SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 29, 2002
------------
VORNADO OPERATING COMPANY
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware No. 001-14525 22-3569068
---------------------------- ------------- -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
888 Seventh Avenue, New York, New York 10019
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 894-7000
-------------
N/A
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On May 29, 2002, the Board of Directors of Vornado Operating
Company, a Delaware corporation (the "Company"), declared a dividend of one
right (a "Right") for each outstanding share of common stock, par value $0.01
per share ("Common Stock"), of the Company, payable on June 7, 2002 to
stockholders of record at the close of business on June 7, 2002 (the "Record
Time"). In addition, the Company will issue one Right in respect of each common
unit of limited partnership (a "Common Unit") in Vornado Operating L.P., a
Delaware limited partnership (the "Partnership"), held by a limited partner
other than the Company. As of May 29, 2002 there were 4,068,924 shares of Common
Stock issued and outstanding, 1,114,926 shares of Common Stock reserved for
issuance pursuant to employee benefit plans and 447,017 Common Units outstanding
and held by limited partners other than the Company. The Company expects to
issue the Rights pursuant to a Stockholder Protection Rights Agreement, dated as
of May 29, 2002 (the "Rights Agreement"), between the Company and Wachovia Bank
National Association, as Rights Agent (the "Rights Agent").
The Rights Agreement provides that the Company will also issue one
Right for each share of Common Stock or Common Unit issued after the Record Time
and prior to the Separation Time referred to below (other than Common Units
issued to the Company), and that the Company will in certain cases thereafter
issue additional Rights in connection with the issuance of Common Stock pursuant
to the terms of convertible or redeemable securities or options.
The Rights Agreement was not adopted in response to any specific
effort to acquire control of the Company. Rather, it was adopted to deter
abusive takeover tactics that can be used to deprive stockholders of the full
value of their investment.
The Rights Agreement is not intended to -- and will not -- prevent a
takeover of the Company at a full and fair price. Although the Rights may cause
substantial dilution to any person if that person, together with that person's
affiliates and associates (as defined in the Rights Agreement), acquires
beneficial ownership (as defined in the Rights Agreement) of 10% or more of the
Common Stock, the board of directors of the Company has the ability to redeem
the Rights for $0.01 per Right and clear the way for any transaction that it
determines to be in the best interests of the Company and its stockholders.
The Company's certificate of incorporation currently has an
ownership limitation which generally prohibits holders from acquiring beneficial
ownership (as defined in the Company's certificate of incorporation) of more
than 4.9% of the Common Stock and designates any shares over the limit as
non-voting, non-participating "Excess Shares." However, although this provision
was intended to afford some protection
Page 2 of 9 Pages
against abusive takeover tactics, it was primarily designed to preserve certain
tax attributes relating to the taxation of Vornado Realty Trust as a REIT;
accordingly the definition of beneficial ownership is not the same under this
provision as it is under the Rights Agreement. For example, shares held by a
person's affiliates and associates are not aggregated with shares held by that
person under the definition of beneficial ownership in the certificate of
incorporation unless that person and those affiliates and associates are acting
in concert with that person as a "group" or that person has constructive
ownership of the shares held by those affiliates and associates for tax
purposes. Accordingly, the ownership limitation in the certificate of
incorporation offers protections which are similar to but not coextensive with
the protections offered by the Rights Agreement.
The Rights Agreement and the Rights do not in any way weaken the
Company financially or interfere with its business plans. The initial issuance
of the Rights has no accounting or tax consequences and will not change the way
in which the Company's shares are traded.
The following is a summary of the Rights Agreement and the Rights.
Various Defined Terms: ACQUIRING PERSON: any person who, together with its
affiliates and associates, is or becomes the beneficial
owner of 10% or more of the Common Stock, with various
exceptions described in the Rights Agreement including
for certain pre-existing holders.
STOCK ACQUISITION TIME: the first time that any person
becomes an Acquiring Person.
SEPARATION TIME: the earlier of (a) the close of
business on the tenth business day after any person
commences a tender offer that would result in such
person becoming an Acquiring Person (or such later date
as the Board may fix by resolution adopted prior to the
Separation Time that would otherwise have occurred) and
(b) the Flip-in Time referred to below; provided that if
the foregoing results in the Separation Time being prior
to the Record Time, the Separation Time will be the
Record Time; and provided further that if a tender or
exchange offer referred to in clause (b) is canceled,
terminated or otherwise withdrawn prior to the
Separation Time without the purchase of any
Page 3 of 9 Pages
shares of stock pursuant thereto, such offer will be
deemed, for purposes of the definition of Separation
Time, never to have been made.
FLIP-IN TIME: the Stock Acquisition Time or such earlier
or later date and time as the board of directors of the
Company may fix by resolution adopted prior to the
Flip-in Time that would otherwise have occurred.
Transfer of Rights;
Rights Certificates: Prior to the Separation Time, the Rights will be
evidenced by, and trade with, the Common Stock and
Common Units and will not be exercisable. After the
Separation Time, the Rights Agent will mail Rights
Certificates to stockholders and unit holders and the
Rights will trade independently from the Common Stock
and Common Units.
Exercise of Rights
After Separation Time: If a Separation Time occurs, each Right will initially
entitle the holder to receive, for $13.50 (the "Exercise
Price"), cash in an amount, or debt or other securities
with a value, equal to the Closing Price of one share of
Common Stock on the date of exercise, except that the
Company will in its sole discretion have the option to
deliver, in respect of the exercise of any Right, in
lieu of the cash or debt or other securities referred to
above, one share of Common Stock.
"Flip-in": If a Flip-in Time occurs, then:
(a) Rights owned by the Acquiring Person or its
affiliates or associates will automatically become
void; and
(b) each other Right will automatically become a right
to receive, for the Exercise Price, cash in an
amount, or debt or other securities with a value,
equal to (i) the Closing Price of a share of
Common
Page 4 of 9 Pages
Stock on the date of exercise times (ii) that
number of shares of Common Stock having an
aggregate Market Value (based on closing prices
during an averaging period ending shortly before
the date the Flip-in Time occurs) equal to twice
the Exercise Price, except that the Company will
in its sole discretion have the option to deliver,
in respect of the exercise of any Right, in lieu
of the cash or debt or other securities referred
to above, the number of shares of Common Stock
described in (ii) above.
Exchange Option: At any time after the Flip-in Time and before an
Acquiring Person becomes the beneficial owner of more
than 50% of the outstanding Common Stock, the Board may,
in lieu of allowing Rights to be exercised, require each
outstanding Right to be exchanged for cash in an amount,
or debt or other securities with a value, per exchanged
Right equal to the Market Value of a share of Common
Stock (based on closing prices during an averaging
period ending shortly before the date the Company mails
the notice of exchange), except that the Company will in
its sole discretion have the option to deliver, in
respect of each exchanged Right, in lieu of the cash or
debt or other securities referred to above, one share of
Common Stock.
"Flip-over": After the Flip-in Time, if the Acquiring Person
beneficially owns 90% or more of the Common Stock or
controls the Board of Directors, then the Company cannot
consolidate or merge with, or sell assets aggregating
more than 50% of its assets or generating more than 50%
of its earning power to, any other person if the
Acquiring Person is a party to that transaction or
receives consideration in connection therewith that is
not identical to the consideration generally available
to the other holders of the Common Stock, unless each
Right thereafter becomes a right to receive, for the
Exercise Price, cash in an amount, or debt or other
securities with a value, equal to (a) the Closing Price
of a share of stock of the Acquiring Person or its
parent corporation ("Flip-over Stock") on the date of
exercise
Page 5 of 9 Pages
times (b) that number of shares of Flip-over Stock
having an aggregate Market Value (based on closing
prices during an averaging period ending shortly before
the date the Flip-over event occurs) equal to twice the
Exercise Price, except that the surviving company would
in its sole discretion have the option to deliver, in
respect of the exercise of any Right, in lieu of the
cash or debt or other securities referred to above, the
number of shares of Flip-over Stock described in (b)
above.
Redemption: The Rights may be redeemed by the Board, at any time
before the Flip-in Time, at a Redemption Price of $0.01
per Right, payable at the Company's option in cash or in
debt or other securities.
Power to Amend: The Board may amend the Rights Agreement and the Rights
in any respect before the Flip-in Time. Thereafter, the
Board may amend the Rights Agreement and the Rights only
in respects not materially adverse to Rights holders
generally or as required to comply with customary
anti-dilution adjustment provisions.
Anti-dilution
Adjustments: The Exercise Price, the number of Rights, the redemption
price and the cash or debt or other securities
receivable upon exercise of the Rights are subject to
adjustment from time to time in the manner provided in
the Rights Agreement to prevent dilution in the context
of various specified transactions.
Expiration: The Rights will expire in ten years from the date of
issuance unless they expire earlier as provided in the
Rights Agreement.
The form of the Rights Agreement (which includes as Exhibit A the
forms of Rights Certificate and Election to Exercise) is attached hereto as an
exhibit and is incorporated herein by reference. The foregoing description of
the Rights and the Rights
Page 6 of 9 Pages
Agreement is qualified in its entirety by reference to the Rights Agreement and
such exhibit thereto.
ITEM 7. EXHIBITS.
(4.1) Form of Rights Agreement, which includes as Exhibit A the forms of
Rights Certificate and Election to Exercise.
(99.1) Press Release, dated May 29, 2002, issued by Vornado Operating
Company.
Page 7 of 9 Pages
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Vornado Operating Company
By /s/ Joseph Macnow
---------------------
Name: Joseph Macnow
Title: Executive Vice
President -- Finance
and Administration
Date: June 3, 2002
Page 8 of 9 Pages
EXHIBIT INDEX
Exhibit No. Description
(4.1) Form of Stockholder Protection Rights Agreement,
dated as of May 29, 2002 (the "Rights Agreement"),
between Vornado Operating Company (the "Company")
and Wachovia Bank National Association, as Rights
Agent, including as Exhibit A the forms of Rights
Certificate and of Election to Exercise.
(99.1) Press Release, dated May 29, 2002, issued by
Vornado Operating Company.
Page 9 of 9 Pages