term Loan Facility Commitment Papers, the Company or such Company 

     

     

    
      
        
        

      

      
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    Subsidiary
shall have involved Investor substantially in any consultation process related
thereto, and with respect to any matter to which the Company or any Company
Subsidiary has consent or approval rights under the Term Loan Facility
Commitment Papers, the Company or such Company Subsidiary shall have first
obtained the consent or approval of Investor (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, (iv) all loans under the
Term Loan Facility shall have been funded on or prior to the Closing, and (v) on
the Closing (A) there shall not be 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 (B) the Term Loan Facility
shall be in full force and effect.

     

    (u)  Union
Agreements.  The agreements between the Company (or the
applicable Company Subsidiary) 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 (the “Unions”) 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, each in form and substance reasonably
satisfactory to Investor, shall have been ratified by the Unions.

     

    (v)  ABA Pension
Plan.  (i) The Bankruptcy Court shall have entered an order in
the Cases, in form and substance satisfactory to Investor, 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 American Bakers Association Retirement Plan (the “ABA Plan”) based on
the Debtors’ (or their employees’) participation prior to the Closing Date in
the ABA Plan, such liability is a general unsecured pre-petition claim against
the relevant Debtor, and such order shall have 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 shall have expired, or (ii) Investor shall
otherwise be satisfied that any of the Company’s, the Reorganized Company’s or
any of their direct or indirect subsidiaries’ current or future liability
(whether on-or off-balance sheet, contingent or otherwise) to, under or in
connection with the ABA Plan based on the Debtors’ (or their employees’)
participation prior to the Closing 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.

     

    (w)  No Other
Transactions.  The Debtors shall not have 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 the Debtors, other
than sales of real property as set forth on Section 4.01(a)(vii) of the Company
Disclosure Letter.

     

    (x)  Financial
Conditions.  The Company and the Company Subsidiaries, on a
consolidated basis, shall satisfy the conditions set forth on Exhibit J to
the Investor Commitment Letter, subject to the right to cure any failure of such
conditions in accordance with Exhibit J to the Investor Commitment
Letter.

     

     

    
      
        
        

      

      
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    (y)  Existing Letters of
Credit.  All letters of credit outstanding under the
Prepetition Credit Agreement or the DIP Facility as of the Closing shall remain
in place (or be replaced by equivalent letters of credit) on and after the
Closing pursuant to cash collateral or other arrangements by the Company and the
Company Subsidiaries that are in form and substance satisfactory to
Investor.

     

    (z)  Deregistration.  On
the Closing Date, the Reorganized Company shall be eligible to deregister under
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder.

     

    Notwithstanding
the foregoing, in the event (1) a condition set forth in Section 5.02(i),
5.02(j), 5.02(k), 5.02(n) or 5.02(p) is not satisfied by the deadline applicable
thereto (a “Deadline”) and (2)
the Company has used reasonable, good faith efforts to satisfy such condition by
the applicable Deadline, such applicable Deadline shall automatically be
extended once to the date that is five calendar days after the date of such
applicable Deadline as set forth in the relevant Section.

     

    ARTICLE
VI

     

    Termination, Amendment and
Waiver

     

    SECTION
6.01.  Termination.  (a)  Notwithstanding
anything to the contrary in this Agreement, this Agreement may be terminated at
any time prior to the Closing:

     

    (i)  by
mutual written consent of the Company and Investor;

     

    (ii)  by
Investor if any of the conditions set forth in Section 5.01 or 5.02 shall
have become incapable of being satisfied, and shall not have been waived by
Investor;

     

    (iii)  by
the Company if (A) any of the conditions set forth in Section 5.01 shall
have become incapable of being satisfied, and shall not have been waived by the
Company and Investor, or (B) any of the conditions set forth in
Section 5.02(i), (j), (k), (n) or (p) shall have become incapable of being
satisfied and a period of ten days shall have passed following the last date
(after giving effect to the extension contemplated in the final provision of
Section 5.02 and any further extension provided by Investor from time to
time in its sole discretion) upon which the condition could have been satisfied,
and shall not have been waived by Investor;

     

    (iv)  by
the Company after the entry of the Investment Agreement Order in connection with
an unsolicited bona fide written Alternative Proposal that did not result from a
breach of Section 4.02(a) and with terms that the Company Board determines in
good faith, after having consulted with its outside legal counsel and its
independent financial advisors, to be a Superior Proposal; provided, however, that prior
to notifying Investor of the termination of this Agreement pursuant to this
Section 6.01(a)(iv), (x) the Company shall have given Investor written notice

     

     

     

    
      
        
        

      

      
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    of
the terms of such Alternative Proposal (including the identity of the person
making such Alternative Proposal) and of the determination by the Company Board
that such Alternative Proposal constitutes a Superior Proposal, (y) at least
five business days after Investor has received the notice referred to in clause
(x) above, and taking into account any revised proposal made by Investor since
receipt of the notice referred to in clause (x) above, the Company Board 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 (z) the Company has previously paid all amounts due under
the Investor Fee Letter, including amounts due under the Investor Fee Letter as
a result of the termination of this Agreement; or

     

    (v)  by
Investor, if the Closing does not occur on or prior to February 9,
2009.

     

    (b)  In
the event of termination of this Agreement by either Investor or the Company
pursuant to Section 6.01(a), written notice thereof will forthwith be given
to the other and this Agreement will be terminated, without further action by
any party.

     

    SECTION
6.02.  Effect of
Termination.  If this Agreement is terminated by either
Investor or the Company pursuant to Section 6.01, this Agreement will
become null and void and of no further force and effect, without any liability
or obligation on the part of Investor, the Company or any Company Subsidiary (or
any of their respective directors, officers, employees, Affiliates or
Representatives) under this Agreement, except for the provisions of the last
sentence of Section 4.03 and the provisions of Sections 4.10, 4.11, 6.01,
6.02, 7.03, 7.07, 7.09, 7.10, 7.11 and 7.12, which provisions will survive such
termination, and except to the extent that such termination results from the
willful and material breach by a party of any representation, warranty or
covenant set forth in this Agreement.

     

    SECTION
6.03.  Amendments and
Waivers.  This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.  By an instrument in writing Investor, on the one hand, or the
Company, on the other hand, may waive compliance by the other with any term or
provision of this Agreement that such other party was or is obligated to comply
with or perform.

     

    ARTICLE
VII

     

    General
Provisions

     

    SECTION
7.01.  Nonsurvival of
Representations and Warranties.  None of the representations
and warranties in this Agreement or in the Reorganized Company’s Closing
Certificate shall survive the Closing.

     

    SECTION
7.02.  Assignment.  This
Agreement and the rights and obligations hereunder will not be assignable or
transferable by any party without the prior written consent of the other party
hereto.  Notwithstanding the foregoing, (a) Investor

     

     

    
      
        
        

      

      
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    may
assign its rights hereunder to one or more other persons without the prior
written consent of the Company and (b) Investor may assign its rights
hereunder by way of security; provided, however, that such
assignment shall not relieve Investor’s obligations hereunder.  Any
attempted assignment in violation of this Section 7.02 will be
void.  Subject to the preceding sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

     

    SECTION
7.03.  No
Third-Party Beneficiaries.  This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person, other
than the parties hereto and such assigns, any legal or equitable rights
hereunder.

     

    SECTION
7.04.  Notices.  All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be delivered by hand or sent by facsimile or
electronic mail or sent, postage prepaid, by registered, certified or express
mail or overnight courier service and shall be deemed given when received, at
the following addresses (or at such other address for a party as shall be
specified by like notice):

     

    (i) 
 if to Investor,

     

    c/o
Ripplewood Holdings L.L.C.

    One
Rockefeller Plaza, 32nd Floor

    New
York, NY 10020

     

     Attention:
Christopher Minnetian, Esq.

     Facsimile:
(212) 218-2769

     Electronic
Mail: cminnetian@ripplewood.com

     

    with
a copy to:

     

    Cravath,
Swaine & Moore LLP

    Worldwide
Plaza

    825
Eighth Avenue

    New
York, NY 10019-7475

     

    Attention:  Peter S.
Wilson, Esq.

     Facsimile:
(212) 474-3700

     Electronic
Mail: pwilson@cravath.com

     

    (ii)  if
to the Company,

     

    12
East Armour Boulevard

    Kansas
City, MO  64111

    

     Attention:  Kent
Magill, Esq.

     Facsimile:
(816) 502-4138

     Electronic
Mail: Magill_Kent@interstatebrands.com

     

     

    
      
        
        

      

      
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    with
a copy to:

     

    Skadden,
Arps, Slate, Meagher & Flom LLP

    333
West Wacker Drive

    Chicago,
IL 60606

    

    Attention:  J.
Eric Ivester, Esq.

    Facsimile:
(312) 407-8510

    Electronic
Mail: Eric.Ivester@skadden.com

     

    SECTION
7.05.  Interpretation; Exhibits and
Schedules; Certain Definitions.  (a)   When a
reference is made in this Agreement to an Article, Section or Exhibit, such
reference shall be to an Article of, a Section of, or an Exhibit to, this
Agreement unless otherwise indicated.  The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement.  Whenever the words “include”, “includes”, “including” or
“such as” are used in this Agreement, they shall be deemed to be followed by the
words “without limitation”.  The word “will” shall be construed to
have the same meaning and effect as the word “shall.”  The words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  The word “or” shall not be
exclusive.  The word “extent” in the phrase “to the extent” shall mean
the degree to which a subject or other thing extends, and such phrase shall not
mean simply “if”.  The phrase “date hereof” or “date of this
Agreement” shall be deemed to refer to September 26,
2008.  Whenever used in this Agreement, any noun or pronoun shall be
deemed to include the plural as well as the singular and to cover all
genders.  This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party
drafting or causing any instrument to be drafted.  Unless a contrary
intent is apparent, any Contract, instrument or law defined or referred to
herein or in any Contract or instrument that is referred to herein means such
Contract, instrument or law as from time to time amended, modified or
supplemented, including (in the case of Contracts or instruments) by waiver or
consent and (in the case of law) by succession of comparable successor law and
references to all attachments thereto and instruments incorporated
therein.  References to a person are also to its permitted successors
and assigns.  For purposes of this Agreement, the “knowledge of the
Company” shall mean the knowledge of Craig D. Jung, Chief Executive Officer;
Kent B. Magill, Executive Vice President, General Counsel and Corporate
Secretary; J. Randall Vance, Senior Vice President, Chief Financial Officer and
Treasurer; David A. Loeser, Consultant, Acting Executive Vice President - Human
Resources; Gary K. Wandschneider, Consultant, Acting Executive Vice President -
Operations; Daniel Gresham, Senior Vice President of Supply Chain; and Robert
Kissick, Senior Vice President of Purchasing.

     

    (b)  For
all purposes of this Agreement:

     

    “ABL Facility” means
the asset-based revolving credit facility in the aggregate committed amount of
$125,000,000, to be entered into by the 

     

     

    
      
        
        

      

      
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    Company,
certain Company Subsidiaries party thereto and General Electric Capital
Corporation, as administrative agent, and that satisfies the condition set forth
in Section 5.02(s).

     

    “ABL Facility Commitment
Papers” means the commitment letter (including the exhibits thereto) and
the fee letter for the ABL Facility, dated September 12, 2008, among the
Company, Interstate Brands Corporation and General Electric Capital Corporation,
in the form attached as Exhibit F to the Investor Commitment
Letter.

     

    “Affiliate” of any
person means another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such first person.

     

    “Ancillary Agreements”
means (1) the Stockholders’ Agreement and (2) the New Convertible Debt
Indenture.

     

    “Company Material Adverse
Effect” means a material adverse effect on (a) the business, operations,
property, condition (financial or otherwise) or prospects of the Company and the
Company Subsidiaries, taken as a whole or (b) the ability of the Company to
perform its obligations under this Agreement or to consummate the
Transaction.

     

    “Company Subsidiary”
means each subsidiary of the Company (including, on and after the Closing, each
subsidiary of the Reorganized Company).

     

    “Contract” means any
contract, lease, license, indenture, note, bond, agreement, permit, concession,
franchise, commitment or other legally binding arrangement.

     

    “Financing” means the
financing of the Company under the ABL Facility and the Term Loan
Facility.

     

    “Investor Commitment
Letter” means the commitment letter (including the exhibits and annexes
attached thereto), dated September 12, 2008, between Investor and the
Company.

     

    “Investor Commitment
Papers” means, collectively, the Investor Commitment Letter and the
Investor Fee Letter.

     

    “Investor Fee Letter”
means the fee letter, dated September 12, 2008, between Investor and the
Company.

     

    “Investor Material Adverse
Effect” means a material adverse effect on the ability of Investor to
perform its obligations under this Agreement to consummate the
Transaction.

     

     

    
      
        
        

      

      
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    “Liens” means,
collectively, all pledges, liens, charges, mortgages, easements, leases,
subleases, covenants, rights of way, options, claims, restrictions, encumbrances
and security interests of any kind or nature whatsoever.

     

    “Long Term Incentive
Plan” means the management incentive plan for senior management and
selected employees and directors of the Reorganized Company to be effective as
of the Closing Date, in form and substance reasonably satisfactory to
Investor.  All equity grants to be made as of the Closing Date,
including with respect to existing employment agreements, shall be made under
the Long Term Incentive Plan.

     

    “person” means any
individual, firm, corporation, partnership, company, limited liability company,
trust, joint venture, association, Governmental Entity or other
entity.

     

    “Prepetition Agent”
means JPMorgan Chase Bank, N.A., in its capacity as administrative agent under
the Prepetition Credit Agreement.

     

    “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.

     

    “Prepetition Credit
Agreement” means the Amended and Restated Credit Agreement, dated April
24, 2002, among the Company, Interstate Brands Corporation, the lenders and
financial institutions from time to time party thereto and JPMorgan Chase Bank,
N.A., as administrative agent, together with the related collateral documents
and letters of credit issued thereunder.

     

    “Prepetition
Investors” means, collectively, Silver Point Finance, LLC, Monarch
Alternative Capital L.P. and McDonnell Investment Management LLC and their
respective Affiliates and managed funds.

     

    “Series B
Warrants” means Series B Warrants of the Reorganized Company in the
form attached as Exhibit A hereto.

     

    “Series C
Warrants” means Series C Warrants of the Reorganized Company in the
form attached as Exhibit A hereto.

     

    A
“subsidiary” of
any person means another person of which such first person, (i) owns
directly or indirectly an amount of the voting securities, other voting
ownership or voting partnership interests sufficient to elect at least a
majority of such other person’s board of directors or other governing body (or,
if there are no such voting interests, 50% or more of the equity interests),
(ii) in the case of a partnership, serves as a general partner or
(iii) in the case of a limited liability company, serves as a managing
member.

     

     

    
      
        
        

      

      
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    “Term Loan Facility”
means the secured term loan facility in the aggregate principal amount of
$339,000,000 (which may be increased in accordance with the terms set forth in
the Term Loan Facility Commitment Papers), to be entered into by the Company,
certain Company Subsidiaries party thereto and Silver Point Finance, LLC, as
administrative agent, and that satisfies the condition set forth in
Section 5.02(t).

     

    “Term Loan Facility
Commitment Papers” means the commitment letter (including the exhibits
and annexes attached thereto) and the fee letter for the Term Loan Facility,
dated September 12, 2008, among the Company, Interstate Brands Corporation,
Silver Point Finance, LLC and Monarch Master Funding Ltd, in the form attached
as Exhibit G to the Investor Commitment Letter.

     

    “Term Loan Lender
Shares” means the 4,420,000 shares of New Common Stock to be issued to
the lenders under the Term Loan Facility on the Closing Date, as to be provided
in the Plan.

     

    “Warrants” means,
collectively, the Series A Warrants, the Series B Warrants and the
Series C Warrants.

     

    SECTION
7.06.  Counterparts.  This
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 such counterparts have been signed by each of the parties and delivered to
the other parties.  Delivery of an executed counterpart of a signature
page by facsimile or electronic transmission will be effective as delivery of an
original executed counterpart of this Agreement.

     

    SECTION
7.07.  Entire
Agreement.  This Agreement, taken together with the Company
Disclosure Letter, the Ancillary Agreements, the Confidentiality Agreement and
the Equity Contribution Agreement, along with the Exhibits and Annexes hereto
and thereto, contain the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to such subject matter, including the
Investor Commitment Papers; provided, however, that (a)
each of the exhibits and annexes to the Investor Commitment Letter, (b) the
tenth and eleventh paragraphs of the Investor Commitment Letter and (c) the
Investor Fee Letter, shall in each case remain in full force and effect in
accordance with the terms thereof.  None of the parties shall be
liable or bound to any other party in any manner by any representations,
warranties or covenants relating to such subject matter except as specifically
set forth herein or in the Ancillary Agreements, the Confidentiality Agreement
or the Equity Contribution Agreement.  Upon the Closing the
Confidentiality Agreement shall terminate and be no longer in
effect.

     

    SECTION
7.08.  Severability.  If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any rule or Law, or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions

     

     

    
      
        
        

      

      
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    contemplated
hereby is not affected in any manner materially adverse to any
party.  Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the maximum extent
possible under applicable Law.

     

    SECTION
7.09.  Consent to
Jurisdiction.  Each party hereto (i) consents to submit
itself to the exclusive jurisdiction and venue of the Bankruptcy Court and in
the event that such court does not have or declines to exercise jurisdiction, to
the exclusive jurisdiction and venue of any state court or any Federal court
located in the City of New York, Borough of Manhattan, in the event any
dispute arises out of this Agreement or any transaction contemplated hereby,
(ii) agrees that it will not attempt to deny or defeat such exclusive
jurisdiction by motion or other request for leave from any such court and
(iii) agrees that it will not bring any action relating to this Agreement
or any transaction contemplated hereby in any court other than the Bankruptcy
Court or, in the event that such court does not have or declines to exercise
jurisdiction, in any state court or any Federal court sitting in the City of New
York, Borough of Manhattan.  Each of the parties to this Agreement
irrevocably consents to service of process in the manner provided for delivering
notices in Section 7.04.  Nothing in this Agreement will affect
the right of any party to this Agreement to serve process in any other manner
permitted by applicable Law.  Each party further agrees that service
of any process, summons, notice or document to such party’s respective address
set forth above shall be effective service of process for any action, suit or
proceeding in New York with respect to any matters to which it has submitted to
jurisdiction in this Section 7.09.

     

    SECTION
7.10.  Governing
Law.  This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.

     

    SECTION
7.11.  Waiver of Jury
Trial.  Each party hereby waives to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in respect
to any litigation directly or indirectly arising out of, under or in connection
with this Agreement or any transaction contemplated hereby.  Each
party (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and
certifications in this Section 7.11.

     

    SECTION
7.12.  No
Recourse.  Notwithstanding anything that may be expressed or
implied in this Agreement, the Equity Contribution Agreement or any document or
instrument in connection herewith or therewith or otherwise, and notwithstanding
the fact that the Contributor is a partnership, 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, 

     

     

     

    
      
        
        

      

      
        52

        
          

        

      

      
        
        

      

    

    representatives,
Affiliates, general or limited partners, securityholders, members, managers,
trustees or controlling persons of the Contributor or Investor (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, Investor or otherwise, whether by
or through attempted piercing of the corporate veil, by or through a claim by or
on behalf of Investor against the Contributor or any of the Contributor
Affiliates, including under the Contributor’s commitment letter to Investor, by
or through this 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, 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 Investor (or, at the election of the
Contributor, payment to the Company) up to the amount of the Covered Obligations
(as defined in the Equity Contribution Agreement) under and to the extent
provided in the Equity Contribution Agreement, (ii) recourse against the
Contributor to cause the Contributor to make a contribution to Investor (or, at
the election of the Contributor, payment to the Company) required under the
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 Agreement, the Equity
Contribution Agreement or the transactions contemplated hereby or thereby and
(iii) in no event will Investor, the Contributor or any Contributor Affiliates
be subject to liability in the aggregate in excess of the Cap (as defined in the
Equity Contribution Agreement) for all losses and damages arising under, or in
connection with, this Agreement, the Equity Contribution Agreement and the
transactions contemplated hereby and thereby.

     

    
      
        
        

      

      
        53

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Company and Investor have duly executed this Agreement as
of the date first written above.

     

    
      	 	INTERSTATE
      BAKERIES CORPORATION,
	 	 
	 	by
	 	 	/s/
      J. Randall Vance	 
	 	 	Name:
      J. Randall Vance
	 	 	Title:	Senior
      Vice President, Chief  

              Financial
      Officer and Treasurer

            	
               

            	
               

            
	 	 
	 	 
	 	IBC
      INVESTORS I, LLC,
	
               
      

            	
               

            

    

    
      	 	by	RIPPLEWOOD
      PARTNERS II, L.P.,
	
               
      

            	
              as
      its Sole Member,

            

    

     

    
      	
               
      

            	by	
              RIPPLEWOOD
      PARTNERS II, GP, 

              L.P.,
      as its General Partner,

            

    

     

    
      	
               
      

            	
              by
      RP II GP, LLC,

            

    

    
      	
               
      

            	
              as
      its General Partner,

            

    

    
      	 	 
	
               
      

            	
              by

            

    

    
      	
               
      

            	
              /s/ Christopher
      Minnetian                                 
      

            	 

    

    
      	
               
      

            	
              Name:

            

    

    
      	
               
      

            	
              Title:

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