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FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-3688
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 31, 1996)
700,000 SHARES
LEXINGTON CORPORATE PROPERTIES, INC.
CLASS A SENIOR
CUMULATIVE CONVERTIBLE
PREFERRED STOCK
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THE 700,000 SHARES OF PREFERRED STOCK (THE "SHARES") OF THE
COMPANY, PAR VALUE $.0001, OFFERED HEREBY (THE "OFFERING") ARE BEING SOLD
DIRECTLY BY THE COMPANY. PRIOR TO THIS OFFERING THERE HAS BEEN NO PUBLIC MARKET
FOR THE SHARES. EACH SHARE IS CONVERTIBLE INTO ONE (1) SHARE OF COMMON STOCK,
PAR VALUE $.0001, OF THE COMPANY, SUBJECT TO ADJUSTMENT, AND IS ENTITLED TO ONE
(1) VOTE FOR EACH SHARE OF COMMON STOCK INTO WHICH SUCH SHARE IS CONVERTIBLE.
SEE "VOTING RIGHTS." THE COMMON STOCK INTO WHICH SUCH PREFERRED STOCK IS
CONVERTIBLE IS LISTED ON THE NEW YORK STOCK EXCHANGE (THE "NYSE") UNDER THE
SYMBOL "LXP."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JANUARY 21, 1997
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THE COMPANY
Lexington Corporate Properties, Inc. is a self-managed and
self-administered real estate investment trust ("REIT") which acquires, owns and
manages a geographically diversified portfolio of high quality office,
industrial and retail properties that are net leased to corporations operating
in a variety of industries. Under a net lease ("Net Lease"), the tenant bears
all, or substantially all, of the costs and cost increases for real estate
taxes, insurance and ordinary maintenance.
The Company commenced operations in 1993 as an umbrella
partnership real estate investment trust ("UPREIT") to continue the business of
its predecessor companies which had commenced operations in the Net Lease
business in 1986. The Company believes that the UPREIT structure facilitates the
Company's ability to acquire properties by using operating partnership units as
currency in property acquisitions.
The Company was originally incorporated under the laws of the
State of Delaware, and was reincorporated in the State of Maryland in June 1994.
References herein to the Company include references to the Company's Delaware
predecessor and the predecessor companies referenced above, unless the context
otherwise requires. The principal executive offices of the Company are located
at 355 Lexington Avenue, New York, New York 10017, and its telephone number is
(212) 692-7260.
USE OF PROCEEDS
The net proceeds to the Company from the Offering are
estimated to be approximately $8,400,000, after payment of expenses related to
the Offering. The Company intends to use such net proceeds for general corporate
purposes, which may include the acquisition of additional properties, the
improvement of certain properties or other matters incidental to the Company's
business and operations.
DESCRIPTION OF CLASS A SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK
The following description of certain terms of the Shares
offered hereby (which are included in the Preferred Stock referenced in the
accompanying Prospectus) supplements, and to the extent inconsistent therewith
replaces, the description and general terms and provisions of Preferred Stock
set forth in the accompanying Prospectus, to which reference is hereby made. The
following statements related to the Shares are summaries of the provisions
contained in the Articles Supplementary of Lexington Corporate Properties, Inc.
(the "Certificate of Designation") dated January 17, 1997 and do not purport to
be complete. As such, statements made herein are qualified in their entirety by
reference to the provisions of the Certificate of Designation. Capitalized terms
used herein but not otherwise defined shall have the meanings given to such
terms in the Prospectus or the Certificate of Designation.
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GENERAL
The Shares are being offered to Five Arrows Realty Securities
L.L.C. (the "Investor") at a per Share purchase price of $12.50. Pursuant to the
terms of an Investment Agreement between the Company and Investor, the Offering
is limited to an aggregate of up to 2,000,000 Shares for an aggregate purchase
price of $25,000,000. On January 21, 1997, the Company exercised its right under
the Investment Agreement to sell 700,000 Shares to the Investor.
DIVIDENDS
The holders of the Shares are entitled to receive, when, as
and if declared by the Board of Directors, dividends on the Shares, out of funds
legally available therefor, under the Maryland General Corporation Law,
cumulative (commencing as of the date of issuance of the Shares) preferential
cash dividends at a quarterly rate equal to the greater of (i) $0.295 per Share,
per quarter and (ii) the product of 1.05 and the per Share quarterly dividend
paid in respect of the Common Stock, par value $.0001 per share of the Company
(subject to adjustment). Dividends shall be paid for each of the quarters ending
on March 30, June 30, September 30 and December 31 and shall be paid on each
February 15, May 15, August 15 and November 15, with respect to the prior
quarter, commencing May 15, 1997, provided that, if such date is not a business
day, on the next succeeding business day. Dividends will cease to accrue on the
first to occur of (i) the date on which the Liquidation Value of the Shares
(plus all accrued and unpaid dividends thereon whether or not declared) is paid
to the holders thereof in connection with the liquidation of the Company, (ii)
the last day of the quarter preceding the quarter in which the Shares are
converted into shares of Common Stock if such date is after the record date for
the Regular Quarterly Dividend (as herein defined) on the Common Stock for the
quarter in which such conversion takes place, (iii) the last day of the quarter
second preceding the quarter in which the Shares are converted into shares of
Common Stock if such date is prior to the record date for the Regular Quarterly
Dividend on the Common Stock for the quarter in which such conversion takes
place or (iv) the date on which the Shares are otherwise acquired and paid for
by the Company.
Dividends are calculated and paid pro rata based on the number
of actual days in any partial quarter. In the event that the legally available
funds, under Maryland General Corporation Law, available for the payment of
dividends shall be insufficient for the payment of the entire amount of
dividends payable with respect to Shares on any date on which the Board has
declared the payment of a dividend or otherwise, the amount of any available
surplus shall be allocated for the payment of dividends with respect to the
Shares and any other shares of capital stock that are pari passu as to dividends
pro rata based upon the amount of accrued and unpaid dividends of such shares of
capital stock.
Dividends on the Shares shall accrue whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared and
shall accumulate to the extent such dividends are not paid.
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Unless dividends have been paid to the holders of the Shares,
the Company and its subsidiaries shall be prohibited from paying dividends on,
making any other distributions on, or redeeming or purchasing or otherwise
acquiring for consideration any capital stock of the Company.
LIQUIDATION RIGHTS
In the event of the liquidation, dissolution or winding up of
the Company, before the distribution or payment to the holders of shares of
capital stock of the Company ranking junior to the Shares (as to dividends or
upon liquidation, dissolution or winding up), the holders of the Shares shall be
entitled to be paid $12.50 per share (the "Liquidation Value") plus any accrued
and unpaid dividends whether or not declared (or a pro rata portion thereof with
respect to fractional shares), provided, however, that if the liquidation,
dissolution or winding up of the Company occurs in connection with or subsequent
to a Change of Control, then the holders of the Shares shall be entitled to be
paid an amount equal to 102% of the Liquidation Value plus any accrued and
unpaid dividends whether or not declared. If, upon liquidation, dissolution or
winding up of the Company, there are insufficient assets to permit the full
payment to the holders of the Shares, the sums which such holders are entitled
to receive in such case, then all of the assets available for distribution to
the holders of the Shares shall be distributed among and paid to the holders of
the Shares, ratably in proportion to the respective amounts that would be
payable to such holders if such assets were sufficient to permit payment in
full.
VOTING RIGHTS
The holders of the Shares will have one (1) vote for each
share of Common Stock into which each Share is convertible and will be entitled
to vote or consent on all matters submitted to the holders of Common Stock,
together with the holders of the Common Stock and the holders of any other
classes or series of stock which are entitled to vote on such matter, as a
single class and not as a separate class.
In addition, subject to certain exceptions, so long as the
Investor, an affiliate thereof, a successor in which the current members of the
Investor own greater than a majority interest of such successor, or a member of
the Investor, is the holder of either (A) all of the outstanding Shares or (B)
an amount of the voting securities of the Company which, if converted into
shares of Common Stock, would exceed 7.5% of the outstanding Common Stock on a
fully diluted basis (determined on the basis of then convertible, exercisable or
exchangeable securities, warrants or options issued by the Company) (the
"Minimum Threshold"), then, in each such case, the holders of the Shares shall
have the special right, voting separately as a single class, to elect as soon as
practical, a director or directors, as the case may be, to the Board (the
"Preferred Directors"). Except to the extent that the Board may otherwise
determine hereafter, the Preferred Directors shall not be entitled to receive
any compensation, in cash or kind, in connection with their service as a
director of the Company; provided, that, the indemnification or insurance
provided by the Company to its directors shall not be deemed "compensation" for
these purposes.
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So long as the conditions set forth in either (A) or (B) above
exist, then in each such case, (i) the number of directors constituting the
Board shall be automatically increased by one (1) member and (ii) upon the
occurrence of any of (x) the payment of the Regular Quarterly Dividend on the
Common Stock for any quarter of less than $.28 per share (subject to adjustment
to the Conversion Ratio) (the "Dividend Reduction Default"), (y) the Company's
ratio of its Consolidated EBITDA to its reported interest expense (as described
in clause (2) under the definition of Consolidated EBITDA below) for each of
three consecutive fiscal quarters was less than 1.25 to 1.00 (the "Earnings
Default"), or (z) the Company fails to pay in full the quarterly dividend
payable hereunder (whether or not declared) at any time in respect of the Shares
(the "Dividend Payment Default"), then, in the case of any of the events
described in clauses (x), (y), or (z), the Board shall be automatically
increased by an additional one (1) member for an aggregate increase of two (2)
directors pursuant to clauses (i) and (ii) above. The position on the Board
established pursuant to clause (i) shall remain available until the Minimum
Threshold is no longer satisfied and shall not be available at any time
thereafter. The position on the Board established pursuant to clause (ii) shall
remain available until the earlier of (i) the date on which the Minimum
Threshold fails to be satisfied and (ii) the Dividend Reduction/Earnings Cure
(as herein defined).
The term "Regular Quarterly Dividend" means any cash dividend
or dividends paid in any calendar quarter that do not in the aggregate exceed
the Company's reported Funds From Operations (as defined by the National
Association of Real Estate Investment Trusts prior to 1996) for the quarter
relating to such dividend.
The term "Consolidated EBITDA" means the consolidated net
income of the Company (before extraordinary income or gains) as reported in its
Quarterly Report on Form 10-Q under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or otherwise furnished to holders of Shares by the
sum of the following (without duplication):
(1) all income and state franchise taxes paid or
accrued according to Generally Accepted Accounting Principles
("GAAP") for such period (other than income taxes attributable
to extraordinary, unusual or non-recurring gains or losses
except to the extent that such gains were not included in
Consolidated EBITDA),
(2) all interest expense paid or accrued in
accordance with GAAP for such period (including financing fees
and amortization of deferred financing fees and amortization
of original issue discount),
(3) depreciation and depletion reflected in such
reported net income,
(4) amortization reflected in such reported net
income including, without limitation, amortization of
capitalized debt issuance costs (only to the extent that such
amounts have not been previously included in the amount of
Consolidated EBITDA pursuant to clause (2) above), and
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(5) any other non-cash charges or discretionary
prepayment penalties, to the extent deducted from consolidated
net income (including, but not limited to, income allocated to
minority interests).
If, at any time, (i) the rights granted pursuant to the
immediately preceding paragraph shall no longer be available, (ii) any persons
designated to serve on the Board pursuant to such paragraph shall have resigned
as required by the terms of such paragraph and (iii) a Dividend Payment Default
shall have occurred for three consecutive quarters, the number of directors
constituting the Board shall be automatically increased by two (2) members. The
position on the Board created hereby shall continue to be available until the
earlier of (i) the date on which there are no Shares of the Company outstanding
and (ii) the date on which the Dividend Payment Cure (as herein defined) is
effected.
The term "Dividend Reduction/Earnings Cure" shall mean the
time at which (i) the Regular Quarterly Dividend paid in the immediately
preceding quarter on the Common Stock shall be greater than $.28 per share
(subject to adjustment), (ii) the Company reports for the prior three
consecutive fiscal quarters that the ratio of its Consolidated EBITDA to its
reported interest expense (as described in clause (2) under the definition of
Consolidated EBITDA above) for each such quarter was greater than 1.25 to 1.00,
and (iii) all accrued and unpaid dividends, whether or not declared, on the
Shares have been paid or made available for payment. Upon the occurrence of the
Dividend Payment Default, the same shall be deemed to continue and exist until
(the "Dividend Payment Cure") such time as the earlier to occur of (i) none of
the Shares shall remain outstanding and (ii) all accrued and unpaid dividends,
whether or not declared, on the Shares have been paid or made available for
payment.
Furthermore, so long as any Shares are outstanding, without
the consent of the holders of at least a majority of the Shares at the time
outstanding, the Company may not (i) effect or validate the amendment,
alteration or repeal of any provision of the Certificate of Designation, (ii)
effect or validate the amendment, alteration or repeal of any provision of the
Charter of the Company which would adversely effect the rights of the holders of
the Shares, (iii) other than as required to maintain the status of the Company
as a real estate investment trust (or to prevent the Company from becoming a
Pension-held REIT) as described in Section 856 of the Internal Revenue Code of
1986, as amended, effect or validate the amendment, alteration or repeal of any
provision of the Charter of the Company which would increase in any respect the
restrictions or limitations on ownership applicable to the Shares pursuant
thereto, (iv) effect or validate the amendment, alteration or repeal of any
provision of the Charter of the Company or By-Laws of the Company in a manner
which would make the right to indemnification provided to any present or future
director elected by the holders of Shares materially different from that
provided to other members of the Board, (v) other than the Shares, issue a
series of preferred stock that would vote as a class with the Shares with
respect to the election of any Preferred Director) or shares of stock ranking
senior or equal to the Shares (as to dividends or upon liquidation, dissolution
or winding up), or (vi) effect or validate the amendment, alteration or repeal
of any provision of the Charter of
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the Company or By-Laws of the Company so as to increase the number of members of
the Board beyond twelve (12) members (not including any Preferred Directors).
Any action required or permitted to be taken by holders of
Shares at any meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if a consent, in writing, setting forth the
action so taken, is signed by the holders of Shares who would have been
sufficient to approve such action at a meeting duly held and is executed and
delivered to the Secretary of the Company for placement among the minutes of
proceedings of the stockholders of the Company.
REDEMPTION
Subject to certain exceptions, the Company may, at its option,
to the extent it shall have legally available funds therefor, under Maryland
General Corporation Law, redeem all (but not less than all) of the outstanding
Shares, at any time on or after the date which is the fifth (5th) anniversary of
the original date of issuance of the Shares. The option of the Company to redeem
the Shares shall be exercised by mailing of a written notice of election (the
"Redemption Notice") by the Company to the holders of the Shares at such
holder's address appearing in the records of the Company not less than thirty
(30) days prior to the date specified therein for the redemption of the Shares.
On the redemption date specified in the Redemption Notice, the
Company shall be required, unless such holder of Shares has exercised its
conversion rights with respect to such Shares, to purchase from such holder of
Shares, such Shares, at a price equal to the product of (i) $12.50 per Share
plus accrued and unpaid dividends, plus a premium equal to the following
percentage of $12.50:
<TABLE>
<CAPTION>
Redemption Occurs
On or After But Prior to % Premium
- ----------- ------------ ---------
<S> <C> <C>
December 31, 2001 December 31, 2003 6.0
December 31, 2003 December 31, 2005 5.0
December 31, 2005 December 31, 2007 4.0
December 31, 2007 December 31, 2009 3.0
December 31, 2009 December 31, 2010 2.0
December 31, 2010 December 31, 2011 1.0
December 31, 2011 0.0
</TABLE>
and (ii) the number of Shares held by such holder to be redeemed (the
"Redemption Price").
In addition, subject to the conversion rights of the holder of
Shares, if a Change of Control occurs on or before December 31, 2001, the
Company may, at its option, to the extent it
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shall have legally available funds therefor, under Maryland General Corporation
Law, redeem all (but not less than all) of the outstanding Shares on the date of
such Change of Control. On the date of the Change of Control, the Company shall
be required, unless such holder of Shares has exercised its right to convert
such Shares, to purchase from such holder such Shares, at a price equal to the
product of (i) $13.75 plus accrued and unpaid dividends and (ii) the number of
Shares held by such holder to be redeemed. No Share is entitled to any dividends
accruing after the date on which the payment for such share is paid or made
available for payment to the holder thereof.
If a Change of Control or Put Event occurs each holder of
Shares will have the right to require that the Company, to the extent the
Company shall have legally available funds therefor, under Maryland General
Corporation Law, to redeem such holder's Shares at a redemption price payable in
cash in an amount equal to 102% of the Liquidation Value thereof, plus accrued
and unpaid dividends whether or not declared, if any (the "Put Payment"), to the
date of redemption or the date payment is made available (the "Put Date").
If a REIT-Put Event occurs each holder of Shares will have the
right to require that the Company, to the extent the Company shall have legally
available funds therefor, under Maryland General Corporation Law, to redeem such
holder's Shares at a redemption price payable in cash in an amount equal to the
greater of (i) 110% of the Liquidation Value thereof, plus accrued and unpaid
dividends whether or not declared, if any, (ii) 105% of the Current Market
Price, plus accrued and unpaid dividends whether or not declared, if any, and
(iii) the difference between the 52-Week Trading High and $12.50, plus accrued
and unpaid dividends whether or not declared, if any (any of (i), (ii) or (iii),
the "REIT-Put Payment"), to the date of redemption or the date payment is made
available (the "REIT-Put Date").
"52-Week Trading High" means, for any date, the highest per
share closing price of the Common Stock for the 52-calendar week period
immediately preceding such date.
"Change of Control" means each occurrence of any of the
following: (i) the acquisition, directly or indirectly, by any individual or
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act)
of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act, except
that such individual or entity shall be deemed to have beneficial ownership of
all shares that any such individual or entity has the right to acquire, whether
such right is exercisable immediately or only after passage of time) of more
than 30% of the aggregate outstanding voting power of capital stock of the
Company; (ii) other than with respect to the election, resignation or
replacement of the Preferred Directors, during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of 66 2/3% of the directors of the Company
(excluding Preferred Directors) then still in office who were either directors
at the beginning of such period, or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office; and (iii) (A) the Company
consolidates with or merges into
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another entity or conveys, transfers or leases all or substantially all of their
respective assets (including, but not limited to, real property investments) to
any individual or entity, or (B) any corporation consolidates with or merges
into the Company, which in either event (A) or (B) is pursuant to a transaction
in which the outstanding voting capital stock of the Company is reclassified or
changed into or exchanged for cash, securities (unless the holders of the
exchanged securities of the Company immediately prior to such transaction hold
immediately after such transaction at least a majority of the securities into
which such exchange was made) or other property; provided, however, that the
events described in clause (iii) shall not be deemed to be a Change of Control
if the sole purpose of such event is that the Company is seeking to change its
domicile or to change its form from a corporation to a statutory business trust.
"Put Event" means each occurrence of the Company ceasing to be
engaged primarily in the business of owning and managing triple net leased
properties directly, or through subsidiaries, as carried on as of the date
hereof and described in the Company's Annual Report on Form 10-K as filed with
the Commission for the year ended December 31, 1995.
"REIT-Put Event" means each occurrence of either of (i) the
Company fails to qualify as a real estate investment trust as described in
Section 856 of the Internal Revenue Code of 1986, as amended, other than as a
result of any action, or unreasonable failure to act, by the holders of Shares;
(ii) the Company becomes a "Pension-held REIT" as defined in Section
856(h)(3)(D) of the Internal Revenue Code of 1986, as amended, other than as a
result of any action, or unreasonable failure to act, by holders of Shares.
OPTIONAL CONVERSION AT THE OPTION OF THE HOLDER
A holder of Shares shall have the right, at such holder's
option, at any time to convert all or any portion of Shares held by such holder
into the number of fully paid and non-assessable shares of Common Stock obtained
by dividing the number of Shares being converted by the Conversion Ratio and by
surrendering to the Company such Shares to be converted. Such surrender shall be
made in the manner provided herein; provided, however, that the right to convert
any Shares called for redemption shall terminate at the close of business on the
Final Conversion Date, unless the Company shall default in making payment of any
cash payable upon such redemption. The "Conversion Ratio" with respect to any
Shares will initially be equal to 1, subject to adjustment.
In order to exercise the conversion right, the holder of each
Share to be converted shall surrender to the Company the certificate
representing such Share, duly endorsed or assigned to the Company or in blank,
accompanied by written notice to the Company that the holder thereof elects to
convert such Shares. Unless the shares of Common Stock issuable on conversion
are to be issued in the same name as the name in which such Shares are
registered, each Share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or such holder's duly authorized attorney.
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Holders of Shares shall be entitled on the date of conversion
of any Shares to receive all accumulated and unpaid dividends on such Shares.
CONVERSION ADJUSTMENT
If the Company shall, while any Shares are outstanding, (A)
pay a dividend or make a distribution with respect to its capital stock in
shares of its Common Stock, (B) subdivide its outstanding Common Stock into a
greater number of shares, (C) combine its outstanding Common Stock into a
smaller number of shares, or (D) issue any shares of capital stock by
reclassification of its Common Stock, the Conversion Ratio in effect at the
opening of business on the day next following the date fixed for the
determination of shareholders entitled to receive such dividend or distribution
or at the opening of business on the day following the day on which such
subdivision, combination or reclassification becomes effective, as the case may
be, shall be adjusted so that the holder of any Shares thereafter surrendered
for conversion shall be entitled to receive the number of shares of Common Stock
that such holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Shares been converted
immediately prior to the record date in the case of a dividend or distribution
or the effective date in the case of a subdivision, combination or
reclassification.
In addition, if the Company shall, while any Shares are
outstanding, issue rights, options or warrants to all holders of Common Stock
entitling them (for a period expiring within forty five (45) days after the
record date mentioned below) to subscribe for or purchase Common Stock at a
price per share less than the Current Market Price per share of Common Stock on
the record date for the determination of shareholders entitled to receive such
rights or warrants, then the Conversion Ratio in effect at the opening of
business on the day next following such record date shall be adjusted to equal
the ratio determined by multiplying (I) the Conversion Ratio in effect
immediately prior to the opening of business on the day next following the date
fixed for such determination by (II) a fraction, the numerator of which shall be
the sum of (A) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination (without giving effect to such
issuance) and (B) the number of shares that the aggregate proceeds to the
Company from the exercise of such rights or warrants for Common Stock would
purchase at such Current Market Price, and the denominator of which shall be the
sum of (A) the number of shares of Common Stock outstanding on the close of
business on the date fixed for such determination (without giving effect to such
issuance) and (B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants.
If the Company shall distribute to all holders of its Common
Stock any shares of capital stock of the Company (other than Common Stock) or
evidence of its indebtedness or assets (excluding Regular Quarterly Dividends
and certain other distributions) or rights or warrants to subscribe for or
purchase any of its securities (excluding those rights and warrants issued to
all holders of Common Stock entitling them for a period expiring within forty
five (45) days after the record date referred to above to subscribe for or
purchase Common Stock, which rights and warrants are referred to above), then in
each such case each holder of Shares shall receive
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concurrently with the receipt by holders of the Common Stock the kind and amount
of such securities that such holder would have owned or been entitled to receive
had such Shares been converted immediately prior to such distribution or related
record date, as the case may be.
In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding Regular
Quarterly Dividends), each holder of Shares shall receive concurrently with the
receipt by holders of the Common Stock the kind and amount of any such
distribution that it would have owned or been entitled to receive had such
Shares been converted immediately prior to such distribution or related record
date, as the case may be.
The "Current Market Price" per share of Common Stock on any
date in question shall be deemed to be the average of the daily closing prices
for the five consecutive Trading Days immediately preceding such date in
question; provided, however, that if another event occurs that would require an
adjustment pursuant to subsection (f) through (j), inclusive, the Board may make
such adjustments to the closing prices during such five Trading Day period, in
which case any such determination by the Board shall be set forth in a
resolution of the Board and shall be conclusive.
"Trading Day" shall mean a day on which Shares are traded on
the national securities exchange or quotation system used to determine the
closing price.
No adjustment in the Conversion Ratio shall be required unless
such adjustment would require a cumulative increase or decrease of at least .5%;
provided, however, that any adjustments that by reason of this paragraph are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment until made.
ADJUSTMENT FOR CERTAIN TRANSACTIONS
If the Company becomes a party to any transaction (including,
without limitation, a merger, consolidation, statutory share exchange, self
tender offer for all or substantially all shares of Common Stock, sale of all or
substantially all of the Company's assets or recapitalization of the Common
Stock) (each of the foregoing being referred to herein as a "Transaction"), in
each case as a result of which shares of Common Stock shall be converted into
the right to receive stock, securities or other property (including cash or any
combination thereof) of another corporation, each Share that is not converted
into the right to receive stock, securities or other property in connection with
such Transaction shall thereafter be convertible into the kind and amount of
shares of stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which one Share was
convertible immediately prior to such Transaction, assuming such holder of
Common Stock (i) is not a person with which the Company consolidated or into
which the Company merged or which merged into the Company or to which such sale
or transfer was made, as the case may be ("Constituent Person"), or an affiliate
of a Constituent Person or (ii) failed to exercise his or her rights of
election, if any, as to the kind or amount of stock, securities and other
property (including cash) receivable upon such Transaction (provided that if the
kind or amount of
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stock, securities and other property (including cash) receivable upon such
Transaction is not the same for each share of Common Stock of the Company held
immediately prior to such Transaction by other than a Constituent Person or an
affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of this paragraph
the kind and amount of stock, securities and other property (including cash)
receivable upon such Transaction by each Non-electing Share shall be deemed to
be the kind and amount so receivable per share by a plurality of the
Non-electing Shares).
In the event that: (i) the Company shall declare a dividend
(or any other distribution) on the Common Stock (other than the Regular
Quarterly Dividend); (ii) the Company shall authorize the granting to the
holders of Common Stock of rights or warrants to subscribe for or purchase any
shares of any class or any other rights or warrants; (iii) there shall be any
reclassification of the Common Stock or any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the Company is
required, or a statutory share exchange, or self tender offer by the Company for
all or substantially all of its outstanding shares of Common Stock or the sale
or transfer of all or substantially all of the assets of the Company as an
entity; or (iv) there shall occur the involuntary liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall cause to
be mailed to the holders of Shares, at the address as shown on the stock records
of the Company, as promptly as possible, but at least 15 Business Days prior to
the applicable date hereinafter specified, a notice stating (A) the date on
which a record is to be taken for the purpose of such dividend, distribution or
rights or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution
or rights or warrants are to be determined or (B) the date on which such
reclassification, consolidation, merger, statutory share exchange, sale,
transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property, if any, deliverable upon such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up.
OWNERSHIP LIMIT
Except pursuant to an exemption granted by the Board, (A)
prior to the Restriction Termination Date, no Person shall Beneficially Own or
Constructively Own shares of the outstanding Equity Stock in excess of the
Ownership Limit; (B) prior to the Restriction Termination Date, any Transfer
that, if effective, would result in any Person Beneficially Owning or
Constructively Owning Equity Stock in excess of the Ownership Limit shall be
void ab initio as to the Transfer of that number of shares of Equity Stock which
would be otherwise Beneficially or Constructively Owned by such Person in excess
of the Ownership Limit; and the intended transferee shall acquire no rights in
such excess shares of Equity Stock; (C) prior to the Restriction Termination
Date, any Transfer that, if effective, would result in the Equity Stock's being
Beneficially Owned by fewer than 100 Persons (determined without reference to
any rules of attribution) shall be void ab initio as to the Transfer of that
number of shares which would be otherwise Beneficially or Constructively Owned
by the transferee; and the intended transferee shall
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acquire no rights in such excess shares of Equity Stock; and (D) prior to the
Restriction Termination Date, any Transfer of shares of Equity Stock that, if
effective, would result in the Company's being "closely held" within the meaning
of Section 856(h) of the Code shall be void ab initio as to the Transfer of that
number of shares of Equity Stock which would cause the Company to be "closely
held" within the meaning of Section 856(h) of the Code; and the intended
transferee shall acquire no rights in such shares of Equity Stock.
The Board has granted a conditional exemption to the Investor
from the Ownership Limit. However, if the Company fails to qualify as a REIT,
then the waiver of the Ownership Limit may be void ab initio or the Shares held
by the Investor may be converted to Excess Shares of the Company. Either event,
under certain circumstances, may cause a REIT Put Event.
"Beneficial Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital Stock
either directly or indirectly through the application of Section 544 of the Code
as modified by Section 856(h)(1)(B) of the Code.
"Capital Stock" shall mean stock that is Common Stock, Excess
Stock or Preferred Stock, if any.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Constructive Ownership" shall mean ownership of Capital Stock
by a Person who would be treated as an owner of such shares of Capital Stock
either directly or indirectly through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have correlative
meanings.
"Equity Stock" shall mean Common Stock and Preferred Stock in
the aggregate.
"Ownership Limit" shall mean 9.8% of the value of the
outstanding Equity Stock of the Company.
"Person" shall mean an individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section 509(a) of the
Code, joint stock company or other entity and also includes a group as that term
is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended.
"Restriction Termination Date" shall mean the first day on
which the Board of Directors of the Company determines that it is no longer in
the best interests of the Company to attempt to, or continue to, qualify as a
REIT.
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"Transfer" shall mean any sale, transfer, gift, hypothecation,
pledge, assignment, devise or other disposition of Capital Stock (including (i)
the granting of any option or entering into any agreement for the sale, transfer
or the disposition of Equity Stock or (ii) the sale, transfer, assignment or
other disposition of any securities or rights convertible into or exchangeable
for Capital Stock), whether voluntary or involuntary, whether of record,
constructively or beneficially and whether by operation of law or otherwise.
MISCELLANEOUS
Upon issuance, the Shares will be fully paid and
nonassessable. The transfer agent for the Shares is ChaseMellon Shareholder
Services L.L.C.
LEGAL MATTERS
Certain legal matters, including the validity of the Shares
and certain tax matters, will be passed upon for the Company by Paul, Hastings,
Janofsky & Walker LLP, New York, New York. Seth M. Zachary, a partner of Paul,
Hastings, Janofsky & Walker LLP, is presently serving as a director of the
Company and will continue to serve as a director at least until the 1997 Annual
Meeting of Stockholders. Mr. Zachary is the beneficial owner of 4,640 shares of
Common Stock and holds options to purchase an additional 12,500 shares of Common
Stock. In connection with certain matters related to the laws of the State of
Maryland, Paul, Hastings, Janofsky & Walker LLP will rely on the opinion of
Piper & Marbury L.L.P., Baltimore, Maryland.
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No dealer, sales representative or any other person has been authorized
to give any information or to make any representations in connection
with this Offering other than those contained in this Prospectus
Supplement or Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by
the Company or any Underwriter. This Prospectus Supplement or
Prospectus does not constitute an offer to sell, or a solicitation of any
offer to buy any securities other than the registered securities to which
it relates. This Prospectus Supplement or Prospectus does not
constitute an offer to sell or the solicitation of any offer to buy such
securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus Supplement or
Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof or that the information
contained herein is correct as of any time subsequent to the date
hereof.
TABLE OF CONTENTS
Page
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PROSPECTUS SUPPLEMENT
The Company...................................... S-2
Use of Proceeds.................................. S-2
Description of Class A Cumulative Convertible
Preferred Stock................................ S-2
Legal Matters....................................S-14
PROSPECTUS
Available Information............................ 2
Incorporation of Certain Documents by
Reference........................................ 2
The Company...................................... 2
Risk Factors..................................... 4
Use of Proceeds.................................. 7
Ratio of Earnings to Fixed Charges............... 7
Description of Debt Securities................... 8
Description of Preferred Stock................... 20
Description of Common Stock...................... 26
Restrictions on Transfers of Capital Stock and
Anti-takeover Provisions....................... 27
Federal Income Tax Considerations................ 30
Plan of Distribution............................. 36
Experts.......................................... 37
Legal Matters.................................... 37
700,000 Shares
LEXINGTON CORPORATE
PROPERTIES, INC.
Class A Senior Cumulative
Convertible Preferred Stock
PROSPECTUS SUPPLEMENT
January 21, 1997
