Exhibit 10(b)
 
THIRD AMENDMENT TO CREDIT AGREEMENT
 
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is made effective as
of the 29th day of October, 2008 by and among TASTY BAKING COMPANY, a
Pennsylvania corporation (“Company”), the direct and indirect subsidiaries of
the Company from time to time parties to the Credit Agreement (as defined below)
(the “Subsidiary Borrowers” and with the Company, collectively, the
“Borrowers”), each lender from time to time party to the Credit Agreement
(collectively, the “Lenders” and individually, a “Lender”), and CITIZENS BANK OF
PENNSYLVANIA, as Administrative Agent, Collateral Agent, Swing Line Lender and
L/C Issuer (the “Agent”).

BACKGROUND
 
A.     Borrowers, Lenders and Agent have previously entered into a certain
Credit Agreement dated September 6, 2007, amended by (i) that certain First
Amendment to Credit Agreement dated December 12, 2007 and (ii) that certain
Second Amendment to Credit Agreement dated July 16, 2008 (as amended and as may
be further amended, supplemented or restated from time to time, the “Credit
Agreement”), pursuant to which, inter alia, Agent and Lenders agreed to extend
to Borrowers certain credit facilities subject to the terms and conditions set
forth therein.
 
B.    Borrowers, Lenders and Agent have agreed to amend the terms of the Credit
Agreement in accordance with the terms and conditions hereof.
 
C.    Capitalized terms used herein and not otherwise defined in this Amendment
shall have the meanings set forth therefor in the Credit Agreement.
 
NOW THEREFORE, the parties hereto, intending to be legally bound hereby, agree
as follows:
 
1.    Definitions.
 
1.1    The pricing grid contained within the definition of “Applicable Rate” set
forth in Section 1.01 of the Credit Agreement is hereby amended to read, in its
entirety, as follows:
 
Applicable Rate
 
Pricing
Level
Operating
Leverage Ratio
Unused
Commitment Fee
LIBOR Rate +
___________
L/C Fee
Daily LIBOR
Rate +
1
<1.0x
0.20%
1.25%
1.25%
2
>1.0x < 2.0x
0.25%
1.75%
1.75%
3
>2.0x < 3.0
0.30%
2.25%
2.25%
4
>3.0x < 4.0x
0.40%
2.75%
2.75%
5
>4.0 x
0.50%
3.25%
3.25%

 
 

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1.2    The definition of “Daily LIBOR Loan” set forth in Section 1.01 of the
Credit Agreement is hereby amended to read, in its entirety, as follows:
 
““Daily LIBOR Loan” means any Fixed Asset Loan, Swing Line Loan or Working
Capital Revolver Loan bearing interest based on the Daily LIBOR Rate plus the
applicable basis points specified in the calculation of the Applicable Rate for
a Daily LIBOR Loan.”
 
1.3    The following definitions are hereby added to Section 1.01 of the Credit
Agreement in their proper alphabetical order and when used in this Amendment,
such terms shall have the following meanings:
 
““Daily LIBOR Fixed Asset Loan” means a Fixed Asset Loan that is a Daily LIBOR
Loan.”
 
““Daily LIBOR Working Capital Revolver Loan” means a Working Capital Revolver
Loan that is a Daily LIBOR Loan.”
 
1.4    (a) The definition of “Prime Rate” set forth in Section 1.01 of the
Credit Agreement is hereby deleted in its entirety and all references to the
defined term “Prime Rate” contained in the Credit Agreement and Loan Documents
are hereby deleted in their entirety and replaced with the defined term “Daily
LIBOR Rate”; (b) the definition of “Prime Rate Fixed Asset Loan” set forth in
Section 1.01 of the Credit Agreement is hereby deleted in its entirety and all
references to the defined term “Prime Rate Fixed Asset Loan” contained in the
Credit Agreement and Loan Documents are hereby deleted in their entirety and
replaced with the defined term “Daily LIBOR Fixed Asset Loan”; (c) the
definition of “Prime Rate Loan” set forth in Section 1.01 of the Credit
Agreement is hereby deleted in its entirety and all references to the defined
term “Prime Rate Loan” contained in the Credit Agreement and Loan Documents are
hereby deleted in their entirety and replaced with the defined term “Daily LIBOR
Loan”; and (d) the definition of “Prime Rate Working Capital Revolver Loan” set
forth in Section 1.01 of the Credit Agreement is hereby deleted in its entirety
and all references to the defined term “Prime Rate Working Capital Revolver
Loan” contained in the Credit Agreement and Loan Documents are hereby deleted in
their entirety and replaced with the defined term “Daily LIBOR Working Capital
Revolver Loan”.
 
2.    Condition of Fixed Asset Loan; Maximum Funding Cap.  Section 4.04(g) of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:
 
“(g)           Lenders shall have no obligation to make any Fixed Asset Loan
advances which would cause the aggregate amount of all advances of Fixed Asset
Loans, plus all advances under the Job Bank Term Loan, plus all advances under
the MELF Financing, plus all advances under the PIDC Financing to exceed
$44,000,000 in total, unless and until Agent has received evidence reasonably
satisfactory to Agent that fee simple title to the Navy Yard Property has been
conveyed to Landlord pursuant to the terms of the PAID Agreement of Sale.”
 
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2.1    Minimum EBITDA.  Section 6.12(a) of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
 
“(a)           Minimum EBITDA.  Maintain on a consolidated basis EBITDA of at
least the amount indicated for each period specified below:
 

 

  Period   Minimum Amount                         From the date hereof through
the fiscal quarter ending on or about 09/30/08   $13,000,000               For
the fiscal quarter ending on or about 12/31/08   $11,275,000               From
the fiscal quarter ending on or about 3/31/09 through the fiscal quarter ending
on or about 09/30/09   $15,000,000               From the fiscal quarter ending
on or about 12/31/09 through the fiscal quarter ending on or about 09/30/10  
$15,250,000               From the fiscal quarter ending on or about 12/31/10
through the fiscal quarter ending on or about 09/30/11    $21,000,000          
    For the fiscal quarter ending on or about 12/31/11 and for all fiscal
quarter thereafter   $25,000,000                        
The amount will be calculated at the end of each fiscal quarter using the
results of the twelve-month period then ended.”
 

 
3.    Maximum Operating Leverage Ratio.  Notwithstanding the effective date of
this Amendment, effective as of September 27, 2008, Section 6.12(c) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
 
“(c)           Maximum Operating Leverage Ratio.  Maintain on a consolidated
basis an Operating Leverage Ratio not exceeding the ratios indicated for each
period specified below:
 
 
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  Period Maximum Ratio             From the date hereof through 12/29/07   3.75
to 1.0              From 12/30/07 through 6/28/08 4.25 to 1.0              From
6/29/08 through 9/28/08 4.90 to 1.0              From 9/29/08 through 12/27/08 
6.0 to 1.0              From 12/28/08 through 12/26/09 6.0 to 1.0             
From 12/27/09 through 12/25/10 4.75 to 1.0              From 12/26/11 and
thereafter 3.75 to 1.0                     
This ratio will be calculated at the end of each fiscal quarter using the
results of the twelve-month period then ended.” 
 

 
4.    No Prime Rate Loans.  Notwithstanding anything to the contrary set forth
in the Loan Agreement, Borrowers shall not request and Lenders shall have no
obligation to make or continue any Prime Rate Loans.
 
5.    Amendment Fee.  As consideration for Agent and Lenders to enter into this
Amendment, Borrowers shall pay to Agent, for the account of each Lender in
accordance with their respective Applicable Percentages of the Loans, an
amendment fee in an amount of $150,000 (the “Amendment Fee”).  The Amendment Fee
is due and payable in full upon execution of this Amendment.  Borrowers agree
that the Amendment Fee has been fully earned by Agent and Lenders and is
non-refundable.
 
6.    Other References.  All references in the Credit Agreement and all the Loan
Documents to the term “Loan Documents” shall mean the Loan Documents as defined
therein and this Amendment and any and all other documents executed and
delivered by Borrowers pursuant to and in connection herewith.
 
7.    Covenants and Representations and Warranties.  Borrowers hereby:
 
7.1    ratify, confirm and agree that the Credit Agreement, as amended by this
Amendment, and all other Loan Documents are valid, binding and in full force and
effect as of the date of this Amendment, and enforceable in accordance with
their terms.
 
 
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7.2    agree that they have no defense, set-off, counterclaim or challenge
against the payment of any sums owed or owing under the Loan Documents or the
enforcement of any of the terms of the Loan Documents.
 
7.3    ratify, confirm and continue all liens, security interests, pledges,
rights and remedies granted to Agent for the benefit of Lenders in the Loan
Documents and agree that such liens, security interests and pledges shall secure
all of the Obligations under the Loan Documents as amended by this Amendment.
 
7.4    represent and warrant that all representations and warranties in the Loan
Documents are true and complete as of the date of this Amendment.
 
7.5    agree that their failure to comply with or perform any of their covenants
or agreements in this Amendment will constitute a Default or an Event of Default
under the Loan Documents subject to applicable notice and cure periods set forth
in Section 9.01 of the Credit Agreement.
 
7.6    represent and warrant that no condition or event exists after taking into
account the terms of this Amendment which would constitute a Default or an Event
of Default.
 
7.7    represent and warrant that the execution and delivery of this Amendment
by Borrowers and all documents and agreements to be executed and delivered
pursuant to this Amendment:
 
(a)    have been duly authorized by all requisite action of Borrowers;
 
(b)    will not conflict with or result in a breach of, or constitute a default
(or with the passage of time or the giving of notice or both, will constitute a
default) under, any of the terms, conditions, or provisions of any applicable
statute, law, rule, regulation or ordinance or any Borrower’s Articles of
Incorporation or By-Laws or any indenture, mortgage, loan or credit agreement or
instrument to which any Borrower is a party or by which it may be bound or
affected, or any judgment or order of any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign; and
 
(c)    will not result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon any of the property or assets of
Borrowers under the terms or provisions of any such agreement or instrument,
except liens in favor of Lenders.
 
8.    No Novation or Waiver.  Nothing contained herein constitutes a novation of
the Credit Agreement or any of the documents collateral thereto and shall not
constitute a release, termination or waiver of any of the liens, security
interests, rights or remedies granted to Agent and Lenders in the Credit
Agreement or any of the other Loan Documents, which liens, security interests,
rights or remedies are hereby ratified, confirmed, extended and continued as
security for all obligations secured by the Credit Agreement.  Nothing contained
herein constitutes an agreement or obligation by Agent or Lenders to grant any
further amendments to the Credit Agreement or any of the other Loan Documents.
 
 
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9.     Inconsistencies.  To the extent of any inconsistency between the terms
and conditions of this Amendment and the terms and conditions of the Credit
Agreement or the other Loan Documents, the terms and conditions of this
Amendment shall prevail.  All terms and conditions of the Credit Agreement and
the other Loan Documents not inconsistent herewith, shall remain in full force
and effect and are hereby ratified and confirmed by Borrowers.
 
10.    Binding Effect.  This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
 
11.    No Third Party Beneficiaries.  The rights and benefits of this Amendment
and the Loan Documents shall not inure to the benefit of any third party.
 
12.    Headings.  The headings of the Sections of this Amendment are inserted
for convenience only and shall not be deemed to constitute a part of this
Amendment.
 
13.    Severability.  The provisions of this Amendment and all other Loan
Documents are deemed to be severable, and the invalidity or unenforceability of
any provision shall not affect or impair the remaining provisions which shall
continue in full force and effect.
 
14.    Modifications.  No modifications of this Amendment or any of the Loan
Documents shall be binding or enforceable unless done in accordance with Section
11.01 of the Credit Agreement.
 
15.    Law Governing.  This Amendment has been made, executed and delivered in
the Commonwealth of Pennsylvania and will be construed in accordance with and
governed by the laws of such Commonwealth, without regard to any rules or
principles regarding conflicts of law or any rule or canon of construction which
interprets agreements against the draftsman.
 
16.    Waiver of Right to Trial by Jury.  EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AMENDMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY).  EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON 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 AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
 
 
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17.    Counterparts; Facsimile Signatures.  This Amendment may be executed in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original without the production of any other
counterpart.  Any signature delivered via facsimile or other electronic means
shall be deemed an original signature hereto.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
 
 

 

  BORROWERS:          TASTY BAKING COMPANY          By:  /s/  Eugene P.
Malinowski    Name:  Eugene P. Malinowski    Title:  Vice President & Corporate
Treasurer                      TASTYKAKE INVESTMENT COMPANY          By: 
/s/  Eugene P. Malinowski        Name:  Eugene P. Malinowski     Title: 
Treasurer                        TBC FINANCIAL SERVICES, INC.          By: 
/s/  Eugene P. Malinowski       Name:  Eugene P. Malinowski     Title: 
Treasurer                        TASTY BAKING OXFORD, INC.          By: 
/s/  Eugene P. Malinowski         Name:  Eugene P. Malinowski      Title: 
Treasurer                         AGENT:       
CITIZENS BANK OF PENNSYLVANIA, as
Administrative Agent, Collateral Agent and L/C Issuer 
        By:  /s/  W. Anthony Watson      Name:  W. Anthony Watson      Title: 
Senior Vice President         

 
 
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CITIZENS BANK OF PENNSYLVANIA, as Lender 
        By:  /s/  W. Anthony Watson       Name:   W. Anthony Watson    Title:  
Senior Vice President                      BANK OF AMERICA, N.A., as Lender     
    By:   /s/  Robert Fratta    Name:    Robert Fratta     Title:   Vice
President                      SOVEREIGN BANK, as Lender          By: 
/s/  Dennis Wasilewski    Name:   Dennis Wasilewski      Title:   Senior Vice
President                      
MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender 
        By:   /s/  David W. Mills    Name:    David W. Mills    Title:     Vice
President 

 
 
 
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