As filed with the Securities and Exchange Commission on April 7, 2000
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FRONTLINE CAPITAL GROUP
(Exact name of each registrant as specified in its charter)
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Delaware
(State or other jurisdiction 11-3383642
of incorporation or organization) (I.R.S. employer identification number)
1350 Avenue of the Americas
New York, New York 10019
(212) 931-8000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive office)
Scott H. Rechler
President and Chief Executive Officer
FrontLine Capital Group
1350 Avenue of the Americas
New York, New York 10019
(212) 931-8000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
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Copy to:
Edward F. Petrosky, Esq.
J. Gerard Cummins, Esq.
Brown & Wood LLP
One World Trade Center, 58th Floor
New York, New York 10048
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Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
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If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. __
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest reinvestment
plans, please check the following box. X
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If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.__
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. __
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. __
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CALCULATION OF REGISTRATION FEE
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Title of Class of Securities Amount to Proposed Maximum Aggregate Proposed Maximum Amount of
to be Registered be Registered Price per Share (1) Aggregate Offering Price(1) Registration Fee(2)
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Common Stock 3,038,388 $35.50 $107,862,774 $28,476.00
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(1) Estimated solely for purposes of calculating the registration fee.
(2) Pursuant to Rule 457(c) of the rules and regulations under the
Securities Act of 1933, as amended, the registration fee is calculated
based on the average of the high and low sale prices of the Company's
common stock on the Nasdaq National Market for April 4, 2000.
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The Registrant hereby amends this registration statement on the date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on the date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 7, 2000
PROSPECTUS
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3,038,388 Shares
FrontLine Capital Group
Common Stock
(Par Value $0.01 Per Share)
This prospectus relates to 3,038,388 shares of common stock, $.01 par
value per share, of FrontLine Capital Group ("FrontLine" or the "Company"),
which may be offered from time to time by the selling stockholders named
herein in transactions on the Nasdaq National Market, in negotiated
transactions or otherwise, at fixed prices prevailing at the time of sale, at
negotiated prices, or without consideration, or by any other legally available
means. We are registering the common stock as required under the terms of
registration rights agreements entered into with the selling stockholders. The
registration of the common stock does not necessarily mean that any of the
shares will be offered or sold by the selling stockholders.
The selling stockholders will receive all of the net proceeds from
the sale of the common stock and will pay all underwriting discounts and
selling commissions, if any, applicable to any such sale. We will not receive
any of the proceeds from the sale of the shares by the selling stockholders.
We are paying the costs of preparing and filing the registration statement of
which this prospectus is a part.
Our common stock is listed on the Nasdaq National Market under the
trading symbol "FLCG." On April 5, 2000 the last reported sale price of the
common stock was $38.00 per share.
The common stock may be sold by selling stockholders from time to
time directly to purchasers or through agents, underwriters and dealers. See
"Plan of Distribution" and "Selling Stockholders." The selling stockholders
and any dealers, agents or underwriters which participate in the distribution
of the common stock may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933 and any commission received by them and any profit
on the resale of the common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of indemnification arrangements.
See "Risk Factors" beginning on p. 3 of this prospectus for a
description of risks that should be considered by purchasers of the common
stock.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
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The date of this prospectus is ___________, 2000.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the regional offices of the
Commission at 7 World Trade Center (13th Floor), New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such information can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Information on the operation of the Public
Reference Room can be obtained by calling the Commission at 1-800-SEC-0330.
The Commission maintains a Web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission.
We have filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), of which this prospectus constitutes a part. This
prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we previously filed with the Commission
are hereby incorporated by reference into this prospectus:
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SEC Filings (File No. 1-14183) Period
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Annual Report on Form 10-K Year ended December 31, 1999
Current Reports on Form 8-K Filed January 25, 2000, February 15, 2000,
March 2, 2000, March 2, 2000 and March 28, 2000
Registration Statement on Form 8-A Filed June 1, 1998
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We also incorporate by reference each of the following documents that
are filed with the Commission after the date of this prospectus until the
particular offering is completed or after the date of the initial registration
statement and prior to effectiveness of the registration statement:
o Reports filed under Section 13(a) and (c) of the Exchange Act;
o Definitive proxy or information statements filed
under Section 14 of the Exchange Act in connection with any
subsequent stockholders' meeting; and
o Any reports filed under Section 15(d) of the Exchange Act.
Any statement contained herein or in a document all or any portion of
which is incorporated or deemed to be incorporated by reference herein will be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such earlier statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
We will provide a copy of any or all of these documents (exclusive of
exhibits unless the exhibits are specifically incorporated by reference
therein), without charge, to each person to whom this prospectus is delivered,
upon written or oral request to FrontLine Capital Group, 1350 Avenue of the
Americas, New York, New York 10019, Attn: James Burnham, Senior Vice
President, telephone number (212) 931-8000.
CAUTIONARY STATEMENTS CONCERNING
FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference in
this prospectus may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act, and as
such may involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of our company
to be materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Forward-looking
statements, which are based on certain assumptions and describe our future
plans, strategies and expectations are generally identifiable by use of the
words "may," "will," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative thereof or other variations thereon or
comparable terminology. Factors which could have a material adverse effect on
the operations and future prospects of our company are described below under
"Risk Factors." These risks and uncertainties should be considered in
evaluating any forward-looking statements contained or incorporated by
reference herein. Our actual results may differ significantly from the results
discussed in such forward-looking statements.
RISK FACTORS
An investment in our common stock involves various risks. Prospective
investors should carefully consider the following information in conjunction
with the other information contained in this prospectus before purchasing the
common stock offered hereby. This prospectus contains forward-looking
statements which involve risks and uncertainties. Factors that might cause a
difference include, but are not limited to, those discussed below. You should
refer to the explanation of the qualifications and limitations of such
forward-looking statements discussed above.
Our lack of operating history impairs our ability to predict future earnings
and we have sustained operating losses since our inception
We were formed in July 1997 and have operated as a public company
since June 1998. We have sustained operating losses since our inception and
expect to sustain operating losses in the near future. The financial
information relating to us and our subsidiaries and their respective assets
included or incorporated by reference in this prospectus are not necessarily
indicative of our or our subsidiaries' future consolidated financial condition
or results of operations.
Certain members of our senior management lack experience in our investment
sectors
Three of the members of our senior management, including our chief
executive officer, are executive officers of Reckson Associates Realty Corp.
("Reckson Associates"), a New York Stock Exchange-listed real estate
investment trust ("REIT"), and have served as part of our senior management
since prior to the spin-off distribution of our shares from Reckson
Associates. Although subsequent to the spin-off we have retained members of
senior management who have relevant experience and we may retain the
management of the businesses that we acquire, the primary experience of those
three officers is in the business of acquiring, developing, and re-developing
suburban office and industrial properties in the New York "Tri-State" area and
not in pursuing our investment objectives.
We cannot assure our ability to manage growth
We intend to expand our operations through the acquisition of, or
investment in, business to business ("B2B") e-commerce and e-services
companies (each a "partner company"). In addition, Reckson Strategic Venture
Partners, LLC, our subsidiary ("Reckson Strategic Venture Partners"), may also
expand through the acquisition of real estate and real estate operating
companies. The success of our growth strategies will depend on our ability to
identify attractive business opportunities and effectively operate and
integrate any newly acquired businesses. Our growth plans will require the
participation of, and place demands upon, our management and operating
personnel. Our ability to manage future growth effectively requires the
development of operational, financial and management information systems. We
cannot assure that we will effectively manage our growth. If we are unable to
manage our growth effectively, it may adversely affect our business, results
of operations and financial condition.
Our strategy of growth through acquisitions involves risks and may result in
losses
Acquisition is a significant source of our growth. We cannot assure
that suitable acquisition opportunities will be available to us or our
affiliates. We also cannot assure that we or our affiliates will not overpay
for acquisitions or the efficient and adequate integration of these
acquisitions. Significant competition may exist for targeted acquisitions.
Some of the companies in which we acquire an interest may have (i) little or
no operating histories, (ii) historical operating losses, and (iii)
competitors that are larger and more well capitalized. Some of our or our
affiliates' acquisitions may be involved in sectors that are subject to
increasing competition. As a result, the costs incurred to acquire or
reposition companies may be significant and non-recoverable. Furthermore, we
cannot assure that acquisitions will not result in additional losses.
The acquisition of interests in start-up or early stage companies,
particularly in the Internet area, involves a high degree of business and
financial risk that can result in substantial losses. Among these are the
risks associated with investment in companies in an early stage of development
or with little or no operating history, companies operating at a loss or with
substantial variations in operating results from period to period, and
companies with the need for substantial additional capital to support
expansion or to achieve or maintain a competitive position. Such companies may
face intense competition, including competition from companies with greater
financial resources, more extensive development, manufacturing, marketing and
service capabilities, and a larger number of qualified managerial and
technical personnel. We may take significant positions in companies in rapidly
changing high-technology and Internet fields; such companies may face special
risks of product obsolescence and may encounter intense competition from other
companies financed by venture capitalists. In addition, start-up companies may
require significant additional capital contributions from us.
We may hold our interests in start-up or early stage companies for an
indefinite period of time; and it may take several years from the date of our
initial acquisition of such interest for the start-up company to reach such a
state of maturity that disposition could be considered.
It is anticipated that a substantial portion of our holdings may
consist of securities that are subject to restrictions on sale because they
were acquired from the issuer in "private placement" transactions or because
we might be deemed to be an affiliate of the issuer. Generally, we would not
be able to sell these securities publicly without the expense and time
required to register the securities under the Securities Act or to sell the
securities under Rule 144 or other rules under the Securities Act which permit
only limited sales under specified conditions. When restricted securities are
sold to the public, we could be deemed an "underwriter," or possibly a
controlling person, with respect thereto for the purpose of the Securities Act
and be subject to liability as such under that Act.
In addition, practical limitations may inhibit our ability to sell
our holdings because the issuers thereof are privately held, we own a
relatively large percentage of the issuer's outstanding securities, or the
customers, joint venture associates, other investors, financial institutions
or management are relying on our continued investment. Sales may also be
limited by securities market conditions, which may be unfavorable for sales of
securities of particular issuers or issuers in particular industries. The
above limitations on liquidity of our holdings could prevent a successful sale
thereof, result in delay of any sale or reduce the amount of proceeds that
might otherwise be realized.
Dependence on future market conditions
Our strategy involves creating value for our shareholders by helping
our partner companies develop and effectively execute their business plans.
Depending upon our partner companies' success in executing their business
plans and future market conditions, some of such partner companies may seek to
complete initial public offerings of their shares. We expect to retain a
significant ownership portion after a partner company goes public. If the
public market in general, or the market for Internet-related companies in
particular, were to weaken for a prolonged period of time, the ability of our
partner companies to complete public offerings would be materially adversely
affected. In addition, future weakness in the public markets, particularly the
market for Internet-related companies, may adversely affect the value of our
common stock, as well as the value of the stock of our partner companies.
Our business and future opportunities are restricted
We are prohibited under the intercompany agreement between us and
Reckson Operating Partnership, L.P. ("Reckson Operating Partnership") from
making REIT-qualified investments unless Reckson Operating Partnership is
given the right of first opportunity in respect of those investments and
chooses not to pursue the investments. In addition, if an investment becomes
available to one of our affiliates, the affiliate is required to allow Reckson
Operating Partnership to participate in the investment to the extent of our
interest in the investment. Our charter provides that one of our corporate
purposes is to perform our obligations under the intercompany agreement. We
are also required to assist Reckson Operating Partnership in structuring and
consummating any REIT-qualified investment presented to Reckson Operating
Partnership which it elects to pursue. As a result, our and our affiliates'
business and future opportunities are restricted.
We are highly dependent upon Reckson Operating Partnership for financing
We rely significantly on Reckson Operating Partnership for the
financing of our operations. As a result, if Reckson Associates is unable to
access the financial markets, our ability to finance operations may be
severely restricted. In addition, if Reckson Associates should fail to qualify
as a REIT or have a decline in its financial or other condition or earnings,
affairs or prospects, it may substantially and adversely affect our ability to
pursue business opportunities and our financial condition. Investors should
review the section captioned "-- We may have conflicts of interest with
Reckson Associates -- Conflicts in our loans with Reckson Operating
Partnership; limitation on our ability to pay dividends and incur additional
debt."
We rely heavily on key personnel
Our success and the success of our partner companies depends
significantly upon the contribution of our executive officers, senior
management, and other key personnel that we retain. None of our executive
officers have an employment agreement with the Company. The two managing
directors of Reckson Strategic Venture Partners (the "Reckson Strategic
Venture Partners Managing Directors") have entered into employment contracts
with RSVP Holdings, LLC, the managing member of Reckson Strategic Venture
Partners. Conversely, two of our executive officers have employment agreements
with Reckson Associates pursuant to which they have agreed to spend as much
time as may be necessary in carrying out their duties to Reckson Associates.
These executive officers do not have similar obligations to the Company.
Furthermore, we cannot assure that we or our partner companies will retain key
managerial and other personnel or attract suitable replacements or additional
personnel if required. We have not obtained key-man insurance for any of our
executive officers or other key personnel.
We may have conflicts of interests with Reckson Associates
Conflicts as a result of overlapping management. Our President and
Chief Executive Officer, Chairman of the Board, Chief Financial Officer, and
General Counsel each serve in similar capacities for Reckson Associates. In
addition, four members of our Board of Directors also serve as directors of
Reckson Associates. Although each of the individuals referred to above is
committed to our success, they are also committed to the success of Reckson
Associates. As of March 31, 2000, Reckson Associates' senior management and
directors beneficially owned approximately 12.43% of the outstanding common
stock of Reckson Associates and approximately 24.62% of our outstanding common
stock. In calculating the ownership of common stock of Reckson Associates, we
have included Reckson Associates' Class A common stock and its Class B
exchangeable common stock; and we have assumed the exchange of all limited
partnership units in Reckson Operating Partnership for shares of Class A and
Class B common stock and the exercise of all vested stock options. There is a
risk that the common membership of management, members of the Boards of
Directors and ownership of Reckson Associates and the Company will lead to
conflicts of interest in the fiduciary duties owed to stockholders by common
directors and officers in connection with transactions between the two
companies, as well as a conflict in allocating management time.
Conflicts under the Intercompany Agreement. In connection with the
spin-off distribution of our common stock, we entered into an intercompany
agreement with Reckson Operating Partnership to formalize our relationship at
the outset and to limit conflicts of interest. The intercompany agreement was
not negotiated at arms' length since 95% of our capital stock was owned by
Reckson Operating Partnership at the time it was executed. Under the
intercompany agreement, we granted Reckson Operating Partnership a right of
first opportunity to make any REIT-qualified investment that becomes available
to us. In addition, if a REIT-qualified investment opportunity becomes
available to an affiliate of ours, including Reckson Strategic Venture
Partners, 100% of the common ownership interest of which is indirectly owned
by us, the intercompany agreement requires our affiliate to allow Reckson
Operating Partnership to participate in the opportunity to the extent of our
interest in the affiliate.
Under the intercompany agreement, Reckson Operating Partnership
granted us a right of first opportunity to provide to Reckson Operating
Partnership and its tenants any type of non-customary commercial services for
occupants of office, industrial and other property types, which Reckson
Associates may not be permitted to provide because they may generate REIT
non-qualifying income under Federal tax laws. We will provide services to
Reckson Operating Partnership at rates and on terms as attractive as either
the best available for comparable services in the market or those offered by
us to third parties. In addition, Reckson Operating Partnership will give us
access to its tenants with respect to commercial services that may be provided
to tenants.
Under the intercompany agreement, subject to certain conditions,
Reckson Operating Partnership granted us a right of first refusal to become
the lessee of any real property acquired by Reckson Operating Partnership if
it determines that the operation of the property may involve the performance
of non-customary services that would jeopardize Reckson Associates' REIT
status and it is required to enter into a "master" lease arrangement. Pursuant
to this "master" lease arrangement, Reckson Operating Partnership would own
the property, but lease it entirely to a single lessee that would operate the
property.
With respect to services that we will provide to Reckson Operating
Partnership, management will have a conflict of interest relating to the
market rates being charged to Reckson Operating Partnership for these
services. In addition, management will have a conflict of interest in
determining whether we or Reckson Operating Partnership should pursue a
REIT-qualified investment opportunity outside of Reckson Associates' core
business strategy of investing in office and industrial properties in the New
York Tri-State area. Furthermore, we and Reckson Operating Partnership may
structure investments so that Reckson Operating Partnership - Reckson
Strategic Venture Partners joint ventures may pursue the portion of
investments generating REIT-qualified income and Reckson Strategic Venture
Partners will pursue directly the other portion of these investments.
Accordingly, Reckson Strategic Venture Partners and Reckson Operating
Partnership - Reckson Strategic Venture Partners joint ventures may have
conflicts of interest in the structuring, valuation, management and
disposition of these investments.
Conflicts in our loans with Reckson Operating Partnership; limitation
on our ability to pay dividends and incur additional debt. In June 1998, we
established a credit facility with Reckson Operating Partnership (the
"FrontLine Facility") in the amount of $100 million for our service sector
operations and other general corporate purposes. In addition, in June 1998,
Reckson Operating Partnership authorized the investment of $100 million with
respect to the funding of the investment of Reckson Strategic Venture Partners
(the "Reckson Strategic Venture Partners Commitment"). Amounts available under
the Reckson Strategic Venture Partners Commitment are funded through
investments by Reckson Operating Partnership into joint ventures with Reckson
Strategic Venture Partners or through loans directly to the Company under a
credit agreement with terms substantially identical to those under the
FrontLine Facility. Although the credit agreement provides for the borrowing
of up to $100 million from Reckson Operating Partnership, the amount available
is reduced by the amount of any joint venture investments between Reckson
Operating Partnership and Reckson Strategic Venture Partners. Loans under the
Reckson Strategic Venture Partners Commitment in excess of $25 million in any
single investment are subject to approval by the Board of Directors of Reckson
Associates, while advances under the FrontLine Facility in excess of $10
million in respect of any single investment are subject to approval by the
Board of Directors of Reckson Associates, or a committee thereof. The
FrontLine Facility has a term of five years and advances thereunder are
recourse obligations of the Company. Interest accrues on advances made under
the FrontLine Facility at a rate equal to the greater of (1) the prime rate
plus 2% and (2) 12% per annum, with the rate on amounts that are outstanding
for more than one year increasing annually at a rate of 4% of the prior year's
rate. Prior to maturity, interest is payable quarterly but only to the extent
of net cash flow and on an interest-only basis and is prepayable without
penalty at our option.
Subject to the amendments described below, as long as there are
outstanding advances under the FrontLine Facility or borrowings by us under
the credit agreement with respect to the Reckson Strategic Venture Partners
Commitment, we are prohibited from paying dividends on any shares of our
capital stock or incurring additional debt. The FrontLine Facility and the
credit agreement with respect to the Reckson Strategic Venture Partners
Commitment are subject to certain other covenants and prohibit advances
thereunder to the extent the advances could, in Reckson Associates'
determination, endanger the status of Reckson Associates as a REIT. The terms
of the FrontLine Facility and the credit agreement with respect to the Reckson
Strategic Venture Partners Commitment were not negotiated at arms' length and
thus may not reflect terms that could have been obtained from independent
third parties. Additional indebtedness may be incurred by our subsidiaries. As
of March 31, 2000, borrowings under the FrontLine Facility aggregated
approximately $92.3 million and pursuant to the Reckson Strategic Venture
Partners Commitment, Reckson Operating Partnership had made approximately
$24.8 million in joint venture investments with Reckson Strategic Venture
Partners and had loaned approximately $36.1 million under the credit
agreement. In November 1999, the credit facilities were amended to allow the
Company to incur up to $135 million in debt secured by Company assets and to
pay interest thereon, and to allow the payment of dividends on up to $200
million of preferred stock which may be issued by the Company. As
consideration for the amendments, which were approved by the Board of
Directors of both the Company and Reckson Associates, we paid a fee to Reckson
Operating Partnership of approximately $3.6 million in the form of
approximately 176,000 shares of our common stock.
Policies with respect to conflicts of interest may not be successful.
We have adopted policies designed to eliminate or minimize conflicts of
interest. These policies include the approval of all transactions in which our
directors or officers have a conflicting interest by a majority of the
directors who are neither officers of the Company nor affiliated with us.
These policies do not prohibit sales of assets to or from affiliates, but
would require the sales to be approved by the independent directors of the
Company. However, there is no assurance that these policies will be successful
and, if they are not successful, decisions could be made that might fail to
reflect fully the interests of all of our stockholders.
We have no prior sponsorship of a venture capital vehicle and may invest in
companies in an early stage of development or with historical operating losses
Reckson Strategic Venture Partners is a real estate venture capital
entity formed to acquire interests in real estate and real estate-related
operating companies. We have committed up to $100 million in Reckson Strategic
Venture Partners although such commitment is reduced by the amount of any
investments made by Reckson Operating Partnership into joint ventures with
Reckson Strategic Venture Partners. A subsidiary of ours serves as the
managing member of Reckson Strategic Venture Partners. Neither we nor Reckson
Associates have previously sponsored a real estate venture capital entity.
Reckson Strategic Venture Partners' holdings may include, among other things,
holdings in companies in an early stage of development that have historical
operating losses. In addition, decreases in values in the property markets,
volatility in the securities markets, interest rate increases and unfavorable
conditions in the economy generally, and in the real estate industry in
particular, may have a negative impact on the performance of Reckson Strategic
Venture Partners.
Reckson Strategic Venture Partners has obtained a $200 million
preferred equity facility from PaineWebber Real Estate Securities ("PWRES"),
which is partially funded by an investment fund that is jointly sponsored by
financier George Soros and PWRES. Under the terms of the PaineWebber equity
facility, Reckson Strategic Venture Partners is subject to various covenants
and events of default and related remedies. Such remedies include increased
control rights of PWRES over the operation of Reckson Strategic Venture
Partners under certain circumstances. In addition, PWRES and such investment
fund, if applicable, receive a priority or preferred distribution from the
operations of Reckson Strategic Venture Partners prior to the distribution of
cash to our subsidiary serving as the managing member of Reckson Strategic
Venture Partners. The Reckson Strategic Venture Partners Managing Directors
are entitled to a portion of the profits of the managing member of Reckson
Strategic Venture Partners after we obtain a return of our capital plus a
minimum return. As a result, we cannot assure that the Reckson Strategic
Venture Partners Managing Directors will not pursue investments involving
greater risk in seeking higher profits. Any investments identified by the
Reckson Strategic Venture Partners Managing Directors are subject to our
approval.
Ownership of assets through partner companies and joint ventures could limit
our control of those investments
We and Reckson Strategic Venture Partners anticipate holding a
significant portion of our assets through ownership of an interest in joint
ventures and in partner companies in which we own a significant interest and
participate in management and other parties also own an interest. These
investments may involve risks not otherwise present for investments made
solely by us, including the possibility that our co-venturer or other owners
of partner companies might become bankrupt, that our co-venturer or other
owners of partner companies might at any time have different interests or
goals than we do, and that our co-venturer or other owners of partner
companies may take action contrary to our instructions, requests, policies or
objectives. Other risks of joint venture investments and holdings in partner
companies include impasse on decisions, such as a sale, because neither we nor
our partner or co-venturer would have full control over the joint venture or
partner company. There is no limitation under our organizational documents as
to the amount of funds that may be invested in joint ventures or partner
companies.
In addition, if we do not control sufficiently one or more of our
partner companies, our investment in those companies may be considered
"investment securities" under the Investment Company Act of 1940 (the "1940
Act"). Generally, any company that owns investment securities with a value
exceeding 40% of its total assets (excluding cash items and government
securities) is an "investment company" subject to registration under, and
compliance with, the 1940 Act, unless a particular exemption or safe harbor
applies. Compliance with the 1940 Act might be very costly and difficult. In
addition, there could be negative consequences if we are found to be operating
as an unregistered investment company. At the same time, if we are required to
take actions, such as the acquisition or disposition of investments, to avoid
being considered an investment company it also may have negative consequences.
Accordingly, matters related to the 1940 Act may at any time harm our business
and results of operations.
Our holdings in OnSite Access, Inc., a company with a limited operating
history, expose us to regulatory risks; the risk of technological obsolescence
and other risks
Our holdings include an approximately 37% interest in OnSite Access,
Inc. ("OnSite"). OnSite is currently a privately-held company that provides
advanced telecommunication systems and services within commercial buildings.
OnSite has been in existence since 1999, has a relatively small
capitalization, and has historical operating losses. We anticipate that OnSite
will continue to grow rapidly, but we cannot assure when, if ever, OnSite will
become profitable. OnSite's success is contingent upon its ability to continue
to obtain contracts to wire buildings for the delivery of Internet access,
data and voice transport services. In addition, certain executive officers at
OnSite have only recently been hired and OnSite's future success will be
dependent, in part, on such executives' ability to perform effectively.
Our holdings in OnSite are exposed to risks specific to the
telecommunications industry. The industry is regulated on both the federal and
state level and we cannot assure that governmental regulations that adversely
affect our investment will not be passed. Additionally, the technology sector
is constantly undergoing rapid change and innovation. OnSite is therefore
subject to the risk that its technological services could become obsolete.
On December 15, 1999, OnSite filed a registration statement on Form
S-1 with the Securities and Exchange Commission covering the initial public
offering of its common stock. There can be no assurance that the OnSite
initial public offering will be consummated or, if consummated, the timing of
such offering.
Our holdings in VANTAS Incorporated expose us to real estate and operational
risks
Our holdings include an approximately 84% interest in VANTAS
Incorporated ("VANTAS"). VANTAS is a company that provides tenants with
furnished office suites and immediate support services, including but not
limited to, secretarial services, telecommunication services and conference
facilities. The executive office suites industry is subject to risks
comparable to those of the real estate industry. Supply and demand and the
location of office buildings are all factors that directly affect the office
suites industry. A significant downturn in the real estate market could
adversely affect our holdings in VANTAS.
We have entered into a merger agreement pursuant to which VANTAS will
be merged with HQ Global Workplaces, Inc. ("HQ"). The merger will create the
world's largest virtual workplace solutions provider and comprehensive
e-fulfillment enterprise. The new company, HQ Global Workplaces, will serve
approximately 43,000 customers through 463 owned, managed or franchised
centers in 17 countries. The merger is scheduled to close by April 30, 2000
and requires us to obtain approximately $190 million in equity financing and,
subject to certain conditions, $350 million in debt financing. VANTAS has
posted a letter of credit in the amount of $35 million to secure its
obligations under the merger agreement. We have obtained conditional
commitments for the debt financing and we are in negotiations to obtain the
equity financing. However, no assurance can be given that we will be
successful in obtaining the equity financing required under the merger
agreement such that the merger will be consummated on its terms or that the
merger will not be consummated for any other reason.
In addition, VANTAS has a credit agreement with various lending
institutions for $157.9 million. On February 22, 2000, VANTAS and the lenders
entered into an amendment to the credit facility whereby certain of the
financial covenants contained in the credit facility were amended. VANTAS has
obtained a commitment letter for the provision of a new credit facility,
subject to the satisfaction of various conditions, which would replace its
existing credit facility upon consummation of the merger with HQ. If the
merger does not occur, there can be no assurance that VANTAS will be able to
meet certain of the financial covenants contained in its existing credit
facility for the fiscal quarters subsequent to December 31, 1999.
If consummated, the merger with HQ subjects us to the following
additional risks:
o the combined company may not perform as we anticipate and
o VANTAS's and HQ's operations may not be effectively integrated.
We do not anticipate paying dividends in the foreseeable future
We intend to use our available funds to pursue investment and
business opportunities. Therefore, we do not anticipate the payment of any
dividends on our common stock in the foreseeable future. Payment of dividends
on our common stock is prohibited under our credit facilities until all
amounts outstanding under the credit facilities are paid in full. In addition,
the payment of dividends on our common stock is prohibited unless full
distributions have been paid on our convertible cumulative preferred stock.
The payment of dividends will also be subject to any limitations
imposed by other credit facilities and debt securities that we may obtain or
issue in the future.
Real estate risks may affect our earnings
Our holdings include real estate and real estate-related assets,
particularly through our holdings in VANTAS and Reckson Strategic Venture
Partners. Investments in real estate are subject to the risks incident to the
ownership and operation of real estate. Our real estate holdings may be
adversely affected by a number of factors, including:
o real estate holdings are generally illiquid
o the national, state and local economic climate and
real estate conditions, such as oversupply of or reduced
demand for space and changes in market rental rates
o the need to periodically renovate, repair and relet our space
o increasing operating costs, including real estate taxes and
utilities, which may not be passed through to tenants
o defaults by our tenants or their failure to pay rent on a timely
basis
o uninsured losses
Through Reckson Strategic Venture Partners, we have real estate and
real estate-related holdings in the areas of student housing, assisted living
and government occupied buildings. Reckson Strategic Ventures Partners is
likely to make additional acquisitions in commercial real estate, and may,
particularly through joint ventures, be involved in the development of real
estate. Development and construction activities in connection with these types
of investments include risks of cost overruns, completion and lease-up delays,
unavailability of financing and changes in market conditions.
Our development activities are also subject to risks relating to the
inability to obtain, or delays in obtaining, all necessary zoning, land-use,
building, occupancy and other required governmental permits and
authorizations. If any of the above events occur, the revenues received from
Reckson Strategic Venture Partners' real estate investments and the values of
these investments could be adversely affected. In addition, new development
activities, regardless of whether or not they are ultimately successful,
typically require a substantial portion of management's time and attention.
Environmental problems are possible and may be costly
Federal, state and local laws and regulations relating to the
protection of the environment may require a current or previous owner or
operator of real estate to investigate and clean up hazardous or toxic
substances or petroleum product releases at a property. An owner of real
estate is liable for the costs of removal or remediation of certain hazardous
or toxic substances on or in the property. These laws often impose such
liability without regard to whether the owner knew of, or caused, the presence
of the contaminants. Clean-up costs and the owner's liability generally are
not limited under the enactments and could exceed the value of the property
and/or the aggregate assets of the owner. The presence of or the failure to
properly remediate the substances may adversely affect the owner's ability to
sell or rent the property or to borrow using the property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the clean-up costs of the substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by the person. Even if more than one person was responsible for the
contamination, each person covered by the environmental laws may be held
responsible for the clean-up costs incurred. In addition, third parties may
sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal
of asbestos-containing materials ("ACMs"). These laws impose liability for
release of ACMs into the air and third parties may seek recovery from owners
or operators of real properties for personal injury associated with ACMs. In
connection with the ownership (direct or indirect), operation, management and
development of real properties, we may be considered an owner or operator of
properties containing ACMs. We may be potentially liable for removal,
remediation and other costs, including governmental fines and injuries to
persons and property.
Certain antitakeover provisions may deter third party acquisition proposals
Our charter and bylaws and applicable sections of the Delaware
General Corporation Law may make the acquisition of control of our company
more difficult without the approval of our Board of Directors. Certain
provisions of our charter and bylaws, among other things:
o classify our Board of Directors into three classes, each of which
serves for staggered three-year terms;
o provide that any of our directors may be removed by the
affirmative vote of stockholders having at least 80% of the total
voting power only for cause;
o provide that only the Chairman of the Board, President or a
majority of our Board of Directors may call special meetings of
the stockholders;
o provide that the stockholders may take action only at a meeting
of our stockholders, not by written consent;
o provide that stockholders must comply with certain advance notice
procedures in order to nominate candidates for election to our
Board of Directors or to place stockholders' proposals on the
agenda for consideration at meetings of the stockholders;
o provide that, under certain circumstances, the affirmative vote
of the holders of two-thirds of our common stock is required to
approve any merger or similar business combination involving our
company;
o provide that the holder of "control shares" of our company
acquired in a control share acquisition have no voting rights
with respect to such control shares except to the extent approved
by the vote of the holders of two-thirds of our common stock;
o subject to certain exceptions, limit the ownership by any person
of our common stock to 9.9% of the number of shares or value of
our common stock and limit the ownership by any person of our
capital stock to 9.9% of the aggregate value of all classes of
our capital stock; and
o provide that the stockholders may amend or repeal any of the
foregoing provisions of the charter or bylaws only by a vote of
at least 80% of the stock entitled to vote generally in the
election of directors.
With certain exceptions, Section 203 of the Delaware General
Corporation Law imposes certain restrictions on mergers and other business
combinations between the Company and any holder of 15% or more of our common
stock. The charter provides that the foregoing provisions and Section 203 do
not apply to Reckson Associates and its affiliates. Accordingly, Reckson
Associates and its affiliates are in a position to effect a business
combination or other transaction with us in situations where others are
restricted from effecting a similar transaction. Our charter authorizes the
Board of Directors to issue up to 25 million shares of preferred stock, par
value $.01 per share, in series, and to establish the rights and preferences
(including the exchange of such shares of preferred stock into shares of our
common stock) of any series of preferred stock so issued. As of March 31,
2000, there were 26,000 shares of our convertible cumulative preferred stock
outstanding. The issuance of certain types of preferred stock could have the
effect of delaying or preventing a change in control of our company, even if
such a change in control were in the best interests of some, or a majority, of
our stockholders.
THE COMPANY
We were formed on July 15, 1997 as a subsidiary of Reckson Associates
and our shares of common stock were spun-off to shareholders of Reckson
Associates in June 1998. We are a publicly traded operating company that
acquires interests in and develops a network of B2B e-commerce and e-services
Internet companies focused on serving small and medium sized enterprises
including independent professionals, entrepreneurs and the mobile workforces
of larger companies. We recently changed our name from Reckson Service
Industries, Inc. to FrontLine Capital Group.
We are a Delaware corporation. Our principal executive office is
located at 1350 Avenue of the Americas, New York, New York 10019, and our
telephone number is (212) 931-8000.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares
of common stock by the selling stockholders.
DESCRIPTION OF COMMON STOCK
General
Our charter (the "Charter") provides that we may issue up to 100
million shares of common stock, $.01 par value per share. As of March 31,
2000, there were 33,378,370 shares of common stock outstanding.
All shares of common stock offered hereby have been duly authorized
and are fully paid and nonassessable. Subject to the preferential rights of
any other shares or series of stock and to the provisions of the Charter
regarding Excess Stock (as defined under "Restrictions on Ownership of Capital
Stock"), holders of shares of common stock offered hereby will be entitled to
receive dividends on the stock if, as and when authorized and declared by the
Board of Directors of the Company out of assets legally available therefor and
to share ratably in the assets of the Company legally available for
distribution to its common stockholders in the event of its liquidation,
dissolution or winding up after payment of or adequate provision for all known
debts and liabilities of the Company. Under the terms of our credit agreements
with Reckson Operating Partnership, we are prohibited from paying any
dividends on shares of our common stock as long as there are amounts
outstanding under such agreements. In addition, we are prohibited from paying
any dividends on shares of our capital stock ranking on a parity or junior to
our outstanding convertible cumulative preferred stock unless full
distributions have been paid on such preferred stock.
Subject to the provisions of the Charter regarding Excess Stock, each
outstanding share of common stock, entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of
directors, and, except as provided with respect to any other class or series
of stock, the holders of these shares will possess the exclusive voting power.
There is no cumulative voting in the election of directors, which means that
the holders of a majority of the outstanding shares of the Company's existing
common stock can elect all of the directors then standing for election and the
holders of the remaining shares will not be able to elect any directors.
Holders of shares of common stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any other securities. Subject to the provisions of the
Charter regarding Excess Stock, shares of common stock will have equal
dividend, liquidation and other rights.
Certain Provisions of the Charter
The Board of Directors is divided into three classes of directors,
each class constituting approximately one-third of the total number of
directors, with the classes serving staggered terms. At each annual meeting of
stockholders, the class of directors to be elected at the meeting will be
elected for a three-year term and the directors in the other two classes will
continue in office. We believe that classified directors will help to assure
the continuity and stability of the Board of Directors and our business
strategies and policies as determined by the Board. The use of a staggered
board may delay or defer a change in control or removal of incumbent
management.
Our charter and bylaws contain additional provisions that may deter
third party acquisition proposals. Prospective investors should review the
section captioned "Risk Factors -- Certain Anti-takeover provisions may deter
third party acquisition proposals."
Restrictions on Ownership
In order for Reckson Associates to qualify as a REIT under the
Internal Revenue Code (the "Code"), it must satisfy a variety of requirements,
including annual tests with respect to the nature of its gross income.
Substantially all of Reckson Associates' gross income meets these requirements
by qualifying as "rentals from real property" under Section 856(d) of the
Code. Under this provision, however, a REIT's real property rentals can be
disqualified if the rent is received by the REIT from a related party or if
noncustomary services are performed for the tenant other than by an
independent contractor. The characterization of a party as a related-party
tenant or as an independent contractor depends, in part, upon the percentage
of stock, assets or net profits of such party that may be owned by the REIT or
by stockholders of the REIT. Such ownership may be direct or may be indirect
under certain attribution rules prescribed by the Code. At the time that the
Company was spun-off from Reckson Associates, there was a substantial identity
of ownership between stockholders of Reckson Associates and stockholders of
the Company. It is not known to what degree such identity of ownership may
still exist or may continue. Therefore, in order to protect Reckson Associates
from the risk that rental income it earns from the Company or its affiliates,
or from tenants that the Company or its affiliates provides commercial
services to, will not be disqualified as rent from real property for REIT
qualification purposes, subject to certain exceptions, the ownership by any
person or entity of the Company's common stock is limited to 9.9% of the
aggregate number or value of shares of the Company's common stock outstanding
and the ownership by any person of the Company's capital stock is limited to
9.9% of the aggregate value of all classes of capital stock outstanding.
Restrictions on Ability to Pay Dividends
Subject to certain exceptions, as long as there are outstanding
advances under our credit agreements with Reckson Operating Partnership, we
are prohibited from paying dividends on any shares of our capital stock or
incurring additional debt. In addition, we are prohibited from paying any
dividends on shares of our capital stock ranking on a parity or junior to our
convertible cumulative preferred stock unless full distributions have been
paid on such preferred stock. See the section captioned "Risk Factors -- We
may have conflicts of interest with Reckson Associates -- Conflicts in our
loans with Reckson Operating Partnership; limitation on our ability to pay
dividends and incur additional debt" above.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is American
Stock Transfer & Trust Company.
SELLING STOCKHOLDERS
The common stock was originally issued by the Company in offerings
exempt from the registration requirements of the Securities Act. The
purchasers in those offerings or their pledgees, transferees or other
successors in interest (including, but not limited to, partners in a
partnership receiving a distribution of the common stock), who we collectively
refer to in this prospectus as selling stockholders, may from time to time
offer and sell any and all of the shares of common stock offered under this
prospectus.
The following table sets forth certain information, as of March 15,
2000, with respect to shares of common stock covered by this prospectus and
other shares of common stock owned by the selling stockholders. Because the
selling stockholders may offer all, some or none of the shares of common stock
that are covered by this prospectus, no estimate can be made of the number of
shares of common stock that will be offered under this prospectus or the
number of shares of common stock that will be owned by any of the selling
stockholders upon completion of the offering to which this prospectus relates.
<TABLE>
<CAPTION>
<S> <C> <C>
Shares of Common Shares of Common
Stock Covered by Stock Covered by
this this
Name of Selling Stockholder Prospectus(1)(2) Name of Selling Stockholder Prospectus(1)(2)
- --------------------------- ---------------- --------------------------- ----------------
JAH Realties, L.P. (3)......................... 431,551 Kuhn, Loeb & Co....................................23,103
Rieger I/O LLC................................. 75,000 Henry T. Wilson.....................................4,072
Arnold Widder.................................. 61,234 Paribas North America, Inc........................139,667
Cahill, Warnock Strategic Partners Crossland Partners LLC..............................3,610
Fund, L.P. .................................... 721,091
Strategic Associates, L.P...................... 39,955 Samuel Klutznick....................................5,343
David L. Warnock............................... 1,895 Deborah Baker.......................................2,517
Northwood Ventures LLC......................... 285,206 MLPF&S Custodian for Deborah Baker..................1,516
Northwood Capital Partners LLC................. 54,694 Francis G. Hickey, Jr. Revocable Trust............38,165
Thomas and Tracy Phillips...................... 1,264 Thomas S. Shattan and Kate D. Shattan Trust
FBO Cecily Bay Shattan................................240
The Spielman Group............................. 3,359 Thomas S. Shattan and Kate D. Shattan Trust
FBO Ward Harrison Shattan.............................240
William E. Phillips............................ 14,824 Arnold L. Cohen....................................65,419
Wiliam E. Phillips IRA......................... 19,998 Barbara Cohen.......................................7,193
Robert Spielman................................ 2,960 Louis Perlman.....................................178,657
Gerald Spielman................................ 8,230 Wilma Perlman......................................13,895
Robin Spielman................................. 7,946 Louis Perlman IRA Rollover.........................12,632
Stanley Spielman IRA........................... 1,108 Kenneth Perlman....................................26,969
Stanley Spielman............................... 2,322 Gary Perlman.......................................19,011
William Spier.................................. 2,980 Julie Perlman......................................18,948
Kasso Circle Inc. Profit Sharing Plan.......... 2,810 The Louis and Wilma Perlman
1996 Family Trust...................................6,316
Douglas Scharfberg............................. 2,367 Nancy Warshauer Mendel custodian for Erica
Brooke Mendel.........................................532
Karen S. Scharfberg............................ 3,658 Nancy Warshauer Mendel custodian for David
Ross Mendel...........................................532
G. Lee Bohs.................................... 2,788 David W. Beale....................................306,764
Jerry Daniels.................................. 13,745 Alan M. Langer.....................................56,428
Alan Goldberg.................................. 5,960 Edward M. Caravalho.................................3,738
Susan Melchner................................. 8,418 Mitchell Knecht.....................................4,099
Peter Halstead, trustee for E. Finkelstein..... 3,020 Laura Kozelouzek...................................25,437
Peter Halstead, trustee for J. Finkelstein..... 3,021 Linda V. B. Harris..................................5,017
Tippet Partners................................ 2,216 Carol Whalin........................................5,820
Bettylu K. Saltzman............................ 3,021 Kelly G. Besecker...................................8,998
The Shattan Group LLC.......................... 477 Bonnie L. Deininger.................................5,550
Thomas S. Shattan.............................. 36,570 Reckson Operating Partnership, L.P................115,186
Kate Dundes Shattan............................ 55 Frank Adipietro....................................15,000
Michael C. Phillips............................ 1,264 Salvatore Campofranco..............................10,000
G. Kevin Fechtmeyer............................ 13,810 Thomas Carey........................................5,000
Gregory E. Mendel.............................. 23,855 F.D. Rick Rich III.................................10,000
Sarah P. Pember................................ 1,264 Jeffrey Schotz......................................7,500
Erica S. Witover............................... 1,511 Philip M. Waterman III.............................10,000
M. Kenneth Witover............................. 2,322 Susan McGuire.......................................2,500
Peggy Kahn..................................... 2,741 Karen Pollinger.....................................1,000
Fidelity Management Trust Company f/b/o Dorothy
Wight.......................................... 1,264
Total Number of Shares Covered by this Prospectus ........................................................ 3,038,388
=========
</TABLE>
(1) Such amount also represents the total number of shares of common stock of
the Company held by each selling stockholder prior to the offering,
except for JAH Realties, L.P., which owned an additional 522,945 shares
of common stock.
(2) The selling stockholders are under no obligation known to the Company to
sell any of the shares of common stock registered hereunder. However,
assuming the sale of all shares of common stock registered hereunder,
each selling shareholder will have sold all of the shares of common stock
currently held by such person or entity, except for JAH Realties, L.P.
which will continue to own 522,945 shares of common stock.
(3) The general partner of JAH Realties, L.P. is JLH Management, Inc., of
which Jon L. Halpern is the sole stockholder. Mr. Halpern is a former
executive officer and director of Reckson Associates Realty Corp. In
addition, JAH Realties, L.P., directly or indirectly, has in the past
been a co-venturer with the Company in various holdings, including OnSite
Access, Inc., OnSite Commerce and Content LLC, VANTAS Incorporated,
American Campus Communities LLC and Dobie Center LLC, and continues to own
interests in OnSite Access, Inc. and Dobie Center LLC. The shares of
common stock to be offered by JAH Realties, L.P. were acquired from the
Company in exchange for indirect interests in VANTAS Incorporated. The
sale of 260,000 shares of common stock of the Company owned by JAH
Realties, L.P. and 1,731,597 shares of common stock of the Company owned
by Veritech Ventures LLC (of which JAH Realties, L.P. is the managing
member) has been registered under a separate registration statement of
Form S-3 (File No. 333-92247), filed by the Company with the Securities
and Exchange Commission on December 7, 1999.
PLAN OF DISTRIBUTION
We have been advised that the selling stockholders (a term that
includes pledgees, transferees and other successors in interest, as described
above) may offer shares of common stock from time to time depending on market
conditions and other factors, in one or more transactions on the Nasdaq
National Market, or other national securities exchanges or over-the-counter
markets on which the shares are traded, or in negotiated transactions, at
market prices prevailing at the time of sale, at prices related to those
market prices, at negotiated prices or at fixed prices.
Sales of shares of common stock by the selling stockholders may
involve (i) block transactions in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction, (ii) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own
account pursuant to this prospectus, (iii) ordinary brokerage transactions and
transactions in which a broker solicits purchasers and (iv) privately
negotiated transactions. To the extent required, this prospectus may be
amended and supplemented from time to time to describe a specific plan of
distribution. In connection with the distribution of the shares of common
stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers. In connection with such transactions,
broker-dealers may engage in short sales of the common stock in the course of
hedging the position they assume with the selling stockholders. The selling
stockholders may also sell the common stock short and redeliver the shares to
close out such short positions.
The selling stockholders may also enter into option transactions
(including call or put option transactions) or other transactions with
broker-dealers which require delivery to such broker-dealer of shares offered
hereby, which shares such broker-dealer may resell pursuant to this prospectus
(as supplemented or amended to reflect such transaction, if necessary). The
selling stockholders may also pledge shares to a broker-dealer and, upon a
default, such broker-dealer may effect sales of the pledged shares pursuant to
this prospectus (as supplemented or amended to reflect such transaction, if
necessary). The selling stockholders may also sell the common stock through
one or more underwriters on a firm commitment or best-efforts basis (with a
supplement or amendment to this prospectus, if necessary). In addition, any
shares that qualify for sale pursuant to Rule 144 may be sold under Rule 144
rather than pursuant to this prospectus. Certain of the selling stockholders
may also distribute the shares of common stock covered by this prospectus to
their partners or members. Such partners or members may sell the shares of
common stock received upon such distribution pursuant to this prospectus (as
supplemented or amended to reflect such transaction, if necessary).
Brokers and dealers may receive compensation in the form of
concessions or commissions from the selling stockholders and/or purchasers of
shares for whom they may act as agent and/or to whom they may sell as
principal (which compensation may be in excess of customary commissions). The
selling stockholders and any broker or dealer that participates in the
distribution of shares may be deemed to be underwriters and any commissions
received by them and any profit on the resale of shares positioned by a broker
or dealer may be deemed to be underwriting discounts and commissions under the
Securities Act. We have agreed to indemnify certain of the selling
stockholders, certain underwriters who participate in an offering of the
shares of common stock, and each person, if any, who controls any of such
parties within the meaning of the Securities Act and the Exchange Act, and
each of their respective directors, officers, employees and agents against
certain liabilities, including liabilities arising under the Securities Act.
The selling stockholders may agree to indemnify any agent or broker-dealer
that participates in transactions involving sales of the shares of common
stock against certain liabilities, including liabilities arising under the
Securities Act.
We have advised the selling stockholders that Regulation M under the
Exchange Act may apply to sales of shares and to the activities of the selling
stockholders or broker-dealers in connection therewith. We will bear all
costs, expenses and fees in connection with the registration of the shares of
common stock covered by this prospectus. The selling stockholders will bear
any brokerage commissions and similar selling expenses, if any, attributable
to the sale of the shares.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
Excess Stock
The Charter provides that the Company may issue up to 25 million
shares of excess stock, par value $.01 per share ("Excess Stock"). For a
description of Excess Stock, see "--Restrictions on Ownership" below.
Restrictions on Ownership
As described above, in order to protect Reckson Associates against
the risk of failing to satisfy certain tax laws applicable to REITs, our
Charter provides that no stockholder may own, or be deemed to own by virtue of
certain attribution provisions of the Code, more than 9.9% of the aggregate
number or value of the Company's outstanding shares of common stock or more
than 9.9% of the aggregate value of the outstanding shares of all classes of
the Company's capital stock (the "Ownership Limit"), provided that in no event
will a stockholder be limited in the amount of the Company's common stock
acquired in connection with awards or exercises of employee stock options. In
addition, in the event we issue any additional series of preferred stock, we
may, in the designating amendment, set a limit on the ownership of such
preferred stock. Any direct or indirect ownership of shares of stock in excess
of the Ownership Limit or that would result in common ownership among 10%
holders of the Company's common stock and Reckson Associates' common stock,
will be null and void, and the intended transferee will acquire no rights to
the shares of capital stock. The foregoing restrictions on transferability and
ownership will not apply if Reckson Associates determines that it is no longer
in its best interests to attempt to qualify, or to continue to qualify, as a
REIT. Under the terms of the intercompany agreement, the Company's Board of
Directors will have the right to waive the Ownership Limit only if permission
to do so is granted by Reckson Associates, in Reckson Associates' sole
discretion, and the Company's Board of Directors otherwise decides that such
action is in the best interest of the Company.
Shares of capital stock owned, or deemed to be owned, or transferred
to a stockholder in excess of the Ownership Limit will automatically be
converted into shares of Excess Stock that will be transferred, by operation
of law, to the trustee of a trust for the exclusive benefit of one or more
charitable organizations described in Section 170(b)(1)(A) and 170(c) of the
Code (the "Charitable Beneficiary"). The trustee of the trust will be deemed
to own the Excess Stock for the benefit of the Charitable Beneficiary on the
date of the violative transfer to the original transferee-stockholder. Any
dividend or distribution paid to the original transferee-stockholder of Excess
Stock prior to the discovery by the Company that capital stock has been
transferred in violation of the provisions of the Company's Charter will be
repaid to the trustee upon demand. Any dividend or distribution authorized and
declared but unpaid shall be rescinded as void ab initio with respect to the
original transferee-stockholder and will instead be paid to the trustee of the
trust for the benefit of the Charitable Beneficiary. Any vote cast by an
original transferee-stockholder of shares of capital stock constituting Excess
Stock prior to the discovery by the Company that shares of capital stock have
been transferred in violation of the Company's Certificate of Incorporation
shall be rescinded as void ab initio. While the Excess Stock is held in trust,
the original transferee-stockholder will be deemed to have given an
irrevocable proxy to the trustee to vote the capital stock for the benefit of
the Charitable Beneficiary. The trustee of the trust may transfer the interest
in the trust representing the Excess Stock to any person whose ownership of
the shares of capital stock converted into such Excess Stock would be
permitted under the Ownership Limit. If such transfer is made, the interest of
the Charitable Beneficiary will terminate and the proceeds of the sale will be
payable to the original transferee-stockholder and to the Charitable
Beneficiary as described herein. The original transferee-stockholder will
receive the lesser of (i) the price paid by the original
transferee-stockholder for the shares of capital stock that were converted
into Excess Stock or, if the original transferee-stockholder did not give
value for such shares (e.g., the stock was received through a gift, devise or
other transaction), the average closing price for the class of shares from
which such shares of capital stock were converted for the ten trading days
immediately preceding such sale or gift, and (ii) the price received by the
trustee from the sale or other disposition of the Excess Stock held in trust.
The trustee may reduce the amount payable to the original
transferee-stockholder by the amount of dividends and distributions relating
to the shares of Excess Stock which have been paid to the original
transferee-stockholder and are owed by the original transferee-stockholder to
the trustee. Any proceeds in excess of the amount payable to the original
transferee-stockholder will be paid by the trustee to the Charitable
Beneficiary. Any liquidation distributions relating to Excess Stock will be
distributed in the same manner as proceeds of a sale of Excess Stock. If the
foregoing transfer restrictions are determined to be void or invalid by virtue
of any legal decision, statute, rule or regulations, then the original
transferee-stockholder of any shares of Excess Stock may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the shares of Excess Stock and to hold the shares of Excess Stock on
behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held in trust, to purchase all
or any portion of the shares of Excess Stock at the lesser of (i) the price
initially paid for such shares by the original transferee-stockholder, or if
the original transferee-stockholder did not give value for such shares (e.g.,
the shares were received through a gift, devise or other transaction), the
average closing price for the class of stock from which such shares of Excess
Stock were converted for the ten trading days immediately preceding such sale
or gift, and (ii) the average closing price for the class of stock from which
such shares of Excess Stock were converted for the ten trading days
immediately preceding the date the Company elects to purchase such shares. The
Company may reduce the amount payable to the original transferee-stockholder
by the amount of dividends and distributions relating to the shares of Excess
Stock which have been paid to the original transferee-stockholder and are
owned by the original transferee-stockholder to the trustee. The Company may
pay the amount of such reductions to the trustee for the benefit of the
Charitable Beneficiary. The 90-day period begins on the later date of which
notice is received of the violative transfer if the original
transferee-stockholder gives notice to the Company of the transfer or, if no
such notice is given, the date the Company's Board of Directors determines
that a violative transfer has been made.
All certificates representing shares of capital stock will bear a
legend referring to the restrictions described above.
Each stockholder will be required, upon demand by the Company, to
disclose to the Company in writing any information with respect to the direct,
indirect and constructive ownership of capital stock of the Company as Reckson
Associates deems necessary for Reckson Associates to determine its compliance
with the provisions of the Code applicable to REITs.
The Company is required to maintain in its Charter the foregoing
Ownership Limit, Excess Stock and stock ownership disclosure requirements
under the terms of the Intercompany Agreement.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby and
certain legal matters will be passed upon by Brown & Wood LLP, New York, New
York.
EXPERTS
The consolidated financial statements appearing in the Company's
Annual Report (Form 10-K) for the year ended December 31, 1999; and the
consolidated financial statements of VANTAS Incorporated and Subsidiaries for
the year ended December 31, 1999, appearing in the Company's Form 8-K, filed
March 2, 2000, have in each case been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon, incorporated
herein by reference. Such consolidated and combined financial statements are
incorporated herein by reference in reliance upon such reports given on the
authority of such firm as experts in accounting and auditing.
The financial statements incorporated in this prospectus by reference
to the audited historical consolidated financial statements of VANTAS
Incorporated and Subsidiaries as of December 31, 1998 and for each of the two
years in the period ended June 30, 1998 and for the period July 1, 1998 to
December 31, 1998 included in our Form 8-K, filed March 2, 2000, have been so
incorporated in reliance on the reports of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements incorporated herein by reference to the
audited historical consolidated financial statements of HQ Global Workplaces,
Inc. and Subsidiaries as of December 31, 1999 and 1998 and for the years ended
December 31, 1999 and 1998 and for the period from August 25, 1997 (inception)
to December 31, 1997 and the audited historical consolidated financial
statement of OmniOffices (UK) Limited as of December 31, 1999 and 1998, and
for the year ended December 31, 1999 and the nine-month period ended December
31, 1998 appearing in our Form 8-K, filed March 2, 2000, have been so
incorporated in reliance on the reports of KPMG LLP, independent certified
public accountants, given on the authority of said firm as experts in
accounting and auditing.
The financial statements incorporated in this prospectus by reference
to the audited historical consolidated financial statements of OmniOffices
Group, Inc. for the period from January 1, 1997 to August 25, 1997 appearing
in our Form 8-K, filed March 2, 2000, have been so incorporated in reliance on
the report of BDO Seidman, LLP, independent auditors, given on the authority
of said firm as experts in accounting and auditing.
===========================================================================
Neither we nor the selling stockholders have authorized any dealer,
salesperson or other person to give any information or to make any
representations not contained in the prospectus in connection with the
offering covered by this prospectus. If given or made, such information or
representations must not be relied upon as having been authorized by the
Company or the selling stockholders. This prospectus does not constitute an
offer to sell, or a solicitation of any offer to buy, the offered shares, in
any jurisdiction where, or to any person to whom, it is unlawful to make any
such offer or solicitation. Neither the delivery of this prospectus nor any
offer or sale made hereunder shall, under any circumstances, create an
implication that there has not been any change in the facts set
forth in this prospectus or in the affairs of the Company since the date hereof.
---------------- FrontLine Capital Group
TABLE OF CONTENTS
Available Information.............................. 2
Incorporation of Certain Documents
By Reference.................................. 2
Cautionary Statements Concerning
Forward-Looking Information................... 3
Risk Factors....................................... 3
The Company....................................... 12
Use of Proceeds................................... 13
Description of Common Stock....................... 13
Selling Stockholders.............................. 14
Plan of Distribution.............................. 17
Restrictions on Ownership of Capital Stock........ 18
Legal Matters..................................... 20
Experts........................................... 20
----------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the estimated expenses in connection with
the issuance and distribution of the Registrant's securities being registered
hereby, other than underwriting discounts and commissions, all of which will
be borne by the Company:
Securities and Exchange Commission registration fee............ $28,476.00
Printing and engraving expenses................................ 5,000.00
Legal fees and expenses........................................ 25,000.00
Accounting fees and expenses................................... 12,000.00
Miscellaneous.................................................. 5,000.00
----------
Total.......................................................... $75,476.00
==========
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law (the "Delaware Law") provides
that a corporation may limit the liability of each director to the corporation
of its stockholders for monetary damages except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) in respect of
certain unlawful dividend payments or stock redemptions or repurchases, and
(iv) for any transaction from which the director derives an improper personal
benefit. The Certificate of Incorporation and Bylaws provide for the
elimination and limitation of the personal liability of directors of the
Company for monetary damages to the fullest extent permitted by the Delaware
Law. In addition, the Certificate of Incorporation and Bylaws provide that if
the Delaware Law is amended to authorize the further elimination or limitation
of the liability of a director, then the liability of the directors shall be
eliminated or limited to the fullest extent permitted by the Delaware Law, as
so amended. The effect of this provision is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
the fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described in
clauses (i) through (iv) above. The provision does not limit or eliminate the
rights of the Company or any stockholder to seek non-monetary relief such as
an injunction or rescission in the event of a breach of a director's duty of
care. In addition, the Bylaws provide that the Company shall, to the full
extent permitted by the Delaware Law, as amended from time to time, indemnify
and advance expenses to each of its currently acting and former directors,
officers, members of the management advisory committee, employees and agents.
Item 16. Exhibits.
<TABLE>
<CAPTION>
<S> <C> <C>
4.1 -- First Amended and Restated Certificate of Incorporation.(1)
4.2 -- Amended and Restated By-laws.(2)
4.3 -- Form of Common Stock Certificate.
5 -- Opinion of Brown & Wood LLP as to the legality of the common stock.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP.
23.4 -- Consent of KPMG LLP.
23.5 -- Consent of KPMG LLP.
23.6 -- Consent of BDO Seidman, LLP.
24 -- Power of attorney (included on the signature page of this Registration Statement).
- ---------------
(1) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1998, filed March 31, 1999
and incorporated herein by reference.
(2) Previously filed as an exhibit to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1999, filed March 29, 2000,
and incorporated herein by reference.
</TABLE>
Item 17. Undertakings.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) (a) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, partners and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer, partner or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, partner or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, FrontLine
Capital Group certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
April 7, 2000.
FRONTLINE CAPITAL GROUP
By: /s/ Scott H. Rechler
----------------------------
Scott H. Rechler
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald Rechler, Scott H. Rechler and
Michael Maturo, and each of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capabilities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
--------- ----- ----
/s/ Donald J. Rechler Chairman of the Board and Director April 7, 2000
-----------------------
Donald J. Rechler
/s/ Scott H. Rechler President, Chief Executive Officer and April 7, 2000
-------------------- Director (Principal Executive Officer)
Scott H. Rechler
/s/ Michael Maturo Executive Vice President, Treasurer and
------------------- Chief Financial Officer (Principal April 7, 2000
Michael Maturo Financial Officer and Principal Accounting
Officer)
_______________ Director
Roger M. Rechler
/s/ Mitchell D. Rechler Secretary and Director April 7, 2000
------------------------
Mitchell D. Rechler
/s/ Gregg M. Rechler Director April 7, 2000
--------------------
Gregg M. Rechler
/s/ Paul F. Amoruso Director April 7, 2000
-------------------
Paul F. Amoruso
/s/ Ronald Cooper Director April 7, 2000
-----------------
Ronald Cooper
</TABLE>
<TABLE>
<CAPTION>
Exhibit Index
<S> <C> <C>
Exhibits Description Page
-------- ----------- ----
4.3 -- Form of Common Stock Certificate.
5 -- Opinion of Brown & Wood LLP as to the legality of the Common Stock.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).
23.2 -- Consent of Ernst & Young LLP.
23.3 -- Consent of PricewaterhouseCoopers LLP.
23.4 -- Consent of KPMG LLP.
23.5 -- Consent of KPMG LLP.
23.6 -- Consent of BDO Seidman, LLP.
24 -- Power of attorney (included on the signature page of this Registration Statement).
</TABLE>
Exhibit 4.3
NUMBER FLCG *** *** SHARES
[logo]
FRONTLINE CAPITAL GROUP
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK COMMON STOCK
$.01 PAR VALUE
THIS CERTIFIES THAT CUSIP
IS THE OWNER OF *** ***
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
FrontLine Capital Group
(hereinafter called the "Corporation"), transferable on the books of
the Corporation by the registered holder hereof in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are
issued and shall be held subject to all of the provisions of the
certificate of incorporation of the Corporation, as amended (the
"Charter"), and the Bylaws of the Corporation and any amendments
thereto. This Certificate is not valid unless countersigned and
registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the Corporation has caused the facsimile
signatures of its duly authorized officers and its facsimile seal to
be affixed hereto.
Dated:
--------------------------- ------------------------
Mitchell Rechler, Secretary Scott Rechler, President
Countersigned and Registered:
American Stock Transfer &
Trust Company, Transfer Agent
and Registrar
By______________________________
Authorized Signature
IMPORTANT NOTICE
The Corporation will furnish to any stockholder on request and
without charge a full statement of the information required by Section 151(f)
of the General Corporation Law of the State of Delaware with respect to the
powers, designations, preferences and relative, participating, optional, or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Except as otherwise provided pursuant to the charter of the
Corporation, no Person may Beneficially Own shares of Common Stock in excess
of 9.9% (or such greater percentage as may be determined by the Board of
Directors of the Corporation) of the number or value of the outstanding shares
of the Common Stock and no Person may Beneficially Own shares of Equity Stock
in excess of 9.9% (or such greater percentage as may be determined by the
Board of Directors of the Corporation) of the value of the outstanding shares
of Equity Stock. Any Person who attempts or proposes to Beneficially Own
shares of Common Stock or Equity Stock in excess of the above limitations must
notify the Corporation in writing at least 15 days prior to such proposed or
attempted Transfer. All capitalized terms in this legend have the meanings
defined in the charter of the Corporation, a copy of which, including the
restrictions on transfer, will be sent without charge to each stockholder who
so requests. If the restrictions on transfer are violated, the securities
represented hereby will be designated and treated as shares of Excess Stock
that will be held in trust by the Corporation.
-------------------------
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN
OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF
INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
-------------------------
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT -- _________ Custodian _______
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with under Uniform Gifts to Minors Act _______
right of survivorship and (State)
not as tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ HEREBY SELL, ASSIGN AND TRANSFER UNTO
Please insert social security or other identifying number of assignee
- ------------------------------------------------------------------------------
(Please Print or Typewrite Name and Address, Including Zip Code, of Assignee)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ----------------------------------------------------SHARES REPRESENTED BY THIS
CERTIFICATE AND DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT
- ----------------------------------------------------ATTORNEY TO TRANSFER THE
SAID SHARES ON THE BOOKS OF THE CORPORATION WITH THE POWER OF SUBSTITUTION IN
THE PREMISES.
Dated: Signature:
------------------------ --------------------------------
NOTICE: The Signature To This
Assignment Must Correspond With
The Name As Written Upon the
Face Of The Certificate In
Every Particular, Without
Alteration Or Enlargement Or
Any Change Whatsoever.
Signature Guaranteed by:
- --------------------------------------
Exhibit 5
Brown & Wood LLP
One World Trade Center
New York, New York 10048
April 7, 2000
FrontLine Capital Group
1350 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
This opinion is furnished in connection with the registration
statement on Form S-3 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the offering from time to time
by selling stockholders of up to 3,038,388 shares of common stock, par value
$0.01 per share (the "Common Shares"), of FrontLine Capital Group (the
"Company").
In connection with rendering this opinion, we have examined the
Company's Amended and Restated Certificate of Incorporation, Bylaws, as
amended, records of the Company's corporate proceedings, the Registration
Statement and such other certificates, records and documents as considered
necessary for the purposes of this opinion.
We are attorneys admitted to practice in the State of New York. We
express no opinion concerning the laws of any of the jurisdictions other than
the laws of the United States of America, the State of Delaware and the State
of New York.
Based upon the foregoing, we are of the opinion that the Common
Shares are validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to our firm under the caption "Legal
Matters" in the prospectus.
Very truly yours,
/s/ Brown & Wood
Exhibit 23.2
Consent of Independent Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of FrontLine Capital
Group, formerly known as Reckson Service Industries, Inc. (the "Company"), for
the registration of 3,038,388 shares of its common stock and to the
incorporation by reference therein of our reports dated (i) February 22, 2000,
with respect to the consolidated financial statements of Reckson Service
Industries, Inc. and Subsidiaries (d/b/a FrontLine Capital Group) included in
its Annual Report (Form 10-K) for the year ended December 31, 1999, filed with
the Securities and Exchange Commission on March 29, 2000, (ii) February 22,
2000, with respect to the consolidated financial statements of VANTAS
Incorporated and Subsidiaries for the year ended December 31, 1999, included
in the Company's Form 8-K filed with the Securities and Exchange Commission on
March 2, 2000.
/s/ Ernst & Young LLP
New York, New York
April 5, 2000
Exhibit 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement of FrontLine Capital Group on Form S-3 of our report dated January
6, 2000 relating to the consolidated balance sheet as of December 31, 1998 and
the related consolidated statements of operations, of redeemable convertible
preferred stock and stockholders' equity (deficit), and of cash flows and the
supplemental schedule of valuation and qualifying accounts for each of the two
years in the period ended June 30, 1998 and for the period July 1, 1998 to
December 31, 1998 of VANTAS Incorporated and Subsidiaries, which appears in
the Current Report on Form 8-K of Reckson Service Industries, Inc. filed March
2, 2000. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
New York, New York
April 6, 2000
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
HQ Global Workplaces, Inc.
We consent to the use of our report incorporated therein by reference and
the reference to our firm under the heading "Experts" in the Prospectus and
related Registration Statement on Form S-3 of FrontLine Capital Group.
/s/ KPMG LLP
Atlanta, Georgia
April 4, 2000
Exhibit 23.5
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
OmniOffices (UK) Limited
We consent to the use of our report incorporated therein by reference and
the reference to our firm under the heading "Experts" in the Prospectus and
related Registration Statement on Form S-3 of FrontLine Capital Group.
/s/ KPMG LLP
Atlanta, Georgia
April 4, 2000
Exhibit 23.6
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FrontLine Capital Group
New York, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our report
dated February 13, 1998 relating to the consolidated statements of operations,
shareholders' equity, and cash flows of OmniOffices Group, Inc. for the period
from January 1, 1997 to August 25, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO SEIDMAN, LLP
Atlanta, Georgia
April 5, 2000
