IMPROVEMENTS AGREEMENT
Exhibit
10 (b)
THIS
IMPROVEMENTS AGREEMENT (this “Agreement”) is made this 8th day of May,
2007, by and Between LIBERTY PROPERTY/SYNTERRA LIMITED
PARTNERSHIP, a Pennsylvania limited partnership (“Liberty”), and
TASTY BAKING COMPANY, a Pennsylvania corporation
(“Tasty”).
W
I T N E S S E T H:
WHEREAS,
Liberty and Tasty have entered into that certain Industrial Lease Agreement
of
even date herewith (the “Lease”), whereby Liberty, as Landlord, leases to Tasty,
as Tenant, certain premises located in the Navy Yard (as defined in the Lease)
to be used by Tasty as a baking, warehouse and distribution facility, all as
more particularly described in the Lease;
WHEREAS,
pursuant to the terms of the Lease, Liberty has agreed (i) to construct certain
improvements on the Premises for the benefit of Tasty (the “Improvements”), and
(ii) to advance to tasty a portion of the costs of the Improvements, which
advance shall be repaid by Tasty to Liberty a set forth in this Agreement;
and
WHEREAS,
in connection with the construction of the Improvements, the parties now desire
to enter into this Improvements Agreement upon the terms and conditions set
forth below.
NOW,
THEREFORE, in consideration of the covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereby
agree
as follows:
1. Advance. The
parties have agreed that Tasty will contribute the sum of $18,312,259.00 toward
the hard costs to construct the Improvements and the construction management
fee
payable in connection therewith. Of this amount, Liberty hereby
agrees to advance on behalf of Tasty an amount equal to
$9,463,516.00 on account of hard and soft costs incurred to construct the
Improvements, which amount shall be repaid by Tasty to Liberty in accordance
with this Agreement.
2. Payments.
Commencing on the first anniversary of the Commencement
Date under the Lease, and continuing on each calendar month thereafter for
a
period of 180 consecutive months (the “Term”), Tasty shall pay to Liberty or its
designee the sum of $101,695.00 (the “Monthly Payment Amount”). The
Monthly Payment Amount shall be paid on the first business day of each calendar
month during the Term, without set-off or deduction. All payments
under this Agreement shall be made in immediately available funds during regular
business hours and shall be made in currency of the United States of
America. Any installment of the Monthly Payment Amount or any other
amount due hereunder that is not paid within five (5) days after the date due
will accrue interest at the Interest Rate from the date due and shall be subject
to a late payment charge equal to five percent (5%) of the overdue
amount. As used herein, “Interest Rate” means the rate of interest
per annum from time to time published in The Wall Street Journal (or comparable
financial publication designated by Liberty if The Wall Street Journal ceases
to
be published or ceases to publish a prime rate) as the “High Prime Rate”, or the
“Prime Rate” if only one “Prime Rate” is published, as the same may fluctuate
from time to time, plus 4%, compounded annually.
3. Address
for Payment. Unless otherwise instructed by Liberty or
its successor, payments under this Agreement shall be made at 000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxxxx, XX 00000.
4. Prepayment. Provided
Tasty is not in default of this Agreement, Tasty may prepay all or part of
the
amounts due under this Agreement on the first business day of any calendar
month
during the term of this Agreement. If Tasty elects to prepay all of
the amounts due hereunder, Tasty shall pay to Liberty or its designee the sum
identified next to the corresponding prepayment date set forth on the prepayment
amortization schedule attached hereto as Exhibit A, together with any
other amount due and payable from Tasty to Liberty hereunder. If
Tasty elects to prepay less than the full amount due hereunder, the prepayment
so made by Tasty shall be applied on account of the aggregate amount due
hereunder, and Tasty shall continue to pay the Monthly Payment Amount in
accordance with this Agreement until the balance of all amounts payable under
this Agreement are paid in full.
5. Letter
of Credit.
(a) As
security for the full and prompt performance by Tasty of the terms and covenants
of this Agreement, Tasty shall deliver to Liberty within five (5) business
days
after the date of this Agreement, an irrevocable negotiable letter of credit
(an
“LC”), issued by a bank acceptable to Liberty, having a banking office in
Philadelphia, Pennsylvania, in form and content reasonably acceptable to
Liberty, for the benefit of Liberty, in the sum of $8,000,000.00. The
LC shall provide that, provided the other conditions set forth therein for
a
draw upon the LC have been met: (i) from and after the date of this Agreement
until December 31, 2007, Liberty may draw up to One Million Dollars
($1,000,000.00) against the LC, (ii) from and after January 1, 2008, until
June
30, 2008, Liberty may draw up to Two Million Six Hundred Thousand Dollars
($2,600,000.00) against the LC, (iii) from and after July 1, 2008, until
December 31, 2008, Liberty may draw up to Three Million Five Hundred Thousand
Dollars ($3,500,000.00) against the LC, and (iv) from and after January 1,
2009,
Liberty may draw up to Eight Million Dollars ($8,000,000.00) against the
LC The parties also acknowledge that the LC shall secure Tasty’s
performance under the Lease. Such LC shall have a term covering the
entire Term of this Agreement and shall expire not less than sixty (60) days
after all amounts required under this Agreement have been paid. Tasty
shall not be entitled to reduce the face amount of the LC without Liberty’s
prior consent in each instance. Tasty’s failure to keep the LC in
place for the period specified above shall constitute an Event of Default under
this Agreement and under the Lease. Liberty shall be entitled to draw
upon the LC (a) upon the occurrence and during the continuance of an Event
of
Default under this Agreement, or (b) if the term of the LC is to expire prior
to
the period specified above and Tasty does not cause the term to be extended,
or
a new LC issued (from an acceptable bank and in a form as specified above),
at
least thirty (30) days prior to such expiration. In the event the LC
is presented for payment, Liberty may apply the proceeds on account of all
amounts due under this Agreement (including any amounts accelerated pursuant
to
Paragraph 6 below). If the LC has been
drawn upon in connection with the default under this Agreement, Tasty shall,
upon demand by Liberty, restore the LC to a face amount not less than the
outstanding balance of all amounts due under this Agreement.
-2-
(b) Notwithstanding
the foregoing, Tasty may initially satisfy the aforementioned requirement to
deliver the LC by delivering to Liberty within five (5) business days after
the
date of this Agreement an LC in the face amount of One Million Dollars
($1,000,000.00) substantially in the form of Exhibit B attached hereto,
issued by PNC Bank, N.A., naming Liberty as the beneficiary and containing
other
terms reasonably acceptable to Liberty (the Interim LC); provided that
Tasty replaces the Interim LC on or before July 30, 2007, with a new LC that
complies with all of the terms of Section 5(a) and is in the form of Exhibit
C attached hereto (the Final LC). The failure of Tasty to replace
the Interim LC with the Final LC by July 30, 2007 shall be an Event of Default
under this Agreement.
6. Defaults;
Remedies.
(a) The
following shall be deemed to be “Events of Default” under this
Agreement:
(i) Tasty
fails to make any payment due under this Agreement within five (5) business
days
of its receipt of notice thereof from Liberty;
(ii) Tasty
fails to perform or observe or otherwise breaches any other obligation under
this Agreement within ten (10) business days of its receipt of notice thereof
from Liberty, provided, however, if the default cannot reasonably be cured
within ten (10) business days following Liberty's notice, Tasty shall be
afforded additional reasonable time to cure the default (not to exceed an
additional one hundred Eighty (180) days) if Tasty begins to cure the default
within ten (10) business days following Liberty's notice and continues
diligently in good faith to completely cure the default;
(iii) The
occurrence of any other event identified as an Event of Default under this
Agreement;
(iv) If
Tasty
becomes insolvent or bankrupt in any sense or makes a general assignment for
the
benefit of creditors or offers a settlement to creditors, or if a petition
in
bankruptcy or for reorganization or for an arrangement with creditors under
any
federal or state law is filed by or against Tasty, or a xxxx in equity or other
proceeding for the appointment of a receiver for any of Tasty's assets is
commenced, or if any of the real or personal property of Tasty shall be levied
upon in connection with such insolvency or bankruptcy proceeding; provided
that
any proceeding brought by anyone other than Liberty or Tasty under any
bankruptcy, insolvency, receivership or similar law shall not constitute an
Event of Default until such proceeding has continued unstayed for more than
sixty (60) consecutive days;
(v) If
Tasty
enters in to or permits a Transfer in violation of Paragraph 10 below;
or
(vi) The
occurrence of an Event of Default under the Lease.
-3-
(b) If
an
Event of Default occurs under this Agreement, Liberty shall have the following
rights and remedies:
(i) to
accelerate the whole or any part of the Monthly Payment Amounts due for the
balance of the Term of this Agreement, and declare the same to be immediately
due and payable;
(ii) To
draw
upon the LC, in whole or in part;
(iii) To
exercise any other rights available at law or in equity.
IN
ADDITION TO THE RIGHTS AND REMEDIES PROVIDED ABOVE, IF AN EVENT OF DEFAULT
OCCURS RELATING TO TASTY’S NON-PAYMENT OF ANY AMOUNT DUE HEREUNDER, TASTY HEREBY
AUTHORIZES ANY ATTORNEY OF ANY COURT OF RECORD OF THE COMMONWEALTH OF
PENNSYLVANIA TO APPEAR FOR TASTY AND TO CONFESS JUDGMENT AGAINST TASTY, AND
IN
FAVOR OF LIBERTY, FOR ALL RENT DUE HEREUNDER PLUS COSTS AND AN ATTORNEY'S
COLLECTION COMMISSION EQUAL TO THE GREATER OF 10% OF ALL AMOUNTS DUE HEREUNDER
OR $1,000, FOR WHICH THIS AGREEMENT OR A TRUE AND CORRECT COPY HEREOF SHALL
BE
GOOD AND SUFFICIENT WARRANT. TASTY UNDERSTANDS THAT THE FOREGOING
PERMITS LIBERTY TO ENTER A JUDGMENT AGAINST TASTY WITHOUT PRIOR NOTICE OR
HEARING. ONCE SUCH A JUDGMENT HAS BEEN ENTERED AGAINST TASTY, ONE OR
MORE WRITS OF EXECUTION OR WRITS OF GARNISHMENT MAY BE ISSUED THEREON WITHOUT
FURTHER NOTICE TO TASTY AND WITHOUT A HEARING, AND, PURSUANT TO SUCH WRITS,
LIBERTY MAY CAUSE THE SHERIFF OF THE COUNTY IN WHICH ANY PROPERTY OF TASTY
IS
LOCATED TO SEIZE TASTY'S PROPERTY BY LEVY OR ATTACHMENT. IF THE
JUDGMENT AGAINST TASTY REMAINS UNPAID AFTER SUCH LEVY OR ATTACHMENT, LIBERTY
CAN
CAUSE SUCH PROPERTY TO BE SOLD BY THE SHERIFF EXECUTING THE WRITS, OR, IF SUCH
PROPERTY CONSISTS OF A DEBT OWED TO TASTY BY ANOTHER ENTITY, LIBERTY CAN CAUSE
SUCH DEBT TO BE PAID DIRECTLY TO LIBERTY IN AN AMOUNT UP TO BUT NOT TO EXCEED
THE AMOUNT OF THE JUDGMENT OBTAINED BY LIBERTY AGAINST TASTY, PLUS THE COSTS
OF
THE EXECUTION. SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ONE EXERCISE
THEREOF, BUT JUDGMENT MAY BE CONFESSED AS AFORESAID FROM TIME TO TIME AS OFTEN
AS ANY OF THE SUMS DUE HEREUNDER SHALL FALL DUE OR BE IN ARREARS, AND SUCH
POWERS MAY BE EXERCISED AS WELL AFTER THE EXPIRATION OF THE TERM OF THIS
AGREEMENT.
THE
WARRANT TO CONFESS JUDGMENT SET FORTH ABOVE SHALL CONTINUE IN FULL FORCE AND
EFFECT AND BE UNAFFECTED BY AMENDMENTS TO THIS AGREEMENT OR OTHER AGREEMENTS
BETWEEN LIBERTY AND TASTY EVEN IF ANY SUCH AMENDMENTS OR OTHER AGREEMENTS
INCREASE TASTY'S OBLIGATIONS. TASTY WAIVES ANY PROCEDURAL ERRORS IN
CONNECTION WITH THE ENTRY OF ANY SUCH JUDGMENT OR IN THE ISSUANCE OF ANY ONE
OR
MORE WRITS OF EXECUTION OR GARNISHMENT THEREON.
-4-
TASTY
KNOWINGLY AND EXPRESSLY WAIVES ANY RIGHT WHICH TASTY MAY HAVE TO NOTICE AND
TO
HEARING PRIOR TO A LEVY UPON OR ATTACHMENT OF TASTY'S PROPERTY OR
THEREAFTER.
Initials
on behalf of
Tasty: ____________
(c) Any
provision to the contrary in this Section 6 notwithstanding,
(i) Liberty shall not be required to give Tasty the notice and opportunity
to cure provided in Subsection 6(a)(i) above more than twice in any
consecutive 12-month period, and thereafter Liberty may declare an Event of
Default without affording Tasty any of the notice and cure rights provided
under
this Agreement, and (ii) Liberty shall not be required to give such notice
prior
to exercising its rights under Subsection 6(a)(ii) if Tasty fails to comply
with the provisions of Sections 5 or 10 or in an
emergency. Notwithstanding the foregoing, Liberty shall provide Tasty
with additional written notice at least thirty (30) days prior to exercising
any
confession of judgment against Tasty pursuant to Section 6; provided, however,
that if Liberty elects to confess judgment without first accelerating the
Monthly Payment Amounts, thereby requiring multiple confessions of judgment
as
Monthly Payment Amounts accrue, a single notice of such election delivered
to
Tasty at least thirty (30) days prior to the first such exercise of the
confession of judgment shall suffice, and no further notices shall be required
for subsequent confessions of judgment for Rent and attorney fees.
(d) No
waiver
by Liberty of any breach by Tasty shall be a waiver of any subsequent breach,
nor shall any forbearance by Liberty to seek a remedy for any breach by Tasty
be
a waiver by Liberty of any rights and remedies with respect to such or any
subsequent breach. Efforts by Liberty to mitigate the damages caused
by Tasty's default shall not constitute a waiver of Liberty's right to recover
damages hereunder. No right or remedy herein conferred upon or
reserved to Liberty is intended to be exclusive of any other right or remedy
provided herein or by law, but each shall be cumulative and in addition to
every
other right or remedy given herein or now or hereafter existing at law or in
equity. No payment by Tasty or receipt or acceptance by Liberty of a
lesser amount than the total amount due Liberty under this Agreement shall
be
deemed to be other than on account, nor shall any endorsement or statement
on
any check or payment be deemed an accord and satisfaction, and Liberty may
accept such check or payment without prejudice to Liberty's right to recover
the
balance of all amounts due, or Liberty's right to pursue any other available
remedy.
(e)
(i) Tasty
shall pay upon demand all costs and expenses, including the reasonable fees
and
out-of-pocket expenses of counsel, agents and others retained by Liberty,
incurred in enforcing Tasty's obligations hereunder or incurred by Liberty
in
any litigation, negotiation or transaction in which Tasty causes Liberty to
become involved.
(ii) If
either party commences an action against the other party arising out of or
in
connection with this Agreement, the prevailing party shall be entitled to have
and recover from the losing party reasonable attorneys' fees, costs of suit,
investigation expenses and discovery costs, including costs of
appeal.
-5-
(iii) Liberty
shall pay upon demand all costs and expenses, including the reasonable fees
and
out-of-pocket expenses of counsel, agents and others retained by Tasty, incurred
in enforcing Liberty’s obligations hereunder or incurred by Tasty in any
litigation, negotiation or transaction in which Liberty causes Tasty to become
involved.
(iv) Notwithstanding
the foregoing, each of Liberty and Tasty shall pay the fees of its own counsel
in negotiating this Agreement.
(f) TASTY
HEREBY AGREES TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
THE COMMONWEALTH OF PENNSYLVANIA, AND TASTY AGREES THAT ALL SERVICE OF PROCESS
MAY BE MADE BY CERTIFIED MAIL DIRECTED TO TASTY, TO THE ATTENTION OF TASTY’S
GENERAL COUNSEL, AT TASTY'S ADDRESS SET FORTH BELOW, AND SERVICE SO MADE WILL
BE
DEEMED TO BE COMPLETED, PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
LIBERTY FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY SECURITY
OR AGAINST TASTY INDIVIDUALLY, OR AGAINST ANY PROPERTY OF TASTY WITHIN ANY
OTHER
STATE OR NATION TO ENFORCE ANY AWARD OR JUDGMENT OBTAINED IN THE VENUE PROVIDED
ABOVE. TASTY WAIVES ANY OBJECTION TO VENUE AND ANY OBJECTION BASED ON
A MORE CONVENIENT FORUM IN ANY ACTION INSTITUTED HEREIN, PURSUANT TO THE
PROVISIONS HEREOF.
7. Time
of the Essence. It is agreed that time is of the essence
in the performance of all obligations under this Agreement.
8. Governing
Law. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
9. Severability. If
any provision or any portion of any provision contained in this Agreement is
held by a court of law to be invalid, illegal, unlawful, void or unenforceable
as written in any respect, then it is the intent of all parties hereto that
such
portion or provision shall be given force to the fullest possible extent that
is
legal, valid and enforceable and that the remainder of the Agreement shall
be
construed as if such illegal, invalid, unlawful, void or unenforceable portion
or provision was not contained therein.
10. Assignment. Liberty
shall not sell, assign or transfer all or any portion of its rights and
obligations under this Agreement to any party, other than an Affiliate of
Liberty (as defined in the Lease) or to a joint venture for which Liberty or
its
Affiliate serves as the general partner, managing member or manager (pursuant
to
the joint venture agreement or a separate management agreement) for a period
of
five (5) years from the date of this Agreement without Tasty’s prior approval,
which may be withheld at Tasty’s sole discretion. After such five (5)
year period, Liberty shall have the right to sell, assign or transfer all or
any
portion of its rights and obligations under this Agreement, and all such rights
and obligations shall inure to the such purchaser, assignee or
transferee. Tasty shall not sell, assign or transfer any of its
rights or obligations under this Agreement without Liberty’s prior approval,
which approval shall not be unreasonably withheld, conditioned or
delayed. No sale, assignment or transfer by Tasty of any of its
rights or obligations hereunder shall release Tasty from any of its obligations
hereunder, and Tasty shall remain fully liable hereunder. Any sale,
assignment or transfer by Tasty in violation of this Paragraph shall be void
at
the option of Liberty. Notwithstanding the provisions hereof, Liberty
agrees that no consent shall be required for a transfer by Tasty to any
Affiliate of Tasty, in accordance with the provisions of Section 18(c) of the
Lease.
-6-
11. Notices. Any
notice or other communication under this Agreement shall be in writing and
addressed to Liberty or Tasty at their respective addresses specified as follows
(or to such other address as either may designate by notice to the other) with
a
copy to any Mortgagee or other party designated by Liberty:
If
to
Liberty:
Liberty
Property/Synterra Limited Partnership
c/o
Liberty Property Trust
0
Xxxx
Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxxx, Senior Vice President
with
a
copy to:
Liberty
Property Trust
000
Xxxxxxxxxxxx Xxxxxxx
Xxxxxxx,
XX 00000
Attention: Legal
Department
with
a
copy to:
Wolf,
Block, Xxxxxx and Xxxxx-Xxxxx LLP
0000
Xxxx
Xxxxxx, 00xx Xxxxx
Xxxxxxxxxxxx,
XX 00000
Attention: Xxxxxx
X. Xxxx, Esquire
If
to
Tasty before the Rent Commencement Date under the Lease:
Tasty
Baking Company
0000
Xxx
Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
President and CEO
With
a
copy to:
Tasty
Baking Company
0000
Xxx
Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attention:
General Counsel
-7-
With
a
copy to:
Xxxxxxxx
Ronon Xxxxxxx & Xxxxx, LLP
0000
Xxx
Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx,
XX 00000
Attn:
Chair of Business Department
If
to
Tasty on or after the Rent Commencement Date under the Lease: To the
Premises (as defined in the Lease).
Each
notice or other communication shall be deemed given if sent by prepaid overnight
delivery service or by certified mail, return receipt requested, postage
prepaid, with delivery in any case evidenced by a receipt, and shall be deemed
received on the day of actual receipt by the intended recipient or on the
business day delivery is refused. The giving of notice by Liberty's
or Tasty's attorneys, representatives and agents under this Paragraph shall
be
deemed to be the acts of Liberty or Tasty, as applicable; however, the foregoing
provisions governing the date on which a notice is deemed to have been received
shall mean and refer to the date on which a party to this Agreement, and not
its
counsel or other recipient to which a copy of the notice may be sent, is deemed
to have received the notice.
12. Counterparts. This
Agreement may be executed in any number of counterparts each of which, taken
together, shall constitute one and the same instrument. Faxed or
electronically delivered signatures shall be enforceable as original signatures
against the party delivering such signature.
-8-
IN
WITNESS WHEREOF, the parties have executed this Improvements Agreement
as of the date first above written:
LIBERTY
PROPERTY/SYNTERRA
LIMITED
PARTNERSHIP
By: Liberty
Property Philadelphia Navy Yard
Limited
Partnership, its General
Partner
By: Liberty
Property
Philadelphia Navy Yard
Corporation,
its General Partner
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| Title: Senior Vice President | ||||
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| TASTY BAKING COMPANY | ||||
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