EIGHTH AMENDMENT TO SECOND RESTATED AND AMENDED AGREEMENT OF LIMITED PARTNERSHIP OF LIBERTY PROPERTY LIMITED PARTNERSHIP
FINAL
EIGHTH AMENDMENT
TO
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
TO
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
This Eighth Amendment to the Second Restated and Amended Agreement of Limited
Partnership, dated as of August 21, 2007 (this “Amendment”), is entered into by
LIBERTY PROPERTY TRUST, a Maryland real estate investment trust, as general partner (the
“General Partner”) of LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited
partnership (the “Partnership”), for itself and on behalf of the limited partners of the
Partnership, and Belmar Realty Corporation, a Delaware corporation (“Belmar”), Belport
Realty Corporation, a Delaware corporation (“Belport”), Belrose Realty Corporation, a
Delaware corporation (“Belrose”), Belshire Realty Corporation, a Delaware corporation
(“Belshire”), Belterra Realty Corporation, a Delaware corporation (“Belterra”), and
Beldore Realty Corporation, a Delaware corporation (“Beldore”, and each of Belmar, Belport,
Belrose, Belshire and Belterra a “Series H Preferred Partner” and, collectively, the
“Series H Preferred Partners”).
Whereas, Section 4.2(a) of the Second Restated and Amended Agreement of Limited
Partnership of the Partnership, as amended by that certain First Amendment to the Second Restated
and Amended Agreement of Limited Partnership, dated as of July 28, 1999, that certain Second
Amendment to the Second Restated and Amended Agreement of Limited Partnership, dated as of April
18, 2000, that certain Third Amendment to the Second Restated and Amended Agreement of Limited
Partnership, dated as of June 10, 2002, that certain Fourth Amendment to the Second Restated and
Amended Agreement of Limited Partnership, dated as of September 1, 2004, that certain Fifth
Amendment to the Second Restated and Amended Agreement of Limited Partnership, dated as of June 16,
2005, and that certain Sixth Amendment to the Second Restated and Amended Agreement of Limited
Partnership, dated as of June 30, 2005 (as amended), that certain Seventh Amendment to the Second
Restated and Amended Agreement of Limited Partnership, dated as of December 15, 2006 (collectively,
as amended, the “Partnership Agreement”), authorizes the General Partner to cause the
Partnership to issue additional Partnership Units in one or more classes or series, with such
designations, preferences and relative, participating, optional or other special rights, powers and
duties as shall be determined by the General Partner, subject to the provisions of such section;
and
Whereas, pursuant to the authority granted to the General Partner pursuant to
Sections 4.2(a) and 14.1(b) of the Partnership Agreement, the General Partner desires to amend the
Partnership Agreement (i) to establish a new class of Partnership Units, the “Series H Preferred
Units” (as hereinafter defined), and to set forth the designations, rights, powers, preferences and
duties of such Series H Preferred Units, (ii) to issue the Series H Preferred Units to each of the
Series H Preferred Partners as set forth in Annex A to this Amendment and admit each of the Series
H Preferred Partners as an Additional Limited Partner and (iii) to make certain other changes to
the Partnership Agreement.
Now, therefore, in consideration of good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the General Partner hereby amends the Partnership
Agreement as follows:
Section 1. Definitions. For purposes of this Amendment, the term “Parity
Preferred Units” shall be used to refer to any class or series of Partnership Interests of the
Partnership now or hereafter authorized, issued or outstanding expressly designated by the
Partnership to rank on a parity with Series H Preferred Units with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of the Partnership
including, without limitation, the “7.45% Series B Cumulative Redeemable Preferred Partnership
Interests,” the “7.625% Series D Cumulative Redeemable Preferred Partnership Interests,” the “7.00%
Series E Cumulative Redeemable Preferred Partnership Interests”, the “6.65% Series F Cumulative
Redeemable Preferred Partnership Interests,” and the “6.70% Series G Cumulative Redeemable
Preferred Partnership Interests.” The term “Priority Return” shall mean an amount equal to
7.40% per annum, as the same may be adjusted pursuant to Section 3(a) below, determined on the
basis of a 360 day year of twelve (12) 30-day months (and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the distribution payable will
be computed based on the ratio of the actual number of days elapsed in such period to ninety (90)
days), cumulative to the extent not distributed for any given distribution period pursuant to
Section 6.2 of the Partnership Agreement, of the stated value of $25 per Series H Preferred Unit,
commencing on the date of issuance of such Series H Preferred Unit. The term “Subsidiary”
shall mean with respect to any person, any corporation, partnership, limited liability company,
joint venture or other entity of which a majority of (i) voting power of the voting equity
securities or (ii) the outstanding equity interests, is owned, directly or indirectly, by such
person. The term “PTP” shall mean a “publicly traded partnership” within the meaning of
Section 7704 of the Internal Revenue Code (the “Code”). Capitalized terms used herein and
not otherwise defined herein shall have the meanings ascribed to them in the Partnership Agreement.
Section 2. Designation and Number. A series of Partnership Interests in the
Partnership designated as the “7.40% Series H Cumulative Redeemable Preferred Partnership
Interests” (the “Series H Preferred Units”) is hereby established. The maximum number of
Series H Preferred Units shall be 4,000,000.
Section 3.
(a) Payment of Distributions. Subject to the rights of holders of Parity
Preferred Units and holders of Partnership Interests ranking senior to the Series H
Preferred Units as to payment of distributions, pursuant to Section 6.2 of the Partnership
Agreement, holders of Series H Preferred Units will be entitled to receive, when, as and if
declared by the Partnership acting through the General Partner, out of Net Operating Cash
Flow, cumulative preferential cash distributions at the rate per annum of 7.40% of the
original Capital Contribution per Series H Preferred Unit (the “Issuance Rate”).
All distributions shall be cumulative, shall accrue from the original date of issuance and
will be payable (i) quarterly in arrears, on or before March 31, June 30, September 30 and
December 31 of each year commencing on the first such date to occur after the original date
of issuance, and, (ii), in the event of (A) an exchange of Series H Preferred Units into
Series H Preferred Shares, or (B) a redemption of Series H Preferred Units, on the exchange
date
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or redemption date, as applicable (each a “Preferred Unit Distribution Payment
Date”). The amount of the distribution payable for any period will be computed on the
basis of a 360-day year of twelve (12) 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the distribution
payable will be computed based on the ratio of the actual number of days elapsed in such
period to ninety (90) days. If any date on which distributions are to be made on the Series
H Preferred Units is not a Business Day (as such term is defined herein), then payment of
the distribution to be made on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series H Preferred Units will be made to the
holders of record of the Series H Preferred Units on the relevant record dates to be fixed
by the Partnership acting through the General Partner, which record dates shall in no event
exceed fifteen (15) Business Days prior to the relevant Preferred Unit Distribution Payment
Date (the “Preferred Unit Partnership Record Date”).
(b) Distributions Cumulative. Distributions on the Series H Preferred Units
will accrue whether or not the terms and provisions of any agreement of the Partnership,
including any agreement relating to its indebtedness at any time prohibit the declaration,
setting aside for payment or current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized. Accrued but
unpaid distributions on the Series H Preferred Units will accumulate as of the Preferred
Unit Distribution Payment Date on which they first become payable. Distributions on account
of arrears for any past distribution periods may be declared and paid at any time, without
reference to a regular Preferred Unit Distribution Payment Date to holders of record of the
Series H Preferred Units on the record date fixed by the Partnership acting through the
General Partner, which date shall not exceed fifteen (15) Business Days prior to the payment
date. Accumulated and unpaid distributions will not bear interest.
(c) Priority as to Distributions.
(i) So long as any Series H Preferred Units are outstanding, no distribution of
cash or other property shall be authorized, declared, paid or set apart for payment
on or with respect to any class or series of Partnership Interest of the Partnership
ranking junior as to the payment of distributions or rights upon a voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership to the Series
H Preferred Units (collectively, “Junior Units”), nor shall any cash or
other property be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series H Preferred Units, any Parity Preferred
Units or any Junior Units, unless, in each case, all distributions accumulated on
all Series H Preferred Units and all classes and series of outstanding Parity
Preferred Units have been paid in full or a sum sufficient for such full payment has
been irrevocably deposited in trust for immediate payment. The foregoing sentence
will not prohibit (a) distributions
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payable solely in Junior Units, (b) the conversion of Junior Units or Parity
Preferred Units into Partnership Interests of the Partnership ranking junior to the
Series H Preferred Units as to distributions and rights upon the voluntary or
involuntary liquidation, dissolution or winding up of the Partnership, (c) the
redemption of Partnership Interests corresponding to any Series H Preferred Shares,
Parity Preferred Shares or Junior Shares to be purchased by the General Partner
pursuant to Article VII of the Amended and Restated Declaration of Trust of the
General Partner (as amended and modified through the date hereof, the
“Charter”) to preserve the General Partner’s status as a real estate
investment trust, provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article VII of the Charter or (d) the foreclosure
by the Partnership on the Partnership Interests constituting the Indemnity
Collateral and/or the Special Indemnity Collateral (as such term is defined in
Section 13.3 of the Partnership Agreement).
(ii) So long as distributions have not been paid in full (or a sum sufficient
for such full payment is not irrevocably deposited in trust for immediate payment)
upon the Series H Preferred Units, all distributions authorized and declared on the
Series H Preferred Units and all classes or series of outstanding Parity Preferred
Units shall be authorized and declared so that the amount of distributions
authorized and declared per Series H Preferred Unit and such other classes or series
of Parity Preferred Units shall in all cases bear to each other the same ratio that
accrued distributions per Series H Preferred Unit and such other classes or series
of Parity Preferred Units (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such class or series of
Parity Preferred Units do not have cumulative distribution rights) bear to each
other. No interest or any sum of money in lieu of interest shall be payable in
respect of any distribution, payment or payments on Series H Preferred Units which
may be in arrears.
(d) No Further Rights. Holders of Series H Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or otherwise, in
excess of the full cumulative distributions described herein.
Section 4. Allocations. Section 1 of Exhibit C to the Partnership Agreement is hereby
deleted and replaced by the following:
(a) Net Income. Except as otherwise provided herein, Net Income for any fiscal
year or other applicable period shall be allocated in the following order and priority:
(i) first, to the General Partner to the extent of Net Loss previously
allocated to the General Partner pursuant to Section 1(b)(iii) below for all prior
fiscal years or other applicable periods exceed Net Income previously allocated to
the General Partner pursuant to this Section 1(a)(i) for all prior fiscal years or
other applicable periods;
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(ii) second, to Partners holding any Partnership Interests that are entitled to
any preference in distribution to the extent that Net Loss previously allocated to
such holders pursuant to Section l(b)(ii) below for all prior fiscal years or other
applicable periods exceeds Net Income previously allocated to such Partners pursuant
to this Section 1(a)(ii) for all prior fiscal years or other applicable periods;
(iii) third, to Partners holding Partnership Interests of a class not entitled
to preference in distribution to the extent that Net Loss previously allocated to
such holders pursuant to Section 1(b)(i) below for all prior fiscal years or other
applicable periods exceeds Net Income previously allocated to such holders pursuant
to this Section 1(a)(iii) for all prior fiscal years or other applicable periods;
(iv) fourth, to Partners holding any Partnership Interests that are entitled to
any preference in distribution in accordance with the rights of any such class of
Partnership Interests until each such Partnership Interest has been allocated, Net
Income equal to the excess of (A) the cumulative amount of preferred
distributions such Partners are entitled to receive to the last day of the current
fiscal year or other applicable period or to the date of redemption, to the extent
such Partnership Interests are redeemed during such period, over (B) the
cumulative Net Income allocated to such Partners, pursuant to this Section 1(a)(iv)
for all prior fiscal years or other applicable periods (and, within each such class,
pro rata in proportion to the respective share of such Partnership Interests each
Partner holds as of the last day of the period for which such allocation is being
made); and
(v) fifth, with respect to Partnership Interests that are not entitled to any
preference in the allocation of Net Income, pro rata to each such class in
accordance with the terms of such class (and, within each such class, pro rata in
proportion to each Partner’s respective share of such Partnership Interests as of
the last day of the period for which such allocation is being made).
Provided, further, that the holders of the Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units and Series H Preferred Units shall be allocated an amount of the net
“rents from real property” (within the meaning of Sec. 856(d) of the Code) of the Partnership equal
to all amounts paid or accrued with respect to the Series E Preferred Units, Series F Preferred
Units, Series G Preferred Units, and Series H Preferred Units, respectively, pursuant to Section
3.(a) of the Fifth Amendment to the Second Restated and Amended Agreement of Limited Partnership,
dated as of June 16, 2005, Section 3.(a) of the Sixth Amendment to the Second Restated and Amended
Agreement of Limited Partnership, dated as of June 30, 2005 (as amended), Section 3.(a) of the
Seventh Amendment to the Second Restated and Amended Agreement of Limited Partnership, dated as of
December 15, 2006, and Section 3.(a) of this Amendment, respectively, with respect to such fiscal
year or other period in lieu of any allocation of Net Income or Net Loss under this Section 1 and
the amount of Net Income and Net Loss of the Partnership for any fiscal year or other period shall
be computed after taking into account the special allocation of such net income to the holders of
the Series E Preferred Xxxxx,
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Series F Preferred Units, Series G Preferred Units and Series H Preferred Units, provided that the
amount of net “rents from real property” that are allocated to the holders of the Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units and Series H Preferred Units
with respect to any fiscal year or other period shall not exceed the amount of Net Income that
would have been allocated to such holders under this Section 1 had the foregoing allocations of net
“rents from real property” not been included in the Partnership Agreement.
(b) Net Loss. Except as otherwise provided herein, Net Loss for any fiscal year
or other applicable period shall be allocated in the following order and priority:
(i) first, with respect to classes of Partnership Interests that are not
entitled to any preference in distribution (including the General Partner Interest),
pro rata to each such class in accordance with the terms of such class (and, within
such class, pro rata in proportion to each Partner’s respective share of such
Partnership Interests as of the last day of the period for which such allocation is
being made) until the Adjusted Capital Account (ignoring for this purpose any
amounts a Partner is obligated to contribute to the capital of the Partnership or is
deemed obligated to contribute pursuant to Regulations Section
1.704-1(b)(2)(ii)(c)(2)) of each Partner with respect to such Partnership Interests
is reduced to zero;
(ii) second, to the Partners holding any Partnership Interests that are
entitled to any preference in distribution in accordance with the rights of any such
class of Partnership Interests (and, if there is more than one class of such
Partnership Interests, then in the reverse order of their preference in
distribution), until the Adjusted Capital Account (modified in the same manner as in
clause (i)) of each such Partner with respect to such Partnership Interests is
reduced to zero; and
(iii) third, to the General Partner.
To the extent permitted under Section 704 of the Code, solely for purposes of allocating Net
Income or Net Loss in any taxable year (or a portion thereof) to Partners holding Series B
Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units or Series H Preferred Units pursuant to this Section 1, items of Net
Income or Net Loss, as the case may be, shall not include Depreciation with respect to properties
that are “ceiling limited” in respect of holders of Series B Preferred Units, Series D Preferred
Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units or Series H
Preferred Units. For purposes of the preceding sentence, Partnership property shall be considered
“ceiling limited” in respect of a holder of Series B Preferred Units, Series D Preferred Units,
Series E Preferred Units, Series F Preferred Units, Series G Preferred Units or Series H Preferred
Units if Depreciation attributable to such Partnership property which would otherwise be allocable
to such Partner, without regard to this paragraph, exceeds depreciation determined for federal
income tax purposes attributable to such Partnership property which would otherwise be allocable to
such holder by more than 5%. Notwithstanding the foregoing sentences in this paragraph, in
applying this paragraph, the General Partner may, in its discretion for administrative ease and
convenience, calculate Net Income or Net Loss in any taxable year (or a
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portion thereof) allocable to the Partners holding Series B Preferred Units, Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G Preferred Units or
Series H Preferred Units by excluding Depreciation with respect to all properties of the
Partnership. The parties intend hereunder that the aggregate Capital Account balance of the
holders of Series B Preferred Units, Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units, Series G Preferred Units or Series H Preferred Units at any date shall not exceed
the amount of the original Capital Contribution of such holder plus the cumulative Priority Return,
whether or not declared, to the extent not previously distributed.
Section 5. Liquidation Proceeds.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding-up of the
affairs of the Partnership, distributions on the Series H Preferred Units shall be made in
accordance with Section 8.2 of the Partnership Agreement.
(b) Notice. Written notice of any such voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, stating the payment date or dates when, and
the place or places where, the amounts distributable in such circumstances shall be payable,
shall be given by (i) fax and (ii) by first class mail, postage prepaid, not less than
twenty (20) and not more than sixty (60) days prior to the payment date stated therein, to
each record holder of the Series H Preferred Units at the respective addresses of such
holders as the same shall appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series H Preferred Units will have
no right or claim to any of the remaining assets of the Partnership.
(d) Consolidation, Merger or Certain Other Transactions. The consolidation or
merger of the Partnership with or into any other corporation, trust, partnership, limited
liability company or other entity (or of any other corporation, trust, partnership, limited
liability company or other entity with or into the Partnership), or the sale, lease,
exchange, transfer or conveyance of all or substantially all of the property or business of
the Partnership shall not be deemed to constitute a liquidation, dissolution or winding-up
of the Partnership.
Section 6. Optional Redemption.
(a) Right of Optional Redemption. The Series H Preferred Units may not be
redeemed prior to August 21, 2012. On or after such date, the Partnership at its sole
option shall have the right to redeem the Series H Preferred Units, in whole or in part, at
any time or from time to time, upon not less than thirty (30) nor more than sixty (60) days
written notice, at a redemption price, payable in cash, equal to the Capital Account balance
of the holders of Series H Preferred Units (the “Series H Redemption Price”);
provided, however, that no redemption pursuant to this Section 6 will be
permitted if the Redemption Price does not equal or exceed the original Capital Contribution
of such holder plus the cumulative Priority Return, whether or not declared, to the
redemption date to the extent not previously distributed. If fewer than all of the
outstanding Series H
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Preferred Units are to be redeemed, the Series H Preferred Units to be redeemed shall
be selected pro rata (as nearly as practicable without creating fractional units).
(b) Limitation on Redemption.
(i) The Redemption Price of the Series H Preferred Units (other than the
portion thereof consisting of accumulated but unpaid distributions) will be payable
solely out of the sale proceeds of capital stock of the General Partner, which will
be contributed by the General Partner to the Partnership as additional capital
contribution, or out of the sale of limited partner interests in the Partnership and
from no other source. For purposes of the preceding sentence, “capital stock” means
any equity securities (including Common Shares and Preferred Shares (as such terms
are defined in the Charter)), shares, participation or other ownership interests
(however designated) and any rights (other than debt securities convertible into or
exchangeable for equity securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the outstanding Series H
Preferred Units unless all accumulated and unpaid distributions have been paid or
contemporaneously are authorized and paid (or authorized and a sum sufficient for
the full payment thereof is irrevocably deposited in trust for immediate payment) on
all Series H Preferred Units for all quarterly distribution periods terminating on
or prior to the date of redemption.
(c) Procedures for Redemption.
(i) Notice of redemption will be (A) faxed, and (B) mailed by the Partnership,
by certified mail, postage prepaid, not less than thirty (30) nor more than sixty
(60) days prior to the redemption date, addressed to the respective holders of
record of the Series H Preferred Units at their respective addresses as they appear
on the records of the Partnership. No failure to give or defect in such notice or
in the transmission thereof shall affect the validity of the proceedings for the
redemption of any Series H Preferred Units except as to the holder to whom such
notice was defective or not given or received. In addition to any information
required by law, each such notice shall state: (1) the redemption date; (2) the
Redemption Price; (3) the aggregate number of Series H Preferred Units to be
redeemed and if fewer than all of the outstanding Series H Preferred Units are to be
redeemed, the number of Series H Preferred Units to be redeemed held by such holder,
which number shall equal such holder’s pro rata share (based on the percentage of
the aggregate number of outstanding Series H Preferred Units the total number of
Series H Preferred Units held by such holder represents) of the aggregate number of
Series H Preferred Units to be redeemed; (4) the place or places where the Series H
Preferred Units are to be surrendered for payment of the Redemption Price; (5) that
distributions on the Series H Preferred Units to be redeemed will cease to
accumulate on such redemption date; and (6) that payment of the Redemption Price
will be made upon presentation and surrender of such Series H Preferred Units.
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(ii) If the Partnership gives a notice of redemption in respect of Series H
Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York
City time, on the redemption date, the Partnership will deposit irrevocably in trust
for the benefit of the Series H Preferred Units being redeemed funds sufficient to
pay the applicable Redemption Price and will give irrevocable instructions and
authority to pay such Redemption Price to the holders of the Series H Preferred
Units upon surrender of the Series H Preferred Units by such holders at the place
designated in the notice of redemption. If the Series H Preferred Units are
evidenced by a certificate and if fewer than all Series H Preferred Units evidenced
by any certificate are being redeemed, a new certificate shall be issued, upon
surrender of the certificate evidencing all Series H Preferred Units, evidencing the
unredeemed Series H Preferred Units without cost to the holder thereof. On and
after the date of such redemption, distributions will cease to accumulate on the
Series H Preferred Units or portions thereof called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for redemption of
Series H Preferred Units is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such delay) except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date fixed for redemption. If payment of the Redemption
Price is improperly withheld or refused and not paid by the Partnership,
distributions on such Series H Preferred Units will continue to accumulate from the
original redemption date to the date of payment, in which case the actual payment
date will be considered the date fixed for redemption for purposes of calculating
the applicable Redemption Price.
Section 7. Voting Rights.
(a) General. Holders of the Series H Preferred Units will not have any voting
rights or right to consent to any matter requiring the consent or approval of the Limited
Partners, except as set forth below.
(b) Certain Voting Rights. So long as any Series H Preferred Units remain
outstanding, the Partnership shall not, without the affirmative vote of the holders of at
least two-thirds of the Series H Preferred Units outstanding at the time (i) (A) authorize
or create, or increase the authorized or issued amount of, any class or series of
Partnership Interests senior to the Series H Preferred Units with respect to payment of
distributions or rights upon liquidation, dissolution or winding-up, (B) reclassify any
Partnership Interests of the Partnership into any such senior Partnership Interest, or (C)
create, authorize or issue any obligations or security convertible into or evidencing the
right to purchase any such senior Partnership Interests, (ii) (A) authorize or create, or
increase the authorized or issued amount of any Parity Preferred Units, (B) reclassify any
Partnership Interest into a Parity Preferred Unit, or (C) create, authorize or issue any
obligations or security convertible into or evidencing the right to purchase any Parity
Preferred Unit; provided, however, that restrictions contained in this
clause (ii) of this paragraph (b) shall apply only to Parity Preferred Units that are issued
to an Affiliate of
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the Partnership other than on arms’ length terms, and to no other issuance, including,
without limitation, an issuance to the General Partner, the purpose of which is to allow the
General Partner to issue corresponding preferred Shares to persons who are not Affiliates or
the Partnership, or (iii) either (A) consolidate or merge into or with any corporation or
other entity or (B) amend, alter or repeal the provisions of the Partnership Agreement,
whether by merger or consolidation or otherwise, in such a way that would materially and
adversely affect the powers, special rights, preferences, privileges or voting power of the
Series H Preferred Units or the holders thereof; provided, however, that
with respect to the occurrence of a merger or consolidation, so long as (1) the Partnership
is the surviving entity and the Series H Preferred Units remain outstanding with the terms
thereof unchanged, or (2) the resulting, surviving or transferee entity is a partnership,
limited liability company or other pass-through entity organized under the laws of any
state, and such entity substitutes for the Series H Preferred Units other interests in such
entity having substantially the same terms and rights as the Series H Preferred Units,
including with respect to distributions, voting rights and rights upon liquidation,
dissolution or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect the rights, privileges or voting powers of the holders of
the Series H Preferred Units; provided, further, that any increase in the
amount of Partnership Interests or the creation or issuance of any other class or series of
Partnership Interests, shall not be deemed to materially and adversely affect the rights,
preferences, privileges or voting powers of the Series H Preferred Units, if such
Partnership Units rank (y) junior to the Series H Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution or winding up, or
(z) on a parity with the Series H Preferred Units with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-up; provided,
however, that any Preferred Units issued in reliance on the preceding clause (z)
shall have been issued to an Affiliate of the Partnership on arms’ length terms, or to the
General Partner in order to allow the General Partner to issue corresponding preferred
Shares to persons who are not Affiliates of the Partnership. In the event of any conflict
or inconsistency between this Section 7 and Article XIV of the Partnership Agreement, this
Section 7 shall control.
(c) Certain Additional Voting Rights. So long as any Series H
Preferred Units remain outstanding, the General Partner shall not, without the affirmative
vote of the holders of at least two-thirds (2/3) of the Series H Preferred Units outstanding
at the time, (i) consummate any transaction or series of transactions which would result in
a Change of Control of the General Partner or the Partnership, (ii) consummate any
transaction or series of transactions which would result in the common shares of the General
Partner or any successor entity of the General Partner ceasing to be listed on at least one
of the New York Stock Exchange, the American Stock Exchange or the NASDAQ Global or Global
Select Market (or, in each case, a successor thereto) or (iii) elect not to qualify for
taxation as a real estate investment trust under Section 856 et seq. of the Code. For the
purposes of this Section 7(c), “Change of Control” shall mean: (i) any sale or
other disposition of all or substantially all of the assets of the Partnership or the
General Partner, as the case may be, to an entity that is not an Affiliate of the General
Partner; or (ii) any consolidation, amalgamation, merger, business combination, share
exchange, reorganization or similar transaction involving the Partnership or the General
Partner, as
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the case may be, pursuant to which the Partners of the Partnership or the stockholders
of the General Partner, as the case may be, immediately prior to the consummation of such
transaction will own less than a majority of the equity interest in the entity surviving
such transaction. If the requisite holders of the Series H Preferred Units fail to approve
any of the General Partner actions specified in clauses (i), (ii) or (iii) of the first
sentence of this Section 7(c) (each a “Mandatory Redemption Event”) the Partnership
shall redeem, on the date such Mandatory Redemption Event is consummated or otherwise
becomes effective, all of the Series H Preferred Units outstanding at a redemption price,
payable in cash, equal to the Capital Account balance of the holders of the Series H
Preferred Units or, if greater, the original Capital Contribution of such holders plus the
current Series H Priority Return, whether or not declared, to the date of such redemption to
the extent not previously distributed; provided, however, that notwithstanding any provision
hereof to the contrary, the actions specified in clause (i) of the first sentence of this
Section 7(c) shall not constitute a Mandatory Redemption Event if, on or prior to the date
of the consummation of such transaction or transactions, a “nationally recognized
statistical rating organization” (as such term is defined for purposes of Rule 436(g)(2)
promulgated under the Securities Act) shall have affirmed the rating accorded the securities
of the General Partner immediately prior to the public announcement of such transaction or
transactions, or shall have upgraded such rating (or, if the General Partner is not the
surviving entity in such transaction or transactions, affirmed that the rating of the
securities of the successor to the General Partner shall be at least equal to the rating
accorded the securities of the General Partner immediately prior to the public announcement
of such transaction or transactions). The date of such redemption shall be the date of the
Mandatory Redemption Event.”
Section 8. Transfer Restrictions. The Series H Preferred Units shall be subject to
the provisions of Article IX of the Partnership Agreement; provided, however, that
(a) the General Partner shall act reasonably in exercising its discretion pursuant to the
provisions of Sections 9.2(a) and 9.2(c) of the Partnership Agreement and shall not withhold its
consent to any transfer to any Person, and the admission of such Person as a Substituted Limited
Partner, which Person does not violate the requirements of Section 9.3 of the Partnership Agreement
and such transfers do not cause the total number of holders of Series H Preferred Units which would
be considered partners under Treasury Regulation Section 1.7704-1(h)(3), at any time the
Partnership is satisfying the private placement safe harbor of Treasury Regulation Section
1.7704-1(h) to exceed the lesser of (i) six (6) and (ii) the maximum number that would permit the
Partnership to continue to satisfy such safe harbor (but in assessing the status of such safe
harbor, (1) substituting “90” for “100”; and (2) taking into account any number of partners that
the General Partner reasonably anticipates becoming partners within the meaning of the Treasury
Regulations Section 1.7704-1(h)(3) within six months of the date of such transfer by the Series H
Preferred Unit holders) and (b) the term “transfer” when used in Article IX shall not be deemed to
include any exchange pursuant to Section 9 below.
11
Section 9. Exchange Rights.
(a) Right to Exchange.
(i) Series H Preferred Units will be exchangeable in whole or in part at
anytime on or after August 21, 2017, at the option of the holders thereof, for
authorized but previously unissued shares of 7.40% Series H Cumulative Redeemable
Preferred Shares of the General Partner (the “Series H Preferred Shares”) at
an exchange rate of one Series H Preferred Share for one Series H Preferred Unit,
subject to adjustment as described below (the “Exchange Price”), provided
that the Series H Preferred Units will become exchangeable at any time, in whole or
in part, at the option of the holders of Series H Preferred Units for Series H
Preferred Shares if (x) at any time full distributions shall not have been timely
made on any Series H Preferred Unit with respect to six (6) prior quarterly
distribution periods, whether or not consecutive, provided, however,
that a distribution in respect of Series H Preferred Units shall be considered
timely made if made within two (2) Business Days after the applicable Preferred Unit
Distribution Payment Date if at the time of such late payment there shall not be any
prior quarterly distribution periods in respect of which full distributions were not
timely made, or (y) upon receipt by a holder or holders of Series H Preferred Units
of (1) notice from the General Partner that the General Partner or a Subsidiary of
the General Partner has taken the position that the Partnership is, or upon the
occurrence of a defined event in the immediate future will be, a PTP and (2) an
opinion rendered by an outside nationally recognized independent counsel familiar
with such matters addressed to a holder or holders of Series H Preferred Units that
the Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP. In addition, the Series H
Preferred Units may be exchanged for Series H Preferred Shares, in whole or in part,
at the option of any holder prior to August 21, 2017, and after August 21, 2010, if
such holder of Series H Preferred Units shall deliver to the General Partner either
(i) a private letter ruling addressed to such holder of Series H Preferred Units or
(ii) an opinion of independent counsel reasonably acceptable to the General Partner
based on the enactment of temporary or final Treasury Regulations or the publication
of a Revenue Ruling, in either case to the effect that an exchange of the Series H
Preferred Units at such earlier time would not cause the Series H Preferred Units to
be considered “stock and securities” within the meaning of Section 351(e) of the
Code for purposes of determining whether the holder of such Series H Preferred Units
is an “investment company” under Section 721(b) of the Code if an exchange were to
occur at such time.. Furthermore, the Series H Preferred Units may be exchanged in
whole but not in part by any holder thereof which is a real estate investment trust
within the meaning of Sections 856 through 859 of the Code for Series H Preferred
Shares (but only if the exchange in whole may be accomplished consistently with the
ownership limitations set forth under Article VII of the Charter (taking into
account exceptions thereto and exemptions therefrom)) if at any time, (i) the
Partnership reasonably determines that based upon the assets and income of the
Partnership for a taxable year after 2006, it is imminent that the Partnership will
12
not or likely will not satisfy the income and assets tests of Section 856 of
the Code if the Partnership were a real estate investment trust within the meaning
of the Code, or (ii) any holder of Series H Preferred Units delivers to the
Partnership and the General Partner an opinion of nationally recognized independent
counsel reasonably acceptable to the General Partner to the effect that, based on
the assets and income of the Partnership for a taxable year after 2006, it is
imminent that the Partnership will not or likely will not satisfy the income and
assets tests of Section 856 of the Code if the Partnership were a real estate
investment trust within the meaning of the Code and that such failure would create a
meaningful risk that a holder of the Series H Preferred Units would fail to maintain
qualification as a real estate investment trust. In addition, the Series H
Preferred Units may be exchanged for Series H Preferred Shares, in whole or in part,
at the option of any holder that is not a corporation (a “non-corporate
holder”) if (a) such non-corporate holder concludes based on results or
projected results that there exists (in the reasonable judgment of the holder) an
imminent and substantial risk that the holder’s interest in the Partnership will
represent more than 19.9% of the total profits or capital interests in the
Partnership (determined in accordance with Treasury regulations Section
1.731-2(e)(4)) for a taxable year (or portion thereof), (b) the non-corporate holder
delivers to the General Partner an opinion of nationally recognized independent
counsel to the effect that there is an imminent and substantial risk that the
holder’s interest in the Partnership will represent more than 19.9% of the total
profits or capital interests in the Partnership (determined in accordance with
Treasury regulations Section 1.731-2(e)(4)) for a taxable year, and (c) the General
Partner agrees with the conclusions referred to in clauses (a) and (b) of this
sentence, such agreement not to be unreasonably withheld.
(ii) Notwithstanding anything to the contrary set forth in Section 9(a)(i)
hereof, if an Exchange Notice (as such term is defined herein) has been delivered to
the General Partner, then the General Partner may, at its option, elect to redeem or
cause the Partnership to redeem all or a portion of the outstanding Series H
Preferred Units for cash in an amount equal to the original Capital Contribution per
Series H Preferred Unit plus all accrued and unpaid distributions thereon to the
date of redemption. The General Partner may exercise its option to redeem the
Series H Preferred Units for cash pursuant to this Section 9(a)(ii) hereof by giving
each holder of record of Series H Preferred Units notice of its election to redeem
for cash, within ten (10) Business Days after receipt of the Exchange Notice, by (1)
fax, and (2) registered mail, postage paid, at the address of each holder as it may
appear on the records of the Partnership stating (A) the redemption date, which
shall be no later than sixty (60) days following the receipt of the Exchange Notice,
(B) the redemption price, (C) the place or places where the Series H Preferred Units
are to be surrendered for payment of the redemption price, (D) that distributions on
the Series H Preferred Units will cease to accrue on such redemption date, (E) that
payment of the redemption price will be made upon presentation and surrender of the
Series H Preferred Units and (F) the aggregate number of Series H Preferred Units to
be redeemed, and if fewer than all of the outstanding Series H Preferred Units are
to be redeemed, the number of Series H Preferred Units to be redeemed held by such
holder, which number shall
13
equal such holder’s pro rata share (based on the percentage of the aggregate
number of outstanding Series H Preferred Units the total number of Series H
Preferred Units held by such holder represents) of the aggregate number of Series H
Preferred Units being redeemed.
(iii) In the event an exchange of all or a portion of Series H Preferred Units
pursuant to Section 9(a)(i) hereof would violate the provisions on ownership
limitation of the General Partner set forth in Article VII of the Charter with
respect to the Series H Preferred Shares, the General Partner shall give written
notice thereof to each holder of record of Series H Preferred Units, within five (5)
Business Days following receipt of the Exchange Notice, by (1) fax, and (2)
registered mail, postage prepaid, at the address of each such holder set forth in
the records of the Partnership. In such event, each holder of Series H Preferred
Units shall be entitled to exchange, pursuant to the provision of Section 9(b) a
number of Series H Preferred Units which would comply with the provisions on the
ownership limitation of the General Partner set forth in Article VII of the Charter
and any Series H Preferred Units not so exchanged (the “Excess Units”) shall
be redeemed by the Partnership for cash in an amount equal to the original Capital
Contribution per Excess Unit, plus any accrued and unpaid distributions thereon,
whether or not declared, to the date of redemption. The written notice of the
General Partner shall state (A) the number of Excess Units held by such holder, (B)
the redemption price of the Excess Units, (C) the date on which such Excess Units
shall be redeemed, which date shall be no later than sixty (60) days following the
receipt of the Exchange Notice, (D) the place or places where such Excess Units are
to be surrendered for payment of the Redemption Price, (E) that distributions on the
Excess Units will cease to accrue on such redemption date and (F) that payment of
the redemption price will be made upon presentation and surrender of such Excess
Units. In the event an exchange would result in Excess Units, as a condition to
such exchange, each holder of such Excess Units agrees to provide representations
and covenants reasonably requested by the General Partner relating to: (x) the
widely held nature of the interests in such holder, sufficient to assure the General
Partner that the holder’s ownership of shares of beneficial interest of the General
Partner (without regard to the limits described above) will not cause any individual
to Beneficially Own in excess of the Aggregate Share Ownership Limit (all as such
term is defined in the Charter); and (y) to the extent such holder can so represent
and covenant without obtaining information from its owners, the holder’s ownership
of tenants of the Partnership and its affiliates.
(iv) The redemption of Series H Preferred Units described in Sections 9(a)(ii)
and (iii) hereof shall be subject to the provisions of Section 6(b)(i) hereof;
provided, however, that the term “Redemption Price” in such
Section shall be read to mean the original Capital Contribution per Series H
Preferred Unit being redeemed plus all accrued and unpaid distributions to the
redemption date.
14
(b) Procedure for Exchange.
(i) Any exchange shall be exercised pursuant to a notice of exchange (the
“Exchange Notice”) delivered to the General Partner by the holder who is
exercising such exchange right, by (A) fax and (B) by certified mail postage
prepaid. The exchange of Series H Preferred Units, or a specified portion thereof,
may be effected after the fifth (5th) Business Day following receipt by the General
Partner of the Exchange Notice by delivering certificates, if any, representing such
Series H Preferred Units to be exchanged together with, if applicable, written
notice of exchange and a proper assignment of such Series H Preferred Units to the
office of the General Partner maintained for such purpose. Currently, such office
is:
000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx, Xxxxxxxxxxxx 00000
Each exchange will be deemed to have been effected immediately prior to the close of
business on the date on which such Series H Preferred Units to be exchanged
(together with all required documentation) shall have been surrendered and notice
shall have been received by the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series H Preferred Shares issued pursuant to this Section
9 shall be delivered as shares which are duly authorized, validly issued, fully paid
and nonassessable, free of pledge, lien, encumbrance or restriction other than those
provided in the Charter, the Bylaws of the General Partner, the Securities Act and
relevant state securities or blue sky laws.
(ii) If the event of an exchange of Series H Preferred Units for shares of
Series H Preferred Shares, an amount equal to the accrued and unpaid distributions,
whether or not declared, to the date of exchange on any Series H Preferred Units
tendered for exchange shall (A) accrue on the Series H Preferred Shares into which
such Series H Preferred Units are exchanged, and (B) continue to accrue on such
Series H Preferred Units, which shall remain outstanding following such exchange,
with the General Partner as the holder of such Series H Preferred Units.
Notwithstanding anything to the contrary set forth herein, in no event shall a
holder of a Series H Preferred Unit that was validly exchanged into Series H
Preferred Shares pursuant to this Section 9 (other than the General Partner now
holding such Series H Preferred Unit), receive a cash distribution out of Available
Cash of the Partnership, if such holder, after exchange, is entitled to receive a
distribution out of Available Cash with respect to the Series H Preferred Shares for
which such Series H Preferred Unit was exchanged or redeemed.
(iii) Fractional shares of Series H Preferred Shares are not to be issued upon
exchange but, in lieu thereof, the General Partner will pay a cash adjustment based
upon the fair market value of the Series H Preferred Shares on the day prior to the
exchange date as determined in good faith by the Board of Directors of the General
Partner.
15
(c) Adjustment of Exchange Price.
(i) The Exchange Price is subject to adjustment upon certain events, including,
(A) subdivisions, combinations and reclassification of the Series H Preferred
Shares, and (B) distributions to all holders of Series H Preferred Shares of
evidence of indebtedness of the General Partner or assets (including securities, but
excluding dividends and distributions paid in cash out of equity applicable to
Series H Preferred Shares).
(ii) In case the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share exchange,
tender offer for all or substantially all of the General Partner’s capital stock or
sale of all or substantially all of the General Partner’s assets), in each case as a
result of which the Series H Preferred Shares will be converted into the right to
receive shares of capital stock, other securities or other property (including cash
or any combination thereof), each Series H Preferred Unit will thereafter be
exchangeable into the kind and amount of shares of capital stock and other
securities and property receivable (including cash or any combination thereof) upon
the consummation of such transaction by a holder of that number of Series H
Preferred Shares or fraction thereof into which one Series H Preferred Unit was
exchangeable immediately prior to such transaction. The General Partner may not
become a party to any such transaction unless the terms thereof are consistent with
the foregoing.
(d) No Rights Under Article XI. Holders of Series H Preferred Units shall not
be entitled to any “Rights” provided to Limited Partners pursuant to Article XI of the
Partnership Agreement.
Section 10. No Conversion Rights. Except as set forth in this Amendment, the holders
of the Series H Preferred Units shall not have any rights, in their sole election, to convert,
redeem or exchange their Series H Preferred Units for any other property (including cash) of the
Partnership or the General Partner, including for units of any other class or series of units or
into any other securities of, or interest in, the Partnership or the General Partner.
Section 11. No Sinking Fund. No sinking fund shall be established for the retirement
or redemption of Series H Preferred Units.
Section 12. Admission of Limited Partners: Exhibits to Partnership. In accordance
with Section 4.1 of the Partnership Agreement, each Series H Preferred Partner is hereby admitted
as an Additional Limited Partner. Schedule A to the Partnership Agreement is hereby amended to
reflect the issuance of the Series H Preferred Units provided for herein.
Section 13. Miscellaneous.
(a) The parties hereto agree that the holders of Series H Preferred Units shall not be
deemed “Limited Partners” for the purpose of calculating the ownership level of limited
partners as contemplated by Section 7.2 of the Partnership Agreement.
16
(b) For greater clarity, Article XIII of the Partnership Agreement shall not apply to
any of the Series H Preferred Partners or to their affiliates, successors and assigns or to
their interests in the Partnership.
Section 14. Reaffirmation. Except as modified herein, all terms and conditions of the
Partnership Agreement shall remain in full force and effect, which terms and conditions the General
Partner hereby ratifies and affirms.
17
In Witness Whereof, this Amendment has been executed as of the date first above
written.
| GENERAL PARTNER LIBERTY PROPERTY TRUST |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxx | |||
| Title: | Chairman, President and Chief Executive Officer | |||
| ADDITIONAL LIMITED PARTNERS BELMAR REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
| BELPORT REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
| BELROSE REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
| BELSHIRE REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
SIGNATURE PAGE TO EIGHTH AMENDMENT
| BELTERRA REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
| BELDORE REALTY CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| XXXXXXX X. XXXXX | ||||
| President | ||||
SIGNATURE PAGE TO EIGHTH AMENDMENT
ANNEX A
Allocation of Series H Preferred Units
| Series H Preferred Partner | Number of Series H Preferred Units | |||
Belmar Realty Corporation
|
600,000 | |||
Belport Realty Corporation
|
400,000 | |||
Belrose Realty Corporation
|
1,000,000 | |||
Belshire Realty Corporation
|
1,000,000 | |||
Belterra Realty Corporation
|
600,000 | |||
Beldore Realty Corporation
|
400,000 | |||
A-1
