As filed with the Securities and Exchange Commission on January 5, 1996
Registration No. 33-62779
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION Washington,ON NOVEMBER 21, 2003
REGISTRATION NOS. 333-
33-62779
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO---------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------------
ALEXANDER'S, INC.
(Exact name of registrant as specified in its charter)
Delaware
DELAWARE 51-01-00517
(State or other jurisdiction of incorporation or (IRS employer identification number)
incorporation or
organization)
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
(201) 587-8541
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888 SEVENTH AVENUE
NEW YORK, NY 10019
(212) 894-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph Macnow
Chief Financial Officer
Alexander's, Inc.
Park 80 West, Plaza II, Saddle Brook, New Jersey 07663
(201) 587-8541---------------------
JOSEPH MACNOW
CHIEF FINANCIAL OFFICER
ALEXANDER'S, INC.
888 SEVENTH AVENUE
NEW YORK, NY 10019
(212) 894-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Douglas P. Bartner, Esq.
Shearman---------------------
COPY TO:
DANIELLE CARBONE, ESQ.
SHEARMAN & SterlingSTERLING LLP
599 Lexington Avenue
New York, New YorkLEXINGTON AVENUE
NEW YORK, NY 10022-6069
Approximate date of commencement of proposed sale to the public:---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement, as determined
by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statementRegistration Statement number of the earlier
effective registration statementRegistration Statement for the same offering. |_|[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statementRegistration Statement number of the earlier effective registration
statementRegistration Statement
for the same offering. |_|[ ]
---------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |X|
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The Registrant hereby amends[X]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED(1)(2) PRICE PER UNIT (4) OFFERING PRICE(1)(2)(3) FEE(2)
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Common stock, par value $1.00 per
share.................................
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Preferred stock, par value $1.00 per
share.................................
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Depositary shares representing preferred
stock(5)..............................
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Debt securities.........................
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Debt warrants(6)........................
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Total................................... $1,500,000,000 $1,500,000,000 $121,350
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(1) An indeterminate aggregate initial offering price or number of the common
stock, preferred stock, depositary shares, debt securities and debt warrants
is being registered as may from time to time be issued at indeterminate
prices in an aggregate amount not to exceed $1,500,000,000 or the equivalent
of that amount in one or more other currencies, currency units or composite
currencies.
(2) In accordance with Rule 429 under the Securities Act, the prospectus filed
as part of this Registration Statement on such date
or dates as may be necessaryalso relates to delay its effective date until the Registrant
shall file a further amendment which specifically states$250,000,000
aggregate initial offering price of common stock, preferred stock and
depositary shares, debt securities and debt warrants of Alexander's, Inc.
that thiswere previously registered under Registration Statement shall thereafter become effectiveNo. 33-62779
and have not yet been issued and sold. A filing fee of $86,207 was
previously paid for the $250,000,000 aggregate initial offering price of
securities registered under Registration Statement No. 33-62779.
(3) Estimated for the sole purpose of computing the registration fee in
accordance with Section 8(a) ofRule 457(o) under the Securities ActAct. Separate consideration
may not be received for registered securities that are issuable on
conversion or exchange of other securities or represented by depositary
shares.
(4) Omitted in accordance with General Instruction II.D of Form S-3 under the
Securities Act.
(5) Each depositary share will be issued under a deposit agreement, will
represent an interest in a fractional preferred share and will be evidenced
by a depositary receipt.
(6) Debt warrants may be sold separately or with other securities.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. ATHIS REGISTRATION
STATEMENT RELATINGINCLUDES A PROSPECTUS THAT MAY RELATE TO SECURITIES REGISTERED BY
ALEXANDER'S, INC. ON FORM S-3 (REGISTRATION STATEMENT NO. 33-62779).
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES HAS BEENUNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMESCOMMISSION IS EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTEIS NEITHER AN
OFFER TO SELL OR THE
SOLICITATION OFTHESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCHTHE OFFER SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JANUARY 5, 1996
[Alexander's, Inc. Logo]
Prospectus
Debt Securities, Preferred Stock, Depositary Shares, Common
Stock and Debt Warrants
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Alexander's, Inc. (the "Company")NOVEMBER 21, 2003
PROSPECTUS
(ALEXANDER'S, INC. LOGO)
ALEXANDER'S, INC.
$1,500,000,000
DEBT SECURITIES, PREFERRED STOCK, DEPOSITARY SHARES, COMMON
STOCK AND DEBT WARRANTS
We may, offer from time to time, together
or separately, in one or more series (i)offer to sell common stock, preferred stock,
debt securities ("Debt Securities"),
whichand debt warrants. The preferred stock may either be sold
separately or represented by depositary shares. The debt securities may be
either senior debt securities (the "Senior Debt Securities")exchangeable for our common or
subordinated debt securities (the "Subordinated Debt Securities"), (ii) shares
of preferred stock $1.00 par value per share, ofand the Company ("Preferred
Stock"), whichpreferred stock may be
issued in the formconvertible into common stock or into preferred stock of depositary shares (the "Depositary
Shares") evidenced by depositary receipts, (iii) sharesanother series. The
debt warrants will be to purchase debt securities. The total amount of common
stock, $1.00
par value per share, of the Company ("Common Stock") and (iv) warrants to
purchasepreferred stock, debt securities of the Company as shall be designated by the Company at
the time of the offering (the "Debt Warrants") (the Debt Securities, Preferred
Stock, Common Stock and Debt Warrants are collectively referred to as the
"Securities"), atdebt warrants offered under this
prospectus will have an initial aggregate initial offering price notof up to exceed U.S.
$250,000,000,$1,500,000,000
or the equivalent amount in amounts, at prices and on terms to be determined at the time of
sale.other currencies, currency units or composite
currencies. The Debt Securities, Preferred Stock, Common Stock and Debt Warrantssecurities may be offered separately or together and in one or
more separate seriesseries.
We may offer and sell these securities to or through one or more
underwriters, dealers and agents or directly to purchasers, on a continuous or
delayed basis.
We will provide the specific terms of these securities in amounts, at prices and
on terms to be set forth in a supplementsupplements to
this Prospectus (a "Prospectus
Supplement").
The accompanying Prospectus Supplement will set forth with regard to
the particular Securities in respect of whichprospectus. You should read this Prospectus is being delivered
(i) in the case of Debt Securities, the title, aggregate principal amount,
denominations (which may be in United States dollars, or in any other currency,
currencies or currency unit, including the European Currency Unit), maturity,
rate, if any (which may be fixed or variable), or method of calculation thereof,
time of payment of any interest, any terms for redemption at the option of the
Company or the Holder, any terms for sinking fund payments, rank, any conversion
or exchange rights, any listing on a securities exchange,prospectus and the initial public
offering price and any other terms in connection with the offering and sale of
such Debt Securities, (ii) in the case of Preferred Stock, the specific title,
the aggregate amount and the stated value, any dividend (including the method of
calculating the payment of dividend), liquidation, redemption, conversion,
voting or other rights and the initial public offering price, (iii) in the case
of Common Stock, the number of shares of Common Stock, the initial offering
price and the terms of the offering thereof and (iv) in the case of Debt
Warrants, the duration, purchase price, exercise price and detachability of such
Debt Warrants. The Prospectus Supplement will also contain, as applicable, a
discussion of the material United States federal income tax considerations
relating to the Securities in respect of which this Prospectussupplements carefully
before you invest.
Our common stock is being
delivered to the extent not contained herein.
The shares of Common Stock of the Company are listed on the New York Stock Exchange ("NYSE") under the symbol
"ALX".
The Company intends to qualify as a real estate investment trust
("REIT") for federal income tax purposes for the year ending December 31, 1995."ALX."
Investing in our securities involves risks. See "Risk Factors" beginning on
page 5 herein for a discussion of
certain factors that should be carefully considered by prospective investors in
the Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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The Company may sell Securities to or through underwriters, and also
may sell Securities directly to other purchasers or through agents. The
accompanying Prospectus Supplement will set forth the names of any underwriters
or agents involved in the sale of5.
Neither the Securities in respect of which this
Prospectus is being delivered, the amounts of Securities, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution" herein.
The date of this Prospectus is _______________, 1996.
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus or the accompanying Prospectus Supplement in connection with the
offer contained in this Prospectus and the accompanying Prospectus Supplement
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or any underwriters, agents or
dealers. This Prospectus and the accompanying Prospectus Supplement do not
constitute an offer to sell or solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus and the accompanying
Prospectus SupplementExchange Commission nor any salestate securities
commission has approved or disapproved of these securities or offerdetermined if this
prospectus is truthful or complete. Any representation to sell the Securities offered
hereby shall, under any circumstances, create an implication that there has been
no change in the affairs of the Companycontrary is a
criminal offense.
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Prospectus dated
TABLE OF CONTENTS
PAGE
----
WHERE YOU CAN FIND MORE INFORMATION......................... 3
FORWARD-LOOKING STATEMENTS.................................. 4
RISK FACTORS................................................ 5
ALEXANDER'S, INC............................................ 14
RATIOS OF EARNINGS TO FIXED CHARGES......................... 15
USE OF PROCEEDS............................................. 15
DESCRIPTION OF DEBT SECURITIES.............................. 16
DESCRIPTION OF CAPITAL STOCK................................ 34
DESCRIPTION OF DEBT WARRANTS................................ 46
LEGAL OWNERSHIP AND BOOK-ENTRY ISSUANCE..................... 47
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS................... 53
PLAN OF DISTRIBUTION........................................ 69
VALIDITY OF THE SECURITIES.................................. 69
EXPERTS..................................................... 69
In this prospectus, "Alexander's," "we," "our" or "us" refers to
Alexander's, Inc. and its consolidated subsidiaries, sinceunless the respective dates of this Prospectuscontext requires
otherwise.
2
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and the accompanying Prospectus Supplement
or that the information contained in this Prospectus or the accompanying
Prospectus Supplement is correct as of any time subsequent to the respective
dates of this Prospectus and the accompanying Prospectus Supplement.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith filescurrent reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The reports, proxy
statementsCommission. You may read and other information filed by the Company with the Commission can be
inspected and copiedcopy
any document we file at the CommissionSEC's public reference room at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, andDC 20549. Please call the SEC at 1-800-SEC-0330 for further
information on its public reference room. Our SEC filings are also available to
the following regional offices ofpublic through the Commission: 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 from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,SEC's web site at prescribed rates. The Company's Common Stock ishttp://www.sec.gov. Our common shares
are listed on the New York Stock Exchange, ("NYSE") and similar information can be inspected and copied at the
NYSE, 20 Broad Street, 17th Floor, New York, New York 10005.about us is also
available there.
This Prospectus constitutesprospectus is a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). As permitted by
the rules and regulations of the Commission, this Prospectus omits certain of
the information contained in the Registration Statement and reference is hereby
made to the Registration Statement and related exhibits for further information
with respect to the Company and the Securities offered hereby. Statements
contained herein concerning the provisions of any documents filed as an exhibit
to the Registration Statement or otherwisethat we filed with
the Commission are not
necessarily complete,SEC. The SEC allows us to "incorporate by reference" the information that we
file with it, which means that we can disclose important information to you by
referring you to other documents that we identify as part of this prospectus.
Any information referred to in this way is considered part of this prospectus
from the date we file that document. Our subsequent filings of similar documents
with the SEC will automatically update and in each instancesupercede this information. We
incorporate by reference is made to the copydocuments listed below and any future filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of such
document so filed. Each suchthe Securities
Exchange Act of 1934 (1) after the date of the filing of this registration
statement is qualified inand before its entiretyeffectiveness and (2) until our offering of securities
has been completed.
We incorporate by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i)reference into this prospectus the documents listed below
or information filed with the SEC:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1994 as amended by2002.
- Quarterly Reports on Form 10-K/A (the "Form 10-K/A")10-Q for the fiscalquarters ended March 31, 2003,
June 30, 2003 and September 30, 2003.
- Current Reports on Form 8-K filed with the SEC on September 23, 2003 and
November 20, 2003.
You may obtain a copy of these filings, at no cost, by writing to or telephoning
us at the following address: Alexander's, Inc., 888 Seventh Avenue, New York, NY
10019, Attention: Corporate Secretary. Telephone (212) 894-7000.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. This prospectus is an offer to
sell or buy only the securities described in this document, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of the date of this prospectus.
3
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents incorporated by reference,
contains forward-looking statements with respect to our financial condition,
results of operations and business. You can typically identify forward-looking
statements by the use of words such as "believes," "expects," "anticipates,"
"estimates," "intends," "plans" and other similar terms.
These forward-looking statements represent our intentions, plans,
expectations and beliefs and are subject to numerous assumptions, risks and
uncertainties. Many of these factors are outside our control and could cause
actual results to differ materially from such forward-looking statements. These
factors include those listed under the caption "Risk Factors" in this
prospectus, as well as the following:
- national, regional and local economic conditions,
- the consequences of any armed conflict involving, or terrorist attack
against, the United States,
- our ability to secure adequate insurance,
- local conditions, such as an oversupply of space or a reduction in demand
for real estate in the area,
- competition from other available space,
- whether tenants consider a property attractive,
- the financial condition of our tenants, including the extent of tenant
bankruptcies or defaults,
- whether we are able to pass some or all of any increased operating costs
we incur through to our tenants,
- how well we manage our properties,
- any increase in interest rates,
- any increase in real estate taxes and other expenses,
- any decreases in market rental rates,
- the timing and costs associated with property development, improvements
and rentals,
- changes in taxation or zoning laws,
- government regulations,
- our failure to continue to qualify as a real estate investment trust,
- availability of financing on acceptable terms or at all,
- potential liability under environmental or other laws or regulations, and
- general competitive factors.
You are cautioned not to place undue reliance on our forward-looking
statements, which speak only as of the date of this prospectus or the date of
the applicable document incorporated by reference, as the case may be. All
subsequent written and oral forward-looking statements attributable to us or any
person acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
4
RISK FACTORS
An investment in our securities involves risks. You should carefully
consider the following factors and other information in this prospectus and
accompanying prospectus supplement before deciding to purchase our securities.
REAL ESTATE INVESTMENTS' VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
THE VALUE OF REAL ESTATE FLUCTUATES DEPENDING ON CONDITIONS IN THE GENERAL
ECONOMY AND THE REAL ESTATE BUSINESS. THESE CONDITIONS MAY ALSO LIMIT OUR
REVENUES AND AVAILABLE CASH.
The factors that affect the value of our real estate include:
- national, regional and local economic conditions,
- the consequences of any armed conflict involving, or terrorist attack
against, the United States,
- our ability to secure adequate insurance,
- local conditions, such as an oversupply of space or a reduction in demand
for real estate in the area,
- competition from other available space,
- whether tenants consider a property attractive,
- the financial condition of our tenants, including the extent of tenant
bankruptcies or defaults,
- whether we are able to pass some or all of any increased operating costs
we incur through to our tenants,
- how well we manage our properties,
- any increase in interest rates,
- any increase in real estate taxes and other expenses,
- any decreases in market rental rates,
- the timing and costs associated with property development, improvements
and rentals,
- changes in taxation or zoning laws,
- government regulations,
- our failure to continue to qualify as a real estate investment trust,
- availability of financing on acceptable terms or at all,
- potential liability under environmental or other laws or regulations, and
- general competitive factors.
The rents we receive and the occupancy levels at our properties may decline
as a result of adverse changes in any of these factors. Some of our major
expenses and payments, including mortgage payments, real estate taxes and
maintenance costs, generally do not decline when the related rents decline. If
rents decline while costs remain the same, our income and funds available for
distribution to our security holders will decline.
WE DEPEND ON LEASING SPACE TO TENANTS ON ECONOMICALLY FAVORABLE TERMS AND
COLLECTING RENT FROM OUR TENANTS, SOME OF WHOM MAY NOT BE ABLE TO PAY.
Our financial results depend on leasing space in our properties to tenants
on economically favorable terms. In addition, because substantially all of our
income comes from rentals of real property, our income and funds available for
distribution to our security holders will decrease if a significant number of
our tenants cannot pay their rent. If a tenant does not pay its rent, we might
not be able to enforce our rights as landlord
5
without delays and might incur substantial legal costs. For information
regarding the bankruptcy of our tenants, see "-- Bankruptcy of tenants may
decrease our revenues and available cash." below.
SOME OF OUR TENANTS REPRESENT A SIGNIFICANT PORTION OF OUR REVENUES. LOSS OF
THESE TENANT RELATIONSHIPS OR DETERIORATION IN THE TENANTS' CREDIT QUALITY
COULD ADVERSELY AFFECT OUR RESULTS.
Sears accounted for 19%, 21% and 21% of our revenues for the years ended
December 31, 2002, 2001 and 2000, respectively, and 20% of our revenues for the
nine months ended September 30, 2003. In addition, at our Lexington Avenue
location, Bloomberg L.P. has entered into a long-term lease for 695,000 square
feet of the 878,000 net rentable square feet of office space at that site. It is
expected that the rental stream from the Bloomberg, L.P. lease will also
represent a significant portion of our revenues. If we fail to maintain a
relationship with any of our significant tenants or fail to perform our
obligations under our agreements with these tenants or if any of these tenants
fails or becomes unable to perform its obligations under our agreements, we
expect that any one or more of these events would adversely affect our results
of operations and financial condition.
BANKRUPTCY OF TENANTS MAY DECREASE OUR REVENUES AND AVAILABLE CASH.
A number of companies, including some of our tenants, have declared
bankruptcy in recent years, and other tenants may declare bankruptcy or become
insolvent in the future. If a major tenant declares bankruptcy or becomes
insolvent, the rental property at which it leases space may have lower revenues
and operational difficulties, and, in the case of our shopping centers, we may
have difficulty leasing the remainder of the effected property. Our leases
generally do not contain restrictions designed to ensure the creditworthiness of
our tenants. As a result, the bankruptcy or insolvency of a major tenant could
result in a lower level of funds available for distribution to our security
holders.
SOME OF OUR POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE.
We carry comprehensive liability and all-risk property insurance (fire,
flood, extended coverage and rental loss insurance) with respect to our assets
but are at risk for financial loss in excess of the policies' limits. Such a
loss could be material.
Our all-risk insurance policies in effect before September 11, 2001 did not
expressly exclude coverage for hostile acts, except for acts of war. Since
September 11, 2001, but prior to the enactment of the Terrorism Risk Insurance
Act of 2002, insurance companies have, for the most part, excluded terrorist
acts from coverage in all-risk policies. We were generally unable to obtain
all-risk insurance that includes coverage for terrorist acts for policies we
renewed during that period.
Our debt instruments, consisting of mortgage loans secured by our
properties (which are generally non-recourse to us), contain customary covenants
requiring us to maintain insurance. There can be no assurance that the lenders
under these instruments will not take the position that an exclusion from
all-risk insurance coverage for losses due to terrorist acts is a breach of
these debt instruments allowing the lenders to declare an event of default and
accelerate repayment of debt. In addition, if lenders insist on coverage for
these risks, our ability to finance and/or refinance our properties and
business, including the construction of our Lexington Avenue property may be
adversely affected.
On November 26, 2002, the Terrorism Risk Insurance Act of 2002 was signed
into law. Under this new legislation, through 2004 (with a possible extension
through 2005), regulated insurers must offer coverage in their commercial
property and casualty policies (including existing policies) for losses
resulting from defined "acts of terrorism." As a result of the legislation, in
June 2003, we obtained $500,000,000 of coverage per occurrence for certified
terrorist acts, as defined in the legislation, and $150,000,000 for
non-certified acts. Therefore, we are at risk for financial loss in excess of
these limits for terrorist acts as defined by the policies and the legislation
and such loss could be material.
6
WE HAVE MADE A SIGNIFICANT INVESTMENT IN THE DEVELOPMENT OF OUR LEXINGTON
AVENUE PROPERTY. OUR FAILURE TO COMPLETE THIS DEVELOPMENT ON TIME AND WITHIN
BUDGET WOULD ADVERSELY AFFECT OUR RESULTS AND FINANCIAL CONDITION.
Our development plans for our property at Lexington Avenue and 59th Street
in New York, New York require the construction of an approximately 1,300,000
square foot multi-use building. The building will contain approximately 162,000
net rentable square feet of retail space (83,000 and 27,000 square feet of which
has been leased to The Home Depot and Hennes & Mauritz, respectively),
approximately 878,000 net rentable square feet of office space (695,000 square
feet of which has been leased to Bloomberg L.P.) and approximately 248,000 net
saleable square feet of residential space consisting of condominium units
(through a taxable REIT subsidiary). As of September 30, 2003, we have received
deposits of $5,509,000 on sales of condominium units in the project.
Construction is expected to be completed in 2005. On July 3, 2002, we finalized
a $490,000,000 construction loan with HVB Real Estate Capital (Hypo Vereinsbank)
to finance the construction of the Lexington Avenue property. We have provided
the estimated construction costs in excess of the construction loan of
approximately $140,000,000. Under the terms of the construction loan, we will
retain the first $140,000,000 from the sales proceeds of condominium units,
provided that certain performance measures, as defined, are attained.
Thereafter, we are required to use the net proceeds to pay down the construction
loan. We have received funding of $187,256,000 under the construction loan as of
September 30, 2003. Of the construction budget of $630,000,000 (which excludes
$29,000,000 for development and guarantee fees), $354,300,000 has been expended
through September 30, 2003 and an additional $85,000,000 has been committed.
There can be no assurance that the Lexington Avenue project ultimately will
be completed, completed on time or completed for the budgeted amount. Further,
we may need additional financing for the project, which may involve issuance of
equity or debt, investments from joint venture partners and asset sales, and
which may involve arrangements with Vornado Realty Trust. If the project is not
completed on a timely basis, the Bloomberg L.P. lease may be cancelled and
significant penalties may apply. Furthermore, any failure to complete the
Lexington Avenue project on time and within budget may adversely affect future
cash flows and funds from operations, and our financial condition.
WE MAY ACQUIRE OR DEVELOP NEW PROPERTIES, AND THIS MAY CREATE RISKS.
In addition to our Lexington Avenue project, we may acquire or develop
other properties or acquire other real estate companies when we believe that an
acquisition or development is consistent with our business strategies. We may
not, however, succeed in consummating desired acquisitions or in completing
developments, including our Lexington Avenue property, on time or within budget.
We also might not succeed in leasing newly developed or acquired properties,
including our Lexington Avenue property, at rents sufficient to cover their
costs of acquisition or development and operations.
WE MAY NOT BE PERMITTED TO DISPOSE OF CERTAIN PROPERTIES OR PAY DOWN THE DEBT
ASSOCIATED WITH THOSE PROPERTIES WHEN WE MIGHT OTHERWISE DESIRE TO DO SO
WITHOUT INCURRING ADDITIONAL COSTS.
As part of an acquisition of a property, we may agree with the seller that
we will not dispose of the acquired properties or reduce the mortgage
indebtedness on them for significant periods of time unless we pay certain of
the resulting tax costs of the seller. These agreements could result in our
holding on to properties that we would otherwise sell and not paying down or
refinancing indebtedness that we would otherwise pay down or refinance.
IT MAY BE DIFFICULT TO BUY AND SELL REAL ESTATE QUICKLY, AND TRANSFER
RESTRICTIONS APPLY TO SOME OF OUR MORTGAGED PROPERTIES.
Equity real estate investments are relatively difficult to buy and sell
quickly. We therefore have limited ability to vary our portfolio promptly in
response to changes in economic or other conditions. Some of our properties are
mortgaged to secure payment of indebtedness. If we were unable to meet our
mortgage payments, the lender could foreclose on the properties and we could
incur a loss. In addition, if we wish to
7
dispose of one or more of the mortgaged properties, we may not be able to obtain
release of the lien on the mortgaged property. If a lender forecloses on a
mortgaged property or if a mortgage lien prevents us from selling a property,
our funds available for distribution to our security holders may decline. For
information relating to the mortgages on our properties, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in our Annual Report on Form 10-K
for the year ended December 31, 1994 filed on December 8, 1995, (ii)2002 and Quarterly Report on Form 10-Q for the
quarterly periodquarter ended March 31, 1995September 30, 2003 and the notes to our consolidated financial
statements in these reports.
ALL OF OUR PROPERTIES IS IN THE NEW YORK CITY/NEW JERSEY METROPOLITAN AREA AND
IS AFFECTED BY THE ECONOMIC CYCLES AND RISKS INHERENT IN THAT REGION.
During 2002 and the nine months ended September 30, 2003, all of our
revenues came from properties located in the New York City metropolitan area and
in Paramus, New Jersey. Like other real estate markets, the real estate market
in these areas has experienced economic downturns in the past, and we cannot
predict how the current economic conditions will impact this market in both the
short and long term. Further declines in the economy or a decline in the real
estate market in these areas could hurt our financial performance and the value
of our properties. The factors affecting economic conditions in these regions
include:
- business layoffs or downsizing,
- industry slowdowns,
- relocations of businesses,
- changing demographics,
- increased telecommuting and use of alternative work places,
- financial performance and productivity of the publishing, advertising,
financial, technology, retail, insurance and real estate industries,
- infrastructure quality, and
- any oversupply of, or reduced demand for, real estate.
It is impossible for us to assess the future effects of the current
uncertain trends in the economic and investment climates of the New York
City/New Jersey region, and more generally of the United States, on the real
estate market in these areas. If these conditions persist, they may adversely
affect our businesses and future profitability.
WE MAY INCUR COSTS IN COMPLYING WITH ENVIRONMENTAL LAWS.
Our operations and properties are subject to various federal, state and
local laws, ordinances and regulations concerning the protection of the
environment, including air and water quality, hazardous substances and health
and safety. Under certain of these environmental laws, a current or previous
owner or operator of real estate may be required to investigate and clean up
hazardous or toxic substances released at a property. The owner or operator may
also be held liable to a government entity or to third parties for property
damage or personal injuries and for investigation and cleanup costs incurred by
those parties because of the contamination. These laws often impose liability
without regard to whether the owner or operator knew of the release of the
substances or caused the release. The presence of contamination or the failure
to remediate contamination may impair our ability to sell or lease real estate
or to borrow using the real estate as amendedcollateral. Other laws and regulations
govern indoor and outdoor air quality, including those that can require the
abatement or removal of materials containing asbestos in the event of damages,
demolition, renovations or remodeling, and also govern emissions of, and
exposure to, asbestos fibers in the air. The maintenance and removal of lead
paint, certain electrical equipment containing polychlorinated biphenyls and
underground storage tanks are also regulated by Form
10-Q/Afederal and state laws. We could
incur fines for environmental compliance and be held liable for the quarterly periodcosts of
remedial action with respect to the foregoing regulated substances or tanks or
related claims arising out of environmental contamination or exposure at or from
our properties.
8
Each of our properties has been subjected to varying degrees of
environmental assessment at various times. The environmental assessments did not
reveal any material environmental condition except as noted in the following
paragraph. However, identification of new compliance concerns or undiscovered
areas of contamination, changes in the extent or known scope of contamination,
discovery of additional sites, human exposure to the contamination or changes in
cleanup or compliance requirements could result in significant costs to us.
In June 1997, our Kings Plaza Regional Shopping Center commissioned a Phase
II Environmental Study and Contamination Assessment Site Investigation to
evaluate and delineate environmental conditions disclosed in a Phase I study.
The results of the Phase II study indicated the presence of petroleum and bis
(2-ethylhexyl) phthalate contamination in the soil and groundwater. We have
delineated the contamination and have developed a remediation approach, which is
ongoing. The New York State Department of Environmental Conservation has
approved a portion of the remediation approach. We accrued $2,675,000 in
previous years, of which $2,408,000 has been paid as of September 30, 2003, for
our estimated obligation with respect to the cleanup of the site, which includes
costs of (i) remedial investigation, (ii) feasibility study, (iii) remedial
design, (iv) remedial action and (v) professional fees. If New York State
regulators insist on a more extensive remediation approach, we could incur
additional obligations. We can make no assurance that we will not incur
additional environmental costs with respect to this property.
REAL ESTATE IS A COMPETITIVE BUSINESS.
We operate in a highly competitive environment. All of our properties are
located in the New York City metropolitan area and Paramus, New Jersey. We
compete with a large number of real estate property owners and developers.
Principal factors of competition are the amount of rent charged, attractiveness
of location and quality and breadth of services provided. Our success depends
upon, among other factors, trends of the national and local economies, financial
condition and operating results of current and prospective tenants and
customers, availability and cost of capital, construction and renovation costs,
taxes, governmental regulations, legislation and population trends.
THE TERRORIST ATTACKS OF SEPTEMBER 11, 2001 IN THE NEW YORK CITY AREA MAY
ADVERSELY AFFECT THE VALUE OF OUR PROPERTIES AND OUR ABILITY TO GENERATE CASH
FLOW.
THERE MAY BE A DECREASE IN DEMAND FOR SPACE IN LARGE METROPOLITAN AREAS THAT
ARE CONSIDERED AT RISK FOR FUTURE TERRORIST ATTACKS, AND THIS DECREASE MAY
REDUCE OUR REVENUES FROM PROPERTY RENTALS.
All of our properties are located in the New York City metropolitan area
and Paramus, New Jersey. In the aftermath of terrorist attacks, tenants in this
area may choose to relocate their business to less populated, lower-profile
areas of the United States that are not as likely to be targets of future
terrorist activity. This would trigger a decrease in the demand for space in our
markets, which could increase vacancies in our properties and force us to lease
our properties on less favorable terms. As a result, the value of our properties
and the level of our revenues could decline materially.
WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT EXTERNAL FINANCING TO FUND OUR
OPERATIONS AND BUSINESS.
Our operating properties in the aggregate do not generate sufficient cash
flow to pay all of our expenses. While we expect that our cash flow will become
positive after the completion of the development of the Lexington Avenue
property, which is not expected until 2005, there can be no assurance that our
Lexington Avenue property will be completed on time or completed for the
budgeted amount or that our operational and financial expectations are accurate.
If we do not complete the construction of our Lexington Avenue property on a
timely basis, the Bloomberg L.P. lease may be cancelled and significant
penalties may apply, which would have adverse effects upon our results and
liquidity.
Accordingly, we depend principally upon external financing to fund our
operations and business, including the development of the Lexington Avenue
property. While we have received financing and credit support in the form of
guarantees from Vornado Realty Trust, there can be no assurance that Vornado
Realty Trust will provide us with any additional financing or credit support.
Additionally, our access to debt or equity financing
9
depends on banks' willingness to lend and on conditions in the capital markets.
We and other companies in the real estate industry have experienced limited
availability of bank loans and capital markets financing from time to time.
Although we believe that we will be able to finance any investments we wish to
make in the foreseeable future, financing in addition to what we already have
available may not be available on acceptable terms.
For information about our available sources of funds, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" in our Annual Report on Form 10-K for the year
ended MarchDecember 31, 1995 filed on December 8, 1995,
(iii)2002 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1995
as amended by Form 10-Q/A for the quarterly period ended June 30, 1995 filed on
December 8, 1995, (iv) Quarterly Report on Form 10-Q for the quarterly periodquarter ended
September 30, 1995 as amended by Form 10-Q/A for2003 and the quarterly period
endednotes to the consolidated financial statements in
these reports.
OUR OWNERSHIP STRUCTURE AND RELATED-PARTY TRANSACTIONS MAY GIVE RISE TO
CONFLICTS OF INTEREST.
STEVEN ROTH AND INTERSTATE PROPERTIES MAY EXERCISE SUBSTANTIAL INFLUENCE OVER
US. THEY AND SOME OF OUR OTHER DIRECTORS AND OFFICERS HAVE INTERESTS OR
POSITIONS IN OTHER ENTITIES THAT MAY COMPETE WITH US.
As of September 30, 1995 filed on December 8, 19952003, Interstate Properties, a New Jersey general
partnership, and (v) Current Reports on
Form 8-K dated January 4, 1995, February 6, 1995, September 18, 1995 and January
3, 1996, have been filed by the Company with the Commission and are hereby
incorporated by reference into this Prospectus. All other documents and reports
filed pursuant to Sections 13(a), 13(c), 14 or 15(d)its partners owned approximately 12.3% of the Exchange Act from
the datecommon shares of this Prospectus and prior to the termination of the offering of the
Securities shall be deemed to be incorporated by reference herein and shall be
deemed to be a part hereof from the date of the filing of such reports and
documents (provided, however, that the information referred to in item 402(a)(8)
of Regulation S-K of the Commission shall not be deemed specifically
incorporated by reference herein).
-2-
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on written or oral request of such person, a copy
of any or all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in the document which this Prospectus incorporates).
Requests should be directed to the Secretary of the Company, Park 80 West, Plaza
II, Saddle Brook, New Jersey 07663, telephone number (201) 587-8541.
TABLE OF CONTENTS
AVAILABLE INFORMATION........................................................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. 2
THE COMPANY.................................................................. 4
RISK FACTORS................................................................. 5
USE OF PROCEEDS.............................................................. 11
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES.............................. 12
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION....................... 13
DESCRIPTION OF DEBT SECURITIES............................................... 15
DESCRIPTION OF CAPITAL STOCK................................................. 23
DESCRIPTION OF DEBT WARRANTS................................................. 34
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.................................... 35
PLAN OF DISTRIBUTION......................................................... 45
EXPERTS...................................................................... 46
VALIDITY OF THE SECURITIES................................................... 46
-3-
THE COMPANY
The Company is a real estate company engaged in leasing, managing,
developing and redeveloping properties, focusing primarily on the properties
where its department stores were formerly located. These department stores
ceased operating in 1992 and are on properties located in New York City and
Bergen County, New Jersey (the "New York Area"). The Company believes that its
properties offer advantageous retail opportunities, principally because of their
size and location in areas where comparable store sites are not readily
available.
The Company seeks to increase its income and property values by
strategically renovating, expanding and developing its properties. The Company's
general strategy is to lease each of its properties to large-space users,
typically national or large regional retailers, under long-term leases
(generally 20 years or longer) which provide the Company with fixed rents and
also with periodic rent increases (generally every five years). These leases
also generally require the tenant to pay, or reimburse the Company, for common
area charges (including roof and structure costs), real estate taxes, insurance
costs and certain capital expenditures.
The Company's real estate portfolio consists of the following nine
properties, four of which are currently operating (the "Operating Properties")
and five of which are currently being or will be redeveloped (the "Redevelopment
Properties"):
Property Location Leasable Building Square Footage
-------- -------- --------------------------------
Operating Properties:
Fordham Road Bronx, NY 303,000
Flushing Queens, NY 177,000
Third Avenue Bronx, NY 173,000
Kings Plaza Mall (1) Brooklyn, NY 427,000
Redevelopment Properties:
Rego Park I Queens, NY 359,000
Rego Park II Queens, NY ---(2)---
Kings Plaza Store Brooklyn, NY 320,000
Paramus Paramus, NJ ---(3)---
Lexington Avenue (4) New York, NY 418,000
- ----------
(1) The Company owns a 50% interest in this property.
(2) This property consists of 287,500 square feet of vacant land in
approximately one and one-half square blocks adjacent to the Rego Park I
Property.
(3) This property consists of approximately 39 acres. A portion of this
property is subject to condemnation. See "Risk Factors-- Real Estate
Investment Risks."
(4) The Company owns the general partnership interest and 92% of the limited
partnership interests in this property.
The Fordham Road Property and the Flushing Property are 100% leased to The
Caldor Corporation ("Caldor") and the Third Avenue Property is 100% leased to a
subsidiary of Conway Stores, Inc. The Kings Plaza Mall is 88% leased to over 100
tenants. The Rego Park I Property has been entirely pre-leased to Sears, Roebuck
& Company, Marshalls, Inc. and Caldor and the commencement of such tenants'
leases is conditioned upon the completion of certain improvements by the Company
which are under construction and are expected to be completed by March 1996. The
Company is in discussions with prospective tenants for the remaining
Redevelopment Properties. See "Risk Factors -- Bankruptcy of a Major Tenant" and
"Risk Factors -- Real Estate Investment Risks -- Dependence on Rental Income and
Concentration of Rental Income with Certain Lessees; Bankruptcy of a Major
Tenant."
Vornado Realty Trust, ("Vornado"), a NYSE-listed REITour manager, and major stockholderapproximately 27.5% of the Company, manages the properties and business affairs of the Company and
acts as the Company's exclusive leasing agent pursuant to agreements with the
Company.Alexander's, Inc.
common stock. Steven Roth, David Mandelbaum and Russell B. Wight, Jr. are the
three partners of Interstate Properties. Mr. Roth is our Chief Executive Officer
and a director, the Chairman of the Company, is
also the
-4-
ChairmanBoard of Trustees and Chief Executive
Officer of Vornado. See "Risk Factors --
Control-Related Risks; Possible ConflictsVornado Realty Trust and the Managing General Partner of Interest."Interstate
Properties. Mr. Wight and Mr. Mandelbaum are both trustees of Vornado Realty
Trust and members of our board of directors. In May 1992, at a time whenaddition, Vornado Realty Trust
manages and leases the Company's business consisted of retail
store operations, the Company and its subsidiaries filed petitions for relief
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court").
In September 1993, the Bankruptcy Court confirmed the Joint Plan of
Reorganization (the "Plan"), pursuant to which the Company and its subsidiaries
reorganized their business as a real estate company. The Company has consummated
the Plan and has complied with allassets of its obligations thereunder. Pursuant to
the Plan, (i) all holders of allowed general unsecured claims were paid in full,
together with accrued interest in respect of their claims and (ii) all holders
of allowed secured claims received one hundred percent of their claims through
the issuance of new secured debt instruments or by payment in cash or a
combination thereof. The Bankruptcy Court has retained jurisdiction to resolve
the remaining disputed claims and for other limited purposes.Interstate Properties.
As of September 30, 1995, the Company2003, Vornado Realty Trust owned approximately 33.1% of
our outstanding common stock, in addition to that owned by Interstate Properties
and its subsidiaries had aggregate
indebtedness outstandingpartners. In addition to the relationships described in the immediately
preceding paragraph, Michael D. Fascitelli, the President and a trustee of
$173,613,000. The Company currently expects to
borrowVornado Realty Trust, is our President and expend, through the first quartera member of 1996, up to an additional
$20,000,000 to complete the Rego Park I redevelopment.
The Companyour board of directors.
Mr. Richard West is a Delaware corporation whose earliest predecessor
corporation was organizedtrustee of Vornado Realty Trust and a member of our board
of directors. In addition, Joseph Macnow, our Executive Vice
President -- Finance and Administration and Chief Financial Officer, holds the
same positions with Vornado Realty Trust.
Because of their overlapping interests, Mr. Roth, Interstate Properties and
the other individuals noted in 1928. The Company intendsthe preceding paragraphs may have substantial
influence over both Vornado Realty Trust and us, and on the outcome of any
matters submitted to file,Vornado Realty Trust shareholders or Alexander's, Inc.
stockholders for approval. In addition, certain decisions concerning our
operations or financial structure may present conflicts of interest among
Messrs. Roth, Mandelbaum and Wight and Interstate Properties and our other
security holders. Mr. Roth and Interstate Properties may in the future engage in
a wide variety of activities in the real estate business which may result in
conflicts of interest with its federal
income tax return for 1995, an electionrespect to matters affecting Vornado Realty Trust or
us, such as which of these entities or persons, if any, may take advantage of
potential business opportunities, the business focus of these entities, the
types of properties and geographic locations in which these entities make
investments, potential competition between business activities conducted, or
sought to be treatedconducted, by Vornado Realty Trust or us, competition for
properties and tenants, possible corporate transactions such as acquisitions and
other strategic decisions affecting the future of these entities.
THERE MAY BE CONFLICTS OF INTEREST BETWEEN VORNADO REALTY TRUST, ITS
AFFILIATES AND US.
At September 30, 2003, Vornado Realty L.P., a real estate
investment trustsubsidiary of Vornado Realty
Trust, had loans receivable from us of $124,000,000 at an interest rate of
12.48%. These loans mature on the earlier of January 3, 2006 or the date that
our Lexington Avenue construction loan is repaid in full. In addition,
$21,000,000 was available under our line of credit with Vornado Realty L.P. at
September 30, 2003. Vornado Realty L.P. also manages, develops and leases our
properties under agreements under which Vornado Realty L.P. receives annual fees
and will receive an aggregate estimated development fee and guarantee fee for
our Lexington Avenue property of $26,300,000 and $6,300,000, respectively. These
agreements have one-year terms expiring in March of each year, except that the
Internal Revenue Code of 1986, as amended (the
"Code"), effective for 1995.
The Company's principal executive offices are located at Park 80 West,
Plaza II, Saddle Brook, New Jersey 07663; telephone (201) 587-8541.
RISK FACTORS
Prospective purchasersLexington Avenue management and development agreements have terms lasting until
10
substantial completion of the Securities should consider carefullydevelopment of the factors set forth below, as well asLexington Avenue property, and
are all automatically renewable. Because we and Vornado Realty Trust share
common senior management and because a majority of the trustees of Vornado
Realty Trust also constitute the majority of our directors, the terms of the
foregoing agreements and any future agreements between us and Vornado Realty
Trust and its affiliates may not be comparable to those we could have negotiated
with an unaffiliated third party.
For a description of Interstate Properties' ownership of Vornado Realty
Trust and Alexander's, Inc., see "-- Steven Roth and Interstate Properties may
exercise substantial influence over us. They and some of our other applicable risk factorsdirectors and
officers have interests or positions in other entities that may be set forthcompete with
us." above.
OUR ORGANIZATIONAL AND FINANCIAL STRUCTURE GIVES RISE TO OPERATIONAL AND
FINANCIAL RISKS.
WE DEPEND ON OUR DIRECT AND INDIRECT SUBSIDIARIES' DIVIDENDS AND
DISTRIBUTIONS, AND THESE SUBSIDIARIES' CREDITORS AND PREFERRED SECURITY
HOLDERS ARE ENTITLED TO PAYMENT OF AMOUNTS PAYABLE TO THEM BY THE SUBSIDIARIES
BEFORE THE SUBSIDIARIES MAY PAY ANY DIVIDENDS OR DISTRIBUTIONS TO US.
Alexander's, Inc. holds substantially all of its properties and assets
through subsidiaries. Alexander's, Inc. therefore depends on cash distributions
and dividends from its subsidiaries for substantially all of its cash flow. The
creditors of each of our direct and indirect subsidiaries are entitled to
payment of that subsidiary's obligations to them, when due and payable, before
that subsidiary may make distributions or dividends to Alexander's, Inc. Thus,
Alexander's, Inc.'s ability to make dividends to its security holders depends on
its subsidiaries' ability to first satisfy their obligations to their creditors.
WE HAVE SUBSTANTIAL INDEBTEDNESS, AND THIS INDEBTEDNESS MAY INCREASE.
As of September 30, 2003, we had approximately $678,553,000 in total debt
outstanding, inclusive of $124,000,000 due to Vornado Realty L.P., a subsidiary
of Vornado Realty Trust. Our ratio of total debt to total enterprise value was
57.2% at September 30, 2003. When we say "enterprise value" in the accompanying Prospectus Supplement, before purchasing the
Securities offered hereby.
Adverse Consequencespreceding
sentence, we mean market equity value of Financial Leverage; Deficiency of Earnings to Fixed
Charges; Effect of Encumbrances; Covenant Restrictions
The Company hasAlexander's, Inc. plus debt less cash
and cash equivalents at September 30, 2003. In addition, we have significant
debt service obligations. The Company borrowed
$138,425,000 during the nine months ended September 30, 1995 (the "1995
Financings") and at September 30, 1995, the Company's long-term debt was
$173,613,000. For the nine months ended September 30, 1995,2003, our cash
payments for principal and interest were $36,454,000. Except for the Company's
deficiency ofyear ended
December 31, 2001, we had deficiencies in earnings to cover fixed charges was $12,605,000.charges. In
the future, we may incur additional debt, and thus increase our ratio of total
debt to total enterprise value, to finance acquisitions or property
developments. We may review and modify our debt level from time to time without
notice to or any vote of our security holders. Unless otherwise described in any
prospectus supplement relating to debt securities of Alexander's, Inc., the
indentures and debt securities do not limit our ability to incur additional
debt.
Except as described in this prospectus under the heading "Description of
Debt Securities -- Mergers and Similar Transactions" or in any applicable
prospectus supplement, the indentures do not contain provisions that would
afford you protection in the event of:
- a highly leveraged or similar transaction involving one of our
affiliates,
- a change of control of Alexander's, Inc. or any of its affiliates, or
- a reorganization, restructuring, merger or similar transaction involving
us that may adversely affect you.
ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE STOCK APPRECIATION RIGHTS.
THE EXERCISE OF THESE STOCK APPRECIATION RIGHTS MAY IMPACT OUR LIQUIDITY.
As of September 30, 2003, 850,000 stock appreciation rights were
outstanding and exercisable at a weighted-average exercise price of $71.82. The
Company alsoagreements for these stock appreciation rights require that they be settled in
cash. Had the holders of these stock appreciation rights chose to exercise their
rights as of September 30, 2003, we would have had a deficiencyto pay $28,631,000 in net assetscash.
Further appreciation in Alexander's, Inc. stock price from the closing stock
price of $28,203,000$105.50 at September 30, 1995. The
Company's ability2003 will increase the cash we would have
11
to operate aspay upon exercise and may impact our liquidity by requiring us to secure
additional borrowings to replace such a viable real estate company will depend on the
successful and timely completion of the redevelopment and leasing of the
Redevelopment Properties, which will materially affect the Company's ability to
meet its debt service requirements.
Under the 1995 Financings, the Company granted certain lenders mortgages oncash outflow.
OUR EXISTING FINANCING DOCUMENTS CONTAIN COVENANTS AND RESTRICTIONS THAT MAY
INHIBIT OUR OPERATIONAL AND FINANCIAL FLEXIBILITY AND RESTRICT OR PROHIBIT OUR
ABILITY TO MAKE PAYMENTS UPON SECURITIES.
At September 30, 2003, substantially all of the Company's assets and/our properties were pledged to
secure our obligations under $554,553,000 of existing secured indebtedness. If
we were to fail to perform our obligations under our existing indebtedness or
pledges of the stock of the Company's
subsidiaries owning assets and/or guarantees of such subsidiaries and the
Company. If the Company becomesbecome insolvent or iswere liquidated, or if its
indebtedness is accelerated, the lenders under the 1995 Financings willour secured creditors would be entitled to
payment in full from the proceeds of their securitythe sale of our pledged assets prior to the
paymentany
proceeds being paid to Holdersour other creditors or to any holders of Securities.our securities.
In such an event, it is possible that therewe would be nohave insufficient assets
remaining from which claimsto make payments to you as a holder of Holders of Securities could be
satisfied or, if any assets remain, such assets may be insufficient to satisfy
fully such claims.
-5-
The 1995 Financingour securities. In addition,
our existing financing documents contain certain restrictive covenants. Such
restrictions affect, and in many respects significantlycovenants which limit or prohibit, among
other things, theour
ability of the Company and certain of its subsidiaries to incur indebtedness, make prepayments of certain indebtedness, pay dividends,
make investments, engage in transactions with affiliates, issue or sell capital
stock of subsidiaries, create liens, sell assets, acquire or transfer property
and engage in mergers and consolidations. Theacquisitions. These covenants may significantly
limit
the Company's (and such subsidiaries') operatingrestrict our operational and financial flexibility and there can be no assurance that such restrictions will not adversely affect the
Company's (and such subsidiaries')may restrict our ability
to finance future operationsobtain additional financing or capital needs or to engage inpursue other business activities whichthat may be
beneficial to the Company. Additional restrictive covenants may be created with respect to
a particular series of Securities and will be set forth in the applicable
Prospectus Supplement.
In the event of a default under the terms of any indebtedness of the
Company, the obligees thereunder would be permitted to accelerate the maturity
of such obligations, which may cause defaults under other obligations of the
Company, including Securities issued pursuant to this Registration Statement. In
such circumstances, Holders of such Securities may be forced to accelerate the
maturity of such Securities to protect their interests at a time when it would
not otherwise be in their interest to do so. Further, such defaults could be
expected to delay or preclude payment of principal of and/or interest on such
Debt Securities.
Lack of Profitability
Because the Company has not yet developed a number of its properties, its
current operating properties (four of its nine properties) do not generate
sufficient cash flow to pay all of its expenses. The Company's five
non-operating properties (Rego Park I, Rego Park II, Lexington Avenue, Paramus,
and the Kings Plaza Store)us.
LOSS OF OUR KEY PERSONNEL COULD HARM OUR OPERATIONS.
We are in various stages of redevelopment. There can be
no assurance that the Company will attain profitable operations.
Need for Additional Financing
The Company estimates that its capital expenditure requirements for
projects other than Rego Park I and Rego Park II will include (i) the
redevelopment of the Paramus Property estimated to cost between $55,000,000 and
$60,000,000 (ii) the subdivision of the existing space and other improvements at
the Kings Plaza Store Property estimated to cost between $10,000,000 and
$15,000,000, and (iii) the renovation of the existing Lexington Avenue building
estimated to cost between $20,000,000 and $25,000,000. There can be no assurance
that financing for such projects will be obtained, or if obtained, that such
financing will be on terms that are acceptable to the Company. In addition, it
is uncertain as to when these projects will commence. The Company may also
require additional financing as a result of its lack of profitability. See "--
Lack of Profitability" above.
Bankruptcy of a Major Tenant
On September 18, 1995, Caldor filed for relief under Chapter 11 of the
United States Bankruptcy Code. Property rentals from leases with Caldor
represented approximately 63% of the Company's consolidated revenues for the
year ended December 31, 1994 and approximately 54% of the Company's consolidated
revenues for the nine months ended September 30, 1995. Caldor is also the lessee
of a portion of the Rego Park I Property under a lease scheduled to commence
after the completion of the redevelopment of this property. Caldor, which is
responsible for the construction of its store, ceased such construction in
September 1995. The Company believes that the loss of Caldor as a tenant would
have a material adverse effectdependent on the Company. Caldor's filing under Chapter 11
may lead to the terminationefforts of or default under, such leases with Caldor.
Additionally, under the terms of a $25,000,000 loan to the Company, secured
by a mortgage on the Fordham Road Property, the failure of Caldor to meet
certain financial tests may result in the Company being required to escrow net
cash flow of approximately $500,000 per annum from the Fordham Road Property
into an account of the lender as a reserve against future payments under the
loan.
-6-
Holding Company Structure
Since substantially all of the Company's operations are conducted, and
substantially all of the Company's assets are owned, by its subsidiaries, the
Securities will effectively be subordinated to all existing and future
liabilities of the Company's subsidiaries, including the subsidiaries'
guarantees of indebtedness incurred under the 1995 Financings. As of September
30, 1995, the Company's subsidiaries and the Seven Thirty One Limited
Partnership, of which the Company owns a 92.36% interest, had outstanding
$103,410,000 of liabilities (including trade payables and indebtedness) and also
had guarantees of $75,000,000 of Company indebtedness incurred under the 1995
Financings. Any right of the Company to participate in any distribution of the
assets of any of the Company's subsidiaries upon the liquidation, reorganization
or insolvency of such subsidiary (and any consequent right of the Holders of the
Securities to participate in those assets) will be subject to the claims of the
creditors (including trade creditors) and preferred stockholders, if any, of
such subsidiary, except to the extent the Company has a claim against such
subsidiary as a creditor of such subsidiary. The Company has expressly
subordinated certain of its claims against its subsidiaries to the subsidiaries'
guarantees of indebtedness incurred under the 1995 Financings. In addition, in
the event that claims of the Company as a creditor of a subsidiary are
recognized, such claims would be subordinate to any security interest in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by the Company.
The Company's ability to make required principal and interest payments with
respect to its indebtedness, including any Debt Securities, depends on the
earnings of its subsidiaries and on its ability to receive funds from such
subsidiaries through dividends or other payments. Since the Securities are
obligations of the Company only, the Company's subsidiaries are not obligated or
required to pay any amounts due pursuant to the Securities or to make funds
available therefor in the form of dividends or advances to the Company.
Limited Financial and Operating History; Noncomparability of Financial
Information
Prior to May 1992, the Company operated a retail department store business.
Accordingly, the Company has a limited operating history as a real estate
company upon which prospective investors may evaluate its performance.
Information reflecting the results of operations and financial condition of the
Company for periods subsequent to May 1992 are not comparable to information for
the periods prior to such date due to (i) the termination of the Company's
retail operations, including the sale of the Company's retail inventory, and the
Company's transition to real estate operations and (ii) the Company's bankruptcy
case, including the costs and expenses relating to the administration thereof,
and the payment of the Company's liabilities as a result thereof.
Control-Related Risks; Possible Conflicts of Interest
Vornado, an unincorporated Maryland business trust, owns 29.3% of the
outstanding Common Stock of the Company, including 27.1% purchased in March
1995. Interstate Properties, a New Jersey general partnership ("Interstate"),
which owns an additional 27.1% of the outstanding Common Stock of the Company,
owns 27.7% of the outstanding common shares of beneficial interest of Vornado.
Steven Roth, our Chief Executive
Officer, and a Director of the Company, is also
Chairman of the Board and Chief Executive Officer of Vornado, and the Managing
General Partner of Interstate. Mr. Roth, David Mandelbaum, Richard R. West and
Russell B. Wight, members of the Company's Board of Directors, are also Trustees
of Vornado. Messrs. Roth, Mandelbaum and Wight are the three partners of
Interstate. Messrs. Roth, Mandelbaum and Wight and Interstate own, in the
aggregate, 32.6% of the outstanding Common Shares of beneficial interest of
Vornado. Further, Vornado has provided the Company with a loan to finance its
operations in the principal amount of $45,000,000 (the subordinate portion of a
$75,000,000 facility, the balance of which was provided by an unaffiliated
bank). The loan is secured by liens on substantially all of the Company's
properties.
Based on the foregoing, Mr. Roth, Interstate Properties and Vornado
(collectively, the "Principal Stockholders") may have substantial influence on
the Company and on the outcome of any matters submitted to the Company's
stockholdersMichael D. Fascitelli, our President. While we believe that we
could find replacements for approval. In addition, certain decisions concerning the
operations or financial structure
-7-
of the Company may present conflicts of interest between the Principal
Stockholders and the Holders of the Securities. For example, if the Company
encounters financial difficulties, or is unable to pay its debts as they mature,
the interests of the Principal Stockholders might conflict with those of the
Holders of the Securities. In addition, the Principal Stockholders may have an
interest in pursuing acquisitions, divestitures, financings or other
transactions that, in their judgment, could enhance their equity investment,
even though such transactions might involve risk to the Holders of the
Securities. Interstate Properties, Vornado and Mr. Roth engage in a wide variety
of activities in the real estate business which may result in conflicts of
interest with respect to certain matters affecting the Company, such as
potential business opportunities, business dealings between the Company,
Interstate Properties and Vornado and their affiliates, demands on the time of
Mr. Roth and certain of the executive officers of Vornado, changes of existing
arrangements between Mr. Roth, the Company and Vornado (such as the Management
and Development Agreement, dated February 6, 1995 (the "Management and
Development Agreement") and the Retention Agreement, dated July 20, 1992 (the
"Retention Agreement")), potential competition between business activities
conducted, or sought to be conducted, by the Company, Vornado and Interstate
Properties (including competition for properties and tenants), possible
corporate transactions, and other strategic decisions affecting the Company in
the future. Neither Mr. Roth nor Vornado is obligated to present to the Company
any particular investment opportunity which comes to their attention, even if
such opportunity is of a character which might be suitable for investment by the
Company.
Real Estate Investment Risks Applicable to the Company
General
Real property investments are subject to varying degrees of risk. The
Company's success will be affected by, among other factors, the trends of the
national and local economies, the financial condition and operating results of
current and prospective tenants, the availability and cost of capital, interest
rate levels, construction and renovation costs, income tax laws, governmental
regulations and legislation, population trends, the market for real estate
properties in the New York Area, competition from other available space, zoning
laws, potential liability under environmental and other laws and the ability of
the Company to lease or sublease its properties at profitable levels.
Dependence on Rental Income and Concentration of Rental Income with Certain
Lessees; Bankruptcy of a Major Tenant
As substantially all of the Company's income is derived from rentals of
real property, the Company's results of operations will depend on its ability to
lease space in its real estate properties on economically favorable terms.
Although none of the Company's leases are cancelable by the lessee in the
event of default by such lessee, the Company may experience delays in enforcing
its rights as lessor or sublessor and may incur substantial costs in protecting
its investment if the lessee defaults under its lease. In addition, certain
significant expenditures associated with real estate investments (such as
mortgage payments, real estate taxes and maintenance costs) are generally not
reduced when circumstances (such as vacancies or the inability of tenants to
meet their obligations) cause a reduction in income from the investment. Should
such events occur, the Company's income and cash flows would be adversely
affected. The Company's properties are mortgaged to secure payment of
indebtedness, and if the Company were unable to meet its mortgage payments, a
loss could be sustained as a result of a foreclosure on its property by the
mortgagee.
The Company's income and cash flows would be adversely affected if a
significant number of the Company's lessees (or a lessee accounting for a
significant portion of the Company's rental income) were unable to meet their
obligations to the Company. Property rentals from leases with Caldor and the
Conway affiliate represented approximately 63% and 13%, respectively, of the
Company's consolidated revenues for the year ended December 31, 1994 and
approximately 54% and 11%, respectively, of the Company's consolidated revenues
for
-8-
the nine months ended September 30, 1995. The Company believes thatthese key personnel, the loss of either of these tenants would have a material adverse effect on the Company.
Caldor's filing of petitions for relief under Chapter 11 of the United States
Bankruptcy Code on September 18, 1995 may lead to the termination of, or default
under, such leases with Caldor.
Limited Number of Properties; Geographic Concentration
The Company concentrates on the redevelopmenttheir services
could harm our operations.
WE MIGHT FAIL TO QUALIFY OR REMAIN QUALIFIED AS A REIT.
Although we believe that Alexander's, Inc. will remain organized and leasing of its nine real
estate properties, which are located in the New York Area and are subject to
fluctuations in the real estate market of, and economic conditions particular
to, the New York Area. As a result, the Company's results of operations are
dependent upon the success of a limited number of properties and upon the demand
for retail space in its market area. There can be no assurance that local
economic conditions will be favorable to the Company's operations. An adverse
development affecting any one of the Company's properties could have a material
adverse effect on the Company's financial condition or results of operations.
Condemnation
The State of New Jersey has notified the Company of its intention to
condemn approximately ten acres or 25% of the Paramus Property in connection
with the redesign of a highway intersection. The New Jersey Department of
Transportation ("DOT") has recently made an offer to the Company to purchase the
land which is the subject of the condemnation proceeding for $15,400,000 based
on an appraisal performed on the DOT's behalf. The Company expects to negotiate
with the DOT to attempt to reach agreement on the value. In the event that the
Company and the DOT do not reach agreement on the value, a formal process will
be initiated by the DOT, pursuant to which, among other things, a group of
independent commissioners will be appointed by a court to determine fair market
value. If the condemnation occurs, the Company would be required to change its
redevelopment plans, and the time and cost to redevelop the Paramus Property may
materially increase.
In addition, the Company believes that, along with a number of other
locations, a portion of the Lexington Avenue Property is being considered by the
Port Authority of New York and New Jersey (the "Port Authority") for the site of
the terminus for a rail link from midtown Manhattan to LaGuardia and Kennedy
Airports. Approvals of numerous Federal, New York State and New York City
agencies are required before construction could begin. If the project proceeds
and the Port Authority selects a portion of the Lexington Avenue Property for
such use and can establish that it is needed to serve a public use, benefit or
purpose, the Port Authority, after conducting the requisite public hearings, may
acquire such portion of the Lexington Avenue Property pursuant to its powers of
eminent domain. Since the nature and scope of any plans being considered by the
Port Authority, and whether any such plans would ultimately affect the Lexington
Avenue Property, cannot be fully assessed by the Company at this time, it is
impossible to determine the ultimate effect that a taking, or any uncertainty
with respect thereto, would have on the Company's use or redevelopment of the
Lexington Avenue Property.
Environmental Matters
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real property may be liable for the costs of removal or
remediation of hazardous substances located on, under or in such property. Such
laws often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances and the
liability may continue after the sale or other disposition of the contaminated
property. Other federal and state laws require the removal or encapsulation of
asbestos-containing material in the event of remodeling, renovation or
demolition. Other statutes may require the removal of underground storage tanks
that are out of service or out of compliance. Although compliance with
applicable provisions of federal, state and local laws regulating the discharge
of materials into the environment or otherwise relating to the protection of the
environment has not had a material effect on the Company's financial condition
or results of operations, there can be no assurance that such compliance will
not have such an effect in the future.
-9-
In September 1993, the Company had Phase I environmental assessments (which
generally involve site and records inspection without soil or groundwater
sampling) performed by an environmental engineering firm on each of its
properties. The results of the assessments at the Kings Plaza Shopping Center's
("Center") property show that certain adjacent properties owned by third parties
have experienced petroleum hydrocarbon contamination. Based on this assessment
and preliminary investigation of the Center's property and its history there is
a potential for contamination on the property. If contamination is found on the
property, the Center may be required to engage in remediation activities;
management is unable to estimate the financial impact of potential contamination
if any is discovered in the future.
In addition, there can be no assurance that the identification of new areas
of contamination, changes in the known scope of contamination, the discovery of
additional sites, or changes in cleanup requirements would not result in
material costs to the Company. The process of investigating and remediating
environmental contamination is lengthy and subject to the uncertainties of
changing legal requirements, developing technology and the allocation of
liability among potentially liable parties. The presence of contamination, or
the failure to properly remediate contamination, may also adversely affect the
Company's ability to borrow money using such real property as collateral or to
sell such property.
Uninsured Loss
The Company carries commercial liability, fire, flood, extended coverage
and rental loss insurance with respect to its properties and with policy
specifications and insured limits and deductibles customarily carried for
similar properties. There are, however, certain types of losses that are
generally not insured either because they are uninsurable or not economically
insurable. Should an uninsured loss occur, the Company could lose both its
invested capital in and anticipated profits from the property and would
continue to be obligated to repay any mortgage indebtedness on the property. Any such
loss could adversely affect the profitability and cash flow of the Company.
Reliance on Key Personnel and Agreements with Vornado
The Company believes that the continued services of Steven Roth, the
Company's Chief Executive Officer, are important to the Company's future
success. Although Mr. Roth has a significant ownership interest in the Company,
there is no assurance that he will remain with the Company. In addition, the
Company has retained Vornado pursuant to the Management and Development
Agreement, to manage all of the Company's business affairs and to manage and
develop the Company's properties, and pursuant to the Retention Agreement, to
actoperate so as the Company's exclusive leasing agent with respect to all of the
Company's properties. If, for any reason, Mr. Roth and Vornado do not continue
to be active in the Company's management, the Company's operations could be
adversely affected.
Changes in Operating or Investment Strategy
The Company's operating and investment strategy and its policies with
respect to certain other activities, including growth, capitalization,
distributions and REIT status, will be determined by the Board of Directors of
the Company. The Board of Directors may amend or revise these policies from time
to time at their discretion without a vote of the stockholders of the Company.
Adverse Consequences of the Failure to Qualify or Remain Qualified as a REIT
The Board of Directors of the Company has determined that the Company
should take the necessary actions to qualify as a REIT for federalFederal income tax purposes,
under the Code. Although management believes that the Company will be
organized and will operatewe might fail to remain qualified in such a manner as to so qualify, no assurance can
be given that it will qualify or remain so qualified. Future economic, market,
legal, tax or other considerations may cause management to determine that it is
in the best interest of the Company and its stockholders to revoke the REIT
-10-
election.this way. Qualification as a REIT for
federalFederal income tax purposes involves the
application ofis governed by highly technical and complex
provisions of the Internal Revenue Code provisions for which there are only limited
judicial or administrative interpretations,interpretations. Our qualification as a REIT also
depends on various facts and the determination
of various factual matters and circumstances that are not entirely within the control of
the Company may affect its ability to qualify as a REIT.our
control. In addition, no
assurance can be given that legislation, new regulations, administrative
interpretations or court decisions will notmight significantly change the tax laws with
respect to the requirements for qualification as a REIT or the federalFederal income
tax consequences of such qualification.qualification as a REIT.
In order to qualify and maintain itsour qualification as a REIT for federalFederal
income tax purposes, the Company iswe are required, among other distribution
requirements,conditions, to distribute as
dividends on shares of Common Stock and/or
Preferred Stockto our stockholders at least 95%90% of its "real estate investment trustour annual REIT taxable income." As
of December 31, 1994, the Company2002, we had reported net operating loss ("NOL") carryovers of
approximately $110 million,$94,064,000, which generally would be available to offset the amount of real estate investment trustREIT
taxable income that the Companywe otherwise would be required to distribute. However, the
NOLsnet operating losses reported on the Company'sour tax returns are not binding on the Internal
Revenue Service (the "IRS") and are subject to adjustment as a result of future IRS
audits. In
addition, under Section 382 of the Internal Revenue Code, the Company'sour ability to use its NOLour
net operating loss carryovers could be limited if, generally, there wereare
significant changes in the ownership of itsour outstanding stock. Since itsour
reorganization as a REIT the Company hascommencing in 1995, we have not paid regular dividends
and, unless otherwise provided in an applicable Prospectus Supplement, doesprospectus supplement, do not
believe that itwe will be required to, and may not pay regular dividends, until
its NOLour net operating loss carryovers have been fully utilized, on any Common Stock or Preferred Stock issued pursuant to
this Prospectus except for dividends
on Preferred Stockpreferred stock as may be described in anyan applicable Prospectus Supplement.
Anti-Takeover Effectsprospectus supplement.
12
LIMITS ON CHANGES IN CONTROL MAY DISCOURAGE TAKEOVER ATTEMPTS BENEFICIAL TO
STOCKHOLDERS.
Provisions in our certificate of Provisions of the Certificate of Incorporationincorporation and By-laws
Certainour by-laws as well as
provisions of the CertificateInternal Revenue Code and Delaware corporate law, may:
- delay or prevent a change of Incorporationcontrol over us or a tender offer, even if
such action might be beneficial to our stockholders, and
the By-laws- limit our stockholders' opportunity to receive a potential premium for
their shares of the Company may be deemedcommon stock over then-prevailing market prices.
Stock Ownership Limit. Primarily to have anti-takeover effects and may discourage or
make more difficult a takeover attempt that a stockholder might consider in its
best interest. The Certificatefacilitate maintenance of Incorporation provides that the Board of
Directors of the Company be divided into three classes serving staggered
three-year terms and that the number of directors will be no greater than
seventeen or less than three. The classes of directors are as nearly equal in
number as possible. Accordingly, approximately one-third of the Company's Board
of Directors will be elected each year. The By-laws provide that any vacancies
on the Board of Directors may only be filled by the remaining directors and not
by the stockholders. This precludes stockholders from removing incumbent
directors without cause and filling the resulting vacancies with their own
nominees. These provisions, among other things, limit the ability of the
stockholders to amend or repeal the By-laws or certain provisions of the
Certificate of Incorporation.
Additionally, for the Company to qualifyour
qualification as a REIT, our certificate of incorporation generally prohibits
ownership, directly, indirectly or beneficially, by any single stockholder of
more than 9.9% of the outstanding shares of preferred stock of any series or
4.9% of our outstanding common stock. Our board of directors may waive or modify
these ownership limits with respect to one or more persons if it is satisfied
that ownership in excess of these limits will not jeopardize our status as a
REIT for Federal income tax purposes. See "Description of Capital
Stock -- Restrictions on Ownership of Preferred Stock" and "-- Restrictions on
Ownership of Common Stock" for more information. In addition, our board of
directors has, subject to certain conditions and limitations, exempted our
manager, Vornado Realty Trust, and certain of its affiliates from these
ownership limitations. Shares owned in violation of these ownership limits will
be subject to the loss of rights and other restrictions. These ownership limits
may have the effect of inhibiting or impeding a change in control.
THE NUMBER OF SHARES OF OUR COMMON STOCK AND THE MARKET FOR THOSE SHARES GIVE
RISE TO VARIOUS RISKS.
ALEXANDER'S, INC. HAS OUTSTANDING AND EXERCISABLE OPTIONS TO PURCHASE OUR
COMMON STOCK. THE EXERCISE OF THESE OPTIONS COULD DECREASE THE MARKET PRICE OF
THE SHARES OF COMMON STOCK CURRENTLY OUTSTANDING.
As of September 30, 2003, 105,000 options were outstanding and exercisable
at a weighted-average exercise price of $70.375. Additionally, 1,745,000 shares
are available for future grant under the Code, not more
than 50%terms of our omnibus stock plan. We
cannot predict the impact that future exercises of outstanding options or grants
of additional options would have on the market price of our common stock.
CHANGES IN MARKET CONDITIONS COULD DECREASE THE MARKET PRICE OF OUR
SECURITIES.
The value of our securities depends on various market conditions, which may
change from time to time. Among the market conditions that may affect the value
of our shares are the outstandingfollowing:
- the extent of institutional investor interest in us,
- the reputation of REITs generally and the attractiveness of their equity
securities in comparison to other equity securities, including securities
issued by other real estate companies, and fixed income securities,
- our net operating loss carryovers which are generally available to offset
the amount of our REIT taxable income that we otherwise would be required
to distribute as dividends,
- our financial condition and performance,
- our ability to complete our Lexington Avenue development project on a
timely basis and for the budgeted amount,
- prevailing interest rates, and
- general financial market conditions.
In addition, the stock may be owned, directlymarket in recent years has experienced extreme price
and volume fluctuations that have often been unrelated or indirectly, by five or fewer individuals (as defineddisproportionate to
the operating performance of companies.
13
ALEXANDER'S, INC.
Alexander's, Inc. is a real estate investment trust organized under the
laws of the State of Delaware and engaged in leasing, managing, developing and
redeveloping properties. Alexander's activities are conducted through its
manager, Vornado Realty Trust.
Alexander's has six properties consisting of:
- Operating properties:
- the Code to include
certain entities) during the last halfKings Plaza Regional Shopping Center on Flatbush Avenue in Brooklyn,
New York, which contains 1,100,000 square feet, is comprised of a
taxable yeartwo-level mall containing 470,000 square feet, a 289,000 square foot
department store leased to Sears and another anchor department store
owned and operated as a Macy's by Federated Department Stores, Inc.,
- the stock mustRego Park I property located on Queens Boulevard and 63rd Road in
Rego Park, Queens, New York, which contains a 351,000 square foot
building, which is 100% leased to Sears, Circuit City, Bed Bath &
Beyond, Marshalls and Old Navy,
- the Paramus property which consists of 30.3 acres of land located at the
intersection of Routes 4 and 17 in Paramus, New Jersey and is leased to
IKEA Properties, Inc.,
- the Flushing property located at Roosevelt Avenue and Main Street in
Flushing, New York, which contains a 177,000 square foot building that
is currently vacant,
- Property under development:
- the Lexington Avenue property which comprises the entire square block
bounded by Lexington Avenue, East 59th Street, Third Avenue and East
58th Street in Manhattan, New York, and
- Property to be beneficially owned by 100 or more persons during at least 335 daysdeveloped:
- the Rego Park II property, which comprises one and one-half square
blocks of a taxable
year of 12 months (or during a proportionate part of a shorter taxable year).
Accordingly,vacant land adjacent to the Certificate of Incorporation contains provisions that restrict
the ownership and transfer of shares of capital stock. The Certificate of
Incorporation also contains provisions that restrict the ownership and transfer
of shares of capital stock to reduce the risk that the Company's ability to use
its NOLs would be limited.
USE OF PROCEEDS
Except as otherwise provided in the applicable Prospectus Supplement, the
Company anticipates that the net proceeds of the sales of the Securities will be
used for general corporate purposes which may include, without limitation,
redevelopment of the Company's Redevelopment Properties and repayment of
outstanding indebtedness.
-11-Rego Park I property.
14
CONSOLIDATED RATIORATIOS OF EARNINGS TO FIXED CHARGES
For purposes of calculating the followingOur consolidated ratios (i) earnings represent
income from continuing operations before income taxes, plus fixed charges, and
(ii) fixed charges represent interest expense on all indebtedness from
continuing operations (including the Company's 50% share of interest expense in
the Kings Plaza Mall and amortization of deferred debt issuance costs) and the
portion of operating lease rental expense that is representative of the interest
factor (deemed to be one-third of operating lease rentals). There were no shares
of Preferred Stock outstanding during any of the periods below indicated and
therefore the ratio of earnings to combined fixed charges and preferred share
dividend requirements would have been the same as the ratio of earnings to fixed charges for each period indicated.of the fiscal
years ended December 31, 1998, 1999, 2000, 2001 and 2002 and the nine-month
periods ended September 30, 2002 and 2003 are as follows:
Nine Months Five Months
Ended Year Ended Ended(1) Fiscal Year Ended
----- ----------NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- ------------------
1998 1999 2000 2001 2002 2002 2003
-------- -----------------
Sept. 30, Dec. 31, Dec. 31, Dec. 31, July 31, July 25, July 27, July 28,
1995 1994 1993(1) 1993 1993(2) 1992 1991 1990------- -------- ---- ------------ ------- ---- ------- ---- ---- ------------
Ratio of earnings to fixed
charges: -- 1.39 4.68 2.49 21.89(3)charges.......................... -- -- 2.35-- 1.17 -- -- --
Deficiency in earnings available to
cover fixed charges: $12,605,000charges.............. $(14,650) $(4,609) $(12,306) -- -- -- -- $14,630,000 $300,000 --
- ----------
(1) In November 1993, the Company changed to a calendar year from a fiscal year
ending on the last Saturday in July. The ratio for the year ended December
31, 1993 is included for comparative purposes only.
(2) Includes 53 weeks.
(3) This amount includes a gain on the sale of leases of $28,779,000, without
which the Company would have had a deficiency in earnings to cover fixed
charges of $1,628,000.$(11,386) $(7,431) $(41,759)
======== ======= ======== ==== ======== ======= ========
-12-
CONDENSED CONSOLIDATED PRO FORMA FINANCIAL INFORMATIONFor purposes of calculating these ratios, (a) earnings represent pretax
income from continuing operations plus fixed charges less capitalized interest,
and (b) fixed charges represent interest expense from continuing operations,
including amortization of deferred debt issuance costs, plus the portion of
operating lease rental expense that management considers representative of the
interest factor (one-third of operating lease rentals) plus capitalized
interest. There were no preference securities outstanding during the periods
shown. The unaudited pro forma information set forth below presentscalculation of the condensed
consolidated statements of operations for the Company for the nine months ended
September 30, 1995ratios and the year ended December 31, 1994,deficiencies in earnings available
to cover fixed charges is included as if on January 1,
1994,Exhibit 12 to this registration statement.
USE OF PROCEEDS
Except as may be described otherwise in a prospectus supplement, we expect
to use the Company executednet proceeds from the Management Agreement with Vornado Realty Trust,
issued $75,000,000sale of new debt ($45,000,000 at a ratethe securities offered by this
prospectus for general corporate purposes, which may include redevelopment of
16.43%our properties and $30,000,000
at a ratethe repayment of 9.86%) and used the proceeds to pay $39,552,000 ofour outstanding funded debt, $7,000,000 of unpaid real estate taxes, $24,000,000 of amounts due
to unsecured creditors and $4,448,000 of other liabilities.
Nine Months Ended September 30, 1995 Year Ended December 31, 1994
------------------------------------ ----------------------------
Historical Adjustments Pro Forma Historical Adjustments Pro Forma
---------- ----------- --------- ---------- ----------- ---------
(in thousands except per share amounts)
Real estate operating
revenue $ 7,985 $ 7,985 $ 10,853(1) $ 10,853
Equity in income of
unconsolidated joint
venture 2,131 2,131 1,821 1,821
-------- -------- -------- --------
Total revenue 10,116 10,116 12,674 12,674
-------- -------- -------- --------
Expenses:
Operating, general and
administrative 5,683 $ 500(2) 6,183 4,697(1) $ 3,000(2) 7,697
Depreciation and
amortization 1,393 1,393 1,821 1,821
Reorganization costs 1,938 1,938 3,721 3,721
-------- -------- -------- -------- -------- --------
Total expenses 9,014 500 9,514 10,239 3,000 13,239
-------- -------- -------- -------- -------- --------
Operating income (loss) 1,102 (500) 602 2,435 (3,000) (565)
Interest and debt expense (10,208) (1,149)(3) (11,487) (3,331) (5,431)(3) (9,762)
(130)(4) (1,000)(4)
Interest and other income,
net 1,070 1,070 4,768 4,768
Gain on sale of real estate 161 161
-------- -------- -------- -------- -------- --------
(Loss) income before reversal
of deferred taxes (8,036) (1,779) (9,815) 4,033 (9,431) (5,398)
Reversal of deferred taxes 1,406 1,406
-------- -------- -------- -------- -------- --------
Net (Loss) Income $ (6,630) $ (1,779) $ (8,409) $ 4,033 $ (9,431) $ (5,398)
======== ======== ======== ======== ======== ========
Net (Loss) Income Per
Share $ (1.33) $ (1.68) $ .81 $ (1.08)
======== ========= ======== ========
- ----------
(1) Tenant reimbursement of expenses previously offset against operating
expenses, is included in real estate operating revenue to conform to the
current year's presentation.
(2) Reflects management fees payable to Vornado pursuant to the Management
Agreement.
-13-
(3) The adjustments to interest and debt expense reflect the following:
Nine Months
Ended Year Ended
September 30, 1995 December 31, 1994
(in thousands)
Issuance of $75,000,000 of new debt on
Marchindebtedness.
15 1995 ($45,000,000 at a rate
of 16.43% and $30,000,000 at a
rate of 9.86%) $ (2,156) $(10,350)
Repayment of outstanding funded debt of
$39,552,000 with proceeds from the
new debt 726 2,895
Elimination of interest on unpaid real
estate taxes and other liabilities
repaid with the proceeds from the
new debt and additional capitalized
interest 281 2,024
--- -----
$ (1,149) $ (5,431)
======== ========
In addition to the $75,000,000 of new debt reflected above, in the first
quarter of 1995 the Company borrowed $21,631,000 (at a rate of LIBOR plus
1.625%, 8.19% at March, 31, 1995) for new construction financing and
$25,000,000 (at a rate of LIBOR plus 4.25%, 10.38% at March 31, 1995) for
other working capital purposes. The interest on these additional borrowings
is not reflected in the adjustments above.
(4) Reflects the amortization of $1,875,000 of debt issuance costs.
-14-
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may bePlease note that in this section references to "Alexander's," "we," "our"
and "us" refer to Alexander's, Inc. and its consolidated subsidiaries unless the
context requires otherwise. Also, in this section, references to "holders" mean
those who own debt securities registered in their own names, on the books that
we or the trustee maintain for this purpose, and not those who own beneficial
interests in debt securities registered in street name or in debt securities
issued from time to time in book-entry form through one or more series.
The particular termsdepositaries. Owners of each series of Debt Securities offeredbeneficial
interests in the debt securities should see "Legal Ownership and Book-Entry
Issuance" for more information.
DEBT SECURITIES MAY BE SENIOR OR SUBORDINATED
We may issue senior or subordinated debt securities. Neither the senior
debt securities nor the subordinated debt securities will be secured by any Prospectus
Supplementof
our property or Prospectus Supplementsassets. Thus, by owning a debt security, you are an unsecured
creditor of ours.
The senior debt securities will be described therein. The Senior Debt
Securities are to be issued under an Indenture (the "Senior Indenture") between
the Companyour senior debt indenture
described below and State Street Bank & Trust Company, N.A., as trustee (the "Senior
Trustee").will rank equally with all of our other unsecured and
unsubordinated debt.
The Subordinated Debt Securities are tosubordinated debt securities will be issued under a separate
Indenture (the "Subordinated Indenture") betweenour subordinated debt
indenture described below and will be subordinate in right of payment to all of
our "senior indebtedness," as defined in the Companysubordinated debt indenture. The
prospectus supplement for any series of subordinated debt securities or the
information incorporated in this prospectus by reference will indicate the
approximate amount of senior indebtedness outstanding as of the end of our most
recent fiscal quarter. As of September 30, 2003, $678,553,000 or 100% of our
total indebtedness constituted senior indebtedness. Neither indenture limits our
ability to incur additional senior indebtedness, unless otherwise described in
the prospectus supplement relating to any series of debt securities. Our senior
indebtedness is, and State Street
Bank & Trust Company, N.A, as trustee (the "Subordinated Trustee"). The Senior
Indentureany additional senior indebtedness will be, structurally
subordinate to the indebtedness of our subsidiaries.
When we refer to "debt securities" in this prospectus, we mean both the
senior debt securities and the Subordinated Indenture are sometimes referred to collectively
as the "Indentures"subordinated debt securities.
THE SENIOR DEBT INDENTURE AND THE SUBORDINATED DEBT INDENTURE
The senior debt securities and the Senior Trustee and Subordinated Trusteesubordinated debt securities are sometimes referred to collectively aseach
governed by a document called an indenture, the "Trustees."
The following summaries of certain provisionssenior debt indenture, in the
case of the Senior Debt
Securities, the Subordinated Debt Securities, the Senior Indenturesenior debt securities, and the Subordinated Indenture,subordinated debt indenture, in the
case of the subordinated debt securities. Each indenture is a contract between
Alexander's, Inc. and The Bank of New York, which will initially act as modified or superseded by any applicable Prospectus
Supplement,trustee.
The indentures are brief summaries of certain provisions thereof, do not purport to
be complete and are subject, and are qualified in their entirety by reference,
to allsubstantially identical, except for the provisions relating
to subordination, which are included only in the subordinated debt indenture.
The trustee under each indenture has two main roles:
- First, the trustee can enforce your rights against us if we default.
There are some limitations on the extent to which the trustee acts on
your behalf, which we describe later under "-- Default, Remedies and
Waiver of Default."
- Second, the trustee performs administrative duties for us, such as
sending interest payments and notices.
See "-- Our Relationship with the Trustee" below for more information about
the trustee.
When we refer to the indenture or the trustee with respect to any debt
securities, we mean the indenture under which those debt securities are issued
and the trustee under that indenture.
WE MAY ISSUE MANY SERIES OF DEBT SECURITIES
We may issue as many distinct series of debt securities as we wish under
either indenture. This section of the Indenture applicable to a particular series of Debt
Securities. Wherever particular Sections, Articles or definedprospectus summarizes terms of the Indentures are referreddebt
securities that apply generally to hereinall series. The provisions of each
16
indenture allow us not only to issue debt securities with terms different from
those of debt securities previously issued under that indenture, but also to
"reopen" a previous issue of a series of debt securities and issue additional
debt securities of that series. We will describe most of the financial and other
specific terms of a series, whether it be a series of the senior debt securities
or in a Prospectus Supplement, such Sections,
Articles or defined terms are incorporated herein or therein by reference.
General
Unless otherwise specifiedsubordinated debt securities, in the prospectus supplement accompanying this
prospectus. If there are any differences between your prospectus supplement and
this prospectus, your prospectus supplement will control. Thus, the statements
we make in this section may not apply to your debt security.
When we refer to a series of debt securities, we mean a series issued under
the applicable Prospectus Supplement,indenture. When we refer to your prospectus supplement, we mean
the Debt Securities will be general unsecured obligationsprospectus supplement describing the specific terms of the Company.debt security you
purchase. The Indentures do not limitterms used in your prospectus supplement have the meanings
described in this prospectus, unless otherwise specified.
AMOUNTS THAT WE MAY ISSUE
Neither indenture limits the aggregate amount of Debt Securities whichdebt securities that we
may be
issued thereunder,issue or the number of series or the aggregate amount of any particular
series. We may issue debt securities and Debt Securities may be issued thereunder from time to
timeother securities in separate seriesamounts that exceed
the total amount specified on the cover of this prospectus up to the aggregate
amount from time to time authorized by the Companyour board of directors for each series. Unlessseries, at any time without
your consent and without notifying you.
The indentures and the debt securities do not limit our ability to incur
other indebtedness or to issue other securities, unless otherwise described in
the prospectus supplement relating to any series of debt securities. Also, we
are not subject to financial or similar restrictions by the terms of the debt
securities, unless otherwise described in the prospectus supplement relating to
any series of debt securities.
PRINCIPAL AMOUNT, STATED MATURITY AND MATURITY
The principal amount of a debt security means the principal amount payable
at its stated maturity, unless that amount is not determinable, in which case
the principal amount of a debt security is its face amount. Any debt securities
owned by us or any of our affiliates are not deemed to be outstanding for
certain determinations under the indenture.
The term "stated maturity" with respect to any debt security means the date
on which the principal amount of the debt security is scheduled to become due.
The principal may become due sooner, by reason of redemption or acceleration
after a default or otherwise in accordance with the terms of the debt security.
The date on which the principal actually becomes due, whether at the stated
maturity or earlier, is called the "maturity" of the principal.
We also use the terms "stated maturity" and "maturity" to refer to the
dates when other payments become due. For example, we refer to a regular
interest payment date when an installment of interest is scheduled to become due
as the "stated maturity" of that installment.
When we refer to the "stated maturity" or the "maturity" of a debt security
without specifying a particular payment, we mean the stated maturity or
maturity, as the case may be, of the principal.
OUR DEBT SECURITIES ARE STRUCTURALLY SUBORDINATED TO THE INDEBTEDNESS OF OUR
SUBSIDIARIES
Because our assets consist principally of interests in the subsidiaries
through which we own our properties and conduct our businesses, our right to
participate as an equity holder in any distribution of assets of any of our
subsidiaries upon the subsidiary's liquidation or otherwise, and thus the
ability of our security holders to benefit from the distribution, is junior to
creditors of the subsidiary, except to the extent that any claims we may have as
a creditor of the subsidiary may be recognized. We may also guarantee some
obligations of our subsidiaries. Any liability we may have for our subsidiaries'
obligations could reduce our assets that are available to satisfy our direct
creditors, including investors in our debt securities.
17
THIS SECTION IS ONLY A SUMMARY
The indentures and their associated documents, including your debt
security, contain the full legal text of the matters described in this section
and your prospectus supplement. We have filed forms of the indentures as
exhibits to our registration statement of which this prospectus is a part. See
"Available Information" for information on how to obtain copies of them.
This section and your prospectus supplement summarize all the material
terms of the indentures and your debt security. They do not, however, describe
every aspect of the indentures and your debt security. For example, in this
section and your prospectus supplement, we use terms that have been given
special meaning in the indentures, but we describe the meaning for only the more
important of those terms.
GOVERNING LAW
The indentures and the debt securities will be governed by New York law.
CURRENCY OF DEBT SECURITIES
Amounts that become due and payable on a debt security in cash will be
payable in a currency, currencies or currency units specified in the
Prospectus
Supplement,accompanying prospectus supplement. We refer to this currency, currencies or
currency units as the Senior Debt Securities when issued"specified currency." The specified currency for a debt
security will be unsubordinated
obligationsU.S. dollars, unless your prospectus supplement states
otherwise. Some debt securities may have different specified currencies for
principal and interest. You will have to pay for your debt securities by
delivering the requisite amount of the Companyspecified currency for the principal to
us or the underwriters, agents or dealers that we name in the applicable
prospectus supplement, unless other arrangements have been made between you and
us or you and such firm. We will rank equallymake payments on a debt security in the
specified currency, except as described below in "Payment Mechanics for Debt
Securities."
FORM OF DEBT SECURITIES
We will issue each debt security in global, i.e., book-entry form only,
unless we specify otherwise in the applicable prospectus supplement. Debt
securities in book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder of all the debt
securities represented by that global security. Those who own beneficial
interests in a global debt security will do so through participants in the
depositary's securities clearance system, and ratably with all other
unsecured and unsubordinated indebtednessthe rights of these indirect
owners will be governed solely by the applicable procedures of the Company. The Subordinateddepositary
and its participants. We describe book-entry securities below under "-- Legal
Ownership and Book-Entry Issuance."
In addition, we will issue each debt security in fully registered form,
without coupons.
TYPES OF DEBT SECURITIES
We may issue any of the following types of senior debt securities or
subordinated debt securities:
FIXED RATE DEBT SECURITIES
A debt security of this type will bear interest at a fixed rate described
in the applicable prospectus supplement. This type includes zero coupon debt
securities, which bear no interest and are instead issued at a price usually
significantly lower than the principal amount. See "-- Original Issue Discount
Debt Securities when issuedSecurities" below for more information about zero coupon and other original
issue discount debt securities.
Each fixed rate debt security, except any zero coupon debt security, will
be subordinatedbear interest from its original issue date or from the most recent date to which
interest on the debt security has been paid or made available for payment.
Interest will accrue on the principal of a fixed rate debt security at the fixed
yearly rate stated in rightthe applicable prospectus supplement, until the principal
is paid or made available for payment or the debt security is exchanged. Each
payment of interest due on an interest payment date or the date of maturity will
include interest accrued from and including the last date to which interest has
been paid, or made available for
18
payment, or from the issue date if none has been paid, or made available for
payment, to but excluding the priorinterest payment in fulldate or the date of all Senior Debt (as defined inmaturity. We
will compute interest on fixed rate debt securities on the Subordinated Indenture)basis of the Companya 360-day
year of twelve 30-day months. We will pay interest on each interest payment date
and at maturity as described below under "-- SubordinationPayment Mechanics for Debt
Securities."
FLOATING RATE DEBT SECURITIES
A debt security of Subordinated Debt
Securities"this type will bear interest at rates that are
determined by reference to an interest rate formula. In some cases, the rates
also may be adjusted by adding or subtracting a spread or multiplying by a
spread multiplier and may be subject to a minimum rate or a maximum rate. If a
debt security is a floating rate debt security, the formula and any adjustments
that apply to the interest rate will be specified in the Prospectus Supplementapplicable prospectus
supplement.
Each floating rate debt security will bear interest from its original issue
date or from the most recent date to which interest on the debt security has
been paid or made available for payment. Interest will accrue on the principal
of a floating rate debt security at the yearly rate determined according to the
interest rate formula stated in the applicable prospectus supplement, until the
principal is paid or made available for payment or the security is exchanged. We
will pay interest on each interest payment date and at maturity as described
below under "-- Payment Mechanics for Debt Securities."
Calculation of Interest. Calculations relating to floating rate debt
securities will be made by the calculation agent, an institution that we appoint
as our agent for this purpose. The prospectus supplement for a particular
floating rate debt security will name the institution that we have appointed to
act as the calculation agent for that debt security as of its original issue
date. We may appoint a different institution to serve as calculation agent from
time to time after the original issue date of the debt security without your
consent and without notifying you of the change.
For each floating rate debt security, the calculation agent will determine,
on the corresponding interest calculation or determination date, as described in
the applicable prospectus supplement, the interest rate that takes effect on
each interest reset date. In addition, the calculation agent will calculate the
amount of interest that has accrued during each interest period, i.e., the
period from and including the original issue date, or the last date to which
interest has been paid or made available for payment, to but excluding the
payment date. For each interest period, the calculation agent will calculate the
amount of accrued interest by multiplying the face or other specified amount of
the floating rate debt security by an accrued interest factor for the interest
period. This factor will equal the sum of the interest factors calculated for
each day during the interest period. The interest factor for each day will be
expressed as a decimal and will be calculated by dividing the interest rate,
also expressed as a decimal, applicable to that day by 360 or by the actual
number of days in the year, as specified in the applicable prospectus
supplement.
Upon the request of the holder of any floating rate debt security, the
calculation agent will provide for that debt security the interest rate then in
effect and, if determined, the interest rate that will become effective on the
next interest reset date. The calculation agent's determination of any interest
rate, and its calculation of the amount of interest for any interest period,
will be final and binding in the absence of manifest error.
All percentages resulting from any calculation relating to a debt security
will be rounded upward or downward, as appropriate, to the next higher or lower
one hundred-thousandth of a percentage point, e.g., 9.876541% (or .09876541)
being rounded down to 9.87654% (or .0987654) and 9.876545% (or .09876545) being
rounded up to 9.87655% (or .0987655). All amounts used in or resulting from any
calculation relating to a floating rate debt security will be rounded upward or
downward, as appropriate, to the nearest cent, in the case of U.S. dollars, or
to the nearest corresponding hundredth of a unit, in the case of a currency
other than U.S. dollars, with one-half cent or one-half of a corresponding
hundredth of a unit or more being rounded upward.
In determining the base rate that applies to a floating rate debt security
during a particular interest period, the calculation agent may obtain rate
quotes from various banks or dealers active in the relevant market, as described
in the applicable prospectus supplement. Those reference banks and dealers may
include the
19
calculation agent itself and its affiliates, as well as any underwriter, dealer
or agent participating in the distribution of the relevant floating rate debt
securities and its affiliates.
INDEXED DEBT SECURITIES
A debt security of this type provides that the principal amount payable at
its maturity, and the amount of interest payable on an offeringinterest payment date,
will be determined by reference to:
- securities of Subordinated Debt Securities.one or more issuers,
- one or more currencies,
- one or more commodities,
- any other financial, economic or other measure or instrument, including
the occurrence or nonoccurrence of any event or circumstance, or
- one or more indices or baskets of the items described above.
If you are a holder of an indexed debt security, you may receive an amount
at maturity that is greater than or less than the face amount of your debt
security depending upon the value of the applicable index at maturity. The value
of the applicable Prospectus Supplementindex will fluctuate over time.
If you purchase an indexed debt security, your prospectus supplement will
include information about the relevant index and about how amounts that are to
become payable will be determined by reference to the price or Prospectus Supplementsvalue of that
index. The prospectus supplement will also identify the calculation agent that
will calculate the amounts payable with respect to the indexed debt security and
may exercise significant discretion in doing so.
ORIGINAL ISSUE DISCOUNT DEBT SECURITIES
A fixed rate debt security, a floating rate debt security or an indexed
debt security may be an original issue discount debt security. A debt security
of this type is issued at a price lower than its principal amount and provides
that, upon redemption or acceleration of its maturity, an amount less than its
principal amount will be payable. An original issue discount debt security may
be a zero coupon debt security. A debt security issued at a discount to its
principal amount may, for Federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable upon redemption
or acceleration of maturity. The Federal income tax consequences of owning an
original issue discount debt security may be described in the applicable
prospectus supplement.
INFORMATION IN THE PROSPECTUS SUPPLEMENT
A prospectus supplement will describe the followingspecific terms of thea particular
series of Debt Securities in respectdebt securities, which will include some or all of which this Prospectus is being delivered: (1)the following:
- the title of such Debt Securities;
(2)the debt securities,
- whether they are senior debt securities or subordinated debt securities,
- any limit on the aggregate principal amount of such Debt Securities; (3)the debt securities of the
same series,
- the person to whom any interest on any Debt Securitya debt security of the series shallwill be
payable, if other than the person in whose name the Debt Securitydebt security is
registered at the close of business on the regular record date; (4)date,
- the stated maturity,
- the specified currency, currencies or currency units for principal and
interest, if not U.S. dollars,
- the price at which we originally issue the debt securities, expressed as
a percentage of the principal amount, and the original issue date,
- whether the debt securities are fixed rate debt securities, floating rate
debt securities or dates onindexed debt securities,
20
- if the debt securities are fixed rate debt securities, the yearly rate at
which such Debt Securitiesthe debt securities will mature; (5) the rate or rates ofbear interest, if any, or the method of calculation
thereof, which such Debt Securities will bear, the date or dates from which any
such interest will accrue,and the interest
payment dates,
on which any such interest
on such Debt Securities will be payable and- the regular record date for any interest payable on any interest payment
date; (6)date,
- the place or places where the principal of, premium, if any, and interest
on such Debt Securitiesthe debt securities will be payable; (7) the period or periods within which, the events upon the occurrence
of which, and the price or prices at which, such Debt Securities may, pursuant
to any optional or mandatory provisions, be redeemed or purchased, in whole or
in part, by the Company and any terms and conditions relevant thereto; (8) the
obligations of the Company, if any, to redeem or repurchase such Debt Securities
pursuant to any sinking fund provision or analogous provision or at the option
of the Holders and the period or periods within which, and the other terms and
conditions upon which, such Debt Securities shall be redeemed, repaid or
repurchased, in whole or in part, pursuant to such obligations; (9)payable,
- the denominations in which any such Debt Securitiesthe debt securities will be issuable, if other
than denominations of $1,000 and any integral multiple thereof; (10)of $1,000,
- if the debt securities are floating rate debt securities, the interest
rate basis, any applicable index currency or maturity, spread or spread
multiplier or initial, maximum or minimum rate, the interest reset,
determination, calculation and payment dates, the day count used to
calculate interest payments for any period, and the calculation agent,
- any index or formula used to determine the amount of payments of
principal of and any premium and interest on such Debt Securities; (11) the currency, currencies or currency
unit or units of payment of principal of and any premium and interest on such
Debt Securities if other than U.S. dollars; (12)debt securities,
- if the principaldebt securities may be exchanged for shares of our common or
premium, if any, or interestpreferred stock, the terms on such Debt Securitieswhich exchange may occur, including whether
exchange is to be payable,mandatory, at the electionoption of the Companyholder or a Holder thereof, in oneat our option, the
period during which exchange may occur, the initial exchange rate and the
circumstances or more currencies or
currency units other than that or thosemanner in which such Debt Securitiesthe amount of common or preferred stock
issuable upon exchange may be adjusted or calculated according to the
market price of our common or preferred stock,
- if the debt securities are statedoriginal issue discount debt securities, the
yield to be payable, the currency, currencies or currency units in
-15-
which payment of the principal of and any premium and interest on Debt
Securities of such series as to which such election is made shall be payable,
and the periods within which and the terms and conditions upon which such
election is to be made; (13)maturity,
- if other than the principal amount, thereof, the portion of the principal amount
of such Debt Securitiesthe debt securities of the series which will be payable upon
acceleration of the maturity thereof; (14)of the debt securities,
- if applicable, the circumstances under which the debt securities may be
mandatorily redeemed by us, redeemed at our option or repaid at the
holder's option before the stated maturity, including any redemption
commencement date, repayment date(s), redemption price(s) and redemption
period(s),
- if the principal amount of any Debt Securitiesthe debt securities which will be payable at
the maturity thereofof the debt securities will not be determinable as of any
date prior to suchbefore maturity, the amount which will be deemed to be the
outstanding principal amount of such Debt Securities; (15)the debt securities,
- the applicability of any provisions described below under "Defeasance"; (16)
whether any of such Debt Securities are to be issuable in permanent global form
("Global Security")"-- Defeasance and
if so,Covenant Defeasance,"
- the terms and conditions, if any, upon which
interests in such Securities in global form may be exchanged, in whole or in
part,depositary for the individual Debt Securities represented thereby; (17)debt securities, if other than the applicability ofDepository
Trust Company, known as DTC, and any covenant with respect to such Debt Securities andcircumstances under which the holder
may request securities in non-global form,
- the applicability of any provisions described below under "Events"-- Default, Remedies
and Waiver of Default" andDefault,"
- any additional Events of Default applicable thereto; (18) any covenants applicable to such Debt Securities; (19) the termsdebt securities and conditions, if any
pursuantelimination of or modification to which the Debt Securitiescovenants described under
"-- Covenants,"
- the names and duties of any co-trustees, depositaries, authenticating
agents, paying agents, transfer agents or registrars for the debt
securities,
- the Federal income tax consequences to holders of fixed rate debt
securities that are convertiblezero coupon or exchangeable into
shares of Common Stockoriginal issue discount debt
securities, floating rate debt securities, indexed debt securities or
other securities;original discount debt securities, and
(20)- any other terms of such
Debt Securities not inconsistent with the provisions of the Indentures. (Section
301) Debt Securities may alsodebt securities, which could be issued under the Indentures upon the exercise
of Debt Warrants. See "Description of Debt Warrants."
Debt Securities may be issued at a discountdifferent from
their principal amount.
United States federal income tax considerations and other special considerations
applicable to any such original issue discount Securities will bethose described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
the restrictions, elections, general tax considerations, specific terms and
other information with respect to such issue of Debt Securities will be set
forth in the applicable Prospectus Supplement.
Since the Company is a holding company, the rights of the Company, and
hence the right of creditors of the Company (including the Holders of Debt
Securities), to participate in any distribution of the assets of any subsidiary
upon its liquidation or reorganization orthis prospectus.
REDEMPTION AND REPAYMENT
Unless otherwise is necessarily subject to
the prior claims of creditors of any such subsidiary, except to the extent that
claims of the Company itself as a creditor of the subsidiary may be recognized.
The Indentures do not contain any provisions that limit the Company's
ability to incur indebtedness. Except as may be indicated in the applicable Prospectus Supplement with respect toprospectus supplement, a particular series of Debt Securities,
Holders of Debt Securitiesdebt
security will not havebe entitled to the benefit of any specific covenantssinking fund. That is, we
will not deposit money on a regular basis into any separate custodial account to
repay the debt securities. In addition, we will not be entitled to redeem a debt
security
21
before its stated maturity unless the applicable prospectus supplement specifies
a redemption commencement date. You will not be entitled to require us to buy a
debt security from you before its stated maturity unless your prospectus
supplement specifies one or provisionsmore repayment dates.
If your applicable prospectus supplement specifies a redemption
commencement date or a repayment date, it also will specify one or more
redemption prices or repayment prices, which may be expressed as a percentage of
the principal amount of the debt security. It also may specify one or more
redemption periods during which the redemption prices relating to a redemption
of debt securities during those periods will apply.
If we redeem less than all the debt securities of any series, we will, at
least 60 days before the redemption date set by us or any shorter period that is
satisfactory to the trustee, notify the trustee of the redemption date, of the
principal amount of debt securities to be redeemed and, if applicable, of the
tenor of the debt securities to be redeemed. The trustee will select from the
outstanding securities of the series the particular debt securities to be
redeemed not more than 60 days before the redemption date. This procedure will
not apply to any redemption of a single debt security.
If your prospectus supplement specifies a redemption commencement date, the
debt security will be redeemable at our option at any time on or after that date
or at a specified time or times. If we redeem the debt security, we will do so
at the specified redemption price, together with interest accrued to the
redemption date. If different prices are specified for different redemption
periods, the price we pay will be the price that applies to the redemption
period during which the debt security is redeemed.
If your prospectus supplement specifies a repayment date, the debt security
will be repayable at the holder's option on the specified repayment date at the
specified repayment price, together with interest accrued to the repayment date.
If we exercise an option to redeem any debt security, we will give to the
holder written notice of the principal amount of the debt security to be
redeemed, not less than 30 days nor more than 60 days before the applicable
redemption date. We will give the notice in the applicable Indenturemanner described below in
"-- Notices."
If a debt security represented by a global debt security is subject to
repayment at the holder's option, the depositary or Debt Securitiesits nominee, as the holder,
will be the only person that would protect
themcan exercise the right to repayment. Any indirect
owners who own beneficial interests in the eventglobal debt security and wish to
exercise a repayment right must give proper and timely instructions to their
banks or brokers through which they hold their interests, requesting that they
notify the Company engagesdepositary to exercise the repayment right on their behalf. Different
firms have different deadlines for accepting instructions from their customers,
and you should take care to act promptly enough to ensure that your request is
given effect by the depositary before the applicable deadline for exercise.
Street name and other indirect owners should contact their banks or brokers for
information about how to exercise a repayment right in a timely manner.
We or becomesour affiliates may purchase debt securities from investors who are
willing to sell from time to time, either in the subject of a highly
leveraged transaction, and the limitations on mergers, consolidations and
transfers ofopen market at prevailing
prices or in private transactions at negotiated prices. Debt securities that we
or they purchase may, at our discretion, be held, resold or cancelled.
MERGERS AND SIMILAR TRANSACTIONS
We generally are permitted to merge or consolidate with another entity. We
also are permitted to sell our assets substantially all of the Company's properties and assets as an entirety to another
entity. With regard to any person as described below under "-- Consolidation, Merger and
Saleseries of Assets." Such covenantsdebt securities, however, unless otherwise
indicated in the applicable prospectus supplement, we may not take any of these
actions unless all the following conditions are met:
- if the successor entity in the transaction is not Alexander's, Inc., the
successor entity must be waiveda corporation, partnership or modified bytrust organized
under the Companylaws of the United States, any state in the United States or
its Boardthe District of Directors, although HoldersColumbia and must expressly assume all of Debt Securities could waive or
modify such covenants as more fully described belowour obligations
under "-- Modificationthe debt securities of that series and Waiver."
The applicable Prospectus Supplementthe indenture with respect
to any particularthat series,
of Debt Securities that provide for- immediately after giving effect to the optional redemption, prepayment or
conversion of such Debt Securities upon the occurrence of certain events (i.e.,
a change of control), will describe the following: (1) the effects that such
provisions may have in deterring certain mergers, tender offers or other
takeover attempts, as well as that there may be possible adverse effects on the
market price of the Company's securities or ability to obtain financing; (2)
that the Company will comply with the requirements of applicable securities
laws, including Rules 14e-1 and 13e-4transaction, no default under the
Exchange Act, in connection with
such provisionsdebt securities of that series has occurred and any related offers by the Company; (3) whether the
occurrence of the specified events may give rise to cross-defaults on other
indebtedness such that payment on the offered Debt Securities may be effectively
subordinated; (4) limitations on the Company's financial or legal ability to
repurchase the offered Debt Securities upon the triggering of an event risk
provision requiring such a repurchase or offer to repurchase; (5) the impact, if
any,is continuing. For this
purpose, "default under the governing instrumentdebt securities of failure to repurchase, including whether
such failure to make any required repurchases in thethat series" means an
22
event of a change of
control will createdefault with respect to that series or any event that would be
an event of default with respect to that series if the offered Debt
Securities or will become an eventnotice
requirements and the required existence of -16-
the default only after the continuation of such failure for a specifiedspecific
period of time after written notice is given to the Company by the Trustee or to the
Companywere disregarded. We describe these matters below under
"-- Default, Remedies and the Trustee by the holdersWaiver of a specified percentage in aggregate
principal amount of the debt outstanding; (6) that there can be no assurance
that sufficient funds will be available at the time of the triggering of an
event risk provision to make any required repurchases; (7) if such offered Debt
Securities are to be subordinated to other obligations of the Company or its
subsidiaries that would be accelerated upon the triggering of a change in
control or similar event, the material effect thereof on such acceleration
provision and such offered Debt Securities; and (8) to the extent that there is
a definition of "change of control" in a supplemental indenture relating to such
offered Debt Securities that includes the concept of "all or substantially all,Default,"
the established meaning of such phrase under New York law, including whether
such a Change of Control will be triggered if there is a change of control of
the Board of Directors as a result of a proxy contest involving the solicitation
of revocable proxies.
Conversion or Exchange of Debt Securities
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Debt Securities, such series will be convertible or
exchangeable into shares of Common Stock or other securities on the terms and
conditions set forth therein. Such terms shall include provisions as to whether
conversion is mandatory, at the option of the Holder or at the option of the
Company, and may include provisions pursuant to which the number of shares of
Common Stock or other securities of the Company to be received by the Holders of
Debt Securities would be calculated according to the market price of the Common
Stock or other securities of the Company as of a time stated in the Prospectus
Supplement. The applicable Prospectus Supplement will indicate certain
restrictions on ownership which may apply in the event of a conversion or
exchange. See "Description of Preferred Stock -- Restrictions on Ownership" and
"Description of Common Stock -- Restrictions on Ownership."
Form, Exchange, Registration, Conversion, Transfer and Payment
Unless otherwise indicated in the applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form in denominations of
$1,000 or integral multiples thereof. (Section 302) Unless otherwise indicated
in the applicable Prospectus Supplement, payment of principal, premium, if any,
and interest on the Debt Securities will be payable, and the exchange,
conversion and transfer of Debt Securities will be registerable, at the office
or agency of the Company maintained for such purposes and at any other office or
agency maintained for such purpose. (Sections 301, 305 and 1002) No service
charge will be made for any registration of transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge imposed in connection therewith. (Section 305)
All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security which remain
unclaimed for two years after such principal, premium or interest has become due
and payable may be repaid to the Company and thereafter the Holder of such Debt
Security may look only to the Company for payment thereof. (Section 1003)
Book-Entry Debt Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, a depositary (the "Global Depositary") or its nominee identified in the
applicable Prospectus Supplement. In such a case, one or more Global Securities
will be issued in a denomination or aggregate denomination equal to the portion
of the aggregate principal amount of Outstanding Debt Securities of the series
to be represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered form, a Global
Security may not be registered for transfer or exchange except as a whole by the
Global Depositary for such Global Security to a nominee of such Global
Depositary or by a nominee of such Global Depositary to such Global Depositary
or another nominee of such Global Depositary or by such Global Depositary- we or any nominee to a successor Global Depositary or a nominee of such successor Global
Depositary and except in the circumstances described in the applicable
Prospectus Supplement. (Sections 204 and 305)
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The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. The Company expects
that the following provisions will apply to depositary arrangements, although no
assurance can be given that such will be the case.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Global Depositary will be represented by a Global Security
registered in the name of such Global Depositary or its nominee. Upon the
issuance of such Global Security, and the deposit of such Global Security with
or on behalf of the Global Depositary for such Global Security, the Global
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such Global
Depositary or its nominee ("participants"). The accounts to be credited will be
designated by the underwriters or agents for the sale of such Debt Securities or
by the Company, if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interest in such Global Security will be
limited to participants or Persons that may hold interests through participants.
Ownership of beneficial interests by participants in such Global Security will
be shown on, and the transfer of that ownership interest will be effected only
through, records maintained by the Global Depositary or its nominee for such
Global Security. Ownership of beneficial interests in such Global Security by
Persons that hold through participants will be shown on, and the transfer of
such ownership interests within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Global Depositary for a Global Security, or its nominee, is
the registered owner of such Global Security, such Global Depositary or such
nominee,entity, as the case may be, must take such steps as
will be considerednecessary to secure the sole ownerdebt securities of that series equally
and ratably with or Holdersenior to all new indebtedness if, as a result of the
Securities representedtransaction, our properties or assets would become subject to a mortgage,
pledge, lien, security interest or other encumbrance which would not be
permitted by such Global Security for all purposes under the applicable Indenture. Except as set forth below, unless otherwise specifiedindenture, and
- we have delivered to the trustee an officers' certificate and opinion of
counsel, each stating that the transaction complies in all respects with
the applicable Prospectus Supplement, owners of beneficial interests in such
Global Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities of such series in
certificated form and will not be considered the Holders thereof for any
purposes under the applicable Indenture. (Sections 204 and 305) Accordingly,
each Person owning a beneficial interest in such Global Security must rely on
the procedures of the Global Depositary and, if such Person is not a
participant, on the procedures of the participant through which such Person owns
its interest, to exercise any rights of a Holder under the applicable Indenture.
The Company understands that under existing industry practices, if the Company
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the applicable Indenture, the Global Depositary
would authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.indenture.
If the Global Depositary for Debt Securities of a series is at any time
unwilling, unable or ineligible to continue as Global Depositary and a successor
Global Depositary is not appointed by the Company within 90 days or an Event of
Default under the applicable Indenture has occurred and is continuing, the
Company will issue Debt Securities of such series in definitive form in exchange
for the Global Security or Securities representing the Debt Securities of such
series. In addition, the Company may at any time and in its sole discretion,
subject to any limitationsconditions described in the applicable Prospectus Supplement,
determine not to have any Debt Securities of a series represented by one or more
Global Securities and, in such event, will issue Debt Securities of such series
in definitive form in exchange for the Global Security or Securities
representing such Debt Securities. Further, if the Company so specifiesabove are satisfied with respect to the Debt Securities of a series, an owner of a beneficial interest in
a Global Security representing Debt Securities of such series may, on terms
acceptable to the Company and the Global Depositary for such Global Security,
receive Debt Securities of such series in definitive form in exchange for such
beneficial interests, subject to any limitations described in the applicable
Prospectus Supplement relating to such Debt Securities. In any such instance, an
owner of a beneficial interest in a Global Security will be entitled to physical
delivery in definitive form of Debt Securities of the series represented
-18-
by such Global Security equal in principal amount to such beneficial interest
and to have such Debt Securities registered in its name (if the Debt Securities
of such series are issuable as registered securities).
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
Certain Covenants of the Company
If so indicated in the applicable Prospectus Supplement with respect to a
particular series of Debt Securities, the Company will be subject to the
covenants described therein.
Events of Default
The following are Events of Default under the Indentures with respect to
Debt Securities of any series: (a) failure to pay principal of or premium, if
any, on any Debt Security of that series when due; (b) failure to pay any
interest on any Debt Security of that series when due, continued for 30 days;
(c) failure in the deposit of any sinking fund payment in respect of any Debt
Security of that series; (d) failure to perform any other covenant of the
Company in the Indentures (other than a covenant included in the applicable
Indenture solely for the benefit of a series of Debt Securities other than that
series), continued for 60 days after written notice to the Company as provided
in the applicable Indenture; (e) the acceleration of, or failure to pay at
maturity (including any applicable grace period), any indebtedness for money
borrowed by the Company with at least $50,000,000 in principal amount
outstanding, which acceleration or failure to pay is not rescinded or annulled
or such indebtedness paid, in each case within 10 days after the date on which
written notice thereof shall have first been given to the Company as provided in
the applicable Indenture; (f) certain events of bankruptcy, insolvency or
reorganization; and (g) any other Event of Default provided with respect to Debt
Securities of that series. (Section 501)
If an Event of Default with respect to Outstanding Debt Securitiesdebt
securities of any series, shall occur and be continuing, eitherwe will not need to obtain the applicable Trustee or the
Holders of not less than 25% in principal amountapproval of the Outstanding Debt
Securitiesholders
of that series by notice as providedthose debt securities in the Indentures may declare
the principal amount (or, if the Debt Securities of that series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all Debt Securities of that seriesorder to be due and payable immediately. However, at any time after a declaration of
acceleration with respect to Debt Securities of any series has been made, but
before a judgmentmerge or decree based on such acceleration has been obtained, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration. (Section 502) For information as to waiver or defaults, see "--
Modification and Waiver" below.
The Indentures provide that, subject to the duty of the applicable Trustee
thereunder during an Event of Default to act with the required standard of care,
such Trustee will be under no obligation to exercise any of its rights or powers
under the applicable Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to such Trustee reasonable
security or indemnity. (Sections 601 and 603) Subject to certain provisions,
including those requiring security or indemnification of the Trustees, the
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustees, or
exercising any trust or power conferred on such Trustees, with respect to the
Debt Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indentures or for any remedy thereunder,
unless (i) such Holder shall have previously given to the applicable Trustee
written notice of a continuing Event of Default (as defined) with respect to
Debt Securities of that series; (ii) the Holders of not less than 25% in
aggregate principal amount of the Outstanding Debt Securities of the same series
shall have made written request, and offered reasonable indemnity, to the
applicable Trustee to institute proceedings in respect of such Event of Default
in its own name as trustee under the applicable Indenture; (iii) the Trustee
shall have failed to institute
-19-
such proceedings within 60 days; and (iv) the Trustee shall not have received
from the Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of the same series a direction inconsistent with such request
(Section 507); provided, however, that such limitations do not apply to a suit
instituted by a Holder of a Debt Security for enforcement of payment of the
principal of and any premium and interest on such Debt Security on or after the
respective due dates expressed in such Debt Security, or in the case of
convertible Debt Securities, for enforcement of a right of conversion. (Section
508)
The Company will be required to furnish to the Trustees annually a
statement as to the performance by the Company of its obligations under the
Indentures and as to any default in such performance. (Section 1004)
Modification and Waiver
Without the consent of any Holder of Outstanding Debt Securities, the
Company and the applicable Trustee may amend or supplement the applicable
Indenture or Debt Securities to cure any ambiguity, defect or inconsistency,consolidate or to make any change that does not materially adversely affect the rights of any
Holder of Debt Securities. (Section 901) Other modifications and amendments of
the Indentures may be made by the Company and the applicable Trusteesell our assets.
Also, these conditions will apply only with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Outstanding Debt Securities of each series affected thereby;
provided, however, that no such modificationif we wish to merge or amendment may, without the
consent of the Holder of each Outstanding Debt Security affected thereby: (a)
change the Stated Maturity of the principal of, or any installment of principal
of, or interest on, any Debt Security; (b) reduce the principal amount of, the
rate of interest on, or the premium, if any, payable upon the redemption or
repurchase of, any Debt Security; (c) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the Maturity
thereof; (d) change the place or currency of payment of principal of, or
premium, if any, or interest on any Debt Security; (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Security on or after the Stated Maturity or Redemption Date thereof; (f) modify
the conversion provisions applicable to convertible Debt Securities in a manner
adverse to the Holders thereof; (g) modify the subordination provisions
applicable to any series of Debt Securities in a manner adverse to the Holders
thereof; or (h) reduce the percentage in principal amount of Outstanding Debt
Securities of any series, the consent of the Holders of which is required for
modification or amendment of the Indentures or for waiver of compliance with
certain provisions of the applicable Indenture or for waiver of certain
defaults. (Section 902)
The Holders of at least a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain covenants of the Indentures. (Section
1008) The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may, on behalf of the Holders of all
Debt Securities of that series, waive any past default under the applicable
Indenture with respect to that series, except a default in the payment of the
principal of, or premium, if any, or interest on, any Debt Security of that
series or in respect of a provision which under such applicable Indenture cannot
be modified or amended without the consent of the Holder of each Outstanding
Debt Security of that series affected. (Section 513)
Consolidation, Merger and Sale of Assets
The Company, without the consent of any Holders of outstanding Debt
Securities, may consolidate with
another entity or merge into, or transfer or lease itssell our assets substantially as an entirety to another
entity. We will not need to satisfy these conditions if we enter into other
types of transactions, including any Person,transaction in which we acquire the stock
or assets of another entity, any transaction that involves a change of control
of Alexander's, Inc. but in which we do not merge or consolidate and any
other Persontransaction in which we sell less than substantially all our assets.
SUBORDINATION PROVISIONS
Holders of subordinated debt securities should recognize that contractual
provisions in the subordinated debt indenture may consolidate with or merge into, or transfer or lease its assets substantially as
an entiretyprohibit us from making
payments on those securities. Subordinated debt securities are subordinate and
junior in right of payment, to the Company, provided that (a)extent and in the Person (if other thanmanner stated in the
Company) formed by such consolidation or into whichsubordinated debt indenture, to all of our senior debt, as defined in the
Company is merged or
which acquires or leases the assets of the Company substantially as an entirety
assumes the Company's obligations on the Debt Securitiessubordinated debt indenture, including all debt securities we have issued and
will issue under the Indenture
relating thereto and (b) after giving effect to such transaction no Event of
Default, and no event which, after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing. (Article Eight) A
Prospectus Supplement may set forth any additional provisions regarding a
consolidation with, merger
-20-
into, or transfer or lease of its assets substantiallysenior debt indenture.
The subordinated debt indenture defines "senior debt" as an entirety to, any
Person (or of such Person with, into or to the Company).
Defeasance
If so indicated in the applicable Prospectus Supplement with respect to the
Debt Securities of a series, the Company, at its option (i) will be discharged
from any and all obligations in respect of the Debt Securities of such series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace destroyed, stolen, lost or mutilated Debt
Securities of such series, and to maintain an office or agency in respect of the
Debt Securities and hold moneys for payment in trust) or (ii) will be released
from its obligations to comply with any covenants that may be specified in the
applicable Prospectus Supplement with respect to the Debt Securities of such
series, and the occurrence of an event described in clause (d) under "Events of
Default" above with respect to any defeased covenants shall no longer be an
Event of Default, if in either case the Company irrevocably deposits with the
applicable Trustee, in trust, money or U.S. Government Obligations that through
the payment of interest thereon and principal thereof in accordance with their
terms will provide money in an amount sufficient to pay all of the principal of
and premium, if any, and any interest on the Debt Securities of such series on
the dates such payments are due (which may include one or more redemption dates
designated by the Company) in accordance with the terms of such Debt Securities.
Such a trust may only be established if, among other things, (a) no Event of
Default or event which with the giving of notice or lapse of time, or both,
would become an Event of Default under the applicable Indenture shall have
occurred and be continuing on the date of such deposit, (b) no Event of Default
described under clause (e) under "Events of Default" above or event which with
the giving of notice or lapse of time, or both, would become an Event of Default
described under such clause (e) shall have occurred and be continuing at any
time during the period ending on the 91st day following such date of deposit,
and (c) the Company shall have delivered an Opinion of Counsel to the effect
that the Holders of the Debt Securities will not recognize gain or loss for
United States federal income tax purposes as a result of such deposit or
defeasance and will be subject to United States federal income tax in the same
manner as if such deposit and defeasance had not occurred, which Opinion of
Counsel, in the case of a deposit and defeasance of such Indenture with respect
to the Debt Securities of any series as described under clause (i) above, shall
be based on either (A) a ruling to such effect that the Company has received
from, or that has been published by, the Internal Revenue Service or (B) a
change in the applicable federal income tax law, occurring after the date of the
applicable Indenture, to such effect. In the event the Company omits to comply
with its remaining obligations under such Indenture after a defeasance of such
Indenture with respect to the Debt Securities of any series as described under
clause (ii) above and the Debt Securities of such series are declared due and
payable because of the occurrence of any undefeased Event of Default, the amount
of money and U.S. Government Obligations on deposit with the applicable Trustee
may be insufficient to pay amounts due on the Debt Securities of such series at
the time of the acceleration resulting from such Event of Default. However, the
Company will remain liable for such payments. (Article Thirteen)
Subordination of Subordinated Debt Securities
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Debt, including the Senior Debt Securities. Upon any
payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of the Subordinated
Debt Securities will be entitled to receive or retain any payment in respect of
the principal of (and premium, if any) or interest, if any, on the Subordinated
Debt Securities. (Article Fifteen of the Subordinated Indenture)
-21-
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are not holders of Senior Debt or Subordinated Debt
Securities may recover less, ratably, than holders of Senior Debt and may
recover more, ratably, than the holders of the Subordinated Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the holders of all Senior Debt outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the holders of the Subordinated Debt Securities will be
entitled to receive any payment upon the principal of (or premium, if any) or
interest, if any, on the Subordinated Debt Securities.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Subordinated Debt Securities may be made if there shall
have occurred and be continuing a default in any payment with respect to Senior
Debt, or an event of default with respect to any Senior Debt resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default. For purposes of the subordination
provisions, the payment, issuance and delivery of cash, property or securities
(other than stock and certain subordinated securities of the Company) upon
conversion of a Subordinated Debt Security will be deemed to constitute payment
on account of the principal of such Subordinated Debt Security.
"Senior Debt" is defined to mean the principal of (and premium, if any) and
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company to the extent such
claim for post-petition interest is allowed in such proceeding) on allour indebtedness of the Company (including indebtedness of others guaranteed by the
Company), other than the
Subordinated Debt Securitiessubordinated debt securities, whether outstanding on the date of the Subordinated Indentureindenture
or thereafter created, incurred or assumed, which is: (i)is (a) for money borrowed, (ii)(b)
evidenced by a note or similar instrument given in connection with the
acquisition of any businesses, properties or assets of any kind or (iii)(c)
obligations of the CompanyAlexander's, Inc. as lessee under leases required to be
capitalized on the balance sheet of the lessee under accounting principles
generally accepted accounting principlesin the United States of America or leases of property or
assets made as part of any sale and lease-back transaction to which we are a
party. For the Companypurpose of this definition, "interest" includes interest accruing
on or after the filing of any petition in bankruptcy or for reorganization
relating to Alexander's to the extent that the claim for post-petition interest
is a party, includingallowed in the proceeding. Also for the purpose of this definition,
"indebtedness of Alexander's, Inc." includes indebtedness of others guaranteed
by us and amendments, renewals, extensions, modifications and refundings of any
such
indebtedness or obligation unlessof the kinds described in the first sentence of this
paragraph. However, "indebtedness of Alexander's, Inc." for the purpose of this
definition, does not include any case inindebtedness or obligation if the instrument
creating or evidencing any suchthe indebtedness or obligation, or pursuant tounder which the
sameindebtedness or obligation is outstanding, it is providedprovides that suchthe indebtedness or
obligation is not superior in right of payment to the Subordinated Debt Securities.subordinated debt
securities.
The Subordinated Indenture doessubordinated debt indenture provides that, unless all principal of and
any premium or interest on the senior debt has been paid in full, no payment or
other distribution may be made in respect of any subordinated debt securities in
the following circumstances:
- in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceeding
involving us or our assets,
- in the event of any liquidation, dissolution or other winding-up of our
affairs, whether voluntary or involuntary, and whether or not limitinvolving
insolvency or prohibitbankruptcy,
23
- in the incurrenceevent of additional Senior Debt, which may include indebtednessany assignment for the benefit of creditors or any other
marshalling of our assets and liabilities,
- if any of our subordinated debt securities have been declared due and
payable before their stated maturity, or
- (a) in the event and during the continuation of any default in the
payment of principal, premium or interest on any senior debt beyond any
applicable grace period or if any event of default with respect to any of
our senior debt has occurred and is continuing, permitting the holders of
that senior debt or a trustee to accelerate the maturity of that senior
debt, unless the event of default has been cured or waived or ceased to
exist and any related acceleration has been rescinded, or (b) if any
judicial proceeding is seniorpending with respect to a payment default or an
event of default described in (a).
If the trustee under the subordinated debt indenture or any holders of the
subordinated debt securities receive any payment or distribution that they know
is prohibited under the subordination provisions, then the trustee or the
holders will have to repay that money to the Subordinated Debt Securities,holders of the senior debt.
Even if the subordination provisions prevent us from making any payment
when due on the subordinated debt securities of any series, we will be in
default on our obligations under that series if we do not make the payment when
due. This means that the trustee under the subordinated debt indenture and the
holders of that series can take action against us, but subordinatethey will not receive any
money until the claims of the holders of senior debt have been fully satisfied.
COVENANTS
The following covenants apply to us with respect to the debt securities of
each series unless otherwise specified in the applicable prospectus supplement.
Maintenance of Properties. We must maintain all properties used in our
business in good condition. However, we may discontinue the maintenance or
operation of any of our properties if in our judgment, discontinuance is
desirable in the conduct of our business and is not disadvantageous in any
material respect to the holders of debt securities.
Existence. Except as described under "-- Mergers and Similar
Transactions," we must do or cause to be done all things necessary to preserve
and keep in full force and effect our existence, rights and franchises. However,
we are not required to preserve any right or franchise if our board of directors
determines that the preservation of the right or franchise is no longer
desirable in the conduct of our business and that the loss of the right or
franchise is not disadvantageous in any material respect to the holders of the
debt securities.
Payment of Taxes and Other Claims. We are required to pay or discharge or
cause to be paid or discharged (a) all taxes, assessments and governmental
charges levied or imposed upon us or any subsidiary or upon our income, profits
or property or the income, profits or property of any subsidiary and (b) all
lawful claims for labor, materials and supplies which, if unpaid, might by law
become a lien upon our property or the property of any subsidiary. We must pay
these taxes and other claims before they become delinquent. However, we are not
required to pay or discharge or cause to be paid or discharged any tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
DEFEASANCE AND COVENANT DEFEASANCE
The provisions for full defeasance and covenant defeasance described below
apply to each senior and subordinated debt security if so indicated in the
applicable prospectus supplement. In general, we expect these provisions to
apply to each debt security that has a specified currency of U.S. dollars and is
not a floating rate or indexed debt security.
24
Full Defeasance. If there is a change in Federal income tax law, as
described below, we can legally release ourselves from all payment and other
obligations on any debt securities. This is called full defeasance. For us to do
so, each of the Company.following must occur:
- we must deposit in trust for the benefit of all holders of those debt
securities money in an amount or a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on those
debt securities on their various due dates,
- (a) no event of default under the indenture may have occurred and be
continuing and (b) no event of default described in the sixth bullet
point under "-- Default, Remedies and Waiver of Default -- Events of
Default" may have occurred and be continuing at any time during the 90
days following the deposit in trust,
- there must be a change in current Federal income tax law or an IRS ruling
that lets us make the above deposit without causing the holders to be
taxed on those debt securities any differently than if we did not make
the deposit and just repaid those debt securities ourselves. Under
current Federal income tax law, the deposit and our legal release from
your debt security would be treated as though we took back your debt
security and gave you your share of the cash and notes or bonds deposited
in trust. In that event, you could recognize gain or loss on your debt
security, and
- we must deliver to the trustee a legal opinion of our counsel confirming
the Federal income tax law change described above.
If we ever fully defeased your debt security, you would have to rely solely
on the trust deposit for payments on your debt security. You would not be able
to look to us for payment if there was any shortfall.
Covenant Defeasance. Under current Federal income tax law, we can make the
same type of deposit described above and be released from the restrictive
covenants relating to your debt security listed in the bullets below and any
additional restrictive covenants that may be described in your prospectus
supplement. This is called covenant defeasance. In that event, you would lose
the protection of those restrictive covenants. In order to achieve covenant
defeasance for any debt securities, we must take the same steps as are required
for defeasance.
If we accomplish covenant defeasance with regard to your debt security, the
following provisions of the applicable indenture and your debt security would no
longer apply:
- the requirement to secure the debt securities equally and ratably with
all new indebtedness in the event of a consolidation,
- the covenants regarding existence, maintenance of properties, payment of
taxes and other claims,
- any additional covenants that your prospectus supplement states are
applicable to your debt security, and
- the events of default resulting from a breach of covenants, described
below in the fourth, fifth and seventh bullet points under "-- Default,
Remedies and Waiver of Default -- Events of Default."
If we accomplish covenant defeasance on your debt security, we must still
repay your debt security if there is any shortfall in the trust deposit. You
should note, however, that if one of the remaining events of default occurred,
such as our bankruptcy, and your debt security became immediately due and
payable, there may be a shortfall. Depending on the event causing the default,
you may not be able to obtain payment of the shortfall.
DEFAULT, REMEDIES AND WAIVER OF DEFAULT
You will have special rights if an event of default, with respect to your
series of debt securities, occurs and is continuing, as described in this
subsection.
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Events of Default. Unless your prospectus supplement says otherwise, when
we refer to an event of default with respect to any series of debt securities,
we mean any of the following:
- we do not pay interest on any debt security of that series within 30 days
after the due date,
- we do not pay the principal or any premium of any debt security of that
series on the due date,
- we do not deposit a sinking fund payment with regard to any debt security
of that series on the due date, but only if the payment is required under
the applicable prospectus supplement,
- we remain in breach of any covenant we make in the indenture for the
benefit of the relevant series for 60 days after we receive a written
notice of default stating that we are in breach and requiring us to
remedy the breach. The Senior Debt Securities,notice must be sent by the trustee or the holders
of at least 10% in principal amount of the relevant series of debt
securities,
- we do not pay an indebtedness of $50,000,000 or more in principal amount
outstanding when issued,due after the expiration of any applicable grace period,
or we default on an indebtedness of this amount resulting in acceleration
of the indebtedness, in either case, within ten days after written notice
of the default is sent to us. The notice must be sent by the trustee or
the holders of at least 10% in principal amount of the relevant series of
debt securities,
- we file for bankruptcy, or
- if your prospectus supplement states that any additional event of default
applies to the series, that event of default occurs.
REMEDIES IF AN EVENT OF DEFAULT OCCURS
If you are the holder of a subordinated debt security, all the remedies
available upon the occurrence of an event of default under the subordinated debt
indenture will constitute Senior Debt.
The Prospectus Supplement will set forthbe subject to the aggregaterestrictions on the subordinated debt
securities described above under "-- Subordination Provisions."
If an event of default has occurred with respect to any series of debt
securities and has not been cured or waived, the trustee or the holders of not
less than 25% in principal amount of outstanding indebtedness asdebt securities of that series
may declare the entire principal amount of the most recent practicable datedebt securities of that series to
be due immediately.
Each of the situations described above is called an acceleration of the
maturity of the affected series of debt securities. If the maturity of any
series is accelerated, a judgment for payment has not yet been obtained, we pay
or deposit with the trustee an amount sufficient to pay all amounts due on the
securities of the series, and all events of default with respect to the series,
other than the nonpayment of the accelerated principal, have been cured or
waived, then the holders of a majority in principal amount of the outstanding
debt securities of that series may cancel the acceleration for the entire
series.
If an event of default occurs, the trustee will have special duties. In
that situation, the trustee will be obligated to use those of its rights and
powers under the relevant indenture, and to use the same degree of care and
skill in doing so, that a prudent person would use in that situation in
conducting his or her own affairs.
Except as described in the prior paragraph, the trustee is not required to
take any action under the relevant indenture at the request of any holders
unless the holders offer the trustee reasonable protection from expenses and
liability. This is called an indemnity. If the trustee is provided with an
indemnity reasonably satisfactory to it, the holders of a majority in principal
amount of all debt securities of the relevant series may direct the time, method
and place of conducting any lawsuit or other formal legal action seeking any
remedy available to the trustee with respect to that series. These majority
holders may also direct the trustee in performing any other action under the
applicable indenture with respect to the debt securities of that series.
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Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to any debt security, all of the following must occur:
- the holder of your debt security must give the trustee written notice of
a continuing event of default,
- the holders of not less than 25% in principal amount of all debt
securities of your series must make a written request that the trustee
take action because of the default, and they or other holders must offer
to the trustee indemnity reasonably satisfactory to the trustee against
the cost and other liabilities of taking that action,
- the trustee must not have taken action for 60 days after the above steps
have been taken, and
- during those 60 days, the holders of a majority in principal amount of
the debt securities of your series must not have given the trustee
directions that are inconsistent with the written request of the holders
of not less than 25% in principal amount of the debt securities of your
series.
You are entitled at any time, however, to bring a lawsuit for the payment
of money due on your debt security on or after its due date.
Waiver of Default. The holders of not less than a majority in principal
amount of the outstanding debt securities of a series may waive a default for
all debt securities of that series. If this happens, the default will be treated
as if it has not occurred. No one can waive a payment default on your debt
security or a covenant or provision of the indenture that cannot be modified or
amended without the consent of the holder of each outstanding debt security of
the series, however, without the approval of the particular holder of that debt
security.
Book-entry and other indirect owners should consult their banks or brokers
for information on how to give notice or direction to, or make a request of, the
trustee and how to declare or cancel an acceleration of the maturity. Book-entry
and other indirect owners are described below under "Legal Ownership and
Book-Entry Issuance."
CHANGES OF THE INDENTURES REQUIRING EACH HOLDER'S APPROVAL
There are certain changes that cannot be made without the approval of each
holder of a debt security affected by the termschange under a particular indenture.
Here is a list of such indebtedness andthose types of changes:
- changes to the termsstated maturity for any principal or interest payment on a
debt security,
- reduction of the offered Subordinated Debt
Securities would rank seniorprincipal amount or the interest rate or the premium
payable upon the redemption of any debt security,
- reduction of the amount of principal of an original issue discount
security or any other debt security payable upon acceleration of its
maturity,
- changes to the currency of any payment on a debt security,
- changes to the place of payment on a debt security,
- impairment of a holder's right to sue for payment of any amount due on
its debt security,
- reduction of the percentage in principal amount of the debt securities of
any series, the approval of whose holders is needed to change the
applicable indenture or pari passuthose debt securities,
- reduction of the percentage in principal amount of the debt securities of
any series, the consent of whose holders is needed to waive our
compliance with such Subordinated Debt
Securitiesthe applicable indenture or to waive defaults, and
any limitation on the issuance of additional senior or pari passu
indebtedness. The Prospectus Supplement may further describe- changes to the provisions ifof the applicable indenture dealing with
modification and waiver in any applicableother respect, except to increase any
required percentage referred to above or to add to the provisions that
cannot be changed or waived without approval of the holder of each
affected debt security.
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MODIFICATION OF SUBORDINATION PROVISIONS
We may not amend the subordinated debt indenture to alter the subordination
of any outstanding subordinated debt securities without the Subordinated Debt Securitieswritten consent of
each holder of senior debt then outstanding who would be adversely affected. In
addition, we may not modify the subordination provisions of the subordinated
debt indenture in a manner that would adversely affect the outstanding
subordinated debt securities of any one or more series in any material respect,
without the consent of the holders of a majority in aggregate principal amount
of all affected series, voting together as one class.
CHANGES OF THE INDENTURES NOT REQUIRING APPROVAL
Another type of change does not require any approval by holders of the debt
securities of an affected series. These changes are limited to clarifications
and changes that would not adversely affect the debt securities of that series
in any material respect. Nor do we need any approval to make changes that affect
only debt securities to be issued under the applicable indenture after the
changes take effect.
We also may make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities. In those
cases, we do not need to obtain the approval of the holder of the unaffected
debt security, we need only obtain any required approvals from the holders of
the affected debt securities.
CHANGES OF THE INDENTURES REQUIRING MAJORITY APPROVAL
Any other change to a particular indenture and the debt securities issued
under that indenture would require the following approval:
- if the change affects only the debt securities of a particular series, it
must be approved by the holders of a majority in principal amount of the
debt securities of that series, or
- if the change affects the debt securities of more than one series of debt
securities issued under the applicable indenture, it must be approved by
the holders of a majority in principal amount of each series affected by
the change.
In each case, the required approval must be given by written consent.
The same majority approval would be required for us to obtain a waiver of
any of our covenants in either indenture. Our covenants include the promises we
make about merging and similar transactions, which we describe above under
"-- Mergers and Similar Transactions." If the requisite holders approve a waiver
of a covenant, we will not have to comply with it. The holders, however, cannot
approve a waiver of any provision in a particular debt security, or in the
applicable indenture as it affects that debt security, that we cannot change
without the approval of the holder of that debt security as described above in
"-- Changes of the Indentures Requiring Each Holder's Approval," unless that
holder approves the waiver.
Book-entry and other indirect owners should consult their banks or brokers
for information on how approval may be granted or denied if we seek to change an
indenture or any debt securities or request a waiver.
SPECIAL RULES FOR ACTION BY HOLDERS
When holders take any action under either debt indenture, such as giving a
notice of default, declaring an acceleration, approving any change or waiver or
giving the trustee an instruction, we will apply the following rules:
ONLY OUTSTANDING DEBT SECURITIES ARE ELIGIBLE
Only holders of outstanding debt securities of the applicable series will
be eligible to participate in any action by holders of debt securities of that
series. Governing LawAlso, we will count only outstanding debt securities in
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determining whether the various percentage requirements for taking action have
been met. For these purposes, a debt security will not be "outstanding":
- if it has been surrendered for cancellation or cancelled,
- if we have deposited or set aside, in trust for its holder, money for its
payment or redemption,
- if we have fully defeased it as described above under "-- Defeasance and
Covenant Defeasance -- Full Defeasance,"
- if it has been exchanged for other debt securities of the same series due
to mutilation, destruction, loss or theft, or
- if we or one of our affiliates is the owner, unless the debt security is
pledged under certain circumstances described in the indenture.
ELIGIBLE PRINCIPAL AMOUNT OF SOME DEBT SECURITIES
In some situations, we may follow special rules in calculating the
principal amount of a debt security that is to be treated as outstanding for the
purposes described above. This may happen, for example, if the principal amount
is payable in a non-U.S. dollar currency, increases over time or is not to be
fixed until maturity.
For any debt security of the kind described below, we will decide how much
principal amount to attribute to the debt security as follows:
- for an original issue discount debt security, we will use the principal
amount that would be due and payable on the action date if the maturity
of the debt security were accelerated to that date because of a default,
- for a debt security whose principal amount is not determinable, we will
use any amount that we indicate in the applicable prospectus supplement
for that debt security. The Indenturesprincipal amount of a debt security may not
be determinable, for example, because it is based on an index that
changes from time to time and the principal amount is not to be
determined until a later date, or
- for debt securities with a principal amount denominated in one or more
non-U.S. dollar currencies or currency units, we will use the U.S. dollar
equivalent, which we will determine.
DETERMINING RECORD DATES FOR ACTION BY HOLDERS
We generally will be entitled to set any day as a record date for the
purpose of determining the holders that are entitled to take action under either
indenture. In certain limited circumstances, only the trustee will be entitled
to set a record date for action by holders. If we or the trustee set a record
date for an approval or other action to be taken by holders, that vote or action
may be taken only by persons or entities who are holders on the record date and
must be taken during the period that we specify for this purpose, or that the
trustee specifies if it sets the record date. We or the trustee, as applicable,
may shorten or lengthen this period from time to time. This period, however, may
not extend beyond the 180th day after the record date for the action. In
addition, record dates for any global debt security may be set in accordance
with procedures established by the depositary from time to time. Accordingly,
record dates for global debt securities may differ from those for other debt
securities.
FORM, EXCHANGE AND TRANSFER OF DEBT SECURITIES
Unless we indicate otherwise in your prospectus supplement, the debt
securities will be issued:
- only in fully registered form, and
- in denominations of $1,000 and integral multiples of $1,000.
Holders may exchange their debt securities for debt securities of the same
series in any authorized denominations, as long as the total principal amount is
not changed.
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Holders may exchange or transfer their debt securities at the corporate
trust office of the trustee. They may also replace lost, stolen, destroyed or
mutilated debt securities at that office. We have appointed the trustee to act
as our agent for registering debt securities in the names of holders and
transferring and replacing debt securities.
Holders will not be required to pay a service charge to transfer or
exchange their debt securities, but they may be required to pay for any tax or
other governmental charge associated with the registration, exchange or
transfer. The transfer or exchange, and any replacement, will be made only if
our transfer agent is satisfied with the holder's proof of legal ownership. The
transfer agent may require an indemnity before replacing any debt securities.
If a debt security is issued as a global debt security, only the
depositary, e.g., DTC, Euroclear and Clearstream, will be entitled to transfer
and exchange the debt security as described in this subsection, since the
depositary will be the sole holder of the debt security.
The rules for exchange described above apply to exchange of debt securities
for other debt securities of the same series and kind.
PAYMENT MECHANICS FOR DEBT SECURITIES
WHO RECEIVES PAYMENT?
If interest is due on a debt security on an interest payment date, we will
pay the interest to the person in whose name the debt security is registered at
the close of business on that regular record date as described below under
"-- Payment and Record Dates for Interest." If interest is due at maturity but
on a day that is not an interest payment date, we will pay the interest to the
person entitled to receive the principal of the debt security. If principal or
another amount besides interest is due on a debt security at maturity, we will
pay the amount to the holder of the debt security against surrender of the debt
security at a proper place of payment or, in the case of a global debt security,
in accordance with the applicable policies of the depositary, e.g., DTC,
Euroclear and Clearstream, as applicable.
PAYMENT AND RECORD DATES FOR INTEREST
The regular record date relating to an interest payment date for any
floating rate debt security will be the 15th calendar day before that interest
payment date. These record dates will apply regardless of whether a particular
record date is a "business day," as defined below. For the purpose of
determining the holder at the close of business on a regular record date when
business is not being conducted, the close of business will mean 5:00 P.M., New
York City time, on that day.
Business Day. The term "business day" means, with respect to the debt
securities of a series, a Monday, Tuesday, Wednesday, Thursday or Friday that is
not a day on which banking institutions in the place of payment for the debt
securities of that series are authorized or obligated by law or executive order
to close and that satisfies any other criteria specified in the applicable
prospectus supplement.
HOW WE WILL MAKE PAYMENTS DUE IN U.S. DOLLARS
We will follow the practice described in this subsection when paying
amounts due in U.S. dollars. Payments of amounts due in other currencies will be
made as described in the next subsection.
Payments on Global Debt SecuritiesSecurities. We will make payments on a global debt
security in accordance with the applicable policies of the depositary as in
effect from time to time. Under those policies, we will make payments directly
to the depositary, or its nominee, and not to any indirect owners who own
beneficial interests in the global debt security. An indirect owner's right to
receive those payments will be governed by the rules and construedpractices of the
depositary and its participants, as described below in the section entitled
"Legal Ownership and Book-Entry Issuance -- What Is a Global Security?"
Payments on Non-Global Debt Securities. We will make payments on a debt
security in non-global, registered form as follows. We will pay interest that is
due on an interest payment date by check mailed on the
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interest payment date to the holder at his or her address shown on the trustee's
records as of the close of business on the regular record date. We will make all
other payments by check to the paying agent described below, against surrender
of the debt security. All payments by check will be made in next-day funds,
i.e., funds that become available on the day after the check is cashed.
Alternatively, if a non-global debt security has a face amount of at least
$1,000,000 and the holder asks us to do so, we will pay any amount that becomes
due on the debt security by wire transfer of immediately available funds to an
account at a bank in New York City, on the due date. To request a wire payment,
the holder must give the paying agent appropriate wire transfer instructions at
least five business days before the requested wire payment is due. In the case
of any interest payment due on an interest payment date, the instructions must
be given by the person or entity who is the holder on the relevant regular
record date. In the case of any other payment, payment will be made only after
the debt security is surrendered to the paying agent. Any wire instructions,
once properly given, will remain in effect unless and until new instructions are
given in the manner described above.
Book-entry and other indirect owners should consult their banks or brokers
for information on how they will receive payments on their debt securities.
HOW WE WILL MAKE PAYMENTS DUE IN OTHER CURRENCIES
We will follow the practice described in this subsection when paying
amounts that are due in a specified currency other than U.S. dollars.
Payments on Global Debt Securities. We will make payments on a global debt
security in accordance with the lawsapplicable policies of the Statedepositary as in
effect from time to time, which will be DTC, Euroclear or Clearstream. Unless we
specify otherwise in the applicable prospectus supplement, DTC will be the
depositary for all debt securities in global form. We understand that DTC's
policies, as currently in effect, are as follows.
Unless otherwise indicated in your prospectus supplement, if you are an
indirect owner of global debt securities denominated in a specified currency
other than U.S. dollars and if you have the right to elect to receive payments
in that other currency and do so elect, you must notify the participant through
which your interest in the global debt security is held of your election:
- on or before the applicable regular record date, in the case of a payment
of interest, or
- on or before the 16th day before the stated maturity, or any redemption
or repayment date, in the case of payment of principal or any premium.
Your participant must, in turn, notify DTC of your election on or before
the third DTC business day after that regular record date, in the case of a
payment of interest, and on or before the 12th DTC business day prior to the
stated maturity, or on the redemption or repayment date if your debt security is
redeemed or repaid earlier, in the case of a payment of principal or any
premium.
DTC, in turn, will notify the paying agent of your election in accordance
with DTC's procedures.
If complete instructions are received by the participant and forwarded by
the participant to DTC, and by DTC to the paying agent, on or before the dates
noted above, the paying agent, in accordance with DTC's instructions, will make
the payments to you or your participant by wire transfer of immediately
available funds to an account maintained by the payee with a bank located in the
country issuing the specified currency or in another jurisdiction acceptable to
us and the paying agent.
If the foregoing steps are not properly completed, we expect DTC to inform
the paying agent that payment is to be made in U.S. dollars. In that case, we or
our agent will convert the payment to U.S. dollars in the manner described below
under "-- Conversion to U.S. Dollars." We expect that we or our agent will then
make the payment in U.S. dollars to DTC, and that DTC in turn will pass it along
to its participants.
Indirect owners of a global debt security denominated in a currency other
than U.S. dollars should consult their banks or brokers for information on how
to request payment in the specified currency.
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Payments on Non-Global Debt Securities. Except as described in the last
paragraph under this heading, we will make payments on debt securities in
non-global form in the applicable specified currency. We will make these
payments by wire transfer of immediately available funds to any account that is
maintained in the applicable specified currency at a bank designated by the
holder and which is acceptable to us and the trustee. To designate an account
for wire payment, the holder must give the paying agent appropriate wire
instructions at least five business days before the requested wire payment is
due. In the case of any interest payment due on an interest payment date, the
instructions must be given by the person or entity who is the holder on the
regular record date. In the case of any other payment, the payment will be made
only after the debt security is surrendered to the paying agent. Any
instructions, once properly given, will remain in effect unless and until new
instructions are properly given in the manner described above.
If a holder fails to give instructions as described above, we will notify
the holder at the address in the trustee's records and will make the payment
within five business days after the holder provides appropriate instructions.
Any late payment made in these circumstances will be treated under the
applicable indenture as if made on the due date, and no interest will accrue on
the late payment from the due date to the date paid.
Although a payment on a debt security in non-global form may be due in a
specified currency other than U.S. dollars, we will make the payment in U.S.
dollars if the holder asks us to do so. To request U.S. dollar payment, the
holder must provide appropriate written notice to the trustee at least five
business days before the next due date for which payment in U.S. dollars is
requested. In the case of any interest payment due on an interest payment date,
the request must be made by the person or entity who is the holder on the
regular record date. Any request, once properly made, will remain in effect
unless and until revoked by notice properly given in the manner described above.
Book-entry and other indirect owners of a debt security with a specified
currency other than U.S. dollars should contact their banks or brokers for
information about how to receive payments in the specified currency or in U.S.
dollars.
Conversion to U.S. Dollars. When we are asked by a holder to make payments
in U.S. dollars of an amount due in another currency, either on a global debt
security or a non-global debt security as described above, the exchange rate
agent described below will calculate the U.S. dollar amount the holder receives
in the exchange rate agent's discretion.
A holder that requests payment in U.S. dollars will bear all associated
currency exchange costs, which will be deducted from the payment.
When the Specified Currency Is Not Available. If we are obligated to make
any payment in a specified currency other than U.S. dollars, and the specified
currency or any successor currency is not available to us due to circumstances
beyond our control, such as the imposition of exchange controls or a disruption
in the currency markets, we will be entitled to satisfy our obligation to make
the payment in that specified currency by making the payment in U.S. dollars, on
the basis of the exchange rate determined by the exchange rate agent described
below, in its discretion.
The foregoing will apply to any debt security, whether in global or
non-global form, and to any payment, including a payment at maturity. Any
payment made under the circumstances and in a manner described above will not
result in a default under any debt security or the applicable indenture.
The Euro. The euro may be a specified currency for some debt securities.
On January 1, 1999, the euro became the legal currency for the 11 member states
participating in the European Economic and Monetary Union.
Exchange Rate Agent. If we issue a debt security in a specified currency
other than U.S. dollars, we will appoint a financial institution to act as the
exchange rate agent and will name the institution initially appointed when the
debt security is originally issued in the applicable prospectus supplement. We
may change the exchange rate agent from time to time after the original issue
date of the debt security without your consent and without notifying you of the
change.
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All determinations made by the exchange rate agent will be in its sole
discretion unless we state in the applicable prospectus supplement that any
determination requires our approval. In the absence of manifest error, those
determinations will be conclusive for all purposes and binding on you and us,
without any liability on the part of the exchange rate agent.
PAYMENT WHEN OFFICES ARE CLOSED
If any payment is due on a debt security on a day that is not a business
day, we will make the payment on the next day that is a business day. Payments
postponed to the next business day in this situation will be treated under the
applicable indenture as if they were made on the original due date. Postponement
of this kind will not result in a default under any debt security or the
applicable indenture, and no interest will accrue on the postponed amount from
the original due date to the next day that is a business day. The term business
day has a special meaning, which we describe above under "-- Payment and Record
Dates for Interest."
PAYING AGENT
We may appoint one or more financial institutions to act as our paying
agents, at whose designated offices debt securities in non-global entry form may
be surrendered for payment at their maturity. We call each of those offices a
paying agent. We may add, replace or terminate paying agents from time to time.
We also may choose to act as our own paying agent. Initially, we have
appointed the trustee, at its corporate trust office in New York City, as the
paying agent. We must notify the trustee of changes in the paying agents.
NOTICES
Notices to be given to holders of a global debt security will be given only
to the depositary, in accordance with its applicable policies as in effect from
time to time. Notices to be given to holders of debt securities not in global
form will be sent by mail to the respective addresses of the holders as they
appear in the trustee's records. Neither the failure to give any notice to a
particular holder, nor any defect in a notice given to a particular holder, will
affect the sufficiency of any notice given to another holder.
Book-entry and other indirect owners should consult their banks or brokers
for information on how they will receive notices.
OUR RELATIONSHIP WITH THE TRUSTEE
The Bank of New York. (Section 112)
Regarding the Trustees
The CompanyYork has provided commercial banking and certain of its subsidiariesother services for
us and our affiliates in the ordinary coursepast and may do so in the future.
The Bank of business maintain general banking relationsNew York is initially serving as the trustee for our senior
debt securities and subordinated debt securities. Consequently, if an actual or
potential event of default occurs with State Street Bank & Trust
Company, N.A. Pursuantrespect to any of these securities, the
provisionstrustee may be considered to have a conflicting interest for purposes of the
Trust Indenture Act of 1939,
upon a default under either1939. In that case, the Senior Indenture or the Subordinated Indenture,
State Street Bank & Trust Company, N.A.
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trustee may be deemed to have a conflicting interest by virtue of its acting as both the
Senior Trustee and the Subordinated Trustee requiring itrequired to resign
under one or more of the indentures, and we would be replaced byrequired to appoint a
successor trustee in onetrustee. For this purpose, a "potential" event of such positions.default means an
event that would be an event of default if the requirements for giving us
default notice or for the default having to exist for a specific period of time
were disregarded.
33
DESCRIPTION OF CAPITAL STOCK
The following descriptions are summaries of the material terms and
provisions of our preferred stock and our common stock contained in our
certificate of incorporation and our by-laws. Copies of our certificate of
incorporation and the descriptions contained in "--
Description of Preferred Stock" and "-- Description of Common Stock" do not
purport to be complete andby-laws are subject to, and qualified in their entirety by
referenceexhibits to the more complete descriptions thereof set forth in the following
documents: (i) the Company's Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation"), which is filed as an exhibit to the
Registration Statementregistration statement of
which this Prospectus is a part and (ii) its By-laws,
which is incorporated by reference to the Registration Statement of which this
Prospectusprospectus is a part. For the CompanySee "Available Information" for information on
how to qualify as a REIT under the Code, not more than 50%obtain copies of the valueour certificate of the outstanding stock may be owned, directly or indirectly, by five
or fewer individuals (as defined in the Code to include certain entities) during
the last halfincorporation and by-laws.
The certificate of a taxable year and the stock must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months (or
during a proportionate part of a shorter taxable year). Accordingly, the
Certificate of Incorporation contains provisions that restrict the ownership and
transfer of shares of capital stock. The Certificate of Incorporation also
contains provisions that restrict the ownership and transfer of shares of
capital stock to reduce the risk that the Company's ability to use its NOLs
would be limited.
The Certificate of Incorporationincorporation authorizes the issuance of up to
26,000,000 shares of capital stock, consisting of 10,000,000 shares of Common
Stock,common
stock, $1.00 par value per share (the "Common Stock""common stock"), 3,000,000 shares of
preferred stock, $1.00 par value per share (the "Preferred Stock""preferred stock"), and
13,000,000 shares of excess stock, $1.00 par value per share (the "Excess
Stock""excess
stock"). As of November 2, 1995,October 31, 2003, 5,173,450 and 5,000,850 shares of Common Stockcommon stock
were issued and outstanding.outstanding, respectively. No shares of Preferred Stockpreferred stock or
shares of Excess Stockexcess stock are issued and outstanding.
Descriptionoutstanding as of Preferred Stockthe date of this
prospectus.
DESCRIPTION OF PREFERRED STOCK
The following is a description of certain general terms and provisions of
the Preferred Stock. The particularmaterial terms of any series of Preferred Stock will
be described in the applicable Prospectus Supplement. If so indicated inour preferred stock is
only a Prospectus Supplement, the terms of any such series may differ from the terms
set forth below.
The summary of terms of the Company's Preferred Stock contained in this
Prospectus does not purport to be complete and is subject to, and qualified in its entirety by reference to the provisions
of the Certificateour certificate of Incorporationincorporation and the certificate of designations relating
to each series of the Preferred Stockpreferred stock (the "Certificate"certificate of Designation"designations"), which
will be filed as an exhibit to or incorporated by reference in the Registration Statementregistration
statement of which this Prospectusprospectus is a part, at or prior to the time of
issuance of such series of the Preferred
Stock.preferred stock. The Certificateparticular terms of Incorporation authorizesany
series of preferred stock will be described in the issuance of 3,000,000
shares of Preferred Stock. No shares of Preferred Stock are outstanding as ofapplicable prospectus
supplement, which will supplement the date of this Prospectus.information below.
GENERAL
The Preferred Stockpreferred stock authorized by the Certificateour certificate of Incorporationincorporation may be
issued from time to time in one or more series in suchthe amounts and with suchthe
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption as may be fixed by our board of directors. The
preferred stock, upon issuance against full payment of the Boardapplicable purchase
price, will be fully paid and nonassessable. The liquidation preference is not
indicative of Directors.the price at which the shares of preferred stock will actually
trade on or after the date of issuance. Under certain circumstances, the
issuance of Preferred Stockpreferred stock could have the effect of delaying, deferring or
preventing a change of control of the Companyour company and may adversely affect the
voting and other rights of the Holdersholders of Common
Stock.common stock. See "Risk Factors--Anti-takeover Effects of Provisions of the Certificate
of IncorporationFactors -- Our
Organizational and By-laws.Financial Structure Gives Rise to Operational and Financial
Risks. -- Limits on changes in control may discourage takeover attempts
beneficial to stockholders." The Certificatecertificate of Incorporationincorporation authorizes the
Boardour
board of Directorsdirectors to classify or reclassify, in one or more series, any
unissued shares of preferred stock and to reclassify any unissued shares of Preferred
Stockany
series of preferred stock by setting or changing the designations, preferences,
conversion or other rights, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption of such Preferred Stock.
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the
preferred stock.
The Preferred Stockpreferred stock shall have the dividend, liquidation, redemption and
voting rights set forthdescribed below, unless otherwise described in a Prospectus
Supplementas supplemented by the applicable prospectus
supplement relating to aeach particular series of the Preferred Stock.preferred stock. The applicable
Prospectus Supplementprospectus supplement will describe the following terms of the series of
Preferred Stock in respect of which this Prospectus is being delivered: (1)preferred stock:
- the title of such Preferred Stockthe preferred stock and the number of shares offered; (2)offered,
- the amount of liquidation preference per share; (3)share,
- the initial public offering price at which the shares of such Preferred Stockpreferred stock
will be issued; (4)issued,
- the dividend rate (oror method of calculation),calculation, the dates on which dividends
shallwill be payable and the dates from which dividends shallwill commence to
cumulate,accumulate, if any; (5)any,
- any redemption or sinking fund provisions; (6)provisions,
- any conversion or exchange rights;
(7)rights,
34
- any additional voting, dividend, liquidation, redemption, sinking fund
and other rights, preferences, privileges, limitations and restrictions; (8)restrictions,
- any listing of such Preferred Stockthe preferred stock on any securities exchange; (9) a discussion of
federal income tax considerations applicable to such Preferred Stock; (10)exchange,
- the relative ranking and preferences of such Preferred Stockpreferred stock as to
dividend rights and rights upon our liquidation, dissolution or
winding upwinding-up of theour affairs,
of the
Company; (11)- any limitations on issuance of any series of Preferred Stockpreferred stock ranking
senior to or on a parityequally with suchthe series of Preferred Stockpreferred stock as to dividend
rights and rights upon our liquidation, dissolution or winding up of the
affairs of the Company; (12)winding-up,
- any limitations on direct or beneficial ownership and restrictions on
transfer in each case as may be appropriate to preserve theour status of the Company as a REIT;REIT or to
preserve our net operating loss carryovers and
(13)- any other specific terms, preferences or rights of, or limitations or
restrictions on, such Preferred Stock.
Generalthe preferred stock.
The sharesapplicable prospectus supplement also may include a discussion of
Preferred Stock offered hereby will be issued in one or more
series. Shares of Preferred Stock, upon issuance against full payment ofFederal income tax considerations applicable to the purchase price therefor, will be fully paid and nonassessable. The liquidation
preference is not indicative of the price at which the shares of Preferred Stock
will actually trade on or after the date of issuance.
Rank
The Preferred Stock shall, withpreferred stock.
RANKING
With respect to dividend rights and rights upon liquidation, dissolution
and winding up ofwinding-up, the Company,preferred stock will rank priorsenior to the Common
Stockour common stock and
Excess Stock (otherexcess stock, other than certain Excess Stockexcess stock resulting from the conversion of
Preferred Stock)preferred stock and to all other classes and series of our equity securities of the Company now
or hereafterlater authorized, issued or outstanding, (the Common Stockother than any classes or series of
our equity securities which by their terms specifically rank equal or senior to
the preferred stock as to dividend rights and suchrights upon our liquidation,
dissolution or winding-up. We refer to the common stock and the other classes
and series of equity securities collectively may be referred to herein aswhich the "Junior Stock"), other than any
classes or seriesshares of equity securities of the Company which by their terms
specifically provide for a ranking on a parity with (the "Parity Stock") orpreferred stock rank
senior to (the "Senior Stock") the Preferred Stock as to dividend rights and rights upon our liquidation, dissolution or
winding upwinding-up of as the Company."junior stock," we refer to our equity securities that by
their terms rank equal to the shares of preferred stock as the "parity stock,"
and we refer to our equity securities that by their terms rank senior to the
shares of preferred stock as the "senior stock." The Preferred
Stock shall beshares of preferred stock
are junior to all our outstanding debt of the Company. The Preferred
Stock shall be subject to creation of Senior Stock, Parity Stockdebt. We may create and Junior
Stockissue senior stock,
parity stock and junior stock to the extent not expressly prohibited by the Certificateour
certificate of Incorporation.
Dividendsincorporation.
DIVIDENDS
Holders of shares of Preferred Stock shall beour preferred stock are entitled to receive, when, as and if
declared by the Boardour board of Directorsdirectors, out of our assets of the Company legally available for
payment, dividends, or distributions in cash, property or other assets of the Companyour
company or in Securitiessecurities of the Companyour company or from any other source as the Boardour board of
Directorsdirectors in theirits discretion shall determinedetermines and at suchthe dates and at such rates per share per annumannual rate as
described in the applicable Prospectus
Supplement. Suchprospectus supplement. This rate may be fixed or
variable or both. Each declaredauthorized dividend shall beis payable to Holdersholders of record as
they appear at the close of business on the books of our company on the Company on such record
dates,date, not more than 90 calendar days preceding the payment dates therefor,date, as are determined
by the Boardour board of Directors (each of such dates, a "Record Date").
Suchdirectors.
These dividends may be cumulative or noncumulative, as described in the
applicable Prospectus Supplement.prospectus supplement. If dividends on a series of Preferred Stockpreferred stock
are noncumulative and if the Boardour board of Directorsdirectors fails to declareauthorize a dividend in
respect of a dividend period with respect to suchthat series, then Holdersholders of those
shares of such Preferred Stockpreferred stock will have no
-24-
right to receive a dividend in respect of
suchthat dividend period, and the Companywe will have no obligation to pay the dividend for
suchthat period, whether or not dividends are declared payableauthorized on any future dividend
payment dates. If dividends of a series of Preferred Stockpreferred stock are cumulative, the
dividends on suchthose shares will accrue from and after the date set forthstated in the
applicable Prospectus Supplement.prospectus supplement.
No full dividends shall be declaredauthorized or paid or set apart for payment on
Preferred Stockpreferred stock of any series ranking, as to dividends, on a parityequally with or junior
to the series of Preferred Stockpreferred stock offered by the applicable Prospectus
Supplementprospectus supplement
for any period unless full dividends for the immediately preceding dividend
period on such Preferred Stock (includingthe preferred stock, including any accumulation in respect of unpaid
dividends for prior dividend periods, if dividends on such Preferred
Stockthe preferred stock are
cumulative)cumulative, have been or contemporaneously are declaredauthorized and paid or declaredauthorized
and a sum sufficient for the payment thereof is set apart for such payment. When dividends are
not so paid in full, (oror a
35
sum sufficient for such full payment is not so set apart)apart, upon such shares of Preferred Stockthe preferred stock
offered by the applicable prospectus supplement and any other Preferred Stock of the Companypreferred stock
ranking on a parityequally as to dividends with the Preferred Stock,those shares of preferred stock, dividends
upon such Preferred Stockthose shares of preferred stock and dividends on suchthe other Preferred Stock ranking on a parity with the Preferred Stock shallpreferred stock
must be declared pro rataauthorized proportionately so that the amount of dividends declaredauthorized
per share on such
Preferred Stockthose shares of preferred stock and suchthe other Preferred Stock ranking on a parity with the
Preferred Stock shallpreferred stock in
all cases bear to each other the same ratio that accrued dividends for the
then-current dividend period per share on such
Preferred Stock (includingthose shares of preferred stock,
including any accumulation in respect of unpaid dividends for prior dividend
periods, if dividends on such Preferred Stockthose shares of preferred stock are cumulative)cumulative, and
accrued dividends, including required or permitted accumulations, if any, on
shares of suchthe other Preferred Stock,preferred stock, bear to each other. No interest, or sum of
money in lieu of interest, shallwill be payable in respect of any dividend payment(s)
on Preferred Stock which may beshares of preferred stock that are in arrears. Unless full dividends on the
series of Preferred Stockpreferred stock offered by the applicable Prospectus Supplementprospectus supplement have
been declaredauthorized and paid or set apart for payment for the immediately preceding
dividend period, (includingincluding any accumulation in respect of unpaid dividends for
prior dividend periods, if dividends on such Preferred Stock are cumulative), (a)cumulative:
- no cash dividend or distribution, (otherother than in shares of Junior Stock)junior stock,
may be declared,authorized, set aside or paid on the Junior Stock, (b) the
Companyjunior stock,
- we may not, directly or indirectly, repurchase, redeem or otherwise
acquire any shares of its Junior Stock (orjunior stock, or pay any moniesmoney into a sinking fund
for the redemption of any shares)shares, except by conversion into or exchange
for Junior
Stock,junior stock, and
(c) the Company- we may not, directly or indirectly, repurchase, redeem or otherwise
acquire any Preferred Stockpreferred stock or Parity Stock (orparity stock, or pay any moniesmoney into a
sinking fund for the redemption of any shares, of any such stock) otherwise than pursuant to pro ratain
accordance with proportionate offers to purchase or a concurrent
redemption of all, or a pro rataproportionate portion, of the shares of outstanding
Preferred Stockpreferred stock and shares of Parity Stock (exceptparity stock, except by conversion into or
exchange for Junior Stock).junior stock.
Any dividend payment made on a series of Preferred Stock shallpreferred stock will first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of suchthe series.
RedemptionREDEMPTION
The terms, if any, on which shares of Preferred Stockpreferred stock of any series may be
redeemed will be set forthdescribed in the applicable Prospectus Supplement.
Liquidation
Inprospectus supplement.
LIQUIDATION
If we voluntarily or involuntarily liquidate, dissolve or wind up our
affairs, the event of a voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, the Holdersholders of a series of Preferred
Stockpreferred stock will be entitled, subject to
the rights of creditors, but before any distribution or payment to the Holdersholders
of Common Stock, Excess Stock (otherour common stock, excess stock, other than certain Excess Stockshares of excess stock
resulting from the conversion of Preferred Stock)shares of preferred stock, or any Junior Stock on liquidation, dissolution or winding up of the Company,junior stock,
to receive a liquidating distribution in the amount of the liquidation
preference per share as set forthstated in the applicable Prospectus Supplementprospectus supplement plus accrued
and unpaid dividends for the then-current dividend period, (includingincluding any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such series of Preferred Stockpreferred stock are cumulative).cumulative. If the amounts
available for distribution with respect to the Preferred Stockour preferred stock and all other
outstanding Parity Stockparity stock are not sufficient to satisfy the full liquidation
rights of all the outstanding shares of Preferred Stockpreferred stock and Parity Stock,parity stock, then
the Holdersholders of each series of suchthe stock will share ratably in any suchthe distribution
of assets in proportion to the full -25-
respective preferential amount, (whichwhich in the case of
Preferred Stockpreferred stock may include accumulated dividends)dividends, to which they are entitled.
After payment of the full amount of the liquidation distribution, the Holdersholders of
Preferred Stockpreferred stock will not be entitled to any further participation in any
distribution of assets by the
Company.
Voting
Except as set forthus.
VOTING
Unless provided in the Prospectus Supplement relating to a particular
series of Preferred Stockapplicable prospectus supplement or except as expressly required by
applicable law, Holdersholders of shares of Preferred Stockpreferred stock will have no voting rights.
No Other Rights36
NO OTHER RIGHTS
The shares of a series of Preferred Stockpreferred stock will not have any preferences,
conversion or other rights, voting powers, or relative, participating, optional orrestrictions, limitations as to
dividends and other special rightsdistributions, qualifications, and terms and conditions of
redemption except as set forthdescribed above or in the applicable Prospectus Supplement, the
Certificateprospectus supplement,
our certificate of Incorporationincorporation and in the applicable Certificatecertificate of
Designationdesignations or as otherwise required by law.
Transfer Agent and RegistrarTRANSFER AGENT AND REGISTRAR
The transfer agent for each series of Preferred Stockpreferred stock will be described in
the related Prospectus Supplement.
Restrictions onprospectus supplement.
RESTRICTIONS ON OWNERSHIP OF PREFERRED STOCK
The Preferred Stock Beneficial Ownership As discussed below, forLimit. Our certificate of
incorporation contains a number of provisions that restrict the Companyownership and
transfer of shares and are designed to qualifyprotect us against an inadvertent loss of
REIT status. In order to maintain our qualification as a REIT under the Internal
Revenue Code, not more than 50% in value of itsour outstanding shares of capital
stock may be owned, directly or constructively, by five or fewer individuals (as defined in
the Code to include certain entities)at
any time during the last half of a taxable year, and the shares of capital stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months, (oror during a proportionate part of a shorter taxable
year). Therefore,year. The Internal Revenue Code defines "individuals" to include some entities
for the Certificate of
Incorporation contains, and the Certificate of Designation for each series of
Preferred Stock may contain, provisions restricting the ownership and transferpurposes of the Preferred Stock.
In orderpreceding sentence. All references to prevent any Company stockholder from owning sharesa holder's
ownership of preferred stock in an amount
which would cause more than 50%this section assumes application of the
valueapplicable attribution rules of the outstandingInternal Revenue Code under which, for
example, a holder is deemed to own shares owned by his or her spouse.
Our certificate of the
Company to be held by five or fewer individuals, the Certificate of
Incorporationincorporation contains a limitation that restricts
stockholders from owning under the applicable attribution rules of the Code, more than that percentage
(which generally should not exceed 9.9%) of the outstanding shares of Preferred
Stockpreferred
stock of any series as is established by the Board of Directors at the time it
authorizes the issuance of such series (the "Preferred Stock Beneficial
Ownership Limit""preferred stock beneficial ownership limit").
The attribution rules which apply for purposes of the Common
Stock Beneficial Ownership Limit (as defined below) also apply for purposes of
the Preferred Stock Beneficial Ownership Limit. See "Description of Common Stock
- -- Restrictions on Ownership." StockholdersInvestors should be aware that events other than a purchase or other transfer of
Preferred Stockpreferred stock may result in ownership, under the applicable attribution rules
of the Internal Revenue Code, of Preferred Stockpreferred stock in excess of the Preferredpreferred
stock beneficial ownership limit. The attribution rules which apply for purposes
of the common stock beneficial ownership limit also apply for purposes of the
preferred stock beneficial ownership limit. For more information about these
attribution rules, see "Description of Common Stock Beneficial-- Restrictions on
Ownership -- Attribution Rules." You should consult your own tax advisors
concerning the application of the attribution rules of the Internal Revenue Code
in your particular circumstances.
The Constructive Ownership Limit. StockholdersHolders of preferred stock also are
urgedsubject to the constructive ownership limit, which restricts them from owning,
under the applicable attribution rules of the Internal Revenue Code, more than
9.9% of the outstanding shares of preferred stock of any series. See
"Description of Common Stock -- Restrictions on Ownership -- The Constructive
Ownership Limit" below for more information about the constructive ownership
limit.
The attribution rules of the Internal Revenue Code that apply for purposes
of the constructive ownership limit differ from those that apply for purposes of
the preferred stock beneficial ownership limit. See "Description of Common
Stock -- Restrictions on Ownership -- The Constructive Ownership Limit" for more
information about these attribution rules. Investors should be aware that under
the applicable attribution rules of the Internal Revenue Code, events other than
a purchase or other transfer of preferred stock may result in ownership of
preferred stock in excess of the constructive ownership limit. We urge investors
to consult their own tax advisors concerning the application of the attribution
rules of the Internal Revenue Code in their particular circumstances.
HoldersIssuance of PreferredExcess Stock are also subject toif the Constructive Ownership Limit (as defined below in "DescriptionLimits Are Violated. Our
certificate of Common Stock -- Restrictions on
Ownership"), which restricts them from owning, under the applicable attribution
rules of the Code, more than 9.9% of the outstanding shares of Preferred Stock
of any series. The attribution rules which apply for purposes of the
Constructive Ownership Limit differ from those that apply for purposes of the
Preferred Stock Beneficial Ownership Limit. See "Description of Common Stock --
Restrictions on Ownership." Stockholders should be aware that events other than
a purchase or other transfer of Preferred Stock may result in ownership, under
the applicable attribution rules of the Code, of Preferred Stock in excess of
the Constructive Ownership Limit. Stockholders are urged to consult their own
tax advisors concerning the application of the attribution rules of the Code in
their particular circumstances.
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The Certificate of Incorporationincorporation provides that a transfer of shares of Preferred Stockpreferred
stock that would otherwise result in ownership, under the applicable attribution
rules of the Internal Revenue Code, of Preferred Stockpreferred stock in excess of the
Preferred
Stock Beneficial Ownership Limitpreferred stock beneficial ownership limit or the Constructive Ownership Limit,constructive ownership limit,
or which would cause the shares of capital stock of the CompanyAlexander's to be
beneficially owned by fewer than 100 persons, will be null and voidhave no effect and the
purported
37
transferee will acquire no rights or economic interest in such Preferred Stock.preferred stock.
In addition, Preferred Stockpreferred stock that would otherwise be owned, under the applicable
attribution rules of the Internal Revenue Code, in excess of the Preferred Stock Beneficial
Ownership Limitpreferred stock
beneficial ownership limit or the Constructive Ownership Limitconstructive ownership limit will be
automatically exchanged for shares of Excess Stock thatexcess stock. These shares of excess stock
will be transferred, by operation of law, to the Companyus as trustee of a trust for the
exclusive benefit of a beneficiary designated by the purported transferee or
purported Holder.holder. While so held in trust, the trustee shall vote the shares of
Excess Stockexcess stock in the same proportion as the Holdersholders of the Common Stock and Preferred Stock, respectively,
shall vote and suchoutstanding shares of
Excess Stock are not entitled to participate in
any dividends or distributions made by the Company.preferred stock have voted. Any dividends or distributions received by the
purported transferee or other purported Holderholder of such Excess Stock prior to the excess stock before our
discovery by the Company of the automatic exchange for shares of Excess Stock shallexcess stock must be repaid to
the Companyus upon demand.
If the purported transferee or purported Holderholder elects to designate a
beneficiary of an interest in the trust with respect to such Excess Stock,the excess stock, he or
she may only designate a person whose ownership of the shares will not violate
the Preferred Stock
Beneficial Ownership Limitpreferred stock beneficial ownership limit or the Constructive Ownership Limit may be
designated, at which timeconstructive ownership
limit. When the shares of Excess Stockdesignation is made, the excess stock will be automatically
exchanged for shares of Preferred Stockpreferred stock of the same class as the Preferred Stock
whichpreferred stock that were
originally exchanged for such Excess Stock. The Certificatethe excess shares. Our certificate of Incorporationincorporation
contains provisions designed to ensure that the purported transferee or other
purported Holderholder of the Excess Stockshares of excess stock may not receive, in return for
such a transfertransferring an interest in the trust with respect to the excess stock, an
amount that reflects any appreciation in the shares of Preferred Stockpreferred stock for which
suchthe shares of Excess Stockexcess stock were exchanged during the period that suchthe shares of
Excess Stockexcess stock were outstanding but will bear the burden of any decline in value
during suchthat period. Any amount received by a purported transferee or other
purported Holderholder for designating a beneficiary in excess of the amount permitted to be
received must be turned over to the Company. The Certificateus. Our certificate of Incorporationincorporation provides
that the Companywe may purchase any shares of Excess Stockexcess stock that have been automatically
exchanged for shares of Preferred Stockpreferred stock as a result of a purported transfer or
other event. The price at which the Companywe may purchase such Excess Stock shallthe shares of excess stock will
be equal to the lesser of (i)of:
- in the case of shares of Excess Stockexcess stock resulting from a purported transfer
for value, the price per share in the purported transfer that resulted in
the automatic exchange for shares of Excess Stockexcess stock or, in the case of
Excess Stockexcess stock resulting from some other event, the market price of the
shares of Preferred Stockpreferred stock exchanged on the date of the automatic exchange
for shares of Excess Stockexcess stock, and
(ii)- the market price of the shares of Preferred Stockpreferred stock exchanged for such
shares of Excess Stockexcess stock on the date that the Company acceptswe accept the deemed offer to
sell such Excess Stock. The Company'sthe excess stock.
Our purchase right with respect to Excess Stock shallexcess stock will exist for 90 days,
beginning on the date that the automatic exchange for shares of Excess Stockexcess stock
occurred or, if the Companywe did not receive a notice concerning the purported transfer
that resulted in the automatic exchange for shares of Excess Stocks,excess stock, the date
that the Boardour board of Directorsdirectors determines in good faith that an exchange for Excess Stockexcess
stock has occurred.
The BoardOther Provisions Concerning the Restrictions on Ownership. Our board of
Directorsdirectors may in its discretion exempt certain persons from the Preferred Stock Beneficial Ownership Limitpreferred stock beneficial
ownership limit or the Constructive Ownership
Limitconstructive ownership limit if evidence satisfactory to
the Boardour board of Directorsdirectors is presented showing that such exemption will not
jeopardize the Company'sour status as a REIT under the Internal Revenue Code. As a conditionBefore granting
an exemption of such exemption, the Boardthis kind, our board of Directorsdirectors may require a ruling from the
Internal Revenue Service and/orIRS, an opinion of counsel satisfactory to it and/orand representations and
undertakings from the applicant with respect to preserving theour REIT status of the Company.status.
The Board of Directors may, at any time, determine that the foregoing restrictions on ownership and transfer shallwill not apply if our
board of directors determines that it is no longer apply.in our best interests to
attempt to qualify, or to continue to qualify, as a REIT.
Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, impose limitations upon
the utilization of a corporation's net operating loss and credit carryforwards
and certain other tax attributes, following significant changes in the
corporation's stock ownership. In order to preserve the Company'sour ability to use its net
operating loss -27-
carryforwards to reduce its taxable income, the Certificateour certificate of
Incorporationincorporation also contains, and the Certificatecertificate of Designationdesignations for each series
of Preferred
Stockpreferred stock may contain, additional provisions restricting the ownership
of Preferred
Stockour outstanding stock (the "Section 382 Ownership Restrictions"ownership restrictions"). The Section
382 Ownership
Restrictionsownership restrictions merely reduce the risk of certain occurrences that
could cause such a limitation to arise. It is still possible that,
38
due to transfers (either directly or indirectly) of the Company'sour outstanding shares, the Companywe
could become subject to a limitation under SectionsSection 382 andor 383.
The CertificateOur certificate of Incorporationincorporation provides, in general, that, subject to the
exceptions described in the next paragraph, no person may acquire shares of the
Company (orour
company, or options or warrants to acquire such shares)shares, if as a result such
person (or another person to which such shares were attributed under certain
complex attribution rules, which differ in certain respects from those that
apply for purposes of the Preferred Stock Beneficial Ownership Limitpreferred stock beneficial ownership limit or the
Constructive Ownership Limit)constructive ownership limit) would own, directly or under such attribution
rules, 5% or more of the class of such outstanding shares (hereinafter, such
person's "Ownership Interest Percentage""ownership interest percentage"). In addition, subject to the
exceptions described in the next paragraph, no person whose Ownership Interest
Percentageownership interest
percentage of a class of shares equals or exceeds 5% can acquire or transfer
such shares, (oror options or warrants to acquire such shares).shares. The foregoing
restrictions apply independently to each class of the Company'sour outstanding stock.
The foregoing restrictions do not apply to (i) acquisitions and transfers
of Common Stockcommon stock by certain persons (orand their affiliates whose ownership interest
percentage of persons), whose Ownership
Interest Percentage of Common Stockcommon stock on September 21, 1993 was 5% or more, (ii) transfers
of shares pursuant to an offering by the Company,us, to the extent determined by the Boardour board
of Directors,directors, and (iii) other transfers of shares specifically approved by the Company's Boardour
board of Directors.directors.
Transfers of shares, options or warrants in violation of the Section 382
Ownership Restrictionsownership restrictions would be void, and the transferee would acquire no rights
in such shares, options or warrants. Thus, a purported acquiror would have no
right to vote such shares or to receive dividends. Moreover, upon our demand, by the
Company, a
purported acquiror of shares, options or warrants would be required to transfer
them to an agent designated by the Company.us. The agent, generally, would sell such shares,
options or warrants, remit the proceeds thereof to the purported acquiror to the
extent of such person's purchase price for suchthe shares and, to the extent
possible, remit the balance of the proceeds to such person's transferor. A
similar procedure would be applied to any dividends paid to, and to the proceeds
of any resale of shares, options or warrants by, the purported acquiror.
The BoardOur board of Directorsdirectors has the authority to designate a date as of which
the Section 382 Ownership Restrictionsownership restrictions will no longer apply.
All certificates representing shares of Preferred Stockpreferred stock will bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the applicable attribution
rules of the Internal Revenue Code, more than 2% of the outstanding Preferred Stockpreferred
stock of any series must give a written notice to the Companyus containing the information
specified in the Certificateour certificate of Incorporationincorporation by January 3031 of each year. In
addition, each stockholder shall upon demandwill be required to disclose to the Company suchus any information as the Companywe
may request, in good faith, in order to determine the
Company'sour status as a REIT or to
comply with Treasury Regulations promulgated under the REIT provisions of the
Internal Revenue Code.
Depositary SharesDEPOSITARY SHARES
We may, at our option, elect to offer depositary shares, which represent
receipts for fractional interests in shares of preferred stock rather than full
shares of preferred stock. Each depositary share will be evidenced by a
depositary receipt which will represent a fraction of a share of a particular
series of preferred stock and will be issued as described below. The prospectus
supplement relating to any series of depositary shares will state the fraction
of a preferred share represented by each depositary share.
The description set forth below and in any Prospectus Supplement of certainthe material provisions of the Deposit Agreementdeposit agreement
and of the Depositary Sharesdepositary shares and Depositary
Receipts (each as defined below) does not purport to be completedepositary receipts is only a summary and is subject
to and
qualified in its entirety by reference to the forms of Deposit Agreementdeposit agreement and
Depositary Receiptsdepositary receipts relating to each series of the Preferred Stock whichdepositary shares that have
been or will be filed withas an exhibit to or incorporated by reference in the
Commissionregistration statement of which this prospectus is a part, at or prior tobefore the time
of the offeringissuance of sucha series of the Preferred Stock. If so indicated in a Prospectus
Supplement, thedepositary shares. The particular terms of
any series of Depositary Shares may differ from the
terms set forth herein.
-28-
General
The Company may, at its option, elect to offer receipts fordepositary shares representing fractional interests ("Depositary Shares") in shares of Preferred Stock, rather than full
shares of Preferred Stock. In such event, receipts ("Depositary Receipts") for
Depositary Shares, each of which will represent a fraction (to be set forth in
the Prospectus Supplement relating to aany particular series of
Preferred Stock) of
a share of a particular series of Preferred Stock,preferred stock will be issued as described below.in the applicable prospectus supplement, which
will supplement the information in this prospectus.
39
The shares of any series of Preferred Stockpreferred stock represented by Depositary
Sharesdepositary
shares will be deposited under a Deposit Agreement (the "Deposit Agreement")deposit agreement between the Companyus and the
depositary (the "Depositary").depositary. Subject to the terms
of the Deposit Agreement,deposit agreement, each owner of a Depositary Sharedepositary share
will be entitled, in proportion to the applicable fraction of a share of
Preferred Stockpreferred stock represented by such Depositary Share,depositary share, to all the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends and preferencesother distributions, qualifications and terms and conditions of
redemption of the Preferred
Stockpreferred stock represented thereby (including dividend, voting, redemption, subscription
and liquidation rights).
Dividends and Other Distributionsby the depositary share.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositarydepositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stockpreferred stock to the record Holdersholders
of Depositary Sharesdepositary shares relating to such shares of Preferred Stockpreferred stock in proportion to
the numbers of such Depositary Sharesdepositary shares owned by such Holders.
In the event ofholders.
If we make a distribution other than in cash, the Depositarydepositary will
distribute property received by it to the record Holdersholders of Depositary Sharesdepositary shares in
an equitable manner, unless the Depositarydepositary determines that it is not feasible to
make suchthe distribution, in which case the Depositarydepositary may sell such property and
distribute the net proceeds from such sale to such Holders.
Withdrawal of Preferred Stockthe holders.
WITHDRAWAL OF PREFERRED STOCK
Upon surrender of Depositary Receiptsdepositary receipts at the corporate trust office of the
Depositary (unlessdepositary, unless the related Depositary Sharesdepositary shares have previously been called for
redemption or converted into Excess Sharesexcess shares or otherwise), the holders thereofotherwise, each depositary receipt
holder will be entitled to delivery at suchthe depositary's corporate trust office,
to or upon suchthe holder's order, of the number of whole or fractional shares of the
class or series of Preferred
Sharespreferred stock and any money or other property represented
by the Depositary Sharesdepositary shares evidenced by such Depositary Receipts.the depositary receipts. Holders of
Depository Receiptsdepositary receipts will be entitled to receive whole or fractional shares of
the related class or series of Preferred Sharespreferred stock on the basis of the proportionfraction of Preferred Sharesa
share of preferred stock represented by each Depositary Sharedepositary share as specified in
the applicable Prospectus Supplement,prospectus supplement, but holders of such Preferred Sharesthe preferred stock will
not thereafter be entitled to receive Depositary Shares thereof.depositary shares representing the preferred stock
after exchanging the depositary shares for preferred stock. If the Depositary Receiptsdepositary
receipts delivered by the holder evidence a number of Depositary Sharesdepositary shares in
excess of the number of Depositary
Sharesdepositary shares representing the number of shares of
Preferred Sharespreferred stock to be withdrawn, the Depositarydepositary will deliver to suchthe holder at
the same time a new Depositary
Receiptdepositary receipt evidencing such excess number of
Depositary Shares.
Redemption of Depositary Sharesdepositary shares.
REDEMPTION OF DEPOSITARY SHARES
If a series of Preferred Stockpreferred stock represented by Depositary Sharesdepositary shares is subject
to redemption, the Depositary Sharesdepositary shares will be redeemed from the proceeds received
by the Depositarydepositary resulting from the redemption, in whole or in part, of suchthe
series of Preferred Stockpreferred stock held by the Depositary.depositary. The redemption price per
Depositary Sharedepositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to such series of the Preferred Stock.preferred stock.
Whenever the Company redeemswe redeem shares of Preferred Stockpreferred stock held by the Depositary,depositary, the
Depositarydepositary will redeem as of the same redemption date the number of Depositary Sharesdepositary
shares representing the redeemed shares of Preferred Stock so redeemed.preferred stock. If fewer than all
the Depositary Sharesdepositary shares are to be redeemed, the Depositary Sharesdepositary shares to be redeemed
will be selected by lot, pro rataproportionately or by any other equitable method as may
be determined by the Depositary.
-29-
Voting the Preferred Stockdepositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the Holdersholders of the Preferred
Stockpreferred
stock are entitled to vote, the Depositarydepositary will mail the information contained
in such noticesthe notice of meeting to the record Holdersholders of the Depositary Sharesdepositary shares relating
to such Preferred Stock.the preferred stock. Each record Holderholder of such Depositary Sharesthese 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 Depositarydepositary as to the exercise of
the voting rights pertaining to the amount of the Preferred Stockpreferred stock represented by
such Holder's Depositary Shares.the holder's depositary shares. The Depositaryrecord date for voting the depositary shares
will be the same as the record date for voting the preferred stock. The
depositary will endeavor, insofar as practicable, to vote the amount of the
Preferred Stockpreferred stock represented by such
Depositary Sharesthe depositary shares in accordance with
such40
the instructions, and the Companywe will
agree to take all reasonable action which may be deemed necessary by the
Depositarydepositary in order to enable the Depositarydepositary to do so. The Depositarydepositary will
abstain from voting the Preferred Stockpreferred stock to the extent it does not receive
specific instructions from the Holderholder of Depositary Sharesdepositary shares representing such
Preferred Stock.
Amendmentthose
shares of preferred stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We and Termination of the Deposit Agreement
Thedepositary may amend the form of Depositary Receiptdepositary receipt evidencing
the Depositary Sharesdepositary shares and any provision of the Deposit Agreement maydeposit agreement at any time be amended by agreement
between the Company and the Depositary.time.
However, any amendment whichthat materially and adversely alters the rights of the
Holdersholders of Depositary Sharesdepositary shares will not be effective unless such amendment has been approved by the Holdersholders of at
least a majority of the Depositary Sharesdepositary shares then outstanding.outstanding approve the
amendment. The Deposit Agreementdeposit agreement will only terminate if (i)(a) all outstanding
Depositary Sharesdepositary shares have been redeemed or (ii)(b) there has been a final distribution
in respect of the Preferred Stockpreferred stock in connection with any liquidation,
dissolution or winding upwinding-up of the Companyour affairs and suchthat distribution has been
distributed to the Holdersholders of the related Depositary
Shares.
Charges of Depositary
The Companydepositary shares.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. The CompanyWe will pay charges of
the Depositarydepositary in connection with the initial deposit of the Preferred Stockpreferred stock and
issuance of Depositary Receipts,depositary receipts, all withdrawals of Preferred Stockpreferred stock by owners of
Depositary Sharesdepositary shares and any redemption of the Preferred Stock.preferred stock. Holders of
Depositary Receiptsdepositary receipts will pay other transfer and other taxes and governmental
charges and such other charges as are expressly provided in the Deposit Agreementdeposit
agreement to be for their accounts.
Resignation and Removal of Depositaryaccount.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositarydepositary may resign at any time by delivering to the Companyus notice of its
election to do so, and the Companywe may at any time remove the Depositary,
any suchdepositary. The resignation
or removal towill take effect upon the appointment of a successor Depositarydepositary and
its acceptance of suchthe appointment. SuchThe successor Depositarydepositary 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.
Restrictions on OwnershipRESTRICTIONS ON OWNERSHIP
In order to safeguard the Company against an inadvertent loss of our REIT status, the
Deposit Agreementdeposit agreement will contain provisions similar to those in the
Certificateour certificate of
Incorporationincorporation restricting the ownership and transfer of Depositary Shares.depositary shares. Such
restrictions will be described in the applicable Prospectus Supplement.
Miscellaneousprospectus supplement.
REPORTS; LIABILITY OF DEPOSITARY AND ALEXANDER'S, INC.
The Depositarydepositary will forward all reports and communications from the Companyus which
are delivered to the Depositarydepositary and which the Company iswe are required, or otherwise
determinesdetermine, to furnish to the Holdersholders of the Preferred Stock.
-30-
preferred stock.
Neither the Depositarydepositary nor the CompanyAlexander's will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement.deposit agreement. The obligations of the CompanyAlexander's and the
Depositarydepositary under the Deposit Agreementdeposit agreement will be limited to performance in good
faith of their duties thereunderunder the deposit agreement, and they will not be
obligated to prosecute or defend any legal proceeding in respect of any
Depositary Sharesdepositary shares or Preferred
Stockpreferred stock unless satisfactory indemnity is furnished.
They may rely upon written advice of counsel or accountants, or information
provided by persons presenting Preferred Stockpreferred stock for deposit, Holdersholders of
Depositary Sharesdepositary shares or other persons believed to be competent and on documents
believed to be genuine.
Description41
DESCRIPTION OF COMMON STOCK
The following description of Common Stockthe material terms of our common stock is only
a summary and is qualified in its entirety by reference to, the provisions
contained in our certificate of incorporation and the by-laws governing the
common stock.
As of November 2, 1995,October 31, 2003, 5,173,450 and 5,000,850 shares of Common Stockour common stock
were issued and outstanding. The Common Stock of the Companyoutstanding, respectively. Our common stock is listed on the
NYSE under the symbol "ALX".
The"ALX."
DIVIDEND AND VOTING RIGHTS OF HOLDERS OF COMMON STOCK
Holders of Common Stockour common stock are entitled to receive dividends when, if and
as declaredauthorized by the Boardour board of Directors of the Companydirectors out of assets legally available therefor, provided that if any shares of Preferred Stock are atto pay
dividends.
Each common share entitles the time outstanding, the payment of dividends on Common Stock or other
distributions (including purchases of Common Stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding Preferred Stock.
The Holders of Common Stock are entitledholder to one vote for each share on all matters voted on
by stockholders, including elections of directors. There is no cumulative voting
in the election of directors, which means that the Holdersholders of a majority of the
outstanding Common Stockcommon stock can elect all of the directors then standing for
election.
TheOur certificate of incorporation requires the affirmative vote of
two-thirds of the outstanding shares of our stock entitled to vote before we may
merge with another corporation.
Holders of Common Stockcommon stock do not have any conversion, redemption or
preemptive rights to subscribe to any securities of the Company.our company. In the event of
theour dissolution, liquidation or winding up, Holderswinding-up, after the payment or provision of
Common
Stockour debts and other liabilities and the preferential amounts to which holders of
our preferred stock are entitled, if any such preferred stock is outstanding,
the holders of the common stock are entitled to share ratably in any assets
remaining after the
satisfaction in full of the prior rights of creditors, including holders of the
Company's indebtedness, and the aggregate liquidation preference of any
Preferred Stock then outstanding.for distribution to shareholders.
The Common Stockcommon stock has equal dividend, distribution, liquidation and other
rights, and shall havethere are no preference, appraisal or exchange rights.rights applicable
thereto. All outstanding shares of Common Stockcommon stock are, and any shares of Common Stockcommon
stock offered by a Prospectus Supplement,prospectus supplement, upon issuance, will be, fully paid and
non-assessable.
Thenonassessable.
Wachovia Bank, N.A., is the transfer agent for the common stock.
RESTRICTIONS ON OWNERSHIP OF COMMON STOCK
The Common Stock is First Fidelity Bank, N.A.,
Newark, New Jersey.
Restrictions onBeneficial Ownership The CertificateLimit. Our certificate of
Incorporationincorporation contains a number of provisions whichthat restrict the ownership and
transfer of shares and which are designed to safeguard the Companyus against an inadvertent loss
of REIT status. These provisions also seek to deter non-negotiated acquisitions
of, and proxy fights for, us by third parties. In order to prevent any Company stockholder from owning shares in an amount which would
causemaintain our
qualification as a REIT under the Internal Revenue Code, not more than 50% inof
the value of theour outstanding shares of the Company tocapital stock may be owned, directly or
constructively, by five or fewer individuals at any time during the Certificatelast half of
Incorporation contains a limitation that restricts, with certain exceptions, stockholders from owning,
undertaxable year and the shares of capital stock must be beneficially owned by 100
or more persons during at least 335 days of a taxable year of 12 months, or
during a proportionate part of a shorter taxable year. The Internal Revenue Code
defines "individuals" to include some entities for purposes of the preceding
sentence. All references to a holder's ownership of common stock in this section
assumes application of the applicable attribution rules of the Internal Revenue
Code under which, for example, a holder is deemed to own shares owned by his or
her spouse.
Our certificate of incorporation contains a limitation that restricts
stockholders from owning more than 4.9% of the outstanding shares of Common Stock (the "Common Stock Beneficial Ownership
Limit").common
stock. In certain circumstances, the Boardour board of Directorsdirectors may reduce the Common
Stock Beneficial Ownership Limitcommon
stock beneficial ownership limit to as lowlittle as 2%, but only if any person who
would ownowns shares in excess of such new limit could continue to do so. The BoardOur board of
Directorsdirectors has, subject to certain conditions and limitations, exempted our
manager, Vornado Realty Trust, and certain of its affiliates from the Common Stock Beneficial Ownership
Limitation.
Stockholderscommon
stock beneficial ownership limit. As a result, it is less likely as a practical
matter that another holder of common stock could obtain an exemption.
42
Attribution Rules. Investors should be aware that under the applicable
attribution rules of the Internal Revenue Code, events other than a purchase or
other transfer of Common Stockcommon stock can result in ownership under the applicable
attribution rules of the Code, of Common Stockcommon stock in excess
of the Common Stock
Beneficial Ownership Limit.common stock beneficial ownership limit. For instance, if two
stockholders, each of whom owns under the applicable attribution rules of the Code 3% of the outstanding Common Stock,common stock, were to
marry, then after their marriage both stockholders would be deemed to own under the applicable attribution rules of the Code, 6% of
the outstanding shares of Common Stock,common stock, which is in -31-
excess of the Common Stock Beneficial Ownership Limit.common stock
beneficial ownership limit. Similarly, if a stockholder who owns under the applicable attribution rules of the Code, 4% of the
outstanding Common Stockcommon stock were to purchase a 50% interest in a corporation which
owns 3% of the outstanding Common Stock,common stock, then the stockholder would be deemed to
own
under the applicable attribution rules of the Code, 5.5% of the outstanding shares of Common Stock. Stockholders are urged tocommon stock. You should consult theiryour own
tax advisersadvisors concerning the application of the attribution rules of the Internal
Revenue Code in theiryour particular circumstances.
The Constructive Ownership Limit. Under the Internal Revenue Code, rental
income received by a REIT from persons inwith respect to which the REIT is
treated, under the applicable attribution rules of the Internal Revenue Code, as
owning a 10% or greater interest does not constitute qualifying income for
purposes of the income requirements that REITs must satisfy. For these purposes,
a REIT is treated as owning any stock owned, under the applicable attribution
rules of the Internal Revenue Code, by a person that owns 10% or more of the
value of the outstanding shares of the REIT. Therefore,The attribution rules of the
Internal Revenue Code applicable for these purposes are different from those
applicable with respect to the common stock beneficial ownership limit. All
references to a stockholder's ownership of common stock in this section assume
application of the applicable attribution rules of the Internal Revenue Code.
In order to ensure that our rental income of the Company will not be treated as
nonqualifying income under the rule described above,in the preceding paragraph, and
thus to ensure that therewe will not be an inadvertent loss ofinadvertently lose our REIT status as a result
of the ownership of shares of a tenant, or a person that holds an interest in a
tenant, the Certificateour certificate of Incorporation alsoincorporation contains an ownership limit that
restricts, with certain exceptions, stockholders from owning under the applicable attribution rules of the Code (which are different
from those applicable with respect to the Common Stock Beneficial Ownership
Limit), more than 9.9% of
the outstanding shares of any class (the "Constructive
Ownership Limit""common stock beneficial ownership
limit").
Stockholders should be aware that events other than a purchase or other
transfer of shares can result in ownership, under the applicable attribution
rules of the Internal Revenue Code, of shares in excess of the Constructive Ownership Limit.constructive
ownership limit. As the attribution rules that apply with respect to the
Constructive Ownership
Limitconstructive ownership limit differ from those that apply with respect to the
Common Stock Beneficial
Ownership Limit,common stock beneficial ownership limit, the events other than a purchase or
other transfer of shares which can result in share ownership in excess of the
Constructive Ownership
Limitconstructive ownership limit can differ from those which can result in share
ownership in excess of the Common Stock Beneficial Ownership Limit. Stockholderscommon stock beneficial ownership limit. You should
consult theiryour own tax advisersadvisors concerning the application of the attribution
rules of the Internal Revenue Code in theiryour particular circumstances.
The CertificateIssuance of IncorporationExcess Stock if the Ownership Limits Are Violated. Our
certificate of incorporation provides that a transfer of shares of Common Stockcommon stock
that would otherwise result in ownership, under the applicable attribution rules
of the Internal Revenue Code, of Common Stockcommon stock in excess of the Common Stock
Beneficial Ownership Limitcommon stock
beneficial ownership limit or the Constructive Ownership Limit,constructive ownership limit, or which would
cause the shares of beneficial interestcapital stock of the CompanyAlexander's to be beneficially owned by
fewer than 100 persons, will be null and voidwould have no effect and the purported transferee willwould
acquire no rights or economic interest in such Common Stock.common stock. In addition, Common Stockcommon
stock that would otherwise be owned, under the applicable attribution rules of
the Internal Revenue Code, in excess of the Common Stock Beneficial Ownership Limitcommon stock beneficial ownership
limit or the Constructive Ownership Limitconstructive ownership limit will be automatically exchanged for
shares of Excess Stock that willexcess stock. These shares of excess stock would be transferred, by
operation of law, to the Companyus as trustee of a trust for the exclusive benefit of a
beneficiary designated by the purported transferee or purported Holder.holder. While so
held in trust, the trustee shall vote the shares of Excess Stockexcess stock in the same
proportion as the Holdersholders of the Common Stock and Preferred Stock, respectively, shall vote and suchoutstanding shares of Excess Stock are not entitled to participate in any dividends or
distributions made by the Company.common stock have voted.
Any dividends or distributions received by the purported transferee or other
purported Holderholder of such Excess Stock prior to
the excess stock before our discovery by the Company of the automatic
exchange for Excess Stock shallshares of excess stock must be repaid to the Companyus upon demand.
If the purported transferee or purported Holderholder elects to designate a
beneficiary of an interest in the trust with respect to such Excess Stock,the excess stock, he or
she may only designate a person whose ownership of the shares will not violate
the Common Stock
Beneficial Ownership Limitcommon stock beneficial ownership limit or the Constructive Ownership Limit may be
designated, at which timeconstructive ownership limit.
When the shares of Excess Stockdesignation is made, the excess stock will be automatically exchanged
for sharescommon stock. Our certificate of Common Stock. The Certificate of Incorporationincorporation
43
contains provisions designed to ensure that the purported transferee or other
purported Holderholder of shares of Excess Stockexcess stock may not receive in return for
such a transfertransferring an interest in the trust with respect to the excess stock, an
amount that reflects any appreciation in the shares of Common Stockcommon stock for which
suchthe shares of Excess Stockexcess stock were exchanged during the period that suchthe shares of
Excess Stockexcess stock were outstanding but will bear the burden of any decline in value
during suchthat period. Any amount received by a purported transferee or other
purported Holderholder for designating a beneficiary in excess of the amount permitted
to be received must be turned over to the Company. The Certificateus. Our certificate of Incorporationincorporation
provides that the Companywe may purchase any shares of Excess Stockexcess stock that have been
automatically exchanged for shares of Common Stockcommon stock as a result of a purported
transfer or other event. The -32-
price at which the Companywe may purchase such Excess Stock shallthe excess stock
will be equal to the lesser of (i)of:
- in the case of Excess Stockshares of excess stock resulting from a purported transfer
for value, the price per share in the purported transfer that resulted in
the automatic exchange for Excess Stockshares of excess stock or, in the case of
Excess Stockexcess stock resulting from some other event, the market price of the
Common Stockshares of common stock exchanged on the date of the automatic exchange
for Excess Stockexcess stock, and
(ii)- the market price of the Common Stockshares of common stock exchanged for such Excess Stockthe excess
stock on the date that the Company
acceptswe accept the deemed offer to sell such Excess Stock. The Company'sthe excess
stock.
Our purchase right with respect to Excess Stock shallexcess stock will exist for 90 days,
beginning on the date that the automatic exchange for shares of Excess Stockexcess stock
occurred or, if the Companywe did not receive a notice concerning the purported transfer
that resulted in the automatic exchange for shares of Excess Stock,excess stock, the date
that the Boardour board of Directorsdirectors determines in good faith that an exchange for Excess Stockexcess
stock has occurred.
The BoardOther Provisions Concerning the Restrictions on Ownership. Our board of
Directors of the Companydirectors may in its discretion exempt certain persons from the Common Stock Beneficial Ownership Limitcommon stock beneficial ownership
limit or the Constructive
Ownership Limit,constructive ownership limit if evidence satisfactory to the Boardour board
of Directorsdirectors is presented showing that such exemption will not jeopardize the Company'sour
status as a REIT under the Internal Revenue Code. As a conditionBefore granting an exemption
of such exemption, the Boardthis kind, our board of Directorsdirectors may require a ruling from the Internal Revenue Service and/orIRS, an
opinion of counsel satisfactory to it and/orand representations and undertakings from
the applicant with respect to preserving theour REIT statusstatus.
Our board of the Company.
The Board of Directorsdirectors has, subject to certain conditions and limitations,
exempted our manager, Vornado Realty Trust, and certain of its affiliates from
the Common Stock Beneficial
Ownership Limitation.common stock beneficial ownership limit. As a result, it is unlikelyless likely as a
practical matter that another Holderholder of Common Stockcommon stock could obtain an exemption.
The Board of Directors may, at any time, determine that the foregoing restrictions on ownership and transfer shallwill not apply if our
board of directors determines that it is no longer apply.in our best interests to
attempt to qualify, or continue to qualify, as a REIT.
Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, impose limitations upon
the utilization of a corporation's net operating loss and credit carryforwards
and certain other tax attributes, following significant changes in the
corporation's stock ownership. In order to preserve the Company'sour ability to use its net
operating loss carryforwards to reduce its taxable income, the Certificateour certificate of
Incorporationincorporation also contains additional provisions restricting the ownership of
the Company'sour outstanding shares (the "Section 382 Ownership Restrictions"ownership restrictions"). The Section
382 Ownership Restrictionsownership restrictions merely reduce the risk of certain occurrences that
could cause such a limitation to arise. It is still possible that, due to
transfers (either directly or indirectly) of the
Company'sour outstanding shares, the Companywe could
become subject to a limitation under SectionsSection 382 andor 383.
The CertificateOur certificate of Incorporationincorporation provides, in general, that, subject to the
exceptions described in the next paragraph, no person may acquire shares of the
Company (orour
company, or options or warrants to acquire such shares)shares, if as a result such
person (or another person to which such shares were attributed under certain
complex attribution rules, which differ in certain respects from those that
apply for purposes of the Common Stock Beneficial Ownership Limitcommon stock beneficial ownership limit or the
Constructive Ownership Limit)constructive ownership limit) would own, directly or under such attribution
rules, 5% or more of the class of such outstanding shares (hereinafter, such
person's "Ownership Interest Percentage""ownership interest percentage"). In addition, subject to the
exceptions described in the next paragraph, no person whose Ownership Interest
Percentageownership interest
percentage of a class of shares equals or exceeds 5% can acquire or transfer
such shares, (oror options or warrants to acquire such shares).shares. The foregoing
restrictions apply independently to each class of the Company'sour outstanding stock.
44
The foregoing restrictions do not apply to (i) acquisitions and transfers
of shares of Common Stockcommon stock by certain persons (orand their affiliates whose
ownership interest percentage of persons), whose
Ownership Interest Percentage of Common Stockcommon stock on September 21, 1993 was 5% or
more, (ii) transfers of shares pursuant to an offering by the Company,us, to the extent
determined by the Boardour board of Directors,directors, and (iii) other transfers of shares
specifically approved by the Company's Boardour board of Directors.directors.
Transfers of shares, options or warrants in violation of the Section 382
Ownership Restrictionsownership restrictions would be void, and the transferee would acquire no rights
in such shares, options or warrants. Thus, a purported acquiror would have no
right to vote such shares or to receive dividends. Moreover, upon our demand, by the
Company, a
purported acquiror of
-33-
shares, options or warrants would be required to transfer
them to an agent designated by the Company.us. The agent, generally, would sell such shares,
options or warrants, remit the proceeds thereof to the purported acquiror to the
extent of such person's purchase price for suchthe shares and, to the extent
possible, remit the balance of the proceeds to such person's transferor. A
similar procedure would be applied to any dividends paid to, and to the proceeds
of any resale of shares, options or warrants by, the purported acquiror.
The BoardOur board of Directorsdirectors has the authority to designate a date as of which
the Section 382 Ownership Restrictionsownership restrictions will no longer apply.
All certificates representing shares of common stock will bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the applicable attribution
rules of the Internal Revenue Code, more than 2% of the shares of outstanding
Common Stockcommon stock must give a written notice to the Companyus containing the information
specified in the
Certificateour certificate of Incorporationincorporation by January 31 of each year. In
addition, each stockholder shall upon demand be required to disclose to the Companyus such
information as the Companywe may request, in good faith, in order to determine the
Company'sour status
as a REIT or to comply with Treasury Regulations promulgated under the REIT
provisions of the Internal Revenue Code.
IMPORTANT PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF INCORPORATION AND
BY-LAWS
The ownership restrictions described abovefollowing is a summary of important provisions of Delaware law and our
certificate of incorporation and by-laws which affect us and our stockholders.
The description below is intended as only a summary. You can access complete
information by referring to Delaware General Corporation Law and our certificate
of incorporation and by-laws.
BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS UNDER DELAWARE LAW
Section 203 of the Delaware General Corporation Law prevents a publicly
held corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless:
- before the date on which the person became an interested stockholder, the
board of directors of the corporation approved either the business
combination or the transaction in which the person became an interested
stockholder,
- the interested stockholder owned at least 85% of the outstanding voting
stock of the corporation at the beginning of the transaction in which it
became an interested stockholder, excluding stock held by directors who
are also officers of the corporation and by employee stock plans that do
not provide participants with the rights to determine confidentially
whether shares held subject to the plan will be tendered in a tender or
exchange offer, or
- after the date on which the interested stockholder became an interested
stockholder, the business combination is approved by the board of
directors and the holders of two-thirds of the outstanding voting stock
of the corporation voting at a meeting, excluding the voting stock owned
by the interested stockholder.
As defined in Section 203, an "interested stockholder" is generally a
person owning 15% or more of the outstanding voting stock of the corporation. As
defined in Section 203, a "business combination" includes mergers,
consolidations, stock and assets sales and other transactions with the
interested stockholder.
45
The provisions of Section 203 may have the effect of precluding acquisitiondelaying, deferring or
preventing a change of control of Alexander's, Inc.
AMENDMENT OF OUR CERTIFICATE OF INCORPORATION AND BY-LAWS
Amendments to our certificate of incorporation must be approved by our
board of directors. Unless otherwise required by law, our board of directors may
amend our by-laws by a majority vote of the Company.directors then in office.
MEETINGS OF STOCKHOLDERS
Under our by-laws, we will hold annual meetings of our stockholders at a
date and time as determined by our board of directors, chairman, vice chairman
or president. Our by-laws require advance notice for our stockholders to make
nominations of candidates for our board of directors or bring other business
before an annual meeting of our stockholders. The chairman or vice chairman
shall call special meetings of our stockholders whenever stockholders owning at
least a majority of our issued and outstanding shares entitled to vote on
matters to be submitted to stockholders shall request in writing such a meeting.
BOARD OF DIRECTORS
Our board of directors is divided into three classes. As the term of each
class expires, directors in that class will be elected for a term of three years
and until their successors are duly elected and qualified. These staggered terms
may reduce the possibility of an attempt to change control of Alexander's.
DESCRIPTION OF DEBT WARRANTS
The CompanyWe may issue, Debt Warrantseither together with other debt securities or separately,
debt warrants to purchase Debt Securities ("Debt
Warrants"). Debt Warrants may be issued independently or together withunderlying debt securities. We will issue debt
warrants, if any, Debt
Securities and may be attached to or separate from such Debt Securities. The
Debt Warrants are to be issued under warrant agreements (each, a "Warrant
Agreement""debt warrant agreement")
tothat would be entered into between the Companyus and a bank or trust company, as warrant agent (the
"Warrant Agent""debt warrant agent"), all as shall be set forth in the
Prospectus Supplement relating to Debt Warrants being offered pursuant thereto.
If so indicatedthat we will describe in a Prospectus Supplement,prospectus supplement.
GENERAL
You should read the applicable prospectus supplement for the terms of any Debt Warrants may
differ from the
terms set forth below.
The applicable Prospectus Supplement will describe the terms of Debt
Warrants offered thereby, the Warrant Agreement relating to such Debt Warrants
and the debt warrant certificates representing such Debt Warrants,warrants, including the following:
(1)- the title of such Debt Warrants; (2) theand aggregate number of such Debt Warrants; (3)debt warrants,
- the initial offering price or prices at which such Debt Warrants will be
issued and the procedures for adjusting such price; (4)the initial
offering price,
- the currency, or
currencies, including composite currencies or currency units in which the price
of such Debt Warrants may be payable; (5)debt warrants are
payable,
- the designation, aggregate principal amount and other terms of the Debt Securitiesdebt
securities purchasable upon exercise of such Debt
Warrants, and the procedures and conditions relating to the exercise of such
Debt Warrants; (6)debt warrants,
- if applicable, the designation and terms of any related Debt Securitiesthe debt securities with
which such Debt Warrantsthe debt warrants are issued and the number of such Debt Warrantsdebt warrants issued
with each such Debt Security; (7)debt security,
- the currency, or currencies, including
composite currencies or currency units in which the principal of,
(or premium, if any),any, or interest, if any, is payable on the Debt Securitiesdebt securities
purchasable upon exercise of such Debt Warrants will be payable; (8)the debt warrants,
- if applicable, the date if any, on and after which such Debt Warrantsthe debt warrants and the
related Debt Securitiesdebt securities will be separately transferable; (9)transferable,
- the principal amount of Debt Securitiesdebt securities purchasable upon exercise of each Debt Warrant,one
debt warrant and the price at which and the currency,
including composite currency or currency unit, in which such principal amount of Debt Securitiesdebt
securities may be purchased upon such exercise; (10)exercise,
- the date on which the right to exercise such Debt Warrants shallthe debt warrants will commence
and the date on which such right shall expire; (11)will expire,
46
- the maximum or minimum number of such Debt Warrantsdebt warrants which may be exercised at
any time; (12)time,
- if applicable, a discussion of the material federalFederal income tax
considerations, if any;consequences applicable to the exercise of the debt warrants and (13)to the
debt securities purchasable upon the exercise of the debt warrants, and
- any other terms of such Debt Warrants and
terms, procedures and limitations relating to the exercise of such Debt
Warrants.debt warrants.
Debt warrant certificates willmay be exchangeableexchanged for new debt warrant
certificates of different denominations and, Debt Warrantsif in registered form, may be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Warrant Agentdebt warrant agent or any other office indicated in the
Prospectus Supplement.prospectus supplement relating thereto. Prior to the exercise of their Debt Warrants, Holders
of Debt Warrantsthe debt
warrants, holders will not have any of -34-
the rights of Holdersholders of the Debt Securitiesdebt securities
purchasable upon such exercise and will not be entitled to payments of
principal, of (or premium, if any)any, or interest, if any, on the Debt Securities purchasable upon such exercise.
Exercise of Debt Warrantsdebt securities.
EXERCISE OF DEBT WARRANTS
Each Debt Warrantoffered debt warrant will entitle the Holder of such Debt Warrantholder thereof to purchase
for cash such
principal amount of Debt Securitiesunderlying debt securities at suchthe exercise price as
shall in each case be set forth
in, or be determinable as set forth in,calculable from, the Prospectus Supplementprospectus supplement relating to the Debt Warrantssuch offered thereby. Debt
Warrants may be exercised at any time up to the close of business on the
expiration date set forth in the Prospectus Supplement relating to the Debt
Warrants offered thereby.debt
warrants. After the close of business on the expiration date, unexercised Debt Warrantsdebt
warrants will become void.
Debt WarrantsYou may be exercised as set forth in the Prospectus Supplement
relatingexercise debt warrants by payment to the Debt Warrants offered thereby.debt warrant agent of the
applicable exercise price and by delivery to the debt warrant agent of the
related debt warrant certificate, properly completed. Upon receipt of such
payment and the warrant certificate properly completed and duly executeddebt warrant certificates at the corporate
trust office of the Warrant Agentdebt warrant agent or any other office indicated in the
Prospectus
Supplement, the Companyprospectus supplement, we will, as soon as practicable, forwarddeliver the Debt
Securities purchasableamount of
the underlying debt securities purchased upon such exercise. If lessfewer than all
of the Debt Warrantsdebt warrants represented by suchany debt warrant certificate are exercised,
a new debt warrant certificate will be issued for the remaining Debt Warrants.unexercised debt warrants.
If you hold a debt warrant, you must pay any tax or other governmental charge
that may be imposed in connection with any transfer involved in the issuance of
underlying debt securities purchased upon such exercise.
LEGAL OWNERSHIP AND BOOK-ENTRY ISSUANCE
In this section, we describe special considerations that will apply to
registered securities issued in global, i.e., book-entry form. First we describe
the difference between legal ownership and indirect ownership of registered
securities. Then we describe special provisions that apply to global securities.
WHO IS THE LEGAL OWNER OF A REGISTERED SECURITY?
Each debt security, share of common or preferred stock and depositary share
in registered form will be represented either by a certificate issued in
definitive form to a particular investor or by one or more global securities
representing the entire issuance of securities. We refer to those who have
securities registered in their own names, on the books that we or the trustee or
other agent maintain for this purpose, as the "holders" of those securities.
These persons are the legal holders of the securities. We refer to those who,
indirectly through others, own beneficial interests in securities that are not
registered in their own names as indirect owners of those securities. As we
discuss below, indirect owners are not legal holders, and investors in
securities issued in book-entry form or in street name will be indirect owners.
BOOK-ENTRY OWNERS
We expect to issue debt securities, shares of preferred stock and
depositary shares in book-entry form only. However, we may issue shares of
common stock in book-entry form. This means those securities will be represented
by one or more global securities registered in the name of a financial
institution that holds them as depositary on behalf of other financial
institutions that participate in the depositary's book-entry system. These
participating institutions, in turn, hold beneficial interests in the securities
on behalf of themselves or their customers.
47
Under each indenture or other applicable agreement, only the person in
whose name a security is registered is recognized as the holder of that
security. Consequently, for securities issued in global form, we will recognize
only the depositary as the holder of the securities and we will make all
payments on the securities, including deliveries of shares of common or
preferred stock in exchange for exchangeable debt securities, to the depositary.
The depositary passes along the payments it receives to its participants, which
in turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants do so under agreements they have
made with one another or with their customers; they are not obligated to do so
under the terms of the securities.
As a result, investors will not own securities directly. Instead, they will
own beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system or
holds an interest through a participant. As long as the securities are issued in
global form, investors will be indirect owners, and not holders, of the
securities.
STREET NAME OWNERS
In the future we may terminate a global security or issue securities
initially in non-global form. In these cases, investors may choose to hold their
securities in their own names or in street name. Securities held by an investor
in street name would be registered in the name of a bank, broker or other
financial institution that the investor chooses, and the investor would hold
only a beneficial interest in those securities through an account he or she
maintains at that institution.
For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities and we will make all payments
on those securities, including deliveries of common or preferred shares in
exchange for exchangeable debt securities, to them. These institutions pass
along the payments they receive to their customers who are the beneficial
owners, but only because they agree to do so in their customer agreements or
because they are legally required to do so. Investors who hold securities in
street name will be indirect owners, not holders, of those securities.
LEGAL HOLDERS
Our obligations, as well as the obligations of the trustee under either
indenture and the obligations, if any, of any other third parties employed by
us, the trustee or any agents, run only to the holders of the securities. We do
not have obligations to investors who hold beneficial interests in global
securities, in street name or by any other indirect means. This will be the case
whether an investor chooses to be an indirect owner of a security or has no
choice because we are issuing the securities only in global form.
For example, once we make a payment or give a notice to the holder, we have
no further responsibility for that payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose, e.g., to amend the
indenture for a series of debt securities or to relieve us of the consequences
of a default or of our obligation to comply with a particular provision of an
indenture, we would seek the approval only from the holders, and not the
indirect owners, of the relevant securities. Whether and how the holders contact
the indirect owners is up to the holders.
When we refer to "you" in this section of the prospectus, we mean those who
invest in the securities being offered by this prospectus, whether they are the
holders or only indirect owners of those securities. When we refer to "your
securities" in this section of the prospectus, we mean the securities in which
you will hold a direct or indirect interest.
48
SPECIAL CONSIDERATIONS FOR INDIRECT OWNERS
If you hold securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you should check with
your own institution to find out:
- how it handles securities payments and notices,
- whether it imposes fees or charges,
- how it would handle a request for the holders' consent, if ever required,
- whether and how you can instruct it to send you securities registered in
your own name so you can be a holder, if that is permitted in the future,
- how it would exercise rights under the securities if there were a default
or other event triggering the need for holders to act to protect their
interests, and
- if the securities are in book-entry form, how the depositary's rules and
procedures will affect these matters.
WHAT IS A GLOBAL SECURITY?
A global security is issued in book-entry form only. Each security issued
in book-entry form will be represented by a global security that we deposit with
and register in the name of one or more financial institutions or clearing
systems, or their nominees, which we select. A financial institution or clearing
system that we select for any security for this purpose is called the
"depositary" for that security. A security will usually have only one depositary
but it may have more.
Each series of these securities will have one or more of the following as
the depositaries:
- The Depository Trust Company, New York, New York, which is known as
"DTC,"
- a financial institution holding the securities on behalf of Euroclear
Bank S.A./N.V., as operator of the Euroclear system, which is known as
"Euroclear,"
- a financial institution holding the securities on behalf of Clearstream
Banking, societe anonyme, Luxembourg, which is known as "Clearstream,"
and
- any other clearing system or financial institution named in the
applicable prospectus supplement.
The depositaries named above may also be participants in each other's
systems. Thus, for example, if DTC is the depositary for a global security,
investors may hold beneficial interests in that security through Euroclear or
Clearstream, as DTC participants. The depositary or depositaries for your
securities will be named in your prospectus supplement and if none is named, the
depositary will be DTC.
A global security may represent one or any other number of individual
securities. Generally, all securities represented by the same global security
will have the same terms. We may, however, issue a global security that
represents multiple securities of the same kind, such as debt securities, that
have different terms and are issued at different times. We call this kind of
global security a master global security. Your prospectus supplement will
indicate whether your securities are represented by a master global security.
A global security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "-- Holder's Option
to Obtain a Non-Global Security; Special Situations When a Global Security Will
Be Terminated." As a result of these arrangements, the depositary, or its
nominee, will be the sole registered owner and holder of all securities
represented by a global security, and investors will be permitted to own only
indirect interests in a global security. Indirect interests must be held by
means of an account with a broker, bank or other financial institution that in
turn has an account with the depositary or with another institution that does.
Thus, an investor whose security is represented by a global security will not be
a holder of the security, but only an indirect owner of an interest in the
global security.
49
If the prospectus supplement for a particular security indicates that the
security will be issued in global form only, then the security will be
represented by a global security at all times unless and until the global
security is terminated. We describe the situations in which this can occur below
under "-- Holder's Option to Obtain a Non-Global Security; Special Situations
When a Global Security Will Be Terminated." If termination occurs, we may issue
the securities through another book-entry clearing system or decide that the
securities may no longer be held through any book-entry clearing system.
SPECIAL CONSIDERATIONS FOR GLOBAL SECURITIES
As an indirect owner, an investor's rights relating to a global security
will be governed by the account rules of the depositary and those of the
investor's financial institution or other intermediary through which it holds
its interest (e.g., Euroclear or Clearstream, if DTC is the depositary), as well
as general laws relating to securities transfers. We do not recognize this type
of investor or any intermediary as a holder of securities and instead deal only
with the depositary that holds the global security.
If securities are issued only in the form of a global security, an investor
should be aware of the following:
- an investor cannot cause the securities to be registered in his or her
own name, and cannot obtain non-global certificates for his or her
interest in the securities, except in the special situations we describe
below,
- an investor will be an indirect holder and must look to his or her own
bank or broker for payments on the securities and protection of his or
her legal rights relating to the securities, as we describe above under
"-- Who Is the Legal Owner of a Registered Security?,"
- an investor may not be able to sell interests in the securities to some
insurance companies and other institutions that are required by law to
own their securities in non-book-entry form,
- an investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the securities
must be delivered to the lender or other beneficiary of the pledge in
order for the pledge to be effective,
- the depositary's policies will govern payments, deliveries, transfers,
exchanges, notices and other matters relating to an investor's interest
in a global security, and those policies may change from time to time.
We, the trustee and any agents will have no responsibility for any aspect
of the depositary's policies, actions or records of ownership interests
in a global security. We, the trustee and any agents also do not
supervise the depositary in any way,
- the depositary will require that those who purchase and sell interests in
a global security within its book-entry system use immediately available
funds and your broker or bank may require you to do so as well, and
- financial institutions that participate in the depositary's book-entry
system and through which an investor holds its interest in the global
securities, directly or indirectly, may also have their own policies
affecting payments, deliveries, transfers, exchanges, notices and other
matters relating to the securities, and those policies may change from
time to time. For example, if you hold an interest in a global security
through Euroclear or Clearstream, when DTC is the depositary, Euroclear
or Clearstream, as applicable, will require those who purchase and sell
interests in that security through them to use immediately available
funds and comply with other policies and procedures, including deadlines
for giving instructions as to transactions that are to be effected on a
particular day. There may be more than one financial intermediary in the
chain of ownership for an investor. We do not monitor and are not
responsible for the policies or actions or records of ownership interests
of any of those intermediaries.
50
HOLDER'S OPTION TO OBTAIN A NON-GLOBAL SECURITY; SPECIAL SITUATIONS WHEN A
GLOBAL SECURITY WILL BE TERMINATED
If we issue any series of securities in book-entry form but we choose to
give the beneficial owners of that series the right to obtain non-global
securities, any beneficial owner entitled to obtain non-global securities may do
so by following the applicable procedures of the depositary, any transfer agent
or registrar for that series and that owner's bank, broker or other financial
institution through which that owner holds its beneficial interest in the
securities. For example, in the case of a global security representing shares of
preferred stock or depositary shares, a beneficial owner will be entitled to
obtain a non-global security representing its interest by making a written
request to the transfer agent or other agent designated by us. If you are
entitled to request a non-global certificate and wish to do so, you will need to
allow sufficient lead-time to enable us or our agent to prepare the requested
certificate.
In addition, in a few special situations described below, a global security
will be terminated and interests in it will be exchanged for certificates in
non-global form representing the securities it represented. After that exchange,
the choice of whether to hold the securities directly or in street name will be
up to the investor. Investors must consult their own banks or brokers to find
out how to have their interests in a global security transferred on termination
to their own names, so that they will be holders. We have described the rights
of holders and street name investors above under "-- Who Is the Legal Owner of a
Registered Security?".
The special situations for termination of a global security are as follows:
- if the depositary notifies us that it is unwilling or unable to continue
as depositary for that global security or the depositary has ceased to be
a clearing agency registered under the Securities Exchange Act of 1934,
and in either case we do not appoint another institution to act as
depositary within 90 days,
- in the case of a global security representing debt securities, if an
event of default has occurred with regard to the debt securities and has
not been cured or waived, or
- any other circumstances specified for this purpose in the applicable
prospectus supplement.
If a global security is terminated, only the depositary, and not we or the
trustee for any debt securities, is responsible for deciding the names of the
institutions in whose names the securities represented by the global security
will be registered and, therefore, who will be the holders of those securities.
CONSIDERATIONS RELATING TO EUROCLEAR AND CLEARSTREAM
Euroclear and Clearstream are securities clearance systems in Europe. Both
systems clear and settle securities transactions between their participants
through electronic, book-entry delivery of securities against payment.
Euroclear and Clearstream may be depositaries for a global security. In
addition, if DTC is the depositary for a global security, Euroclear and
Clearstream may hold interests in the global security as participants in DTC.
As long as any global security is held by Euroclear or Clearstream, as
depositary, you may hold an interest in the global security only through an
organization that participates, directly or indirectly, in Euroclear or
Clearstream. If Euroclear or Clearstream is the depositary for a global security
and there is no depositary in the United States, you will not be able to hold
interests in that global security through any securities clearance system in the
United States.
Payments, deliveries, transfers, exchanges, notices and other matters
relating to the securities made through Euroclear or Clearstream must comply
with the rules and procedures of those systems. Those systems could change their
rules and procedures at any time. We have no control over those systems or their
participants and we take no responsibility for their activities. Transactions
between participants in Euroclear or Clearstream, on one hand, and participants
in DTC, on the other hand, when DTC is the depositary, would also be subject to
DTC's rules and procedures.
51
SPECIAL TIMING CONSIDERATIONS FOR TRANSACTIONS IN EUROCLEAR AND CLEARSTREAM
Investors will be able to make and receive through Euroclear and
Clearstream payments, deliveries, transfers, exchanges, notices and other
transactions involving any securities held through those systems only on days
when those systems are open for business. Those systems may not be open for
business on days when banks, brokers and other institutions are open for
business in the United States.
In addition, because of time-zone differences, U.S. investors who hold
their interests in the securities through these systems and wish to transfer
their interests, or to receive or make a payment or delivery or exercise any
other right with respect to their interests, on a particular day may find that
the transaction will not be affected until the next business day in Luxembourg
or Brussels, as applicable. Thus, investors who wish to exercise rights that
expire on a particular day may need to act before the expiration date. In
addition, investors who hold their interests through both DTC and Euroclear or
Clearstream may need to make special arrangements to finance any purchases or
sales of their interests between the U.S. and European clearing systems, and
those transactions may settle later than would be the case for transactions
within one clearing system.
52
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary ofdiscussion summarizes the taxation of the CompanyAlexander's, Inc. and
the material federalFederal income tax consequences to Holdersholders of the Securities. The summary sets
forth the opinion of Shearman & Sterling, counsel to the Company, as to the
material federal incomecommon stock,
preferred stock, debt warrants and debt securities that are not original issue
discount or zero coupon debt securities for your general information only. It is
not tax consequences to Holders of the Securities.advice. The tax treatment of a Holder of Securitiesthese holders will vary depending upon the
Holder'sholder's particular situation, and this discussion addresses only Holdersholders that
hold Securitiesthese securities as capital assets and does not purport to deal with all aspects of
taxation that may be relevant to particular Holdersholders in light of their personal
investment or tax circumstances, orcircumstances. This section also does not deal with all
aspects of taxation that may be relevant to certain types of Holders (includingholders to which
special provisions of the Federal income tax laws apply, including:
- dealers in securities or currencies,
- traders in securities that elect to use a mark-to-market method of
accounting for their securities holdings,
- banks,
- tax-exempt organizations,
life- certain insurance companies,
- persons liable for the alternative minimum tax,
- persons that hold Securitiessecurities that are a hedge, or that are hedged against
interest rate or currency risks or that are part of a straddle or
conversion transaction) subject to special treatment undertransaction, and
- U.S. shareholders or U.S. debt security holders whose functional currency
is not the federal income tax laws.U.S. dollar.
This summary is based on the Internal Revenue Code, its legislative
history, existing and proposed regulations thereunder,under the Internal Revenue Code,
published rulings and court decisions, alldecisions. This summary describes the provisions of
these sources of law only as they are currently in effect and all subject toeffect. All of these sources
of law may change at any time, perhaps with
retroactive effect.
INVESTORS ARE URGEDand any change in the law may apply
retroactively.
WE URGE YOU TO CONSULT WITH THEIRYOUR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX
CONSEQUENCES TO THEMYOU OF THE ACQUISITION, OWNERSHIPACQUIRING, OWNING AND SALESELLING SHARES OF COMMON STOCK,
PREFERRED STOCK AND FIXED RATE DEBT SECURITIES, INCLUDING THE FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIPACQUIRING, OWNING AND SALESELLING THESE
SECURITIES IN THEIRYOUR PARTICULAR CIRCUMSTANCES AND POTENTIAL CHANGES IN APPLICABLE
LAWS.
TaxationTAXATION OF ALEXANDER'S, INC. AS A REIT
In the opinion of the Company as a REIT
General
The Company believes that,Shearman & Sterling LLP, commencing with its taxable year
endingended December 31, 1995, itAlexander's, Inc. has been organized and has operated in
such a manner as to qualifyconformity with the requirements for qualification and taxation as a REIT under
Sections 856 through 860the Internal Revenue Code, and Alexander's, Inc.'s proposed method of operation
will enable it to continue to meet the requirements for qualification and
taxation as a REIT under the Internal Revenue Code. Investors should be aware,
however, that opinions of counsel are not binding upon the IRS or any court.
In providing its opinion, Shearman & Sterling LLP is relying, as to certain
factual matters, upon the statements and representations contained in
certificates provided to Shearman & Sterling LLP by Alexander's, Inc.
Alexander's, Inc.'s qualification as a REIT will depend upon the continuing
satisfaction by Alexander's, Inc. of the Code. The Companyrequirements of the Internal Revenue
Code relating to qualification for REIT status. Some of these requirements
depend upon actual operating results, distribution levels, diversity of stock
ownership, asset composition, source of income and record keeping. Accordingly,
while Alexander's, Inc. intends to continue to qualify to be taxed as a REIT,
but no assurancethe actual results of continuedAlexander's, Inc.'s operations for any particular year
might not satisfy these requirements. Shearman & Sterling LLP will not monitor
the compliance of Alexander's, Inc. with the requirements for REIT qualification
can be given.on an ongoing basis.
53
The sections of the Internal Revenue Code applicable to REITs are highly
technical and complex. The following discussion summarizes material aspects thereof are summarized below.
-35-
of
these sections of the Internal Revenue Code.
As a REIT, the CompanyAlexander's, Inc. generally will not be subjecthave to federalpay Federal
corporate income taxes on its net income that isit currently distributeddistributes to
stockholders. This treatment substantially eliminates the "double taxation" (atat
the corporate and stockholder levels)levels that generally results from investment in a
regular corporation.
However, the CompanyAlexander's, Inc. will be subjecthave to federalpay Federal income tax as follows.follows:
- First, the CompanyAlexander's, Inc. will be taxedhave to pay tax at regular corporate rates
on any undistributed real estate investment trust taxable income,
including undistributed net capital gains.
- Second, under certain circumstances, Alexander's, Inc. may have to pay
the Company may be subject to the "alternativealternative minimum tax"tax on its items of tax preference.
- Third, if the CompanyAlexander's, Inc. has (i)(a) net income from the sale or other
disposition of "foreclosure property"property," as defined in the Internal Revenue
Code, which is held primarily for sale to customers in the ordinary
course of business, or (ii)(b) other non-qualifying income from foreclosure
property, it will be subjecthave to pay tax at the highest corporate rate on suchthat
income.
- Fourth, if the CompanyAlexander's, Inc. has net income from "prohibited
transactions" (whichtransactions," as defined in the Internal Revenue Code, Alexander's, Inc.
will have to pay a 100% tax on that income. Prohibited transactions are,
in general, certain sales or other dispositions of property, other than
foreclosure property, held primarily for sale to customers in the
ordinary course of business), such income will be subject to a 100% tax.business.
- Fifth, if the Company should failAlexander's, Inc. fails to satisfy the 75% gross income test or
the 95% gross income test, (asas discussed below),below under "-- Requirements for
Qualification -- Income Tests," but has nonetheless maintained its
qualification as a REIT because certainAlexander's, Inc. has satisfied some
other requirements, have been met, it will be subjecthave to pay a 100% tax on an amount equal to
(a) the gross income attributable to the greater of (i) 75% of
Alexander's, Inc.'s gross income over the amount by which the Company failsof gross income that is
qualifying income for purposes of the 75% ortest, and (ii) 90% of
Alexander's, Inc.'s gross income (95% for taxable years ending before
January 1, 2001) over the amount of gross income that is qualifying
income for purposes of the 95% test, multiplied by (b) a fraction
intended to reflect the Company'sAlexander's, Inc.'s profitability.
- Sixth, if the Company should failAlexander's, Inc. fails to distribute during each calendar year
at least the sum of (i)(1) 85% of its real estate investment trustREIT ordinary income for suchthat year,
(ii)(2) 95% of its real estate investment trustREIT capital gain net income for suchthat year and (iii)(3) any
undistributed taxable income from prior periods, the CompanyAlexander's, Inc. would
be subjecthave to pay a 4% excise tax on the excess of suchthat required distribution
over the amounts actually distributed.
- Seventh, if during the 10-year period (the "Recognition Period") beginning on the first day of the
first taxable year for which the CompanyAlexander's, Inc. qualified as a REIT,
the CompanyAlexander's, Inc. recognizes gain on the disposition of any asset held by
the
CompanyAlexander's, Inc. as of the beginning of the Recognition Period,that period, then, to the extent
of the excess of (a) fair market value of suchthat asset as of the beginning
of the
Recognition Periodthat period over (b) the Company'sAlexander's, Inc.'s adjusted basis in suchthat asset
as of the beginning of the Recognition Period (the "Built-in Gain"), suchthat period, Alexander's, Inc. will have to pay
tax on that gain will be
subject to tax at the highest regular corporate rate pursuantrate. We refer to Treasury
regulations thatthe
excess of fair market value over adjusted basis described in the
preceding sentence as "built-in gain."
Notwithstanding the taxation of built-in gain described in the preceding
paragraph of this bullet point, Alexander's, Inc. will not have not been promulgated; provided, however, that the Company
shall not be subject to pay tax
on recognized Built-in Gainbuilt-in gain with respect to assets held as of the first
day of the Recognition Period10-year period beginning on the first day of the first taxable
year for which Alexander's, Inc. qualified as a REIT, to the extent that
the aggregate amount of suchthat recognized Built-in Gainbuilt-in gain exceeds the net
aggregate amount of the Company'sAlexander's, Inc.'s unrealized Built-in Gainbuilt-in gain as of the
first day of the
Recognition Period.that period.
54
- Eighth, if the CompanyAlexander's, Inc. acquires any asset from a C corporation (i.e., generally a corporation subject to full corporate-level tax)
in
certain transactions in which Alexander's, Inc. must adopt the basis of
the asset or any other property in the hands of the C corporation as the
basis of the asset in the hands of the
Company is determined by reference to the basis of the asset (or any other
property) in the hands of the C corporation,Alexander's, Inc., and the CompanyAlexander's,
Inc. recognizes gain on the disposition of suchthat asset during the Recognition Period10-year
period beginning on the date on which suchAlexander's, Inc. acquired that
asset, was acquired bythen Alexander's, Inc. will have to pay tax on the Company, then, pursuant to the
Treasury regulations that have not yet been issued and to the extent of the
Built-in Gain, suchbuilt-in gain will be subject to tax
at the highest regular corporate rate. A C corporation means generally a
corporation that has to pay full corporate-level tax.
- Ninth, for taxable years beginning after December 31, 2000, if
Alexander's, Inc. receives non-arm's length income from a taxable REIT
subsidiary (as defined under "-- Requirements for Qualification -- Asset
Tests"), or as a result of services provided by a taxable REIT subsidiary
to tenants of Alexander's, Inc., Alexander's, Inc. will be subject to a
100% tax on the amount of Alexander's, Inc.'s non-arm's length income.
Alexander's, Inc. has a net operating loss carryover as of December 31,
2002 of $94,064,000. The net operating loss carryover would be available to
reduce its REIT taxable income as well as any built-in gain that it recognizes.
The amount of the net operating loss carryover is subject to audit and
adjustment by the IRS.
REQUIREMENTS FOR QUALIFICATION
The Internal Revenue Code defines a REIT as a corporation, trust or
association (1) which is managed by one or more trustees or directors, (2)directors:
- the beneficial ownership of which is evidenced by transferable shares, or
by transferable certificates of beneficial interest,
(3)- which would otherwise be taxable as a domestic corporation, but for
Sections 856 through 859 of the Internal Revenue Code,
(4)- which is neither a financial institution nor an insurance company subject to
which certain provisions of the Internal Revenue Code (5)apply,
- the beneficial ownership of which is held by 100 or more persons,
(6)- during the last half of each taxable year, not more than 50% in value of
the outstanding stock of which is owned, directly or constructively, by
five or fewer individuals, (asas defined in the Internal Revenue Code to
include certain entities)entities, and
(7)- which meets certain other tests, described below, regarding the nature of
its income and assets.
The Internal Revenue Code provides that the conditions (1) to (4)described in the
first through fourth bullet points above must be met during the entire taxable
year and that the condition (5)described in the fifth bullet point above must be
met during at least 335 days of a taxable year of 12 months, or during a
proportionate part of a taxable year of less than 12 months.
Conditions (5) and (6) do not apply until
afterAlexander's, Inc. has satisfied the conditions described in the first
taxable year for which an election is made to be taxed as a
REIT.
The Company has satisfied condition (5)through fifth bullet points of the preceding paragraph and believes that it also
has also
satisfied the condition (6).described in the sixth bullet point of the preceding
paragraph. In addition, the Company's CertificateAlexander's, Inc.'s certificate of Incorporationincorporation
provides for restrictions regarding the ownership and transfer of the Company's
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shares, whichAlexander's,
Inc.'s shares. These restrictions are intended to assist the CompanyAlexander's, Inc. in
continuing to satisfy the share ownership requirements described in (5)the fifth
and (6) above.sixth bullet points of the preceding paragraph. The ownership and transfer
restrictions pertaining to the common stock are described in this prospectus
under the heading "Description of Common Stock are described
above under the headings "Description of Capital Stock--Description of Preferred
Stock--Restrictions-- Restrictions on Ownership" and "Description of Capital Stock--DescriptionOwnership of
Common Stock-Restrictions on Ownership.Stock."
The CompanyAlexander's, Inc. owns and operates a number of properties through wholly-owned corporate subsidiaries.
Internal Revenue Code Section 856(i) provides that unless a REIT makes an
election to treat the corporation as a taxable REIT subsidiary, a corporation
which is a "qualified REIT subsidiary" shallsubsidiary," as defined in the Internal Revenue Code,
will not be treated as a separate corporation, and all assets, liabilities and
items of income, deduction and credit of a "qualifiedqualified REIT subsidiary" shallsubsidiary will be
treated as assets, liabilities and such
items (as the case may be)of these kinds of the REIT. Thus, in
55
applying the requirements described herein, the Company's "qualifiedin this section, Alexander's, Inc.'s
qualified REIT subsidiaries"subsidiaries will be ignored, and all assets, liabilities and
items of income, deduction and credit of suchthese subsidiaries will be treated as
assets, liabilities and such items (as the case
may be) of the Company. The Companythese kinds of Alexander's, Inc. Alexander's,
Inc. believes that all of its wholly-owned corporate subsidiaries are "qualifiedqualified
REIT subsidiaries."
In the case ofsubsidiaries, except 731 Residential Holding LLC, which is a taxable REIT
thatsubsidiary.
If a REIT is a partner in a partnership, Treasury regulations provide that
the REIT will be deemed to own its proportionate share of the assets of the
partnership and will be deemed to be entitled to the income of the partnership
attributable to suchthat share. In addition, the character of the assets and gross
income of the partnership will retain the same character in the hands of the
REIT for purposes of Section 856 of the Internal Revenue Code, including
satisfying the gross income tests and the asset tests. Thus, the Company'sAlexander's, Inc.'s
proportionate share of the assets, liabilities and items of income of any
partnership in which the CompanyAlexander's, Inc. is a partner will be treated as assets,
liabilities and items of income of the CompanyAlexander's, Inc. for purposes of applying
the requirements described herein.
Income Tests.in this section. Thus, actions taken by partnerships
in which Alexander's, Inc. owns an interest, either directly or through one or
more tiers of partnerships or qualified REIT subsidiaries, can affect
Alexander's, Inc.'s ability to satisfy the REIT income and assets tests and the
determination of whether Alexander's, Inc. has net income from prohibited
transactions. See the fourth bullet point under "-- Taxation of Alexander's,
Inc. as a REIT" above for a discussion of prohibited transactions. Alexander's,
Inc. is not currently a partner in a partnership.
INCOME TESTS. In order to maintain its qualification as a REIT,
the CompanyAlexander's, Inc. annually must satisfy three gross income requirements.
- First, Alexander's, Inc. must derive at least 75% of the Company'sits gross income,
(excludingexcluding gross income from prohibited transactions)transactions, for each taxable
year must be derived directly or indirectly from investments relating to real property or
mortgages on real property, (includingincluding "rents from real property"--which term generally includes expenses ofproperty," as
defined in the Company that are
paid or reimbursed by tenants--and, in certain circumstances, interest)Internal Revenue Code, or from certain types of temporary
investments. Rents from real property generally include expenses of
Alexander's, Inc. that are paid or reimbursed by tenants.
- Second, at least 95% of the Company'sAlexander's, Inc.'s gross income, (excludingexcluding gross
income from prohibited transactions)transactions, for each taxable year must be
derived from such real property investments as described in the preceding
bullet point, dividends, interest and gain from the sale or disposition
of stock or securities, (oror from any combination of the foregoing).these types of source.
- Third, for its taxable years before 1998, short-term gain from the sale
or other disposition of stock or securities, gain from prohibited
transactions and gain on the sale or other disposition of real property
held for less than four years, (apartapart from involuntary conversions and
sales of foreclosure property) mustproperty, was required to represent less than 30% of
the Company'sAlexander's, Inc.'s gross income, (includingincluding gross income from prohibited
transactions)transactions, for each of these taxable year.years.
Rents received by the Companythat Alexander's, Inc. receives will qualify as "rentsrents from real
property"property in satisfying the gross income requirements for a REIT described above
only if the rents satisfy several conditions are met.conditions.
- First, the amount of rent must not be based in whole or in part on the
income or profits of any person. However, an amount received or accrued
generally will not be excluded from the terms "rentsrents from real property"property solely
by reason of beingbecause it is based on a fixed percentage or percentages of receipts or
sales.
- Second, the Internal Revenue Code provides that rents received from a
tenant will not qualify as "rentsrents from real property"property in satisfying the
gross income tests if the REIT, directly or under the applicable
attribution rules, owns a 10% or greater interest in suchthat tenant; except
that for tax years beginning after December 31, 2000, rents received from
a taxable REIT subsidiary under certain circumstances qualify as rents
from real property even if Alexander's, Inc. owns more than a 10%
interest in the subsidiary. We refer to a tenant (a "Related Party Tenant").in which Alexander's,
Inc. owns a 10% or greater interest as a "related party tenant."
56
- Third, if rent attributable to personal property leased in connection
with a lease of real property is greater than 15% of the total rent
received under the lease, then the portion of rent attributable to suchthe
personal property will not qualify as "rentsrents from real property".property.
- Finally, for rents received to qualify as "rentsrents from real property," the
REIT generally must not operate or manage the property or furnish or
render services to the tenants of suchthe property, other than through an
independent contractor from whom the REIT derives no revenue;
provided, however, that the Company is not required to use an independent
contractor torevenue or through a
taxable REIT subsidiary. However, Alexander's, Inc. may directly perform
certain services that are "usuallylandlords usually or customarily rendered" in connection with the rental ofrender when
renting space for occupancy only andor that are not otherwise considered "renderedrendered to
the occupant"occupant of the property.
The CompanyAlexander's, Inc. does not and will not charge rent for any property to a Related Party Tenant,
and the Companyderive significant rents from related party
tenants. Alexander's, Inc. also does not and will not derive rental income
attributable to personal property, (otherother than personal property leased in
connection with the lease of real property, the amount of which is less than 15%
of the total rent received under the lease). The Companylease.
Alexander's, Inc. directly performs services for some of its tenants.
Alexander's, Inc. does not believe that anythe provision of the
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these services that are performed for its tenants will
cause its gross income attributable to suchthese tenants to fail to be treated as
"rentsrents from real property." If Alexander's, Inc. were to provide services to a
tenant that are other than those landlords usually or customarily provide when
renting space for occupancy only, amounts received or accrued by Alexander's,
Inc. for any of these services will not be treated as rents from real property
for purposes of the REIT gross income tests. However, the amounts received or
accrued for these services will not cause other amounts received with respect to
the property to fail to be treated as rents from real property unless the
amounts treated as received in respect of the services, together with amounts
received for certain management services, exceed 1% of all amounts received or
accrued by Alexander's, Inc. during the taxable year with respect to the
property. If the sum of the amounts received in respect of the services to
tenants and management services described in the preceding sentence exceeds the
1% threshold, then all amounts received or accrued by Alexander's, Inc. with
respect to the property will not qualify as rents from real property, even if
Alexander's, Inc. provides the impermissible services to some, but not all, of
the tenants of the property.
The term "interest" generally does not include any amount received or
accrued, (directlydirectly or indirectly)indirectly, if the determination of suchthat amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"interest solely
by reason of beingbecause it is based on a fixed percentage or percentages of receipts or sales.
If the CompanyAlexander's, Inc. fails to satisfy one or both of the 75% or 95% gross
income tests for any taxable year, it may nevertheless qualify as a REIT for
suchthat year if it is entitled to relief under certainsatisfies the requirements of other provisions of the Code.Internal
Revenue Code that allow relief from disqualification as a REIT. These relief
provisions generally will generally be available if the Company'sif:
- Alexander's, Inc.'s failure to meet suchthe income tests was due to
reasonable cause and not due to willful neglect, the Companyneglect;
- Alexander's, Inc. attaches a schedule of the sources of its income to its
federalFederal income tax return,return; and
- any incorrect information on the schedule was not due to fraud with
intent to evade tax.
It isAlexander's, Inc. might not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions.provisions, however. As discussed abovein the fifth bullet point under "-- General," -- Taxation
of Alexander's, Inc. as a REIT" above, even if these relief provisions apply,
Alexander's, Inc. would have to pay a tax would be imposed with respect toon the excess net income.
Asset Tests. The Company,ASSET TESTS. Alexander's, Inc., at the close of each quarter of its
taxable year, also must also satisfy threevarious tests relating to the nature of its
assets.
- First, at least 75% of the value of the Company'sAlexander's, Inc.'s total assets must
be represented by real estate assets, (including (i)including (a) real estate assets
held by the Company'sAlexander's, Inc.'s qualified REIT subsidiaries, and the Company'sAlexander's,
Inc.'s allocable share of real estate assets held by partnerships in
which the CompanyAlexander's, Inc. owns an interest (ii)and stock issued by another
REIT, (b) for a period of one year from the date of
57
Alexander's, Inc.'s receipt of proceeds of an offering of its shares of
beneficial interest or publicly offered debt with a term of at least five
years, stock or debt instruments held for not more than one year purchased with thethese proceeds of a
stock offering or long-term (at least five years) debt offering of the Company
and (iii) stock issued by another REIT),(c)
cash, cash items and government securities.
- Second, not more than 25% of the Company'sAlexander's, Inc.'s total assets may be
represented by securities other than those in the 75% asset class.
- Third, for taxable years beginning after December 31, 2000, not more than
20% of Alexander's, Inc.'s total assets may constitute securities issued
by taxable REIT subsidiaries and, of the investments included in the 25%
asset class, the value of any one issuer's securities, (otherother than
securities issued by another REIT)REIT or by a taxable REIT subsidiary, owned
by the CompanyAlexander's, Inc. may not exceed 5% of the value of Alexander's,
Inc.'s total assets. Moreover, Alexander's, Inc. may not own more than
10% of the Company'svote or value of the outstanding securities of any one issuer,
except for issuers that are REITs, qualified REIT subsidiaries or taxable
REIT subsidiaries, or debt instruments that are considered straight debt
under a safe harbor provision of the Internal Revenue Code. For these
purposes, a taxable REIT subsidiary is any corporation in which
Alexander's, Inc. owns an interest that joins with Alexander's, Inc. in
making an election to be treated as a "taxable REIT subsidiary" and
certain subsidiaries of a taxable REIT subsidiary, if the subsidiaries do
not engage in certain activities.
- Fourth, of the investments included in the 25% asset class, the value of
any one issuer's securities, other than securities issued by another
REIT, owned by Alexander's, Inc. may not exceed 5% of the value of
Alexander's, Inc.'s total assets and the CompanyAlexander's, Inc. may not own more
than 10% of any one issuer's outstanding voting securities.
Annual Distribution Requirements. The Company,test described in the fourth bullet point above, and not that described
in the third bullet point, will continue to apply for taxable years of
Alexander's, Inc. that begin after December 31, 2000, only with respect to stock
in any corporation owned by Alexander's, Inc. before July 12, 1999, so long as a
taxable REIT subsidiary election is not made with respect to the corporation and
the corporation does not acquire substantial new assets or engage in a
substantial new line of business and certain other conditions are satisfied.
ANNUAL DISTRIBUTION REQUIREMENTS. Alexander's, Inc., in order to qualify
as a REIT, is required to distribute dividends, (otherother than capital gain
dividends)dividends, to its stockholders in an amount at least equal to (A)(1) the sum of (i) 95%(a)
90% of the
Company'sAlexander's, Inc.'s "real estate investment trust taxable income" (computedincome,"
computed without regard to the dividends paid deduction and the Company'sAlexander's, Inc.'s
net capital gain)gain, and (ii) 95%(b) 90% of the net after-tax income, (after tax), if any, from
foreclosure property minus (B)(2) the sum of certain items of non-cash income.
For taxable years beginning before January 1, 2001, the required amount of
distributions described above and below was 95% of the amount of Alexander's,
Inc.'s income or gain, as the case may be.
In addition, if the CompanyAlexander's, Inc. disposes of any asset during its Recognition Period, the Companywithin 10 years of
acquiring it, Alexander's, Inc. will be required pursuant
to Treasury regulations which have not yet been promulgated, to distribute at least 95%90% of
the Built-in Gain (after tax),after-tax built-in gain, if any, recognized on the disposition of such asset. Suchthe asset
after taking into account net operating loss carryovers and capital loss
carryovers.
These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if declared before the
CompanyAlexander's, Inc. timely
files its tax return for suchthe year to which they relate and if paid on or before
the first regular dividend payment after suchthe declaration.
To the extent that the
CompanyAlexander's, Inc. does not distribute all of its net
capital gain or distributes at least 95%90%, but less than 100%, of its "realreal estate
investment trust taxable income," as adjusted, it will be subjecthave to pay tax thereonon those
amounts at regular ordinary and capital gain corporate tax rates. Furthermore,
if the Company should failAlexander's, Inc. fails to distribute during each calendar year at least the
sum of (i)(a) 85% of its ordinary income for suchthat year, (ii)(b) 95% of its capital gain
net income for suchthat year and (iii)(c) any undistributed taxable income from prior
periods, the CompanyAlexander's, Inc. would be subjecthave to pay a 4% excise tax on the excess of
suchthe required distribution over the amounts actually distributed.
The CompanyAlexander's, Inc. intends to satisfy the annual distribution requirements.
As of December 31, 1994, the Company had reported net operating loss
("NOL") carryovers aggregating approximately $110 million. These NOL carryovers
expire in 2005, 2006, 2007, 2008 and 2009. Under the Code, the Company's NOL
carryovers generally would be available58
From time to offset the amount of the Company's
"real estate investment trust taxable income" that otherwise would be required
to be distributed to its stockholders. As a result, until the NOL carryovers are
utilized, the Company does not expect to be required to pay dividends (except
with respect to any recognized Built-in Gain) in order to continue to qualify as
a REIT. However, the NOLs reported on the Company's
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tax returns are not binding on the Internal Revenue Service (the "IRS") and are
subject to adjustment as a result of future IRS audits of the Company's tax
returns. In addition, under Section 382 of the Code, the Company's ability to
use its NOL carryovers could be limited if, generally, there were significant
changes in the ownership of its outstanding stock.
If the Company is required to make a distribution to its stockholders, it
is possible that the Companytime, Alexander's, Inc. may not have sufficient cash or other
liquid assets to meet the 95%90% distribution requirementsrequirement due to various circumstances,
including debt amortization requirements or timing differences
between (i) the
actual receipt of(a) when Alexander's, Inc. actually receives income and actual payment ofwhen it actually
pays deductible expenses and (ii)(b) when Alexander's, Inc. includes the
inclusion of such income and
deduction of suchdeducts the expenses in arriving at its taxable incomeincome. If timing differences of
the Company. In the event that such insufficiency occurs,this kind occur, in order to meet the 95%90% distribution requirements, the Companyrequirement, Alexander's,
Inc. may find it necessary to arrange for short-term, or possibly long-term,
borrowings or to pay dividends in the form of taxable stock dividends or subordinated notes.dividends.
Under certain circumstances, the CompanyAlexander's, Inc. may be able to rectify a
failure to meet the distribution requirement for a year by paying "deficiency
dividends" to stockholders in a later year, which may be included in
the Company'sAlexander's, Inc.'s deduction for dividends paid for the earlier year. Thus,
the CompanyAlexander's, Inc. may be able to avoid being taxed on amounts distributed as
deficiency dividends; however, the CompanyAlexander's, Inc. will be required to pay
interest based upon the amount of any deduction taken for deficiency dividends.
Failure to QualifyFAILURE TO QUALIFY AS A REIT
If the CompanyAlexander's, Inc. fails to qualify for taxation as a REIT in any taxable
year, and the relief provisions do not apply, the CompanyAlexander's, Inc. will be subjecthave to pay
tax, (includingincluding any applicable alternative minimum tax)tax, on its taxable income at
regular corporate rates. DistributionsAlexander's, Inc. will not be able to deduct
distributions to stockholders in any year in which the
Companyit fails to qualify, will not be deductible by the Company nor will
theyAlexander's, Inc. be required to be made.make distributions to stockholders. In suchthis
event, to the extent of current and accumulated earnings and profits, all
distributions to stockholders will be taxable to the stockholders as ordinarydividend
income and,(which may be subject to certain limitations of the Code,tax at preferential rates) and corporate
distributees may be eligible for the dividends received deduction.deduction if they
satisfy the relevant provisions of the Internal Revenue Code. Unless entitled to
relief under specific statutory provisions, the CompanyAlexander's, Inc. also will also be
disqualified from taxation as a REIT for the four taxable years following the
year during which qualification was lost. It isAlexander's, Inc. might not possible to state whether in
all circumstances the Company would be
entitled to suchthe statutory relief.
Taxation of Holders of Debt Securitiesrelief described in this paragraph in all
circumstances.
TAXATION OF HOLDERS OF COMMON STOCK OR PREFERRED STOCK
U.S. STOCKHOLDERS
As used herein,in this section, the term "U.S. Holder"stockholder" means a holder of
a Debt Securitycommon stock or preferred stock who, (forfor United States federalFederal income tax
purposes)purposes, is
(i)- a citizen or resident of the United States, (ii)States;
- a domestic corporation or (iii) otherwise subject to
United States federal income taxation on a net income basis in respect of the
Debt Security and "U.S. Alien Holder" means a holder of a Debt Security who (for
United States federal income tax purposes) is (i) a nonresident alien individual
or (ii) a foreign corporation, partnership or estate or trust which is not
subject to United States federal income tax on a net income basis in respect of
income or gain from the Debt Security.
U.S. Holders
Payments of Interest. Interest on a Debt Security will be taxable to a U.S.
Holder as ordinary income at the time it is received or accrued, depending on
the holder's method of accounting for tax purposes.
Purchase, Sale and Retirement of the Debt Securities. A U.S. Holder's tax
basis in a Debt Security will generally be its U.S. dollar cost (including, in
the case of a Debt Security acquired through the exercise of a Debt Warrant,
both the cost of the Debt Warrant and the amount paid on exercise of the Debt
Warrant). A U.S. Holder will generally recognize gain or loss on the sale or
retirement of a Debt Security equal to the difference between the amount
realized on the sale or retirement and the U.S. Holder's tax basis in the Debt
Security. Except to the extent attributable to accrued but unpaid interest, gain
or loss recognized on the sale or retirement of a Debt Security will be capital
gain or loss and will be long-term capital gain or loss if the Debt Security was
held for more than one year.
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U.S. Alien Holders
This discussion assumes that the Debt Security is not subject to the rules
of Section 871(h)(4)(A) of the Code (relating to interest payments that are
determined by reference to the income, profits, changes in the value of property
or other attributes of the debtor or a related party).
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(i) payments of principal, premium (if any) and interest by the Company or
any of its paying agents to any holder of a Debt Security that is a U.S. Alien
Holder will not be subject to United States federal withholding tax if, in the
case of interest (a) the beneficial owner of the Debt Security does not actually
or constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote, (b) the beneficial owner of
the Debt Security is not a controlled foreign corporation that is related to the
Company through stock ownership, and (c) either (A) the beneficial owner of the
Debt Security certifies to the Company or its agent, under penalties of perjury,
that it is not a U.S. person and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the Debt Security certifies to the Company or
its agent under penalties of perjury that such statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof;
(ii) a U.S. Alien Holder of a Debt Security will not be subject to United
States federal withholding tax on any gain realized on the sale or exchange of a
Debt Security; and
(iii) a Debt Security held by an individual who at death is not a citizen
or resident of the United States will not be includible in the individual's
gross estate for purposes of the United States federal estate tax as a result of
the individual's death if (a) the individual did not actually or constructively
own 10% or more of the total combined voting power of all classes of stock of
the Company entitled to vote and (b) the income on the Debt Security would not
have been effectively connected with a United States trade or business of the
individual at the time of the individual's death.
Information Reporting and Backup Withholding
U.S. Holders. In general, information reporting requirements will apply to
payments of principal, any premium and interest on a Debt Security and the
proceeds of the sale of a Debt Security before maturity within the United States
to non-corporate U.S. Holders, and "backup withholding" at a rate of 31% will
apply to such payments if the U.S. Holder fails to provide an accurate taxpayer
identification number or to report all interest and dividends required to be
shown on its federal income tax returns.
U.S. Alien Holders. Information reporting and backup withholding will not
apply to payments of principal, premium (if any) and interest made by the
Company or a paying agent to a U.S. Alien Holder on a Debt Security if the
certification described in clause (i)(c) under "U.S. Alien Holders" above is
received, provided that the payor does not have actual knowledge that the holder
is a U.S. person.
Payments of the proceeds from the sale by a U.S. Alien Holder of a Debt
Security made to or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the broker is a U.S.
person, a controlled foreign corporation for United States federal income tax
purposes or a foreign person 50% or more of whose gross income is effectively
connected with a United States trade or business for a specified three-year
period, information reporting may apply to such payments. Payments of the
proceeds from the sale of a Debt Security to or through the United States office
of a broker is subject to information reporting and backup withholding unless
the holder or beneficial owner certifies as to its non-United States status or
otherwise establishes an exemption from information reporting and backup
withholding.
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The applicable Prospectus Supplement will contain a discussion of any
special United States federal income tax rules with respect to Debt Securities
that are issued at a discount or premium or as a unit with other Securities,
have a maturity of one year or less, provide for conversion rights, contingent
payments, early redemption or payments that are denominated in or determined by
reference to a currency other than the U.S. dollar or otherwise subject to
special United States federal income tax rules.
Taxation of Holders of Debt Warrants
Sale or Expiration
Generally, a holder of a Debt Warrant will recognize gain or loss upon the
sale or other disposition of a Debt Warrant in an amount equal to the difference
between the amount realized on such sale or other disposition and the holder's
tax basis in the Debt Warrant. A holder of a Debt Warrant that expires
unexercised will generally recognize loss in an amount equal to such holder's
tax basis in the Debt Warrant. Gain or loss resulting from the sale, other
disposition or expiration of a Debt Warrant will generally be capital gain or
loss and will be long-term if the Debt Warrant was held for more than one year.
Exercise
The exercise of a Debt Warrant with cash will not be a taxable event for
the exercising holder. Such holder's basis in the Debt Securities received on
exercise of the Debt Warrant will equal the sum of such holder's tax basis in
the exercised Debt Warrant and the exercise price of the Debt Warrant. The
holding period in a Debt Security received on exercise of a Debt Warrant will
not include the period during which the Debt Warrant was held.
The applicable Prospectus Supplement will contain a discussion of any
special United States federal income tax rules with respect to Debt Warrants
that are issued as a unit with other Securities.
Taxation of Holders of Common Stock or Preferred Stock
U.S. Stockholders
As used herein, the term "U.S. Stockholder" means a holder of Common Stock
or Preferred Stock ("Stock") who (for United States federal income tax purposes)
is (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof, or (iii)corporation;
- an estate or
trust thewhose income of which is subject to United States federalFederal income
taxation regardless of its source.source; or
- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons have
authority to control all substantial decisions of the trust.
As long as the CompanyAlexander's, Inc. qualifies as a REIT, distributions made by
the
CompanyAlexander's, Inc. out of its current or accumulated earnings and profits, (andand
not designated as capital gain dividends)dividends, will constitute dividends taxable to
its taxable U.S. Stockholdersstockholders as ordinary income. Such distributionsUnder recently enacted law,
individual U.S. stockholders will be entitled to the new lower rate on dividends
only for the portion of any distribution equal to Alexander's, Inc.'s REIT
taxable income (taking into account the dividends paid deduction available to
Alexander's, Inc.) and realized built-in gains from Alexander's, Inc.'s previous
taxable year less any taxes paid by Alexander's, Inc. on these items during
Alexander's, Inc.'s previous taxable year. Individual U.S. stockholders should
consult their own tax advisors to determine the impact of this new legislation.
Distributions of this kind will not be eligible for the dividends-receiveddividends received
deduction in the case of U.S. Stockholdersstockholders that are corporations. Distributions
made by the CompanyAlexander's, Inc. that areAlexander's, Inc. properly designated by the Companydesignates as capital
gain dividends will be taxable to U.S. Stockholdersstockholders as long-termgain from the sale of a
capital gains (toasset held for more than one year, to the extent that they do not exceed
the Company'sAlexander's, Inc.'s actual net capital gain for the taxable year)year, without regard
to the period for which a U.S. Stockholderstockholder has held his shares. Thus, with
certain limitations, capital gain dividends received by an individual U.S.
Stockholdersstockholder may be
59
eligible for preferential rates of taxation. U.S. stockholders that are
corporations may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income.
To the extent that the CompanyAlexander's, Inc. makes distributions, (notnot designated as
capital gain dividends)dividends, in excess of its current and accumulated earnings and
profits, suchthese distributions will be treated first as a tax-free return of
capital to each U.S. Stockholder, reducingshareholder. Thus, these distributions will reduce the
adjusted basis which suchthat the U.S. Stockholdershareholder has in his or her shares for tax
purposes by the amount of suchthe distribution, (butbut not below zero), with distributionszero. Distributions in
excess of a U.S. Stockholder'sshareholder's adjusted basis in his shares will be taxable as
capital gains, (providedprovided that the shares have been held as a capital asset).asset. For
purposes of determining the
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portion of distributions on separate classes of
Stockshares that will be treated as a
dividends for federalFederal income tax purposes,
current and accumulated earnings and profits will be allocated to distributions
resulting from priority rights of Preferred Stockpreferred shares before being allocated to
other distributions.
Dividends declaredauthorized by the CompanyAlexander's, Inc. in October, November, or December
of any year and payable to a stockholder of record on a specified date in any such month shallof
these months will be treated as both paid by the CompanyAlexander's, Inc. and received by
the stockholder on December 31 of suchthat year, provided that Alexander's, Inc.
actually pays the dividend is actually paid by the
Company on or before January 31 of the following calendar
year. Stockholders may not include in their own income tax returns any net
operating losses or capital losses of Alexander's, Inc.
U.S. stockholders holding shares at the Company.close of Alexander's, Inc.'s
taxable year will be required to include, in computing their long-term capital
gains for the taxable year in which the last day of Alexander's, Inc.'s taxable
year falls, the amount that Alexander's, Inc. designates in a written notice
mailed to its stockholders. Alexander's, Inc. may not designate amounts in
excess of Alexander's, Inc.'s undistributed net capital gain for the taxable
year. Each U.S. stockholder required to include the designated amount in
determining the stockholder's long-term capital gains will be deemed to have
paid, in the taxable year of the inclusion, the tax paid by Alexander's, Inc. in
respect of the undistributed net capital gains. U.S. stockholders to whom these
rules apply will be allowed a credit or a refund, as the case may be, for the
tax they are deemed to have paid. U.S. stockholders will increase their basis in
their shares by the difference between the amount of the includible gains and
the tax deemed paid by the stockholder in respect of these gains.
Distributions made by the CompanyAlexander's, Inc. and gain arising from thea U.S.
stockholder's sale or exchange by a U.S. Stockholder of shares of Stock will not be treated as passive activity
income, and, asincome. As a result, U.S. Stockholdersstockholders generally will not be able to apply any
"passive losses"passive losses against suchthat income or gain.
Distributions made by
the Company (to the extent they do not constituteWhen a return of capitalU.S. stockholder sells or capital
gain dividends) generally will be treated as investment income for purposes of
computing the investment interest deduction limitation. Gain arising from the
sale or other dispositionotherwise disposes of shares, of Stock, however, will not be treated as
investment income unless the
U.S. Stockholder elects to reduce the amount of his
total net capital gain eligible for the 28% maximum capital gains rate by the
amount of such gain with respect to the Stock.
Upon any sale or other disposition of shares of Stock, a U.S. Stockholderstockholder will recognize gain or loss for federalFederal income tax purposes in an
amount equal to the difference between (i)(a) the amount of cash and the fair
market value of any property received on suchthe sale or other disposition, and (ii)(b)
the holder's adjusted basis in the shares of Stock for tax purposes. SuchThis gain or loss
will be capital gain or loss if the shares have beenU.S. stockholder has held by the U.S. Stockholdersshares as a
capital asset, andasset. The gain or loss will be long-term gain or loss if such Stockthe U.S.
stockholder has been held the shares for more than one year. Long-term capital gain
of an individual U.S. stockholder is generally taxed at preferential rates. In
general, any loss recognized by a U.S. Stockholder
uponstockholder when the salestockholder sells or
other dispositionotherwise disposes of shares of Alexander's, Inc. that the Company that have beenstockholder has held
for six months or less, (afterafter applying certain holding period rules)rules, will be
treated as a long-term capital loss, to the extent of distributions received by
such U.S. Stockholderthe stockholder from the CompanyAlexander's, Inc. which were required to be treated as
long-term capital gains.
Backup Withholding. The CompanyBACKUP WITHHOLDING. Alexander's, Inc. will report to its U.S. Stockholdersstockholders
and the Internal Revenue Service (the "IRS")IRS the amount of dividends paid during each calendar year, and the
amount of tax withheld, if any. Under the backup withholdingswithholding rules, a stockholder may be subject to backup
withholding at the
rate of 31%may apply to a stockholder with respect to dividends paid unless suchthe
holder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (b) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding rules.
AThe IRS also may impose penalties on a U.S. Stockholderstockholder that does not provide
the CompanyAlexander's, Inc. with his correct taxpayer identification numbernumber. A stockholder
may also be subject to penalties imposed by the IRS. Anycredit any amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, the CompanyAlexander's, Inc. may be required to withhold
a portion of capital gain distributions to any stockholders who fail to certify
their non-foreign status to the Company.
Taxation of Tax-Exempt Stockholders. Generally,Alexander's, Inc.
60
TAXATION OF TAX-EXEMPT STOCKHOLDERS. The IRS has ruled that amounts
distributed as dividends by a REIT generally do not constitute unrelated
business taxable income when received by a tax-exempt investorentity. Based on that
ruling, provided that a tax-exempt stockholder is exemptnot one of the types of entity
described in the next paragraph and has not held its shares as "debt financed
property" within the meaning of the Internal Revenue Code, and the shares are
not otherwise used in a trade or business, the dividend income from tax on its investment income, such as an individual retirement
account (IRA) or a 401(k) plan, that holds shares of Stock as an investment will
not be subjectunrelated business taxable income to a tax-exempt stockholder. Similarly,
income from the sale of shares will not constitute unrelated business taxable
income unless the tax-exempt stockholder has held the shares as "debt financed
property" within the meaning of the Internal Revenue Code or has used the shares
in a trade or business.
Income from an investment in Alexander's, Inc.'s shares will constitute
unrelated business taxable income for tax-exempt stockholders that are social
clubs, voluntary employee benefit associations, supplemental unemployment
benefit trusts, and qualified group legal services plans exempt from Federal
income taxation under the applicable subsections of Section 501(c) of the
Internal Revenue Code, unless the organization is able to properly deduct
amounts set aside or placed in reserve for certain purposes so as to offset the
income generated by its shares. Prospective investors of the types described in
the preceding sentence should consult their own tax onadvisors concerning these
"set aside" and reserve requirements.
Notwithstanding the foregoing, however, a portion of the dividends paid by
the Company. However, if such
tax-exempt investor isa "pension-held REIT" will be treated as having purchased its shares with borrowedunrelated business taxable income to
any trust which:
- is described in Section 401(a) of the Internal Revenue Code,
- is tax-exempt under Section 501(a) of the Internal Revenue Code, and
- holds more than 10% (by value) of the equity interests in the REIT.
Tax-exempt pension, profit-sharing and stock bonus funds somethat are described
in Section 401(a) of the Internal Revenue Code are referred to below as
"qualified trusts." A REIT is a "pension-held REIT" if:
- it would not have qualified as a REIT but for the fact that Section
856(h)(3) of the Internal Revenue Code provides that stock owned by
qualified trusts will be treated, for purposes of the "not closely held"
requirement, as owned by the beneficiaries of the trust (rather than by
the trust itself), and
- either (a) at least one qualified trust holds more than 25% by value of
the interests in the REIT or all(b) one or more qualified trusts, each of
which owns more than 10% by value of the interests in the REIT, hold in
the aggregate more than 50% by value of the interests in the REIT.
The percentage of any REIT dividend treated as unrelated business taxable
income to a qualifying trust is equal to the ratio of (a) the gross income of
the REIT from unrelated trades or businesses, determined as though the REIT were
a qualified trust, less direct expenses related to this gross income, to (b) the
total gross income of the REIT, less direct expenses related to the total gross
income. A de minimis exception applies where this percentage is less than 5% for
any year. Alexander's, Inc. does not expect to be classified as a pension-held
REIT.
The rules described above under the heading "U.S. Stockholders" concerning
the inclusion of Alexander's, Inc.'s designated undistributed net capital gains
in the income of its dividendsstockholders will apply to tax-exempt entities. Thus,
tax-exempt entities will be subject to tax.
Non-U.S. Stockholdersallowed a credit or refund of the tax deemed paid by
these entities in respect of the includible gains.
NON-U.S. STOCKHOLDERS
The rules governing United States federalU.S. Federal income taxation of the ownership
and dispositions of shares of Stock by persons that are, for purposes of such
taxation, nonresident alien
individuals, foreign corporations, foreign partnerships or foreignand estates or trusts
(collectively, "Non-U.S.
Stockholders")that in either case are complex, and no attemptnot subject to United States Federal income tax on a net
income basis who own common stock or preferred stock, which we call "non-U.S.
stockholders," are complex. The following discussion is made herein to provide more thanonly a brieflimited summary
of suchthese rules. Accordingly, the discussion does not address all
aspects of United States federal income taxation and does not address state,
local or foreign tax consequences that may be relevant to a Non-U.S. Stockholder
in light of its particular circumstances. In addition, this discussion is based
on current law, which
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is subject to change, and assumes that the Company qualifies for taxation as a
REIT. Prospective Non-U.S. Stockholders are urged tonon-U.S. stockholders should consult with their own
tax advisersadvisors to determine the impact of federal,U.S. Federal, state
local61
and foreignlocal income tax laws with regard to an investment in common stock or
preferred stock, including any reporting requirements.
Distributions.ORDINARY DIVIDENDS. Distributions, by the Company to a Non-U.S. Stockholderother than distributions that are
neithertreated as attributable to gain from sales or exchanges by the CompanyAlexander's, Inc. of
United StatesU.S. real property interests, noras discussed below, and other than distributions
designated by the CompanyAlexander's, Inc. as a capital gainsgain dividends, will be treated as dividends of
ordinary income to the extent that they are made out of current or accumulated
earnings and profits of Alexander's, Inc. A withholding tax equal to 30% of the
Company. Suchgross amount of the distribution will ordinarily apply to distributions ordinarily will be subjectof this
kind to withholdingnon-U.S. stockholders, unless an applicable tax treaty reduces that tax.
However, if income from the investment in the shares is treated as effectively
connected with the non-U.S. stockholder's conduct of a U.S. trade or business or
is attributable to a permanent establishment that the non-U.S. stockholder
maintains in the United States federal tax on a gross basis (thatif that is without allowance of deductions)
at a 30% rate or such lower rate as may be specifiedrequired by an applicable income tax
treaty unlessas a condition for subjecting the dividends are treated as effectively connected with the
conduct by the Non-U.S. Stockholder of a United States trade or business.
Dividends that are effectively connected with such a trade or business will be
subjectnon-U.S. stockholder to taxU.S. taxation
on a net income basis, (that is, after allowance of deductions)tax at graduated rates generally will apply to the non-
U.S. stockholder in the same manner as domesticU.S. stockholders are taxed with respect
to such dividends, and are generally not subject to withholding. Any such
dividends received by a Non-U.S. Stockholder thatthe 30% branch profits tax also may apply if the stockholder
is a corporation may alsoforeign corporation. Alexander's, Inc. expects to withhold U.S. tax at the
rate of 30% on the gross amount of any dividends, other than dividends treated
as attributable to gain from sales or exchanges of U.S. real property interests
and capital gain dividends, paid to a non-U.S. stockholder, unless (a) a lower
treaty rate applies and the required form evidencing eligibility for that
reduced rate is filed with Alexander's, Inc. or the appropriate withholding
agent or (b) the non-U.S. stockholder files an IRS Form W-8 ECI or a successor
form with Alexander's, Inc. or the appropriate withholding agent claiming that
the distributions are effectively connected with the non-U.S. stockholder's
conduct of a U.S. trade or business.
Distributions to a non-U.S. stockholder that are designated by Alexander's,
Inc. at the time of distribution as capital gain dividends which are not
attributable to or treated as attributable to the disposition by Alexander's,
Inc. of a U.S. real property interest generally will not be subject to an additional branch profits tax at a 30% rate or such lower rateU.S.
Federal income taxation, except as may be specified by an applicable income tax treaty.
Pursuant to current Treasury regulations, dividends paid to an address in a
country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
proposed Treasury regulations, which are not currently in effect, however, a
Non-U.S. Stockholder who wished to claim the benefit of an applicable treaty
rate would be required to satisfy certain certification and other requirements.
Under certain treaties, lower withholding rates generally applicable to
dividends do not apply to dividends from a REIT, such as the Company. Certain
certification and disclosure requirements must be satisfied to be exempt from
withholding under the effectively connected income exemption discussed above.described below.
RETURN OF CAPITAL. Distributions in excess of Alexander's, Inc.'s current
orand accumulated earnings and profits, which are not treated as attributable to
the gain from Alexander's, Inc.'s disposition of the Companya U.S. real property interest,
will not be taxable to a Non-U.S. Stockholdernon-U.S. stockholder to the extent that they do not
exceed the adjusted basis of the non-U.S. stockholder's sharesshares. Distributions of
Stock, but
ratherthis kind instead will reduce the adjusted basis of such stock.the shares. To the extent
that such
distributions of this kind exceed the adjusted basis of a Non-U.S. Stockholder's stock,non-U.S.
stockholder's shares, they will give rise to tax liability if the non-U.S.
stockholder otherwise would have to pay tax on any gain from the sale or
exchangedisposition of his stock, the tax treatment
of which isits shares, as described below. For withholding purposes,If it cannot be determined at the
Companytime a distribution is required
to treat all distributions as if made outwhether the distribution will be in excess of
current orand accumulated earnings and profits.profits, withholding will apply to the
distribution at the rate applicable to dividends. However, the non-U.S.
stockholder may seek a refund of these amounts thus withheld are generally refundablefrom the IRS if it is
subsequently determined that suchthe distribution was, in fact, in excess of current
or accumulated earnings and profits of the Company.
Distributions to a Non-U.S. Stockholder that are designated by the Company
at the time of distribution as capital gains dividends (other than those arising
from the disposition of a United States real property interest) generally will
not be subject to United States federal income taxation, unless (i) the
investment in the shares of Stock is effectively connected with the Non-U.S.
Stockholder's United States trade or business,Alexander's, Inc.
CAPITAL GAIN DIVIDENDS. For any year in which case the Non-U.S.
Stockholder will be subject to the same treatmentAlexander's, Inc. qualifies
as domestic stockholders with
respect to such gain (except that a stockholder that is a foreign corporation
may also be subject to the 30% branch profits tax, as discussed above), or (ii)
the Non-U.S. Stockholder is a nonresident alien individual who is present in the
United States for 183 or more days during the taxable year and has a "tax home"
in the United States, in which case the nonresident alien individual will be
subject to a 30% tax on the individual's capital gains.
Distributions to a Non-U.S. StockholderREIT, distributions that are attributable to gain from sales or exchanges
by the CompanyAlexander's, Inc. of United StatesU.S. real property interests will cause the Non-U.S. Stockholder to be treated as recognizing such gain as income
effectively connected with a United States trade or business. Non-U.S.
Stockholders would thus generally be taxed at the same rates applicable to
domestic stockholders (subject to a special alternative minimum tax innon-U.S.
stockholder under the case
of nonresident alien individuals). The Company is required to withhold 35% of
any such distribution. That amount is creditable against the Non-U.S.
Stockholder's United States federal income tax liability. Also, such
distribution may be subject to a 30% branch profits tax in the hands of a
Non-U.S. Stockholder that is a corporation, as discussed above.
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Sale of Stock. Gain recognized by a Non-U.S. Stockholder upon the sale or
exchange of shares of Stock generally will not be subject to United States
taxation unless the Stock constitutes a "United States real property interest"
within the meaningprovisions of the Foreign Investment in Real Property Tax
Act of 1980, ("FIRPTA").as amended.
Under this statute, these distributions are taxed to a non-U.S. stockholder
as if the gain were effectively connected with a U.S. business. Thus, non-U.S.
stockholders will be taxed on the distributions at the normal capital gain rates
applicable to U.S. stockholders, subject to any applicable alternative minimum
tax and special alternative minimum tax in the case of individuals. Alexander's,
Inc. is required by applicable Treasury regulations under this statute to
withhold 35% of any distribution that Alexander's, Inc. could designate as a
capital gain dividend. However, if Alexander's, Inc. designates as a capital
gain dividend a distribution made before the day Alexander's, Inc. actually
effects the designation, then although the distribution may be taxable to a
non-U.S. stockholder, withholding does not apply to the distribution under this
statute. Rather, Alexander's, Inc. must effect the 35% withholding from
distributions made on and after the date of the designation, until the
distributions so withheld equal 35% of the amount of the prior distribution
designated as
62
a capital gain dividend. The Stocknon-U.S. stockholder may credit the amount withheld
against its U.S. tax liability.
SALES OF SHARES. Gain recognized by a non-U.S. stockholder upon a sale or
exchange of common stock generally will not constitute a "United States real property
interest" so long asbe taxed under the CompanyForeign
Investment in Real Property Tax Act if Alexander's, Inc. is a "domestically
controlled REIT.REIT," A
"domestically controlled REIT" isdefined generally as a REIT, less than 50% in whichvalue of whose
stock is and was held directly or indirectly by foreign persons at all times
during a specified testing period less than 50% in value of its stockperiod. Alexander's, Inc. believes that it is held directly or
indirectly by Non-U.S. Stockholders. Notwithstanding the foregoing, gain fromand
will continue to be a domestically controlled REIT, and, therefore, that
taxation under this statute generally will not apply to the sale or exchange of StockAlexander's,
Inc. shares. However, gain to which this statute does not otherwise subject to FIRPTAapply will be taxable
to a Non-U.S. Stockholder (i)non-U.S. stockholder if the investment in the Stockshares is treated as effectively
connected with the Non-U.S. Stockholder'snon-U.S. stockholder's U.S. trade or business or is
attributable to a permanent establishment that the non-U.S. stockholder
maintains in whichthe United States if that is required by an applicable income tax
treaty as a condition for subjecting the non-U.S. stockholder to U.S. taxation
on a net income basis. In this case,
the Non-U.S. Stockholder will be subject to the same treatment will apply to the
non-U.S. stockholder as domesticto U.S. stockholders with respect to suchthe gain. In
addition, gain or (ii)to which the Foreign Investment in Real Property Tax Act does not
apply will be taxable to a non-U.S. stockholder if the Non-U.S. Stockholdernon-U.S. stockholder is a
nonresident alien individual who iswas present in the United States for 183 days
or more during the taxable year and has a "tax home" in the United States, or
maintains an office or a fixed place of business in the United States to which
the gain is attributable. In this case, a 30% tax will apply to the nonresident
alien individualindividual's capital gains. A similar rule will be subjectapply to capital gain
dividends to which this statute does not apply.
If Alexander's, Inc. was not a domestically controlled REIT, tax under the
Foreign Investment in Real Property Tax Act would apply to a 30% United States
withholding tax in the amount of such individual's gain.
If the Company is not or ceases to be a "domestically-controlled REIT,"
whether gain arising from thenon-U.S.
stockholder's sale or exchange by a Non-U.S. Stockholder of shares only if the selling non-U.S. stockholder owned more
than 5% of Stock would be subject to United States taxation under FIRPTA asthe class of shares sold at any time during a salespecified period. This
period is generally the shorter of a "United States real property interest" will depend on whetherthe period that the non-U.S. stockholder
owned the shares are "regularly traded" (as defined by applicable Treasury regulations) on
an established securities market (e.g.,sold or the New York Stock Exchange) andfive-year period ending on the sizedate when the
stockholder disposed of the selling Non-U.S. Stockholder's interest inshares. If tax under this statute applies to the Company. If
gain on the sale or exchange of shares, of Stock was subjectthe same treatment would apply to taxation under FIRPTA,
the Non-U.S. Stockholder would be subjectnon-U.S.
stockholder as to regular United States income taxU.S. stockholders with respect to suchthe gain, in the same manner as a U.S. Stockholder (subjectsubject to any
applicable alternative minimum tax and a special alternative minimum tax in the
case of nonresident alien individuals) and the purchaser of the Stock would
be required to withhold and remit to the IRS 10% of the purchase price.
Backup Withholding and Information Reporting. Backup withholding tax (which
generally isindividuals.
FEDERAL ESTATE TAXES
Common stock or preferred stock held by a withholding tax imposednon-U.S. stockholder at the ratetime
of 31% on certain payments to
persons that fail to furnish certain information underdeath will be included in the stockholder's gross estate for United States
information reporting requirements) and information reporting willfederal estate tax purposes, unless an applicable estate tax treaty provides
otherwise.
BACKUP WITHHOLDING AND INFORMATION REPORTING
If you are a non-U.S. stockholder, you are generally not
apply to distributions paid to Non-U.S. Stockholders outside the United States
that are treated as (i) dividends subject to the 30% (or lower treaty rate)
withholding tax discussed above, (ii) capital gains dividends or (iii)
distributions attributable to gainexempt from the sale or exchange by the Company of
United States real property interests. As a general matter, backup
withholding and information reporting will not apply to arequirements with respect to:
- dividend payments, and
- the payment of the proceeds from the sale of common shares effected at a
United States office of a broker,
as long as the income associated with these payments is otherwise exempt
from United States federal income tax, and:
- the payor or broker does not have actual knowledge or reason to know that
you are a United States person and you have furnished to the payor or
broker:
- a valid IRS Form W-8BEN or an acceptable substitute form upon which you
certify, under penalties of perjury, that you are a non-United States
person, or
63
- other documentation upon which it may rely to treat the payments as made
to a non-United States person in accordance with U.S. Treasury
regulations, or
- you otherwise establish an exemption.
Payment of the proceeds from the sale of shares of Stock by or throughcommon stock effected at a foreign
office of a foreign broker.
Informationbroker generally will not be subject to information reporting (but notor
backup withholding) will apply, however, to a
payment of the proceeds ofwithholding. However, a sale of Stockcommon stock or preferred stock that is
effected at a foreign office of a broker will be subject to information
reporting and backup withholding if:
- the proceeds are transferred to an account maintained by you in the
United States,
- the payment of proceeds or throughthe confirmation of the sale is mailed to you
at a United States address, or
- the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above are
met or you otherwise establish an exemption.
In addition, a sale of common stock or preferred stock will be subject to
information reporting if it is effected at a foreign office of a broker that (a) isis:
- a U.S.United States person,
(b) derives- a controlled foreign corporation for United States tax purposes,
- a foreign person 50% or more of itswhose gross income for certain periods fromis effectively
connected with the conduct of a United States trade or business for a
specified three-year period, or
- a foreign partnership, if at any time during its tax year:
- one or more of its partners are "U.S. persons," as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in the conduct of a United States
trade or (c) is a "controlled foreign corporation" (generally, a foreign corporation
controlled by United States stockholders) for United States federal income tax
purposes,business,
unless the broker has documentary evidence in its recordsdoes not have actual knowledge or reason to know that you are
a United States person and the holder is a Non-U.S. Stockholder and certain other conditionsdocumentation requirements described above are
met or the
stockholderyou otherwise establishesestablish an exemption. PaymentBackup withholding will apply if
the sale is subject to or throughinformation reporting and the broker has actual knowledge
that you are a United States office of a broker of the proceeds of a sale of shares of Stock is
subject to both backup withholding and information reporting unless the
stockholder certifies under penalties of perjury that the stockholder is a
Non-U.S. Stockholder, or otherwise establishes an exemption. A Non-U.S.
Stockholderperson.
You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by timely filing the appropriatea
refund claim for refund with the IRS.
Estate Tax. Shares of Stock owned by an individual who is not a citizenOTHER TAX CONSEQUENCES
State or resident of the United States (as determined for purposes of U.S. federal estate
tax law) at the time of death will generally be includible in such individual's
gross estate for federal estate tax purposes unless an applicable estate tax
treaty provides otherwise.
Other Tax Consequences
The Companylocal taxation may apply to Alexander's, Inc. and its stockholders may be subject to state or local taxation
in various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the CompanyAlexander's,
Inc. and its stockholders may not conform to the federalFederal income tax consequences
discussed above. Consequently, prospective -44-
stockholders are urged toshould consult their own
tax advisors regarding the effect of state and local tax laws on an investment
in Alexander's, Inc.
TAXATION OF HOLDERS OF DEBT WARRANTS
SALE OR EXPIRATION
Generally, you will recognize gain or loss upon the Company.sale or other
disposition of your debt warrant in an amount equal to the difference between
the amount you realize on such sale or other disposition and your tax basis in
the debt warrant. Your tax basis in your debt warrant generally will be its
cost. If you hold a debt warrant that expires unexercised you generally will
recognize loss in an amount equal to your tax basis in the
64
debt warrant. Gain or loss resulting from the sale, other disposition or
expiration of a debt warrant generally will be capital gain or loss and will be
long-term if the debt warrant was held for more than one year.
EXERCISE
If you exercise your debt warrant with cash it will not be a taxable event
for you. Your basis in the debt securities received on exercise of the debt
warrant will equal the sum of your tax basis in the exercised debt warrant and
the exercise price of the debt warrant. The holding period in a debt security
received on exercise of a debt warrant will not include the period during which
the debt warrant was held.
The applicable prospectus supplement will contain a discussion of any
special United States federal income tax rules with respect to debt warrants
that are issued as a unit with other securities.
TAXATION OF HOLDERS OF DEBT SECURITIES
This section describes the material United States federal income tax
consequences of owning a debt security that Alexander's, Inc. may offer for your
general information only. It is not tax advice. It applies to you only if the
debt security you purchase is not an original issue discount or zero coupon debt
security and you acquire the debt security in the initial offering at the
offering price. If you purchase a debt security at a price other than the
offering price, the amortizable bond premium or market discount rules also may
apply to you. You should consult your own tax advisors regarding this
possibility.
The tax consequences of owning any debt security that is a zero coupon debt
security or an original issue discount debt security, a floating rate debt
security, or an indexed debt security that we offer will be discussed in the
applicable prospectus supplement.
UNITED STATES DEBT SECURITY HOLDERS
This subsection describes the tax consequences to a United States holder of
a debt security. You are a United States holder of a debt security if you are a
beneficial owner of a debt security to which this section applies and you are:
- a citizen or resident of the United States,
- a domestic corporation,
- an estate whose income is subject to United States federal income tax
regardless of its source, or
- a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder of a debt security, this subsection
does not apply to you and you should refer to "-- United States Alien Debt
Security Holders" below.
PAYMENTS OF INTEREST. You will be taxed on the interest on your debt
security as ordinary income at the time you receive the interest or when it
accrues, depending on your method of accounting for tax purposes.
PURCHASE, SALE AND RETIREMENT OF DEBT SECURITIES. Your tax basis in your
debt security generally will be its cost (including, in the case of a debt
security acquired through the exercise of a debt warrant, both the cost of the
debt warrant and the amount paid on exercise of the debt warrant). You generally
will recognize capital gain or loss on the sale or retirement of your debt
security equal to the difference between the amount you realize on the sale or
retirement, excluding any amounts attributable to accrued but unpaid interest,
and your tax basis in your debt security. Capital gain of a noncorporate United
States debt security holder is generally taxed at preferential rates where the
holder has a holding period greater than one year.
65
UNITED STATES ALIEN DEBT SECURITY HOLDERS
This subsection describes the tax consequences to a United States alien
debt security holder. You are a United States alien debt security holder if you
are the beneficial owner of a debt security to which this section applies and
are, for United States federal income tax purposes:
- a nonresident alien individual,
- a foreign corporation,
- a foreign partnership, or
- an estate or trust that in either case is not subject to United States
federal income tax on a net income basis on income or gain from a debt
security.
If you are a United States debt security holder, this subsection does not apply
to you.
Under United States federal income and estate tax law, and subject to the
discussion of backup withholding below, if you are a United States alien debt
security holder:
- we and other U.S. payors generally will not be required to deduct United
States withholding tax from payments of principal and interest to you if,
in the case of payments of interest:
1. you do not actually or constructively own 10% or more of the
capital or profits interest of Alexander's, Inc.,
2. you are not a controlled foreign corporation that is related to
Alexander's, Inc. through stock ownership, and
3. the U.S. payor does not have actual knowledge or reason to know
that you are a United States person and:
a. you have furnished to the U.S. payor an Internal Revenue
Service Form W-8BEN or an acceptable substitute form upon which you
certify, under penalties of perjury, that you are a non-United States
person,
b. in the case of payments made outside the United States to you
at an offshore account (generally, an account maintained by you at a
bank or other financial institution at any location outside the United
States), you have furnished to the U.S. payor documentation that
establishes your identity and your status as a non-United States person,
c. the U.S. payor has received a withholding certificate
(furnished on an appropriate IRS Form W-8 or an acceptable substitute
form) from a person claiming to be:
i. a withholding foreign partnership (generally, a foreign
partnership that has entered into an agreement with the IRS to assume
primary withholding responsibility with respect to distributions and
guaranteed payments it makes to its partners),
ii. a qualified intermediary (generally, a non-United States
financial institution or clearing organization or a non-United States
branch or office of a United States financial institution or clearing
organization that is a party to a withholding agreement with the
IRS), or
iii. a U.S. branch of a non-United States bank or of a
non-United States insurance company,
and the withholding foreign partnership, qualified intermediary or
U.S. branch has received documentation upon which it may rely to
treat the payment as made to a non-United States person in accordance
with U.S. Treasury regulations (or, in the case of a qualified
intermediary, in accordance with its agreement with the IRS), or
d. the U.S. payor receives a statement from a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business,
66
i. certifying to the U.S. payor under penalties of perjury that
an IRS Form W-8BEN or an acceptable substitute form has been received
from you by it or by a similar financial institution between it and
you, and
ii. to which is attached a copy of the IRS Form W-8BEN or
acceptable substitute form, or
4. the U.S. payor otherwise possesses documentation upon which it may
rely to treat the payment as made to a non-United States person in
accordance with U.S. Treasury regulations, and
- no deduction for any United States federal withholding tax will be made
from any gain that you realize on the sale or exchange of your debt
security.
Further, a debt security held by an individual who at the individual's time of
death is not a citizen or resident of the United States will not be includible
in the individual's gross estate for United States federal estate tax purposes
if:
- the individual did not actually or constructively own 10% or more of the
capital or profits interest of Alexander's, Inc. at the time of the
individual's death and
- the income on the debt security would not have been effectively connected
with a United States trade or business of the individual at the time of
the individual's death.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, if you are a noncorporate United States debt security holder,
we and other payors are required to report to the IRS all payments of principal
and interest on your debt security. In addition, we and other payors are
required to report to the IRS any payment of proceeds of the sale of your debt
security before maturity within the United States. Additionally, backup
withholding will apply to any payments if you fail to provide an accurate
taxpayer identification number, or you are notified by the IRS that you have
failed to report all interest and dividends required to be shown on your federal
income tax returns.
In general, if you are a United States alien debt security holder, payments
of principal or interest made by us and other payors to you will not be subject
to backup withholding and information reporting, provided that the certification
requirements described above under "-- United States Alien Debt Security
Holders" are satisfied or you otherwise establish an exemption. However, we and
other payors are required to report payments of interest on your debt securities
on IRS Form 1042-S even if the payments are not otherwise subject to information
reporting requirements. In addition, payment of the proceeds from the sale of
debt securities effected at a United States office of a broker will not be
subject to backup withholding and information reporting provided that:
- the broker does not have actual knowledge or reason to know that you are
a United States person and you have furnished to the broker:
- an appropriate IRS Form W-8 or an acceptable substitute form upon which
you certify, under penalties of perjury, that you are not a United
States person, or
- other documentation upon which it may rely to treat the payment as made
to a non-United States person in accordance with U.S. Treasury
regulations, or
- you otherwise establish an exemption.
If you fail to establish an exemption and the broker does not possess
adequate documentation of your status as a non-United States person, the
payments may be subject to information reporting and backup withholding.
However, backup withholding will not apply with respect to payments made to an
offshore account maintained by you unless the broker has actual knowledge that
you are a United States person.
67
In general, payment of the proceeds from the sale of debt securities
effected at a foreign office of a broker will not be subject to information
reporting or backup withholding. However, a sale effected at a foreign office of
a broker will be subject to information reporting and backup withholding if:
- the proceeds are transferred to an account maintained by you in the
United States,
- the payment of proceeds or the confirmation of the sale is mailed to you
at a United States address, or
- the sale has some other specified connection with the United States as
provided in U.S. Treasury regulations,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above
(relating to a sale of debt securities effected at a United States office of a
broker) are met or you otherwise establish an exemption.
In addition, payment of the proceeds from the sale of debt securities
effected at a foreign office of a broker will be subject to information
reporting if the broker is:
- a United States person,
- a controlled foreign corporation for United States tax purposes,
- a foreign person 50% or more of whose gross income is effectively
connected with the conduct of a United States trade or business for a
specified three-year period, or
- a foreign partnership, if at any time during its tax year:
- one or more of its partners are "U.S. persons," as defined in U.S.
Treasury regulations, who in the aggregate hold more than 50% of the
income or capital interest in the partnership, or
- such foreign partnership is engaged in the conduct of a United States
trade or business,
unless the broker does not have actual knowledge or reason to know that you are
a United States person and the documentation requirements described above
(relating to a sale of debt securities effected at a United States office of a
broker) are met or you otherwise establish an exemption. Backup withholding will
apply if the sale is subject to information reporting and the broker has actual
knowledge that you are a United States person.
You generally may obtain a refund of any amounts withheld under the backup
withholding rules that exceed your income tax liability by timely filing a
refund claim with the IRS.
68
PLAN OF DISTRIBUTION
The CompanyWe may sell the Securitiesoffered securities as follows:
- through agents,
- to or through underwriters, or
- directly to other purchasers.
We will identify any underwriters or agents and describe their compensation
in a prospectus supplement.
We, directly or through agents, may sell, and the underwriters may resell,
the offered securities in one or more underwriters for public
offering and sale by them ortransactions, including negotiated
transactions. These transactions may sell the Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Securities will be named in the related Prospectus Supplement. The Company
has reserved the right to sell the Securities directly to investors on its own
behalf in those jurisdictions where it is authorized to do so.
Underwriters may offer and sell the Securitiesbe:
- at a fixed public offering price or prices, thatwhich may be changed,
- at market prices prevailing at the time of sale,
- at prices related to such prevailing market prices, or
- at negotiated prices. The Company also may, from time to
time, authorize dealers, acting as the Company's agents, to offer and sell the
Securities upon such terms and conditions as set forth in the related Prospectus
Supplement.
In connection with the sale of offered securities, the Securities, underwriters or
agents may receive compensation from the Company in the form of underwriting discountsus or
commissions and may also receive commissions from purchasers of the Securities
for whom they may act as agent. Underwriters may sell the Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concession or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasersoffered
securities for whom they may act as agents. Any underwritingThe underwriters may sell offered
securities to or through dealers, who may also receive compensation paid by the Company to underwriters or agents
in connection with the offeringfrom
purchasers of the Securities, and anyoffered securities for whom they may act as agents.
Compensation may be in the form of discounts, concessions or commissions allowed by underwriters to participatingcommissions.
Underwriters, dealers
will be set forth in the related Prospectus Supplement. Dealers and agents participatingthat participate in the distribution of the
Securitiesoffered securities may be deemed to be
underwriters as defined in the Securities Act of 1933,
and any discounts andor commissions received by them from us and any profit realized by them on the
resale of the Securitiesoffered securities by them may be deemed to betreated as underwriting
discounts and commissions under the Securities Act.Act of 1933.
We will indemnify the underwriters and agents against certain civil
liabilities, including liabilities under the Securities Act of 1933.
Underwriters, dealers and agents may be entitled, under agreements entered into with the Company, to
indemnification against and contribution towards certain civil liabilities,
including any liabilities under the Securities Act.
If so indicated in the related Prospectus Supplement, the Company will
authorize dealers acting as the Company's agents to solicit agreements by
certain institutions to purchase the Securities from the Company at the public
offering price set forth in the related Prospectus Supplement pursuant to
delayed delivery contracts ("Contracts") providing for payment and delivery on
the date or dates stated in a Prospectus Supplement. Each Contract will be for
an amount specified in the applicable Prospectus Supplement. Institutions, with
whom Contracts, when authorized, may be made include commercial and savings
banks, insurance companies, pension funds, investment companies, educational and
charitable institutions and other institutions, but will in all cases be subject
to the approval of the Company. Contracts will not be subject to any conditions
except that (i) the purchase by an institution of the Securities covered by
Contracts will not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject and (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters such amount specified in the applicable Prospectus Supplement.
Any Securities issued hereunder (other than Common Stock) will be new
issues of securities with no established trading market. Any underwriters or
agents to or through whom such Securities are sold by the Company for public
offering and sale may make a market in such Securities, but such underwriters or
agents will not be obligated to do so and may discontinue any such market making
at any time without notice. No assurance can be given as to the liquidity of the
trading market for any such Securities.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with, andor
perform services for, the Company and certain
of itsus or our affiliates in the ordinary course of business.
-45-
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules of the Company and the financial statements of
Kings Plaza Shopping Center and Marina incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1994 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in (i) their
report dated March 29, 1995, which expresses an
unqualified opinion and includes explanatory paragraphs relating to the need for
additional borrowings and to change in the method of accounting for
postretirement healthcare benefits related to the Company for the year ended
December 31, 1994 and (ii) their report dated September 15, 1995 related to the
Kings Plaza Shopping Center and Marina for the year ended June 30, 1995, and
have been so incorporated in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.businesses.
VALIDITY OF THE SECURITIES
The validity of the Securitiessecurities issued hereunderunder this prospectus will be passed
upon for the
Companyus by Shearman & Sterling LLP, New York, New York, counsel to
the Company.Alexander's, Inc. The validity of any Securitiessecurities issued hereunderunder this prospectus
will be passed upon for any underwriters by the counsel named in the applicable
Prospectus Supplement.
-46-prospectus supplement.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules of Alexander's, Inc. incorporated in this
prospectus by reference from Alexander's, Inc.'s Annual Report on Form 10-K
(which expresses an unqualified opinion and includes an explanatory paragraph
concerning the adoption of Statement of Financial Accounting Standards No. 144)
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
69
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ItemITEM 14. Other ExpensesOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of Issuance and Distribution.
Theexpenses (all of which are estimated expensesother
than the SEC registration fee) in connection with the issuance and distribution
of the securities being registered, other than Underwriting Compensation, are as
follows:
SEC registration fee.......................................... $ 86,207
Printing and engraving expenses............................... 100,000
Legal fees and disbursements.................................. 200,000
Accounting fees and disbursements............................. 60,000
Transfer Agent's, Depositary's and Trustee's fees
and disbursements . ........................................ 20,000
Blue Sky fees and expenses.................................... 67,785
Miscellaneous (including listing fees, if applicable, and
rating agency fees)......................................... 66,008
------------
Total $ 600,000
============
Itemunderwriting compensation:
SEC registration fee........................................ $ 121,350
Printing and engraving expense.............................. 300,000
Legal fees and disbursements................................ 750,000
Accounting fees and disbursements........................... 200,000
Transfer agent's, depositary's and trustee's fees and
disbursements............................................. 75,000
Blue sky fees and expenses.................................. 75,000
Miscellaneous (including listing and rating agency fees).... 750,000
----------
Total..................................................... $2,271,350
==========
ITEM 15. Indemnification of Directors and Officers.INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers or former directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers under certain circumstances. Such law provides
further that the indemnification permitted thereunder shall not be deemed
exclusive of any other rights to which the directors and officers may be
entitled under a corporation's Certificatecertificate of Incorporation, By-laws,incorporation, by-laws, agreement
or otherwise.
The Company's CertificateAlexander's, Inc.'s certificate of Incorporationincorporation provides that the Company'sour officers
and directors will be indemnified to the fullest extent permitted by Delaware
law. The Companydirectors shall be liable to the Companyus or the stockholders for monetary
damages for breach of the director's fiduciary duty. Such provision does not
limit a director's liability to the Companyus or itsour stockholders resulting from: (i) any
breach of the director's duty of loyalty to the Companyus or itsour stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in section 174 of the Delaware General
Corporation Law or (iv) any transaction from which the director derived an
improper personal benefit.
The Company's CertificateAlexander's, Inc.'s certificate of Incorporationincorporation provides that the Companywe shall pay
the expenses incurred by an officerour officers or a director of the Companydirectors in defending a civil or
criminal action, suit, or proceeding involving such person's acts or omissions
as an officer or a director of the Companyours if such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Companyus or itsour stockholders and, with respect to a criminal action or
proceeding, if the person had no reasonable cause to believe his or her conduct
was unlawful. Unless ordered by a court, indemnification of an officer shall be
made by the Companyus only as authorized in a specific case upon the determination that
indemnification of the officer or director is proper under the circumstances
because he or she has met the applicable standard of conduct. Such determination
shall be made (i) by majority vote of theour directors of the Company who are not parties to the
action, suit or proceeding, (ii) by independent legal counsel in a written
opinion, or (iii) by the stockholdersour stockholders. Alexander's, Inc.'s certificate of
the Company. The Company's Certificate of Incorporationincorporation authorizes the Companyus to pay the expenses incurred by an officer or a
director in defending a civil or criminal action, suit, or
II-1
proceeding in advance
of the final disposition thereof, upon receipt of an undertaking by or on behalf
of such person to repay the expenses if it is ultimately determined that the
person is not entitled to be indemnified by the
Company.
The Company hasus.
We have the power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the Company
or is liable as aour
director, of the Company, or is or was serving, at theour request,
of the Company, as a director, officer,
II-1
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity or arising out of his status as such, regardless of whether
the Companywe would have power to indemnify him against such liability.
The Company hasWe have purchased a policy of directors' and officers' insurance that
insures both the Companyus and itsour officers and directors against expenses and liabilities
of the type normally insured against under such policies, including the expense
of the indemnifications described above.
Pursuant to the form of Underwriting Agreement, to be filed by amendment
hereto or by Form 8-K, the underwriters will agree, subject to certain
conditions, to indemnify the Company,Alexander's, Inc., its directors, certain of its
officers and persons who control the CompanyAlexander's, Inc. within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), against certain
liabilities.
ItemITEM 16. Exhibits.EXHIBITS
See the Exhibit Number Description
------ -----------
1.1** Form of Underwriting Agreement (for Common Stock)
1.2** Form of Underwriting Agreement (for Preferred Stock)
1.3** Form of Underwriting Agreement (for Debt Securities)
3.1* Amended and Restated Certificate of Incorporation of the Company
3.2* By-laws of the Company (incorporatedIndex which is incorporated herein by reference to Exhibit 3(B)
to the Company's Annual Report on Form 10-K, filed on July 27,
1991)
4.2* Form of Indenture for Senior Debt Securities
4.3* Form of Senior Debt Security (included in Exhibit 4.2)
4.4* Form of Indenture for Subordinated Debt Securities
4.5* Form of Subordinated Debt Security (included in Exhibit 4.4)
4.6* Form of Deposit Agreement
4.7* Form of Depositary Receipt (included in Exhibit 4.6)
- --------
* Filed previously.
** To be filed by amendment or 8-K.
II-2
5.1* Opinion of Shearman & Sterling
8.1* Tax Opinion of Shearman & Sterling
12.1* Statement Regarding Computation of Consolidated Ratios of Earnings
to Fixed Charges
23.1 Consent of Deloitte & Touche LLP
23.2* Consent of Shearman & Sterling (included in its opinion filed as
Exhibit 5.1)
24.1* Powers of Attorney (included on signature page)
25.1* Statement of Eligibility of Senior Trustee on Form T-1
25.2* Statement of Eligibility of Subordinated Trustee on Form T-1
- -------------
* Filed previously.
Itemreference.
ITEM 17. Undertakings.UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment of this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
II-3
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual reportAnnual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual reportAnnual Report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is
II-2
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
Exhibit Index
Exhibit No.
23.1 Consent of Deloitte & Touche LLPII-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Alexander's,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Amendment No. 3
to its Registration Statementregistration statement on
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in theThe City of Saddle BrookNew York and State of New Jersey,York, on January 5, 1996.November 21, 2003.
ALEXANDER'S, INC.
ByBy: /s/ JOSEPH MACNOW
------------------------------------
Joseph Macnow
____________________________
Joseph MacnowExecutive Vice President -- Finance
and Administration and Chief
Financial Officer
(Principal Financial and Principal Accounting
OfficerOfficer)
II-4
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Steven
Roth, Michael D. Fascitelli and Joseph Macnow, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments, including post-effective amendments,
to this registration statement, to any related Rule 462(b) registration
statement and to any other documents filed with the Securities and Exchange
Commission and to file the same, with all exhibits to the registration statement
and other documents in connection with the registration statement, with the
Securities and Exchange Commission or any other regulatory authority, grants to
the attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, and ratifies and confirms all that the attorney-in-fact and agent, or
his substitute, may lawfully do or cause to be done by virtue of this power of
attorney.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment
No. 3 to the Registration Statementregistration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
Chief Executive Officer January 5, 1996
*_____________________________ and Director
Steven Roth
Chairman of the Board of January 5, 1996
*_____________________________ Directors
Stephen Mann
*_____________________________ Director January 5, 1996
David Mandelbaum
*_____________________________ Director January 5, 1996
Thomas R. DiBenedetto
*_____________________________ Director January 5, 1996
Richard R. West
*_____________________________ Director January 5, 1996
Arthur I. Sonnenblick
*_____________________________ Director January 5, 1996
SIGNATURE TITLE DATE
--------- ----- ----
/s/ STEVEN ROTH Chief Executive Officer and November 21, 2003
- -------------------------------------- Director (Principal Executive
Steven Roth Officer)
/s/ MICHAEL D. FASCITELLI President and Director November 21, 2003
- --------------------------------------
Michael D. Fascitelli
/s/ STEPHEN MANN Chairman of the Board of November 21, 2003
- -------------------------------------- Directors
Stephen Mann
/s/ JOSEPH MACNOW Executive Vice President -- November 21, 2003
- -------------------------------------- Finance and Administration and
Joseph Macnow Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ THOMAS R. DIBENEDETTO Director November 21, 2003
- --------------------------------------
Thomas R. DiBenedetto
/s/ DAVID MANDELBAUM Director November 21, 2003
- --------------------------------------
David Mandelbaum
/s/ ARTHUR I. SONNENBLICK Director November 21, 2003
- --------------------------------------
Arthur I. Sonnenblick
/s/ NEIL UNDERBERG Director November 21, 2003
- --------------------------------------
Neil Underberg
/s/ RICHARD WEST Director November 21, 2003
- --------------------------------------
Richard West
/s/ RUSSELL B. WIGHT, JR. Director November 21, 2003
- --------------------------------------
Russell B. Wight, Jr.
*_____________________________ Director January 5, 1996
Neil Underberg
/s/ Joseph Macnow Vice President -- Chief
______________________________ Financial Officer and January 5, 1996
Joseph Macnow Principal Accounting Officer
II-5
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
1.1** Form of Underwriting Agreement (for Common Stock)
1.2** Form of Underwriting Agreement (for Preferred Stock)
1.3** Form of Underwriting Agreement (for Debt Securities)
3.1* Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference from the Company's Form
S-3 (No. 033-62779) filed September 20, 1995)
3.2* By-laws of the Company (incorporated by reference to the
Company's Form 10-Q filed May 9, 2000)
4.1 Form of Indenture for Senior Debt Securities
4.2 Form of Senior Debt Security (included in Exhibit 4.1)
4.3 Form of Indenture for Subordinated Debt Securities
4.4 Form of Subordinated Debt Security (included in Exhibit 4.3)
4.5 Form of Deposit Agreement
4.6 Form of Depositary Receipt (included in Exhibit 4.5)
5.1 Opinion of Shearman & Sterling LLP
8.1 Tax Opinion of Shearman & Sterling LLP
12.1 Statement Regarding Computation of Consolidated Ratios of
Earnings to Fixed Charges
15.1 Letter Regarding Unaudited Interim Financial Information
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Shearman & Sterling LLP (included in Exhibit 5.1)
23.3 Consent of Shearman & Sterling LLP (included in Exhibit 8.1)
24.1 Powers of Attorney (included on signature page)
25.1 Statement of Eligibility of Senior Trustee on Form T-1
25.2 Statement of Eligibility of Subordinated Trustee on Form T-1
- ---------------
* By: /s/ Joseph Macnow
________________________
Joseph Macnow
Attorney-in-FactFiled previously.
** To be filed by amendment or on a Form 8-K.