-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVkt/9Quum/4grP/OwPAe442zmJVjzYlQ1NWeOFy7mP/OefeQYLjwN4MLU5q4n3L KSkWGHg2Tyz1gO900UtrjA== 0001116679-04-002432.txt : 20041214 0001116679-04-002432.hdr.sgml : 20041214 20041214161301 ACCESSION NUMBER: 0001116679-04-002432 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041208 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041214 DATE AS OF CHANGE: 20041214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEXINGTON CORPORATE PROPERTIES TRUST CENTRAL INDEX KEY: 0000910108 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133717318 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12386 FILM NUMBER: 041201702 BUSINESS ADDRESS: STREET 1: 355 LEXINGTON AVE CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2126927260 MAIL ADDRESS: STREET 1: 355 LEXINGTON AVE STREET 2: 14TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: LEXINGTON CORPORATE PROPERTIES INC DATE OF NAME CHANGE: 19930816 8-K 1 lex8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) December 8, 2004 ------------------------ Lexington Corporate Properties Trust - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Maryland - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-12386 13-3717318 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) One Penn Plaza, Suite 4015 New York, New York 10119-4015 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (212) 692-7200 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01. Entry into a Material Definitive Agreement. On December 3, 2004, Lexington Corporate Properties Trust (the "Trust") filed a current report on Form 8-K disclosing, among other things, that it entered into an Underwriting Agreement, dated as of December 2, 2004, between Bear, Stearns & Co. Inc., as sole underwriter, on the one hand, and the Trust, Lepercq Corporate Income Fund L.P., Lepercq Corporate Income Fund II L.P. and Net 3 Acquisition L.P., on the other, with respect to the offering of 2,700,000 shares of the Trust's 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per preferred share ("Preferred Shares"), and up to an additional 400,000 Preferred Shares pursuant to an effective shelf registration statement on Form S-3 (Registration No. 333-109393), as amended and supplemented by a prospectus supplement dated December 3, 2004 (the "Prospectus"). On December 8, 2004, the Trust closed on the offer and sale of 2,700,000 Preferred Shares (the "Sale"). LCIF Amendment - -------------- On December 8, 2004, Lex GP-1 Trust, a wholly-owned subsidiary of the Trust and general partner of Lepercq Corporate Income Fund L.P. ("LCIF"), entered into the Fifth Amendment (the "LCIF Amendment") to the Fifth Amended and Restated Limited Partnership Agreement of LCIF, dated as of December 31, 1996, as amended by Amendment No. 1 thereto dated as of December 31, 2000, by First Amendment thereto effective as of June 19, 2003, by Second Amendment thereto effective as of June 30, 2003, by Third Amendment thereto effective as of December 31, 2003, and by Fourth Amendment thereto effective as of October 28, 2004. The purpose of the LCIF Amendment is to reflect the issuance of Series C Preferred Units of LCIF (the "LCIF Preferred Units) to Lex LP-1 Trust, a wholly-owned subsidiary of the Trust ("LP-1"), in consideration of the contribution by the Trust to LCIF of a portion of the net proceeds of the Sale. Attached as Exhibit 10.1 to this Form 8-K (and incorporated herein by reference) is a copy of the LCIF Amendment. LCIF II Amendment - ----------------- On December 8, 2004, Lex GP-1 Trust, a wholly-owned subsidiary of the Trust and general partner of Lepercq Corporate Income Fund II L.P. ("LCIF II"), entered into the Third Amendment (the "LCIF II Amendment") to the Second Amended and Restated Limited Partnership Agreement of LCIF II, dated as of August 27, 1998, as amended by First Amendment thereto effective as of June 19, 2003, and by Second Amendment thereto effective as of June 30, 2003. The purpose of the LCIF II Amendment is to reflect the issuance of Series C Preferred Units of LCIF II (the "LCIF II Preferred Units) to LP-1, in consideration of the contribution by the Trust to LCIF II of a portion of the net proceeds of the Sale. Attached as Exhibit 10.2 to this Form 8-K (and incorporated herein by reference) is a copy of the LCIF II Amendment. Net 3 Amendment - --------------- On December 8, 2004, Lex GP-1 Trust, a wholly-owned subsidiary of the Trust and general partner of Net 3 Acquisition L.P. ("Net 3"), entered into the Fourth Amendment (the "Net 3 Amendment") to the Amended and Restated Limited Partnership Agreement of Net 3, dated as of November 28, 2001, as amended by First Amendment thereto effective as of November 28, 2001, by Second Amendment thereto effective as of June 19, 2003, and by Third Amendment thereto effective as of June 30, 2003. The purpose of the Net 3 Amendment is to reflect the issuance of Series C Preferred Units of Net 3 (the "Net 3 Preferred Units) to LP-1, in consideration of the contribution by the Trust to Net 3 of a portion of the net proceeds of the Sale. Attached as Exhibit 10.3 to this Form 8-K (and incorporated herein by reference) is a copy of the Net 3 Amendment. Item 3.02. Unregistered Sales of Equity Securities. LCIF Preferred Units - -------------------- In connection with the Sale and the LCIF Amendment, LCIF issued 1,891,016 LCIF Preferred Units in consideration of the contribution of $92,068,820.50. The issuance of the LCIF Preferred Units was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), as a transaction not involving a public offering of securities. The terms of conversion of the LCIF Preferred Units are similar to those granted to holders of the Preferred Shares and are further described in Exhibit 10.1 hereto and the Prospectus. LCIF II Preferred Units - ----------------------- In connection with the Sale and the LCIF II Amendment, LCIF II issued 439,507 LCIF II Preferred Units in consideration of the contribution of $21,398,510.06. The issuance of the LCIF II Preferred Units was exempt from registration under Section 4(2) of the Securities Act as a transaction not involving a public offering of securities. The terms of conversion of the LCIF II Preferred Units are similar to those granted to holders of the Preferred Shares and are further described in Exhibit 10.2 hereto and the Prospectus. Net 3 Preferred Units - --------------------- In connection with the Sale and the Net 3 Amendment, Net 3 issued 369,477 Net 3 Preferred Units in consideration of the contribution of $17,988,919.44. The issuance of the Net 3 Preferred Units was exempt from registration under Section 4(2) of the Securities Act as a transaction not involving a public offering of securities. The terms of conversion of the Net 3 Preferred Units are similar to those granted to holders of the Preferred Shares and are further described in Exhibit 10.3 hereto and the Prospectus. Item 9.01. Financial Statements and Exhibits. (a) Not applicable (b) Not applicable (c) Exhibits 10.1 LCIF Amendment 10.2 LCIF II Amendment 10.3 Net 3 Amendment 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 hereunto duly authorized. Lexington Corporate Properties Trust Date: December 14, 2004 By: /s/ Patrick Carroll ------------------------------------ Patrick Carroll Chief Financial Officer Exhibit Index ------------- Exhibit Number Description 10.1 LCIF Amendment 10.2 LCIF II Amendment 10.3 Net 3 Amendment EX-10 2 ex10-1.txt EX. 10.1- LCIF AMENDMENT Exhibit 10.1 FIFTH AMENDMENT TO FIFTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LEPERCQ CORPORATE INCOME FUND L.P. This FIFTH AMENDMENT TO FIFTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LEPERCQ CORPORATE INCOME FUND L.P. (this "Amendment") is made and entered into effective as of December 8, 2004 by and among the entities and individuals signatory hereto. A. Lepercq Corporate Income Fund L.P., a Delaware limited partnership (the "Partnership"), is governed by that certain Fifth Amended and Restated Agreement of Limited Partnership, dated as of December 31, 1996, as amended by Amendment No. 1 thereto dated as of December 31, 2000, by First Amendment thereto effective as of June 19, 2003, by Second Amendment thereto effective as of June 30, 2003, by Third Amendment thereto effective as of December 31, 2003, and by Fourth Amendment thereto effective as of October 28, 2004 (the "Agreement"). Unless otherwise defined, all capitalized terms used herein shall have such meaning ascribed such terms in the Agreement. B. Lexington Corporate Properties Trust, a Maryland real estate investment trust ("LXP") is the sole unitholder of each of (i) Lex GP-1 Trust, a Delaware statutory trust ("Lex GP") and (ii) Lex LP-1 Trust, a Delaware statutory trust ("Lex LP"). Lex GP is the general partner of the Partnership, Lepercq Corporate Income Fund L.P., a Delaware limited partnership, and Net 3 Acquisition L.P., a Delaware limited partnership (collectively, the "Operating Partnerships"). Lex LP is the Initial Limited Partner of each of the Operating Partnerships. C. Pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP and the Operating Partnerships, on the other, and as of the date hereof, LXP has completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003. D. The Preferred Shares carry a (i) cumulative preferred dividend, (ii) liquidation preference and (iii) conversion right. E. Pursuant to Section 4.2 of the Agreement, the Partnership may issue additional partnership interests to LXP and its affiliates in connection with the issuance of shares by LXP provided LXP makes a capital contribution to the Partnership of the proceeds raised in connection with such issuance. F. LXP has agreed to contribute a portion of the proceeds of the Offering to the Partnership in exchange for Series C Preferred Operating Partnership Units ("Preferred OP Units") in the Partnership to be issued to an affiliate of LXP, Lex LP. G. As required by Section 4.2 of the Agreement, the Preferred OP Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares, as further described and set forth in the Certificate of Designation for the Preferred OP Units attached hereto as Annex I (the "Certificate of Designation"). H. As of the date hereof, and pursuant to the terms of the Agreement, the parties hereto desire to amend the Agreement to reflect the issuance of 1,891,016 Preferred OP Units to Lex LP as well as all other changes in the ownership of Partnership Units since the date of the Agreement by amending and restating Exhibit A to the Agreement and (ii) the admission of Lex LP as a Limited Partner holding Preferred OP Units (a "Preferred Limited Partner"). NOW, THEREFORE, the undersigned, being desirous of effectuating the foregoing and amending the Agreement accordingly, hereby enter into this Amendment and amend the Agreement as follows: 1. Certificate of Designation; Preferred Limited Partner. The Agreement is hereby amended to the extent necessary to reflect that the rights, preferences and privileges of the Preferred OP Units and the Preferred Limited Partner, shall be as set forth in the Certificate of Designation which is hereby attached as Annex I to the Agreement and made a part hereof. To the extent there is a conflict between the terms of the Certificate of Designation and the terms of the Agreement, the terms of the Certificate of Designation shall control. 2. Exhibit A. Exhibit A to the Agreement is deleted in its entirety and replaced with Exhibit A hereto. 3. Miscellaneous. Except as amended hereby, the Agreement shall remain unchanged and in full force and effect. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment on behalf of the Partnership in accordance with the provisions of Section 14.1 of the Agreement as of the date first written above. GENERAL PARTNER: LEX GP-1 TRUST By: /s/ T. Wilson Eglin ---------------------------- T. Wilson Eglin President EXHIBIT A PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS
Percentage Name and Address of Partner Capital Partnership Interest of Redemption Contribution Units Class Exercise Date - --------------------------------------------------------------------------------------------------------------- General Partner - --------------- Lex GP-1 Trust $100 217,387 0.84731% N/A Limited Partner - --------------- Lex LP-1 Trust $100 21,487,537.5 83.75165% N/A Series B Preferred Limited Partner - ---------------------------------- Lex LP-1 Trust $52,645,950 2,105,838 100% (of N/A Series B) Series C Preferred Limited Partner - ---------------------------------- Lex LP-1 Trust $92,068,841.50 1,891,016 100% (of N/A Series C) Special Limited Partners 0.42159% - ------------------------ Douglas S. Altabef ___ 6,556 N/A The LCP Group, L.P. ___ 28,057 N/A Ellen C. Monk ___ 4,065.5 N/A Terrell R. Peterson Trust dtd. 4/5/90 ___ 2,608 N/A E. Robert Roskind Family, L.P. ___ 41,813 N/A Richard J. Rouse ___ 16,063 N/A Edward C. Whiting ___ 9,001 N/A Dubuque Limited Partner 15-Jan-99 - ----------------------- Wellington Real Estate Investments L.P. 12,893 0.05025% 6-Dec-02
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Property Limited Partners - ------------------------- 1) Barngiant Livingston(1) 0.06020% March 1, 2004 John Heubel 0.25 1,951 Leone Heubel 0.25 1,951 Antony Monk Ins. Trust f/b/o Joanna Monk 0.00033 135 Antony Monk Ins. Trust f/b/o Jonathan Monk 0.00033 136 Antony Monk Ins. Trust f/b/o Samantha Monk 0.00033 135 Ellen C. Monk 0.001 406 F/B/O Jeffrey W. Pomerantz (Harry Pomerantz Trust) 0.5 3,902 F/B/O Michele P. Kolz (Harry Pomerantz Trust) 0.5 3,902 D. Swarzman 0.125 976 J. Swarzman 0.125 975 L. Swarzman 0.125 975 2) Barnhale Modesto 0.11003% February 1, 2006 Roger Brooks 1,655 Jeffrey Caspe 115.5 4,967 Richard Caspe 77 3,311 Richard Jacobson 3,311 Dwight L. Long Trust 1,655
------------------------ 1 For purposes of Section 5.1, Property Limited Partners that contributed interests in Barngiant Livingston (except for Kirschner Brothers Oil Co.) shall be entitled to cash distributions of $2,200 annually in 1996 through 2003, and $350 in 2004. A-2
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Albert J. Mintzer, Trustee Albert J. Mintzer Revocable Trust dtd 3/24/92 38.5 1,656 Estate of Thomas S. Nurnberger 1,655 Jack Pester 77 3,311 Sheldon I. Rips 19.25 1,655 Renee G. Rubinow Soskin Trust 1,655 William A. Stauffer 19.25 1,656 E. Robert Roskind 20.2 872 (economic interest only) Barnes Properties, Inc. 20.2 871 (economic interest only) 3) Barnes Rockshire 0.11453% March 1, 2005 Daniel R. Baty 1 3,672 Charles W. Coker, Jr. 1 3,672 Richard M. Durwood 1.5 5,508 William Fromm 1 3,672 The Residuary Trust U/W Isadore L. Krischner 0.5 1,836 Antony Monk Ins. Trust f/b/o Joanna Monk 0.00050 2 Antony Monk Ins. Trust f/b/o Jonathan Monk 0.00025 1 Antony Monk Ins. Trust f/b/o Samantha Monk 0.00025 1 Ellen C. Monk 0.001 4 Albert Silverman 1 3,672 Randi C. Halpern TTEE 0.5 1,836 Karin Alyce Silverman TTEE 0.5 1,836 R. James Thornton 1 3,672
A-3
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ 4) Barnvyn Bakersfield 0.06977% January 1, 2003 John P. Jennings 6,257 Robert Miller 1.47 5,485 (William D.) Kimpton Revocable Trust 0.26 978 Jack Brownstein 5,181 5) Barnhech Montgomery(2) 0.03651% May 1, 2006 Crestar Bank, Co-Ttee u/a dtd 1/31/86 James A. Linen IV Irrevocable Trust 1 1,703 Charles R. Perko 1 1,703 Rogers Living Trust, dtd 10/7/97 0.5 852 William A. Rogers III & Shirley Rogers Herbert G. Roskind, Jr. 0.5 852 Gary Smith 1 1,703 Bruce A. Wallis 0.25 426 Lynda W. Johnson 0.25 426 Jacqueline Gay Gaines 1,703 6) Barnward Brownsville 0.09570% November 2, 2004 Aaron David Bear 1 5,424 Robert Bole 1 5,424 Barry Pidgeon 1 5,424 Gerald Riddle 1 5,424 E. Robert Roskind 0.26 1,428 (economic interest only)
------------------------ 2 For purposes of Section 5.1, Property Limited Partners that contributed interests in Barnhech Montgomery shall be entitled to cash distributions of $490 annually in 1996 through 2005, and $163 in 2006. A-4
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Barnes Properties, Inc. 0.26 1,428 (economic interest only) Red Butte Limited Partners 4.74797% May 22, 1998 - -------------------------- Partners of Barnshore Associates -E. Robert Roskind Family L.P. 4,245 -Ellen C. Monk 2,122 -Richard J. Rouse 2,123 -Edward C. Whiting 2,123 -Steven Boughner 2,123 -Peter Kinnunen 1,061 -Terrell R. Peterson Trust 1,061 dtd. 4/5/90 Abbott, Mary I. Family Trust 16,921 Babush, R.K. 1,811 Baer, Verdilla 33,842 Barry, Joanne 8,461 Becker, Warren J. 16,921 Sharon Bracken, Trustee, Sharon Bracken Marital Trust 33,842 Calkins, Windsor & Judy 16,921 Cherrington, James S. 16,921 Dallas, Robert H. (Sr.) 16,921 Danzig, Murray (Alan J. Rubens, escrow agent) 33,842 Diversi, Henry L. (Jr.) 10,861 Dodds, W. Douglas 16,921
A-5
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Dye Investment Properties #1 33,842 Ebrahimian (Moosa) Family, L.P. 33,842 Falconer Family L.P. 33,842 Flake, Rodney J. Trust 16,921 The Bud and Mary Lou Flocchini Partnership 16,921 The Armando J. and Lena Flocchini Family Partnership 16,921 Gilbert, Peter G. 5,431 Golia, Dominick T. 37,236 Harrington, Thomas J. 20,315 Healey, Thomas J. 3,734 Irvin, Tinesley H. 10,862 Jacobs, Randolph 33,842 Jenkins, Edward Max Trust 16,921 Jones, Billy Ray 5,431 Jones, J. Curtis 2,716 Kadish, Rosalyn S. 2,716 Kenyon Trust 38,594 Kornman, Jacob S. 1,810 Kotkins, Henry L. (Jr.) 33,842 Kotkins, Henry L. (Sr.) TTEE 33,842 Kremers, Joseph A. 33,842 Krone, Marilyn R. Living Trust 8,147 Legum, Steven F. 5,431 Manlowe, Donald & Virginia 33,842 Maronick, E. Phil 33,842
A-6
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Martin, Eff W. 3,734 Mathews, Glenna C. 16,921 Mazo, (Gerald)/Trust 5,431 McGonacle, Linda & Jim 16,921 Murphy Family Trust 8,461 Murphy, Margaret Trustee 8,460 Neiman, H.F. 1,810 Obernauer, Marne (Jr.) 20,315 Obie, Gordon T. 16,921 Post, Allen W. (Jr.) 10,862 Price, Gerald E. 16,921 Rhoad, Estate of Guy C. 37,236 Romney, Gloria Lynn & Clark TTEE 20,315 Schaefer, Robert A. 5,431 Schubach, Robert M. 33,842 Schwartz, Richard J. 33,842 Sherry, Henry I. 5,431 Stephenson, Leroy 33,842 Strimatter, Paul L. 8,460 Thompson Revocable Living Trust 33,842 Weaver, (The) Judith Family LLC 16,921 Weaver, Terry M. 16,921 Whitmore, George M. (Jr.) 5,431 John C. Williams Trustee, Red Butte Creek Trust 2,716 Young, Raymond 5,431
A-7
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ The LCP Group, L.P. 68,704 Richard J. Rouse 9,302 Expansion Limited Partners - -------------------------- 1) Toy Properties Associates II 0.25293% January 15, 1999 Brooks, Bonnie Jo 854 Burnett, Pamela A. 569 Carolyn A. Butler 854 Lee C. Butler 854 Robert C. Dickson 1,707 Patricia E. Dupree 1,707 Robert L. Dupree 1,707 Dr. John M. Gallus 1,707 W.C. Gilbert 3,414 Robert Hecht 1,707 Johnson Living Trust 1,707 Jennifer Kastelic 569 James R. Keller 1,707 Oliver W. Lund 1,707 David L. Mitchell 1,707 Lawrence E. Mulkerin 1,707 Wayne H. Nay 853 James E. Rottsolk 1,707 Dr. Allen Ruth 1,707 Earl L. Sherron, Jr. 1,707 Joseph F. Sutter 1,707
A-8
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ WAT Enterprises Limited Partnership ("Thielman") 1,707 Mary Lou Tillay 1,707 L. Suzan Watson 569 Zavrski, Lynne 1,707 O.K.O.W. Investors (Special LP) 3,628 (Special LP) The LCP Group, L.P. 18,065 Richard J. Rouse 4,696 E. Robert Roskind Family, L.P. 327 Ellen C. Monk 163 Edward C. Whiting 196 Terrell R. Peterson Trust dtd. 4/5/90 131 Peter Kinnunen 131 2) Toy Properties Associates V 0.11771% January 15, 1999 Leonard V. Ackermann, DDS 778 George L. and Donna L. Adams 778 9401 Allied L.P. 778 John R. Bedingfield, Jr., MD 778 Stephen P. Boger, DDS 778 James L. Bridge, Jr. 778 John Richard Burg, MD 778 Eva P. Csathy 778 Archie R. and Nancy H. Dykes 778 George W. Flynn 778 Gordon G. Fowler 778
A-9
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Burton J. Iverson 778 Douglas A. Jensen 778 James P. Larkin 778 W. Jack Lovern 778 Miles A. Nelson 778 Terry O. Noble 778 Michael D. O'Leary, DDS 778 Ruth P. Ruben 778 Thomas T. Schattenberg 778 Robert and Kathleen Schlangen 778 Thomas E. and Connie J. Taff 778 Luis W. and Pacita Tam 778 The LCP Group, L.P. 9,601 Richard J. Rouse 1,958 E. Robert Roskind Family, L.P. 238 Ellen C. Monk 119 Edward C. Whiting 146 Terrell R. Peterson Trust dtd. 4/5/90 97 Peter Kinnunen 97 Francois Letaconnoux 51 3) Fort Street Partners 0.73443% January 15, 2006 Marilyn Anixter Allen 2,262 Robert M. Arnold 6,855 Fred R. Backer 6,855 Thomas E. Burton 6,855
A-10
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Carole Anixter Cohen 2,331 Donald De Pinto, MD 6,855 Averell Fisk 2,285 Robert Fisk 9,140 James Flood 27,420 The Goddard Revocable Trust 2,262 James W. Gosselin 1,713 Mary Lee Beuregard 1,714 Carol A. Claypool 1,714 Edward W. Gosselin 1,714 Bruce A. Gregga 6,855 David Haley 6,855 Guenther P. Koenkow 6,855 Leonard and Caroline S. Lorberbaum 13,710 Averell H. Mortimer 6,855 David Mortimer 6,855 Gary W. Rollins 13,710 R. Randall Rollins 13,710 W. Dieter Tede 6,855 C. Joseph Tyree 6,855 Stephen P. Glennon 1,662 E. Robert Roskind 208 Richard J. Rouse 208 Richard J. Rouse 3,815 January 15, 1999 The LCP Group, L.P. 13,444 January 15, 1999
A-11 Pacific Place Limited Partners Supplement ----------------------------------------- As a result of the merger of the Partnership with Pacific Place Partners Ltd. ("Pacific Place") on March 10, 1997, the General Partner has authorized the issuance of Partnership Units to all former partners of Pacific Place (the "Pacific Place Limited Partners") in the amounts specified on Exhibit A-1 attached hereto and made a part hereof. For purposes of applying the terms and conditions of the Partnership Agreement, the Pacific Place Limited Partners shall be Partners of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, each Pacific Place Limited Partners shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Pacific Place Limited Partners. Taxable income shall be specially allocated to the Pacific Place Limited Partners in an amount equal to, but not in excess of, the cash distributed to the Pacific Place Limited Partners; provided, however, that the Pacific Place Limited Partners shall be allocated taxable income (i) as otherwise required in Exhibit B and C of the Partnership Agreement, and (ii) resulting from the transaction in which the Replacement Property (as defined below) was acquired. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the Pacific Place Limited Partners pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the Pacific Place Limited Partners in an amount sufficient to avoid recapture of tax liability with respect to the Pacific Place Limited Partners' negative capital accounts. For purposes of Section 8.4 of the Partnership Agreement, on April 15, 1999, and on each January 15, April 15, July 15 and October 15 thereafter (each a "Notice Date"), each Pacific Place Limited Partner shall have the right (the "Pacific Place Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by a Pacific Place Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that a Pacific Place Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i)1,000 Partnership Units, or (ii) all of the Partnership Units held by such Partner. The Pacific Place Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the Pacific Place Limited Partner) delivered to the General Partner and LXP on a Notice Date by the Pacific Place Limited Partner who is exercising the redemption right (the "Pacific Place Redeeming Partner"). The Pacific Place Redeeming A-12 Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of any Pacific Place Limited Partner may exercise the redemption rights of such Pacific Place Limited Partner, and such Pacific Place Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of such Pacific Place Limited Partner, the Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Pacific Place Limited Partner. The Partnership Units held by the Pacific Place Limited Partners shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. The Partnership hereby covenants not to dispose of its interest in those certain properties located at 6 Doughton Rd., New Kingston, Pa., 34 E. Main St., New Kingston, Pa., and 245 Salem Church Rd., Mechanicsburg, Pa., (the "Replacement Property") prior to March 1, 2002 without the prior consent of the holders of fifty one percent (51%) of the Partnership Units held by Pacific Place Limited Partners, except in the event of a foreclosure or in the event the Partnership determines that such a disposition is necessary to ensure its continued qualification as a real estate investment trust. In any event in which the Partnership determines to dispose of the Replacement Property, the Partnership agrees to use its best efforts to structure such a disposition as an exchange that meets the requirements of Code Section 1031. Notwithstanding the foregoing, if the Partnership does dispose of its interest prior to April 15, 1999, then the General Partner shall provide prompt written notification to the Pacific Place Limited Partners of such disposition and each such Pacific Place Limited Partner may exercise its Pacific Place Limited Partner Redemption Right on the last Business Day of the calendar year in which such disposition occurs or, if later, ten (10) Business Days following the consummation of such transaction. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Pacific Place Limited Partners are admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Pacific Place Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Pacific Place Redeeming Partner as a sale of the Pacific Place Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. Each Pacific Place Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Pacific Place Limited Partner Redemption Right. A-13
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Pacific Place Limited Partners 1.49370% April 15, 1999 - ------------------------------ Dr. Stuart D. Aaron 1,543 Dr. Kenneth H. Adler 772 Dr. Norman I. Agin 1,543 James J. Akers, Trustee 771 u/a dated 12/28/90 Phyllis M. Akers, Trust 772 Douglas J. Backman 1,543 C. Peter Beler 1,543 William C. Butcher 386 Shoppers Village Associates 1,543 c/o Steven H. Caller Steven H. Caller 1,188 Chappy Partners 72,000 Louis G. Chiodini 772 Harry S. Cohen 1,543 Robert S. Cohen 1,543 Dr. Robert L. Diaz 3,085 Marvin J. Dolinka 772 William D. Evans 1,543 Elizabeth A. Fendell 772 Dr. Gerald Finerman 1,543 Ronald T. Fredette 2,314 David Freishtat and 1,157 Paul Sandler Dr. & Mrs. Mithlesh Govil 1,543
A-14
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Marilyn R. Heller Trust 1,543 Joe M. Henson 1,543 Gloria Hillman 771 Dr. Phillip L. Horowitz 1,543 Investment Capital Associates 1,619 ICA Pacific Place, Inc. 3,373 John C. Isaacs, III Ranch, Ltd. 1,543 Sam S. Isaacs Ranch, Ltd. 1,542 Marsha Caller Jaffee 1,188 Dr. Bernard J. Judis 771 David A. Katz 772 Jay Latterman and 385 Jack Goldsmith Earl M. Latterman 772 Bernard B. Latterman 772 King Laughlin 1,687 Stephen P. Lawrence 89,300 Martin C. Leibowitz Revocable Trust 88,906 Barry Z. Liber 3,085 Ronald U. Lurie 772 John McCallum 1,620 Richard G. McCauley 1,543 Richard Mrad 5,399 Dr. Vijayachandra S. Nair 1,543 Godfrey P. Padberg Marital Trust 1,543 Pell Holdings 39,100
A-15
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Irving L. Peterson 1,543 John Allen Pierce 1,687 Dr. Sonja S. Pinsky 1,543 Lawrence Raskin 1,296 Ernest E. & Mary B. Renaud 1,543 Irving Rosenstein 1,188 Arthur R. Salomon 2,314 Paul Sandler & David Freishtat 386 Dr. Sylvan Sarasohn 1,543 Dr. Michael J. Schou 1,543 Antonia Shusta 386 Dr. William R. Sloan 1,543 Irving Spivak 772 Jeffrey P. Stern 1,543 Dr. William Sternfeld 1,543 Dr. Norman A. Stokes 771 Marilyn A. Teague Revocable Trust 1,543 James M. Tushman 1,543 Thomas E. Tushman 771 Dr. & Mrs. Irving Waldman 771 Mr. & Mrs. Neil Wolfson 1,543 Andrew S. Wolfson 1,543
A-16 Phoenix Limited Partners Supplement ----------------------------------- As a result of the contribution of the interests in the Phoenix Hotel Associates Limited Partnership ("Phoenix") on January 29, 1998, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to those former partners of Phoenix (the "Phoenix Limited Partners") electing to contribute all or a portion of their interests to the Partnership. Each Phoenix Limited Partner shall receive the number of Units specified below. For purposes of applying the terms and conditions of the Partnership Agreement, the Phoenix Limited Partners shall be Partners of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, each Phoenix Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record of LXP on January 30, 1998. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Phoenix Limited Partners. Pursuant to the General Partners' authority in Section 14.1.B(3), Partnership taxable income shall be specially allocated to the Phoenix Limited Partners in an amount equal to, but not in excess of, all cash distributions to the Phoenix Limited Partners; provided, however, that the Phoenix Limited Partners shall be allocated taxable income (i) as otherwise required in Exhibit B and C of the Partnership Agreement, and (ii) resulting from the transaction in which the Replacement Property (as defined below) was acquired. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the Phoenix Limited Partners pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners, the Phoenix Limited Partners, the Savannah Limited Partners and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the Phoenix Limited Partners in an amount sufficient to avoid recapture of tax liability with respect to the Phoenix Limited Partners' negative capital accounts. For purposes of Section 8.4 of the Partnership Agreement, on January 15, 1999, and on each January 15, April 15, July 15 and October 15 thereafter (each a "Notice Date"), each Phoenix Limited Partner shall have the right (the "Phoenix Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by a Phoenix Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that a Phoenix Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such Partner. The Phoenix Limited Partner Redemption Right shall be exercised pursuant to a A-17 Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the Phoenix Limited Partner) delivered to the General Partner and LXP on a Notice Date by the Phoenix Limited Partner who is exercising the redemption right (the "Phoenix Redeeming Partner"). The Phoenix Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of any Phoenix Limited Partner may exercise the redemption rights of such Phoenix Limited Partner, and such Phoenix Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of such Phoenix Limited Partner, the Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Phoenix Limited Partner. The Partnership Units held by the Phoenix Limited Partners shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. The Partnership hereby covenants not to permit Phoenix to dispose of its interest in those certain properties acquired by Phoenix in connection with its rights under that certain Exchange Agreement dated December 29, 1997 between Phoenix and Security Trust Company (the property so acquired, the "Replacement Property") prior to January 1, 2003 without the prior consent of the holders of fifty-one percent (51%) of the Partnership Units held by Phoenix Limited Partners, except in the event of a foreclosure or in the event the Partnership determines that such a disposition is necessary to ensure its continued qualification as a real estate investment trust. In any event in which the Partnership determines to cause Phoenix to dispose of the Replacement Property, the Partnership agrees to use its best efforts to cause Phoenix to structure such a disposition as an exchange that meets the requirements of Code Section 1031. Notwithstanding the foregoing, if the Partnership does dispose of its interest prior to January 15, 1999, then the General Partner shall provide prompt written notification to the Phoenix Limited Partners of such disposition and each such Phoenix Limited Partner may exercise its Phoenix Limited Partner Redemption Right on the last Business Day of the calendar year in which such disposition occurs or, if later, ten (10) Business Days following the consummation of such transaction. In addition, if the Code Section 1031 exchange described in the Exchange Agreement does not take place, or if such exchange does not result in a deferral of all of the gain that would have been recognized upon the sale by Phoenix of the Relinquished Property (as defined in the Exchange Agreement), then the General Partner shall provide prompt written notification to the Phoenix Limited Partners and shall cause LCIF to distribute cash to the Phoenix Limited Partners in redemption of the portion of their LCIF Units corresponding to the portion of the value of the Relinquished Property which is treated as transferred in a taxable transaction. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Phoenix Limited Partners are admitted to the Partnership, on terms A-18 reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Phoenix Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Phoenix Redeeming Partner as a sale of the Phoenix Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. Each Phoenix Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Phoenix Limited Partner Redemption Right.
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Phoenix Limited Partners (Class A Units 3.40508% January 15, 1999 - ------------------------ Contributed) James Berdell 0.25 12,272 Kemp Biddulph Revocable Trust dtd. 5/6/83 0.5 24,546 Melissa Thaler Brody 1,000 Blair E. Clarkson 250 Thomas B. Clarkson 250 John H. Clarkson 250 Robert W. Clarkson as custodian for 250 John Robert Wittman deWilde Family Trust 0.25 12,273 dtd. 6/21/90 Richard T. Flaute 0.5 20,000 Frederick Frank 0.5 24,546 Fremar Company 0.1425 6,996 Paul Myron Haas Trust 0.5 24,546 Jerome L. Heard, M.D. 0.5 24,546 Benjamin Jagendorf, M.D. 1 49,093 Edward J. Ledder, Trustee 1 49,093 Edward J. Ledder Rev. Trust u/a/d 4/6/90 Karl L. Matthies 0.25 12,272
A-19
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Ellen C. Monk 6,136 E. Robert Roskind Family, L.P. 0.25 12,272 Ann B. Schroeder TTEE Robert E. & Ann B. Schroder Marital 1 49,093 Trust U/A dtd. 1/7/82 Benjamin N. Simon 0.5 24,546 Terri Simon TTEE 0.5 24,546 Soren Family Limited Partnership 0.5 24546 Lewis J. Thaler 0.5 18,146 (Class B Units Contributed) E. Robert Roskind Family, L.P. 7.5 344,663 Terrell R. Peterson Trust 1.6 73,528 dtd. 4/5/90 Third Lero Corp. 1% G.P. interest 33,957
A-20 Savannah Limited Partners Supplement ------------------------------------ As a result of the contribution of the interests in the Savannah Waterfront Hotel LLC ("Savannah") on January 29, 1998, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to those former members of Savannah (the "Savannah Limited Partners") electing to contribute all or a portion of their interests to the Partnership. Each Savannah Limited Partner shall receive the number of Units specified below. For purposes of applying the terms and conditions of the Partnership Agreement, the Savannah Limited Partners shall be Partners of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, each Savannah Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record of LXP on January 30, 1998. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Savannah Limited Partners. Pursuant to the General Partners' authority in Section 14.1.B(3), Partnership taxable income shall be specially allocated to the Savannah Limited Partners in an amount equal to, but not in excess of, all cash distributions to the Savannah Limited Partners; provided, however, that the Savannah Limited Partners shall be allocated taxable income (i) as otherwise required in Exhibit B and C of the Partnership Agreement, and (ii) resulting from the transaction in which the Replacement Property (as defined below) was acquired. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the Savannah Limited Partners pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners, the Savannah Limited Partners, the Phoenix Limited Partners and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the Savannah Limited Partners in an amount sufficient to avoid recapture of tax liability with respect to the Savannah Limited Partners' negative capital accounts. For purposes of Section 8.4 of the Partnership Agreement, on January 15, 1999, and on each January 15, April 15, July 15 and October 15 thereafter (each a "Notice Date"), each Savannah Limited Partner shall have the right (the "Savannah Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by a Savannah Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that a Savannah Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such Partner. The Savannah Limited Partner Redemption Right shall be exercised pursuant to A-21 a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the Savannah Limited Partner) delivered to the General Partner and LXP on a Notice Date by the Savannah Limited Partner who is exercising the redemption right (the "Savannah Redeeming Partner"). The Savannah Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of any Savannah Limited Partner may exercise the redemption rights of such Savannah Limited Partner, and such Savannah Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of such Savannah Limited Partner, the Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Savannah Limited Partner. The Partnership Units held by the Savannah Limited Partners shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. The Partnership hereby covenants not to permit Savannah to dispose of its interest in those certain properties acquired by Savannah in connection with its rights under that certain Exchange Agreement dated December 29, 1997 between Savannah and Security Trust Company (the property so acquired, the "Replacement Property") prior to January 1, 2003 without the prior consent of the holders of fifty-one percent (51%) of the Partnership Units held by Savannah Limited Partners, except in the event of a foreclosure or in the event the Partnership determines that such a disposition is necessary to ensure its continued qualification as a real estate investment trust. In any event in which the Partnership determines to cause Savannah to dispose of the Replacement Property, the Partnership agrees to use its best efforts to cause Savannah to structure such a disposition as an exchange that meets the requirements of Code Section 1031. Notwithstanding the foregoing, if the Partnership does dispose of its interest prior to January 15, 1999, then the General Partner shall provide prompt written notification to the Savannah Limited Partners of such disposition and each such Savannah Limited Partner may exercise its Savannah Limited Partner Redemption Right on the last Business Day of the calendar year in which such disposition occurs or, if later, ten (10) Business Days following the consummation of such transaction. In addition, if the Code Section 1031 exchange described in the Exchange Agreement does not take place, or if such exchange does not result in a deferral of all of the gain that would have been recognized upon the sale by Savannah of the Relinquished Property (as defined in the Exchange Agreement), then the General Partner shall provide prompt written notification to the Savannah Limited Partners and shall cause LCIF to distribute cash to the Savannah Limited Partners in redemption of the portion of their LCIF Units corresponding to the portion of the value of the Relinquished Property which is treated as transferred in a taxable transaction. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Savannah Limited Partners are admitted to the Partnership, on terms A-22 reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Savannah Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Savannah Redeeming Partner as a sale of the Savannah Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. Each Savannah Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Savannah Limited Partner Redemption Right.
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Savannah Limited Partners (Units 0.96850% January 15, 1999 - ------------------------- Contributed) H. Mitchell Dunn, Jr. 1,100 157,447 Elizabeth Dunn Shiftan 125 17,891 Eleanor M. Dunn 125 17,891 Terrell R. Peterson Trust dtd. 4/5/90 125 17,891 David Walsh 275 37,361
A-23 Anchorage Limited Partner Supplement ------------------------------------ As a result of the Partnership having entered into a Contribution Agreement with RBH Ventures, a Washington general partnership on May 8, 1998, pursuant to which the Partnership acquired 51.31% of the net equity value of certain real property located in the city of Anchorage, Alaska, on which is located a commercial building (the "Anchorage Property") from RBH, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to RBH (the "Anchorage Limited Partner"). The Anchorage Limited Partner shall receive the number of Units specified below. For purposes of applying the terms and conditions of the Partnership Agreement, the Anchorage Limited Partner shall be a Partner of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, the Anchorage Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record of LXP on July 30, 1998. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Anchorage Limited Partner. Pursuant to the General Partner's authority in Section 14.1.B(3), Partnership taxable income shall be specially allocated to the Anchorage Limited Partner in an amount equal to, but not in excess of, all cash distributions to the Anchorage Limited Partner; provided, however, that the Anchorage Limited Partner shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the Anchorage Limited Partner pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners, the Savannah Limited Partners, the Phoenix Limited Partners and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the Anchorage Limited Partner in an amount sufficient to avoid recapture of tax liability with respect to the Anchorage Limited Partner's negative capital accounts. For purposes of Section 8.4 of the Partnership Agreement, on July 15, 1999, and on each July 15, October 15, January 15 and April 15 thereafter (each a "Notice Date"), the Anchorage Limited Partner shall have the right (the "Anchorage Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by the Anchorage Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that the Anchorage Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such A-24 Partner. The Anchorage Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the Anchorage Limited Partner) delivered to the General Partner and LXP on a Notice Date by the Anchorage Limited Partner who is exercising the redemption right (the "Anchorage Redeeming Partner"). The Anchorage Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of the Anchorage Limited Partner may exercise the redemption rights of the Anchorage Limited Partner, and the Anchorage Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of the Anchorage Limited Partner, such Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Anchorage Limited Partner. The Partnership Units held by the Anchorage Limited Partner shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Anchorage Limited Partner is admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Anchorage Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Anchorage Redeeming Partner as a sale of the Anchorage Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. The Anchorage Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Anchorage Limited Partner Redemption Right.
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Anchorage Limited Partner July 15, 1999 - ------------------------- Ronald D. Crockett 97,816 0.38126%
A-25 Columbia Limited Partners Supplement ------------------------------------ As a result of the Partnership having entered into (i) a Contribution Agreement with Columbia Property Associates, a Maryland limited partnership ("CPA") on December 31, 1998, pursuant to which the Partnership acquired an estate-for-years interest in a parcel of real property located in Columbia, Maryland (the "Columbia Property") from CPA, (ii) a Contribution Agreement with The E. Robert Roskind Irrevocable Trust on December 3, 1998 pursuant to which the Partnership acquired a remainder interest in the Columbia Property, (iii) a Contribution Agreement with The LCP Group, L.P. on December 3, 1998, (iv) a Contribution Agreement with The LCP Group, L.P. on December 3, 1998, and (v) a Contribution Agreement with The LCP Group, L.P., Hadley Page, Inc., Peter J. Kinnunen and Terrell R. Peterson Trust on December 3, 1998, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to all former partners of CPA, The LCP Group, L.P., Hadley Page, Inc., Peter J. Kinnunen, Terrell R. Peterson Trust and The E. Robert Roskind Irrevocable Trust (the "Columbia Limited Partners"). The Columbia Limited Partners shall receive the number of Units specified below. For purposes of applying the terms and conditions of the Partnership Agreement, the Columbia Limited Partners shall be a Partner of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, each Columbia Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution in respect to the first quarter of 1999. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Columbia Limited Partners. Pursuant to the General Partner's authority in Section 14.1.B(3), Partnership taxable income shall be specially allocated to the Columbia Limited Partners in an amount equal to, but not in excess of, all cash distributions to the Columbia Limited Partners; provided, however, that the Columbia Limited Partners shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the Columbia Limited Partners pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners, the Savannah Limited Partners, the Phoenix Limited Partners, the Anchorage Limited Partner, the Trademark Lancaster Limited Partner and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the Columbia Limited Partners in an amount sufficient to avoid recapture of tax liability with respect to the Columbia Limited Partners' negative capital accounts. A-26 For purposes of Section 8.4 of the Partnership Agreement, on December 1, 1999, and on each December 1, March 1, June 1 and September 1 thereafter (each a "Notice Date"), each Columbia Limited Partner shall have the right (the "Columbia Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by a Columbia Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that a Columbia Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such Partner. The Columbia Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the Columbia Limited Partner) delivered to the General Partner and LXP on a Notice Date by the Columbia Limited Partner who is exercising the redemption right (the "Columbia Redeeming Partner"). The Columbia Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of the Columbia Limited Partner may exercise the redemption rights of the Columbia Limited Partner, and the Columbia Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of such Columbia Limited Partner, such Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Columbia Limited Partner. The Partnership Units held by the Columbia Limited Partners shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. The Partnership hereby covenants not to dispose of its interest in the Columbia Property prior to January 1, 2004 except in the event of a foreclosure or in the event the Partnership determines that such a disposition is necessary to ensure its continued qualification as a real estate investment trust. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Columbia Limited Partners are admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Columbia Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Columbia Redeeming Partner as a sale of the Columbia Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. The Columbia Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Columbia Limited Partner Redemption Right. A-27
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ (Units 0.73118% December 1, 1999 Columbia Limited Partners Contributed) - ------------------------- The LCP Group, L.P. 86,014 James F. Dannhauser 392.5 E. Robert Roskind Irrevocable Trust 19,231 Peter J. Kinnunen 7,158.5 Terrell R. Peterson Trust 1,349 Frank Bond 0.5 3,866 Rudolph V. Cassani Family Trust 1 7,731 Elizabeth Dancy 0.5 3,866 David M. Dorsen 0.5 3,866 David D. Eash 1 7,731 Nora B. Garman 0.5 3,866 Richard E. Gilbreath 1 7,731 Lawrence M. Goldberg 1 7,731 Kenneth E. Kolb Family Trust 0.5 3,866 Clyde Locker 0.5 3,866 Kazuko Price 0.5 3,866 Blaine Smith 1 7,731 James R. Snyder 0.5 3,866 John J. Stirk 0.5 3,866
A-28 LPM Limited Partners Supplement ------------------------------- As a result of the contribution of 9,900 Class B non-voting shares of common stock (the "Stock") in Leased Properties Management, Inc., a Delaware corporation ("LPM") on June 23, 2000, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to the former holders of the Stock (the "LPM Limited Partner"). The LPM Limited Partner shall receive the number of Units specified below. For purposes of applying the terms and conditions of the Partnership Agreement, the LPM Limited Partner shall be a Partner of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, the LPM Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of LXP in respect of the second quarter of 2000. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the LPM Limited Partner. Pursuant to the General Partner's authority in Section 14.1.B(3), Partnership taxable income shall be specially allocated to the LPM Limited Partner in an amount equal to, but not in excess of, all cash distributions to the LPM Limited Partner; provided, however, that the LPM Limited Partner shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement. For purposes of Section 6.1C of the Partnership Agreement, Nonrecourse Liabilities of the Partnership shall be allocated to account for any income or gain to be allocated to the LPM Limited Partner pursuant to Sections 2.B and 2.D of Exhibit C, in the same priority as Nonrecourse Liabilities are allocated to the Property Limited Partners, the Red Butte Limited Partners, the Expansion Limited Partners, the Pacific Place Limited Partners, the Phoenix Limited Partners, the Savannah Limited Partners, the Anchorage Limited Partner, the Trademark Limited Partners, the Columbia Limited Partners and any subsequent Additional Limited Partners that are admitted to the Partnership. The Partnership covenants to use its best efforts during the five-year period ending June 22, 2005 to retain sufficient Nonrecourse Liabilities to permit the allocation of such Nonrecourse Liabilities to the LPM Limited Partner in an amount sufficient to avoid recapture of tax liability with respect to the LPM Limited Partner's negative capital accounts. For purposes of Section 8.4 of the Partnership Agreement, on June 23, 2002, and on each June 23, September 23, December 23 and March 23 thereafter (each a "Notice Date"), the LPM Limited Partner shall have the right (the "LPM Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by the LPM Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that the LPM Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership A-29 Units, or (ii) all of the Partnership Units held by such Partner. The LPM Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4 modified to reflect the LPM Limited Partner) delivered to the General Partner and LXP on a Notice Date by the LPM Limited Partner who is exercising the redemption right (the "LPM Redeeming Partner"). The LPM Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of the LPM Limited Partner may exercise the redemption rights of the LPM Limited Partner, and the LPM Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of the LPM Limited Partner, such Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such LPM Limited Partner. The Partnership Units held by the LPM Limited Partner shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the LPM Limited Partner is admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the LPM Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the LPM Redeeming Partner as a sale of the LPM Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. The LPM Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the LPM Limited Partner Redemption Right.
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ LPM Limited Partner June 23, 2002 - ------------------- The LCP Group, L.P. 83,400 0.32507%
A-30 12/31/03 Limited Partners Supplement ------------------------------------ As a result of the Partnership having entered into a Contribution Agreement with The LCP Group, L.P., the beneficiaries of the Estate of Antony E. Monk listed below, Peter J. Kinnunen, Francois Letaconnoux, Terrell R. Peterson, E. Robert Roskind, Richard J. Rouse and Edward C. Whiting (each a "12/31/2003 Limited Partner"), the General Partner has authorized the issuance of Partnership Units to each 12/31/2003 Limited Partner in the amount specified below. For purposes of applying the terms and conditions of the Agreement, each 12/31/2003 Limited Partner shall be a Partner of the Partnership with the rights and obligations of Additional Limited Partners, subject to the terms and conditions of this supplement. Notwithstanding Section 5.1.A of the Agreement, each 12/31/2003 Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of LXP common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record of LXP in February, 2004. Partnership taxable income shall be specially allocated to each 12/31/2003 Limited Partner in an amount equal to, but not in excess of, the cash distributed to each such 12/31/2003 Limited Partner; provided, however, that each such partner shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement. For purposes of Section 8.4 of the Partnership Agreement, beginning on January 15, 2006, and on each January 15, April 15, July 15 and October 15 thereafter (each a "Notice Date"), each 12/31/2003 Limited Partner shall have the right (the "12/31/2003 Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by such 12/31/2003 Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that each 12/31/2003 Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such partner. The 12/31/2003 Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4) delivered to the General Partner and LXP on a Notice Date by the 12/31/2003 Limited Partner who is exercising the redemption right (the "12/31/2003 Redeeming Partner"). The 12/31/2003 Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of any 12/31/2003 Limited Partner may exercise the redemption rights of such 12/31/2003 Limited Partner, and such 12/31/2003 Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of such 12/31/2003 Limited Partner, A-31 the Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such 12/31/2003 Limited Partner. The Partnership Units held by a 12/31/2003 Limited Partner shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the 12/31/2003 Limited Partners are admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the 12/31/2003 Limited Partners, LXP, the Partnership and the General Partner shall treat the transaction between LXP and each 12/31/2003 Limited Partner as a sale of the 12/31/2003 Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. Each 12/31/2003 Limited Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of its Redemption Right.
Redemption Partnership Percentage Exercise Name and Address of Partner Units Interest Date - ----------------------------------------------------------------------------------------------------- January 15, 12/31/2003 Limited Partners 231,763 0.90334 2006 - --------------------------- - ----------------------------------------------------------------------------------------------------- The LCP Group, L.P. 91,137 Antony Monk Insurance Trust U/A/D 5/13/92, F/B/O Monk Children, Ellen Monk, Trustee 44,762 Trust F/B/O Samantha Monk, U/A 2/28/89, Denis Monk, Trustee 2,704 Trust f/b/o Joanna Monk U/A 2/28/89, Denis Monk, Trustee 2,704 Trust f/b/o Jonathon Monk U/A 2/28/89, Denis Monk, Trustee 2,704 Ellen C. Monk 14,932
A-32 Peter J. Kinnunen 11,126 Francois Letaconnoux 4,356 Terrell R. Peterson Trust dtd. 4/5/90 11,126 E. Robert Roskind 17,010 Richard J. Rouse 12,515 Edward C. Whiting 16,687 A-33 Montgomery Limited Partners Supplement As a result of the contribution of the interests in Barnhech Montgomery Associates Limited Partnership ("Montgomery") on October 28, 2004, the General Partner pursuant to Section 4.2.A and Sections 14.1.B(2) and 14.1.B(3) of this Agreement has authorized the issuance of Partnership Units to those former limited partners of Montgomery (the "Montgomery Limited Partners") electing to contribute all of their interests to the Partnership. Each Montgomery Limited Partner shall receive the number of Partnership Units specified below. For purposes of applying the terms and conditions of the Agreement, each Montgomery Limited Partner shall be a Partner of the Partnership with the rights and obligations of Additional Limited Partners. Notwithstanding Section 5.1.A of the Agreement, each Montgomery Limited Partner shall be entitled to receive distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of REIT Shares, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record of LXP in November, 2004. Partnership taxable income shall be specially allocated to each Montgomery Limited Partner in an amount equal to, but not in excess of, the cash distributed to each such Montgomery Limited Partner; provided, however, that each such Montgomery Limited Partner shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement. For purposes of Section 8.4 of the Partnership Agreement, beginning on May 1, 2006, and on each August 1st, November 1st, February 1st, and May 1st thereafter (each a "Notice Date"), each Montgomery Limited Partner shall have the right (the "Montgomery Limited Partner Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by such Montgomery Limited Partner for the Redemption Amount to be delivered by the Partnership; provided, however, that each Montgomery Limited Partner must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such partner. The Montgomery Limited Partner Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-4) delivered to the General Partner and LXP on a Notice Date by the Montgomery Limited Partner who is exercising its Montgomery Limited Partner Redemption Right (the "Montgomery Redeeming Partner"). The Montgomery Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any REIT Shares issued in connection with a redemption in such a manner as is required so that the REIT Shares issued in connection with such redemption are freely transferable. The Assignee of any Montgomery Limited Partner may exercise the redemption rights of such Montgomery Limited Partner, and such Montgomery Limited Partner shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of A-34 such Montgomery Limited Partner, the Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to such Montgomery Limited Partner. The Partnership Units held by a Montgomery Limited Partner shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Montgomery Limited Partner are admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. Each of the Montgomery Limited Partners, LXP, the Partnership and the General Partner shall treat the transaction between LXP and each Montgomery Limited Partner as a sale of the Montgomery Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. Each Montgomery Limited Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT Shares upon exercise of its Redemption Right.
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Name and Address of Partner Capital Partnership Percentage Redemption Contribution(3) Units Interest Exercise Date - ------------------------------------------------------------------------------------------------------------------------------------ Montgomery Limited Partners 0.3813% May 1, 2006 - --------------------------- Peter J. Kinnunen 0.15647520 1,974 Francois Letaconnoux 0.06128612 773 Ellen C. Monk 0.21808731 2,751 Antony Monk Insurance Trust U/A/D 0.65393594 8,251 5/13/92, F/B/O Monk Children, Ellen Monk, Trustee Terrell R. Peterson Trust dtd. 4/5/90 0.15647520 1,974 E. Robert Roskind 0.23927666 3,019 Richard J. Rouse 0.17603460 2,221
------------------------ 3 Units of Limited Partnership of Montgomery Contributed A-35
Edward C. Whiting 0.23471280 2,961 Trust F/B/O Joanna Monk U/A 2/28/89, 0.04074875 514 Dennis Monk, Trustee Trust F/B/O Jonathan Monk U/A 2/28/89, 0.04074875 514 Dennis Monk, Trustee Trust F/B/O Samantha Monk 0.04074875 514 U/A 2/28/89, Dennis Monk, Trustee The LCP Group, L.P. 1.74136992 21,972 Donald R. Tomlin, Jr. 0.50000000 6,309 Ileana Basil 2.49355200 31,463 Mary Blair Fawcett 1.00000000 12,618
A-36 ANNEX I CERTIFICATE OF DESIGNATION OF SERIES C PREFERRED OPERATING PARTNERSHIP UNITS OR LIMITED PARTNERSHIP INTERESTS OF LEPERCQ CORPORATE INCOME FUND L.P. ------------------------------------------- Series C Preferred Units ------------------------ A series of 2,171,166 operating units of Preferred Limited Partnership Interests of LERPERCQ CORPORATE INCOME FUND L.P., a Delaware limited partnership (the "Partnership"), shall be created and be designated "Series C Preferred Units" having the rights and preferences set forth herein. WHEREAS, Lexington Corporate Properties Trust, a Maryland statutory real estate investment trust ("LXP"), is the sole beneficial owner of Lex GP-1 Trust, a Delaware statutory trust and the sole general partner of the Partnership (the "General Partner"); WHEREAS, pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP, the Partnership, Lepercq Corporate Income Fund II L.P. and Net 3 Acquisition L.P., on the other, and as of the date hereof, LXP has (i) completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), and (ii) granted the Underwriter a 30-day option to purchase an additional 400,000 Preferred Shares, both pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003; WHEREAS, the Preferred Shares carry a cumulative preferred dividend, liquidation preference and conversion right further described in the Articles Supplementary of LXP, dated as of December 8, 2004 (the "Articles Supplementary"); WHEREAS, pursuant to Section 4.2 of the Fifth Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 31, 1996, as amended (the "Partnership Agreement"), LXP has contributed a portion of the net proceeds of the Offering to the Partnership in exchange for Series C Preferred Units; and WHEREAS, as required by the Partnership Agreement, the Series C Preferred Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares; -1- FIRST: Pursuant to the authority expressly vested in the General Partner of the Partnership by Section 4.2 of the Partnership Agreement, and in accordance with Section 17-302 of the Delaware Revised Uniform Limited Partnership Act, the General Partner has adopted resolutions designating the Series C Preferred Units and setting forth the terms of the Series C Preferred Units, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption and the price. SECOND: The terms of the Series C Preferred Units as set by the General Partner, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption, are as follows: Section 1. Number of Units and Designation. The Series C Preferred Units shall be a series of preferred Partnership Units designated as "Series C Preferred Units", and the number of units constituting such series shall be 2,171,166. Section 2. Definitions. "Articles Supplementary" shall have the meaning set forth in the Recitals hereto. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Cash Settlement Average Period" shall have the meaning set forth in the Articles Supplementary. "Closing Sale Price" shall have the meaning set forth in the Articles Supplementary. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Partnership Unit" shall mean a Partnership Unit that receives no preferential treatment. "Common Stock" shall mean the common shares of beneficial interest, par value $0.0001 per share, of LXP. "Company Conversion Option" shall have the meaning set forth in the Articles Supplementary. "Company Conversion Option Date" shall have the meaning set forth in the Articles Supplementary. "Conversion Amount" shall equal (x) the fraction with (i) a numerator consisting of the number of Series C Preferred Units outstanding prior to the applicable conversion or repurchase, and (ii) a denominator consisting of the number of Preferred Shares outstanding prior to such conversion or repurchase, multiplied by (y) the number of Preferred Shares to be converted or repurchased. -2- "Conversion Date" shall have the meaning set forth in the Articles Supplementary. "Conversion Notice" shall have the meaning set forth in the Articles Supplementary. "Conversion Price" shall mean, as of any day, a per Partnership Unit amount equal to the quotient of the liquidation preference amount of a share of Series C Preferred Units on that day divided by the Conversion Rate (as adjusted pursuant to the Articles Supplementary) on such day. "Conversion Rate" shall have the meaning set forth in the Articles Supplementary. "Conversion Right" shall have the meaning set forth in the Articles Supplementary. "Conversion Value" shall mean an amount equal to the product of the applicable Conversion Rate (as adjusted pursuant to the Articles Supplementary) multiplied by the arithmetic average of the Closing Sale Prices of the Common Stock during the Cash Settlement Average Period. "Converted Series C Preferred Units" shall have the meaning set forth in Section 5(a)(1). "Distribution Payment Date" shall mean, with respect to each Distribution Period, the fifteenth day of February, May, August and November of each year, commencing on February 15, 2005. "Distribution Period" shall mean the respective periods commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period, which shall commence on the Original Issue Date and end on and include December 31, 2004). "Distribution Record Date" shall mean the date designated by the Board of Trustees of the LXP as the Dividend Record Date (as defined in the Articles Supplementary) with respect to the Preferred Shares. "Event" shall have the meaning set forth in Section 9(b) hereof. "General Partner" shall have the meaning set forth in the Recitals hereto. "LXP" shall have the meaning set forth in the Recitals hereto. "Offering" shall have the meaning set forth in the Recitals hereto. "Original Issue Date" shall mean December 8, 2004. "Partnership" shall have the meaning set forth in the preamble hereto. "Partnership Agreement" shall have the meaning set forth in the Recitals hereto. -3- "Partnership Unit" shall have the meaning set forth in Article FIRST of the Partnership Agreement. "Preferred Shares" shall have the meaning set forth in Recitals hereof. "Public Acquirer Common Stock" shall have the meaning set forth in the Articles Supplementary. "Repurchase Date" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Price" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Right" shall have the meaning set forth in Section 6(a) hereof. "Repurchased Series C Preferred Units" shall have the meaning set forth in Section 6(a) hereof. "Series C Preferred Units" shall have the meaning set forth in preamble hereof. "Series B Preferred Units" shall mean the Series B Preferred Units of the Partnership. "Trading Day" shall have the meaning set forth in the Articles Supplementary. "Underwriter" shall have the meaning set forth in the Recitals hereto. Section 3. Distributions. (a) Subject to the preferential rights of the holders of any class or series of Partnership Units ranking senior to the Series C Preferred Units as to distributions, the holders of the Series C Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 6.50% per annum of the $50.00 liquidation preference per Series C Preferred Unit (equivalent to the annual rate of $3.25 per Series C Preferred Unit). Such distributions shall accrue and be cumulative from and including the Original Issue Date and shall be payable quarterly in arrears on each Distribution Payment Date, commencing February 15, 2005 in respect of the quarterly distribution periods ending on December 31, March 31, June 30, and September 30, respectively; provided, however, that if any Distribution Payment Date is not a Business Day, then the distribution which would otherwise have been payable on such Distribution Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on such Distribution Payment Date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such Distribution Payment Date to such next succeeding Business Day. The distribution payable on the Series C Preferred Units on February 15, 2005 shall be a pro rata distribution from the Original Issue Date to December 31, 2004 in the amount of $0.2167 per Series C Preferred Unit. The amount of any distribution payable on the Series C Preferred Units for each full Distribution Period shall be computed by dividing the annual distribution by four (4). The amount of any distribution payable on the Series C Preferred Units for any partial Distribution Period other than the initial Distribution Period shall be prorated and computed on the basis of a 360-day year consisting of -4- twelve 30-day months. Distributions will be payable to holders of record as they appear in the Partnership's records at the close of business on the applicable Distribution Record Date. (b) No distributions on the Series C Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration, or payment or setting apart for payment shall be restricted or prohibited by law. (c) Notwithstanding anything contained herein to the contrary, distributions on the Series C Preferred Units shall accrue whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions, and whether or not such distributions are declared. (d) Except as provided in Section 3(e) below, unless full cumulative distributions on the Series C Preferred Units for all past distribution periods and the then current distribution period shall have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set apart for such payment, (i) no distributions, other than distributions in Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation, shall be declared or paid or set apart for payment and no other distributions or distribution of cash or other property may be declared or made, directly or indirectly, on or with respect to any other class or series of Partnership Units ranking, as to distributions, on a parity with or junior to the Series C Preferred Units (other than pro rata distributions on Series B Preferred Units or other preferred Partnership Units ranking on parity as to distributions with the Series C Preferred Units) for any period, nor (ii) shall any other class or series of Partnership Units ranking, as to distributions or upon liquidation, on a parity with or junior to the Series C Preferred Units, including without limitation the Series B Preferred Units, be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Partnership Units) by the Partnership (except by conversion into or exchange for other classes or series of Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation). (e) When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Units and the Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units, including, without limitation the Series B Preferred Units, all distributions declared upon the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units including, without limitation the Series B Preferred Units, shall be declared pro rata so that the amount of distributions declared per Series C Preferred Unit and such other class or series of Partnership Units shall in all cases bear to each other the same ratio that accrued distributions per Series C Preferred Unit and such other class or series of Partnership Units (which shall not include any accrual in respect of unpaid distributions on such other class or series of Partnership Units for prior distribution periods if such other class or series of Partnership Units does not have a cumulative distribution) bear to each other. No interest, or -5- sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Series C Preferred Units which may be in arrears. (f) Holders of Series C Preferred Units shall not be entitled to any distribution, whether payable in cash, property or Partnership Units, in excess of full cumulative distributions on the Series C Preferred Units as provided herein. Any distribution payment made on the Series C Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such units which remains payable. Accrued but unpaid distributions on the Series C Preferred Units will accumulate as of the Distribution Payment Date on which they first become payable. Section 4. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Partnership, before any distribution or payment shall be made to holders of any other class or series of Partnership Units of the Partnership ranking, as to liquidation rights, junior to the Series C Preferred Units, the holders of Series C Preferred Units shall be entitled to be paid out of the assets of the Partnership legally available for distribution to its partners a liquidation preference of $50.00 per unit, plus an amount equal to any accrued and unpaid distributions to the date of payment (whether or not declared). In the event that, upon such voluntary or involuntary liquidation, dissolution or winding-up, the available assets of the Partnership are insufficient to pay the amount of the liquidating distributions on all outstanding Series C Preferred Units and the corresponding amounts payable on all other classes or series of Partnership Units of the Partnership ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, the Series B Preferred Units, in the distribution of assets, then the holders of the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Written notice of any such liquidation, dissolution or winding up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than thirty (30) nor more than sixty (60) days prior to the payment date stated therein, to each record holder of Series C Preferred Units at the respective addresses of such holders as the same shall appear on Schedule I hereto. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Units will have no right or claim to any of the remaining assets of the Partnership. The consolidation or merger of the Partnership with or into any other partnership, corporation or entity, or the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Partnership, shall not be deemed to constitute a liquidation, dissolution or winding-up of the affairs of the Partnership. Section 5. Conversion. (a) General. (1) Subject to the provisions of Section 5(b) below, on the date any Preferred Shares are converted, an amount of Series C Preferred Units equal to the Conversion -6- Amount (the "Converted Series C Preferred Units") shall automatically convert into a number of Common Partnership Units equal to the number of shares of Common Stock issued by LXP (or shares of Public Acquirer Common Stock, if applicable) with respect to the Preferred Shares related to the Converted Series C Preferred Units. (2) In connection with the conversion of any Series C Preferred Units, no fractional Common Partnership Units will be issued, but the Partnership shall pay a cash adjustment in respect of any fractional interest in an amount equal to the fractional interest multiplied by the Closing Sale Price on the Trading Day immediately prior to the corresponding Conversion Date or the Company Conversion Option Date, as applicable. If more than one Series C Preferred Unit will be surrendered for conversion by the same holder at the same time, the number of full Common Partnership Units will be computed on the basis of the total number of Series C Preferred Units so surrendered. (3) A holder of Series C Preferred Units is not entitled to any rights of a holder of Common Partnership Units until the Series C Preferred Units held are converted into Common Partnership Units, and only to the extent the Series C Preferred Units are deemed to have been converted to Common Partnership Units in accordance with this Section 5. (4) Each conversion of Series C Preferred Units shall be deemed to have been made on the corresponding Conversion Date or Company Conversion Option Date, as applicable, so that the rights of the holder thereof as to the Series C Preferred Units being converted as a result, will cease except for the right to receive the Conversion Value per each converted Series C Preferred Unit, and, if applicable, the person entitled to receive Common Partnership Units will be treated for all purposes as having become the record holder of those Common Partnership Units at that time. (b) Settlement Upon Conversion. The Partnership shall deliver the Conversion Value per each converted Series C Preferred Unit, in (i) Common Partnership Units, cash or a combination of cash and Common Partnership Units, in accordance with LXP's election with respect to the Preferred Shares being converted. (c) Payment of Distributions. (1) Conversion Right. (i) If a Series C Preferred Unit is converted as a result of a Conversion Right, upon conversion, that Series C Preferred Unit shall cease to cumulate distributions as of the end of the day immediately preceding the Conversion Date and the holder will not receive any cash payment representing accrued and unpaid distributions of the Series C Preferred Unit, except in those limited circumstances discussed in this Section 5(c). Except as provided herein, the Partnership shall make no payment for accrued and unpaid distributions, whether or not in arrears, on a Series C Preferred Unit converted pursuant to a Conversion Right, or for distributions on Common Partnership Units issued upon such conversion. -7- (ii) If the related Conversion Notice is received by LXP before the close of business on a Distribution Record Date, the holder shall not be entitled to receive any portion of the distribution payable on such converted Series C Preferred Units on the corresponding Distribution Payment Date. (iii) If the related Conversion Notice is received by LXP after the Distribution Record Date but prior to the corresponding Distribution Payment Date, the holder on the Distribution Record Date shall receive on that Distribution Payment Date accrued distributions on those Series C Preferred Units, notwithstanding the conversion of those Series C Preferred Units prior to that Distribution Payment Date, because the holder shall have been the holder of record on the corresponding Distribution Record Date. However, upon conversion, the holder shall pay an amount equal to the distribution that has accrued and that will be paid on the related Distribution Payment Date. (iv) A holder of Series C Preferred Units on a Distribution Record Date whose Series C Preferred Units are converted into Common Partnership Units on or after the corresponding Distribution Payment Date shall be entitled to receive the distribution payable on such Series C Preferred Units on such Distribution Payment Date, and such holder need not include payment of the amount of such distribution upon conversion. (v) If the related Conversion Notice is received by LXP on or before the close of business on a Distribution Record Date or following such Distribution Record Date but before the Distribution Payment Date therefore, and the settlement date for any Common Partnership Units to be issued upon such conversion is after the close of business on the record date for the payment of distributions for the corresponding period on such Common Partnership Units, such holder shall be entitled to receive such Common Partnership Unit distributions upon the next payment date of distributions on the Common Partnership Units as if it were the holder of such Common Partnership Units on such record date. (2) Company Conversion Option. (i) In the event a conversion occurs as a result of a Company Conversion Option, whether the Company Conversion Option Date is prior to, on or after the Distribution Record Date for the current period, all unpaid distributions which are in arrears as of the Company Conversion Option Date shall be payable to the holder of the converted Series C Preferred Units. (ii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is prior to the close of business on any Distribution Record Date, the holder shall not be entitled to receive any portion of the distribution payable for such period on such converted Series C Preferred Units on the corresponding Distribution Payment Date. -8- (iii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is on, or after the close of business on, any Distribution Record Date and prior to the close of business on the corresponding Distribution Payment Date, all distributions, including accrued and unpaid distributions, whether or not in arrears, with respect to the Series C Preferred Units called for conversion on such date, shall be payable on such Distribution Payment Date to the record holder of such Series C Preferred Units on such record date. (d) Maturity; Sinking Fund. The Series C Preferred Units shall have no stated maturity and shall not be subject to any sinking fund or mandatory redemption. (e) Effect of Conversion. All Series C Preferred Units converted pursuant to this Section 5, repurchased pursuant to Section 6, or otherwise converted or repurchased shall be authorized but unissued Series C Preferred Units until reclassified into another class or series of Common Partnership Units. Section 6. Purchase of Series C Preferred Units Upon a Fundamental Change. ------------------------------------------------------- (a) In the event a holder of Preferred Shares requires LXP to repurchase (the "Repurchase Right") for cash all or any part of such holder's Preferred Shares, the Partnership shall repurchase, on the date LXP repurchases such Preferred Shares (the "Repurchase Date"), an amount of Series C Preferred Units equal to the Conversion Amount (the "Repurchased Series C Preferred Units") at a per Series C Preferred Unit repurchase price equal to the per Preferred Share repurchase price paid by LXP with respect to the Preferred Shares related to the Repurchased Series C Preferred Units (the "Repurchase Price"). (b) If the Partnership holds cash sufficient to pay the Repurchase Price of the Series C Preferred Units on the Trading Day following the Repurchase Date, then: (1) the Series C Preferred Units will cease to be outstanding and distributions (including additional distributions, if any) will cease to accrue; and (2) all other rights of the holder will terminate (other than the right to receive the Repurchase Price upon transfer of the Series C Preferred Units). Section 7. Voting Rights. (a) Holders of the Series C Preferred Units shall not have any voting rights, except as provided by applicable law. (b) In any matter in which the Series C Preferred Units may vote (as expressly provided herein or as may be required by law), each Series C Preferred Unit shall be entitled to one vote per $25.00 of liquidation preference. -9- Section 8. Redemption. Except as otherwise set forth herein, the Series C Preferred Units shall not be redeemable by the Partnership. Section 9. Ranking. (a) In respect of rights to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the affairs of the Partnership, the Series C Preferred Units shall rank (i) senior to any class or series of Partnership Units of the Partnership other than any class or series referred to in clauses (ii) and (iii) of this sentence, (ii) on a parity with any class or series of Partnership Units of the Partnership the terms of which specifically provide that such class or series of Partnership Units ranks on a parity with the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership, including, without limitation the Series B Preferred Units, and (iii) junior to any class or series of Partnership Units of the Partnership ranking senior to the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership. For avoidance of doubt, any debt of the Partnership which is convertible into or exchangeable for Partnership Units of the Partnership shall not constitute a class or series of Partnership Units of the Partnership. (b) Unless (x) no Series C Preferred Units remain outstanding or (y) the requisite holders of the Preferred Shares have approved similar actions with respect to the Preferred Shares in accordance with the Articles Supplementary (in which event the Partnership may take similar action with respect to the Series C Preferred Units), the Partnership shall not: (i) authorize or create, or increase the authorized or issued amount of, any class or series of Partnership Units ranking senior to the Series C Preferred Units with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding-up of the affairs of the Partnership or reclassify any authorized shares of Partnership Units into such Partnership Units, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such Partnership Units; or (ii) amend, alter or repeal the provisions of the Partnership Agreement or this Certificate of Designation, whether by merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise (an "Event"), so as to materially and adversely affect any right, preference, or privilege of the Series C Preferred Units or the holders thereof; provided however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the Series C Preferred Units remains outstanding with the terms thereof materially unchanged, taking into account that, upon the occurrence of an Event, the Partnership may not be the surviving entity, the occurrence of such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges of holders of Series C Preferred Units. The provisions of this Section 9(b) shall not, however, prohibit the Partnership from taking the following actions: (A) any increase, decrease or issuance from time to time of any class or series of Partnership Units (including the Series C Preferred Units), or (B) the creation or issuance from time to time of any additional classes or series of Partnership Units, in each case referred to in clause (A) or (B) above ranking on a parity with or junior to the Series C Preferred Units with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Partnership. -10- (c) Notwithstanding anything to the contrary in this Section 9, nothing herein shall prevent the Partnership from taking such action as may be necessary or advisable in its sole discretion so as to avoid being treated as an association taxable as a corporation for federal tax purposes or so as to avoid adversely affecting (for as long as LXP deems necessary) LXP's ability to qualify as a REIT for federal tax purposes. Section 10. Exclusion of Other Rights. The Series C Preferred Units shall not have any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption other than expressly set forth in the Partnership Agreement and this Certificate of Designation. Section 11. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. Section 12. Severability of Provisions. If any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of conversion of the Series C Preferred Units set forth in the Partnership Agreement and this Certificate of Designation are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of conversion of Series C Preferred Units set forth in the Partnership Agreement which can be given effect without the invalid, unlawful or unenforceable provision thereof shall, nevertheless, remain in full force and effect and no preferences or other rights, voting powers, restrictions, limitations as to distributions or other qualifications or terms or conditions of conversion of the Series C Preferred Units herein set forth shall be deemed dependent upon any other provision thereof unless so expressed therein. Section 13. No Preemptive Rights. No holder of Series C Preferred Units shall be entitled to any preemptive rights to subscribe for or acquire any Partnership Units of the Partnership (whether now or hereafter authorized) or instruments of the Partnership convertible into or carrying a right to subscribe to or acquire Partnership Units of the Partnership. LEPERCQ CORPORATE INCOME FUND L.P. By: Lex GP-1 Trust, its General Partner By: /s/ T. Wilson Eglin ----------------------------- T. Wilson Eglin President -11- EX-10 3 ex10-2.txt EX. 10.2 - LCIF II AMENDMENT Exhibit 10.2 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LEPERCQ CORPORATE INCOME FUND II L.P. This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF LEPERCQ CORPORATE INCOME FUND II L.P. (this "Amendment") is made and effective as of December 8, 2004 by and among the entities and individuals signatory hereto. A. Lepercq Corporate Income Fund II L.P., a Delaware limited partnership (the "Partnership") is governed by that certain Second Amended and Restated Agreement of Limited Partnership, dated effective as of August 27, 1998, as amended by that certain First Amendment thereto effective as of June 19, 2003, and by Second Amendment thereto effective as of June 30, 2003, (the "Agreement"). Unless otherwise defined, all capitalized terms used herein shall have such meaning ascribed such terms in the Agreement. B. Lexington Corporate Properties Trust, a Maryland real estate investment trust ("LXP") is the sole unitholder of each of (i) Lex GP-1 Trust, a Delaware statutory trust ("Lex GP") and (ii) Lex LP-1 Trust, a Delaware statutory trust ("Lex LP"). Lex GP is the general partner of the Partnership, Lepercq Corporate Income Fund L.P., a Delaware limited partnership, and Net 3 Acquisition L.P., a Delaware limited partnership (collectively, the "Operating Partnerships"). Lex LP is the Initial Limited Partner of each of the Operating Partnerships. C. Pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP and the Operating Partnerships, on the other, and as of the date hereof, LXP has completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003. D. The Preferred Shares carry a (i) cumulative preferred dividend, (ii) liquidation preference and (iii) conversion right. E. Pursuant to Section 4.2 of the Agreement, the Partnership may issue additional partnership interests to LXP and its affiliates in connection with the issuance of shares by LXP provided LXP makes a capital contribution to the Partnership of the proceeds raised in connection with such issuance. F. LXP has agreed to contribute a portion of the proceeds of the Offering to the Partnership in exchange for Series C Preferred Operating Partnership Units ("Preferred OP Units") in the Partnership to be issued to an affiliate of LXP, Lex LP. G. As required by Section 4.2 of the Agreement, the Preferred OP Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares, as further described and set forth in the Certificate of Designation for the Preferred OP Units attached hereto as Annex I (the "Certificate of Designation"). H. As of the date hereof, and pursuant to the terms of the Agreement, the parties hereto desire to amend the Agreement to reflect the issuance of 439,507 Preferred OP Units to Lex LP as well as all other changes in the ownership of Partnership Units since the date of the Agreement by amending and restating Exhibit A to the Agreement and (ii) the admission of Lex LP as a Limited Partner holding Preferred OP Units (a "Preferred Limited Partner"). NOW, THEREFORE, the undersigned, being desirous of effectuating the foregoing and amending the Agreement accordingly, hereby enter into this Amendment and amend the Agreement as follows: 1. Certificate of Designation; Preferred Limited Partner. The Agreement is hereby amended to the extent necessary to reflect that the rights, preferences and privileges of the Preferred OP Units and the Preferred Limited Partner, shall be as set forth in the Certificate of Designation which is hereby attached as Annex I to the Agreement and made a part hereof. To the extent there is a conflict between the terms of the Certificate of Designation and the terms of the Agreement, the terms of the Certificate of Designation shall control. 2. Exhibit A. Exhibit A to the Agreement is deleted in its entirety and replaced with Exhibit A hereto. 3. Miscellaneous. Except as amended hereby, the Agreement shall remain unchanged and in full force and effect. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment on behalf of the Partnership in accordance with the provisions of Section 14.1 of the Agreement as of the date first written above. GENERAL PARTNER: LEX GP-1 TRUST By: /s/ T. Wilson Eglin ---------------------------- T. Wilson Eglin President
EXHIBIT A PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- General Partner - --------------- Lex GP-1 Trust $100 35,411 0.72018% N/A Limited Partner - --------------- Lex LP-1 Trust $100 3,462,082.5 70.41091% N/A Series B Preferred Limited Partner - ---------------------------------- Lex LP-1 Trust $14,199,025 567,961 100% (of N/A Series B) Series C Preferred Limited Partner - ---------------------------------- Lex LP-1 Trust $21,398,497.06 439,507 100% (of N/A Series C) Special Limited Partners 1.11285% N/A - ------------------------ Douglas S. Altabef _____ 3,354 The LCP Group, L.P. _____ 14,914 Ellen C. Monk _____ 2,161.5 E. Robert Roskind _____ 21,443 Richard J. Rouse _____ 8,241 Edward C. Whiting _____ 4,605 Phoenix Limited Partner 4.37884% 15-Jan-99 - ----------------------- E. Robert Roskind G.P. interest 175,306 The E. Robert Roskind Family, L.P. 40,000 Warren Limited Partners (Units 23.34995% 1-Sep-99 - ----------------------- Contributed) AGR Trust 2 6,672 Ambrose, Joseph D. 1 3,336 Ambrose, Joseph D. III 1 3,336 Angell, E. Joe 1 3,336 Baghramian, Michael M. & Carol 1 3,336 Bain, Frank L.(Jr.) & Linda C. 1 3,336 Bancroft, Toby O. Jr. 1 3,336
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Barnett, Paul 0.5 1,668 Bartlett, June F. 1 3,336 Becker, Karl E. 0.5 1,668 Berg, Michael P. & Virginia I. 1 3,336 Berger, Milton 1 3,336 Berman, Michael L. 1 3,336 W.C. & P.G. Bickett Family Trust 1 3,336 Birdsall, John H. Revocable 1 3,336 Intervivos Trust Bolliger, Theodore T. 0.5 1,668 Bond, John L. 1 3,336 Botsai, Elmer E. 0.5 1,668 Boyd, John & Sylvia 1 3,336 Breen, James J. 1 3,336 Brenner, William I. 1 3,336 Broback Family Trust 1 3,336 Burnett Living Trust 1 3,336 Carpenter, David R. 0.5 1,668 Chambers, Richard O. 1 3,336 Chen, Howard H. 1 3,336 Chen, Wen Long & Chun Hwa 0.5 1,668 Cherin, Harris A. 0.5 1,668 Chinn, Aaron 1 3,336 Clark, William R. & Janice R. 1 3,336 Coberly (Joseph E. Jr.)Revocable Trust 1 3,336 Cooper, George M. 0.5 1,668 Croft (Nelda J.) Trust dtd 6/2/89 1 3,336 Crow, Frank (Jr.) & Gertrude 0.5 1,668
A-2
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Cuneo, Joseph J. 1 3,336 Dafcik, William V. (Jr.) 0.25 834 Dash, Jay 1 3,336 Davis, Phyllis B. 1 3,336 DeLapp, Phyllis B. 1 3,336 DMK Trust 1 3,336 Dorman, Malcolm J. 0.5 1,668 Dunn, Jerry. 1 3,336 Eagleson, James S. & Elree F. 1 3,336 Edelman (Alan) Trust 1 3,336 Ehland, Elizabeth 0.333 1,111 Eleuterio, Herbert 1 3,336 Endsley, (Fred S. Jr.) Ins. Trust 1 3,336 Evans, Robert L. & Jewell V. 1 3,336 Everett, Billy T. & Betty J. 1 3,336 Fogarty, Patrick J. 1 3,336 Fogelson, Jeffery P. & Janet 1 3,336 Fout, James E. 0.5 1,668 Fouts, John B. & Susan 1 3,336 Fox, Jerrold & Miriam 1 3,336 Frandsen (James S.) Trust u/a/d 5/7/90 1 3,336 Gibbins, Peggie 1 3,336 Girod, Rene M. 1 3,336 Gold, Ronald A. 1 3,336 Goldfinger, David A. Trust 1 3,336 Gosseen, Robert I. & Francine A. 1 3,336 The LCP Group 1 3,336
A-3
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Grimes, Daphne B. 1 3,336 Grossman, Kenneth S. 1 3,336 Habermann, James H. & Helen A. 1 3,336 Hallisey, Michael J. & Elizabeth 1 3,336 Hamada, Frank K. 0.5 1,668 Hanger, Robert T. 1 3,336 Hendler, Albert I. 1 3,336 Henry, Drexwell 4 13,343 Hilb, Justin M. 1 3,336 HMSP Realty Co. 1 3,336 Houston, Robert A. 1 3,336 Hundahl (John C.) Trust 1 3,336 Hyde, Dolores 0.5 1,668 Ingram, Charles B. 1 3,336 Irmscher, Carol M. 1 3,336 Ito, Thomas Yakata 0.5 1,668 Jameson, Jacqueline 0.333 1,111 Jenkins, Stephen L 1 3,336 Johnson, Russell L. & Mary C. 1 3,336 Jones (Edna M.) Rev. Trust uad 9/24/91 1 3,336 Joseph, Allen S. 1 3,336 Joseph, Gerald 1 3,336 Kaplansky, Arthur 1 3,336 Kaufman (Irving & Beatrice) Rev Trust 1 3,336 Keto, Robert E. 1 3,336 Korshun, Sanford L. 1 3,336 Kraines, Lawrence M. 3 10,007
A-4
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Kraines, Maurice H. 8 26,686 Kraines, Steven 3 10,007 Kuhlmann, Bruce W. 1 3,336 Larson, Carol 1 3,336 Lee, Robert T. 0.5 1,668 Lee, Winfred Y. 1 3,336 Lesser, Melvin M. 1.5 5,004 Lesser, Norman B. 0.5 1,668 Levine (Howard & Irene) Trust 1 3,336 Levy, James A. & Paul G. 1 3,336 Levy, Marie 0.5 1,668 Lockton, John D. Jr. 1 3,336 Love, Elizabeth 1 3,336 Lynch, F.F. Revocable Trust 1 3,336 Mankodi, Rashmikant P. 1 3,336 Markstein Trust 1 3,336 Maruyama, Donald 0.5 1,668 Maruyama, Harriet H. 0.5 1,668 McCanna, Living Trust 0.5 1,668 McCowan, Robert T. 1 3,336 McDonald, Allen R. 0.5 1,668 McGarry, Frank P. 0.5 1,668 McKee, Susan D. 0.5 1,668 Monk, Edward H. 0.5 1,668 Moss, Joel 0.5 1,668 Naparst, Eugene A. 0.5 1,668 Oceans Unlimited Partnership 1 3,336
A-5
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Oliver, Fred L. 1 3,336 O'Meallie, Lawrence P. 1 3,336 Osborn, Robert P. 0.5 1,668 Otsuka, Charles I. 1 3,336 Padfield, Denise 0.25 834 Patel, Chupendra & Indira 1 3,336 Penn, Sanford R. Jr. 1 3,336 Phillips, Merlin 0.5 1,668 Philpot, Donald 1 3,336 Pine Forrest Irrevocable Trust 1 3,336 Potthoff, Anne 0.25 834 Quigg, John D. & Tim D. 1 3,336 Quinn, David C. 0.5 1,668 Rockstrom, Donald W. 0.5 1,668 Rosenberg, Seligman 1 3,336 Roth, Paul W. Sr. 2 6,672 Russell, Charles M. Jr. 0.5 1,668 Sanders Family Trust 1 3,336 Sandin (Richard L.) Trust 1 3,336 Sandin, R. Keith 1 3,336 Silberer, Eunice D. 3 10,007 Simmons, William M. 1 3,336 Sindler, Richard A.& Victoria M. 1 3,336 Smith, Edwin E. 1 3,336 Smith, Sandra 5 16,679 Specht, Alan 1 3,336 Spira, Melvin 1 3,336
A-6
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- St. Martin, M. Edward Jr. 1 3,336 Stein, Gail Revocable Trust 0.5 1,668 Stone, Bohdan W. 0.5 1,668 Storaasli (Iris) Marital Trust 1 3,336 Stritmatter, Paul L. 1 3,336 Sullivan, Pamalee Jean 0.333 1,111 Sonia G. Travis Trust 1 3,336 UBATCO & CO. 0.5 1,668 Verlin, Murray 1 3,336 Voute, P. Michael 1 3,336 Watt, Emily 0.25 834 Weckerle, Joseph F. 1 3,336 Weinstock, Michael 1 3,336 Weinstock, George A. 1 3,336 Weyand, Fred C. 1 3,336 Wilcox, Allen 1 3,336 Williamson, Ronald K. 1 3,336 Worthington (Frances Fant) Special 1 3,336 Trust Wright, Robert R. 1 3,336 Wu, Yen Bin & Jean Eng 0.5 1,668 Yusim, Milton & Jo Anne 1 3,336 Zahr, Sameer & Muna 1 3,336 Zaslow, Stanley & Thelma 1 3,336 Roskind, E. Robert 0.302 22,300 Monk, Ellen C. 0.1125 1,575 Rouse, Richard J. 0.121 40,296 Whiting, Edward C. 0.095 53,015
A-7
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Percentage Capital Partnership Interest of Redemption Name of Partner Contribution Units Class Exemption Date - --------------------------------------------------------------------------------------------------------------- Kinnunen, Peter J. 0.078 35,394 Dannhauser, James F. 0.01 33 The LCP Group, L.P. 373,116 Peterson (Terrell) Trust dtd. 4/5/90 35,214 Roskind, E. Robert 2001 Trust 33,333 Third Lero Corp. 3,404
A-8 Scannell Limited Partners Supplement ------------------------------------ As a result of Lepercq Corporate Income Fund II L.P. (the "Partnership") and Lexington OC LLC ("LOC") having entered into a Contribution Agreement with Scannell Properties #14 LLC, an Indiana limited liability company ("Scannell #14") and Scannell Properties #16 LLC, an Indiana limited liability company ("Scannell #16," collectively with Scannell #14, the "Scannell Entities" or individually a "Scannell Entity") on the date hereof, pursuant to which at the direction of the Partnership, LOC acquired fee title to certain real property commonly known as 191 and 200 Arrowhead Drive in Hebron Business Center in Hebron, Ohio and the building improvements thereon (the "Property") from the Scannell Entities, subject to Seller's Indebtedness (as defined in the Agreement for Purchase and Sale, dated September 20, 2001, between Scannell Entities and Lexington Corporate Properties Trust in respect of the Property (the "Purchase Agreement")), the General Partner pursuant to Section 4.2A and Section 14.1.B(2) of the Partnership Agreement (defined below) has authorized the issuance of Partnership Units to the Scannell Entities. The Scannell Entities shall receive the number of Partnership Units specified in the Schedule. For purposes of applying the terms and conditions of the Partnership Agreement, the Scannell Entities shall be Partners of the Partnership with the rights and obligations of Additional Limited Partners. For purposes of Section 5.1 of the Partnership Agreement, the Scannell Entities shall be entitled to receive cash distributions with respect to each Partnership Unit equal to the cash dividend payable with respect to each share of Lexington Corporate Properties Trust ("LXP") common stock, determined at the time of each quarterly distribution beginning with the distribution payable to shareholders of record from and after the date hereof. For purposes of Sections 6.1A and 6.1B of the Partnership Agreement, allocations of Net Income and Net Loss by the Partnership generally shall be made after giving effect to all allocations of taxable income to the Scannell Entities. Pursuant to the General Partner's authority in Section 14.1.B(2), Partnership taxable income shall be specially allocated to the Scannell Entities in an amount equal to, but not in excess of, all cash distributions to the Scannell Entities; provided, however, that the Scannell Entities shall be allocated taxable income as otherwise required in Exhibit B and C of the Partnership Agreement; provided further, that with respect to Exhibit C2.A.(1)(a) of the Partnership Agreement that in the case of the Property, such items attributable thereto shall be allocated among the Partners using the "traditional method" under Treasury Regulation Section 1.704-3(b)(1). For purposes of Section 8.4 of the Partnership Agreement, on the first anniversary of the Closing Date (as such term is defined in the Purchase Agreement) and on each December 1, March 1, June 1 and September 1 thereafter (each a "Specified Redemption Date"), the Scannell Entities shall have the right (the "Scannell Redemption Right") to require the Partnership to redeem on a Specified Redemption Date the Partnership Units held by the Scannell Entities for the Redemption Amount to be delivered by the Partnership; provided, however, that the Scannell Entities must convert a number of Partnership Units equal to at least the lesser of (i) 1,000 Partnership Units, or (ii) all of the Partnership Units held by such Partner. The Scannell Redemption Right shall be exercised pursuant to a Notice of Redemption (substantially in the form of Exhibits D-1 through D-3 modified to reflect the Scannell Entities giving notice) delivered to the General Partner and LXP on a Specified A-9 Redemption Date by the Scannell Entity who is exercising the redemption right (the "Scannell Redeeming Partner"). The Scannell Redeeming Partner shall have no right, with respect to any Partnership Units so redeemed, to receive any distributions paid after the Specified Redemption Date. The Partnership covenants to cause the registration of any LXP Common Stock issued in connection with a redemption in such a manner as is required so that the shares of LXP Common Stock issued in connection with such redemption are freely transferable. The Assignee of the Scannell Entities may exercise the redemption rights of the Scannell Entities, and the Scannell Entities shall be deemed to have assigned such rights to such Assignee and shall be bound by the exercise of such rights by such Assignee. In connection with any exercise of such rights by such Assignee on behalf of the Scannell Entities, such Redemption Amount shall be delivered by the Partnership directly to such Assignee and not to the Scannell Entities. The Partnership Units held by the Scannell Entities shall be subject to redemption by the Partnership if otherwise required by the terms of the Partnership Agreement. The Partnership hereby covenants not to dispose of its interest in the Property or repay any of the Seller's Indebtedness with respect to the Property (other than normal periodic payments of principal and other than a refinancing that does not result in a reduction of the Seller's Indebtedness) during the Tax Protection Period without the prior consent of the holders of fifty one (51%) percent of the Partnership Units held by the Scannell Entities, except that the foregoing covenant shall not apply and no such consent shall be required in the event of (a) a foreclosure of the Property and any subsequent sale thereof by any lender or such lender's designee or assignee; (b) sale of the Property by the Partnership after the disaffirmance or rejection of either of (i) the Net Lease Agreement dated October 2, 1998, as amended by First Amendment to Lease Agreement dated as of July 12, 1999, as amended by Second Amendment to Lease Agreement dated as of March 2, 2001, as amended by Third Amendment to Lease Agreement, dated as of October 16, 2001, between Scannell Properties #16, LLC and Owens Corning in respect of the Property or (ii) the Net Lease Agreement dated August 25, 1999, as amended by First Amendment to Net Lease Agreement dated as of March 2, 2001 as amended by Second Amendment to Lease Agreement, dated as of October 16, 2001, between Scannell Properties #14, LLC and Owens Corning in respect of the Property; (c) a sale of the Property by the Partnership if the Partnership determines that such disposition is necessary to ensure its continued qualification as a real estate investment trust, or (d) an exchange of the Property meeting the requirements of Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code") (Items a, b, c, and d above are hereinafter referred to as the "Exempted Transactions"). In any event in which the Partnership determines to dispose of the Property, the Partnership agrees to use its best efforts to structure such a disposition as an exchange that meets the requirements of Section 1031 of the Code. LXP agrees to enter into a Guaranty Agreement with the Partnership on the date the Scannell Entities are admitted to the Partnership, on terms reasonably satisfactory to LXP and the Partnership, pursuant to which LXP shall guaranty the obligations of the Partnership to pay the Redemption Amount on the Specified Redemption Date. The Scannell Redeeming Partner, LXP, the Partnership and the General Partner shall treat the transaction between LXP and the Scannell Redeeming Partner as a sale of the Scannell Redeeming Partner's Partnership Units to LXP or the General Partner, as the case may be, for federal income tax purposes. The A-10 Scannell Redeeming Partner agrees to execute such documents as the Partnership may reasonably require in connection with the issuance of REIT shares upon exercise of the Scannell Redemption Right. "Non-Recourse Built-in Gain" shall mean gain recognized by the Scannell Entities under Section 731(a)(1) of the Code as a result of a deemed distribution under Section 752(b) of the Code. "Nonrecourse Debt" means the type of indebtedness which is described in Treasury Regulation Section 1.752-1(a)(2), provided that if under this Supplement such indebtedness of the Partnership is to be guaranteed by the Scannell Entities, then "Nonrecourse Debt" means the type of indebtedness which would be described in Treasury Regulation Section 1.752-1(a)(2) but for any such guarantee(s). "Qualified Debt" means Nonrecourse Debt which also constitutes "qualified nonrecourse financing" within the meaning of Section 465(b)(6) of the Code. "Required Debt Amount" means from time to time, as to the Scannell Entities, the amount of indebtedness of the Partnership which needs to be allocated to the Scannell Entities pursuant to Treasury Regulation Section 1.752 such that the Scannell Entities will not recognize any Non-Recourse Built-in Gain. The Required Debt Amount for the Scannell Entities as of the date of this Supplement is set forth on Exhibit A attached hereto. Such amount (including any modification thereof pursuant to the immediately following sentence) shall automatically change from time to time as a result of the operations, allocations of taxable income and loss, and distributions made by the Partnership. It is understood that the Required Debt Amount set forth on Exhibit A is believed by the Scannell Entities to be the requisite amount as of the date hereof but until tax returns are completed for the Scannell Entities such amounts are not final, and after the date hereof, until April 25, 2002, the Scannell Entities may provide to the Partnership a different, then current Required Debt Amount to reflect any such final determination, and thirty (30) days after receipt thereof by the Partnership, Exhibit A shall be deemed amended to reflect such other amount; provided that in no event shall such amount be five percent (5%) more or less than the Required Debt Amount set forth on Exhibit A. "Tax Protection Period" shall mean the earlier of (i) the span of time commencing on the date hereof and ending on the second (2nd) anniversary thereof, or (ii) the date on which all of the Partnership Units issued to the Scannell Entities have been redeemed, sold or otherwise disposed of in other than a non-taxable disposition. In the event the Partnership (or any entity which obtained the Property directly or indirectly from the Partnership in a fully or partially non-taxable transaction) intends to repay or refinance any indebtedness of the Partnership or any such other entity secured by the Property (or allocated to the Property as contemplated below) or which indebtedness has been guaranteed (in part) by the Scannell Entities (other than normal periodic payments of principal or a refinancing which does not result in a reduction of such indebtedness), the Partnership shall notify the Scannell Entities prior to engaging in any such repayment or refinancing, which notice shall include the Partnership's good faith estimate of the amount of the reduction in the Partnership's liabilities that will be allocated to the Scannell Entities for inclusion in its tax A-11 basis pursuant to Section 752 of the Code as a result of such repayment or refinancing. The Partnership shall include in its notice how it intends to provide for compliance with this Section. Any such notice shall be given as soon as reasonably possible before a proposed repayment or refinancing but in any event at least fifteen (15) days prior to any such repayment or refinancing. To the extent the amounts allocated or to be allocated pursuant to Treasury Regulation 1.752-3(a) are not sufficient to result in the Scannell Entities receiving an allocation of Qualified Debt at least equal to the Required Debt Amount, the Partnership shall be obliged to provide the Scannell Entities with the opportunity to make a so-called "bottom-up" guarantee of either (m) new secured Qualified Debt of the Partnership fulfilling the requirements set forth immediately below, (n) new unsecured, unsubordinated Qualified Debt of the Partnership or (o) if no debt of the Partnership under clauses (m) or (n) is either then being incurred or such debt does not meet the other requirements of this paragraph applicable to any such debt, existing secured or unsecured Qualified Debt of the Partnership, but only if the Scannell Entities are provided sufficient evidence of the validity under applicable law of a guarantee thereof made pursuant to this Supplement. In all events under this paragraph, the general partner(s) of the Partnership shall be exculpated under the applicable loan documents and no other partner of the Partnership, or any affiliate of any partner (general or limited), shall be liable for any portion of any indebtedness described in this paragraph to be guaranteed by the Scannell Entities. Any such debt of the Partnership so guaranteed by the Scannell Entities for which the Scannell Entities are allocated a share of the Partnership's indebtedness under Treasury Regulation Section 1.752-2 is herein referred to as "Guaranteed Debt". The requirements for Qualified Debt under subclause (m) of the preceding paragraph above shall be that the principal amount of such Qualified Debt at the time of the making of any proposed guarantee does not exceed a seventy percent (70%) loan to fair market value ratio and has a commercially reasonable debt service coverage ratio, and the portion of such Qualified Debt to be guaranteed by the Scannell Entities pursuant hereto does not exceed the lesser of (1) the bottom sixty percent (60%) of the stated principal amount of the Qualified Debt or (2) the bottom thirty-five percent (35%) of the fair market value of the encumbered property, the bottom portion being the amount such that if the encumbered property were foreclosed upon, the Scannell Entities would not be required to pay or perform under such guarantee unless the proceeds from the foreclosure sale were less than sixty percent (60%) (or such lesser percentage of the stated principal in the event a lower limit is set in the preceding paragraph) of the stated principal amount of the Qualified Debt. If any Guaranteed Debt is unsecured debt of the Partnership, the portion to be guaranteed shall be the bottom twenty-five percent (25%) of the stated principal amount of such unsecured debt. If and to the extent a Scannell Entity redeems, sells or otherwise disposes of all or any Partnership Units (but not including herein a conversion or redemption into other Partnership Units), then the provisions of this Supplement related to the allocation of indebtedness to the Scannell Entities as to any such Partnership Units so redeemed, sold or otherwise disposed of, shall end at the time of such redemption, sale or other disposition. This document may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same agreement. A-12 IN WITNESS WHEREOF, the parties hereto have executed this Scannell Limited Partner Supplement on or as of December 6, 2001. SCANNELL PROPERTIES #14, LLC By: /s/ Douglas L. Snyder --------------------- Name: Douglas L. Synder Title: Manager SCANNELL PROPERTIES #16, LLC By: /s/ Douglas L. Snyder --------------------- Name: Douglas L. Synder Title: Manager LEPERCQ CORPORATE INCOME FUND II L.P. By: Lex GP-1, Inc., General Partner By: /s/ Richard J. Rouse -------------------- Name: Richard J. Rouse Title: Vice President Scannell Entities Required Debt Amount - ------------------ -------------------- Scannell Properties #14 LLC $1,382,641.59 Scannell Properties #16 LLC $2,807,181.41
PARTNERS' CONTRIBUTIONS AND PARTNERSHIP INTERESTS Capital Partnership Percentage Redemption Name of Partner Contribution Units Interest Exemption Date - --------------------------------------------------------------------------------------------------------------- Scannell Limited Partners 0.02727% 1-Dec-02 - ------------------------- Scannell Properties #14 LLC $6,305 443 Scannell Properties #16 LLC $12,801.07 898
A-13 ANNEX I CERTIFICATE OF DESIGNATION OF SERIES C PREFERRED OPERATING PARTNERSHIP UNITS OR LIMITED PARTNERSHIP INTERESTS OF LEPERCQ CORPORATE INCOME FUND II L.P. ------------------------------------------- Series C Preferred Units ------------------------ A series of 504,619 operating units of Preferred Limited Partnership Interests of LERPERCQ CORPORATE INCOME FUND II L.P., a Delaware limited partnership (the "Partnership"), shall be created and be designated "Series C Preferred Units" having the rights and preferences set forth herein. WHEREAS, Lexington Corporate Properties Trust, a Maryland statutory real estate investment trust ("LXP"), is the sole beneficial owner of Lex GP-1 Trust, a Delaware statutory trust and the sole general partner of the Partnership (the "General Partner"); WHEREAS, pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP, the Partnership, Lepercq Corporate Income Fund L.P. and Net 3 Acquisition L.P., on the other, and as of the date hereof, LXP has (i) completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), and (ii) granted the Underwriter a 30-day option to purchase an additional 400,000 Preferred Shares, both pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003; WHEREAS, the Preferred Shares carry a cumulative preferred dividend, liquidation preference and conversion right further described in the Articles Supplementary of LXP, dated as of December 8, 2004 (the "Articles Supplementary"); WHEREAS, pursuant to Section 4.2 of the Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of August 27, 1998, as amended (the "Partnership Agreement"), LXP has contributed a portion of the net proceeds of the Offering to the Partnership in exchange for Series C Preferred Units; and WHEREAS, as required by the Partnership Agreement, the Series C Preferred Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares; -1- FIRST: Pursuant to the authority expressly vested in the General Partner of the Partnership by Section 4.2 of the Partnership Agreement, and in accordance with Section 17-302 of the Delaware Revised Uniform Limited Partnership Act, the General Partner has adopted resolutions designating the Series C Preferred Units and setting forth the terms of the Series C Preferred Units, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption and the price. SECOND: The terms of the Series C Preferred Units as set by the General Partner, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption, are as follows: Section 1. Number of Units and Designation. The Series C Preferred Units shall be a series of preferred Partnership Units designated as "Series C Preferred Units", and the number of units constituting such series shall be 504,619. Section 2. Definitions. "Articles Supplementary" shall have the meaning set forth in the Recitals hereto. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Cash Settlement Average Period" shall have the meaning set forth in the Articles Supplementary. "Closing Sale Price" shall have the meaning set forth in the Articles Supplementary. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Partnership Unit" shall mean a Partnership Unit that receives no preferential treatment. "Common Stock" shall mean the common shares of beneficial interest, par value $0.0001 per share, of LXP. "Company Conversion Option" shall have the meaning set forth in the Articles Supplementary. "Company Conversion Option Date" shall have the meaning set forth in the Articles Supplementary. "Conversion Amount" shall equal (x) the fraction with (i) a numerator consisting of the number of Series C Preferred Units outstanding prior to the applicable conversion or repurchase, and (ii) a denominator consisting of the number of Preferred Shares outstanding prior to such conversion or repurchase, multiplied by (y) the number of Preferred Shares to be converted or repurchased. -2- "Conversion Date" shall have the meaning set forth in the Articles Supplementary. "Conversion Notice" shall have the meaning set forth in the Articles Supplementary. "Conversion Price" shall mean, as of any day, a per Partnership Unit amount equal to the quotient of the liquidation preference amount of a share of Series C Preferred Units on that day divided by the Conversion Rate (as adjusted pursuant to the Articles Supplementary) on such day. "Conversion Rate" shall have the meaning set forth in the Articles Supplementary. "Conversion Right" shall have the meaning set forth in the Articles Supplementary. "Conversion Value" shall mean an amount equal to the product of the applicable Conversion Rate (as adjusted pursuant to the Articles Supplementary) multiplied by the arithmetic average of the Closing Sale Prices of the Common Stock during the Cash Settlement Average Period. "Converted Series C Preferred Units" shall have the meaning set forth in Section 5(a)(1). "Distribution Payment Date" shall mean, with respect to each Distribution Period, the fifteenth day of February, May, August and November of each year, commencing on February 15, 2005. "Distribution Period" shall mean the respective periods commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period, which shall commence on the Original Issue Date and end on and include December 31, 2004). "Distribution Record Date" shall mean the date designated by the Board of Trustees of the LXP as the Dividend Record Date (as defined in the Articles Supplementary) with respect to the Preferred Shares. "Event" shall have the meaning set forth in Section 9(b) hereof. "General Partner" shall have the meaning set forth in the Recitals hereto. "LXP" shall have the meaning set forth in the Recitals hereto. "Offering" shall have the meaning set forth in the Recitals hereto. "Original Issue Date" shall mean December 8, 2004. "Partnership" shall have the meaning set forth in the preamble hereto. "Partnership Agreement" shall have the meaning set forth in the Recitals hereto. -3- "Partnership Unit" shall have the meaning set forth in Article FIRST of the Partnership Agreement. "Preferred Shares" shall have the meaning set forth in Recitals hereof. "Public Acquirer Common Stock" shall have the meaning set forth in the Articles Supplementary. "Repurchase Date" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Price" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Right" shall have the meaning set forth in Section 6(a) hereof. "Repurchased Series C Preferred Units" shall have the meaning set forth in Section 6(a) hereof. "Series C Preferred Units" shall have the meaning set forth in preamble hereof. "Series B Preferred Units" shall mean the Series B Preferred Units of the Partnership. "Trading Day" shall have the meaning set forth in the Articles Supplementary. "Underwriter" shall have the meaning set forth in the Recitals hereto. Section 3. Distributions. (a) Subject to the preferential rights of the holders of any class or series of Partnership Units ranking senior to the Series C Preferred Units as to distributions, the holders of the Series C Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 6.50% per annum of the $50.00 liquidation preference per Series C Preferred Unit (equivalent to the annual rate of $3.25 per Series C Preferred Unit). Such distributions shall accrue and be cumulative from and including the Original Issue Date and shall be payable quarterly in arrears on each Distribution Payment Date, commencing February 15, 2005 in respect of the quarterly distribution periods ending on December 31, March 31, June 30, and September 30, respectively; provided, however, that if any Distribution Payment Date is not a Business Day, then the distribution which would otherwise have been payable on such Distribution Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on such Distribution Payment Date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such Distribution Payment Date to such next succeeding Business Day. The distribution payable on the Series C Preferred Units on February 15, 2005 shall be a pro rata distribution from the Original Issue Date to December 31, 2004 in the amount of $0.2167 per Series C Preferred Unit. The amount of any distribution payable on the Series C Preferred Units for each full Distribution Period shall be computed by dividing the annual distribution by four (4). The amount of any distribution payable on the Series C Preferred Units for any partial Distribution Period other than the initial Distribution Period shall be prorated and computed on the basis of a 360-day year consisting of -4- twelve 30-day months. Distributions will be payable to holders of record as they appear in the Partnership's records at the close of business on the applicable Distribution Record Date. (b) No distributions on the Series C Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration, or payment or setting apart for payment shall be restricted or prohibited by law. (c) Notwithstanding anything contained herein to the contrary, distributions on the Series C Preferred Units shall accrue whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions, and whether or not such distributions are declared. (d) Except as provided in Section 3(e) below, unless full cumulative distributions on the Series C Preferred Units for all past distribution periods and the then current distribution period shall have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set apart for such payment, (i) no distributions, other than distributions in Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation, shall be declared or paid or set apart for payment and no other distributions or distribution of cash or other property may be declared or made, directly or indirectly, on or with respect to any other class or series of Partnership Units ranking, as to distributions, on a parity with or junior to the Series C Preferred Units (other than pro rata distributions on Series B Preferred Units or other preferred Partnership Units ranking on parity as to distributions with the Series C Preferred Units) for any period, nor (ii) shall any other class or series of Partnership Units ranking, as to distributions or upon liquidation, on a parity with or junior to the Series C Preferred Units, including without limitation the Series B Preferred Units, be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Partnership Units) by the Partnership (except by conversion into or exchange for other classes or series of Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation). (e) When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Units and the Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units, including, without limitation the Series B Preferred Units, all distributions declared upon the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units including, without limitation the Series B Preferred Units, shall be declared pro rata so that the amount of distributions declared per Series C Preferred Unit and such other class or series of Partnership Units shall in all cases bear to each other the same ratio that accrued distributions per Series C Preferred Unit and such other class or series of Partnership Units (which shall not include any accrual in respect of unpaid distributions on such other class or series of Partnership Units for prior distribution periods if such other class or series of Partnership Units does not have a cumulative distribution) bear to each other. No interest, or -5- sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Series C Preferred Units which may be in arrears. (f) Holders of Series C Preferred Units shall not be entitled to any distribution, whether payable in cash, property or Partnership Units, in excess of full cumulative distributions on the Series C Preferred Units as provided herein. Any distribution payment made on the Series C Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such units which remains payable. Accrued but unpaid distributions on the Series C Preferred Units will accumulate as of the Distribution Payment Date on which they first become payable. Section 4. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Partnership, before any distribution or payment shall be made to holders of any other class or series of Partnership Units of the Partnership ranking, as to liquidation rights, junior to the Series C Preferred Units, the holders of Series C Preferred Units shall be entitled to be paid out of the assets of the Partnership legally available for distribution to its partners a liquidation preference of $50.00 per unit, plus an amount equal to any accrued and unpaid distributions to the date of payment (whether or not declared). In the event that, upon such voluntary or involuntary liquidation, dissolution or winding-up, the available assets of the Partnership are insufficient to pay the amount of the liquidating distributions on all outstanding Series C Preferred Units and the corresponding amounts payable on all other classes or series of Partnership Units of the Partnership ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, the Series B Preferred Units, in the distribution of assets, then the holders of the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Written notice of any such liquidation, dissolution or winding up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than thirty (30) nor more than sixty (60) days prior to the payment date stated therein, to each record holder of Series C Preferred Units at the respective addresses of such holders as the same shall appear on Schedule I hereto. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Units will have no right or claim to any of the remaining assets of the Partnership. The consolidation or merger of the Partnership with or into any other partnership, corporation or entity, or the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Partnership, shall not be deemed to constitute a liquidation, dissolution or winding-up of the affairs of the Partnership. Section 5. Conversion. (a) General. (1) Subject to the provisions of Section 5(b) below, on the date any Preferred Shares are converted, an amount of Series C Preferred Units equal to the Conversion -6- Amount (the "Converted Series C Preferred Units") shall automatically convert into a number of Common Partnership Units equal to the number of shares of Common Stock issued by LXP (or shares of Public Acquirer Common Stock, if applicable) with respect to the Preferred Shares related to the Converted Series C Preferred Units. (2) In connection with the conversion of any Series C Preferred Units, no fractional Common Partnership Units will be issued, but the Partnership shall pay a cash adjustment in respect of any fractional interest in an amount equal to the fractional interest multiplied by the Closing Sale Price on the Trading Day immediately prior to the corresponding Conversion Date or the Company Conversion Option Date, as applicable. If more than one Series C Preferred Unit will be surrendered for conversion by the same holder at the same time, the number of full Common Partnership Units will be computed on the basis of the total number of Series C Preferred Units so surrendered. (3) A holder of Series C Preferred Units is not entitled to any rights of a holder of Common Partnership Units until the Series C Preferred Units held are converted into Common Partnership Units, and only to the extent the Series C Preferred Units are deemed to have been converted to Common Partnership Units in accordance with this Section 5. (4) Each conversion of Series C Preferred Units shall be deemed to have been made on the corresponding Conversion Date or Company Conversion Option Date, as applicable, so that the rights of the holder thereof as to the Series C Preferred Units being converted as a result, will cease except for the right to receive the Conversion Value per each converted Series C Preferred Unit, and, if applicable, the person entitled to receive Common Partnership Units will be treated for all purposes as having become the record holder of those Common Partnership Units at that time. (b) Settlement Upon Conversion. The Partnership shall deliver the Conversion Value per each converted Series C Preferred Unit, in (i) Common Partnership Units, cash or a combination of cash and Common Partnership Units, in accordance with LXP's election with respect to the Preferred Shares being converted. (c) Payment of Distributions. (1) Conversion Right. (i) If a Series C Preferred Unit is converted as a result of a Conversion Right, upon conversion, that Series C Preferred Unit shall cease to cumulate distributions as of the end of the day immediately preceding the Conversion Date and the holder will not receive any cash payment representing accrued and unpaid distributions of the Series C Preferred Unit, except in those limited circumstances discussed in this Section 5(c). Except as provided herein, the Partnership shall make no payment for accrued and unpaid distributions, whether or not in arrears, on a Series C Preferred Unit converted pursuant to a Conversion Right, or for distributions on Common Partnership Units issued upon such conversion. -7- (ii) If the related Conversion Notice is received by LXP before the close of business on a Distribution Record Date, the holder shall not be entitled to receive any portion of the distribution payable on such converted Series C Preferred Units on the corresponding Distribution Payment Date. (iii) If the related Conversion Notice is received by LXP after the Distribution Record Date but prior to the corresponding Distribution Payment Date, the holder on the Distribution Record Date shall receive on that Distribution Payment Date accrued distributions on those Series C Preferred Units, notwithstanding the conversion of those Series C Preferred Units prior to that Distribution Payment Date, because the holder shall have been the holder of record on the corresponding Distribution Record Date. However, upon conversion, the holder shall pay an amount equal to the distribution that has accrued and that will be paid on the related Distribution Payment Date. (iv) A holder of Series C Preferred Units on a Distribution Record Date whose Series C Preferred Units are converted into Common Partnership Units on or after the corresponding Distribution Payment Date shall be entitled to receive the distribution payable on such Series C Preferred Units on such Distribution Payment Date, and such holder need not include payment of the amount of such distribution upon conversion. (v) If the related Conversion Notice is received by LXP on or before the close of business on a Distribution Record Date or following such Distribution Record Date but before the Distribution Payment Date therefore, and the settlement date for any Common Partnership Units to be issued upon such conversion is after the close of business on the record date for the payment of distributions for the corresponding period on such Common Partnership Units, such holder shall be entitled to receive such Common Partnership Unit distributions upon the next payment date of distributions on the Common Partnership Units as if it were the holder of such Common Partnership Units on such record date. (2) Company Conversion Option. (i) In the event a conversion occurs as a result of a Company Conversion Option, whether the Company Conversion Option Date is prior to, on or after the Distribution Record Date for the current period, all unpaid distributions which are in arrears as of the Company Conversion Option Date shall be payable to the holder of the converted Series C Preferred Units. (ii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is prior to the close of business on any Distribution Record Date, the holder shall not be entitled to receive any portion of the distribution payable for such period on such converted Series C Preferred Units on the corresponding Distribution Payment Date. -8- (iii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is on, or after the close of business on, any Distribution Record Date and prior to the close of business on the corresponding Distribution Payment Date, all distributions, including accrued and unpaid distributions, whether or not in arrears, with respect to the Series C Preferred Units called for conversion on such date, shall be payable on such Distribution Payment Date to the record holder of such Series C Preferred Units on such record date. (d) Maturity; Sinking Fund. The Series C Preferred Units shall have no stated maturity and shall not be subject to any sinking fund or mandatory redemption. (e) Effect of Conversion. All Series C Preferred Units converted pursuant to this Section 5, repurchased pursuant to Section 6, or otherwise converted or repurchased shall be authorized but unissued Series C Preferred Units until reclassified into another class or series of Common Partnership Units. Section 6. Purchase of Series C Preferred Units Upon a Fundamental Change. ------------------------------------------------------- (a) In the event a holder of Preferred Shares requires LXP to repurchase (the "Repurchase Right") for cash all or any part of such holder's Preferred Shares, the Partnership shall repurchase, on the date LXP repurchases such Preferred Shares (the "Repurchase Date"), an amount of Series C Preferred Units equal to the Conversion Amount (the "Repurchased Series C Preferred Units") at a per Series C Preferred Unit repurchase price equal to the per Preferred Share repurchase price paid by LXP with respect to the Preferred Shares related to the Repurchased Series C Preferred Units (the "Repurchase Price"). (b) If the Partnership holds cash sufficient to pay the Repurchase Price of the Series C Preferred Units on the Trading Day following the Repurchase Date, then: (1) the Series C Preferred Units will cease to be outstanding and distributions (including additional distributions, if any) will cease to accrue; and (2) all other rights of the holder will terminate (other than the right to receive the Repurchase Price upon transfer of the Series C Preferred Units). Section 7. Voting Rights. (a) Holders of the Series C Preferred Units shall not have any voting rights, except as provided by applicable law. (b) In any matter in which the Series C Preferred Units may vote (as expressly provided herein or as may be required by law), each Series C Preferred Unit shall be entitled to one vote per $25.00 of liquidation preference. -9- Section 8. Redemption. Except as otherwise set forth herein, the Series C Preferred Units shall not be redeemable by the Partnership. Section 9. Ranking. (a) In respect of rights to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the affairs of the Partnership, the Series C Preferred Units shall rank (i) senior to any class or series of Partnership Units of the Partnership other than any class or series referred to in clauses (ii) and (iii) of this sentence, (ii) on a parity with any class or series of Partnership Units of the Partnership the terms of which specifically provide that such class or series of Partnership Units ranks on a parity with the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership, including, without limitation the Series B Preferred Units, and (iii) junior to any class or series of Partnership Units of the Partnership ranking senior to the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership. For avoidance of doubt, any debt of the Partnership which is convertible into or exchangeable for Partnership Units of the Partnership shall not constitute a class or series of Partnership Units of the Partnership. (b) Unless (x) no Series C Preferred Units remain outstanding or (y) the requisite holders of the Preferred Shares have approved similar actions with respect to the Preferred Shares in accordance with the Articles Supplementary (in which event the Partnership may take similar action with respect to the Series C Preferred Units), the Partnership shall not: (i) authorize or create, or increase the authorized or issued amount of, any class or series of Partnership Units ranking senior to the Series C Preferred Units with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding-up of the affairs of the Partnership or reclassify any authorized shares of Partnership Units into such Partnership Units, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such Partnership Units; or (ii) amend, alter or repeal the provisions of the Partnership Agreement or this Certificate of Designation, whether by merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise (an "Event"), so as to materially and adversely affect any right, preference, or privilege of the Series C Preferred Units or the holders thereof; provided however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the Series C Preferred Units remains outstanding with the terms thereof materially unchanged, taking into account that, upon the occurrence of an Event, the Partnership may not be the surviving entity, the occurrence of such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges of holders of Series C Preferred Units. The provisions of this Section 9(b) shall not, however, prohibit the Partnership from taking the following actions: (A) any increase, decrease or issuance from time to time of any class or series of Partnership Units (including the Series C Preferred Units), or (B) the creation or issuance from time to time of any additional classes or series of Partnership Units, in each case referred to in clause (A) or (B) above ranking on a parity with or junior to the Series C Preferred Units with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Partnership. -10- (c) Notwithstanding anything to the contrary in this Section 9, nothing herein shall prevent the Partnership from taking such action as may be necessary or advisable in its sole discretion so as to avoid being treated as an association taxable as a corporation for federal tax purposes or so as to avoid adversely affecting (for as long as LXP deems necessary) LXP's ability to qualify as a REIT for federal tax purposes. Section 10. Exclusion of Other Rights. The Series C Preferred Units shall not have any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption other than expressly set forth in the Partnership Agreement and this Certificate of Designation. Section 11. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. Section 12. Severability of Provisions. If any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of conversion of the Series C Preferred Units set forth in the Partnership Agreement and this Certificate of Designation are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of conversion of Series C Preferred Units set forth in the Partnership Agreement which can be given effect without the invalid, unlawful or unenforceable provision thereof shall, nevertheless, remain in full force and effect and no preferences or other rights, voting powers, restrictions, limitations as to distributions or other qualifications or terms or conditions of conversion of the Series C Preferred Units herein set forth shall be deemed dependent upon any other provision thereof unless so expressed therein. Section 13. No Preemptive Rights. No holder of Series C Preferred Units shall be entitled to any preemptive rights to subscribe for or acquire any Partnership Units of the Partnership (whether now or hereafter authorized) or instruments of the Partnership convertible into or carrying a right to subscribe to or acquire Partnership Units of the Partnership. LEPERCQ CORPORATE INCOME FUND II L.P. By: Lex GP-1 Trust, its General Partner By: /s/ T. Wilson Eglin ------------------------------ T. Wilson Eglin President -11- EX-10 4 ex10-3.txt EX. 10.3 - NET 3 AMENDMENT Exhibit 10.3 Execution Copy FOURTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NET 3 ACQUISITION L.P. This FOURTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF NET 3 ACQUISITION L.P. (this "Amendment") is made and effective as of December 8, 2004, by and among the entities and individuals signatory hereto. A. Net 3 Acquisition L.P., a Delaware limited partnership (the "Partnership"), is governed by that certain Amended and Restated Agreement of Limited Partnership, dated effective as of November 28, 2001, as amended by that certain First Amendment dated effective as of November 28, 2001, that certain Second Amendment dated effective as of June 19, 2003, and that certain Third Amendment dated effective as of June 30, 2003 (the "Agreement"). Unless otherwise defined, all capitalized terms used herein shall have such meaning ascribed such terms in the Agreement. B. Lexington Corporate Properties Trust, a Maryland real estate investment trust ("LXP") is the sole unitholder of each of (i) Lex GP-1 Trust, a Delaware statutory trust ("Lex GP") and (ii) Lex LP-1 Trust, a Delaware statutory trust ("Lex LP"). Lex GP is the general partner of the Partnership, Lepercq Corporate Income Fund L.P., a Delaware limited partnership, and Lepercq Corporate Income Fund II L.P., a Delaware limited partnership (collectively, the "Operating Partnerships"). Lex LP is the Initial Limited Partner of each of the Operating Partnerships. C. Pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP and the Operating Partnerships, on the other, and as of the date hereof, LXP has completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003. D. The Preferred Shares carry a (i) cumulative preferred dividend, (ii) liquidation preference and (iii) conversion right. E. Pursuant to Section 4.2 of the Agreement, the Partnership may issue additional partnership interests to LXP and its affiliates in connection with the issuance of shares by LXP provided LXP makes a capital contribution to the Partnership of the proceeds raised in connection with such issuance. F. LXP has agreed to contribute a portion of the proceeds of the Offering to the Partnership in exchange for Series C Preferred Operating Partnership Units ("Preferred OP Units") in the Partnership to be issued to an affiliate of LXP, Lex LP. G. As required by Section 4.2 of the Agreement, the Preferred OP Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares, as further described and set forth in the Certificate of Designation for the Preferred OP Units attached hereto as Annex I (the "Certificate of Designation"). H. As of the date hereof, and pursuant to the terms of the Agreement, the parties hereto desire to amend the Agreement to reflect the issuance of 369,477 Preferred OP Units to Lex LP by amending and restating Exhibit A to the Agreement and (ii) the admission of Lex LP as a Limited Partner holding Preferred OP Units (a "Preferred Limited Partner"). NOW, THEREFORE, the undersigned, being desirous of effectuating the foregoing and amending the Agreement accordingly, hereby enter into this Amendment and amend the Agreement as follows: 1. Certificate of Designation; Preferred Limited Partner. The Agreement is hereby amended to the extent necessary to reflect that the rights, preferences and privileges of the Preferred OP Units and the Preferred Limited Partner, shall be as set forth in the Certificate of Designation which is hereby attached as Annex I to the Agreement and made a part hereof. To the extent there is a conflict between the terms of the Certificate of Designation and the terms of the Agreement, the terms of the Certificate of Designation shall control. 2. Exhibit A. Exhibit A to the Agreement is deleted in its entirety and replaced with Exhibit A hereto. 3. Miscellaneous. Except as amended hereby, the Agreement shall remain unchanged and in full force and effect. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 2 IN WITNESS WHEREOF, the parties hereto have executed this Amendment on behalf of the Partnership in accordance with the provisions of Section 14.1 of the Agreement as of the date first written above. GENERAL PARTNER: LEX GP-1 TRUST By: /s/ T. Wilson Eglin ----------------------------- T. Wilson Eglin President
EXHIBIT A PARTNERS - ------------------------------------------------------------------------------------------------------------- Number Of Number Of Number Of Special Limited Preferred OP Capital Name And Address Common Units Partner Units Units Contribution - ------------------------------------------------------------------------------------------------------------- General Partner: - ---------------- Lex GP-1 Trust. 44,858 $643,500.90 Initial Limited Partner: - ------------------------ Lex LP-1 Trust 4,396,084 $63,706,502.16 Special Limited Partner: - ------------------------ The LCP Group, L.P. 44,858 $649,992.42 Series B Preferred Limited - -------------------------- Partner: -------- Lex LP-1 Trust 486,201 $12,155,025 Series C Preferred Limited - -------------------------- Partner: -------- Lex LP-1 Trust 369,477 $17,988,911.44 --------------- ---------------- ----------------- ------------------ 4,440,942 44,858 855,678 $95,143,931.92 =============== ================ ================= ==================
ANNEX I CERTIFICATE OF DESIGNATION OF SERIES C PREFERRED OPERATING PARTNERSHIP UNITS OR LIMITED PARTNERSHIP INTERESTS OF NET 3 ACQUISITION L.P. ------------------------------------------- Series C Preferred Units ------------------------ A series of 424,215 operating units of Preferred Limited Partnership Interests of NET 3 ACQUISITION L.P., a Delaware limited partnership (the "Partnership"), shall be created and be designated "Series C Preferred Units" having the rights and preferences set forth herein. WHEREAS, Lexington Corporate Properties Trust, a Maryland statutory real estate investment trust ("LXP"), is the sole beneficial owner of Lex GP-1 Trust, a Delaware statutory trust and the sole general partner of the Partnership (the "General Partner"); WHEREAS, pursuant to that certain Underwriting Agreement, dated as of December 2, 2004, by and among Bear, Stearns & Co. Inc. (the "Underwriter "), on the one hand, and LXP, the Partnership, Lepercq Corporate Income Fund L.P. and Lepercq Corporate Income Fund II L.P., on the other, and as of the date hereof, LXP has (i) completed the offer and sale (the "Offering") to the Underwriter of 2,700,000 preferred shares of beneficial interest, classified as 6.50% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share, of LXP ("Preferred Shares"), and (ii) granted the Underwriter a 30-day option to purchase an additional 400,000 Preferred Shares, both pursuant to a prospectus supplement dated December 3, 2004 and the accompanying base prospectus dated October 22, 2003; WHEREAS, the Preferred Shares carry a cumulative preferred dividend, liquidation preference and conversion right further described in the Articles Supplementary of LXP, dated as of December 8, 2004 (the "Articles Supplementary"); WHEREAS, pursuant to Section 4.2 of the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of November 28, 2001, as amended (the "Partnership Agreement"), LXP has contributed a portion of the net proceeds of the Offering to the Partnership in exchange for Series C Preferred Units; and WHEREAS, as required by the Partnership Agreement, the Series C Preferred Units have designations, preferences and other rights such that the economic interests are substantially similar to the designations, preferences and other rights of the Preferred Shares; FIRST: Pursuant to the authority expressly vested in the General Partner of the Partnership by Section 4.2 of the Partnership Agreement, and in accordance with Section 17-302 -1- of the Delaware Revised Uniform Limited Partnership Act, the General Partner has adopted resolutions designating the Series C Preferred Units and setting forth the terms of the Series C Preferred Units, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption and the price. SECOND: The terms of the Series C Preferred Units as set by the General Partner, including preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption, are as follows: Section 1. Number of Units and Designation. The Series C Preferred Units shall be a series of preferred Partnership Units designated as "Series C Preferred Units", and the number of units constituting such series shall be 424,215. Section 2. Definitions. "Articles Supplementary" shall have the meaning set forth in the Recitals hereto. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Cash Settlement Average Period" shall have the meaning set forth in the Articles Supplementary. "Closing Sale Price" shall have the meaning set forth in the Articles Supplementary. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Partnership Unit" shall mean a Partnership Unit that receives no preferential treatment. "Common Stock" shall mean the common shares of beneficial interest, par value $0.0001 per share, of LXP. "Company Conversion Option" shall have the meaning set forth in the Articles Supplementary. "Company Conversion Option Date" shall have the meaning set forth in the Articles Supplementary. "Conversion Amount" shall equal (x) the fraction with (i) a numerator consisting of the number of Series C Preferred Units outstanding prior to the applicable conversion or repurchase, and (ii) a denominator consisting of the number of Preferred Shares outstanding prior to such conversion or repurchase, multiplied by (y) the number of Preferred Shares to be converted or repurchased. "Conversion Date" shall have the meaning set forth in the Articles Supplementary. -2- "Conversion Notice" shall have the meaning set forth in the Articles Supplementary. "Conversion Price" shall mean, as of any day, a per Partnership Unit amount equal to the quotient of the liquidation preference amount of a share of Series C Preferred Units on that day divided by the Conversion Rate (as adjusted pursuant to the Articles Supplementary) on such day. "Conversion Rate" shall have the meaning set forth in the Articles Supplementary. "Conversion Right" shall have the meaning set forth in the Articles Supplementary. "Conversion Value" shall mean an amount equal to the product of the applicable Conversion Rate (as adjusted pursuant to the Articles Supplementary) multiplied by the arithmetic average of the Closing Sale Prices of the Common Stock during the Cash Settlement Average Period. "Converted Series C Preferred Units" shall have the meaning set forth in Section 5(a)(1). "Distribution Payment Date" shall mean, with respect to each Distribution Period, the fifteenth day of February, May, August and November of each year, commencing on February 15, 2005. "Distribution Period" shall mean the respective periods commencing on and including January 1, April 1, July 1 and October 1 of each year and ending on and including the day preceding the first day of the next succeeding Distribution Period (other than the initial Distribution Period, which shall commence on the Original Issue Date and end on and include December 31, 2004). "Distribution Record Date" shall mean the date designated by the Board of Trustees of the LXP as the Dividend Record Date (as defined in the Articles Supplementary) with respect to the Preferred Shares. "Event" shall have the meaning set forth in Section 9(b) hereof. "General Partner" shall have the meaning set forth in the Recitals hereto. "LXP" shall have the meaning set forth in the Recitals hereto. "Offering" shall have the meaning set forth in the Recitals hereto. "Original Issue Date" shall mean December 8, 2004. "Partnership" shall have the meaning set forth in the preamble hereto. "Partnership Agreement" shall have the meaning set forth in the Recitals hereto. "Partnership Unit" shall have the meaning set forth in Article FIRST of the Partnership Agreement. -3- "Preferred Shares" shall have the meaning set forth in Recitals hereof. "Public Acquirer Common Stock" shall have the meaning set forth in the Articles Supplementary. "Repurchase Date" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Price" shall have the meaning set forth in Section 6(a) hereof. "Repurchase Right" shall have the meaning set forth in Section 6(a) hereof. "Repurchased Series C Preferred Units" shall have the meaning set forth in Section 6(a) hereof. "Series C Preferred Units" shall have the meaning set forth in preamble hereof. "Series B Preferred Units" shall mean the Series B Preferred Units of the Partnership. "Trading Day" shall have the meaning set forth in the Articles Supplementary. "Underwriter" shall have the meaning set forth in the Recitals hereto. Section 3. Distributions. (a) Subject to the preferential rights of the holders of any class or series of Partnership Units ranking senior to the Series C Preferred Units as to distributions, the holders of the Series C Preferred Units shall be entitled to receive, when, as and if declared by the General Partner, out of funds legally available for the payment of distributions, cumulative cash distributions at the rate of 6.50% per annum of the $50.00 liquidation preference per Series C Preferred Unit (equivalent to the annual rate of $3.25 per Series C Preferred Unit). Such distributions shall accrue and be cumulative from and including the Original Issue Date and shall be payable quarterly in arrears on each Distribution Payment Date, commencing February 15, 2005 in respect of the quarterly distribution periods ending on December 31, March 31, June 30, and September 30, respectively; provided, however, that if any Distribution Payment Date is not a Business Day, then the distribution which would otherwise have been payable on such Distribution Payment Date may be paid on the next succeeding Business Day with the same force and effect as if paid on such Distribution Payment Date, and no interest or additional distributions or other sums shall accrue on the amount so payable from such Distribution Payment Date to such next succeeding Business Day. The distribution payable on the Series C Preferred Units on February 15, 2005 shall be a pro rata distribution from the Original Issue Date to December 31, 2004 in the amount of $0.2167 per Series C Preferred Unit. The amount of any distribution payable on the Series C Preferred Units for each full Distribution Period shall be computed by dividing the annual distribution by four (4). The amount of any distribution payable on the Series C Preferred Units for any partial Distribution Period other than the initial Distribution Period shall be prorated and computed on the basis of a 360-day year consisting of twelve 30-day months. Distributions will be payable to holders of record as they appear in the Partnership's records at the close of business on the applicable Distribution Record Date. -4- (b) No distributions on the Series C Preferred Units shall be declared by the General Partner or paid or set apart for payment by the Partnership at such time as the terms and provisions of any agreement of the Partnership, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration, or payment or setting apart for payment shall be restricted or prohibited by law. (c) Notwithstanding anything contained herein to the contrary, distributions on the Series C Preferred Units shall accrue whether or not the Partnership has earnings, whether or not there are funds legally available for the payment of such distributions, and whether or not such distributions are declared. (d) Except as provided in Section 3(e) below, unless full cumulative distributions on the Series C Preferred Units for all past distribution periods and the then current distribution period shall have been or contemporaneously are declared and paid in cash or declared and a sum sufficient for the payment thereof in cash is set apart for such payment, (i) no distributions, other than distributions in Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation, shall be declared or paid or set apart for payment and no other distributions or distribution of cash or other property may be declared or made, directly or indirectly, on or with respect to any other class or series of Partnership Units ranking, as to distributions, on a parity with or junior to the Series C Preferred Units (other than pro rata distributions on Series B Preferred Units or other preferred Partnership Units ranking on parity as to distributions with the Series C Preferred Units) for any period, nor (ii) shall any other class or series of Partnership Units ranking, as to distributions or upon liquidation, on a parity with or junior to the Series C Preferred Units, including without limitation the Series B Preferred Units, be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Partnership Units) by the Partnership (except by conversion into or exchange for other classes or series of Partnership Units ranking junior to the Series C Preferred Units as to distributions and upon liquidation). (e) When distributions are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Units and the Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units, including, without limitation the Series B Preferred Units, all distributions declared upon the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to distributions, on a parity with the Series C Preferred Units including, without limitation the Series B Preferred Units, shall be declared pro rata so that the amount of distributions declared per Series C Preferred Unit and such other class or series of Partnership Units shall in all cases bear to each other the same ratio that accrued distributions per Series C Preferred Unit and such other class or series of Partnership Units (which shall not include any accrual in respect of unpaid distributions on such other class or series of Partnership Units for prior distribution periods if such other class or series of Partnership Units does not have a cumulative distribution) bear to each other. No interest, or sum of money in lieu of interest, shall be payable in respect of any distribution payment or payments on the Series C Preferred Units which may be in arrears. -5- (f) Holders of Series C Preferred Units shall not be entitled to any distribution, whether payable in cash, property or Partnership Units, in excess of full cumulative distributions on the Series C Preferred Units as provided herein. Any distribution payment made on the Series C Preferred Units shall first be credited against the earliest accrued but unpaid distributions due with respect to such units which remains payable. Accrued but unpaid distributions on the Series C Preferred Units will accumulate as of the Distribution Payment Date on which they first become payable. Section 4. Liquidation Preference. Upon any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Partnership, before any distribution or payment shall be made to holders of any other class or series of Partnership Units of the Partnership ranking, as to liquidation rights, junior to the Series C Preferred Units, the holders of Series C Preferred Units shall be entitled to be paid out of the assets of the Partnership legally available for distribution to its partners a liquidation preference of $50.00 per unit, plus an amount equal to any accrued and unpaid distributions to the date of payment (whether or not declared). In the event that, upon such voluntary or involuntary liquidation, dissolution or winding-up, the available assets of the Partnership are insufficient to pay the amount of the liquidating distributions on all outstanding Series C Preferred Units and the corresponding amounts payable on all other classes or series of Partnership Units of the Partnership ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, the Series B Preferred Units, in the distribution of assets, then the holders of the Series C Preferred Units and each such other class or series of Partnership Units ranking, as to liquidation rights, on a parity with the Series C Preferred Units, including, without limitation, shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. Written notice of any such liquidation, dissolution or winding up of the Partnership, stating the payment date or dates when, and the place or places where, the amounts distributable in such circumstances shall be payable, shall be given by first class mail, postage pre-paid, not less than thirty (30) nor more than sixty (60) days prior to the payment date stated therein, to each record holder of Series C Preferred Units at the respective addresses of such holders as the same shall appear on Schedule I hereto. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of Series C Preferred Units will have no right or claim to any of the remaining assets of the Partnership. The consolidation or merger of the Partnership with or into any other partnership, corporation or entity, or the sale, lease, transfer or conveyance of all or substantially all of the property or business of the Partnership, shall not be deemed to constitute a liquidation, dissolution or winding-up of the affairs of the Partnership. Section 5. Conversion. (a) General. (1) Subject to the provisions of Section 5(b) below, on the date any Preferred Shares are converted, an amount of Series C Preferred Units equal to the Conversion Amount (the "Converted Series C Preferred Units") shall automatically convert into a number of Common Partnership Units equal to the number of shares of Common Stock issued by LXP (or -6- shares of Public Acquirer Common Stock, if applicable) with respect to the Preferred Shares related to the Converted Series C Preferred Units. (2) In connection with the conversion of any Series C Preferred Units, no fractional Common Partnership Units will be issued, but the Partnership shall pay a cash adjustment in respect of any fractional interest in an amount equal to the fractional interest multiplied by the Closing Sale Price on the Trading Day immediately prior to the corresponding Conversion Date or the Company Conversion Option Date, as applicable. If more than one Series C Preferred Unit will be surrendered for conversion by the same holder at the same time, the number of full Common Partnership Units will be computed on the basis of the total number of Series C Preferred Units so surrendered. (3) A holder of Series C Preferred Units is not entitled to any rights of a holder of Common Partnership Units until the Series C Preferred Units held are converted into Common Partnership Units, and only to the extent the Series C Preferred Units are deemed to have been converted to Common Partnership Units in accordance with this Section 5. (4) Each conversion of Series C Preferred Units shall be deemed to have been made on the corresponding Conversion Date or Company Conversion Option Date, as applicable, so that the rights of the holder thereof as to the Series C Preferred Units being converted as a result, will cease except for the right to receive the Conversion Value per each converted Series C Preferred Unit, and, if applicable, the person entitled to receive Common Partnership Units will be treated for all purposes as having become the record holder of those Common Partnership Units at that time. (b) Settlement Upon Conversion. The Partnership shall deliver the Conversion Value per each converted Series C Preferred Unit, in (i) Common Partnership Units, cash or a combination of cash and Common Partnership Units, in accordance with LXP's election with respect to the Preferred Shares being converted. (c) Payment of Distributions. (1) Conversion Right. (i) If a Series C Preferred Unit is converted as a result of a Conversion Right, upon conversion, that Series C Preferred Unit shall cease to cumulate distributions as of the end of the day immediately preceding the Conversion Date and the holder will not receive any cash payment representing accrued and unpaid distributions of the Series C Preferred Unit, except in those limited circumstances discussed in this Section 5(c). Except as provided herein, the Partnership shall make no payment for accrued and unpaid distributions, whether or not in arrears, on a Series C Preferred Unit converted pursuant to a Conversion Right, or for distributions on Common Partnership Units issued upon such conversion. (ii) If the related Conversion Notice is received by LXP before the close of business on a Distribution Record Date, the holder shall not be entitled to receive -7- any portion of the distribution payable on such converted Series C Preferred Units on the corresponding Distribution Payment Date. (iii) If the related Conversion Notice is received by LXP after the Distribution Record Date but prior to the corresponding Distribution Payment Date, the holder on the Distribution Record Date shall receive on that Distribution Payment Date accrued distributions on those Series C Preferred Units, notwithstanding the conversion of those Series C Preferred Units prior to that Distribution Payment Date, because the holder shall have been the holder of record on the corresponding Distribution Record Date. However, upon conversion, the holder shall pay an amount equal to the distribution that has accrued and that will be paid on the related Distribution Payment Date. (iv) A holder of Series C Preferred Units on a Distribution Record Date whose Series C Preferred Units are converted into Common Partnership Units on or after the corresponding Distribution Payment Date shall be entitled to receive the distribution payable on such Series C Preferred Units on such Distribution Payment Date, and such holder need not include payment of the amount of such distribution upon conversion. (v) If the related Conversion Notice is received by LXP on or before the close of business on a Distribution Record Date or following such Distribution Record Date but before the Distribution Payment Date therefore, and the settlement date for any Common Partnership Units to be issued upon such conversion is after the close of business on the record date for the payment of distributions for the corresponding period on such Common Partnership Units, such holder shall be entitled to receive such Common Partnership Unit distributions upon the next payment date of distributions on the Common Partnership Units as if it were the holder of such Common Partnership Units on such record date. (2) Company Conversion Option. (i) In the event a conversion occurs as a result of a Company Conversion Option, whether the Company Conversion Option Date is prior to, on or after the Distribution Record Date for the current period, all unpaid distributions which are in arrears as of the Company Conversion Option Date shall be payable to the holder of the converted Series C Preferred Units. (ii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is prior to the close of business on any Distribution Record Date, the holder shall not be entitled to receive any portion of the distribution payable for such period on such converted Series C Preferred Units on the corresponding Distribution Payment Date. (iii) In the event the Company Conversion Option occurs and the Company Conversion Option Date is a date that is on, or after the close of business on, any Distribution Record Date and prior to the close of business on the corresponding Distribution -8- Payment Date, all distributions, including accrued and unpaid distributions, whether or not in arrears, with respect to the Series C Preferred Units called for conversion on such date, shall be payable on such Distribution Payment Date to the record holder of such Series C Preferred Units on such record date. (d) Maturity; Sinking Fund. The Series C Preferred Units shall have no stated maturity and shall not be subject to any sinking fund or mandatory redemption. (e) Effect of Conversion. All Series C Preferred Units converted pursuant to this Section 5, repurchased pursuant to Section 6, or otherwise converted or repurchased shall be authorized but unissued Series C Preferred Units until reclassified into another class or series of Common Partnership Units. Section 6. Purchase of Series C Preferred Units Upon a Fundamental Change. ------------------------------------------------------- (a) In the event a holder of Preferred Shares requires LXP to repurchase (the "Repurchase Right") for cash all or any part of such holder's Preferred Shares, the Partnership shall repurchase, on the date LXP repurchases such Preferred Shares (the "Repurchase Date"), an amount of Series C Preferred Units equal to the Conversion Amount (the "Repurchased Series C Preferred Units") at a per Series C Preferred Unit repurchase price equal to the per Preferred Share repurchase price paid by LXP with respect to the Preferred Shares related to the Repurchased Series C Preferred Units (the "Repurchase Price"). (b) If the Partnership holds cash sufficient to pay the Repurchase Price of the Series C Preferred Units on the Trading Day following the Repurchase Date, then: (1) the Series C Preferred Units will cease to be outstanding and distributions (including additional distributions, if any) will cease to accrue; and (2) all other rights of the holder will terminate (other than the right to receive the Repurchase Price upon transfer of the Series C Preferred Units). Section 7. Voting Rights. (a) Holders of the Series C Preferred Units shall not have any voting rights, except as provided by applicable law. (b) In any matter in which the Series C Preferred Units may vote (as expressly provided herein or as may be required by law), each Series C Preferred Unit shall be entitled to one vote per $25.00 of liquidation preference. Section 8. Redemption. Except as otherwise set forth herein, the Series C Preferred Units shall not be redeemable by the Partnership. -9- Section 9. Ranking. (a) In respect of rights to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the affairs of the Partnership, the Series C Preferred Units shall rank (i) senior to any class or series of Partnership Units of the Partnership other than any class or series referred to in clauses (ii) and (iii) of this sentence, (ii) on a parity with any class or series of Partnership Units of the Partnership the terms of which specifically provide that such class or series of Partnership Units ranks on a parity with the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership, including, without limitation the Series B Preferred Units, and (iii) junior to any class or series of Partnership Units of the Partnership ranking senior to the Series C Preferred Units as to the payment of distributions and the distribution of assets in the event of any liquidation, dissolution or winding up of the Partnership. For avoidance of doubt, any debt of the Partnership which is convertible into or exchangeable for Partnership Units of the Partnership shall not constitute a class or series of Partnership Units of the Partnership. (b) Unless (x) no Series C Preferred Units remain outstanding or (y) the requisite holders of the Preferred Shares have approved similar actions with respect to the Preferred Shares in accordance with the Articles Supplementary (in which event the Partnership may take similar action with respect to the Series C Preferred Units), the Partnership shall not: (i) authorize or create, or increase the authorized or issued amount of, any class or series of Partnership Units ranking senior to the Series C Preferred Units with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding-up of the affairs of the Partnership or reclassify any authorized shares of Partnership Units into such Partnership Units, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such Partnership Units; or (ii) amend, alter or repeal the provisions of the Partnership Agreement or this Certificate of Designation, whether by merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise (an "Event"), so as to materially and adversely affect any right, preference, or privilege of the Series C Preferred Units or the holders thereof; provided however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the Series C Preferred Units remains outstanding with the terms thereof materially unchanged, taking into account that, upon the occurrence of an Event, the Partnership may not be the surviving entity, the occurrence of such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges of holders of Series C Preferred Units. The provisions of this Section 9(b) shall not, however, prohibit the Partnership from taking the following actions: (A) any increase, decrease or issuance from time to time of any class or series of Partnership Units (including the Series C Preferred Units), or (B) the creation or issuance from time to time of any additional classes or series of Partnership Units, in each case referred to in clause (A) or (B) above ranking on a parity with or junior to the Series C Preferred Units with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of the Partnership. (c) Notwithstanding anything to the contrary in this Section 9, nothing herein shall prevent the Partnership from taking such action as may be necessary or advisable in its sole discretion so as to avoid being treated as an association taxable as a corporation for federal tax -10- purposes or so as to avoid adversely affecting (for as long as LXP deems necessary) LXP's ability to qualify as a REIT for federal tax purposes. Section 10. Exclusion of Other Rights. The Series C Preferred Units shall not have any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of redemption other than expressly set forth in the Partnership Agreement and this Certificate of Designation. Section 11. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. Section 12. Severability of Provisions. If any preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications, or terms or conditions of conversion of the Series C Preferred Units set forth in the Partnership Agreement and this Certificate of Designation are invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other preferences or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of conversion of Series C Preferred Units set forth in the Partnership Agreement which can be given effect without the invalid, unlawful or unenforceable provision thereof shall, nevertheless, remain in full force and effect and no preferences or other rights, voting powers, restrictions, limitations as to distributions or other qualifications or terms or conditions of conversion of the Series C Preferred Units herein set forth shall be deemed dependent upon any other provision thereof unless so expressed therein. Section 13. No Preemptive Rights. No holder of Series C Preferred Units shall be entitled to any preemptive rights to subscribe for or acquire any Partnership Units of the Partnership (whether now or hereafter authorized) or instruments of the Partnership convertible into or carrying a right to subscribe to or acquire Partnership Units of the Partnership. NET 3 ACQUISITION L.P. By: Lex GP-1 Trust, its General Partner By:/s/ T. Wilson Eglin ------------------------------- T. Wilson Eglin President -11- -----END PRIVACY-ENHANCED MESSAGE-----