FIFTH AMENDMENT
TO
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
This Fifth Amendment to
the Second Restated and Amended Agreement of Limited
Partnership , dated as of June 16, 2005 (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 MONTEBELLO REALTY CORP. 2002, a Delaware corporation (“
Montebello ”).
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, and that certain
Fourth Amendment to the Second Restated and Amended Agreement of
Limited Partnership, dated as of September 1, 2004
(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 E Preferred Units” (as hereinafter
defined), and to set forth the designations, rights, powers,
preferences and duties of such Series E Preferred Units,
(ii) to issue the Series E Preferred Units to Montebello
and admit Montebello 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 E 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” and the “7.625% Series D Cumulative
Redeemable Preferred Partnership Interests,” The term “
Priority
Return
” shall mean, an amount equal
to 7.00% 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 $50 per Series E
Preferred Unit, commencing on the date of issuance of such
Series E 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
“7.00% Series E Cumulative Redeemable Preferred
Partnership Interests” (the “ Series E
Preferred Units ”) is hereby established. The maximum
number of Series E Preferred Units shall be
400,000.
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 E Preferred Units as to
payment of distributions, pursuant to Section 6.2 of the
Partnership Agreement, holders of Series E 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 7.00% of the original Capital Contribution
per Series E 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 E Preferred Units into Series E Preferred Shares,
or (B) a redemption of Series E Preferred Units, on the
exchange date 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 E 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 E Preferred Units will be
made to the holders of record of the Series E 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 E 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 E 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 E
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 E 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 E 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 E Preferred Units, any Parity Preferred Units or any
Junior Units, unless, in each case, all distributions accumulated
on all Series E 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 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 E 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 E Preferred Shares,
Parity Preferred Shares with respect to distributions 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 E Preferred
Units, all distributions authorized and declared on the
Series E 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 E 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 E 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 E Preferred Units
which may be in arrears.
(d)
No Further Rights . Holders of Series E
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;
(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, however, that the
holders of the Series E 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 pursuant to Section 3.(a) of the Fifth
Amendment to the Second Restated and Amended Agreement of Limited
Partnership, dated as of June , 2005 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 Units.
(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 or Series E Preferred
Units pursuant to Section 1 hereof, 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 or Series E 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 or
Series E 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 portion
thereof) allocable to the Partners holding Series B Preferred
Units, Series D Preferred Units or Series E 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 or Series E 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 E 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 E 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
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