12-22052-rdd doc 498 filed 03/09/12 entered 03/09/12 … · (e) review, analyze and advise the...

Hearing Date and Time: March 13, 2012 at 10:00 a.m. Objection Deadline: March 6, 2012 at 4:00 p.m.

NYI-4436011v2

JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 Corinne Ball Heather Lennox Lisa Laukitis Veerle Roovers - and - JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 Ryan T. Routh Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- In re Hostess Brands, Inc., et al.,1

Debtors.

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

x : : : : : : : x

Chapter 11 Case No. 12-22052 (RDD) (Jointly Administered)

AMENDED MOTION OF DEBTORS AND

DEBTORS IN POSSESSION, PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE, FOR AN ORDER TO (A) EMPLOY

KOBI PARTNERS, LLC AND (B) DESIGNATE GREGORY F. RAYBURN AS CHIEF EXECUTIVE OFFICER, NUNC PRO TUNC AS OF FEBRUARY 22, 2012

1 The Debtors are the following six entities (the last four digits of their respective taxpayer identification

numbers follow in parentheses): Hostess Brands, Inc. (0322), IBC Sales Corporation (3634), IBC Services, LLC (3639), IBC Trucking, LLC (8328), Interstate Brands Corporation (6705) and MCF Legacy, Inc. (0599).

12-22052-rdd Doc 498 Filed 03/09/12 Entered 03/09/12 19:37:09 Main Document Pg 1 of 60

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1222052120309000000000018

Docket #0498 Date Filed: 3/9/2012

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TO THE HONORABLE ROBERT D. DRAIN UNITED STATES BANKRUPTCY JUDGE:

Hostess Brands, Inc. and its five domestic direct and indirect subsidiaries, as

debtors and debtors in possession (collectively, "Hostess" or the "Debtors"), respectfully

represent as follows: Background

1. On January 11, 2012 (the "Petition Date"), the Debtors commenced their

reorganization cases by filing voluntary petitions for relief under chapter 11 of title 11 of the

United States Code (the "Bankruptcy Code"). The Debtors' chapter 11 cases have been

consolidated and are being administered jointly for procedural purposes only.

2. The Debtors are authorized to continue to operate their business and

manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the

Bankruptcy Code.

3. On January 18, 2012, the United States Trustee for the Southern District of

New York (the "U.S. Trustee") appointed an official committee of unsecured creditors, pursuant

to section 1102 of the Bankruptcy Code (the "Creditors Committee"). The U.S. Trustee

subsequently amended such appointments to the Creditors' Committee on January 30, 2012.

4. Founded in 1930, Hostess is one of the largest wholesale bakers and

distributors of bread and snack cakes in the United States. Today, Hostess sells an array of

popular products under new and iconic brands such as Butternut®, Ding Dongs®, Dolly

Madison®, Drake's®, Home Pride®, Ho Hos®, Hostess®, Merita®, Nature's Pride®,

Twinkies® and Wonder®. The Debtors operate 36 bakeries, 565 distribution centers,

approximately 5,500 delivery routes and 570 bakery outlet stores throughout the United States.


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Jurisdiction

5. This Court has subject matter jurisdiction to consider this matter pursuant

to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper

before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

Relief Requested

6. On February 27, 2012, the Debtors filed a motion seeking an order,

pursuant to section 363 of the Bankruptcy Code, authorizing: (a) the employment of Kobi

Partners, LLC ("Kobi") to provide a chief restructuring officer ("CRO"); and (b) Gregory F.

Rayburn to act as CRO, nunc pro tunc, as of February 22, 2012 (the "CRO Motion").

7. Effective as of March 9, 2012, the Debtors' chief executive officer, Brian

Driscoll, resigned his position with the Debtors.

8. The Debtors hereby amend the CRO Motion and seek an order, pursuant

to section 363 of the Bankruptcy Code, authorizing: (a) the employment of Kobi to provide a

chief executive officer ("CEO"); and (b) Gregory F. Rayburn to act as CEO, nunc pro tunc, as of

February 22, 2012. In particular, Mr. Rayburn will serve as Hostess' CEO to perform the

services as set forth in amended Kobi's amended engagement letter, dated as of February

22, 2012 (the "Amended Engagement Letter"). In support of this Motion, the Debtors submit the

Declaration of Gregory F. Rayburn, Managing Partner at Kobi (the "Rayburn Declaration"), a

copy of which is attached hereto as Exhibit A. A copy of the Amended Engagement Letter is

attached to the Rayburn Declaration as Annex 1, and a blackline comparing the Amended

Engagement Letter to the engagement letter attached to the CRO Motion as Annex 1 is attached

to the Rayburn Declaration as Annex 2.


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Basis for Relief Requested

Qualifications of Mr. Rayburn

9. Mr. Rayburn has extensive experience in the reorganization and

restructuring of troubled companies, both out-of-court and in chapter 11 cases. In addition, he

has advised debtors, creditors and equity constituencies in many complex financial restructurings

in a wide range of industries, including gaming, thoroughbred horse racing, hospitality,

manufacturing, freight, telecommunications, retail, home building, pharmaceutical, health care

and outsourced services.

10. Mr. Rayburn began serving as CRO of Hostess on February 22, 2012.

Following Mr. Driscoll's resignation, he began serving as CEO of Hostess on March 9, 2012.

Additionally, he has served as an officer in several high profile distressed and restructuring

situations, including Indianapolis Downs, LLC, as chief restructuring officer; New York City Off

Track Betting Association, as chief executive officer; Magna Entertainment Corporation, as chief

executive officer; aaiPharma, as chief restructuring officer; WorldCom, as chief restructuring

officer; and Sunterra Corporation as chief executive officer.

11. Mr. Rayburn has more than 29 years of experience working with troubled

businesses in their efforts to create and maximize value for the stakeholders of companies facing

economic, strategic and competitive challenges. Additionally, Mr. Rayburn is a certified fraud

examiner and licensed as a non-practicing certified public accountant. He also has testified and

has been qualified as an expert witness in federal and state courts on issues including business

viability, valuation, strategic plan assessment, fraud, damages, bankruptcy and reorganization.

Scope of Services

12. Kobi's engagement is governed by the Amended Engagement Letter,

which reflects the substantial efforts that will be required in this engagement and the services to


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be rendered by Mr. Rayburn, for which Kobi will be paid a monthly fee. In his role as CEO of

Hostess and pursuant to the Amended Engagement Letter, Mr. Rayburn will:

(a) Report to the Board of Directors and serve as a member of the Board of Directors;

(b) Lead the negotiations with the Debtors' unions;

(c) Assist the Debtors with the identification of core business assets and the disposition of assets or liquidation of unprofitable operations;

(d) Oversee and direct the preparation and presentation of disclosures and other information in connection with the Debtors' chapter 11 cases;

(e) Review, analyze and advise the Board of Directors with respect to the Debtors' turnaround plan, and oversee and direct the implementation the turnaround plan, as it may be revised by the Board of Directors;

(f) Lead negotiations and direct analysis, proposal, prosecution and consummation of the chapter 11 plan as directed by the Board of Directors;

(g) Oversee and direct the day-to-day implementation of the Debtors' reorganization plan and the Debtors' overall corporate strategies as directed by the Board of Directors;

(h) Oversee and direct any liquidation process of the Debtors;

(i) Oversee and direct the implementation of any strike preparedness plan of the Debtors that may be necessary or appropriate;

(j) Provide testimony in court as required or appropriate during the Debtors' chapter 11 cases;

(k) Participate in meetings internally or with outside constituencies as requested by the Board of Directors; and

(l) Provide such other services, advice or assistance as may be requested by the Board of Directors from time to time.

13. As CEO, Mr. Rayburn will report directly to, and serve at the direction of,

the Board of Directors and work with the Debtors' other senior management and Debtors'


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professionals. Mr. Rayburn will not duplicate the efforts of any other professional retained in

these cases.

Compensation

14. Kobi will be compensated for Mr. Rayburn's services as CEO of Hostess

with a non-refundable monthly advisory fee of $125,000 to be paid in advance (the

"Compensation Structure"). In addition to the fees outlined above, Kobi will bill for all direct

reasonable out-of-pocket expenses incurred in the performance of Mr. Rayburn's services. Direct

expenses include actual, reasonable and customary out-of-pocket expenses such as certain

telephone, overnight mail, messenger, travel, meals, accommodations and other expenses

specifically related to the engagement.

15. The Debtors believe that the Compensation Structure is within the market

for fees that require the level of services set forth above, and that adoption of the Compensation

Structure is within the proper business judgment of the Debtors pursuant to section 363(b) of the

Bankruptcy Code.

Indemnification

16. The Debtors and Kobi have agreed that the Debtors shall only indemnify

those Kobi employees serving as executive officers of the Debtors on the same terms as provided

to the Debtors' other officers and directors under the Debtors' by-laws and applicable state law,

along with insurance coverage under the Debtors' directors' and officers' insurance policies.

Reporting Requirements

17. To maintain transparency, Kobi would file with the Court and serve on the

Debtors, the U.S. Trustee, and any statutory committee(s) appointed in these cases (collectively,

the "Committees," and together with the Debtors and the U.S. Trustee, the "Notice Parties")


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reports of compensation earned and expenses incurred (the "Compensation Reports") on at least

a quarterly basis. The Compensation Reports would summarize the services provided, identify

the compensation earned, itemize expenses incurred and provide for an objection period. All

such compensation would be subject to review by this Court if an objection is filed.

Argument

Kobi's Employment is Reasonable

18. Pursuant to section 363(b) of the Bankruptcy Code, a debtor in possession

is authorized to retain and employ officers on an interim basis. Section 363(b) provides, in

relevant part, that a debtor, "after notice and a hearing, may use, sell, or lease, other than in the

ordinary course of business, property of the estate." 11 U.S.C. § 363(b)(1). Where a debtor

exercises its reasonable business judgment, use of its assets under section 363(b) of the

Bankruptcy Code should be approved. See Comm. of Equity Sec. Holders v. Lionel Corp. (In re

Lionel Corp.), 722 F.2d 1063, 1070 (2d Cir. 1983); Comm. of Asbestos-Related Litigants v.

Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986);

see also Myers v. Martin (In re Martin), 91 F.3d 389, 395 (3d Cir. 1996) (citing Fulton State

Bank v. Schipper (In re Schipper), 933 F.2d 513, 515 (7th Cir. 1991); In re Delaware & Hudson

Ry. Co., 124 B.R. 169, 175-76 (D. Del. 1991).

19. The Debtors believe that Mr. Rayburn's services are appropriate to assist

in the completion of these chapter 11 cases and that the employment of Kobi and appointment of

Mr. Rayburn as CEO is a sound exercise of the Debtors' business judgment. Mr. Rayburn has

extensive experience as a CEO, CRO and restructuring advisor. The appointment of Mr.

Rayburn as CEO will provide services that benefit the Debtors' estates and creditors. For the

reasons set forth above, the Debtors submit that the employment of Kobi and appointment of Mr.


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Rayburn as CEO is a proper exercise of the Debtors' business judgment and is in the best interest

of the Debtors and their estates.

Kobi's Employment Comports with the Bankruptcy Code

20. Because the Debtors are seeking to employ Kobi pursuant to section 363

of the Bankruptcy Code and not under section 327 of the Bankruptcy Code, Kobi is not subject

to the compensation requirements of sections 328, 330 and 331 of the Bankruptcy Code, and,

therefore, the Debtors request that fees and expenses of Kobi incurred in the performance of the

above-described services be treated as an administrative expense of the Debtors' chapter 11

estates and be paid by the Debtors in the ordinary course of business, without the need for Kobi

to file fee applications or otherwise seek Court approval for the compensation of its services and

reimbursement of its expenses, other than those described above.

21. In addition, the Debtors are not seeking to retain Kobi as a professional

under section 327 of the Bankruptcy Code. Accordingly, there is no requirement that Kobi be

disinterested. However, to the best of the Debtors' knowledge, information, and belief, Kobi

does not have any interest materially adverse to the Debtors' estates or any class of creditor or

equity security holders, by reason of any direct or indirect relationship to, connection with, or

interest in, the Debtors, or for any other reason. With that said, Kobi believes it is disinterested

because, to the best of Kobi's knowledge, information, and belief, Kobi has no connection with

the Debtors, their creditors or any other party-in-interest, except as disclosed in the Rayburn

Declaration.

22. Additionally, the Court's general equitable powers codified in section

105(a) of the Bankruptcy Code provide additional authority for the relief requested herein.

Section 105(a) of the Bankruptcy Code empowers the Court to "issue any order, process, or


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judgment that is necessary to carry out the provisions of this title." See 11 U.S.C. § 105(a); see

also U.S. v. Energy Res. Co., 495 U.S. 545, 549 (1990); Adelphia Comm'cns Corp. v. The

American Channel (In re Adelphia Comm'cns Corp.), 345 B.R. 69, 85 (Bankr. S.D.N.Y. 2006)

("Section 105(a) provides broad equitable power for a Bankruptcy Court to maintain its own

jurisdiction and to facilitate the reorganization process"); Gillman v. Cont'l Airlines (In re Cont'l

Airlines), 203 F.3d 203, 211 (3d Cir. 2000) ("Section 105(a) of the Bankruptcy Code

supplements courts' specifically enumerated bankruptcy powers by authorizing orders necessary

or appropriate to carry out provisions of the Bankruptcy Code").

Conclusion

23. For the foregoing reasons, the Debtors respectfully request that the Court

authorize the employment of Kobi, as set forth herein and in the Amended Engagement Letter,

and for Kobi to provide the services of Mr. Rayburn as CEO. Similar relief has been granted by

courts in this and other districts in other cases. See, e.g., In re Blockbuster, Inc., No. 10-14997

(BRL) (Bankr. S.D.N.Y. Oct. 27, 2010) (approving, among other things, designation of a CRO

pursuant to section 363 of the Bankruptcy Code); In re Old Carco LLC (f/k/a Chrysler LLC),

No. 09-50002 (AJG) (Bankr. S.D.N.Y. Dec. 17, 2009) (approving, among other things,

designation of a CEO pursuant to section 363 of the Bankruptcy Code); In re General Motors

Corp., Case No. 09-50026 (REG) (Bankr. S.D.N.Y. July 2, 2009) (approving, among other

things, designation of CEO pursuant to section 363 of the Bankruptcy Code); In re General

Motors, (Bankr. S.D.N.Y. June 25, 2009) (approving designation of a CRO); In re Bearingpoint,

Inc., Case No. 09-10691 (REG) (Bankr. S.D.N.Y. Mar. 30, 2009) (approving appointment of

CFO); In re PRC, LLC, Case No. 08-10239 (MG) (Bankr. S.D.N.Y. Feb. 27, 2008) (approving

designation of a CRO); In re Bally Total Fitness of Greater N.Y., Inc., Case No. 07-12395 (BRL)

(Bankr. S.D.N.Y. Aug. 21, 2007) (approving designation of a CEO); In re Dana Corp., Case


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No. 06-10354 (BRL) (Bankr. S.D.N.Y. Mar. 29, 2006) (approving designation of a CRO); In re

Enron Corp., Case No. 01-16034 (AJG) (Bankr. S.D.N.Y. Apr. 4, 2002) (same).2

Notice

24. Pursuant to the Administrative Order, Pursuant to Rule 1015(c) of the

Federal Rules of Bankruptcy Procedure, Establishing Case Management and Scheduling

Procedures (Docket No. 371) (the "Case Management Order"), entered on February 21, 2012,

notice of this Motion has been given to the parties identified on the Special Service List and the

General Service List (as such terms are defined in the Case Management Order). The Debtors

submit that no other or further notice need be provided.

Prior Request

25. No prior request for the relief sought in this Motion has been made to this

or any other Court in connection with these chapter 11 cases. As noted above, the original CRO

Motion, prior to this amendment, had sought relief to appoint Mr. Rayburn as CRO.

2 Copies of the unreported orders are available from the Debtors' counsel upon request.


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WHEREFORE, the Debtors respectfully request that this Court: (i) enter

an order substantially in the form attached hereto as Exhibit B, granting the relief sought herein

and (ii) grant such other and further relief to the Debtors as the Court may deem proper.

Dated: March 9, 2012 New York, New York

Respectfully submitted, Hostess Brands, Inc., on behalf of itself and its affiliated debtors and debtors in possession

/s/ Christopher Minnetian Christopher Minnetian Chairman of the Board of Directors of Hostess Brands, Inc.

Filed by:

Dated: March 9, 2012 New York, New York

Respectfully submitted,

/s/ Corinne Ball Corinne Ball Heather Lennox Lisa Laukitis Veerle Roovers JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 - and - Ryan T. Routh JONES DAY North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Telephone: (216) 586-3939 Facsimile: (216) 579-0212 ATTORNEYS FOR DEBTORS AND DEBTORS IN POSSESSION


NYI-4436011v2

EXHIBIT A

[Rayburn Declaration]


NYI-4436011v2


Debtors.

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x : : : : : : : x


DECLARATION OF GREGORY F. RAYBURN IN SUPPORT OF THE AMENDED MOTION OF DEBTORS AND

DEBTORS IN POSSESSION, PURSUANT TO SECTION 363 OF THE BANKRUPTCY CODE, FOR AN ORDER TO (A) EMPLOY

KOBI PARTNERS, LLC AND (B) DESIGNATE GREGORY F. RAYBURN AS CHIEF EXECUTIVE OFFICER, NUNC PRO TUNC AS OF FEBRUARY 22, 2012

STATE OF NORTH CAROLINA ) ) SS: COUNTY OF FORSYTH )

Gregory F. Rayburn declares:

1. I am Managing Partner with Kobi Partners, LLC ("Kobi"), a restructuring

advisory services firm that has its principal office at 819 Oaklawn Avenue, Winston-Salem,

North Carolina 27104. I am duly authorized to make this declaration (the "Declaration") on

behalf of Kobi and submit this Declaration in support of the Amended Motion of Debtors and

Debtors in Possession, Pursuant to Section 363 of the Bankruptcy Code, for an Order to (a)

Employ Kobi Partners, LLC and (b) Designate Gregory F. Rayburn as Chief Executive Officer,




NYI-4436011v2 -2-

Nunc Pro Tunc as of February 22, 2012 (the "Motion"),2 filed by the above-captioned debtors

and debtors in possession (collectively, the "Debtors").

2. Except as otherwise noted, I have personal knowledge of the matters set

forth herein.

Qualifications

3. I have extensive experience in the reorganization and restructuring of

troubled companies, both out-of-court and in chapter 11 cases. In addition, I have advised

debtors, creditors and equity constituencies in many complex financial restructurings in a wide

range of industries, including gaming, thoroughbred horse racing, hospitality, manufacturing,

freight, telecommunications, retail, home building, pharmaceutical, health care and outsourced

services.

4. I began serving as CRO of Hostess on February 22, 2012. I began serving

as CEO of Hostess on March 9, 2012. Additionally, I have served as an officer in several high

profile distressed and restructuring situations, including Indianapolis Downs, LLC, as chief

restructuring officer; New York City Off Track Betting Association, as chief executive officer;

Magna Entertainment Corporation, as chief executive officer; aaiPharma, as chief restructuring

officer; WorldCom, as chief restructuring officer; and Sunterra Corporation as chief executive

officer.

5. I have over 29 years of experience working with troubled businesses in

their efforts to create and maximize value for stakeholders of companies facing economic,

strategic and competitive challenges. Additionally, I am a certified fraud examiner and licensed

as a non-practicing certified public accountant. I also have testified and have been qualified as

2 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.


NYI-4436011v2 -3-

an expert witness in federal and state courts on issues including business viability, valuation,

strategic plan assessment, fraud, damages, bankruptcy and reorganization.

Services to Be Provided

6. In my role as CEO of Hostess and pursuant to the Amended Engagement

Letter, I will:

(a) Report to the Board of Directors and serve as a member of the Board of Directors;

(b) Lead the negotiations with the Debtors' unions;

(c) Assist the Debtors with the identification of core business assets and the disposition of assets or liquidation of unprofitable operations;

(d) Oversee and direct the preparation and presentation of disclosures and other information in connection with the Debtors' chapter 11 cases;

(e) Review, analyze and advise the Board of Directors with respect to the Debtors' turnaround plan, and oversee and direct the implementation the turnaround plan, as it may be revised by the Board of Directors;

(f) Lead negotiations and direct analysis, proposal, prosecution and consummation of the chapter 11 plan as directed by the Board of Directors;

(g) Oversee and direct the day-to-day implementation of the Debtors' reorganization plan and the Debtors' overall corporate strategies as directed by the Board of Directors;

(h) Oversee and direct any liquidation process of the Debtors;

(i) Oversee and direct the implementation of any strike preparedness plan of the Debtors that may be necessary or appropriate;

(j) Provide testimony in court as required or appropriate during the Debtors' chapter 11 cases;

(k) Participate in meetings internally or with outside constituencies as requested by the Board of Directors; and


NYI-4436011v2 -4-

(l) Provide such other services, advice or assistance as may be requested by the Board of Directors from time to time.

7. As CEO, I will report directly to the Board of Directors and work with the

Debtors' other senior management and Debtors' professionals. I will not duplicate the efforts of

any other professional retained in these cases.

Compensation

8. Kobi will be compensated for my services as CEO of Hostess with a non-

refundable monthly advisory fee of $125,000 to be paid in advance (the "Compensation

Structure"). In addition to the fees outlined above, Kobi will bill for all direct reasonable out-of-

pocket expenses incurred in the performance of my services. Direct expenses include actual,

reasonable and customary out-of-pocket expenses such as certain telephone, overnight mail,

messenger, travel, meals, accommodations and other expenses specifically related to the

engagement.

9. I believe the Compensation Structure is within the market for fees that

require the level of services set forth above and that the adoption of the Compensation Structure

is within the proper business judgment of the Debtors pursuant to section 363(b) of the

Bankruptcy Code.

10. Hostess has agreed to indemnify myself and Kobi as set forth in the

Amended Engagement Letter.

Disclosure Concerning Disinterestedness

11. In connection with the preparation of this Declaration, Kobi conducted a

review of its contacts with the Debtors, their affiliates and certain entities holding large claims

against or interests in the Debtors that were made reasonably known to Kobi. A listing of the

parties reviewed is reflected on Schedule 1 to this Declaration. Kobi's review, completed under


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my supervision, consisted of a query of the Schedule 1 parties within an internal computer

database containing names of individuals and entities that are present or recent former clients of

Kobi. Kobi will supplement this Declaration for any additional relationships identified. Based

on the results of its review thus far, Kobi does not have a relationship with any of the parties on

Schedule 1 in matters related to these proceedings.

12. As part of its diverse practice, Kobi appears in numerous cases,

proceedings and transactions that involve many different professionals, including attorneys,

accountants and financial consultants, who may represent claimants and parties-in-interest in the

Debtors' chapter 11 cases. Also, Kobi has performed in the past, and may perform in the future,

advisory consulting services for various attorneys and law firms, and has been represented by

several attorneys and law firms, some of whom may be involved in these proceedings. In

addition, Kobi has in the past, may currently and will likely in the future be working with or

against other professionals involved in these cases in matters unrelated to the Debtors and these

cases. Based on our current knowledge of the professionals involved, and to the best of my

knowledge, none of these relationships create interests materially adverse to the Debtors in

matters upon which Kobi is to be employed, and none are in connection with these cases.

13. It is Kobi's policy and intent to update and expand its ongoing relationship

search for additional parties in interest in an expedient manner. If any new material relevant facts

or relationships are discovered or arise, Kobi will promptly file a supplemental affidavit under

Bankruptcy Rule 2014(a).

[The remainder of this page is intentionally blank.]


NYI-4436011v2

Schedule 1 to the Declaration


SCHEDULE 1

Hostess Brands, Inc., et al.

Interested Parties

The Debtors Hostess Brands, Inc. IBC Sales Corporation IBC Services, LLC IBC Trucking, LLC Interstate Brands Corporation MCF Legacy, Inc.

Names of Debtors Filing Petitions in the Debtors' Previous Chapter 11 Cases (And Not Identified Above) Armour and Main Redevelopment Corporation Baker's Inn Quality Baked Goods, LLC Interstate Bakeries Corporation Mrs. Cubbison's Foods, Inc. New England Bakery Distributors, L.L.C.

All Other Names Used by the Debtors in the Previous Eight Years (Including Trade Names) Baker's Inn Beefsteak Bread du Jour Brown's Bakery Butter-Nut Butter-Nut Bakeries Colombo Bakery Continental Baking Company Cotton's Holsum Cotton's Holsum Bakeries Di Carlo Bakery Dolly Madison Dolly Madison Bakery Drake's Drake's Bakery Eddy's Eddy's Bakery Grandma Emilie's Grandma Emilie Brown's Bakery Holsum Bakery Home Pride Hostess Hostess Bakeries IBC Hostess Services, LLC Interstate Brands West Corporation Interstate Brands Companies J.J. Nissen Bakery Merita Merita Bakeries Millbrook Bakeries My Bread Bakery


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Nature's Pride Pantry Pride Parisian Bakery San Francisco French Bread Company Sunbeam Sunbeam Bakery Sweetheart Sweetheart Bakery Standish Farms Weber's Bread Wonder Wonder Bakeries Wonder/Hostess Bakeries

Current Directors and Officers of Hostess Brands, Inc. Altizer, Jeffrey Birgfeld, Steven D. Cahill, John T. Driscoll, Brian J. Duran, Michael Herenstein, Andrew J. Hobbs, Richard L. Kissick, Jr., Robert M. Knipp, Christopher J. Lavine, Lawrence N. Loeser, David A. Magill, Kent B. Minnetian, Christopher Murphy, Gregory B. Reganato, David Ross, Martha Seban, Richard C. Singer, Leonard Stewart, John O. Wandschneider, Gary K.

Former Directors and Officers of Hostess Brands, Inc. Adams, Randall Akeson, John C. Flowers, Daniel R. Jung, Craig Lavelle, Timothy Lewis, Frank Mathews, Suresh Schneider, Bill Spielvogel, Scott Swanston, William Vance, J. Randall Verstraete, Stephany

Current Directors and Officers of Debtors Other Than Hostess Brands, Inc. (And Not Identified Above) Angst, Daniel G. Bilello, Lawrence R.


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Cooper, Steven P. Dibble, James W. Walsh, Mark A.

Hostess Brands, Inc. Equity Ownership Arrow Distressed Securities Fund Driscoll, Brian Gephardt Group Labor Advisory Services IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC Jung, Craig D. Mars & Co. Consulting LLC Monarch Debt Recovery Master Fund Ltd Monarch Opportunities Master Fund Ltd Monarch Income Master Fund Ltd McDonnell Loan Opportunity Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC

Ultimate Owners of the Debtors McDonnell Investment Management LLC Monarch Alternative Capital L.P. Ripplewood Holdings L.L.C. Silver Point Finance, LLC

Certain Competitors of the Debtors Flowers Foods, Inc. George Weston Limited Grupo Bimbo, S.A. McKee Foods Corporation Sara Lee Corporation


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Debtors' Professionals and Service Providers Accenture LLP Arent Fox LLP Ernst & Young LLP ESIS, Inc. Fisher & Phillips LLP FTI Consulting Houlihan Lokey Capital, Inc. Jefferson Wells International, Inc. Jones Day KPMG LLP Kurtzman Carson Consultants LLC Lockton Companies LLC Mars & Co. Consulting LLC Marsh USA, Inc. Perella Weinberg Partners LP Sitrick and Company Skadden Arps Slate Meagher & Flom Stinson Morrison Hecker Venable LLP

Known Professionals for Certain Significant Nondebtor Parties in Interest Conway Del Genio Gries & Co., LLC Cravath, Swaine & Moore LLP Debevoise & Plimpton LLP Lazard Ltd. Locker Associates Inc. Fulbright & Jaworski LLP Glanzer & Co. LLC MAEVA Advisors, LLC Paul, Hastings, Janofsky & Walker LLP Paul, Weiss, Rifkind, Wharton & Garrison LLP Richards Kibbe & Orbe LLP Willkie, Farr & Gallagher LLP

Major Secured Lenders Under The Debtors' Senior Secured Revolving Credit Facility And The Agents Thereunder

GE Capital Markets, Inc. General Electric Capital Corporation (as Administrative Agent) Wells Fargo Bank, N.A.

Major Secured Lenders Under The Debtors' First Lien Term Loan Facility And The Agents Thereunder Altai Capital Master Fund, Ltd. Archer Capital Master Fund, L.P. Archer SIF II, L.P. Arizona State Retirement System BA/CSCredit 1, LLC Candlewood Credit Value Master Fund Cerberus Series Four Holdings LLC Credit Suisse Loan Funding LLC Field Point III, Ltd. Field Point IV, Ltd.


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Gannett Peak CLO I, Ltd. Goldman Sachs Lending Partners LLC H Senior Income Fund LLC Hastings Master Fund, L.P. HSBC Distressed Opportunities Master Fund, Ltd. JPMorgan Chase Bank, N.A. McDonnell Loan Opportunity, Ltd. Monarch Master Funding, Ltd. Morgan Stanley Senior Funding, Inc. NB Distressed Debt Investment Fund, Ltd. Schultze Apex Master Fund, Ltd. Silver Point Finance, LLC (as Administrative Agent) SPF CDO I, Ltd. Talamod Capital Partners, L.P. UBS AG, Stamford Branch VR Global Partners, L.P.

Major Secured Lenders Under The Debtors' Third Lien Term Loan Facility And The Agents Thereunder Arizona State Retirement System Arrow Distressed Securities Fund BA/CSCREDIT 1, LLC Bank of America, N.A. Candlewood Credit Value Master Fund II, L.P. Courage Special Situations Master Fund, L.P. CVP Distressed Fund, L.P. Deutsche Bank Trust Company Americas Deutsche Bank AG, New York Branch H Senior Income Fund LLC HFR ED Courage Special Situations Master Trust Indonesian Shrimp Company Lehman Commercial Paper, Inc. McDonnell Loan Opportunity, Ltd. Monarch Master Funding, Ltd. Morgan Stanley Senior Funding, Inc. Promethean Managers LLC Rockview Trading, Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. Silver Point Finance LLC (as Administrative Agent) SPCP Group LLC The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, L.P. Yucaipa American Alliance Fund I, L.P.

Holders of 5% Secured Convertible PIK-Election Series A and B Notes and 10% Secured Convertible PIK-Election Series C Notes and the Indenture Trustee Thereunder

Arrow Distressed Securities Fund Deutsche Bank AG New York Branch Deutsche Bank Trust Company Americas Hare & Co. IBC Investors I, LLC IBC Investors II, LLC IBC Investors III, LLC Indonesian Shrimp Co. J.P. Morgan Securities LLC (formerly Inc.)


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Lehman Commercial Paper Inc. McDonnell Loan Opportunity Ltd. Monarch Master Funding Ltd Rockview Trading, Ltd. Schultze Apex Master Fund, Ltd. Schultze Master Fund, Ltd. SPCP Group, LLC Swiss Re Financial Products Corporation The Bank of New York Mellon Trust Company, N.A. (as Indenture Trustee) The Bank of Nova Scotia Yucaipa American Alliance (Parallel) Fund I, LP Yucaipa American Alliance Fund I, LP

Additional Material Lienholders

7-Eleven Corporation APEX Cold Storage Baker Transfer & Storage Diversified Transfer and Storage #1423392 Glacier Cold Storage Groves Faison Hunter Creek Warehouse (Park Creek Venture) International Transit & Storage MBM Corporation Merchandise Warehouse Millard Refrigerated Services Ress Properties (Kent Lindemuth Warehouse)

Parties to Recent Material Transactions with the Debtors Lee & Associates, Inc. Sugar Foods Corp. Debtors' Current and Former Depository and Disbursement Banks and Financial Institutions With Which

the Debtors Maintain Accounts ADM Investor Services, Inc. Bank of America Bank of Oklahoma Bank of the West Banknorth MA Banknorth, N.A. Banknorth Vermont Columbus Bank & Trust Comerica Fifth Third Bank First National Bank of Alaska First Tennessee Bank Franklin Savings Bank Harris Trust JP Morgan Chase National City Bank Penson GHCO PNC Bank RBC Bank Regions Bank


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Sovereign Bank United Missouri Bank Union Bank Wachovia Securities Wells Fargo Bank, N.A. Zions Bank Major Vendors of the Debtors ADM, Inc. Ag Processing Amalgamated Sugars American Pan/Pan Glo American Yeast Bagcraft Barry Callebaut Bay State Milling Company Blommer Chocolate Company Bunge North America Calise & Sons Bakery, Inc. Caravan Ingredients Cargill, Inc. Cereal Food Processors Comdata Corporation Conagra Foods Dakota Specialty Danisco Delavau LLC Domino Sugar Flavor Solutions Fleischmann Yeast General Mills Glopak Groeb Farms HC Brill Hoogwegt International Molasses International Paper LeSaffre Yeast Loders Croklaan Main Street Ingredients Mallet Malnove, Inc. of Nebraska Manildra Milling Manpower, Inc. Michael's Foods Milner Milling National Starch Perfect Commerce Pliant Corporation Prestige Pak, Inc. Roquette Siemer Milling Sonstegard Foods South Chicago Packing Company Speedway SuperAmerica


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St. Johns Packaging, Ltd. Tate and Lyle Public Limited Company TJ Harkings United Sugars Corporation UPS

Debtors' 40 Largest Unsecured Creditors as Identified in the Debtors' Chapter 11 Petitions

Accenture LLP ADM Inc. Automotive Industries Pension Plan Bakery & Confectionery Union & Industry International Pension Fund Bakery Drivers and Salesman Local 550 and Industry Pension Fund Bakery Drivers and Salesmen Local 194 and Industry Pension Fund Berry Plastics Corp. Blommer Chocolate Co. Blue Cross Blue Shield Bunge North America Calise & Sons Bakery Inc. Caravan Ingredients Cargill, Inc. Central Pension Fund of the IUOE Central States, Southeast and Southwest Areas Pension Plan Cereal Food Processors Cleveland Bakers and Teamsters Pension Fund Cloverhill Pastry Vending Corp. Comdata Corporation CSM Bakery Products Delavau LLC I.A.M. National Pension Plan Local 734 Pension Fund Malnove Inc. of Nebraska Manildra Milling Manpower Inc. MSC Industrial New England Teamsters & Trucking Industry Pension Fund Northern New England Benefit Trust Ortran Inc. Philadelphia Bakery Employers & Food Driver Salesmens Union Local 463 & Teamsters Local 676 Pension Plan Retail, Wholesale & Department Store International Union and Industry Pension Fund SAP America, Inc. Southern California Bakery Security Fund Speedway Superamerica LLC The Goodyear Tire & Rubber Co Twin Cities Bakery Drivers Pension Fund United Sugars Corp. Waste Management National Services Western Conference of Teamsters Pension Plan Significant Utility Providers Access Point Alabama Power Alcorn County Electric Power Association Amerada Corporation Ameren Illinois


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AT&T Birmingham Water Works City of Emporia City of Seattle Columbia Gas of Kentucky Columbia Gas of Maryland Columbia Gas of Ohio Columbia Gas of Pennsylvania Columbia Gas of Virginia ComEd ConEdison Consumers Energy Company Duquesne Light Co. Harriman Utility Board Indianapolis Power & Light Co. Knoxville Utilities Board Matrix Telecom Inc. Memphis Light Gas & Water Nicor Gas NIPSCO Northwestern Energy Passaic Valley Sewerage Rocky Mountain Public Utilities Southern Connecticut Gas Southwest Gas Corp. The Gas Company Township of Wayne Vectren Energy Delivery of Indiana, Inc. Verizon Water Revenue Bureau (Philadelphia, PA) Xcel Energy

Beneficiaries and Issuers of Letters of Credit ACE American Insurance Company Comerica Bank Director of Rhode Island Workers Compensation Florida Power & Light Company Florida Self-Insurers Guaranty Association, Inc. Hartford Fire Insurance Company JP Morgan Chase Bank Kansas Dept. of Human Resources Louisiana Department of Labor Ohio Bureau of Workers Compensation Oklahoma Workers' Compensation Court Peoples Gas System Self-Insurance Division, Bureau of Workers' Compensation (Harrisburg, PA) State of Connecticut State of Michigan Tampa Electric Company Travelers Casulty & Surety Company of America Travelers Indemnity Company United States Fidelity and Guaranty Company


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Counterparties to Hedging Arrangements AG Processing, Inc. Archer-Daniels-Midland Company Bartlett Milling Bay State Milling Company Blommer Chocolate Co. Bunge North America Cereal Food Processors Conagra Foods Horizon Milling, LLC Mennel Milling Company Milner Milling Company Roquette America Inc. Siemer Milling Company Major Lessors and Related Entities 17201 Figueroa LLC Aircraft Bolt Corp. APC Capital Partners Boise Capital Partners Bristol Properties Inc. Brookdale Properties LLC Carson Madrona Co. LLC Century Warehousing Inc. CRP Institutional Investors LP Darwin C. Parrish Sonja G. Parr Donald J. Bruzzone Donna J. Bruzzon Eastgroup Properties LP Future Home Inc. JSLB LLC MBWCA VII Associates Inc. Park Creek Venture Piedmont Operating Partnership LP Prologis TLF (Las Vegas) LLC Russo Development LLC S&D Wells Investments LLC Seminary Road LLC Severson Ranch Partnership Thompson Road Associates LLC VT One LLC National Unions Representing Significant Number of Debtor Employees Bakery, Confectionery, Tobacco Workers & Grain Millers International Union. International Brotherhood of Teamsters Parties to Other Significant Contracts with the Debtors Banc of America Merchant Services LLC OCE Imagistics, Inc. OCE North America


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Common Carriers, Customs Brokers and Warehousemen to the Debtors ABF Freight Services CR England Inc. CH Robinson Worldwide The Custom Companies Fleet Global Services Inc. Greatwide Dedicated Transport HLN Services International Transit & Storage Interstate Distributor Co. Kansas Continental Express Ortran Inc. RDG Truckin LCC Redline Select Space Strive Logistics Totem Ocean Trailer Express Universal Am-Cam Ltd. YRC, Inc. Parties to Litigation with the Debtors Aybar, Casilda Baker, Kara Bernhard, Kimberly Blackshear, Venus Blood, Curtis Boyle, George Brooks, Anthony Browder's Maximum Security ATS Connecticut Dept. of Labor Investigation Dewitt, Donna Fitzgerald, Steven R. Flowers Bakeries Brands, Inc. Fraser, Brenda Gallion, Ola Hall, Derek Halvorson, Cora Hedback, John A. Henderson, Tyrone Johnson, Adam Jones, Bryan Kaye, William S. Lorenz (Kuhn), Lizette Loy, Timothy Lucchesi, Richard Madera, Ana Matter, Marc Mazim's Nutricare (d/b/a Papa Pita Bakery) McKinzy, Michael, Sr. Northwest Administrators OneBeacon Insurance Company Pigford, Michael Reid-Fitzgerald, Joanne Rutherford, Lewis, Sr.


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Scheinfeld, Craig Scott, Alice Sprick, Michael Turner, LeJuan Werwinski, Charlene Whitfield, Charles Zielinski, Todd Parties to Material License Agreements with the Debtors Alaska Pride Baking Company American Bakers Cooperative Delavau, LLC Evrilholder Products LLC Gonzales Enterprises, Inc. d/b/a Fifth Sun Graphics International Foods Company Rasta Imposta, Inc. Sara Lee Corp. (successor to Heilman Baking Company) SBC Services Sun-Maid Growers of California The Federated Group The Long Company Major Insurers and Insurance Brokers ACE American Insurance Company Allied World Assurance Company American International Specialty Lines Insurance Company Arch Insurance Company Darwin Select Insurance Company Fireman's Fund Insurance Company Illinois Union Insurance Company Lexington Insurance Company Liberty Mutual Fire Insurance Company Lloyd's of London Princeton Excess & Surplus Lines Insurance Company RSUI Indemnity Company Safety National Casualty Corporation St. Paul Fire & Marine Insurance Company Travelers Property Casualty Company of America XL Insurance America, Inc. Major Benefits Administrators Blue Cross Blue Shield Broadspire Services, Inc. Cigna Behavioral Health Delta Dental Insurance Company Eyemed Vision Care (ECPA) Employer Self Insurance Service (ESIS) John Eastern Company M&I Trust Company Principal Life Insurance Company Vision Service Plan – IC


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Additional Third Party Administrators ADP, Inc. Harland Technology Services Significant Multi Employer Pension Plans Alaska Teamster-Employer Pension Plan Automobile Mechanics Local No. 701 Union and Industry Pension Fund Automotive Industries Pension Plan Automotive Machinist Pension Plan Bakers Local No. 433 Pension Plan Bakery & Confectionery Union & Industry International Pension Fund Bakery and Sales Drivers Local Union 33 Industry Pension Fund Bakery Drivers and Salesman Local 550 and Industry Pension Fund Bakery Drivers and Salesmen Local 194 and Industry Pension Fund Central Ohio UFCW Unions and Retail Employers Pension Plan Central Pension Fund of the IUOE & Participating Employers Central States, Southeast and Southwest Areas Pension Plan Cleveland Bakers and Teamsters Pension Fund District No. 9, International Association of Machinists and Aerospace Workers Pension Plan Employer-Teamsters Local Nos. 175 & 505 Pension Plan I.A.M. National Pension Plan Indiana Teamsters Pension Fund Pension Plan IUOE Stationary Engineers Local 39 Pension Local 734 Pension Fund Milwaukee Drivers Pension Plan New England Teamsters & Trucking Industry Pension Fund New York State Teamsters Conference Pension & Retirement Fund Oregon Retail Employees Pension Plan Philadelphia Bakery Employers & Food Driver Salesmens Union Local 463 & Teamsters Local 676 Pension Plan Retail, Wholesale & Department Store International Union and Industry Pension Fund Richmond Teamsters & Industry Pension Plan Sound Retirement Trust (f/k/a Retail Clerks Pension Plan) Teamsters Local 639 Employers Pension Trust Teamsters Negotiated Pension Plan Teamsters Union Local 142 Pension Trust Fund Teamsters Union Local No. 52 Pension Fund The National Conference of Firemen and Oilers National Pension Fund Twin Cities Bakery Drivers Pension Fund UFCW - Northern California Employers Joint Pension UFCW District Union Local Two and Employers Pension Plan (f/k/a Kansas City Area Retail Food Store

Employees Pension Plan) United Food & Commercial Workers Unions & Employers Midwest Pension Fund United Food and Commercial Workers Unions and Employers Pension Plan Upstate New York Bakery Drivers and Industry Pension Fund Western Conference of Teamsters Pension Plan Western Pennsylvania Teamsters and Employers Pension Plan Bankruptcy Judges for the Southern District of New York Chief Judge Arthur J. Gonzalez Judge Stuart M. Bernstein Judge Shelley C. Chapman Judge Robert D. Drain Judge Robert E. Gerber


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Judge Martin Glenn Judge Allan J. Gropper Judge Sean H. Lane Judge Burton R. Lifland Judge Cecelia G. Morris Judge James M. Peck

The Attorneys for the United States Trustee's Office for the Southern District of New York Davis, Tracy Hope Gasparini, Elisabetta Golden, Susan Khodorovsky, Nazar Masumoto, Brian S. Morrissey, Richard C. Nakano, Serene Schwartz, Andrea B. Schwartzberg, Paul K. Riffkin, Linda A. Velez-Rivera, Andy Zipes, Greg M.


NYI-4436011v2

ANNEX 1

[Amended Engagement Letter]


Kobi Partners, LLC Gregory F. Rayburn Managing Partner

PRIVATE & CONFIDENTIAL February 22, 2012 Via E-mail Delivery Hostess Brands, Inc. Attn: Mr. Chris Minnetian Chairman of the Board 6031 Connection Drive, Suite 600 Irving, Texas 75039 Re: Engagement Letter between Kobi Partners, LLC and Hostess Brands, Inc. Ladies & Gentlemen: 1. Introduction

This letter confirms that we, Kobi Partners, LLC (“Kobi”), have been retained by you, Hostess Brands, Inc. (the “Company”), to provide certain financial advisory and consulting services (the “Services”) set out below. This letter of engagement (the “Engagement”) and the related Standard Terms and Conditions constitute the engagement contract (the “Engagement Contract”) pursuant to which the Services will be provided. The Company and its affiliates have filed chapter 11 cases (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and Kobi’s retention will be required to be approved by the Bankruptcy Court. Kobi’s role will include providing Gregory F. Rayburn as CRO and CEO to the Company in the Chapter 11 Cases, subject Bankruptcy Court approval.

2. Scope of Services

The Services, to be performed at the Company’s direction, are expected to include the following: • Provide the services of Gregory F Rayburn to serve as the Chief Restructuring

Officer (the “CRO”) and, unless changed by action of the Board of Directors, the Chief Executive Officer (the “CEO”) of the Company. During the term of this


Hostess Brands Attn: Mr. Minnetian February 22, 2012 Page 2 of 4

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Engagement, Mr. Rayburn will not take on any new engagement without the express prior written consent of the Company.

• Mr. Rayburn will:

1. Report to the Board of Directors and serve as a member of the Board of Directors;

2. Lead the negotiations with the Company’s unions;

3. Assist the Company with the identification of core business assets and the disposition of assets or liquidation of unprofitable operations;

4. Oversee and direct the preparation and presentation of disclosures and other information in connection with the Company’s chapter 11 cases;

5. Review, analyze and advise the Board of Directors with respect to the Company’s turnaround plan, and oversee and direct the implementation the turnaround plan, as it may be revised by the Board of Directors;

6. Lead negotiations and direct analysis, proposal, prosecution and consummation of the chapter 11 plan as directed by the Board of Directors;

7. Oversee and direct the day-to-day implementation of the Company’s reorganization plan and the Company’s overall corporate strategies as directed by the Board of Directors;

8. Oversee and direct any liquidation process of the Company;

9. Oversee and direct the implementation of any strike preparedness plan of the Company that may be necessary or appropriate;

10. Provide testimony in court as required or appropriate during the Company’s and its affiliated debtors’ chapter 11 cases;

11. Participate in meetings internally or with outside constituencies as requested by the Board of Directors; and

12. Provide such other services, advice or assistance as may be requested by the Board of Directors from time to time in connection with this Engagement.

The Services, as outlined above, are subject to change as mutually agreed between us.



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The Services will encompass those described above and consistent with our ethical obligations.

3. Fees and Cash on Accounts

For services rendered in connection with this assignment, the Company agrees to pay Kobi a monthly, non-refundable fee of $125,000 for the services of Greg Rayburn. Payment of such fees is due and payable in advance on the first business day of each month. In addition to the fees outlined above, Kobi will bill for direct reasonable out of pocket expenses which are incurred on your behalf during this Engagement. Direct expenses include actual, reasonable and customary out-of-pocket expenses which are directly incurred in connection with the engagement such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the Engagement.

4. Terms and Conditions

The attached Standard Terms and Conditions set forth the duties of each party with respect to the Services. Further, this letter and the Standard Terms and Conditions attached comprise the entire Engagement Contract for the provision of the Services to the exclusion of any other express or implied terms, whether expressed orally or in writing, including any conditions, warranties and representations, and shall supersede all previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services.

5. Conflicts of Interest We have undertaken a review of our records to determine Kobi's professional relationships with the Company, its creditors and other related parties.

We were not made aware of nor did we discover any conflicts of interest or additional relationships that we believe would preclude us from performing the Services. We are regularly engaged by new clients, which may include one or more of the parties involved in this matter. We will not accept an engagement that directly conflicts with this Engagement.



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6. Acknowledgement and Acceptance

Please acknowledge your acceptance of the terms of this Engagement Contract by signing both the confirmation below and the attached Standard Terms and Conditions and returning a copy of each to us at the above address.

If you have any questions regarding this letter or the attached Standard Terms and Conditions, please do not hesitate to contact Gregory F. Rayburn at (336) 407-4857. Very truly yours, Kobi Partners, LLC By: Gregory F. Rayburn Managing Partner Attachment – As stated Confirmation of Terms of Engagement We agree to engage Kobi Partners, LLC upon the terms set forth herein and in the attached Standard Terms and Conditions. Hostess Brands, Inc. By: /s/ Christopher Minnetian Chris Minnetian Chairman of the Board

Date: February 22, 2012


Kobi Partners, LLC

STANDARD TERMS AND CONDITIONS The following are the Standard Terms and Conditions on which we will provide the Services to you set forth within the attached letter of engagement with Hostess Brands, Inc. dated February 22, 2012. The Engagement letter and the Standard Terms and Conditions (collectively the “Engagement Contract”) form the entire agreement between us relating to the Services and replace and supersede any previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services. The headings and titles in the Engagement Contract are included to make it easier to read but do not form part of the Engagement Contract. 1. Reports and Advice 1.1 Use and purpose of advice and reports – Any advice given or report issued by us

is provided solely for your use and benefit and only in connection with the purpose in respect of which the Services are provided. Unless required by law, you shall not provide any advice given or report issued by us to any third party other than your attorneys and your other restructuring advisors, or refer to us or the Services, without our prior written consent, which shall not be unreasonably withheld. In no event, regardless of whether consent has been provided, shall we assume any responsibility to any third party to which any advice or report is disclosed or otherwise made available.

2. Information and Assistance 2.1 Provision of information and assistance – Our performance of the Services is

dependent upon your providing us with such information and assistance as we may reasonably require from time to time.

2.2 Punctual and accurate information – You shall use reasonable skill, care and

attention to ensure that all information we may reasonably require is provided on a timely basis and is accurate and complete and relevant for the purpose for which it is required. You shall also notify us if you subsequently learn that the information provided is incorrect or inaccurate or otherwise should not be relied upon.

2.3 No assurance on financial data – While our work may include an analysis of

financial and accounting data, the Services will not include an audit, compilation or


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review of any kind of any financial statements or components thereof. Company management will be responsible for any and all financial information they provide to us during the course of this Engagement, and we will not examine or compile or verify any such financial information. Moreover, the circumstances of the Engagement may cause our advice to be limited in certain respects based upon, among other matters, the extent of sufficient and available data and the opportunity for supporting investigations in the time period. Accordingly, as part of this Engagement, we will not express any opinion or other form of assurance on financial statements of the Company.

2.4 Prospective financial information - In the event the Services involve prospective

financial information, our work will not constitute an examination or compilation, or apply agreed-upon procedures, in accordance with standards established by the American Institute of Certified Public Accountants or otherwise, and we will express no assurance of any kind on such information. There will usually be differences between estimated and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. We will take no responsibility for the achievability of results or events projected or anticipated by the management of the Company.

3. Additional Services 3.1 Responsibility for other parties – You shall be solely responsible for the work and

fees of any other party engaged by you to provide services in connection with the Engagement regardless of whether such party was introduced to you by us. Except as provided in this Engagement Contract, we shall not be responsible for providing or reviewing the advice or services of any such third party, including advice as to legal, regulatory, accounting or taxation matters. Further, we acknowledge that we are not authorized under our Engagement Contract to engage any third party to provide services or advice to you, other than our agents or independent contractors engaged to provide Services, without your prior written authorization.

4. Confidentiality 4.1 Restrictions on confidential information – Both parties agree that any confidential

information received from the other party shall only be used for the purposes of providing or receiving Services under this or any other contract between us. Except as provided below, neither party will disclose the other party’s confidential information to any third party without the other party’s consent. Confidential information shall not include information that:


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4.1.1 is or becomes generally available to the public other than as a result of a

breach of an obligation under this Clause 4.1;

4.1.2 is acquired from a third party who, to the recipient party’s knowledge, owes no obligation of confidence in respect of the information;

4.1.3 was already known to recipient without an obligation of confidentiality before receiving such information from the disclosing party hereunder; or

4.1.4 is or has been independently developed by the recipient without use of any of

the confidential information of the disclosing party.

4.2 Disclosing confidential information – Notwithstanding Clause 1.1 or 4.1 above, either party will be entitled to disclose confidential information of the other to a third party to the extent that this is required by valid legal process, provided that (and without breaching any legal or regulatory requirement) where reasonably practicable not less than 2 business days’ notice in writing is first given to the other party.

4.3 Citation of engagement – Without prejudice to Clause 4.1 and Clause 4.2 above, to the extent our engagement is or becomes known to the public, we may cite the performance of the Services to our clients and prospective clients as an indication of our experience, unless we and you specifically agree otherwise in writing.

5. Termination

5.1 Termination of Engagement with notice – Either party may terminate the

Engagement Contract for whatever reason upon written notice to the other party. 5.2 Continuation of terms – The terms of the Engagement that by their context are

intended to be performed after termination or expiration of this Engagement Contract, including but not limited to, Clauses 1.1, 4, 6 and 7 of the Standard Terms and Conditions, are intended to survive such termination or expiration and shall continue to bind all parties.

6. Indemnification; Independent Contractor; Waiver of Jury Trial 6.1 Indemnification - The Company shall indemnify those Kobi employees serving as

executive officers of the Company on the same terms as provided to the Company's


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other officers and directors under the Company's by-laws and applicable state law, along with insurance coverage under the Company's directors' and officers' insurance policies.

6.2 Independent Contractor - The parties intend that an independent contractor

relationship will be created by this Engagement Contract. As an independent contractor, Kobi will have complete and exclusive charge of the management and operation of its business, including hiring and paying the wages and other compensation of all its employees and agents, and paying all bills, expenses and other charges incurred or payable with respect to the operation of its business. None of Kobi’s employees will be entitled to receive from the Company any salary, bonus, compensation, vacation pay, sick leave, retirement, pension or social security benefits, workers compensation, disability, unemployment insurance benefits or any other Company employee benefits. Kobi will be responsible for all employment, withholding, income and other taxes incurred in connection with the operation and conduct of its business.

6.3 WAIVER OF JURY TRIAL –TO FACILITATE JUDICIAL RESOLUTION AND SAVE

TIME AND EXPENSE, YOU AND KOBI IRREVOCABLY AND UNCONDITIONALLY AGREE NOT TO DEMAND A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE SERVICES OR ANY SUCH OTHER MATTER.

7. Governing Law and Jurisdiction-The Engagement Contract shall be governed by

and interpreted in accordance with the laws of the State of New York, without giving effect to the choice of law provisions thereof. During the pendency of the Chapter 11 Cases, the Bankruptcy Court shall have exclusive jurisdiction in relation to any claims, dispute or difference concerning the Engagement Contract and any matter arising from it; thereafter, the United States District Court for the Southern District of New York and the appropriate Courts of the State of New York sitting in the Borough of Manhattan, City of New York shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning the Engagement Contract and any matter arising from it. The parties submit to the jurisdiction of such Courts and irrevocably waive any right they may have to object to any action being brought in these Courts, to claim that the action has been brought in an inconvenient forum or to claim that those Courts do not have jurisdiction.


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Confirmation of Standard Terms and Conditions We agree to engage Kobi Partners, LLC upon the terms set forth in these Standard Terms and Conditions as outlined above. Hostess Brands, Inc. By: /s/ Christopher Minnetian

Chris Minnetian Chairman of the Board Date: February 22, 2012


NYI-4436011v2 -3-

ANNEX 2

[Blackline Comparing Engagement Letters]


Kobi Partners, LLC Gregory F. Rayburn Managing Partner

PRIVATE & CONFIDENTIAL February 22, 2012 Via E-mail Delivery Mr. Brian Driscoll Chief Executive Officer Hostess Brands, Inc. Attn: Mr. Chris Minnetian Chairman of the Board 6031 Connection Drive, Suite 600 Irving, Texas 75039 Re: Engagement Letter between Kobi Partners, LLC and Hostess Brands, Inc. Dear Mr. DriscollLadies & Gentlemen: 1. Introduction

This letter confirms that we, Kobi Partners, LLC (“Kobi”), have been retained by you, Hostess Brands, Inc. (the “Company”), to provide certain financial advisory and consulting services (the “Services”) set out below. This letter of engagement (the “Engagement”) and the related Standard Terms and Conditions constitute the engagement contract (the “Engagement Contract”) pursuant to which the Services will be provided. The Company and its affiliates have filed chapter 11 cases (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and Kobi’s retention will be required to be approved by the Bankruptcy Court. Kobi’s role will include providing Gregory F. Rayburn as CRO and CEO to the Company in the Chapter 11 Cases, subject Bankruptcy Court approval.

2. Scope of Services

The Services, to be performed at the Company’s direction, are expected to include the following:


Mr. Driscoll Hostess Brands Attn: Mr. Minnetian February 22, 2012 Page 2 of 84

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• Provide the services of Gregory F Rayburn to serve as the Chief Restructuring Officer (the “CRO”) and, unless changed by action of the Board of Directors, the Chief Executive Officer (the “CEO”) of the Company. During the term of this Engagement, Mr. Rayburn will not take on any new engagement without the express prior written consent of the Company.

• Mr. Rayburn will:

1. Report to the CEOBoard of Directors and serve as a member of the CompanyBoard of Directors;

2. Attend and participate in meetings of the Company’s Board of Directors as requested by the CEO or the Chairman of the Board;

2. Lead the negotiations with the Company’s unions;

3. Assist the Company with the identification of core business assets and the disposition of assets or liquidation of unprofitable operations;

4. Assist in the preparation of information for distribution to creditors and others;

54. Assist withOversee and direct the preparation and presentation of disclosures required duringand other information in connection with the Company’s chapter 11 cases;

6. Review and evaluate the Company’s turnaround plan and advise the CEO and, if requested, the Board with respect to the same;

5. Review, analyze and advise the Board of Directors with respect to the Company’s turnaround plan, and oversee and direct the implementation the turnaround plan, as it may be revised by the Board of Directors;

6. Lead negotiations and direct analysis, proposal, prosecution and consummation of the chapter 11 plan as directed by the Board of Directors;

7. Oversee and direct the day-to-day implementation of the Company’s reorganization plan and the Company’s overall corporate strategies as directed by the Board of Directors;

78. Oversee and direct any liquidation process of the Company;

89. Oversee and direct the implementation of any strike preparedness plan of the Company that may be necessary or appropriate;



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910. Provide testimony in court as required or appropriate during the Company’s and its affiliated debtors’ chapter 11 cases;

1011. Participate in meetings internally or with outside constituencies as requested by the CEOBoard of Directors; orand

1112. Provide such other services, advice or assistance as may be requested by the Company’s CEOBoard of Directors from time to time in connection with this Engagement.

The Services, as outlined above, are subject to change as mutually agreed between us.

The Services will encompass those described above and consistent with our ethical obligations. As usual, our Engagement is to represent the Company and not its individual directors, officers, employees or shareholders. However, we anticipate that in the course of that Engagement, we may provide information or advice to directors, officers or employees in their corporate capacities.

3. Fees and Cash on Accounts

For services rendered in connection with this assignment, the Company agrees to pay Kobi a monthly, non-refundable advisory fee of $100,000125,000 for the services of Greg Rayburn. Payment of such fees is due and payable in advance on the first business day of each month. In addition to the fees outlined above, Kobi will bill for direct reasonable out of pocket expenses which are incurred on your behalf during this Engagement. Direct expenses include actual, reasonable and customary out-of-pocket expenses which are directly incurred in connection with the engagement such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the Engagement.

34. Terms and Conditions

The attached Standard Terms and Conditions set forth the duties of each party with respect to the Services. Further, this letter and the Standard Terms and Conditions



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attached comprise the entire Engagement Contract for the provision of the Services to the exclusion of any other express or implied terms, whether expressed orally or in writing, including any conditions, warranties and representations, and shall supersede all previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services.

45. Conflicts of Interest We have undertaken a review of our records to determine Kobi's professional relationships with the Company, its creditors and other related parties.

We were not made aware of nor did we discover any conflicts of interest or additional relationships that we believe would preclude us from performing the Services. We are regularly engaged by new clients, which may include one or more of the parties involved in this matter. We will not accept an engagement that directly conflicts with this Engagement.

56. Acknowledgement and Acceptance

Please acknowledge your acceptance of the terms of this Engagement Contract by signing both the confirmation below and the attached Standard Terms and Conditions and returning a copy of each to us at the above address.

If you have any questions regarding this letter or the attached Standard Terms and Conditions, please do not hesitate to contact Gregory F. Rayburn at (336) 407-4857. Very truly yours, Kobi Partners, LLC By: Gregory F. Rayburn Managing Partner Attachment – As stated



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Confirmation of Terms of Engagement We agree to engage Kobi Partners, LLC upon the terms set forth herein and in the attached Standard Terms and Conditions. Hostess Brands, Inc. By: Brian DriscollChris Minnetian Chief Executive OfficerChairman of the Board

Date:


Kobi Partners, LLC

STANDARD TERMS AND CONDITIONS The following are the Standard Terms and Conditions on which we will provide the Services to you set forth within the attached letter of engagement with Hostess Brands, Inc. dated February 22, 2012. The Engagement letter and the Standard Terms and Conditions (collectively the “Engagement Contract”) form the entire agreement between us relating to the Services and replace and supersede any previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services. The headings and titles in the Engagement Contract are included to make it easier to read but do not form part of the Engagement Contract. 1. Reports and Advice 1.1 Use and purpose of advice and reports – Any advice given or report issued by us

is provided solely for your use and benefit and only in connection with the purpose in respect of which the Services are provided. Unless required by law, you shall not provide any advice given or report issued by us to any third party other than your attorneys and your other restructuring advisors, or refer to us or the Services, without our prior written consent, which shall not be unreasonably withheld. In no event, regardless of whether consent has been provided, shall we assume any responsibility to any third party to which any advice or report is disclosed or otherwise made available.

2. Information and Assistance 2.1 Provision of information and assistance – Our performance of the Services is

dependent upon your providing us with such information and assistance as we may reasonably require from time to time.

2.2 Punctual and accurate information – You shall use reasonable skill, care and

attention to ensure that all information we may reasonably require is provided on a timely basis and is accurate and complete and relevant for the purpose for which it is required. You shall also notify us if you subsequently learn that the information provided is incorrect or inaccurate or otherwise should not be relied upon.

2.3 No assurance on financial data – While our work may include an analysis of

financial and accounting data, the Services will not include an audit, compilation or


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review of any kind of any financial statements or components thereof. Company management will be responsible for any and all financial information they provide to us during the course of this Engagement, and we will not examine or compile or verify any such financial information. Moreover, the circumstances of the Engagement may cause our advice to be limited in certain respects based upon, among other matters, the extent of sufficient and available data and the opportunity for supporting investigations in the time period. Accordingly, as part of this Engagement, we will not express any opinion or other form of assurance on financial statements of the Company.

2.4 Prospective financial information - In the event the Services involve prospective

financial information, our work will not constitute an examination or compilation, or apply agreed-upon procedures, in accordance with standards established by the American Institute of Certified Public Accountants or otherwise, and we will express no assurance of any kind on such information. There will usually be differences between estimated and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material. We will take no responsibility for the achievability of results or events projected or anticipated by the management of the Company.

3. Additional Services 3.1 Responsibility for other parties – You shall be solely responsible for the work and

fees of any other party engaged by you to provide services in connection with the Engagement regardless of whether such party was introduced to you by us. Except as provided in this Engagement Contract, we shall not be responsible for providing or reviewing the advice or services of any such third party, including advice as to legal, regulatory, accounting or taxation matters. Further, we acknowledge that we are not authorized under our Engagement Contract to engage any third party to provide services or advice to you, other than our agents or independent contractors engaged to provide Services, without your prior written authorization.

4. Confidentiality 4.1 Restrictions on confidential information – Both parties agree that any confidential

information received from the other party shall only be used for the purposes of providing or receiving Services under this or any other contract between us. Except as provided below, neither party will disclose the other party’s confidential information to any third party without the other party’s consent. Confidential information shall not include information that:


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4.1.1 is or becomes generally available to the public other than as a result of a

breach of an obligation under this Clause 4.1;

4.1.2 is acquired from a third party who, to the recipient party’s knowledge, owes no obligation of confidence in respect of the information;

4.1.3 was already known to recipient without an obligation of confidentiality before receiving such information from the disclosing party hereunder; or

4.1.4 is or has been independently developed by the recipient without use of any of

the confidential information of the disclosing party.

4.2 Disclosing confidential information – Notwithstanding Clause 1.1 or 4.1 above, either party will be entitled to disclose confidential information of the other to a third party to the extent that this is required by valid legal process, provided that (and without breaching any legal or regulatory requirement) where reasonably practicable not less than 2 business days’ notice in writing is first given to the other party.

4.3 Citation of engagement – Without prejudice to Clause 4.1 and Clause 4.2 above, to the extent our engagement is or becomes known to the public, we may cite the performance of the Services to our clients and prospective clients as an indication of our experience, unless we and you specifically agree otherwise in writing.

5. Termination

5.1 Termination of Engagement with notice – Either party may terminate the

Engagement Contract for whatever reason upon thirty days written notice to the other party.

5.2 Continuation of terms – The terms of the Engagement that by their context are

intended to be performed after termination or expiration of this Engagement Contract, including but not limited to, Clauses 1.1, 4, 6 and 7 of the Standard Terms and Conditions, are intended to survive such termination or expiration and shall continue to bind all parties.


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6. Indemnification and Liability Limitation; Independent Contractor; Waiver of Jury Trial

6.1 Indemnification - You agree toThe Company shall indemnify and hold harmless Kobi

and any of its subsidiaries and affiliates, officers, directors, principals, shareholders, agents, independent contactors and employees (collectively “Indemnified Persons”) from and against any and all claims, liabilities, damages, obligations, costs and expenses (including reasonable attorneys’ fees and expenses and costs of investigation) arising out of or relating to your retention of Kobi, the execution and delivery of this Engagement Contract, the provision of Services or other matters relating to or arising from this Engagement Contract, except to the extent that any such claim, liability, obligation, damage, cost or expense shall have been determined by final non-appealable order of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Person or Persons in respect of whom such liability is asserted.those Kobi employees serving as executive officers of the Company on the same terms as provided to the Company's other officers and directors under the Company's by-laws and applicable state law, along with insurance coverage under the Company's directors' and officers' insurance policies.

6.2 Limitation of liability - You agree that no Indemnified Person shall have any liability

as a result of your retention of Kobi, the execution and delivery of this Engagement Contract, the provision of Services or other matters relating to or arising from this Engagement Contract, other than liabilities that shall have been determined by final non-appealable order of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Person or Persons in respect of whom such liability is asserted. Without limiting the generality of the foregoing, in no event shall any Indemnified Person be liable for consequential, indirect or punitive damages, damages for lost profits or opportunities or other like damages or claims of any kind.

6.36.2 In addition to the above indemnification, Gregory F. Rayburn will be entitled to the

benefit of the indemnities provided by the Company to its officers and directors, whether under the Company’s by-laws, certificate of incorporation, by contract or otherwise. The Company agrees that it will use its commercially reasonable efforts to obtain Directors and Officers insurance and that should such insurance be obtained, it specifically will include and cover Gregory F. Rayburn under the Company’s policies for directors’ and officers’ insurance. The Company agrees to also maintain insurance coverage for Mr. Rayburn for a period of not less than two (2) years following the date of termination of his services hereunder. The provisions of this section 7 are in the


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nature of contractual obligations and no change in applicable law or the Company's charter, by-laws or other organizational documents or policies shall affect any of Mr. Rayburn’s rights hereunder. The obligations of the parties as reflected herein shall survive the termination of the Engagement.Independent Contractor - The parties intend that an independent contractor relationship will be created by this Engagement Contract. As an independent contractor, Kobi will have complete and exclusive charge of the management and operation of its business, including hiring and paying the wages and other compensation of all its employees and agents, and paying all bills, expenses and other charges incurred or payable with respect to the operation of its business. None of Kobi’s employees will be entitled to receive from the Company any salary, bonus, compensation, vacation pay, sick leave, retirement, pension or social security benefits, workers compensation, disability, unemployment insurance benefits or any other Company employee benefits. Kobi will be responsible for all employment, withholding, income and other taxes incurred in connection with the operation and conduct of its business.

6.46.3 WAIVER OF JURY TRIAL –TO FACILITATE JUDICIAL RESOLUTION AND SAVE

TIME AND EXPENSE, YOU AND KOBI IRREVOCABLY AND UNCONDITIONALLY AGREE NOT TO DEMAND A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE SERVICES OR ANY SUCH OTHER MATTER.

7. Governing Law and Jurisdiction-The Engagement Contract shall be governed by

and interpreted in accordance with the laws of the State of New York, without giving effect to the choice of law provisions thereof. During the pendency of the Chapter 11 Cases, the Bankruptcy Court shall have exclusive jurisdiction in relation to any claims, dispute or difference concerning the Engagement Contract and any matter arising from it; thereafter, the United States District Court for the Southern District of New York and the appropriate Courts of the State of New York sitting in the Borough of Manhattan, City of New York shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning the Engagement Contract and any matter arising from it. The parties submit to the jurisdiction of such Courts and irrevocably waive any right they may have to object to any action being brought in these Courts, to claim that the action has been brought in an inconvenient forum or to claim that those Courts do not have jurisdiction.


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Confirmation of Standard Terms and Conditions We agree to engage Kobi Partners, LLC upon the terms set forth in these Standard Terms and Conditions as outlined above. Hostess Brands, Inc. By:

Brian DriscollChris Minnetian Chief Executive OfficerChairman of the Board Date:


NYI-4436011v2

EXHIBIT B

[Proposed Order]


NYI-4436011v2


Debtors.

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x : : : : : : : x


ORDER AUTHORIZING THE DEBTORS TO (A) EMPLOY KOBI PARTNERS, LLC AND (B) DESIGNATE GREGORY F. RAYBURN AS

CHIEF EXECUTIVE OFFICER, NUNC PRO TUNC AS OF FEBRUARY 22, 2012

This matter coming before the Court on the Amended Motion of Debtors and

Debtors in Possession, Pursuant to Section 363 of the Bankruptcy Code, for an Order to (a)

Employ Kobi Partners, LLC and (b) Designate Gregory F. Rayburn as Chief Executive Officer,

Nunc Pro Tunc as of February 22, 2012 (the "Motion"),2 filed by the above-captioned debtors

and debtors-in-possession (the "Debtors"); the Court having reviewed the Motion and the

Declaration of Gregory F. Rayburn attached thereto (the "Rayburn Declaration") and having

considered the statements of counsel and the evidence adduced with respect to the Motion at a

hearing before the Court (the "Hearing"); and the Court having found that (i) the Court has

jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334, (ii) this is a core proceeding

pursuant to 28 U.S.C. § 157(b), (iii) notice of the Motion and the Hearing was sufficient under

the circumstances, (iv) the employment of Kobi Partners, LLC ("Kobi") and the designation of

Gregory F. Rayburn as Chief Executive Officer ("CEO"), as described in the Motion and the



2 Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.


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Amended Engagement Letter attached to the Rayburn Declaration as Annex 1, is a proper

exercise of the Debtors' business judgment pursuant to section 363(b) of the Bankruptcy Code,

(v) Kobi is a "disinterested person," as defined in section 101(14) of the Bankruptcy Code and

(vi) the Motion and all related papers fully comply with the Bankruptcy Code, the Bankruptcy

Rules and the Local Bankruptcy Rules; and the Court having determined that the legal and

factual bases set forth in the Motion and the Rayburn Declaration and at the Hearing establish

just cause for the relief granted herein;

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED as set forth herein.

2. The terms of the Amended Engagement Letter are reasonable terms and

conditions of employment and are hereby approved.

3. The Debtors are authorized, effective as of February 22, 2012, to employ

Kobi, and to appoint Gregory F. Rayburn as CEO, on the terms described in the Motion.

4. Kobi will file with the Court and serve on the Debtors, the Office of the

United States Trustee for the Southern District of New York, and any official committee, reports

of compensation earned and expenses incurred (the "Compensation Reports") on at least a

quarterly basis. The Compensation Reports will summarize the services provided, identify the

compensation earned, itemize expenses incurred and provide for an objection period. All such

compensation will be subject to review by this Court if an objection is filed.

5. The Debtors are authorized to take all actions necessary to effectuate the

relief granted pursuant to this Order and in accordance with the Motion.

6. The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.


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7. The Court retains jurisdiction with respect to all matters arising from or

related to the implementation, interpretation and/or enforcement of this Order.

Dated: ______________, 2012 White Plains, New York

UNITED STATES BANKRUPTCY JUDGE


12-22052-rdd doc 498 filed 03/09/12 entered 03/09/12 … · (e) review, analyze and advise the...

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