EXHIBIT 3.1
LIBERTY PROPERTY TRUST
ARTICLES OF AMENDMENT
THIS IS TO CERTIFY THAT:
FIRST: The Declaration of Trust of Liberty Property
Trust, a Maryland real estate investment trust (the "Trust"), is hereby amended
by deleting existing Article VII in its entirety and adding a new Article VII to
read as follows:
"ARTICLE VII
RESTRICTION ON TRANSFER,
ACQUISITION AND REDEMPTION OF EQUITY SHARES;
EXCHANGE FOR EXCESS SHARES
SECTION 7.1 Definitions. For the purposes of this Article VII,
the following terms shall have the following meanings:
"Aggregate Share Ownership Limit" shall mean not more than 5.0%
in value of the aggregate of the outstanding Equity Shares. The value of
the outstanding Equity Shares shall be determined by the Board of
Trustees in good faith, which determination shall be conclusive for all
purposes hereof.
"Beneficial Ownership" shall mean ownership of Equity Shares by
a Person, whether the interest in Equity Shares is held directly or
indirectly (including by a nominee), and shall include interests that
would be treated as owned through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall
have the correlative meanings.
"Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law,
regulation or executive order to close.
"Charitable Beneficiary" shall mean one or more beneficiaries of
the Charitable Trust as determined pursuant to Section 7.18, provided
that each such organization must be described in Section 501(c)(3) of
the Code and contributions to each such organization must be eligible
for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the
Code.
"Charitable Trust" shall mean any trust provided for in Section
7.13.
"Common Share Ownership Limit" shall mean not more than 5.0% (in
value or in number of shares, whichever is more restrictive) of the
aggregate number of the outstanding Common Shares. The number and value
of outstanding
Common Shares shall be determined by the Board of Trustees in good
faith, which determination shall be conclusive for all purposes hereof.
"Constructive Ownership" shall mean ownership of Equity Shares
by a Person, whether the interest in Equity Shares is held directly or
indirectly (including by a nominee), and shall include interests that
would be treated as owned through the application of Section 318(a) of
the Code, as modified by Section 856(d)(5) of the Code. The terms
"Constructive Owner," "Constructively Owns" and "Constructively Owned"
shall have the correlative meanings.
"Equity Shares" shall mean either Common Shares and Preferred
Shares.
"Excepted Holder" shall mean a shareholder of the Trust for whom
an Excepted Holder Limit is created by this Article VII or by the Board
of Trustees pursuant to Section 7.10.
"Excepted Holder Limit" shall mean, provided that the affected
Excepted Holder agrees to comply with the requirements established by
the Board of Trustees pursuant to Section 7.10, the percentage limit
established by the Board of Trustees for such Excepted Holder pursuant
to Section 7.10.
"Excess Shares" shall have the meaning ascribed to it in Section
7.2(b).
"Initial Date" shall mean the date of issuance of the Common
Shares pursuant to the initial underwritten public offering of Common
Shares.
The term "Market Price" on any date shall mean, with respect to
any class or series of outstanding Equity Shares, the Closing Price for
such Equity Shares on such date. The "Closing Price" on any date shall
mean the last sale price for such Equity Shares, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, for such Equity Shares, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
NYSE or, if such Equity Shares are not listed or admitted to trading on
the NYSE, as reported on the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which such Equity Shares are listed or
admitted to trading or, if such Equity Shares are not listed or admitted
to trading on any national securities exchange, the last quoted price,
or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotation
system that may then be in use or, if such Equity Shares are not quoted
by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in
such Equity Shares selected by the Board of Trustees or, in the event
that no trading price is available for such Equity Shares, the fair
market value of Equity Shares, as determined in good faith by the Board
of Trustees.
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"NYSE" shall mean the New York Stock Exchange, Inc.
"Prohibited Owner" shall mean, with respect to any purported
Transfer, any Person who, but for the provisions of Section 7.2, would
Beneficially Own or Constructively Own Equity Shares in violation of the
provisions of Section 7.2(a), and if appropriate in the context, shall
also mean any Person who would have been the record owner of Equity
Shares that the Prohibited Owner would have so owned.
"REIT" shall mean a real estate investment trust within the
meaning of Section 856 of the Code.
"Restriction Termination Date" shall mean the first day after
the Initial Date on which the Board of Trustees determines that it is no
longer in the best interests of the Trust to attempt to, or continue to,
qualify as a REIT or that compliance with the restrictions and
limitations on Beneficial Ownership, Constructive Ownership and
Transfers of Equity Shares set forth herein is no longer required in
order for the Trust to qualify as a REIT.
"SDAT" shall mean the State Department of Assessments and
Taxation of Maryland.
"Transfer" shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that
causes any Person to acquire Beneficial Ownership or Constructive
Ownership, or any agreement to take any such actions or cause any such
events, of Equity Shares or the right to vote or receive dividends on
Equity Shares, including (a) the granting or exercise of any option (or
any disposition of any option), (b) any disposition of any securities or
rights convertible into or exchangeable for Equity Shares or any
interest in Equity Shares or any exercise of any such conversion or
exchange right and (c) Transfers of interests in other entities that
result in changes in Beneficial or Constructive Ownership of Equity
Shares; in each case, whether voluntary or involuntary, whether owned of
record, Constructively Owned or Beneficially Owned and whether by
operation of law or otherwise. The terms "Transferring" and
"Transferred" shall have the correlative meanings.
"Trustee" shall mean the Person unaffiliated with the Trust and
a Prohibited Owner, that is appointed by the Trust to serve as trustee
of the Charitable Trust.
SECTION 7.2 Ownership Limitation.
(a) Basic Restrictions.
(i) (1) No Person, other than an Excepted Holder,
shall Beneficially Own or Constructively Own Equity Shares in excess of
the Aggregate Share Ownership Limit, (2) no Person, other than an
Excepted Holder, shall Beneficially Own or Constructively Own Common
Shares in excess of the
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Common Share Ownership Limit and (3) no Excepted Holder shall
Beneficially Own or Constructively Own Equity Shares in excess of the
Excepted Holder Limit for such Excepted Holder.
(ii) No Person shall Beneficially or Constructively
Own Equity Shares to the extent that such Beneficial or Constructive
Ownership of Equity Shares would result in the Trust being "closely
held" within the meaning of Section 856(h) of the Code (without regard
to whether the ownership interest is held during the last half of a
taxable year), or otherwise failing to qualify as a REIT (including, but
not limited to, Beneficial or Constructive Ownership that would result
in the Trust owning (actually or Constructively) an interest in a tenant
that is described in Section 856(d)(2)(B) of the Code if the income
derived by the Trust from such tenant would cause the Trust to fail to
satisfy any of the gross income requirements of Section 856(c) of the
Code).
(iii) Notwithstanding any other provisions contained
herein, any Transfer of Equity Shares (whether or not such Transfer is
the result of a transaction entered into through the facilities of the
NYSE or any other national securities exchange or automated inter-dealer
quotation system) that, if effective, would result in Equity Shares
being beneficially owned by less than 100 Persons (determined under the
principles of Section 856(a)(5) of the Code) shall be void ab initio,
and the intended transferee shall acquire no rights in such Equity
Shares.
(b) Transfer in Trust. If any Transfer of Equity Shares
(whether or not such Transfer is the result of a transaction entered
into through the facilities of the NYSE or any other national securities
exchange or automated inter-dealer quotation system) occurs which, if
effective, would result in any Person Beneficially Owning or
Constructively Owning Equity Shares in violation of Section 7.2(a)(i) or
(ii),
(i) then that number of Equity Shares the Beneficial
or Constructive Ownership of which otherwise would cause such Person to
violate Section 7.2(a)(i) or (ii) (rounded to the nearest whole share)
(the "Excess Shares") shall be automatically transferred to a Charitable
Trust for the benefit of a Charitable Beneficiary, as described in
Section 7.13, effective as of the close of business on the Business Day
prior to the date of such Transfer, and such Person shall acquire no
rights in such Excess Shares; or
(ii) if the transfer to the Charitable Trust
described in clause (i) of this sentence would not be effective for any
reason to prevent the violation of Section 7.2(a)(i) or (ii), then the
Transfer of that number of such Excess Shares that otherwise would cause
any Person to violate Section 7.2(a)(i) or (ii) shall be void ab initio,
and the intended transferee shall acquire no rights in such Excess
Shares.
SECTION 7.3 Prevention of Transfer. If the Board of Trustees or
any duly authorized committee thereof shall at any time determine in
good faith that a
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Transfer or other event has taken place that results in a violation of
Section 7.2(a) or that a Person intends to acquire or has attempted to
acquire Beneficial or Constructive Ownership of any Equity Shares in
violation of Section 7.2(a) (whether or not such violation is intended),
the Board of Trustees or a committee thereof shall take such action as
it deems advisable to refuse to give effect to or to prevent such
Transfer or other event, including, without limitation, causing the
Trust to redeem Equity Shares, refusing to give effect to such Transfer
on the books of the Trust or instituting proceedings to enjoin such
Transfer or other event; provided, however, that any Transfers or
attempted Transfers or other events in violation of Section 7.2(a) shall
automatically result in the transfer to the Charitable Trust described
above, and, where applicable, such Transfer (or other event) shall be
void ab initio as provided above irrespective of any action (or
non-action) by the Board of Trustees or a committee thereof.
SECTION 7.4 Notice to Trust. Any Person who acquires or attempts
or intends to acquire Beneficial Ownership or Constructive Ownership of
Equity Shares that will or may violate Section 7.2(a), or any Person who
would have owned Equity Shares that resulted in a transfer to the
Charitable Trust pursuant to the provisions of Section 7.2(b), shall
immediately give written notice to the Trust of such event, or in the
case of such a proposed or attempted transaction, give at least 15 days
prior written notice, and shall provide to the Trust such other
information as the Trust may request in order to determine the effect,
if any, of such Transfer on the Trust's status as a REIT.
SECTION 7.5 Information for Trust. From and after the Initial
Date and prior to the Restriction Termination Date:
(a) Every owner of more than five percent (or such lower
percentage as required by the Code or the Treasury Regulations
promulgated thereunder) of the outstanding Equity Shares, within 30 days
after the end of each taxable year, shall give written notice to the
Trust stating the name and address of such owner, the number of Equity
Shares Beneficially Owned and a description of the manner in which such
shares are held. Each such owner shall provide to the Trust such
additional information as the Trust may request in order to determine
the effect, if any, of such Beneficial Ownership on the Trust's status
as a REIT and to ensure compliance with the Aggregate Share Ownership
Limit.
(b) Each Person who is a Beneficial or Constructive Owner of
Equity Shares and each Person (including the shareholder of record) who
is holding Equity Shares for a Beneficial or Constructive Owner shall
provide to the Trust such information as the Trust may request, in good
faith, in order to determine the Trust's status as a REIT and to comply
with requirements of any taxing authority or governmental authority or
to determine such compliance.
SECTION 7.6 Other Action by Board. Nothing contained in this
Article VII shall limit the authority of the Board of Trustees to take
such other action as it
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deems necessary or advisable to protect the Trust and the interests of
the Shareholders by preservation of the Trust's status as a REIT.
SECTION 7.7 Ambiguities. In the case of an ambiguity in the
application of any of the provisions of this Article VII, including any
definition contained in Section 7.1, the Board of Trustees shall have
the power to determine the application of the provisions of this Article
VII with respect to any situation based on the facts known to it.
SECTION 7.8 Increase in Ownership Limit. Subject to the
limitations provided in Section 7.9, the Board of Trustees may from time
to time increase the Common Share Ownership Limit and the Aggregate
Share Ownership Limit.
SECTION 7.9 Limitations on Changes in Ownership Limits. Prior to
the modification of the Common Share Ownership Limit and the Aggregate
Share Ownership Limit pursuant to Section 7.8, the Board of Trustees may
require such opinions of counsel, affidavits, undertakings or agreements
as it may deem necessary or advisable in order to determine or ensure
the Trust's status as a REIT.
SECTION 7.10 Exceptions by Board.
(a) Subject to Section 7.2(a)(ii), the Board of Trustees, in
its sole discretion, may exempt a Person from the Aggregate Share
Ownership Limit and/or the Common Share Ownership Limit, as the case may
be, and may establish or increase an Excepted Holder Limit for such
Person if:
(i) the Board of Trustees obtains such
representations and undertakings from such Person as are reasonably
necessary to ascertain that no individual (defined to mean any Person
who would be treated as an individual for purposes of Section 542(a)(2)
of the Code (determined by taking into account Section 856(h)(3)(A) of
the Code)) would Beneficially or Constructively Own Equity Shares in
violation Section 7.2(a)(ii);
(ii) such Person does not and represents that it will
not own, actually or Constructively, an interest in a tenant of the
Trust (or a tenant of any entity owned or controlled by the Trust) that
would cause the Trust to own, actually or Constructively, more than a
5.0% interest (as set forth in Section 856(d)(2)(B) of the Code) in such
tenant and the Board of Trustees obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain
this fact (for this purpose, a tenant from whom the Trust (or an entity
owned or controlled by the Trust) derives (and is expected to continue
to derive) a sufficiently small amount of revenue such that, in the
opinion of the Board of Trustees, rent from such tenant would not
adversely affect the Trust's ability to qualify as a REIT, shall not be
treated as a tenant of the Trust); and
(iii) such Person agrees that any violation or
attempted violation of such representations or undertakings (or other
action which is contrary to the
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restrictions contained in Sections 7.2 through 7.7) will result in such
Equity Shares being automatically transferred to a Charitable Trust in
accordance with Sections 7.2(b) and 7.3.
(b) Prior to granting any exception pursuant to Section
7.10(a), the Board of Trustees may require a ruling from the Internal
Revenue Service, or an opinion of counsel, in either case in form and
substance satisfactory to the Board of Trustees in its sole discretion,
as it may deem necessary or advisable in order to determine or ensure
the Trust's status as a REIT. Notwithstanding the receipt of any ruling
or opinion, the Board of Trustees may impose such conditions or
restrictions as it deems appropriate in connection with granting such
exception.
(c) Subject to Section 7.2(a)(ii), an underwriter which
participates in a public offering or a private placement of Equity
Shares (or securities convertible into or exchangeable for Equity
Shares) may Beneficially Own or Constructively Own Equity Shares (or
securities convertible into or exchangeable for Equity Shares) in excess
of the Aggregate Share Ownership Limit, the Common Share Ownership Limit
or both such limits, but only to the extent necessary to facilitate such
public offering or private placement.
(d) The Board of Trustees may only reduce the Excepted
Holder Limit for an Excepted Holder: (1) with the written consent of
such Excepted Holder at any time, or (2) pursuant to the terms and
conditions of the agreements and undertakings entered into with such
Excepted Holder in connection with the establishment of the Excepted
Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be
reduced to a percentage that is less than the Common Share Ownership
Limit.
SECTION 7.11 Legend. Each certificate for Equity Shares shall
bear substantially the following legend:
The securities represented by this certificate are subject to
restrictions on transfer for the purpose of the Trust's maintenance of
its status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended. Except as otherwise provided pursuant to the
Declaration of Trust, no Person may Beneficially Own Shares in excess of
that number of Shares which equals the lesser of 5.0% (or such greater
percentage as may be determined by the Board of Trustees) of (a) the
number of outstanding Equity Shares of the Trust and (b) the value of
outstanding Equity Shares of the Trust. Any Person who attempts or
proposes to beneficially own Shares in excess of the above limitations
must notify the Trust in writing at least 15 days prior to such proposed
or attempted Transfer. All capitalized terms in this legend have the
meanings defined in the Declaration of Trust of the Trust, a copy of
which will be sent without charge to each Shareholder who so requests.
If the restrictions on transfer are violated, the securities represented
hereby will be designated and treated as Excess Shares which will be
held in the Charitable Trust by the Trust.
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Instead of the foregoing legend, the certificate may state that
the Trust will furnish a full statement about certain restrictions on
transferability to a shareholder on request and without charge.
SECTION 7.12 Severability. If any provision of this Article VII
or any application of any such provision is determined to be void,
invalid or unenforceable by any court of competent jurisdiction, the
validity and enforceability of the remaining provisions shall not be
affected and other applications of such provision shall be affected only
to the extent necessary to comply with the determination of such court.
SECTION 7.13 Ownership in Trust. Upon any purported Transfer or
other event described in Section 7.2(b) that would result in a transfer
of Equity Shares to a Charitable Trust, such Equity Shares shall be
deemed to have been transferred to the Trustee as trustee of a
Charitable Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such transfer to the Trustee shall be deemed to be
effective as of the close of business on the Business Day prior to the
purported Transfer or other event that results in the transfer to the
Charitable Trust pursuant to Section 7.2(b). The Trustee shall be
appointed by the Trust and shall be a Person unaffiliated with the Trust
and any Prohibited Owner. Each Charitable Beneficiary shall be
designated by the Trust as provided in Section 7.18.
SECTION 7.14 Status of Shares Held by the Trustee. Equity Shares
held by the Trustee shall be issued and outstanding Equity Shares of the
Trust. The Prohibited Owner shall have no rights in the shares held by
the Trustee. The Prohibited Owner shall not benefit economically from
ownership of any shares held in trust by the Trustee, shall have no
rights to dividends or other distributions and shall not possess any
rights to vote or other rights attributable to the shares held in the
Charitable Trust.
SECTION 7.15 Dividend and Voting Rights. The Trustee shall have
all voting rights and rights to dividends or other distributions with
respect to Equity Shares held in the Charitable Trust, which rights
shall be exercised for the exclusive benefit of the Charitable
Beneficiary. Any dividend or other distribution paid to a Prohibited
Owner prior to the discovery by the Trust that Equity Shares have been
transferred to the Trustee shall be paid with respect to such Equity
Shares by the Prohibited Owner to the Trustee upon demand and any
dividend or other distribution authorized but unpaid shall be paid when
due to the Trustee. Any dividends or distributions so paid over to the
Trustee shall be held in trust for the Charitable Beneficiary. The
Prohibited Owner shall have no voting rights with respect to shares held
in the Charitable Trust and, subject to Maryland law, effective as of
the date that Equity Shares have been transferred to the Trustee, the
Trustee shall have the authority (at the Trustee's sole discretion) (i)
to rescind as void any vote cast by a Prohibited Owner prior to the
discovery by the Trust that Equity Shares have been transferred to the
Trustee and (ii) to recast such vote in accordance with the desires of
the Trustee acting for the benefit of the Charitable
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Beneficiary; provided, however, that if the Trust has already taken
irreversible trust action, then the Trustee shall not have the authority
to rescind and recast such vote. Notwithstanding the provisions of this
Article VII, until the Trust has received notification that Equity
Shares have been transferred into a Charitable Trust, the Trust shall be
entitled to rely on its share transfer and other shareholder records for
purposes of preparing lists of shareholders entitled to vote at
meetings, determining the validity and authority of proxies and
otherwise conducting votes of shareholders.
SECTION 7.16 Sale of Shares by Trustee. Within 20 days of
receiving notice from the Trust that Equity Shares have been transferred
to the Charitable Trust, the Trustee of the Charitable Trust shall sell
the shares held in the Charitable Trust to a person, designated by the
Trustee, whose ownership of the shares will not violate the ownership
limitations set forth in Section 7.2(a). Upon such sale, the interest of
the Charitable Beneficiary in the shares sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the Prohibited
Owner and to the Charitable Beneficiary as provided in this Section
7.16. The Prohibited Owner shall receive the lesser of (1) the price
paid by the Prohibited Owner for the shares or, if the Prohibited Owner
did not give value for the shares in connection with the event causing
the shares to be held in the Charitable Trust (e.g., in the case of a
gift, devise or other such transaction), the Market Price of the shares
on the day of the event causing the shares to be held in the Charitable
Trust and (2) the price per share received by the Trustee from the sale
or other disposition of the shares held in the Charitable Trust. Any net
sales proceeds in excess of the amount payable to the Prohibited Owner
shall be immediately paid to the Charitable Beneficiary. If, prior to
the discovery by the Trust that Equity Shares have been transferred to
the Trustee, such shares are sold by a Prohibited Owner, then (i) such
shares shall be deemed to have been sold on behalf of the Charitable
Trust and (ii) to the extent that the Prohibited Owner received an
amount for such shares that exceeds the amount that such Prohibited
Owner was entitled to receive pursuant to this Section 7.16, such excess
shall be paid to the Trustee upon demand.
SECTION 7.17 Purchase Right in Shares Transferred to the
Trustee. Equity Shares transferred to the Trustee shall be deemed to
have been offered for sale to the Trust, or its designee, at a price per
share equal to the lesser of (i) the price per share in the transaction
that resulted in such transfer to the Charitable Trust (or, in the case
of a devise or gift, the Market Price at the time of such devise or
gift) and (ii) the Market Price on the date the Trust, or its designee,
accepts such offer. The Trust shall have the right to accept such offer
until the Trustee has sold the shares held in the Charitable Trust
pursuant to Section 7.16. Upon such a sale to the Trust, the interest of
the Charitable Beneficiary in the shares sold shall terminate and the
Trustee shall distribute the net proceeds of the sale to the Prohibited
Owner.
SECTION 7.18 Designation of Charitable Beneficiaries. By written
notice to the Trustee, the Trust shall designate one or more nonprofit
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organizations to be the Charitable Beneficiary of the interest in the
Charitable Trust such that (i) Equity Shares held in the Charitable
Trust would not violate the restrictions set forth in Section 7.2(a) in
the hands of such Charitable Beneficiary and (ii) each such organization
must be described in Section 501(c)(3) of the Code and contributions to
each such organization must be eligible for deduction under each of
Sections 170(b)(1)(A), 2055 and 2522 of the Code.
SECTION 7.19 Priority of New York Stock Exchange, Inc.
Transactions. Notwithstanding anything in this Article VII to the
contrary, nothing herein shall preclude the settlement of a transaction
entered into through the facilities of the New York Stock Exchange, Inc.
The fact that the settlement of any transaction occurs shall not negate
the effect of any other provision of this Article VII and any transferee
in such a transaction shall be subject to all of the provisions and
limitations set forth in this Article VII.
SECTION 7.20 Enforcement. The Trust is authorized specifically
to seek equitable relief, including injunctive relief, to enforce the
provisions of this Article VII.
SECTION 7.21 Non-Waiver. No delay or failure on the part of the
Trust or the Board of Trustees in exercising any right hereunder shall
operate as a waiver of any right of the Trust or the Board of Trustees,
as the case may be, except to the extent specifically waived in
writing."
SECOND: The Articles of Amendment as set forth above
have been duly advised by the board of trustees and approved by the shareholders
of the Trust as required by law.
THIRD: The undersigned President acknowledges these
Articles of Amendment to be the act of the Trust and as to all matters or facts
required to be verified under oath, the undersigned President acknowledges that
to the best of the President's knowledge, information and belief, these matters
and facts are true in all material respects and that this statement is made
under the penalties for perjury.
IN WITNESS WHEREOF, the Trust has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and
attested to by its Secretary on this 21st day of June, 2004.
ATTEST: LIBERTY PROPERTY TRUST
/s/ James J. Bowes By:/s/ William P. Hankowsky (SEAL)
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James J. Bowes, Secretary William P. Hankowsky, President
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