a5463757ex10_b.htm


                                                                                                                                    Exhibit
      10 (b)

     

    IMPROVEMENTS
      AGREEMENT


     

    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 500 Chesterfield
      Parkway, Malvern, PA 19355.

     

    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 bill 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

    8
      Penn
      Center, Suite 1100

    Philadelphia,
      PA  19103

    Attention:
      John S. Gattuso, Senior Vice President

     

    with
      a
      copy to:

     

    Liberty
      Property Trust

    500
      Chesterfield Parkway

    Malvern,
      PA 19355

    Attention:  Legal
      Department

     

    with
      a
      copy to:

     

    Wolf,
      Block, Schorr and Solis-Cohen LLP

    1650
      Arch
      Street, 22nd Floor

    Philadelphia,
      PA 19103

    Attention:  Herman
      C. Fala, Esquire

     

    If
      to
      Tasty before the Rent Commencement Date under the Lease:

     

    Tasty
      Baking Company

    3413
      Fox
      Street

    Philadelphia,
      PA  19129

    Attention:
      President and CEO

     

    With
      a
      copy to:

     

    Tasty
      Baking Company

    3413
      Fox
      Street

    Philadelphia,
      PA  19129

    Attention:
      General Counsel

     

    


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    With
      a
      copy to:

     

    Stradley
      Ronon Stevens & Young, LLP

    2600
      One
      Commerce Square

    Philadelphia,
      PA 19103

    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

     

     

    
      
        	 	
                 

              	
                By:

              	 	 
	 	 	Name:
                John S. Gattuso
	 	 	Title:
                Senior Vice President


      

       

      
        
           

          
            	 	
                     

                  	
                    By:

                  	 	 
	 	 	Name:	 	 
	 	 	Title:
                    	 	 


          

        

      

      


      
         

        
          	 	 	TASTY
                  BAKING COMPANY 
	 	
                   

                	 
	 	
                   

                	
                  By:

                	 	 
	 	 	Name:	 	 
	 	 	Title: