Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________________________________
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, 2014
  
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)  
__________________________________________________________
LIBERTY PROPERTY TRUST
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 of incorporation or organization)
(I.R.S. Employer Identification Number)
 
 
500 Chesterfield Parkway
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   x     No   o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   x     No   o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). (Check one):
  
Large Accelerated Filer
x
Accelerated Filer
o
Non-Accelerated Filer
o  (Do not check if a smaller reporting company)
Smaller Reporting Company
o
    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o     No   x
On July 28, 2014, 148,100,502 Common Shares of Beneficial Interest, par value $0.001 per share, of Liberty Property Trust were outstanding.

Table of Contents

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2014 of Liberty Property Trust and Liberty Property Limited Partnership. Unless stated otherwise or the context otherwise requires, references to the “Trust” mean Liberty Property Trust and its consolidated subsidiaries, and references to the “Operating Partnership” mean Liberty Property Limited Partnership and its consolidated subsidiaries. The terms the “Company,” “we,” “our” and “us” mean the Trust and the Operating Partnership, collectively.

The Trust is a self-administered and self-managed Maryland real estate investment trust (“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 its subsidiary, the Operating Partnership, a Pennsylvania limited partnership.

The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.7% of the common equity of the Operating Partnership at June 30, 2014 . The common units of limited partnership interest in the Operating Partnership (the “Common Units”), other than those owned by the Trust, are exchangeable on a one-for-one basis (subject to anti-dilution protections) for the Trust's common shares of beneficial interest, $0.001 par value per share (the “Common Shares”). The Company had issued several series of cumulative redeemable preferred units of the Operating Partnership (the “Preferred Units”). The outstanding Preferred Units of each series were exchangeable on a one-for-one basis after stated dates into a corresponding series of cumulative redeemable preferred shares of the Trust except for the Series I-2 Preferred Units, which are not convertible or exchangeable into any other securities. The Preferred Units, except for the Series I-2 Preferred Units, were redeemed during 2013. The ownership of the holders of Common and Preferred Units is reflected in the Trust's financial statements as “noncontrolling interest-operating partnership” both in mezzanine equity and as a component of total equity. The ownership of the holders of Common and Preferred Units not owned by the Trust is reflected in the Operating Partnership's financial statements as “limited partners' equity” both in mezzanine equity and as a component of total owners' equity.

The financial results of the Operating Partnership are consolidated into the financial statements of the Trust. The Trust has no significant assets other than its investment in the Operating Partnership. The Trust and the Operating Partnership are managed and operated as one entity. The Trust and the Operating Partnership have the same managers.

The Trust's sole business purpose is to act as the general partner of the Operating Partnership. Net proceeds from equity issuances by the Trust are contributed to the Operating Partnership in exchange for partnership units. The Trust itself does not issue any indebtedness, but guarantees certain of the unsecured debt of the Operating Partnership.

We believe combining the quarterly reports on Form 10-Q of the Trust and the Operating Partnership into this single report results in the following benefits:
•
enhances investors' understanding of the Trust and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•
eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the Company's disclosure applies to both the Trust and the Operating Partnership; and
•
creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

To help investors understand the significant differences between the Trust and the Operating Partnership, this report presents the following separate sections for each of the Trust and the Operating Partnership:
•
consolidated financial statements;
•
the following notes to the consolidated financial statements;
◦
Income per Common Share of the Trust and Income per Common Unit of the Operating Partnership;
◦
Noncontrolling Interests of the Trust and Limited Partners' Equity and Noncontrolling Interest of the Operating Partnership

This report also includes separate Item 4. Controls and Procedures sections and separate Exhibit 31 and 32 certifications for each of the Trust and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of each entity have made the requisite certifications and that the Trust and Operating Partnership are compliant with Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended.





2
Table of Contents

Liberty Property Trust/Liberty Property Limited Partnership
Form 10-Q for the period ended June 30, 2014
 
Index
 
Page
 
 
 
PART I.
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.

3
Table of Contents

Index
 
Page
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 
 
 
 
 
 
 
 
ARTICLES OF AMENDMENT TO DECLARATION OF TRUST
 
 
 
 
 
AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF 18A LLC
 
 
 
 
 
LIMITED LIABILITY COMPANY OPERATING AGREEMENT OF 18A HOTEL LLC
 
 
 
 
 
DEVELOPMENT AGREEMENT BY AND AMONG LIBERTY PROPERTY 18TH & ARCH, LP, LIBERTY PROPERTY LIMITED PARTNERSHIP AND A WHOLLY OWNED SUBSIDIARY OF 18A HOTEL LLC
 
 
 
 
 
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
 
 
 
 
 
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
 
 
 
 
 
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(A)
 
 
 
 
 
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
 
 
 
 
 
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(A)
 
 
 
 
 
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
 
 
 
 
 
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST REQUIRED BY RULE 13A-14(B)
 
 
 
 
 
CERTIFICATION OF CEO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
 
 
 
 
 
CERTIFICATION OF CFO OF LIBERTY PROPERTY TRUST, IN ITS CAPACITY AS THE GENERAL PARTNER OF LIBERTY PROPERTY LIMITED PARTNERSHIP, REQUIRED BY RULE 13A-14(B)
 
 
 
 
 
XBRL Instance Document
 
 
 
 
 
XBRL Taxonomy Extension Schema Document
 
 
 
 
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
 
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
 
 
XBRL Extension Labels Linkbase
 
 
 
 
 
XBRL Taxonomy Extension Presentation Linkbase Document
 

4
Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(In thousands, except share and unit amounts)
 
 
June 30, 2014
 
December 31, 2013
ASSETS
(unaudited)
 
 
Real estate:
 
 
 
Land and land improvements
$
1,162,397

 
$
1,139,455

Building and improvements
5,244,783

 
5,144,758

Less accumulated depreciation
(1,135,864
)
 
(1,057,680
)
Operating real estate
5,271,316

 
5,226,533

Development in progress
329,685

 
209,187

Land held for development
241,196

 
233,055

Net real estate
5,842,197

 
5,668,775

Cash and cash equivalents
228,678

 
163,414

Restricted cash
18,980

 
51,456

Accounts receivable
15,272

 
13,900

Deferred rent receivable
107,473

 
99,956

Deferred financing and leasing costs, net of accumulated amortization (2014, $158,313; 2013, $140,958)
221,121

 
226,607

Investments in and advances to unconsolidated joint ventures
203,876

 
179,655

Assets held for sale
—

 
275,957

Prepaid expenses and other assets
94,142

 
95,840

Total assets
$
6,731,739

 
$
6,775,560

LIABILITIES
 
 
 
Mortgage loans
$
537,338

 
$
545,306

Unsecured notes
2,708,668

 
2,708,213

Credit facility
—

 
—

Accounts payable
56,073

 
70,406

Accrued interest
28,530

 
25,777

Dividend and distributions payable
71,864

 
71,323

Other liabilities
219,050

 
250,819

Total liabilities
3,621,523

 
3,671,844

Noncontrolling interest - operating partnership - 301,483 preferred units outstanding as of June 30, 2014 and December 31, 2013
7,537

 
7,537

EQUITY
 
 
 
Shareholders’ equity
 
 
 
Common shares of beneficial interest, $.001 par value, 283,987,000 shares authorized; 149,008,030 (includes 1,249,909 in treasury) and 147,846,801 (includes 1,249,909 in treasury) shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively
149

 
148

Additional paid-in capital
3,709,753

 
3,669,618

Accumulated other comprehensive income
15,752

 
9,742

Distributions in excess of net income
(630,706
)
 
(591,713
)
Common shares in treasury, at cost, 1,249,909 shares as of June 30, 2014 and December 31, 2013
(51,951
)
 
(51,951
)
Total shareholders’ equity
3,042,997

 
3,035,844

Noncontrolling interest – operating partnership
 
 
 
3,553,566 and 3,556,556 common units outstanding as of June 30, 2014 and December 31, 2013, respectively
55,763

 
56,713

Noncontrolling interest – consolidated joint ventures
3,919

 
3,622

Total equity
3,102,679

 
3,096,179

Total liabilities, noncontrolling interest - operating partnership and equity
$
6,731,739

 
$
6,775,560


See accompanying notes.

5
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 
Three Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING REVENUE
 
 
 
Rental
$
139,377

 
$
106,955

Operating expense reimbursement
53,582

 
44,069

Total operating revenue
192,959

 
151,024

OPERATING EXPENSE
 
 
 
Rental property
31,928

 
26,684

Real estate taxes
25,716

 
18,906

General and administrative
14,973

 
16,455

Depreciation and amortization
57,872

 
37,527

Total operating expenses
130,489

 
99,572

Operating income
62,470

 
51,452

OTHER INCOME (EXPENSE)
 
 
 
Other income
3,117

 
5,352

Interest expense
(38,470
)
 
(28,133
)
Total other income (expense)
(35,353
)
 
(22,781
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
27,117

 
28,671

Gain on property dispositions
1,896

 
—

Income taxes
(693
)
 
(660
)
Equity in earnings of unconsolidated joint ventures
1,546

 
1,566

Income from continuing operations
29,866

 
29,577

Discontinued operations (including net gain on property dispositions of $140 and $7,658 for the three months ended June 30, 2014 and 2013, respectively)
241

 
13,666

Net income
30,107

 
43,243

Noncontrolling interest – operating partnership
(821
)
 
(3,134
)
Noncontrolling interest – consolidated joint ventures
(37
)
 
—

Net income available to common shareholders
$
29,249

 
$
40,109

 
 
 
 
Net income
$
30,107

 
$
43,243

Other comprehensive income - foreign currency translation
6,464

 
40

Other comprehensive loss - change in net unrealized gain on derivative instruments
(1,145
)
 
—

Other comprehensive income
5,319

 
40

Total comprehensive income
35,426

 
43,283

Less: comprehensive income attributable to noncontrolling interest
(983
)
 
(3,135
)
Comprehensive income attributable to common shareholders
$
34,443

 
$
40,148

Earnings per common share
 
 
 
Basic:
 
 
 
Income from continuing operations
$
0.20

 
$
0.22

Income from discontinued operations
—

 
0.11

Income per common share – basic
$
0.20

 
$
0.33

Diluted:
 
 
 
Income from continuing operations
$
0.20

 
$
0.22

Income from discontinued operations
—

 
0.11

Income per common share – diluted
$
0.20

 
$
0.33

Distributions per common share
$
0.475

 
$
0.475

Weighted average number of common shares outstanding
 
 
 
Basic
147,012

 
120,081

Diluted
147,774

 
120,911

Amounts attributable to common shareholders
 
 
 
Income from continuing operations
$
29,014

 
$
26,848

Discontinued operations
235

 
13,261

Net income available to common shareholders
$
29,249

 
$
40,109

See accompanying notes.

6
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands, except per share amounts)
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING REVENUE
 
 
 
Rental
$
278,311

 
$
211,670

Operating expense reimbursement
112,263

 
86,480

Total operating revenue
390,574

 
298,150

OPERATING EXPENSE
 
 
 
Rental property
70,489

 
51,913

Real estate taxes
50,217

 
36,863

General and administrative
33,334

 
36,248

Depreciation and amortization
114,606

 
74,748

Total operating expenses
268,646

 
199,772

Operating income
121,928

 
98,378

OTHER INCOME (EXPENSE)
 
 
 
Other income
5,570

 
9,732

Interest expense
(77,677
)
 
(55,872
)
Total other income (expense)
(72,107
)
 
(46,140
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
49,821

 
52,238

Gain on property dispositions
1,896

 
—

Income taxes
(1,224
)
 
(1,151
)
Equity in earnings of unconsolidated joint ventures
5,705

 
3,323

Income from continuing operations
56,198

 
54,410

Discontinued operations (including net gain on property dispositions of $46,256 and $49,364 for the six months ended June 30, 2014 and 2013, respectively)
48,015

 
63,489

Net income
104,213

 
117,899

Noncontrolling interest – operating partnership
(2,674
)
 
(6,551
)
Noncontrolling interest – consolidated joint ventures
(390
)
 
—

Net income available to common shareholders
$
101,149

 
$
111,348

 
 
 
 
Net income
$
104,213

 
$
117,899

Other comprehensive income (loss) - foreign currency translation
7,811

 
(4,812
)
Other comprehensive loss - change in net unrealized gain on derivative instruments
(1,656
)
 
—

Other comprehensive income (loss)
6,155

 
(4,812
)
Total comprehensive income
110,368

 
113,087

Less: comprehensive income attributable to noncontrolling interest
(3,209
)
 
(6,406
)
Comprehensive income attributable to common shareholders
$
107,159

 
$
106,681

Earnings per common share
 
 
 
Basic:
 
 
 
Income from continuing operations
$
0.37

 
$
0.42

Income from discontinued operations
0.32

 
0.51

Income per common share – basic
$
0.69

 
$
0.93

Diluted:
 
 
 
Income from continuing operations
$
0.37

 
$
0.42

Income from discontinued operations
0.32

 
0.51

Income per common share – diluted
$
0.69

 
$
0.93

Distributions per common share
$
0.95

 
$
0.95

Weighted average number of common shares outstanding
 
 
 
Basic
146,749

 
119,416

Diluted
147,444

 
120,229

Amounts attributable to common shareholders
 
 
 
Income from continuing operations
$
54,262

 
$
49,751

Discontinued operations
46,887

 
61,597

Net income available to common shareholders
$
101,149

 
$
111,348

See accompanying notes.


7
Table of Contents

CONSOLIDATED STATEMENT OF EQUITY OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 
 
 
COMMON
SHARES OF
BENEFICIAL
INTEREST
 
ADDITIONAL
PAID-IN
CAPITAL
 
ACCUMULATED
OTHER
COMPREHENSIVE INCOME
 
DISTRIBUTIONS
IN EXCESS OF
NET INCOME
 
COMMON
SHARES
HELD
IN
TREASURY
 
TOTAL
LIBERTY
PROPERTY
TRUST
SHAREHOLDERS’
EQUITY
 
NONCONTROLL-
ING INTEREST -
OPERATING
PARTNERSHIP-
COMMON UNITS
 
NONCONTROLL-
ING INTEREST -
OPERATING
PARTNERSHIP –
PREFERRED UNITS
 
NONCONTROLL-
ING INTEREST -
CONSOLIDATED
JOINT
VENTURES
 
TOTAL
EQUITY
Balance at January 1, 2014
 
$
148

 
$
3,669,618

 
$
9,742

 
$
(591,713
)
 
$
(51,951
)
 
$
3,035,844

 
$
56,713

 
$
—

 
$
3,622

 
$
3,096,179

Net proceeds from the issuance of common shares
 
1

 
31,587

 
—

 
—

 
—

 
31,588

 
—

 
—

 
—

 
31,588

Net income
 
—

 
—

 
—

 
101,149

 
—

 
101,149

 
2,438

 
236

 
390

 
104,213

Distributions
 
—

 
—

 
—

 
(140,142
)
 
—

 
(140,142
)
 
(3,485
)
 
(236
)
 
(93
)
 
(143,956
)
Share-based compensation
 
—

 
8,500

 
—

 
—

 
—

 
8,500

 
—

 
—

 
—

 
8,500

Other comprehensive income - foreign currency translation
 
—

 
—

 
7,627

 
—

 
—

 
7,627

 
184

 
—

 
—

 
7,811

Other comprehensive loss - change in net unrealized gain on derivative instruments
 
—

 
—

 
(1,617
)
 
—

 
—

 
(1,617
)
 
(39
)
 
—

 
—

 
(1,656
)
Redemption of noncontrolling interests – common units
 
—

 
48

 
—

 
—

 
—

 
48

 
(48
)
 
—

 
—

 
—

Balance at June 30, 2014
 
$
149

 
$
3,709,753

 
$
15,752

 
$
(630,706
)
 
$
(51,951
)
 
$
3,042,997

 
$
55,763

 
$
—

 
$
3,919

 
$
3,102,679


See accompanying notes.

8
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(Unaudited and in thousands)
 
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING ACTIVITIES
 
 
 
Net income
$
104,213

 
$
117,899

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
116,547

 
90,956

Amortization of deferred financing costs
2,629

 
1,964

Equity in earnings of unconsolidated joint ventures
(5,705
)
 
(3,323
)
Distributions from unconsolidated joint ventures
—

 
470

Gain on property dispositions
(48,152
)
 
(49,364
)
Share-based compensation
8,500

 
6,359

Other
(2,210
)
 
(4,461
)
  Changes in operating assets and liabilities:
 
 
 
Restricted cash
33,239

 
5,478

Accounts receivable
(1,307
)
 
875

Deferred rent receivable
(7,548
)
 
(4,197
)
Prepaid expenses and other assets
(29,907
)
 
1,477

Accounts payable
9,100

 
1,161

Accrued interest
2,753

 
(158
)
Other liabilities
(34,802
)
 
(18,727
)
Net cash provided by operating activities
147,350

 
146,409

INVESTING ACTIVITIES
 
 
 
Investment in operating properties - acquisitions
(90,837
)
 
(133,500
)
Investment in operating properties - other
(39,073
)
 
(24,104
)
Investments in and advances to unconsolidated joint ventures
(12,008
)
 
(8,153
)
Distributions from unconsolidated joint ventures
5,429

 
4,975

Net proceeds from disposition of properties/land
351,299

 
124,453

Net proceeds from public reimbursement receivable/escrow
5,627

 
10,845

Investment in development in progress
(150,199
)
 
(47,843
)
Investment in land held for development
(12,793
)
 
(13,586
)
Investment in deferred leasing costs
(18,252
)
 
(15,166
)
Net cash provided by (used in) investing activities
39,193

 
(102,079
)
FINANCING ACTIVITIES
 
 
 
Net proceeds from issuance of common shares
31,588

 
108,852

Redemption of preferred units
—

 
(64,500
)
Proceeds from mortgage loans
—

 
6,738

Repayments of mortgage loans
(7,013
)
 
(2,506
)
Proceeds from credit facility
—

 
269,550

Repayments on credit facility
—

 
(216,550
)
Payment of deferred financing costs
(3,635
)
 
(8
)
Distribution paid on common shares
(139,598
)
 
(113,241
)
Distribution paid on units/to consolidated joint venture partners
(3,814
)
 
(5,827
)
Net cash used in financing activities
(122,472
)
 
(17,492
)
Net increase in cash and cash equivalents
64,071

 
26,838

Increase (decrease) in cash and cash equivalents related to foreign currency translation
1,193

 
(3,515
)
Cash and cash equivalents at beginning of period
163,414

 
38,356

Cash and cash equivalents at end of period
$
228,678

 
$
61,679


See accompanying notes.

9
Table of Contents

CONSOLIDATED BALANCE SHEETS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(In thousands, except unit amounts)
 
 
June 30, 2014
 
December 31, 2013
ASSETS
(Unaudited)
 
 
Real estate:
 
 
 
Land and land improvements
$
1,162,397

 
$
1,139,455

Building and improvements
5,244,783

 
5,144,758

Less accumulated depreciation
(1,135,864
)
 
(1,057,680
)
Operating real estate
5,271,316

 
5,226,533

Development in progress
329,685

 
209,187

Land held for development
241,196

 
233,055

Net real estate
5,842,197

 
5,668,775

Cash and cash equivalents
228,678

 
163,414

Restricted cash
18,980

 
51,456

Accounts receivable
15,272

 
13,900

Deferred rent receivable
107,473

 
99,956

Deferred financing and leasing costs, net of accumulated amortization (2014, $158,313; 2013, $140,958)
221,121

 
226,607

Investments in and advances to unconsolidated joint ventures
203,876

 
179,655

Assets held for sale
—

 
275,957

Prepaid expenses and other assets
94,142

 
95,840

Total assets
$
6,731,739

 
$
6,775,560

LIABILITIES
 
 
 
Mortgage loans
$
537,338

 
$
545,306

Unsecured notes
2,708,668

 
2,708,213

Credit facility
—

 
—

Accounts payable
56,073

 
70,406

Accrued interest
28,530

 
25,777

Distributions payable
71,864

 
71,323

Other liabilities
219,050

 
250,819

Total liabilities
3,621,523

 
3,671,844

Limited partners' equity - 301,483 preferred units outstanding as of June 30, 2014 and December 31, 2013
7,537

 
7,537

OWNERS’ EQUITY
 
 
 
General partner’s equity - 147,758,121 (net of 1,249,909 treasury units) and 146,596,892 (net of 1,249,909 treasury units) common units outstanding as of June 30, 2014 and December 31, 2013, respectively
3,042,997

 
3,035,844

Limited partners’ equity – 3,553,566 and 3,556,556 common units outstanding as of June 30, 2014 and December 31, 2013, respectively
55,763

 
56,713

Noncontrolling interest – consolidated joint ventures
3,919

 
3,622

Total owners’ equity
3,102,679

 
3,096,179

Total liabilities, limited partners' equity and owners’ equity
$
6,731,739

 
$
6,775,560


See accompanying notes.

10
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 
 
Three Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING REVENUE
 
 
 
Rental
$
139,377

 
$
106,955

Operating expense reimbursement
53,582

 
44,069

Total operating revenue
192,959

 
151,024

OPERATING EXPENSE
 
 
 
Rental property
31,928

 
26,684

Real estate taxes
25,716

 
18,906

General and administrative
14,973

 
16,455

Depreciation and amortization
57,872

 
37,527

Total operating expenses
130,489

 
99,572

Operating income
62,470

 
51,452

OTHER INCOME (EXPENSE)
 
 
 
Other income
3,117

 
5,352

Interest expense
(38,470
)
 
(28,133
)
Total other income (expense)
(35,353
)
 
(22,781
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
27,117

 
28,671

Gain on property dispositions
1,896

 
—

Income taxes
(693
)
 
(660
)
Equity in earnings of unconsolidated joint ventures
1,546

 
1,566

Income from continuing operations
29,866

 
29,577

Discontinued operations (including net gain on property dispositions of $140 and $7,658 for the three months ended June 30, 2014 and 2013, respectively)
241

 
13,666

Net income
30,107

 
43,243

Noncontrolling interest – consolidated joint ventures
(37
)
 
—

Preferred unit distributions
(118
)
 
(672
)
Excess of preferred unit redemption over carrying amount
—

 
(1,236
)
Income available to common unitholders
$
29,952

 
$
41,335

Net income
$
30,107

 
$
43,243

Other comprehensive income - foreign currency translation
6,464

 
40

Other comprehensive loss - change in net unrealized gain on derivative instruments
(1,145
)
 
—

Other comprehensive income
5,319

 
40

Total comprehensive income
$
35,426

 
$
43,283

Earnings per common unit
 
 
 
Basic:
 
 
 
Income from continuing operations
$
0.20

 
$
0.22

Income from discontinued operations
—

 
0.11

Income per common unit - basic
$
0.20

 
$
0.33

Diluted:
 
 
 
Income from continuing operations
$
0.20

 
$
0.22

Income from discontinued operations
—

 
0.11

Income per common unit - diluted
$
0.20

 
$
0.33

Distributions per common unit
$
0.475

 
$
0.475

Weighted average number of common units outstanding
 
 
 
        Basic
150,563

 
123,795

        Diluted
151,325

 
124,625

Net income allocated to general partners
$
29,249

 
$
40,109

Net income allocated to limited partners
$
821

 
$
3,134


See accompanying notes.

11
Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands, except per unit amounts)
 
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING REVENUE
 
 
 
Rental
$
278,311

 
$
211,670

Operating expense reimbursement
112,263

 
86,480

Total operating revenue
390,574

 
298,150

OPERATING EXPENSE
 
 
 
Rental property
70,489

 
51,913

Real estate taxes
50,217

 
36,863

General and administrative
33,334

 
36,248

Depreciation and amortization
114,606

 
74,748

Total operating expenses
268,646

 
199,772

Operating income
121,928

 
98,378

OTHER INCOME (EXPENSE)
 
 
 
Other income
5,570

 
9,732

Interest expense
(77,677
)
 
(55,872
)
Total other income (expense)
(72,107
)
 
(46,140
)
Income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures
49,821

 
52,238

Gain on property dispositions
1,896

 
—

Income taxes
(1,224
)
 
(1,151
)
Equity in earnings of unconsolidated joint ventures
5,705

 
3,323

Income from continuing operations
56,198

 
54,410

Discontinued operations (including net gain on property dispositions of $46,256 and $49,364 for the six months ended June 30, 2014 and 2013, respectively)
48,015

 
63,489

Net income
104,213

 
117,899

Noncontrolling interest – consolidated joint ventures
(390
)
 
—

Preferred unit distributions
(236
)
 
(1,883
)
Excess of preferred unit redemption over carrying amount
—

 
(1,236
)
Income available to common unitholders
$
103,587

 
$
114,780

Net income
$
104,213

 
$
117,899

Other comprehensive income (loss) - foreign currency translation
7,811

 
(4,812
)
Other comprehensive loss - change in net unrealized gain on derivative instruments
(1,656
)
 
—

Other comprehensive income (loss)
6,155

 
(4,812
)
Total comprehensive income
$
110,368

 
$
113,087

Earnings per common unit
 
 
 
Basic:
 
 
 
Income from continuing operations
$
0.37

 
$
0.42

Income from discontinued operations
0.32

 
0.51

Income per common unit - basic
$
0.69

 
$
0.93

Diluted:
 
 
 
Income from continuing operations
$
0.37

 
$
0.42

Income from discontinued operations
0.32

 
0.51

Income per common unit - diluted
$
0.69

 
$
0.93

Distributions per common unit
$
0.95

 
$
0.95

Weighted average number of common units outstanding
 
 
 
        Basic
150,304

 
123,130

        Diluted
150,999

 
123,943

Net income allocated to general partners
$
101,149

 
$
111,348

Net income allocated to limited partners
$
2,674

 
$
6,551


See accompanying notes.

12
Table of Contents


CONSOLIDATED STATEMENT OF OWNERS’ EQUITY OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 
 
GENERAL
PARTNER’S
EQUITY
 
LIMITED
PARTNERS’
EQUITY  –
COMMON
UNITS
 
LIMITED
PARTNERS’
EQUITY  –
PREFERRED
UNITS
 
NONCONTROLLING
INTEREST –
CONSOLIDATED
JOINT VENTURES
 
TOTAL
OWNERS’
EQUITY
Balance at January 1, 2014
$
3,035,844

 
$
56,713

 
$
—

 
$
3,622

 
$
3,096,179

Contributions from partners
40,088

 
—

 
—

 
—

 
40,088

Distributions to partners
(140,142
)
 
(3,485
)
 
(236
)
 
(93
)
 
(143,956
)
Foreign currency translation adjustment
7,627

 
184

 
—

 
—

 
7,811

Change in net unrealized gain on derivative instruments
(1,617
)
 
(39
)
 
—

 
—

 
(1,656
)
Net income
101,149

 
2,438

 
236

 
390

 
104,213

Redemption of limited partners common units for common shares
48

 
(48
)
 
—

 
—

 
—

Balance at June 30, 2014
$
3,042,997

 
$
55,763

 
$
—

 
$
3,919

 
$
3,102,679


See accompanying notes.

13
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Unaudited and in thousands)
 
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
OPERATING ACTIVITIES
 
 
 
Net income
$
104,213

 
$
117,899

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
116,547

 
90,956

Amortization of deferred financing costs
2,629

 
1,964

Equity in earnings of unconsolidated joint ventures
(5,705
)
 
(3,323
)
Distributions from unconsolidated joint ventures
—

 
470

Gain on property dispositions
(48,152
)
 
(49,364
)
Share-based compensation
8,500

 
6,359

Other
(2,210
)
 
(4,461
)
  Changes in operating assets and liabilities:
 
 
 
Restricted cash
33,239

 
5,478

Accounts receivable
(1,307
)
 
875

Deferred rent receivable
(7,548
)
 
(4,197
)
Prepaid expenses and other assets
(29,907
)
 
1,477

Accounts payable
9,100

 
1,161

Accrued interest
2,753

 
(158
)
Other liabilities
(34,802
)
 
(18,727
)
Net cash provided by operating activities
147,350

 
146,409

INVESTING ACTIVITIES
 
 
 
Investment in operating properties - acquisitions
(90,837
)
 
(133,500
)
Investment in operating properties - other
(39,073
)
 
(24,104
)
Investments in and advances to unconsolidated joint ventures
(12,008
)
 
(8,153
)
Distributions from unconsolidated joint ventures
5,429

 
4,975

Net proceeds from disposition of properties/land
351,299

 
124,453

Net proceeds from public reimbursement receivable/escrow
5,627

 
10,845

Investment in development in progress
(150,199
)
 
(47,843
)
Investment in land held for development
(12,793
)
 
(13,586
)
Investment in deferred leasing costs
(18,252
)
 
(15,166
)
Net cash provided by (used in) investing activities
39,193

 
(102,079
)
FINANCING ACTIVITIES
 
 
 
Redemption of preferred units
—

 
(64,500
)
Proceeds from mortgage loans
—

 
6,738

Repayments of mortgage loans
(7,013
)
 
(2,506
)
Proceeds from credit facility
—

 
269,550

Repayments on credit facility
—

 
(216,550
)
Payment of deferred financing costs
(3,635
)
 
(8
)
Capital contributions
31,588

 
108,852

Distributions to partners
(143,412
)
 
(119,068
)
Net cash used in financing activities
(122,472
)
 
(17,492
)
Net increase in cash and cash equivalents
64,071

 
26,838

Increase (decrease) in cash and cash equivalents related to foreign currency translation
1,193

 
(3,515
)
Cash and cash equivalents at beginning of period
163,414

 
38,356

Cash and cash equivalents at end of period
$
228,678

 
$
61,679


See accompanying notes.

14
Table of Contents

Liberty Property Trust and Liberty Property Limited Partnership
Notes to Consolidated Financial Statements (Unaudited)
June 30, 2014
Note 1: Organization and Basis of Presentation
Organization
Liberty Property Trust (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 its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, together with the Trust and their consolidated subsidiaries, the “Company”). The Trust is the sole general partner and also a limited partner of the Operating Partnership, owning 97.7% of the common equity of the Operating Partnership at June 30, 2014 . The Company provides leasing, property management, development, acquisition, and other tenant-related services. The Company owns and operates industrial properties nationally and owns and operates office properties primarily in Metro Philadelphia, Washington D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom. Unless otherwise indicated, the notes to the Consolidated Financial Statements apply to both the Trust and the Operating Partnership. The terms the “Company,” “we,” “our” and “us” mean the Trust and Operating Partnership collectively.
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“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 Company for the year ended December 31, 2013 . 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 the current period presentation including reclassifying the accompanying statements of comprehensive income for discontinued operations.

Recently Issued Accounting Standards
In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) 2014-08,  Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360), Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity ("ASU 2014-08"), which changes the requirements for reporting discontinued operations. Under ASU 2014-08, a disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the component or group of components meets the criteria to be classified as held for sale or when the component or group of components is disposed of by sale or other than by sale. Generally, the sale of a real estate asset would not meet the discontinued operations criteria and would not be presented as such under ASU 2014-08. ASU 2014-08 also requires additional disclosures about both discontinued operations and the disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation in the financial statements. The Company has adopted the provisions of ASU 2014-08 effective January 1, 2014, and has applied the provisions prospectively.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which supersedes nearly all existing revenue recognition guidance. The standard clarifies the required factors that an entity must consider when recognizing revenue. The standard also requires additional disclosures concerning contracts with customers, judgments concerning revenue recognition, and assets recognized for the costs to obtain or fulfill a contract. ASU 2014-09 is effective for the Company beginning January 1, 2017. The Company is evaluating the impact ASU 2014-09 will have on its financial position and results of operations.








15

Note 2: Income per Common Share of the Trust

The following table sets forth the computation of basic and diluted income per common share of the Trust (in thousands except per share amounts):
 
 
For the Three Months Ended
 
For the Three Months Ended
 
June 30, 2014
 
June 30, 2013
 
Income
(Loss) (Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
$
29,014

 
147,012

 
$
0.20

 
$
26,848

 
120,081

 
$
0.22

Dilutive shares for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
$
29,014

 
147,774

 
$
0.20

 
$
26,848

 
120,911

 
$
0.22

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
$
235

 
147,012

 
$
—

 
$
13,261

 
120,081

 
$
0.11

Dilutive shares for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
$
235

 
147,774

 
$
—

 
$
13,261

 
120,911

 
$
0.11

Basic income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
29,249

 
147,012

 
$
0.20

 
$
40,109

 
120,081

 
$
0.33

Dilutive shares for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
29,249

 
147,774

 
$
0.20

 
$
40,109

 
120,911

 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16

 
For the Six Months Ended
 
For the Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
 
Income
(Numerator)
 
Weighted
Average
Shares
(Denominator)
 
Per Share
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
$
54,262

 
146,749

 
$
0.37

 
$
49,751

 
119,416

 
$
0.42

Dilutive shares for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations net of noncontrolling interest
54,262

 
147,444

 
$
0.37

 
49,751

 
120,229

 
$
0.42

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
46,887

 
146,749

 
$
0.32

 
61,597

 
119,416

 
$
0.51

Dilutive shares for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations net of noncontrolling interest
46,887

 
147,444

 
$
0.32

 
61,597

 
120,229

 
$
0.51

Basic income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
101,149

 
146,749

 
$
0.69

 
111,348

 
119,416

 
$
0.93

Dilutive shares for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income per common share
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
101,149

 
147,444

 
$
0.69

 
$
111,348

 
120,229

 
$
0.93


Dilutive shares for long-term compensation plans represent the unvested common shares outstanding during the periods as well as the dilutive effect of outstanding options. The amount of anti-dilutive options excluded from the computation of diluted income per common share was 750,000 for both the three and six months ended June 30, 2014 as compared to 625,000 and 773,000 , respectively, for the same periods in 2013 .
During the three and six months ended June 30, 2014 , 42,000 and 43,000 common shares, respectively, were issued upon the exercise of options. During the year ended December 31, 2013 , 504,000 common shares were issued upon the exercise of options.



17

Note 3: Income per Common Unit of the Operating Partnership

The following table sets forth the computation of basic and diluted income per common unit of the Operating Partnership (in thousands, except per unit amounts):
 
 
For the Three Months Ended
 
For the Three Months Ended
 
June 30, 2014
 
June 30, 2013
 
Income
(Loss) (Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations - net of noncontrolling interest - consolidated joint ventures
$
29,829

 
 
 
 
 
$
29,577

 
 
 
 
Less: Preferred unit distributions
(118
)
 
 
 
 
 
(672
)
 
 
 
 
Excess of preferred unit redemption over carrying amount
—

 
 
 
 
 
(1,236
)
 
 
 
 
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
$
29,711

 
150,563

 
$
0.20

 
$
27,669

 
123,795

 
$
0.22

Dilutive units for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
$
29,711

 
151,325

 
$
0.20

 
$
27,669

 
124,625

 
$
0.22

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
$
241

 
150,563

 
$
—

 
$
13,666

 
123,795

 
$
0.11

Dilutive units for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
$
241

 
151,325

 
$
—

 
$
13,666

 
124,625

 
$
0.11

Basic income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
$
29,952

 
150,563

 
$
0.20

 
$
41,335

 
123,795

 
$
0.33

Dilutive units for long-term compensation plans
—

 
762

 
 
 
—

 
830

 
 
Diluted income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
$
29,952

 
151,325

 
$
0.20

 
$
41,335

 
124,625

 
$
0.33

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

18

 
For the Six Months Ended
 
For the Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
 
Income
(Numerator)
 
Weighted
Average Units
(Denominator)
 
Per Unit
Income from continuing operations net of noncontrolling interest - consolidated joint ventures
$
55,808

 
 
 
 
 
$
54,410

 
 
 
 
Less: Preferred unit distributions
(236
)
 
 
 
 
 
(1,883
)
 
 
 
 
Excess of preferred unit redemption over carrying amount
—

 
 
 
 
 
(1,236
)
 
 
 
 
Basic income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
55,572

 
150,304

 
$
0.37

 
51,291

 
123,130

 
$
0.42

Dilutive units for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income from continuing operations
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations available to common unitholders
55,572

 
150,999

 
$
0.37

 
51,291

 
123,943

 
$
0.42

Basic income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
48,015

 
150,304

 
$
0.32

 
63,489

 
123,130

 
$
0.51

Dilutive units for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income from discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
48,015

 
150,999

 
$
0.32

 
63,489

 
123,943

 
$
0.51

Basic income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
103,587

 
150,304

 
$
0.69

 
114,780

 
123,130

 
$
0.93

Dilutive units for long-term compensation plans
—

 
695

 
 
 
—

 
813

 
 
Diluted income per common unit
 
 
 
 
 
 
 
 
 
 
 
Income available to common unitholders
$
103,587

 
150,999

 
$
0.69

 
$
114,780

 
123,943

 
$
0.93


Dilutive units for long-term compensation plans represent the unvested common units outstanding during the periods as well as the dilutive effect of outstanding options. The amount of anti-dilutive options excluded from the computation of diluted income per common unit was 750,000 for both the three and six months ended June 30, 2014 as compared to 625,000 and 773,000 , respectively, for the same periods in 2013 .
During the three and six months ended June 30, 2014 , 42,000 and 43,000 common units, respectively, were issued upon the exercise of options. During the year ended December 31, 2013 , 504,000 common units were issued upon the exercise of options.


19

Note 4: Accumulated Other Comprehensive Income (Loss)

The following table sets forth the components of Accumulated Other Comprehensive Income (Loss) (in thousands):

 
 
Six Months Ended June 30,
 
 
2014
 
2013
Foreign Currency Translation:
 
 
 
 
     Beginning balance
 
$
8,592

 
$
3,195

     Translation adjustment
 
7,811

 
(4,812
)
     Ending balance
 
16,403

 
(1,617
)
 
 
 
 
 
Net unrealized gain (loss) on derivative instruments:
 
 
 
 
     Beginning balance
 
1,584

 
—

     Unrealized losses
 
(1,656
)
 
—

     Ending balance
 
(72
)
 
—

Total accumulated other comprehensive income (loss)
 
16,331

 
(1,617
)
Less: portion included in noncontrolling interest – operating partnership
 
(579
)
 
(150
)
Total accumulated other comprehensive income (loss) included in shareholders' equity
 
$
15,752

 
$
(1,767
)
Note 5: Segment Information
The Company owns and operates industrial properties nationally and owns and operates office properties primarily in Metro Philadelphia, Washington D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom. The Company's reportable segments are as follows.

•
Carolinas;
•
Chicago/Milwaukee;
•
Houston;
•
Lehigh/Central PA;
•
Minnesota;
•
Orlando;
•
Philadelphia;
•
Richmond/Hampton Roads;
•
Southeastern PA;
•
South Florida;
•
Tampa;
•
United Kingdom.

Certain other segments are aggregated into an "Other" category which includes the reportable segments: Arizona; Atlanta; Cincinnati/Columbus/Indianapolis; Dallas; Jacksonville; Maryland; New Jersey; Northern Virginia; Southern California; Washington D.C. and other.
The Company evaluates the performance of its reportable segments based on net operating income. Net operating income includes operating revenue from external customers, real estate taxes, amortization of lease transaction costs and other operating expenses which relate directly to the management and operation of the assets within each reportable segment.
The Company's accounting policies for the segments are the same as those used in the Company's consolidated financial statements. There are no material inter-segment transactions.

20

The operating information by reportable segment is as follows (in thousands):
 
 
 
For the Three Months
 
For the Six Months
 
 
 
Ended June 30,
 
Ended June 30,
 
 
 
2014
 
2013
 
2014
 
2013
Operating revenue
 
 
 
 
 
 
 
 
 
Carolinas
 
$
8,486

 
$
7,309

 
$
16,803

 
$
14,587

 
Chicago/Milwaukee
 
8,152

 
3,470

 
16,723

 
6,163

 
Houston
 
12,128

 
9,018

 
23,995

 
17,353

 
Lehigh/Central PA
 
28,195

 
24,681

 
57,819

 
49,358

 
Minnesota
 
13,541

 
15,345

 
27,292

 
30,728

 
Orlando
 
8,061

 
7,876

 
16,056

 
15,573

 
Philadelphia
 
8,691

 
7,061

 
18,099

 
15,394

 
Richmond/Hampton Roads
 
10,115

 
9,794

 
20,184

 
19,940

 
South Florida
 
11,707

 
8,676

 
24,016

 
17,234

 
Southeastern PA
 
36,309

 
40,389

 
74,746

 
81,443

 
Tampa
 
13,230

 
13,116

 
26,404

 
26,082

 
United Kingdom
 
4,218

 
1,120

 
8,320

 
2,220

 
Other
 
30,122

 
30,716

 
65,158

 
60,446

Segment-level operating revenue
 
192,955

 
178,571

 
395,615

 
356,521

 
 
 
 
 
 
 
 
 
 
 Reconciliation to total operating revenues
 
 
 
 
 
 
 
 
 
 Discontinued operations
 
28

 
(27,516
)
 
(4,735
)
 
(58,597
)
 
 Other
 
(24
)
 
(31
)
 
(306
)
 
226

 Total operating revenue
 
$
192,959

 
$
151,024

 
$
390,574

 
$
298,150

 
 
 
 
 
 
 
 
 
 
 Net operating income
 
 
 
 
 
 
 
 
 
 
Carolinas
 
$
5,693

 
$
4,939

 
$
11,435

 
$
9,853

 
Chicago/Milwaukee
 
4,973

 
1,812

 
10,136

 
3,986

 
Houston
 
7,232

 
5,058

 
14,284

 
10,309

 
Lehigh/Central PA
 
19,773

 
16,550

 
39,013

 
33,218

 
Minnesota
 
6,770

 
7,562

 
13,390

 
15,274

 
Orlando
 
5,354

 
5,125

 
10,846

 
10,376

 
Philadelphia
 
6,790

 
5,071

 
13,511

 
10,950

 
Richmond/Hampton Roads
 
6,054

 
5,853

 
11,973

 
12,079

 
South Florida
 
6,891

 
4,858

 
14,418

 
9,433

 
Southeastern PA
 
20,060

 
22,255

 
39,660

 
44,868

 
Tampa
 
8,488

 
8,353

 
16,929

 
16,607

 
United Kingdom
 
2,722

 
(321
)
 
6,248

 
(455
)
 
Other
 
19,167

 
15,665

 
40,898

 
32,792

Segment-level net operating income
 
119,967

 
102,780

 
242,741

 
209,290

 
 
 
 
 
 
 
 
 
 
 Reconciliation to income from continuing operations
 
 
 
 
 
 
 
 
 
 Interest expense (1)
 
(38,470
)
 
(32,138
)
 
(78,234
)
 
(64,220
)
 
 Depreciation/amortization expense (2)
 
(44,561
)
 
(29,061
)
 
(89,098
)
 
(58,368
)
 
 Gain on property dispositions
 
1,896

 
—

 
1,896

 
—

 
 Equity in earnings of unconsolidated joint ventures
 
1,546

 
1,566

 
5,705

 
3,323

 
 General and administrative expense (2)
 
(8,232
)
 
(8,945
)
 
(20,633
)
 
(22,821
)
 
 Discontinued operations excluding gain on property dispositions
 
(101
)
 
(6,008
)
 
(1,759
)
 
(14,125
)
 
 Income taxes (2)
 
(663
)
 
(645
)
 
(1,146
)
 
(1,136
)
 
 Other
 
(1,516
)
 
2,028

 
(3,274
)
 
2,467

 Income from continuing operations
 
$
29,866

 
$
29,577

 
$
56,198

 
$
54,410

(1)
Includes interest on discontinued operations.
(2)
Excludes costs which are included in determining segment-level net operating income.


21

During the three months ended June 30, 2014 , the Company acquired six properties for a total purchase price of $53.2 million . During the six months ended June 30, 2014 , the Company acquired eight properties for a total purchase price of $90.9 million .

During the three months ended June 30, 2014 , the Company sold three operating properties to a joint venture in which the Company retains a 25% interest for $32.2 million . During the six months ended June 30, 2014 , the Company realized proceeds of $366.9 million from the sale of 52 properties and 19 acres of land.

The Company's total assets by reportable segment as of June 30, 2014 and December 31, 2013 is as follows (in thousands):

 
 
June 30,
2014
 
December 31,
2013
Total assets
 
 
 
 
 
Carolinas
$
303,215

 
$
257,230

 
Chicago/Milwaukee
416,197

 
413,585

 
Houston
401,045

 
380,248

 
Lehigh/Central PA
972,962

 
938,824

 
Minnesota
343,894

 
335,613

 
Orlando
255,915

 
253,888

 
Philadelphia
336,783

 
316,810

 
Richmond/Hampton Roads
248,446

 
250,008

 
South Florida
379,976

 
380,138

 
Southeastern PA
699,676

 
695,966

 
Tampa
336,012

 
337,300

 
United Kingdom
265,018

 
247,537

 
Other
1,504,110

 
1,735,393

Segment-level total assets
6,463,249

 
6,542,540

 
Corporate Other
268,490

 
233,020

Total assets
$
6,731,739

 
$
6,775,560


Note 6: Accounting for the Disposal of Long-Lived Assets
Under ASU 2014-08, a disposal of a component of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results.
In November 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell 97 operating properties containing an aggregate of 6.6 million square feet for $697.3 million (the "Portfolio Sale"). In December 2013, the Company closed on the first of two planned settlements under this agreement. The proceeds from the first settlement were $367.7 million and included 49 properties totaling approximately 4.0 million square feet of space and 140 acres of land. In January 2014, the Company closed on the remaining settlement for proceeds of $329.6 million which consisted of 23 properties totaling 1.4 million square feet and 19 acres of land in the Maryland reportable segment, 24 properties and 1.2 million square feet in the New Jersey reportable segment and one property totaling 37,000 square feet in the Company's Southeastern PA reportable segment.
The Portfolio Sale is considered a discontinued operation under the provisions of ASU 2014-08 as it represents a strategic shift that will have a major effect on the Company's operations and financial results.
Prior to the adoption of ASU 2014-08, the results of operations for all operating properties sold or held for sale during the reported periods were shown under discontinued operations on the consolidated statements of comprehensive income. Under ASU 2014-08, operating properties that were sold or classified as held for sale before the adoption of ASU 2014-08 continue to be classified as discontinued operations. Accordingly, operating properties previously reported as discontinued operations will continue to be presented as discontinued operations on the consolidated statements of comprehensive income for all periods presented. The proceeds from the disposition of properties excluding the Portfolio Sale that were included in discontinued operations were zero for the three and six months ended June 30, 2014 and were $51.4 million and $126.0 million for the same periods in 2013.



22

A summary of the results of operations for the Portfolio Sale and other properties classified as discontinued operations through the respective disposition dates is as follows (in thousands):
 
 
 
For the Three Months Ended
 
For the Six Months Ended
 
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Portfolio Sale
 
 
 
 
 
 
 
 
Revenues
$
(28
)
 
$
26,659

 
$
4,733

 
$
53,800

 
Operating expenses
129

 
(9,113
)
 
(2,441
)
 
(18,549
)
 
Interest and other income
—

 
57

 
29

 
106

 
Interest expense
—

 
(3,720
)
 
(557
)
 
(7,472
)
 
Depreciation and amortization
—

 
(7,293
)
 
—

 
(14,604
)
 
Income before gain on property dispositions
101

 
6,590

 
1,764

 
13,281

 
Gain on property dispositions
80

 
—

 
46,121

 
—

 
Income from discontinued operations - Portfolio Sale
$
181

 
$
6,590

 
$
47,885

 
$
13,281

 
Noncontrolling interest
(4
)
 
(195
)
 
(1,144
)
 
(396
)
 
Income from discontinued operations available to common shareholders - Portfolio Sale
$
177

 
$
6,395

 
$
46,741

 
$
12,885

 
Add back noncontrolling interest
4

 
$
195

 
$
1,144

 
$
396

 
Income from discontinued operations - Portfolio Sale
$
181

 
$
6,590

 
$
47,885

 
$
13,281

 
Income from discontinued operations - other properties
60

 
7,076

 
130

 
50,208

 
Income from discontinued operations
$
241

 
$
13,666

 
$
48,015

 
$
63,489


Net cash used in operating activities from the properties included in the Portfolio Sale for the three and six months ended June 30, 2014 was $97,000 and $2.8 million , respectively, compared to net cash provided by operating activities from such properties of $13.3 million and $28.0 million , respectively, for the three and six months ended June 30, 2013. Net cash provided by investing activities from the properties included in the Portfolio Sale for the three and six months ended June 30, 2014 was $50,000 and $313.2 million , respectively, compared to net cash used by investing activities from such properties of $4.0 million and $7.8 million , respectively, for the three and six months ended June 30, 2013.
Interest expense has been allocated to discontinued operations. The allocation of interest expense to discontinued operations was based on the ratio of net assets sold and held for sale (without continuing involvement) to the sum of total net assets plus consolidated debt.
During the three months ended June 30, 2014 , the Company sold three operating properties in a segment grouped into the Company's "Other" category for aggregate proceeds of $32.2 million . During the six months ended June 30, 2014 , the Company sold four operating properties in segments grouped into the Company's "Other" category for aggregate proceeds of $37.3 million Under ASU 2014-08, these sold properties have not been classified as discontinued operations.
Note 7: Noncontrolling Interests of the Trust
Noncontrolling interests in the accompanying financial statements represent the interests of the common and preferred units in the Operating Partnership not held by the Trust. In addition, noncontrolling interests include third-party ownership interests in consolidated joint venture investments.
Common units
The common units outstanding of the Operating Partnership not held by the Trust as of June 30, 2014 have the same economic characteristics as common shares of the Trust. The 3,553,566 outstanding common units of the Operating Partnership at such date not held by the Trust share proportionately in the net income or loss and in any distributions of the Operating Partnership. The common units of the Operating Partnership not held by the Trust are redeemable at any time at the option of the holder. The Trust, as the sole general partner of the Operating Partnership, may at its option elect to settle the redemption in cash or through the exchange on a one-for-one basis with unregistered common shares of the Trust. The market value of the 3,553,566 outstanding common units based on the closing price of the common shares of the Trust at June 30, 2014 was $ 134.8 million .
 

23

Note 8: Limited Partners' Equity and Noncontrolling Interest of the Operating Partnership

Limited partners' equity in the accompanying financial statements represents the interests of the common and preferred units in the Operating Partnership not held by the Trust. The Operating Partnership's noncontrolling interest includes third-party ownership interests in consolidated joint venture investments.

Common units

The common units outstanding as of June 30, 2014 have the same economic characteristics as common shares of the Trust. The 3,553,566 outstanding common units at such date are the limited partners' equity - common units held by persons and entities other than the Trust, the general partner of the Operating Partnership, which holds a number of common units equal to the number of outstanding common shares of beneficial interest. The common units share proportionately in the net income or loss and in any distributions of the Operating Partnership and are exchangeable into the same number of common shares of the Trust. The market value of the 3,553,566 outstanding common units at June 30, 2014 based on the closing price of the common shares of the Trust at June 30, 2014 was $ 134.8 million .

Note 9: Noncontrolling Interest - Operating Partnership/Limited Partners' Equity - Preferred Units
As of June 30, 2014 , the following cumulative preferred units of the Operating Partnership were outstanding:

ISSUE
 
AMOUNT
 
UNITS
 
LIQUIDATION
PREFERENCE
 
DIVIDEND
RATE
 
 
(in 000’s)
 
 
 
 
Series I-2
 
$
7,537

 
301

 
$25
 
6.25
%
The preferred units are putable at the holder's option at any time and are callable at the Operating Partnership's option after a stated period of time for cash.

Note 10: Indebtedness

Credit Facility

In March 2014, the Company replaced its existing $500 million credit facility which was due in November 2015 with a new credit facility. The new facility (the "Credit Facility") is for $800 million . It matures in March 2018 and the Company has options to extend the maturity date for up to one additional year. Based upon the Company’s current credit ratings, borrowings under the new facility bear interest at LIBOR plus 105 basis points. There is also a 20 basis point annual facility fee on the current borrowing capacity. The credit facility contains a competitive bid option, whereby participating lenders bid on the interest rate to be charged. This feature is available for up to 50% of the amount of the facility.

The Credit Facility contains financial covenants, certain of which are set forth below:
•
total debt to total assets may not exceed 0.60 : 1 ;
•
earnings before interest, taxes, depreciation and amortization to fixed charges may not be less than 1.50 :1;
•
unsecured debt to unencumbered asset value must equal or be less than 60% ; and
•
unencumbered net operating income to unsecured interest expense must equal or exceed 175% .

As of June 30, 2014 , the Company was in compliance with the Credit Facility financial covenants.


Note 11: Disclosure of Fair Value of Financial Instruments
The following disclosure of estimated fair value was determined by management using available market information and appropriate valuation methodologies. However, considerable judgment is necessary to interpret market data and develop estimated fair value. Accordingly, the following estimates are not necessarily indicative of the amounts the Company could have realized on disposition of the financial instruments at June 30, 2014 and December 31, 2013 . The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

24

The carrying value of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued interest, dividend and distributions payable and other liabilities are reasonable estimates of fair value because of the short-term nature of these instruments.
The Company used a discounted cash flow model to determine the estimated fair value of its debt as of June 30, 2014 .  This is a Level 3 fair value calculation. The inputs used in preparing the discounted cash flow model include actual maturity dates and scheduled cash flows as well as estimates for market value discount rates.  The Company updates the discounted cash flow model on a quarterly basis to reflect any changes in the Company's debt holdings and changes to discount rate assumptions.  
The following summarizes the fair value of the Company's mortgage loans and unsecured notes as of December 31, 2013 and June 30, 2014 (in thousands):
 
 
Mortgage Loans
 
Unsecured Notes
 
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
As of December 31, 2013
 
$
545,306

 
$
573,944

 
$
2,708,213

 
$
2,764,831

As of June 30, 2014
 
$
537,338

 
$
561,388

 
$
2,708,668


$
2,850,123


Note 12: Investment in Unconsolidated Joint Ventures
Comcast Innovation & Technology Center

On June 30, 2014, the Company entered into two joint ventures for the purpose of developing and owning the Comcast Innovation & Technology Center (the "Project") located on the 1800 block of Arch Street in Philadelphia, Pennsylvania as part of a trophy-class mixed-use development. The 59 -story building will include 1.334 million square feet of rentable office space (the "Office") and a 222 -room Four Seasons Hotel (the "Hotel").  The Project is expected to be completed during the first quarter of 2018.  Project costs for the development of the Project, exclusive of tenant-funded interior improvements, are anticipated to be approximately $933 million , of which $40 million represents public assistance in the form of grants from the Commonwealth of Pennsylvania and the City of Philadelphia for funding of infrastructure improvements and public spaces.  The Company's investment in the project is expected to be approximately $185 million with 20% ownership in both joint ventures. As of June 30, 2014, the Company's investment in these joint ventures was $14.2 million . This investment is reflected in investments in and advances to unconsolidated joint ventures in the Company's consolidated balance sheet.

The two joint ventures have engaged the Company as the developer of the Project pursuant to a Development Agreement by which the Company agrees, in consideration for a development fee, to be responsible for all aspects of the development of the Project and to guarantee the timely lien-free completion of construction of the Project and the payment, subject to certain exceptions, of any cost overruns incurred in the development of the Project.

Comcast Corporation has signed a 20 -year lease for 982,275 square feet, or approximately 74% of the office space in the Office.  The Company will manage and lease the Office and Four Seasons Hotels Limited will manage the Hotel.

Liberty Venture I, LP

During the three and six months ended June 30, 2014, Liberty Venture I, LP acquired three properties comprising 603,000 square feet from the Company for $32.2 million .

Note 13: Business Combination

On October 8, 2013 , the Company acquired all of the outstanding general and limited partnership interests of Cabot Industrial Fund III Operating Partnership, L.P. , a Delaware limited partnership (the "Cabot Acquisition"). The acquisition resulted in the purchase of a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet. The purchase price for the Cabot Acquisition was $1.469 billion , which was paid through the assumption of approximately $229.8 million of mortgage debt and the remainder in cash. The Company funded the cash portion of the acquisition consideration through a combination of proceeds from an August 2013 equity offering, proceeds from a September 2013 offering of senior notes and draws under its Credit Facility.


25

The allocation of purchase price of the Cabot Acquisition is preliminary pending the receipt of the information necessary to complete the resolution of certain tangible and intangible assets and liabilities including the reconciliation of working capital accounts and the completion of tenant operating expense reconciliations.

Note 14: Derivative Instruments
We borrow funds at a combination of fixed and variable rates. Borrowings under our revolving credit facility and certain bank mortgage loans bear interest at variable rates. Our long-term debt typically bears interest at fixed rates. Our interest rate risk management objectives are to limit generally the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we enter into interest rate hedge contracts such as collars, swaps, caps and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We generally do not hold or issue these derivative contracts for trading or speculative purposes. The interest rate on all of our variable rate debt is generally adjusted at one or three month intervals, subject to settlements under interest rate hedge contracts.
Interest rate swaps involve the receipt of variable-rate amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (for the Trust) and general partner's equity and limited partners' equity - common units (for the Operating Partnership) and is subsequently reclassified into interest expense in the period that the hedged forecasted transaction affects earnings.

In connection with the Cabot Acquisition, the Company assumed the seller’s interest in three interest rate swap contracts (“Swaps”) that eliminate the impact of changes in interest rates on the payments required under variable rate mortgages that were also assumed. The Swaps had aggregate notional amounts of $104.5 million and $105.2 million at June 30, 2014 and December 31, 2013, respectively, and expire at various dates between 2018 and 2020 .

For the three and six months ended June 30, 2014 , the effective portion of the change in the fair value of the swaps was a decrease in the amount of $1.5 million and $2.4 million , respectively, which was recorded as a reduction of other comprehensive income and will be reclassified into earnings as a component of interest expense in the period that the hedged forecasted transaction affects earnings. The amount of loss reclassified into interest expense from accumulated other comprehensive income was $366,000 and $726,000 for the three and six months ended June 30, 2014 , respectively. The ineffective portion of the change in the fair value of the Swaps for the three and six months ended June 30, 2014 in the amounts of $37,000 and $55,000 , respectively, were recorded as increases to interest expense in the accompanying consolidated statements of comprehensive income.

The fair value of the Swaps in the amount of $9.1 million and $8.4 million as of June 30, 2014 and December 31, 2013, respectively, is included in other liabilities in the accompanying consolidated balance sheets. The Company estimates that $1.4 million will be reclassified from accumulated other comprehensive income as an increase to interest expense over the next 12 months.
The Company has agreements with its derivative counterparties that contain a provision whereby if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to breach any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under the agreements at their termination value including accrued interest for approximately $9.5 million .

Note 15: Commitments and Contingencies
Environmental Matters
Substantially all of the Company's properties and land were subject to Phase I Environmental Assessments and when appropriate Phase II Environmental Assessments (collectively, the “Environmental Assessments”) obtained in contemplation of their acquisition by the Company or obtained by predecessor owners prior to the sale of the property or land to the Company. The Environmental Assessments did not reveal, nor is the Company aware of, any non-compliance with environmental laws, environmental liability or other environmental claim that the Company believes would likely have a material adverse effect on the Company.
Operating Ground Lease Agreements
Future minimum rental payments under the terms of all non-cancelable operating ground leases under which the Company is the lessee, as of June 30, 2014 , were as follows (in thousands):
 

26

Year
 
Amount
2014 (six months)
 
$
187

2015
 
393

2016
 
412

2017
 
412

2018
 
412

2019 through 2034
 
5,627

Total
 
$
7,443


Operating ground lease expense for the three and six months ended June 30, 2014 were $91,000 and $175,000 , respectively, as compared to $42,000 and $84,000 , respectively, for the same periods in 2013 .
Legal Matters
From time to time, the Company is a party to a variety of legal proceedings, claims and assessments arising in the normal course of business. As of June 30, 2014 there were no legal proceedings, claims or assessments that the Company expects to have a material adverse effect on the Company’s business or financial statements.
Other
As of June 30, 2014 , the Company had letter of credit obligations of $8.1 million . The Company believes that the likelihood is remote that there will be a draw upon these letter of credit obligations.
As of June 30, 2014 , the Company had 17 buildings under development. These buildings are expected to contain, when completed, a total of 5.7 million square feet of leasable space and represent an anticipated aggregate investment of $467.3 million . At June 30, 2014 , development in progress totaled $329.7 million . In addition, as of June 30, 2014 , the Company had invested $10.8 million in deferred leasing costs related to these development buildings. See Note 12 for details of the Company's commitments related to the development of the Comcast Innovation and Technology Center.
As of June 30, 2014 , the Company was committed to $10.5 million in improvements on certain buildings and land parcels.
As of June 30, 2014 , the Company was committed to $82.8 million in future land purchases.
As of June 30, 2014 , the Company was obligated to pay for tenant improvements not yet completed for a maximum of $40.1 million .
The Company maintains cash and cash equivalents at financial institutions. The combined account balances at each institution typically exceed FDIC insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes the risk is not significant.
Note 16: Supplemental Disclosure to Statements of Cash Flows
The following are supplemental disclosures to the statements of cash flows for the six months ended June 30, 2014 and 2013 (amounts in thousands):
 
 
2014
 
2013
 Write-off of fully depreciated property and deferred costs
$
20,672

 
$
17,784

 Write-off of depreciated property and deferred costs due to sale
$
132,707

 
$
49,618

 Unrealized losses on cash flow hedge
$
(1,656
)
 
$
—

Write-off of origination costs relating to preferred unit redemptions
$
—

 
$
1,236

Increase in investments in and advances to unconsolidated joint ventures due to disposition activity

$
(11,948
)
 
$
—

Changes in accrued development capital expenditures
$
4,280

 
$
794


Amounts paid in cash for deferred leasing costs incurred in connection with signed leases with tenants are paid in conjunction with improving (acquiring) property, plant and equipment. Such costs are not contained within net real estate. However, they are integral to the completion of a tenant lease and ultimately are related to the improvement and thus the value of the Company’s

27

property, plant and equipment. They are therefore included in investing activities in the Company’s consolidated statements of cash flows.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
Liberty Property Trust (the “Trust”) is a self-administered and self-managed Maryland real estate investment trust (“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 its subsidiary, Liberty Property Limited Partnership, a Pennsylvania limited partnership (the “Operating Partnership” and, collectively with the Trust and their consolidated subsidiaries, the “Company”).
The Company owns and operates industrial properties nationally and owns and operates office properties primarily in metro Philadelphia, Washington D.C. and certain sunbelt cities. Additionally, the Company owns certain assets in the United Kingdom.
As of June 30, 2014 , the Company owned and operated 489 industrial and 186 office properties (the “Wholly Owned Properties in Operation”) totaling 88.4 million square feet. In addition, as of June 30, 2014 , the Company owned 17 properties under development, which when completed are expected to comprise 5.7 million square feet (the “Wholly Owned Properties under Development”) and 1,230 acres of developable land, substantially all of which is zoned for commercial use. Additionally, as of June 30, 2014 , the Company had an ownership interest, through unconsolidated joint ventures, in 48 industrial and 34 office properties totaling 14.1 million square feet (the “JV Properties in Operation” and, together with the Wholly Owned Properties in Operation, the “Properties in Operation”), one property under development, which when completed is expected to comprise 203,000
square feet (the "JV Property under Development" and, collectively with the Wholly Owned Properties under Development, the
"Properties under Development" and, collectively with the Properties in Operation, the "Properties") and 468 acres of developable land, substantially all of which is zoned for commercial use. Additionally, during the six months ended June 30, 2014, the Company entered into two joint ventures with the purpose of developing and owning the Comcast Innovation & Technology Center located in Philadelphia, Pennsylvania. See Note 12 to the Company’s financial statements.
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 maximizing rental rates and controlling costs. The Company pursues development opportunities that it believes will create value and yield acceptable 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 expects its strategy with respect to product and market selection to favor industrial and metro-office properties and markets with strong demographic and economic fundamentals.
Consistent with its strategy, on October 8, 2013, the Company completed the acquisition of 100% of the outstanding general partnership and limited partnership interests of the Cabot Industrial Value Fund III Operating Partnership, L.P. ("Cabot"). The purchase price for the acquisition (the "Cabot Acquisition") was $1.469 billion, which was paid through the assumption of approximately $229.8 million of mortgage debt and the remainder in cash. The Company funded the cash portion of the acquisition consideration through a combination of proceeds from an August 2013 offering of common shares, proceeds from a September 2013 offering of senior notes and draws under its credit facility. Pursuant to the purchase of Cabot, the Company acquired a 100% ownership interest in 177 industrial assets totaling approximately 23.0 million square feet at a purchase price of approximately $64 per square foot. These assets are located in 24 markets.
Also consistent with its strategy, on November 7, 2013, the Company entered into an Agreement of Sale and Purchase pursuant to which the Company agreed to sell a real estate portfolio which included the Company’s Jacksonville, Florida portfolio in its entirety, all of the office properties in Maryland, Southern New Jersey and the Fort Washington suburb of Philadelphia and flex properties in Minnesota for a purchase price of $697.3 million (the "Portfolio Sale"). The properties consisted of 97 buildings containing an aggregate of 6.6 million square feet. On December 24, 2013, the Company closed on the first of two planned settlements under this agreement.  The proceeds from the first settlement were $367.7 million and included 49 properties containing approximately 4.0 million square feet of space and 140 acres of land. The remaining 48 properties containing an aggregate of 2.6 million square feet and 19 acres of land were sold for $329.6 million in January 2014.
Due to long-term trends that the Company believes favor industrial properties and indicate potential erosion in value of suburban office properties, the Company has increased its investment in industrial and metro-office properties and decreased its investment in suburban office properties. The short-term implication of these activities is a decrease in net cash from operating activities, as rental income from the Company's industrial properties is less than that from the Company's suburban office properties. The Company anticipates that over time it will realize the benefits of these activities, including a higher rate of rental growth and a lower level of transaction costs for industrial properties as opposed to suburban office properties. For 2014, the Company anticipates that the net cash provided by operating activities, less customary capital expenditures and leasing transaction costs, will be less

28
Table of Contents

than dividend distributions primarily due to the delay in the deployment of proceeds from the Portfolio Sale. The Company will continue to evaluate its dividend distribution policy in light of these circumstances.
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 three and six months ended June 30, 2014 , straight line rents on renewal and replacement leases were on average 2.7% and 1.9% higher , respectively, than rents on expiring leases. The Company's original guidance for 2014 contemplated a decrease in straight line rent on average of up to 5%. Its revised guidance issued in July 2014 contemplates an increase of straight line rent on average of up to 4%. During the three and six months ended June 30, 2014 , the Company successfully leased 7.2 million square feet and 12.5 million square feet, respectively, and, as of that date, attained occupancy of 91.7% for the Wholly Owned Properties in Operation and 91.8% for the JV Properties in Operation for a combined occupancy of 91.7% for the Properties in Operation. At December 31, 2013 , occupancy for the Wholly Owned Properties in Operation was 91.4% and for the JV Properties in Operation was 92.3% for a combined occupancy for the Properties in Operation of 91.6% . The Company's original guidance for 2014 contemplated an increase in occupancy on average of up to 1%. Its revised guidance issued in July 2014 contemplates a decrease in occupancy on average of up to 1%.
WHOLLY OWNED CAPITAL ACTIVITY
Guidance
The Company has revised its 2014 guidance for wholly owned capital activity as follows (in millions):
 
Original Range
 
Revised Range
Acquisitions
$200 - $400
 
$91
Land Acquisitions
$50 - $100
 
$140 - $150
Dispositions
$500 - $650
 
$500 - $650
Development Deliveries
$250 - $350
 
$225 - $275
Development Starts
$400 - $600
 
$480 - $580
Development Spend
$300 - $500
 
$250 - $350
Acquisitions
During the three months ended June 30, 2014 , the Company acquired six properties for a total purchase price of $53.2 million . These properties, which contain 790,000 square feet of leasable space, were 100% occupied as of June 30, 2014 . During the six months ended June 30, 2014 , the Company acquired eight properties for a total purchase price of $90.9 million . These properties, which contain 1.4 million square feet of leasable space, were 56.3% occupied as of June 30, 2014 .

Dispositions
During the three months ended June 30, 2014 , the Company sold three operating properties to a joint venture in which the Company retained a 25% interest for $32.2 million. During the six months ended June 30, 2014 , the Company realized proceeds of $366.9 million from the sale of 52 properties representing 3.3 million square feet and 19 acres of land.
Development
During the three months ended June 30, 2014 , the Company brought into service one Wholly Owned Property under Development representing 227,000 square feet and a Total Investment of $12.4 million . During the six months ended June 30, 2014 , the Company brought into service four Wholly Owned Properties under Development representing 729,000 square feet and a Total Investment of $42.9 million . During the three months ended June 30, 2014 , the Company initiated three Wholly Owned Properties under Development with a projected Total Investment of $69.2 million . During the six months ended June 30, 2014 , the Company initiated five Wholly Owned Properties under Development with a projected Total Investment of $130.2 million. As of June 30, 2014 , the Company had 17 Wholly Owned Properties under Development with a projected Total Investment of $467.3 million .
“Total Investment” for a property is defined as the property's purchase price plus closing costs (in the case of acquisitions if vacant) and management's estimate, as determined at the time of acquisition, of the cost of necessary building improvements and lease transaction costs in the case of acquisitions, or land costs and land improvement, building improvement and lease transaction costs in the case of development projects, and, where appropriate, other development costs and carrying costs.
UNCONSOLIDATED JOINT VENTURE CAPITAL ACTIVITY
The Company periodically enters into unconsolidated joint venture relationships in connection with the execution of its real estate operating strategy.

29
Table of Contents

Acquisitions/Dispositions
During the three and six months ended June 30, 2014, a joint venture in which the Company held a 25% interest acquired three properties comprising 603,000 square feet from the Company for $32.2 million. During the three and six months ended June 30, 2014, a joint venture in which the Company holds a 25% interest sold 52 acres of land for $10.1 million. During the three and six months ended June 30, 2014 , none of the unconsolidated joint ventures in which the Company held an interest sold any operating properties. Consistent with the Company's strategy, from time to time the Company may consider transferring assets to or purchasing assets from an unconsolidated joint venture in which the Company holds an interest.
Development
During the six months ended June 30, 2014 , none of the unconsolidated joint ventures in which the Company held an interest brought any properties into service or began any development activities. As of June 30, 2014 , a joint venture in which the Company held a 25% interest had one property under development, which is expected to comprise, upon completion, 203,000 square feet and is expected to represent a Total Investment of $15.6 million. Additionally, during the six months ended June 30, 2014, the Company entered into two joint ventures with the purpose of developing and owning the Comcast Innovation & Technology Center located in Philadelphia, Pennsylvania. See Note 12 to the Company’s financial statements.

PROPERTIES IN OPERATION
The composition of the Company’s Properties in Operation as of June 30, 2014 and 2013 was as follows (square feet in thousands):

 
Net Rent
Per Square Foot (1)
 
Straight Line Rent and Operating Expense Reimbursement Per Square Foot (2)
 
Total Square Feet
 
Percent Occupied
 
June 30,
 
June 30,
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Wholly Owned Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial-Distribution
$
4.51

 
$
4.44

 
$
5.95

 
$
5.76

 
64,783

 
39,417

 
92.8
%
 
95.8
%
Industrial-Flex
$
8.63

 
$
9.04

 
$
12.39

 
$
13.05

 
9,041

 
8,952

 
90.9
%
 
90.3
%
Office
$
15.91

 
$
15.28

 
$
24.28

 
$
23.74

 
14,587

 
18,478

 
87.2
%
 
88.1
%
 
$
6.72

 
$
7.88

 
$
9.48

 
$
11.42

 
88,411

 
66,847

 
91.7
%
 
93.0
%
JV Properties in Operation: (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial-Distribution
$
3.92

 
$
3.52

 
$
5.62

 
$
5.56

 
9,872

 
9,270

 
93.9
%
 
94.3
%
Industrial-Flex
$
29.27

 
$
24.70

 
$
28.10

 
$
22.93

 
108

 
151

 
93.5
%
 
69.5
%
Office
$
25.52

 
$
24.05

 
$
37.05

 
$
35.62

 
4,114

 
4,285

 
86.6
%
 
88.3
%
 
$
10.07

 
$
9.85

 
$
14.45

 
$
14.71

 
14,094

 
13,706

 
91.8
%
 
92.2
%
Properties in Operation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial-Distribution
$
4.43

 
$
4.27

 
$
5.90

 
$
5.72

 
74,655

 
48,687

 
92.9
%
 
95.6
%
Industrial-Flex
$
8.88

 
$
9.24

 
$
12.58

 
$
13.18

 
9,149

 
9,103

 
90.9
%
 
89.9
%
Office
$
18.01

 
$
16.94

 
$
27.07

 
$
25.98

 
18,701

 
22,763

 
87.1
%
 
88.1
%
 
$
7.18

 
$
8.21

 
$
10.16

 
$
11.98

 
102,505

 
80,553

 
91.7
%
 
92.8
%

(1) Net rent represents the contractual rent per square foot at June 30, 2014 or 2013 for tenants in occupancy. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant at June 30, 2014 or 2013 was within a free rent period its rent would equal zero for the purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the straight line rent including operating expense recoveries per square foot at June 30, 2014 or 2013 for tenants in occupancy.
(3) JV Properties in Operation represents the 82 properties owned by unconsolidated joint ventures in which the Company has an interest.


30
Table of Contents

The table below details the vacancy activity during the six months ended June 30, 2014 :
 
 Total Square Feet
 
Wholly Owned Properties in Operation
 
JV Properties in Operation
 
Properties in Operation
Vacancy Activity
 
 
 
 
 
Vacancy at January 1, 2014
7,655,546

 
1,044,395

 
8,699,941

Acquisition vacant space
522,772

 
235,007

 
757,779

Completed development vacant space
68,272

 
—

 
68,272

Disposition vacant space
(534,226
)
 
—

 
(534,226
)
Expirations
11,859,850

 
851,620

 
12,711,470

Property structural changes/other
2,988

 
—

 
2,988

Leasing activity
(12,211,535
)
 
(975,267
)
 
(13,186,802
)
Vacancy at June 30, 2014
7,363,667

 
1,155,755

 
8,519,422

 


 
 
 
 
Lease transaction costs per square foot (1)
$
3.23

 
$
4.93

 
$
3.37

(1) Transaction costs include tenant improvement and lease transaction costs.

Forward-Looking Statements
When used throughout this report, the words “believes,” “anticipates,” “estimates” 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 that could cause actual financial results or management plans and objectives to differ materially from those projected or expressed herein, including: the effect of global, national and regional economic conditions; rental demand; the Company’s ability to identify, and enter into agreements with suitable joint venture partners in situations where it believes such arrangements are advantageous; the Company’s ability to identify and secure additional properties and sites, both for itself and the joint ventures to which it is a party, that meet its criteria for acquisition or development; the effect of prevailing market interest rates; risks related to the integration of the operations of entities that we have acquired or may acquire; risks related to litigation; and other risks described from time to time in the Company’s filings with the SEC. Given these uncertainties, readers are cautioned not to place undue reliance on such statements.
Critical Accounting Policies and Estimates
Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 for a discussion of critical accounting policies which include capitalized costs, revenue recognition, allowance for doubtful accounts, impairment of real estate, intangibles, investments in unconsolidated joint ventures and derivative instruments and hedging activities. During the six months ended June 30, 2014 , 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, 2014 with the results of operations of the Company for the three and six months ended June 30, 2013 . As a result of the varying levels of development, acquisition and disposition activities by the Company in 2014 and 2013 , 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.

This information should be read in conjunction with the accompanying consolidated financial statements and notes included elsewhere in this report.
Comparison of Three and Six Months Ended June 30, 2014 to Three and Six Months Ended June 30, 2013
Overview
The Company’s average gross investment in operating real estate owned for the three months ended June 30, 2014 increased to $ 6,381.4 million from $ 4,518.9 million for the three months ended June 30, 2013 . For the six months ended June 30, 2014 the Company's average gross investment in operating real estate owned increased to $6,349.0 million from $4,466.1 million

31
Table of Contents

for the six months ended June 30, 2013 . The change in average gross investment in operating real estate was primarily due to the Cabot Acquisition. This increase in operating real estate resulted in increases in rental revenue, operating expense reimbursement, rental property expenses, real estate taxes and depreciation and amortization expense. Rental property expense includes utilities, insurance, janitorial, landscaping, snow removal and other costs necessary to maintain a property.
Total operating revenue increased to $ 193.0 million for the three months ended June 30, 2014 from $ 151.0 million for the three months ended June 30, 2013 . The $ 42.0 million increase was primarily due to the increase in average gross investment in operating real estate. Total operating revenue increased to $390.6 million for the six months ended June 30, 2014 from $298.2 million for the six months ended June 30, 2013 . The $92.4 million increase was primarily due to the increase in average gross investment in operating real estate.
Segments
The Company evaluates the performance of the Wholly Owned Properties in Operation in terms of net operating income by reportable segment (see Note 5 to the Company’s financial statements for a reconciliation of this measure to income from continuing operations). The following table identifies changes to net operating income in reportable segments (dollars in thousands):
 
 
Three Months Ended
 
Percentage Increase (Decrease)
 
Six Months Ended
 
Percentage Increase (Decrease)
 
 
June 30,
 
 
June 30,
 
 
 
2014
 
2013
 
 
2014
 
2013
 
 
Carolinas
$
5,693

 
$
4,939

 
15.3
%
(1)
$
11,435

 
$
9,853

 
16.1
%
(1)
Chicago/Milwaukee
4,973

 
1,812

 
174.4
%
(1)
10,136

 
3,986

 
154.3
%
(1)
Houston
7,232

 
5,058

 
43.0
%
(1)
14,284

 
10,309

 
38.6
%
(1)
Lehigh/Central PA
19,773

 
16,550

 
19.5
%
(1)
39,013

 
33,218

 
17.4
%
(1)
Minnesota
6,770

 
7,562

 
(10.5
%)
(2)
13,390

 
15,274

 
(12.3
%)
(2)
Orlando
5,354

 
5,125

 
4.5
%
 
10,846

 
10,376

 
4.5
%
 
Philadelphia
6,790

 
5,071

 
33.9
%
(1)
13,511

 
10,950

 
23.4
%
(1)
Richmond/Hampton Roads
6,054

 
5,853

 
3.4
%
 
11,973

 
12,079

 
(0.9
%)
 
South Florida
6,891

 
4,858

 
41.8
%
(1)
14,418

 
9,433

 
52.8
%
(1)
Southeastern PA
20,060

 
22,255

 
(9.9
%)
(3)
39,660

 
44,868

 
(11.6
%)
(3)
Tampa
8,488

 
8,353

 
1.6
%
 
16,929

 
16,607

 
1.9
%
 
United Kingdom
2,722

 
(321
)
 
N/A

(1)
6,248

 
(455
)
 
N/A

(1)
Other
19,167

 
15,665

 
22.4
%
(1)
40,898

 
32,792

 
24.7
%
(1)
Total reportable segment net operating income
$
119,967

 
$
102,780

 
16.7
%
 
$
242,741

 
$
209,290

 
16.0
%
 

(1) The increase was primarily due to an increase in average gross investment in operating real estate.
(2) The decrease was primarily due to the change in property type from office to industrial properties.
(3) The decrease was primarily due to a decrease in average gross investment in operating real estate.

Same Store
Property level operating income, exclusive of termination fees, for the Same Store properties is identified in the table below.
The same store results were affected by changes in occupancy and rental rates as detailed below for the respective periods. The six-month results were also affected by the non-recovered portion of the increase in snow removal costs and other weather-related expenses for the respective periods.
 
Three Months Ended
 
Six Months Ended
 
June 30,
 
June 30,
 
2014
 
2013
 
2014
 
2013
Average occupancy %
92.6
%
 
93.4
%
 
93.1
%
 
93.2
%
Average rental rate - cash basis (1)
$
7.36

 
$
7.28

 
$
7.35

 
$
7.28

Average rental rate - straight line rent and operating expense reimbursement (2)
$
10.54

 
$
10.37

 
$
10.48

 
$
10.38


32
Table of Contents

(1) Represents the average contractual rent per square foot for the six months ended June 30, 2014 or 2013 for tenants in occupancy in Same Store properties. Net rent does not include the tenant's obligation to pay property operating expenses and real estate taxes. If a tenant was within a free rent period its rent would equal zero for purposes of this metric.
(2) Straight line rent and operating expense reimbursement represents the average straight line rent including operating expense recoveries per square foot for the six months ended June 30, 2014 or 2013 for tenants in occupancy.
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. In addition, Same Store property level operating income and Same Store cash basis property level operating income is considered by management to be a more reliable indicator of the portfolio’s baseline performance. The Same Store properties consist of the 479 properties totaling approximately 59.4 million square feet owned on January 1, 2013 . Properties that were acquired, or on which development was completed, during the year ended December 31, 2013 and the six months ended June 30, 2014 are excluded from the Same Store properties. Properties that were acquired, or on which development was completed, are included in Same Store when they have been purchased in the case of acquisitions, and placed into service in the case of completed development, prior to the beginning of the earliest period presented in the comparison. The 58 properties sold during 2013 and the 52 properties sold during the six months ended June 30, 2014 are also excluded.

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, 2014 and 2013 . Same Store property level operating income and cash basis property level operating income are non-GAAP measures and do not represent income before gain on property dispositions, income taxes and equity in earnings of unconsolidated joint ventures because they do not reflect the consolidated operations of the Company. Investors should review Same Store results, along with Funds from operations (see “Liquidity and Capital Resources” below), GAAP net income and cash flow from operating activities, investing activities and financing activities when considering the Company’s operating performance. Also set forth below is a reconciliation of Same Store property level operating income and cash basis property level operating income to net income (in thousands).


33
Table of Contents

 
Three Months Ended
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Same Store:
 
 
 
 
 
 
 
Rental revenue
$
103,498

 
$
102,999

 
$
206,266

 
$
205,965

Operating expenses:
 
 
 
 
 
 
 
Rental property expense
27,137

 
26,559

 
59,623

 
52,357

Real estate taxes
17,929

 
17,805

 
35,469

 
35,005

Operating expense recovery
(42,757
)
 
(43,167
)
 
(90,359
)
 
(85,355
)
Unrecovered operating expenses
2,309

 
1,197

 
4,733

 
2,007

Property level operating income
101,189

 
101,802

 
201,533

 
203,958

Less straight line rent
2,300

 
565

 
2,905

 
1,579

Cash basis property level operating income
$
98,889

 
$
101,237

 
$
198,628

 
$
202,379

Reconciliation of non-GAAP financial measure – Same Store:
 
 
 
 
 
 
 
Cash basis property level operating income
$
98,889

 
$
101,237

 
$
198,628

 
$
202,379

Straight line rent
2,300

 
565

 
2,905

 
1,579

Property level operating income
101,189

 
101,802

 
201,533

 
203,958

Non-Same Store property level operating income - continuing operations
33,998

 
3,354

 
67,378

 
4,831

Termination fees
128

 
278

 
957

 
585

General and administrative expense
(14,973
)
 
(16,455
)
 
(33,334
)
 
(36,248
)
Depreciation and amortization expense
(57,872
)
 
(37,527
)
 
(114,606
)
 
(74,748
)
Other income (expense)
(35,353
)
 
(22,781
)
 
(72,107
)
 
(46,140
)
Gain on property dispositions
1,896

 
—

 
1,896

 
—

Income taxes
(693
)
 
(660
)
 
(1,224
)
 
(1,151
)
Equity in earnings of unconsolidated joint ventures
1,546

 
1,566

 
5,705

 
3,323

Discontinued operations (1)
241

 
13,666

 
48,015

 
63,489

Net income
$
30,107

 
$
43,243

 
$
104,213

 
$
117,899

 
(1) Includes termination fees of $8,000 for the six months ended June 30, 2014 and $498,000 and $731,000 for the three and six months ended June 30, 2013, respectively. There were no termination fees included in discontinued operations for the three months ended June 30, 2014. Termination fees are fees that the Company agrees 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 and if a property is sold, related termination fees are included in discontinued operations.
General and Administrative
General and administrative expenses decreased to $ 15.0 million for the three months ended June 30, 2014 compared to $ 16.5 million for the three months ended June 30, 2013 and decreased to $33.3 million for the six months ended June 30, 2014 compared to $36.2 million for the six months ended June 30, 2013 . These decreases were primarily due to decreases in costs related to certain operating initiatives and acquisition-related expenditures. General and administrative expenses include salaries, wages and incentive compensation for general and administrative staff along with related costs, consulting, marketing, public company expenses, costs associated with the acquisition of properties and other general and administrative costs.
Depreciation and Amortization
Depreciation and amortization increased to $ 57.9 million for the three months ended June 30, 2014 from $ 37.5 million for the three months ended June 30, 2013 and increased to $114.6 million for the six months ended June 30, 2014 from $74.7 million for the six months ended June 30, 2013 . These increases were primarily due to the increased investment in operating real estate.

Other Income
Other income was $3.1 million for the three months ended June 30, 2014 compared to $5.4 million for the three months ended June 30, 2013 and $5.6 million for the six months ended June 30, 2014 compared to $9.7 million for the six months ended June 30, 2013 . These decreases were primarily due to a decrease in gains associated with a land development in the United Kingdom.

34
Table of Contents


Interest Expense
Interest expense increased to $ 38.5 million for the three months ended June 30, 2014 from $ 28.1 million for the three months ended June 30, 2013 . The increase was primarily due to an increase in the average debt outstanding to $ 3,249.4 million for the three months ended June 30, 2014 from $ 2,637.5 million for the three months ended June 30, 2013 . Interest expense increased to $77.7 million for the six months ended June 30, 2014 from $55.9 million for the six months ended June 30, 2013 . The increase was primarily due to an increase in the average debt outstanding to $3,250.7 million for the six months ended June 30, 2014 from $2,644.1 million for the six months ended June 30, 2013 . The increases in the average debt outstanding were primarily due to the issuance of $450 million in unsecured notes in September 2013 in anticipation of the Cabot Acquisition. Another contribution was the decrease in interest allocated to discontinued operations. There was no interest expense allocated to discontinued operations for the three months ended June 30, 2014 compared to $ 4.0 million for the three months ended June 30, 2013 . There was $557,000 in interest expense allocated to discontinued operations for the six months ended June 30, 2014 compared to $8.3 million for the six months ended June 30, 2013 . The amount of interest allocated to discontinued operations is related to the level of dispositions in 2014 compared to 2013.
The increases in interest expense for the three and six months ended June 30, 2014 were partially offset by a decrease in the weighted average interest rate which was 5.0% for the three and six months ended June 30, 2014 compared to 5.1% for the three and six months ended June 30, 2013 .
Equity in Earnings of Unconsolidated Joint Ventures
Equity in earnings of unconsolidated joint ventures decreased to $1.5 million for the three months ended June 30, 2014 compared to $1.6 million for the three months ended June 30, 2013 and increased to $5.7 million for the six months ended June 30, 2014 compared to $3.3 million for the six months ended June 30, 2013 . The increase for the six-month periods was primarily due to a $2.7 million gain related to the sale of a land leasehold interest by an unconsolidated joint venture in which the Company holds an interest.
Other
Income from discontinued operations decreased to $241,000 for the three months ended June 30, 2014 from $ 13.7 million for the three months ended June 30, 2013 and decreased to $48.0 million for the six months ended June 30, 2014 from $63.5 million for the six months ended June 30, 2013 . These decreases were primarily due to the level of dispositions in 2014 compared to 2013.
As a result of the foregoing, the Company’s net income decreased to $ 30.1 million for the three months ended June 30, 2014 from $43.2 million for the three months ended June 30, 2013 and decreased to $104.2 million for the six months ended June 30, 2014 from $117.9 million for the six months ended June 30, 2013 .
Liquidity and Capital Resources
Overview
The Company seeks to maintain a conservative balance sheet and pursue a strategy of financial flexibility. The Company's liquidity requirements include operating and general and administrative expenses, shareholder distributions, funding its investment in development properties and satisfying interest requirements and debt maturities. The Company believes that proceeds from operating activities, asset sales, its available cash, borrowing capacity from its Credit Facility (as defined below) and its other sources of capital including the public debt and equity markets will provide it with sufficient funds to satisfy these obligations.
Activity
As of June 30, 2014 , the Company had cash and cash equivalents of $247.7 million , including $19.0 million in restricted cash.
Net cash provided by operating activities increased to $147.4 million for the six months ended June 30, 2014 from $146.4 million for the six months ended June 30, 2013 . This $1.0 million increase was primarily due to changes in restricted cash, prepaid expenses and other assets and other liabilities during 2014 related to expenditures on and the distribution of proceeds for a land development in the United Kingdom. There were no similar expenditures or distributions during 2013. Decreases were offset by an increase in operating activities during 2013, reflecting the impact of the Cabot Acquisition net of the Portfolio Sale. Net cash flow provided by operating activities is the primary source of liquidity to fund distributions to shareholders and for recurring capital expenditures and leasing transaction costs for the Company’s Wholly Owned Properties in Operation.


35
Table of Contents

Net cash provided by investing activities was $39.2 million for the six months ended June 30, 2014 compared to net cash used in investing activities of $102.1 million for the six months ended June 30, 2013 . This $141.3 million change primarily resulted from an increase in net proceeds from the disposition of properties and land associated with the close of the second settlement of the Portfolio Sale. This amount was partially offset by an increase in the investment in development properties.
Net cash used in financing activities increased to $122.5 million for the six months ended June 30, 2014 compared to $17.5 million for the six months ended June 30, 2013 . This $105.0 million increase was primarily due to net usage of the Credi t Facility related to the company’s acquisition, disposition and development activities during 2013. No amounts were dra wn on the Credit Facility at December 31, 2013 and June 30, 2014. In addition, distributions to shareholders were higher in 2014 due to the equity offering associated with the Cabot Acquisition. Net cash used in financing activities includes proceeds from the issuance of equity and debt, net of debt repayments, equity repurchases and distributions.
The Company funds its development activities and acquisitions with long-term capital sources and proceeds from the disposition of properties. When appropriate the Company also funds such activities with available capacity under its $800 million credit facility (the "Credit Facility"). The Credit Facility replaced a $500 million credit facility during the three months ended March 31, 2014. The interest rate on borrowings under the Credit Facility fluctuates based upon ratings from Moody’s Investors Service, Inc., Standard and Poor’s Ratings Group and Fitch, Inc. Based on the Company’s existing ratings, the interest rate for borrowings under the Credit Facility at June 30, 2014 was LIBOR plus 105 basis points.
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 fixed charge coverage ratio. As of June 30, 2014 , the Company’s debt to gross assets ratio was 41.3% and for the six months ended June 30, 2014 , the fixed charge coverage ratio was 2.9 x. Debt to gross assets equals total long-term debt and borrowings under the Credit Facility divided by total assets plus accumulated depreciation. The fixed charge coverage ratio equals income from continuing operations, including operating activity from discontinued operations, plus interest expense and depreciation and amortization, divided by interest expense, including capitalized interest, plus distributions on preferred units.
As of June 30, 2014 , $537.3 million in mortgage loans and $2,708.7 million in unsecured notes were outstanding with a weighted average interest rate of 5.05% . The interest rates on $3,230.0 million of mortgage loans and unsecured notes are fixed (including $104.5 million fixed via a swap arrangement - see Note 14 to the Company's financial statements) and range from 3.0% to 7.5% . The weighted average remaining term for the mortgage loans and unsecured notes is 5.4 years.

The scheduled principal amortization and maturities of the Company’s mortgage loans, unsecured notes and the Credit Facility and the related weighted average interest rates as of June 30, 2014 are as follows (in thousands, except percentages):
 
 
MORTGAGES
 
 
 
 
 
 
 
WEIGHTED
AVERAGE
INTEREST RATE
 
PRINCIPAL
AMORTIZATION
 
PRINCIPAL
MATURITIES
 
UNSECURED
NOTES
 
CREDIT
FACILITY
 
TOTAL
 
2014
$
5,817

 
$
—

 
$
199,991

 
$
—

 
$
205,808

 
5.64
%
2015
12,138

 
44,469

 
315,925

 
—

 
372,532

 
5.16
%
2016
11,720

 
182,318

 
299,470

 
—

 
493,508

 
6.08
%
2017
10,916

 
2,349

 
295,952

 
—

 
309,217

 
6.57
%
2018
8,730

 
27,051

 
99,972

 
—

 
135,753

 
6.80
%
2019
8,680

 
50,043

 
—

 
—

 
58,723

 
3.99
%
2020
4,280

 
67,361

 
349,482

 
—

 
421,123

 
4.83
%
2021
2,716

 
65,008

 
—

 
—

 
67,724

 
4.06
%
2022
2,172

 
—

 
399,380

 
—

 
401,552

 
4.13
%
2023 & thereafter
29,625

 
1,945

 
748,496

 
—

 
780,066

 
4.03
%
 
$
96,794

 
$
440,544

 
$
2,708,668

 
$
—

 
$
3,246,006

 
5.05
%

General
The Company has an effective S-3 shelf registration statement on file with the SEC pursuant to which the Trust and the Operating Partnership may issue an unlimited amount of equity securities and debt securities.


36
Table of Contents

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 operating 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 REITs 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.


37
Table of Contents

Funds from operations (“FFO”) available to common shareholders for the three and six months ended June 30, 2014 and 2013 are as follows (in thousands, except per share amounts):
 
Three Months Ended
 
Six Months Ended
 
June 30, 2014
 
June 30, 2013
 
June 30, 2014
 
June 30, 2013
Reconciliation of net income to FFO - basic:
 
 
 
 
 
 
 
Net income available to common shareholders
$
29,249

 
$
40,109

 
$
101,149

 
$
111,348

Basic - income available to common shareholders
29,249

 
40,109

 
101,149

 
111,348

Basic - income available to common shareholders per weighted average share
$
0.20

 
$
0.33

 
$
0.69

 
$
0.93

Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
3,341

 
3,301

 
6,632

 
6,698

Depreciation and amortization
57,509

 
44,804

 
113,616

 
89,776

Gain on property dispositions
(2,085
)
 
(7,658
)
 
(47,611
)
 
(49,364
)
Noncontrolling interest share in addback for depreciation and amortization and gain on property dispositions
(1,380
)
 
(1,199
)
 
(1,707
)
 
(1,399
)
Funds from operations available to common shareholders – basic
$
86,634

 
$
79,357

 
$
172,079

 
$
157,059

Basic Funds from operations available to common shareholders per weighted average share
$
0.59

 
$
0.66

 
$
1.17

 
$
1.32

Reconciliation of net income to FFO - diluted:
 
 
 
 
 
 
 
Net income available to common shareholders
$
29,249

 
$
40,109

 
$
101,149

 
$
111,348

Diluted - income available to common shareholders
29,249

 
40,109

 
101,149

 
111,348

Diluted - income available to common shareholders per weighted average share
$
0.20

 
$
0.33

 
$
0.69

 
$
0.93

Adjustments:
 
 
 
 
 
 
 
Depreciation and amortization of unconsolidated joint ventures
3,341

 
3,301

 
6,632

 
6,698

Depreciation and amortization
57,509

 
44,804

 
113,616

 
89,776

Gain on property dispositions
(2,085
)
 
(7,658
)
 
(47,611
)
 
(49,364
)
Noncontrolling interest less preferred share distributions
703

 
1,226

 
2,438

 
3,432

Funds from operations available to common shareholders - diluted
$
88,717

 
$
81,782

 
$
176,224

 
$
161,890

Diluted Funds from operations available to common shareholders per weighted average share
$
0.59

 
$
0.66

 
$
1.17

 
$
1.31

Reconciliation of weighted average shares:
 
 
 
 
 
 
 
Weighted average common shares - all basic calculations
147,012

 
120,081

 
146,749

 
119,416

Dilutive shares for long term compensation plans
762

 
830

 
695

 
813

Diluted shares for net income calculations
147,774

 
120,911

 
147,444

 
120,229

Weighted average common units
3,551

 
3,714

 
3,555

 
3,714

Diluted shares for Funds from operations calculations
151,325

 
124,625

 
150,999

 
123,943



38
Table of Contents

Inflation
Inflation has remained relatively low in recent years, and as a result, it has not had a significant impact on the Company during this period. To the extent an increase in inflation would result in increased operating costs, such as 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.

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, 2013 .
Item 4. Controls and Procedures
Controls and Procedures with respect to the Trust
(a) Evaluation of Disclosure Controls and Procedures
The Trust’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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Trust’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Trust in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Trust’s internal control over financial reporting during the quarter ended June 30, 2014 that have materially affected or are reasonably likely to materially affect the Trust’s internal control over financial reporting.
Controls and Procedures with respect to the Operating Partnership
(a) Evaluation of Disclosure Controls and Procedures
The Trust’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, on behalf of the Trust in its capacity as the general partner of the Operating Partnership, evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer have concluded that the Operating Partnership’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership in its reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC’s rules and forms and (ii) accumulated and communicated to the Trust’s management, including its principal executive and principal financial officers, or persons performing similar function, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in the Operating Partnership’s internal control over financial reporting during the quarter ended June 30, 2014 that have materially affected or are reasonably likely to materially affect the Operating Partnership’s internal control over financial reporting.

39
Table of Contents

PART II. OTHER INFORMATION
Item 1.
Legal Proceedings
The Company is not a party to any material litigation as of June 30, 2014 .
Item 1A.
Risk Factors

None.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.
Defaults upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.

40
Table of Contents

Item 6.
Exhibits
 
3.1*
Articles of Amendment to Declaration of Trust.
 
 
10.1+*
Amended and Restated Limited Liability Company Operating Agreement of 18A LLC, dated as of June 30, 2014, by and between Liberty Property Limited Partnership and Comcast Corporation
 
 
10.2+*
Limited Liability Company Operating Agreement of 18A Hotel LLC, dated as of June 30, 2014, by and between Comcast Corporation and Liberty Property Development Company IV-S, LLC, a wholly owned subsidiary of Liberty Property Limited Partnership
 
 
10.3+*
Development Agreement, dated as of June 30, 2014, by and among Liberty Property 18th & Arch, LP, Liberty Property Limited Partnership and a wholly owned subsidiary of 18A Hotel LLC
 
 
10.4
Liberty Property Trust Amended and Restated Share Incentive Plan (Incorporated herein by reference to appendix to the Trust’s Definitive Proxy Statement on Schedule 14A filed on April 7, 2014).

 
 
12.1*
Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges.
 
 
31.1*
Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.2*
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.3*
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.4*
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
32.1*
Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.2*
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.3*
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.4*
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
101.INS*
XBRL Instance Document.
 
 
101.SCH*
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
101.LAB*
XBRL Extension Labels Linkbase.
 
 
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.

41
Table of Contents

________________________
*    Filed herewith
+    Confidential treatment has been requested with respect to a portion of this exhibit pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.

42
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
 
/s/ WILLIAM P. HANKOWSKY
 
July 31, 2014
William P. Hankowsky
 
Date
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
 
 
 
 
 
/s/ GEORGE J. ALBURGER, JR.
 
July 31, 2014
George J. Alburger, Jr.
 
Date
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
 
 

43
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 LIMITED PARTNERSHIP
 
BY:
Liberty Property Trust
 
 
 
General Partner
 
 
 
 
 
 
/s/ WILLIAM P. HANKOWSKY
 
July 31, 2014
William P. Hankowsky
 
Date
Chairman of the Board of Trustees, President and Chief Executive Officer (Principal Executive Officer)
 
 
 
 
 
 
/s/ GEORGE J. ALBURGER, JR.
 
July 31, 2014
George J. Alburger, Jr.
 
Date
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
 
 

44
Table of Contents

EXHIBIT INDEX
 
EXHIBIT
NO.
 
 
 
3.1
Articles of Amendment to Declaration of Trust.
 
 
10.1+
Amended and Restated Limited Liability Company Operating Agreement of 18A LLC, dated as of June 30, 2014, by and between Liberty Property Limited Partnership and Comcast Corporation
 
 
10.2+
Limited Liability Company Operating Agreement of 18A Hotel LLC, dated as of June 30, 2014, by and between Comcast Corporation and Liberty Property Development Company IV-S, LLC, a wholly owned subsidiary of Liberty Property Limited Partnership
 
 
10.3+
Development Agreement, dated as of June 30, 2014, by and among Liberty Property 18th & Arch, LP, Liberty Property Limited Partnership and a wholly owned subsidiary of 18A Hotel LLC

 
 
12.1
Statement Re: Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges.
 
 
31.1
Certification of the Chief Executive Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.2
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.3
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
31.4
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(a) under the Securities Exchange Act of 1934.
 
 
32.1
Certification of the Chief Executive Officer of Liberty Property Trust required under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.2
Certification of the Chief Financial Officer of Liberty Property Trust required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.3
Certification of the Chief Executive Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
32.4
Certification of the Chief Financial Officer of Liberty Property Trust, in its capacity as the general partner of Liberty Property Limited Partnership, required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended. (This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.)
 
 
101.INS
XBRL Instance Document.
 
 
101.SCH
XBRL Taxonomy Extension Schema Document.
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
101.LAB
XBRL Extension Labels Linkbase.
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
 
______________________


45
Table of Contents

+    Confidential treatment has been requested with respect to a portion of this exhibit pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended.


46


Exhibit 3.1

LIBERTY PROPERTY TRUST
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The Declaration of Trust, as amended and restated to date (the “Declaration of Trust), of Liberty Property Trust, a Maryland real estate investment trust (the “Trust”), is hereby amended by deleting Section 6.1 of Article VI of the Declaration of Trust in its entirety and replacing it with the following:

“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 three hundred million (300,000,000), 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 fully paid and nonassessable by the Trust.”
SECOND: The amendment to the Declaration of Trust as set forth above has been duly advised by the board of trustees and approved by the shareholders of the Trust as required by law.

THIRD: The undersigned President and Chief Executive Officer acknowledges these Articles of Amendment to be the corporate act of the Trust and as to all matters or facts required to be verified under oath, the undersigned President and Chief Executive Officer acknowledges that to the best of the President and and Chief Executive Officer’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 to be signed in its name and on its behalf by its President and Chief Executive Officer and attested to by its Secretary on this 20th day of May, 2014.
ATTEST:                      LIBERTY PROPERTY TRUST


/s/ Herman C. Fala              By: /s/ William P. Hankowsky (SEAL)
Herman C. Fala, Secretary           William P. Hankowsky, President
and Chief Executive Officer




Exhibit 10.1

[Where indicated by “[***],” the confidential material contained herein has been omitted and has been separately filed with the Commission.]

AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
18A LLC
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS
3
ARTICLE II CONTINUATION OF EXISTENCE AND PURPOSE
18
2.01.      Superseding the Letter Agreements, the Original Operating Agreement and the JV Term Sheet    18
2.02.      Continuation of Existence    18
2.03.      Name of Company    18
2.04.      Principal Place of Business    18
2.05.      Purpose    19
2.06.      Exclusive Activities of Company    19
2.07.      No Payment of Individual Obligations    19
2.08.      Title to Assets    19
2.09.      Term    19
2.10.      Representations and Warranties    19
2.11.      Respecting the Affiliated Company and Operating Partnership    19
ARTICLE III DEVELOPMENT OF THE PROJECT; COMCAST LEASE; PROPERTY MANAGEMENT
20
3.01.      Project Design and Engineering    20
3.02.      Construction Contract    20
3.03.      Development Agreement    20
3.04.      Approved Project Budget    21
3.05.      Comcast Lease.    21
3.06.      Property Management    21
3.07.      Loan    21
ARTICLE IV CAPITALIZATION OF THE COMPANY
22
4.01.      Initial Capital Contributions    22
4.02.      Additional Capital Contributions – Total Project Costs    22
4.03.      Additional Capital Contributions -- Other than Total Project Costs    23
4.04.      Failure to Make Additional Capital Contributions    23
4.05.      No Other Required Capital Contributions    24
4.06.      Capital Accounts    24
4.07.      Negative Capital Accounts    25
4.08.      Return of Capital; No Interest on Amounts in Capital Account    25
ARTICLE V ALLOCATIONS
25
5.01.      Allocation of Profits and Losses    25
5.02.      Regulatory Allocations    26
5.03.      Allocation in the Event of Transfer    27
ARTICLE VI DISTRIBUTIONS
28
6.01.      Distribution of Proceeds    28
6.02.      Distributions in Kind    28
6.03.      REIT Distributions    28
ARTICLE VII MANAGEMENT
29
7.01.      Management and Control of the Business and Affairs of the Company    29
7.02.      Delegation; Standards; Indemnification    29
7.03.      Matters Requiring Unanimous Approval of the Members    31
7.04.      Special Meetings; Action by Written Consent    34
7.05.      Third Parties    34
7.06.      Other Activities of Members    34
7.07.      Withholding of Tax on Certain Company Distributions    34
7.08.      REIT Provisions    35
7.09.      Right to Disclose Information    37
7.10.      Loan Provisions    37
7.11.      Management Dispute    38
7.12.      Removal of the Managing Member    38
ARTICLE VIII PUT/CALL
39
8.01.      Invoking the Put/Call Provisions    39
8.02.      Put Sale Option    41
8.03.      Purchase Price    41
8.04.      Appraisal Process    42
8.05.      Closing    43
8.06.      Assumption of Company’s Obligations    44
8.07.      Payment of Debts    44
ARTICLE IX COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES
44
9.01.      Company Expenses    44
9.02.      No Other Compensation    44
ARTICLE X COMPANY BOOKS, RECORDS AND STATEMENTS
45
10.01.      Books and Records    45
10.02.      Method of Accounting    45
10.03.      Financial Statements    45
10.04.      Bank Accounts    47
10.05.      Tax Matters    47
10.06.      Certain Elections    49
10.07.      Certain Tax Accounting Matters    49
10.08.      Reserves    50
10.09.      Intentionally Omitted    50
10.10.      Annual Budget; Leasing Guidelines    50
ARTICLE XI TRANSFER OF MEMBERSHIP INTERESTS
53
11.01.      Transfer    53
11.02.      Transfers of Membership Interests to Affiliates    54
11.03.      Transfers of Membership Interests to Third Party    54
11.04.      Intentionally Omitted    56
11.05.      Withdrawal of a Member    56
11.06.      Admission of Transferee as a Member    57
11.07.      Admission of Additional Members    57
ARTICLE XII DISSOLUTION AND LIQUIDATION
57
12.01.      No Dissolution, etc    57
12.02.      Events Causing Dissolution    57
12.03.      Rights to Continue Business of Company    57
12.04.      Dissolution    58
12.05.      Liquidation    58
12.06.      Reasonable Time for Winding Up    58
12.07.      Termination of Company    58
ARTICLE XIII MISCELLANEOUS PROVISIONS
58
13.01.      Additional Actions and Documents    58
13.02.      Notices    58
13.03.      Survival and Reliance    61
13.04.      Waivers    61
13.05.      Exercise of Rights    61
13.06.      Binding Effect    61
13.07.      Limitation on Benefits of this Agreement    61
13.08.      Amendment Procedure    62
13.09.      Entire Agreement    62
13.10.      Gender    62
13.11.      Captions    62
13.12.      Governing Law    62
13.13.      Execution in Counterparts    62
13.14.      Telefax Signatures    62
13.15.      Insurance    62
13.16.      Attorneys’ Fees    62
13.17.      Confidentiality    63
13.18.      Severability    63
13.19.      Member Estoppel Certificates    63
13.20.      Calculation of Time    64
13.21.      Time of the Essence    64
13.22.      Exhibits    64
13.23.      Payment of Costs    64
13.24.      Non-Disparagement    64
13.25.      Waiver of Conflict    64

AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
18A LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “ Agreement ”) is made and entered into as of the 30th day of June, 2014 (the “ Effective Date ”), by and between COMCAST CORPORATION a Pennsylvania corporation (“ Comcast ”) and LIBERTY PROPERTY LIMITED PARTNERSHIP , a Pennsylvania limited partnership (“ Liberty ” and sometimes “ Managing Member ”).
RECITALS
WHEREAS , prior to the Effective Date, 18A LLC (the “ Company ”) was formed by Comcast as a Delaware limited liability company pursuant to the terms of the Delaware Limited Liability Company Act, as amended (the “ Act ”), by the filing of the certificate of formation of the Company with the Secretary of State of the State of Delaware on July 12, 2011. Comcast, as the sole member of the Company, also executed a Limited Liability Company Operating Agreement dated as of July 12, 2011 to memorialize the manner in which the Company would be governed and managed (the “ Original Operating Agreement ”). Prior to the execution of this Agreement, Comcast was the sole member of the Company.
WHEREAS , the Company is the sole member of LPT 18 th & Arch Street Limited, LLC, a Delaware limited liability company (“ 18 th Limited ”) and is the sole member of LPT 18 th & Arch Street GP, LLC, a Delaware limited liability company (“ 18 th GP ” and together with 18 th Limited, the “ Affiliated Companies ”). 18 th Limited owns an 89% limited partnership interest in Liberty Property 18th & Arch, LP, a Delaware limited partnership (the “ Operating Partnership ”) and 18 th GP holds an 11% general partnership interest in the Operating Partnership.
WHEREAS , the Company is the sole member of 18A Lender, LLC, a Delaware limited liability company (“ 18A Lender ”), whose sole purpose is to provide financing to the Operating Partnership.
WHEREAS , prior to the execution of this Agreement, the Company caused the Operating Partnership to acquire fee simple title to that certain parcel of land known as 1800 Arch Street, Philadelphia, Pennsylvania (the “ Land ”).
WHEREAS , the Company, the Affiliated Companies and the Operating Partnership entered into a Management Agreement with Liberty Property Philadelphia Development/Management LP, a Delaware limited partnership (“ Liberty Manager ”) dated August 3, 2011 pursuant to which Liberty Manager was appointed as the manager of the Company, the Affiliated Companies and the Operating Partnership and of the Land, and which agreement is being terminated as of the date hereof.
WHEREAS , Comcast and LPT previously entered into that certain Letter Agreement dated July 18, 2011 (the “ Original Letter Agreement ”) which outlined the understandings between Comcast and LPT concerning the acquisition of the Land and related matters.
WHEREAS , the Members have agreed to cause the Operating Partnership and Hotel Owner to develop, construct and own a mixed-use development (the “ Project ”) on the Land in accordance with the Approved Plans and Specifications, which Project is intended to be a trophy-class mixed-use development with an approximate total project costs (exclusive of tenant improvements) of $933 million, consisting of one or more buildings that will contain approximately 1,333,580 rentable square feet of office space, a full-service 5-star luxury hotel with approximately 222 rooms, approximately 4,052 square feet of ancillary retail space, indoor and outdoor public space with an area of approximately 20,000 square feet, an underground pedestrian concourse connecting from the east curb-line of the Land to the existing concourse, and an underground parking area approximately fifty-five (55) automobile parking spaces (consisting of standard sized parking spaces, compact car spaces and charging stations) and six (6) oversized van parking spaces and in furtherance of such agreement, the Company shall cause the Operating Partnership to develop the Office Unit (as defined below).
WHEREAS , pursuant to a Supplemental Letter Agreement between Comcast and LPT dated May 30, 2013 (the “ Supplemental Letter Agreement ” and together with the Original Letter Agreement, the “ Letter Agreements ”), the parties updated, amended and supplemented the terms of the Original Letter Agreement, and provided for, among other things, the sharing of certain pre-development costs related to the Project on a 50-50 basis.
WHEREAS , pursuant to a Joint Venture Term Sheet dated January 15, 2014 between Comcast and LPT (the “ JV Term Sheet ”), the parties agreed to a non-binding outline of the principal terms for the formation of one or more joint ventures to develop, construct and own certain real estate developments in Philadelphia, Pennsylvania, including the Project.
WHEREAS , in order to facilitate the development and operation of the Project, the Company caused or will cause the Operating Partnership to submit the Land to the provisions of the Pennsylvania Uniform Condominium Act, 68 Pa. C.S. §3101 et seq by recording a Declaration of Condominium executed by the Operating Partnership and recorded with the Department of Records for Philadelphia, PA (the “ Declaration ”), and creating a condominium known as “1800 Arch Street Condominium” (the “ Condominium ”). The Condominium contains the following units: Office Unit, which consists of the proposed office, retail space and the parking area together with an approximately 83.95% percentage interest in the common elements (the “ Office Unit ”), Hotel Unit, which consists of the hotel together with an approximately 16.04% percentage interest in the common elements (the “ Hotel Unit ”), and Public Unit, which consists of the underground pedestrian concourse and certain infrastructure, utility and related improvements, together with a 0.01% percentage interest in the common elements (the “ Public Unit ”).
WHEREAS , immediately prior to entering into this Agreement, the Company caused, or promptly following the execution of this Agreement the Company will cause, the Operating Partnership to convey the Hotel Unit to Liberty Property 18 th & Arch Hotel, LLC, a Delaware limited liability company affiliated with the Company (the “ Hotel Owner ”).
WHEREAS , immediately prior to entering into this Agreement, the Company caused, or promptly following the execution of this Agreement the Company will cause, the Operating Partnership to convey the Public Unit to PIDC/Development Management Corporation, a Pennsylvania non-profit corporation (“ PIDC ”).
WHEREAS , on or about the date hereof, the Company has caused, or will cause, the Operating Partnership to execute as tenant that certain Lease Agreement with PIDC for the Public Unit and any and all rights of PIDC in and to the structures and improvements constituting a portion of the below-ground pedestrian concourse tunnel (and all improvements related thereto) located within the bed of N. 18th Street, which tunnel connects the Public Unit to the real property and improvements owned by PIDC and known as Unit 3 of the 1701-1717 JFK Boulevard Condominium in such form as previously approved by the Members (the “ Public Unit Lease ”).
WHEREAS , Comcast and Liberty desire to confirm Liberty’s admission to the Company and desire to set forth their agreement as to the manner in which the Company, 18A Lender, 18th Limited, 18th GP, the Operating Partnership and the Property shall be governed and operated.
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto agree that the Original Operating Agreement is hereby amended and restated in its entirety as follows, and that this Agreement shall hereafter govern the relationship between Comcast and Liberty with respect to the Company, 18th Limited, 18th GP, the Operating Partnership and the Property.
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined in this ARTICLE I shall, for the purposes of this Agreement, have the meanings herein specified. Unless otherwise specified, all references herein to Articles or Sections are to Articles or Sections of this Agreement.
“ 18A Lender ” shall have the meaning set forth in the Recitals.
“ 18A Loan ” shall mean that certain loan made by 18A Lender to the Operating Partnership.
“ 18th GP ” shall have the meaning set forth in the Recitals.
“ 18th Limited ” shall have the meaning set forth in the Recitals.
“ 8082 Notice ” shall have the meaning set forth in Section 10.05(c) .
“ AAA ” shall have the meaning set forth in Section 10.10(c)(ii) .
“ Act ” shall have the meaning given thereto in the Recitals.
“ Additional Arbitrator ” shall have the meaning set forth in Section 10.10(c)(i) .
“ Additional Capital Contribution ” shall have the meaning set forth in Section 4.03 .
“ Adjusted Capital Account Deficit ” means, with respect to any Member, the deficit balance in such Member’s Capital Account as of the end of the relevant Fiscal Year or period, after (a) crediting to such Capital Account any amounts which such Member is deemed to be obligated to restore to the Company pursuant to the next-to-last sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“ Affiliate ” means, when used with reference to a specific Person, any Person directly or indirectly controlling, controlled by, or under common control with the Person in question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. For the avoidance of doubt, neither the Company, the Affiliated Companies, the Operating Partnership, Hotel Owner, 18A Hotel LLC, a Delaware limited liability company, nor 18A Hotel Lender LLC, a Delaware limited liability company, shall be deemed to be an “Affiliate” of any Member.
“ Affiliated Companies ” shall have the meaning set forth in the Recitals.
“ Agreement ” means this Amended and Restated Limited Liability Company Operating Agreement, as amended from time to time.
“ Annual Budget ” shall mean for each fiscal year of the Company, the budget setting forth projected receipts and expenditures (capital, operating and other) for such fiscal year, as proposed by the Managing Member and approved by Comcast pursuant to Section 10.10 .
“ Appraisal Deadline ” shall have the meaning set forth in Section 8.04(a) .
“ Appraisal Initiation Date ” shall mean:
(a)    with respect to an Appraisal Process being initiated pursuant to Section 8.01(a) , the date upon which the Put Notice is deemed to be delivered pursuant to Section 13.02 (as such date may be extended pursuant to Section 8.01(c) );
(b)    with respect to an Appraisal Process being initiated pursuant to Section 8.01(a) , the date upon which the Call Notice is deemed to be delivered pursuant to Section 13.02 (as such date may be extended pursuant to Section 8.01(c) );
(c)    with respect to an Appraisal Process being initiated pursuant to Section 11.03 , the date upon which the Offer is deemed to be delivered pursuant to Section 13.02 .
“ Appraisal Process ” shall have the meaning set forth in Section 8.04 .
“ Approved Plans and Specifications ” means the Design Development Plans and Project Narratives, as they may hereafter be developed into final plans and specifications as permitted in this Agreement and as they may be amended as permitted in this Agreement.
“ Approved Project Budget ” means the budget attached hereto as Schedule 3.04 as such may be amended as permitted by this Agreement.
“ Arbiter ” shall have the meaning set forth in Section 10.10(c)(i) .
“ Architect ” shall have the meaning set forth in Section 3.01 .
“ Bankrupt ” and “ Bankruptcy ” shall mean, and a Member shall be deemed “Bankrupt” upon, (i) the entry of a final and appealable decree or order for relief of such Member by a court of competent jurisdiction in any involuntary case involving such Member under any bankruptcy, insolvency, or other similar law now or hereafter in effect and the expiration of the applicable appeals period without any appeal being filed; (ii) the appointment of a receiver, liquidator, assignee for the benefit of creditors, custodian, trustee, sequestrator, or other similar agent for such Member or for any substantial part of such Member’s assets or property; (iii) the entry of a final non-appealable order for the winding up or liquidation of such Member’s affairs by a court of competent jurisdiction in any involuntary case involving such Member under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (iv) the filing with respect to such Member of a petition in any such involuntary bankruptcy case which petition remains undismissed for a period of 90 days; (v) the commencement by such Member of a voluntary case under any bankruptcy, insolvency , or other similar law now or hereafter in effect; (vi) the consent by such Member to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar agent for such Member or for any substantial part of such Member’s assets or property; or (vii) the making by such Member of any general assignment for the benefit of creditors.
[***]
“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such in the Commonwealth of Pennsylvania shall not be regarded as a Business Day.
“ Call for Capital ” shall have the meaning set forth in Section 4.03 .
“ Call for Development Capital ” shall have the meaning set forth in Section 4.02 .
“ Call Notice ” shall have the meaning set forth in Section 8.01(b) .
“ Call Right ” shall have the meaning set forth in Section 8.01(b) .
“ Capital Account ” means the Capital Account maintained for each Member pursuant to Section 4.06 .
“ Capital Contributions ” means, with respect to any Member, the total amount of contributions made by or credited to such Member.
“ Cash Flow Statement ” shall have the meaning set forth in Section 10.03(c)(i) .
“ Change in REIT Law ” means any amendment to the Code or the Treasury Regulations applicable to the taxation of REITs and any modification to a published administrative interpretation of the Code or Treasury Regulations by the Internal Revenue Service which occurs after the date of the issuance of a certificate of occupancy for the Property and which (i) would impact the ability of LPT to continue to qualify as a REIT under the Code or (ii) would cause LPT to incur any tax obligation under Section 857 or Section 4981 of the Code that is material to LPT.
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). References to Sections of the Code are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Code.
“ Comcast ” shall have the meaning set forth in the Preamble to this Agreement.
“ Comcast COC ” means [***].
“ Comcast Lease ” shall have the meaning set forth in Section 3.05 .
“ Comcast Merger Successor ” shall have the meaning set forth in Section 11.02 .
“ Comcast Tenancy Requirement ” shall mean (a) the Comcast Tenant (together with any Affiliate of Comcast) leases at least [***] rentable square feet in the Office Unit and (b) no other tenant (together with Affiliates of such tenant) leases any portion of the Office Unit greater than that leased by the Comcast Tenant (together with any Affiliate of Comcast).
“ Comcast Tenant ” shall have the meaning set forth in Section 3.05 .
“ Company ” shall have the meaning set forth in the Recitals.
“ Competitor ” shall mean:
[***].
(b)     with respect to Liberty, any of the following: a publicly held or privately held real estate investment trust; a private equity fund whose principal investments are directly or indirectly in income-producing real estate; any individual or organization that directly or through its Affiliates has as its primary business the ownership, development or operation of income-producing real estate assets; and any Affiliate of any of the foregoing.
“ Condominium ” shall have the meaning set forth in the Recitals.
“ Construction Contract ” shall have the meaning set forth in Section 3.02 .
“ Contributing Member ” shall have the meaning set forth in Section 4.04 .
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.
“ Credit Support Agreement ” shall mean any guarantee, indemnity agreement or other credit support instrument, executed or delivered by a Member or any Affiliate of a Member in connection with or relating to any Financing, including any guaranty of all or any portion of the Financing or any so-called non-recourse carve-out guarantee and/or environmental indemnity agreement, and all amendments, modifications, extensions, renewals or supplements thereto.
“ Declaration ” shall have the meaning set forth in the Recitals.
“ Deferral Right ” shall have the meaning set forth in Section 8.01(c) .
“ Depreciation ” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Year or period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such Year or period, then Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such Year or period bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis for Federal income tax purposes of an asset at the beginning of such Year or period is zero, then Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.
“ Design Contract ” shall have the meaning set forth in Section 3.01 .
“ Design Development Plans and Project Narratives ” shall have the meaning set forth in Section 3.01 .
“ Designated Arbitrator ” shall have the meaning set forth in Section 10.10(c)(i) .
“ Developer ” shall have the meaning set forth in Section 3.03 .
“ Development Agreement ” shall have the meaning set forth in Section 3.03 .
“ Development Contribution ” shall have the meaning set forth in Section 4.02 .
“ Development Termination Event ” shall mean a termination of the Development Agreement pursuant to Section 10.1(c) thereof.
“ Dispute Notice ” shall have the meaning set forth in Section 10.10(c)(i).
“ Drag Along Right ” shall have the meaning set forth in Section 11.03(c) .
“ Early Put ” shall have the meaning set forth in Section 7.08(d) .
“ Effective Date ” shall have the meaning set forth in the Preamble to this Agreement.
“ Emergency Item ” shall have the meaning set forth in Section 10.10(a) .
“ Engineering Contract ” shall have the meaning set forth in Section 3.01 .
“ Estimated Closing Costs ” means one percent (1%) of the Fair Market Value of the Property, which the Members agree is a fair and reasonable allocation of the transfer taxes, brokerage commission, allocations and other costs typically associated with the closing of a real estate transaction.
“ Extraordinary Cash Flow ” means the cash proceeds realized by the Company and the Affiliated Companies as a result of a Liquidating Sale (and/or payments made under any interest rate swap, cap or hedging arrangements and other interest rate breakage costs), decreased by the sum of the following: (i) all principal, interest, prepayment premiums and other sums paid to a lender (or to a third party in connection with such swap, cap or hedging arrangements) in connection with the repayment and discharge of any debt of the Company or the Operating Partnership (without duplication), and (ii) any expenses, costs or liabilities incurred by the Company or the Operating Partnership (without duplication) in effecting or consummating such Liquidating Sale (including, without limitation, attorneys’ fees, court costs, brokerage fees, commissions, realty transfer taxes and other taxes), all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.
“ Fair Market Value ” shall have the meaning set forth in Section 8.04(a) .
“ Filing Member ” shall have the meaning set forth in Section 10.05(c) .
“ Final Appraisal Date ” shall have the meaning set forth in Section 8.04(a) .
“ Financing ” means any indebtedness (including any mortgage loan and the 18A Loan), financing or refinancing by debt, bonds, sale and leaseback or other form of financing relating to any Company asset, the Property, or any debt or other similar monetary obligation of the Company or any Subsidiary (but excluding trade payables incurred in the ordinary course of business).
“ Financing Document ” shall mean any loan agreement, security agreement, mortgage, deed of trust, indenture, bond, note, debenture, guaranty, indemnity agreement or other instrument or agreement relating to or delivered in connection with any Financing (including the 18A Loan).
“ Fiscal Year ” means the calendar year.
“ General Contractor ” shall have the meaning set forth in Section 3.02 .
“ Gross Asset Value ” means, with respect to any asset, such asset’s adjusted basis for Federal income tax purposes, with the following modifications:
(a)    The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the Contributing Member and the Managing Member.
(b)    The Gross Asset Values of all Company assets shall be adjusted (without, however, changing the Percentage Interests of the Members) to equal their respective gross fair market values, as reasonably determined by the unanimous agreement of the Members as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) and (iv) in connection with the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a member capacity, or by a new Member acting in a member capacity or in anticipation of being a member, and (v) in connection with the issuance by the Company of a noncompensatory option (other than an option for a de minimis partnership interest); provided, however that adjustments pursuant to clauses (i) and (ii) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company.
(c)    The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined in accordance with Section 6.02 .
(d)    The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), for purposes of paragraph (f) of the definition of Profits and Losses and for purposes of ARTICLE V hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent the Managing Member reasonably determines that an adjustment pursuant to subparagraph (b) above in this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d) .
(e)    If the Gross Asset Value of an asset has been determined or adjusted pursuant to this Section, then such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.
(f)    This definition of Gross Asset Value is intended to comply with the Internal Revenue Code, with particular adherence to the provisions of Code Section 704(b) and the Regulations thereunder.
“ Guaranteed Maximum Development Price ” shall have the meaning set forth in the Development Agreement.
“ Hotel Owner ” shall have the meaning set forth in the Recitals.
“ Hotel Unit ” shall have the meaning set forth in the Recitals.
“ Indemnified Party ” and “ Indemnified Parties ” shall have the meanings set forth in Section 7.02(e) .
“ JV Term Sheet ” shall have the meaning set forth in the Recitals.
“ Land ” shall have the meaning set forth in the Recitals.
“ Lease Vacancy ” means that any portion of the Office Unit is available for lease or is anticipated to be available for lease in the ensuing six (6) months.
“ Leasing Guidelines ” shall mean an annual leasing plan proposed by the Managing Member and approved by Comcast setting forth (a) a listing of each space in the Property then vacant or expected to be or become vacant during such year and showing the size thereof and the anticipated rent per square foot of such space and other material economic terms, and (b) a schedule listing other significant actions proposed with respect to the leasing or re-leasing of the Property.
“ Letter Agreements ” shall have the meaning set forth in the Recitals.
“ Liberty ” shall have the meaning set forth in the Preamble to this Agreement.
“ Liberty COC ” means [***].
“ Liberty Manager ” shall have the meaning set forth in the Recitals.
“ Liberty Merger Successor ” shall have the meaning set forth in Section 11.02(ii) .
“ Liquidating Sale ” means the sale, directly or indirectly, of substantially all of the Property, either in one transaction or in a series of related transactions.
“ Liquidation ” means (a) when used with reference to the Company, the earlier of (i) the date upon which the Company is terminated under Code Section 708(b)(1)(A), (ii) the date upon which the Company ceases to be a going concern, or (iii) the date upon which the Company dissolves in accordance with ARTICLE XII, and (b) when used with reference to a Member, the earlier of (i) the date upon which there is a liquidation of such Member, or (ii) the date upon which there is a liquidation of such Member’s Membership Interest for purposes of Code Section 761(d).
“ LPT ” means Liberty Property Trust, a Maryland real estate investment trust, the sole general partner of Liberty.
“ Major Lease ” means any lease of [***] rentable square feet or more (except for the Comcast Lease) or any lease whose financial terms are less favorable to the landlord than the leasing terms set forth in the then current Leasing Guidelines.
“ Make-Whole ” shall have the meaning set forth in Section 7.08(d) .
“ Management Dispute ” means an unresolved disagreement between Liberty and Comcast respecting the operation of the Company and/or the Operating Partnership or the management, development, financing, leasing or disposition of the Property.
“ Management Dispute Notice ” shall have the meaning set forth in Section 7.11 .
“ Manager Indemnified Party ” and “ Manager Indemnified Parties ” shall have the meanings set forth in Section 7.02(e) .
“ Managing Member ” shall have the meaning set forth in the Preamble to this Agreement.
“ Management Termination Event ” means a termination of the Property Management Agreement pursuant to Section 12.2 thereof.
“ Member(s) ” shall mean, individually or collectively (as the case may be), Comcast, Liberty and any other Person hereafter admitted as a Member under this Agreement, for so long as such Person is a Member under the terms of this Agreement.
“ Membership Interest ” means, as to any Member, all of the interest of such Member in the Company including, without limitation, such Member’s right to a distributive share of the profits, losses, and distributions of the Company and to a distributive share of Company assets.
“ Net Cash Flow ” means, for any period, the excess of (a) gross cash receipts of the Company during such period other than Net Financing Proceeds and Extraordinary Cash Flow, minus (b) the aggregate of the following for the same period (i) all taxes, operating costs, leasing costs and other cash expenditures of the Company or the Operating Partnership (without duplication), (ii) all regularly scheduled payments of debt service, including interest and principal and any applicable fees under any debt of the Company or the Operating Partnership (without duplication), (iii) all sums paid or incurred for repair or replacement of any portion of the Property or other capital expenditures not taken out of reserves; and (iv) additions to reserves in amounts required by any lender or as otherwise reasonably approved by the Members.
“ Net Financing Proceeds ” means the cash proceeds realized by the Company as a result of a financing or refinancing of the Property, decreased by the sum of the following: (i) any amounts applied in repayment of any debt or required to be set aside or reserved by any lender of the Company, and prepayment premiums and other sums paid to a lender (or to a third party in connection with swap, cap or hedging arrangements or other interest rate breakage costs) (ii) the amount set aside in reserves as required by any lender or as otherwise reasonably approved by the Members; (iii) all expenses, costs and liabilities incurred by the Company or the Operating Partnership (without duplication) in effecting or obtaining any such proceeds (including, without limitation, attorneys’ fees, due diligence costs, title insurance and survey costs, recording fees and brokerage commissions), all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.
“ Non-Contributing Member ” shall have the meaning set forth in Section 4.04 .
“ Non-Controllable Items ” shall have the meaning set forth in Section 10.10(a) .
“ Non-Managing Members ” means all members other than the Managing Member.
“ Offer ” shall have the meaning set forth in Section 11.03(a) .
“ Offeree Member ” shall have the meaning set forth in Section 11.03(a) .
“ Offeror Member ” shall have the meaning set forth in Section 11.03(a) .
“ Office Entities ” means the Affiliated Companies, the Operating Partnership and 18A Lender.
“ Office Unit ” shall have the meaning set forth in the Recitals.
“ Operating Partnership ” shall have the meaning set forth in the Recitals.
“ Operating Partnership LP Agreement ” means the Amended and Restated Limited Partnership Agreement of the Operating Partnership dated of even date herewith, as such may be amended or restated from time to time.
“ Original Letter Agreement ” shall have the meaning set forth in the Recitals.
“ Original Operating Agreement ” shall have the meaning set forth in the Recitals.
“ Outside Put Election Date ” shall have the meaning set forth in Section 8.01(a) .
“ Outside Put Sale Date ” shall have the meaning set forth in Section 8.02 .
“ Outside Third Party Sale Date ” shall have the meaning set forth in Section 11.03(a) .
“ Partner Minimum Gain ” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability (as defined in Section 1.704-2(b)(3) of the Regulations) determined in accordance with Section 1.704-2(i)(3) of the Regulations.
“ Partner Nonrecourse Debt ” has the meaning of “partner nonrecourse debt” set forth in Section 1.704-2(b)(4) of the Regulations.
“ Percentage Interest ” means the percentage interests of each Member, as such may be adjusted from time to time in the manner set forth in this Agreement. Each Member’s initial Percentage Interest is as follows: Liberty- 20%; Comcast- 80%.
“ Partnership Minimum Gain ” has the meaning of “partnership minimum gain” set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
“ Person ” means any individual, corporation, association, company, limited liability company, joint venture, trust, estate, or other entity or organization.
“ PIDC ” shall have the meaning set forth in the Recitals.
“ Prevailing Party ” shall mean a party who, upon any final (unappealed and unappealable) award or judgment, decree or order in any arbitration or judicial proceeding (including without limitation any appeal) shall have established the substance of its claim or defense and who shall have been awarded substantially the relief (or denial of relief) sought by such party on account of its claim or defense. Any dispute concerning the identity of the “Prevailing Party” or the amount of the obligation of the non-Prevailing Party to the Prevailing Party shall be determined (after entry of a final (unappealed and unappealable) award, judgment, decree or order) by the arbitrators in any proceeding determined by arbitration, or by the trial court in any proceeding determined by judicial judgment, decree or order.
“ Prime Rate ” means the prime rate published from time in the Wall Street Journal, or if such rate is not available, such replacement rate as may be reasonably designated by the Managing Member.
“ Priority Loan ” shall have the meaning set forth in Section 4.04(a) .
“ Priority Loan Yield ” shall have the meaning set forth in Section 4.04(a) .
“ Profits ” and “ Losses ” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(a)    Any income of the Company that is exempt from Federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be added to such taxable income or loss;
(b)    Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section, shall be subtracted from such taxable income or loss;
(c)    In the event the Gross Asset Value of any Company Asset is adjusted pursuant to any provision of this Agreement in accordance with the definition of “Gross Asset Value” above, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Profits or Losses;
(d)    Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e)    In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition of “Depreciation” above;
(f)    To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4) to be taken into account in determining Capital Accounts, in the case of adjustment under Code Section 734(b) as a result of a distribution other than in Liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of such asset) or loss (if the adjustment decreases the basis of such asset) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses;
(g)    Notwithstanding any other provision of this Section, any items which are specially allocated pursuant to Section 5.03 shall not be taken into account in computing Profits or Losses; and
(h)    The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Section 5.03 but not previously taken into account because of the restrictions of paragraph (g) shall be determined by applying rules analogous to those set forth in this Section.
“ Project ” shall have the meaning set forth in the Recitals.
“ Property ” shall mean all of the Operating Partnerships’ right, title and interest in the Office Unit and the Public Unit and the improvements therein.
“ Property Management Agreement ” shall have the meaning set forth in Section 3.06 .
“ Property Manager ” shall have the meaning set forth in Section 3.06 .
“ Public Unit ” shall have the meaning set forth in the Recitals.
“ Public Unit Lease ” shall have the meaning set forth in the Recitals.
“ Purchase Price ” shall have the meaning set forth in Section 8.03 .
“ Purchasing Member ” shall have the meaning set forth in Section 8.05(a) .
“ Put Election Notice ” shall have the meaning set forth in Section 8.01(a) .
“ Put Notice ” shall have the meaning set forth in Section 8.01(a) .
“ Put Right ” shall have the meaning set forth in Section 8.01(a) .
“ Put Sale Option ” shall have the meaning set forth in Section 8.01(a) .
“ Qualified Appraiser ” shall have the meaning set forth in Section 8.04(a) .
“ Qualified Arbitrator ” shall mean a real estate management professional with at least fifteen (15) years’ experience in the management of first class office buildings in Center City Philadelphia, New York, or Washington, D.C. and in any case shall not be employees, officers or counsel to any Member or its Affiliates
“ Receiving Party ” shall have the meaning set forth in Section 8.01(c) .
“ Reconciliation Statement ” shall have the meaning set forth in Section 10.03(c)(i) .
“ Regulations ” means the Income Tax Regulations promulgated under the Code as such regulations may be amended from time to time (including Temporary Regulations). References to Sections of the Regulations are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Regulations.
“ Regulatory Allocations ” shall have the meaning set forth in Section 5.02(f).
“ REIT ” means a “real estate investment trust” within the meaning of the Code.
“ Renewal Assumption ” shall mean an assumption that [***].
“ Reserve Accounts ” shall have the meaning set forth in Section 10.05(a) .
“ Right of First Offer ” shall have the meaning set forth in Section 11.03(a) .
“ Round I Appraisal ” shall have the meaning set forth in Section 8.04(a) .
“ Selling Member ” shall have the meaning set forth in Section 8.05(a) .
“ Standard Lease Form ” shall mean the standard form of lease used by the Operating Partnership for the office portion of the Office Unit, which form shall be approved by the Members.
“ Standstill Period ” shall mean the period of time commencing on the Effective Date and terminating on the earliest to occur of (i) the [***] anniversary of the Final Occupancy Date for the Basic Office Premises (as such terms are defined in the Comcast Lease ) , (ii) a Comcast COC or (iii) a Liberty COC.
“ Subsidiary ” shall mean any entity in which the Company owns any direct or indirect equity interest.
“ Supplemental Letter Agreement ” shall have the meaning set forth in the Recitals.
“ Tag Along Right ” shall have the meaning set forth in Section 11.03(c) .
“ Tax Matters Member ” shall have the meaning set forth in Section 10.05(a).
“ Tax Payment Loan ” shall have the meaning set forth in Section 7.07(a).
“ Tax Payment Loan Date ” shall have the meaning set forth in Section 7.07(a).
“ Third Appraiser ” shall have the meaning set forth in Section 8.04(a) .
“ Third-Party Purchaser ” shall mean the purchaser of a Member’s Membership Interests pursuant to Section 11.03 .
“ Total Project Costs ” shall mean the total of all costs paid or incurred by or on behalf of the Company to form the Affiliated Companies, the Operating Partnership, 18A Lender, 18A Hotel Lender LLC, a Delaware limited liability company, Hotel Owner and 18A Hotel LLC, a Delaware limited liability company, to acquire the Land, and to design, develop, lease, finance and construct the Project, including, but not limited to, costs of architects, engineers and other design and technical professionals and consultants, including the costs of models and renderings, all transfer taxes; due diligence costs; title costs; permitting costs, including payments to lawyers, engineers, design professionals and other third parties or other costs incurred in conjunction with the receipt of public entitlements for the Project; loan fees, interest and other financing costs for any financing of the Project; design and engineering fees and costs; payments to contractors and the cost of materials, supplies and equipment; marketing costs; the fees and costs of lawyers and other consultants incurred in connection with the foregoing carrying costs during construction, including real estate taxes, insurance, condominium assessments, security and interest charges during the construction period (which construction period shall be determined in accordance with generally accepted accounting principles); including (without limitation) costs included within the description of the line items and categories set forth in the Approved Project Budget; provided that, for the avoidance of doubt, Total Project Costs will not include legal fees and expenses and personnel costs incurred in connection with the negotiation and documentation of this Agreement and the other transaction documents for which the lawyers representing Comcast and Liberty or their Affiliates are negotiating opposite one another as opposed to representing the Company.
“ Transfer ” shall have the meaning set forth in Section 11.01(a) .
“ Treasury Regulations ” means the regulations promulgated under the Code.
“ Unreimbursable Portion ” shall have the meaning set forth in Section 7.02(f) .
“ Withholding Tax Act ” shall have the meaning set forth in Section 7.07(a) .
ARTICLE II     
CONTINUATION OF EXISTENCE AND PURPOSE
2.01.      Superseding the Letter Agreements, the Original Operating Agreement and the JV Term Sheet . The Letter Agreements, the Original Operating Agreement and the JV Term Sheet (to the extent it relates to the Property) are hereby superseded in their entirety by this Agreement.
2.02.      Continuation of Existence . Prior to the Effective Date, Comcast formed the Company as a limited liability company pursuant to the provisions of the Act by filing a Certificate of Formation with the State of Delaware. The Company shall continue to exist as a limited liability company under the laws of the State of Delaware with Comcast and Liberty as the Members. If the laws of any jurisdiction in which the Company transacts business so require, the Managing Member shall file, with the appropriate office in that jurisdiction, all documents necessary for the Company to qualify to transact business. The Members shall execute, acknowledge, and cause to be filed for record, in the place or places and manner prescribed by law, any amendments to this Agreement as may be required, either by the Act, by the laws of any jurisdiction in which the Company transacts business, or by this Agreement, to reflect changes in the information contained herein or otherwise to comply with the requirements of law for the continuation, preservation, and operation of the Company as a limited liability company under the Act.
2.03.      Name of Company . The name of the Company shall be “18A LLC”, and all business of the Company shall be conducted in such name.
2.04.      Principal Place of Business . The principal place of business of the Company shall be located at c/o 500 Chesterfield Parkway, Malvern, PA 19355, or such other place or places as the Managing Member may from time to time determine. The Managing Member may establish and maintain such other offices and additional places of business of the Company as it deems appropriate.
2.05.      Purpose . The purpose of the Company shall be: (a) to hold a 100% membership interest in 18 th GP and to exercise all rights appurtenant to such interest, (b) to hold a 100% membership interest in 18 th LP and to exercise all rights appurtenant to such interest, (c) indirectly, through the Affiliated Companies, to own 100% of the partnership interests in the Operating Partnership, (d) to hold a 100% membership interest in 18A Lender and to exercise all rights appurtenant to such interest, (e) to cause the Affiliated Companies and the Operating Partnership to develop, own, operate, lease, manage, finance, refinance and sell and/or otherwise dispose of the Property and/or interests therein, (f) to cause 18A Lender to make the 18A Loan, (g) to undertake any and all actions necessary or incidental to any of the foregoing activities, and (h) to take or cause to be taken all actions and to perform or cause to be performed all functions necessary or appropriate to promote the business of the Company and to realize and carry out its purposes.
2.06.      Exclusive Activities of Company . Except as otherwise provided in this Agreement, the Company shall not engage in any other activity or business other than the purpose specified under Section 2.05 , and no Member shall have any authority to hold itself out as the agent of any other Member or as a Member of the Company with respect to any other business or activity.
2.07.      No Payment of Individual Obligations . The Members shall use the Company’s credit and assets solely for the benefit of the Company. No asset of the Company shall be transferred or encumbered for or in payment of any individual obligation of any Member.
2.08.      Title to Assets . All Company assets shall be owned by and held in the name of the Company. No Member shall have any ownership interest in any Company asset in its individual name or right, and each Member’s interest in the Company shall be personal property for all purposes.
2.09.      Term . The Company shall continue in perpetuity unless and until the Company is dissolved and liquidated in accordance with the provisions of ARTICLE XII.
2.10.      Representations and Warranties . Each Member hereby represents and warrants to the Company and to the other Members that it is duly organized, validly existing, and in good standing under applicable law, it has full and unrestricted right, authority and power to enter into this Agreement and to perform its obligations hereunder, and that doing so does not violate any of its organizational documents; this Agreement constitutes a valid and binding obligation of such Member, enforceable in accordance with its terms.
2.11.      Respecting the Affiliated Company and Operating Partnership . In the exercise of its rights as the sole member of the Affiliated Companies and the indirect owner of the Operating Partnership, notwithstanding anything in the organizational documents of the Affiliated Companies and the Operating Partnership to the contrary, the Company shall authorize and direct the Affiliated Companies and the Operating Partnership to make such allocations, make such distributions, and take such other actions and refrain from taking such other actions, as are consistent with the terms of this Agreement, and the Company shall not authorize or direct the Affiliated Companies or Operating Partnership to make any allocation or make any distribution or take any other action or refrain from taking any other action which is inconsistent with the terms of this Agreement.
ARTICLE III     
DEVELOPMENT OF THE PROJECT; COMCAST LEASE;
PROPERTY MANAGEMENT
3.01.      Project Design and Engineering .
(a)      The Operating Partnership has entered into that certain AIA Document B141 – 1987 edition, Standard Form of Agreement Between Owner and Architect (as revised by Owner and Architect) with Kendall/Heaton Associates, Inc. (the “ Architect ”) dated January 14, 2014 with respect the design of the Project (the “ Design Contract ”). Concurrently with or promptly following the execution of this Agreement, the Operating Partnership will assign the Design Contract to the Developer. The Members hereby approve the selection of the Architect as the architect and the execution of the Design Contract and the assignment to Developer of the Design Contract. The Members hereby approve the design of the Project as described in (i) the Core and Shell Design Development Plans attached to the Development Agreement as Schedule 1-A, (ii) the Core and Shell Project Narrative attached to the Development Agreement as Schedule 1-B, (iii) the Hotel Interiors Design Development Plans attached to the Development Agreement as Schedule 1-C, and (iv) the Hotel Interiors Project Narrative attached to the Development Agreement as Schedule 1-D (collectively, the “ Design Development Plans and Project Narratives ”).
(b)      The Operating Partnership has entered into that certain AIA Document B727, 1988 Edition, Agreement Between Owner and Engineer for Special Services, as revised by Owner and Engineer, with Pennoni Associates, Inc. dated September 26, 2013 with respect engineering and consulting services for the Project (the “ Engineering Contract ”). Concurrently with or promptly following the execution of this Agreement, the Operating Partnership will assign the Engineering Contract to the Developer. The Members hereby approve the execution of the Engineering Contract and the assignment to Developer of the Engineering Contract.
3.02.      Construction Contract . Concurrently with or promptly following the execution of this Agreement, Developer has entered into or will enter into that certain AIA A111-1987 ed., Standard Form of Agreement Between Developer and Contractor, As Revised by Developer and Contractor, with L.F. Driscoll (the “ General Contractor ”) with respect to the construction of the Project (the “ Construction Contract ”). The Members hereby approve the selection of the General Contractor as the general contractor and approve the terms of the Construction Contract.
3.03.      Development Agreement . Concurrently with the execution of this Agreement, the Company shall cause the Operating Partnership to enter into a development agreement (the “ Development Agreement ”) with Liberty (in such capacity and together with any successor thereto, the “ Developer ”) and the Hotel Owner pursuant to which the Developer will develop and cause the construction of the office building on behalf of the Operating Partnership and the hotel on behalf of the Hotel Owner. Comcast, acting on behalf of the Company (acting in turn on behalf of the Operating Partnership), shall have the unilateral right to enforce all rights of the Operating Partnership under the Development Agreement, including, without limitation, (a) giving notices of default under the Development Agreement, (b) pursuing any remedies the Operating Partnership may have against the Developer by reason of an event of default of the Developer under the Development Agreement, (c) granting any waivers or consents and (d) entering into any amendments to the Development Agreement.
3.04.      Approved Project Budget . The Members hereby approve the overall budget of the projected Total Project Costs as set forth on Schedule 3.04 (the “ Approved Project Budget ”), provided that the Company (and the Operating Partnership) shall incur only the costs attributable to the Property (and not the costs attributable to the Hotel Unit) as allocated pursuant to the terms of the Development Agreement. The Approved Project Budget may be amended only upon the written approval of both Members, except as otherwise set forth in the Development Agreement.
3.05.      Comcast Lease. Concurrently with the execution of this Agreement or promptly thereafter, the Company shall cause the Operating Partnership to execute that certain Lease with Comcast Corporation (in such capacity, the “ Comcast Tenant ”) in such form as has been approved by the Members (as such may be amended from time to time in accordance with this Agreement, the “ Comcast Lease ”). Liberty, acting on behalf of the Company (acting in turn on behalf of the Operating Partnership), shall have the unilateral right to exercise and enforce the rights of the landlord under the Comcast Lease, including, without limitation, (a) giving notices of default under the Comcast Lease, (b) pursuing any remedies the Operating Partnership may have against the Comcast Tenant by reason of an event of default of the Comcast Tenant under the Comcast Lease, (c) granting any waivers or consents thereunder, and (d) entering into any amendments to the Comcast Lease. Notwithstanding the foregoing, Liberty shall not be permitted to unilaterally exercise any termination rights under the Comcast Lease at any time that Comcast or its Affiliate owns, directly or indirectly, a majority of the Membership Interests of the Company, except to the extent that such termination rights arise from an uncured default by the Comcast Tenant and for which termination is otherwise permitted under the Comcast Lease.
3.06.      Property Management . On or about the date hereof, the Company shall cause the Operating Partnership to enter into a property management agreement (the “ Property Management Agreement ”) with Liberty (in such capacity and together with any successor thereto, the “ Property Manager ”). Comcast, acting on behalf of the Company (and the Operating Partnership), shall have the unilateral right to exercise and enforce all rights of the Operating Partnership under the Property Management Agreement, including, without limitation, (a) giving notices of default under the Property Management Agreement, (b) pursuing any remedies the Operating Partnership may have against the Property Manager by reason of an event of default of the Property Manager under the Property Management Agreement, (c) granting any waivers or consents, and (d) entering into any amendments to the Property Management Agreement. If at any time the Property Management is terminated in accordance with its terms, Comcast may cause the Operating Partnership to enter into a new property management agreement with such manager and on such terms as Comcast shall elect in its sole discretion.
3.07.      Loan . On the date hereof, the Company caused the Operating Partnership and the 18A Lender to execute those certain loan documents evidencing the 18A Loan from 18A Lender to the Operating Partnership, upon such terms and conditions which have been approved by the Members. The Company shall cause 18A Lender to immediately distribute to the Company all payments received by 18A Lender from Operating Partnership pursuant to the 18A Loan.

ARTICLE IV     
CAPITALIZATION OF THE COMPANY
4.01.      Initial Capital Contributions .
(a)      Prior to entering into this Agreement, Comcast has recapitalized the Operating Partnership so that one hundred percent (100%) of the capital value of the Operating Partnership is represented by debt. On the date hereof, Liberty has made a capital contribution to the Company, such that all contributions to the capital of the Company have been contributed by the Members pro rata in proportion to their respective Percentage Interests, and after taking such contributions into account, the respective capital contributions of the Members are: Comcast - [***]; Liberty - [***]. All funds so contributed to the Company have been further contributed by the Company to 18A Lender (which then lent such funds to the Operating Partnership).
(b)      The capital contributions of the Members set forth in Section 4.01(a) are calculated based on costs incurred by the Company and cash on hand of the Company both as of May 31, 2014. If the Operating Partnership or Company incurred additional expenditures for Approved Activities (as defined in the Supplemental Letter Agreement) between June 1, 2014 and the Effective Date, the Members shall perform a further reconciliation between themselves such that the total capital contributions of the Members shall be in proportion to their respective Percentage Interests.
4.02.      Additional Capital Contributions – Total Project Costs . Except (a) to the extent payable by Liberty pursuant to the Development Agreement, or (b) to the extent funded out of the proceeds of a public grant approved by both Members, or (c) to the extent paid or payable by Comcast Tenant pursuant to the Comcast Lease, all Total Project Costs payable with respect to the Property (as allocated between the Operating Partnership and the Hotel Owner pursuant to the Development Agreement) shall be funded by Capital Contributions by the Members in accordance with the Approved Project Budget, in monthly installments in advance, in amounts proportionate to the Members’ respective Membership Interests. The Managing Member shall provide written notice to the other Members each month (each a “ Call for Development Capital ”) of the Total Project Costs anticipated to be payable by the Company during the ensuing calendar month in accordance with the Approved Project Budget (as allocated between the Operating Partnership and the Hotel Owner pursuant to the Development Agreement), and the amount of each Member’s required Capital Contribution; provided that, if the Managing Member fails to provide a Call for Development Capital, any other Member may do so on its behalf. The Members shall fund the Call for Development Capital by making cash contributions to the Company in the aggregate amount of such Call for Development Capital, pro rata in proportion to each Member’s respective Percentage Interest in the Company (each a “ Development Contribution ”) within five (5) Business Days after the issuance of such Call for Development Capital. Until such time as [***] percent ([***]%) the total capitalization of the Operating Partnership is represented by debt and [***] percent ([***]%) of the total capitalization of the Operating Partnership is represented by equity, one hundred percent (100%) of such funds so contributed to the Company shall in turn be contributed by the Company pro rata: (a) to 18th GP (for its contribution in turn to the Operating Partnership), in proportion to 18th GP’s percentage interest in the Operating Partnership, and (b) to 18th Limited (for its contribution in turn to the Operating Partnership), in proportion to 18th Limited’s percentage interest in the Operating Partnership. From and after such time as [***] percent ([***]%) the total capitalization of the Operating Partnership is represented by debt and [***] percent ([***]%) of the total capitalization of the Operating Partnership is represented by equity, [***] percent ([***]%) (or such other portion as mutually agreed upon by the Members) of funds contributed to the Company shall in turn be contributed by the Company to 18A Lender, which shall then lend such funds (pursuant to a separate loan agreement) to the Operating Partnership and the remaining portion of such funds so contributed to the Company shall in turn be contributed pro rata: (a) to 18th GP (for its contribution in turn to the Operating Partnership), in proportion to 18th GP’s percentage interest in the Operating Partnership, and (b) to 18th Limited (for its contribution in turn to the Operating Partnership), in proportion to 18th Limited’s percentage interest in the Operating Partnership. If a Member fails to advance a Development Contribution in accordance with this Section 4.02 , such failure shall be a default under this Agreement, and the other Members and the Company shall have all rights and remedies available at law and in equity on account of such default, including without limitation the right to pursue the defaulting Member for recourse liability, and shall not be limited to the remedies set forth in Section 4.04 .
4.03.      Additional Capital Contributions -- Other than Total Project Costs . Except as set forth in Section 4.02 above with respect to Total Project Costs, if the Managing Member determines at any time that the Company does not expect to have adequate cash available to meet its imminent cash needs, and if no Financing is available to the Company and approved by all Members to satisfy such need for cash, then the Managing Member may provide written notice thereof to the other Members from time to time (each a “ Call for Capital ”), which notice shall be accompanied by backup documentation and financial reports in adequate detail to explain the need for the Call for Capital; provided that, if the Managing Member fails to provide a Call for Capital, any other Member may do so on its behalf. Each Member shall fund the Call for Capital by making a cash contribution to the Company in the aggregate amount of such Call for Capital multiplied times such Member’s Percentage Interest in the Company (each an “ Additional Capital Contribution ”) within thirty (30) days after the issuance of such Call for Capital. All funds so contributed to the Company shall in turn be contributed by the Company to the Affiliated Companies and 18A Lender (to be loaned to the Operating Partnership), all in the same manner as the Development Contributions pursuant to Section 4.02 .
4.04.      Failure to Make Additional Capital Contributions If any Member (the “ Non-Contributing Member ”) fails to make a Development Contribution or an Additional Capital Contribution within the time period set forth above for such a contribution, the Managing Member shall provide a notice to all Members of such failure, after which such Non-Contributing Member shall have five (5) Business Days in which to cure its failure and make such contribution. Following such cure period, one or more of the other Members (each a “ Contributing Member ”) may (but without obligation to do so) advance to the Company an additional amount equal to the Non-Contributing Member’s unpaid Development Contribution or Additional Capital Contribution (as appropriate), and such advance shall be treated as a Priority Loan as provided in Section 4.04(a) below.
(a)      The entire advance made by the Contributing Member in response to the applicable Call for Development Capital or Call for Capital (i.e., both the portion advanced by the Contributing Member on its own behalf and the portion advanced by the Contributing Member on behalf of the Non-Contributing Member) shall be deemed a loan (a “ Priority Loan ”) to the Company which shall accrue interest at an annual rate equal [***] (the “ Priority Loan Yield ”), and which shall be payable as a first priority out of any and all distributions otherwise payable under this Agreement in the manner set forth in ARTICLE VI. Interest expense incurred on any Priority Loan shall be treated as an expense of the Company. For the avoidance of doubt, in no event shall the Priority Loan Yield be deemed part of the Total Project Costs.
(b)      Notwithstanding the provisions of Section 4.04(a) , if the Priority Loan has not been repaid in full by the date which is nine (9) months after the advance in question, the Contributing Member may elect, by written notice to the Non-Contributing Member at any time thereafter until the date such Priority Loan and the Priority Loan Yield thereon are repaid in full to treat the entire unpaid portion of the Priority Loan and the then accrued Priority Loan Yield, as a Capital Contribution, whereupon the Percentage Interests of the Contributing Member and the Non-Contributing Member shall be adjusted effective as of the date of such Capital Contribution, as follows:
(i)      The Percentage Interest of the Non-Contributing Member shall be decreased to the percentage obtained (rounded to the nearest 1/1000 of a percentage point) by (1) multiplying its Percentage Interest by the aggregate Capital Contributions of all of the Members, before giving effect to the Capital Contributions made by the Members pursuant to such Call for Capital or Call for Development Capital, as applicable, and (2) dividing the product so obtained by the sum of (A) the aggregate Capital Contributions of all of the Members before giving effect to the Capital Contributions made pursuant to such Call for Capital or Call for Development Capital, as applicable, [***] of the then outstanding principal balance of the Priority Loan plus the Priority Loan Yield thereon then outstanding; and
(ii)      The Percentage Interest of the Contributing Member shall be increased by the same number of percentage points as the decrease in the Non-Contributing Member’s Percentage Interest.
4.05.      No Other Required Capital Contributions . No Member shall be required to contribute capital to the Company except as set forth in Section 4.02 and Section 4.03 above.
4.06.      Capital Accounts .
(a)      The Company shall establish and maintain a separate Capital Account for each Member in accordance with Regulations Section 1.704-1(b), which shall be interpreted and applied in a manner consistent with such Regulations. In the event the Managing Member shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the Managing Member may make such modification, provided that it will not have any adverse effect on the amounts distributable to any Member pursuant to this Agreement. The Managing Member also shall (1) make any adjustments that are necessary or appropriate to maintain equality between the combined Capital Accounts of the Members and the total amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (2) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) subject, however, to the limitation on modifications having any adverse effect on amounts to be distributed to a Member as provided in the preceding sentence. Any questions with respect to a Member’s Capital Account shall be resolved by the Managing Member in its reasonable discretion, applying principles consistent with this Agreement. On the Effective Date, the Capital Account balances of the Members shall equal the amounts set forth next to the Members names in Section 4.01(a) hereof.
(b)      Any transferee of a portion or all of a Member’s Membership Interest shall succeed to the Capital Account of the transferor Member to the extent it relates to the Membership Interest transferred.
4.07.      Negative Capital Accounts . Except to the extent Members are required to make Capital Contributions to the Company under Section 4.02 , no Member shall be required to pay to the Company or to any other Member any deficit or negative balance which may exist in such Member’s Capital Account from time to time or upon Liquidation of the Company. A negative Capital Account shall not be considered a loan from or an asset of the Company.
4.08.      Return of Capital; No Interest on Amounts in Capital Account . Except upon dissolution of the Company or as may be expressly set forth in this Agreement, no Member shall have the right to demand or receive the return of any of its aggregate Capital Contributions or any part of its Capital Account or be entitled to receive any interest on its Capital Contributions or its outstanding Capital Account balance.
ARTICLE V     
ALLOCATIONS
5.01.      Allocation of Profits and Losses . After giving effect to the Regulatory Allocations set forth in Section 5.02 of this Agreement, Profits and Losses for any fiscal year or other period of the Company shall be credited to the Capital Accounts of the Members as follows: Profits and Losses shall be allocated among the Members so as to produce, as nearly as possible, Capital Account balances for the Members (taking into account all prior allocations and distributions) which would equal the amount to which the Members would be entitled as a liquidating distribution from the Company upon a hypothetical liquidation in which the net proceeds were distributed in accordance with the priorities set forth in ARTICLE VI and as if the net proceeds available for distribution were an amount equal to the aggregate positive balance in the Members’ Capital Accounts computed after taking into account all allocations of Profit and Loss (or items thereof) for the fiscal period, including those pursuant to this Section 5.01 ; provided, however, that if the allocation of all or any portion of the Company Losses (or items thereof) causes or increases an Adjusted Capital Account Deficit of a Member or Members with respect to such fiscal year to which the allocation of such Company Losses relates, the excess, if any, shall be allocated to those Members, if any, having positive remaining Capital Account balances, to the extent of any such positive balances, and thereafter in accordance with the Members’ respective economic risk of loss with respect to any indebtedness to which the remaining Loss or deductions are attributable. All items of the Profit for any fiscal year having a like character and treatment for federal income tax purpose, (e.g., ordinary income, as opposed to short-term capital gain, as opposed to long-term capital gain) shall be allocated proportionately in accordance with the foregoing principles to the maximum extent possible, as if there were no items of Profit of another character.
5.02.      Regulatory Allocations . The following special allocations shall be made in the following order:
(a)      Partnership Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(f) of the Regulations, in the event there is a net decrease in Partnership Minimum Gain during any fiscal year, each Member shall be allocated items of income and gain for such fiscal year and, if necessary, for subsequent fiscal years equal to that Member’s share of the net decrease in Partnership Minimum Gain. The determination of a Member’s share of the net decrease in Partnership Minimum Gain shall be determined in accordance with Section 1.704-2(g) of the Regulations. The items to be specially allocated to the Members in accordance with this Section 5.02(a) shall be determined in accordance with Section 1.704-2(f)(6) of the Regulations. This Section 5.02(a) is intended to comply with the minimum gain chargeback requirement set forth in Section 1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
(b)      Partner Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(i)(4) of the Regulations, in the event there is a net decrease in Partner Minimum Gain during any fiscal year, each Member that had a share of such Partner Minimum Gain as of the beginning of the fiscal year shall be allocated, to the extent required by Section 1.704-2(i)(4) of the Regulations , items of Company income and gain for such fiscal year and, if necessary, subsequent years equal to that Member ’s share of the net decrease in Partner Minimum Gain . This Section 5.02(b) is intended to comply with the minimum gain chargeback requirement set forth in Section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently therewith.
(c)      Qualified Income Offset Allocation . In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Regulations which would cause such Member to have an Adjusted Capital Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. This Section 5.02(c) is intended to constitute a “qualified income offset” in satisfaction of the alternate test for economic effect set forth in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
(d)      Allocation of Nonrecourse Deductions . Nonrecourse Deductions (within the meaning of Section 1.704-2(b)(1) of the Regulations) shall be allocated to the Members in accordance with the Members’ Percentage Interests.
(e)      Allocation of Partner Nonrecourse Deductions . Partner Nonrecourse Deductions (within the meaning of Section 1.704-2(i) of the Regulations) shall be specially allocated to the Member who bears the economic risk of loss with respect to the Partner Nonrecourse Debt (within the meaning of Section 1.704-2(b)(4) of the Regulations) to which such Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i)(1) of the Regulations.
(f)      Offsets to Regulatory Allocations . This Section 5.02 provides for a series of allocations (“ Regulatory Allocations ”) whose purpose is to comply with certain requirements of the Treasury Regulations. In the event that Regulatory Allocations are made, such allocations shall be taken into account in subsequent allocations of Profits, Losses and items thereof so that the net amount of allocations of Profits, Losses and items thereof to each Member shall be equal to the amount that would have been allocated to such Member pursuant to the provisions of this ARTICLE V if the Regulatory Allocations had not occurred. For purposes of applying the foregoing sentence, allocations pursuant to this Section 5.02(f) shall be made only to the extent that the Managing Member reasonably determines that allocations pursuant to this ARTICLE V would otherwise be inconsistent with the economic agreement among the Members.
(g)      Section 704(c) Tax Allocations . in the event that the Capital Account of any Member is credited with or adjusted to reflect the fair market value of a Company property or properties, the Members’ distributive shares of depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to such property, shall be determined pursuant to Section 704(c) of the Code and the Regulations thereunder, so as to take account of the variation between the adjusted tax basis and book value of such property. Any deductions, income, gain or loss specially allocated pursuant to this Section 5.02(g) shall not be taken into account for purposes of determining Profits or Losses or for purposes of adjusting a Member’s Capital Account.
5.03.      Allocation in the Event of Transfer . If a Membership Interest in the Company is transferred and/or modified in accordance with the provisions of this Agreement, there shall be allocated to each Member which held the transferred and/or modified Membership Interest during the fiscal year of the transfer and/or modification the product of (a) the Company’s Profits or Losses allocable to such transferred and/or modified Membership Interest for such fiscal year, and (b) a fraction, the numerator of which is the number of days such Member held the transferred and/or modified Membership Interest during such fiscal year, and the denominator of which is the total number of days in such fiscal year; provided, however, that the Company shall allocate such Profits or Losses by closing the books of the Company immediately after the transfer and/or modification of an Membership Interest if determined by the Managing Member prior to the due date for the Company’s taxable year in which the transfer occurred or at the request of a transferor or transferee of such transferred Membership Interest. Such allocation shall be made without regard to the date, amount or receipt of any distributions which may have been made with respect to such reduced, transferred and/or modified Membership Interest.
ARTICLE VI     
DISTRIBUTIONS
6.01.      Distribution of Proceeds . Net Cash Flow, Net Financing Proceeds and/or Extraordinary Cash Flow derived from a Liquidating Sale shall be distributed within ten (10) days after the event giving rise to the Net Financing Proceeds or Extraordinary Cash Flow and otherwise on a monthly basis:
[***]
6.02.      Distributions in Kind . All distributions shall be made in cash and no Company assets shall be distributed in kind without the consent of all of the Members except as provided in Section 12.02(a). Any assets distributed in kind shall be valued for such purpose at their fair market value as of the date of distribution as determined by an independent appraiser selected by the Managing Member with the approval of the other Members, and shall be treated for the purposes of this ARTICLE VI as if the Company had sold such assets at such value and distributed the proceeds of such sale to the Member or Members receiving such assets.
6.03.      REIT Distributions . At the option of the Managing Member, the Company shall take (and shall cause the Operating Partnership and the Affiliated Companies to take), and the Managing Member is authorized to take, reasonable action which in the opinion of tax counsel selected by the Managing Member is necessary and consistent with the Managing Member’s (or its Affiliate’s) qualification as a REIT, to distribute pro rata to the Members in proportion to their respective Percentage Interests sufficient amounts pursuant to this ARTICLE VI to enable the Managing Member (or its Affiliate that is a REIT) to pay shareholder dividends that will (i) enable the Managing Member (or its Affiliate that is a REIT) to satisfy the requirements for qualifying as a REIT under the Code and Regulations; and (ii) enable the Managing Member (or its Affiliate that is a REIT) to avoid any material federal income or excise tax liability of the Managing Member (or its Affiliate that is a REIT) as a result of its status as a REIT, assuming for purposes of this determination that the only items on the federal income tax return of the Managing Member (or such Affiliate that is a REIT) are the items shown on its Schedule K-1 received from the Company and all cash distributions received from the Company (less a reasonable allowance for non-deductible administrative costs) have been paid as dividends to the shareholders of the Managing Member on the day after such distributions are received from the Company.
ARTICLE VII     
MANAGEMENT
7.01.      Management and Control of the Business and Affairs of the Company .
(c)      Subject to the limitations and restrictions set forth in Section 7.03 and elsewhere in this Agreement and under applicable law, the Managing Member shall have full, exclusive, and complete discretion to manage and control the day-to-day business affairs of the Company, the Operating Partnership, the Affiliated Companies and the Property, all in accordance with the purpose set forth in Section 2.05 .
(d)      Except as otherwise expressly set forth in ARTICLE III or as otherwise expressly provided in this Agreement, in any instance in which the Company or the Operating Partnership intends to, or is making a determination whether to, negotiate with, enter into any agreement or other arrangement with, or enforce its rights under an agreement with, a Member or an Affiliate of a Member, the non-affiliated Member shall have the exclusive right to direct the Company’s actions in connection with such negotiation, agreement or enforcement.
7.02.      Delegation; Standards; Indemnification .
(a)      Subject to the terms of this Agreement, the Managing Member may, at any time, delegate any of its powers, duties and responsibilities to its Affiliate. Any delegation pursuant to this Section 7.02(a) shall not, however, relieve the Managing Member of any of its obligations hereunder.
(b)      It is the intention of the Members that, to the extent feasible and except as expressly provided in Section 7.01(b) , all other actions taken on behalf of the Company shall be taken by the Managing Member or its authorized delegates, subject to the approval rights of the Members set forth in Section 7.03 .
(c)      The Managing Member shall perform its duties hereunder with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, for the exclusive benefit and protection of the Company, except that the Managing Member shall not be required to diversify the Company’s assets.
(d)      In the performance of its duties and responsibilities and the exercise of its right, power, authority and discretion under this Agreement:
(i)      the Managing Member shall act solely in the interests of the Company; and
(ii)      neither the Managing Member nor any Affiliate of the Managing Member shall deal with the assets of the Company in its own interests or for its own account.
(e)      The Company (but not any Member) shall indemnify, defend and hold harmless the Members, their Affiliates and their respective trustees, officers, directors, members, partners, shareholders, employees and agents (each individually an “ Indemnified Party ” and collectively the “ Indemnified Parties ”) in the event it was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of any acts or omissions, or alleged acts or omissions, arising out of the activities of any Indemnified Party on behalf of the Company, or in furtherance of the interests of the Company, against any and all costs, losses, damages or expenses of any nature whatsoever (including attorneys’ fees, judgments, fines and accounts paid in settlement) actually incurred by any Indemnified Party in connection with such action, suit or proceeding so long as the Indemnified Party believed in good faith that its actions were within the scope of this Agreement and the Indemnified Party did not act fraudulently or in bad faith or in a manner constituting gross negligence or willful misconduct, or a breach of applicable law or this Agreement; provided that, the foregoing indemnification shall not be available to a Member or its affiliated Indemnified Parties in the case of an action, suit or proceeding brought by the Company, a Member or any other party to this Agreement against such Indemnified Party. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself (except insofar as such judgment, order, settlement or plea shall itself specifically provide) create a presumption that the Indemnified Party acted fraudulently or in bad faith or acted in a manner constituting gross negligence or willful misconduct. The indemnification rights of the Indemnified Parties set forth in this Section 7.02(e) shall be cumulative of and in addition to, any and all rights, remedies, and recourse to which it shall be entitled whether pursuant to the provisions of this Agreement, at law, or in equity. Managing Member shall indemnify, defend and hold harmless the other Members, their Affiliates and their respective trustees, officers, directors, members, partners, shareholders, employees and agents (each individually a “ Manager Indemnified Party ” and collectively the “ Manager Indemnified Parties ”) in the event it was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative against any and all costs, losses, damages or expenses of any nature whatsoever (including attorneys’ fees, judgments, fines and accounts paid in settlement) actually incurred by any Manager Indemnified Party.
(f)      In addition to the indemnity set forth above, the Company shall reimburse any payments made by any Member or its Affiliates pursuant to a Credit Support Agreement; provided that to the extent the Company does not have, and is not able to obtain, the funds needed to honor its obligations under this subsection, each of the Members shall severally reimburse the Member giving the Credit Support Agreement for a portion of such funds which the Company was unable to pay to such Member (the “ Unreimbursable Portion ”) in an amount equal to the product of (i) the Unreimbursable Portion of such funds times (ii) the Percentage Interest of the reimbursing Member. Notwithstanding anything contained to the contrary in this Agreement, to the extent that losses under such Credit Support Agreement are solely and directly attributable to the actions of one Member or its Affiliates (it being understood that the Company and its Subsidiaries shall not be deemed Affiliates of a Member for this purpose), that Member shall bear 100% of the losses and liability related to such act, without any right to reimbursement.
(g)      In the event of any withdrawal or attempted withdrawal of the Managing Member other than as permitted in Section 11.05 below, the interest of the Managing Member shall be converted into that of a Non-Managing Member and Comcast shall automatically be vested with the rights of the Managing Member hereunder.
7.03.      Matters Requiring Unanimous Approval of the Members . The following actions or decisions with respect to or affecting the Company, the Affiliated Companies, the Operating Partnership or Company’s assets shall require the unanimous approval of the Members, which approval may be withheld in the absolute discretion of any Member:
[***]
7.04.      Special Meetings; Action by Written Consent . Any Member may call a special meeting of the Members at any time. All of the provisions set forth above with respect to regular meetings shall also apply to any special meetings. Any action requiring the consent of the Members may be taken without a meeting pursuant to written consent of the Members.
7.05.      Third Parties . Notwithstanding anything to the contrary contained herein, the Managing Member may execute a certificate that, except in the case of any matter which requires the unanimous approval of the Members pursuant to this Agreement, may be conclusively relied upon by any third party (without any further inquiry whatsoever) stating that any action or proposed action does not require the approval or consent of the Members under this Agreement or that such approval or consent has been obtained, and any action taken by the Managing Member in connection therewith shall in fact be the act of, and bind, the Company.
7.06.      Other Activities of Members . Except as expressly provided in that certain Agreement Regarding Future Developments to be mutually executed by the Members on or after the date hereof, any Member and its Affiliates may have other business interests and may engage in other business ventures of any nature or description whatsoever, whether presently existing or hereafter created, and whether or not competitive with the business of the Company or any Member.
7.07.      Withholding of Tax on Certain Company Distributions .
(a)      Unless treated as a Tax Payment Loan, any amount paid by the Company for or with respect to any Member on account of any withholding tax or other tax payable with respect to the income, profits or distributions of the Company pursuant to the Code, the Regulations or any state or local statute, regulation or ordinance requiring such payment (a “ Withholding Tax Act ”) shall be treated as a distribution to such Member for all purposes of this Agreement, consistent with the character or source of the income, profits or cash that gave rise to the payment or withholding obligation. To the extent that the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to such Member, unless and to the extent that funds shall have been provided by such Member pursuant to the last sentence of this Section 7.07(a), the excess shall constitute a loan from the Company to such Member (a “ Tax Payment Loan ”). Any such Tax Payment Loan shall be payable upon demand and shall bear interest, from the date that the Company makes the payment to the relevant taxing authority, at the lesser of: (i) the Prime Rate plus two (2) percentage points per annum, or (ii) the highest rate permitted by applicable law, compounded monthly (but in no event higher than the highest interest rate permitted by applicable law). During such time as any Tax Payment Loan to any Member (or the interest thereon) remains unpaid, the Company shall make future distributions due to such Member under this Agreement by applying the amount of any such distributions first to the payment of any unpaid interest on such Tax Payment Loan and then to the repayment of the principal thereof, and no such future distributions shall be paid to such Member until all of such principal and interest has been paid in full. If the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to a Member, the Company shall notify such Member at least five (5) Business Days in advance of the date upon which the Company would be required to make a Tax Payment Loan under this Section 7.07(a) (the “ Tax Payment Loan Date ”) and provide such Member the opportunity to pay to the Company on or before the Tax Payment Loan Date, all or a portion of such deficit.
(b)      The Managing Member shall have the authority to take all actions necessary to enable the Company to comply with the provisions of any Withholding Tax Act applicable to the Company and to carry out the provisions of this Section 7.07 . Nothing in this Section 7.07 shall create any obligation on the Managing Member to advance funds to the Company or to borrow funds from third parties in order to make any payments on account of any liability of the Company under a Withholding Tax Act.
7.08.      REIT Provisions .
(a)      Notwithstanding any other provisions of this Agreement or any non-mandatory provision of the Act, any action of the Managing Member on behalf of the Company or any decision by the Managing Member to refrain from acting on behalf of the Company, based on an opinion of tax counsel selected by the Managing Member (and reasonably acceptable to the other Members, the other Members agreeing that, for this purpose, an opinion of counsel issued by any of the following law firms is deemed to be acceptable until the fifth anniversary of the close of the Company’s taxable year in which the certificate of occupancy is issued for the Property (as may be extended with the mutual approval of the Members): [***], or their successors) that such action or omission is necessary or advisable in order to: (i) protect the ability of LPT to continue to qualify as a REIT under the Code, or (ii) avoid LPT incurring any material taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Members.
(b)      At any time when a direct or indirect beneficial interest in the Company is owned by an entity that has elected to be taxed as a REIT under the Code, neither the Company nor any Subsidiary shall without the prior written consent of Liberty: (i) except as otherwise contemplated by this Agreement with respect to the Project, acquire any asset that is not described in Section 856(c)(4)(a) of the Code or any successor provision; (ii) enter into a loan secured by an interest in real property in which the Company would receive income from a “shared appreciation provision” as defined in Section 856(j)(5) of the Code; (iii) enter into a loan in which the interest income depends, directly or indirectly, in whole or in part, on the income or profits of any person for purposes of Section 856(f) of the Code; (iv) enter into any lease involving real property where any portion of the rents would be excluded from the definition of “rents from real property” under Section 856(d)(2) of the Code; (v) sell any property which, when sold, would constitute property described in Section 1221(1) of the Code, except when the net selling price is less than $10,000; except with respect to a taxable REIT subsidiary (within the meaning of Section 856(l) of the Code) and securities described in Section 856(c)(4)(A) of the Code, acquire securities of any single issuer having a value greater than four percent (4%) of the value of the Company’s total assets, or hold securities of any one issuer or having a value of more than eight percent (8%) of the total voting power of the outstanding securities of any one issuer or having a value of more than eight percent (8%) of the total value of the outstanding securities of any one issuer. Notwithstanding the foregoing, if any of the provisions of Sections 856 or 857 of the Code are amended so that one of the requirements in clauses (i) through (v) above becomes irrelevant to the qualification of a REIT as a REIT under the Code and will not cause adverse tax consequences to a REIT if the requirement is not complied with, such provision shall no longer apply to the Company.
(c)      In making any determinations under this Agreement in which the classification of any entity as a “real estate investment trust” for federal income tax purposes is relevant, such determination or calculation shall be made by assuming that only the items reported on such entity’s federal income tax return are the items reported on the Member’s Schedule K-1 received from the Company (or the entity’s distributive share of such items).
(d)      [***]
(e)      As of the date hereof, based on advice received, the parties anticipate that all of the gross rental income from the portion of the Property leased to Comcast shall qualify as “rents from real property” within the meaning of Section 856(d) of the Code.
7.09.      Right to Disclose Information . No Member shall be in breach of its obligations under this Agreement or any other obligations or duties to the Members at law or in equity (whether under a theory of fiduciary duty or otherwise) solely because such Member or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent the Member or its Affiliates reasonably believe necessary to enable it or its Affiliates to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by an Affiliate of the Member, as the issuer of publicly traded securities.
7.10.      Loan Provisions . Each Member shall cooperate to amend this Agreement and the Certificate of Formation (and or to cause the Company to amend the organizational documents of any Subsidiary of the Company) if required to comply with the requirements of any lender providing mortgage financing to the Company or any Subsidiary of the Company in accordance with this Agreement, provided that no such amendment shall reduce the rights or increase the obligations of the Members under this Agreement. No Member will be required to guaranty debt, except that (a) to the extent a mutually approved construction loan requires guarantees of the repayment of the loan, Liberty and Comcast shall (subject to Section 7.02(f) ) each provide joint and several guarantees and (b) Liberty shall provide a completion guaranty if required by the construction lender, provided that the obligations thereunder shall be no more onerous on Liberty than the Development Agreement. At any time while any Member has potential liability under so called non-recourse carve-outs, the Company and its Subsidiaries shall not be authorized to take any action that would result in the triggering of liability under the non-recourse carve-outs, without the prior approval of all of the Members, which may be withheld for any reason or no reason. Without limiting the generality of the foregoing, at any time while any Member has potential liability under so called non-recourse carve-outs: (i) without the consent of the Members, the Company shall not be authorized to commence, on behalf of the Company or any Subsidiary, any voluntary proceeding for bankruptcy, reorganization or similar relief, or to consent to any involuntary petition for such relief; (ii) the Members expressly waive any rights that they may have at any time, whether under a theory of fiduciary duty or under any other legal or equitable principle, to compel the Company or any Subsidiary to take any action that would trigger liability under non-recourse carve-outs, including, without limitation, commencing a voluntary bankruptcy proceeding or consenting to any involuntary petition or relief in connection therewith; and (iii) the Members agree that they themselves shall not initiate an involuntary bankruptcy proceeding with respect to the Company or any of its Subsidiaries.
7.11.      Management Dispute . If any Member believes that a Management Dispute exists, such Member may deliver notice thereof to the other Member in writing pursuant to the notice provisions set forth in Section 13.02 (a “ Management Dispute Notice ”). The Management Dispute Notice shall set forth in reasonable detail the nature of the dispute. Promptly after the delivery of the Management Dispute Notice, each Member shall designate a member of its senior management to meet with each other in person and to exercise all diligent efforts, acting in good faith, to resolve such dispute.
7.12.      Removal of the Managing Member .
(a)      Comcast may remove the Managing Member at any time if [***].
(b)      Any removal of the Managing Member shall be effective upon such date that Comcast provides written notice to the Managing Member specifying the basis for the removal. If Comcast so removes the Managing Member, Comcast shall select a new Managing Member, which new Managing Member shall not be required to be a Member prior to its admission as the Managing Member, and the removed Managing Member shall become Non-Managing Member and Liberty shall have no consent or approval rights with respect to the Company except that (i) [***]. Upon the removal of the Managing Member as a result of any of the events described in subsections (i) through (iv) of Section 7.12(a) , Comcast shall be permitted at any time thereafter to exercise its Call Right pursuant to Section 8.01(b) , notwithstanding that the Standstill Period has not then expired; provided that, the Deferral Right shall not be available to Liberty pursuant to Section 8.01(c), but the right to rescind following any such exercise of the Call Right shall be available in accordance with Section 8.01.
ARTICLE VIII     
PUT/CALL
8.01.      Invoking the Put/Call Provisions . The Put/Call provisions set forth in this ARTICLE VIII may not be invoked by any party for any reason prior to the termination of the Standstill Period. The Put/Call provisions set forth in this Article VIII shall be subject to the restrictions on transfer set forth in any Financing Document.
(h)      Put Right . At any time after the Standstill Period, Liberty shall have the right and option (the “ Put Right ”) exercisable by giving written notice (the “ Put Notice ”) to Comcast to cause Comcast to purchase from Liberty all of the Membership Interests owned by Liberty free and clear from any claims, liens and encumbrances for the Purchase Price (defined below). The Put Notice shall set forth a statement that Liberty desires to terminate the relationship between the Members and to sell its Membership Interests to Comcast pursuant to the provisions of this ARTICLE VIII. After receipt of the Put Notice, the Members shall commence the Appraisal Process set forth in Section 8.04 below. [***].
(i)      Call Right . At any time after the Standstill Period, Comcast shall have the right and option (the “ Call Right ”) exercisable by giving written notice (the “ Call Notice ”) to Liberty to purchase from Liberty all of the Membership Interests owned by Liberty free and clear from any claims, liens and encumbrances for the Purchase Price. The Call Notice shall set forth a statement that Comcast desires to terminate the relationship between the Members and to purchase Liberty’s Membership Interests pursuant to the provisions of this ARTICLE VIII. After delivery of the Call Notice, [***].
(j)      Deferral Right . Notwithstanding the provisions of this ARTICLE VIII to the contrary, if Liberty delivers to Comcast a Put Notice, or if Comcast delivers to Liberty a Call Notice, then the party receiving such notice (the “ Receiving Party ”) shall have the right (the “ Deferral Right ”), exercisable by written notice to the other party within thirty (30) days after receipt of the Put Notice or Call Notice, as applicable, [***] of the date on which the Appraisal Initiation Date would have fallen if the deferral under this subsection (c) had not occurred. If a party timely exercises its Deferral Right, the Appraisal Initiation Date shall be the date which is [***] after the Put Notice, with respect to the Put Right, or [***] after the Call Notice, with respect to the Call Right.
8.02.      Put Sale Option . [***].
8.03.      Purchase Price . The purchase price payable by the Purchasing Member for the Membership Interests being acquired pursuant to Section 8.01 or 8.02 (the “ Purchase Price ”) shall be equal to [***].
8.04.      Appraisal Process .
(a)      The “ Fair Market Value ” of the Property shall mean the amount that a willing purchaser would pay and a willing seller would accept, for a sale of the Property on the Appraisal Initiation Date, based on the assumptions set forth in Section 8.04(b) , as determined in accordance with this Section 8.04 . Unless otherwise agreed by the Members, the “Fair Market Value” of the Property shall be determined by the appraisal procedures set forth in this Section 8.04 (the “ Appraisal Process ”). Each of Liberty and Comcast shall deliver to the other, not later than the date (the “ Appraisal Deadline ”) which is sixty (60) days after the Appraisal Initiation Date, the written appraisal report of a reputable M.A.I. appraiser having at least ten (10) years’ experience in the business of appraising high rise office buildings in the city of Philadelphia, Pennsylvania (a “ Qualified Appraiser ”), which report shall set forth such appraiser’s appraisal of the fair market value of the Property as of the Appraisal Initiation Date (a “ Round I Appraisal ”). Each Round I Appraisal shall be prepared in accordance with the then-current Uniform Standards of Professional Appraisal Practices. If the lower of the fair values set forth in the two Round I Appraisals shall be in an amount at least equal to [***]% of the higher of such fair values, the Fair Market Value shall be an amount equal to the arithmetic average of such two fair values. However, if the lower of the fair market values set forth in the two Round I Appraisals is less than [***]% of the higher of such fair market values, the Qualified Appraiser selected by Comcast and the Qualified Appraiser selected by Liberty shall jointly select, within seven (7) Business Days after the Appraisal Deadline, select a third Qualified Appraiser (the “ Third Appraiser ”). Each of the Round I Appraisals shall be furnished to the Third Appraiser. Within twenty (20) days after the appointment of the Third Appraiser, the Third Appraiser shall render a written determination of the Fair Market Value by selecting, without change, the determination of one (1) of the original Qualified Appraisers as to the Fair Market Value and such determination shall be final, conclusive and binding. The Fair Market Value as determined pursuant to this Section 8.04 shall be deemed accepted and agreed to by the Members and shall be final, binding and non-appealable by the parties hereto. The date upon which the Fair Market Value of the Property shall finally be determined in accordance with this Section 8.04 shall be referred to herein as the “ Final Appraisal Date ”. Subject to the following sentence, each Member shall pay the costs of its own Qualified Appraiser, and the Members shall share equally the costs of the Third Appraiser. Notwithstanding the foregoing sentence, if a Member exercises its right to rescind a Call Notice, Put Notice or Offer, as applicable, such rescinding party shall pay 100% of the costs of the Qualified Appraisers.
(b)      Each Round I Appraisal shall be accompanied by a complete narrative appraisal report setting forth the data and matters upon which the Qualified Appraiser’s appraisal of value is predicated, and shall utilize, inter alia, the following assumptions:
(i)      there are no mortgages or other encumbrances affecting title to the Property;
(ii)      there are no transfer taxes, brokerage commission, allocation or other costs typically associated with the closing of a real estate purchase transaction which are payable, and in determining Fair Market Value, no reduction shall be made for the Estimated Closing Costs, which shall be accounted for as provided in Section 8.03 above; and
(iii)      for the purposes of a sale pursuant to Sections 8.01(a) and 8.01(a) only (and specifically not in connection with a Transfer pursuant to the exercise of a Right of First Offer under Section 11.03 ), [***].
8.05.      Closing . The provisions of this Section 8.05 shall apply (1) in the event Comcast elects (or is deemed to elect) to purchase Liberty’s Membership Interests pursuant to Section 8.01(a) , (2) in the event Comcast exercises its Call Right pursuant to Section 8.01(b) , (3) in the event Comcast elects pursuant Section 8.01(a) to market the Property to a third party and Comcast fails to cause the Operating Partnership to enter into a binding agreement of sale or to consummate such sale within the time periods set forth in Section 8.01(a) or (4) in the event either Member exercises its Right of First Offer pursuant to Section 11.03 .
(a)      The Member selling its Membership Interests is referred to herein as the “ Selling Member ”. The Member purchasing the Membership Interests, or any Person designated by such Member to purchase the Membership Interests (which designation shall be permitted by written notice to the Selling Member, but shall not relieve the Purchasing Member of its obligations for the payment of the Purchase Price or other obligations of the Purchasing Member hereunder), is referred to herein as the “ Purchasing Member ”, provided that, so long as the Comcast Tenancy Requirement is satisfied, no such designated Purchasing Member may be a Competitor of Comcast.
(b)      The Purchase Price shall be payable by wire transfer of immediately available funds at the time of the consummation of the sale. The sale shall be consummated on or before the one hundred twentieth (120th) day after the Final Appraisal Date, except with respect to a sale pursuant to the provisions of clause (3) of Section 8.05 above, in which event the sale shall be consummated on or before the sixtieth (60 th ) day after the Outside Put Sale Date (or, if applicable, the expiration of the 180-day period without the sale having been consummated as set forth herein) (or in any such event, on the first Business Day thereafter, if such day is not a Business Day), subject in all cases, to any extension necessary to obtain any applicable governmental or lender approvals, such extensions to continue as long as the applicable parties are diligently pursuing such approvals.
(c)      Any transfer of interests to a Member pursuant to this ARTICLE VIII or Section 11.03 shall be for all cash and shall be free and clear of any claims, liens and encumbrances thereon, and the agreement evidencing the sale of the Selling Member’s interest shall contain customary provisions for an assignment of this type, including a representation and warranty as to the Selling Member’s title to the interest, which representation shall survive the closing thereof, and for any breach thereof the Purchasing Member shall have recourse to the Selling Member (or, in the event of liquidation or dissolution of the Selling Member, to any transferee of the assets and liabilities of the Selling Member).
(d)      The Selling Member shall execute and deliver (and shall cause its Affiliates to execute and deliver, to the extent necessary to carry out the purpose of this ARTICLE VIII or Section 11.03 , as applicable) such assignments and other documents (in form reasonably acceptable to the Selling Member and the Purchasing Member) as shall be necessary to convey the Membership Interests of the Selling Member to the Purchasing Member and/or its designee, free and clear of all liens, encumbrances and other adverse claims. If either Member fails to complete the closing of the transaction as required hereunder, the other Member shall have all rights and remedies available hereunder, at law or in equity, including the right to seek specific performance of this Agreement. If the Selling Member and/or its Affiliate is a party to any Credit Support Agreement, then at or before the closing of the sale transaction the Purchasing Member shall secure on behalf of the Selling Member and/or its Affiliate (at the Purchasing Member’s sole cost) a release from such Credit Support Agreements or, if such release is not available despite Purchasing Member’s commercially reasonable efforts to obtain same, provide such indemnities in favor of the Selling Member and its Affiliates as the Selling Member deems acceptable in its reasonable discretion. Such release or indemnity shall relate only to matters arising from and after the completion of such sale of the Membership Interests.
8.06.      Assumption of Company’s Obligations . Following the closing of a purchase by a Member of the other Member’s Membership Interests in accordance with this Article VIII or Section 11.03 , the Purchasing Member shall assume all rights and obligations of the Selling Member arising under or pursuant to this Agreement (except liability arising through an act in contravention of this Agreement or the partnership agreement of the Affiliated Companies or of the Operating Partnership by the Selling Member or its Affiliates), and the Purchasing Member shall indemnify and hold harmless the Selling Member and its Affiliates from and against all such assumed obligations, and to that extent the Selling Member and its Affiliates shall continue to be responsible with respect thereto. .
8.07.      Payment of Debts . If the Selling Member or its Affiliates have any outstanding debts to the Company, the Affiliated Company, the Operating Partnership, or to the Purchasing Member relating to the Company, all proceeds of the Purchase Price due the Selling Member shall be paid to the Company, the Affiliated Companies, the Operating Partnership, or the Purchasing Member (as the case may be) for and on behalf of the Selling Member and its Affiliates until all such debts shall have been paid and discharged in full.
ARTICLE IX     
COMPENSATION OF PARTNERS;
PAYMENT OF COMPANY EXPENSES
9.01.      Company Expenses . The Company shall bear all costs and expenses incurred in connection with the management and operation of the business and affairs of the Company, or in carrying out the business, purposes, and objectives of the Company, including without limitation, costs associated with a proposed transaction that is not consummated for any reason whatsoever. Without limiting the foregoing, the Company shall bear the costs of all third-party vendors who provide services to the Company (including without limitation auditors, tax consultants and attorneys).
9.02.      No Other Compensation . Except as expressly set forth in this ARTICLE IX or elsewhere in this Agreement, no Member shall receive any compensation from the Company for any services rendered in its capacity as a Member. Nothing contained herein shall prevent (i) a Member or its Affiliate from receiving reasonable compensation for any services rendered to the Company in a non-Member capacity, subject to Section 7.03 , (ii) any Member from receiving distributions under ARTICLE VI, or (iii) Liberty or its Affiliate from receiving the fees and compensation pursuant to the Property Management Agreement and the Development Agreement.
ARTICLE X     
COMPANY BOOKS, RECORDS AND STATEMENTS
10.01.      Books and Records . The Managing Member shall establish and maintain accurate, full and complete Company records and books of account showing assets, liabilities and the Capital Accounts of the Members, revenues and expenditures, and all other aspects of the operations, transactions and cash flows of the Company in accordance with generally accepted accounting practices, consistently applied. The Company shall use the standard accounting software utilized by the Managing Member and its Affiliates for properties in their own portfolio to keep the accounting books and records of the Company, provided that such software used shall at all times be of a quality consistent with industry standards applicable to trophy class office buildings. The Managing Member shall also maintain books sufficient to show the computation of any fees payable pursuant to the Property Management Agreement and the Development Agreement. The Company’s books and accounts shall be maintained at the principal office of the Company, with copies thereof at such other place or places, if any, as may be required by law, and any Member shall have access to the Company books (and the right to make copies thereof) during ordinary business hours. Any Member (and its accountants, advisors and other consultants) shall have access upon reasonable prior written notice, during normal business hours, to the books, accounts and financial records of the Company, including to audit the Company at such Member’s expense, and to monitor the Company’s and Managing Member’s compliance with the terms and conditions of this Agreement, compliance with the Company’s obligations and compliance with applicable laws.
10.02.      Method of Accounting . The Company shall use generally accepted accounting principles, consistently applied, unless otherwise required by applicable law.
10.03.      Financial Statements .
(e)      Each Member or its designated representative shall at all reasonable times have access to, and may inspect and make copies of, such books, records and accounts. The Managing Member shall afford Comcast or its counsel access to all documents of the Company upon not less than twenty-four (24) hours prior written notice given by Comcast to the Managing Member.
(f)      The Members agree that the Company’s auditors shall initially be Ernst & Young LLP. The Managing Member shall not change the auditors without the approval of Comcast. The Managing Member shall cause the auditors to audit the books of the Company for each fiscal year and to prepare and issue audited financial statements to the Members as soon as reasonably practicable after the end of such fiscal year (but in any event within seventy five (75) calendar days thereafter). Such annual statements shall include a balance sheet of the Company as at the end of such fiscal year, together with related statements of operations and partners’ capital and cash flow for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, and shall be prepared in accordance with generally accepted accounting principles, consistently applied. Notwithstanding any other provisions of this Agreement, to the extent more extensive financial statements are required pursuant to the terms of any Financing Document, the Managing Member shall provide the Members with a copy of such financial statements.
(g)      Commencing upon completion of the construction of the Office Unit, on or before the fifth (5th) day following the close of each calendar month and quarter, as applicable, the Managing Member shall furnish the following information to the Members:
(i)      on a monthly basis, a statement certified by the Managing Member, in reasonable detail and in a form reasonably approved by Comcast, setting forth all the information necessary to calculate the Net Cash Flow for such calendar month and quarter, and the distribution of said Net Cash Flow (hereinafter referred to as the “ Cash Flow Statements ”) and bank and other depository statements reflecting the current amounts in any Partnership accounts reconciled with the amounts shown on the Company’s books and Cash Flow Statements for such accounts;
(ii)      on a monthly basis, a tenant report setting forth (i) the amount of leased space and vacant space at the Property for the preceding calendar month, (ii) the amount of rent due as of the end of the preceding calendar month, and (iii) such other tenant related information as Comcast reasonably requests;
(iii)      on a monthly basis, a budget to actual comparison with monthly and year-to-date explanation of variances, if any, of major line items. The operating statement will be supported by the following documents:
(a)
a rent roll;
(b)
a reconciliation of security deposit accounts, if any;
(c)
a computation of the management fee and the leasing commissions;
(d)
a leasing activity report;
(e)
a budget versus actual income statement for the applicable month and for the year-to-date a narrative variance report for any amount in excess of the [***];
(f)
a monthly tenant arrearages report;
(g)
information regarding all legal issues related to the Property, the Operating Partnership or the Company;
(h)
bank statements and general ledger ; and
(i)
monthly rent roll and leasing activity report in form satisfactory to Comcast; and
(iv)      on a quarterly basis (i) property level financial statements (unaudited) for the quarter and year to date, together with projections through the end of the Fiscal Year, (ii) a balance sheet for the Property as at the end of such calendar quarter, (iii) a bank reconciliation as at the end of such calendar quarter, (iv) statements of any changes in Company capital; (v) statement of operations, (vi) a statement of cash flows, and (vii) a quarterly membership distribution schedule. Such financial statements shall be prepared on a GAAP basis;
(v)      such other matters as Comcast may reasonably request.
(h)      The Managing Member shall direct the manager under the Property Management Agreement to (i) send to Comcast a copy of (A) each report relating to the Property that is sent to the Operating Partnership at the same time such report is sent to the Operating Partnership, and (B) any other report reasonably requested from time to time by Comcast and (ii) attend meetings with Comcast if requested by Comcast.
10.04.      Bank Accounts . All funds received by the Company shall be deposited in the name of the Company in such checking and savings accounts, time deposits or certificates of deposit, or other accounts or instruments at such financially sound commercial banks, savings banks and savings and loan institutions not then controlled, directly or indirectly, by the Managing Member and its Affiliates, as the Managing Member may reasonably determine. The signatories for such accounts and instruments shall be representatives of the Managing Member. All accounts containing funds of the Company shall be segregated accounts and shall not be commingled with the funds of any other person or entity.
10.05.      Tax Matters .
(f)      The Managing Member shall cause to be prepared and filed timely all informational and other tax returns required to be filed by the Company, and shall deliver copies thereof to the Members promptly thereafter. Subject to Section 10.06 , the Managing Member shall reasonably determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Company and the accounting methods and conventions under the tax laws of the United States, the several states and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the preparation of such tax returns; provided that the Managing Member shall consult in good faith and give due consideration to the views of other Members in respect of the tax treatment of partnership items of the Company with respect to which the Managing Member exercised discretion or judgment as to the treatment and which do not affect the ability of the LPT (or any Affiliate of the Managing Member that is a REIT) to satisfy the requirements for qualifying as a REIT under the Code and Regulations or affect the ability of LPT (or any Affiliate of the Managing Member that is a REIT) to avoid any material federal income or excise tax liability as a result of the operations of the Company, assuming for purposes of this determination that the only items on the federal income tax return of LPT (or any Affiliate of the Managing Member that is a REIT) are the items shown on the Schedule K-1 of the Managing Member. The Managing Member shall inform Comcast and/or its Affiliate that is a Member of the proposed tax treatment to be made on any Company tax return in a timely manner sufficiently in advance of any tax filing to allow such Members to review relevant information and shall provide any additional information reasonably requested, and the other Members shall present their views to the Managing Member within 30 days of the receipt of relevant information. The Managing Member may cause the Company to make, refrain from making, or revoke any and all elections permitted by such tax laws in its reasonable judgment, provided that the Managing Member may not make, change or revoke any material election with respect to taxes without the unanimous consent of the other Members . The Managing Member shall provide to all Members (i) an estimated Schedule K-1 as soon as reasonably practicable and in any case within one hundred twenty (120) days after the close of each Fiscal Year, and (ii) a final Schedule K-1 as soon as reasonably practicable and in any case within one hundred eighty (180) days after the close of each Fiscal Year.
(g)      The Managing Member is hereby designated as the “Tax Matters Member” under Code Section 6231(a)(7). The Tax Matters Member shall manage audits of the Company conducted by the Internal Revenue Service or other governmental agency pursuant to the audit procedures under the Code and the regulations issued thereunder. The Company, through the Tax Matters Member, is authorized to cooperate with and to monitor the Internal Revenue Service in any audit that the Internal Revenue Service may conduct of the Company’s books and records and information or other returns filed by the Company. The Tax Matters Member shall take all actions necessary to preserve the rights of the Members with respect to audits and shall provide the Members with any notices of such proceedings and other information as required by law. The Tax Matters Member shall keep the Members timely informed of its activities under this Section. The Company, through the Tax Matters Member, may similarly cooperate with and monitor any audit by any other governmental authority and prepare and file protests or other appropriate responses to such audits. All costs incurred in connection with the foregoing activities, including legal and accounting costs, shall be borne by the Company. Any additional expenses with respect to judicial review of adverse determinations in connection with any such tax audits or the defense of any Member against any claim asserted by the Internal Revenue Service or other tax authority of additional tax liability arising out of its ownership of its interest in the Company shall be borne by the Member who wishes to proceed with such judicial review or defense. Notwithstanding the foregoing, (i) the Non-Managing Members retain all of their rights under the Code and Treasury Regulations to participate in any proceeding with the Internal Revenue Service or with any relevant governmental authority; and (ii) no Member shall extend the statute of limitations or enter into any settlement or agreement with any governmental authority that would adversely impact the Non-Managing Members without its prior consent.
(h)      All of the Members shall file their separate federal, State and local income tax returns strictly in accordance with the information provided to them on the Schedule K-1 furnished by the Company and no Member shall file an IRS Form 8082 with respect to any “partnership item” of the Company (as that term is defined in Section 6231(a)(3) of the Code) unless the Member desiring to file IRS Form 8082 (the “ Filing Member ”) (i) notifies the other Members thereof in writing (the “ 8082 Notice ”) at least thirty (30) days before filing that the Member intends to file an IRS Form 8082 with respect to a partnership item attributable to the Company, and provides an opinion from a nationally recognized law firm or public accounting firm (expert in such matters) issued to such Member, at such member’s expense, that the position set forth in the proposed Form 8082 is, more likely than not, the correct position with respect to the tax treatment of such partnership item, and (ii) engages in good faith discussions with the other Members in an effort to resolve the differences among them with respect to the relevant partnership item. If such discussions have not resulted in an amicable resolution within ten (10) days after the 8082 Notice, each Member shall designate a representative of its senior management to meet in person and to exercise all diligent efforts, acting in good faith, to resolve such differences within thirty (30) days after the 8082 Notice. If such meeting or meetings do not result in agreement among the Members within such thirty (30)-day period, the Filing Member shall have the right to file the IRS Form 8082 with respect to the partnership item identified in the 8082 Notice. Notwithstanding the foregoing, neither Comcast nor its Affiliate that is a Member shall be precluded from filing the 8082 Notice on account of the limitations of this Section 10.05 solely because such Member did not receive its Form K-1 from the Company on or before April 15 th of the applicable year and the only reason for filing the 8082 Notice is that the partnership items attributable to the Company reported on its income tax return are based on estimates.
(i)      During such time as the Company has more than one Member for tax purposes, neither the Company nor any Member shall take any action, including making any election, that would result in the Company being taxed as other than a “partnership” for federal income tax purposes.
10.06.      Certain Elections . In the event that a distribution of any of the Company’s assets is made in the manner provided in Code Section 734, where a transfer of an interest in the Company permitted by this Agreement is made in the manner provided in Code Section 743, or in any other circumstance permitting an election to be made under Section 754 of the Code, then, upon the request and at the expense of any Member, the Company shall file an election under Code Section 754, in accordance with procedures set forth in the applicable Regulations. The Members’ Capital Accounts shall be adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(m). Each Member shall provide the Company with all information necessary to give effect to any election under Code Section 754.
10.07.      Certain Tax Accounting Matters . [***].
10.08.      Reserves . The Managing Member may establish reserves consistent with the Annual Budget, for the purposes and requirements as may be required by any secured lender providing financing for the Properties or as the Members may otherwise deem appropriate (the “ Reserve Accounts ”). The Reserve Accounts will be increased by any deposits thereto from time to time of amounts of the revenues of the Company from operations, the net proceeds from capital transactions, and contributions and other sources, before any distributions of such amounts to the Members, as determined to be reasonably necessary by the Members. Such Reserve Accounts may be charged with any expenditure for the operation of the Company or the Operating Partnership or the Property that is consistent with the purposes for which such Reserve Accounts were established, whether such items are treated as current expense deductions or as capital expenditures under generally accepted accounting principles to the extent provided for in the Annual Budget or Approved Project Budget (including variances provided for in the Property Management Agreement or in the Development Agreement) or agreed to by the Members. Nothing contained in this Section (a) shall in any way limit or restrict the right of the Members to use other assets or funds of the Company (other than deposits to the Reserve Accounts) for any such expenditures.
10.09.      Intentionally Omitted .
10.10.      Annual Budget; Leasing Guidelines .
(a)      The Managing Member shall, prior to October 1, 2016, submit to Comcast for its approval a proposed initial operating budget for the year 2017. Beginning with the Annual Budget for calendar year 2018, the Managing Member shall submit not later than November 1 of the prior year a proposed operating budget for the following year to Comcast for its approval. Comcast shall promptly communicate, in writing to the Managing Member, its approval or disapproval of each such proposal. Any disapproval of a proposed budget must specify which particular line items are disapproved. If Comcast fails to send a written approval or disapproval within thirty (30) days after submission of the proposal, the proposal shall be deemed to have been approved. If Comcast provides a timely disapproval and the Managing Member fails to send its written objection in writing within thirty (30) days thereafter, Comcast’s disapproval shall be deemed to be accepted and binding with respect to the Annual Budget. If a proposed budget is not approved (or deemed approved) by the date that is five (5) days prior to commencement of the applicable year, the then most recent Annual Budget shall continue to be in effect, except as follows: (i) to the extent specific line items of the proposed budget have been approved by Comcast, then the budget for such specific line items shall be as so approved; (ii) subject to the preceding clause (i), (A) the budget for any expenditures over which the Company has no control, such as real property taxes, insurance premiums for then existing coverage, utility charges, interest and principal due to then existing creditors of the Company or the Operating Partnership and to the holders of liens on Property, and amounts payable pursuant to the terms of then existing contracts (including, without limitation, leases and brokerage agreements) by which the Company and/or Operating Partnership is bound (collectively, “ Non-Controllable Items ”) or is required to address an emergency situation, by eliminating a condition that poses a threat to life (an “ Emergency Item ”) shall be the amount required to pay such items; and (B) the budget for recurring capital expenditures and any other items that are not Non-Controllable Items nor Emergency Items shall be the applicable amount set forth in the then most recent Annual Budget, such amounts in (A) and (B) being adjusted for (x) inflation as reflected in the Consumer Price Index since the date of such most recent Annual Budget and (y) any changes in the level of leasing or occupancy of the Property. The Managing Member shall be entitled to submit to Comcast for its approval revisions to any Annual Budget at any time during the period to which such Annual Budget relates, and upon approval (or deemed approval) of such revisions by Comcast, the Annual Budget, as revised by such revisions, shall thereafter constitute the Annual Budget for the period covered thereby. Comcast shall promptly communicate in writing to the Managing Member, its approval or disapproval of each such proposed revision, provided that, in any event, if Comcast fails to send a written approval or disapproval within thirty (30) days after submission of such revisions, the revisions shall be deemed to have been approved.
(b)      Commencing on January 1, 2016, Managing Member shall submit not later than January 1 and July 1 of each year in which a Lease Vacancy exists, proposed Leasing Guidelines or amendments to the then existing Leasing Guidelines (including the proposed standard form of lease, if different in any material respect from the approved standard form in effect) to Comcast for its approval. Comcast shall promptly communicate, in writing to the Managing Member, its approval or disapproval of each such proposal. Any disapproval of a Leasing Guidelines or amendments thereto must specify which particular aspects of the proposed leasing guidelines are disapproved. If Comcast fails to send a written approval or disapproval within twenty (20) days after submission of the proposal, the proposal shall be deemed to have been approved. If a Leasing Guideline or amendment thereto is not approved (or deemed approved) by the date that is five (5) days prior to commencement of the applicable period, the then the most recent Leasing Guidelines shall continue to be in effect, except as follows: (i) to the extent specific aspects of the proposed leasing guidelines have been approved by Comcast, then the leasing guidelines for such specific aspects shall be as so approved. The Managing Member shall be entitled to submit to Comcast for its approval revisions to any Leasing Guidelines at any time during the period to which such Leasing Guidelines relate, and upon approval (or deemed approval) of such revisions by Comcast, the Leasing Guidelines, as revised by such revisions, shall thereafter constitute the Leasing Guidelines for the period covered thereby. Comcast shall promptly communicate in writing to the Managing Member, its approval or disapproval of each such proposed revision. If a Leasing Vacancy exists, but Managing Member does not desire to amend the most recent Leasing Guidelines, Managing Member shall not be required to submit updated Leasing Guideline to Comcast and the most recent Leasing Guidelines shall continue to be in effect.
(c)      In any case in which Comcast disapproves a proposed budget or proposed leasing guidelines and the Managing Member delivers a timely objection to Comcast’s disapproval, either Comcast or the Managing Member may elect to have such dispute resolved by arbitration conducted in Philadelphia, Pennsylvania in accordance with the provisions of this Section 10.09(c) , and judgment upon the award rendered may be entered in any court having jurisdiction thereof.
(i)      If either Member desires to arbitrate such disapproval by Comcast, it shall give notice (a “ Dispute Notice ”) to that effect to the other Member, whereupon the Managing Member and Comcast shall endeavor to resolve their dispute through diligent and good faith negotiations. If, notwithstanding such negotiations, the Managing Member and Comcast shall be unable to resolve their dispute on or before that date which is ten (10) Business Days after such Dispute Notice has been delivered, the parties shall use good faith efforts to agree on a Qualified Arbitrator as the arbitrator for such dispute. If the parties are unable to agree upon a Qualified Arbitrator, then within fifteen (15) Business Days after the Dispute Notice, each of the parties shall nominate and appoint a Qualified Arbitrator and shall notify the other party to the controversy in writing of the name and address of the arbitrator so chosen (each of which is hereinafter referred to as a “ Designated Arbitrator ”). Upon the appointment of the Designated Arbitrators, they shall, within ten (10) days after their appointment and before exchanging views as to the question at issue, appoint in writing one additional arbitrator (referred to as the “ Additional Arbitrator ”), and give written notice of such appointment to all parties. In the event that the Designated Arbitrators shall fail to appoint or agree upon such Additional Arbitrator within such ten-day period, the Additional Arbitrator shall be selected by the parties if they so agree upon such Additional Arbitrator within a further period of ten (10) days. If such parties do not so agree upon such Additional Arbitrator, then such Additional Arbitrator shall be chosen by the President (or equivalent chief executive) of the local (i.e., that which includes Philadelphia, Pennsylvania) chapter of BOMA or its successor. The Qualified Arbitrator who is ultimately selected through the foregoing process is referred to herein as the “ Arbiter ”.
(ii)      The arbitration shall be conducted in accordance with the then prevailing Commercial Arbitration Rules (without regard to mediation procedures but including rules for expedited proceedings) of the American Arbitration Association (the “ AAA ”), except that, to the extent that the Pennsylvania State Civil Practice and Law Rules, or any successor statute, imposes requirements different from the AAA in order for the decision of the Arbiter to be enforceable in the courts of the Commonwealth of Pennsylvania, such requirements shall be complied with in the arbitration.
(iii)      The sole issues to be determined by the Arbiter with respect to an Annual Budget dispute are the [***]. If the Arbiter concludes that the disputed item satisfies the reasonable and customary standard, then Comcast’s disapproval of such budget item or items shall be deemed to have been unreasonable; provided, however, that in the case of any budget item consisting of a proposed capital expenditure that is desirable for primarily aesthetic reasons, rather than in order to continue the Property’s status as a “trophy” quality office building or to improve the operation, maintenance or upkeep of the Property or to enhance the marketability of the Property and/or the leasing demand for space in the Property, Comcast shall not be subject to challenge or overruling by the Arbiter. The sole issue to be determined by the Arbiter, with respect to any leasing guidelines Dispute, is whether the proposed leasing guidelines are consistent with fair market rental terms. If the Arbiter concludes that the disputed leasing guidelines are consistent with fair market rental terms, then Comcast’s disapproval of such leasing guidelines shall be deemed to have been unreasonable. Within ten (10) Business Days after the Arbiter has been chosen, both parties shall make whatever presentations they wish to the Arbiter. The Arbiter shall use his or her best efforts to reach a decision within forty-eight (48) hours from the conclusion of the hearing, provided that it is the desire of the parties that the Arbiter render his or her decision at the conclusion of the hearing. The Arbiter’s decision may be made orally or telephonically, provided that the Arbiter must confirm such decision in writing, with a short summary of the reasons for the decision, within two (2) Business Days thereafter. Copies of the Arbiter’s decision shall be sent to each of the Members and shall be binding on the Company and on all of the Members. Any costs incurred by or payable to the Arbiter in any such proceeding shall be borne by the non-prevailing party and each party shall bear the costs of its own attorneys and other experts. The Arbiter shall have no power to vary or modify any of the provisions of this Agreement, and its powers and jurisdiction are hereby limited accordingly.
(d)      The Managing Member shall operate the Property in accordance with the Annual Budget. Except with respect to matters which relate to the development and construction of the Property (which shall be governed by the Development Agreement), Managing Member shall not make any expenditure other than as set forth in the Annual Budget, except for (i) Non-Controllable Items and Emergency Items as defined in Section 10.10(a) , and (ii) any expenditure which does not cause the total expenditures relating to any line item in the Annual Budget to be exceeded by [***]; provided that, in no event may the total expenditures for any budget year exceed the Annual Budget by more than [***] in the aggregate. The Managing Member may not take make any payment that would cause the fees or other sums payable to Liberty or its Affiliates to exceed the amounts in the applicable Annual Budget.
ARTICLE XI     
TRANSFER OF MEMBERSHIP INTERESTS
11.01.      Transfer .
(c)      The term “ Transfer ,” when used with respect to a Membership Interest, shall include any sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of the Membership Interest or any issuance, sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of any direct or indirect ownership interest in a Member. Notwithstanding the foregoing, the term “Transfer” shall not include the issuance, sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of any beneficial interests in (i) Liberty, (ii) LPT, (iii) any Liberty Merger Successor (as defined below), (iv) any publicly-traded Affiliate of a Liberty Merger Successor, (v) Comcast, (vi) any Comcast Merger Successor (defined below), or (vii) any publicly-traded Affiliate of a Comcast Merger Successor.
(d)      Except as provided in Article VIII , Sections 11.02 and 11.03 , no Member may enter into or suffer to occur a Transfer, in whole or in part, directly or indirectly, without the approval of all Members. Any Transfer or purported Transfer of any Membership Interest not made in accordance with this Agreement shall be null and void and in breach of this Agreement.
11.02.      Transfers of Membership Interests to Affiliates . The following Transfers shall be permitted upon written notice to the other Members but without the need for the consent of any other Member:
(i)      Transfers of direct or indirect Membership Interests to (A) Comcast, (B) an Affiliate of Comcast, or (C) any successor to Comcast or its Affiliates (or any Affiliate of such successor) resulting from a merger, consolidation, sale of all or substantially all of the assets or beneficial interests, or similar fundamental corporate transaction, affecting Comcast and/or its Affiliates (in any such case under this clause (C), a “ Comcast Merger Successor ”)
(ii)      Transfers of direct or indirect Membership Interests to (A) Liberty, (B) an Affiliate of Liberty, or (C) any successor to Liberty or its Affiliates (or any Affiliate of such successor) resulting from a merger, consolidation, sale of all or substantially all of the assets or beneficial interests, or similar fundamental corporate transaction, affecting Liberty and/or its Affiliates (in any such case under this clause (ii), a “ Liberty Merger Successor ”).
11.03.      Transfers of Membership Interests to Third Party . Subject to the Right of First Offer granted to the Members pursuant to this Section 11.03 , Comcast and Liberty shall each have the right after the Standstill Period to Transfer all, but not less than all, of its entire Membership Interest to a Third-Party Purchaser.
(c)      Right of First Offer . Comcast and Liberty shall each have a right of first offer (a “ Right of First Offer ”) to purchase the other Member’s Membership Interests in accordance with this Section 11.03 . If either Liberty or Comcast desires to Transfer its Membership Interest to a third party (such electing party being referred to herein as the “ Offeror Member ”), the Offeror Member shall deliver to the other Member (the “ Offeree Member ”) a written offer (an “ Offer ”) pursuant to which the Offeror Member will offer to [***] of such Membership Interest to the Offeree Member for the Purchase Price, provided, however, that for purposes of this Section 11.03 , in determining the Fair Market Value, the [***]. Within ten (10) Business Days after delivery by the Offeror Member to the Offeree Member of the Offer, the Offeror Member shall initiate the Appraisal Process. The Offeree Member shall notify the Offeror Member in writing, not later than ninety (90) calendar days following the Final Appraisal Date, as to whether it desires to purchase such Membership Interest (or in the case of an Offer made by Comcast to Liberty, whether Liberty elects to exercise its Tag-Along Right pursuant to Section 11.03(d) ) (any failure on the part of the Offeree Member to respond in writing to the Offer within such ninety (90) calendar day period to be deemed to constitute an election on the part of the Offeree Member not to purchase, and in the case of an Offer made to Liberty, an election not to exercise the Tag-Along Right). If the Offeree Member shall elect (or shall be deemed to have elected) not to purchase such Membership Interest, the Offeror Member shall be entitled, at any time during the twelve month period immediately following such election (or deemed election) (the “ Outside Third-Party Sale Date ”), to sell such Membership Interest, at a price not less than [***] percent ([***]%) of the Purchase Price. If the Offeror Member shall be entitled, pursuant to this Section, to sell such Membership Interest, but shall fail to effect such sale prior to the Outside Third-Party Sale Date, then (1) the Offeror Member shall be obligated to re-offer such Membership Interest to the Offeree Member in accordance with the applicable provisions of this Section 11.03(a) above prior to selling such Membership Interest to a Third-Party Purchaser and (2) the Offeror Member shall have no right to initiate a sale of its Membership Interests to a Third-Party Purchaser or make an Offer or exercise a Call Right or Put Right (whichever is applicable) for a period of two (2) years after the Outside Third-Party Sale Date. If the Offeror Member shall be entitled, pursuant to this Section 11.03(a) , to sell such Membership Interest, but desires to sell such Membership Interest for less than [***] percent ([***]%) of the Purchase Price, the Offeror Member shall be obligated to re-offer such Membership Interest to the Offeree Member at such lesser price, in which event the Offeree Member shall respond within sixty (60) calendar days after such re-offer. If the Offeree Member shall timely accept the Offer, the Offeror Member shall Transfer the subject Membership Interest to the Offeree Member (or if the Comcast Tenancy Requirement is satisfied, any designee of the Offeree Member that is not a Competitor of Comcast), and the Offeree Member shall accept such Membership Interest and assume the associated obligations hereunder, on the terms set forth in the Offer and otherwise in accordance with the provisions of Section 8.05 hereof, as if the Offeror Member were the Selling Member and the Offeree Member were the Purchasing Member with the same force and effect as if such provisions had been set forth in the Offer in their entirety. No designation by the Offeree Member to a third party shall relieve the Offeree Member of its obligations for the payment of the Purchase Price or other obligations of the Offeree Member hereunder.
(d)      No Transfers to Competitors . Concurrently with its delivery of the Offer to the Offeree Member, the Offeror Member shall inform the Offeree Member as to whether the Offeror Member has determined the Person or Persons to which it intends to sell or offer to sell its Membership Interest if the Offeree Member declines to purchase, and if so, shall identify such Person or Persons to the Offeror Member with reasonable specificity. Except for a sale of 100% of the Membership Interests of all Members to a Third-Party Purchaser in accordance with Section 11.03(c) or 11.03(d) below, neither party shall have the right to Transfer its Membership Interests to a Competitor of the Offeree Member.
(e)      Drag Along Right . If Comcast desires to Transfer its Membership Interests to a Third-Party Purchaser pursuant to this Section 11.03 and Liberty does not elect to accept the Offer pursuant to Section 11.03(a) , Comcast shall have the right, in its sole and absolute discretion, to require Liberty (“ Drag Along Right ”) to sell all its Membership Interests to such Third-Party Purchaser (or to vote in favor of any merger, sale of assets or other transaction which would effect such a sale) for the same consideration per Membership Interest and pursuant to the same terms and conditions with respect to payment for the Membership Interests as agreed to by Comcast. In such case, Comcast shall give written notice of its exercise of the Drag Along Right within thirty (30) days after Liberty elects (or is deemed to elect) to not exercise its Right of First Offer, setting forth (a) the consideration to be received by the Members, (b) the identity of the Third-Party Purchaser, (c) any other material items and conditions of the proposed Transfer, and (d) the date of the proposed Transfer. Liberty shall take all reasonably necessary actions, as requested by Comcast to consummate such Transfer of Membership Interests pursuant to the exercise of the Drag Along Right.
(f)      Tag-Along Right . If Comcast desires to Transfer its Membership Interests to a Third-Party Purchaser, Liberty shall have the right (but not the obligation, except as set forth in Section 11.03(c) above), in its sole and absolute discretion (the “ Tag Along Right ”) to participate in such Transfer, by delivering written notice to Comcast within sixty (60) calendar days following the determination of the appraised value pursuant to Section 11.03(a) . Upon receipt of such notice of election, Comcast shall use commercially reasonable efforts to obtain the agreement of the prospective Third-Party Purchaser to purchase Liberty’s Membership Interests and shall otherwise take all reasonably necessary actions to consummate such Transfer of Membership Interests pursuant to the exercise of the Tag Along Right. If the prospective purchaser does not agree to purchase all of Comcast’s Membership Interests and Liberty’s Membership Interests, Comcast and Liberty shall be entitled to sell to the prospective purchaser, for the same consideration per Membership Interest and pursuant to the same terms and conditions, Membership Interests equal to the product of (a) such Member’s Percentage Interest multiplied by (b) the Percentage Interest held by Comcast immediately prior to such sale. By way of example only, if at the time of such proposed sale, Comcast holds an 80% Percentage Interest and Liberty holds a 20% Percentage Interest, then if the proposed purchaser declines to purchase Liberty’s Membership Interest, Comcast shall be entitled to Transfer to such Third-Party Purchaser 80%*80% = a 64% Membership Interest and Liberty shall be entitled to Transfer to such Third-Party Purchaser 20%*80% = a 16% Membership Interest. Comcast shall not be permitted to Transfer, and shall not Transfer, all or any portion of its Membership Interests to the prospective purchaser under this paragraph if the prospective purchaser declines to allow the participation of the Liberty.
(g)      Sale of Equity Interests Only . If Liberty shall sell its Membership Interests to a Third-Party Purchaser pursuant to this Section 11.03 , such Third-Party Purchaser shall acquire Liberty’s equity interests only, shall not become the Managing Member unless Comcast agrees in writing in its sole discretion, and Comcast shall have the right to designate the Managing Member of the Company. In addition, such Third-Party Purchaser shall only assume Liberty’s rights and obligations under the Property Management Agreement if approved in writing by Comcast. If Comcast shall not approve such assignment of the Property Management Agreement, Comcast shall have the right to terminate the Property Management Agreement, as more fully set forth therein.
(h)      Rescission Right . Notwithstanding anything set forth in this Agreement to the contrary, the Offeror Member shall have the right to rescind its Offer by providing written notice to the Offeree Member within thirty (30) days after the Final Appraisal Date. If the Offeror Member so elects to rescind its Offer, then (1) the Offeror Member shall pay 100% of the costs of the Qualified Appraisers and (2) the Offeror Member shall not have the right to make an Offer or exercise a Call Right or Put Right (whichever is applicable) for a period of two (2) years after the date of such rescission of the Offer.
11.04.      Intentionally Omitted .
11.05.      Withdrawal of a Member . A Member may voluntarily withdraw from the Company only upon a Transfer of all of such Member’s Membership Interest in accordance with this ARTICLE XI.
11.06.      Admission of Transferee as a Member . Any Person to whom any portion or all of a Membership Interest has been transferred pursuant to Section 11.02 or 11.03 shall be admitted as a substituted Member as a result of such transfer to the extent of the Membership Interest so transferred only upon the satisfaction of all of the following conditions:
(a)      Such transferee’s written acceptance of, and written agreement to be bound by, all of the terms and provisions of this Agreement;
(b)      Reasonable evidence of the authority of such transferee to become a Member and to be bound by all of the terms and provisions of this Agreement; and
(c)      The approval of any third party lender if required by any loan documents entered into by the Company.
Anything herein to the contrary notwithstanding, any transferee who does not become a substituted Member shall be only entitled to receive the share of Profits, Losses and distributions of the Company to which the transferor was entitled with respect to the Membership Interest so transferred, and shall not have any right to vote on, consent to, approve or otherwise take part in any decision of the Members, or to any of the other rights associated with the ownership of such Membership Interest.
11.07.      Admission of Additional Members . No Person may be admitted as an additional Member without the unanimous approval of the Members.
ARTICLE XII     
DISSOLUTION AND LIQUIDATION
12.01.      No Dissolution, etc . The Company shall not be dissolved by the admission of any new or additional Member, and the Members hereby waive any right they may have to seek a partition of the Company assets or to dissolve the Company except in accordance with this Agreement.
12.02.      Events Causing Dissolution . Subject to Section 12.03 , the Company shall be dissolved and its affairs wound up upon the occurrence of any of the following events:
(i)      The sale or other disposition by the Company of all or substantially all of the Company’s assets and the collection of all amounts derived from any such sale or other disposition, including all amounts payable to the Company under any promissory notes or other evidences of indebtedness taken by the Company in connection with such sale or other disposition (unless the Managing Member shall elect, with the approval of the Non-Managing Members, to distribute such indebtedness to the Members in liquidation); or
(j)      The occurrence of any event not specified above that, under the Act or other applicable laws, would cause the dissolution of the Company or that would make it unlawful for the business of the Company to be continued.
12.03.      Rights to Continue Business of Company . Upon an event described in Sections 12.02(a) or 12.02(b) (but not an event described in Section 12.02(b) that makes it unlawful for the business of the Company to be continued), the Company thereafter shall be dissolved and liquidated unless, within 90 days after the event described in such Section, an election to reconstitute and continue the business of the Company shall be made in writing by all of the Members.
12.04.      Dissolution . Except as otherwise provided in Section 12.02 and Section 12.03 , upon the dissolution of the Company, the Managing Member shall promptly notify the Members of such dissolution.
12.05.      Liquidation .
(d)      Except as otherwise provided in Section 12.03 , upon the dissolution of the Company, the Managing Member (or other Person responsible for winding up the affairs of the Company) shall proceed without any unnecessary delay to sell or otherwise liquidate the Company’s assets and pay or make due provision for the payment of all debts, liabilities, and obligations of the Company.
(e)      After adequate provision has been made for the payment of all debts, liabilities, and obligations of the Company, the Managing Member (or other Person responsible for winding up the affairs of the Company) shall distribute the net liquidation proceeds to the Members in accordance with ARTICLE VI;
12.06.      Reasonable Time for Winding Up . A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 12.05 in order to minimize any losses otherwise attendant upon such a winding up.
12.07.      Termination of Company . Except as otherwise provided in this Agreement, the Company shall terminate when all of the Company’s assets shall have been converted into cash and the net proceeds therefrom, as well as any other liquid assets of the Company, after payment of or due provision for the payment of all debts, liabilities, and obligations of the Company, shall have been distributed to the Members as provided for in Section 12.05 , and all instruments recorded or filed in the manner required by the Act.
ARTICLE XIII     
MISCELLANEOUS PROVISIONS
13.01.      Additional Actions and Documents . Each Member shall take or cause to be taken such further actions and shall execute, acknowledge, deliver, and file such further documents and instruments, and use reasonable efforts to obtain such consents, as may be necessary or as may be reasonably requested in order to maintain the Company pursuant to the terms and conditions of this Agreement.
13.02.      Notices .
(j)      Except as set forth in Section 13.02(b) , wherever in this Agreement it shall be required or permitted that notice or demand be given or served or consent or approval given by either party to this Agreement to or on the other party, such notice or demand or consent or approval shall be deemed to have been duly given or served if in writing and either: (i) personally served with receipt of delivery; (ii) delivered by pre-paid nationally recognized overnight courier service (e.g. Federal Express) with evidence of receipt required for delivery; (iii) forwarded by Registered or Certified mail, return receipt requested, postage prepaid or (iv) by e-mail or facsimile transmission (at the email address or facsimile number set forth below, with the original to be sent the same day by one of the methods provided in clauses (i), (ii) or (iii) above); in all such cases addressed to the parties at the addresses set forth below in this Section 13.02 . Each notice which shall be hand delivered, sent by e-mail or facsimile or mailed in the manner described shall be deemed sufficiently given, served, sent, received, or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or the affidavit of messenger being deemed conclusive (but not exclusive) evidence of such delivery or at such time as delivery is refused by the addressee upon presentation) if received prior to 5:00 pm local time on a Business Day, or if received at any other time, then on the next Business Day. Subject to the above, all notices shall be addressed as follows, or to such other address as any Member may specify for itself by written notice given in accordance with this Section:
(i)      If to the Company, at the Company’s principal office, with copies to each Member;
(ii)      If to the Managing Member:

c/o Liberty Property Trust
Eight Penn Center - Suite 1100
1628 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]

with a copy to:
Liberty Property Trust
500 Chesterfield Parkway
Malvern, PA 19355
Attn: [***]
Fax No: [***]
E-Mail: [***]

and:
Cozen O’Connor
1900 Market Street
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]
(iii)      If to Comcast:

c/o Comcast Corporation
One Comcast Center
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]
with a copy to:
Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]
and
Ballard Spahr LLP
1735 Market Street- 51 st Floor
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]
(k)      Wherever it shall be required or permitted that notice or demand be given or served or consent or approval given by either party to this Agreement to or on the other party with respect to (1) a Call for Development Capital made in accordance with the Approved Project Budget or (2) a Call for Capital made in accordance with an Annual Budget, such notice or demand or consent or approval shall be deemed to have been duly given or served if made pursuant to the notice provisions set forth in Section 13.02(a) above or via e-mail to the following addresses (or to such other e-mail address as any Member may specify for itself by written notice given in accordance with Section 13.02(a) ) and shall be deemed given on the date upon which the e-mail is sent if received prior to 5:00 pm local time on a Business Day, or if received at any other time, then on the next Business Day :
(i)      If to the Managing Member:

c/o Liberty Property Trust
Attn: [***]
E-Mail: [***]

with a copy to:
c/o Liberty Property Trust
Attn: [***]
E-Mail: [***]

If to Comcast:

c/o Comcast Corporation
Attn: [***]
Email: [***]

with a copy to:

c/o Comcast Corporation
Attn: [***]
Email: [***]

13.03.      Survival and Reliance . All covenants, agreements, statements, representations, warranties, and indemnities made in this Agreement shall survive the execution and delivery of this Agreement and the termination of the Company, and may be relied upon by each of the Members.
13.04.      Waivers . Except as otherwise provided herein, neither the waiver by a Member of a breach of or a default under any of the provisions of this Agreement, nor the failure of a Member, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, remedy, or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights, remedies, or privileges hereunder.
13.05.      Exercise of Rights . Except as expressly provided herein, no failure or delay on the part of a Member or the Company in exercising any right, power, or privilege hereunder and no course of dealing between the Members or between a Member and the Company shall operate as a waiver thereof and no single or partial exercise of any right, power, or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, any Member shall have the right to seek specific performance of the duties and obligations set forth in this Agreement. The rights and remedies herein are cumulative and not exclusive of any other rights or remedies which a Member or the Company would otherwise have at law or in equity or otherwise.
13.06.      Binding Effect . Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon and shall inure to the benefit of the Members and their respective successors and assigns.
13.07.      Limitation on Benefits of this Agreement . No person or entity other than the Members is or shall be entitled to bring any action to enforce any provision of this Agreement against any Member or the Company. All covenants, undertakings, and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the Members (or their respective successors and assigns as permitted hereunder).
13.08.      Amendment Procedure . Any amendment to this Agreement shall be in writing and require the unanimous approval of all of the Members.
13.09.      Entire Agreement . This Agreement, including the Exhibits and Schedules hereto (which are hereby incorporated by this reference), supersedes any prior discussions, proposals, negotiations and discussions between the parties, including, without limitation, the Letter Agreements and the JV Term Sheet (to the extent applicable to the Property), and this Agreement, the Development Agreement and the Property Management Agreement contain all the agreements, conditions, understandings, representations and warranties made between the parties hereto with respect to the subject matter hereof, and may not be modified orally or in any manner other than by an agreement in writing signed by both parties hereto or their respective successors in interest.
13.10.      Gender . As used in this Agreement, the word “Person” shall mean and include, where appropriate, an individual, corporation, partnership, limited liability company or other entity; the plural shall be substituted for the singular, and the singular for the plural, where appropriate; and the words of any gender shall mean to include any other gender
13.11.      Captions . Marginal captions, titles or exhibits and riders and the table of contents in this Agreement are for convenience and reference only, and are in no way to be construed as defining, limiting or modifying the scope or intent of the various provisions of this Agreement.
13.12.      Governing Law . This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (but not including the choice of law rules thereof).
13.13.      Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which when taken together shall be deemed to be one and the same instrument.
13.14.      Telefax Signatures . The parties acknowledge and agree that notwithstanding any law or presumption to the contrary a telefaxed or electronic signature of either party whether upon this Agreement or any related document shall be deemed valid and binding and admissible by either party against the other as if same were an original ink signature.
13.15.      Insurance . The Company shall maintain insurance on the Property of such types and in such amounts and with such insurers as the Managing Member shall reasonably determine, in compliance with the requirements of any Financing Documents in effect from time to time. All liability insurance policies shall name the Company and all the Members as named insureds. Upon the request of any Member, the Managing Member shall provide a copy of the certificate of insurance listing the coverages maintained by the Company.
13.16.      Attorneys’ Fees . Unless otherwise provided herein in any specific instance, including, without limitation below in this Section 13.16 , each party shall bear and pay all out-of-pocket costs, charges and expenses, including the fees and out of pocket expenses of counsel, agents and others retained by such party, incurred by such party in any litigation, negotiation or transaction in which such party becomes involved or concerned, without reimbursement from the other party. If either party incurs any reasonable expenses, including, but not limited to, reasonable attorneys’ fees, relating to enforcing the provisions of this Agreement or pursuing any default hereunder, provided that such party is the Prevailing Party in a legal action, arbitration or proceeding against the other party, then the losing party agrees to reimburse the Prevailing Party for all such expenses. Notwithstanding any provision in this Agreement to the contrary, the terms “attorney’s fees” and “Attorney’s Fees” wherever used in this Agreement shall mean (but shall mean only) the reasonable charges for services actually performed and rendered by independent, outside legal counsel.
13.17.      Confidentiality . Each party acknowledges that, during the course of the transactions outlined herein and the implementation of such transactions and during the existence of the Company, each of the parties may obtain from the other and from the Company certain information and documents concerning the other party and the Company and their respective financial resources, the other parties’ plans for development (including development of the Property) and its business needs or objectives, and other matters that are the proprietary and valuable information of the other party, the disclosure or unauthorized use of which may cause irreparable harm to the other party (the “ Information ”). Each party agrees to keep the Information confidential, not to disclose the Information to any other person except (i) as required (in the determination of the disclosing party based on advice of counsel) by law, regulation or rule of any applicable securities exchange or trading system, court or government agency, (ii) as reasonably required to pursue governmental approvals, permits, incentives and other cooperation in connection with the Project, (iii) to its professional advisors and those persons within its organization having a reasonable need for such information, and (iv) as contemplated by this Agreement or the other documents contemplated hereby. Each party agrees not to use the Information except in connection with the Project. Except as required by law or as contemplated by this Agreement and the other documents contemplated hereby, neither party will disclose to any person the fact that the Information has been made available. Each party shall ensure that all of its representatives to which information is made available under this Agreement are subject to confidentiality duties substantially similar to those set forth herein and each party shall be responsible for any breach of this Section 13.17 by any of its representatives.
13.18.      Severability . If any provisions of this Agreement shall be held to be invalid, void or unenforceable, the remaining provisions hereof shall in no way be affected or impaired and such remaining provisions shall remain in full force and effect, unless by its nature such provision is of the essence of this Agreement and its invalidity, voidance or unenforceability shall so impair the rights or obligations of the parties as to defeat the mutuality of the covenants of this Agreement.
13.19.      Member Estoppel Certificates . Upon the written request of a Member, the other Member shall, within fifteen (15) calendar days of its receipt of such request, execute and deliver a written statement certifying: (A) that this Agreement is unmodified and in full force and effect (or, if modified, that this Agreement is in full force and effect as modified and stating any and all modifications), (B) to the actual knowledge of the certifying Member, that such Member is not in default hereunder, in each case except as specified in such statement, (C) that to the actual knowledge of the certifying Member, no event has occurred which with the passage of time or the giving of notice, or both, would ripen into a default hereunder, except as specified in such statement, and (D) as to the then current balances of the certifying Member’s accounts provided for herein. Such written statement may be relied upon by a Member’s prospective purchasers, investors or lenders.
13.20.      Calculation of Time . In computing any period of time prescribed or allowed by any provision of this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is not a Business Day, in which event the period runs until the end of the next day which is a Business Day. Unless otherwise provided herein, all notice and other periods expire as of 5:00 p.m. (local time in Philadelphia, Pennsylvania) on the last day of the notice or other period.
13.21.      Time of the Essence . Time is of the essence in all provisions of this Agreement, including all notice provisions to be performed by or on behalf of any Member.
13.22.      Exhibits . Each and every document or other writing which is referred to herein as being attached hereto or is otherwise designated herein as an exhibit hereto is hereby made a part hereof.
13.23.      Payment of Costs . The Members shall each bear their respective costs and expenses (including attorney’s fees) incurred in connection with the processing and documentation of any other requests for the other party’s approval or consent or waivers or other responses in connection with any other matters for which a Member’s consent is required or sought under this Agreement, subject to and provision hereof expressly providing for reimbursement or indemnification of such costs by the other party in any specific instance.
13.24.      Non-Disparagement . Neither party shall, in any public statement made or promoted by it or its Affiliates, disparage the other party or its Affiliates with respect to the acquisition, lease, ownership, development, use or occupancy of the Project, or any prospective location which either Member may propose, from time to time, to own, lease or develop, or at which it may propose to operate its business activities; provided, however, that nothing in this Section 13.24 shall prevent Comcast from objecting or opposing a development by Liberty or its Affiliates that would adversely impact an existing facility owned or leased by Comcast or its Affiliates.

[***] .

IN WITNESS WHEREOF , each of the undersigned has caused this Amended and Restated Limited Liability Company Operating Agreement to be duly executed on its behalf, as of the day and year first above set forth.
COMCAST
COMCAST CORPORATION , a Pennsylvania corporation
By: /s/ Arthur R. Block                
Name: Arthur R. Block
Title: Senior Vice President
LIBERTY:
LIBERTY PROPERTY LIMITED PARTNERSHIP , a Pennsylvania limited partnership
By:    Liberty Property Trust, its sole general partner

By:     /s/ George J. Alburger            
    Name: George J. Alburger, Jr.
    Title:     Chief Financial Officer
By:     /s/ John S. Gattuso            
    Name: John S. Gattuso
    Title:     Senior Vice President and Regional Director

SCHEDULE 3.04
[***]

1
16714022\15 11638.0001.000/254510.000
Exhibit 10.2

[Where indicated by “[***],” the confidential material contained herein has been omitted and has been separately filed with the Commission.]

LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
18A HOTEL LLC
TABLE OF CONTENTS
Page
ARTICLE I CERTAIN DEFINITIONS
2
ARTICLE II CONTINUATION OF EXISTENCE AND PURPOSE
16
2.01.      Superseding the Letter Agreements and the JV Term Sheet    16
2.02.      Formation of the Company    16
2.03.      Name of Company    16
2.04.      Principal Place of Business    16
2.05.      Purpose    17
2.06.      Exclusive Activities of Company    17
2.07.      No Payment of Individual Obligations    17
2.08.      Title to Assets    17
2.09.      Term    17
2.10.      Representations and Warranties    17
2.11.      Respecting Hotel Owner and 18A Hotel Lender    17
ARTICLE III DEVELOPMENT OF THE PROJECT; HOTEL AGREEMENTS
18
3.01.      Project Design and Engineering    18
3.02.      Construction Contract    18
3.03.      Development Agreement    18
3.04.      Approved Project Budget    19
3.05.      Pre-Opening Services Agreement    19
3.06.      Hotel License Agreement    19
3.07.      Hotel Management Agreement    19
3.08.      Loan    19
ARTICLE IV CAPITALIZATION OF THE COMPANY
20
4.01.      Initial Capital Contributions    20
4.02.      Additional Capital Contributions – Total Project Costs    20
4.03.      Additional Capital Contributions -- Other than Total Project Costs    20
4.04.      Failure to Make Additional Capital Contributions    21
4.05.      No Other Required Capital Contributions    22
4.06.      Capital Accounts    22
4.07.      Negative Capital Accounts    22
4.08.      Return of Capital; No Interest on Amounts in Capital Account    22
4.09.      LPLP Guaranty    23
ARTICLE V ALLOCATIONS
23
5.01.      Allocation of Profits and Losses    23
5.02.      Regulatory Allocations    23
5.03.      Allocation in the Event of Transfer    25
ARTICLE VI DISTRIBUTIONS
25
6.01.      Distribution of Proceeds    25
6.02.      Distributions in Kind    25
ARTICLE VII MANAGEMENT
26
7.01.      Management and Control of the Business and Affairs of the Company    26
7.02.      Delegation; Standards; Indemnification    26
7.03.      Matters Requiring Unanimous Approval of the Members    28
7.04.      Special Meetings; Action by Written Consent    31
7.05.      Third Parties    31
7.06.      Other Activities of Members    31
7.07.      Withholding of Tax on Certain Company Distributions    31
7.08.      REIT Provisions    32
7.09.      Right to Disclose Information    32
7.10.      Loan Provisions    32
7.11.      Operation and Management of the Hotel    33
7.12.      Management Dispute    33
7.13.      Removal of the Managing Member    33
ARTICLE VIII PUT/CALL
35
8.01.      Invoking the Put/Call Provisions    35
8.02.      Put Sale Option    36
8.03.      Purchase Price    36
8.04.      Appraisal Process    37
8.05.      Closing    38
8.06.      Assumption of Company’s Obligations    39
8.07.      Payment of Debts    39
ARTICLE IX COMPENSATION OF PARTNERS; PAYMENT OF COMPANY EXPENSES
39
9.01.      Company Expenses    39
9.02.      No Other Compensation    40
ARTICLE X COMPANY BOOKS, RECORDS AND STATEMENTS
40
10.01.      Books and Records    40
10.02.      Method of Accounting    40
10.03.      Financial Statements    40
10.04.      Bank Accounts    42
10.05.      Tax Matters    42
10.06.      Certain Elections    44
10.07.      Certain Tax Accounting Matters    44
10.08.      Reserves    44
10.09.      Annual Plan    44
ARTICLE XI TRANSFER OF MEMBERSHIP INTERESTS
45
11.01.      Transfer    45
11.02.      Transfers of Membership Interests to Affiliates    45
11.03.      Transfers of Membership Interests to Third Party    46
11.04.      Intentionally Omitted    48
11.05.      Withdrawal of a Member    48
11.06.      Admission of Transferee as a Member    48
11.07.      Admission of Additional Members    49
ARTICLE XII DISSOLUTION AND LIQUIDATION
49
12.01.      No Dissolution, etc    49
12.02.      Events Causing Dissolution    49
12.03.      Rights to Continue Business of Company    49
12.04.      Dissolution    49
12.05.      Liquidation    49
12.06.      Reasonable Time for Winding Up    50
12.07.      Termination of Company    50
ARTICLE XIII MISCELLANEOUS PROVISIONS
50
13.01.      Additional Actions and Documents    50
13.02.      Notices    50
13.03.      Survival and Reliance    53
13.04.      Waivers    53
13.05.      Exercise of Rights    53
13.06.      Binding Effect    53
13.07.      Limitation on Benefits of this Agreement    53
13.08.      Amendment Procedure    53
13.09.      Entire Agreement    53
13.10.      Gender    53
13.11.      Captions    54
13.12.      Governing Law    54
13.13.      Execution in Counterparts    54
13.14.      Telefax Signatures    54
13.15.      Insurance    54
13.16.      Attorneys’ Fees    54
13.17.      Confidentiality    54
13.18.      Severability    55
13.19.      Member Estoppel Certificates    55
13.20.      Calculation of Time    55
13.21.      Time of the Essence    55
13.22.      Exhibits    56
13.23.      Payment of Costs    56
13.24.      Non-Disparagement    56
13.25.      Waiver of Conflict    56

LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
18A HOTEL LLC
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT (this “ Agreement ”) is made and entered into as of the 30th day of June, 2014 (the “ Effective Date ”), by and between COMCAST CORPORATION a Pennsylvania corporation (“ Comcast ”) and LIBERTY PROPERTY DEVELOPMENT COMPANY IV-S, LLC , a Delaware limited liability company (“ Liberty ” and sometimes “ Managing Member ”).
RECITALS
WHEREAS , 18A Hotel LLC (the “ Company ”) was formed as a Delaware limited liability company pursuant to the terms of the Delaware Limited Liability Company Act, as amended (the “ Act ”), by the filing of the certificate of formation of the Company with the Secretary of State of the State of Delaware on June 18, 2014.
WHEREAS , the Company is the sole member of Liberty Property 18 th & Arch Hotel, LLC, a Delaware limited liability company (the “ Hotel Owner ”).
WHEREAS , the Company is the sole member of 18A Hotel Lender LLC, a Delaware limited liability company (“ 18A Hotel Lender ”), whose sole purpose is to provide financing to Hotel Owner.
WHEREAS , prior to the execution of this Agreement, Liberty Property 18 th & Arch, LP, a Delaware limited partnership (“ Office Owner ”) acquired fee simple title to that certain parcel of land known as 1800 Arch Street, Philadelphia, Pennsylvania (the “ Land ”).
WHEREAS , Comcast and Liberty Property Trust, a Maryland real estate investment trust (“ LPT ”) previously entered into that certain Letter Agreement dated July 18, 2011 (the “ Original Letter Agreement ”) which outlined the understandings between Comcast and LPT concerning the acquisition of the Land and related matters.
WHEREAS , Comcast and LPT have agreed to cause the Hotel Owner and the Office Owner to jointly develop, construct and own a mixed-use development (the “ Project ”) on the Land in accordance with the Approved Plans and Specifications, which Project is intended to be a trophy-class mixed-use development with an approximate total project costs (exclusive of tenant improvements) of $933 million, consisting of one or more buildings that will contain approximately 1,333,580 rentable square feet of office space, a full-service 5-star luxury hotel with approximately 222 rooms, approximately 4,052 square feet of ancillary retail space, indoor and outdoor public space with an area of approximately 20,000 square feet, an underground pedestrian concourse connecting from the east curb-line of the Land to the existing concourse, and an underground parking area approximately fifty-five (55) automobile parking spaces (consisting of standard sized parking spaces, compact car spaces and charging stations) and six (6) oversized van parking spaces and in furtherance of such agreement, the Company shall cause the Hotel Owner to develop the Hotel (as defined below).
WHEREAS , pursuant to a Supplemental Letter Agreement between Comcast and LPT dated May 30, 2013 (the “ Supplemental Letter Agreement ” and together with the Original Letter Agreement, the “ Letter Agreements ”), the parties updated, amended and supplemented the terms of the Original Letter Agreement, and provided for, among other things, the sharing of certain pre-development costs related to the Project on a 50-50 basis.
WHEREAS , pursuant to a Joint Venture Term Sheet dated January 15, 2014 between Comcast and LPT (the “ JV Term Sheet ”), the parties agreed to a non-binding outline of the principal terms for the formation of one or more joint ventures to develop, construct and own certain real estate developments in Philadelphia, Pennsylvania, including the Project.
WHEREAS , in order to facilitate the development and operation of the Project, the Office Owner submitted the Land to the provisions of the Pennsylvania Uniform Condominium Act, 68 Pa. C.S. §3101 et seq by recording a Declaration of Condominium executed by the Office Owner and recorded with the Department of Records for Philadelphia, PA (the “ Declaration ”), and creating a condominium known as “1800 Arch Street Condominium” (the “ Condominium ”). The Condominium contains the following units: Office Unit, which consists of the proposed office, retail space and the parking area together with an approximately 83.95% percentage interest in the common elements (the “ Office Unit ”), Hotel Unit, which consists of the hotel together with an approximately 16.04% percentage interest in the common elements (the “ Property ”), and Public Unit, which consists of the underground pedestrian concourse and certain infrastructure, utility and related improvements, together with a 0.01% percentage interest in the common elements (the “ Public Unit ”).
WHEREAS , immediately prior to entering into this Agreement, the Office Owner conveyed, or promptly following the execution of this Agreement the Office Owner will convey the Property to the Hotel Owner.
WHEREAS , immediately prior to entering into this Agreement, Office Owner conveyed, or promptly following the execution of this Agreement the Office Owner will convey the Public Unit to PIDC/Development Management Corporation, a Pennsylvania non-profit corporation.
WHEREAS , Comcast and Liberty desire to set forth their agreement as to the manner in which the Company, Hotel Owner, 18A Hotel Lender and the Property shall be governed and operated.
NOW, THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree that this Agreement shall hereafter govern the relationship between Comcast and Liberty with respect to the Company, Hotel Owner, 18A Hotel Lender, and the Property.
ARTICLE I
CERTAIN DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined in this ARTICLE I shall, for the purposes of this Agreement, have the meanings herein specified. Unless otherwise specified, all references herein to Articles or Sections are to Articles or Sections of this Agreement.
“ 18A Hotel Lender ” shall have the meaning set forth in the Recitals.
“ 18A Hotel Loan ” shall mean that certain loan made, or to be made, by 18A Hotel Lender to Hotel Owner.
“ Act ” shall have the meaning given thereto in the Recitals.
“ Additional Capital Contribution ” shall have the meaning set forth in Section 4.03 .
“ Adjusted Capital Account Deficit ” means, with respect to any Member, the deficit balance in such Member’s Capital Account as of the end of the relevant Fiscal Year or period, after (a) crediting to such Capital Account any amounts which such Member is deemed to be obligated to restore to the Company pursuant to the next-to-last sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting to such Capital Account the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“ Affiliate ” means, when used with reference to a specific Person, any Person directly or indirectly controlling, controlled by, or under common control with the Person in question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. For the avoidance of doubt, neither the Company nor any of the Affiliated Companies shall be deemed to be an “Affiliate” of any Member.
“ Affiliated Companies ” shall mean the Office Owner; Liberty Property 18 th & Arch Street GP, LLC, a Delaware limited liability company; Liberty Property 18 th & Arch Street Limited, LLC, a Delaware limited liability company; 18A LLC, a Delaware limited liability company; 18A Lender LLC, a Delaware limited liability company; 18A Hotel Lender; and Hotel Owner.
“ Agreement ” means this Limited Liability Company Operating Agreement, as amended from time to time.
“ Annual Plan ” shall have the meaning set forth in the Hotel Management Agreement.
“ Appraisal Deadline ” shall have the meaning set forth in Section 8.04(a) .
“ Appraisal Initiation Date ” shall mean:
(a)    with respect to an Appraisal Process being initiated pursuant to Section 8.01(a) , the date upon which the Put Notice is deemed to be delivered pursuant to Section 13.02 (as such date may be extended pursuant to Section 8.01(c) );
(b)    with respect to an Appraisal Process being initiated pursuant to Section 8.01(a) , the date upon which the Call Notice is deemed to be delivered pursuant to Section 13.02 (as such date may be extended pursuant to Section 8.01(c) );
(c)    with respect to an Appraisal Process being initiated pursuant to Section 11.03 , the date upon which the Offer is deemed to be delivered pursuant to Section 13.02 .
“ Appraisal Process ” shall have the meaning set forth in Section 8.04 .
“ Approved Plans and Specifications ” means the Design Development Plans and Project Narratives, as they may hereafter be developed into final plans and specifications as permitted in this Agreement and as they may be amended as permitted in this Agreement.
“ Approved Project Budget ” means the budget attached hereto as Schedule 3.04 as such may be amended as permitted by this Agreement.
“ Architect ” shall have the meaning set forth in Section 3.01 .
“ Bankrupt ” and “ Bankruptcy ” shall mean, and a Member shall be deemed “Bankrupt” upon, (i) the entry of a final and appealable decree or order for relief of such Member by a court of competent jurisdiction in any involuntary case involving such Member under any bankruptcy, insolvency, or other similar law now or hereafter in effect and the expiration of the applicable appeals period without any appeal being filed; (ii) the appointment of a receiver, liquidator, assignee for the benefit of creditors, custodian, trustee, sequestrator, or other similar agent for such Member or for any substantial part of such Member’s assets or property; (iii) the entry of a final non-appealable order for the winding up or liquidation of such Member’s affairs by a court of competent jurisdiction in any involuntary case involving such Member under any bankruptcy, insolvency, or other similar law now or hereafter in effect; (iv) the filing with respect to such Member of a petition in any such involuntary bankruptcy case which petition remains undismissed for a period of 90 days; (v) the commencement by such Member of a voluntary case under any bankruptcy, insolvency , or other similar law now or hereafter in effect; (vi) the consent by such Member to the entry of an order for relief in an involuntary case under any such law or to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, or other similar agent for such Member or for any substantial part of such Member’s assets or property; or (vii) the making by such Member of any general assignment for the benefit of creditors.
[***]
“ Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such in the Commonwealth of Pennsylvania shall not be regarded as a Business Day.
“ Call for Capital ” shall have the meaning set forth in Section 4.03 .
“ Call for Development Capital ” shall have the meaning set forth in Section 4.02 .
“ Call Notice ” shall have the meaning set forth in Section 8.01(b) .
“ Call Right ” shall have the meaning set forth in Section 8.01(b) .
“ Capital Account ” means the Capital Account maintained for each Member pursuant to Section 4.06 .
“ Capital Contributions ” means, with respect to any Member, the total amount of contributions made by or credited to such Member.
“ Cash Flow Statement ” shall have the meaning set forth in Section 10.03(c)(i) .
“ Code ” means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). References to Sections of the Code are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Code.
“ Comcast ” shall have the meaning set forth in the Preamble to this Agreement.
“ Comcast COC ” means [***].
“ Comcast Lease ” shall mean that certain Lease between Comcast Corporation, as tenant, and Office Owner, as landlord, for premises in the Office Unit.
“ Comcast Merger Successor ” shall have the meaning set forth in Section 11.02 .
“ Comcast Tenancy Requirement ” shall mean (a) Comcast (together with any Affiliate of Comcast) leases at least [***] rentable square feet in the Office Unit and (b) no other tenant (together with Affiliates of such tenant) leases any portion of the Office Unit greater than that leased by Comcast (together with any Affiliate of Comcast).
“ Company ” shall have the meaning set forth in the Recitals.
“ Competitor ” shall mean:
[***]
(b)     with respect to Liberty, any of the following: a publicly held or privately held real estate investment trust; a private equity fund whose principal investments are directly or indirectly in income-producing real estate; any individual or organization that directly or through its Affiliates has as its primary business the ownership, development or operation of income-producing real estate assets; and any Affiliate of any of the foregoing.
“ Condominium ” shall have the meaning set forth in the Recitals.
“ Construction Contract ” shall have the meaning set forth in Section 3.02 .
“ Contributing Member ” shall have the meaning set forth in Section 4.04 .
“ Control ” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.
“ Credit Support Agreement ” shall mean any guarantee, indemnity agreement or other credit support instrument, executed or delivered by a Member or any Affiliate of a Member in connection with or relating to any Financing, including any guaranty of all or any portion of the Financing or any so-called non-recourse carve-out guarantee and/or environmental indemnity agreement, and all amendments, modifications, extensions, renewals or supplements thereto.
“ Declaration ” shall have the meaning set forth in the Recitals.
“ Deferral Right ” shall have the meaning set forth in Section 8.01(c) .
“ Depreciation ” means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such Year or period, except that if the Gross Asset Value of an asset differs from its adjusted basis for Federal income tax purposes at the beginning of such Year or period, then Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the Federal income tax depreciation, amortization, or other cost recovery deduction for such Year or period bears to such beginning adjusted tax basis; provided, however, that if the adjusted tax basis for Federal income tax purposes of an asset at the beginning of such Year or period is zero, then Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member.
“ Design Contract ” shall have the meaning set forth in Section 3.01 .
“ Design Development Plans and Project Narratives ” shall have the meaning set forth in Section 3.01 .
“ Developer ” shall have the meaning set forth in Section 3.03 .
“ Development Agreement ” shall have the meaning set forth in Section 3.03 .
“ Development Contribution ” shall have the meaning set forth in Section 4.02 .
“ Development Termination Event ” shall mean a termination of the Development Agreement pursuant to Section 10.1(c) thereof.
“ Drag Along Right ” shall have the meaning set forth in Section 11.03(c) .
“ Effective Date ” shall have the meaning set forth in the Preamble to this Agreement.
“ Engineering Contract ” shall have the meaning set forth in Section 3.01 .
“ Estimated Closing Costs ” means one percent (1%) of the Fair Market Value of the Property, which the Members agree is a fair and reasonable allocation of the transfer taxes, brokerage commission, allocations and other costs typically associated with the closing of a real estate transaction.
“ Extraordinary Cash Flow ” means the cash proceeds realized by the Company, Hotel Owner and 18A Hotel Lender as a result of a Liquidating Sale (and/or payments made under any interest rate swap, cap or hedging arrangements and other interest rate breakage costs), decreased by the sum of the following: (i) all principal, interest, prepayment premiums and other sums paid to a lender (or to a third party in connection with such swap, cap or hedging arrangements) in connection with the repayment and discharge of any debt of the Company or the Hotel Owner (without duplication), and (ii) any expenses, costs or liabilities incurred by the Company or the Hotel Owner (without duplication) in effecting or consummating such Liquidating Sale (including, without limitation, attorneys’ fees, court costs, brokerage fees, commissions, realty transfer taxes and other taxes), all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.
“ Fair Market Value ” shall have the meaning set forth in Section 8.04(a) .
“ Filing Member ” shall have the meaning set forth in Section 10.05(c) .
“ Final Appraisal Date ” shall have the meaning set forth in Section 8.04(a) .
“ Financing ” means any indebtedness (including any mortgage loan and the 18A Hotel Loan), financing or refinancing by debt, bonds, sale and leaseback or other form of financing relating to any Company asset, the Property, or any debt or other similar monetary obligation of the Company or any Subsidiary (but excluding trade payables incurred in the ordinary course of business).
“ Financing Document ” shall mean any loan agreement, security agreement, mortgage, deed of trust, indenture, bond, note, debenture, guaranty, indemnity agreement or other instrument or agreement relating to or delivered in connection with any Financing (including the 18A Hotel Loan).
“ Fiscal Year ” means the calendar year.
“ Four Seasons ” means Four Seasons Hotels Limited, a corporation incorporated under the laws of the Province of Ontario, Canada, its successors and assigns.
“ General Contractor ” shall have the meaning set forth in Section 3.02 .
“ Gross Asset Value ” means, with respect to any asset, such asset’s adjusted basis for Federal income tax purposes, with the following modifications:
(a)    The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the Contributing Member and the Managing Member.
(b)    The Gross Asset Values of all Company assets shall be adjusted (without, however, changing the Percentage Interests of the Members) to equal their respective gross fair market values, as reasonably determined by unanimous agreement of the Members as of the following times: (i) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (ii) the distribution by the Company to a Member of more than a de minimis amount of property as consideration for an interest in the Company; (iii) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) and (iv) in connection with the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Member acting in a member capacity, or by a new Member acting in a member capacity or in anticipation of being a member, and (v) in connection with the issuance by the Company of a noncompensatory option (other than an option for a de minimis partnership interest); provided, however that adjustments pursuant to clauses (i) and (ii) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company.
(c)    The Gross Asset Value of any Company asset distributed to any Member shall be adjusted to equal the gross fair market value of such asset on the date of distribution as determined in accordance with Section 6.02 .
(d)    The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), for purposes of paragraph (f) of the definition of Profits and Losses and for purposes of ARTICLE V hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent the Managing Member reasonably determines that an adjustment pursuant to subparagraph (b) above in this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d) .
(e)    If the Gross Asset Value of an asset has been determined or adjusted pursuant to this Section, then such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.
(f)    This definition of Gross Asset Value is intended to comply with the Internal Revenue Code, with particular adherence to the provisions of Code Section 704(b) and the Regulations thereunder.
“ Guaranteed Maximum Development Price ” shall have the meaning set forth in the Development Agreement.
“ Hotel ” means the Property and the World Class Luxury Hotel to be constructed in the Property as provided for in the Pre-Opening Services Agreement, which shall include approximately 222, but not fewer than 210, guest rooms and suites, together with restaurants, bars, appropriately sized meeting and banquet facilities and other public rooms, an indoor pool, a fitness club and related back of house service and administration areas and all other facilities as are necessary or desirable for the operation of a World Class Luxury Hotel in accordance with the Hotel Agreements.
“ Hotel Agreements ” shall mean collectively the Hotel License Agreement, the Hotel Management Agreement, and the Pre-Opening Services Agreement.
“ Hotel License Agreement ” shall have the meaning set forth in Section 3.06 .
“ Hotel Management Agreement ” shall have the meaning set forth in Section 3.07 .
“ Hotel Owner ” shall have the meaning set forth in the Recitals.
“ Indemnified Party ” and “ Indemnified Parties ” shall have the meanings set forth in Section 7.02(e) .
“ JV Term Sheet ” shall have the meaning set forth in the Recitals.
“ Land ” shall have the meaning set forth in the Recitals.
“ Letter Agreements ” shall have the meaning set forth in the Recitals.
“ Liberty ” shall have the meaning set forth in the Preamble to this Agreement.
“ Liberty COC ” means [***].
“ Liberty Merger Successor ” shall have the meaning set forth in Section 11.02(ii) .
“ Liquidating Sale ” means the sale, directly or indirectly, of substantially all of the Property, either in one transaction or in a series of related transactions.
“ Liquidation ” means (a) when used with reference to the Company, the earlier of (i) the date upon which the Company is terminated under Code Section 708(b)(1)(A), (ii) the date upon which the Company ceases to be a going concern, or (iii) the date upon which the Company dissolves in accordance with ARTICLE XII, and (b) when used with reference to a Member, the earlier of (i) the date upon which there is a liquidation of such Member, or (ii) the date upon which there is a liquidation of such Member’s Membership Interest for purposes of Code Section 761(d).
“ LPLP ” means Liberty Property Limited Partnership, a Pennsylvania limited partnership.
“ LPT ” means Liberty Property Trust, a Maryland real estate investment trust, the sole general partner of Liberty.
“ Management Dispute ” means an unresolved disagreement between Liberty and Comcast respecting the operation of the Company and/or Hotel Owner or the management, development, financing, leasing or disposition of the Property.
“ Management Dispute Notice ” shall have the meaning set forth in Section 7.12 .
“ Manager Indemnified Party ” and “ Manager Indemnified Parties ” shall have the meanings set forth in Section 7.02(e).
“ Managing Member ” shall have the meaning set forth in the Preamble to this Agreement.
“ Member(s) ” shall mean, individually or collectively (as the case may be), Comcast, Liberty and any other Person hereafter admitted as a Member under this Agreement, for so long as such Person is a Member under the terms of this Agreement.
“ Membership Interest ” means, as to any Member, all of the interest of such Member in the Company including, without limitation, such Member’s right to a distributive share of the profits, losses, and distributions of the Company and to a distributive share of Company assets.
“ Net Cash Flow ” means, for any period, the excess of (a) gross cash receipts of the Company during such period other than Net Financing Proceeds and Extraordinary Cash Flow, minus (b) the aggregate of the following for the same period (i) all taxes, operating costs, leasing costs and other cash expenditures of the Company or the Hotel Owner (without duplication), (ii) all regularly scheduled payments of debt service, including interest and principal and any applicable fees under any debt of the Company or the Hotel Owner (without duplication), (iii) all sums paid or incurred for repair or replacement of any portion of the Property or other capital expenditures not taken out of reserves; and (iv) additions to reserves in amounts required by any lender or as otherwise reasonably approved by the Members
“ Net Financing Proceeds ” means the cash proceeds realized by the Company as a result of a financing or refinancing of the Property, decreased by the sum of the following: (i) any amounts applied in repayment of any debt or required to be set aside or reserved by any lender of the Company, and prepayment premiums and other sums paid to a lender (or to a third party in connection with swap, cap or hedging arrangements or other interest rate breakage costs) (ii) the amount set aside in reserves as required by any lender or as otherwise reasonably approved by the Members; (iii) all expenses, costs and liabilities incurred by the Company or the Hotel Owner (without duplication) in effecting or obtaining any such proceeds (including, without limitation, attorneys’ fees, due diligence costs, title insurance and survey costs, recording fees and brokerage commissions), all of which expenses, costs and liabilities shall be paid from the gross amount of such cash proceeds to the extent thereof.
“ Non-Contributing Member ” shall have the meaning set forth in Section 4.04 .
“ Non-Managing Members ” means all members other than the Managing Member.
“ Offer ” shall have the meaning set forth in Section 11.03(a) .
“ Offeree Member ” shall have the meaning set forth in Section 11.03(a) .
“ Offeror Member ” shall have the meaning set forth in Section 11.03(a) .
“ Office Owner ” shall have the meaning set forth in the Recitals.
“ Office Unit ” shall have the meaning set forth in the Recitals.
“ Original Letter Agreement ” shall have the meaning set forth in the Recitals.
“ Outside Put Election Date ” shall have the meaning set forth in Section 8.01(a) .
“ Outside Put Sale Date ” shall have the meaning set forth in Section 8.02 .
“ Outside Third Party Sale Date ” shall have the meaning set forth in Section 11.03(a) .
“ Partner Minimum Gain ” means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability (as defined in Section 1.704-2(b)(3) of the Regulations) determined in accordance with Section 1.704-2(i)(3) of the Regulations.
“ Partner Nonrecourse Debt ” has the meaning of “partner nonrecourse debt” set forth in Section 1.704-2(b)(4) of the Regulations.
“ Percentage Interest ” means the percentage interests of each Member, as such may be adjusted from time to time in the manner set forth in this Agreement. Each Member’s initial Percentage Interest is as follows: Liberty- 20%; Comcast- 80%.
“ Partnership Minimum Gain ” has the meaning of “partnership minimum gain” set forth in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
“ Person ” means any individual, corporation, association, company, limited liability company, joint venture, trust, estate, or other entity or organization.
“ Pre-Opening Services Agreement ” shall have the meaning set forth in Section 3.05 .
“ Prevailing Party ” shall mean a party who, upon any final (unappealed and unappealable) award or judgment, decree or order in any arbitration or judicial proceeding (including without limitation any appeal) shall have established the substance of its claim or defense and who shall have been awarded substantially the relief (or denial of relief) sought by such party on account of its claim or defense. Any dispute concerning the identity of the “Prevailing Party” or the amount of the obligation of the non-Prevailing Party to the Prevailing Party shall be determined (after entry of a final (unappealed and unappealable) award, judgment, decree or order) by the arbitrators in any proceeding determined by arbitration, or by the trial court in any proceeding determined by judicial judgment, decree or order.
“ Prime Rate ” means the prime rate published from time in the Wall Street Journal, or if such rate is not available, such replacement rate as may be reasonably designated by the Managing Member.
“ Priority Loan ” shall have the meaning set forth in Section 4.04(a) .
“ Priority Loan Yield ” shall have the meaning set forth in Section 4.04(a) .
“ Profits ” and “ Losses ” means, for each Fiscal Year or other period, an amount equal to the Company’s taxable income or loss for such Year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:
(a)    Any income of the Company that is exempt from Federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this Section shall be added to such taxable income or loss;
(b)    Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this Section, shall be subtracted from such taxable income or loss;
(c)    In the event the Gross Asset Value of any Company Asset is adjusted pursuant to any provision of this Agreement in accordance with the definition of “Gross Asset Value” above, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such Asset for purposes of computing Profits or Losses;
(d)    Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for Federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;
(e)    In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition of “Depreciation” above;
(f)    To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or (4) to be taken into account in determining Capital Accounts, in the case of adjustment under Code Section 734(b) as a result of a distribution other than in Liquidation of a Member’s interest in the Company, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of such asset) or loss (if the adjustment decreases the basis of such asset) from the disposition of such asset and shall be taken into account for purposes of computing Profits or Losses;
(g)    Notwithstanding any other provision of this Section, any items which are specially allocated pursuant to Section 5.03 shall not be taken into account in computing Profits or Losses; and
(h)    The amounts of the items of Company income, gain, loss, or deduction available to be specially allocated pursuant to Section 5.03 but not previously taken into account because of the restrictions of paragraph (g) shall be determined by applying rules analogous to those set forth in this Section.
“ Project ” shall have the meaning set forth in the Recitals.
“ Property ” shall have the meaning set forth in the Recitals.
“ Public Unit ” shall have the meaning set forth in the Recitals.
“ Purchase Price ” shall have the meaning set forth in Section 8.03 .
“ Purchasing Member ” shall have the meaning set forth in Section 8.05(a) .
“ Put Election Notice ” shall have the meaning set forth in Section 8.01(a) .
“ Put Notice ” shall have the meaning set forth in Section 8.01(a) .
“ Put Right ” shall have the meaning set forth in Section 8.01(a) .
“ Put Sale Option ” shall have the meaning set forth in Section 8.01(a) .
“ Qualified Appraiser ” shall have the meaning set forth in Section 8.04(a) .
“ Receiving Party ” shall have the meaning set forth in Section 8.01(c) .
“ Reconciliation Statement ” shall have the meaning set forth in Section 10.03(c)(i) .
“ Regulations ” means the Income Tax Regulations promulgated under the Code as such regulations may be amended from time to time (including Temporary Regulations). References to Sections of the Regulations are to those in effect on the date of this Agreement and shall include any corresponding future provision of the Regulations.
“ Regulatory Allocations ” shall have the meaning set forth in Section 5.02(f) .
“ REIT ” means a “real estate investment trust” within the meaning of the Code.
“ Renewal Assumption ” shall mean an assumption that [***].
“ Reserve Accounts ” shall have the meaning set forth in Section 10.08 .
“ Right of First Offer ” shall have the meaning set forth in Section 11.03(a) .
“ Round I Appraisal ” shall have the meaning set forth in Section 8.04(a) .
“ Selling Member ” shall have the meaning set forth in Section 8.05(a) .
“ Standstill Period ” shall mean the period of time commencing on the Effective Date and terminating on the earliest to occur of (i) the [***] anniversary of the Final Occupancy Date for the Basic Office Premises (as such terms are defined in the Comcast Lease ) , (ii) a Comcast COC, (iii) a Liberty COC or (iv) the date upon which the Put Right set forth in that certain Amended and Restated Limited Liability Company Agreement of 18A LLC (the indirect holder of all of the equity interests in Office Owner) is exercised by LPLP pursuant to the terms thereof.
“ Subsidiary ” shall mean any entity in which the Company owns any direct or indirect equity interest.
“ Supplemental Letter Agreement ” shall have the meaning set forth in the Recitals.
“ Tag Along Right ” shall have the meaning set forth in Section 11.03(c) .
“ Tax Matters Member ” shall have the meaning set forth in Section 10.05(a) .
“ Tax Payment Loan ” shall have the meaning set forth in Section 7.07(a) .
“ Tax Payment Loan Date ” shall have the meaning set forth in Section 7.07(a) .
“ Third Appraiser ” shall have the meaning set forth in Section 8.04(a) .
“ Third-Party Purchaser ” shall mean the purchaser of a Member’s Membership Interests pursuant to Section 11.03 .
“ Total Project Costs ” shall mean the total of all costs paid or incurred by or on behalf of the Company to form the Affiliated Companies and the Company, to acquire the Land, and to design, develop, lease, finance and construct the Project, including, but not limited to, costs of architects, engineers and other design and technical professionals and consultants, including the costs of models and renderings, all transfer taxes; due diligence costs; title costs; permitting costs, including payments to lawyers, engineers, design professionals and other third parties or other costs incurred in conjunction with the receipt of public entitlements for the Project; loan fees, interest and other financing costs for any financing of the Project; design and engineering fees and costs; payments to contractors and the cost of materials, supplies and equipment; marketing costs; the fees and costs of lawyers and other consultants incurred in connection with the foregoing carrying costs during construction, including real estate taxes, insurance, condominium assessments, security and interest charges during the construction period (which construction period shall be determined in accordance with generally accepted accounting principles); including (without limitation) costs included within the description of the line items and categories set forth in the Approved Project Budget; provided that, for the avoidance of doubt, Total Project Costs will not include legal fees and expenses and personnel costs incurred in connection with the negotiation and documentation of this Agreement and the other transaction documents for which the lawyers representing Comcast and Liberty or their Affiliates are negotiating opposite one another as opposed to representing the Company.
“ Transfer ” shall have the meaning set forth in Section 11.01(a) .
“ Treasury Regulations ” means the regulations promulgated under the Code.
“ Unreimbursable Portion ” shall have the meaning set forth in Section 7.02(f) .
“ Withholding Tax Act ” shall have the meaning set forth in Section 7.07(a).
ARTICLE II     
CONTINUATION OF EXISTENCE AND PURPOSE
2.01.      Superseding the Letter Agreements and the JV Term Sheet . The Letter Agreements and the JV Term Sheet (to the extent each relates to the Property) are hereby superseded in their entirety by this Agreement.
2.02.      Formation of the Company . The Members formed the Company as a limited liability company pursuant to the provisions of the Act by filing a Certificate of Formation with the State of Delaware. The Company shall continue to exist as a limited liability company under the laws of the State of Delaware with Comcast and Liberty as the Members. If the laws of any jurisdiction in which the Company transacts business so require, the Managing Member shall file, with the appropriate office in that jurisdiction, all documents necessary for the Company to qualify to transact business. The Members shall execute, acknowledge, and cause to be filed for record, in the place or places and manner prescribed by law, any amendments to this Agreement as may be required, either by the Act, by the laws of any jurisdiction in which the Company transacts business, or by this Agreement, to reflect changes in the information contained herein or otherwise to comply with the requirements of law for the continuation, preservation, and operation of the Company as a limited liability company under the Act.
2.03.      Name of Company . The name of the Company shall be “18A Hotel LLC”, and all business of the Company shall be conducted in such name.
2.04.      Principal Place of Business . The principal place of business of the Company shall be located at c/o 500 Chesterfield Parkway, Malvern PA 19355, or such other place or places as the Managing Member may from time to time determine. The Managing Member may establish and maintain such other offices and additional places of business of the Company as it deems appropriate.
2.05.      Purpose . The purpose of the Company shall be (a) to hold a 100% membership interest in Hotel Owner and to exercise all rights appurtenant to such interest, (b) to hold a 100% membership interest in 18A Hotel Lender and to exercise all rights appurtenant to such interest, (c) to cause the Hotel Owner to develop, own, finance, refinance, sell and/or otherwise dispose of the Property and/or interests therein, (d) to cause 18A Hotel Lender to make the 18A Hotel Loan, (e) to undertake any and all actions necessary or incidental to any of the foregoing activities, and (f) to take or cause to be taken all actions and to perform or cause to be performed all functions necessary or appropriate to promote the business of the Company and to realize and carry out its purposes.
2.06.      Exclusive Activities of Company . Except as otherwise provided in this Agreement, the Company shall not engage in any other activity or business other than the purpose specified under Section 2.05 , and no Member shall have any authority to hold itself out as the agent of any other Member or as a Member of the Company with respect to any other business or activity.
2.07.      No Payment of Individual Obligations . The Members shall use the Company’s credit and assets solely for the benefit of the Company. No asset of the Company shall be transferred or encumbered for or in payment of any individual obligation of any Member.
2.08.      Title to Assets . All Company assets shall be owned by and held in the name of the Company. No Member shall have any ownership interest in any Company asset in its individual name or right, and each Member’s interest in the Company shall be personal property for all purposes.
2.09.      Term . The Company shall continue in perpetuity unless and until the Company is dissolved and liquidated in accordance with the provisions of ARTICLE XII.
2.10.      Representations and Warranties . Each Member hereby represents and warrants to the Company and to the other Members that it is duly organized, validly existing, and in good standing under applicable law, it has full and unrestricted right, authority and power to enter into this Agreement and to perform its obligations hereunder, and that doing so does not violate any of its organizational documents; this Agreement constitutes a valid and binding obligation of such Member, enforceable in accordance with its terms.
2.11.      Respecting Hotel Owner and 18A Hotel Lender . In the exercise of its rights as the sole member of Hotel Owner and 18A Hotel Lender, notwithstanding anything in the organizational documents of 18A Hotel Lender and/or the Hotel Owner to the contrary, the Company shall authorize and direct Hotel Owner and 18A Hotel Lender to make such allocations, make such distributions, and take such other actions and refrain from taking such other actions, as are consistent with the terms of this Agreement, and the Company shall not authorize or direct Hotel Owner or 18A Hotel Lender to make any allocation or make any distribution or take any other action or refrain from taking any other action which is inconsistent with the terms of this Agreement.

ARTICLE III     
DEVELOPMENT OF THE PROJECT;
HOTEL AGREEMENTS
3.01.      Project Design and Engineering .
(a)      The Office Owner entered into that certain AIA Document B141 – 1987 edition, Standard Form of Agreement Between Owner and Architect (as revised by Owner and Architect) with Kendall/Heaton Associates, Inc. (the “ Architect ”) dated January 14, 2014 with respect the design of the Project (the “ Design Contract ”). Concurrently with or promptly following the execution of this Agreement, the Office Owner will assign the Design Contract to the Developer. The Members hereby approve the selection of the Architect as the architect. The Members hereby approve the design of the Project as described in (i) the Core and Shell Design Development Plans attached to the Development Agreement as Schedule 1-A, (ii) the Core and Shell Project Narrative attached to the Development Agreement as Schedule 1-B, (iii) the Hotel Interiors Design Development Plans attached to the Development Agreement as Schedule 1-C, and (iv) the Hotel Interiors Project Narrative attached to the Development Agreement as Schedule 1-D (collectively, the “ Design Development Plans and Project Narratives ”).
(b)      The Office Owner entered into that certain AIA Document B727, 1988 Edition, Agreement Between Owner and Engineer for Special Services, as revised by Owner and Engineer, with Pennoni Associates, Inc. dated September 26, 2013 with respect engineering and consulting services for the Project (the “ Engineering Contract ”). Concurrently with or promptly following the execution of this Agreement, the Office Owner will assign the Engineering Contract to the Developer.
3.02.      Construction Contract . Concurrently with or promptly following the execution of this Agreement, Developer has entered into or will enter into that certain AIA A111-1987 ed., Standard Form of Agreement Between Developer and Contractor, As Revised by Developer and Contractor, with L.F. Driscoll (the “ General Contractor ”) with respect to the construction of the Project (the “ Construction Contract ”). The Members hereby approve the selection of the General Contractor as the general contractor and approve the terms of the Construction Contract.
3.03.      Development Agreement . Concurrently with the execution of this Agreement, the Company shall cause the Hotel Owner to enter into a development agreement (the “ Development Agreement ”) with LPLP (referred to in this capacity, the “ Developer ”) and the Office Owner pursuant to which the Developer will develop and cause the construction of the office building on behalf of the Office Owner and the Hotel on behalf of the Hotel Owner. Comcast, acting on behalf of the Company (acting in turn on behalf of the Hotel Owner), shall have the unilateral right to enforce all rights of the Hotel Owner under the Development Agreement, including, without limitation, (a) giving notices of default under the Development Agreement, (b) pursuing any remedies the Hotel Owner may have against the Developer by reason of an event of default of the Developer under the Development Agreement, (c) granting any waivers or consents and (d) entering into any amendments to the Development Agreement.
3.04.      Approved Project Budget . The Members hereby approve the overall budget of the projected Total Project Costs as set forth on Schedule 3.04 (the “ Approved Project Budget ”), provided that the Company (and Hotel Owner) shall incur only the costs attributable to the Property (and not the costs attributable to the Office Unit) as allocated pursuant to the terms of the Development Agreement. The Approved Project Budget may be amended only upon the written approval of both Members, except as otherwise set forth in the Development Agreement.
3.05.      Pre-Opening Services Agreement . On or about the date hereof, the Company shall cause the Hotel Owner to enter into an agreement (the “ Pre-Opening Services Agreement ”) with Four Seasons, pursuant to which Four Seasons (for certain fees) has agreed to provide to the Hotel Owner certain services with respect to the development and construction of the Hotel and certain other services with respect to the pre-opening acquisition of the Furniture, Fixtures and Equipment and the Operating Supplies and Consumables (all as defined in the Hotel Management Agreement) and the pre-opening operations of the Hotel. The Pre-Opening Services Agreement is in form and substance acceptable to each of the Members. Except as otherwise set forth in Section 7.03 , Managing Member shall have the right to enforce the rights of the Hotel Owner under the Pre-Opening Services Agreement.
3.06.      Hotel License Agreement . On or about the date hereof, the Company shall cause the Hotel Owner to enter into an agreement (the “ Hotel License Agreement ”) with Four Seasons, pursuant to which Four Seasons (for certain fees and other consideration) has agreed to provide the right and license to use the Trademarks and the Proprietary Materials (each as defined in the Hotel Management Agreement) to the Hotel Owner in connection with the marketing, operation and management of the Hotel. The Hotel License Agreement is in form and substance acceptable to each of the Members. Except as otherwise set forth in Section 7.03 , Managing Member shall have the right to enforce the rights of the Hotel Owner under the Hotel License Agreement.
3.07.      Hotel Management Agreement . On or about the date hereof, the Company shall cause the Hotel Owner to enter into an agreement (the “ Hotel Management Agreement ”) with Four Seasons, pursuant to which Four Seasons (for certain fees and other consideration) has agreed to provide advice and services in connection with the furnishing, equipping, servicing, marketing, operation, management, supervision and direction of the Hotel. The Hotel Management Agreement is in form and substance acceptable to each of the Members. Except as otherwise set forth in Section 7.03 , Managing Member shall have the right to enforce the rights of the Hotel Owner under the Hotel Management Agreement.
3.08.      Loan . On or about the date hereof, the Company shall cause the Hotel Owner and the 18A Hotel Lender to execute those certain loan documents evidencing the 18A Hotel Loan from 18A Hotel Lender to Hotel Owner, upon such terms and conditions which have been approved by the Members. The Company shall cause 18A Hotel Lender to immediately distribute to the Company all payments received by 18A Hotel Lender from Hotel Owner pursuant to the 18A Hotel Loan.
ARTICLE IV     
CAPITALIZATION OF THE COMPANY
4.01.      Initial Capital Contributions . The Members shall contribute capital to the Company pro rata in proportion to their respective Percentage Interests such that the respective capital contributions of the Members as of the Effective Date are as follows: Comcast - $[***]; Liberty - $[***]. All funds so contributed to the Company shall be further contributed by the Company to 18A Hotel Lender (which then lent such funds to the Hotel Owner).
4.02.      Additional Capital Contributions – Total Project Costs . Except (a) to the extent payable by Liberty pursuant to the Development Agreement, or (b) to the extent funded out of the proceeds of a public grant approved by both Members, all Total Project Costs payable with respect to the Property (as allocated between the Hotel Owner and the Office Owner pursuant to the Development Agreement), shall be funded by Capital Contributions by the Members in accordance with the Approved Project Budget, in monthly installments in advance, in amounts proportionate to the Members’ respective Membership Interests. The Managing Member shall provide written notice to the other Members each month (each a “ Call for Development Capital ”) of the Total Project Costs anticipated to be payable by the Company during the ensuing calendar month in accordance with the Approved Project Budget (as allocated between the Company and the Office Owner pursuant to the Development Agreement), and the amount of each Member’s required Capital Contribution; provided that, if the Managing Member fails to provide a Call for Development Capital, any other Member may do so on its behalf. The Members shall fund the Call for Development Capital by making cash contributions to the Company in the aggregate amount of such Call for Development Capital, pro rata in proportion to each Member’s respective Percentage Interest in the Company (each a “ Development Contribution ”) within five (5) Business Days after the issuance of such Call for Development Capital. Until such time as [***] percent ([***]%) the total capitalization of the Hotel Owner is represented by debt and [***] percent ([***]%) of the total capitalization of the Hotel Owner is represented by equity, one hundred percent (100%) of such funds so contributed to the Company shall in turn be contributed by the Company to the Hotel Owner. From and after such time as [***] percent ([***]%) the total capitalization of the Hotel Owner is represented by debt and [***] percent ([***]%) of the total capitalization of the Hotel Owner is represented by equity, [***] percent ([***]%) (or such other portion as mutually agreed upon by the Members) of funds contributed to the Company shall in turn be contributed by the Company to 18A Hotel Lender, which shall then lend such funds (pursuant to the 18A Hotel Loan Agreement) to the Hotel Owner and the remaining portion of such funds so contributed to the Company shall in turn be contributed to the Hotel Owner. If a Member fails to advance a Development Contribution in accordance with this Section 4.02 , such failure shall be a default under this Agreement, and the other Members and the Company shall have all rights and remedies available at law and in equity on account of such default, including without limitation the right to pursue the defaulting Member for recourse liability, and shall not be limited to the remedies set forth in Section 4.04 .
4.03.      Additional Capital Contributions -- Other than Total Project Costs . Except as set forth in Section 4.02 above with respect to Total Project Costs, if the Managing Member determines at any time that the Company does not expect to have adequate cash available to meet its imminent cash needs, and if no Financing is available to the Company and approved by all Members to satisfy such need for cash, then the Managing Member may provide written notice thereof to the other Members from time to time (each a “ Call for Capital ”), which notice shall be accompanied by backup documentation and financial reports in adequate detail to explain the need for the Call for Capital; provided that, if the Managing Member fails to provide a Call for Capital, any other Member may do so on its behalf. Each Member shall fund the Call for Capital by making a cash contribution to the Company in the aggregate amount of such Call for Capital multiplied times such Member’s Percentage Interest in the Company (each an “ Additional Capital Contribution ”) within thirty (30) days after the issuance of such Call for Capital. All funds so contributed to the Company shall in turn be contributed by the Company to Hotel Owner and 18A Hotel Lender (to be loaned to Hotel Owner), all in the same manner as the Development Contributions pursuant to Section 4.02 .
4.04.      Failure to Make Additional Capital Contributions If any Member (the “ Non-Contributing Member ”) fails to make a Development Contribution or an Additional Capital Contribution within the time period set forth above for such a contribution, the Managing Member shall provide a notice to all Members of such failure, after which such Non-Contributing Member shall have five (5) Business Days in which to cure its failure and make such contribution. Following such cure period, one or more of the other Members (each a “ Contributing Member ”) may (but without obligation to do so) advance to the Company an additional amount equal to the Non-Contributing Member’s unpaid Development Contribution or Additional Capital Contribution (as appropriate), and such advance shall be treated as a Priority Loan as provided in Section 4.04(a) below.
(a)      The entire advance made by the Contributing Member in response to the applicable Call for Development Capital or Call for Capital (i.e., both the portion advanced by the Contributing Member on its own behalf and the portion advanced by the Contributing Member on behalf of the Non-Contributing Member) shall be deemed a loan (a “ Priority Loan ”) to the Company which shall accrue interest at an annual rate equal [***] (the “ Priority Loan Yield ”), and which shall be payable as a first priority out of any and all distributions otherwise payable under this Agreement in the manner set forth in ARTICLE VI. Interest expense incurred on any Priority Loan shall be treated as an expense of the Company. For the avoidance of doubt, in no event shall the Priority Loan Yield be deemed part of the Total Project Costs.
(b)      Notwithstanding the provisions of Section 4.04(a) , if the Priority Loan has not been repaid in full by the date which is nine (9) months after the advance in question, the Contributing Member may elect, by written notice to the Non-Contributing Member at any time thereafter until the date such Priority Loan and the Priority Loan Yield thereon are repaid in full to treat the entire unpaid portion of the Priority Loan and the then accrued Priority Loan Yield, as a Capital Contribution, whereupon the Percentage Interests of the Contributing Member and the Non-Contributing Member shall be adjusted effective as of the date of such Capital Contribution, as follows:
(i)      The Percentage Interest of the Non-Contributing Member shall be decreased to the percentage obtained (rounded to the nearest 1/1000 of a percentage point) by (1) multiplying its Percentage Interest by the aggregate Capital Contributions of all of the Members, before giving effect to the Capital Contributions made by the Members pursuant to such Call for Capital or Call for Development Capital, as applicable, and (2) dividing the product so obtained by the sum of (A) the aggregate Capital Contributions of all of the Members before giving effect to the Capital Contributions made pursuant to such Call for Capital or Call for Development Capital, as applicable, [***] of the then outstanding principal balance of the Priority Loan plus the Priority Loan Yield thereon then outstanding; and
(ii)      The Percentage Interest of the Contributing Member shall be increased by the same number of percentage points as the decrease in the Non-Contributing Member’s Percentage Interest.
4.05.      No Other Required Capital Contributions . No Member shall be required to contribute capital to the Company except as set forth in Section 4.02 and Section 4.03 above.
4.06.      Capital Accounts .
(a)      The Company shall establish and maintain a separate Capital Account for each Member in accordance with Regulations Section 1.704-1(b), which shall be interpreted and applied in a manner consistent with such Regulations. In the event the Managing Member shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations, the Managing Member may make such modification, provided that it will not have any adverse effect on the amounts distributable to any Member pursuant to this Agreement. The Managing Member also shall (1) make any adjustments that are necessary or appropriate to maintain equality between the combined Capital Accounts of the Members and the total amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (2) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) subject, however, to the limitation on modifications having any adverse effect on amounts to be distributed to a Member as provided in the preceding sentence. Any questions with respect to a Member’s Capital Account shall be resolved by the Managing Member in its reasonable discretion, applying principles consistent with this Agreement. On the Effective Date, the Capital Account balances of the Members shall equal the amounts set forth next to the Members names in Section 0 hereof.
(b)      Any transferee of a portion or all of a Member’s Membership Interest shall succeed to the Capital Account of the transferor Member to the extent it relates to the Membership Interest transferred.
4.07.      Negative Capital Accounts . Except to the extent Members are required to make Capital Contributions to the Company under Section 4.02 , no Member shall be required to pay to the Company or to any other Member any deficit or negative balance which may exist in such Member’s Capital Account from time to time or upon Liquidation of the Company. A negative Capital Account shall not be considered a loan from or an asset of the Company.
4.08.      Return of Capital; No Interest on Amounts in Capital Account . Except upon dissolution of the Company or as may be expressly set forth in this Agreement, no Member shall have the right to demand or receive the return of any of its aggregate Capital Contributions or any part of its Capital Account or be entitled to receive any interest on its Capital Contributions or its outstanding Capital Account balance.
4.09.      LPLP Guaranty . LPLP Agrees to guaranty the obligations of Managing Member to make the Development Contributions and Additional Capital Contributions pursuant to Sections 4.02 and 4.03 , respecitvely.
ARTICLE V     
ALLOCATIONS
5.01.      Allocation of Profits and Losses . After giving effect to the Regulatory Allocations set forth in Section 5.02 of this Agreement, Profits and Losses for any fiscal year or other period of the Company shall be credited to the Capital Accounts of the Members as follows: Profits and Losses shall be allocated among the Members so as to produce, as nearly as possible, Capital Account balances for the Members (taking into account all prior allocations and distributions) which would equal the amount to which the Members would be entitled as a liquidating distribution from the Company upon a hypothetical liquidation in which the net proceeds were distributed in accordance with the priorities set forth in ARTICLE VI and as if the net proceeds available for distribution were an amount equal to the aggregate positive balance in the Members’ Capital Accounts computed after taking into account all allocations of Profit and Loss (or items thereof) for the fiscal period, including those pursuant to this Section 5.01 ; provided, however, that if the allocation of all or any portion of the Company Losses (or items thereof) causes or increases an Adjusted Capital Account Deficit of a Member or Members with respect to such fiscal year to which the allocation of such Company Losses relates, the excess, if any, shall be allocated to those Members, if any, having positive remaining Capital Account balances, to the extent of any such positive balances, and thereafter in accordance with the Members’ respective economic risk of loss with respect to any indebtedness to which the remaining Loss or deductions are attributable. All items of the Profit for any fiscal year having a like character and treatment for federal income tax purpose, (e.g., ordinary income, as opposed to short-term capital gain, as opposed to long-term capital gain) shall be allocated proportionately in accordance with the foregoing principles to the maximum extent possible, as if there were no items of Profit of another character.
5.02.      Regulatory Allocations . The following special allocations shall be made in the following order:
(a)      Partnership Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(f) of the Regulations, in the event there is a net decrease in Partnership Minimum Gain during any fiscal year, each Member shall be allocated items of income and gain for such fiscal year and, if necessary, for subsequent fiscal years equal to that Member’s share of the net decrease in Partnership Minimum Gain. The determination of a Member’s share of the net decrease in Partnership Minimum Gain shall be determined in accordance with Section 1.704-2(g) of the Regulations. The items to be specially allocated to the Members in accordance with this Section 5.02(a) shall be determined in accordance with Section 1.704-2(f)(6) of the Regulations. This Section 5.02(a) is intended to comply with the minimum gain chargeback requirement set forth in Section 1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
(b)      Partner Minimum Gain Chargeback . Except as otherwise provided in Section 1.704-2(i)(4) of the Regulations, in the event there is a net decrease in Partner Minimum Gain during any fiscal year, each Member that had a share of such Partner Minimum Gain as of the beginning of the fiscal year shall be allocated, to the extent required by Section 1.704-2(i)(4) of the Regulations , items of Company income and gain for such fiscal year and, if necessary, subsequent years equal to that Member ’s share of the net decrease in Partner Minimum Gain . This Section 5.02(b) is intended to comply with the minimum gain chargeback requirement set forth in Section 1.704-2(i)(4) of the Regulations and shall be interpreted consistently therewith.
(c)      Qualified Income Offset Allocation . In the event any Member unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Regulations which would cause such Member to have an Adjusted Capital Account Deficit, items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible. This Section 5.02(c) is intended to constitute a “qualified income offset” in satisfaction of the alternate test for economic effect set forth in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
(d)      Allocation of Nonrecourse Deductions . Nonrecourse Deductions (within the meaning of Section 1.704-2(b)(1) of the Regulations) shall be allocated to the Members in accordance with the Members’ Percentage Interests.
(e)      Allocation of Partner Nonrecourse Deductions . Partner Nonrecourse Deductions (within the meaning of Section 1.704-2(i) of the Regulations) shall be specially allocated to the Member who bears the economic risk of loss with respect to the Partner Nonrecourse Debt (within the meaning of Section 1.704-2(b)(4) of the Regulations) to which such Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i)(1) of the Regulations.
(f)      Offsets to Regulatory Allocations . This Section 5.02 provides for a series of allocations (“ Regulatory Allocations ”) whose purpose is to comply with certain requirements of the Treasury Regulations. In the event that Regulatory Allocations are made, such allocations shall be taken into account in subsequent allocations of Profits, Losses and items thereof so that the net amount of allocations of Profits, Losses and items thereof to each Member shall be equal to the amount that would have been allocated to such Member pursuant to the provisions of this ARTICLE V if the Regulatory Allocations had not occurred. For purposes of applying the foregoing sentence, allocations pursuant to this Section 5.02(f) shall be made only to the extent that the Managing Member reasonably determines that allocations pursuant to this ARTICLE V . would otherwise be inconsistent with the economic agreement among the Members.
(g)      Section 704(c) Tax Allocations . in the event that the Capital Account of any Member is credited with or adjusted to reflect the fair market value of a Company property or properties, the Members’ distributive shares of depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to such property, shall be determined pursuant to Section 704(c) of the Code and the Regulations thereunder, so as to take account of the variation between the adjusted tax basis and book value of such property. Any deductions, income, gain or loss specially allocated pursuant to this Section 5.02(g) shall not be taken into account for purposes of determining Profits or Losses or for purposes of adjusting a Member’s Capital Account.
5.03.      Allocation in the Event of Transfer . If a Membership Interest in the Company is transferred and/or modified in accordance with the provisions of this Agreement, there shall be allocated to each Member which held the transferred and/or modified Membership Interest during the fiscal year of the transfer and/or modification the product of (a) the Company’s Profits or Losses allocable to such transferred and/or modified Membership Interest for such fiscal year, and (b) a fraction, the numerator of which is the number of days such Member held the transferred and/or modified Membership Interest during such fiscal year, and the denominator of which is the total number of days in such fiscal year; provided, however, that the Company shall allocate such Profits or Losses by closing the books of the Company immediately after the transfer and/or modification of an Membership Interest if determined by the Managing Member prior to the due date for the Company’s taxable year in which the transfer occurred or at the request of a transferor or transferee of such transferred Membership Interest. Such allocation shall be made without regard to the date, amount or receipt of any distributions which may have been made with respect to such reduced, transferred and/or modified Membership Interest.
ARTICLE VI     
DISTRIBUTIONS
6.01.      Distribution of Proceeds . Net Cash Flow, Net Financing Proceeds and/or Extraordinary Cash Flow derived from a Liquidating Sale shall be distributed within ten (10) days after the event giving rise to the Net Financing Proceeds or Extraordinary Cash Flow and otherwise on a monthly basis:
[***].
6.02.      Distributions in Kind . All distributions shall be made in cash and no Company assets shall be distributed in kind without the consent of all of the Members except as provided in Section 12.02(a). Any assets distributed in kind shall be valued for such purpose at their fair market value as of the date of distribution as determined by an independent appraiser selected by the Managing Member with the approval of the other Members, and shall be treated for the purposes of this ARTICLE VI as if the Company had sold such assets at such value and distributed the proceeds of such sale to the Member or Members receiving such assets.
ARTICLE VII     
MANAGEMENT
7.01.      Management and Control of the Business and Affairs of the Company .
(c)      Subject to the limitations and restrictions set forth in Section 7.03 and elsewhere in this Agreement and under applicable law, the Managing Member shall have full, exclusive, and complete discretion to manage and control the day-to-day business affairs of the Company, the Hotel Owner, the 18A Hotel Lender, all in accordance with the purpose set forth in Section 2.05 .
(d)      Except as otherwise expressly set forth in ARTICLE III or as otherwise expressly provided in this Agreement, in any instance in which the Company or the Hotel Owner intends to, or is making a determination whether to, negotiate with, enter into any agreement or other arrangement with, or enforce its rights under an agreement with, a Member or an Affiliate of a Member, the non-affiliated Member shall have the exclusive right to direct the Company’s actions in connection with such negotiation, agreement or enforcement.
7.02.      Delegation; Standards; Indemnification .
(a)      Subject to the terms of this Agreement, the Managing Member may, at any time, delegate any of its powers, duties and responsibilities to its Affiliate. Any delegation pursuant to this Section 7.02(a) shall not, however, relieve the Managing Member of any of its obligations hereunder.
(b)      It is the intention of the Members that, to the extent feasible and except as expressly provided in Section 7.01(b) , all other actions taken on behalf of the Company shall be taken by the Managing Member or its authorized delegates, subject to the approval rights of the Members set forth in Section 7.03 .
(c)      The Managing Member shall perform its duties hereunder with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, for the exclusive benefit and protection of the Company, except that the Managing Member shall not be required to diversify the Company’s assets.
(d)      In the performance of its duties and responsibilities and the exercise of its right, power, authority and discretion under this Agreement:
(i)      the Managing Member shall act solely in the interests of the Company; and
(ii)      neither the Managing Member nor any Affiliate of the Managing Member shall deal with the assets of the Company in its own interests or for its own account.
(e)      The Company (but not any Member) shall indemnify, defend and hold harmless the Members, their Affiliates and their respective trustees, officers, directors, members, partners, shareholders, employees and agents (each individually an “ Indemnified Party ” and collectively the “ Indemnified Parties ”) in the event it was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of any acts or omissions, or alleged acts or omissions, arising out of the activities of any Indemnified Party on behalf of the Company, or in furtherance of the interests of the Company, against any and all costs, losses, damages or expenses of any nature whatsoever (including attorneys’ fees, judgments, fines and accounts paid in settlement) actually incurred by any Indemnified Party in connection with such action, suit or proceeding so long as the Indemnified Party believed in good faith that its actions were within the scope of this Agreement and the Indemnified Party did not act fraudulently or in bad faith or in a manner constituting gross negligence or willful misconduct, or a breach of applicable law or this Agreement; provided that, the foregoing indemnification shall not be available to a Member or its affiliated Indemnified Parties in the case of an action, suit or proceeding brought by the Company, a Member or any other party to this Agreement against such Indemnified Party. The termination of any action, suit or proceeding by judgment, order, settlement or upon a plea of nolo contendere or its equivalent shall not of itself (except insofar as such judgment, order, settlement or plea shall itself specifically provide) create a presumption that the Indemnified Party acted fraudulently or in bad faith or acted in a manner constituting gross negligence or willful misconduct. The indemnification rights of the Indemnified Parties set forth in this Section 7.02(e) shall be cumulative of and in addition to, any and all rights, remedies, and recourse to which it shall be entitled whether pursuant to the provisions of this Agreement, at law, or in equity. Managing Member shall indemnify, defend and hold harmless the other Members, their Affiliates and their respective trustees, officers, directors, members, partners, shareholders, employees and agents (each individually a “ Manager Indemnified Party ” and collectively the “ Manager Indemnified Parties ”) in the event it was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative against any and all costs, losses, damages or expenses of any nature whatsoever (including attorneys’ fees, judgments, fines and accounts paid in settlement) actually incurred by any Manager Indemnified Party. LPLP shall guaranty the indemnity by Managing Member set forth in the preceding sentence.
(f)      In addition to the indemnity set forth above, the Company shall reimburse any payments made by any Member or its Affiliates pursuant to a Credit Support Agreement; provided that to the extent the Company does not have, and is not able to obtain, the funds needed to honor its obligations under this subsection, each of the Members shall severally reimburse the Member giving the Credit Support Agreement for a portion of such funds which the Company was unable to pay to such Member (the “ Unreimbursable Portion ”) in an amount equal to the product of (i) the Unreimbursable Portion of such funds times (ii) the Percentage Interest of the reimbursing Member. Notwithstanding anything contained to the contrary in this Agreement, to the extent that losses under such Credit Support Agreement are solely and directly attributable to the actions of one Member or its Affiliates (it being understood that the Company and its Subsidiaries shall not be deemed Affiliates of a Member for this purpose), that Member shall bear 100% of the losses and liability related to such act, without any right to reimbursement.
(g)      In the event of any withdrawal or attempted withdrawal of the Managing Member other than as permitted in Section 11.05 below, the interest of the Managing Member shall be converted into that of a Non-Managing Member and Comcast shall automatically be vested with the rights of the Managing Member hereunder.
7.03.      Matters Requiring Unanimous Approval of the Members . The following actions or decisions with respect to or affecting the Company, Hotel Owner or 18A Hotel Lender, or the Company’s, Hotel Owner’s or 18A Hotel Lender’s assets shall require the unanimous approval of the Members, which approval may be withheld in the absolute discretion of any Member:
[***]
7.04.      Special Meetings; Action by Written Consent . Any Member may call a special meeting of the Members at any time. All of the provisions set forth above with respect to regular meetings shall also apply to any special meetings. Any action requiring the consent of the Members may be taken without a meeting pursuant to written consent of the Members.
7.05.      Third Parties . Notwithstanding anything to the contrary contained herein, the Managing Member may execute a certificate that, except in the case of any matter which requires the unanimous approval of the Members pursuant to this Agreement, may be conclusively relied upon by any third party (without any further inquiry whatsoever) stating that any action or proposed action does not require the approval or consent of the Members under this Agreement or that such approval or consent has been obtained, and any action taken by the Managing Member in connection therewith shall in fact be the act of, and bind, the Company.
7.06.      Other Activities of Members . Except as expressly provided in that certain Agreement Regarding Future Developments to be mutually executed by the Members on or after the date hereof, any Member and its Affiliates may have other business interests and may engage in other business ventures of any nature or description whatsoever, whether presently existing or hereafter created, and whether or not competitive with the business of the Company or any Member.
7.07.      Withholding of Tax on Certain Company Distributions .
(a)      Unless treated as a Tax Payment Loan, any amount paid by the Company for or with respect to any Member on account of any withholding tax or other tax payable with respect to the income, profits or distributions of the Company pursuant to the Code, the Regulations or any state or local statute, regulation or ordinance requiring such payment (a “ Withholding Tax Act ”) shall be treated as a distribution to such Member for all purposes of this Agreement, consistent with the character or source of the income, profits or cash that gave rise to the payment or withholding obligation. To the extent that the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to such Member, unless and to the extent that funds shall have been provided by such Member pursuant to the last sentence of this Section 7.07(a), the excess shall constitute a loan from the Company to such Member (a “ Tax Payment Loan ”). Any such Tax Payment Loan shall be payable upon demand and shall bear interest, from the date that the Company makes the payment to the relevant taxing authority, at the lesser of: (i) the Prime Rate plus two (2) percentage points per annum, or (ii) the highest rate permitted by applicable law, compounded monthly (but in no event higher than the highest interest rate permitted by applicable law). During such time as any Tax Payment Loan to any Member (or the interest thereon) remains unpaid, the Company shall make future distributions due to such Member under this Agreement by applying the amount of any such distributions first to the payment of any unpaid interest on such Tax Payment Loan and then to the repayment of the principal thereof, and no such future distributions shall be paid to such Member until all of such principal and interest has been paid in full. If the amount required to be remitted by the Company under the Withholding Tax Act exceeds the amount then otherwise distributable to a Member, the Company shall notify such Member at least five (5) Business Days in advance of the date upon which the Company would be required to make a Tax Payment Loan under this Section 7.07(a) (the “ Tax Payment Loan Date ”) and provide such Member the opportunity to pay to the Company on or before the Tax Payment Loan Date, all or a portion of such deficit.
(b)      The Managing Member shall have the authority to take all actions necessary to enable the Company to comply with the provisions of any Withholding Tax Act applicable to the Company and to carry out the provisions of this Section 7.07 . Nothing in this Section 7.07 shall create any obligation on the Managing Member to advance funds to the Company or to borrow funds from third parties in order to make any payments on account of any liability of the Company under a Withholding Tax Act.
7.08.      REIT Provisions . At any time when a direct or indirect beneficial interest in the Company is owned by an entity that has elected to be taxed as a REIT under the Code, neither the Company nor any Subsidiary shall operate or manage a lodging facility within the meaning of Section 856(d)(9)(D) of the Code. For these purposes, the ownership of the Property and its operation pursuant to the Hotel License Agreement and the Hotel Management Agreement with Four Seasons does not constitute the operation or management of a lodging facility.
7.09.      Right to Disclose Information . No Member shall be in breach of its obligations under this Agreement or any other obligations or duties to the Members at law or in equity (whether under a theory of fiduciary duty or otherwise) solely because such Member or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent the Member or its Affiliates reasonably believe necessary to enable it or its Affiliates to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by an Affiliate of the Member, as the issuer of publicly traded securities.
7.10.      Loan Provisions . Each Member shall cooperate to amend this Agreement and the Certificate of Formation (and or to cause the Company to amend the organizational documents of any Subsidiary of the Company) if required to comply with the requirements of any lender providing mortgage financing to the Company or any Subsidiary of the Company in accordance with this Agreement, provided that no such amendment shall reduce the rights or increase the obligations of the Members under this Agreement. No Member will be required to guaranty debt, except that (a) to the extent a mutually approved construction loan requires guarantees of the repayment of the loan, Liberty and Comcast shall (subject to Section 7.02(f) ) each provide joint and several guarantees and (b) Liberty shall provide a completion guaranty if required by the construction lender, provided that the obligations thereunder shall be no more onerous on Liberty than the Development Agreement. At any time while any Member has potential liability under so called non-recourse carve-outs, the Company and its Subsidiaries shall not be authorized to take any action that would result in the triggering of liability under the non-recourse carve-outs, without the prior approval of all of the Members, which may be withheld for any reason or no reason. Without limiting the generality of the foregoing, at any time while any Member has potential liability under so called non-recourse carve-outs: (i) without the consent of the Members, the Company shall not be authorized to commence, on behalf of the Company or any Subsidiary, any voluntary proceeding for bankruptcy, reorganization or similar relief, or to consent to any involuntary petition for such relief; (ii) the Members expressly waive any rights that they may have at any time, whether under a theory of fiduciary duty or under any other legal or equitable principle, to compel the Company or any Subsidiary to take any action that would trigger liability under non-recourse carve-outs, including, without limitation, commencing a voluntary bankruptcy proceeding or consenting to any involuntary petition or relief in connection therewith; and (iii) the Members agree that they themselves shall not initiate an involuntary bankruptcy proceeding with respect to the Company or any of its Subsidiaries.
7.11.      Operation and Management of the Hotel . At all times, the Company shall engage a third-party operator to manage the operations of the Hotel, and the Company shall not have any authority to direct the operations or management of the Hotel, except for the limited approval rights under the Hotel Management Agreement, such as, by way of example and not limitation, approval of the Annual Plan. In no event shall the Company cause or permit (i) any gaming or gambling at the Property (except solely as a charitable event) or (ii) any employee of the Company or any subsidiary to be engaged in the operation of the Hotel.
7.12.      Management Dispute . If any Member believes that a Management Dispute exists, such Member may deliver notice thereof to the other Member in writing pursuant to the notice provisions set forth in Section 13.02 (a “ Management Dispute Notice ”). The Management Dispute Notice shall set forth in reasonable detail the nature of the dispute. Promptly after the delivery of the Management Dispute Notice, each Member shall designate a member of its senior management to meet with each other in person and to exercise all diligent efforts, acting in good faith, to resolve such dispute.
7.13.      Removal of the Managing Member .
(a)      Comcast may remove the Managing Member at any time if [***].
(b)      Any removal of the Managing Member shall be effective upon such date that Comcast provides written notice to the Managing Member specifying the basis for the removal. If Comcast so removes the Managing Member, Comcast shall select a new Managing Member, which new Managing Member shall not be required to be a Member prior to its admission as the Managing Member, and the removed Managing Member shall become Non-Managing Member and Liberty shall have no consent or approval rights with respect to the Company except that (i) [***]. Upon the removal of the Managing Member as a result of any of the events described in subsections (i) through (iv) of Section 7.13(a) , Comcast shall be permitted at any time thereafter to exercise its Call Right pursuant to Section 8.01(b) , notwithstanding that the Standstill Period has not then expired; provided that, the Deferral Right shall not be available to Liberty pursuant to Section 8.01(c) , but the right to rescind following any such exercise of the Call Right shall be available in accordance with Section 8.01.
ARTICLE VIII     
PUT/CALL
8.01.      Invoking the Put/Call Provisions . The Put/Call provisions set forth in this ARTICLE VIII may not be invoked by any party for any reason prior to the termination of the Standstill Period. The Put/Call provisions set forth in this Article VIII shall be subject to the restrictions on transfer set forth in the Hotel Agreements and any Financing Document.
(h)      Put Right . At any time after the Standstill Period, Liberty shall have the right and option (the “ Put Right ”) exercisable by giving written notice (the “ Put Notice ”) to Comcast to cause Comcast to purchase from Liberty all of the Membership Interests owned by Liberty free and clear from any claims, liens and encumbrances for the Purchase Price (defined below). The Put Notice shall set forth a statement that Liberty desires to terminate the relationship between the Members and to sell its Membership Interests to Comcast pursuant to the provisions of this ARTICLE VIII. After receipt of the Put Notice, the Members shall commence the Appraisal Process set forth in Section 8.04 below. [***].
(i)      Call Right . At any time after the Standstill Period, Comcast shall have the right and option (the “ Call Right ”) exercisable by giving written notice (the “ Call Notice ”) to Liberty to purchase from Liberty all of the Membership Interests owned by Liberty free and clear from any claims, liens and encumbrances for the Purchase Price. The Call Notice shall set forth a statement that Comcast desires to terminate the relationship between the Members and to purchase Liberty’s Membership Interests pursuant to the provisions of this ARTICLE VIII. After delivery of the Call Notice, [***].
(j)      Deferral Right . Notwithstanding the provisions of this ARTICLE VIII to the contrary, if Liberty delivers to Comcast a Put Notice, or if Comcast delivers to Liberty a Call Notice, then the party receiving such notice (the “ Receiving Party ”) shall have the right (the “ Deferral Right ”), exercisable by written notice to the other party within thirty (30) days after receipt of the Put Notice or Call Notice, as applicable, [***] of the date on which the Appraisal Initiation Date would have fallen if the deferral under this subsection (c) had not occurred. If a party timely exercises its Deferral Right, the Appraisal Initiation Date shall be the date which is two (2) years after the Put Notice, with respect to the Put Right, or two (2) years after the Call Notice, with respect to the Call Right.
8.02.      Put Sale Option . [***].
8.03.      Purchase Price . The purchase price payable by the Purchasing Member for the Membership Interests being acquired pursuant to Section 8.01 or 8.02 (the “ Purchase Price ”) shall be equal to [***].
8.04.      Appraisal Process .
(a)      The “ Fair Market Value ” of the Property shall mean the amount that a willing purchaser would pay and a willing seller would accept, for a sale of the Property on the Appraisal Initiation Date, based on the assumptions set forth in Section 8.04(b) , as determined in accordance with this Section 8.04 . Unless otherwise agreed by the Members, the “Fair Market Value” of the Property shall be determined by the appraisal procedures set forth in this Section 8.04 (the “ Appraisal Process ”). Each of Liberty and Comcast shall deliver to the other, not later than the date (the “ Appraisal Deadline ”) which is sixty (60) days after the Appraisal Initiation Date, the written appraisal report of a reputable M.A.I. appraiser having at least ten (10) years’ experience in the business of appraising high rise office buildings in the city of Philadelphia, Pennsylvania (a “ Qualified Appraiser ”), which report shall set forth such appraiser’s appraisal of the fair market value of the Property as of the Appraisal Initiation Date (a “ Round I Appraisal ”). Each Round I Appraisal shall be prepared in accordance with the then-current Uniform Standards of Professional Appraisal Practices. If the lower of the fair values set forth in the two Round I Appraisals shall be in an amount at least equal to [***]% of the higher of such fair values, the Fair Market Value shall be an amount equal to the arithmetic average of such two fair values. However, if the lower of the fair market values set forth in the two Round I Appraisals is less than [***]% of the higher of such fair market values, the Qualified Appraiser selected by Comcast and the Qualified Appraiser selected by Liberty shall jointly select, within seven (7) Business Days after the Appraisal Deadline, select a third Qualified Appraiser (the “ Third Appraiser ”). Each of the Round I Appraisals shall be furnished to the Third Appraiser. Within twenty (20) days after the appointment of the Third Appraiser, the Third Appraiser shall render a written determination of the Fair Market Value by selecting, without change, the determination of one (1) of the original Qualified Appraisers as to the Fair Market Value and such determination shall be final, conclusive and binding. The Fair Market Value as determined pursuant to this Section 8.04 shall be deemed accepted and agreed to by the Members and shall be final, binding and non-appealable by the parties hereto. The date upon which the Fair Market Value of the Property shall finally be determined in accordance with this Section 8.04 shall be referred to herein as the “ Final Appraisal Date ”. Subject to the following sentence, each Member shall pay the costs of its own Qualified Appraiser, and the Members shall share equally the costs of the Third Appraiser. Notwithstanding the foregoing sentence, if a Member exercises its right to rescind a Call Notice, Put Notice or Offer, as applicable, such rescinding party shall pay 100% of the costs of the Qualified Appraisers.
(b)      Each Round I Appraisal shall be accompanied by a complete narrative appraisal report setting forth the data and matters upon which the Qualified Appraiser’s appraisal of value is predicated, and shall utilize, inter alia, the following assumptions:
(i)      there are no mortgages or other encumbrances affecting title to the Property;
(ii)      there are no transfer taxes, brokerage commission, allocation or other costs typically associated with the closing of a real estate purchase transaction which are payable, and in determining Fair Market Value, no reduction shall be made for the Estimated Closing Costs, which shall be accounted for as provided in Section 8.03 above; and
(iii)      for the purposes of a sale pursuant to Sections 8.01(a) and 8.01(a) only (and specifically not in connection with a Transfer pursuant to the exercise of a Right of First Offer under Section 11.03 ), [***].
8.05.      Closing . The provisions of this Section 8.05 shall apply (1) in the event Comcast elects (or is deemed to elect) to purchase Liberty’s Membership Interests pursuant to Section 8.01(a) , (2) in the event Comcast exercises its Call Right pursuant to Section 8.01(b) , (3) in the event Comcast elects pursuant Section 8.01(a) to market the Property to a third party and Comcast fails to cause Hotel Owner to enter into a binding agreement of sale or to consummate such sale within the time periods set forth in Section 8.01(a) or (4) in the event either Member exercises its Right of First Offer pursuant to Section 11.03 .
(a)      The Member selling its Membership Interests is referred to herein as the “ Selling Member ”. The Member purchasing the Membership Interests, or any Person designated by such Member to purchase the Membership Interests (which designation shall be permitted by written notice to the Selling Member, but shall not relieve the Purchasing Member of its obligations for the payment of the Purchase Price or other obligations of the Purchasing Member hereunder), is referred to herein as the “ Purchasing Member ”, provided that, so long as the Comcast Tenancy Requirement is satisfied, no such designated Purchasing Member may be a Competitor of Comcast.
(b)      The Purchase Price shall be payable by wire transfer of immediately available funds at the time of the consummation of the sale. The sale shall be consummated on or before the one hundred twentieth (120th) day after the Final Appraisal Date, except with respect to a sale pursuant to the provisions of clause (3) of Section 8.05 above, in which event the sale shall be consummated on or before the sixtieth (60 th ) day after the Outside Put Sale Date (or, if applicable, the expiration of the 180-day period without the sale having been consummated as set forth herein) (or in any such event, on the first Business Day thereafter, if such day is not a Business Day), subject in all cases, to any extension necessary to obtain any applicable governmental or lender approvals, such extensions to continue as long as the applicable parties are diligently pursuing such approvals.
(c)      Any transfer of interests to a Member pursuant to this ARTICLE VIII or Section 11.03 shall be for all cash and shall be free and clear of any claims, liens and encumbrances thereon, and the agreement evidencing the sale of the Selling Member’s interest shall contain customary provisions for an assignment of this type, including a representation and warranty as to the Selling Member’s title to the interest, which representation shall survive the closing thereof, and for any breach thereof the Purchasing Member shall have recourse to the Selling Member (or, in the event of liquidation or dissolution of the Selling Member, to any transferee of the assets and liabilities of the Selling Member).
(d)      The Selling Member shall execute and deliver (and shall cause its Affiliates to execute and deliver, to the extent necessary to carry out the purpose of this ARTICLE VIII or Section 11.03 , as applicable) such assignments and other documents (in form reasonably acceptable to the Selling Member and the Purchasing Member) as shall be necessary to convey the Membership Interests of the Selling Member to the Purchasing Member and/or its designee, free and clear of all liens, encumbrances and other adverse claims. If either Member fails to complete the closing of the transaction as required hereunder, the other Member shall have all rights and remedies available hereunder, at law or in equity, including the right to seek specific performance of this Agreement. If the Selling Member and/or its Affiliate is a party to any Credit Support Agreement, then at or before the closing of the sale transaction the Purchasing Member shall secure on behalf of the Selling Member and/or its Affiliate (at the Purchasing Member’s sole cost) a release from such Credit Support Agreements or, if such release is not available despite Purchasing Member’s commercially reasonable efforts to obtain same, provide such indemnities in favor of the Selling Member and its Affiliates as the Selling Member deems acceptable in its reasonable discretion. Such release or indemnity shall relate only to matters arising from and after the completion of such sale of the Membership Interests.
8.06.      Assumption of Company’s Obligations . Following the closing of a purchase by a Member of the other Member’s Membership Interests in accordance with this Article VIII or Section 11.03 , the Purchasing Member shall assume all rights and obligations of the Selling Member arising under or pursuant to this Agreement (except liability arising through an act in contravention of this Agreement or the operating agreement of Hotel Owner or 18A Hotel Lender by the Selling Member or its Affiliates), and the Purchasing Member shall indemnify and hold harmless the Selling Member and its Affiliates from and against all such assumed obligations, and to that extent the Selling Member and its Affiliates shall continue to be responsible with respect thereto.
8.07.      Payment of Debts . If the Selling Member or its Affiliates have any outstanding debts to the Company, Hotel Owner or 18A Hotel Lender or to the Purchasing Member relating to the Company, all proceeds of the Purchase Price due the Selling Member shall be paid to the Company, Hotel Owner or 18A Hotel Lender or the Purchasing Member (as the case may be) for and on behalf of the Selling Member and its Affiliates until all such debts shall have been paid and discharged in full.
ARTICLE IX     
COMPENSATION OF PARTNERS;
PAYMENT OF COMPANY EXPENSES
9.01.      Company Expenses . The Company shall bear all costs and expenses incurred in connection with the management and operation of the business and affairs of the Company, or in carrying out the business, purposes, and objectives of the Company, including without limitation, costs associated with a proposed transaction that is not consummated for any reason whatsoever. Without limiting the foregoing, the Company shall bear the costs of all third-party vendors who provide services to the Company (including without limitation auditors, tax consultants and attorneys).
9.02.      No Other Compensation . Except as expressly set forth in this ARTICLE IX or elsewhere in this Agreement, no Member shall receive any compensation from the Company for any services rendered in its capacity as a Member. Nothing contained herein shall prevent (i) a Member or its Affiliate from receiving reasonable compensation for any services rendered to the Company in a non-Member capacity, subject to Section 7.03 , (ii) any Member from receiving distributions under ARTICLE VI, or (iii) Liberty or its Affiliate from receiving the fees and compensation pursuant to the Development Agreement.
ARTICLE X     
COMPANY BOOKS, RECORDS AND STATEMENTS
10.01.      Books and Records . The Managing Member shall establish and maintain accurate, full and complete Company records and books of account showing assets, liabilities, and the Capital Accounts of the Members, revenues and expenditures, and all other aspects of the operations, transactions and cash flows of the Company in accordance with generally accepted accounting practices, consistently applied. The Company shall use the standard accounting software utilized by the Managing Member and its Affiliates for properties in their own portfolio to keep the accounting books and records of the Company, provided that such software used shall at all times be of a quality consistent with industry standards applicable to trophy class office buildings. The Managing Member shall also maintain books sufficient to show the computation of any fees payable pursuant to the Hotel Agreements and the Development Agreement. The Company’s books and accounts shall be maintained at the principal office of the Company, with copies thereof at such other place or places, if any, as may be required by law, and any Member shall have access to the Company books (and the right to make copies thereof) during ordinary business hours. Any Member (and its accountants, advisors and other consultants) shall have access upon reasonable prior written notice, during normal business hours, to the books, accounts and financial records of the Company, including to audit the Company at such Member’s expense, and to monitor the Company’s and Managing Member’s compliance with the terms and conditions of this Agreement, compliance with the Company’s obligations and compliance with applicable laws.
10.02.      Method of Accounting . The Company shall use generally accepted accounting principles, consistently applied, unless otherwise required by applicable law.
10.03.      Financial Statements .
(e)      Each Member or its designated representative shall at all reasonable times have access to, and may inspect and make copies of, such books, records and accounts. The Managing Member shall afford Comcast or its counsel access to all documents of the Company upon not less than twenty-four (24) hours prior written notice given by Comcast to the Managing Member.
(f)      The Members agree that the Company’s auditors shall initially be Ernst & Young LLP. The Managing Member shall not change the auditors without the approval of Comcast. The Managing Member shall cause the auditors to audit the books of the Company for each fiscal year and to prepare and issue audited financial statements to the Members as soon as reasonably practicable after the end of such fiscal year (but in any event within seventy five (75) calendar days thereafter). Such annual statements shall include a balance sheet of the Company as at the end of such fiscal year, together with related statements of operations, partners’ capital and cash flow for such fiscal year, all in reasonable detail and stating in comparative form the respective figures for the corresponding date and period in the prior fiscal year, and shall be prepared in accordance with generally accepted accounting principles and the then most current version of the Uniform System of Accounts for Hotels, consistently applied. Notwithstanding any other provisions of this Agreement, to the extent more extensive financial statements are required pursuant to the terms of any Financing Document, the Managing Member shall provide the Members with a copy of such financial statements.
(g)      Commencing upon completion of the construction of the Hotel, on or before the fifth (5th) day following the receipt by Managing Member of the underlying information (or such earlier time as is commercially reasonable), the Managing Member will prepare, or have prepared by the asset manager, and deliver to Comcast the following information:
(i)      on a monthly basis, a statement certified by the Managing Member, in reasonable detail and in a form reasonably approved by Comcast, setting forth all the information necessary to calculate the Net Cash Flow for such calendar month and quarter, and the distribution of said Net Cash Flow (hereinafter referred to as the “ Cash Flow Statements ”) and bank and other depository statements reflecting the current amounts in any partnership accounts reconciled with the amounts shown on the Company’s books and Cash Flow Statements for such accounts;
(ii)      on a monthly basis, a budget to actual comparison with monthly and year-to-date explanation of variances, if any, of major line items. The operating statement will be supported by the following documents:
(a)
a budget versus actual income statement for the applicable month and for the year-to-date a narrative variance report for any amount in excess of [***];
(b)
information regarding all legal issues related to the Property, the Hotel Owner or the Company; and
(c)
bank statements and general ledger.
(iii)      on a quarterly basis (i) property level financial statements (unaudited) for the quarter and year to date, together with projections through the end of the Fiscal Year, (ii) a balance sheet for the Property as at the end of such calendar quarter, (iii) a bank reconciliation as at the end of such calendar quarter, (iv) statements of any changes in Company capital; (v) statement of operations, (vi) a statement of cash flows, and (vii) a quarterly membership distribution schedule. Such financial statements shall be prepared in accordance with generally accepted accounting principles and the then most current version of the Uniform System of Accounts for Hotels, consistently applied; and
(iv)      such other matters as Comcast may reasonably request.
(h)      The Managing Member shall direct the manager under the Hotel Management Agreement to (i) send to Comcast a copy of (A) each report relating to the Property that is sent to the Hotel Owner at the same time such report is sent to the Hotel Owner, and (B) any other report reasonably requested from time to time by Comcast and (ii) attend meetings with Comcast if requested by Comcast. If the hotel manager will not agree to provide such reports directly to Comcast, Managing Member shall provide copies of the same within one (1) Business Day after Hotel Owner’s receipt of such reports from the hotel manager.
10.04.      Bank Accounts . All funds received by the Company shall be deposited in the name of the Company in such checking and savings accounts, time deposits or certificates of deposit, or other accounts or instruments at such financially sound commercial banks, savings banks and savings and loan institutions not then controlled, directly or indirectly, by the Managing Member and its Affiliates, as the Managing Member may reasonably determine. The signatories for such accounts and instruments shall be representatives of the Managing Member. All accounts containing funds of the Company shall be segregated accounts and shall not be commingled with the funds of any other person or entity.
10.05.      Tax Matters .
(a)      The Managing Member shall cause to be prepared and filed timely all informational and other tax returns required to be filed by the Company, and shall deliver copies thereof to the Members promptly thereafter. Subject to Section 10.06 , the Managing Member shall reasonably determine the appropriate treatment of each item of income, gain, loss, deduction and credit of the Company and the accounting methods and conventions under the tax laws of the United States, the several states and other relevant jurisdictions as to the treatment of any such item or any other method or procedure related to the preparation of such tax returns; provided that the Managing Member shall consult in good faith and give due consideration to the views of other Members in respect of the tax treatment of partnership items of the Company with respect to which the Managing Member exercised discretion or judgment as to the treatment. The Managing Member shall inform Comcast and/or its Affiliate that is a Member of the proposed tax treatment to be made on any Company tax return in a timely manner sufficiently in advance of any tax filing to allow such Members to review relevant information and shall provide any additional information reasonably requested, and the other Members shall present their views to the Managing Member within 30 days of the receipt of relevant information. The Managing Member may cause the Company to make, refrain from making, or revoke any and all elections permitted by such tax laws in its reasonable judgment, provided that the Managing Member may not make, change or revoke any material election with respect to taxes without the unanimous consent of the other Members. The Managing Member shall provide to all Members (i) an estimated Schedule K-1 as soon as reasonably practicable and in any case within one hundred twenty (120) days after the close of each Fiscal Year, and (ii) a final Schedule K-1 as soon as reasonably practicable and in any case within one hundred eighty (180) days after the close of each Fiscal Year.
(b)      The Managing Member is hereby designated as the “Tax Matters Member” under Code Section 6231(a)(7). The Tax Matters Member shall manage audits of the Company conducted by the Internal Revenue Service or other governmental agency pursuant to the audit procedures under the Code and the regulations issued thereunder. The Company, through the Tax Matters Member, is authorized to cooperate with and to monitor the Internal Revenue Service in any audit that the Internal Revenue Service may conduct of the Company’s books and records and information or other returns filed by the Company. The Tax Matters Member shall take all actions necessary to preserve the rights of the Members with respect to audits and shall provide the Members with any notices of such proceedings and other information as required by law. The Tax Matters Member shall keep the Members timely informed of its activities under this Section. The Company, through the Tax Matters Member, may similarly cooperate with and monitor any audit by any other governmental authority and prepare and file protests or other appropriate responses to such audits. All costs incurred in connection with the foregoing activities, including legal and accounting costs, shall be borne by the Company. Any additional expenses with respect to judicial review of adverse determinations in connection with any such tax audits or the defense of any Member against any claim asserted by the Internal Revenue Service or other tax authority of additional tax liability arising out of its ownership of its interest in the Company shall be borne by the Member who wishes to proceed with such judicial review or defense. Notwithstanding the foregoing, (i) the Non-Managing Members retain all of their rights under the Code and Treasury Regulations to participate in any proceeding with the Internal Revenue Service or with any relevant governmental authority; and (ii) no Member shall extend the statute of limitations or enter into any settlement or agreement with any governmental authority that would adversely impact the Non-Managing Members without its prior consent.
(c)      All of the Members shall file their separate federal, State and local income tax returns strictly in accordance with the information provided to them on the Schedule K-1 furnished by the Company and no Member shall file an IRS Form 8082 with respect to any “partnership item” of the Company (as that term is defined in Section 6231(a)(3) of the Code) unless the Member desiring to file IRS Form 8082 (the “ Filing Member ”) (i) notifies the other Members thereof in writing (the “ 8082 Notice ”) at least thirty (30) days before filing that the Member intends to file an IRS Form 8082 with respect to a partnership item attributable to the Company, and provides an opinion from a nationally recognized law firm or public accounting firm (expert in such matters) issued to such Member, at such member’s expense, that the position set forth in the proposed Form 8082 is, more likely than not, the correct position with respect to the tax treatment of such partnership item, and (ii) engages in good faith discussions with the other Members in an effort to resolve the differences among them with respect to the relevant partnership item. If such discussions have not resulted in an amicable resolution within ten (10) days after the 8082 Notice, each Member shall designate a representative of its senior management to meet in person and to exercise all diligent efforts, acting in good faith, to resolve such differences within thirty (30) days after the 8082 Notice. If such meeting or meetings do not result in agreement among the Members within such thirty (30)-day period, the Filing Member shall have the right to file the IRS Form 8082 with respect to the partnership item identified in the 8082 Notice. Notwithstanding the foregoing, neither Comcast nor its Affiliate that is a Member shall be precluded from filing the 8082 Notice on account of the limitations of this Section 10.05(c) solely because such Member did not receive its Form K-1 from the Company on or before April 15 th of the applicable year and the only reason for filing the 8082 Notice is that the partnership items attributable to the Company reported on its income tax return are based on estimates.
(d)      During such time as the Company has more than one Member for tax purposes, neither the Company nor any Member shall take any action, including making any election, that would result in the Company being taxed as other than a “partnership” for federal income tax purposes.
10.06.      Certain Elections . In the event that a distribution of any of the Company’s assets is made in the manner provided in Code Section 734, where a transfer of an interest in the Company permitted by this Agreement is made in the manner provided in Code Section 743, or in any other circumstance permitting an election to be made under Section 754 of the Code, then, upon the request and at the expense of any Member, the Company shall file an election under Code Section 754, in accordance with procedures set forth in the applicable Regulations. The Members’ Capital Accounts shall be adjusted in accordance with Regulations Section 1.704-1(b)(2)(iv)(m). Each Member shall provide the Company with all information necessary to give effect to any election under Code Section 754.
10.07.      Certain Tax Accounting Matters . [***].
10.08.      Reserves . The Managing Member may establish reserves consistent with the Annual Plan, for the purposes and requirements as may be required by any secured lender providing financing for the Properties or as the Members may otherwise deem appropriate (the “ Reserve Accounts ”). The Reserve Accounts will be increased by any deposits thereto from time to time of amounts of the revenues of the Company from operations, the net proceeds from capital transactions, and contributions and other sources, before any distributions of such amounts to the Members, as determined to be reasonably necessary by the Members. Such Reserve Accounts may be charged with any expenditure for the operation of the Company or the Property that is consistent with the purposes for which such Reserve Accounts were established, whether such items are treated as current expense deductions or as capital expenditures under generally accepted accounting principles to the extent provided for in the Annual Plan or Approved Project Budget (including variances provided for in the Development Agreement) or agreed to by the Members. Nothing contained in this Section 10.08 shall in any way limit or restrict the right of the Members to use other assets or funds of the Company (other than deposits to the Reserve Accounts) for any such expenditures.
10.09.      Annual Plan . The proposed Annual Plan shall be submitted to the Company by Four Seasons in accordance with the Hotel Management Agreement and shall not be deemed final until approved by both Members. In any case in which one Member approves a proposed Annual Plan, and the other Member does not approve such proposed Annual Plan, the disapproving Member shall have the right to object to the Annual Plan on behalf of the Hotel Owner in accordance with the terms of the Hotel Management Agreement. If neither Member approves the proposed Annual Plan, but the basis of the Members’ disapproval is different, the Members shall work together in good faith to provide a unified response to the proposed Annual Plan and a unified position with respect to any dispute resolution process under the Hotel Management Agreement; provided that, if the Members fail to reach a unified position, either or both Members may present their positions in any such dispute process, and will cooperate in good faith to permit all positions to be heard.
ARTICLE XI     
TRANSFER OF MEMBERSHIP INTERESTS
11.01.      Transfer . This Article XI shall be subject to the restrictions on Transfers set forth in the Hotel Management Agreement.
(c)      The term “ Transfer ,” when used with respect to a Membership Interest, shall include any sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of the Membership Interest or any issuance, sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of any direct or indirect ownership interest in a Member. Notwithstanding the foregoing, the term “Transfer” shall not include the issuance, sale, assignment, gift, bequest, succession through intestacy, pledge, hypothecation, mortgage, exchange, or other disposition of any beneficial interests in (i) Liberty, (ii) LPT, (iii) any Liberty Merger Successor (as defined below), (iv) any publicly-traded Affiliate of a Liberty Merger Successor, (v) Comcast, (vi) any Comcast Merger Successor (defined below), or (vii) any publicly-traded Affiliate of a Comcast Merger Successor.
(d)      Except as provided in Article VIII , Sections 11.02 and 11.03 , no Member may enter into or suffer to occur a Transfer, in whole or in part, directly or indirectly, without the approval of all Members. Any Transfer or purported Transfer of any Membership Interest not made in accordance with this Agreement shall be null and void and in breach of this Agreement.
11.02.      Transfers of Membership Interests to Affiliates . The following Transfers shall be permitted upon written notice to the other Members but without the need for the consent of any other Member:
(i)      Transfers of direct or indirect Membership Interests to (A) Comcast, (B) an Affiliate of Comcast, or (C) any successor to Comcast or its Affiliates (or any Affiliate of such successor) resulting from a merger, consolidation, sale of all or substantially all of the assets or beneficial interests, or similar fundamental corporate transaction, affecting Comcast and/or its Affiliates (in any such case under this clause (C), a “ Comcast Merger Successor ”)
(ii)      Transfers of direct or indirect Membership Interests to (A) Liberty, (B) an Affiliate of Liberty, or (C) any successor to Liberty or its Affiliates (or any Affiliate of such successor) resulting from a merger, consolidation, sale of all or substantially all of the assets or beneficial interests, or similar fundamental corporate transaction, affecting Liberty and/or its Affiliates (in any such case under this clause (ii), a “ Liberty Merger Successor ”).
11.03.      Transfers of Membership Interests to Third Party . Subject to the Right of First Offer granted to the Members pursuant to this Section 11.03 , Comcast and Liberty shall each have the right after the Standstill Period to Transfer all, but not less than all, of its entire Membership Interest to a Third-Party Purchaser.
(c)      Right of First Offer . Comcast and Liberty shall each have a right of first offer (a “ Right of First Offer ”) to purchase the other Member’s Membership Interests in accordance with this Section 11.03 . If either Liberty or Comcast desires to Transfer its Membership Interest to a third party (such electing party being referred to herein as the “ Offeror Member ”), the Offeror Member shall deliver to the other Member (the “ Offeree Member ”) a written offer (an “ Offer ”) pursuant to which the Offeror Member will offer to [***] of such Membership Interest to the Offeree Member for the Purchase Price, provided, however, that for purposes of this Section 11.03 , in determining the Fair Market Value, the [***]. Within ten (10) Business Days after delivery by the Offeror Member to the Offeree Member of the Offer, the Offeror Member shall initiate the Appraisal Process. The Offeree Member shall notify the Offeror Member in writing, not later than ninety (90) calendar days following the Final Appraisal Date, as to whether it desires to purchase such Membership Interest (or in the case of an Offer made by Comcast to Liberty, whether Liberty elects to exercise its Tag-Along Right pursuant to Section 11.03(d) ) (any failure on the part of the Offeree Member to respond in writing to the Offer within such ninety (90) calendar day period to be deemed to constitute an election on the part of the Offeree Member not to purchase, and in the case of an Offer made to Liberty, an election not to exercise the Tag-Along Right). If the Offeree Member shall elect (or shall be deemed to have elected) not to purchase such Membership Interest, the Offeror Member shall be entitled, at any time during the twelve month period immediately following such election (or deemed election) (the “ Outside Third-Party Sale Date ”), to sell such Membership Interest, at a price not less than [***] percent ([***]%) of the Purchase Price. If the Offeror Member shall be entitled, pursuant to this Section, to sell such Membership Interest, but shall fail to effect such sale prior to the Outside Third-Party Sale Date, then (1) the Offeror Member shall be obligated to re-offer such Membership Interest to the Offeree Member in accordance with the applicable provisions of this Section 11.03(a) above prior to selling such Membership Interest to a Third-Party Purchaser and (2) the Offeror Member shall have no right to initiate a sale of its Membership Interests to a Third-Party Purchaser or make an Offer or exercise a Call Right or Put Right (whichever is applicable) for a period of two (2) years after the Outside Third-Party Sale Date. If the Offeror Member shall be entitled, pursuant to this Section 11.03(a) , to sell such Membership Interest, but desires to sell such Membership Interest for less than [***] percent ([***]%) of the Purchase Price, the Offeror Member shall be obligated to re-offer such Membership Interest to the Offeree Member at such lesser price, in which event the Offeree Member shall respond within sixty (60) calendar days after such re-offer. If the Offeree Member shall timely accept the Offer, the Offeror Member shall Transfer the subject Membership Interest to the Offeree Member (or if the Comcast Tenancy Requirement is satisfied, any designee of the Offeree Member that is not a Competitor of Comcast), and the Offeree Member shall accept such Membership Interest and assume the associated obligations hereunder, on the terms set forth in the Offer and otherwise in accordance with the provisions of Section 8.05 hereof, as if the Offeror Member were the Selling Member and the Offeree Member were the Purchasing Member with the same force and effect as if such provisions had been set forth in the Offer in their entirety. No designation by the Offeree Member to a third party shall relieve the Offeree Member of its obligations for the payment of the Purchase Price or other obligations of the Offeree Member hereunder.
(d)      No Transfers to Competitors . Concurrently with its delivery of the Offer to the Offeree Member, the Offeror Member shall inform the Offeree Member as to whether the Offeror Member has determined the Person or Persons to which it intends to sell or offer to sell its Membership Interest if the Offeree Member declines to purchase, and if so, shall identify such Person or Persons to the Offeror Member with reasonable specificity. Except for a sale of 100% of the Membership Interests of all Members to a Third-Party Purchaser in accordance with Section 11.03(c) or 11.03(d) below, neither party shall have the right to Transfer its Membership Interests to a Competitor of the Offeree Member.
(e)      Drag Along Right . If Comcast desires to Transfer its Membership Interests to a Third-Party Purchaser pursuant to this Section 11.03 and Liberty does not elect to accept the Offer pursuant to Section 11.03(a) , Comcast shall have the right, in its sole and absolute discretion, to require Liberty (“ Drag Along Right ”) to sell all its Membership Interests to such Third-Party Purchaser (or to vote in favor of any merger, sale of assets or other transaction which would effect such a sale) for the same consideration per Membership Interest and pursuant to the same terms and conditions with respect to payment for the Membership Interests as agreed to by Comcast. In such case, Comcast shall give written notice of its exercise of the Drag Along Right within thirty (30) days after Liberty elects (or is deemed to elect) to not exercise its Right of First Offer, setting forth (a) the consideration to be received by the Members, (b) the identity of the Third-Party Purchaser, (c) any other material items and conditions of the proposed Transfer, and (d) the date of the proposed Transfer. Liberty shall take all reasonably necessary actions, as requested by Comcast to consummate such Transfer of Membership Interests pursuant to the exercise of the Drag Along Right.
(f)      Tag-Along Right . If Comcast desires to Transfer its Membership Interests to a Third-Party Purchaser, Liberty shall have the right (but not the obligation, except as set forth in Section 11.03(c) above), in its sole and absolute discretion (the “ Tag Along Right ”) to participate in such Transfer, by delivering written notice to Comcast within sixty (60) calendar days following the determination of the appraised value pursuant to Section 11.03(a) . Upon receipt of such notice of election, Comcast shall use commercially reasonable efforts to obtain the agreement of the prospective Third-Party Purchaser to purchase Liberty’s Membership Interests and shall otherwise take all reasonably necessary actions to consummate such Transfer of Membership Interests pursuant to the exercise of the Tag Along Right. If the prospective purchaser does not agree to purchase all of Comcast’s Membership Interests and Liberty’s Membership Interests, Comcast and Liberty shall be entitled to sell to the prospective purchaser, for the same consideration per Membership Interest and pursuant to the same terms and conditions, Membership Interests equal to the product of (a) such Member’s Percentage Interest multiplied by (b) the Percentage Interest held by Comcast immediately prior to such sale. By way of example only, if at the time of such proposed sale, Comcast holds an 80% Percentage Interest and Liberty holds a 20% Percentage Interest, then if the proposed purchaser declines to purchase Liberty’s Membership Interest, Comcast shall be entitled to Transfer to such Third-Party Purchaser 80%*80% = a 64% Membership Interest and Liberty shall be entitled to Transfer to such Third-Party Purchaser 20%*80% = a 16% Membership Interest. Comcast shall not be permitted to Transfer, and shall not Transfer, all or any portion of its Membership Interests to the prospective purchaser under this paragraph if the prospective purchaser declines to allow the participation of the Liberty.
(g)      Sale of Equity Interests Only . If Liberty shall sell its Membership Interests to a Third-Party Purchaser pursuant to this Section 11.03 , such Third-Party Purchaser shall acquire Liberty’s equity interests only, shall not become the Managing Member unless Comcast agrees in writing in its sole discretion, and Comcast shall have the right to designate the Managing Member of the Company.
(h)      Rescission Right . Notwithstanding anything set forth in this Agreement to the contrary, the Offeror Member shall have the right to rescind its Offer by providing written notice to the Offeree Member within thirty (30) days after the Final Appraisal Date. If the Offeror Member so elects to rescind its Offer, then (1) the Offeror Member shall pay 100% of the costs of the Qualified Appraisers and (2) the Offeror Member shall not have the right to make an Offer or exercise a Call Right or Put Right (whichever is applicable) for a period of two (2) years after the date of such rescission of the Offer.
11.04.      Intentionally Omitted .
11.05.      Withdrawal of a Member . A Member may voluntarily withdraw from the Company only upon a Transfer of all of such Member’s Membership Interest in accordance with this ARTICLE XI.
11.06.      Admission of Transferee as a Member . Any Person to whom any portion or all of a Membership Interest has been transferred pursuant to Section 11.02 or 11.03 shall be admitted as a substituted Member as a result of such transfer to the extent of the Membership Interest so transferred only upon the satisfaction of all of the following conditions:
(a)      Such transferee’s written acceptance of, and written agreement to be bound by, all of the terms and provisions of this Agreement;
(b)      Reasonable evidence of the authority of such transferee to become a Member and to be bound by all of the terms and provisions of this Agreement; and
(c)      The approval of any third party lender if required by any loan documents entered into by the Company.
Anything herein to the contrary notwithstanding, any transferee who does not become a substituted Member shall be only entitled to receive the share of Profits, Losses and distributions of the Company to which the transferor was entitled with respect to the Membership Interest so transferred, and shall not have any right to vote on, consent to, approve or otherwise take part in any decision of the Members, or to any of the other rights associated with the ownership of such Membership Interest.
11.07.      Admission of Additional Members . No Person may be admitted as an additional Member without the unanimous approval of the Members.
ARTICLE XII     
DISSOLUTION AND LIQUIDATION
12.01.      No Dissolution, etc . The Company shall not be dissolved by the admission of any new or additional Member, and the Members hereby waive any right they may have to seek a partition of the Company assets or to dissolve the Company except in accordance with this Agreement.
12.02.      Events Causing Dissolution . Subject to Section 12.03 , the Company shall be dissolved and its affairs wound up upon the occurrence of any of the following events:
(i)      The sale or other disposition by the Company of all or substantially all of the Company’s assets and the collection of all amounts derived from any such sale or other disposition, including all amounts payable to the Company under any promissory notes or other evidences of indebtedness taken by the Company in connection with such sale or other disposition (unless the Managing Member shall elect, with the approval of the Non-Managing Members, to distribute such indebtedness to the Members in liquidation); or
(j)      The occurrence of any event not specified above that, under the Act or other applicable laws, would cause the dissolution of the Company or that would make it unlawful for the business of the Company to be continued.
12.03.      Rights to Continue Business of Company . Upon an event described in Sections 12.02(a) or 12.02(b) (but not an event described in Section 12.02(b) that makes it unlawful for the business of the Company to be continued), the Company thereafter shall be dissolved and liquidated unless, within 90 days after the event described in such Section, an election to reconstitute and continue the business of the Company shall be made in writing by all of the Members.
12.04.      Dissolution . Except as otherwise provided in Section 12.02 and Section 12.03 , upon the dissolution of the Company, the Managing Member shall promptly notify the Members of such dissolution.
12.05.      Liquidation .
(d)      Except as otherwise provided in Section 12.03 , upon the dissolution of the Company, the Managing Member (or other Person responsible for winding up the affairs of the Company) shall proceed without any unnecessary delay to sell or otherwise liquidate the Company’s assets and pay or make due provision for the payment of all debts, liabilities, and obligations of the Company.
(e)      After adequate provision has been made for the payment of all debts, liabilities, and obligations of the Company, the Managing Member (or other Person responsible for winding up the affairs of the Company) shall distribute the net liquidation proceeds to the Members in accordance with ARTICLE VI;
12.06.      Reasonable Time for Winding Up . A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 12.05 in order to minimize any losses otherwise attendant upon such a winding up.
12.07.      Termination of Company . Except as otherwise provided in this Agreement, the Company shall terminate when all of the Company’s assets shall have been converted into cash and the net proceeds therefrom, as well as any other liquid assets of the Company, after payment of or due provision for the payment of all debts, liabilities, and obligations of the Company, shall have been distributed to the Members as provided for in Section 12.05 , and all instruments recorded or filed in the manner required by the Act.
ARTICLE XIII     
MISCELLANEOUS PROVISIONS
13.01.      Additional Actions and Documents . Each Member shall take or cause to be taken such further actions and shall execute, acknowledge, deliver, and file such further documents and instruments, and use reasonable efforts to obtain such consents, as may be necessary or as may be reasonably requested in order to maintain the Company pursuant to the terms and conditions of this Agreement.
13.02.      Notices .
(e)      Except as set forth in Section 13.02(b) , wherever in this Agreement it shall be required or permitted that notice or demand be given or served or consent or approval given by either party to this Agreement to or on the other party, such notice or demand or consent or approval shall be deemed to have been duly given or served if in writing and either: (i) personally served with receipt of delivery; (ii) delivered by pre-paid nationally recognized overnight courier service (e.g. Federal Express) with evidence of receipt required for delivery; (iii) forwarded by Registered or Certified mail, return receipt requested, postage prepaid or (iv) by e-mail or facsimile transmission (at the email address or facsimile number set forth below, with the original to be sent the same day by one of the methods provided in clauses (i), (ii) or (iii) above); in all such cases addressed to the parties at the addresses set forth below in this Section 13.02. Each notice which shall be hand delivered, sent by e-mail or facsimile or mailed in the manner described shall be deemed sufficiently given, served, sent, received, or delivered for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, or the affidavit of messenger being deemed conclusive (but not exclusive) evidence of such delivery or at such time as delivery is refused by the addressee upon presentation) if received prior to 5:00 pm local time on a Business Day, or if received at any other time, then on the next Business Day. Subject to the above, all notices shall be addressed as follows, or to such other address as any Member may specify for itself by written notice given in accordance with this Section::
(v)      If to the Company, at the Company’s principal office, with copies to each Member;
(vi)      If to the Managing Member:

c/o Liberty Property Trust
Eight Penn Center - Suite 1100
1628 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]

with a copy to:
Liberty Property Trust
500 Chesterfield Parkway
Malvern, PA 19355
Attn: [***]
Fax No: [***]
E-Mail: [***]
and:
Cozen O’Connor
1900 Market Street
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]
(vii)      If to Comcast:

c/o Comcast Corporation
One Comcast Center
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]
with a copy to:
Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
AAttn: [***]
Fax No: [***]
E-Mail: [***]

and
Ballard Spahr LLP
1735 Market Street- 51 st Floor
Philadelphia, PA 19103
Attn: [***]
Fax No: [***]
E-Mail: [***]
(f)      Wherever it shall be required or permitted that notice or demand be given or served or consent or approval given by either party to this Agreement to or on the other party with respect to (1) a Call for Development Capital made in accordance with the Approved Project Budget, (2) a Call for Capital made in accordance with an Annual Plan, (3) or approval of the Annual Plan or changes thereto, such notice or demand or consent or approval shall be deemed to have been duly given or served if made pursuant to the notice provisions set forth in Section 13.02(a) above or via e-mail to the following addresses (or to such other e-mail address as any Member may specify for itself by written notice given in accordance with Section 13.02(a) ) and shall be deemed given on the date upon which the e-mail is sent, if received prior to 5:00 pm local time on a Business Day, or if received at any other time, then on the next Business Day:
(iii)      If to the Managing Member:

c/o Liberty Property Trust
Attn: [***]
E-Mail: [***]

with a copy to:
c/o Liberty Property Trust
Attn: [***]
E-Mail: [***]

(iv)      If to Comcast:

c/o Comcast Corporation
Attn: [***]
E-Mail: [***]

with a copy to:

c/o Comcast Corporation
Attn: [***]
E-Mail: [***]
13.03.      Survival and Reliance . All covenants, agreements, statements, representations, warranties, and indemnities made in this Agreement shall survive the execution and delivery of this Agreement and the termination of the Company, and may be relied upon by each of the Members.
13.04.      Waivers . Except as otherwise provided herein, neither the waiver by a Member of a breach of or a default under any of the provisions of this Agreement, nor the failure of a Member, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right, remedy, or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights, remedies, or privileges hereunder.
13.05.      Exercise of Rights . Except as expressly provided herein, no failure or delay on the part of a Member or the Company in exercising any right, power, or privilege hereunder and no course of dealing between the Members or between a Member and the Company shall operate as a waiver thereof and no single or partial exercise of any right, power, or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Except as otherwise provided herein, any Member shall have the right to seek specific performance of the duties and obligations set forth in this Agreement. The rights and remedies herein are cumulative and not exclusive of any other rights or remedies which a Member or the Company would otherwise have at law or in equity or otherwise.
13.06.      Binding Effect . Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon and shall inure to the benefit of the Members and their respective successors and assigns.
13.07.      Limitation on Benefits of this Agreement . No person or entity other than the Members is or shall be entitled to bring any action to enforce any provision of this Agreement against any Member or the Company. All covenants, undertakings, and agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable only by, the Members (or their respective successors and assigns as permitted hereunder).
13.08.      Amendment Procedure . Any amendment to this Agreement shall be in writing and require the unanimous approval of all of the Members.
13.09.      Entire Agreement . This Agreement, including the Exhibits and Schedules hereto (which are hereby incorporated by this reference), supersedes any prior discussions, proposals, negotiations and discussions between the parties, including, without limitation, the Letter Agreements and the JV Term Sheet (to the extent applicable to the Property), and this Agreement and the Development Agreement contain all the agreements, conditions, understandings, representations and warranties made between the parties hereto with respect to the subject matter hereof, and may not be modified orally or in any manner other than by an agreement in writing signed by both parties hereto or their respective successors in interest.
13.10.      Gender . As used in this Agreement, the word “Person” shall mean and include, where appropriate, an individual, corporation, partnership, limited liability company or other entity; the plural shall be substituted for the singular, and the singular for the plural, where appropriate; and the words of any gender shall mean to include any other gender
13.11.      Captions . Marginal captions, titles or exhibits and riders and the table of contents in this Agreement are for convenience and reference only, and are in no way to be construed as defining, limiting or modifying the scope or intent of the various provisions of this Agreement.
13.12.      Governing Law . This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (but not including the choice of law rules thereof).
13.13.      Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which when taken together shall be deemed to be one and the same instrument.
13.14.      Telefax Signatures . The parties acknowledge and agree that notwithstanding any law or presumption to the contrary a telefaxed or electronic signature of either party whether upon this Agreement or any related document shall be deemed valid and binding and admissible by either party against the other as if same were an original ink signature.
13.15.      Insurance . The Company shall maintain insurance on the Property of such types and in such amounts and with such insurers as the Managing Member shall reasonably determine, in compliance with the requirements of any Financing Documents in effect from time to time. All liability insurance policies shall name the Company and all the Members as named insureds. Upon the request of any Member, the Managing Member shall provide a copy of the certificate of insurance listing the coverages maintained by the Company.
13.16.      Attorneys’ Fees . Unless otherwise provided herein in any specific instance, including, without limitation below in this Section 13.16 , each party shall bear and pay all out-of-pocket costs, charges and expenses, including the fees and out of pocket expenses of counsel, agents and others retained by such party, incurred by such party in any litigation, negotiation or transaction in which such party becomes involved or concerned, without reimbursement from the other party. If either party incurs any reasonable expenses, including, but not limited to, reasonable attorneys’ fees, relating to enforcing the provisions of this Agreement or pursuing any default hereunder, provided that such party is the Prevailing Party in a legal action, arbitration or proceeding against the other party, then the losing party agrees to reimburse the Prevailing Party for all such expenses. Notwithstanding any provision in this Agreement to the contrary, the terms “attorney’s fees” and “Attorney’s Fees” wherever used in this Agreement shall mean (but shall mean only) the reasonable charges for services actually performed and rendered by independent, outside legal counsel.
13.17.      Confidentiality . Each party acknowledges that, during the course of the transactions outlined herein and the implementation of such transactions and during the existence of the Company, each of the parties may obtain from the other and from the Company certain information and documents concerning the other party and the Company and their respective financial resources, the other parties’ plans for development (including development of the Property) and its business needs or objectives, and other matters that are the proprietary and valuable information of the other party, the disclosure or unauthorized use of which may cause irreparable harm to the other party (the “Information”). Each party agrees to keep the Information confidential, not to disclose the Information to any other person except (i) as required (in the determination of the disclosing party based on advice of counsel) by law, regulation or rule of any applicable securities exchange or trading system, court or government agency, (ii) as reasonably required to pursue governmental approvals, permits, incentives and other cooperation in connection with the Project, (iii) to its professional advisors and those persons within its organization having a reasonable need for such information, and (iv) as contemplated by this Agreement or the other documents contemplated hereby. Each party agrees not to use the Information except in connection with the Project. Except as required by law or as contemplated by this Agreement and the other documents contemplated hereby, neither party will disclose to any person the fact that the Information has been made available. Each party shall ensure that all of its representatives to which information is made available under this Agreement are subject to confidentiality duties substantially similar to those set forth herein and each party shall be responsible for any breach of this Section 13.17 by any of its representatives
13.18.      Severability . If any provisions of this Agreement shall be held to be invalid, void or unenforceable, the remaining provisions hereof shall in no way be affected or impaired and such remaining provisions shall remain in full force and effect, unless by its nature such provision is of the essence of this Agreement and its invalidity, voidance or unenforceability shall so impair the rights or obligations of the parties as to defeat the mutuality of the covenants of this Agreement.
13.19.      Member Estoppel Certificates . Upon the written request of a Member, the other Member shall, within fifteen (15) calendar days of its receipt of such request, execute and deliver a written statement certifying: (A) that this Agreement is unmodified and in full force and effect (or, if modified, that this Agreement is in full force and effect as modified and stating any and all modifications), (B) to the actual knowledge of the certifying Member, that such Member is not in default hereunder, in each case except as specified in such statement, (C) that to the actual knowledge of the certifying Member, no event has occurred which with the passage of time or the giving of notice, or both, would ripen into a default hereunder, except as specified in such statement, and (D) as to the then current balances of the certifying Member’s accounts provided for herein. Such written statement may be relied upon by a Member’s prospective purchasers, investors or lenders.
13.20.      Calculation of Time . In computing any period of time prescribed or allowed by any provision of this Agreement, the day of the act, event or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is not a Business Day, in which event the period runs until the end of the next day which is a Business Day. Unless otherwise provided herein, all notice and other periods expire as of 5:00 p.m. (local time in Philadelphia, Pennsylvania) on the last day of the notice or other period.
13.21.      Time of the Essence . Time is of the essence in all provisions of this Agreement, including all notice provisions to be performed by or on behalf of any Member.
13.22.      Exhibits . Each and every document or other writing which is referred to herein as being attached hereto or is otherwise designated herein as an exhibit hereto is hereby made a part hereof.
13.23.      Payment of Costs . The Members shall each bear their respective costs and expenses (including attorney’s fees) incurred in connection with the processing and documentation of any other requests for the other party’s approval or consent or waivers or other responses in connection with any other matters for which a Member’s consent is required or sought under this Agreement, subject to and provision hereof expressly providing for reimbursement or indemnification of such costs by the other party in any specific instance.
13.24.      Non-Disparagement . Neither party shall, in any public statement made or promoted by it or its Affiliates, disparage the other party or its Affiliates with respect to the acquisition, lease, ownership, development, use or occupancy of the Project, or any prospective location which either Member may propose, from time to time, to own, lease or develop, or at which it may propose to operate its business activities; provided, however, that nothing in this Section 13.24 shall prevent Comcast from objecting or opposing a development by Liberty or its Affiliates that would adversely impact an existing facility owned or leased by Comcast or its Affiliates.
[***]
IN WITNESS WHEREOF , each of the undersigned has caused this Limited Liability Company Operating Agreement to be duly executed on its behalf, as of the day and year first above set forth.
COMCAST
COMCAST CORPORATION , a Pennsylvania corporation
By: /s/ Arthur R. Block                         
Name: Arthur R. Block
Title: Senior Vice President
LIBERTY:
LIBERTY PROPERTY DEVELOPMENT COMPANY IV-S, LLC , a Delaware limited liability company
By:     /s/ George J. Alburger, Jr.                
    Name: George J. Alburger, Jr.
    Title:     Executive Vice President and Chief Financial Officer
By:     /s/ John S. Gattuso                    
    Name: John S. Gattuso
    Title:     Senior Vice President and Regional Director
JOINDER OF LIBERTY PROPERTY LIMITED PARTNERSHIP

Liberty Property Limited Partnership, a Pennsylvania limited partnership, intending to be legally bound, hereby joins in this Limited Liability Company Operating Agreement for the purpose of guaranteeing the obligations of the Managing Member as set forth in Section 4.09 and Section 7.02(e) .

LIBERTY PROPERTY LIMITED PARTNERSHIP

By:        Liberty Property Trust, its general partner


By: /s/ George J. Alburger, Jr.            
Name:    George J. Alburger, Jr.
Title:
Chief Financial Officer and Executive Vice President


By: /s/ John S. Gattuso                
Name:    John S. Gattuso
Title:    Senior Vice President and Regional Director













[signature page to Joinder to Limited Liability Company Operating Agreement of 18A Hotel LLC]

SCHEDULE 3.04
[***]

1
18988993\11 11638.0001.000/348607.000


Exhibit 10.3

[Where indicated by “[***],” the confidential material contained herein has been omitted and has been separately filed with the Commission.]
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this “ Agreement ”) dated as of the 30 th day of June, 2014 by and among LIBERTY PROPERTY 18 TH & ARCH LP , a Delaware limited partnership (“ Office Owner ”), and LIBERTY PROPERTY 18 TH & ARCH HOTEL, LLC , a Delaware limited liability company (“ Hotel Owner ”), and LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership (“ Developer ”).
RECITALS
WHEREAS , on July 12, 2011, Comcast Corporation, a Pennsylvania corporation (“ Comcast ”), formed 18A LLC, a Delaware limited liability company (“ 18A LLC ”), pursuant to the terms of the Delaware Limited Liability Company Act, as amended (the “ Act ” ) . 18A LLC indirectly owns 100% of the ownership interests in Office Owner.
WHEREAS , prior to the date hereof, Office Owner acquired those certain parcels of land located within the City and County of Philadelphia, Pennsylvania, commonly known as 1800 Arch Street, as more particularly described in Exhibit A attached hereto (the “ Land ”).
WHEREAS , Office Owner now desires to initiate the development of the Overall Project (defined below) on the Land.
WHEREAS , to facilitate the development and operation of the Overall Project, Office Owner has submitted (or will shortly submit) the Land to the provisions of the Pennsylvania Uniform Condominium Act, 68 Pa. CS §3101 et. seq ., by executing and recording a Declaration of Condominium with the Department of Records for Philadelphia, PA, and creating a condominium known as “1800 Arch Street Condominium” (the “ Condominium ”). The Condominium contains the following units, all as more particularly described and defined in the aforementioned Declaration of Condominium: the Office Unit, which consists of the proposed office space, retail space and the underground parking area, together with an initial percentage interest of approximately 83.95% in the general common elements of the Condominium (the “ Office Unit ”); the Hotel Unit, which consists of the Hotel (defined below) together with an initial percentage interest of approximately 16.04% in the general common elements of the Condominium (the “ Hotel Unit ”); and the Public Unit, which consists of the underground pedestrian concourse and certain other indoor and outdoor public spaces, including the so-called “Winter Garden,” together with an initial percentage interest of 0.01% in the general common elements of the Condominium (the “ Public Unit ”, and together with the Office Unit and the Hotel Unit, the “ Property ”).
WHEREAS , prior to the date hereof, Comcast was the sole member of 18A LLC. On or about the date hereof Developer has been admitted as the managing member of 18A LLC, and thereby manages the day-to-day operations of Office Owner.

LEGAL\19062995\17


WHEREAS , prior to the date hereof, Comcast and an Affiliate of Developer jointly formed Hotel Owner pursuant to the Act. An Affiliate of Developer serves as the managing member of the sole member of Hotel Owner, and thereby manages the day-to-day operations of Hotel Owner.
WHEREAS , prior to the date hereof, Office Owner has conveyed the Hotel Unit to Hotel Owner and the Public Unit to PIDC-DMC, a Pennsylvania non-profit corporation (“ PIDC-DMC ”), which is a subsidiary of the Philadelphia Industrial Development Corporation, a body corporate and politic organized under the laws of the Commonwealth of Pennsylvania. Office Owner has retained ownership of the Office Unit.
WHEREAS , Office Owner, as landlord, and Comcast, as tenant, have entered into that certain lease (as the same may hereafter be amended, restated or modified from time to time, the “ Major Tenant Lease ”) for an initial premises of approximately 982,275 square feet of office space within the Office Unit.
WHEREAS , the Owners (defined below) wish to engage Developer to develop the Project (defined below) and Developer is willing to accept such engagement, all upon the terms and conditions hereinafter set forth.
NOW, THEREFORE , in consideration of the covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Owners and Developer hereby agree as follows (all capitalized terms contained in this Agreement and not otherwise defined in these Recitals are defined in Article I ):
Article I
Certain Defined Terms
As used herein, the following capitalized terms shall have the following meanings:
1.1      “ Affiliate ” means, when used with reference to a specific Person, any Person directly or indirectly controlling, controlled by, or under common control with the Person in question. As used in this definition, the terms “controlling”, “controlled” and “control” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. For the avoidance of doubt, except to the extent the context would otherwise indicate, no entity in which Comcast and Developer both have a direct or indirect ownership interest shall be deemed an Affiliate of Comcast or Liberty.
1.2      “ Architect ” means the Project Architect, any architect selected by the Major Tenant for the Tenant Improvements, as defined in the Work Letter, or any other design professional selected by Developer, subject to the provisions of Section 3.1(i) .
1.3      “ Architect Agreement ” means that certain agreement between Developer (as assignee of Office Owner) and the Project Architect dated January 14, 2014 respecting the Project.

3
LEGAL\19062995\17


1.4      “ Base Project Budget ” means the approved budget for the development of the Base Project Improvements and the Hotel Furnishings and for certain other activities and services related to the Project, attached hereto as Exhibit B .
1.5      “ Base Project Improvements ” means all improvements depicted on the Base Project Plans and Specifications, including, without limitation, the core and shell of the Office Unit, the Public Improvements and the Hotel Improvements.
1.6      “ Base Project Guaranteed Maximum Development Price ” has the meaning set forth in the definition of Guaranteed Maximum Development Price in Section 1.33 .
1.7      “ Base Project Plans and Specifications ” means the final plans and specifications for the Base Project Improvements developed in accordance with the Work Letter and based on the Preliminary Design Development Documents attached hereto as Schedule 1 . For avoidance of doubt, the Base Project Plans and Specifications are the same as the “Project Plans and Specifications” developed in accordance with the Work Letter.
1.8      “ Base Project Work ” means all construction and other activities required under the Construction Contracts or otherwise in order to Complete the development of the Base Project Improvements, including all labor, materials, equipment and other services to be furnished thereunder to Complete the Base Project Improvements in accordance with the Base Project Plans and Specifications.
1.9      “ Bonding Costs ” has the meaning set forth in Section 3.1(f).
1.10      “ Building ” means a trophy-class mixed-use skyscraper to be developed on the Property as part of the Project.
1.11      “ Comcast ” has the meaning set forth in the recitals to this Agreement.
1.12      “ Complete ” shall mean the Project, or a designated portion thereof that Owners have agreed to accept separately, has been completed (including all punch list items), free of Liens, in accordance with (in all material respects) the Plans and Specifications, this Agreement, the Related Documents and any agreements with the City of Philadelphia, Philadelphia Authority for Industrial Development and/or its Affiliates relating to the Public Improvements, and has been accepted in accordance with the Related Documents by the Major Tenant and the Owners, and Developer has obtained all necessary final and unappealable governmental approvals and certificates permitting occupancy for the Project (other than unleased portions of the Office Unit, if any). When “Complete” is used as a verb, it shall mean the taking of all actions necessary to make the Project, or such designated portion, Complete. “ Completion ” is the time when the Project, or such designated portion, is Complete.
1.13      “ Condominium ” has the meaning set forth in the recitals to this Agreement.

3
LEGAL\19062995\17


1.14      “ Construction Contracts ” mean all contracts and purchase orders with the General Contractor, including the GMP Contracts, and specialty trade contractors and suppliers as necessary to cause the construction of the Improvements.
1.15      “ Construction Schedule ” means the schedule for completion of the various stages of the Work under the various GMP Contracts for the Project to be prepared by or on behalf of Developer and approved and reasonably updated in accordance with the Work Letter (with respect to the Base Project Improvements and the Tenant Improvements) and the Hotel JV Agreement and the Hotel Agreements (with respect to the Hotel Furnishings) and shall include therein each major event expected during the construction of the applicable Improvements. Nothing in the Construction Schedule shall be deemed to modify any time deadlines set forth in this Agreement.
1.16      “ Cumulative Tenant Delay ” has the meaning set forth in the Work Letter.
1.17      “ Developer ” has the meaning set forth in the recitals to this Agreement.
1.18      “ Developer Default ” has the meaning set forth in Section 10.1(b).
1.19      “ Developer’s Dispute Representative ” has the meaning set forth in Section 11.1 .
1.20      “ Development Costs ” has the meaning set forth in Section 3.3(a) .
1.21      “ Development Fee ” has the meaning set forth in Section 4.1 .
1.22      “ Economic Opportunity Plans ” means (i) the Economic Opportunity Plan between Liberty Property Trust (on behalf of Owners) and the City of Philadelphia dated February 25, 2014, and (ii) the Economic Opportunity Plan between Major Tenant and the City of Philadelphia dated February 25, 2014.
1.23      “ Environmental Laws ” means all Federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of Hazardous Materials, substances, or wastes, presently in effect or hereafter adopted, all amendments thereto, and all rules and regulations issued pursuant to any of the foregoing.
1.24      “ FM Notice ” has the meaning set forth in Section 3.2(e) .
1.25      “ Force Majeure ” means delays, to the extent to which they could not have been prevented or overcome wholly or in part by the exercise of due diligence by Developer, to items on the critical path of the Construction Schedule, caused by: (i) acts of God; (ii) strikes, lockouts or other labor or industrial disturbances or disputes (whether lawful or not) which involve multiple employers; (iii) action or inaction by a governmental authority not resulting from wrongful or negligent acts or omissions of Developer or any other Responsible Party; (iv) war, civil disturbance, vandalism, disease, acts of terrorism or civil riots; (v) floods; (vi) embargo of machinery, materials, supplies or equipment; (vii) natural disasters; (viii) fire, explosion or other casualty; (ix) inability to secure supplies, utilities, materials or labor necessary for Developer to comply with its obligations under this Agreement, without reasonably available and reasonably acceptable substitute; (x) orders of any court or public authority having jurisdiction, to the extent not caused by the wrongful or

3
LEGAL\19062995\17


negligent acts or omissions of Developer or any other Responsible Party; (xi) adverse weather conditions (including high wind), which cause, in the aggregate, more than fifty (50) days of delay, and (xii) any other causes not reasonably within the control of Developer or any other Responsible Party and which by the exercise of due diligence neither Developer nor any other Responsible Party could have prevented or overcome. Developer acknowledges that it has a high level of expertise in the development of complex, major projects in urban areas, and that Owners are relying on Developer to use its expertise to prevent and mitigate the occurrence of delay resulting from Force Majeure, to the extent reasonably possible. For the purposes of this Section 1.25 , a “ Responsible Party ” is one or more of Developer, its Affiliates, and their respective contractors, subcontractors, officers, directors, members, partners (other than Comcast Corporation and its Affiliates), agents and employees. If adverse weather conditions are the basis for a claim of Force Majeure by Developer, such claim shall be documented by data substantiating that weather conditions were hazardous for the work being performed at that time and that such weather conditions had an adverse effect on the scheduled activity.
1.26      “ Force Majeure Delay ” means (1) any actual delay to the extent due to Force Majeure, and (1) any delay or default by an Owner (to the extent caused by Comcast in its capacity as a partner or member in such Owner) in performing any of its obligations under this Agreement, to the extent such delay or default delays an item on the critical path of the Construction Schedule.
1.27      “ Funding Default ” means (i) failure of Comcast, subject to any applicable notice and cure periods, to fund any amounts required under the Office JV Agreement or the Hotel JV Agreement, (ii) the failure of Major Tenant to fund any amounts when required under the Work Letter, or (iii) the failure of any lender to Office Owner or Hotel Owner to fund its loan obligation due to the action or inaction of Comcast.
1.28      “ General Contractor ” means L. F. Driscoll Co., LLC, or any replacement general contractor or construction manager approved by the Major Tenant in accordance with the Work Letter, or any other general contractor or construction manager selected by Developer for the Work, subject to the provisions of Section 3.1(i).
1.29      “ GMP Contract ” means each of the guaranteed maximum price Construction Contracts to be entered into with the General Contractor for portions of the Work.
1.30      “ Governmental Incentives ” means funds to be used for the development and construction of the Public Improvements and obtained pursuant to governmental incentive programs (except for the incentives and credits described in the last sentence of Section 4.2 ), including (i) [***], as any of the foregoing may be modified from time to time.
1.31      “ Guaranteed Cost Exceptions ” means collectively:
(a)      All items in the Base Project Budget identified as “Guaranteed Cost Exceptions”;
(b)      Costs of unforeseeable legal fees in obtaining Governmental Incentives;

3
LEGAL\19062995\17


(c)      Costs for public art, to the extent costs exceed the budgeted amounts therefor as a result of decisions made by Comcast;
(d)      Extraordinary out-of-pocket costs of travel, lodging and entertainment incurred in connection with the design or construction of the Project,
(e)      Costs of press conferences and parties;
(f)      any gross receipts or similar taxes payable by Owners in connection with the payment of the subcontractors in connection with the development of the Project, provided that payments to such subcontractors are made in accordance with the terms of the Work Letter and this Agreement.
Although Developer is not responsible for payment of the Guaranteed Cost Exceptions, Developer may not make expenditures for Guaranteed Cost Exceptions (i) greater than those set forth in the Base Project Budget, or (ii) for any of the items described in Sections 1.31 (b), (c), (d) or (e), without in each case Comcast’s prior written consent. For the avoidance of doubt, but subject to the preceding sentence, the dollar amounts set forth next to each Guaranteed Cost Exception in the Base Project Budget are for reference only and do not constitute a limitation on the amount of the Guaranteed Cost Exceptions.
1.32      “ Guaranty Cost Items ” means all costs and expenses incurred in the performance of the Work and of all other obligations of Developer under this Agreement, except the Guaranteed Cost Exceptions. For the avoidance of doubt, the Guaranty Cost Items do not include construction period interest or return on investment.
1.33      “ Guaranteed Maximum Development Price ” means (a) with respect to the Guaranty Cost Items that are incurred in the performance of the Base Project Work, procurement and installation of the Hotel Furnishings, and performance of all other obligations of Developer under this Agreement, except the Tenant Improvements Work and work and services that are covered by the Guaranteed Cost Exceptions, the sum of $[***], as that sum may be increased or decreased as set forth in this Agreement (the “ Base Project Guaranteed Maximum Development Price ” ), and (b) with respect to the Guaranty Cost Items that are incurred in the performance of the Tenant Improvements Work, an amount equal to (i) the Tenant Work GMP multiplied by [***]% (representing the Landlord’s Fee and a [***] percent ([***]%) contingency), minus (ii) $[***], as that sum may be increased or decreased in accordance with this Agreement (the “ Tenant Improvements Guaranteed Maximum Development Price ” ). Developer acknowledges that no Guaranteed Cost Exceptions will be incurred in connection with the Tenant Improvements Work. The components of the Guaranteed Maximum Development Price are shown in the Project Budget, but do not include the Guaranteed Cost Exceptions.
1.34      “ Hard Costs ” means the total of all costs, expenditures and liabilities paid or incurred by the Owners to the General Contractor, subcontractors or to any other person providing labor, materials, equipment or supplies for the erection and construction of the Project, and all other costs, expenditures and liabilities of the Owners incurred with respect to the erection and construction of

3
LEGAL\19062995\17


the Project, except fees to contractors and costs commonly referred to in the construction industry as “general conditions costs.”
1.35      “ Hazardous Materials ” means any flammable items, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation pursuant to Environmental Laws.
1.36      “ Hotel ” means the hotel portions of the Overall Project, including guest rooms, hotel public space, hotel back-of-house, stairs, elevators/escalators, restaurants and other amenities intended to serve the guests of the Hotel.
1.37      “ Hotel Agreements ” means, collectively (i) the Hotel Management Agreement, (ii) the Hotel License Agreement, and (iii) the Pre-Opening Services Agreement, between Hotel Owner and Hotel Operator and dated on or about the date hereof, as the same may hereafter be amended, restated or modified from time to time.
1.38      “ Hotel Delay Damages ” has the meaning set forth in Section 3.1(e) .
1.39      “ Hotel Furnishings ” means all furniture, fixtures, and equipment respecting the Hotel (including the restaurants in the Hotel), as well as all operating supplies and consumables required for the operation thereof, as the foregoing are designed, installed and procured pursuant to the Hotel Agreements and the Work Letter.
1.40      “ Hotel Improvements ” means the Base Project Improvements relating to the Hotel (including the restaurants located in the Hotel).
1.41      “ Hotel JV Agreement ” means the Limited Liability Company Operating Agreement of 18A Hotel, LLC, as the same may hereafter be amended, restated or modified from time to time.
1.42      “ Hotel Operator ” means Four Seasons Hotels and Resorts, and any replacement Hotel Operator.
1.43      “ Hotel Owner ” has the meaning set forth in the recitals to this Agreement.
1.44      “ Hotel Plans and Specifications ” means collectively, (i) with respect to the Hotel Improvements, the portion of the Base Project Plans and Specifications relating thereto, as the same may be prepared and modified in accordance with the Work Letter, and (ii) with respect to the Hotel Furnishings, the designs and selections thereof, as the same may be prepared and modified in accordance with the Hotel JV Agreement, the Hotel Agreements and the Work Letter.
1.45      “ Improvements ” means, collectively, the Base Project Improvements, the Tenant Improvements and the Hotel Furnishings.
1.46      “ Independent Neutral ” shall have the meaning set forth in Section 11.1 .

3
LEGAL\19062995\17


1.47      “ Joint Venture Agreement ” means, individually or collectively, the Office JV Agreement and the Hotel JV Agreement, as the context may require.
1.48      “ Landlord’s Fee ” has the meaning set forth in the Work Letter.
1.49      “ Law ” or “ Laws ” means all laws, ordinances, statues, rules, regulations and codes pertaining to the Improvements, including any determinations of all Federal, state, county or municipal authorities having jurisdiction over the Overall Project.
1.50      “ Lien ” and “ Liens ” shall mean individually and collectively, as the context may require, any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, the filing of any financing statement under the UCC or comparable law of any jurisdiction in respect of any of the foregoing and a mechanics’ or materialmen’s lien).
1.51      “ Major Tenant ” means Comcast, in its capacity as the tenant under the Major Tenant Lease and any successor to Comcast permitted under the Major Tenant Lease.
1.52      “ Major Tenant Lease ” has the meaning set forth in the recitals to this Agreement, and includes all schedules and exhibits thereto.
1.53      “ Management Agreement ” means that certain Management and Leasing Agreement between Office Owner and Developer dated on or about the date hereof.
1.54      “ Office JV Agreement ” means the Amended and Restated Limited Liability Company Operating Agreement of 18A LLC, as the same may hereafter be amended, restated or modified from time to time
1.55      “ Office Owner ” has the meaning set forth in the recitals to this Agreement.
1.56      “ Overall Project ” means a trophy-class mixed-use skyscraper consisting of an approximately 59-story vertically integrated office and hotel building containing: approximately 1,333,580 rentable square feet of office space; a 265,000 square foot, 222-room, 5-star luxury hotel with spa, restaurant(s), banquet and meeting space; approximately 4,052 square feet of retail space; indoor and outdoor public space with an area of approximately 20,000 square feet at various levels of the building; an underground pedestrian concourse connecting from the east curb-line of the Land to the existing concourse; and an underground parking area with accessory parking, all as depicted in the Plans and Specifications.
1.57      “ Owner ” means Office Owner and/or Hotel Owner, individually. As used herein, the term the “ Owners ” means Office Owner and Hotel Owner collectively.
1.58      “ Owner Default ” has the meaning specified in Section 10.2 .
1.59      “ Owner’s Dispute Representative ” has the meaning set forth in Section 11.1 .

3
LEGAL\19062995\17


1.60      “ Payment Account(s) ” has the meaning set forth in Section 3.4(a) .
1.61      “ Permits ” has the meaning set forth in Section 3.1(b)(v) .
1.62      “ Person ” means a natural person or a corporation, partnership, limited liability company or other entity.
1.63      “ Phase ” has the meaning set forth in the Work Letter.
1.64      “ PIDC-DMC ” has the meaning set forth in the recitals to this Agreement.
1.65      “ Plans and Specifications ” means, collectively, the Base Project Plans and Specifications, the Hotel Plans and Specifications for the Hotel Furnishings and the Tenant Improvements Plans and Specifications.
1.66      “ Preliminary Design Development Documents ” means, collectively (i) the Core and Shell Preliminary Design Development Plans dated 5/15/14 and attached hereto as Schedule 1-A , (ii) the Core and Shell Project Narrative dated 6/24/14 and attached hereto as Schedule 1-B , (iii) the Preliminary Hotel Interiors Design Development Plans dated 5/15/14 and attached hereto as Schedule 1-C , and (iv) the Hotel Interiors Project Narrative dated 6/17/14 and attached hereto as Schedule 1-D . For the avoidance of doubt, the Preliminary Design Development Documents are the same as the “Preliminary Design Development Documents” referenced in the Work Letter.
1.67      “ Principal Design Architect ” means architect(s) selected by Developer and approved by Comcast pursuant to Section 3.1(i) and/or Major Tenant pursuant to the Work Letter that is responsible for the overall design of the Project, and any replacement thereof selected in accordance with this Agreement. The initial Principal Design Architect is F&P Architects, New York, Inc.
1.68      “ Principal Landscape Architect ” means the architect(s) selected by Developer and approved by Comcast pursuant to Section 3.1(i) that is responsible for the design of the exterior landscaping of the Project, and any replacement thereof selected in accordance with this Agreement. The initial Principal Landscape Architect is the Olin Partnership.
1.69      “ Principal Lighting Designer ” means the architect(s) or designer(s) selected by Developer and approved by Comcast pursuant to Section 3.1(i) that is responsible for the exterior lighting design for the Project, and any replacement thereof selected in accordance with this Agreement. The initial Principal Lighting Designer is Tillotson Design Associates, Inc.
1.70      “ Project ” means the Overall Project to be developed by Developer pursuant to the terms hereof, including the Base Project Improvements, the Hotel Furnishings and the Tenant Improvements, but excluding any tenant fit-out for tenants of the Office Unit other than the Tenant Improvements to be constructed on behalf of the Major Tenant in accordance with the Major Tenant Lease.
1.71      “ Project Architect ” means Kendall/Heaton Associates, Inc. (together with F&P Architects, New York, Inc., which is contracted as a consultant to Kendall/Heaton).

3
LEGAL\19062995\17


1.72      “ Public Improvements ” means those portions of the Overall Project principally located within the Public Unit and consisting generally of a winter garden and infrastructure, utility, roadway, concourse and similar improvements, as depicted in the Public Improvements Plans and Specifications, and which are funded, in part, with Governmental Incentives.
1.73      “ Public Improvements Plans and Specifications ” means the portion of the Base Project Plans and Specifications relating to the Public Improvements, as the same may be modified in accordance with the Work Letter and the applicable agreements governing the granting, distribution and use of the Governmental Incentives.
1.74      “ Public Unit ” has the meaning set forth in the recitals to this Agreement.
1.75      “ Related Documents ” shall mean, collectively, the Work Letter, the Hotel Agreements, the Office JV Agreement and the Hotel JV Agreement.
1.76      “ Responsibilities ” means the obligations of Developer described in Article III .
1.77      “ Soft Costs ” means all costs to design and construct the Overall Project, other than Hard Costs.
1.78      “ Standard of Care ” has the meaning set forth in Section 3.1 .
1.79      “ Substantial Completion ” shall, with respect to the applicable portion of the Work, have the meaning given to such term in the Work Letter.
1.80      “ Tenant Delay ” has the meaning set forth in the Work Letter.
1.81      “ Tenant Improvements ” means the tenant improvements contemplated in the Major Tenant Lease and as described in the Tenant Improvements Plans and Specifications. For the avoidance of doubt, the Tenant Improvements contemplated under this Agreement are the same improvements to be designed and constructed as the “ Tenant Work ” under the Work Letter.
1.82      “ Tenant Improvements Guaranteed Maximum Development Price ” has the meaning set forth in the definition of Guaranteed Maximum Development Price in Section 1.33 .
1.83      “ Tenant Improvements Plans and Specifications ” means the final plans and specifications for the Tenant Improvements, as the same may be established and modified in accordance with the Work Letter. For avoidance of doubt, the Tenant Improvements Plans and Specifications are the same as the “Tenant Construction Documents Issued for Construction,” developed in accordance with the Work Letter.
1.84      “ Tenant Improvements Work ” means all construction and other activities required under the Construction Contracts or otherwise in order to Complete the development of the Tenant Improvements, including all labor, materials, equipment and other services to be furnished thereunder to Complete the Tenant Improvements in accordance with the Tenant Improvements Plans and Specifications.

3
LEGAL\19062995\17


1.85      “ Tenant Work GMP ” has the meaning set forth in the Work Letter, and includes any increase or decrease thereto made in accordance with the terms of the Work Letter.
1.86      “ Work ” means, collectively, the Base Project Work, the design, procurement and installation of the Hotel Furnishings, and the Tenant Improvements Work. For the avoidance of doubt, the “Work” does not include any third-party tenant fit-out.
1.87      “ Work Letter ” means the Work Letter that is attached to, and made part of, the Major Tenant Lease, as the same may hereafter be amended, restated or modified from time to time.
ARTICLE II     
ENGAGEMENT AND TERM
Owners hereby engage Developer to design, develop, cause the construction of and Complete the Project and perform all of its other obligations under this Agreement, upon the terms and conditions herein stated. Developer accepts such engagement and shall perform the duties and obligations of the Developer set forth herein in accordance with the terms and provisions of this Agreement. The term of this Agreement shall commence on the date hereof and shall end on the date upon which the construction of the Project is Complete (subject to Section 3.8 hereof) and all other obligations of the parties set forth herein have been fulfilled.
ARTICLE III     
DEVELOPER’S RESPONSIBILITIES
3.1      Responsibilities . In consideration of the fees and other compensation to be paid to Developer hereunder, and subject to all of the other terms and conditions set forth herein, Developer agrees to design, develop, cause the construction of and Complete the Project and to provide or cause to be provided (i) all design, construction, construction procurement, development, environmental, consulting and other soft-costs and services necessary to Complete the Project, including, with respect to the procurement and installation of all furniture, fixtures and equipment for the Hotel Furnishings as well as the procurement of all operating supplies and consumables necessary for the proper operation of the Hotel, and (ii) all other activities or services reasonably inferable from the line item descriptions in the Base Project Budget or otherwise described in this Agreement. Developer shall provide all necessary management and oversight of professionals (including Architects, engineers and other design professionals, attorneys, accountants, and other consultants) involved in the development of the Project and cause all other Soft Costs to be incurred and Completed in accordance with this Agreement and the Related Documents. Developer shall have the authority, duty and responsibility to undertake the matters described below, subject in all events to the terms of Section 3.1(i) and the Related Documents, including all applicable consent and approval rights of Comcast, Major Tenant and Hotel Operator set forth therein. All activities of Developer pursuant to this Agreement shall be undertaken using the standard of care that an experienced developer in the Philadelphia area, with experience on projects similar to the Project, would be expected to exercise, but in no case less than a high degree of care and diligence (the “ Standard of Care ” ). Notwithstanding the foregoing, exercise by Developer of the Standard of Care shall not be deemed to relieve Developer of any of its obligations under this Agreement,

3
LEGAL\19062995\17


including its duties to correct defective Work, or qualify any express representations and warranties set forth in this Agreement.
(a)      Design Related Responsibilities . Developer shall cause the Project to be designed in accordance with (i) the terms of the Work Letter and the Office JV Agreement (with respect to the Base Project Improvements and the Tenant Improvements), and (ii) the Hotel Agreements, the Hotel JV Agreement and the Work Letter (with respect to the Hotel Furnishings). Without limiting the generality of the foregoing, Developer shall undertake the following:
(i)      Developer shall select, engage, terminate and replace all architects, engineers and other design professionals for the Project (except the architect designing the Tenant Improvements) as set forth in the Work Letter;
(ii)      Developer shall oversee the preparation and finalization of all architectural drawings, specifications, and other design documentation for the construction of the Improvements, which shall refine and implement the design concepts contemplated in the various design documents developed under the Related Documents, and shall review and approve or disapprove (as applicable) (x) any proposed changes to the scope of the Improvements, and (y) any proposed changes to any of the Plans and Specifications, provided, however, that (A) any modification of the Base Project Plans and Specifications and/or the Tenant Improvements Plans and Specifications shall be subject to the approval of the Major Tenant in accordance with and to the extent set forth in the Work Letter, and Comcast in accordance with and to the extent set forth in, the Office JV Agreement, (B) the design and selection of the Hotel Furnishings shall be subject to the approval of the Hotel Manager in accordance with and to the extent set forth in the Hotel Agreements, Comcast in accordance with and to the extent set forth in, the Hotel JV Agreement, and Major Tenant in accordance with and to the extent set forth in the Work Letter, and (C) any modification of the Public Improvements Plans and Specifications shall also be subject to the approval of applicable governmental and/or quasi-governmental agencies to the extent required under the instruments, codes or ordinances governing the Governmental Incentives;
(iii)      Coordinate and monitor efforts by the Architect to comply with all applicable Laws; and
(iv)      Otherwise cause the Plans and Specifications to be developed, finalized and approved in accordance with the terms of the applicable Related Documents. Because Developer will have the benefit of the OPPI insurance described in Section 6.1(b) , it shall be responsible for errors and omissions in the Plans and Specifications discovered prior to the expiration of the warranty period described in Section 3.8 .
(b)      Construction Related Responsibilities . Developer shall cause the Project to be constructed in a good and workmanlike manner in accordance with the Plans and Specifications in all material respects, this Agreement and the Related Documents. Without limiting the generality of the foregoing, Developer shall undertake the following:

3
LEGAL\19062995\17


(i)      Select, engage, terminate and replace all contractors, subcontractors and materialmen providing goods or services for the Project;
(ii)      Finalize and execute in its own name the GMP Contracts and coordinate, administer and enforce all rights and perform all obligations of the “owner” under the Construction Contracts;
(iii)      Review and approve or disapprove (as applicable) any proposed amendment or modifications to the Construction Contracts, including, without limitation, any and all change orders;
(iv)      Provide the General Contractor with all documentation, including but not limited to the Plans and Specifications, necessary to obtain competitive bids for all the Work, and oversee such bid process;
(v)      Obtain, or cause to be obtained, all final and unappealable governmental permits and approvals required for the construction and Completion of the Work, including, without limitation, all building permits, partial building permits, and temporary or final certificates of occupancy (collectively, the “ Permits ”). All such Permits relating to construction of the Improvements shall be obtained in the appropriate Owner’s name;
(vi)      Coordinate and monitor (1) all applications for the Permits, and (2) the compliance with the terms and conditions of (x) such Permits, (y) any insurance policy required under this Agreement and affecting or covering the Improvements, and (z) any surety bond or approved alternative to a surety bond obtained by General Contractor and/or any subcontractors in connection with the Work;
(vii)      Coordinate, administer and implement (x) the application and approval process in connection with the issuance of the Permits, and (y) the making of any periodic inspections required by governmental officials;
(viii)      Cause the General Contractor or a scheduling consultant to prepare the Construction Schedule;
(ix)      Review and approve or disapprove (as applicable) all applications for payment and supporting documentation prepared by General Contractor and others performing work or furnishing materials for the Improvements, obtain certificates for payment from the Architect, obtain and review partial and final lien waivers, and direct payments to be made from the applicable Payment Account to the General Contractor, subcontractors and others as provided in Section 3.4 .
(x)      Cause Completion of the Project to occur, including the preparation of all required punch lists, and coordinate the activities of contractors to facilitate Completion of the Project (including procurement of equipment manuals, warranties and guaranties for

3
LEGAL\19062995\17


the equipment installed in the Building) and coordinate the waiver or release of all lien rights;
(xi)      Oversee the Architect in administering the Construction Contracts and monitoring performance of the Work for compliance with the Plans and Specifications;
(xii)      Hold monthly job meetings with the General Contractor, Architect, and other contractors and subcontractors on an as-needed basis, or as otherwise determined by Developer during the construction phase of the Improvements, and permit Comcast to have representatives present at such meetings;
(xiii)      Attend any and all public meetings which may be held concerning the Project and negotiate all contracts for the furnishing of utilities to the Project in capacities adequate for the intended use of the Project, and permit Comcast to have representatives present at such meetings;
(xiv)      Enforce the obligation of the General Contractor to comply with the requirements of the Economic Opportunity Plans; and
(xv)      Provide Comcast with copies of any amendments or modifications of the existing Construction Contracts and Architect Agreement and copies of any Construction Contract and design contract, and any amendments thereto, entered into by Developer in connection with the Project after the date hereof.
(c)      Miscellaneous Responsibilities . Developer shall:
(i)      Administer, implement, adjust (subject to Section 6.2 ) and enforce all insurance policies and insurance requirements contemplated under this Agreement, including, without limitation, the insurance requirements set forth in Section 6.1 hereof;
(ii)      Retain or hire all necessary third parties (including contractors, engineers, surveyors, architects, accountants, attorneys, consultants and other qualified personnel), in order to accomplish the duties of Developer as set forth herein;
(iii)      Negotiate with any third parties including any adjacent land owners and community associations, concerning all matters relating to the Project;
(iv)      In the event of an emergency at the Improvements, take any action in good faith and in the exercise of the Standard of Care believed by Developer to be required under the circumstances, and notify Comcast promptly of the emergency and any actions taken by Developer with respect thereto;
(v)      Identify any necessary or desirable easements for the Project and negotiate such easements with the owners of the servient estate; administer all covenants, reciprocal easement agreements and the like affecting the Project, assist Owner in understanding and observing, and performing its covenants and obligations under all such covenants and agreements;

3
LEGAL\19062995\17


(vi)      As provided in Section 6.3 , initiate, prosecute, litigate, arbitrate, mediate, defend and settle any and all manner of claims, actions, causes of action, cross-actions, suits, counter-claims, demands, litigation, arbitration, mediation, administrative (including OSHA) proceedings, and all other controversies arising from or relating to the design, development or construction of the Project;
(vii)      Perform all other obligations provided elsewhere in this Agreement to be performed by Developer or reasonably believed by Developer to be desirable, necessary or appropriate to carry out its duties hereunder;
(viii)      Comply with the Condominium Documents and any other matters of record affecting the Project;
(ix)      Procure on behalf of the Owners title insurance coverage for their fee and leasehold interests in the Project, in such amounts and with such exceptions, coverages and endorsements, as are consistent with the Standard of Care;
(x)      Provide at all times such qualified and experienced personnel as may be necessary to accomplish Developer’s responsibilities hereunder. Without limiting the foregoing, [***] shall be actively involved in oversight of the Project, provided he remains employed by Developer or an Affiliate of Developer;
(xi)      Ensure compliance with the requirements of all grants relating to the Public Improvements (other than requirements that are specific to the Major Tenant);
(xii)      At or prior to Substantial Completion of the applicable Work, conduct the checkout of all utilities and operational systems and equipment for readiness and assist the Owner(s) and/or Major Tenant, as applicable, in initial start-up, testing and operation of the same. Provide all initial training as may be reasonably necessary to permit the Owner(s) and Major Tenant, as applicable, to operate all operational systems and equipment;
(xiii)      At or prior to Completion of the applicable Work, cause to be submitted to Comcast, the Major Tenant, and the Owners, as applicable, all operation and maintenance data and instructions and warranties for the Project;
(xiv)      Establish an indoor air quality plan consistent with a LEED Platinum certification for the core and shell of the Building;
(xv)      Developer, in its capacity as Manager under the Management Agreement, shall diligently market the Office Unit (including the retail portions thereof) to potential third-party tenants and undertake all necessary lease negotiations in connection with the initial lease-up of all portions of the Office Unit not leased to the Major Tenant under the Major Tenant Lease, in accordance with the Management Agreement, and shall be entitled to any and all leasing commissions for such initial lease-up, as set forth in the Management Agreement. Developer shall utilize for the purpose of performing its responsibilities under this Section 3.1(c)(xv) the funds allocated for marketing and leasing

3
LEGAL\19062995\17


activities in the Base Project Budget (subject to reallocation by Developer as set forth in Section 3.2(a) ) and shall not exceed such budgeted amount without the prior consent of Comcast; and
(xvi)      Developer shall cause completion of the activities and services (not otherwise described above) described in each applicable line item in the Base Project Budget (or reasonably inferable therefrom) in accordance with this Agreement and the Related Documents.
(d)      Respecting the Major Tenant Lease .
(i)      Developer shall undertake all design, development and construction obligations of Office Owner in its capacity as the Landlord under the Major Tenant Lease, including, without limitation, the exercise of all rights and the performance of all obligations of the Office Owner under the Work Letter. For the avoidance of doubt, nothing in this Agreement shall be deemed to modify, abrogate or supersede the rights of Comcast in its capacity as Tenant under the Major Tenant Lease.
(ii)      Except as provided in Section 10.1(c) with regard to self-help, the following shall be Office Owner’s sole and exclusive remedies against Developer for late delivery of the Project or any part thereof:
(A)      Developer shall be solely responsible for any Projected Delivery Delay Damages (as defined in the Work Letter) payable by Office Owner to Major Tenant under paragraph I.7.b.(v) of the Work Letter.
(B)      If the Major Tenant receives a credit against rent under paragraph I.7.b.(vi) of the Work Letter, Developer shall pay to Office Owner an amount equal to such rent credits.
(C)      Developer shall be responsible for any Per Diem (as defined in the Work Letter) payable to the Major Tenant under paragraph I.7.b.(vii) of the Work Letter.
(iii)      Developer shall be entitled to receive and retain any cost savings to which the Landlord is entitled under paragraph F.5 of the Work Letter.
(iv)      Unless the dispute resolution procedures set forth in Article XI have been instituted with respect thereto, all payments due pursuant to this Section 3.1(d) and Section 3.1(e) shall be made within ten (10) business days after demand from the party entitled to the same. All amounts under Section 3.1(d)(ii) or Section 3.1(e) awarded to Office Owner or Hotel Owner pursuant to Article XI shall be paid to Office Owner or Hotel Owner, as the case may be, within ten (10) business days after entry of the award, unless otherwise provided in the award. Interest shall accrue at the Lease Interest Rate on all amounts not paid by Developer pursuant to this Section 3.1(d)(iv) from the date ten (10) business days after the due date until they are paid. For the avoidance of doubt, the parties

3
LEGAL\19062995\17


acknowledge and agree that Force Majeure Delay(s) and/or Cumulative Tenant Delay(s) may extend deadlines under the Lease and/or Work Letter and hence the dates after which certain sums are payable by the Office Owner under the Lease and/or the Work Letter, and Developer shall have the benefit of any such delays to the same extent as the Landlord under the Major Tenant Lease.
(e)      Respecting the Hotel . Developer shall undertake all design, development and construction obligations of the Hotel Owner in its capacity as “owner” under the Hotel Agreements. To facilitate the foregoing, Hotel Owner hereby delegates all of its rights and obligations under the Hotel Agreements to Developer, to the extent such rights and obligations relate to the development of the Project (but subject in all events the consent and approval rights of the members of 18A Hotel, LLC pursuant to, and to the extent set forth in, the Hotel JV Agreement and the consent and approval rights of the Major Tenant, pursuant to, and to the extent set forth in, the Work Letter). Developer’s obligations under this Section 3.1(e) shall include the design, procurement and installation of all Hotel Furnishings for the Hotel, as well pre-opening activities and the procurement of all operating supplies and consumables necessary for the proper operation of the Hotel in coordination with Hotel Operator. If Hotel Owner is required to pay any fees, costs or other sums to the Hotel Operator due to delayed opening of the Hotel, then to the extent such delay is not due to Force Majeure Delay or Cumulative Tenant Delay to an item on the critical path of the Construction Schedule, Developer shall be responsible for the payment of such sums to the Hotel Operator (the “ Hotel Delay Damages ” ). The payment of Hotel Delay Damages by Developer shall be Hotel Owner’s sole remedy hereunder with respect to the delayed Completion or opening of the Hotel, except as provided in Section 10.1(c) with regard to self-help. Hotel Owner hereby acknowledges that the Work Letter provides the Major Tenant with certain rights with respect to the design and development of the Hotel Improvements and the Hotel Furnishings. Hotel Owner hereby consents to such rights and agrees to be bound thereby in the same manner as though Hotel Owner were a party to the Work Letter.
(f)      Respecting Governmental Incentives and Public Improvements . Developer shall apply for, oversee and administer all Governmental Incentives, and shall enter into and comply with all grant agreements, sub-grant agreements, development agreements and other governing documentation required with respect thereto. The Owners shall make (or cause to be made) all available Governmental Incentives, up to a maximum of $[***], available (if, as and when received) to fund the costs of the development and construction of the Public Improvements, and for no other purpose. Any Governmental Incentives received by Developer or the Owners in excess of $[***] (net of all reasonable costs associated with the Governmental Incentives, excluding legal fees but including the cost of payment and performance bonds or other financial security required to obtain the Governmental Incentives) shall belong to Comcast. Developer shall seek to obtain all approvals, easements, rights of way and other rights and agreements from applicable parties (including governmental and quasi-governmental agencies and utility providers) as may be required for the design, construction and (if applicable) the ongoing maintenance and operation of the Public Improvements. Developer makes no representation, warranty or guaranty that the Governmental Incentives will be granted or, if granted, will be funded by the applicable governmental or quasi-governmental agency, provided that nothing herein shall excuse Developer from exercising reasonable due diligence and commercially reasonable efforts, in accordance with the Standard of

3
LEGAL\19062995\17


Care, to obtain and collect the Governmental Incentives. Any shortfall resulting from the disapproval, unavailability or failure to fund any Governmental Incentives (and not caused by Developer’s failure to comply with all grant agreements, sub-grant agreements, development agreements and other governing documentation required with respect thereto or Developer’s failure to exercise reasonable due diligence and commercially reasonable efforts in accordance with the Standard of Care to obtain and collect the same) shall be borne by the Owners. As an accommodation to the Owners in order to avoid or reduce the cost of third party bonds that would otherwise be necessary, Developer may agree to obtain on behalf of Owners, or, at Developer’s election, issue or cause one or more Affiliates of Developer to issue, such completion bonds, payment bonds, guaranties and other forms of security as may be required by applicable governmental authorities in connection with the Public Improvements, Governmental Incentives, public art, transit oriented improvements, zoning and similar matters or as may be required by the surety companies issuing such bonds. All out-of-pocket payments made by Developer or its Affiliates in connection with any disbursement under such bonds, guaranty or other security (collectively, the “ Bonding Costs ” ), shall be a cost of the Project payable by Owners pursuant Section 3.3(a) , subject to the Base Project Guaranteed Maximum Development Price.
(g)      Respecting Comcast Center . The parties acknowledge that certain elements of the Project (including certain of the Public Improvements) require construction within the footprint of the property encompassed by the 1701-1717 JFK Boulevard Condominium, which property is commonly known as Comcast Center. Pursuant to separate instruments, Developer has obtained, or will obtain, such rights of access and easements as are necessary to allow Developer to cause such Work to be undertaken and Completed in accordance with the Plans and Specifications. Any costs incurred by the owners of any of the condominium units of Comcast Center on account of the Project shall be reimbursed by the Owners, subject to the applicable Guaranteed Maximum Development Price.
(h)      Developer’s Authority . Developer shall have sole and exclusive authority and responsibility to undertake all of its rights, duties and obligations set forth in this Agreement (including, without limitation, the Responsibilities set forth in Section 3.1 ) on behalf of the Owners, in the Owners’ name or Developer’s name, without interference from the Owners or anyone claiming by, through or under the Owners; subject, however, to the Comcast’s rights of approval set forth in Section 3.1(i) below and the other provisions of this Agreement.
(i)      Comcast’s Approval Rights . Notwithstanding anything herein to the contrary, the following decisions by Developer shall require Comcast’s prior written consent:
[***].
3.2      Budget; Guaranty .
(a)      Base Project Budget .
(xvi)      The Base Project Budget may be amended only upon the written approval of Comcast, except that Developer may, upon written notice to Comcast, but without Comcast’s prior approval: [***], or (iii) additional costs have been incurred as a

3
LEGAL\19062995\17


result of Force Majeure, subject to Section 3.2(e) . Furthermore, the line item in the Base Project Budget for “Total Marketing Cost” shall not be reduced by more than [***] percent ([***]%) and in no case shall the amount budgeted for tenant improvements for tenants of the Office Unit be less than $[***] per square foot of rentable area. Nothing herein shall be deemed to prohibit Developer from exceeding amounts set forth in the Base Project Budget, subject to its obligation to pay for such overages pursuant to the guaranty set forth in Section 3.2(b) and subject to the next to last sentence of Section 1.31 .
(xvii)      Notwithstanding anything to the contrary contained in this Agreement, no amount may be reallocated between the Base Project Budget, or the Base Project Guaranteed Maximum Development Price, on the one hand, and the Tenant Work Guaranteed Maximum Development Price, on the other hand, without Comcast’s prior written approval. Notwithstanding the foregoing, Developer may from time to time, at Developer’s election, and with notice to Comcast, reallocate up to $[***] from the “Project Contingency” line item in the Base Project Budget to the costs of the Tenant Improvements Work, whereupon the Tenant Improvements Guaranteed Maximum Development Price shall be deemed increased, and the Base Project Guaranteed Maximum Development Price shall be deemed decreased, on a dollar-for-dollar basis by such reallocated amount.
(xviii)      Developer acknowledges that as of May 31, 2014, Owners have advanced certain sums toward Guaranty Cost Items previously incurred by Owners or Developer with respect to the Base Project Budget. Such sums are described in Exhibit C attached hereto.
(b)      Guaranty .
(xvii)      Subject to Section 3.1(d)(ii) , Section 3.1(e) and Section 10.1(c) , which set forth Owners’ sole and exclusive remedies for late delivery of the Improvements described therein, Developer hereby guaranties to Office Owner and Hotel Owner (i) to oversee, manage and develop the Base Project Improvements in accordance with this Agreement and the applicable Related Documents, and to execute and Complete the Base Project Work related thereto and all other services covered by (or reasonably inferable from) each line item set forth in the Base Project Budget in accordance with the Standard of Care, (ii) the Substantial Completion of the Base Project Improvements for each Phase as and when required by the Work Letter, (iii) the Completion of the Base Project Improvements for each Phase as promptly thereafter as reasonably practicable, (iv) the Completion of the Hotel Furnishings by the Hotel LD Date (as defined in the Work Letter), (v) that the total aggregate cost for the Guaranty Cost Items expended by both Owners with respect to the Base Project Work, the Hotel Furnishings and all other obligations of Developer under this Agreement (except the Tenant Improvements Work and work and services that are described in the Guaranteed Cost Exceptions), shall not exceed the Base Project Guaranteed Maximum Development Price (with Developer agreeing to pay for all Guaranty Cost Items in excess of the Base Project Guaranteed Maximum Development Price), (vi) the prompt discharge of any Lien with respect to the Base Project Work and/or the Hotel Furnishings, and (vii) that the base building core and shell of the Project will attain LEED Platinum certification

3
LEGAL\19062995\17


to the extent required by any zoning or building permits issued pursuant to the Philadelphia Code.
(xviii)      Subject to Section 3.1(d)(ii), Section 3.1(e) and Section 10.1(c), which set forth Owners’ sole and exclusive remedies for late delivery of the Improvements described therein, Developer hereby guaranties to Office Owner (i) to oversee, manage and develop the Tenant Improvements in accordance with this Agreement and the applicable Related Documents, and to execute and Complete the Tenant Improvements Work in accordance with the Standard of Care, (ii) the Substantial Completion of the Tenant Improvements for each Phase as and when required by the Work Letter, (iii) the Completion of the Tenant Improvements for each Phase as promptly thereafter as reasonably practicable, (iv) that the total aggregate cost for the Guaranty Cost Items expended by Office Owner and Major Tenant for the Tenant Improvements Work shall not exceed the Tenant Improvements Guaranteed Maximum Development Price (with Developer agreeing to pay for all costs and expenses in excess of the Tenant Improvements Guaranteed Maximum Development Price), (v) no Guaranteed Cost Exceptions will be incurred in connection with the Tenant Improvements Work, and (vi) the prompt discharge of any Lien with respect to the Tenant Improvements Work.
(xix)      If any Lien relating to the Work is filed against all or any part of the Property for any reason, other than as a result of a Funding Default, Developer shall cause such Lien to be removed or satisfied of record, or cause such Lien to be bonded over, no later than the earlier of sixty (60) days after notice thereof to Developer, or such other time as may be required pursuant to any lease of the Office Unit or agreement with the City of Philadelphia, Philadelphia Authority for Industrial Development or any of its Affiliates.
(xx)      Developer shall commence completion of all punchlist items with respect to the Tenant Improvements as required by the Work Letter. Developer shall commence completion of all punchlist items with respect to each Phase or other applicable portion of the Project within thirty (30) days after Substantial Completion of such Phase or applicable portion of the Project, and will proceed diligently to complete the same.
(xxi)      Developer agrees to pay to the applicable Owner all costs, fees, losses and expenses arising out of the failure of Developer to comply with the provisions of this Section 3.2(b) .
(c)      Conditions to Guaranty . Notwithstanding anything herein to the contrary, the obligations of Developer set forth in this Agreement shall be subject to, and conditioned upon, there not existing any Funding Default, Developer is also relying on the timely performance by the Major Tenant of its non-monetary obligations under the Work Letter. Accordingly, the failure of Major Tenant to comply with any of such non-monetary obligations in any material respect may be a defense to enforcement of certain of Developer’s obligations under this Agreement, as may be equitably determined in accordance with Article XI .
(d)      Cooperation . Developer and Owners shall cooperate together in good faith in order to minimize, to the extent practicable, the amount of the Guaranteed Cost Exceptions.

3
LEGAL\19062995\17


(e)      Notice of Force Majeure . Developer shall promptly notify Comcast (the “ FM Notice ”) of the occurrence and nature of any Force Majeure or Force Majeure Delay that may result in the unavailability, delay or increased costs in obtaining materials or supplies (including operating supplies and consumables for the Hotel) necessary to construct or Complete the Project in accordance with the Plans and Specifications and the applicable Related Documents. Such notice will include reasonable detail about such delay, unavailability or increased cost, and shall include suggested alternatives and/or substitutes. If Developer delivers the aforesaid notice, Comcast may direct Developer to take any of the following actions, or any combination thereof, to the extent feasible: (i) purchase the originally-selected materials or supplies at the increased cost, in which event such increased cost of the materials or supplies, together with any increased out-of-pocket costs incurred by Developer therefor, such as, by way of example and not limitation, any increased cost of shipping or transportation of such material or increased costs of labor incurred to mitigate any delay, if Comcast requests Developer to mitigate, shall increase the applicable Guaranteed Maximum Development Price, (ii) accept the delay in obtaining the originally-selected materials or supplies at the originally-budgeted price, in which event such delay shall be Force Majeure Delay to the extent it delays an item on the critical path of the Construction Schedule and any out-of-pocket cost incurred by Developer to mitigate such delay, if Comcast requests Developer to mitigate, shall increase the applicable Guaranteed Maximum Development Price, or (iii) purchase alternate materials or supplies, in which event any increased costs of such materials or supplies, together with any increased out-of-pocket costs incurred by Developer therefor such as, by way of example and not limitation, any increased cost of shipping or transportation of such material or increased costs of labor incurred to mitigate any delay, if Comcast requests Developer to mitigate, shall increase the applicable Guaranteed Maximum Development Price, and/or any delay in obtaining such alterative materials or supplies shall be Force Majeure Delay to the extent it delays an item on the critical path of the Construction Schedule. Except as expressly set forth in this Section 3.2(e) and in Section 6.2(a) , increased costs resulting from Force Majeure shall not increase the Guaranteed Maximum Development Price. If the amount of any delay or any cost increase changes from that described in the FM Notice, Developer shall promptly notify Comcast and Comcast shall have the right to change its direction to Developer described above in this Section 3.2 .
3.3      Owner’s Payment Obligation .
(a)      Development Costs . Subject to the other provisions of this Agreement, Owners shall be responsible for the payment, without deduction or setoff (except as otherwise expressly set forth herein), of all costs incurred to develop and construct the Project ( “ Development Costs ” ) including, without limitation, (i) all amounts payable under any Construction Contract, architect agreement or other contract or agreement respecting the design and construction of the Project entered into in accordance with the terms of this Agreement and the Related Documents, (ii) all taxes payable with respect to the Project (other than income, net profits and similar taxes), (iii) the premiums for all insurance required or permitted hereunder and carried by or on behalf of Developer with respect to the Project, (iv) all permit and approval fees incurred with respect to the Project, (v) the Development Fee, (vi) the Bonding Costs, and (vii) all other costs and expenses incurred by Developer in the performance of its obligations under this Agreement. Notwithstanding the foregoing (A) Owners shall not be required to pay for the aggregate amount of Guaranty Cost Items in respect of the Base Project Improvements and Hotel Furnishings which exceed the Base

3
LEGAL\19062995\17


Project Guaranteed Maximum Development Price, and (B) Office Owner shall not be required to pay for the aggregate amount of Guaranty Cost Items in respect of the Tenant Improvements which, when added to amounts expended by Major Tenants (without duplication) for Guaranty Cost Items in respect of the Tenant Improvements, exceed the Tenant Improvements Guaranteed Maximum Development Price. Office Owner shall cause the Major Tenant to advance and pay pursuant to the terms of the Work Letter, subject to the rights of Major Tenant to object thereto and withhold payment under the Work Letter, all costs and payments which are the Major Tenant’s responsibility under the Work Letter. Notwithstanding anything to the contrary contained in this Agreement, Owners shall not be deemed to be in default with respect to a monetary obligation under this Agreement so long as no Funding Default exists. Title to all work, materials, and equipment installed in or about the Project shall pass to the Owner(s) and/or Major Tenant, as applicable, upon the applicable party’s receipt of payment therefor, free and clear of any liens, claims, security interests or encumbrances.
(b)      Allocation of Costs . As between the Hotel Owner and the Office Owner, the costs of the Work shall be shared as follows:
(v)      The Soft Costs relating to the design of the core and shell of the Overall Project (including the portion of the Development Fee related thereto), and the Hard Costs of constructing the core and shell, shall be shared between the Office Owner and the Hotel Owner pro rata based on their relative percentage interests in the Condominium;
(vi)      The Soft Costs relating to the design of the Hotel Furnishings and the Hotel Improvements other than core and shell (including the portion of the Development Fee related thereto) and the Hard Costs of constructing the Hotel Improvements (other than core and shell) and procuring and installing the Hotel Furnishings shall be paid by the Hotel Owner;
(vii)      The Soft Costs relating to the design of the Base Project Improvements (other than core and shell) relating to the Office Unit (including the portion of the Development Fee related thereto) and the Hard Costs of constructing the Base Project Improvements (other than core and shell, the Hotel Improvements and the Public Improvements) shall be paid by the Office Owner
(viii)      All costs of the Public Improvements other than core and shell (including design and construction and the portion of the Development Fee relating thereto) shall be reimbursed out of the net proceeds of the Governmental Incentives, up to the aggregate amount of $[***], and the balance of such costs shall be shared between the Office Owner and the Hotel Owner pro rata based on their relative percentage interests in the Condominium;
(ix)      All Hard Costs and Soft Costs relating to the Tenant Improvements shall be paid by the Office Owner, except to the extent payable by Major Tenant; and

3
LEGAL\19062995\17


(x)      All other costs of constructing the Project (to the extent not expressly mentioned above) shall be shared between the between the Office Owner and the Hotel Owner pro rata based on their relative percentage interests in the Condominium.
3.4      Construction Draw Process . Funding for the Project shall be made as follows:
(a)      Funding the Payment Accounts . Not more often than monthly, Developer shall provide the Owners and Comcast with a reasonable estimate of Development Costs to be paid the following month, less amounts in the applicable Payment Accounts that were not needed to fund Development Costs for the then-current month. Such estimate shall contain reasonable backup information to support the estimate, including a breakdown of amounts to be funded in respect of each line item in the Base Project Budget, or the Tenant Improvements Guaranteed Maximum Development Price, as applicable, and shall specify the amounts allocable to the Hotel Improvements, the Hotel Furnishings, the Base Project Improvements (other than the Hotel Improvements) and the Tenant Improvements. The Owners shall, subject to the Base Project Guaranteed Maximum Development Price, fund the amount of the estimate (other than the portion of the estimate that relates to the Tenant Improvements Work) into two (2) bank accounts owned jointly by the Owners and for which Developer has check writing and wiring authority. One such account shall be used for funding the Hotel Improvements and the Hotel Furnishings and the other shall be used for funding the other Base Project Improvements (except the Hotel Improvements). Similarly, subject to the Tenant Improvements Guaranteed Development Price and the rights of Major Tenant under the Work Letter, Office Owner shall fund the Construction Allowance (as defined in the Work Letter), and shall cause the Major Tenant to fund the balance of the estimate that relates to the Tenant Improvements, into a bank account owned jointly by Office Owner and Major Tenant and for which Developer has check writing and wiring authority. Each of the bank accounts described in this Section 3.4(a) is referred to as a “ Payment Account ” and collectively as the “ Payment Accounts ”.
(b)      Review of Applications for Payment . It is contemplated that the General Contractor’s application for payment and other invoices shall be submitted to Developer (and to the Architect with respect to the General Contractor’s application for payment) no later than the tenth (10 th ) day of the month following the month in which the work which is the subject of such application for payment or invoices was completed. Thereafter, Developer (in consultation with the Architect as necessary) shall promptly review the General Contractor’s application for payment and all other invoices. Developer shall promptly forward each monthly certificate for payment (which shall show the percentage Completion of the Work and otherwise be in form reasonably acceptable to Comcast) issued by the Architect to Comcast.
(c)      Payment on Behalf of Owners . To the extent Developer approves the General Contractor’s application for payment, Developer shall cause payment to be made out of the applicable Payment Account on behalf of Owners and Major Tenant (to the extent the Work for which the draw is made is for Tenant Improvements Costs payable by Major Tenant and subject to the Major Tenant’s rights under the Work Letter), including the applicable installment of the Development Fee, not more than thirty (30) days after such approval. Such payments shall be made directly to the applicable subcontractors (other than the “general conditions costs” and contractor’s

3
LEGAL\19062995\17


fee which will be paid directly to the General Contractor). All checks and wire transfers made from the Payment Accounts shall be identified as coming directly from Owners or Major Tenant, as applicable, and not from Developer. The amount of Governmental Incentives actually received by the Owners, up to a maximum of $40,000,000, shall be applied on account of amounts due and payable by the Owners with respect to the design and construction of the Public Improvements. Promptly after Completion of the applicable portions of the Project, any amounts in the Payment Accounts not paid to or properly payable pursuant to this Agreement to Developer, General Contractor or its subcontractors pursuant to this Section 3.4 , or reserved (in the reasonable discretion of Developer) against pending claims, shall be paid to the applicable Owner. When it is reasonably determined by Developer that such reserved amounts will not be needed for pending claims, they shall promptly be paid to the applicable Owner. Developer will keep detailed records of all amounts paid from the Payment Accounts, in form reasonably satisfactory to Owner, and shall provide such records to Owner monthly and at such other times as Owner may reasonably request. In addition, if Comcast reasonably believes that the percentage derived by taking the amounts previously paid by the Owners into the Payment Accounts and allocable to Work performed by the General Contractor (except any Tenant Improvements Work), plus the portion of the next monthly installment allocable to such Work, divided by the line items in the Base Project Guaranteed Maximum Development Price allocable to such Work, indicates that the payments made previously and then being made exceed the percentage of the Base Project Work and the Hotel Furnishings that is complete (as certified by the Architect) by [***] ([***]) percentage points or more, it may request that the Independent Neutral equitably adjust the monthly amount payable to such Payment Accounts, which the Independent Neutral shall be authorized to do. For example, [***].
(d)      Owners’ Pledge of Credit . Notwithstanding anything to the contrary contained in this Agreement, Developer and Owners have agreed that General Contractor, acting pursuant to authorization by Owners, shall purchase materials and hire all labor and engage all subcontractors necessary for General Contractor to perform the Work. Owners hereby (1) pledge their credit and agree to be liable in the first instance to such subcontractors for amounts to which they become entitled pursuant to, and as limited by, this Agreement, for proper performance of their subcontracts, as distinguished from merely guaranteeing payments to them or undertaking to reimburse General Contractor for the cost of such subcontracts, and (2) agree to make payments, limited to the amounts due pursuant to this Agreement, directly to such subcontractors, when and if such payments are authorized by Owners, Developer and General Contractor, pursuant to the payment procedures set forth above in this Agreement. Other than as set forth in the immediately preceding sentence, General Contractor shall remain liable under each subcontract with its subcontractors as if and as though General Contractor were responsible for making all payments thereunder and for all other obligations set forth in such subcontracts, including, without limitation, sole liability for any claims for incidental, special or consequential damages (including, without limitation, damages for delay, interference and/or loss of efficiency), and for any and all additional compensation of any type or amount not approved by Owners and Comcast. It is the intent of the parties to this Agreement that no other rights and responsibilities among Owners, Developer, General Contractor and its subcontractors shall be affected hereby, including but not limited to Developer’s responsibility to Owners for the proper and timely performance of the Work (whether performed by General Contractor, such subcontractors or anyone else on its or their behalf), and Developer’s responsibility to pursue and defend all disputes between and among Owners, General Contractor

3
LEGAL\19062995\17


and its subcontractors, whether regarding payments to subcontractors or any other matters. General Contractor shall not include in its invoices to Developer amounts allocated to the payment of the Philadelphia Business Privilege Tax, with respect to payments from Owners to General Contractor and its subcontractors. All payments made by or on behalf of Owners to General Contractor or any subcontractors under this Section 3.4 or otherwise, shall be credited against the payment obligations of Owners under this Agreement. For the purposes of this Section 3.4 , references to subcontractors shall include suppliers with which General Contractor has contracts for a portion of the Work. Claims, judgments, suits, damages, costs, expenses (including but not limited to reasonable legal fees) and liabilities incurred by or asserted against Owners or any other party indemnified under Section 6.4 , by General Contractor or any subcontractor of any tier are covered by the indemnity set forth in Section 6.4 . For the avoidance of doubt, it is the intent of the parties that Developer be solely responsible for responding to and defending against any demands or claims arising by General Contractor or its subcontractors of any tier against Owners or Comcast, except those arising because of a Funding Default.
3.5      Employees . Developer shall select, employ, pay, supervise and discharge all employees, independent contractors, and personnel necessary for the performance of Developer’s duties pursuant to the terms hereof. All personnel used by Developer in the construction and operation of the Improvements shall be employees of Developer, employees of an Affiliate of Developer or independent contractors and not employees of the Owners.
3.6      Payments . Developer shall check and verify all bills received for services, work and supplies ordered in connection with the construction of the Improvements. If such bills relate to materials supplied or work performed on the Improvements, Developer shall obtain all necessary lien waivers evidencing payment of such obligations.
3.7      Reporting . Developer shall keep Comcast fully informed during the development and construction of the Project. Developer shall prepare and deliver to Comcast, within twenty (20) days following the end of each calendar month, a monthly report on development and construction activities for the Project containing: (a) a summary of all expenditures incurred in connection with the development or construction during such month and a reconciliation to the Base Project Budget and the Tenant Improvements Work Guaranteed Maximum Development Price; (b) a report detailing progress of construction of the Project against the approved Construction Schedule; (c) a report listing and describing any proposed or approved change orders or construction change directives under the Construction Contracts; (d) a report describing any claims made against the Owners, Comcast or the Project and any material notices issued to the Owners or Comcast by the General Contractor, the Architect, or any state, municipal or other governmental authority with respect to the Project. Developer shall provide for [***] or her designee to attend the bi-weekly construction meetings relating to the Project, and the monthly draw meetings, and shall accompany [***] or such designee on site visits to the Project no less frequently than monthly, subject to such safety rules and regulations as may be imposed by the General Contractor.
3.8      Warranty . Developer hereby guarantees that all materials, machinery and equipment incorporated into the Project will be of good quality (or higher, if a higher quality is specified) and new and that the Work will be in accordance with the Plans and Specifications, and free from defects

3
LEGAL\19062995\17


including design defects, and will remain free from such defects for a period of one (1) year after Substantial Completion of the applicable Work. Notwithstanding the foregoing, the guaranty described in this Section 3.8 shall be for a period of one-year commencing upon the date of Completion of the applicable Work with respect to portions of the Work completed after Substantial Completion. Developer shall repair or replace, as reasonably determined by Developer, at its sole cost and expense all Work that does not conform to the requirements of this Section 3.8 , and shall cause all warranties relating to the Work given by the General Contractor and, to the extent assignable, General Contractor’s subcontractors and suppliers, to be assigned in writing to the applicable Owners and Major Tenant, as applicable, upon completion of the Work. All repairs or replacements required pursuant to this Section 3.8 shall be made at the reasonable convenience of the Owners and the occupants of the Project (including the Hotel Operator and the Major Tenant) during such times as will not unreasonably and unnecessarily interfere with such parties’ use and occupancy of the Project (subject to Sections 17 and 24 of the Major Tenant Lease). If any item of Work is repaired or replaced during the warranty period described in this Section 3.8 , the warranty period with respect to such item shall be extended for a one (1)-year period. Notwithstanding the foregoing, Developer makes no warranty herein with respect to any defect in Work constructed by Developer to the extent such defect arose out of an error in the Tenant Improvements Plans and Specifications not caused by any error in the Base Project Plans and Specifications or any other design documents prepared by or on behalf of Developer, or Major Tenant’s or Hotel Operator’s failure to follow any written manufacturer’s instructions delivered to such party in due course with regard to the use and care of the Tenant Improvements Work or Hotel Furnishings (and not caused by a breach or violation by Developer or General Contractor of the provisions of this Agreement), or to otherwise maintain the same in accordance with commonly recognized industry standards to the extent Major Tenant or Hotel Operator is responsible for such maintenance pursuant to the terms of the Major Tenant Lease (with respect to the Tenant Improvements) or the Hotel Agreements (with respect to the Hotel Furnishings). To the extent Developer expends funds or incurs any liability under the guaranty set forth in this Section 3.8 , Developer shall be subrogated to the rights of Owners (if any) to pursue any warranty or guarantee issued by the General Contractor, any subcontractor, or any supplier, vendor or manufacturer relating to the same defect.
3.9      Developer’s Representations and Warranties . Developer hereby makes the following representations and warranties to the Owners:
(a)      The construction, and development of the Project shall be undertaken and shall be Completed in accordance, in all material respects, with (i) all applicable requirements of all appropriate governmental entities, and (ii) the Plans and Specifications.
(b)      The Land is and will be properly zoned for the Project; all Permits have been obtained or are readily obtainable in the ordinary course as required, and the Project conforms and upon completion will conform in all material respects to all applicable federal, state and local land use, zoning, building, health, fire, environmental and other governmental laws and regulations. Notwithstanding the preceding sentence, Developer shall have no liability for failure of the Tenant Work to so conform to such laws and regulations if noncompliance is caused by an error or omission in the Tenant Improvements Plans and Specifications that did not occur because of an error in the

3
LEGAL\19062995\17


Base Project Plans and Specifications or any other design documents prepared by or on behalf of Office Owner pursuant to the Work Letter.
(c)      All appropriate utilities, including, without limitation, sanitary and storm sewers, cable television, telephone, water, gas and electricity, will be available and will be operating properly and in sufficient capacity for the intended use of the Project. Subject to the rights of the City of Philadelphia and any restrictions set forth in the documents governing the Condominium, the Project shall have free and uninterrupted legal pedestrian access under 18 th Street from the Project to the Comcast Center concourse.
(d)      The copies of the Construction Contracts and Architect Agreement submitted by Developer to Owners were true and complete and copies of any modifications thereto or additional Construction Contracts or design contracts submitted by Developer to Owners will be true and complete.
ARTICLE IV     
COMPENSATION OF DEVELOPER
4.1      Development Fee . As compensation for Developer’s development services rendered under this Agreement, the Owners shall, subject to the Base Project Guaranteed Maximum Development Price, pay to Developer a fee (the “ Development Fee ” ) of [***] percent ([***]%) of the Base Project Budget (excluding the Development Fee), which will therefore increase or decrease, as applicable, if the Base Project Budget is increased or decreased in accordance with this Agreement; provided, that no Development Fee shall be payable with respect to amounts in the Base Project Budget not actually expended and no Development Fee will be paid in respect of any Guaranty Cost Items applicable to the Base Project Work to the extent they, in the aggregate, exceed the Base Project Guaranteed Maximum Development Price. [***] percent ([***]%) of the Development Fee shall be payable by Owners within thirty (30) days after the commencement of construction of the Project. [***] percent ([***]%) of the Development Fee shall be payable by Owners in equal monthly installments over the period set forth in the Construction Schedule for the development of the Project. If the initial Construction Schedule is modified in accordance with this Agreement for any reason, the monthly payments of the Development Fee shall be adjusted so that the last monthly installment of the [***]% payment coincides with the Substantial Completion of the Project as so adjusted. The final [***] percent ([***]%) of the Development Fee shall be payable by Owners upon Completion of the Project. Developer shall not be reimbursed for any employee costs, overhead costs or office equipment, stationery, postage, telephone, bank charges, travel and all other administration and overhead expenses, all of which are included as part of the Development Fee.
4.2      Other Rights of Developer . In addition to the Development Fee described in Section 4.1 and in consideration for the agreements of Developer set forth herein, Developer shall be entitled to retain all Project Development Assets (as defined below), whether received or receivable by Owner(s) or Developer, all of which are hereby assigned, to the extent permitted by law and subject to the last sentence of this Section 4.2 , by Owners to Developer. If any Owner or any member of any Owner that is an Affiliate of Comcast, shall at any time receive a Project Development Asset, the party receiving same shall forthwith, to the extent permitted by law, remit it and assign it to

3
LEGAL\19062995\17


Developer. As used herein, “ Project Development Assets ” shall mean: (a) all sources of funds (other than capital contributions and loans) made available to Owner(s) for the payment or reimbursement of the costs of development and construction of the Project, including, without limitation, any governmental or quasi-governmental grants or incentives such as the Governmental Incentives, up to an aggregate of $[***] (net of all reasonable costs associated with the Governmental Incentives, excluding legal fees but including the cost of payment and performance bonds or other financial security required to obtain the Governmental Incentives); provided, that such Governmental Incentives shall not be paid to Developer but shall be applied by Owners toward the cost of constructing the Public Improvements; (b) the amounts payable by the Major Tenant for the Tenant Improvements Work under the Work Letter, (c) the [***] percent ([***]%) Landlord’s Fee payable by Major Tenant to the Landlord under the Work Letter; (d) the Raised Flooring Cost payable by Major Tenant to Landlord under the Major Tenant Lease; (e) all claims, actions, causes of action, and counterclaims and receivables of Owner(s) to the extent arising out of the development or construction of the Project, including without limitation all such matters against any contractors, subcontractors, suppliers of equipment or materials, vendors, labor unions, architects, engineers, design professionals, attorneys and other professionals, neighbors, community groups, governmental and quasi-governmental agencies, and other public or private third parties, including any warranties or claims thereunder contained (but excluding manufacturer’s warranties respecting specific components of the construction after the warranty period set forth in Section 3.8 ) in any Construction Contracts; and (f) the proceeds of any of the above. For the avoidance of doubt, rental and other payments by Major Tenant (other than the aforesaid cost of the Tenant Improvements Work, the [***]% Landlord’s Fee and the Landlord’s share of cost savings, if any, attributable to the development of the Tenant Improvements) under the Major Tenant Lease or any other lease or any revenue under the Hotel Agreement or otherwise relating to the Hotel are not Project Development Assets. Subject to Section 6.3 , Developer shall have the unilateral right, in its sole discretion, to institute, prosecute, appeal, settle and discharge any and all claims, actions, causes of action and counterclaims referred to above or arising out of the Project Development Assets, whether in the name of Developer or its Affiliates or in the name of Owner(s). Any losses, costs, expenses, claims, damages and liabilities incurred by or asserted against the parties indemnified under Section 6.4 arising out of Developer’s rights set forth in this Section 4.2 shall be covered by the indemnity set forth in Section 6.4 . Notwithstanding the foregoing, (1) all Property-related tax credits, incentives, and abatements will be for the sole benefit of the Owners and all job creation tax credits and incentives will be for the sole benefit of Comcast or its Affiliates, and (ii) the Owners shall be entitled to all Project Development Assets relating to claims against architects, suppliers, contractors, and subcontractors of any tier after the expiration of the warranty period(s) described in Section 3.8 .
ARTICLE V     
ACCOUNTING AND FINANCIAL MATTERS
5.1      Books and Records . Developer shall keep or cause to be kept at Developer’s place of business suitable records necessary with regard to the Responsibilities provided hereunder, including all contracts and sub-contracts and one original of each contract and any other agreement relating to the development of the Overall Project. Such records shall be open to inspection by

3
LEGAL\19062995\17


Owners and Comcast or their representatives at any reasonable time. Upon the effective termination date of this Agreement, all of such records shall be delivered to the applicable Owner.
ARTICLE VI     
INSURANCE; INDEMNITY
6.1      Developer’s Insurance Responsibility .
[***].
6.2      Developer’s Duties in Case of Loss .
(a)      Casualty . Developer shall promptly notify Comcast of any fire or other damage to any part of the Project. In the event of any material damage to any part of the Project, Developer shall telephone Comcast and comply with Owners’ insurance requirements with respect to providing notice to such insurance companies. Subject to the terms of the Major Tenant Lease, Developer is, except as provided below, hereby authorized to act on behalf of Owners to settle any such losses, complete loss reports and/or adjust such losses on behalf of Owners and to meet with any federal, state or local regulatory agency. Developer shall keep Owners reasonably informed as to the status of such settlements, adjustments and meetings. Notwithstanding the foregoing, if as a result of such fire or other damage Completion of the Project will be delayed by more than fifteen (15) months or the uninsured or underinsured portion of the loss is or will be greater than $[***], Comcast shall be entitled to participate in the settlement, adjustment and/or meetings. If, pursuant to the Major Tenant Lease, Office Owner elects to undertake the restoration or reconstruction of the Office Unit, then (i) Developer shall undertake restoration of the Project in accordance with the terms of this Agreement (subject to the other terms of this Section 6.2(a) ), (ii) Owners shall make all insurance proceeds received by them available for such restoration or reconstruction, (iii) any delay to an activity on the critical path of the Construction Schedule resulting from the casualty shall be deemed to be Force Majeure Delay, and (iv) each Guaranteed Maximum Development Price shall be increased only as necessary to account for the amount by which the cost to restore the Project exceeds the available insurance proceeds (provided that Developer has otherwise complied with the provisions of this Agreement respecting insurance). If, pursuant to the Major Tenant Lease, Office Owner elects not to restore or reconstruct the Office Unit, the Owners shall make sufficient insurance proceeds available to permit Developer to raze the Improvements, clear and landscape the Property, and undertake such other remediation as may be required in Developer’s reasonable discretion or as required by Law, and the balance of the insurance proceeds shall be retained by the Owners.
(b)      Developer’s Obligation to Notify . Developer shall notify Comcast promptly of any personal injury or property damage occurring to or claimed by any tenant or third party on or with respect to any part of the Project. Developer shall promptly forward to Comcast upon receipt copies of any summons, subpoena or other like legal document served upon Developer relating to actual or alleged potential liability of any Owner, Comcast, Developer or the Project.
6.3      Litigation . Subject to Section 6.2 , Developer shall have the unilateral right, in its sole discretion, to institute, prosecute, appeal, settle and discharge any and all claims, actions, causes

3
LEGAL\19062995\17


of action and counterclaims arising out of the development and construction of the Project, to the extent that the amounts in controversy are reasonably related to the Guaranty Cost Items, whether in the name of Developer or its Affiliates or in the name of the Owners. Before bringing any claim, action, cause of action or counterclaim in the name of Owners, or either of them, Developer shall consult with them concerning the same.
6.4      Indemnity . Utilizing funds provided by Owners (up to (i) the Base Project Guaranteed Maximum Development Price for all Guaranty Cost Items in the aggregate relating to Base Project Improvements, and (ii) the Tenant Improvements Guaranteed Maximum Development Price for the Tenant Improvements) and utilizing Developer’s own funds for Guaranty Cost Items in excess of the applicable Guaranteed Maximum Development Price, Developer shall cause the Project to be designed, developed, constructed and Completed in accordance with this Agreement and the applicable Related Documents and shall indemnify, defend with counsel reasonable acceptable to Owners and Comcast and hold Owners, Comcast and the Major Tenant and their respective officers, managers, partners, shareholders, directors, agents and employees harmless from and against any claim, loss, expense, cost, liability or damage arising therefrom, with the exception of payment for the Guaranteed Cost Exceptions and matters to the extent arising from the negligence or willful misconduct of Comcast. For the avoidance of doubt, the parties agree that any decision mutually made by Comcast, in any capacity, and Developer, or Comcast and an Owner shall not constitute negligence or willful misconduct on the part of Comcast. It is the intent of the parties that claims, losses, expenses, costs, liabilities and damages that are paid by Developer in accordance with the foregoing indemnity, regardless of whether they arise out of the negligence, willful misconduct or breach of this Agreement by Developer, its Affiliates, or any of their respective agents, contractors or employees (excluding claims for payment of the Guaranteed Cost Exceptions or to the extent arising from the negligence or willful misconduct of Comcast or Major Tenant) shall be deemed Guaranty Cost Items for the purposes of this Section 6.4 . Subject to Section 3.2(a)(iii) , nothing in this Section 6.4 shall be deemed to permit the reallocation between the Base Project Budget and the Base Project Guaranteed Maximum Development Price, on the one hand, and the Tenant Improvements Guaranteed Maximum Development Price, on the other hand. In any claims against any Person indemnified under this Section 6.4 by an employee of Developer or any of its Affiliates, the indemnification obligation under this Section 6.4 shall not be limited by a limitation on amount or type of damages, compensation or benefits payable by or for the any party under workers’ or workmen’s compensation acts, disability benefit acts or other employee benefit acts.
ARTICLE VII     
NOTICES
7.1      Method of Giving . Any notice, request, demand, instruction or other communication to be given to either party hereunder, except those required to be delivered at the Closing, shall be in writing, and shall be deemed to be delivered (a) upon receipt, if delivered by electronic mail on a business day before 5:00 PM prevailing eastern time (or the following business day if delivered after 5:00 PM prevailing eastern time), (b) upon receipt if hand delivered, (c) on the first business day after having been delivered to a national overnight air courier service, or (d) three business days after deposit in registered or certified mail, return receipt requested, addressed as follows:

3
LEGAL\19062995\17



If to Office Owner:            Liberty Property 18 th & Arch, LP
c/o Liberty Property Trust
500 Chesterfield Parkway
Malvern, PA 19355
Attn: [***]
Fax No.: [***]
Email: [***]

and with additional copies to:        Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]

If to Hotel Owner:            Liberty Property 18 th & Arch Hotel, LLC
c/o Liberty Property Trust
500 Chesterfield Parkway
Malvern, PA 19355
Attn: [***]
Fax No.: [***]
Email: [***]

and with additional copies to:        Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]

If to Developer:            Liberty Property Limited Partnership
c/o Liberty Property Trust
1628 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Email: [***]
    
and with additional copies to:        Liberty Property Trust
500 Chesterfield Parkway
Malvern, PA 19359
Attention: [***]
Email: [***]


3
LEGAL\19062995\17


If to Comcast:                Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]

and with additional copies to:        Comcast Corporation
1701 John F. Kennedy Boulevard
Philadelphia, PA 19103
Attn: [***]
Fax No.: [***]
Email: [***]
7.2      Respecting Comcast . Notwithstanding anything herein to the contrary, so long as Developer is the general partner or managing member of each Owner or any entity that directly or indirectly controls each Owner and Comcast holds a majority direct or indirect ownership interest in each Owner, then (i) in any instance in which Developer is required to provide notice to the Owner(s) hereunder, such notice shall be deemed to have been properly given when delivered to Comcast in accordance with Section 7.1 above, and (ii) in any instance in which any Owner is required to provide notice to the Developer hereunder, such notice shall be deemed to have been properly given when delivered by Comcast to Developer in accordance with Section 7.1 above.
ARTICLE VIII     
ASSIGNMENT
This Agreement may not be assigned by Developer without the prior written consent of Comcast, and no such assignment shall release Developer from liability hereunder. Any purported assignment or delegation of Developer’s duties without Comcast’s consent shall be void and of no effect. In the event Owners sell the Improvements and seek to assign this Agreement to the purchaser(s), Developer shall have the option to terminate this Agreement as of the date of such purchase.
ARTICLE IX     
RELATIONSHIP OF PARTIES
9.1      Nature of Relationship . In taking any action pursuant to this Agreement, Developer will be acting only as independent contractor, with authority to act in accordance with the terms of this Agreement and nothing explicit or implied in this Agreement shall be construed as creating a partnership or joint venture or agency or an employment relationship between Developer (or any person employed by Developer) and the Owners or any other relationship between the parties hereto except that of owner and independent contractor. Developer acknowledges and agrees that it shall act as an independent contractor hereunder with respect to the Owners in connection with Developer’s obligations under this Agreement.
9.2      Confidentiality . The Owners and Developer shall each maintain the confidentiality of all matters pertaining to this Agreement, except as may be required by Law; provided, however,

3
LEGAL\19062995\17


that neither party shall be in breach of its obligations under this Agreement, at law or in equity (whether under a theory of fiduciary duty or otherwise) if such party or its Affiliates files this Agreement (and some or all of the exhibits hereto) as an exhibit to a filing it may make with the Securities Exchange Commission or makes disclosures regarding the transactions governed by this Agreement to the extent such disclosing party or its Affiliates reasonably believe necessary to enable it to comply with federal and state securities laws and the regulations of the Securities Exchange Commission, the rules of any stock exchange, or in connection with any filing or registration made by Liberty Property Trust, an Affiliate of Developer and the Owners, or Comcast Corporation, an Affiliate of the Owners, as the issuer of publicly traded securities.
9.3      Third Party Beneficiary . Major Tenant and Comcast are intended third party beneficiaries of this Agreement and may enforce all of the provisions of this Agreement.
ARTICLE X     
DEFAULTS; REMEDIES
10.1      Default by Developer .
(a)      Default by Developer . Developer shall be deemed to be in default hereunder (a “ Developer Default ”) if: (i) as determined by the Independent Neutral in the manner set forth in Article XI , Developer shall fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by Developer and such default shall continue for a period of thirty (30) days (ten 10 days in the case of a monetary default) after notice thereof by the applicable Owner(s) to Developer, which notice shall to the extent information is reasonably available to the applicable Owner(s) specify the nature of the default and possible cures thereof, provided that, unless such failure is a non-monetary default and not susceptible to cure, if within such thirty (30) day period Developer commences curing and continues diligently to cure such failure, then Developer shall have such additional time as may be reasonably required to cure such failure; (ii) a receiver is appointed to take possession of the assets of Developer or Developer makes a general assignment for the benefit of creditors, or any action is taken or suffered by Developer under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute (unless such proceeding is commenced by Comcast or its Affiliates or any of them), unless, in the case of an involuntary proceeding, it is dismissed within ninety (90) days; or (iii) the dissolution of Developer. Notwithstanding the foregoing, no notice and cure period set forth in this Section 10.1(a) shall extend any dates by which Developer must achieve an event described in Section 3.2(b) .
(b)      Owners’ Remedies . Upon the occurrence of a Developer Default, the Owners (or either of them) shall have the right (but not the obligation) to:
(i)      Pursue a claim for specific performance of Developer’s obligations under this Agreement; and/or
(ii)      Recover the damages described in Section 3.1(d)(ii) and Section 3.1(e) hereof with respect to the matters described therein; and/or

3
LEGAL\19062995\17


(iii)      Pursue a claim to recover any costs expended by the Owners for Guaranty Cost Items related to the Base Project Work and Hotel Furnishings (including all costs payable by Office Owner pursuant to paragraph I.7.b(viii) of the Work Letter) that, in the aggregate, exceed the Base Project Guaranteed Maximum Development Price; and/or
(iv)      With respect to Office Owner only, pursue a claim to recover any costs expended for Guaranty Cost Items (including all costs payable by Office Owner pursuant to paragraph I.7.b.(viii) of the Work Letter) related to the Tenant Improvements that, in the aggregate, together with all costs incurred by Major Tenant related to the Tenant Improvements (without duplication), exceed the Tenant Improvements Guaranteed Maximum Development Price; and/or
(v)      Subject to Section 10.4 , pursue any other remedies available at law or equity in connection with Developer’s default, except that Owners’ remedies for late delivery of the Project, or any portion thereof, are limited as provided in Sections 3.1(d) , 3.1(e) and 10.1(c) .
The Owners may offset amounts found by the Independent Neutral to be due to the Owners against payments of the Development Fee otherwise payable to Developer and the amount so offset shall satisfy the Owners’ obligation to pay the Developer Fee to the extent of the offset.
(c)      Limited Termination Right and Self Help . [***].
10.2      Default by Owner . The Owners shall be deemed to be in default hereunder (an “ Owner Default ”): (i) if, as determined by the Independent Neutral in the manner set forth in Article XI , a Funding Default continues for a period of ten (10) days after written notice thereof by Developer to Comcast, (ii) the Owners (at Comcast’s direction) shall fail to keep, observe or perform any other covenant, agreement, term or provision of this Agreement to be kept, observed or performed by the Owners and such default continues for thirty (30) days after notice thereof by Developer to Comcast, which notice shall to the extent information is reasonably available to Developer specify the nature of the default and possible cure thereof, provided that, unless such failure is not susceptible to cure, if within such thirty (30) day period for a non-monetary default the Owners commence curing and continue diligently to cure such failure, then the Owners shall have such additional time as may be reasonably required to cure such failure; (iii) Comcast or the Major Tenant shall materially interfere with the performance of the Work by Developer, General Contractor, Principal Architect, Principal Lighting Designer, Principal Landscape Architect or any subcontractor, material supplier or other professional involved in the performance of the Work, which interference delays Substantial Completion of any element of the Project or materially increases the cost of any element of the Project and such default continues for thirty (30) days after notice thereof by Developer to Comcast and Major Tenant, which notice shall to the extent information is reasonably available to Developer specify the nature of the default and possible cure thereof, provided that, unless such default is not susceptible to cure, if within such thirty (30) day period for a non-monetary default Comcast or Major Tenant, as the case may be, commences curing and continues diligently to cure such default, then Comcast or Major Tenant, as the case may be, shall have such additional time as may be reasonably required to cure such default; (iv) an Event of Default by the Major Tenant occurs and is continuing under the Major Tenant Lease, (v) a receiver is appointed to take possession of the

3
LEGAL\19062995\17


assets of Comcast or Major Tenant or Comcast or Major Tenant makes an assignment for the benefit of creditors, or any action is taken or suffered by Comcast or Major Tenant under any insolvency, bankruptcy, reorganization, moratorium, or other debtor-relief act or statute (unless such proceeding is commenced by Developer or its Affiliates or any of them) and unless any involuntary proceeding is not dismissed within ninety (90) days following filing); or (vi) the dissolution of Comcast or Major Tenant.
10.3      Developer’s Remedies . Upon the occurrence of an Owner Default, Developer shall be entitled to suspend performance of the Work until such Owner Default is cured and to pursue any other remedy it may have at law or in equity, subject to the last sentence of this Section 10.3 and Section 10.4 . Any suspension of the Work pursuant to the immediately preceding sentence shall, to the extent it delays an item on the critical path of the Construction Schedule, constitute Force Majeure Delay. Furthermore, the applicable Guaranteed Maximum Development Price shall be increased by any additional reasonable cost resulting from any Owner Default hereunder, including any cost incurred by reason of the suspension of the Work as described above (such costs to include, by way of example and not limitation, costs to store materials and secure the construction site, increased costs of materials and personnel, costs to re-mobilize equipment, personnel and resources upon the resumption of the Work, and costs of overtime and/or additional personnel needed to ameliorate the delay caused by the suspension). Notwithstanding anything to the contrary, in no case may Developer terminate this Agreement unless there is a Funding Default by Comcast that is not remedied within ten (10) days after the date that a court of competent jurisdiction enters a final judgment that such Funding Default exists.
10.4      Special Damages . In no event shall Developer or any Owner be liable to the other for any consequential, special or indirect damages arising out of this Agreement, but this provision shall not be deemed to derogate from Owner’s rights under Sections 3.1(d) or 3.1(e) .
ARTICLE XI     
DISPUTE RESOLUTION
11.1      Selection of Independent Neutral . In the event of a dispute among the parties under this Agreement, they shall use reasonable efforts to select an unaffiliated third party with substantial expertise with respect to the matter in dispute to serve as an independent neutral with respect to such dispute (the “ Independent Neutral ”). If the Owners and Developer do not agree on an individual to serve as the Independent Neutral within ten (10) days after written notice of the dispute has been sent by Owners to Developer or vice versa, each shall, within ten (10) days thereafter, select an unaffiliated third party with substantial expertise with respect to the matter in dispute as “ Owners’ Dispute Representative ” and “ Developer’s Dispute Representative ”, respectively. Within fifteen (15) days after their selection, Owner’s Dispute Representative and Developer’s Dispute Representative shall jointly select an unaffiliated third party with substantial experience with respect to the matter in dispute to serve as the Independent Neutral.
11.2      Duties of the Independent Neutral . The Independent Neutral shall serve to facilitate the resolution of the particular dispute he or she was chosen to resolve. The Independent Neutral shall be provided a reasonable opportunity to interview Owners’ and Developer’s construction professionals, including, without limitation, the General Contractor, Principal Architect, Principal

3
LEGAL\19062995\17


Landscape Architect and Principal Lighting Designer. Once this provision is elected by Owners or Developer for a particular dispute(s), the dispute(s) in question shall be promptly presented to the Independent Neutral. The Independent Neutral will attempt to resolve disputes amicably within ten (10) days after he/she is presented with the dispute. The parties shall cooperate fully with the Independent Neutral and shall provide such additional information, documentation or materials as the Independent Neutral may request. If the parties do not resolve the dispute amicably within such ten (10)-day period, the Independent Neutral shall render his/her decision respecting such dispute, in writing, as promptly as possible but no later than thirty (30) days after it was presented to him/her. The parties shall comply with the decisions of the Independent Neutral; provided, however, that following the decision of the Independent Neutral, either party may elect to litigate the dispute in a court of competent jurisdiction within the Commonwealth of Pennsylvania. The time periods herein are not jurisdictional and shall be subject to change by the Independent Neutral for good cause shown. The Independent Neutral shall have the authority to establish the procedures for resolving the dispute including, without limitation, if necessary, retaining a consultant to advise on technical matters.
11.3      Compensation of Independent Neutral . The Independent Neutral shall be paid a reasonable fee for his/her services, and shall be reimbursed all reasonable out-of-pocket costs incurred in carrying out his/her duties hereunder. All costs of engaging the Independent Neutral, including costs described herein, shall be shared equally between the Owners, on the one hand, and Developer, on the other hand (and the share payable by the Owners shall be paid by the Owner(s) involved in the dispute, or if the dispute involves both Owners, shared between the Office Owner and the Hotel Owner pro rata based on their relative percentage interests in the Condominium). The Owners and Developer shall each pay their own costs associated with the engagement of Owner’s Dispute Representative and Developer’s Dispute Representative, respectively (the cost of the Owner’s Dispute Representative shall be shared between the Office Owner and the Hotel Owner pro rata based on their relative percentage interests in the Condominium).
11.4      Coordination with the Work Letter . If the dispute resolution procedures described in this Article XI are initiated in connection with one or more incidents which also give rise to the initiation of the dispute resolution procedures available under the Work Letter, then at the request of any party all such matters shall be consolidated into a single proceeding, a single Independent Neutral shall adjudicate all such disputes, and the costs and fees payable to the Independent Neutral, the Developer’s Dispute Representative and the Owner’s Dispute Representative shall be allocated among the parties as set forth herein, but without duplication of the fees otherwise payable to such parties under the Work Letter.
ARTICLE XII     
MISCELLANEOUS
12.1      Governing Law . This Agreement shall be construed and enforceable in accordance with the laws of the Commonwealth of Pennsylvania without regard to conflict of laws principles.
12.2      Entire Agreement . This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and the same shall not be amended, modified or canceled except in writing signed by the party to be charged.

3
LEGAL\19062995\17


12.3      Time of Essence . Time is of the essence with respect to all matters under this Agreement.
12.4      Successors and Assigns . All terms, conditions and agreements herein set forth shall inure to the benefit of, and be binding upon the parties and their respective permitted successors and assigns.
12.5      Waiver . The failure of any party to insist upon strict performance of any term or provision of this Agreement or to exercise any option, right or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the future of such term, provision, option, right or remedy, but the same shall continue and remain in full force and effect. No waiver by any party of any term or provision hereof shall be deemed to have been made unless expressed in writing and signed by such party.
12.6      Partial Invalidity . If any portion of this Agreement shall be decreed invalid by the judgment of a court, this Agreement shall be construed as if such portion had not been inserted herein except when such construction would constitute a substantial deviation from the general intent and purpose of this Agreement.
12.7      Include and Including, References to Sections; Approvals . When used in this Agreement, the words “including” and “include” shall be deemed to mean “including, without limitation” and “include, without limitation”, respectively, unless “without limitation” or a similar concept is already expressly set forth after the words “including” or “include”. References to Sections and Articles are to Sections and Articles in this Agreement, unless expressly provided otherwise. Unless a different standard is expressly stated, any approval rights of a party or a third party beneficiary in this Agreement may be exercised in such party’s sole and absolute discretion. The fact that this standard is mentioned in some provisions of this Agreement regarding approval but not others shall not derogate from the principle set forth in the preceding sentence.
12.8      Limitation on Owner’s Liability . The obligations of the Owners are intended to be binding only on the assets of the Owners and shall not be personally binding upon, nor shall any resort be had to, the private properties of its constituent partners, directors, shareholders, trustees, beneficiaries, officers, members or managers, or any employees or agents of any of them.
12.9      Limitation on Developer’s Liability . The obligations of Developer are intended to be binding only on the assets of the Developer and shall not be personally binding upon, nor shall any resort be had to, the private properties of its shareholders, trustees, beneficiaries, directors, officer, employees or agents.
12.10      Survival . All (i) indemnification, confidentiality, warranty, payment, insurance and other obligations of the parties under this Agreement that could reasonably be expected to require performance, (ii) all remedies of the parties that could reasonably be expected to be exercised, after the expiration or sooner termination of this Agreement, and (iii) all representations and warranties of the parties shall survive such expiration or sooner termination of this Agreement.


3
LEGAL\19062995\17


(Remainder of this page intentionally left blank)

3
LEGAL\19062995\17


IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date first above written.

OFFICE OWNER:

LIBERTY PROPERTY 18 TH & ARCH, LP

By: LPT 18 TH & ARCH STREET GP, LLC,
its general partner


By: /s/ George J. Alburger, Jr.            
Name: George J. Alburger, Jr.
Title: Chief Financial Officer



By: /s/ John S. Gattuso                
Name: John S. Gattuso
Title: Senior Vice President and Regional Director



HOTEL OWNER :

LIBERTY PROPERTY 18 TH & ARCH HOTEL, LLC


By: /s/ George J. Alburger, Jr.            
Name: George J. Alburger, Jr.
Title: Chief Financial Officer



By: /s/ John S. Gattuso                
Name: John S. Gattuso
Title: Senior Vice President and Regional Director





(Signatures continued on next page)

3
LEGAL\19062995\17



(Signatures continued from previous page)




DEVELOPER:

LIBERTY PROPERTY LIMITED PARTNERSHIP


By: /s/ George J. Alburger, Jr.            
Name: George J. Alburger, Jr.
Title: Chief Financial Officer



By: /s/ John S. Gattuso                
Name: John S. Gattuso
Title: Senior Vice President and Regional Director


3
LEGAL\19062995\17



EXHIBIT A

LEGAL DESCRIPTION OF
THE PROPERTY

ALL THAT CERTAIN lot or piece of ground with the buildings and improvements thereon erected, situate in the 8 th Ward of the City of Philadelphia and described in accordance with a Proposed Lot Configuration prepared by Pennoni Associates Inc. dated August 28, 2013 as follows:

BEGINNING at a point formed by the intersection of the proposed southerly side of Arch Street (on City Plan 72 feet wide) and the westerly side of 18 th Street (50 feet wide);

THENCE extending from said Point of Beginning southwardly along the westerly side of 18 th Street, south 11 degrees 21 minutes west, 157 feet 0 inches to a point formed by the intersection of the northerly side of Cuthbert Street (30 feet wide) and the intersection of the westerly side of 18 th Street (50 feet wide);

THENCE extending along the said northerly side of Cuthbert Street, north 78 degrees 59 minutes west, 396 feet 0 inches to a point formed by the intersection of the said northerly side of Cuthbert Street and the easterly side of 19 th Street (50 feet wide);

THENCE extending along said easterly side of 19 th Street, north 11 degrees 21 minutes east, 157 feet 0 inches to a point on the southerly side of Arch Street (on City Plan 72 feet wide);

THENCE extending along the said southerly side of Arch Street, South 78 degrees 59 minutes east, 396 feet 0 inches to the first mentioned point and place of BEGINNING.

BEING the same premises which MEPT WSC Arch Partners LP, a Delaware limited partnership, by Deed dated August 3, 2011 and recorded in the Department of Records in and for the City and County of Philadelphia, Commonwealth of Pennsylvania on August 8, 2011 as Document ID No. 52377335, granted and conveyed unto Liberty Property 18 th & Arch LP, a Delaware limited liability partnership, in fee.


EXHIBIT B

BASE PROJECT BUDGET

[***]
EXHIBIT C
AMOUNTS PREVIOUSLY ADVANCED
TOWARD GUARANTY COST ITEMS
[***]
Schedule 1
Preliminary Design Development Documents
(See Schedules 1-A, 1-B, 1-C and 1-D)

Schedule 1-A
Preliminary Core and Shell Design Development Plans dated 5/15/14
[***]

Schedule 1-B
Core and Shell Project Narrative dated 6/19/14
[***]

Schedule 1-C
Preliminary Hotel Interiors Design Development Plans dated 5/15/14
[***]

Schedule 1-D
Hotel Interiors Project Narrative dated 6/19/14
[***]
Schedule 6.1
[***]

3
LEGAL\19062995\17


EXHIBIT 12.1 - STATEMENT RE: COMPUTATION OF RATIO
 OF EARNINGS TO FIXED CHARGES
 AND RATIO OF EARNINGS TO COMBINED FIXED CHARGES
 
 
 
 
 
LIBERTY PROPERTY TRUST / LIBERTY PROPERTY LIMITED PARTNERSHIP
 (Amounts in thousands except ratio amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2014
 
 
 
 
 
 Earnings before fixed charges:
 
 
 
Income from continuing operations before equity in earnings of unconsolidated subsidiaries and after distribution of earnings from unconsolidated subsidiaries
 
 
$
55,922

 Add:
Interest expense
 
 
75,066

 
Depreciation expense on capitalized interest
 
 
857

 
Amortization of deferred financing costs
 
 
2,611

 
 
 
 
 
 Earnings before fixed charges
 
 
$
134,456

 
 
 
 
 
 
 
 
 
 
 Fixed charges:
 
 
 
 Interest expense
 
 
$
75,066

 Amortization of deferred financing costs
 
 
2,611

 Capitalized interest
 
 
6,763

 
 
 
 
 
 Fixed charges
 
 
84,440

 
 
 
 
 
 Preferred unit distributions
 
 
236

 
 
 
 
 
 Combined fixed charges
 
 
$
84,676

 
 
 
 
 
 Ratio of earnings to fixed charges
 
 
1.59

 
 
 
 
 
 Ratio of earnings to combined fixed charges
 
 
1.59






Exhibit 31.1
LIBERTY PROPERTY TRUST
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 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 officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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 officer(s) 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 functions):
(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 control over financial reporting.
 
Date:
July 31, 2014
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 officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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 officer(s) 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 functions):
(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 control over financial reporting.
 
Date:
July 31, 2014
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 officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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 officer(s) 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 functions):
(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 control over financial reporting.
 
Date:
July 31, 2014
By: /s/ WILLIAM P. HANKOWSKY
 
 
William P. Hankowsky
 
 
Chairman, President and Chief Executive Officer of
 
 
Liberty Property Trust, the Registrant’s 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 officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) 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
(d) 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 officer(s) 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 functions):
(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 control over financial reporting.
 
Date:
July 31, 2014
By: /s/ GEORGE J. ALBURGER, JR.
 
 
George J. Alburger, Jr.
 
 
Executive Vice President and Chief Financial Officer
of Liberty Property Trust, the Registrant’s 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, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, President and Chief Executive Officer 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/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chairman, President and Chief Executive Officer
 
 
Date:
July 31, 2014




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, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and Chief Financial Officer 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
 
 
Date:
July 31, 2014




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 Limited Partnership (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, WILLIAM P. HANKOWSKY, President and 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, 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/ WILLIAM P. HANKOWSKY
William P. Hankowsky
Chairman, President and Chief Executive Officer
of Liberty Property Trust, the Company’s sole general partner
 
 
Date:
July 31, 2014




Exhibit 32.4
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 Limited Partnership (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2014 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, GEORGE J. ALBURGER, JR., Executive Vice President and 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, the Company’s sole general partner
 
 
Date:
July 31, 2014