Exhibit 10(mm)
 
EXECUTION VERSION

WAIVER AGREEMENT AND
SEVENTH AMENDMENT TO CREDIT AGREEMENT

THIS WAIVER AGREEMENT AND SEVENTH AMENDMENT TO CREDIT AGREEMENT (the
“Agreement”) is made as of January 14, 2011 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
herein) (the “Subsidiary Borrowers” and with the Company, collectively, the
“Borrowers”), CITIZENS BANK OF PENNSYLVANIA, as Administrative Agent and
Collateral Agent (in such capacities, collectively, the “Agent”), and Citizens
Bank of Pennsylvania as Swing Line Lender and L/C Issuer, and EACH OTHER LENDER
party to the Credit Agreement (collectively, including Citizens Bank of
Pennsylvania in its capacities as Swing Line Lender and L/C Issuer, the
“Lenders” and each individually, a “Lender”).

RECITALS

WHEREAS, 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, (ii) that certain Second
Amendment to Credit Agreement, dated July 16, 2008, (iii) that certain Third
Amendment to Credit Agreement, dated October 29, 2008, (iv) that certain Fourth
Amendment to Credit Agreement, dated December 24, 2009, (v) that certain Fifth
Amendment to Credit Agreement, dated July 30, 2010, and (vi) that certain Waiver
Agreement and Sixth Amendment to Credit Agreement, dated December 31, 2010 (as
so amended and as the same 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; and

WHEREAS, Borrowers are indebted to Lenders on account of various loans and
advances extended by one or more Lenders to Borrowers  (collectively, the
“Loans”) pursuant to the Credit Agreement and other Loan Documents (as defined
in the Credit Agreement), including, without limitation, each of the following
executed by one or more Borrowers and dated September 6, 2007: (i) the Security
Agreement; (ii) Open-End Mortgage and Security Agreement; (iii) Open-End Fee and
Leasehold Mortgage and Security Agreement; and (iv) other Collateral Documents
(as defined in the Credit Agreement); and

WHEREAS, Agent has a first priority, perfected security interest and lien in and
against all of Borrowers’ assets, including, without limitation, all real
property and tangible and intangible personal property, including but not
limited to all accounts, equipment, goods, inventory, and general intangibles
(including, without limitation, all patents, trademarks and copyrights) whether
now owned or hereafter acquired, and the cash and non-cash proceeds thereof, as
such terms are defined under the Uniform Commercial Code, as adopted by the
 
 
 
 

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Commonwealth of Pennsylvania, and the Bakery Lease (all of the foregoing,
collectively, the “Collateral”), subject only to the terms of the Intercreditor
Agreement (as defined below); and

WHEREAS, the Commonwealth of Pennsylvania acting by and through the Department
of Community and Economic Development, Machinery and Equipment Loan Fund
(“MELF”) has extended to Borrowers certain loans (the “MELF Loans”) secured by a
security interest in certain of the Collateral, subject to the Intercreditor
Agreement; and

WHEREAS, Borrowers and MELF entered into that certain letter agreement, dated
December 31, 2010, pursuant to which, among other things MELF waived all
defaults and events of default, if any, related to the MELF Loans and deferred
to January 31, 2011 all payments owed MELF; and

WHEREAS, the PIDC Local Development Corporation (“PIDC”) has extended to
Borrowers certain loans (the “PIDC Loans”) secured by a security interest in
certain of the Collateral, subject to the Intercreditor Agreement; and

WHEREAS, Borrowers and PIDC entered into that certain letter agreement, dated
December 31, 2010, pursuant to which, among other things, PIDC waived all
defaults and events of default, if any, related to the PIDC Loans and deferred
to January 31, 2011 all payments owed PIDC; and

WHEREAS, that certain Intercreditor and Collateral Sharing Agreement (as amended
and restated on or about the date hereof and as the same may be further amended,
restated, modified and/or supplemented from time to time, the “Intercreditor
Agreement”), dated September 6, 2007, by and among the Borrowers, Agent (on its
own behalf and in its capacity as agent for the Lenders), MELF and PIDC, sets
forth the respective priorities, rights and remedies with respect to payment of
Borrowers’ respective obligations to Lenders, MELF and PIDC, and with respect to
the Collateral; and

WHEREAS, the Company has entered into the following agreements related to
premises occupied or to be occupied by it at the former Philadelphia Navy Yard:
the Company’s Industrial Lease Agreement (the “Bakery Lease”) and the Company’s
Improvements Agreement (the “Improvements Agreement”), each with L/S 26th Street
South, L.P. (“Liberty”), as assignee of Liberty Property/Synterra Limited
Partnership, each dated May 8, 2007, as amended, and the Company’s Office Lease
(the “Office Lease”, and together with the Bakery Lease and the Improvements
Agreement, as each may have been amended from time to time, the “Liberty
Leases”) with L/S Three Crescent Drive, LP (“Liberty II”), dated June 15, 2007;
and

WHEREAS, Borrowers and Liberty entered into that certain letter agreement, dated
December 31, 2010, pursuant to which, among other things, Liberty waived all
defaults and events of default, if any, under the Bakery Lease and Improvements
Agreement and deferred to January 31, 2011 all payments (except payments for
Operating Expenses (as defined in the Bakery Lease)) owed Liberty; and
 
 
 
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WHEREAS, Borrowers and Liberty II entered into that certain letter agreement,
dated December 31, 2010, pursuant to which, among other things, Liberty II
waived all defaults and events of default, if any, under the Office Lease and
deferred to January 31, 2011 all payments (except payments for Operating
Expenses (as defined in the Office Lease)) owed Liberty II; and

WHEREAS, that certain Lease Estoppel, Certificate, Amendment of Lease and
Agreement, dated September 6, 2007, among Liberty, the Company and the Agent (on
its own behalf and in its capacity as agent for the Lenders), sets forth, among
other things, the respective rights and remedies of Liberty and Agent related to
the Bakery Lease and the Improvements Agreement and the obligations to Lenders
and Liberty with respect to the such agreements and related premises (“Estoppel
Certificate”).  Pursuant to the Estoppel Certificate, Liberty has acknowledged
and consented to the Agent’s leasehold mortgage in the Bakery Lease; and

WHEREAS, in December 2010, Borrowers informed Agent that they would be unable to
make payments of principal due January 1, 2011 under the Credit Agreement and
other Loan Documents (the “Payment Default”) in the amounts set forth in
Schedule 1 hereto; and

WHEREAS, in December 2010, Borrowers further informed Agent that, as of
December 25, 2010, they did not expect to be in compliance with certain
financial covenants tested as at December 25, 2010 set forth in Section 6.12 of
the Credit Agreement as more particularly identified on Schedule 1 hereto
(collectively with the Payment Default, but specifically excluding any defaults
that may now or hereafter exist under Section 6.12 (as amended hereby) with
respect to any periods other than the period ending December 25, 2010, the
“Specified Defaults”, and each a “Specified Default”); and

WHEREAS, the Commitment to make Working Capital Loans (of which the Swing Line
Loan facility is a subfacility) was to be reduced from $35,000,000 to
$34,000,000 on December 31, 2010 and, in December 2010, the Borrowers requested
that the Lenders agree to postpone the reduction until January 14, 2011; and

WHEREAS, pursuant to the Waiver Agreement and Sixth Amendment to Credit
Agreement, dated December 31, 2010 (the “Sixth Amendment”), the Lenders, among
other things, waived the Specified Defaults to the extent such Specified
Defaults existed prior to January 15, 2011 (but not to the extent such Specified
Defaults continued to exist on or after January 15, 2011), and delayed to
January 14, 2011 the reduction of the Commitment to make Working Capital Loans,
all subject to terms and conditions set forth in the Sixth Amendment, in order
to allow Borrowers to pursue a strategy to pay in full in cash and satisfy
Borrowers’ financial obligations to Lenders under the Credit Agreement and other
Loan Documents; and

WHEREAS, the Specified Defaults, as of January 15, 2011, would constitute Events
of Default under the Credit Agreement and other Loan Documents, without the need
for further notice or opportunity to cure; and

WHEREAS, Borrowers have informed Agent that Borrowers have commitments for new
loans (the “New Loans”) from lenders (each a “New Lender” and, together, the
“New Lenders”),
 
 
 
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including without limitation PIDC and MELF, in an aggregate principal amount of
not less than $5,000,000; and

WHEREAS, Borrowers have requested that Lenders, among other things, waive the
Specified Defaults to the extent such Specified Defaults exist prior to the
Waiver Termination Date (as defined herein) (but not to the extent such
Specified Defaults exist on or after the Waiver Termination Date), continue to
make Working Capital Revolver Loans to Borrowers, and further delay the
reduction in the Commitment to make Working Capital Loans during the Waiver
Period, to allow Borrowers to continue to pursue a strategy to pay in full in
cash and satisfy Borrowers’ financial obligations to Lenders under the Credit
Agreement and other Loan Documents, including pursuing a sale of all or
substantially all of the assets or equity of the Borrowers (the “Sale”); and

WHEREAS, the Q1 Budget, required by Section 9(h) hereof, has been delivered by
the Borrowers on behalf of the Borrowers to Lenders, and Lenders acknowledge
that the Q1 Budget is in form and substance acceptable to Lenders.

AGREEMENT

NOW THEREFORE, in consideration of the promises and mutual covenants contained
herein, and the foregoing recitals being fully incorporated as if set forth
below, the parties hereto hereby agree, effective as of the Effective Date (as
defined below), as follows:

1.           Defined Terms.  Unless otherwise defined herein, capitalized terms
used herein which are defined in Credit Agreement are used herein as therein
defined.
 
2.           Amount of Indebtedness.  Borrowers acknowledge and agree that (a)
as of January 13, 2011, the outstanding principal amount of the Obligations
under the Loan Documents was in an amount not less than $93,888,711.81,
exclusive of late charges, default and other interest, fees, costs of
collection, attorney fees, and other charges and additional amounts which are
due or may become due with the passage of time under the Loan Documents, and (b)
Borrowers are truly and justly indebted to one or more Lenders in respect of all
Obligations under the Loan Documents without defense, counterclaim or offset of
any kind, and Borrowers ratify and reaffirm the validity, enforceability and
binding nature of such Obligations.  Borrowers acknowledge and agree that the
amounts set forth on Schedule 1, but for this Agreement, were due and payable to
Lenders on January 14, 2011.  Borrowers acknowledge and agree that, as of the
Waiver Termination Date, the Specified Defaults, including, without limitation
Borrowers’ failure to pay to Agent the amounts of the Payment Default on or
before the Waiver Termination Date, shall constitute Events of Default under the
Credit Agreement and other Loan Documents (which may be in addition to other
Events of Default), without the need for further notice to Borrowers or any
other person and without any opportunity to cure.  Each Borrower hereby waives
any right it may otherwise have now or in the future to notice of or opportunity
to cure any Specified Default.
 
3.           Security.  As security for the Obligations due to the Agent and the
Lenders under the Loan Documents, Agent (for itself and for the benefit of the
Lenders) has been granted and
 
 
 
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holds valid and perfected first-priority security interests in and against,
inter alia, the Collateral, which Collateral constitutes all of the Borrowers’
assets.  Borrowers hereby reaffirm and confirm their grant to Agent and Lenders
of a security interest and lien in and against all of Borrowers’ assets,
including, without limitation, all fee, leasehold and other interests in real
property, and tangible and intangible personal property, including but not
limited to all accounts, equipment, goods, inventory, investment property and
general intangibles (including, without limitation, all patents, trademarks and
copyrights), whether now owned or hereafter acquired, and the cash and non-cash
proceeds thereof, as such terms are defined under the Uniform Commercial Code,
as adopted by the Commonwealth of Pennsylvania.  Borrowers previously agreed,
and by this Agreement, reaffirm their agreement, to deliver and authorize the
filing of Uniform Commercial Code Financing Statements, mortgage and leasehold
mortgage agreements and intellectual property security agreements by the Agent
to confirm and/or perfect the Agent’s security interests in the Borrowers’
assets, and grant power to and appoint Agent as Borrowers’ attorney-in-fact to
execute and record such instruments on Borrowers’ behalf.
 
4.           Events of Default and Waiver.
 
          a.           Events of Default.  Borrowers (a) acknowledge and agree
that, without this Agreement, the Specified Defaults would constitute Events of
Default under the Loan Documents, and (b) represent and warrant to Lenders that
no other Default or Event of Default has occurred and continues to exist as of
the Effective Date.
 
          b.           Waiver.  Lenders hereby waive any Specified Default, but
only to the extent such Specified Default exists prior to the Waiver Termination
Date.  For the sake of clarity, to the extent any Specified Default continues to
exist as of the Waiver Termination Date (or, but for this Agreement, would have
existed at any time from and including December 25, 2010 through the Waiver
Termination Date), such Specified Default shall constitute an Event of Default
under the Credit Agreement without the need for further notice to Borrowers or
any other person and without any opportunity to cure as of the Waiver
Termination Date.  Each Borrower hereby waives any right it may otherwise have
now or in the future to notice of any Specified Default or to cure any Specified
Default.  For the sake of clarity, immediately upon termination of the Waiver
Period (for any reason), the Specified Defaults shall constitute Events of
Default under the Credit Agreement and other Loan Documents and the Lenders
shall be entitled to take any and all remedial actions and exercise any and all
rights and remedies against the Borrowers and may cease making Loans under the
Credit Agreement.
 
EXCEPT AS EXPRESSLY PROVIDED IN THE PRECEDING SUBSECTION 4(b), THIS AGREEMENT
DOES NOT SERVE AS A WAIVER OF ANY DEFAULTS OR EVENTS OF DEFAULT WHICH MAY NOW OR
HEREAFTER EXIST and the Lenders and Agent reserve any and all rights and
remedies under the Loan Documents, at law or in equity, in connection with any
Defaults or Events of Default other than as provided above with respect to
Specified Defaults.  No delay or failure on the part of the Lenders or Agent to
exercise any right or remedy hereunder or under the Loan Documents shall operate
as a waiver of any Default or Event of Default, and no single or partial
exercise of any right or remedy hereunder or under the Loan Documents shall
preclude other or further exercise thereof or the exercise of any other right or
remedy.  No action or forbearance by the Lenders shall be construed to
constitute a waiver of any of the provisions hereof or of the Loan Documents.
 
 
 
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5.           Waiver Period.  For purposes of this Agreement, the term “Waiver
Period” shall mean the period from and including the Effective Date until the
earliest to occur of (the date of such occurrence, the “Waiver Termination
Date”) (i) June 30, 2011; (ii) the Closing of a Sale; or (iii) the occurrence of
any Default or Event of Default under the Credit Agreement (except for any
Specified Default).
 
6.           Amendments to Credit Agreement.  The Credit Agreement and other
Loan Documents are hereby amended to provide as follows:
 
          a.           Deferral of Principal Payments.  The Loan Documents are
hereby amended to provide that payments of principal to be paid to Lenders from
the Effective Date to the Waiver Termination Date (other than payments related
to the Swing Loans to the extent the Total Outstandings of Working Capital
Revolver Loans, Swing Line Loans and L/C Obligations, would otherwise exceed the
Aggregate Commitment for Working Capital Loans for all Lenders), shall be due
and payable and shall be paid to Lenders on the Waiver Termination Date.  For
the sake of clarity, Borrowers’ obligations under the Loan Documents to pay
Obligations other than principal payments remain unchanged by this Agreement.
 
          b.           Letters of Credit.
 
            (i)           Section 1.01 of the Credit Agreement is hereby amended
to replace the definition of “L/C Sublimit” with the following: ““L/C Sublimit”
means an amount equal to $20,000,000; provided, however, effective on and after
the Seventh Amendment Effective Date, the L/C Sublimit shall mean an amount
equal to the aggregate amount of outstanding Letters of Credit as of the Seventh
Amendment Effective Date.  The L/C Sublimit is part of, and not in addition to,
the Aggregate Commitments for Revolving Loans.”
 
            (ii)          Section 2.03(a)(i) is hereby amended to replace “(1)
from time to time on any Business Day during the period from the Closing Date
until the L/C Expiration Date” with “(1) from time to time on any Business Day
during the period from the Closing Date until the Seventh Amendment Effective
Date”.
 
            (iii)         This will confirm the agreement of the parties that
Letters of Credit may not, from and after the Seventh Amendment Effective Date,
be issued by the L/C Issuer under the Fixed Asset Revolving Loan Sublimit and no
L/C Credit Extension shall be permitted under the Fixed Asset Revolving Loan
Sublimit.
 
c.         Definitions.
 
                 (i)           Each of the following new definitions is added in
its correct alphabetical location in Section 1.01 of the Credit Agreement:
 
“Financial Advisor” has the meaning specified in Section 9.01(u).

“Gross Sales” means the total invoice value of sales before deducting discounts
or making allowances for returns or other adjustments.
 
 
 
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“Janney” means Janney Montgomery Scott LLC.

“Liberty” has the meaning specified in Section 7.20.

“Liberty II” has the meaning specified in Section 7.20.

“Liquidity” means ledger cash plus available amounts under the Swing Line.

“New Lender” has the meaning specified in the Seventh Amendment.

“New Loans” has the meaning specified in the Seventh Amendment.

“Office Lease” means the Company’s Office Lease with Liberty II dated June 15,
2007.

“Purchase Agreement” has the meaning specified in Section 6.25.

“Sale” means a sale of all or substantially all of the assets or equity of the
Borrowers (whether by asset sale, merger, equity sale or otherwise).

“Seventh Amendment” means that certain Waiver Agreement and Seventh Amendment to
Credit Agreement, dated as of January 14, 2011, among the Borrowers, the Agent
and the Lenders.

“Seventh Amendment Effective Date” means the date that the Seventh Amendment
becomes effective in accordance with its terms.

“Sixth Amendment” has the meaning specified in Section 9.01(u).

“Waiver Period” means the period from and including the Seventh Amendment
Effective Date until the earliest to occur of (the date of such occurrence, the
“Waiver Termination Date”) (i) June 30, 2011; (ii) the closing of a Sale; or
(iii) the occurrence of any Default or Event of Default under the Credit
Agreement (except for any Specified Default (as defined in the Seventh
Amendment)).

(ii)           The definition of “EBITDA” is deleted in its entirety and
replaced with the following:
 
“EBITDA” means with respect to Borrowers for any period the cumulative
consolidated net income (excluding Option Proceeds
 
 
 
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and extraordinary gains and losses), plus the sum of but without duplication (a)
Interest Expense, (b) income tax expense (in the case of accrued income tax
benefit, this shall be a negative number), (c) depreciation and amortization,
(d) costs and expenses associated with financing the Borrowers and the Sale
process, (e) non-cash charges against net income related to stock-based
compensation, (f) non-cash gains to net income and (g) non-cash accrued rent
expense in connection with the Navy Yard Lease or Office Lease, in each case to
the extent deducted in determining net income, as determined for the Borrowers
in accordance with GAAP.

d.         Amendment to Schedule 2.01 to Credit Agreement.  In order to postpone
the Commitment reduction with respect to Working Capital Revolver Loans that is
scheduled to occur on January 14, 2011, Part A of Schedule 2.01 (Commitments and
Applicable Percentages) to the Credit Agreement is hereby amended as follows:
under heading “A. Working Capital Revolver Loan and L/C Obligations”, each place
the date “January 14, 2011” appears, replace such date with “the Maturity Date”
and delete all text following the newly inserted “the Maturity Date” in each
entry under the column heading “Working Capital Revolver Loan and L/C
Obligations Commitment”.
 
e.          Loan Maturity Date.
 
             (i)           Section 2.13(d) of the Credit Agreement is hereby
amended by replacing “September 1, 2012” with “the Waiver Termination Date”.
 
             (ii)           Section 2.13 of the Credit Agreement is hereby
amended to add the following Section 2.13(e):  “(e) Notwithstanding the
foregoing Sections 2.13(a) through (c), if the Working Capital Revolver Loan
Maturity Date, the Swing Line Loan Maturity Date, the Fixed Asset Loan Maturity
Date, the Mortgage Component Maturity Date, the Equipment Component Maturity
Date, and the IP Component Maturity Date have not otherwise occurred as of the
Waiver Termination Date, then each such Maturity Date shall be the Waiver
Termination Date.”
 
f.           Interest Rate.  Section 2.14 of the Credit Agreement is hereby
amended to add the following Section 2.14(e):  “(e) Notwithstanding the
foregoing Sections 2.14(a) through (d), effective December 31, 2010, (i) each
Loan (other than the Job Bank Term Loan) shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Daily LIBOR Rate plus
5.5%, and (ii) each Job Bank Term Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum of 7.5%.  All interest shall be
payable on the first business day of each calendar month.”
 
 
 
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g.          Covenants.
 
(i)           Section 6.01(g) of the Credit Agreement is amended to delete the
“.” at the end of such section and to add in its place “; and”.
 
(ii)           New Sections 6.01(h) and (i) are added to the Credit Agreement,
which sections shall read as follows:
 
             (h)           (i) on or before the Seventh Amendment Effective
Date, a thirteen-week cash flow forecast for the thirteen-week period covering
the period of the week ending January 14, 2011 to the week ending April 8, 2011
(the “Q1 Budget”), (ii) on or before April 1, 2011, a thirteen-week cash flow
forecast reasonably acceptable to the Lenders for the thirteen-week period
covering the period of the week ending April 15, 2011 to the week ending June
30, 2011 (the “Q2 Budget”), and (iii) on or before every Wednesday after the
Seventh Amendment Effective Date, a thirteen-week cash flow forecast in form
substantially similar to the Q1 Budget or the Q2 Budget, as applicable (each, a
“Weekly Budget”), which, in the case of each of the Q1 Budget, the Q2 Budget and
each Weekly Budget, projects on a weekly basis for said thirteen-week period
(each, a “Budget Period”) cash revenue, receipts, expenses and disbursements and
other information relevant to the Borrowers’ business and, in the case of each
Weekly Budget, showing for the week most recently ended actual cash flows versus
the Q1 Budget or Q2 Budget, as applicable.  Any material and adverse amendments
or changes to the Q1 Budget or Q2 Budget may only be made with the prior written
consent of the Agent; and

             (i)           on or before every Wednesday after the Seventh
Amendment Effective Date (time being of the essence), a weekly sales flash
report setting forth weekly gross sales of the Borrowers.

(iii)           Section 6.12 of the Credit Agreement is deleted in its entirety
and replaced with the following:
 
   (a)           Minimum EBITDA.    Maintain on a consolidated basis EBITDA of
at least the amount indicated for each period specified below:
 
Period
Minimum Amount
For the three months ended March 26, 2011
$3,200,000
For the four months ended
$5,500,000

 
 
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April 30, 2011  
For the five months ended May 28, 2011
$7,700,000
For the six months ended June 25, 2011
$9,300,000

The amount will be calculated at the end of each period specified above and such
calculation, in reasonable detail, shall promptly, but in any event no later
than 30 days after the end of such period, be delivered to Agent.
 
(b)           Minimum Liquidity.      Maintain on a consolidated basis minimum
Liquidity of:
 
(i) $1,250,000 as of the end of each week ended February 4, 2011 through the
week ended February 18, 2011;
 
(ii) $750,000 as of the end of each week ended February 25, 2011 through the
week ended April 8, 2011; and
 
(iii) For the Budget Period reflected in the Q2 Budget, an amount to be agreed
upon by Borrowers and the Lenders after receipt of the Q2 Budget.
 
The minimum Liquidity will be calculated at the end of each period specified
above and such calculation, in reasonable detail, shall be delivered to Agent no
later than Wednesday of the immediately following week.
 
(c)           Capital Expenditures.      Not permit its Capital Expenditures
(excluding Capital Leases) to exceed $1,700,000 during the Waiver Period.
 
(d)           Minimum Cumulative Gross Sales Test.  Maintain on a consolidated
basis cumulative Gross Sales of at least the amount indicated for each period
specified below:
 
Period
Cumulative Gross Sales
Reporting Date
Nine Weeks Ended February 26, 2011
$47,400,000
March 4, 2011
Thirteen Weeks Ended March 26,
$72,300,000
April 1, 2011

 
 
 
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2011    
Thirteen Weeks Ended April 30, 2011
$76,100,000
May 6, 2011
Thirteen Weeks Ended May 28, 2011
$79,700,000
June 3, 2011
Thirteen Weeks Ended June 25, 2011
$80,100,000
July 1, 2011

The cumulative Gross Sales of Borrowers shall be calculated for each period
specified above and such calculation, in reasonable detail, shall promptly, but
in any event no later than the applicable Reporting Date specified above, be
delivered to Agent.
 
(iv)           New Section 6.25 is added to the Credit Agreement, which section
shall read as follows:
 
6.25      Sale Process.   Undertake a process (the “Sale Process”) to effectuate
a Sale during the Waiver Period.  In connection with the Sale and Sale Process,
the Borrowers agree to the following tasks by the dates set forth below (each a
“Sale Process Milestone” and, collectively, the “Sale Process Milestones”):

(a)           By no later than the week of January 17, 2011, Borrowers and
Janney shall have completed an offering book (the “Offering Book”) for
potentially-interested parties and delivered a copy of the Offering Book to the
Agent;
 
(b)           By no later than the week of January 24, 2011, the Borrowers and
Janney shall have begun to distribute the Offering Book to
potentially-interested parties;
 
(c)           By no later than the week of January 31, 2011, Borrowers shall
have set up either or both of a physical or virtual due diligence room and shall
have populated such due diligence room(s) with all then current data, documents,
information and materials that a bona fide purchaser would reasonably deem
relevant in evaluating whether to participate in a Sale.  Agent and Lenders and
their representatives, consultants, advisors, attorneys and other professionals
shall have access to the due diligence room(s) and all information, documents
and materials (including,
 
 
 
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without limitation, access to Janney and Borrowers’ employees and executives)
made available to any prospective purchaser;
 
(d)           By no later than the week of March 7, 2011, Borrowers shall have
received at least one (1) expression of interest that contemplate sufficient
cash consideration to repay in full in cash all of the Obligations and all
transaction costs (each an “Expression of Interest”) from a bona fide
prospective purchaser for a Sale, such purchaser having the financial
wherewithal to close on a Sale on or before June 30, 2011.  Promptly upon
receipt of an Expression of Interest, Borrowers shall deliver to the Agent a
copy of such Expression of Interest, together with all exhibits, attachments and
items related thereto;
 
(e)           By no later than the week of April 29, 2011, Borrowers’ Boards of
Directors shall have approved as required in accordance with Borrowers’
respective Bylaws, and the Borrowers shall have executed, a definitive agreement
(the “Purchase Agreement”) for a Sale to a bona fide purchaser to close on or
before June 30, 2011 and which provides for sufficient cash consideration to
repay in full in cash all of the Obligations and transaction costs.  Promptly
upon receipt of such a Purchase Agreement, the Borrowers shall deliver to the
Agent an executed copy of the Purchase Agreement, together with all exhibits,
attachments and items related thereto; and
 
(f)           By no later than June 30, 2011, Borrowers shall have closed on a
Sale, with shareholder approval, as required, and satisfied in full in cash all
Obligations.
 
Time is of the essence with regard to each Sale Process Milestone.
 
In connection with the Sale Process, the Borrowers and Janney shall deliver to
the Agent and its consultants and advisors written status reports, in form and
substance reasonably acceptable to the Agent, regarding the Sale Process,
interested parties, prospective purchasers, status of due diligence and
projected timeline to a closing on a Sale, and, on each Thursday during the
Waiver Period, shall meet either in person or telephonically with the Agent,
Lenders and their consultants and advisors to discuss the Sale Process.  In
addition to representatives of Janney, Borrowers’ Chief Financial Officer and,
to the extent one exists, Chief Restructuring Officer (or if either is not
available, a designee with comparable knowledge) shall participate in each such
weekly meeting.
 
h.           Negative Covenants.
 
 
 
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(i)           Section 7.08 of the Credit Agreement is deleted and replaced with
the following:
 
                   7.08.           Restricted Payments.  Announce, declare or
make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, or issue or sell any Equity Interests except
upon and as part of the consummation of a Sale in accordance with the terms of
this Agreement.

(ii)           New Section 7.20 is added to the Credit Agreement, which section
shall read as follows:
 
          7.20           Payments to MELF, PIDC, Liberty, Liberty II and New
Lenders. Make any payments to MELF, PIDC, L/S 26th Street South, L.P.
(“Liberty”), L/S Three Crescent Drive, LP (“Liberty II”) or any New Lender on or
after the Seventh Amendment Effective Date through the Waiver Termination Date,
except that Borrowers may (x) make payments to Liberty and Liberty II for
Operating Expenses first due in January 2011 or during the Waiver Period to
Liberty under the Navy Yard Lease or Liberty II under the Office Lease, (y) make
payments of interest to MELF and PIDC on their portion of the New Loans at per
annum rates not in excess of 4.25% and 9.5%, respectively.  For purposes of this
section, “Operating Expenses” shall have the meaning ascribed to such term in
each of the Navy Yard Lease and the Office Lease, respectively, and (z) pay any
commitment fee payable to PIDC or MELF, respectively, in connection with their
portion of the New Loans.

i.           Events of Default.
 
(i)           Section 9.01(c) is amended to delete the words “and such failure
continues for 30 days”.
 
                        (ii)          Section 9.01(f) is amended to delete the
words (a) “and the appointment continues undischarged or unstayed for 60
calendar days” from the third clause of such section and (b) “and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding” from the last clause of such section.
 
(iii)         Sections 9.01(u) and 9.01(v) of the Credit Agreement are deleted
and replaced with the following:
 
(u)           (i) any breach by any Borrower of any of its agreements under the
Waiver Agreement and Sixth Amendment to Credit Agreement (the “Sixth
Amendment”), dated as of December 31, 2010 (except to the extent performance of
any obligation thereunder is waived pursuant to the Seventh Amendment); (ii) any
 
 
 
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breach by any Borrower of any of its agreements under Seventh Amendment; and
(iii) the termination or resignation of Argus Management Corporation (“Financial
Advisor”) as financial advisor to the Company and the Company’s failure to
replace Financial Advisor with a financial advisory firm reasonably acceptable
to Lenders within three (3) Business Days after the effective date of such
termination or resignation; or

(v)           the occurrence, on the reasonable determination of the Lenders, of
a material adverse deviation of the Borrowers’ financial performance from that
set forth in the Q1 Budget or Q2 Budget; or

(w)           to the extent any Specified Default (as defined in the Seventh
Amendment) exists as of the Waiver Termination Date or, but for the Sixth
Amendment and Seventh Amendment, would have existed at any time from and
including December 25, 2010 through the Waiver Termination Date; or

(iv)           New Sections 9.01(x) - (gg) are added to the Credit Agreement,
which sections shall read as follows:
 
(x)           the termination or suspension of the Sale Process for any reason;
or

(y)           the termination or resignation of Janney as Borrowers’ investment
banker and financial advisor or other reduction in Janney’s duties or
responsibilities in such roles or any act by Borrowers to inhibit Janney’s
performance of its duties and responsibilities in such roles, unless (A) such
termination or resignation is for the purpose of the Borrowers engaging another
investment banker satisfactory to the Agent and (B) the Borrowers, in fact,
engage such other investment banker within three (3) business days of Janney’s
resignation or termination; or

(z)           after execution of a Purchase Agreement, such Purchase Agreement
is terminated for any reason unless another Purchase Agreement is executed no
later than the week of April 29, 2011; or

(aa)           MELF or PIDC receives any payment from, or on behalf of, any
Borrower other than monthly interest payments under the New Loans to the extent
expressly permitted under this Agreement; or

(bb)           any New Lender, other than MELF and PIDC, receives any payment
from or on behalf of Borrowers; or
 
 
 
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(cc)           Liberty or Liberty II receives any payment from, or on behalf of,
any Borrower other than payments for Operating Expenses first due during the
Waiver Period to Liberty under the Navy Yard Lease or Liberty II under the
Office Lease; or

(dd)           MELF, PIDC, Liberty or Liberty II terminates any obligation that
any of the foregoing now or in the future have to forbear from exercising rights
and remedies under their respective agreements with one or more of the Borrowers
or any of MELF, PIDC, any New Lender (as defined in the Seventh Amendment),
Liberty or Liberty II seeks to exercise any remedies against any of the
Borrowers in connection with obligations owing by the Borrowers to it; or

(ee)           Any material default occurs under (a) the New Loans or the
documents related thereto or (b) the Office Lease or the documents collateral
thereto; or

(ff)             the termination of the “Waiver Period” as defined in the Letter
from Liberty to the Company dated January 14, 2011; or

(gg)           the termination of the “Waiver Period” as defined in the Letter
from Liberty II to the Company dated January 14, 2011.

7.             Cash Management and Swing Line Advances.  For the sake of
clarity, the Lenders acknowledge and agree that the Swing Line Lender may
continue to make Swing Line Loans to the Borrowers and such Lenders confirm
their obligations to the Swing Line Lender under Section 2.04 of the Credit
Agreement (Swing Line Loans) with respect to Swing Line Loans.
 
8.             Covenants of and Acknowledgements by Borrowers.  Borrowers
further acknowledge and agree that:
 
a.           Cooperation with Agent’s and Lenders’ Consultants.  Borrowers and
their consultants and advisors shall provide Agent, Lenders and their advisors,
consultants and professionals access, at Borrowers’ expense, to all books,
records and other information (except for privileged information and attorney
work product, it being understood that Janney work product shall not constitute
privileged information or attorney work product) in Borrowers’ possession or
control and to Borrowers’ executives, as may be reasonably requested, for all
purposes.  Borrowers and their consultants and advisors and executives shall
cooperate fully with Agent, Lenders and their advisors, consultants and
professionals in providing access to books, records and other information.
 
 
 
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b.           IP Assignments.  Borrowers shall execute and deliver within five
Business Days after the Effective Date to Agent the IP Assignment Agreements in
the form attached hereto as Schedule 4.
 
9.             Effective Date.  This Agreement shall become effective on the
date (the “Effective Date”) that the following conditions are satisfied:
 
a.           each of the Lenders, each of the Borrowers, and the Agent shall
have executed counterparts to this Agreement and delivered the same to the
Agent,
 
b.           MELF and PIDC shall have agreed to postpone all payments due and
owing to them by the Borrowers through at least July 1, 2011 and shall have
waived all existing defaults, if any, related to the MELF Loans and PIDC Loans,
respectively, pursuant to an agreement(s) in the form attached hereto as
Schedule 2 (each a “MELF/PIDC Agreement”), each of which MELF/PIDC Agreement
(without implying any current or future obligation on the Agent or Lenders to
obtain any consent to any amendments or waivers except as expressly set forth in
the Intercreditor Agreement) shall include MELF’s and PIDC’s consent to this
Agreement,
 
c.           Liberty and Liberty II shall have each agreed, pursuant to an
agreement in the form attached hereto as Schedule 3 (each a “Liberty
Agreement”), to postpone all payments (except for Operating Expenses first due
pursuant to the Bakery Lease and Office Lease, respectively, during the Waiver
Period) due and owing to Liberty and Liberty II, respectively, by the Borrowers
through at least June 30, 2011 and to waive all known defaults, if any, related
to the Liberty Leases,
 
d.           Borrowers shall have delivered to Agent updated insurance
certificates showing, in the case of liability insurance, that "Citizens Bank of
Pennsylvania, as Agent"  is an "additional insured" and, in the case of property
casualty insurance, that "Citizens Bank of Pennsylvania, as Agent"  is an
"additional insured and lender loss payee",
 
e.           Borrower shall have received not less than $5,000,000 in cash
proceeds of one or more loans on terms and conditions acceptable to Agent (each
such loan a “New Loan”), the payment obligations and any liens related thereto
to be subordinate to the Obligations and Agent’s liens in Borrowers’ assets,
subject only to the terms of the Intercreditor Agreement,
 
f.           each New Lender, PIDC and MELF shall have executed and delivered an
Amended and Restated Intercreditor Agreement in the form attached hereto as
Schedule 5 (the “New Loan Intercreditor Agreement”), and
 
g.           Borrowers shall have delivered to Lenders a cash flow forecast for
the thirteen-week period covering the period of the week ending January 14, 2011
to the week ending April 8, 2011 (the “Q1 Budget”) in form and substance
reasonably acceptable to the Lenders, which projects on a weekly basis for the
period reflected therein cash revenue, receipts, expenses and disbursements and
other information relevant to the Borrowers’ business.
 
10.           Representations and Warranties.  Borrowers represent and warrant
to Lenders that (a) each Borrower: (i) is a corporation duly organized, validly
existing and in good standing
 
 
 
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under the laws of its state of formation, and (ii) has all necessary corporate
power, authority and legal right to execute, deliver and perform its obligations
under this Agreement; (b) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Borrowers (including, without limitation, any required shareholder
approvals); (c) the execution, delivery and performance hereof, the consummation
of the transactions herein contemplated and the compliance with the terms and
conditions hereof do not conflict with or result in a breach of, or require
consent under, the organizational documents of any Borrower, or any applicable
law or regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument by which any
Borrower or any of its property is bound or by which any Borrower or any of its
property is subject, and do not constitute a default under any such agreement or
instrument, or result in the creation or imposition of any lien or encumbrance
upon any property of any Borrower pursuant to the terms of any such agreement or
instrument; (d) this Agreement has been duly and validly executed and delivered
by each Borrower and constitutes its legal, valid and binding obligation,
enforceable against each Borrower in accordance with its terms;  (e) no
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency, or any securities exchange,
are necessary for the execution, delivery or performance by any Borrower of this
Agreement or for the legality, validity or enforceability hereof; (f) there are
no Default or Events of Default in existence under the Loan Documents other than
the Specified Defaults; (g) assuming PIDC and MELF each execute a MELF/PIDC
Agreement, no Borrower is aware of any facts or circumstances existing or
expected to exist prior to June 30, 2011 that would constitute defaults or
events of default under any Borrower’s agreement(s) with MELF or PIDC; (h)
assuming Liberty and Liberty II execute the Liberty Agreement, no Borrower is
aware of any facts or circumstances existing or expected to exist prior to June
30, 2011 that would constitute defaults or events of default under any
Borrower’s agreement(s) with Liberty I or Liberty II, and (i) no Borrower is
aware of any facts or circumstances existing or expected to exist prior to June
30, 2011 that would constitute defaults or events of default under any
Borrower’s agreement(s) with any New Lender.
 
11.           ACKNOWLEDGEMENT AND RELEASE.
 
BORROWERS AND LENDERS EACH ACKNOWLEDGE AND AGREE THAT (I) THE INDEBTEDNESS,
SECURITY INTERESTS AND OTHER LIENS GRANTED TO LENDERS SECURING THE OBLIGATIONS
ARE VALID AND PERFECTED IN ACCORDANCE WITH APPLICABLE LAW; (II) THE OBLIGATIONS
ARE NOT SUBJECT TO ANY SETOFF, DEFENSE, CLAIM, COUNTERCLAIM, RECOUPMENT, OR
AVOIDANCE AND/OR SUBORDINATION UNDER THE BANKRUPTCY CODE OR OTHERWISE; AND (III)
BORROWERS HOLD NO CLAIMS AGAINST AGENT OR ANY LENDER, INDIVIDUALLY AND/OR AS
AGENT, SUCCESSOR OR ASSIGN, OR AGAINST AGENT’S OR ANY LENDER’S OFFICERS, AGENTS,
DIRECTORS, REPRESENTATIVES, ATTORNEYS, AND SUCCESSORS AND ASSIGNS (COLLECTIVELY,
THE “LENDER PARTIES”).  TO THE EXTENT THAT ANY BORROWER HOLDS ANY CLAIMS AGAINST
ONE OR MORE OF THE LENDER PARTIES, INCLUDING BUT NOT LIMITED TO CLAIMS RELATING
TO ANY EXTENSION OR NON-EXTENSION OF A LETTER OF CREDIT OR ANY ISSUANCE OR
NON-ISSUANCE OF A LETTER OF CREDIT OR OTHERWISE ARISING FROM THE LOAN DOCUMENTS
AND ADMINISTRATION THEREOF OR COLLECTION OF
 
 
 
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--------------------------------------------------------------------------------

 
 
AMOUNTS DUE THEREUNDER, OR ANY APPLICATIONS, DISCUSSIONS, AND/OR COMMITMENTS TO
ENTER INTO ANY FINANCE TRANSACTIONS, WAIVER OR FORBEARANCE AGREEMENTS AND/OR
AGREEMENTS PRIOR TO THE DATE OF EXECUTION OF THIS AGREEMENT, AS CONSIDERATION
FOR AGENT’S AND LENDERS’ UNDERTAKINGS UNDER THIS AGREEMENT, BORROWERS HEREBY
UNCONDITIONALLY FOREVER RELEASE, DISCHARGE, AND ACQUIT THE LENDER PARTIES OF ANY
AND ALL CLAIMS, BREACHES OF CONTRACT, DEBTS, SUITS, DEMANDS, CAUSES OF ACTIONS
AND ACTIONS OF ANY TYPE OR NOTICE WHICH AROSE OR ARE BASED ON OCCURRENCES OR
TRANSACTIONS WHICH TOOK PLACE PRIOR TO THE EFFECTIVE DATE OF THIS AGREEMENT,
WHETHER KNOWN OR UNKNOWN, CONTINGENT OR LIQUIDATED, SUSPECTED OR UNSUSPECTED, AT
LAW OR IN EQUITY, OR BASED IN CONTRACT OR TORT.  EACH BORROWER ACKNOWLEDGES AND
REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO RECEIVE THE ADVICE OF COUNSEL IN
CONNECTION WITH THIS ACKNOWLEDGMENT AND RELEASE AND HAS VOLUNTARILY ENTERED INTO
THIS ACKNOWLEDGEMENT AND RELEASE.

EACH PARTY HERETO HEREBY 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 AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 11.

BORROWERS ACKNOWLEDGE THAT BORROWERS HAVE NO RIGHT TO CURE EVENTS OF DEFAULT.

12.           Future Negotiations.  The parties hereto acknowledge and agree
that (A) the Lenders and Agent have not agreed to and have no future obligation
whatsoever to discuss, negotiate or agree to any restructuring of the Borrowers’
obligations with respect to (i) the MELF Loans, (ii) the PIDC Loans, (iii) the
Bakery Lease , the Improvement Agreement or the Office Lease, (iv) the New
Loans, or (v) the Loans and the Loan Documents, or any of them, or any
modification, amendment, restructuring or reinstatement of the Loan Documents
(including any future postponement of any Commitment reduction) or forbearing
from exercising their rights and remedies under the Loan Documents, (B) if there
are any future discussions among any of the Lenders, Agent, MELF, PIDC, Liberty,
Liberty II, one or more New Lenders, and the Borrowers concerning any such
restructuring, modification, amendment or reinstatement, then no restructuring,
modification, amendment, reinstatement, compromise, settlement, agreement or
understanding with respect to the Borrowers’ obligations with respect to the
Loan Documents, or any of them, or any aspect thereof, shall constitute a
legally binding agreement or contract or have any force or effect whatsoever
unless and until reduced to writing and signed by authorized
 
 
 
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representatives of all parties, and that none of the parties hereto shall assert
or claim in any legal proceedings or otherwise that any such agreement exists
except in accordance with the terms of this Section 12.
 
13.           Amendment Fee.  As consideration for Agent and Lenders to enter
into this Agreement, Borrowers shall pay to Agent, for the account of each
Lender in accordance with their respective Applicable Percentages of the Loans,
an amendment fee equal to 50 basis points of the total Commitment (the
“Amendment Fee”). The Amendment Fee is due and payable in full on the Waiver
Termination Date.  Borrowers agree that the Amendment Fee has been fully earned
by Agent and Lenders and is non-refundable.  In addition to the Amendment Fee
and without limiting Borrowers’ expense reimbursement obligations under the
Credit Agreement, Borrowers shall promptly reimburse Agent and Lenders, upon
each periodic request by Agent, for all expenses incurred by Agent and Lenders
related to or arising from Agent’s and each Lender’s engagement of counsel and
Agent’s engagement of FTI Consulting, Inc. (“FTI”) (and any replacement for or
successor to FTI, if any, in the future) for provision of services related to
the Loans, including, without limitation, all fees and expenses of counsel and
FTI incurred by Agent and any Lender.  FTI shall prepare and provide to
Borrowers a budget with respect to the services it has rendered from the date of
its engagement through the date hereof and the services it is to render (subject
to Borrowers’ review and approval in their reasonable discretion), and, if FTI’s
fees, costs and expenses exceed such budget in any material respect, Borrowers
shall not be responsible for the payment of any such excess amounts.
 
14.           Counterparts.  This Agreement may be executed by each party in
counterparts and may be delivered by facsimile or in electronic PDF sent via
e-mail, each of which shall be deemed to be an original and all of which, taken
together, shall constitute one agreement binding upon all parties.
 
15.           Binding Effect.  All the terms and provisions of this Agreement,
including, but not limited to, the security interests and liens confirmed
hereby, and the priority established hereby, shall be binding upon Borrowers and
upon any subsequently appointed trustee (regardless of whether under chapter 7
or chapter 11 of the Bankruptcy Code) in any case filed by or against any
Borrower under the Bankruptcy Code.
 
16.           Status of Loan Documents.  Borrowers further agree that (a) all
terms and conditions of the Loan Documents, including, without limitation, the
Credit Agreement, Security Agreement, Open-end Mortgage and Open End Leasehold
Mortgage described in the Recitals, remain in full force and effect, except as
expressly modified by the terms of this Agreement and (b) this Agreement
constitutes a Loan Document.
 
17.           No Waiver.  The execution, delivery and effectiveness of this
Agreement by Lenders except as expressly provided in this Agreement to the
contrary, shall be without prejudice to, or waiver of any Defaults and Events of
Default that have occurred to date under the Loan Documents or occur with the
passage of time.  The execution of this Agreement shall not operate as a waiver
of any right, power or remedy of Lenders under any of the Loan Documents, nor
constitute a waiver of any provisions of any of the Loan Documents.  All of the
provisions and covenants of the Credit Agreement and other Loan Documents are
and shall continue to remain in full force and effect in accordance with the
terms thereof and are hereby in
 
 
 
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all respects ratified and confirmed, as amended by this Agreement.  Each
Borrower shall remain obligated to comply with all of its obligations contained
in each Loan Document to which it is a party, except as otherwise provided by
this Agreement and any other documents required by this Agreement.  This
Agreement and any other documents required by this Agreement shall be deemed to
be a Loan Document for all purposes under and in connection with this Agreement,
the Credit Agreement and the other Loan Documents and shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns.  This Agreement is not intended to confer any rights or
benefits on any Person other than the parties hereto and their respective
successors and assigns, except that the Lender Parties are intended third-party
beneficiaries of the acknowledgment and release provisions hereof.
 
18.           Choice of Law.  This agreement and the documents executed in
connection herewith shall in all respects be construed in accordance with, and
governed by, the internal laws of the Commonwealth of Pennsylvania, without
regard to the principles of conflicts of laws of such Commonwealth.
 
19.           Authority.  The signatories hereto represent and warrant that they
have full authority to execute this Agreement.
 
20.           Advice of Counsel.  The parties to this agreement have received
the advice of counsel in the negotiation and execution of this Agreement.
 
 

 

 

[signatures on following three page]
 
 
 
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IN WITNESS WHEREOF, the parties are executing this Agreement as of the day and
year first above written.

 
BORROWERS:
     
TASTY BAKING COMPANY
         
By:                                                   
 
Name:                                              
 
Title:                                                
         
TBC FINANCIAL SERVICES, INC.
         
By:                                                   
 
Name:                                              
 
Title:                                                
         
TASTY BAKING OXFORD, INC.
         
By:                                                   
 
Name:                                              
 
Title:                                                

 
 
 

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

 

 
AGENT:
     
CITIZENS BANK OF PENNSYLVANIA, as Administrative Agent, Collateral Agent and L/C
Issuer
         
By:                                                   
 
Name:                                              
 
Title:                                                

 

 
 
 

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LENDERS:
     
CITIZENS BANK OF PENNSYLVANIA, as Lender
         
By:                                                   
 
Name:                                              
 
Title:                                                
         
BANK OF AMERICA, N.A., as Lender
         
By:                                                   
 
Name:                                              
 
Title:                                                
         
SOVEREIGN BANK, as Lender
         
By:                                                   
 
Name:                                              
 
Title:                                                
         
MANUFACTURERS AND TRADERS TRUST COMPANY, as Lender
         
By:                                                   
 
Name:                                              
 
Title:                                                

 
 

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Schedule 1

Specified Defaults

Principal Payments On or About January 1, 2011

 
Fixed Asset Loans
 
$246,211.81
     
Mortgage Component
$19,466.66
       
Equipment Component
$179,545.15
       
IP Component
$47,200.00
       
Job Bank Term Loan
 
$83,333.00
     
TOTAL
 
$329,544.81

 

 
Covenant Defaults
 
(a) failure to satisfy, as at December 25, 2010 certain financial covenants set
forth in Section 6.12 of the Credit Agreement;

(b) any Event of Default that arises as a result of a “going concern”
qualification to Borrowers’ audited financial statements for the fiscal year
ended December 25, 2010;

(c) any Event of Default that arises from Borrower’s failure to make “minimum
required contributions” to Borrowers’ ERISA Plans, provided, the Borrowers shall
have submitted a funding waiver request to the Internal Revenue Service.

 
 
 
 

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Schedule 2
 

 

MELF/PIDC Agreement
 
 

 
 
 

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

 
 
Schedule 3
 

Liberty Agreement
 
 
 
 
 

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

 

 
 
Schedule 4
 

 
IP Assignment Agreements
 
 

 
 
 

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Schedule 5
 

 
Bridge Loan Intercreditor Agreement