As Filed Pursuant to Rule 424(b)(5)
Reg. No. # 333-84353
PROSPECTUS SUPPLEMENT
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(To prospectus dated December 8, 1999)
129,750 Units Consisting of
2,595,000 Shares of Common Stock and
Warrants to Purchase 129,750 Shares of Common Stock
FrontLine Capital Group
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We are a publicly traded operating company that acquires interests in
and develops a network of business-to-business, or 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 offering 129,750 units, each of which consists of 20 shares of
our common stock and a warrant to purchase one share of our common stock at an
initial exercise price of $47.25 per share. The warrants will expire in three
years. Investors may separate and trade the common stock and warrant
components of each unit after issuance. The warrants will not be listed or
quoted on any established trading market and it is anticipated that no trading
market will develop for the warrants.
Our common stock is listed on the Nasdaq National Market under the
symbol "RSII." The last reported sale price of our common stock on March 28,
2000 was $47.25 per share.
Investing in the units consisting of our common stock and warrants
involves a high degree of risk. See "Risk Factors" beginning on page 2 of the
accompanying prospectus.
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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 supplement or the accompanying prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
We are offering the units of our common stock and warrants directly
to prospective purchasers at a price per unit of $945 for aggregate proceeds
of $122,613,750 (before our expenses). These units will be delivered in New
York, New York on March 30, 2000.
The date of this prospectus supplement is March 28, 2000.
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TABLE OF CONTENTS
Page
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Prospectus Supplement
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The Company.................................................................S-3
Recent Developments.........................................................S-3
Use of Proceeds.............................................................S-3
Description of Units........................................................S-4
Plan of Distribution........................................................S-5
Forward-Looking Statements..................................................S-5
Prospectus
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Risk Factors..................................................................2
Available Information........................................................11
Incorporation of Certain Documents by Reference..............................12
The Company..................................................................12
Use of Proceeds..............................................................13
Ratios of Earnings to Fixed Charges..........................................13
Description of Debt Securities...............................................13
Description of Common Stock..................................................23
Description of Preferred Stock...............................................25
Description of Depositary Shares.............................................31
Restrictions on Ownership of Capital Stock...................................34
Description of Warrants......................................................36
Plan of Distribution.........................................................37
Legal Matters................................................................37
Experts......................................................................38
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You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. This
information is accurate only as of its date. Our business, prospects,
financial condition and results of operations may have changed since then. We
have not authorized any person to provide you with different or additional
information. If anyone provides you with different or additional information,
you should not rely on it. We are not making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted.
The information in this prospectus supplement may not contain all of
the information that may be important to you. You should read the entire
prospectus supplement and the accompanying prospectus, including "Risk
Factors" beginning on page 2 of the accompanying prospectus, as well as the
documents incorporated by reference in this prospectus supplement and the
accompanying prospectus, before making an investment decision to purchase the
units consisting of our common stock and warrants. All references to "we,"
"us" or the "Company" in this prospectus supplement and the accompanying
prospectus mean FrontLine Capital Group and all entities owned or controlled
by FrontLine Capital Group, except where it is made clear that the term means
only the parent company.
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THE COMPANY
We are a publicly traded operating company that acquires interests in
and develops a network of business-to-business, or B2B, e-commerce and
e-services Internet companies focused on serving small and medium-sized
enterprises, or SMEs, including independent professionals, entrepreneurs and
the mobile workforces of larger companies.
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.
RECENT DEVELOPMENTS
We have entered into a merger agreement pursuant to which VANTAS
Incorporated, a company in which we own an approximately 84% interest, will be
merged with HQ Global Workplaces, Inc. The merger is scheduled to close by
April 30, 2000 and requires us to obtain approximately $190 million in equity
financing and $350 million in debt financing for the merged company. VANTAS
has posted a letter of credit in the amount of $35 million to secure its
obligations under the merger agreement. We have pledged approximately 15
million shares of our VANTAS stock to secure our non-recourse guarantee of the
letter of credit. In the event the letter of credit is drawn upon and the
lender forecloses upon our pledged VANTAS shares, VANTAS is obligated to
reimburse us in the form of additional shares of VANTAS for any loss of the
collateral, provided that the loss was not a result of our gross negligence.
We have obtained commitments (which are subject to standard conditions) for
the debt financing and we are in negotiations to obtain the equity financing.
No assurance can be given, however, that we will be successful in obtaining
the equity financing required under the merger agreement in order to
consummate the merger on its current terms or that the merger will not be
consummated for any other reason.
OnSite Access, Inc., one of our partner companies, is an integrated
communications provider offering SMEs a range of voice and data services,
including high speed Internet access and enhanced services. 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. On February 16, 2000, Winstar Communications filed a lawsuit in New
York state court against OnSite and its chairman and former chief executive
officer, Howard Taylor, alleging breach of Mr. Taylor's non-compete agreement
with Winstar and the alleged use of Winstar's confidential information. OnSite
recently named Joseph A. Basile, Jr. as its chief executive officer. No
assurance can be given as to the impact, if any, on Onsite of the Winstar
litigation. In addition, there can be no assurance that the Onsite initial
public offering will be consummated or, if consummated, the timing of such
offering.
USE OF PROCEEDS
The net proceeds from the sale of the units consisting of our common
stock and warrants are approximately $122.4 million, after the deduction of
estimated offering expenses of $250,000 payable by us.
We intend to use the net proceeds from the offering for the repayment
of indebtedness and general corporate purposes. We intend to repay the balance
outstanding under our secured credit facility with UBS AG with proceeds from
the offering. As of March 29, 2000, there were $45 million of borrowings
outstanding under such facility with a weighted average interest rate of
approximately 8.9% per annum. The facility matures in May 2000, subject to the
right of the Company to extend the facility for an additional 90 days.
DESCRIPTION OF UNITS
Each unit offered hereby will consist of (i) 20 shares of our common
stock and (ii) a warrant to purchase one share of our common stock at an
exercise price initially equal to $47.25, subject to anti-dilution
adjustments. At any time after issuance, the common stock and warrant
components of each unit may be separated by the holder thereof and thereafter
transferred separately.
For a discussion of our common stock, see "Description of Common
Stock" and "Restrictions on Ownership of Capital Stock" in the accompanying
prospectus.
A holder may exercise its warrants at any time prior to March 30,
2003. Holders must pay the exercise price of their warrants in cash, by
certified or official bank check or by wire transfer to an account we have
designated for that purpose. Holders must also surrender the certificate
representing their warrant being exercised and deliver a properly completed
form of election to exercise such warrant.
No fractional shares of our common stock will be issued upon exercise
of a warrant. At the time of exercise of a warrant, we will pay the holder of
such warrant an amount in cash equal to the then current market price of any
such fractional share of our common stock.
Unless the warrants are exercised, the holders thereof will not be
entitled to receive dividends or other distributions, to vote, to receive
notices for any stockholders meeting for the election of directors or any
other purpose, or to exercise any other rights whatsoever as one of our
stockholders.
In the event a bankruptcy or reorganization is commenced by or
against us, a bankruptcy court may decide that unexercised warrants are
executory contracts that may be subject to our rejection with approval of the
bankruptcy court. As a result, a holder of warrants may not, even if
sufficient funds are available, be entitled to receive any consideration or
may receive an amount less than such holder would be entitled to receive if
such holder had exercised its warrants before the commencement of any such
bankruptcy or reorganization.
The number of shares of our common stock issuable upon exercise of a
warrant and the exercise price will be subject to adjustment upon certain
events, including (i) the payment of common stock dividends on our common
stock, (ii) the issuance to all holders of our common stock of certain rights,
options or warrants entitling them to subscribe for or purchase common stock
at a price less than the current market price per share of our common stock,
(iii) subdivisions, combinations reclassifications of our common stock, and
(iv) distributions to all holders of our common stock of our property or
assets (excluding those rights, options, warrants and distributions referred
to above and excluding distributions from retained earnings).
No adjustment in the exercise price will be required unless the
adjustment would result in an increase or decrease of at least 1% in the
exercise price; provided, however, that any adjustment that is not made as a
result of this paragraph will be carried forward and taken into account in any
subsequent adjustment.
In the case of certain reclassifications, consolidations, mergers,
sales or transfers of assets or other transactions pursuant to which our
common stock is converted into the right to receive other securities, cash or
property, then each warrant will be exercisable for the right to receive the
kind and amount of securities, cash and other property receivable upon
consummation of the particular transaction by a holder of the number of shares
of our common stock which would have been received by the holder of such
warrant immediately prior to the date of consummation of such transaction if
such warrant had been exercised immediately prior thereto.
The warrants will be governed by, and construed in accordance with,
the laws of the State of New York.
PLAN OF DISTRIBUTION
We are offering the units of our common stock and warrants directly
to prospective purchasers at the price set forth on the cover page of this
prospectus supplement.
FORWARD-LOOKING STATEMENTS
Information contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus may constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties and assumptions about us and our partner companies, including,
among other things:
o development of an e-commerce market;
o our ability to identify trends in our markets and the markets of our
partner companies and to offer new solutions that address the
changing needs of these markets;
o our ability to successfully execute our business model;
o our partner companies' ability to compete successfully against
direct and indirect competitors;
o our ability to successfully integrate our partner companies into a
collaborative network;
o our ability to acquire interests in additional companies, including
the consummation of the HQ Merger; and
o our ability to finance our business opportunities.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions,
the events referred to in the forward-looking statements might not occur.
(This page has been left blank intentionally.)
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PROSPECTUS
$500,000,000
RECKSON SERVICE INDUSTRIES, INC.
COMMON STOCK, COMMON STOCK WARRANTS,
PREFERRED STOCK, PREFERRED STOCK WARRANTS, DEPOSITARY SHARES
AND DEBT SECURITIES
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Reckson Service Industries, Inc. may offer up to $500,000,000 of shares of
our common stock, shares of our preferred stock, depositary shares representing
interests in our preferred stock, warrants to purchase shares of our common
stock (including rights to purchase our common stock) or preferred stock and our
debt securities in one or more series. Our common stock is listed on the Nasdaq
National Market under the symbol "RSII."
We may offer the securities at prices and on terms to be set forth in one or
more supplements to this prospectus. The securities may be offered directly,
through agents on our behalf or through underwriters or dealers.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS PROSPECTUS FOR A DESCRIPTION
OF RISKS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE SECURITIES.
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.
The date of this prospectus is December 8, 1999.
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RISK FACTORS
This prospectus contains forward-looking statements which involve risks and
uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause a
difference include, but are not limited to, those discussed below. An investment
in the securities involves various risks. Prospective investors should carefully
consider the following information in conjunction with the other information
contained in this prospectus and the related prospectus supplement before
purchasing the securities offered by the related prospectus supplement.
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 nine 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, 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 rapidly 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
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reposition companies may be significant and non-recoverable. Furthermore, we can
not 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 is 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 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
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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 Associates; 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 our 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
September 30, 1999, Reckson Associates' senior management and directors
beneficially owned approximately 10% of the outstanding common stock of Reckson
Associates and approximately 35% of our outstanding common stock. In calculating
the ownership of common stock of Reckson Associates, we have included Reckson
Associates 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 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
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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, it is required
to enter into a "master" lease arrangement. Pursuant to a 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 "Reckson
Service Industries 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
Reckson Service Industries 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 Reckson Service
Industries Facility in excess of $10 million in
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respect of any single investment are subject to approval by the Board of
Directors of Reckson Associates, or a committee thereof. The Reckson Service
Industries Facility has a term of five years and advances thereunder are
recourse obligations of our company. Interest accrues on advances made under the
Reckson Service Industries 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.
As long as there are outstanding advances under the Reckson Service
Industries 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 Reckson Service Industries 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 Reckson Service Industries
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 September 30, 1999,
borrowings under the Reckson Service Industries Facility aggregated
approximately $83.6 million and pursuant to the Reckson Strategic Venture
Partners Commitment, Reckson Operating Partnership had made approximately
$21.7 million in joint venture investments with Reckson Strategic Venture
Partners and had loaned approximately $32.9 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 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 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.
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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 our partner or co-venturer nor us 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 AS WELL AS THE RISK OF TECHNOLOGICAL OBSOLESCENCE
Our holdings include an approximately 36% fully-diluted interest in Onsite
Access, Inc. ("Onsite"). Onsite is 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
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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 can not 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.
OUR HOLDINGS IN VANTAS INCORPORATED EXPOSE US TO REAL ESTATE AND OPERATIONAL
RISKS
Our holdings include an approximately 45% fully diluted interest in VANTAS
Incorporated ("VANTAS"). VANTAS is a company that provides tenants with
furnished office suites and immediate support services, included but not limited
to, secretarial services, telecommunication services and conference facilities.
The executive office suites industry is subject to risks comparable to 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 investment in VANTAS.
VANTAS is the successor to three separate executive office suites companies.
The management team at VANTAS has not worked together as a unit for a long
period and we cannot assure that the integration of the three office suites
companies will be successful.
THE STUDENT HOUSING SECTOR EXPOSES US TO PARTICULAR RISKS
Through Reckson Strategic Venture Partners, we hold a 77.77% in American
Campus Communities, a manager of student housing facilities, and a 23.33%
interest in the Dobie Center, a student housing facility located near the campus
of the University of Texas. The student housing business is a fragmented sector
undergoing rapid development and change. In addition to traditional real estate
risks, student housing risks include economic, social, governmental and
demographic factors as they relate to the number of students attending colleges
and universities in need of student housing. Student housing facilities are to a
large extent reliant upon the well-being of the colleges or universities to
which such facilities relate. Student housing facilities are possibly subject to
competition from colleges and universities as well as other providers of student
housing. In addition, the maintenance and insurance costs of student housing may
exceed the costs typical of multifamily housing. Furthermore, due to the nature
of student housing, turnover of tenants is significant and student housing is
less utilized during summer months.
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 the credit facilities until all amounts outstanding
under the credit facilities are paid in full. 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 Reckson Strategic Venture Partners.
Investments in real estate are subject to the risks incident to the
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ownership and operation of real estate. Our real estate holdings may be
adversely affected by a number of factors, including:
- real estate holdings are generally illiquid
- 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
- the need to periodically renovate, repair and relet our space
- increasing operating costs, including real estate taxes and utilities,
which may not be passed through to tenants
- defaults by our tenants or their failure to pay rent on a timely basis
- 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.
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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:
- classify our Board of Directors into three classes, each of which serves
for staggered three-year terms;
- 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;
- provide that only the Chairman of the Board, President or a majority of
our Board of Directors may call special meetings of the stockholders;
- provide that the stockholders may take action only at a meeting of our
stockholders, not by written consent;
- 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;
- 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;
- 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;
- 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
- 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
our 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. 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.
RISK OF IMPACT OF YEAR 2000 ISSUE ON OUR OPERATIONS AND FINANCIAL RESULTS
Some of our older computer programs were written using two digits rather
than four to define the applicable year. As a result, those computer programs
have time-sensitive software that recognizes a date using "00" as the year 1900
rather than the year 2000. This could cause a system failure or miscalculation
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, or engage in similar normal business
activities.
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We have completed an assessment to modify or replace portions of our
software so that our computer systems will function properly with respect to
dates in the year 2000 and thereafter. Since our accounting software is
maintained and supported by a third party, the total year 2000 project cost is
estimated to be minimal.
Our year 2000 project is complete to date. Additionally, we have received
assurances from our significant service providers that all of our systems are
currently year 2000 compliant or will be made compliant prior to any impact on
those systems. However, we cannot guarantee that all service providers will
comply with their assurances and therefore we may not be able to determine year
2000 compliance of those contractors. At that time, we will determine the extent
to which we will be able to replace non-compliant service providers. We believe
that with modifications to existing software and conversion to new software, the
year 2000 issue will not pose significant operational problems for our computer
systems. However, if modifications and conversions are not made, or are not
completed timely, the year 2000 issue could have a material impact on our
operations.
To date, we have expended approximately $66,000 in connection with year 2000
issues. However, there can be no guarantee that these estimates will be achieved
and actual results could differ materially from those anticipated. Specific
factors that might cause material differences include, but are not limited to
the availability and costs of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
In a "worst case scenario" of the failure of the third party to timely
deliver the necessary upgrades to the accounting software, we would manually
process transactions, such as the issuance of disbursements, until an
alternative system is implemented.
If we are not successful in implementing our year 2000 compliance plan, we
may suffer a material adverse impact on our results of operations and financial
condition. Because of the importance of addressing the year 2000 issue, we
expect to develop contingency plans if we determine that the compliance plans
will not be implemented.
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. 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 under
the Securities Act with respect to the securities. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information regarding us and the securities,
reference is made to the registration statement, including the exhibits filed as
a part thereof, and the documents incorporated by reference in this prospectus.
Statements made in this prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete; with respect to each
contract, agreement or other document filed as an exhibit to the registration
statement or to an Exchange Act report, reference is made to the exhibit for a
more complete description of the matter involved, and each statement shall be
deemed qualified in its entirety by reference. Copies of the
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registration statement and the exhibits may be inspected, without charge, at the
offices of the Commission, or obtained at prescribed rates from the Public
Reference Section of the Commission at the address set forth above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents that we have previously filed with the Commission
are hereby incorporated by reference into this prospectus:
<TABLE>
<CAPTION>
SEC FILINGS (FILE NO. 1-14183) PERIOD
- ------------------------------ ------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended September 30, 1999, June 30, 1999 and March
31, 1999
Current Reports on Form 8-K Filed January 19, 1999, January 25, 1999, March 24, 1999,
(including Form 8-K/A) April 16, 1999, July 16, 1999, August 13, 1999, September
1, 1999, September 20, 1999, October 12, 1999, October 14,
1999, and October 28, 1999
Registration Statement on Form 8-A Filed June 1, 1998
</TABLE>
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:
- Reports filed under Section 13(a) and (c) of the Exchange Act;
- Definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting; and
- 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 Reckson Service Industries, Inc., 10 East 50(th)
Street, New York, New York 10022, Attn: Jason M. Barnett, Executive Vice
President and General Counsel, telephone number (212) 931-8000.
THE COMPANY
We were formed on July 15, 1997. We are a publicly-traded operating company
that identifies, acquires interest in, and develops a network of
business-to-business ("B2B") e-commerce and e-services companies that service
small and medium sized enterprises, independent professionals and the mobile
workforce of larger companies. We were formed in 1997 as a subsidiary of Reckson
Associates. We were spun-off from Reckson Associates in June 1998.
We are a Delaware corporation. Our principal executive office is located at
10 East 50(th) Street, New York, New York 10022, and our telephone number is
(212) 931-8000.
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USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the net
proceeds from the sale of the securities offered by the applicable prospectus
supplement will be used for general corporate purposes, including the repayment
of existing indebtedness, in each case, as described in detail in the prospectus
supplement depending on the circumstances at the time of the related offering.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods shown:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, 1999 YEAR ENDED DECEMBER 31,
------------------ ------------------------
1998 1997
----------- ---------
<S> <C> <C> <C>
Ratio of Earnings to Fixed Charges.............. ($23,530,786)(1) ($8,079,858)(1) ($257,887)(1)
</TABLE>
- ------------------------
(1) Represents the excess of fixed charges over earnings.
The ratios of earnings to fixed charges were computed by dividing earnings
by fixed charges. For this purpose, earnings consist of income from continuing
operations before fixed charges. Fixed charges consist of interest expense
(including costs capitalized), rent expense and the amortization of organization
costs.
DESCRIPTION OF DEBT SECURITIES
The debt securities covered by this prospectus (the "Debt Securities") will
be issued under an Indenture (the "Indenture") among the Company and the trustee
named therein (the "Trustee"). The form of Indenture has been filed as an
exhibit to the Registration Statement of which this prospectus is a part and is
available for inspection at the corporate trust office of the trustee. The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended (the "TIA"). The statements made hereunder relating to the Indenture and
the Debt Securities to be issued thereunder are summaries of the material
provisions thereof and do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Indenture and
the Debt Securities. All section references appearing herein are to sections of
the Indenture, and capitalized terms used but not defined herein shall have the
respective meanings set forth in the Indenture.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
will rank equally with all other unsecured and unsubordinated indebtedness of
the Company. The Debt Securities may be issued without limit as to aggregate
principal amount, in one or more series, in each case as established from time
to time in or pursuant to authority granted by a resolution of the Board of
Directors of the Company, or as established in one or more indentures
supplemental to the Indenture. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the holders of the Debt Securities of the
series, for issuances of additional Debt Securities of the same series.
The Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
the Indenture may resign or be removed with respect to one or more series of
Debt Securities, and a successor Trustee may be appointed to act with respect to
the series. In the event that two or more persons are acting as Trustee with
respect to different series of Debt Securities, each Trustee shall be a trustee
of a trust under the Indenture separate and apart from the trust administered by
any other Trustee, and, except as otherwise indicated
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herein, any action described herein to be taken by a Trustee may be taken by
each Trustee with respect to, and only with respect to, the one or more series
of Debt Securities for which it is Trustee under the Indenture.
Reference is made to the prospectus supplement relating to the series of
Debt Securities being offered for the specific terms thereof, including:
(1) the title of the Debt Securities;
(2) the aggregate principal amount of the Debt Securities and any limit on
the aggregate principal amount;
(3) the percentage of the principal amount at which the Debt Securities will
be issued and, if other than the principal amount thereof, the portion of
the principal amount thereof payable upon declaration of acceleration of
the maturity thereof;
(4) the date or dates, or the method for determining the date or dates, on
which the principal of such Debt Securities will be payable;
(5) the rate or rates (which may be fixed or variable), or the method by
which the rate or rates shall be determined, at which the Debt Securities
will bear interest, if any;
(6) the date or dates, or the method for determining the date or dates, from
which any interest will accrue, the dates on which any interest will be
payable, the record dates for such interest payment dates, or the method
by which any date shall be determined, the person to whom the interest
shall be payable, and the basis upon which interest shall be calculated
if other than that of a 360-day year of twelve 30-day months;
(7) the place or places where the principal of (and premium, if any) and
interest, if any, on the Debt Securities will be payable, the Debt
Securities may be surrendered for registration of transfer or exchange
and notices or demands to or upon the Company in respect of the Debt
Securities and the Indenture may be served;
(8) the date or dates on which or the period or periods within which, the
price or prices at which and the terms and conditions upon which the Debt
Securities may be redeemed, as a whole or in part, at the option of the
Company, if it is to have an option;
(9) the obligation, if any, of the Company to redeem, repay or purchase the
Debt Securities pursuant to any sinking fund or analogous provision or at
the option of a holder thereof, and the date or dates on which or the
period or periods within which, the price or prices at which and the
terms and conditions upon which the Debt Securities will be redeemed,
repaid or purchased, as a whole or in part, pursuant to its obligation;
(10) if other than U.S. dollars, the currency or currencies in which the
Debt Securities are denominated and payable, which may be a foreign
currency or units of two or more foreign currencies or a composite
currency or currencies, and the terms and conditions relating thereto;
(11) whether the amount of payments of principal of (and premium, if any) or
interest, if any, on the Debt Securities may be determined with reference
to an index, formula or other method (which index, formula or method may,
but need not be, based on a currency, currencies, currency unit or units
or composite currency or currencies) and the manner in which the amounts
shall be determined;
(12) any additional events of default or covenants of the Debt Securities;
(13) whether the Debt Securities will be issued in certificated and/or
book-entry form;
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(14) whether the Debt Securities will be in registered or bearer form and,
if in registered form, the denominations thereof if other than $1,000 and
any integral multiple thereof and, if in bearer form, the denominations
thereof if other than $5,000 and terms and conditions relating thereto;
(15) if the defeasance and covenant defeasance provisions described herein
are to be inapplicable or any modification of these provisions;
(16) if the Debt Securities are to be issued upon the exercise of debt
warrants, the time, manner and place for the Debt Securities to be
authenticated and delivered;
(17) whether and under what circumstances the Company will pay additional
amounts on the Debt Securities in respect of any tax, assessment or
governmental charge and, if so, whether the Company will have the option
to redeem such Debt Securities in lieu of making a payment;
(18) if other than the Trustee, the identity of each security registrar
and/or paying agent; and
(19) any other material terms of the Debt Securities.
The Debt Securities may provide for less than the entire principal amount
thereof to be payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities"). If material or applicable, special U.S.
federal income tax, accounting and other considerations applicable to Original
Issue Discount Securities will be described in the applicable prospectus
supplement.
Except with respect to a covenant limiting the incurrence of indebtedness, a
covenant requiring a certain percentage of unencumbered assets and a covenant
requiring any successor in a business combination with the Company to assume all
of the obligations of the Company under the Indenture, the Indenture does not
contain any other provisions that would limit the ability of the Company to
incur indebtedness or that would afford Holders of the Debt Securities
protection in the case of any of the following events:
- a highly leveraged or similar transaction involving the Company, the
management of the Company, or any affiliate of any these parties;
- a change of control; or
- a reorganization, restructuring, merger or similar transaction involving
the Company that may adversely affect the Holders of the Debt Securities.
In addition, subject to the covenants referred to above, the Company may, in
the future, enter into certain transactions, such as the sale of all or
substantially all of its assets or the merger or consolidation of the Company,
that would increase the amount of the Company's indebtedness or substantially
reduce or eliminate the Company's assets, which may have an adverse effect on
the Company's ability to service its indebtedness, including the Debt
Securities. In addition, restrictions on ownership and transfers of the
Company's common stock and preferred stock may act to prevent or hinder a change
of control. See "Description of Common Stock--Restrictions on Ownership" and
"Description of Preferred Stock--Restrictions on Ownership."
DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable prospectus supplement, the Debt
Securities of any series which are registered securities, other than registered
securities issued in global form (which may be of any denomination), shall be
issuable in denominations of $1,000 and any integral multiple thereof and the
Debt Securities which are bearer securities, other than bearer securities issued
in global form (which may be of any denomination), shall be issuable in
denominations of $5,000.
Unless otherwise specified in the applicable prospectus supplement, the
principal of (and premium, if any) and interest on any series of Debt Securities
will be payable at the corporate trust office of the
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Trustee provided that, at the option of the Company, payment of interest may be
made by check mailed to the address of the Person entitled thereto as it appears
in the applicable Security Register or by wire transfer of funds to the Person
at an account maintained within the United States.
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable Regular Record
Date and may either be paid to the Person in whose name the Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of the Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of the Debt Security not
less than 10 days prior to the Special Record Date, or may be paid at any time
in any other lawful manner, all as more completely described in the Indenture.
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of the
Debt Securities at the corporate trust office of the Trustee referred to above.
In addition, subject to certain limitations imposed upon Debt Securities issued
in book-entry form, the Debt Securities of any series may be surrendered for
registration of transfer thereof at the corporate trust office of the Trustee
referred to above. Every Debt Security surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer. No service charge will be made for any registration of transfer or
exchange of any Debt Securities, but the Trustee or the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. If the applicable prospectus supplement refers
to any transfer agent (in addition to the Trustee) initially designated by the
Company with respect to any series of Debt Securities, the Company may at any
time rescind the designation of any transfer agent or approve a change in the
location through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each place of payment for the series.
The Company may at any time designate additional transfer agents with respect to
any series of Debt Securities.
Neither the Company nor the Trustee shall be required to:
- issue, register the transfer of or exchange any Debt Security if the Debt
Security may be among those selected for redemption during a period
beginning at the opening of business 15 days before selection of the Debt
Securities to be redeemed and ending at the close of business on the day
of selection;
- register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except, in the case of any Registered
Security to be redeemed in part, the portion thereof not to be redeemed;
- exchange any Bearer Security so selected for redemption except that the
Bearer Security may be exchanged for a Registered Security of that series
and like tenor, PROVIDED that the Registered Security shall be
simultaneously surrendered for redemption; or
- issue, register the transfer of or exchange any Security which has been
surrendered for repayment at the option of the Holder, except the portion,
if any, of the Debt Security not to be so repaid.
MERGER, CONSOLIDATION OR SALE
The Company may consolidate with, or sell, lease or convey all or
substantially all of its assets to, or merge with or into, any other entity,
provided that the following conditions are met:
- the Company shall be the continuing entity, or the successor entity (if
other than the Company) formed by or resulting from any consolidation or
merger or which shall have received the transfer of assets shall expressly
assume payment of the principal of (and premium, if any) and
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interest on all the Debt Securities and the due and punctual performance
and observance of all of the covenants and conditions contained in the
Indenture;
- immediately after giving effect to the transaction, no Event of Default
under the Indenture, and no event which, after notice or the lapse of
time, or both, would become an Event of Default, shall have occurred and
be continuing; and
- an officer's certificate and legal opinion covering these conditions shall
be delivered to the Trustee.
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder:
(a) default for 30 days in the payment of any installment of interest on any
Debt Security of the series;
(b) default in the payment of the principal of (or premium, if any, on) any
Debt Security of the series at its maturity;
(c) default in making any sinking fund payment as required for any Debt
Security of the series;
(d) default in the performance of any other covenant of the Company
contained in the Indenture (other than a covenant added to the Indenture
solely for the benefit of a series of Debt Securities issued thereunder
other than the series), the default having continued for 60 days after
written notice as provided in the Indenture;
(e) the Company, any subsidiary in which the Company has invested, or is
committed or otherwise obligated to invest, at least $20,000,000 in
capital or any entity in which the Company is the general partner shall
fail to pay any principal of, premium or interest on or any other amount
payable in respect of, any recourse Indebtedness that is outstanding in a
principal or notional amount of at least $20,000,000 (or the equivalent
thereof in one or more other currencies), either individually or in the
aggregate (but excluding Indebtedness outstanding hereunder), of the
Company and its consolidated Subsidiaries, taken as a whole, when the
same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and the failure shall
continue after the applicable grace period, if any, specified in any
agreement or instrument relating to the Indebtedness, or any other event
shall occur or condition shall exist under any agreement or instrument
evidencing, securing or otherwise relating to any the Indebtedness and
shall continue after the applicable grace period, if any, specified in
the agreement or instrument, if the effect of the event or condition is
to accelerate, or to permit the acceleration of, the maturity of the
Indebtedness or otherwise to cause, or to permit the holder or holders
thereof (or a trustee or agent on behalf of the holders) to cause the
Indebtedness to mature prior to its stated maturity;
(f) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of the Company or any
Significant Subsidiary or any of their respective property;
(g) any other Event of Default provided with respect to a particular series
of Debt Securities.
If an Event of Default under the Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debt Securities of that series may declare the principal amount (or,
if the Debt Securities of that series are Original Issue Discount Securities or
Indexed Securities, the portion of the principal amount as may be specified in
the terms thereof) of all of the Debt Securities of that series to be due and
payable immediately by written notice thereof to the
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Company (and to the Trustee if given by the Holders). However, at any time after
the declaration of acceleration with respect to Debt Securities of the series
(or of all Debt Securities then Outstanding under the Indenture, as the case may
be) has been made, but before a judgment or decree for payment of the money due
has been obtained by the Trustee, the Holders of not less than a majority in
principal amount of Outstanding Debt Securities of the series (or of all Debt
Securities then Outstanding under the Indenture, as the case may be) may rescind
and annul the declaration and its consequences if:
1. the Company shall have deposited with the Trustee all required payments
of the principal of (and premium, if any) and interest on the Debt
Securities of the series (or of all Debt Securities then outstanding
under the Indenture, as the case may be), plus certain fees, expenses,
disbursements and advances of the Trustee; and
2. all Events of Default, other than the non-payment of accelerated
principal of (or specified portion thereof), or premium (if any) or
interest on the Debt Securities of the series (or of all Debt Securities
then Outstanding under the Indenture, as the case may be) have been cured
or waived as provided in the Indenture.
The Indenture also provides that the Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series (or of all
Debt Securities then Outstanding under the Indenture, as the case may be) may
waive any past default with respect to the series and its consequences, except a
default
- in the payment of the principal of (or premium, if any) or interest on any
Debt Security of the series or
- in respect of a covenant or provision contained in the Indenture that
cannot be modified or amended without the consent of the Holder of each
Outstanding Debt Security affected thereby.
The Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the Indenture unless the default
has been cured or waived; PROVIDED, HOWEVER, that the Trustee may withhold
notice to the Holders of any series of Debt Securities of any default with
respect to the series (except a default in the payment of the principal of (or
premium, if any) or interest on any Debt Security of the series or in the
payment of any sinking fund installment in respect of any Debt Security of the
series) if specified Responsible Officers of the Trustee consider the
withholding to be in the interest of the Holders.
The Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the Indenture
or for any remedy thereunder, except in the case of failure of the Trustee, for
60 days, to act after it has received a written request to institute proceedings
in respect of an Event of Default from the Holders of not less than 25% in
principal amount of the Outstanding Debt Securities of the series, as well as an
offer of reasonable indemnity. This provision will not prevent, however, any
holder of Debt Securities from instituting suit for the enforcement of payment
of the principal of (and premium, if any) and interest on the Debt Securities at
the respective due dates thereof.
Subject to provisions in the Indenture relating to its duties in case of
default, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any Holders of any
series of Debt Securities then Outstanding under the Indenture, unless the
Holders shall have offered to the Trustee thereunder reasonable security or
indemnity. The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series (or of all Debt Securities then
Outstanding under the Indenture, as the case may be) shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or of exercising any trust or power conferred upon the
Trustee. However, the Trustee may refuse to follow any direction which is in
conflict with any law or the Indenture, or which may be unduly prejudicial to
the Holders of Debt Securities of the series not joining therein.
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Within 120 days after the close of each fiscal year, the Company must
deliver a certificate of an officer certifying to the Trustee whether or not the
officer has knowledge of any default under the Indenture and, if so, specifying
each default and the nature and status thereof.
MODIFICATION OF THE INDENTURE
Modifications and amendments of the Indenture will be permitted to be made
only with the consent of the Holders of not less than a majority in principal
amount of all Outstanding Debt Securities or series of Outstanding Debt
Securities which are affected by the modification or amendment; PROVIDED,
HOWEVER, that no modification or amendment may, without the consent of the
Holder of each Debt Security affected thereby:
- change the Stated Maturity of the principal of, or premium (if any) or any
installment of interest on, any Debt Security, reduce the principal amount
of, or the rate or amount of interest on, or any premium payable on
redemption of, any Debt Security, or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon
declaration of acceleration of the maturity thereof or would be provable
in bankruptcy, or adversely affect any right of repayment of the holder of
any Debt Security, change the place of payment, or the coin or currency,
for payment of principal of, premium, if any, or interest on any Debt
Security or impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security;
- reduce the above-stated percentage of outstanding Debt Securities of any
series necessary to modify or amend the Indenture, to waive compliance
with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
Indenture;
- modify any of the foregoing provisions or any of the provisions relating
to the waiver of certain past defaults or certain covenants, except to
increase the required percentage to effect the action or to provide that
certain other provisions may not be modified or waived without the consent
of the Holder of the Debt Security.
In addition to the Company's obligation to pay the principal of, and premium
(if any) and interest on, the Debt Securities, the Debt Securities of a series
may be entitled to the benefits of additional covenants. Neither the Company nor
the Trustee may waive compliance with such additional covenants unless the
Holders of not less than a majority in principal amount of a series of
Outstanding Debt Securities consent to the waiver.
Modifications and amendments of the Indenture will be permitted to be made
by the Company and the Trustee without the consent of any Holder of Debt
Securities for any of the following purposes:
1. to evidence the succession of another Person to the Company as obligor
under the Indenture;
2. to add to the covenants of the Company for the benefit of the Holders of
all or any series of Debt Securities or to surrender any right or power
conferred upon the Company in the Indenture;
3. to add Events of Default for the benefit of the Holders of all or any
series of Debt Securities;
4. to add or change any provisions of the Indenture to facilitate the
issuance of, or to liberalize certain terms of, Debt Securities in bearer
form, or to permit or facilitate the issuance of Debt Securities in
uncertificated form, PROVIDED that this action shall not adversely affect
the interests of the Holders of the Debt Securities of any series in any
material respect;
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5. to amend or supplement any provisions of the Indenture, PROVIDED that no
amendment or supplement shall materially adversely affect the interests
of the Holders of any Debt Securities then Outstanding;
6. to secure the Debt Securities;
7. to establish the form or terms of Debt Securities of any series;
8. to provide for the acceptance of appointment by a successor Trustee or
facilitate the administration of the trusts under the Indenture by more
than one Trustee;
9. to cure any ambiguity, defect or inconsistency in the Indenture,
PROVIDED that this action shall not adversely affect the interests of
Holders of Debt Securities of any series in any material respect; or
10. to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series
of the Debt Securities, PROVIDED that the action shall not adversely
affect the interests of the Holders of the Debt Securities of any series
in any material respect.
In determining whether the Holders of the requisite principal amount of
Outstanding Debt Securities of a series have given any request, demand,
authorization, direction, notice, consent or waiver thereunder or whether a
quorum is present at a meeting of Holders of Debt Securities, the Indenture
provides that:
1. the principal amount of an Original Issue Discount Security that shall
be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of the determination upon
declaration of acceleration of the maturity thereof;
2. the principal amount of a Debt Security denominated in a foreign
currency that shall be deemed Outstanding shall be the U.S. dollar
equivalent, determined on the issue date for the Debt Security, of the
principal amount (or, in the case of an Original Issue Discount Security,
the U.S. dollar equivalent on the issue date of the Debt Security of the
amount determined as provided in (1) above);
3. the principal amount of an Indexed Security that shall be deemed
Outstanding shall be the principal face amount of the Indexed Security at
original issuance, unless otherwise provided with respect to the Indexed
Security pursuant to the Indenture; and
4. Debt Securities owned by the Company or any other obligor upon the Debt
Securities or any affiliate of the Company or of the other obligor shall
be disregarded.
The Indenture contains provisions for convening meetings of the Holders of
Debt Securities of a series. A meeting will be permitted to be called at any
time by the Trustee, and also, upon request, by the Company or the Holders of at
least 10% in principal amount of the Outstanding Debt Securities of the series,
in any case upon notice given as provided in the Indenture. Except for any
consent that must be given by the Holder of each Debt Security affected by
certain modifications and amendments of the Indenture, any resolution presented
at a meeting or adjourned meeting duly reconvened at which a quorum is present
will be permitted to be adopted by the affirmative vote of the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series;
PROVIDED, HOWEVER, that, except as referred to above, any resolution with
respect to any request, demand, authorization, direction, notice, consent,
waiver or other action that may be made, given or taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Debt Securities of a series may be adopted at a meeting or adjourned
meeting duly reconvened at which a quorum is present by the affirmative vote of
the Holders of the specified percentage in principal amount of the Outstanding
Debt Securities of that series. Any resolution passed or decision taken at any
meeting of Holders of Debt Securities of any series duly held in accordance with
the Indenture will
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be binding on all Holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
Persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; PROVIDED, HOWEVER,that if any action is
to be taken at the meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal amount
of the Outstanding Debt Securities of a series, the Persons holding or
representing the specified percentage in principal amount of the Outstanding
Debt Securities of the series will constitute a quorum.
Notwithstanding the foregoing provisions, any action to be taken at a
meeting of Holders of Debt Securities of any series with respect to any action
that the Indenture expressly provides may be taken by the Holders of a specified
percentage which is less than a majority in principal amount of the Outstanding
Debt Securities of a series may be taken at a meeting at which a quorum is
present by the affirmative vote of Holders of the specified percentage in
principal amount of the Outstanding Debt Securities of the series.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to Holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
irrevocably depositing with the Trustee, in trust, funds in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Debt Securities are payable in an amount sufficient to pay the entire
indebtedness on the Debt Securities in respect of principal (and premium, if
any) and interest to the date of the deposit (if the Debt Securities have become
due and payable) or to the Stated Maturity or Redemption Date, as the case may
be.
The Indenture provides that, unless these provisions are made inapplicable
to the Debt Securities of or within any series pursuant to the Indenture, the
Company may elect either (a) to defease and discharge itself from any and all
obligations with respect to the Debt Securities (except for the obligation to
pay additional amounts, if any, upon the occurrence of certain events of tax,
assessment or governmental charge with respect to payments on the Debt
Securities and the obligations to register the transfer or exchange of Debt
Securities, to replace temporary or mutilated, destroyed, lost or stolen Debt
Securities, to maintain an office or agency in respect of the Debt Securities
and to hold moneys for payment in trust) ("defeasance") or (b) to release itself
from their obligations with respect to the Debt Securities under certain
sections of the Indenture and, if provided pursuant to the Indenture, their
obligations with respect to any other covenant, and any omission to comply with
the obligations shall not constitute a default or an Event of Default with
respect to the Debt Securities ("covenant defeasance"), in either case upon the
irrevocable deposit by the Company with the Trustee, in trust, of an amount, in
the currency or currencies, currency unit or units or composite currency or
currencies in which the Debt Securities are payable at Stated Maturity, or
Government Obligations (as defined below), or both, applicable to the Debt
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide money in an amount sufficient to pay
the principal of (and premium, if any) and interest on the Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
A trust will only be permitted to be established if, among other things, the
Company has delivered to the Trustee an Opinion of Counsel (as specified in the
Indenture) to the effect that the Holders of the Debt Securities will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of the defeasance or covenant defeasance and will be subject to U.S. federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if the defeasance or covenant defeasance had not
occurred, and the Opinion of Counsel, in the case of defeasance, must refer to
and be based upon a ruling of the Internal Revenue Service or a change in
applicable United States federal income tax law.
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"Government Obligations" means securities which are (1) direct obligations
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of a particular series are payable, for
the payment of which its full faith and credit is pledged or (2) obligations of
a person controlled or supervised by and acting as an agency or instrumentality
of the United States of America or the government which issued the foreign
currency in which the Debt Securities of the series are payable, the payment of
which is unconditionally guaranteed as a full faith and credit obligation by the
United States of America or other government, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as custodian with
respect to any Government Obligation or a specific payment of interest on or
principal of any Government Obligation held by the custodian for the account of
the holder of a depository receipt, PROVIDED that (except as required by law)
the custodian is not authorized to make any deduction from the amount payable to
the holder of the depository receipt from any amount received by the custodian
in respect of the Government Obligation or the specific payment of interest on
or principal of the Government Obligation evidenced by the depository receipt.
Unless otherwise provided in the applicable prospectus supplement, if after
the Company has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any series:
(a) the Holder of a Debt Security of the series is entitled to, and does,
elect pursuant to the Indenture or the terms of the Debt Security to receive
payment in a currency, currency unit or composite currency other than that in
which the deposit has been made in respect of the Debt Security, or
(b) a Conversion Event (as defined below) occurs in respect of the currency,
currency unit or composite currency in which the deposit has been made, the
indebtedness represented by the Debt Security shall be deemed to have been, and
will be, fully discharged and satisfied through the payment of the principal of
(and premium, if any) and interest on the Debt Security as they become due out
of the proceeds yielded by converting the amount so deposited in respect of the
Debt Security into the currency, currency unit or composite currency in which
the Debt Security becomes payable as a result of the election or the Conversion
Event based on the applicable market exchange rate.
"Conversion Event" means the cessation of use of:
- a currency, currency unit or composite currency both by the government of
the country which issued the currency and for the settlement of
transactions by a central bank or other public institutions of or within
the international banking community or
- the euro both within the European Monetary System and for the settlement
of transactions by public institutions of or within the European
Community.
Unless otherwise provided in the applicable prospectus supplement, all
payments of principal of (and premium, if any) and interest on any Debt Security
that is payable in a foreign currency that ceases to be used by its government
of issuance shall be made in U.S. dollars.
In the event the Company effects covenant defeasance with respect to any
Debt Securities and the Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than the Event of Default described
in clause (d) under "Event of Default, Notice and Waiver" with respect to
sections no longer applicable to the Debt Securities or described in clause (g)
under "Events of Default, Notice and Waiver" with respect to any other covenant
as to which there has been covenant defeasance, the amount in the currency,
currency unit or composite currency in which the Debt Securities are payable,
and Government Obligations on deposit with the Trustee, will be sufficient to
pay amounts due on the Debt Securities at the time of their Stated Maturity but
may not be sufficient to pay amounts due on the Debt Securities at the time of
the acceleration resulting from the Event of
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Default. However, the Company would remain liable to make payment of the amounts
due at the time of acceleration.
GOVERNING LAW
The Indenture and the Notes shall be governed by the laws of the State of
New York.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any Debt Securities are
convertible into debt securities or equity securities of the Company will be set
forth in the applicable prospectus supplement. The terms will include the number
or principal amount of securities into which the debt securities are
convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the debt securities, or the Company, the events requiring an
adjustment of the conversion price (or the manner of calculation thereof) and
any provisions affecting conversion in the event of the redemption of the debt
securities.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (the "Global Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the applicable prospectus supplement relating to the series. Global Securities
may be issued in either registered or bearer form and in either temporary or
permanent form. The specific terms of the depositary arrangement with respect to
a series of Debt Securities will be described in the applicable prospectus
supplement relating to the series.
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. On November 30, 1999, there
were 28,201,372 shares of common stock outstanding.
All shares of common stock offered hereby have been duly authorized and will
be 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
capital stock as long as there are amounts outstanding under the agreements.
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.
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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 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. Currently,
there is a substantial identity of ownership between stockholders of Reckson
Associates and stockholders of the Company. It cannot be predicted how long or
to what degree such identity of ownership 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
As long as there are outstanding advances under the Reckson Service
Industries 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 debt. See the
section captioned "Risk Factors--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.
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DESCRIPTION OF PREFERRED STOCK
GENERAL
Our Charter provides that we may issue up to 25 million shares of preferred
stock, $.01 par value per share. As of November 30, 1999, there were no shares
of preferred stock outstanding.
The issuance of preferred stock could adversely affect the voting power,
dividend rights and other rights of holders of common stock. Although the Board
of Directors has no intention at the present time, it could establish a series
of preferred stock that could, depending on the terms of the series, delay,
defer or prevent a transaction or a change in control of the Company that might
involve a premium price for the common stock or otherwise be in the best
interest of the holders thereof. Management believes that the availability of
preferred stock will provide us with increased flexibility in structuring
possible future financing and acquisitions and in meeting other needs that might
arise.
TERMS
Subject to the limitations prescribed by the Charter, the Board of Directors
is authorized to fix the number of shares constituting each series of preferred
stock and the designations and powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or restrictions
thereof, including the provisions as may be desired concerning voting,
redemption, dividends, dissolution or the distribution of assets, conversion,
and other subjects or matters as may be fixed by resolution of the Board of
Directors. The preferred stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
Reference is made to the prospectus supplement relating to the series of
preferred stock offered thereby for the specific terms thereof, including:
- The title and stated value of the preferred stock;
- The number of shares of the preferred stock, the liquidation preference
per share of the preferred stock and the offering price of the preferred
stock;
- The dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred stock;
- The date from which dividends on the preferred stock shall accumulate, if
applicable;
- The procedures for any auction and remarketing, if any, for the preferred
stock;
- The provision for a sinking fund, if any, for the preferred stock;
- The provisions for redemption, if applicable, of the preferred stock;
- Any listing of the preferred stock on any securities exchange;
- The terms and conditions, if applicable, upon which the preferred stock
may or will be convertible into our common stock or debt securities,
including the conversion price or manner of calculation thereof;
- The relative ranking and preferences of the preferred stock as to dividend
rights and rights upon liquidation, dissolution or winding up of the
affairs of the Company;
- Any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to preserve the status of
Reckson Associates as a REIT;
- A discussion of material federal income tax considerations applicable to
the preferred stock; and
- Any other specific terms, preferences, rights, limitations or restrictions
of the preferred stock.
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RANK
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the Company, rank:
i. senior to the common stock and to all classes or series of equity
securities issued by the Company, the terms of which provide that the
equity securities shall rank junior to the preferred stock;
ii. on a parity with all classes or series of equity securities issued by
the Company, other than those referred to in clauses (i) and (iii); and
iii. junior to all classes or series of equity securities issued by the
Company which the terms of the preferred stock provide will rank senior
to it. The term "equity securities" does not include convertible debt
securities.
DIVIDENDS
Unless otherwise specified in the applicable prospectus supplement, the
preferred stock will have the rights with respect to payment of dividends set
forth below.
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of the Company, out of assets
of the Company legally available for payment, cash dividends in the amounts and
on the dates as will be set forth in, or pursuant to, the applicable prospectus
supplement. Each dividend shall be payable to holders of record as they appear
on the stock transfer books of the Company on the record dates as shall be fixed
by the Board of Directors of the Company.
Dividends on any series of preferred stock may be cumulative or
non-cumulative, as provided in the applicable prospectus supplement. Dividends,
if cumulative, will be cumulative from and after the date set forth in the
applicable prospectus supplement. If the Board of Directors of the Company fails
to declare a dividend payable on a dividend payment date on any series of
preferred stock for which dividends are non-cumulative, then the holders of the
series of preferred stock will have no right to receive a dividend in respect of
the related dividend period and the Company will have no obligation to pay the
dividend accrued for the period, whether or not dividends on the series of
preferred stock are declared payable on any future dividend payment date.
If preferred stock of any series is outstanding, no full dividends will be
declared or paid or set apart for payment on any of the capital stock of the
Company of any other series ranking, as to dividends, on a parity with or junior
to the preferred stock of the series for any period unless:
- if the series of preferred stock has a cumulative dividend, full
cumulative dividends have been or contemporaneously are declared and paid
or declared and a sum sufficient for the payment thereof set apart for the
payment for all past dividend periods and the then current dividend period
or
- if the series of preferred stock does not have a cumulative dividend, full
dividends for the then current dividend period have been or
contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for the payment on the preferred stock
of the series.
When dividends are not paid in full (or a sum sufficient for the full
payment is not so set apart) upon preferred stock of any series and the shares
of any other series of preferred stock ranking on a parity as to dividends with
the preferred stock of the series, all dividends declared upon preferred stock
of the series and any other series of preferred stock ranking on a parity as to
dividends with the preferred stock shall be declared pro rata so that the amount
of dividends declared per share of
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preferred stock of the series and the other series of preferred stock shall in
all cases bear to each other the same ratio that accrued dividends per share on
the preferred stock of the series and the other series of preferred stock (which
shall not include any accumulation in respect of unpaid dividends for prior
dividend periods if the preferred stock does not have a cumulative dividend)
bear to each other. No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on preferred stock of the
series which may be in arrears.
Except as provided in the immediately preceding paragraph, unless (1) if the
series of preferred stock has a cumulative dividend, full cumulative dividends
on the preferred stock of the series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, and
(2) if the series of preferred stock does not have a cumulative dividend, full
dividends on the preferred stock of the series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, no dividends (other
than in shares of common stock or other capital stock ranking junior to the
preferred stock of the series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment or other distribution shall be
declared or made upon the common stock, or any other of the capital stock of the
Company ranking junior to or on a parity with the preferred stock of the series
as to dividends or upon liquidation, nor shall any shares of common stock, or
any other capital stock of the Company ranking junior to or on a parity with the
preferred stock of the series as to dividends or upon liquidation, be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid to
or made available for a sinking fund for the redemption of any shares) by the
Company except:
(1) by conversion into or exchange for other capital stock of the Company
ranking junior to the preferred stock of the series as to dividends and upon
liquidation; or
(2) redemptions for the purpose of preserving the status of Reckson
Associates as a REIT.
Under the terms of our credit agreements with Reckson Operating Partnership,
we are prohibited from paying any dividends on shares of our capital stock as
long as there are amounts outstanding under the agreements.
REDEMPTION
If so provided in the applicable prospectus supplement, the preferred stock
will be subject to mandatory redemption or redemption at the option of the
Company, as a whole or in part, in each case upon the terms, at the times and at
the redemption prices set forth in the prospectus supplement.
The prospectus supplement relating to a series of preferred stock that is
subject to mandatory redemption will specify the number of shares of the
preferred stock that the Company will redeem in each year commencing after a
date to be specified, at a redemption price per share to be specified, together
with an amount equal to all accumulated and unpaid dividends thereon (which
shall not, if the preferred stock does not have a cumulative dividend, include
any accumulation in respect of unpaid dividends for prior dividend periods) to
the date of redemption. The redemption price may be payable in cash or other
property, as specified in the applicable prospectus supplement. If the
redemption price for preferred stock of any series is payable only from the net
proceeds of the issuance of capital stock of the Company, the terms of the
preferred stock may provide that, if no capital stock shall have been issued or
to the extent the net proceeds from any issuance are insufficient to pay in full
the aggregate redemption price then due, the preferred stock shall automatically
and mandatorily be converted into the applicable capital stock of the Company
pursuant to conversion provisions specified in the applicable prospectus
supplement.
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Notwithstanding the foregoing, unless (1) if the series of preferred stock
has a cumulative dividend, full cumulative dividends on all shares of any series
of preferred stock shall have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
all past dividend periods and the then current dividend period, and (2) if the
series of preferred stock does not have a cumulative dividend, full dividends on
the preferred stock of any series have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set apart for
payment for the then current dividend period, no shares of any series of
preferred stock shall be redeemed unless all outstanding preferred stock of the
series is simultaneously redeemed; PROVIDED, HOWEVER, that the foregoing shall
not prevent the purchase or acquisition of preferred stock of the series to
preserve the status of Reckson Associates as a REIT or pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding preferred
stock of the series. In addition, unless (1) if the series of preferred stock
has a cumulative dividend, full cumulative dividends on all outstanding shares
of any series of preferred stock have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof set apart for
payment for all past dividend periods and the then current dividend period, and
(2) if the series of preferred stock does not have a cumulative dividend, full
dividends on the preferred stock of any series have been or contemporaneously
are declared and paid or declared and a sum sufficient for the payment thereof
set apart for payment for the then current dividend period, the Company shall
not purchase or otherwise acquire, directly or indirectly, any shares of
preferred stock of the series (except by conversion into or exchange for capital
stock of the Company ranking junior to the preferred stock of the series as to
dividends and upon liquidation); PROVIDED, HOWEVER, that the foregoing shall not
prevent the purchase or acquisition of preferred stock of the series to preserve
the status of Reckson Associates as a REIT or pursuant to a purchase or exchange
offer made on the same terms to holders of all outstanding preferred stock of
the series.
If fewer than all of the outstanding shares of preferred stock of any series
are to be redeemed, the number of shares to be redeemed will be determined by
the Company and the shares may be redeemed pro rata from the holders of record
of the shares in proportion to the number of the shares held or for which
redemption is requested by the holder (with adjustments to avoid redemption of
fractional shares) or by lot or in any other reasonable manner.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of record of preferred stock
of any series to be redeemed at the address shown on the stock transfer books.
Each notice shall state:
- the redemption date;
- the number of shares and series of the preferred stock to be redeemed;
- the redemption price;
- the place or places where certificates for the preferred stock are to be
surrendered for payment of the redemption price;
- that dividends on the shares to be redeemed will cease to accumulate on
the redemption date; and
- the date upon which the holder's conversion rights, if any, as to the
shares shall terminate.
If fewer than all the shares of preferred stock of any series are to be
redeemed, the notice mailed to each holder thereof shall also specify the number
of shares of preferred stock to be redeemed from each holder. If notice of
redemption of any preferred stock has been given and if the funds necessary for
redemption have been set aside by the Company in trust for the benefit of the
holders of any preferred stock so called for redemption, then from and after the
redemption date dividends will cease
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to accumulate on the preferred stock, and all rights of the holders of the
preferred stock will terminate, except the right to receive the redemption
price.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company (referred to herein as a "liquidation"), then, before
any distribution or payment shall be made to the holders of any common stock or
any other class or series of capital stock of the Company ranking junior to the
preferred stock of the series in the distribution of assets upon any
liquidation, dissolution or winding up of the Company, the holders of the
preferred stock shall be entitled to receive out of assets of the Company
legally available for distribution to shareholders liquidating distributions in
the amount of the liquidation preference per share (set forth in the applicable
prospectus supplement), plus an amount equal to all dividends accumulated and
unpaid thereon (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if the preferred stock does not have a
cumulative dividend). After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of preferred stock will
have no rights or claim to any remaining assets. In the event that, upon any
voluntary or involuntary liquidation, dissolution or winding up, the available
assets of the Company are insufficient to pay the amount of the liquidating
distributions on all outstanding preferred stock of the series and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Company ranking on a parity with the preferred stock in the
distribution of assets, then the holders of the preferred stock and all other
classes or series of capital stock shall share ratably in any distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be respectively entitled.
The consolidation or merger of the Company with or into any other entity, or
the merger of another entity with or into the Company, or a statutory share
exchange by the Company, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Holders of the preferred stock will not have any voting rights, except as
set forth below or as otherwise from time to time required by law or as
indicated in the applicable prospectus supplement.
Whenever dividends on any series of preferred stock shall be in arrears for
six or more quarterly periods, the holders of the preferred stock (voting
separately as a class with all other series of preferred stock upon which like
voting rights have been conferred and are exercisable) will be entitled to vote
for the election of two additional directors of the Company at a special meeting
called by the holders of record of at least ten percent (10%) of any series of
preferred stock so in arrears, unless the request is received less than 90 days
before the date fixed for the next annual or special meeting of the
stockholders, or at the next annual meeting of stockholders, and at each
subsequent annual meeting until (i) if the series of preferred stock has a
cumulative dividend, all dividends accumulated on the shares of preferred stock
for the past dividend periods and the then current dividend period shall have
been fully paid or declared and a sum sufficient for the payment thereof set
aside for payment or (ii) if the series of preferred stock does not have a
cumulative dividend, four quarterly dividends shall have been fully paid or
declared and a sum sufficient for the payment thereof set aside for payment. In
these cases, the entire Board of Directors of the Company will be increased by
two directors.
Unless provided otherwise for any series of preferred stock, so long as any
shares of the preferred stock remain outstanding, the Company will not, without
the affirmative vote or consent of the holders
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of at least two-thirds of the shares of the series of preferred stock
outstanding at the time, given in person or by proxy, either in writing or at a
meeting (the series voting separately as a class):
(1) authorize or create, or increase the authorized or issued amount of, any
class or series of capital stock ranking senior to the preferred stock with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up of the Company, or reclassify any authorized capital
stock of the Company into preferred stock, or create, authorize or issue any
obligation or security convertible into or evidencing the right to purchase any
stock; or
(2) amend, alter or repeal the provisions of the Charter or the Designating
Amendment for the series of preferred stock, whether by merger, consolidation or
otherwise (an "Event"), so as to materially and adversely affect any right,
preference, privilege or voting power of the series of preferred stock or the
holders thereof;
PROVIDED, HOWEVER, with respect to the occurrence of any of the Events set
forth in (2) above, so long as the series of preferred stock remains outstanding
with the terms thereof materially unchanged, taking into account that upon the
occurrence of an Event the Company may not be the surviving entity, the
occurrence of any Event shall not be deemed to materially and adversely affect
the rights, preferences, privileges or voting powers of holders of the series of
preferred stock; and PROVIDED, FURTHER, that (x) any increase in the amount of
the authorized preferred stock or the creation or issuance of any other series
of preferred stock, or (y) any increase in the amount of authorized shares of
the series of preferred stock or any other series of preferred stock, in each
case ranking on a parity with or junior to the preferred stock of the series
with respect to payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up of the Company, shall not be deemed to
materially and adversely affect the rights, preferences, privileges or voting
powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which the vote or consent would otherwise be
required shall be effected, all outstanding shares of the series of preferred
stock shall have been converted, redeemed or called for redemption and
sufficient funds shall have been deposited in trust to effect the redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of preferred stock
is convertible into shares of common stock or debt securities of the Company
will be set forth in the applicable prospectus supplement. The terms will
include the number of shares of common stock or aggregate principal amount of
debt securities, as the case may be, into which the shares of preferred stock
are convertible, the conversion price (or manner of calculation thereof), the
conversion period, provisions as to whether conversion will be at the option of
the holders of the preferred stock of the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of the preferred stock.
SHAREHOLDER LIABILITY
Delaware law provides that no shareholder, including holders of preferred
stock, shall be personally liable for the acts and obligations of the Company
and that the funds and property of the Company shall be the only recourse for
these acts or obligations.
RESTRICTIONS ON OWNERSHIP
As discussed below under "Restrictions on Ownership of Capital Stock," in
order to ensure Reckson Associates' status as a REIT under the Code, our charter
provides generally that no stockholder may own more than 9.9% of the aggregate
number or value of our outstanding shares of common stock, or more than 9.9% of
the aggregate value of the outstanding shares of all classes of our
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capital stock. In connection with the issuance of a series of preferred stock
the Designating Amendment for such series may contain additional provisions
restricting the ownership and transfer of the preferred stock. The applicable
prospectus supplement will specify any additional ownership limitation relating
to a series of preferred stock.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
Registrar and Transfer Agent for the preferred stock will be American Stock
Transfer & Trust Company.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Company may issue receipts ("Depositary Receipts") for Depositary
Shares, each of which will represent a fractional interest or a share of a
particular series of a class of preferred stock, as specified in the applicable
prospectus supplement. Preferred stock of each series of each class represented
by Depositary Shares will be deposited under a separate Deposit Agreement (each,
a "Deposit Agreement") among the Company, the depositary named therein (the
depositary or its successor, the "Preferred Stock Depositary") and the holders
from time to time of the Depositary Receipts. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Receipt will be entitled, in
proportion to the fractional interest of a share of the particular series of a
class of preferred stock represented by the Depositary Shares evidenced by the
Depositary Receipt, to all the rights and preferences of the preferred stock
represented by the Depositary Shares, including dividend, voting, conversion,
redemption and liquidation rights.
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the issuance
and delivery of the preferred stock by the Company to the Preferred Stock
Depositary, the Company will cause the Preferred Stock Depositary to issue, on
our behalf, the Depositary Receipts. Copies of the applicable form of Deposit
Agreement and Depositary Receipt may be obtained from the Company upon request.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Stock Depositary will distribute all cash dividends or other
cash distributions received in respect of the preferred stock to the record
holders of the Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of the Depositary Receipts owned by the holder, subject
to certain obligations of holders to file proofs, certificates and other
information and to pay certain charges and expenses to the Preferred Stock
Depositary.
In the event of a distribution other than in cash, the Preferred Stock
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Stock Depositary, unless the Preferred Stock
Depositary determines that it is not feasible to make the distribution, in which
case the Preferred Stock Depositary may, with the approval of the Company, sell
the property and distribute the net proceeds from the sale to holders.
Under the terms of our credit agreements with Reckson Operating Partnership,
we are prohibited from paying any dividends on shares of our capital stock as
long as there are amounts outstanding under the agreements.
WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Stock Depositary (unless the related Depositary Shares have
previously been called for redemption), the
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holders thereof will be entitled to delivery at the office, to or upon the
holder's order, of the number of whole or fractional shares of preferred stock
and any money or other property represented by the Depositary Shares evidenced
by the Depositary Receipts. Holders of Depositary Receipts will be entitled to
receive whole or fractional shares of the related preferred stock on the basis
of the proportion of preferred stock represented by each Depositary Share as
specified in the applicable prospectus supplement, but holders of the preferred
stock will not thereafter be entitled to receive Depositary Shares therefor. If
the Depositary Receipts delivered by the holder evidence a number of Depositary
Shares in excess of the number of Depositary Shares representing the number of
shares of preferred stock to be withdrawn, the Preferred Stock Depositary will
deliver to the holder at the same time a new Depositary Receipt evidencing the
excess number of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Company redeems preferred stock held by the Preferred Stock
Depositary, the Preferred Stock Depositary will redeem as of the same redemption
date the number of Depositary Shares representing the preferred stock so
redeemed, provided the Company shall have paid in full to the Preferred Stock
Depositary the redemption price of the preferred stock to be redeemed plus an
amount equal to any accrued and unpaid dividends thereon to the date fixed for
redemption. The redemption price per Depositary Share will be equal to the
redemption price and any other amounts per share payable with respect to the
preferred stock. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by the Preferred Stock
Depositary by lot.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Receipts evidencing the Depositary Shares so called
for redemption will cease, except the right to receive any moneys payable upon
redemption and any money or other property to which the holders of the
Depositary Receipts were entitled upon redemption upon surrender thereof to the
Preferred Stock Depositary.
VOTING OF THE UNDERLYING PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the Preferred Stock Depositary will mail the
information contained in the notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent the
preferred stock. Each record holder of Depositary Receipts evidencing Depositary
Shares on the record date (which will be the same date as the record date for
the preferred stock) will be entitled to instruct the Preferred Stock Depositary
as to the exercise of the voting rights pertaining to the amount of preferred
stock represented by the holder's Depositary Shares. The Preferred Stock
Depositary will vote the amount of preferred stock represented by the Depositary
Shares in accordance with the instructions, and we will agree to take all
reasonable action which may be deemed necessary by the Preferred Stock
Depositary in order to enable the Preferred Stock Depositary to do so. The
Preferred Stock Depositary will abstain from voting the amount of preferred
stock represented by the Depositary Shares to the extent it does not receive
specific instructions from the holders of Depositary Receipts evidencing the
Depositary Shares.
LIQUIDATION PREFERENCE
In the event of liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, each holder of a Depositary Receipt will be
entitled to the fraction of the liquidation preference accorded each share of
preferred stock represented by the Depositary Share evidenced by the Depositary
Receipt, as set forth in the applicable prospectus supplement.
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CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into common stock or any
other securities or property of the Company. Nevertheless, if so specified in
the applicable prospectus supplement relating to an offering of Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Stock Depositary with written instructions to the Preferred Stock
Depositary to instruct the Company to cause conversion of the preferred stock
represented by the Depositary Shares evidenced by Depositary Receipts into whole
shares of common stock, other preferred stock of the Company or other shares of
capital stock of the Company, and the Company has agreed that upon receipt of
instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for delivery
of preferred stock to effect the conversion. If the Depositary Shares evidenced
by a Depositary Receipt are to be converted in part only, one or more new
Depositary Receipts will be issued for any Depositary Shares not to be
converted. No fractional shares of common stock will be issued upon conversion,
and if the conversion will result in a fractional share being issued, an amount
will be paid in cash by the Company equal to the value of the fractional
interest based upon the closing price of the common stock on the last business
day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the preferred stock and any provision of the Deposit Agreement may at
any time be amended by agreement between the Company and the Preferred Stock
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts will not be effective unless the
amendment has been approved by the existing holders of at least a majority of
the Depositary Shares evidenced by the Depositary Receipts then outstanding.
The Deposit Agreement may be terminated by the Company upon not less than
30 days' prior written notice to the Preferred Stock Depositary if (1) the
termination is to preserve the status of Reckson Associates as a REIT or (2) a
majority of each class of preferred stock affected by the termination consents
to the termination, whereupon the Preferred Stock Depositary shall deliver or
make available to each holder of Depositary Receipts, upon surrender of the
Depositary Receipts held by the holder, the number of whole or fractional shares
of preferred stock as are represented by the Depositary Shares evidenced by
Depositary Receipts. In addition, the Deposit Agreement will automatically
terminate if (1) all outstanding Depositary Shares shall have been redeemed,
(2) there shall have been a final distribution in respect of the related
preferred stock in connection with any liquidation, dissolution or winding up of
the Company and the distribution shall have been distributed to the holders of
Depositary Receipts evidencing the Depositary Shares representing the preferred
stock or (iii) each related share of preferred stock shall have been converted
into capital stock of the Company not so represented by Depositary Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Company will pay the fees and expenses of the Preferred Stock Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay the fees and expenses of the
Preferred Stock Depositary for any duties requested by the holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
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RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Stock Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any time remove
the Preferred Stock Depositary, any resignation or removal to take effect upon
the appointment of a successor Preferred Stock Depositary. A successor Preferred
Shares Depositary must be appointed within 60 days after delivery of the notice
of resignation or removal and must be a bank or trust company having its
principal office in the United States and having a combined capital and surplus
of at least $50,000,000.
MISCELLANEOUS
The Preferred Stock Depositary will forward to holders of Depositary
Receipts any reports and communications from the Company which are received by
the Preferred Stock Depositary with respect to the related preferred stock.
Neither the Company nor the Preferred Stock Depositary will be liable if the
Preferred Stock Depositary is prevented from or delayed in, by law or any
circumstances beyond its control, performing its obligations under the Deposit
Agreement. The obligations of the Company and the Preferred Stock Depositary
under the Deposit Agreement will be limited to performing specified duties
thereunder in good faith and without negligence, gross negligence or willful
misconduct, and the Company and the Preferred Stock Depositary will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Receipts, Depositary Shares or preferred stock represented thereby
unless satisfactory indemnity is furnished. The Company and the Preferred Stock
Depositary may rely on written advice of counsel or accountants, or information
provided by persons presenting the preferred stock represented thereby for
deposit, holders of Depositary Receipts or other persons believed to be
competent to give information, and on documents believed to be genuine and
signed by a proper party.
If the Preferred Stock Depositary shall receive conflicting claims, requests
or instructions from any holders of Depositary Receipts, on the one hand, and
from the Company, on the other hand, the Preferred Stock Depositary shall be
entitled to act on claims, requests or instructions received from the Company.
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 the 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 the event we issue 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
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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 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 and the Aggregate 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
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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.
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of common stock or preferred
stock. Warrants to purchase common stock may include rights to purchase common
stock that the Company issues to its common stock holders as a dividend.
Warrants may be issued independently or together with any securities and may be
attached to or separate from the securities. Each series of Warrants will be
issued under a separate warrant agreement (each, a "Warrant Agreement") to be
entered into between the Company and a warrant agent specified therein ("Warrant
Agent"). The Warrant Agent will act solely for the Company in connection with
the Warrants of the series and will not assume any obligation or relationship of
agency or trust for or with any holders or beneficial owners of Warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the Warrants in respect of which this prospectus is being
delivered:
- the title of the Warrants;
- the aggregate number of the Warrants;
- whether separate consideration will be issued for the Warrants and, if so,
the price or prices at which the Warrants will be issued;
- the currencies in which the price or prices of the Warrants may be
payable, if applicable;
- the designation, amount and terms of the Securities purchasable upon
exercise of the Warrants;
- the designation and terms of the other Securities, if any, with which the
Warrants are issued and the number of the Warrants issued with each
Security;
- if applicable, the date on and after which the Warrants and the Securities
purchasable upon exercise of the Warrants will be separately transferable;
- the price or prices at which and currency or currencies in which the
Securities purchasable upon exercise of the Warrants may be purchased;
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- the date on which the right to exercise the Warrants shall commence and
the date on which the right shall expire;
- the minimum or maximum amount of the Warrants which may be exercised at
any one time;
- information with respect to book-entry procedures, if any;
- a discussion of material federal income tax considerations; and
- any other material terms of the Warrants, including terms, procedures and
limitations relating to the exchange and exercise of the Warrants.
PLAN OF DISTRIBUTION
The Company may sell the securities to one or more underwriters for public
offering and sale by them or may sell the securities to investors directly or
through agents. Any underwriter or agent involved in the offer and sale of the
securities will be named in the applicable prospectus supplement.
Underwriters may offer and sell the securities at a fixed price or prices,
which may be changed, at prices related to the prevailing market prices at the
time of sale or at negotiated prices. The Company also may, from time to time,
authorize underwriters acting as their agents to offer and sell the securities
upon the terms and conditions as are set forth in the applicable prospectus
supplement. In connection with the sale of securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of securities for whom they may act as agent. Underwriters may sell
securities to or through dealers, and dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters and/or
commissions from the purchasers for whom they may act as agent.
Direct sales to investors may be accomplished through subscription offerings
or through subscription rights distributed to our stockholders. In connection
with subscription offerings or the distribution of subscription rights to
stockholders, if all of the underlying offered securities are not subscribed
for, we may sell such unsubscribed offered securities to third parties directly
or through agents and, in addition, whether or not all of the underlying offered
securities are subscribed for, we may concurrently offer additional offered
securities to third parties directly (including third parties that are
affiliated with us) or through agents, which agents may be affiliated with us.
Any underwriter or agent involved in the offer and sale of the offered
securities will be named in the applicable prospectus supplement.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of securities, and any discounts, concessions
for commissions allowed by underwriters to participating dealers, will be set
forth in the applicable prospectus supplement. Underwriters, dealers and agents
participating in the distribution of the securities may be deemed to be
underwriters, and any discounts and commissions received by them and any profit
realized by them on resale of the securities may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters, dealers and
agents may be entitled, under agreements entered into with the Company, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with, and perform services for, the Company and its subsidiaries
in the ordinary course of business.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby and certain
legal matters will be passed upon for the Company by Brown & Wood LLP, New York,
New York.
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EXPERTS
The consolidated financial statements of Reckson Service Industries, Inc.
(the "Company") appearing in the Company's Annual Report (Form 10-K) for the
year ended December 31, 1998; and the consolidated financial statements of
Interoffice Superholdings Corporation and Subsidiaries for the period
November 9, 1998 to December 31, 1998 appearing in the Company's Form 10-K for
the year ended December 31, 1998; and the consolidated financial statements of
RSVP Holdings, LLC for the period February 26, 1998 to December 31, 1998,
appearing in the Company's Form 10-K for the year ended December 31, 1998; and
the combined financial statements of Xebec Management Services, Inc. and
affiliate for the years ended December 31, 1997 and 1996, appearing in the
Company's Form 8-K dated January 19, 1999; and the consolidated financial
statements of InterOffice (Holdings) Corporation and Subsidiaries for the years
ended December 31, 1997, 1996 and 1995 appearing in the Company's Form 8-K dated
January 19, 1999, 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 (formerly ALLIANCE NATIONAL Incorporated and Subsidiaries) as of
June 30, 1998 and 1997 and December 31, 1998 and for the years ended June 30,
1998, 1997 and 1996 and for the period July 1, 1998 to December 31, 1998
appearing in Reckson Service Industries, Inc.'s Form 8-K/A dated March 24, 1999,
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND
RELATED PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT
AND RELATED PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND RELATED
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS SUPPLEMENT.
1,250,000 Shares
[LOGO]
Common Stock
Warburg Dillon Read LLC
