UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
(Mark One)
| [X] |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2004
OR
| [ ] |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
|
Commission file numbers:
|
1-13130 (Liberty Property Trust) | |
|
|
1-13132 (Liberty Property Limited Partnership) |
(Exact name of registrants as specified in their governing documents)
|
MARYLAND
(Liberty Property Trust)
|
23-7768996 | |
|
PENNSYLVANIA
(Liberty Property Limited Partnership)
|
23-2766549
|
|
|
(State or other jurisdiction
|
(I.R.S. Employer | |
|
of incorporation or organization)
|
Identification Number) |
|
65 Valley Stream Parkway, Suite 100,
|
||
|
Malvern, Pennsylvania
|
19355 | |
|
|
|
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
|
|
Registrants’ Telephone Number, Including Area Code
|
(610) 648-1700 |
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months (or for such shorter period that the registrants were required to file such reports) and (2) have been subject to such filing requirements for the past ninety (90) days.
Yes ü NO
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ü NO
On August 2, 2004, 85,150,855 Common Shares of Beneficial Interest, par value $.001 per share, of Liberty Property Trust were outstanding.
1
Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2004
| Index | Page | |||||
|
Part I. |
||||||
|
Item 1. |
||||||
| 3 | ||||||
| 4 | ||||||
| 5 | ||||||
| 6 | ||||||
| 7 | ||||||
| 13 | ||||||
| 14 | ||||||
| 15 | ||||||
| 16 | ||||||
| 17 | ||||||
|
Item 2. |
22 | |||||
|
Item 3. |
30 | |||||
|
Item 4. |
30 | |||||
|
Part II. |
31 | |||||
|
Signatures for Liberty Property Trust |
33 | |||||
|
Signatures for Liberty Property Limited Partnership |
34 | |||||
|
Exhibit Index |
35 | |||||
2
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
See accompanying notes.
3
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
See accompanying notes.
4
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
See accompanying notes.
5
CONSOLIDATED STATEMENTS OF CASH FLOWS
See accompanying notes.
6
Liberty Property Trust
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements of Liberty
Property Trust (the “Trust”) and its subsidiaries, including Liberty Property
Limited Partnership (the “Operating Partnership”) (the Trust, Operating
Partnership and their respective subsidiaries referred to collectively as the
“Company”), have been prepared in accordance with accounting principles
generally accepted in the United States (“US GAAP”) for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by US GAAP for complete financial statements and should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Annual Report on Form 10-K of the Trust and the Operating
Partnership for the year ended December 31, 2003. In the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial statements for these interim periods
have been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. Certain
amounts from prior periods have been reclassified to conform to current period
presentation.
Income per Common Share
Basic income from continuing operations
Diluted income from continuing operations
Basic income from discontinued operations
Diluted income from discontinued operations
Basic income per common share
Diluted income per common share
7
Basic income from continuing operations
Diluted income from continuing operations
Basic income from discontinued operations
Diluted income from discontinued operations
Basic income per common share
Diluted income per common share
Stock Based Compensation
Pro forma net income
Income per common share:
Diluted – as reported
8
Foreign Operations
Note 2: Organization
The Trust is a self-administered and self-managed Maryland real estate
investment trust (a “REIT”). Substantially all of the Trust’s assets are owned
directly or indirectly, and substantially all of the Trust’s operations are
conducted directly or indirectly, by the Operating Partnership. The Trust is
the sole general partner and also a limited partner of the Operating
Partnership, owning 95.9% of the common equity of the Operating Partnership at
June 30, 2004. The Company provides leasing, property management, development,
acquisition, and other tenant-related services for a portfolio of industrial
and office properties which are located principally within the Mid-Atlantic,
Southeastern and Midwestern United States.
Note 3: Segment Information
The Company operates its portfolio of properties primarily throughout the
Mid-Atlantic, Southeastern and Midwestern United States. Additionally, the
Company owns certain assets in the United Kingdom. The Company reviews the
performance of the portfolio on a geographical basis, as such, the following
regions are considered the Company’s reportable segments:
The Company’s reportable segments are distinct business units which are each
managed separately in order to concentrate market knowledge within a geographic
area. Within these reportable segments, the Company derives its revenues from
its two product types: industrial properties and office properties.
The Company evaluates the performance of the reportable segments based on
property level operating income, which is calculated as rental revenue and
operating expense reimbursement less rental property expenses and real estate
taxes. The accounting policies of the reportable segments are the same as those
for the Company on a consolidated basis. The operating information by segment
is as follows (in thousands):
9
10
Note 4: SFAS No. 144, “Accounting For The Impairment Or Disposal Of Long-Lived Assets”
In accordance with SFAS No. 144, which the Company adopted on January 1, 2002,
net income and gain/(loss) on the disposition of real estate for properties
sold subsequent to December 31, 2001 are reflected in the consolidated
statements of operations as discontinued operations. The proceeds from the
disposition of properties for the three and six months ended
June 30, 2004 (there were no sales in the second quarter) were
$0 and $5.5 million as compared to $34.8 million and $38.5 million for the same
periods in 2003. Below is a summary of the results of operations of the
properties disposed of through the respective disposition dates (in thousands):
11
—
Gain or loss on disposition on sales of land and development properties
continues to be reflected as a component of income from continuing operations.
12
CONSOLIDATED BALANCE SHEETS OF
Operating real estate
Development in progress
Net real estate
Cash and cash equivalents
Total assets
LIABILITIES
Total liabilities
Minority interest
OWNERS’ EQUITY
Total liabilities and owners’ equity
See accompanying notes.
13
CONSOLIDATED STATEMENTS OF OPERATIONS OF
OPERATING EXPENSE
Operating income
OTHER INCOME (EXPENSE)
Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
Loss on property dispositions
Income from continuing operations
Discontinued operations (including net gain on property dispositions of
$0 and $11,093 for the three months ended June 30, 2004 and 2003)
Net income
Preferred unit distributions
Income available to common unitholders
Earnings per common unit
Income per common unit – basic
Diluted:
Income per common unit – diluted
Distributions per common unit
Weighted average number of common units outstanding
See accompanying notes.
14
CONSOLIDATED STATEMENTS OF OPERATIONS OF
OPERATING EXPENSE
Operating income
OTHER INCOME (EXPENSE)
Income before property dispositions, income taxes, minority interest
and equity in earnings of unconsolidated joint ventures
(Loss) gain on property dispositions
Income from continuing operations
Discontinued operations (including net gain on property dispositions of
$2,097 and $11,256 for the six months ended June 30, 2004 and 2003)
Net income
Preferred unit distributions
Income available to common unitholders
Earnings per common unit
Income per common unit – basic
Diluted:
Income per common unit – diluted
Distributions per common unit
Weighted average number of common units outstanding
See accompanying notes.
15
CONSOLIDATED STATEMENTS OF CASH FLOWS OF
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Increase in cash and cash equivalents
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
See accompanying notes.
16
Liberty Property Limited Partnership
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements of Liberty
Property Limited Partnership (the “Operating Partnership”) and its direct and
indirect subsidiaries, have been prepared in accordance with accounting
principles generally accepted in the United States (“US GAAP”) for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by US GAAP for complete financial statements and should be
read in conjunction with the consolidated financial statements and notes
thereto included in the Annual Report on Form 10-K of Liberty Property Trust
(the “Trust”) and the Operating Partnership for the year ended December 31,
2003. In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation of the
financial statements for these interim periods have been included. The results
of interim periods are not necessarily indicative of the results to be obtained
for a full fiscal year. Certain amounts from prior periods have been
reclassified to conform to current period presentation.
Income per Common Unit
Basic income from continuing operations
Diluted income from continuing operations
Basic income from discontinued operations
Diluted income from discontinued operations
Basic income per common unit
Diluted income per common unit
17
Basic income from continuing operations
Diluted income from continuing operations
Basic income from discontinued operations
Diluted income from discontinued operations
Basic income per common unit
Diluted income per common unit
Foreign Operations
Note 2: Organization
The Trust, the general partner of Liberty Property Limited Partnership, is a
self-administered and self-managed Maryland real estate investment trust (a
“REIT”). Substantially all of the Trust’s assets are owned directly or
indirectly, and substantially all of the Trust’s operations are conducted
directly or indirectly, by the Operating Partnership (the Trust, Operating
Partnership and their respective subsidiaries, referred to collectively as, the
“Company”). The Trust is the sole general partner and also a limited partner of
the Operating Partnership, owning 95.9% of the common equity of the Operating
Partnership at June 30, 2004. The Company provides leasing, property
management, development, acquisition, and other tenant-related services for a
portfolio of industrial and office properties which are located principally
within the Mid-Atlantic, Southeastern and Midwestern United States.
Note 3: Segment Information
The Company operates its portfolio of properties primarily throughout the
Mid-Atlantic, Southeastern and Midwestern United States. Additionally, the
Company owns certain assets in the United Kingdom. The Company reviews the
performance of the portfolio on a geographical basis, as such, the following
regions are considered the Company’s reportable segments:
18
The Company’s reportable segments are distinct business units which are each
managed separately in order to concentrate market knowledge within a geographic
area. Within these reportable segments, the Company derives its revenues from
its two product types: industrial properties and office properties.
The Company evaluates the performance of the reportable segments based on
property level operating income, which is calculated as rental revenue and
operating expense reimbursement less rental property expenses and real estate
taxes. The accounting policies of the reportable segments are the same as those
for the Company on a consolidated basis. The operating information for the
Operating Partnership by segment is as follows (in thousands):
For the Three Months Ended June 30, 2004
Interest and other income
Income available to common unitholders
For the Three Months Ended June 30, 2003
Income available to common unitholders
19
For the Six Months Ended June 30, 2004
Income available to common unitholders
For the Six Months Ended June 30, 2003
Interest and other income
Income available to common unitholders
Note 4: SFAS No. 144, “Accounting For The Impairment Or Disposal Of Long-Lived Assets”
In accordance with SFAS No. 144, which the Company adopted on January 1, 2002,
net income and gain/(loss) on the disposition of real estate for properties
sold subsequent to December 31, 2001 are reflected in the consolidated
statements of operations as discontinued operations. The proceeds from the
disposition of properties for the three and six months ended June 30, 2004
(there were no sales in the second quarter) were $0 and $5.5 million as
compared to $34.8 million and $38.5 million for the same periods in 2003. Below
is a summary of the results of operations of the properties disposed of through
the respective disposition dates (in thousands):
20
Gain or loss on disposition on sales of land and development properties
continues to be reflected as a component of income from continuing operations.
21
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
The Company has an ownership interest in and operates 435 industrial and 273
office properties located primarily in the Mid-Atlantic, Southeastern and
Midwestern United States (the “Properties in Operation”) totaling approximately
58 million square feet. In addition, the Company has 19 properties under
development (the “Properties under Development” and together with the
Properties in Operation the “Properties”) and owns 1,123 acres of land,
substantially all of which is zoned for commercial use.
The Company focuses on creating value for shareholders and increasing
profitability and cash flow. With respect to its Properties in Operation, the
Company endeavors to maintain high occupancy levels while increasing rental
rates. The Company pursues development opportunities that it believes will
create value and yield high returns. The Company also acquires properties that
it believes will create long-term value, and disposes of Properties that no
longer fit within the Company’s strategic objectives or in situations where it
can optimize cash proceeds. The Company’s operating results depend primarily
upon income from rental operations and are substantially influenced by rental
demand for the Properties in Operation.
During the second quarter of 2004, the Company continued to experience the
effects of what has been a generally slow economy for the last several years.
This economy has been particularly difficult for real estate landlords. These
circumstances impacted many aspects of the Company’s business.
Our Properties in Operation, which represent over 95% of our revenue, were
subjected to market conditions characterized by an oversupply of leaseable
space and soft demand. These conditions resulted in downward pressure on
rental rates and upward pressure on lease transaction costs related to tenant
inducements (e.g. tenant improvement costs). In the face of these conditions,
the Company successfully leased 3.0 million square feet during the second
quarter of 2004 and attained overall occupancy of 91.2%, which it believes
represents performance that is better than market. Property level operating
income for the “Same Store” properties (properties owned since January 1, 2003)
decreased by 1.9% on both a cash basis and a straight line basis for the
quarter ended June 30, 2004 as compared to the quarter ended June 30, 2003.
For the six month period ended June 30, 2004, property level operating income
for the Same Store properties decreased by 0.8% on a cash basis and by 1.1% on
a straight line basis, as compared to the six month period ended June 30, 2003.
Trends relating to occupancy, rental rate and transaction costs remained
generally consistent from quarter to quarter in 2003 and through the first two
quarters of 2004. See further discussion of Same Store results below. The
Company believes that, although 2004 will be a year of transition, these trends
for the Properties in Operation – downward pressure on rents, upward pressure
on transaction costs – will continue in the aggregate, notwithstanding
improvements in some markets. Nevertheless, the Company is hopeful that it
will see some improvement in overall occupancy in the latter part of the year.
Conditions so far in 2004 for the acquisition of properties continue to be very
competitive. During the second quarter of the year, the Company acquired two
buildings representing 395,000 square feet for a total investment of $23.2
million. Year to date, the Company invested $48.0 million in 633,000 square
feet of properties. The Company believes that the level of property
acquisitions in 2004 will be in the $100 to $200 million range and will
represent a positive contribution to earnings.
Dispositions of Properties that no longer fit within the Company’s strategic
objectives or in situations where it can optimize cash proceeds have continued
in 2004. The Company realized $2.9 million from the sale of land during the
second quarter of 2004 and has realized in the aggregate $9.2 million from the
sale of Properties in Operation and land year to date. The Company anticipates
that dispositions will be in the $50 to $100 million range for 2004.
In 2004, the Company has continued to pursue development opportunities,
primarily on a build-to-suit basis. During the second quarter of 2004, the
Company delivered $17.3 million ($27.3 million year to date) of development
properties and initiated development of $36.4 million. This “pipeline” of
development properties is at a relatively low level as compared to the
Company’s historical pace of development which is appropriate given market
conditions. The Company believes that for the remainder of 2004, build-to-suit
activity will continue and that conditions in certain markets have supported
the initiation of inventory projects (i.e. projects that are less than 75%
leased prior to the commencement of construction). The Company is also hopeful
that it will be in a position in 2004 to initiate development of One
Pennsylvania Plaza, its proposed high-rise in Philadelphia’s central business
district. Although the Company is in detailed discussions with
Comcast Corporation (“Comcast”) and other prospective
tenants for the property, some of which are significant enough to justify the
commencement of the development of the proposed 1.3 million square foot office
tower, the Company has not entered into a lease with any tenant. Furthermore,
the legislation that the Company and Comcast were pursuing that would have
designated the site with certain tax advantages has not been approved by the
Pennsylvania legislature. The Company is evaluating this and other factors to
determine the project’s structure and feasibility. The land and projected
costs associated with this project aggregate approximately $425 million. As of
June 30, 2004, the Company has invested $68.9 million in the project and
capitalized costs for the project for the second quarter were
approximately $1 million.
22
The composition of the Company’s Properties in Operation as of June 30, 2004
and 2003 is as follows (in thousands, except dollars and percentages):
Geographic segment data for the three and six months ended June 30, 2004 and
June 30, 2003 are included in Note 3 to the Liberty Property Trust and Liberty
Property Limited Partnership financial statements.
FORWARD-LOOKING STATEMENTS
When used throughout this report, the words “believes,” “anticipates,” “hopes”
and “expects” and similar expressions are intended to identify forward-looking
statements. Such statements indicate that assumptions have been used that are
subject to a number of risks and uncertainties which could cause actual
financial results or management plans and objectives to differ materially from
those projected or expressed herein, including: the effect of national and
regional economic conditions; rental demand; the Company’s ability to identify
and secure additional properties and sites that meet its criteria for
acquisition or development; the availability and cost of capital; the effect of
prevailing market interest rates; and other risks described from time to time
in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Given these uncertainties, readers are cautioned not to place undue reliance on
such statements.
CRITICAL ACCOUNTING POLICIES
Refer to the Company’s 2003 Annual Report on Form 10-K for a discussion of
critical accounting policies which include capitalized costs, allowances for
doubtful accounts and impairment of real estate. During the three and six
months ended June 30, 2004 there were no material changes to these policies.
RESULTS OF OPERATIONS
The following discussion is based on the consolidated financial statements of
the Company. It compares the results of operations of the Company for the three
and six months ended June 30, 2004 with the results of operations of the
Company for the three and six months ended June 30, 2003. As a result of the
varying level of development, acquisition and disposition activities by the
Company in 2004 and 2003, the overall operating results of the Company during
such periods are not directly comparable. However, certain data, including the
Same Store comparison, do lend themselves to direct comparison (see
reconciliation to comparable GAAP financial measure below).
This information should be read in conjunction with the accompanying
consolidated financial statements and notes included elsewhere in this report.
Comparison of the Three and Six Months Ended June 30, 2004 to the Three and Six
Months Ended June 30, 2003.
The Company’s average gross investment in operating real estate owned for the
three months ended June 30, 2004 increased to $3,993.9 million from $3,680.9
million at June 30, 2003 and for the six months ended June 30, 2004 increased
to $3,972.7 million from $3,638.4 million at June 30, 2003. This increase
resulted from the increased investment in real estate acquired or developed,
partially offset by Property dispositions. This increased investment in operating real estate resulted in increases in rental revenue, rental property
operating expenses and real estate taxes, and depreciation and amortization
expense.
23
Total operating revenue increased to $163.5 million for the three months ended
June 30, 2004 from $149.7 million for the three months ended June 30, 2003 and
increased to $325.8 million for the six months ended June 30, 2004 from $305.9
million for the six months ended June 30, 2003. The $13.8 million increase
during the second quarter is primarily due to the net increase in investment in
real estate and the increase in “Termination Fees” accepted during the second
quarter 2004, totaling $4.4 million as compared to $2.3 million for the same
period in 2003. The $19.9 million increase during the six months ended June
30, 2004 compared to the six months ended June 30, 2003 was primarily due to
the net increase in investment in real estate, partially offset by a decrease
in “Termination Fees” accepted during the six months ended June 30, 2004
totaling $6.2 million as compared to $8.5 million for the six months ended June
30, 2003. “Termination Fees” are fees that the Company has agreed to accept in
consideration for permitting certain tenants to terminate their leases prior to
the contractual expiration date. Termination Fees are included in rental
revenue.
The Company evaluates the performance of the Properties in Operation by
reportable segment (see Note 3 to the Company’s financial statements). The
property level operating income for the Delaware Valley, Mid-Atlantic, and
United Kingdom segments increased by 12.2%, 10.0% and 95.7%, respectively, for
the three months ended June 30, 2004 as compared to 2003. There was no
significant change in property level operating income for the Company’s other
segments. The increase in the Delaware Valley segment results is primarily due
to $4.1 million in termination fees accepted during the second quarter of 2004
and there were no termination fees during the second quarter of 2003. The
increase in the Mid-Atlantic segment resulted from property acquisitions that
were made during 2003 and 2004. The increase in the United Kingdom segment is
due to the purchase of Rouse Kent Limited in July 1, 2003. The property level
operating income for the Midwest, Mid-Atlantic and the United Kingdom segments
increased by 11.5%, 10.9% and 87.3%, respectively, for the six months ended
June 30, 2004 as compared to 2003. There was no significant change in property
level operating income for the Company’s other segments. The increase in the
Midwest segment is due to the delivery of $72.6 million in completed
developments during 2003. The increase for the
Mid-Atlantic and United Kingdom segments for the six month periods are the same
as delineated for the quarterly periods above.
Property level operating income, exclusive of Termination Fees, for the Same
Store properties decreased by $1.9 million for the three months ended June 30,
2004 as compared to the three months ended June 30, 2003 on a straight-line
basis (which recognizes rental revenue evenly over the life of the lease), and
decreased by $1.8 million for the three months ended June 30, 2004 as compared
to the three months ended June 30, 2003 on a cash basis. These decreases of
1.9% are primarily due to a higher than usual level of unrecoverable operating
expenses during the second quarter of 2004.
Property level operating income, exclusive of Termination Fees, for the Same
Store properties decreased by $2.2 million for the six months ended June 30,
2004 as compared to the six months ended June 30, 2003 on a straight-line
basis, and decreased by $1.6 million for the six months ended June 30, 2004 as
compared to the six months ended June 30, 2003 on a cash basis. These
decreases of 1.1% and 0.8%, respectively, are due to the higher than usual
level of unrecoverable operating expenses during the second quarter of 2004.
Management generally considers the performance of the Same Store properties to
be a useful financial performance measure because the results are directly
comparable from period to period. Management further believes that the
performance comparison should exclude Termination Fees since they are more
event-specific and are not representative of ordinary performance results. In
addition, Same Store property level operating income exclusive of Termination
Fees is considered by management to be a more reliable indicator of the
portfolio’s baseline performance. The Same Store properties consist of the 639
properties totaling approximately 50.4 million square feet owned since January
1, 2003.
Set forth below is a schedule comparing the property level operating income, on
a straight line basis and on a cash basis, for the Same Store properties for
the three and six months ended June 30, 2004 and 2003. Same Store property
level income is a non-GAAP measure and does not represent income before
property dispositions, income taxes and minority interest because it does not
reflect the consolidated operations of the Company. Investors should review
Same Store results, along with Funds from operations (see Liquidity and Capital
Resources section), GAAP net income and cash flow from operating activities,
investing activities and financing activities when trying to understand the
equity REIT’s operating performance. Also, set forth below is a reconciliation
of Same Store property level operating income to net income (in thousands).
24
Reconciliation of non-GAAP financial measure:
Net income
General and administrative expenses decreased to $8.1 million for the three
months ended June 30, 2004 from $8.4 million for the three months ended June
30, 2003 and increased to $16.5 million for the six months ended June 30, 2004
from $14.2 million for the six months ended June 30, 2003. The decrease for
the three months ended June 30, 2004 as compared to the same period in 2003 is
primarily due to the accelerated vesting of restricted stock and options
related to the death of former Chairman Willard G. Rouse III in 2003. The
increase for the six months ended June 30, 2004 as compared to the same period
in 2003 is primarily due to an increase in salaries and wages, costs related to
the Company’s enterprise resource planning (“ERP”) initiative to update
company-wide accounting and business process software, and costs related to
marketing and canceled transactions.
Interest expense decreased to $30.4 million for the three months ended June 30,
2004 from $31.0 million for the three months ended June 30, 2003 and decreased
to $61.1 million for the six months ended June 30, 2004 from $61.5 million for
the six months ended June 30, 2003. The decreases are due to decreases in the
weighted average interest rates for the periods, which were 6.75% for the three
months ended June 30, 2004 compared to 6.95% for the three months ended June
30, 2003, and 6.78% for the six months ended June 30, 2004 compared to 6.98%
for the six months ended June 30, 2003. These decreases are partially offset
by increases in the average debt outstanding for the respective periods, which
were $1,930.5 million for the three months ended June 30, 2004 as compared to
$1,868.9 million for the three months ended June 30, 2003 and $1,915.6 million
for the six months ended June 30, 2004 as compared to $1,868.0 million for the
six months ended June 30, 2003.
Costs directly related to the development of rental properties and land being
readied for development are capitalized. Capitalized development costs include
interest, development-related salaries, property taxes, insurance and other
directly identifiable costs during the period of development. Capitalized
interest for the three months ended June 30, 2004 was $3.1 million as compared
to $2.4 million for the three months ended June 30, 2003, and was $6.2 million
for the six months ended June 30, 2004 as compared to $5.6 million for the same
period in 2003. Included in capitalized interest costs are the interest costs
relating to the Company’s $68.9 million investment (as of June 30, 2004) in its
proposed office tower in Philadelphia’s central business district. Capitalized
development-related salaries and benefits historically represent approximately
1% of the cost of developed properties brought into service.
25
As a result of the foregoing, the Company’s net income decreased to $37.4
million for the three months ended June 30, 2004 from $45.0 million for the
three months ended June 30, 2003, and decreased to $76.0 million for the six
months ended June 30, 2004 from $86.6 million for the six months ended June 30,
2003.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2004, the Company had cash and cash equivalents of $62.4
million, including $23.2 million in restricted cash.
Net cash flow provided by operating activities increased to $150.1 million for
the six months ended June 30, 2004 from $140.6 million for the six months ended
June 30, 2003. This $9.5 million increase is primarily due to fluctuations in
operating assets and liabilities during the respective periods. Net cash flow
provided by operations is the primary source of liquidity to fund distributions
to shareholders and for the recurring capital expenditures and leasing
transaction costs for the Company’s Properties in Operation.
Net cash used in investing activities increased to $122.1 million for the six
months ended June 30, 2004 from $34.9 million for the six months ended June 30,
2003. This $87.2 million increase primarily resulted from the increased
investment in properties and in development in progress and land held for
development and from the decreased proceeds from the disposition of land and
properties.
Net cash used in financing activities decreased to $10.8 million for the six
months ended June 30, 2004 as compared to $92.2 million for the six months
ended June 30, 2003. This $81.4 million change was primarily due to an
increase in net borrowings under credit facilities to fund the increased
investment activity as described in the preceding paragraph. Net cash provided
by or used in financing activities includes proceeds from the issuance of
equity and debt net of debt repayments and shareholder distributions. Cash
provided by financing activities is a source of capital utilized by the Company
to fund investment activities.
The Company funds its development and acquisitions with long-term capital
sources including proceeds from the disposition of Properties. For the six
months ended June 30, 2004, these activities were funded through a $350 million
unsecured credit facility (the “$350 million Credit Facility”). The interest
rate on borrowings under the $350 million Credit Facility fluctuates based upon
ratings from Moody’s Investors Service, Inc. (“Moody’s”), Standard and Poor’s
Ratings Group (“S&P”) and Fitch, Inc. (“Fitch”). The current ratings for the
Company’s senior unsecured debt are Baa2, BBB and BBB from Moody’s, S&P and
Fitch, respectively. At these ratings, the interest rate for borrowings under
the $350 million Credit Facility is 70 basis points over LIBOR. The $350
million Credit Facility expires in January 2006.
The Company uses debt financing to lower its overall cost of capital in an
attempt to increase the return to shareholders. The Company staggers its debt
maturities and maintains debt levels it considers to be prudent. In determining
its debt levels, the Company considers various financial measures including the
debt to gross assets ratio and the earnings to fixed charge coverage ratio. As
of June 30, 2004 the Company’s debt to gross assets ratio was 42.5%, and the
earnings to fixed charge coverage ratio was 2.9x. Debt to gross assets equals
total long-term debt and borrowings under the $350 million Credit Facility
divided by total assets plus accumulated depreciation. Earnings to fixed
charges equals income before property dispositions and minority interest,
including operating activity from discontinued operations, plus interest
expense and depreciation and amortization (including depreciation and
amortization on unconsolidated joint ventures) divided by interest expense,
including capitalized interest, plus distributions on preferred units.
As of June 30, 2004, $374.0 million in mortgage loans and $1,355.0 million in
unsecured notes were outstanding with a weighted average interest rate of 7.3%.
The interest rates on $1,653.6 million of mortgage loans and unsecured notes
are fixed and range up to 8.8%. Interest rates on $75.4 million of mortgage
loans float with the base rate of the respective lending bank or a municipal
bond index. The weighted average remaining term for the mortgage loans and
unsecured notes is 5.3 years.
The scheduled maturities and principal amortization of the Company’s mortgage
loans, unsecured notes and borrowings under the $350 million Credit Facility
and the related weighted average interest rates as of June 30, 2004 are as
follows (in thousands, except percentages):
26
The Company anticipates that it will refinance or retire these maturities
through its available sources of capital.
General
The Company has continued to focus on the performance of the Same Store
portfolio. In addition, the Company has continued to pursue development and
acquisition opportunities and the strategic disposition of certain properties.
The Company attempts to outperform in its markets by maintaining higher than
market occupancy levels and obtaining higher than market rental rates.
The expiring square feet and annual net rent by year for the Properties in
Operation as of June 30, 2004 are as follows (in thousands):
The Company believes that its existing sources of capital will provide
sufficient funds to finance its continued development and acquisition
activities. The scheduled deliveries of the 1.8 million square feet of
Properties under Development as of June 30, 2004 are as follows (dollars in
thousands):
The Company’s existing sources of capital include the public debt and equity
markets, proceeds from Property dispositions and net cash provided by operating
activities. Additionally, the Company expects to incur variable rate debt,
including borrowings under the $350 million Credit Facility from time to time.
27
The Company has an effective S-3 shelf registration statement on file with the
SEC (the “Shelf Registration Statement”). As of August 2, 2004, pursuant to the
Shelf Registration Statement, the Trust had the capacity to issue up to $586.1
million in equity securities and the Operating Partnership had the capacity to
issue up to $324.3 million in debt securities.
Calculation of Funds from Operations
The National Association of Real Estate Investment Trusts (“NAREIT”) has issued
a standard definition for Funds from operations (as defined below). The SEC
has agreed to the disclosure of this non-GAAP financial measure on a per share
basis in its Release No. 34-47226, Conditions for Use of Non-GAAP Financial
Measures. The Company believes that the calculation of Funds from operations
is helpful to investors and management as it is a measure of the Company’s
operating performance that excludes depreciation and amortization and gains and
losses from property dispositions. As a result, year over year comparison of
Funds from operations reflects the impact on operations from trends in
occupancy rates, rental rates, operating costs, development activities, general
and administrative expenses, and interest costs, providing perspective not
immediately apparent from net income. In addition, management believes that
Funds from operations provides useful information to the investment community
about the Company’s financial performance when compared to other REIT’s since
Funds from operations is generally recognized as the standard for reporting the
operating performance of a REIT. Funds from operations available to common
shareholders is defined by NAREIT as net income (computed in accordance with
generally accepted accounting principles (“GAAP”)), excluding gains (or losses)
from sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Funds from
operations available to common shareholders does not represent net income or
cash flows from operations as defined by GAAP and does not necessarily indicate
that cash flows will be sufficient to fund cash needs. It should not be
considered as an alternative to net income as an indicator of the Company’s
operating performance or to cash flows as a measure of liquidity. Funds from
operations available to common shareholders also does not represent cash flows
generated from operating, investing or financing activities as defined by GAAP.
Funds from operations (“FFO”) available to common shareholders for the six
months ended June 30, 2004 and June 30, 2003 are as follows (in thousands,
except per share amounts):
28
Adjustments:
Funds from operations available to common
Reconciliation of net income to FFO – diluted:
Adjustments:
Funds from operations available to common
Reconciliation of weighted average shares:
Inflation
Inflation has remained relatively low during the last three years, and as a
result, it has not had a significant impact on the Company during this period.
The $350 million Credit Facility bears interest at a variable rate; therefore,
the amount of interest payable under the $350 million Credit Facility will be
influenced by changes in short-term interest rates, which tend to be sensitive
to inflation. To the extent an increase in inflation would result in increased
operating costs, such as in insurance, real estate taxes and utilities,
substantially all of the tenants’ leases require the tenants to absorb these
costs as part of their rental obligations. In addition, inflation also may have
the effect of increasing market rental rates.
29
Item 3:
Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes to the Company’s exposure to market risk
since its Annual Report on Form 10-K for the year ended December 31, 2003.
Item 4:
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
It should be noted that the design of any system of controls is based in part
on certain assumptions about the likelihood of future events. A control
system, no matter how well designed and implemented, can provide only
reasonable, not absolute assurance, that the objectives of the control system
will be met.
Changes in Internal Controls
30
Part I. Financial Information
Item 1. Financial Statements (unaudited)
(In thousands, except share amounts)
Table of Contents
(Unaudited and in thousands, except per share amounts)
Table of Contents
(Unaudited and in thousands, except per share amounts)
Table of Contents
OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2004
The following table sets forth the computation of basic and diluted income per
common share for the three and six months ended June 30, 2004 and 2003 (in
thousands except per share amounts):
For the Three Months Ended June 30, 2004
For the Three Months Ended June 30, 2003
Weighted
Weighted
Average
Average
Income
Shares
Per
Income
Shares
Per
(Numerator)
(Denominator)
Share
(Numerator)
(Denominator)
Share
$
37,356
84,411
$
0.44
$
33,304
78,030
$
0.43
-
1,394
-
1,252
37,356
85,805
$
0.44
33,304
79,282
$
0.42
-
84,411
$
-
11,725
78,030
$
0.15
-
1,394
-
1,252
-
85,805
$
-
11,725
79,282
$
0.15
37,356
84,411
$
0.44
45,029
78,030
$
0.58
-
1,394
-
1,252
$
37,356
85,805
$
0.44
$
45,029
79,282
$
0.57
Table of Contents
For the Six Months Ended June 30, 2004
For the Six Months Ended June 30, 2003
Weighted
Weighted
Average
Average
Income
Shares
Per
Income
Shares
Per
(Numerator)
(Denominator)
Share
(Numerator)
(Denominator)
Share
$
74,012
83,947
$
0.88
$
74,297
77,425
$
0.96
-
1,507
-
1,151
74,012
85,454
$
0.87
74,297
78,576
$
0.95
2,015
83,947
$
0.03
12,319
77,425
$
0.16
-
1,507
-
1,151
2,015
85,454
$
0.02
12,319
78,576
$
0.15
76,027
83,947
$
0.91
86,616
77,425
$
1.12
-
1,507
-
1,151
$
76,027
85,454
$
0.89
$
86,616
78,576
$
1.10
At June 30, 2004, the Company had a share-based employee compensation plan.
Prior to 2003, the Company accounted for the plan under the recognition and
measurement provisions of APB Opinion No. 25, “Accounting for Stock Issued to
Employees,” and related Interpretations. Effective January 1, 2003, the
Company adopted the fair value recognition provisions of the Financial
Accounting Standards Board’s (“FASB”) Statement of Financial Accounting
Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,”
prospectively for all employee option awards granted, modified, or settled
after January 1, 2003. Option awards under the Company’s plan vest over three
years. Therefore, the cost related to share-based employee compensation
included in the determination of net income for 2004 and 2003 is less than that
which would have been recognized if the fair value based method had been
applied to all option awards since the original effective date of SFAS No. 123.
The following table illustrates the effect on net income and earnings per
share if the fair value based method had been applied to all outstanding and
unvested option awards in each period (in thousands, except per share amount).
Three Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
June 30, 2004
June 30, 2003
$
37,356
$
45,029
$
76,027
$
86,616
83
340
120
349
(278
)
(340
)
(588
)
(840
)
$
37,161
$
45,029
$
75,559
$
86,125
$
0.44
$
0.58
$
0.91
$
1.12
$
0.44
$
0.58
$
0.90
$
1.11
$
0.44
$
0.57
$
0.89
$
1.10
$
0.43
$
0.57
$
0.88
$
1.10
Table of Contents
The functional currency for the Company’s United Kingdom operation is pounds
sterling. The financial statements for the United Kingdom operation are
translated into US dollars prior to the consolidation of these financial
statements with those of the Company. Gains and losses resulting from this
translation are included in accumulated other comprehensive income as a
separate component of shareholders’ equity. Other comprehensive loss was $1.3
million for the three months ended June 30, 2004 and other comprehensive income
was $4.0 million for the three months ended June 30, 2003. Other comprehensive
income was $3.2 million for the six months ended June 30, 2004 and $2.4 million
for the same period in 2003.
Reportable Segments
Markets
Southeastern Pennsylvania, New Jersey
Lehigh Valley, Michigan, Minnesota, Milwaukee/Chicago
Maryland, Piedmont Triad, Greenville, S.C., Richmond/Roanoke, Virginia Beach
Jacksonville, Orlando, Boca Raton, Tampa, Texas
County of Kent
Table of Contents
Table of Contents
Table of Contents
Three Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
June 30, 2004
June 30, 2003
$
-
$
1,739
$
93
$
3,028
-
(213
)
(28
)
(557
)
-
(156
)
(36
)
(291
)
-
(187
)
(23
)
(536
)
$
-
$
1,183
$
6
$
1,644
Table of Contents
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands)
June 30, 2004
December 31, 2003
(Unaudited)
ASSETS
Real estate:
$
579,501
$
564,332
3,437,986
3,363,608
(642,051
)
(586,736
)
3,375,436
3,341,204
87,079
56,869
Land held for development
166,888
162,483
3,629,403
3,560,556
39,284
21,809
Restricted cash
23,164
15,292
Accounts receivable
12,029
10,896
Deferred rent receivable
63,270
58,015
98,187
98,506
Investments in unconsolidated joint ventures
20,092
19,631
Prepaid expenses and other assets
51,221
49,303
$
3,936,650
$
3,834,008
Mortgage loans
$
373,995
$
363,866
Unsecured notes
1,355,000
1,355,000
Credit facility
219,000
167,000
Accounts payable
29,576
14,685
Accrued interest
31,660
31,622
Distribution payable
53,481
52,384
Other liabilities
92,637
96,887
2,155,349
2,081,444
3,418
3,455
1,574,278
1,544,897
135,471
135,471
68,134
68,741
Total owners’ equity
1,777,883
1,749,109
$
3,936,650
$
3,834,008
Table of Contents
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
Three Months Ended
June 30, 2004
June 30, 2003
$
119,471
$
109,167
43,992
40,565
163,463
149,732
33,196
28,088
15,599
15,447
8,063
8,362
34,138
31,115
90,996
83,012
72,467
66,720
536
2,280
(30,438
)
(31,021
)
(29,902
)
(28,471
)
42,565
37,979
(78
)
-
(458
)
(478
)
166
-
(125
)
473
42,070
37,974
-
12,276
42,070
50,250
(3,104
)
(3,104
)
$
38,966
$
47,146
$
0.44
$
0.43
-
0.15
$
0.44
$
0.58
$
0.44
$
0.42
-
0.15
$
0.44
$
0.57
$
0.605
$
0.60
88,082
81,695
89,476
82,947
Table of Contents
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
Six Months Ended
June 30, 2004
June 30, 2003
$
235,549
$
221,580
90,228
84,315
325,777
305,895
67,957
60,331
31,445
30,143
16,545
14,207
66,902
59,796
182,849
164,477
142,928
141,418
3,133
4,189
(61,137
)
(61,508
)
(58,004
)
(57,319
)
84,924
84,099
(408
)
598
(847
)
(1,061
)
297
(518
)
(530
)
915
83,436
84,033
2,103
12,901
85,539
96,934
(6,208
)
(6,208
)
$
79,331
$
90,726
$
0.88
$
0.96
0.03
0.16
$
0.91
$
1.12
$
0.87
$
0.95
0.02
0.15
$
0.89
$
1.10
$
1.21
$
1.20
87,632
81,113
89,139
82,264
Table of Contents
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
Six Months Ended
June 30, 2004
June 30, 2003
$
85,539
$
96,934
67,020
60,331
1,935
1,885
530
(915
)
(297
)
518
(1,689
)
(11,854
)
1,417
2,195
(7,872
)
(1,118
)
(1,133
)
3,022
(5,255
)
(4,554
)
(801
)
5,126
14,891
(1,340
)
38
(23
)
(4,250
)
(9,642
)
150,073
140,565
(51,965
)
(34,293
)
(1,520
)
(1,932
)
529
2,168
8,739
41,100
(48,847
)
(24,603
)
(18,607
)
(6,693
)
(10,461
)
(10,609
)
(122,132
)
(34,862
)
-
3,683
-
(23,739
)
7,723
1,212
(10,043
)
(7,209
)
151,756
237,050
(99,756
)
(248,050
)
(506
)
(2,540
)
51,611
55,247
(111,621
)
(107,829
)
(10,836
)
(92,175
)
17,105
13,528
370
551
21,809
7,933
$
39,284
$
22,012
$
1,075
$
8,851
(11,305
)
(870
)
11,305
870
-
1,151
Table of Contents
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2004
For the Three Months Ended June 30, 2004
For the Three Months Ended June 30, 2003
Weighted
Weighted
Average
Average
Income
Units
Per
Income
Units
Per
(Numerator)
(Denominator)
Unit
(Numerator)
(Denominator)
Unit
$
42,070
$
37,974
(3,104
)
(3,104
)
available to common unitholders
38,966
88,082
$
0.44
34,870
81,695
$
0.43
compensation plans
—
1,394
—
1,252
to common unitholders and
assumed
conversions
38,966
89,476
$
0.44
34,870
82,947
$
0.42
—
88,082
$
—
12,276
81,695
$
0. 15
plans
—
1,394
—
1,252
—
89,476
$
—
12,276
82,947
$
0.15
38,966
88,082
$
0.44
47,146
81,695
$
0.58
plans
—
1,394
—
1,252
and assumed conversions
$
38,966
89,476
$
0.44
$
47,146
82,947
$
0.57
Table of Contents
For the Six Months Ended June 30, 2004
For the Six Months Ended June 30, 2003
Weighted
Weighted
Average
Average
Income
Units
Per
Income
Units
Per
(Numerator)
(Denominator)
Unit
(Numerator)
(Denominator)
Unit
$
83,436
$
84,033
(6,208
)
(6,208
)
available to common unitholders
77,228
87,632
$
0.88
77,825
81,113
$
0.96
—
1,507
—
1,151
to common unitholders and
assumed
conversions
77,228
89,139
$
0.87
77,825
82,264
$
0.95
2,103
87,632
$
0.03
12,901
81,113
$
0.16
plans
—
1,507
—
1,151
2,103
89,139
$
0.02
12,901
82,264
$
0.15
79,331
87,632
$
0.91
90,726
81,113
$
1.12
plans
—
1,507
—
1,151
and assumed conversions
$
79,331
89,139
$
0.89
$
90,726
82,264
$
1.10
Table of Contents
Reportable Segments
Markets
Southeastern Pennsylvania, New Jersey
Lehigh Valley, Michigan, Minnesota, Milwaukee/Chicago
Maryland, Piedmont Triad, Greenville, S.C., Richmond/Roanoke, Virginia Beach
Jacksonville, Orlando, Boca Raton, Tampa, Texas
County of Kent
Delaware Valley
Midwest
Southeastern
Lehigh
United
Pennsylvania
Other
Valley
Other
Mid-Atlantic
Florida
Kingdom
Total
$
49,362
$
8,619
$
18,080
$
28,974
$
29,476
$
23,923
$
5,029
$
163,463
and real estate taxes
13,375
2,959
5,256
10,528
8,165
7,489
1,023
48,795
income
$
35,987
$
5,660
$
12,824
$
18,446
$
21,311
$
16,434
$
4,006
$
114,668
536
(30,438
)
(8,063
)
(34,138
)
and equity in earnings of unconsolidated joint ventures
42,565
Loss on property dispositions
(78
)
Income taxes
(458
)
Minority interest
166
Equity in earnings of unconsolidated joint ventures
(125
)
Discontinued operations
-
Preferred unit distributions
(3,104
)
$
38,966
Delaware Valley
Midwest
Southeastern
Lehigh
United
Pennsylvania
Other
Valley
Other
Mid-Atlantic
Florida
Kingdom
Total
$
43,611
$
8,418
$
17,014
$
29,114
$
26,743
$
22,587
$
2,245
$
149,732
and real estate taxes
12,343
2,551
4,181
10,408
7,375
6,479
198
43,535
income
$
31,268
$
5,867
$
12,833
$
18,706
$
19,368
$
16,108
$
2,047
$
106,197
2,280
(31,021
)
(8,362
)
(31,115
)
and equity in earnings of unconsolidated joint ventures
37,979
Gain on property dispositions
-
Income taxes
(478
)
Minority interest
-
Equity in earnings of unconsolidated joint ventures
473
Discontinued operations
12,276
Preferred unit distributions
(3,104
)
$
47,146
Table of Contents
Delaware Valley
Midwest
Southeastern
Lehigh
United
Pennsylvania
Other
Valley
Other
Mid-Atlantic
Florida
Kingdom
Total
$
95,676
$
17,478
$
36,743
$
59,206
$
59,093
$
48,063
$
9,518
$
325,777
and real estate taxes
27,642
6,197
10,973
21,217
16,502
14,632
2,239
99,402
income
$
68,034
$
11,281
$
25,770
$
37,989
$
42,591
$
33,431
$
7,279
$
226,375
3,133
(61,137
)
(16,545
)
(66,902
)
and equity in earnings of unconsolidated joint ventures
84,924
Loss on property dispositions
(408
)
Income taxes
(847
)
Minority interest
297
Equity in earnings of unconsolidated joint ventures
(530
)
Discontinued operations
2,103
Preferred unit distributions
(6,208
)
$
79,331
Delaware Valley
Midwest
Southeastern
Lehigh
United
Pennsylvania
Other
Valley
Other
Mid-Atlantic
Florida
Kingdom
Total
$
96,622
$
17,140
$
32,108
$
57,671
$
53,126
$
44,810
$
4,418
$
305,895
and real estate taxes
27,638
5,876
8,525
20,091
14,720
13,092
532
90,474
income
$
68,984
$
11,264
$
23,583
$
33,579
$
38,406
$
31,717
$
3,886
$
215,421
4,189
Interest expense
(61,508
)
General and administrative
(14,207
)
Depreciation and amortization
(59,796
)
and equity in earnings of unconsolidated joint ventures
84,099
Gain on property dispositions
598
Income taxes
(1,061
)
Minority interest
(518
)
Equity in earnings of unconsolidated joint ventures
915
Discontinued operations
12,901
Preferred unit distributions
(6,208
)
$
90,726
Table of Contents
Three Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
June 30, 2004
June 30, 2003
$
—
$
1,739
$
93
$
3,028
—
(213
)
(28
)
(557
)
—
(156
)
(36
)
(291
)
—
(187
)
(23
)
(536
)
$
—
$
1,183
$
6
$
1,644
Table of Contents
Table of Contents
Net Rent
Per Square Foot
Total Square Feet
Percent Occupied
June 30,
June 30,
June 30,
2004
2003
2004
2003
2004
2003
$
4.33
$
4.50
25,463
20,437
92.7
%
93.1
%
$
8.81
$
8.78
13,487
13,355
90.1
%
90.5
%
$
14.32
$
14.21
18,969
17,836
89.9
%
89.5
%
$
8.59
$
8.89
57,919
51,628
91.2
%
91.2
%
Table of Contents
Table of Contents
Three Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
June 30, 2004
June 30, 2003
$
104,326
$
104,335
$
208,656
$
208,378
30,300
27,407
62,131
59,101
14,555
14,827
29,405
28,949
(40,509
)
(39,780
)
(83,928
)
(82,909
)
4,346
2,454
7,608
5,141
99,980
101,881
201,048
203,237
2,468
2,521
4,497
5,080
$
97,512
$
99,360
$
196,551
$
198,157
$
99,980
$
101,881
$
201,048
$
203,237
or developed subsequent to January 1, 2003
10,265
1,972
19,084
3,702
4,423
2,344
6,243
8,482
(8,063
)
(8,362
)
(16,545
)
(14,207
)
(34,138
)
(31,115
)
(66,902
)
(59,796
)
(29,902
)
(28,741
)
(58,004
)
(57,319
)
(78
)
—
(408
)
598
(458
)
(478
)
(847
)
(1,061
)
(4,548
)
(4,670
)
(9,127
)
(10,254
)
(125
)
473
(530
)
915
—
11,725
2,015
12,319
$
37,356
$
45,029
$
76,027
$
86,616
Table of Contents
Table of Contents
Mortgages
Weighted
Principal
Principal
Unsecured
Credit
Average
Amortization
Maturities
Notes
Facility
Total
Interest Rate
$
4,538
$
21,858
$
100,000
$
—
$
126,396
6.70%
8,250
136,872
—
—
145,122
7.34%
6,117
64,274
100,000
219,000
389,391
4.11%
5,248
1,553
100,000
—
106,801
7.27%
4,874
34,824
—
—
39,698
7.15%
2,555
42,119
270,000
—
314,674
7.82%
1,924
—
200,000
—
201,924
8.49%
1,713
3,533
250,000
—
255,246
7.26%
683
33,060
235,000
—
268,743
6.47%
—
—
100,000
—
100,000
7.50%
$
35,902
$
338,093
$
1,355,000
$
219,000
$
1,947,995
6.72%
Industrial-
Distribution
Industrial-
Flex
Office
Total
Square
Annual
Square
Annual
Square
Annual
Square
Annual
Feet
Net Rent
Feet
Net Rent
Feet
Net Rent
Feet
Net Rent
1,113
$
4,730
862
$
7,370
893
$
12,627
2,868
$
24,727
3,173
15,294
2,292
19,047
3,088
43,325
8,553
77,665
2,811
12,256
2,088
21,339
1,669
23,166
6,568
56,761
2,870
14,120
1,582
15,614
1,802
28,273
6,254
58,008
3,718
16,025
2,211
21,601
2,336
35,531
8,265
73,157
2,547
12,760
1,244
11,432
2,235
35,335
6,026
59,528
7,371
40,541
1,868
20,380
5,039
92,214
14,278
153,134
23,603
$
115,726
12,147
$
116,783
17,062
$
270,471
52,812
$
502,980
Percent
Square Feet
Leased at
Scheduled
Industrial-
Industrial-
June 30,
Total
In-Service Date
Distribution
Flex
Office
Total
2004
Investment
363,000
60,000
103,705
526,705
100.0%
$
33,258
165,733
—
130,000
295,733
100.0%
27,260
—
—
30,844
30,844
69.8%
3,495
346,500
—
74,099
420,599
10.5%
21,869
—
—
237,749
237,749
34.3%
43,312
104,000
118,160
25,000
247,160
—%
18,042
979,233
178,160
601,397
1,758,790
55.1%
$
147,236
Table of Contents
Table of Contents
Three Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
June 30, 2004
June 30, 2003
$
37,356
$
45,029
$
76,027
$
86,616
$
.44
$
.58
$
.91
$
1.12
558
161
1,444
327
33,474
30,783
65,486
59,246
78
(11,093
)
(1,689
)
(11,271
)
amortization, and gain on property dispositions
(1,416
)
(891
)
(2,727
)
(2,177
)
shareholders – basic
$
70,050
$
63,989
$
138,541
$
132,741
shareholders per weighted average share
$
.83
$
.82
$
1.65
$
1.71
$
37,356
$
45,029
$
76,027
$
86,616
$
.44
$
.57
$
0.89
$
1.10
558
161
1,444
327
33,474
30,783
65,486
59,246
78
(11,093
)
(1,689
)
(11,271
)
1,610
2,117
3,304
4,110
shareholders – diluted
$
73,076
$
66,997
$
144,572
$
139,028
shareholders per weighted average share
$
.82
$
.81
$
1.62
$
1.69
84,411
78,030
83,947
77,425
1,394
1,252
1,507
1,151
85,805
79,282
85,454
78,576
3,671
3,665
3,684
3,698
89,476
82,947
89,138
82,274
Table of Contents
The Company’s management, with the participation of its Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of its disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act)
as of the end of the period covered by this report. Based on this evaluation,
the Company’s Chief Executive Officer and Chief Financial Officer have
concluded that its disclosure controls and procedures, as of the end of the
period covered by this report, are functioning effectively to provide
reasonable assurance that information required to be disclosed by the Company
in its reports filed or submitted under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in SEC’s
rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that are filed or
submitted under the Exchange Act is accumulated and communicated to the
Company’s management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow
timely decisions regarding required disclosure.
There were no changes in the Company’s internal control over financial
reporting during the quarter ended June 30, 2004 that have materially affected
or are reasonable likely to materially affect the Company’s internal control
over financial reporting.
Table of Contents
Part II:
Other Information
1. Management’s nominees, M. Leanne Lachman and J. Anthony Hayden, were
elected to fill the two available positions as Class I trustees. Voting
(expressed in number of shares) was as follows: Ms. Lachman: 70,093,787
for, 7,177,533 against or withheld and no abstentions or broker
non-votes; and Mr. Hayden: 76,330,932 for, 940,388 against or withheld
and no abstentions or broker non-votes.
2. The Shareholders approved a proposal to amend the Declaration of
Trust of the Trust to amend and restate in its entirety Article VII of
the Declaration of Trust, which relates to certain ownership limitations
restricting the number of the Trust’s shares of beneficial interest that
may be held by a shareholder. Voting (expressed in number of shares)
was as follows: 68,401,245 for, 750,527 against and 8,119,548
abstentions or broker non-votes.
3. The Shareholders did not approve a proposal to amend Sections 6.2,
6.3 and 10.1(d) of the Declaration of Trust to make clear that, in
accordance with Maryland law, the Board of Trustees may increase or
decrease the number of authorized common shares or preferred shares, or
alter the designation of or classify or reclassify any unissued common shares
or preferred shares. Voting (expressed in number of shares) was
as follows: 52,037,969 for, 17,038,423 against and 8,194,930 abstentions
or broker non-votes.
4. The Shareholders approved a proposal to amend the Liberty Property
Trust Amended and Restated Share Incentive Plan, including an amendment
to increase the number of shares available for awards thereunder by
1,500,000 shares to 11,426,256 shares. Voting (expressed in number of shares)
was as follows: 56,328,004 for, 12,813,781 against and 8,129,535
abstentions or broker non-votes.
31
32
Item 1.
None.
Item 2.
None.
Item 3.
None.
Item 4.
At the 2004 Annual Meeting of Shareholders of the Trust, held on May 5,
2004, the following matters were approved by the requisite vote of the
Shareholders, as follows:
Item 5.
None.
Item 6.
a.
Exhibits
3.1*
3.2*
10.1*+
Table of Contents
* Filed herewith
+ Compensatory plan or arrangement
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIBERTY PROPERTY TRUST
33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIBERTY PROPERTY LIMITED PARTNERSHIP
34
August 5, 2004
Date
August 5, 2004
Date
Table of Contents
BY:
General Partner
August 5, 2004
Date
August 5, 2004
Date
Table of Contents
EXHIBIT INDEX
EXHIBIT NO.
DESCRIPTION
| + Compensatory plan or arrangement |
|
35
EXHIBIT 3.1
LIBERTY PROPERTY TRUST
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The Declaration of Trust of Liberty Property Trust, a Maryland real estate investment trust (the "Trust"), is hereby amended by deleting existing Article VII in its entirety and adding a new Article VII to read as follows:
"ARTICLE VII
RESTRICTION ON TRANSFER,
ACQUISITION AND REDEMPTION OF EQUITY SHARES;
EXCHANGE FOR EXCESS SHARES
SECTION 7.1 Definitions. For the purposes of this Article VII, the following terms shall have the following meanings:
"Aggregate Share Ownership Limit" shall mean not more than 5.0% in value of the aggregate of the outstanding Equity Shares. The value of the outstanding Equity Shares shall be determined by the Board of Trustees in good faith, which determination shall be conclusive for all purposes hereof.
"Beneficial Ownership" shall mean ownership of Equity Shares by a Person, whether the interest in Equity Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 7.18, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
"Charitable Trust" shall mean any trust provided for in Section 7.13.
"Common Share Ownership Limit" shall mean not more than 5.0% (in value or in number of shares, whichever is more restrictive) of the aggregate number of the outstanding Common Shares. The number and value of outstanding
Common Shares shall be determined by the Board of Trustees in good faith, which determination shall be conclusive for all purposes hereof.
"Constructive Ownership" shall mean ownership of Equity Shares by a Person, whether the interest in Equity Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns" and "Constructively Owned" shall have the correlative meanings.
"Equity Shares" shall mean either Common Shares and Preferred Shares.
"Excepted Holder" shall mean a shareholder of the Trust for whom an Excepted Holder Limit is created by this Article VII or by the Board of Trustees pursuant to Section 7.10.
"Excepted Holder Limit" shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Trustees pursuant to Section 7.10, the percentage limit established by the Board of Trustees for such Excepted Holder pursuant to Section 7.10.
"Excess Shares" shall have the meaning ascribed to it in Section 7.2(b).
"Initial Date" shall mean the date of issuance of the Common Shares pursuant to the initial underwritten public offering of Common Shares.
The term "Market Price" on any date shall mean, with respect to any class or series of outstanding Equity Shares, the Closing Price for such Equity Shares on such date. The "Closing Price" on any date shall mean the last sale price for such Equity Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Equity Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Equity Shares are not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Equity Shares are listed or admitted to trading or, if such Equity Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Equity Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Equity Shares selected by the Board of Trustees or, in the event that no trading price is available for such Equity Shares, the fair market value of Equity Shares, as determined in good faith by the Board of Trustees.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Prohibited Owner" shall mean, with respect to any purported Transfer, any Person who, but for the provisions of Section 7.2, would Beneficially Own or Constructively Own Equity Shares in violation of the provisions of Section 7.2(a), and if appropriate in the context, shall also mean any Person who would have been the record owner of Equity Shares that the Prohibited Owner would have so owned.
"REIT" shall mean a real estate investment trust within the meaning of Section 856 of the Code.
"Restriction Termination Date" shall mean the first day after the Initial Date on which the Board of Trustees determines that it is no longer in the best interests of the Trust to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of Equity Shares set forth herein is no longer required in order for the Trust to qualify as a REIT.
"SDAT" shall mean the State Department of Assessments and Taxation of Maryland.
"Transfer" shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions or cause any such events, of Equity Shares or the right to vote or receive dividends on Equity Shares, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Equity Shares or any interest in Equity Shares or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial or Constructive Ownership of Equity Shares; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms "Transferring" and "Transferred" shall have the correlative meanings.
"Trustee" shall mean the Person unaffiliated with the Trust and a Prohibited Owner, that is appointed by the Trust to serve as trustee of the Charitable Trust.
SECTION 7.2 Ownership Limitation.
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Equity Shares in excess of the Aggregate Share Ownership Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Common Shares in excess of the
Common Share Ownership Limit and (3) no Excepted Holder shall Beneficially Own or Constructively Own Equity Shares in excess of the Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively Own Equity Shares to the extent that such Beneficial or Constructive Ownership of Equity Shares would result in the Trust being "closely held" within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would result in the Trust owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Trust from such tenant would cause the Trust to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).
(iii) Notwithstanding any other provisions contained herein, any Transfer of Equity Shares (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system) that, if effective, would result in Equity Shares being beneficially owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such Equity Shares.
(b) Transfer in Trust. If any Transfer of Equity Shares (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system) occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning Equity Shares in violation of Section 7.2(a)(i) or (ii),
(i) then that number of Equity Shares the Beneficial
or Constructive Ownership of which otherwise would cause such Person to
violate Section 7.2(a)(i) or (ii) (rounded to the nearest whole share)
(the "Excess Shares") shall be automatically transferred to a Charitable
Trust for the benefit of a Charitable Beneficiary, as described in
Section 7.13, effective as of the close of business on the Business Day
prior to the date of such Transfer, and such Person shall acquire no
rights in such Excess Shares; or
(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 7.2(a)(i) or (ii), then the Transfer of that number of such Excess Shares that otherwise would cause any Person to violate Section 7.2(a)(i) or (ii) shall be void ab initio, and the intended transferee shall acquire no rights in such Excess Shares.
SECTION 7.3 Prevention of Transfer. If the Board of Trustees or any duly authorized committee thereof shall at any time determine in good faith that a
Transfer or other event has taken place that results in a violation of
Section 7.2(a) or that a Person intends to acquire or has attempted to
acquire Beneficial or Constructive Ownership of any Equity Shares in
violation of Section 7.2(a) (whether or not such violation is intended),
the Board of Trustees or a committee thereof shall take such action as
it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, without limitation, causing the
Trust to redeem Equity Shares, refusing to give effect to such Transfer
on the books of the Trust or instituting proceedings to enjoin such
Transfer or other event; provided, however, that any Transfers or
attempted Transfers or other events in violation of Section 7.2(a) shall
automatically result in the transfer to the Charitable Trust described
above, and, where applicable, such Transfer (or other event) shall be
void ab initio as provided above irrespective of any action (or
non-action) by the Board of Trustees or a committee thereof.
SECTION 7.4 Notice to Trust. Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Equity Shares that will or may violate Section 7.2(a), or any Person who would have owned Equity Shares that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 7.2(b), shall immediately give written notice to the Trust of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Trust such other information as the Trust may request in order to determine the effect, if any, of such Transfer on the Trust's status as a REIT.
SECTION 7.5 Information for Trust. From and after the Initial Date and prior to the Restriction Termination Date:
(a) Every owner of more than five percent (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding Equity Shares, within 30 days after the end of each taxable year, shall give written notice to the Trust stating the name and address of such owner, the number of Equity Shares Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall provide to the Trust such additional information as the Trust may request in order to determine the effect, if any, of such Beneficial Ownership on the Trust's status as a REIT and to ensure compliance with the Aggregate Share Ownership Limit.
(b) Each Person who is a Beneficial or Constructive Owner of Equity Shares and each Person (including the shareholder of record) who is holding Equity Shares for a Beneficial or Constructive Owner shall provide to the Trust such information as the Trust may request, in good faith, in order to determine the Trust's status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.
SECTION 7.6 Other Action by Board. Nothing contained in this Article VII shall limit the authority of the Board of Trustees to take such other action as it
deems necessary or advisable to protect the Trust and the interests of the Shareholders by preservation of the Trust's status as a REIT.
SECTION 7.7 Ambiguities. In the case of an ambiguity in the application of any of the provisions of this Article VII, including any definition contained in Section 7.1, the Board of Trustees shall have the power to determine the application of the provisions of this Article VII with respect to any situation based on the facts known to it.
SECTION 7.8 Increase in Ownership Limit. Subject to the limitations provided in Section 7.9, the Board of Trustees may from time to time increase the Common Share Ownership Limit and the Aggregate Share Ownership Limit.
SECTION 7.9 Limitations on Changes in Ownership Limits. Prior to the modification of the Common Share Ownership Limit and the Aggregate Share Ownership Limit pursuant to Section 7.8, the Board of Trustees may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Trust's status as a REIT.
SECTION 7.10 Exceptions by Board.
(a) Subject to Section 7.2(a)(ii), the Board of Trustees, in its sole discretion, may exempt a Person from the Aggregate Share Ownership Limit and/or the Common Share Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if:
(i) the Board of Trustees obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no individual (defined to mean any Person who would be treated as an individual for purposes of Section 542(a)(2) of the Code (determined by taking into account Section 856(h)(3)(A) of the Code)) would Beneficially or Constructively Own Equity Shares in violation Section 7.2(a)(ii);
(ii) such Person does not and represents that it will not own, actually or Constructively, an interest in a tenant of the Trust (or a tenant of any entity owned or controlled by the Trust) that would cause the Trust to own, actually or Constructively, more than a 5.0% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and the Board of Trustees obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Trust (or an entity owned or controlled by the Trust) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board of Trustees, rent from such tenant would not adversely affect the Trust's ability to qualify as a REIT, shall not be treated as a tenant of the Trust); and
(iii) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the
restrictions contained in Sections 7.2 through 7.7) will result in such Equity Shares being automatically transferred to a Charitable Trust in accordance with Sections 7.2(b) and 7.3.
(b) Prior to granting any exception pursuant to Section 7.10(a), the Board of Trustees may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Trustees in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Trust's status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Trustees may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.
(c) Subject to Section 7.2(a)(ii), an underwriter which participates in a public offering or a private placement of Equity Shares (or securities convertible into or exchangeable for Equity Shares) may Beneficially Own or Constructively Own Equity Shares (or securities convertible into or exchangeable for Equity Shares) in excess of the Aggregate Share Ownership Limit, the Common Share Ownership Limit or both such limits, but only to the extent necessary to facilitate such public offering or private placement.
(d) The Board of Trustees may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Common Share Ownership Limit.
SECTION 7.11 Legend. Each certificate for Equity Shares shall bear substantially the following legend:
The securities represented by this certificate are subject to restrictions on transfer for the purpose of the Trust's maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. Except as otherwise provided pursuant to the Declaration of Trust, no Person may Beneficially Own Shares in excess of that number of Shares which equals the lesser of 5.0% (or such greater percentage as may be determined by the Board of Trustees) of (a) the number of outstanding Equity Shares of the Trust and (b) the value of outstanding Equity Shares of the Trust. Any Person who attempts or proposes to beneficially own Shares in excess of the above limitations must notify the Trust in writing at least 15 days prior to such proposed or attempted Transfer. All capitalized terms in this legend have the meanings defined in the Declaration of Trust of the Trust, a copy of which will be sent without charge to each Shareholder who so requests. If the restrictions on transfer are violated, the securities represented hereby will be designated and treated as Excess Shares which will be held in the Charitable Trust by the Trust.
Instead of the foregoing legend, the certificate may state that the Trust will furnish a full statement about certain restrictions on transferability to a shareholder on request and without charge.
SECTION 7.12 Severability. If any provision of this Article VII or any application of any such provision is determined to be void, invalid or unenforceable by any court of competent jurisdiction, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
SECTION 7.13 Ownership in Trust. Upon any purported Transfer or other event described in Section 7.2(b) that would result in a transfer of Equity Shares to a Charitable Trust, such Equity Shares shall be deemed to have been transferred to the Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Charitable Trust pursuant to Section 7.2(b). The Trustee shall be appointed by the Trust and shall be a Person unaffiliated with the Trust and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Trust as provided in Section 7.18.
SECTION 7.14 Status of Shares Held by the Trustee. Equity Shares held by the Trustee shall be issued and outstanding Equity Shares of the Trust. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Charitable Trust.
SECTION 7.15 Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends or other distributions with respect to Equity Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid to a Prohibited Owner prior to the discovery by the Trust that Equity Shares have been transferred to the Trustee shall be paid with respect to such Equity Shares by the Prohibited Owner to the Trustee upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividends or distributions so paid over to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Charitable Trust and, subject to Maryland law, effective as of the date that Equity Shares have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Trust that Equity Shares have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable
Beneficiary; provided, however, that if the Trust has already taken irreversible trust action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VII, until the Trust has received notification that Equity Shares have been transferred into a Charitable Trust, the Trust shall be entitled to rely on its share transfer and other shareholder records for purposes of preparing lists of shareholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of shareholders.
SECTION 7.16 Sale of Shares by Trustee. Within 20 days of
receiving notice from the Trust that Equity Shares have been transferred
to the Charitable Trust, the Trustee of the Charitable Trust shall sell
the shares held in the Charitable Trust to a person, designated by the
Trustee, whose ownership of the shares will not violate the ownership
limitations set forth in Section 7.2(a). Upon such sale, the interest of
the Charitable Beneficiary in the shares sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the Prohibited
Owner and to the Charitable Beneficiary as provided in this Section
7.16. The Prohibited Owner shall receive the lesser of (1) the price
paid by the Prohibited Owner for the shares or, if the Prohibited Owner
did not give value for the shares in connection with the event causing
the shares to be held in the Charitable Trust (e.g., in the case of a
gift, devise or other such transaction), the Market Price of the shares
on the day of the event causing the shares to be held in the Charitable
Trust and (2) the price per share received by the Trustee from the sale
or other disposition of the shares held in the Charitable Trust. Any net
sales proceeds in excess of the amount payable to the Prohibited Owner
shall be immediately paid to the Charitable Beneficiary. If, prior to
the discovery by the Trust that Equity Shares have been transferred to
the Trustee, such shares are sold by a Prohibited Owner, then (i) such
shares shall be deemed to have been sold on behalf of the Charitable
Trust and (ii) to the extent that the Prohibited Owner received an
amount for such shares that exceeds the amount that such Prohibited
Owner was entitled to receive pursuant to this Section 7.16, such excess
shall be paid to the Trustee upon demand.
SECTION 7.17 Purchase Right in Shares Transferred to the Trustee. Equity Shares transferred to the Trustee shall be deemed to have been offered for sale to the Trust, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Trust, or its designee, accepts such offer. The Trust shall have the right to accept such offer until the Trustee has sold the shares held in the Charitable Trust pursuant to Section 7.16. Upon such a sale to the Trust, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.
SECTION 7.18 Designation of Charitable Beneficiaries. By written notice to the Trustee, the Trust shall designate one or more nonprofit
organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Equity Shares held in the Charitable Trust would not violate the restrictions set forth in Section 7.2(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
SECTION 7.19 Priority of New York Stock Exchange, Inc. Transactions. Notwithstanding anything in this Article VII to the contrary, nothing herein shall preclude the settlement of a transaction entered into through the facilities of the New York Stock Exchange, Inc. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII.
SECTION 7.20 Enforcement. The Trust is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII.
SECTION 7.21 Non-Waiver. No delay or failure on the part of the Trust or the Board of Trustees in exercising any right hereunder shall operate as a waiver of any right of the Trust or the Board of Trustees, as the case may be, except to the extent specifically waived in writing."
SECOND: The Articles of Amendment as set forth above have been duly advised by the board of trustees and approved by the shareholders of the Trust as required by law.
THIRD: The undersigned President acknowledges these Articles of Amendment to be the act of the Trust and as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of the President's knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Trust has caused these Articles of Amendment to be signed in its name and on its behalf by its President and attested to by its Secretary on this 21st day of June, 2004.
ATTEST: LIBERTY PROPERTY TRUST /s/ James J. Bowes By:/s/ William P. Hankowsky (SEAL) -------------------------------- -------------------------------- |
James J. Bowes, Secretary William P. Hankowsky, President
EXHIBIT 3.2
LIBERTY PROPERTY TRUST
ARTICLES OF RESTATEMENT
THIS IS TO CERTIFY THAT:
FIRST: The Declaration of Trust of Liberty Property Trust, a Maryland real estate investment trust (the "Trust"), is hereby restated.
SECOND: The following provisions are all of the provisions of the Trust currently in effect:
"ARTICLE I
THE TRUST; DEFINITIONS
SECTION 1.1 The name of the trust (hereinafter called the "Trust") is:
LIBERTY PROPERTY TRUST
So far as may be practicable, the business of the Trust shall be conducted and transacted under that name, which name (and the word "Trust" wherever used in this Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees collectively but not individually or personally and shall not refer to the Shareholders of the Trust, or to any officers, employees or agents of the Trust or of such Trustees.
Under circumstances in which the Trustees determine that the use of the name "Liberty Property Trust" is not practicable or desirable, they may use any other designation or name for the Trust.
SECTION 1.2 Resident Agent. The Trust may have such offices or places of business within or without the State of Maryland as the Trustees may from time to time determine.
SECTION 1.3 Nature of Trust. The Trust is a real estate investment trust within the meaning of Title 8. The Trust shall not be deemed to be a general partnership, limited partnership, joint venture, joint stock company or, except as provided in Section 12.4, a corporation (but nothing herein shall preclude the Trust from being treated for tax purposes as an association under the Code).
SECTION 1.4 Powers. The Trust shall have all of the powers granted to real estate investment trusts generally by Title 8 or any successor statute and shall have any other and further powers as are not
inconsistent with and are appropriate to promote and attain the purposes set forth in this Declaration of Trust.
SECTION 1.5 Definitions. As used in this Declaration of Trust, the following terms shall have the following meanings unless the context otherwise requires:
"Adviser" means the Person, if any, appointed, employed or contracted with by the Trust pursuant to Section 4.1.
"Affiliate" or "Affiliated" means, as to any individual, corporation, partnership, trust or other association (other than the Trust), any Person (i) who is an officer, director, partner or trustee of such corporation, partnership, trust or other association or of any Person which controls, is controlled by, or is under common control with, such individual, corporation, partnership, trust or other association or (ii) which controls, is controlled by, or is under common control with, such individual, corporation, partnership, trust or other association.
"Bylaws" means the Bylaws of the Trust as the same may be amended from time to time.
"Excluded Assets" shall have the meaning ascribed to the term "Non-REIT Assets" in the Company's Registration Statement on Form S-11 relating to the Company's Initial Public Offering (as such term is defined in Section 7.1).
"Mortgages" means mortgages, deeds of trust or other security interests in or applicable to Real Property.
"Operating Partnership" means Liberty Property Limited Partnership, a Pennsylvania limited partnership.
"Person" means an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity, or any government and agency or political subdivision thereof, and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"Real Property" or "Real Estate" means land, rights in land (including leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land and rights or interests in land.
"REIT Provisions of the Code" means Sections 856 through 858 of the Code and any successor or other provisions of the Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.
"Rouse Affiliates" means the Rouse Senior Executives and their respective Affiliates and associates, present or future, including, without limitation, any other Person acting in concert or as a group with any of the foregoing Persons.
"Rouse Group" means Rouse & Associates and the partnerships, corporations and other entities in which Rouse & Associates and/or its Affiliates have a controlling interest, which the Trust acquires on or prior to the Closing Date of the Initial Public Offering.
"Rouse Senior Executives" means Willard G. Rouse III, George F. Congdon and Joseph P. Denny, together with David C. Hammers, Leslie Reid Price, Robert E. Fenza, Claiborn M. Carr, John A. Castorina, Jill R. Felix, Larry Gildea and Robert Goldschmidt.
"Securities" means Shares, any stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.
"Securities of the Trust" means any Securities issued by the Trust.
"Shareholders" means holders of record of outstanding Shares.
"Shares" means transferable shares of beneficial interest of the Trust of any class or series.
"Trustees" means, collectively, the individuals named in Section 2.2 of this Declaration so long as they continue in office and all other individuals who have been duly elected and qualified as trustees of the Trust hereunder.
"Trust Property" means any and all property, real, personal or otherwise, tangible or intangible, which is transferred or conveyed to the Trust or the Trustees (including all rents, income, profits and gains therefrom), which is owned or held by, or for the account of, the Trust or the Trustees.
ARTICLE II
TRUSTEES
SECTION 2.1 Number. Prior to the Closing Date of the Initial Public Offering (as such term is defined in Section 7.1) the number of Trustees initially shall be seven (7) which number may thereafter be increased or decreased only by the unanimous vote of the Trustees then in office from time to time; however, the total number of Trustees shall be not fewer than three (3) and not more than fifteen (15). No reduction in the number of Trustees shall cause the removal of any Trustee from office prior to the expiration of his term.
SECTION 2.2 Board; Term. The Trustees shall be classified, with respect to the time for which they severally hold office, into three classes (individually, a "Class" and collectively, "Classes"), Class I, Class II and Class III, with approximately one-third of the total number of Trustees in each class as determined by the Trustees.
At the next Annual Meeting of Shareholders and at each annual meeting of the Shareholders thereafter, the successors to the Class of Trustees whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of Shareholders held in the third year following the year of their election and until their successors are duly elected and qualified.
At all times, at least a majority of the members of the Board of Trustees shall be independent. A trustee shall be considered "independent" hereunder if such individual is not an officer or an employee of the Trust or any Affiliate of the Trust when serving as a Trustee and if, at any time that the Common Shares are listed on the New York Stock Exchange, such trustee would be "independent" as determined pursuant to the applicable rules of the New York Stock Exchange; provided, however, that if less than a majority of trustees are independent (through resignation or otherwise), such circumstance shall not cause the Trust to terminate or affect the powers of the remaining trustees to fill vacancies pursuant to the Bylaws.
SECTION 2.3 Resignation; Removal or Death. Any Trustee may resign by written notice to the remaining Trustees, effective upon execution and delivery to the Trust of such written notice or upon any future date specified in the notice. A Trustee may be removed from office only at a meeting of shareholders called for that purpose by the affirmative vote of the holders of not less than two-thirds of the Shares then outstanding and entitled to vote in the election of Trustees. Upon the resignation or removal of any Trustee, or his otherwise ceasing to be a Trustee, he shall automatically cease to have any right, title or interest in
and to the Trust Property and shall execute and deliver such documents as the remaining Trustees require for the conveyance of any Trust Property held in his name, and shall account to the remaining Trustees as they require for all Property which he holds as Trustee. Upon the incapacity or death of any Trustee, his legal representative shall perform those acts.
SECTION 2.4 Legal Title. Legal title to all Trust Property shall
be vested in the Trustees, but they may cause legal title to any Trust
Property to be held by or in the name of any Trustee, or the Trust, or
any other Person as nominee. The right, title and interest of the
Trustees in and to the Trust Property shall automatically vest in
successor and additional Trustees upon their qualification and
acceptance of election or appointment as Trustees, and they shall
thereupon have all the rights and obligations of Trustees, whether or
not conveyancing documents have been executed and delivered pursuant to
Section 2.3 or otherwise. Written evidence of the qualification and
acceptance of election or appointment of successor and additional
Trustees may be filed with the records of the Trust and in such other
offices, agencies or places as the Trustees may deem necessary or
desirable.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1 General. Subject to the express limitations herein or in the Bylaws, (1) the business and affairs of the Trust shall be managed under the direction of the Board of Trustees and (2) the Trustees shall have full, exclusive and absolute power, control and authority over the Trust Property and over the business of the Trust as if they, in their own right, were the sole owners thereof. The Trustees may take any actions as in their sole judgment and discretion are necessary or desirable to conduct the business of the Trust. This Declaration of Trust shall be construed with a presumption in favor of the grant of power and authority to the Trustees. Any construction of this Declaration of Trust or determination made in good faith by the Trustees concerning their powers and authority hereunder shall be conclusive. The enumeration and definition of particular powers of the Trustees included in this Article III shall in no way be limited or restricted by reference to or inference from the terms of this or any other provision of this Declaration of Trust or construed or deemed by inference or otherwise in any manner to exclude or limit the powers conferred upon the Trustees under the general laws of the State of Maryland as now or hereafter in force.
SECTION 3.2 Specific Powers and Authority. Subject only to the express limitations herein (including, but not limited to, those set forth in Section 9.5), and in addition to all other powers and authority conferred by this Declaration of Trust or by law, the Trustees, without any vote, action
or consent by the Shareholders, shall have and may exercise, at any time or times, in the name of the Trust or on its behalf the following powers and authorities:
(a) Investments. Subject to Article IX, to invest in, purchase or otherwise acquire and to hold real, personal or mixed, tangible or intangible, property of any kind (including, without limitation, Securities and Mortgages) wherever located, or rights or interests therein or in connection therewith, all without regard to whether such property, interests or rights are authorized by law for the investment of funds held by trustees or other fiduciaries, or whether obligations the Trust acquires have a term greater or lesser than the term of office of the Trustees or the possible termination of the Trust, for such consideration as the Trustees may deem proper (including cash, property of any kind or Securities of the Trust); provided, however, that the Trustees shall take such actions as they deem necessary and desirable to comply with any requirements of Title 8 relating to the types of assets held by the Trust.
(b) Sale, Disposition and Use of Property. Subject to Article V, Article IX and Section 10.3, to sell, rent, lease, hire, exchange, release, partition, assign, mortgage, grant security interests in, encumber, negotiate, dedicate, grant easements in and options with respect to, convey, transfer (including transfers to entities wholly or partially owned by the Trust or the Trustees) or otherwise dispose of any or all of the Trust Property by deeds (including deeds in lieu of foreclosure with or without consideration), trust deeds, assignments, bills of sale, transfers, leases, mortgages, financing statements, security agreements and other instruments for any of such purposes executed and delivered for and on behalf of the Trust or the Trustees by one or more of the Trustees or by a duly authorized officer, employee, agent or nominee of the Trust, on such terms as they deem appropriate; to give consents and make contracts relating to the Trust Property and its use or other property or matters; to develop, improve, manage, use, alter and otherwise deal with the Trust Property; and to rent, lease or hire from others property of any kind; provided, however, that the Trust may not use or apply land for any purposes not permitted by applicable law.
(c) Financings. To borrow or in any other manner raise money for the purposes and on the terms they determine, and to evidence the same by issuance of Securities of the Trust, which may have such provisions as the Trustees determine; to reacquire such Securities of the Trust; to enter into other contracts or obligations on behalf of the Trust; to guarantee, indemnify or act as surety with respect to payment or performance of obligations of any Person; to mortgage, pledge, assign, grant security interests in or otherwise encumber the Trust Property to secure any such Securities of the Trust, contracts or obligations (including guarantees, indemnifications and suretyships); and to renew, modify,
release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Trust or participate in any reorganization of obligors to the Trust.
(d) Loans. Subject to Article IX, to lend money or other Trust Property on such terms, for such purposes and to such persons as they may determine.
(e) Issuances of Securities. Subject to Article IX, to create and authorize the issuance, in shares, units or amounts of one or more types, series or classes, of Securities of the Trust, which may have such voting rights, dividend or interest rates, preferences, subordinations, conversion or redemption prices or rights, maturity dates, distribution, exchange or liquidation rights or other rights as the Trustees may determine, without vote of or other action by the Shareholders; to issue any type of Securities of the Trust, and any options, warrants or rights to subscribe therefor, all without vote of or other action by the Shareholders, to such Persons for such consideration, at such time or times and in such manner and on such terms as the Trustees determine; to list any of the Securities of the Trust on any securities exchange; and to purchase or otherwise acquire, hold, cancel, reissue, sell and transfer any Securities of the Trust.
(f) Expenses and Taxes. To pay any charges, expenses or liabilities necessary or desirable, in the sole discretion of the Trustees, for carrying out the purposes of this Declaration of Trust and conducting the business of the Trust, including compensation or fees to Trustees, officers, employees and agents of the Trust, and to Persons contracting with the Trust, and any taxes, levies, charges and assessments of any kind imposed upon or chargeable against the Trust, the Trust Property, or the Trustees in connection therewith; and to prepare and file any tax returns, reports or other documents and take any other appropriate action relating to the payment of any such charges, expenses or liabilities.
(g) Collection and Enforcement. To collect, sue for and receive money or other property due to the Trust; to consent to extensions of the time for payment, or to the renewal, of any Securities or obligations; to engage or intervene in, prosecute, defend, compound, enforce, compromise, release, abandon or adjust any actions, suits, proceedings, disputes, claims, demands, security interests, or things relating to the Trust, the Trust Property, or the Trust's affairs; to exercise any rights and enter into any agreements, and take any other action necessary or desirable in connection with the foregoing.
(h) Deposits. To deposit funds or Securities constituting part of the Trust Property in banks, trust companies, savings and loan associations, financial institutions and other depositories, whether or not
such deposits will draw interest, subject to withdrawal on such terms and in such manner as the Trustees determine.
(i) Allocation; Accounts. To determine whether moneys, profits or other assets of the Trust shall be charged or credited to, or allocated between, income and capital, including whether to amortize any premium or discount and to determine in what manner any expenses or disbursements are to be borne as between income and capital (regardless of how such items would normally or otherwise be charged to or allocated between income and capital without such determination); to treat any dividend or other distribution on any investment as, or apportion it between, income and capital; in their discretion to provide reserves for depreciation, amortization, obsolescence or other purposes in respect of any Trust Property in such amounts and by such methods as they determine; to determine what constitutes net earnings, profits or surplus; to determine the method or form in which the accounts and records of the Trust shall be maintained; and to allocate to the Shareholders equity account less than all of the consideration paid for Shares and to allocate the balance to paid-in capital or capital surplus.
(j) Valuation of Property. To determine the value of all or any part of the Trust Property and of any services, Securities, property or other consideration to be furnished to or acquired by the Trust, and to revalue all or any part of the Trust Property, all in accordance with such information as is reasonable, in their sole judgment.
(k) Ownership and Voting Powers. To exercise all of the
rights, powers, options and privileges pertaining to the ownership of
any Mortgages, Securities, Real Estate and other Trust Property to the
same extent that an individual owner might, including, without
limitation, to vote or give any consent, request, or notice or waive any
notice, either in person or by proxy or power of attorney, which proxies
and powers of attorney may be for any general or special meetings or
action, and may include the exercise of discretionary powers; provided,
however, that after the Initial Five Year Period (as defined in Section
7.1) the Trustees shall not, without the prior affirmative vote of not
less than two-thirds of the Shares then outstanding and entitled to
vote, effect (i) the merger or consolidation of the Operating
Partnership in a transaction in which the Operating Partnership is not
the surviving entity, (ii) a voluntary sale or other transfer of all or
substantially all of the assets owned by the Operating Partnership,
(iii) the dissolution of the Operating Partnership, (iv) the institution
of any proceedings for bankruptcy on behalf of the Operating
Partnership, (v) the making of a general assignment for the benefit of
creditors or acquiescence to the filing of an involuntary bankruptcy
petition against the Operating Partnership or (vi) the appointment of a
custodian, receiver or trustee for all or any part of the assets of the
Operating Partnership.
(l) Officers, Etc.; Delegation of Powers. To elect, appoint or employ such officers for the Trust and such committees of the Board of Trustees with such powers and duties as the Trustees may determine or the Trust's Bylaws provide; to engage, employ or contract with and pay compensation to any Person (including, subject to Section 9.5, any Trustee and any Person who is an Affiliate of any Trustee) as agent, representative, Adviser, members of an advisory board, employee or independent contractor (including advisers, consultants, transfer agents, registrars, underwriters, accountants, attorneys, real estate agents, property and other managers, appraisers, brokers, architects, engineers, construction managers, general contractors or others) in one or more capacities, to perform such services on such terms as the Trustees may determine; to delegate to one or more Trustees, officers or other Persons engaged or employed as aforesaid or to committees of Trustees or to the Adviser, the performance of acts or other things (including granting of consents), the making of decisions and the execution of such deeds, contracts or other instruments, either in the names of the Trust, the Trustees or as their attorneys or otherwise, as the Trustees may determine; and to establish such committees as they deem appropriate.
(m) Associations. Subject to Section 9.5, to cause the Trust to enter into joint ventures, general or limited partnerships, participation or agency arrangements or any other lawful combinations, relationships or associations of any kind through which the Trustees may exercise any and all powers accorded them by this Declaration of Trust.
(n) Reorganizations; Etc. Subject to Sections 10.2 and 10.3, to cause to be organized or assist in organizing any Person under the laws of any jurisdiction to acquire all or any part of the Trust Property or carry on any business in which the Trust shall have an interest; to merge or consolidate the Trust with any Person; to sell, rent, lease, hire, convey, negotiate, assign, exchange or transfer all or any part of the Trust Property to or with any Person in exchange for Securities of such Person or otherwise; and to lend money to, subscribe for and purchase the Securities of, and enter into any contracts with, any Person in which the Trust holds, or is about to acquire, Securities or any other interests.
(o) Insurance. To purchase and pay for out of Trust Property insurance policies insuring the Trust and the Trust Property against any and all risks, and insuring the Shareholders, Trustees, officers, employees and agents of the Trust individually against all claims and liabilities of every nature arising by reason of holding or having held any such status, office or position or by reason of any action alleged to have been taken or omitted (including those alleged to constitute misconduct, gross negligence, reckless disregard of duty or bad faith) by any such Person in such capacity, whether or not the Trust would have the power to indemnify such person against such claim or liability.
(p) Executive Compensation; Pension and Other Plans. To adopt and implement executive compensation, pension, profit sharing, stock option, stock bonus, stock purchase, stock appreciation rights, savings, thrift, retirement, incentive or benefit plans, trusts or provisions, applicable to any or all Trustees, officers, employees or agents of the Trust, or to other Persons who have benefited the Trust, all on such terms and for such purposes as the Trustees may determine.
(q) Distributions. To declare and pay dividends or other distributions to Shareholders, subject to Article VII with respect to Excess Shares.
(r) Indemnification. In addition to the indemnification provided for in Section 9.4, to indemnify any Person, including any Adviser or independent contractor, with whom the Trust has dealings.
(s) Charitable Contributions. To make donations for the public welfare or for community, charitable, religious, educational, scientific, civic or similar purposes, regardless of any direct benefit to the Trust.
(t) Discontinue Operations; Bankruptcy. To discontinue the operations of the Trust (subject to Section 11.2); to petition or apply for relief under any provision of federal or state bankruptcy, insolvency or reorganization laws or similar laws for the relief of debtors; to permit any Trust Property to be foreclosed upon without raising any legal or equitable defenses that may be available to the Trust or the Trustees or otherwise defending or responding to such foreclosure; to confess judgment against the Trust; or to take such other action with respect to indebtedness or other obligations of the Trustees, in such capacity, the Trust Property or the Trust as the Trustees in their discretion may determine.
(u) Termination of Status. To terminate the status of the Trust as a real estate investment trust under the REIT Provisions of the Code.
(v) Fiscal Year. Subject to the Code, to adopt, and from time to time change, a fiscal year for the Trust.
(w) Seal. To adopt and use a seal, but the use of a seal shall not be required for the execution of instruments or obligations of the Trust.
(x) Bylaws. To adopt, implement and from time to time amend Bylaws of the Trust relating to the business and organization of the Trust which are not inconsistent with the provisions of this Declaration of Trust.
(y) Voting Trust. To participate in, and accept Securities issued under or subject to, any voting trust.
(z) Proxies. To solicit proxies of the Shareholders at the expense of the Trust.
(aa) Further Powers. To do all other acts and things and execute and deliver all instruments incident to the foregoing powers, and to exercise all powers which they deem necessary, useful or desirable to carry on the business of the Trust or to carry out the provisions of this Declaration of Trust, even if such powers are not specifically provided hereby.
ARTICLE IV
ADVISER
SECTION 4.1 Appointment. The Trustees are responsible for setting the general policies of the Trust and for the general supervision of its business conducted by officers, agents, employees, advisers or independent contractors of the Trust. The Trustees are not required, however, to conduct personally the business of the Trust, and they may (but need not) appoint, employ or contract with any Person (including a Person Affiliated with any Trustee) as an Adviser and may grant or delegate such authority to the Adviser as the Trustees may, in their sole discretion, deem necessary or desirable. The Trustees may determine the terms of retention and the compensation of the Adviser and may exercise broad discretion in allowing the Adviser to administer and regulate the operations of the Trust, to act as agent for the Trust, to execute documents on behalf of the Trust and to make executive decisions which conform to general policies and principles established by the Trustees.
SECTION 4.2 Affiliation and Functions. The Trustees, by resolution or in the Bylaws, may provide guidelines, provisions or requirements concerning the affiliation and functions of the Adviser.
ARTICLE V
INVESTMENT POLICY
The fundamental investment policy of the Trust is to make investments in such a manner as to comply with the REIT Provisions of the Code and with the requirements of Title 8, with respect to the composition of the Trust's investments and the derivation of its income. Subject to Section 3.2(u), the Trustees will use their best efforts to carry out this fundamental investment policy and to conduct the affairs of the Trust in such a manner as to continue to qualify the Trust for tax treatment provided in the REIT Provisions of the Code; provided, however, no Trustee, officer, employee or agent of the Trust shall be liable for any act or omission resulting in the loss of tax benefits under the Code, except to the extent provided in Section 9.2. The Trustees may change from time to
time by resolution or in the Bylaws of the Trust, such investment policies as they determine to be in the best interests of the Trust, including prohibitions or restrictions upon certain types of investments.
ARTICLE VI
SHARES
SECTION 6.1 Shares. The beneficial interest in the Trust shall be divided into Shares. The total number of Shares which the Trust has authority to issue is two hundred million (200,000,000), and shall consist of Shares, which may comprise one or more series or classes, and such other types, series or classes of Securities of the Trust as the Trustees may create and authorize from time to time and designate as representing a beneficial interest in the Trust. Shares may be issued for such consideration as the Trustees determine or, if issued as a result of a Share dividend or Share split, without any consideration, in which case all Shares so issued shall be full paid and nonassessable by the Trust.
SECTION 6.2 Common Shares. Common Shares ("Common Shares") shall have a par value of $.001 per share and, subject to the provisions of Article VII with respect to Excess Shares (as defined in Article VII), shall entitle the holders to one vote per Common Share on a non-cumulative basis on all matters upon which Shareholders are entitled to vote pursuant to Section 8.2, and shares of a particular class of issued Common Shares shall have equal dividend, distribution, liquidation and other rights, and shall have no preference, preemptive, appraisal, conversion or exchange rights. Subject to the express terms of any class of Common Shares outstanding at the time, and notwithstanding any other provision of the Declaration of Trust, the Board of Trustees may increase or decrease the number of, alter the designation of or classify or reclassify any unissued Shares by setting or changing, in any one or more respects, from time to time before issuing the Shares, and, subject to the provisions of Article VII regarding Excess Shares, the terms, preferences, conversion and other rights, including, but not limited to, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any class of Shares, and in such event, the Trust shall file for record with the State Department of Assessments and Taxation of Maryland articles supplementary in substance and form as prescribed by Maryland law.
SECTION 6.3 Preferred Shares. The Trustees are hereby expressly granted the authority to authorize from time to time the issuance of one or more series of preferred Shares ("Preferred Shares") and, with respect to any such series, to fix the numbers, designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications and other terms or conditions of redemption of
such series. Subject to the express terms of any series of Preferred Shares at the time, and notwithstanding any other provision of the Declaration of Trust, the Board of Trustees may increase or decrease the number of, alter the designation of or classify or reclassify any unissued Preferred Shares by setting or changing, in any one or more respects, from time to time before issuing the Preferred Shares, and, subject to the provisions of Article VII regarding Excess Shares, the terms, preferences, conversion and other rights, including, but not limited to, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption, of any series of Preferred Shares, and in such event, the Trust shall file for record with the State Department of Assessments and Taxation of Maryland articles supplementary in substance and form as prescribed by Maryland law.
SECTION 6.4 Dividends or Distributions. The Trustees may from
time to time declare and pay to Shareholders such dividends or
distributions in cash, property or other assets of the Trust or in
Securities of the Trust or from any other source as the Trustees in
their discretion shall determine. The Trustees shall endeavor to declare
and pay such dividends and distributions as shall be necessary for the
Trust to qualify as a real estate investment trust under the REIT
Provisions of the Code; however, Shareholders shall have no right to any
dividend or distribution unless and until declared by the Trustees. The
exercise of the powers and rights of the Trustees pursuant to this
Section shall be subject to the provisions of any class or series of
Shares at the time outstanding. The receipt by any Person in whose name
any Shares are registered on the records of the Trust or by his duly
authorized agent shall be a sufficient discharge for all dividends or
distributions payable or deliverable in respect of such Shares and from
all liability to see to the application thereof.
SECTION 6.5 General Nature of Shares. All Shares shall be personal property entitling the Shareholders only to those rights provided in this Declaration or in the resolution creating any class or series of Shares. The legal ownership of the Trust Property and the right to conduct the business of the Trust are vested exclusively in the Trustees; the Shareholders shall have no interest therein other than beneficial interest in the Trust conferred by their Shares and shall have no right to compel any partition, division, dividend or distribution of the Trust or any of the Trust Property. The death of a Shareholder shall not terminate the Trust or give his legal representative any rights against other Shareholders, the Trustees or the Trust Property, except the right, exercised in accordance with applicable provisions of the Bylaws, to receive a new certificate for Shares in exchange for the certificate held by the deceased Shareholder.
ARTICLE VII
RESTRICTION ON TRANSFER,
ACQUISITION AND REDEMPTION OF EQUITY SHARES;
EXCHANGE FOR EXCESS SHARES
SECTION 7.1 Definitions. For the purposes of this Article VII, the following terms shall have the following meanings:
"Aggregate Share Ownership Limit" shall mean not more than 5.0% in value of the aggregate of the outstanding Equity Shares. The value of the outstanding Equity Shares shall be determined by the Board of Trustees in good faith, which determination shall be conclusive for all purposes hereof.
"Beneficial Ownership" shall mean ownership of Equity Shares by a Person, whether the interest in Equity Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.
"Charitable Beneficiary" shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 7.18, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
"Charitable Trust" shall mean any trust provided for in Section 7.13.
"Common Share Ownership Limit" shall mean not more than 5.0% (in value or in number of shares, whichever is more restrictive) of the aggregate number of the outstanding Common Shares. The number and value of outstanding Common Shares shall be determined by the Board of Trustees in good faith, which determination shall be conclusive for all purposes hereof.
"Constructive Ownership" shall mean ownership of Equity Shares by a Person, whether the interest in Equity Shares is held directly or
indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns" and "Constructively Owned" shall have the correlative meanings.
"Equity Shares" shall mean either Common Shares and Preferred Shares.
"Excepted Holder" shall mean a shareholder of the Trust for whom an Excepted Holder Limit is created by this Article VII or by the Board of Trustees pursuant to Section 7.10.
"Excepted Holder Limit" shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Trustees pursuant to Section 7.10, the percentage limit established by the Board of Trustees for such Excepted Holder pursuant to Section 7.10.
"Excess Shares" shall have the meaning ascribed to it in Section 7.2(b).
"Initial Date" shall mean the date of issuance of the Common Shares pursuant to the initial underwritten public offering of Common Shares.
The term "Market Price" on any date shall mean, with respect to any class or series of outstanding Equity Shares, the Closing Price for such Equity Shares on such date. The "Closing Price" on any date shall mean the last sale price for such Equity Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Equity Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Equity Shares are not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Equity Shares are listed or admitted to trading or, if such Equity Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Equity Shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Equity Shares selected by the Board of Trustees or, in the
event that no trading price is available for such Equity Shares, the fair market value of Equity Shares, as determined in good faith by the Board of Trustees.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Prohibited Owner" shall mean, with respect to any purported Transfer, any Person who, but for the provisions of Section 7.2, would Beneficially Own or Constructively Own Equity Shares in violation of the provisions of Section 7.2(a), and if appropriate in the context, shall also mean any Person who would have been the record owner of Equity Shares that the Prohibited Owner would have so owned.
"REIT" shall mean a real estate investment trust within the meaning of Section 856 of the Code.
"Restriction Termination Date" shall mean the first day after the Initial Date on which the Board of Trustees determines that it is no longer in the best interests of the Trust to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of Equity Shares set forth herein is no longer required in order for the Trust to qualify as a REIT.
"SDAT" shall mean the State Department of Assessments and Taxation of Maryland.
"Transfer" shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership or Constructive Ownership, or any agreement to take any such actions or cause any such events, of Equity Shares or the right to vote or receive dividends on Equity Shares, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Equity Shares or any interest in Equity Shares or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial or Constructive Ownership of Equity Shares; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms "Transferring" and "Transferred" shall have the correlative meanings.
"Trustee" shall mean the Person unaffiliated with the Trust and a Prohibited Owner, that is appointed by the Trust to serve as trustee of the Charitable Trust.
SECTION 7.2 Ownership Limitation.
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Equity Shares in excess of the Aggregate Share Ownership Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Common Shares in excess of the Common Share Ownership Limit and (3) no Excepted Holder shall Beneficially Own or Constructively Own Equity Shares in excess of the Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively Own Equity Shares to the extent that such Beneficial or Constructive Ownership of Equity Shares would result in the Trust being "closely held" within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial or Constructive Ownership that would result in the Trust owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Trust from such tenant would cause the Trust to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).
(iii) Notwithstanding any other provisions contained herein, any Transfer of Equity Shares (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system) that, if effective, would result in Equity Shares being beneficially owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such Equity Shares.
(b) Transfer in Trust. If any Transfer of Equity Shares (whether or not such Transfer is the result of a transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter-dealer quotation system) occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning Equity Shares in violation of Section 7.2(a)(i) or (ii),
(i) then that number of Equity Shares the Beneficial
or Constructive Ownership of which otherwise would cause such Person to
violate Section 7.2(a)(i) or (ii) (rounded to the nearest whole share)
(the "Excess Shares") shall be automatically transferred to a Charitable
Trust for the benefit of a Charitable Beneficiary, as described in
Section 7.13, effective as of the close of business on the Business Day
prior to the date of such Transfer, and such Person shall acquire no
rights in such Excess Shares; or
(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 7.2(a)(i) or (ii), then the Transfer of that number of such Excess Shares that otherwise would cause any Person to violate Section 7.2(a)(i) or (ii) shall be void ab initio, and the intended transferee shall acquire no rights in such Excess Shares.
SECTION 7.3 Prevention of Transfer. If the Board of Trustees or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2(a) or that a Person intends to acquire or has attempted to acquire Beneficial or Constructive Ownership of any Equity Shares in violation of Section 7.2(a) (whether or not such violation is intended), the Board of Trustees or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Trust to redeem Equity Shares, refusing to give effect to such Transfer on the books of the Trust or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfers or attempted Transfers or other events in violation of Section 7.2(a) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Trustees or a committee thereof.
SECTION 7.4 Notice to Trust. Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Equity Shares that will or may violate Section 7.2(a), or any Person who would have owned Equity Shares that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 7.2(b), shall immediately give written notice to the Trust of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Trust such other information as the Trust may request in order to determine the effect, if any, of such Transfer on the Trust's status as a REIT.
SECTION 7.5 Information for Trust. From and after the Initial Date and prior to the Restriction Termination Date:
(a) Every owner of more than five percent (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding Equity Shares, within 30 days after the end of each taxable year, shall give written notice to the Trust stating the name and address of such owner, the number of Equity Shares Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall provide to the Trust such additional information as the Trust may request in order to determine the effect, if
any, of such Beneficial Ownership on the Trust's status as a REIT and to ensure compliance with the Aggregate Share Ownership Limit.
(b) Each Person who is a Beneficial or Constructive Owner of Equity Shares and each Person (including the shareholder of record) who is holding Equity Shares for a Beneficial or Constructive Owner shall provide to the Trust such information as the Trust may request, in good faith, in order to determine the Trust's status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.
SECTION 7.6 Other Action by Board. Nothing contained in this Article VII shall limit the authority of the Board of Trustees to take such other action as it deems necessary or advisable to protect the Trust and the interests of the Shareholders by preservation of the Trust's status as a REIT.
SECTION 7.7 Ambiguities. In the case of an ambiguity in the application of any of the provisions of this Article VII, including any definition contained in Section 7.1, the Board of Trustees shall have the power to determine the application of the provisions of this Article VII with respect to any situation based on the facts known to it.
SECTION 7.8 Increase in Ownership Limit. Subject to the limitations provided in Section 7.9, the Board of Trustees may from time to time increase the Common Share Ownership Limit and the Aggregate Share Ownership Limit.
SECTION 7.9 Limitations on Changes in Ownership Limits. Prior to the modification of the Common Share Ownership Limit and the Aggregate Share Ownership Limit pursuant to Section 7.8, the Board of Trustees may require such opinions of counsel, affidavits, undertakings or agreements as it may deem necessary or advisable in order to determine or ensure the Trust's status as a REIT.
SECTION 7.10 Exceptions by Board.
(a) Subject to Section 7.2(a)(ii), the Board of Trustees, in its sole discretion, may exempt a Person from the Aggregate Share Ownership Limit and/or the Common Share Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if:
(i) the Board of Trustees obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no individual (defined to mean any Person who would be treated as an individual for purposes of Section 542(a)(2) of the Code (determined by taking into account Section 856(h)(3)(A) of the Code))
would Beneficially or Constructively Own Equity Shares in violation
Section 7.2(a)(ii);
(ii) such Person does not and represents that it will not own, actually or Constructively, an interest in a tenant of the Trust (or a tenant of any entity owned or controlled by the Trust) that would cause the Trust to own, actually or Constructively, more than a 5.0% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and the Board of Trustees obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Trust (or an entity owned or controlled by the Trust) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board of Trustees, rent from such tenant would not adversely affect the Trust's ability to qualify as a REIT, shall not be treated as a tenant of the Trust); and
(iii) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 7.2 through 7.7) will result in such Equity Shares being automatically transferred to a Charitable Trust in accordance with Sections 7.2(b) and 7.3.
(b) Prior to granting any exception pursuant to Section 7.10(a), the Board of Trustees may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Trustees in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Trust's status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Trustees may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.
(c) Subject to Section 7.2(a)(ii), an underwriter which participates in a public offering or a private placement of Equity Shares (or securities convertible into or exchangeable for Equity Shares) may Beneficially Own or Constructively Own Equity Shares (or securities convertible into or exchangeable for Equity Shares) in excess of the Aggregate Share Ownership Limit, the Common Share Ownership Limit or both such limits, but only to the extent necessary to facilitate such public offering or private placement.
(d) The Board of Trustees may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Common Share Ownership Limit.
SECTION 7.11 Legend. Each certificate for Equity Shares shall bear substantially the following legend:
The securities represented by this certificate are subject to restrictions on transfer for the purpose of the Trust's maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended. Except as otherwise provided pursuant to the Declaration of Trust, no Person may Beneficially Own Shares in excess of that number of Shares which equals the lesser of 5.0% (or such greater percentage as may be determined by the Board of Trustees) of (a) the number of outstanding Equity Shares of the Trust and (b) the value of outstanding Equity Shares of the Trust. Any Person who attempts or proposes to beneficially own Shares in excess of the above limitations must notify the Trust in writing at least 15 days prior to such proposed or attempted Transfer. All capitalized terms in this legend have the meanings defined in the Declaration of Trust of the Trust, a copy of which will be sent without charge to each Shareholder who so requests. If the restrictions on transfer are violated, the securities represented hereby will be designated and treated as Excess Shares which will be held in the Charitable Trust by the Trust.
Instead of the foregoing legend, the certificate may state that the Trust will furnish a full statement about certain restrictions on transferability to a shareholder on request and without charge.
SECTION 7.12 Severability. If any provision of this Article VII or any application of any such provision is determined to be void, invalid or unenforceable by any court of competent jurisdiction, the validity and enforceability of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.
SECTION 7.13 Ownership in Trust. Upon any purported Transfer or other event described in Section 7.2(b) that would result in a transfer of Equity Shares to a Charitable Trust, such Equity Shares shall be deemed to have been transferred to the Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Charitable Trust pursuant to Section 7.2(b). The Trustee shall be appointed by the Trust and shall be a Person unaffiliated with the Trust and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Trust as provided in Section 7.18.
SECTION 7.14 Status of Shares Held by the Trustee. Equity Shares held by the Trustee shall be issued and outstanding Equity Shares of the Trust. The Prohibited Owner shall have no rights in the shares held
by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Charitable Trust.
SECTION 7.15 Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends or other distributions with respect to Equity Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid to a Prohibited Owner prior to the discovery by the Trust that Equity Shares have been transferred to the Trustee shall be paid with respect to such Equity Shares by the Prohibited Owner to the Trustee upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividends or distributions so paid over to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Charitable Trust and, subject to Maryland law, effective as of the date that Equity Shares have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Trust that Equity Shares have been transferred to the Trustee and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Trust has already taken irreversible trust action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VII, until the Trust has received notification that Equity Shares have been transferred into a Charitable Trust, the Trust shall be entitled to rely on its share transfer and other shareholder records for purposes of preparing lists of shareholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of shareholders.
SECTION 7.16 Sale of Shares by Trustee. Within 20 days of
receiving notice from the Trust that Equity Shares have been transferred
to the Charitable Trust, the Trustee of the Charitable Trust shall sell
the shares held in the Charitable Trust to a person, designated by the
Trustee, whose ownership of the shares will not violate the ownership
limitations set forth in Section 7.2(a). Upon such sale, the interest of
the Charitable Beneficiary in the shares sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the Prohibited
Owner and to the Charitable Beneficiary as provided in this Section
7.16. The Prohibited Owner shall receive the lesser of (1) the price
paid by the Prohibited Owner for the shares or, if the Prohibited Owner
did not give value for the shares in connection with the event causing
the shares to be held in the Charitable Trust (e.g., in the case of a
gift, devise or other such transaction), the Market Price of the shares
on the day of the event causing
the shares to be held in the Charitable Trust and (2) the price per share received by the Trustee from the sale or other disposition of the shares held in the Charitable Trust. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Trust that Equity Shares have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 7.16, such excess shall be paid to the Trustee upon demand.
SECTION 7.17 Purchase Right in Shares Transferred to the Trustee. Equity Shares transferred to the Trustee shall be deemed to have been offered for sale to the Trust, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Trust, or its designee, accepts such offer. The Trust shall have the right to accept such offer until the Trustee has sold the shares held in the Charitable Trust pursuant to Section 7.16. Upon such a sale to the Trust, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.
SECTION 7.18 Designation of Charitable Beneficiaries. By written notice to the Trustee, the Trust shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Equity Shares held in the Charitable Trust would not violate the restrictions set forth in Section 7.2(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
SECTION 7.19 Priority of New York Stock Exchange, Inc. Transactions. Notwithstanding anything in this Article VII to the contrary, nothing herein shall preclude the settlement of a transaction entered into through the facilities of the New York Stock Exchange, Inc. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII.
SECTION 7.20 Enforcement. The Trust is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII.
SECTION 7.21 Non-Waiver. No delay or failure on the part of the Trust or the Board of Trustees in exercising any right hereunder shall operate as a waiver of any right of the Trust or the Board of Trustees, as the case may be, except to the extent specifically waived in writing.
ARTICLE VIII
SHAREHOLDERS
SECTION 8.1 Meetings of Shareholders. There shall be an annual meeting of the Shareholders, to be held at such time and place as shall be determined by or in the manner prescribed in the Bylaws at which the Trustees shall be elected and any other proper business may be conducted. Except as otherwise provided in this Declaration of Trust, special meetings of Shareholders may be called in the manner provided in the Bylaws. If there are no Trustees, the officers of the Trust shall promptly call a special meeting of the Shareholders entitled to vote for the election of successor Trustees. Any meeting may be adjourned and reconvened as the Trustees determine or as provided in the Bylaws.
SECTION 8.2 Voting Rights of Shareholders.
(a) Subject to the provisions of any class or series of Shares then outstanding, the Shareholders shall be entitled to vote only on the following matters: (a) election or removal of Trustees as provided in Sections 8.1 and 2.3; (b) amendment of any provision of this Declaration of Trust as provided in Section 10.1; (c) termination of the Trust as provided in Section 11.2; (d) reorganization of the Trust as provided in Section 10.2; (e) merger, consolidation or Share exchange of the Trust, or the sale or disposition of substantially all of the Trust Property (except for a merger of any entity into the Trust in which the Trust owns 90% or more of the entire equity interests in such entity) as provided in Section 10.3; (f) any matter regarding the Operating Partnership requiring the affirmative vote of Shares pursuant to Section 3.2(k); and (g) any matter for which a vote of Shareholders is required by a national securities exchange on which the Shares are traded. Except with respect to the foregoing matters, no action taken by the Shareholders at any meeting shall in any way bind the Trustees.
(b) The submission of any action to the shareholders for their consideration (other than the removal of one or more Trustees) shall first be approved by the Board of Trustees.
ARTICLE IX
LIABILITY OF SHAREHOLDERS, TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS
AND TRANSACTIONS BETWEEN THEM AND THE TRUST
SECTION 9.1 Limitation of Shareholder Liability. No Shareholder shall be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Trust by reason of his being a Shareholder, nor shall any Shareholder be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with the Trust Property or the affairs of the Trust.
SECTION 9.2 Limitation of Trustee and Officer Liability. To the
maximum extent that Maryland law in effect from time to time permits
limitation of the liability of trustees and officers of a real estate
investment trust, no Trustee or officer of the Trust shall be liable to
the Trust or to any Shareholder for money damages. Neither the amendment
nor repeal of this Section, nor the adoption or amendment of any other
provision of this Declaration of Trust inconsistent with this Section,
shall apply to or affect in any respect the applicability of the
preceding sentence with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption. In the absence of
any Maryland statute limiting the liability of trustees and officers of
a Maryland real estate investment trust for money damages in a suit by
or on behalf of the Trust or by any Shareholder, no Trustee or officer
of the Trust shall be liable to the Trust or to any Shareholder for
money damages except to the extent that (i) the Trustee or officer
actually received an improper benefit or profit in money, property or
services, in which case the liability shall not exceed the amount of the
benefit or profit in money, property or services actually received; or
(ii) a judgment or other final adjudication adverse to the Trustee or
officer is entered in a proceeding based on a finding in the proceeding
that, the Trustee's or officer's action or failure to act was the result
of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.
SECTION 9.3 Express Exculpatory Clauses in Instruments. Neither the Shareholders nor the Trustees, officers, employees or agents of the Trust shall be liable under any written instrument creating an obligation of the Trust, and all Persons shall look solely to the Trust Property for the payment of any claim under or for the performance of that instrument. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any Shareholder, Trustee, officer, employee or agent liable thereunder to any third party, nor shall the Trustees or any officer, employee or agent of the Trust be liable to anyone for such omission.
SECTION 9.4 Indemnification and Advancement for Expenses. The Trust shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any Person who is a present or former
Shareholder, Trustee, officer, employee or agent of the Trust or (b) any
Person who, while a Shareholder, Trustee or officer of the Trust and at
the express request of the Trust, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, shareholder, partner or
trustee of such corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, from and against all claims and
liabilities to which such Person may become subject by reason of his
being or having been a Shareholder, Trustee or officer or by reason of
having served in any of the capacities described in (b) above at the
request of the Trust while a Shareholder, Trustee or officer. The Trust
shall have the power, with the approval of its Board of Trustees, to
provide such indemnification and advancement of expenses to a Person who
served a predecessor of the Trust in any of the capacities described in
(a) or (b) above and to any employee or agent of the Trust or a
predecessor of the Trust.
SECTION 9.5 Transactions Between the Trust and its Trustees, Officers, Employees and Agents.
(a) Subject to any express restrictions in this Declaration of Trust or adopted by the Trustees in the Bylaws or by resolution, the Trust may enter into any contract or transaction of any kind (including without limitation for the purchase or sale of property or for any type of services, including those in connection with underwriting or the offer or sale of Securities of the Trust) with any Person, including any Trustee, officer, employee or agent of the Trust or any Person Affiliated with a Trustee, officer, employee or agent of the Trust, whether or not any of them has a financial interest in such transaction.
(b) Without limiting any other procedures available by law or otherwise to the Trust, the Board of Trustees may authorize any agreement of the character described in Section 3.2 or other transaction with any person, corporation, association, company, trust, partnership (limited or general) or other organization, although one or more of the Trustees or officers of the Trust may be a party to any such agreement or an officer, director, stockholder or member of such other party, and no such agreement or transaction shall be invalidated or rendered void or voidable solely by reason of the existence of any such relationship if the existence is disclosed or known to the Board of Trustees, and the contract or transaction is approved by the Board of Trustees (including the affirmative vote of a majority of the disinterested Trustees even if they constitute less than a quorum of the Board). Any Trustee who is also a director, officer, stockholder or member of such other entity may be counted in determining the existence of a quorum at any meeting of the Board of Trustees considering such matter.
(c) Notwithstanding anything in Section 9.5(b) to the contrary, subsequent to the Closing Date of the Initial Public Offering (as such term is defined in Article VII), the affirmative vote of a majority of the votes cast by the independent Trustees (even if they constitute less than a quorum of the Board) shall be required: (i) to approve the purchase by the Trust or its subsidiaries (including the Operating Partnership and its subsidiaries) of any of the Excluded Assets; (ii) to approve the sale or refinancing of any properties of the Trust or its subsidiaries (including the Operating Partnership and its subsidiaries) contributed by the Rouse Group on or prior to the Closing Date of the Initial Public Offering; and (iii) to approve or adopt, or to waive any right of the Trust (including the waiver of a right to enforce any existing right) under, or to amend in a manner so as to reduce, limit or otherwise eliminate any right of the Trust or any of its subsidiaries under, any agreement or transaction between the Trust or any of its subsidiaries and any one or more of the Rouse Group or the Rouse Senior Executives or their Affiliates, including, but not limited to, employment agreements and agreements pursuant to which the Rouse Group or the Rouse Senior Executives contributed their respective interests in properties to the Operating Partnership.
ARTICLE X
AMENDMENT; REORGANIZATION; MERGER, ETC.
SECTION 10.1 Amendment.
(a) This Declaration of Trust may be amended by the
affirmative vote of the holders of not less than a majority of the
Shares then outstanding and entitled to vote thereon, except that
Section 2.3, Section 3.2(k), Article VII, Section 8.2, Section 9.3,
Article X and Section 11.2 may be amended only by the affirmative vote
of not less than two-thirds of the Shares then outstanding and entitled
to vote.
(b) The Trustees, by a two-thirds vote, may amend provisions of this Declaration of Trust from time to time to enable the Trust to qualify as a real estate investment trust under the REIT Provisions of the Code or under Title 8.
(c) An amendment to this Declaration of Trust shall become effective as provided in Section 12.5.
(d) This Declaration of Trust may not be amended except as provided in this Section 10.1.
SECTION 10.2 Reorganization. Subject to the provisions of any class or series of Shares at the time outstanding, the Trustees shall have the power to (a) cause the organization of a corporation, association, trust or other organization to take over the Trust Property and carry on the
affairs of the Trust; (b) merge the Trust into, or sell, convey and transfer the Trust Property to, any such corporation, association, trust or organization in exchange for Securities thereof or beneficial interests therein, and the assumption by the transferee of the liabilities of the Trust; and (c) thereupon terminate the Trust and deliver such Securities or beneficial interests ratably among the Shareholders according to the respective rights of the class or series of Shares held by them; provided that any such action shall have been approved, at a meeting of the Shareholders called for the purpose, by the affirmative vote of the holders of not less than two-thirds of the Shares then outstanding and entitled to vote thereon.
SECTION 10.3 Merger, Consolidation or Sale of Trust Property. Subject to the provisions of any class or series of Shares at the time outstanding, the Trustees shall have the power to (a) merge the Trust into another entity, (b) consolidate the Trust with one or more other entities into a new entity or (c) sell or otherwise dispose of all or substantially all of the Trust Property; provided, that such action shall have been approved, at a meeting of the Shareholders called for the purpose, by the affirmative vote of the holders of not less than (i) two-thirds, if the Trust is not the surviving entity in any such merger or consolidation or in the event of a proposed sale or disposition of all or substantially all of the Trust Property, or (ii) a majority, in all other cases, of the Shares then outstanding and entitled to vote thereon.
ARTICLE XI
DURATION AND TERMINATION OF TRUST
SECTION 11.1 Duration of Trust. The Trust shall continue perpetually unless terminated pursuant to Section 11.2 or pursuant to any applicable provision of Title 8.
SECTION 11.2 Termination of Trust.
(a) Subject to the provisions of any class or series of Shares at the time outstanding, the Trust may be terminated at any meeting of Shareholders called for that purpose, by the affirmative vote of the holders of not less than two-thirds of the Shares then outstanding and entitled to vote thereon. Upon the termination of the Trust:
(i) The Trust shall carry on no business except for the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust and all of the powers of the Trustees under this Declaration of Trust shall continue, including the powers to fulfill or discharge the Trust's contracts, collect its assets, sell, convey, assign,
exchange, transfer or otherwise dispose of all or any part of the remaining Trust Property to one or more Persons at public or private sale for consideration which may consist in whole or in part of cash, Securities or other Property of any kind, discharge or pay its liabilities and do all other acts appropriate to liquidate its business.
(iii) After paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and agreements as they deem necessary for their protection, the Trustees may distribute the remaining Trust Property, in cash or in kind or partly each, among the Shareholders according to their respective rights, so that after payment in full or the setting apart for payment of such preferential amounts, if any, to which the holders of any Shares (other than Common Shares) at the time outstanding shall be entitled, the remaining Trust Property available for payment and distribution to Shareholders shall, subject to any participating or similar rights of Shares (other than Common Shares) at the time outstanding, be distributed ratably among the holders of Common Shares at the time outstanding.
(b) After termination of the Trust, the liquidation of its business, and the distribution to the Shareholders as herein provided, a majority of the Trustees shall execute and file with the Trust's records a document certifying that the Trust has been duly terminated, and thereupon the Trustees shall be discharged from all liabilities and duties hereunder, and the rights and interests of all Shareholders shall cease.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 Governing Law. This Declaration of Trust is executed by the undersigned Trustees and delivered in the State of Maryland with reference to the laws thereof, and the rights of all parties and the validity, construction and effect of every provision hereof shall be subject to and construed according to the laws of the State of Maryland without regard to conflicts of laws provisions thereof.
SECTION 12.2 Reliance by Third Parties. Any certificate shall be final and conclusive as to any Persons dealing with the Trust if executed by an individual who, according to the records of the Trust or of any recording office in which this Declaration of Trust may be recorded, appears to be the Secretary or an Assistant Secretary of the Trust or a Trustee, and if certifying to: (a) the number or identity of Trustees, officers of the Trust or Shareholders; (b) the due authorization of the execution of any document; (c) the action or vote taken, and the existence of a quorum, at a meeting of Trustees or Shareholders; (d) a copy of this Declaration of Trust or of the Bylaws as a true and complete copy as then
in force; (e) an amendment to this Declaration of Trust; (f) the termination of the Trust; or (g) the existence of any fact which relates to the affairs of the Trust. No purchaser, lender, transfer agent or other Person shall be bound to make any inquiry concerning the validity of any transaction purporting to be made on behalf of the Trust by the Trustees or by any officer, employee or agent of the Trust.
SECTION 12.3 Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if the Trustees shall determine, with the advice of counsel, that any one or more of such provisions (the "Conflicting Provisions") are in conflict with the REIT Provisions of the Code, Title 8 or other applicable federal or state laws, the Conflicting Provisions shall be deemed never to have constituted a part of this Declaration of Trust, even without any amendment of this Declaration of Trust pursuant to Section 10.1; provided, however, that such determination by the Trustees shall not affect or impair any of the remaining provisions of this Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination. No Trustee shall be liable for making or failing to make such a determination.
(b) If any provision of this Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such holding shall not in any manner affect or render invalid or unenforceable such provision in any other jurisdiction or any other provision of this Declaration of Trust in any jurisdiction.
SECTION 12.4 Construction. In this Declaration of Trust, unless the context otherwise requires, words used in the singular or in the plural include both the plural and singular and words denoting any gender include all genders. The title and headings of different parts are inserted for convenience and shall not affect the meaning, construction or effect of this Declaration of Trust. In defining or interpreting the powers and duties of the Trust and its Trustees and officers, reference may be made, to the extent appropriate and not inconsistent with the Code or Title 8, to Titles 1 through 3 of the Corporations and Associations Article of the Annotated Code of Maryland. In furtherance and not in limitation of the foregoing, in accordance with the provisions of Title 3, Subtitles 6 and 7, of the Corporations and Associations Article of the Annotated Code of Maryland, the Trust shall be included within the definition of "corporation" for purposes of such provisions except to the extent provided in the By-laws.
SECTION 12.5 Approvals. This Amended and Restated Declaration of Trust has been duly advised by the Board of Trustees and approved by the shareholders of the Trust as required by law. The
principal office, resident agent, and names and addresses of Trustees currently in office, are as set forth in the Amended and Restated Declaration of Trust.
SECTION 12.6 Recordation. This Declaration of Trust and any amendment hereto shall be filed for record with the State Department of Assessments and Taxation of Maryland and may also be filed or recorded in such other places as the Trustees deem appropriate, but failure to file for record this Declaration of Trust or any amendment hereto in any office other than in the State of Maryland shall not affect or impair the validity or effectiveness of this Declaration of Trust or any amendment hereto. A restated Declaration of Trust shall, upon filing, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the original Declaration of Trust and the various amendments thereto."
THIRD: The Restated Declaration of Trust of the Company as set forth above has been duly advised by the board of trustees of the Company as required by law.
FOURTH: The Declaration of Trust is not amended by these
Articles of Restatement.
FIFTH: The current address of the principal office of the Trust
|
is 11 East Chase Street, Baltimore, Maryland 21202.
SIXTH: The name and address of the current resident agent of the Trust is CSC Lawyers Incorporating Service Company, 11 East Chase Street, Baltimore, Maryland 21202.
SEVENTH: The number of trustees and the names of those currently in office are as follows:
The current Class I Trustees are:
M. Leanne Lachman c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
J. Anthony Hayden c/o 65 Valley Stream Parkway, Suite
100 Malvern, PA 19355
|
The current Class II Trustees are:
Frederick F. Buchholz c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
Thomas C. DeLoach, Jr. c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
Daniel P. Garton c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
Stephen B. Siegel c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
|
The current Class III Trustees are:
William P. Hankowsky c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
David L. Lingerfelt c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
John A. Miller c/o 65 Valley Stream Parkway, Suite 100
Malvern, PA 19355
|
EIGHTH: The undersigned President acknowledges these Articles of Restatement to be the act of the Trust and as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of the President's knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
IN WITNESS WHEREOF, the Trust has caused these Articles of Restatement to be signed in its name and on its behalf by its President and attested to by its Secretary on this 21st day of June, 2004.
ATTEST: LIBERTY PROPERTY TRUST /s/ James J. Bowes By:/s/ William P. Hankowsky (SEAL) -------------------------------- -------------------------------- |
James J. Bowes, Secretary William P. Hankowsky, President
EXHIBIT 10.1
LIBERTY PROPERTY TRUST
AMENDED AND RESTATED SHARE INCENTIVE PLAN
1. Purpose. The Liberty Property Trust Amended and Restated Share Incentive Plan (the "Plan") is intended to recognize the contributions made to Liberty Property Trust (the "Company") by key employees, consultants and advisors of the Company or an Affiliate (including employees who are members of the Board of Trustees) of the Company or any Affiliate, to provide such persons with additional incentive to devote themselves to the future success of the Company or an Affiliate, and to improve the ability of the Company or an Affiliate to attract, retain, and motivate individuals upon whom the Company's sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company through receipt of rights to acquire common shares of beneficial interest, $.001 par value per share (the "Shares"), in the Company, and through transfers of Shares subject to conditions of forfeiture. In addition, the Plan is intended as an additional incentive to members of the Board of Trustees (the "Trustees") who are not employees of the Company or an Affiliate to serve on the Board of Trustees and to devote themselves to the future success of the Company by providing them with an opportunity to acquire or increase their proprietary interest in the Company through the receipt of Options to acquire Shares.
2. Definitions. Unless the context clearly indicates otherwise, the following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent corporation or a subsidiary corporation with respect to the Company within the meaning of Section 424(e) or (f) of the Code. In addition, "Affiliate" means any other entity in which the Company owns an interest which would be an Affiliate as defined in the preceding sentence but for the fact that such entity is not a corporation. Employees of any such non-corporate affiliate shall not be granted ISOs under the Plan.
(b) "Award" means a grant of Shares subject to conditions of forfeiture made pursuant to the terms of the Plan.
(c) "Award Agreement" means the agreement between the Company and a Grantee with respect to an Award made pursuant to the Plan.
(d) "Awardee" means a person to whom an Award has been granted pursuant to the Plan.
(e) "Board of Trustees" means the Board of Trustees of the Company.
(f) "Change of Control" has the meaning as set forth in
Section 10 of the Plan.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" has the meaning set forth in Section 3 of the Plan.
(i) "Company" means Liberty Property Trust, a Maryland real estate investment trust.
(j) "Disability" has the meaning set forth in Section 22(e)(3) of the Code.
(k) "Fair Market Value" has the meaning set forth in Subsection 8(b) of the Plan.
(l) "Grantee" means a person to whom an Option or an Award has been granted pursuant to the Plan.
(m) "ISO" means an Option granted under the Plan which is
intended to qualify as an "incentive stock option" within the meaning of
Section 422(b) of the Code.
(n) "Non-employee Trustee" means a member of the Board of Trustees who is not an employee of the Company or an Affiliate and who qualifies both as a "non-employee director" as that term is used in Rule 16b-3 and as an "outside director" as that term is used in applicable IRS regulations promulgated under Code Section 162(m).
(o) "Non-qualified Stock Option" means an Option granted under the Plan which is not intended to qualify, or otherwise does not qualify, as an "incentive stock option" within the meaning of Section 422(b) of the Code.
(p) "Option" means either an ISO or a Non-qualified Stock Option granted under the Plan.
(q) "Optionee" means a person to whom an Option has been granted under the Plan, which Option has not been exercised and has not expired or terminated.
(r) "Option Document" means the document described in
Section 8 or Section 9 of the Plan, as applicable, which sets forth the
terms and conditions of each grant of Options.
(s) "Option Price" means the price at which Shares may be purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b) or Subsection 9(a) of the Plan.
(t) "Restricted Share" means a Share subject to conditions of forfeiture and transfer granted to any person pursuant to an Award under the Plan.
(u) "Retirement" shall mean a termination of an Optionee's
employment or services for the Company or an Affiliate at any time after
such Optionee has (i) reached age 65, (ii) attained age 55 with at least
10 years of employment or services for the Company or an Affiliate, or
(iii) attained an age of 55 or greater which when combined with the
Optionee's years of employment or services for the Company or an
Affiliate equals 65.
(v) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or any successor rule.
(w) "Section 16 Officer" means any person who is an "officer" within the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934, as amended, or any successor rule.
(x) "Shares" means the shares of beneficial interest, $.01 par value per share, of the Company.
(y) "Trustee" means a member of the Board of Trustees.
3. Administration of the Plan. The Plan shall be administered by
the Board of Trustees of the Company if all members of the Board of Trustees are
Non-employee Trustees; provided, however, that the Board of Trustees may
designate a committee or committee(s) of the Board of Trustees composed of two
or more of its Trustees to administer the Plan in its stead. If any member of
the Board of Trustees is not a Non-employee Trustee, the Board of Trustees shall
(i) designate a committee composed of two or more Trustees, each of whom is a
Non-employee Trustee (the "Non-employee Trustee Committee"), to operate and
administer the Plan in its stead, (ii) designate two committees to operate and
administer the Plan in its stead, one of such committees composed of two or more
of its Non-employee Trustees (the "Non-employee Trustee Committee") to operate
and administer the Plan with respect to the Company's Section 16 Officers and
the Trustees who are not members of the Non-employee Trustee Committee, and
another committee composed of two or more Trustees (which may include Trustees
who are not Non-employee Trustees) to operate and administer the Plan with
respect to persons other than Section 16 Officers or Trustees or (iii) designate
only one committee composed of two or more Non-employee Trustees (the
"Non-employee Trustee Committee") to operate and administer the Plan with
respect to the Company's Section 16 Officers and Trustees (other than those
Trustees serving on the Non-employee Trustee Committee) and itself operate and
administer the Plan with respect to persons other than Section 16 Officers or
Trustees. Any of such committees designated by the
Board of Trustees, and the Board of Trustees itself in its administrative capacity with respect to the Plan, is referred to as the "Committee." With the exception of the timing of grants of Options, the price at which Shares may be purchased, and the number of Shares covered by Options granted to each member of the Non-employee Trustee Committee, all of which shall be as specifically set forth in Section 9, the other provisions set forth herein, as it pertains to members of the Non-employee Trustee Committee, shall be administered by the Board of Trustees.
(a) Meetings. The Committee shall hold meetings at such times and places as it may determine. Acts approved at a meeting by a majority of the members of the Committee or acts approved in writing by the unanimous consent of the members of the Committee shall be the valid acts of the Committee.
(b) Grants and Awards. Except with respect to Options
granted under Subsection 8(j) and to Non-employee Trustee Committee
Members pursuant to Section 9, the Committee shall from time to time at
its discretion direct the Company to grant Options and Awards pursuant
to the terms of the Plan. The Committee shall have plenary authority to
(i) determine the persons to whom, and the times at which Options and
Awards are to be granted as well as the terms applicable to Options and
Awards, (ii) determine the type of Option to be granted and the number
of Shares subject thereto, (iii) determine the Awardees to whom, and the
times at which, Restricted Shares are granted, the number of Shares
awarded, and the purchase price per Share, if any, and (iv) approve the
form and terms and conditions of the Option Documents and Award
Agreements; all subject, however, to the express provisions of the Plan.
In making such determinations, the Committee may take into account the
nature of the Grantee's services and responsibilities, the Grantee's
present and potential contribution to the Company's success and such
other factors as it may deem relevant. Notwithstanding the foregoing,
grants of Options to Non-employee Trustee Committee Members shall be
made exclusively in accordance with Section 9 and such other provisions
of the Plan that specifically apply to such Options. The interpretation
and construction by the Committee of any provisions of the Plan or of
any Option or Award granted under it shall be final, binding and
conclusive.
(c) Exculpation. No member of the Committee shall be personally liable for monetary damages as such for any action taken or any failure to take any action in connection with the administration of the Plan or the granting of Options or Awards thereunder unless (i) the member of the Committee has breached or failed to perform the duties of his office under applicable law and (ii) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness; provided, however, that the provisions of this Subsection 3(c) shall not apply to the responsibility or liability of a member of the Committee pursuant to any criminal statute or to the liability of a member of the Committee for the payment of taxes pursuant to local, state or federal law.
(d) Indemnification. Service on the Committee shall constitute service as a member of the Board of Trustees. Each member of the Committee shall be entitled without further act on his part to indemnity from the Company to the fullest extent provided by applicable law and the Company's Declaration of Trust and/or By-laws in connection with or arising out of any action, suit or proceeding with respect to the administration of the Plan or the granting of Options or Awards thereunder in which he or she may be involved by reason of his or her being or having been a member of the Committee, whether or not he or she continues to be such member of the Committee at the time of the action, suit or proceeding.
4. Grants and Awards under the Plan. Options under the Plan may be in the form of a Non-qualified Stock Option, an ISO, or Awards of Restricted Shares, or any combination thereof, at the discretion of the Committee.
5. Eligibility. All key employees, consultants and advisors of the Company or an Affiliate and members of the Board of Trustees shall be eligible to receive Options and Awards hereunder. The Committee, in its sole discretion, shall determine whether an individual qualifies as a key employee. Notwithstanding anything to the contrary contained herein, consultants and advisors shall only be eligible to receive Options or Awards provided bona fide services shall be rendered by such persons, and such services are not in connection with a capital raising transaction.
6. Shares Subject to the Plan. The aggregate maximum number of Shares for which Options or Awards may be granted pursuant to the Plan (including Shares for which Options or Awards were granted under the Plan prior to this restatement) is Eleven Million Four Hundred Twenty-Six Thousand Two Hundred Fifty Six (11,426,256), subject to adjustment as provided in Section 11 of the Plan. The Shares shall be issued from authorized and unissued Shares or Shares held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, or if Shares granted pursuant to an Award have been conveyed back to the Company pursuant to the terms of an Award Agreement, the Shares for which the Option was not exercised or the Shares that were conveyed back to the Company may again be the subject of one or more Options or Awards granted pursuant to the Plan.
7. Term of the Plan. The amended and restated Plan is effective as of March 23, 2004 (the "Approval Date"), subject to the approval of the amended and restated Plan within twelve months after the Approval Date by a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting interests of the Company is, either in person or by proxy, present and voting, or by a method and in a degree that would be treated as adequate under applicable state law in the case of an action requiring shareholder approval. No Option or Award may be granted under the Plan ten years after the Approval Date.
8. Option Documents and Terms. Each Option granted under the Plan shall be a Non-qualified Stock Option unless the Option shall be specifically designated at the
time of grant to be an ISO for federal income tax purposes. To the extent any Option designated an ISO is determined for any reason not to qualify as an incentive stock option within the meaning of Section 422 of the Code, such Option shall be treated as a Non- qualified Stock Option for all purposes under the provisions of the Plan. Options granted pursuant to the Plan shall be evidenced by the Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan. However, the provisions of this Section 8 shall not be applicable to Options granted to non-employee members of the Board of Trustees, except as otherwise provided in Subsection 9(c).
(a) Number of Option Shares. Each Option Document shall state the number of Shares to which it pertains. An Optionee may receive more than one Option, which may include Options which are intended to be ISO's and Options which are not intended to be ISO's, but only on the terms and subject to the conditions and restrictions of the Plan. Notwithstanding anything to the contrary contained herein, no employee shall be granted Options to acquire more than Seven Hundred Fifty Thousand (750,000) Shares during any calendar year.
(b) Option Price. Each Option Document shall state the Option Price which, for a Non-qualified Stock Option, may be less than, equal to, or greater than the Fair Market Value of the Shares on the date the Option is granted and, for an ISO, shall be at least 100% of the Fair Market Value of the Shares on the date the Option is granted as determined by the Committee in accordance with this Subsection 8(b); provided, however, that if an ISO is granted to an Optionee who then owns, directly or by attribution under Section 424(d) of the Code, interests in the Company or any parent or subsidiary corporation possessing more than ten percent of the total combined voting power of all classes of interests of the Company or such parent or subsidiary, then the Option Price shall be at least 110% of the Fair Market Value of the Shares on the date the Option is granted. If the Shares are traded in a public market, then the Fair Market Value per Share shall be, if the Shares are listed on a national securities exchange or included in the NASDAQ National Market System, the last reported sale price thereof on the relevant date, or, if the Shares are not so listed or included (or if there was no reported sale on the relevant date), the mean between the last reported "bid" and "asked" prices thereof on the relevant date, as reported on NASDAQ or by the exchange, as applicable, or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable, or, in the event such method of determination of fair market value is determined to be inaccurate or such information as is needed for such determination as set forth above is not available, as the Committee determines in good faith.
(c) Exercise. No Option shall be deemed to have been exercised prior to the receipt by the Company of written notice of such exercise and of payment
in full of the Option Price for the Shares to be purchased. Each such
notice shall specify the number of Shares to be purchased and shall
(unless the Shares are covered by a then current registration statement
or qualified Offering Statement under Regulation A under the Securities
Act of 1933, as amended (the "Act"), contain the Optionee's
acknowledgment in form and substance satisfactory to the Company that
(a) such Shares are being purchased for investment and not for
distribution or resale (other than a distribution or resale which, in
the opinion of counsel satisfactory to the Company, may be made without
violating the registration provisions of the Act), (b) the Optionee has
been advised and understands that (i) the Shares have not been
registered under the Act and are "restricted securities" within the
meaning of Rule 144 under the Act and are subject to restrictions on
transfer and (ii) the Company is under no obligation to register the
Shares under the Act or to take any action which would make available to
the Optionee any exemption from such registration, (c) such Shares may
not be transferred without compliance with all pplicable federal and
state securities laws, and (d) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions imposed
under the Option Documents may be endorsed on the certificates.
Notwithstanding the foregoing, if the Company determines that issuance
of Shares should be delayed pending (A) registration under federal or
state securities laws, (B) the receipt of an opinion of counsel
satisfactory to the Company that an appropriate exemption from such
registration is available, (C) the listing or inclusion of the Shares on
any securities exchange or an automated quotation system or (D) the
consent or approval of any governmental regulatory body whose consent or
approval is deemed necessary in connection with the issuance of such
Shares, the Company may defer exercise of any Option granted hereunder
until any of the events described in this sentence has occurred.
(d) Medium of Payment. An Optionee shall pay for Shares (i) in cash, (ii) by certified or cashier's check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve, including payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. Furthermore, the Committee may provide in an Option Document that payment may be made in whole or in part in Shares held by the Optionee. If payment is made in whole or in part in Shares, then the Optionee shall deliver to the Company certificates registered in the name of such Optionee representing the Shares owned by such Optionee, free of all liens, claims and encumbrances of every kind and having an aggregate Fair Market Value on the date of delivery that is at least as great as the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by the payment in Shares, endorsed in blank or accompanied by stock powers duly endorsed in blank by the Optionee. In the event that certificates for Shares delivered to the Company represent a number of Shares in excess of the number of Shares required to make payment for the Option Price of the Shares (or relevant portion thereof) with respect to which such Option is to be exercised by payment in Shares, the certificate or certificates issued to the Optionee shall
represent (i) the Shares in respect of which payment is made, and (ii) such excess number of Shares. Notwithstanding the foregoing, the Committee may impose from time to time such limitations and prohibitions on the use of Shares to exercise an Option as it deems appropriate.
(e) Termination of Options.
(i) No Option shall be exercisable after the first to occur of the following:
(A) Expiration of the Option term specified in the Option Document, which, in the case of an ISO, shall not occur after (1) ten years from the date of grant, or (2) five years from the date of grant of an ISO if the Optionee on the date of grant owns, directly or by attribution under Section 424(d) of the Code, interests in the Company or any parent or subsidiary corporation possessing more than ten percent (10%) of the total combined voting power of all classes of interests of the Company or such parent or subsidiary;
(B) The third month anniversary of the date of termination of the Optionee's services or employment with the Company or an Affiliate for any reason other than death, Disability or Retirement, or the thirty-sixth month anniversary of the date of termination of the Optionee's services or employment with the Company or an Affiliate as a result of the Optionee's death, Disability or Retirement;
(C) A finding by the Committee, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has breached his or her employment or service contract with the Company or an Affiliate, or has been engaged in disloyalty to the Company or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, or has disclosed trade secrets or confidential information of the Company or an Affiliate. In such event, in addition to immediate termination of the Option, the Optionee shall automatically forfeit all Shares for which the Company has not yet delivered the Share certificates upon refund by the Company of the Option Price. Notwithstanding anything herein to the contrary, the Company may withhold delivery of Share certificates pending the resolution of any inquiry that could lead to a finding resulting in a forfeiture;
(D) The date, if any, set by the Board of Trustees as an accelerated expiration date in the event of the liquidation or dissolution of the Company; or
(E) The occurrence of such other event or events as may be set forth in the Option Document as causing an accelerated expiration of the Option.
(ii) Notwithstanding the foregoing, the Committee may
extend the period during which all or any portion of an Option
may be exercised to a date no later than the Option term
specified in the Option Document pursuant to Subsection
8(e)(i)(A), provided that any change pursuant to this Subsection
8(e)(ii) which would cause an ISO to become a Non-qualified
Stock Option may be made only with the consent of the Optionee.
(iii) The terms of an executive severance agreement or other agreement between the Company and an Optionee, approved by the Committee, whether entered into prior or subsequent to the grant of an Option, which provide for Option exercise dates later than those set forth in Subsection 8(e)(i) but permitted by this Subsection 8(e)(ii) shall be deemed to be Option terms approved by the Committee and consented to by the Optionee.
(iv) Unless otherwise expressly permitted in the Option Document, no Option granted pursuant to this Section 8 shall be exercisable following the termination of the Optionee's services as a member of the Board of Trustees or employment with the Company or any Affiliate for any reason other than death, Disability, or Retirement with respect to any Shares in excess of those which could have been acquired by exercise of the Option on the date of such termination of services or employment. Unless otherwise specified in the Option Document, upon termination of the Optionee's services as a member of the Board of Trustees or employment with the Company or any Affiliate as a result of death, Disability, or Retirement, the portion of the Option not exercisable upon such termination shall become exercisable.
(f) Transfers. No Option granted under the Plan may be transferred, except by will or by the laws of descent and distribution. During the lifetime of the person to whom an Option is granted, such Option may be exercised only by such person. Notwithstanding the foregoing, (1) a Non-qualified Stock Option may be transferred pursuant to the terms of a "qualified domestic relations order," within the meaning of Sections 401(a)(13) and 414(p) of the Code or within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, and (2) the Committee may provide, in an Option Document, that an Optionee may transfer Options to his or her children, grandchildren or spouse or
to one or more trusts for the benefit of such family members or to partnerships in which such family members are the only partners (a "Family Transfer"), provided that the Optionee receives no consideration for such Family Transfer and the Option Documents relating to Options transferred in such Family Transfer continue to be subject to the same terms and conditions that were applicable to such Options immediately prior to the Family Transfer.
(g) Limitation on ISO Grants. In no event shall the aggregate Fair Market Value of the Shares with respect to which ISOs issued under the Plan and incentive stock options issued under any other incentive stock option plans of the Company or its Affiliates which are exercisable for the first time by the Optionee during any calendar year exceed $100,000. Any ISOs issued in excess of this limitation shall be treated as Non-qualified Stock Options issued under the Plan. For purposes of this subsection 8(g), the Fair Market Value of Shares shall be determined as of the date of grant of the ISO or other incentive stock option.
(h) Other Provisions. Subject to the provisions of the Plan, the Option Documents shall contain such other provisions including, without limitation, provisions authorizing the Committee to accelerate the exercisability of all or any portion of an Option granted pursuant to the Plan, additional restrictions upon the exercise of the Option or additional limitations upon the term of the Option, as the Committee shall deem advisable.
(i) Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Option Documents issued to an Optionee, subject to the Optionee's consent if such amendment is not favorable to the Optionee, except that the consent of the Optionee shall not be required for any amendment made pursuant to Subsection 8(e)(i)(C) or Section 10 of the Plan, as applicable.
(j) Five or Fewer. No Options shall be granted under the Plan if, taking into account the grant of such options, five or fewer individuals would own more than 50% of the outstanding Shares, as computed for purposes of Code Section 856(h).
9. Special Provisions Relating to Grants of Options to Non-Employee Members of the Board of Trustees. Options granted pursuant to the Plan to non-employee members of the Board of Trustees shall be granted, without any further action by the Committee, in accordance with the terms and conditions set forth in this Section 9. Options granted pursuant to this Section 9 shall be evidenced by Option Documents in such form as the Committee shall from time to time approve, which Option Documents shall comply with and be subject to the following terms and conditions and such other terms and conditions as the Committee shall from time to time require which are not inconsistent with the terms of the Plan and would not cause a Non-employee Trustee to lose his or her status as a "non-employee director" (as that term is used for purposes of Rule 16b-3) due to the grant of Options to such person pursuant to this Section 9.
(a) Timing of Grants; Number of Shares Subject of Options; Exercisability of Options; Option Price. Each non-employee member of the Board of Trustees shall be granted annually, commencing on the date of the initial public offering of Shares, and on each anniversary of such date thereafter, an Option to purchase five thousand (5,000) Shares provided such person is a member of the Board of Trustees on such grant date. Each such Option shall be a Non-qualified Stock Option exercisable with respect to twenty percent (20%) of the Shares subject to such Option after the first anniversary of the date of grant, exercisable with respect to fifty percent (50%) of the Shares after the second anniversary of the date of grant, and fully exercisable after the third anniversary of the date of grant. The Option Price shall be equal to the Fair Market Value of the Shares on the date the Option is granted.
(b) Termination of Options Granted Pursuant to Section 9. No Option granted pursuant to this Section 9 shall be exercisable after the first to occur of the following:
(i) The tenth anniversary of the date of grant.
(ii) The third month anniversary of the date of termination of the Optionee's services as a member of the Board of Trustees for any reason other than death, Disability or Retirement, or the thirty-sixth month anniversary of the date of termination of the Optionee's services as a member of the Board of Trustees as a result of the Optionee's death, Disability or Retirement.
Except as provided in Subsection 8(e)(iv), no Option granted pursuant to this Section 9 shall be exercisable following the termination of the Optionee's services as a member of the Board of Trustees with respect to any Shares in excess of those which could have been acquired by exercise of the Option on the date of such termination of services.
(c) Applicability of Section 8 to Options Granted Pursuant
to Section 9. The following provisions of Section 8 shall be applicable
to Options granted pursuant to this Section 9: Subsection 8(a) (provided
that all Options granted pursuant to this Section 9 shall be
Non-qualified Stock Options); the last sentence of Subsection 8(b);
Subsection 8(c); Subsection 8(d) (provided that Option Documents
relating to Options granted pursuant to this Section 9 shall provide
that payment may be made in whole or in part in Shares); and Subsection
8(f) (provided that Option Documents relating to Options granted
pursuant to this Section 9 shall not permit Family Transfers).
10. Change of Control. In the event of a Change of Control, the Committee may take whatever action it deems necessary or desirable with respect to the Options and Awards outstanding (other than Options granted pursuant to Subsection 8(j) and Section 9), including, without limitation, accelerating the expiration or termination date in the
respective Option Documents to a date no earlier than thirty (30) days after notice of such acceleration is given to the Optionees. In addition to the foregoing, in the event of a Change of Control, Options granted pursuant to the Plan and held by Optionees who are employees of the Company or an Affiliate or members of the Board of Trustees at the time of a Change of Control shall become immediately exercisable in full and the restrictions applicable to Restricted Shares awarded to Awardees who are employees of the Company or an Affiliate or members of the Board of Trustees at the time of a Change of Control shall immediately lapse. Any amendment to this Section 10 which diminishes the rights of Optionees, shall not be effective with respect to Options outstanding at the time of adoption of such amendment, whether or not such outstanding Options are then exercisable.
A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date on which the shareholders of the Company (or the Board of Trustees, if shareholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date on which the transactions contemplated by a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company are consummated, other than a transaction in which the holders of the Shares immediately prior to the transaction will have at least fifty percent (50%) of the voting power of the acquiring entity's voting securities immediately after such transaction (without regard to such holders' ownership of such acquiring entity's voting securities immediately before or contemporaneously with such transaction), which voting securities are to be held by such holders immediately following such transaction in substantially the same proportion among themselves as such holders' ownership of the Shares immediately before such transaction, or (iii) the first date on which (A) the transactions contemplated by a definitive agreement to merge or consolidate the Company with or into the other constituent entity, or to merge such other entity with or into the Company, have been consummated, other than, in any such case, a merger or consolidation of the Company in which the holders of the Shares immediately prior to the merger or consolidation will have at least fifty percent (50%) of the voting power of the surviving entity's voting securities immediately after such merger or consolidation (without regard to such holders' ownership of such acquiring entity's voting securities immediately before or contemporaneously with such merger or consolidation), which voting securities are to be held by such holders immediately following such merger or consolidation in substantially the same proportion among themselves as such holders' ownership of the Shares immediately before such merger or consolidation, and (B) members of the Board of Trustees prior to the consummation of such merger or consolidation cease to constitute a majority of the Board of Trustees, or (iv) the date on which any entity, person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended (other than the Company or any Subsidiary or any employee benefit plan sponsored or maintained by the Company or any Subsidiary), shall have become the beneficial owner of, or shall have obtained voting control over, more than twenty percent (20%) of the outstanding Shares (without regard to any contractual or other restriction on the conversion or other exchange of securities into or for Shares), or (v) the first day after which a majority of the members of the Board of Trustees shall
have been members of the Board of Trustees for less than two (2) years, unless the nomination for election of each new trustee who was not a trustee at the beginning of such two (2)-year period was approved by a vote of at least two-thirds of the trustees then still in office who were trustees at the beginning of such period.
11. Adjustments on Changes in Capitalization.
(a) Corporate Transactions. In the event that the outstanding Shares are changed by reason of a reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination or exchange of shares and the like (not including the issuance of Shares on the conversion of other securities of the Company which are outstanding on the date of grant and which are convertible into Shares) or dividends payable in Shares, an equitable adjustment shall be made by the Committee in the aggregate number of Shares available under the Plan and in the number of Shares and price per Share subject to outstanding Options. Unless the Committee makes other provisions for the equitable settlement of outstanding options, if the Company shall be reorganized, consolidated, or merged with another corporation, or if all or substantially all of the assets of the Company shall be sold or exchanged, an Optionee shall at the time of issuance of the Shares under such corporate event be entitled to receive upon the exercise of his or her Option the same number and kind of shares or the same amount of property, cash or securities as he or she would have been entitled to receive upon the occurrence of any such corporate event as if he or she had been, immediately prior to such event, the holder of the number of shares covered by his or her Option.
(b) Proportionate Application. Any adjustment under this
Section 11 in the number of Shares subject to Options shall apply
proportionately to only the unexercised portion of any Option granted
hereunder. If fractions of a Share would result from any such
adjustment, the adjustment shall be revised to the next lower whole
number of Shares.
(c) Committee Authority. The Committee shall have authority to determine the adjustments to be made under this Section, and any such determination by the Committee shall be final, binding and conclusive.
12. Terms and Conditions of Awards. Awards granted pursuant to the Plan shall be evidenced by written Award Agreements in such form as the Committee shall from time to time approve, which Award Agreements shall comply with and be subject to the following terms and conditions and such other terms and conditions which the Committee shall from time to time require which are not inconsistent with the terms of the Plan. The Committee may, in its sole discretion, shorten or waive any term or condition with respect to all or any portion of any Award. Notwithstanding the foregoing, all restrictions shall lapse or terminate with respect to Restricted Shares upon the death or Disability of the Awardee. The total number of Shares which may be granted pursuant to Awards under the Plan shall not exceed Two Million (2,000,000).
(a) Number of Shares. Each Award Agreement shall state the number of Shares to which it pertains.
(b) Purchase Price. Each Award Agreement shall specify the purchase price, if any, which applies to the Award. If the Board of Trustees specifies a purchase price, the Awardee shall be required to make payment on or before the date specified in the Award Agreement. An Awardee shall pay for such Shares (i) in cash, (ii) by certified check payable to the order of the Company, or (iii) by such other mode of payment as the Committee may approve.
(c) Restrictions on Transfer and Forfeitures. A share certificate representing the Restricted Shares granted to an Awardee shall be registered in the Awardee's name but shall be held in escrow by the Company or an appropriate officer of the Company, together with an undated share transfer power executed by the Awardee with respect to each share certificate representing Restricted Shares in such Awardee's name. The Awardee shall generally have the rights and privileges of a shareholder as to such Restricted Shares including the right to vote such Restricted Shares and to receive and retain all cash dividends with respect to such Shares, except that the following restrictions shall apply: (i) the Awardee shall not be entitled to delivery of the certificate until the expiration or termination of any period designated by the Committee ("Restricted Period") and the satisfaction of any other conditions prescribed by the Committee; and (ii) all distributions with respect to the Restricted Shares other than cash dividends, such as share dividends, share splits or distributions of property, and any distributions (other than cash dividends) subsequently made with respect to other distributions, shall be delivered to the Company or an appropriate officer of the Company, together with appropriate share transfer powers or other instruments of transfer signed and delivered to the Company or appropriate officer of the Company by the Awardee, to be held by the Company or appropriate officer of the Company and released to either the Awardee or the Company, as the case may be, together with the Shares to which they relate; (iii) the Awardee will have no right to sell, exchange, transfer, pledge, hypothecate or otherwise dispose of any of the Restricted Shares or distributions (other than cash dividends) with respect thereto; and (iv) all of the Restricted Shares shall be forfeited and all rights of the Awardee with respect to such Restricted Shares shall terminate without further obligation on the part of the Company unless the Awardee has remained a regular full-time employee of the Company or an Affiliate, any of its subsidiaries or any parent or any combination thereof until the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the Committee applicable to such Restricted Share. Upon the forfeiture of any Restricted Share, such forfeited shares shall be transferred to the Company without further action by the Awardee.
(d) Lapse of Restrictions. Upon the expiration or termination of the Restricted Period and the satisfaction of any other conditions prescribed by the
Committee as provided for in the Plan, the restrictions applicable to
the Restricted Share shall lapse and a stock certificate for the number
of shares of Common Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions, except any
that may be imposed by law, to the Awardee or the beneficiary or estate,
as the case may be. The Company shall not be required to deliver any
fractional share of Common Stock but will pay, in lieu thereof, the fair
market value (determined as of the date the restrictions lapse) of such
fractional share to the Awardee or the Awardee's beneficiary or estate,
as the case may be. The Award may provide for the lapse of restrictions
on transfer and forfeiture conditions in installments. Notwithstanding
the foregoing, unless the Shares are covered by a then current
registration statement or a Notification under Regulation A under the
Act, the Company may require as a condition to the transfer of Share
certificates to an Awardee under this Subsection 12(d) that the Awardee
provide the Company with an acknowledgment in form and substance
satisfactory to the Company that (a) such Shares are being purchased for
investment and not for distribution or resale (other than a distribution
or resale which, in the opinion of counsel satisfactory to the Company,
may be made without violating the registration provisions of the Act),
(b) the Optionee has been advised and understands that (i) the Shares
have not been registered under the Act and are "restricted securities"
within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to
register the Shares under the Act or to take any action which would make
available to the Optionee any exemption from such registration, (c) such
Shares may not be transferred without compliance with all applicable
federal and state securities laws, and (d) an appropriate legend
referring to the foregoing restrictions on transfer may be endorsed on
the certificates. Notwithstanding the foregoing, if the Company
determines that the transfer of Share certificates should be delayed
pending (A) registration under federal or state securities laws, (B) the
receipt of an opinion of counsel satisfactory to the Company that an
appropriate exemption from such registration is available, (C) the
listing or inclusion of the Shares on any securities exchange or an
automated quotation system or (D) the consent or approval of any
governmental regulatory body whose consent or approval is necessary in
connection with the issuance of such Shares, the Company may defer
transfer of Share certificates hereunder until any of the events
described in this sentence has occurred.
(e) Section 83(b) Election. An Awardee who files an election with the Internal Revenue Service to include the fair market value of any Restricted Share in gross income while they are still subject to restrictions shall promptly furnish the Company with a copy of such election together with the amount of any federal, state, local or other taxes required to be withheld to enable the Company to claim an income tax deduction with respect to such election.
(f) Rights as Shareholder. Upon payment of the purchase price, if any, for Shares covered by an Award and compliance with the acknowledgment requirement of subsection 12(d), the Grantee shall have all of the rights of a
shareholder with respect to the Shares covered thereby, including the right to vote the Shares and receive all dividends and other distributions paid or made with respect thereto, except to the extent otherwise provided by the Committee or in the Award Agreement.
(g) Amendment. Subject to the provisions of the Plan, the Committee shall have the right to amend Awards issued to an Awardee, subject to the Awardee's consent if such amendment is not favorable to the Awardee, except that the consent of the Awardee shall not be required for any amendment made pursuant to Section 10 of the Plan.
13. Amendment of the Plan. The Board of Trustees of the Company may amend the Plan from time to time in such manner as it may deem advisable. Nevertheless, the Board of Trustees of the Company may not change the class of individuals eligible to receive an ISO or increase the maximum number of Shares as to which Options or Awards may be granted without obtaining approval, within twelve months before or after such action, by vote of a majority of the votes cast at a duly called meeting of the shareholders at which a quorum representing a majority of all outstanding voting interests of the Company is, either in person or by proxy, present and voting on the matter, or by a method and in a degree that would be treated as adequate under applicable state law in the case of an action requiring shareholder approval. No amendment to the Plan shall adversely affect any outstanding Option or Award, however, without the consent of the Grantee.
14. No Commitment to Retain. The grant of an Option or an Award pursuant to the Plan shall not be construed to imply or to constitute evidence of any agreement, express or implied, on the part of the Company or any Affiliate to retain the Grantee in the employ of the Company or an Affiliate and/or as a member of the Company's Board of Trustees or in any other capacity.
15. Withholding of Taxes. Whenever the Company proposes or is required to deliver or transfer Shares in connection with an Award or the exercise of an Option, the Company shall have the right to (a) require the recipient to remit or otherwise make available to the Company an amount sufficient to satisfy any federal, state and/or local withholding tax requirements prior to the delivery or transfer of any certificate or certificates for such Shares or (b) take whatever other action it deems necessary to protect its interests with respect to its tax liabilities. The Company's obligation to make any delivery or transfer of Shares shall be conditioned on the Grantee's compliance, to the Company's satisfaction, with any withholding requirement.
16. Interpretation. The Plan is intended to enable transactions
under the Plan with respect to Trustees and officers (within the meaning of
Section 16(a) under the Securities Exchange Act of 1934, as amended) to satisfy
the conditions of Rule 16b-3; to the extent that any provision of the Plan would
cause a conflict with such conditions or would cause the administration of the
Plan as provided in Section 3 to fail to satisfy the conditions of Rule 16b-3,
such provision shall be deemed null and void to the extent
permitted by applicable law. This section shall not be applicable if no class of the Company's equity securities is then registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 31.1
LIBERTY PROPERTY TRUST
I, William P. Hankowsky, certify that:
1. I have reviewed this Form 10-Q of Liberty Property Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting,
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 5, 2004 By: /s/ WILLIAM P. HANKOWSKY
_______________________________________
William P. Hankowsky
Chairman, President and Chief Executive
Officer
|
EXHIBIT 31.2
LIBERTY PROPERTY TRUST
CERTIFICATIONS REQUIRED BY
RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, George J. Alburger, Jr., certify that:
1. I have reviewed this Form 10-Q of Liberty Property Trust;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation ; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 5, 2004 By: /s/ GEORGE J. ALBURGER, JR.
George J. Alburger, Jr.
Executive Vice President and Chief
Financial Officer
|
EXHIBIT 31.3
LIBERTY PROPERTY LIMITED PARTNERSHIP
CERTIFICATIONS REQUIRED BY
RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, William P. Hankowsky, certify that:
1. I have reviewed this Form 10-Q of Liberty Property Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation ; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting,
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 5, 2004 By: /s/ WILLIAM P. HANKOWSKY
_______________________________________
William P. Hankowsky
Chairman, President and Chief Executive
Officer of Liberty Property Trust, its
sole general partner
|
EXHIBIT 31.4
LIBERTY PROPERTY LIMITED PARTNERSHIP
CERTIFICATIONS REQUIRED BY
RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, George J. Alburger, Jr., certify that:
1. I have reviewed this Form 10-Q of Liberty Property Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation ; and
c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
Date: August 5, 2004 By: /s/ GEORGE J. ALBURGER, JR.
_______________________________________
George J. Alburger, Jr.
Executive Vice President and Chief
Financial Officer of Liberty Property
Trust, its sole general partner
|
EXHIBIT 32.1
LIBERTY PROPERTY TRUST
CERTIFICATIONS REQUIRED BY
RULE 13A-14(B) UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Quarterly Report of Liberty Property Trust (the "Company") on Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, WILLIAM P. HANKOWSKY, Chief Executive Officer of the Company, certify, in connection with Rule , that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ WILLIAM P. HANKOWSKY _______________________________________________ William P. Hankowsky Chairman, President and Chief Executive Officer Date: August 5, 2004 |
EXHIBIT 32.2
LIBERTY PROPERTY TRUST
CERTIFICATIONS REQUIRED BY
RULE 13A-14(B) UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Quarterly Report of Liberty Property Trust (the "Company") on Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, GEORGE J. ALBURGER, JR., Chief Financial Officer of the Company, certify, in connection with Rule , that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ GEORGE J. ALBURGER, JR. ____________________________________________________ George J. Alburger, Jr. Executive Vice President and Chief Financial Officer Date: August 5, 2004 |
EXHIBIT 32.3
LIBERTY PROPERTY LIMITED PARTNERSHIP
CERTIFICATIONS REQUIRED BY
RULE 13A-14(B) UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection with the Quarterly Report of Liberty Property Trust (the "Company") on Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, WILLIAM P. HANKOWSKY, Chief Executive Officer of Liberty Property Trust (the sole general partner of the Company), certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ WILLIAM P. HANKOWSKY William P. Hankowsky ___________________________________________________ Chairman, President and Chief Executive Officer of Liberty Property Trust, its sole general partner Date: August 5, 2004 |
EXHIBIT 32.4
LIBERTY PROPERTY LIMITED PARTNERSHIP
CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) UNDER THE SECURITIES EXCHANGE ACT OF 1934
In connection the Quarterly Report of Liberty Property Trust (the "Company") on Form 10-Q for the quarterly period ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, GEORGE J. ALBURGER, JR., Chief Financial Officer of Liberty Property Trust (the sole general partner of the Company), certify, in connection with Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/ GEORGE J. ALBURGER, JR. -------------------------------------------- George J. Alburger, Jr. Executive Vice President and Chief Financial Officer of Liberty Property Trust, its sole general partner Date: August 5, 2004 |