GLADSTONE COMMERCIAL LIMITED
PARTNERSHIP
SCHEDULE 4.2(a)(2) TO FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
DESIGNATION OF
7.50% SERIES B CUMULATIVE REDEEMABLE PREFERRED UNITS
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(i)
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Designation and
Number .
A series of Preferred Units, designated the “7.50%
Series B Cumulative Redeemable Preferred Units” (the
“Series B Preferred Units”), is hereby
established. The number of Series B Preferred Units shall be
1,150,000.
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(ii)
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Maturity . The Series B Preferred Units
have no stated maturity and will not be subject to any sinking fund
or mandatory redemption.
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(iii)
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Rank . The Series B Preferred Units,
with respect to distribution rights and rights upon liquidation,
dissolution or winding up of the Partnership, will rank
(i) senior to all classes or series of Common Units of the
Partnership, and to all Partnership Interests ranking junior to the
Series B Preferred Units with respect to distribution rights
or rights upon liquidation, dissolution or winding up of the
Partnership; (ii) on a parity with the 7.75% Series A
Cumulative Redeemable Preferred Units and all Partnership Interests
issued by the Partnership, the terms of which Preferred Units
specifically provide that such Partnership Interests rank on a
parity with the Series B Preferred Units with respect to
distribution rights or rights upon liquidation, dissolution or
winding up of the Partnership (the “Parity Preferred
Units”); and (iii) junior to all existing and future
indebtedness of the Partnership. The term “Parity Preferred
Units” does not include convertible debt securities, which
will rank senior to the Series B Preferred Units prior to
conversion.
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(iv)
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Distributions
. (a) Holders of
the Series B Preferred Units are entitled to receive, when and
as declared by the General Partner out of funds legally available
for the payment of distributions, preferential cumulative cash
distributions at the rate of 7.50% per annum of the Liquidation
Preference (as defined below) per Series B Preferred Unit
(equivalent to a fixed annual amount of $1.875 per Series B
Preferred Unit). Distributions on the Series B Preferred Units
shall be cumulative from (but excluding) the date of original issue
and shall be payable monthly in arrears. The first distribution
will be payable on November 30, 2006 and monthly thereafter on
the last day of the month, or, if not a business day, on the next
succeeding business day (each, a “Distribution Payment
Date”). The first distribution, which will be payable on
November 30, 2006, will be for more than a full month. Such
distribution and any distribution payable on the Series B
Preferred Units for any partial distribution period will be
computed on the basis of a 360-day year consisting of twelve 30-day
months. Distributions will be payable to holders of record as they
appear in the ownership records of the Partnership at the close of
business on the applicable record date, which shall be the date
designated by the General Partner of the Partnership that is not
more than 20 nor less than 7 days prior to such Distribution
Payment Date (each, a “Distribution Record
Date”).
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(b) No
distributions on Series B Preferred Units shall be declared by
the General Partner or paid or set apart for payment by the
Partnership at any time that the terms and provisions of any
agreement of the Partnership, including any agreement relating to
its indebtedness, prohibits such declaration, payment or setting
apart for payment or provides that such declaration, payment or
setting apart for payment of such distributions would constitute a
breach thereof or a default thereunder, or if such declaration or
payment shall be restricted or prohibited by law.
(c) Notwithstanding the foregoing,
distributions on the Series B Preferred Units will accumulate
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 declared. Accumulated but
unpaid distributions on the Series B Preferred Units will not
bear interest and holders of the Series B Preferred Units will
not be entitled to any distributions in excess of full cumulative
distributions described above. Except as set forth in the next
sentence, no distributions will be declared or paid or set apart
for payment on any Partnership Interests or any other series of
Parity Preferred Units or any series or class of equity securities
ranking junior to the Series B Preferred Units (other than a
distribution of the Partnership’s Common Units or any other
class of Partnership Interests ranking junior to the Series B
Preferred Units as to distributions and upon liquidation) for any
period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on
the Series B Preferred Units for all past distribution periods
and the then current distribution period. When distributions are
not declared and paid in full (or a sum sufficient for such full
payment is not so set apart) upon the Series B Preferred Units
and any other series of Parity Preferred Units, all distributions
declared upon the Series B Preferred Units and any other
series of Parity Preferred Units shall be allocated pro rata so
that the amount of distributions declared per Series
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