As Filed Pursuant to Rule 424(B)(3)
Registration No. 333-38486
[ISTAR FINANCIAL LOGO]
To Our Shareholders:
We are pleased to offer you the opportunity to participate in our
Dividend Reinvestment and Direct Stock Purchase Plan (the
"Plan").
The Plan is a cost-free and convenient way to increase your
investment in iStar Financial Inc. common stock. The Plan has a
dividend reinvestment component and a direct stock purchase
component.
- The dividend reinvestment component permits shareholders to
designate all of a portion of their iStar Financial Inc.
common stock dividends for reinvestment in additional
shares of common stock.
- The direct stock purchase component permits our
shareholders and new investors to make purchases of our
common stock by check or by automatic monthly deductions
from a U.S. bank account.
- In each case, shareholders or new investors may purchase
shares of our common stock without payment of brokerage
commissions or service fees.
We invite you to read the enclosed prospectus for further
details. HIGHLIGHTS of the Plan are located on page 1 of the
prospectus and a SUMMARY of the Plan is located on page 5 of the
prospectus.
Participation in the Plan is entirely voluntary. If you are
interested in enrolling in the Plan, please complete and return
the enclosed Enrollment Authorization Form to the Plan's
administrator, EquiServe Trust Company, N.A., in the postage
pre-paid envelope provided.
If you have any questions about the Dividend Reinvestment and
Direct Stock Purchase Plan, please contact EquiServe Trust
Company, N.A., toll free, at (800) 317-4445 or Erin Hart,
Investor Relations Associate at (212) 930-9400.
We hope you will find the Plan a cost-free and convenient way to
increase your ownership in iStar Financial Inc.
Sincerely,
/s/ Jay Sugarman
Jay Sugarman
Chairman and Chief Executive Officer
1114 Avenue of the Americas, 27th Floor -- New York, NY 10036 -- P 212.930.9400
-- F 212.930.9499
DIVIDEND REINVESTMENT AND DIRECT STOCK PURCHASE PLAN
iSTAR FINANCIAL INC.
8,000,000 SHARES OF COMMON STOCK
We have created a Dividend Reinvestment and Direct Stock Purchase Plan and
are offering participation in that plan by means of this prospectus. The plan
has two components: a dividend reinvestment component and a direct stock
purchase component. The dividend reinvestment component permits our shareholders
to designate all or a portion of the cash dividends on their iStar Financial
common stock for reinvestment in additional shares of our common stock. The
direct stock purchase component permits our shareholders and new investors to
purchase shares of our common stock in a cost-free and convenient manner. The
administrator of the plan is EquiServe Trust Company, N.A. (the
"Administrator"). Some of the significant features of the plan are as follows:
- Participants may purchase additional shares of our common stock without
payment of brokerage commissions or service charges by automatically
reinvesting all or a portion of their common stock cash dividends.
- Participants and new investors may purchase shares of our common stock
without payment of brokerage commissions or service charges through the
direct stock purchase component of the plan by making optional cash
investments of $100 to $10,000 per month.
- Participants and new investors may, at our sole discretion, make optional
cash investments in excess of $10,000 without payment of brokerage
commissions or service charges.
- Reinvestment of dividends through the plan is entirely voluntary, and
participants may discontinue dividend reinvestment at any time.
Shareholders who do not choose to participate in the plan will continue to
receive cash dividends, as declared, in the usual manner.
- The Administrator will purchase our common stock directly from us or in
open market or privately negotiated transactions, as we determine from
time to time, to fulfill requirements for the plan. We expect that shares
usually will be purchased directly from us.
- Participants will receive a statement after each purchase of shares and a
detailed statement showing all year-to-date activity after each dividend
reinvestment.
To enroll in the plan you must complete and return an enrollment form to the
Administrator. If you are a new investor, you also must submit or arrange for
your initial investment payment. For further enrollment information, you should
contact:
EquiServe Trust Company, N.A.
Attn: iStar Financial Inc. Stock Purchase Plan
P.O. Box 43081
Providence, RI 02940-3081
Telephone: 800-317-4445 (for shareholders)
877-602-5287 (for new investors)
TDD: 1-201-222-4955 A telecommunications device for the hearing impaired
is available.
Internet: Messages forwarded on the Internet will receive a prompt reply.
EquiServe's Internet address is: "http://www.equiserve.com"
The shares of common stock, both those outstanding and those offered through
this prospectus, are subject to repurchase by us under certain conditions and
are subject to restrictions on ownership and transferability which prohibit any
single person from owning shares in excess of 9.8% of the number of shares or
value of any class or series of our outstanding capital stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is August 9, 2002.
TABLE OF CONTENTS
PAGE
--------
FORWARD-LOOKING INFORMATION................................. 4
iSTAR FINANCIAL INC......................................... 5
SUMMARY OF THE PLAN......................................... 5
Purpose Of Plan........................................... 5
Eligibility and Enrollment................................ 5
Reinvestment of Dividends................................. 5
Optional Cash Investments up to $10,000................... 5
Optional Cash Investments in Excess of $10,000............ 6
Purchase Date............................................. 6
Source of Shares.......................................... 6
Purchase Price............................................ 6
Number of Shares Offered.................................. 7
Advantages of the Plan.................................... 7
Disadvantages of the Plan................................. 8
THE PLAN.................................................... 9
Purpose................................................... 9
Administration............................................ 9
Eligibility............................................... 10
Enrollment Procedures..................................... 10
Dividend Options.......................................... 11
Changing Dividend Options................................. 11
Discontinuing Dividend Reinvestment....................... 11
Investment Options........................................ 12
Direct Deposit of Dividends............................... 12
Optional Cash Investments up to $10,000................... 13
Optional Cash Investments in Excess of $10,000............ 13
Purchase Date............................................. 14
Source of Shares.......................................... 15
Purchase Price............................................ 15
Share Safekeeping and Share Certificate Mailings.......... 17
Certificates for Shares................................... 17
Sale of Shares............................................ 18
Gifts and Transfers of Shares............................. 18
Stock Splits, Stock Dividends and Rights Offerings........ 18
Plan Reports.............................................. 18
Plan Costs................................................ 19
Pledging of Shares in Participant's Accounts.............. 19
Voting Rights of Shares in Participant's Accounts......... 19
Termination, Suspension or Modification of the Plan....... 19
Limitations on Liability.................................. 20
Termination of a Participant.............................. 20
Governing Law............................................. 20
2
PAGE
--------
DESCRIPTION OF COMMON STOCK................................. 21
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS.................. 23
RESTRICTIONS ON OWNERSHIP OF SHARES......................... 26
PLAN OF DISTRIBUTION AND UNDERWRITERS....................... 26
USE OF PROCEEDS............................................. 27
LEGAL OPINIONS AND EXPERTS.................................. 27
WHERE YOU CAN FIND MORE INFORMATION......................... 28
3
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THE
PROSPECTUS OR IN THE DOCUMENTS TO WHICH WE HAVE REFERRED YOU IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
FORWARD-LOOKING INFORMATION
We make statements in this prospectus and the documents we incorporate by
reference that are considered "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, which are usually identified by the use of words such as "will,"
"anticipates," "believes," "estimates," "expects," "projects," "plans,"
"intends," "should" or similar expressions. We intend those forward-looking
statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Reform Act of 1995 and are
including this statement for purposes of complying with these safe harbor
provisions. These forward-looking statements reflect our current views about the
Company's plans, strategies and prospects, which are based on the information
currently available to us and on assumptions we have made. Although we believe
that our plans, intentions and expectations as reflected in or suggested by
those forward-looking statements are reasonable, we can give no assurance that
the plans, intentions or expectations will be achieved. We have listed below and
have discussed elsewhere in this prospectus some important risks, uncertainties
and contingencies which could cause our actual results, performances or
achievements to be materially different from the forward- looking statements we
make in this prospectus. These risks, uncertainties and contingencies include,
but are not limited to, the following:
1. The success or failure of our efforts to implement our current business
strategy.
2. Economic conditions generally and in the commercial real estate and
finance markets specifically.
3. The performance and financial condition of borrowers and corporate
tenants.
4. The actions of our competitors and our ability to respond to those
actions.
5. The cost of our capital, which depends in part on our asset quality, the
nature of our relationships with our lenders and other capital providers,
our business prospects and outlook, and general market conditions.
6. Changes in governmental regulations, tax rates and similar matters.
7. Legislative and regulatory changes (including changes to laws governing
the taxation of REITs).
8. Other factors discussed under the heading "Risk Factors" and which may
be discussed in a prospectus supplement.
We assume no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. In
evaluating forward-looking statements, you should consider these risks and
uncertainties, together with the other risks described from time to time in our
reports and documents filed with the SEC, and you should not place undue
reliance on those statements.
4
ISTAR FINANCIAL INC.
We are the leading publicly-traded finance company focused on the commercial
real estate industry. We provide structured financing to private and corporate
owners of real estate nationwide, including senior and junior mortgage debt,
corporate mezzanine and subordinated capital and corporate net lease financing.
Our objective is to deliver superior risk-adjusted returns on equity to our
stockholders by providing innovative and value-added financing solutions to our
customers. We are taxed as a real estate investment trust.
Our principal executive offices are located at 1114 Avenue of the Americas,
New York, New York 10036, and our telephone number is (212) 930-9400. Our
website is istarfinancial.com. Our six primary regional offices are located in
Atlanta, Boston, Dallas, Denver, Hartford and San Francisco. iStar Asset
Services, our loan servicing subsidiary, is located in Hartford, and iStar Real
Estate Services, our corporate facilities management division, is headquartered
in Atlanta.
SUMMARY OF THE PLAN
The following summary description of our Dividend Reinvestment and Direct
Stock Purchase Plan is qualified by reference to the full text of the plan which
is contained in this prospectus. Terms used in the summary have the meanings
given to them in the plan.
PURPOSE OF PLAN
The purpose of the plan is to provide a cost-free and convenient way for our
shareholders to invest all or a portion of their cash dividends in additional
shares of our common stock. The plan also provides us with a means of raising
additional capital through the direct sale of our common stock.
ELIGIBILITY AND ENROLLMENT
You can participate in the plan if you currently own shares of our stock by
submitting a completed enrollment form. You may participate directly in the plan
only if you hold our stock in your own name. If you hold shares through a
brokerage or other account, you may participate directly in the plan by having
such shares transferred into your own name or you may arrange to have your
broker or other custodian participate on your behalf. If you do not own any
shares of our stock, you can participate in the plan by making an initial
optional cash investment of at least $100 by check or money order, or by
automatic deduction from a U.S. bank account.
REINVESTMENT OF DIVIDENDS
If you are currently a shareholder, you can reinvest your cash dividends on
some or all of your common stock in additional shares of our common stock
without having to pay brokerage commissions or service fees. We may, but are not
obligated to, from time to time, offer up to a 3% discount on shares of common
stock purchased with reinvested cash dividends.
OPTIONAL CASH INVESTMENTS UP TO $10,000
If you are currently a shareholder or if you wish to become a shareholder,
you can buy shares of our common stock without having to pay brokerage
commissions or service fees. You can invest a minimum of $100 and a maximum of
$10,000 in any one calendar month. Purchases may be made by
5
check or money order, or by automatic monthly deductions from a U.S. bank
account. We may, but are not obligated to, from time to time, offer up to a 3%
discount on shares of common stock purchased pursuant to this option.
OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000
Optional cash investments in excess of $10,000 per month may be made
pursuant to a written request and are not subject to a predetermined maximum
limit on the amount of the investment. The discount, if any, on optional cash
investments in excess of $10,000 per month made pursuant to such requests will
range from 0-3% and will be established at our discretion, along with, any other
terms, after a review of current market conditions, the level of participation
and our current and projected capital needs.
PURCHASE DATE
When the Administrator purchases shares of common stock from us through
optional cash investments, such purchases shall be made on the "Purchase Date"
in each month. If the Administrator is buying shares of common stock directly
from us through optional cash investments of up to $10,000, then the Purchase
Date will occur on the last trading day of each month. If the Administrator is
buying shares of common stock directly from us through an optional cash
investment in excess of $10,000, then the Administrator will purchase the common
stock over a pricing period, with each day being considered a Purchase Date, as
more fully discussed below.
If the Administrator purchases shares of common stock directly from us
through dividend reinvestment, then the Purchase Date will occur on the dividend
payment date (or if such date is not a trading day, then the first trading day
immediately preceding such date).
If the Administrator purchases shares of common stock in the open market or
in privately negotiated transactions, the Administrator will purchase such
shares as soon as is practical beginning on the day that would be deemed the
Purchase Date if the common stock were purchased from us.
SOURCE OF SHARES
The Administrator will purchase shares of common stock either directly from
us as newly issued shares of common stock or treasury shares, or from parties
other than us, either in the open market or in privately negotiated
transactions.
PURCHASE PRICE
If the Administrator purchases shares of common stock directly from us with
reinvested dividends or optional cash investments of up to $10,000, the
Administrator will pay a price equal to 100% (subject to change as provided
below) of the average of the daily high and low sales prices for a share of
common stock reported by the New York Stock Exchange on the applicable Purchase
Date, or, if no trading occurs in shares of common stock on the applicable
Purchase Date, the first trading day immediately preceding the Purchase Date for
which trades are reported, computed to three decimal places, if necessary.
If the Administrator purchases shares of common stock directly from us with
optional cash investments of greater than $10,000, the Administrator will
purchase the common stock pro rata on one
6
or more dates, with each day being a Purchase Date. On each of the Purchase
Dates the Administrator may purchase the shares from us in any method determined
in our sole discretion.
The price the Administrator will pay us for shares of common stock in the
case of dividend reinvestments, optional cash purchases up to $10,000 and
optional cash purchases in excess of $10,000 may be discounted by 0-3% at our
discretion.
If the Administrator purchases shares of common stock in the open market or
in privately negotiated transactions, then the Administrator will pay a price
equal to the weighted average purchase price paid by the Administrator for such
shares, computed up to three decimal places, if necessary. The Administrator
will purchase such shares beginning on the Purchase Date.
NUMBER OF SHARES OFFERED
Initially, 8,000,000 shares of common offered stock are authorized to be
issued and registered under the Securities Act for offering pursuant to the
plan. Because we expect to continue the plan indefinitely, we expect to
authorize and register additional shares from time to time as necessary for
purposes of the plan.
ADVANTAGES OF THE PLAN
- Both current shareholders and new investors can participate in the plan.
- The plan provides participants with the opportunity to reinvest cash
dividends in additional shares of our common stock without having to pay
brokerage commissions or service charges.
- The plan provides participants with the opportunity to make monthly
optional cash investments, subject to minimum and maximum amounts, for the
purchase of shares of our common stock without having to pay any brokerage
commissions or service charges.
- Optional cash investments up to $10,000 may be made by check or money
order or by automatic monthly deductions from a U.S. bank account.
- From time to time the plan may provide a 0-3% discount on shares of common
stock purchased from us through reinvested dividends, optional cash
purchases up to $10,000 or optional cash purchases in excess of $10,000.
- Cash dividends paid on our shares enrolled in the plan can be fully
invested in additional shares of our common stock because the plan permits
fractional shares to be credited to plan accounts. Dividends on fractional
shares, as well as on whole shares, may also be reinvested in additional
shares which will be credited to participants' plan accounts.
- A participant may deposit with the Administrator certificates representing
any other shares of our common stock held by the participant for
safekeeping without charge.
- At no charge and at the request of participants, the Administrator will
send certificates to participants for shares credited to their accounts.
- At any time, a participant may request the sale of all or part of the
shares credited to his or her account.
7
- Periodic statements reflecting all current activity, including purchases
of plan shares and the most recent plan account balance, should simplify
participants' record keeping.
DISADVANTAGES OF THE PLAN
- No interest will be paid on dividends or optional cash investments held
pending reinvestment or investment. In addition, optional cash investments
of less than $100 and that portion of any optional cash investment which
exceeds the maximum monthly purchase limit of $10,000, unless that limit
has been waived, are subject to return to the participant without
interest.
- With respect to optional cash investments in excess of $10,000, the actual
number of shares to be purchased will not be determined until after the
end of the relevant pricing period. Therefore, during the pricing period,
participants will not know the actual price per share or number of shares
they have purchased.
- Because optional cash investments are not necessarily invested by the
Administrator immediately on receipt, those payments may be exposed to
changes in market conditions for a longer period of time than in the case
of typical secondary market transactions.
- Sales of shares of common stock credited to a participant's plan account
will involve a nominal fee per transaction to be deducted from the
proceeds of the sale by the Administrator (if the resale is made by the
Administrator at the request of a participant), plus any brokerage
commissions and any applicable stock transfer taxes on the sales.
- Shares of common stock deposited in the participant's plan account cannot
be pledged until a stock certificate is issued for these shares.
- From time to time, financial intermediaries may engage in positioning
transactions in order to benefit from the discount, if any, from the
market price of the shares of common stock acquired through the
reinvestment of dividends and optional cash investments under the plan.
Transactions of this type may cause fluctuations in the trading volume of
our common stock. We reserve the right to modify, suspend or terminate
participation in the plan by otherwise eligible holders of our stock in
order to eliminate practices which are not consistent with the purposes of
the plan.
8
THE PLAN
The provisions of the plan, in effect as of the date of this prospectus, are
provided below. Shareholders who do not elect to participate in the plan will
receive cash dividends, as declared and paid in the usual manner.
PURPOSE
The purpose of the plan is to provide our shareholders and other investors
with a convenient and cost-free method of purchasing shares of our common stock
and reinvesting all or a portion of their cash dividends in additional shares of
our common stock. The plan allows current shareholders and interested new
investors the opportunity to invest cash dividends and optional cash investments
in additional shares of our common stock without payment of any brokerage
commission or service charge. To the extent additional shares are purchased
directly from us, the plan also provides us a means of raising additional
capital through the direct sale of common stock. The plan is primarily intended
for the benefit of long-term investors, and not for the benefit of individuals
or institutions who engage in short-term trading activities that could cause
aberrations in the price or trading volume of our common stock.
ADMINISTRATION
The plan will be administered by EquiServe Trust Company, N.A. The
Administrator acts as agent for participants, processes the purchasing of common
stock acquired under the plan, keeps records of the accounts of participants,
sends regular reports of account activity to participants and performs other
duties relating to the plan. Shares purchased for each participant under the
plan will be held by the Administrator and will be registered in the name of the
Administrator or its nominee on behalf of the participants, unless and until a
participant requests the issuance of a stock certificate for all or part of the
shares or requires the sale of all or part of the shares. The Administrator also
serves as dividend disbursement agent, transfer agent and registrar for our
common stock. The Administrator reserves the right to resign at any time upon
reasonable notice to us.
All correspondence and inquiries concerning the Plan should be directed to:
EquiServe Trust Company, N.A.
Attn: iStar Financial Inc. Stock Purchase Plan
P.O. Box 43081
Providence, RI 02940-3081
Be sure to include a reference to iStar Financial Inc. in your
correspondence.
Telephone:
Shareholder customer service, including sale of shares:
1-800-317-4445 (Within the United States and Canada)
1-781-575-2724 (Outside the United States and Canada)
An automated voice response system is available 24 hours a day, 7 days a
week.
Customer service associates are available from 9:00 a.m. to 5:00 p.m.
U.S. Eastern time each business day.
Non-shareholders requesting Program material: 1-800-649-2213
Available 24 hours a day, 7 days a week.
TDD: 1-201-222-4955 A telecommunications device for the hearing impaired
is available.
9
Foreign language translation service for more than 140 languages is
available.
Internet:
You can also obtain information about your account via the Internet on
EquiServe's web site www.equiserve.com. At the web site, you can access your
share balance, sell shares, request a stock certificate, and obtain online forms
and other information about your account. To get access, you will require a
password which will be sent to you, or you can request one by calling toll-free
1-800-317-4445.
ELIGIBILITY
All interested persons and entities, whether or not holders of record of our
common stock, may participate in the plan. A shareholder whose shares of common
stock are registered in his or her name may participate in the plan directly. A
"beneficial owner" (which means a shareholder whose shares of common stock are
registered in a name other than his or her name, for example, in the name of a
broker, bank or other nominee) may participate in the plan directly upon
becoming a registered holder by having the shares transferred into his or her
name. Alternatively, a beneficial owner may participate in the plan by making
arrangements with his or her broker, bank or other nominee to participate in the
plan on his or her behalf. In addition, a new investor may participate in the
plan by making an initial optional cash investment in our common stock of not
less than $100 or more than $10,000 unless permission has been granted (in which
case such initial investment may exceed $10,000).
The right to participate in the plan is not transferable to another person
apart from a transfer of the underlying shares of common stock. We reserve the
right to exclude from participation in the plan persons who utilize the plan to
engage in short-term trading activities that cause aberrations in the trading
volume of our common stock. We also reserve the right to exclude initial cash
investments for any reason, including compliance with securities laws.
In order to participate, you must fulfill conditions of participation
described below under the caption "Enrollment Procedures"; and if you are a
citizen or resident of a country other than the United States, its territories
and possessions, your participation must not violate local laws applicable to
you, us or the plan. Participants residing in jurisdictions in which their
participation in the plan would be unlawful will not be eligible to participate
in the plan.
ENROLLMENT PROCEDURES
New investors may enroll in the plan by submitting a completed initial
investment form to the Administrator together with a minimal initial investment
of $100 by check or money order, or by authorizing automatic deductions from a
U.S. bank account as described below.
Registered shareholders (i.e., holders of record) may enroll in the plan by
submitting a completed enrollment authorization form to the Administrator.
If you are a beneficial owner of shares of common stock registered in the
name of a financial intermediary (for example, a bank, broker or other nominee),
you may participate in the plan directly after you have instructed your
financial intermediary to re-register your shares in your name. Costs associated
with that registration will be borne by you. You may then enroll in the plan as
a registered shareholder, without having to make an initial investment.
Alternatively, you may make arrangements with your financial intermediary to
participate in the plan on your behalf.
Both the initial investment form and the enrollment authorization form
appoint the Administrator as the participant's agent for purposes of the plan
and direct the Administrator to apply to the
10
purchase of additional shares of common stock the cash dividends on the number
of shares of common stock specified by the participant on the applicable form.
The initial investment form and the enrollment authorization form also direct
the Administrator to purchase additional shares of common stock with any
optional cash investments that the participant may elect to make.
The Administrator will process initial investment and enrollment
authorization forms as promptly as practicable. Participation in the plan will
begin after the properly completed form and any required payments have been
accepted by the Administrator.
DIVIDEND OPTIONS
We typically pay cash dividends on our common stock on the last business day
in the months of April, July, October and December. The payment of dividends in
the future and the amount of dividend payments, if any, will depend upon our
financial condition and other factors as the Board of Directors deems relevant.
You may select from the following dividend options:
- Cash Dividends: You may elect to receive all or part of your dividends in
cash by designating your election on the enrollment authorization form or
initial investment form. Dividends paid in cash will be sent to you by
check in the usual manner or by direct deposit, if you have elected the
direct deposit option described below under the caption "Direct Deposit of
Dividends." If you elect a partial cash payment of your cash dividends,
you must specify the number of whole shares for which you want to receive
cash dividends. Dividends paid on all other shares registered in your name
in stock certificate form and/or credited to your account will be
reinvested under the plan in additional shares of common stock.
- Reinvestment of Cash Dividends: You may elect to reinvest all or part of
your cash dividends by designating your election on the enrollment
authorization form or initial investment form. Automatic reinvestment of
your dividends does not relieve you of liability for income taxes that may
be owed on your dividends. Dividends paid on shares credited to your
account will be included in information provided both to you and the
Internal Revenue Service.
CHANGING DIVIDEND OPTIONS
You may change dividend options by telephoning or writing to the
Administrator or by submitting a new election on an enrollment authorization
form to the Administrator. To be effective for a specific dividend, any change
must be received by the Administrator before the record date for that dividend.
The record date is usually the fifteenth day of the month in which a dividend is
paid.
DISCONTINUING DIVIDEND REINVESTMENT
You may discontinue reinvestment of cash dividends at any time by giving
telephone or written instructions to the Administrator. If the Administrator
receives the request to discontinue dividend reinvestment on or after the record
date for a dividend, the Administrator may either pay the dividend in cash or
reinvest it under the plan on the next Purchase Date to purchase common stock on
your behalf. If reinvested, the Administrator may sell the shares purchased and
send the proceeds to you less any service fee, applicable brokerage commission
and any other costs of sale. After processing your request to discontinue
dividend reinvestment, any shares credited to your account under the plan will
continue to be held in book-entry form. Dividends on any shares held in
book-entry form, and on any
11
shares you held in stock certificate form, will be paid in cash by check or by
direct deposit to a pre-designated bank account of your choice.
FOR EACH METHOD OF DIVIDEND REINVESTMENT, CASH DIVIDENDS WILL BE REINVESTED
ON ALL SHARES OTHER THAN THOSE DESIGNATED FOR PAYMENT OF DIVIDENDS IN CASH IN
THE MANNER SPECIFIED ABOVE UNTIL THE PARTICIPANT SPECIFIES OTHERWISE, OR UNTIL
THE PLAN IS TERMINATED.
INVESTMENT OPTIONS
Full investment of funds in common stock is possible under the plan.
Fractional, as well as full shares, will be credited to your account.
Check Investment:
You may make initial investments and optional cash investments by personal check
or money order payable in United States dollars to "EquiServe-iStar Financial
Inc." To be effective for a particular Purchase Date, the Administrator must
receive your optional cash investment at least (a) one business day before that
Purchase Date for investments up to $10,000 or (b) one business day before the
commencement of the pricing period for investments in excess of $10,000. You
should mail your optional cash investment to the Administrator with the
transaction form attached to each statement of account sent to you by the
Administrator.
Automatic Investments:
You may make automatic optional cash investments of a specified amount (not less
than $100 per purchase nor more than $10,000 monthly) by electronic funds
transfer from a pre-designated account at a United States bank or financial
institution.
If automatic deductions are used for optional cash investments, you must
complete and sign the section entitled "authorization form for automatic
deductions" on either the initial investment form or the enrollment
authorization form and return it to the Administrator, with either a voided
blank check or a deposit form for the bank account from which funds are to be
drawn. The automatic deduction forms will be processed and will become effective
as promptly as practicable. However, you should allow four to six weeks for the
first investment to be initiated using this automatic investment feature.
Once automatic deductions begin, funds will be withdrawn from your bank
account on the third business day preceding each monthly Purchase Date.
Automatic deductions will continue indefinitely until you notify the
Administrator by telephone or in writing that the automatic deductions are to
stop.
You may change or stop automatic deductions by notifying the Administrator
by telephone, fax or in writing. You must complete a new authorization form for
automatic deductions when you transfer ownership of shares or otherwise
establish a new account on the Administrator's records, or close or change your
designated bank account, or are assigned a new account number by your bank. To
be effective for a particular Purchase Date, the Administrator must receive your
new instructions at least six business days before that Purchase Date.
Direct Deposit of Dividends:
Through the plan's direct deposit feature, instead of receiving dividend checks,
you may elect to have your cash dividends paid by electronic funds transfer to
your pre-designated checking or savings account at a United States bank or
financial institution on the dividend payment date. To receive dividends by
direct deposit, you must complete, sign and return to the Administrator a direct
deposit
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authorization form. You may obtain a direct deposit authorization form by
calling the Administrator at 1-800-870-2340.
Direct deposit authorization forms will be processed and will become
effective as promptly as practicable after receipt by the Administrator. You may
change your designated bank account for automatic direct deposit or discontinue
this feature at any time by submitting to the Administrator a new direct deposit
authorization form or by written instruction to the Administrator.
OPTIONAL CASH INVESTMENTS UP TO $10,000
If you are a current shareholder, or if you are a new investor and wish to
become a shareholder, you may make optional cash investments by personal check,
money order or automatic deduction from a U.S. bank account in the minimum
amount of $100, up to a maximum amount of $10,000 monthly.
Except when accompanied by a Request Form (as described below), the
aggregate of your optional cash investments cannot exceed $10,000 per month.
Optional cash investments up to $10,000 per month by check or money order must
be received by the Administrator on or before the business day prior to the next
Purchase Date. Cash received after that date will be held by the Administrator
for purchases to be made on the next Purchase Date. NO INTEREST WILL BE PAID ON
PAYMENTS RECEIVED AND HELD PENDING INVESTMENT BY THE ADMINISTRATOR.
We may adjust all minimum and maximum plan investment amounts at our
discretion from time to time after notification to all participants. Optional
cash investments will be returned to you upon your telephone or written request
received by the Administrator not less than two business days before the
Purchase Date.
PARTICIPANTS SHOULD BE AWARE THAT SINCE INVESTMENTS UNDER THE PLAN ARE MADE
AS OF SPECIFIED DATES, ONE MAY LOSE ANY ADVANTAGE THAT OTHERWISE MIGHT BE
AVAILABLE FROM BEING ABLE TO SELECT THE TIMING OF AN INVESTMENT. NEITHER WE NOR
THE ADMINISTRATOR CAN ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON SHARES OF
COMMON STOCK PURCHASED UNDER THE PLAN.
OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000
We may from time to time allow investors to make an optional cash investment
in excess of $10,000 with our prior written approval. To obtain our approval,
you must submit such a request in writing. To make such a request, you should
obtain a Request Form from our Investor Relations department, at (212) 930-9400.
If we have approved your request, then you must send the Administrator a copy of
our written approval along with your optional cash investment of greater than
$10,000. The Administrator must receive your optional cash investment in good
funds pursuant to a Request Form on the last day immediately preceding the first
day of the pricing period.
We have the sole discretion to approve any request to make an optional cash
investment in excess of the $10,000 maximum allowable amount. We may grant such
requests in order of receipt, price offered, or by any other method that we
determine to be appropriate. We also may adjust the amount that you may invest
pro rata. In deciding whether to approve your request, we may consider, among
other things, the following factors:
- whether, at the time of such request, the Administrator is acquiring
shares of common stock for the plan directly from us or in the open market
or in privately negotiated transactions with third parties;
- our need for additional funds;
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- our desire to obtain such additional funds through the sale of common
stock as compared to other sources of funds;
- the purchase price likely to apply to any sale of common stock;
- the extent and nature of your prior participation in the plan;
- the number of shares of common stock you hold of record; and
- the total amount of optional cash investments in excess of $10,000 for
which requests have been submitted.
If you do not receive a response from us in connection with your request,
you should assume that we have denied your request.
PURCHASE DATE
The Purchase Date is the date or dates on which shares of our common stock
are purchased with reinvested dividends and optional cash payments. The Purchase
Date under the plan depends on how you purchase the shares and whether we issue
new shares to you or the plan obtains your shares by purchasing them from
parties other than us.
- Reinvested Dividends: If the Administrator acquires shares directly from
us, the Purchase Date for reinvested dividends is the date or dates
declared by our Board of Directors for the payment of quarterly dividends
or distributions (or if such date is not a trading day, then the first
trading day immediately preceding such date). If the Administrator
acquires shares from parties other than us either in open market or
privately negotiated purchases, such purchases will begin on the day that
would be deemed the Purchase Date if the shares were acquired directly
from us and will be completed no later than thirty days following the date
on which we paid the applicable cash dividend, except where completion at
a later date is necessary or advisable under any applicable federal or
state securities laws or regulations. The record date associated with a
particular dividend is referred to in this plan as a "dividend record
date."
- Optional Cash Investments up to $10,000: If the Administrator purchases
the shares directly from us, the Purchase Date for optional cash
investments up to $10,000 will be on the last trading day of each month.
If the Administrator acquires shares from parties other than us either in
open market or privately negotiated purchases, such purchases will begin
on the day that would be deemed the Purchase Date if the shares were
acquired directly from us and will be completed no later than thirty-five
days following such date, except where completion at a later date is
necessary or advisable under any applicable federal or state securities
laws or regulations. Optional cash investments up to $10,000 must be
received by the Administrator on or before the business day prior to a
Purchase Date, otherwise the cash will not be invested until the next
Purchase Date.
- Optional Cash Investments in Excess of $10,000: If the Administrator is
buying shares of common stock directly from us with an optional cash
investment in excess of $10,000 pursuant to an approved request, then the
Purchase Date or Dates, as specified on the Request Form, will occur on
one or more separate days on which the New York Stock Exchange is open for
business in a Pricing Period (as defined in the next paragraph), with an
equal amount of your optional cash investment being invested on each such
day, subject to the qualifications set forth under "Minimum Price" below.
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The "Pricing Period" is the period encompassing at least one, or a number
of consecutive trading days which we will determine in our sole
discretion. The Pricing Period shall be no less than one but no more than
to 10 days commencing one day after funds are due.
DIVIDENDS ARE PAID AS AND WHEN DECLARED BY OUR BOARD OF DIRECTORS. THERE CAN
BE NO ASSURANCE AS TO THE DECLARATION OR PAYMENT OF A DIVIDEND, AND NOTHING
CONTAINED IN THE PLAN OBLIGATES US TO DECLARE OR PAY ANY DIVIDEND ON OUR COMMON
STOCK. THE PLAN DOES NOT REPRESENT A GUARANTEE OF FUTURE DIVIDENDS.
SOURCE OF SHARES
Shares will be, at our discretion, purchased: (1) directly from us in the
form of either authorized but unissued shares or treasury shares; (2) on the
open market or in privately negotiated transactions; or (3) a combination of the
above.
Full and fractional shares acquired under the plan will be calculated and
credited to participants' accounts. The number of shares purchased will be the
total amount invested divided by the applicable purchase price per share as
described below.
PURCHASE PRICE
The Purchase Price is the price at which the Administrator purchases our
common stock with reinvested dividends and optional cash payments. The Purchase
Price under the plan depends in part on whether the Administrator purchases the
common shares from us or from parties other than us. The Purchase Price also
depends on whether we are offering discounts on purchases under the plan at that
time.
REINVESTED DIVIDENDS
If the Administrator purchases shares of common stock directly from us with
reinvested dividends, the Administrator will pay a price equal to 100% (subject
to change as provided below) of the average of the daily high and low sales
prices for a share of common stock reported by the New York Stock Exchange on
the applicable Purchase Date, or, if no trading occurs in shares of common stock
on the applicable Purchase Date, the first trading day immediately preceding the
Purchase Date for which trades are reported, computed to three decimal places,
if necessary. The Purchase Price may be reduced by up to 3% if we are offering a
discount on purchases with reinvested dividends on the applicable Purchase Date.
If the Administrator purchases shares of common stock in the open market or
in privately negotiated transactions, then the Administrator will pay a price
equal to the weighted average purchase price paid by the Administrator for such
shares, computed up to three decimal places, if necessary. Discounts are not
available when shares are purchased from persons other than us.
OPTIONAL CASH INVESTMENTS UP TO $10,000
If the Administrator purchases shares of common stock directly from us with
optional cash investments of up to $10,000, the Administrator will pay a price
equal to 100% (subject to change as provided below) of the average of the daily
high and low sales prices for a share of common stock reported by the New York
Stock Exchange on the applicable Purchase Date, or, if no trading occurs in
shares of common stock on the applicable Purchase Date, the first trading day
immediately preceding the Purchase Date for which trades are reported, computed
to seven decimal places, if necessary. The
15
Purchase Price may be reduced by up to 3% if we are offering a discount on
purchases with optional cash investments up to $10,000 on the applicable
Purchase Date.
If the Administrator purchases shares of common stock in the open market or
in privately negotiated transactions, then the Administrator will pay a price
equal to the weighted average purchase price paid by the Administrator for such
shares, computed up to three decimal places, if necessary. Discounts are not
available when shares are purchased from persons other than us.
OPTIONAL CASH INVESTMENTS IN EXCESS OF $10,000
Shares purchased pursuant to a request will be purchased directly from us,
at a price or method determined in our sole discretion, including the
establishment of a "Minimum Price" as more fully described below. If we grant
your request to purchase shares pursuant to a "Minimum Price," the Administrator
will pay a price equal to 100% (subject to change as provided below) of the
average of the daily high and low sales prices of our common stock reported by
the New York Stock Exchange for the trading day relating to each of the Purchase
Dates during the Pricing Period, computed up to three decimal places, if
necessary. The Pricing Period for optional investments made pursuant to an
approved Request Form will be the day or days set forth in the Request Form,
which may be the Purchase Date or up to 10 trading days prior to and including
the Purchase Date. The Purchase Price may be reduced by any discount that we
have provided for optional cash investments in excess of $10,000 on such
Purchase Date.
We may set a minimum purchase price per share (the "Minimum Price") for
optional cash investments in excess of $10,000 for any Pricing Period. We will
determine whether to set a Minimum Price, and, if so, its amount, at least one
business day before the first day of the Pricing Period. We will notify the
Administrator of the Minimum Price, if any. In deciding whether to set a Minimum
Price, we will consider current market conditions, the level of participation in
the Plan and our current and projected capital needs.
We will fix the Minimum Price for a Pricing Period as a dollar amount that
the average of the high and low sale prices reported by the New York Stock
Exchange for each trading day of such Pricing Period (not adjusted for
discounts, if any) must equal or exceed. We will exclude from the Pricing Period
and from the determination of the purchase price any trading day within the
Pricing Period that does not meet the Minimum Price. We also will exclude from
the Pricing Period and from the determination of the purchase price any day in
which no trades of common stock are made on the New York Stock Exchange. Thus,
for example, if the Minimum Price is not met for two of the trading days in a
ten day Pricing Period, then we will base the purchase price upon the remaining
eight trading days in which the Minimum Price was met.
In addition, we will return a portion of each optional cash investment in
excess of $10,000 for each trading day of a Pricing Period for which the Minimum
Price is not met or for each day in which no trades of common stock are reported
on the New York Stock Exchange. Thus, for example, the returned amount in a ten
day Pricing Period will equal one-tenth (1/10) of the total amount of such
optional cash investment (not just the amount exceeding $10,000) for each
trading day that the Minimum Price is not met or for each trading day in which
sales are not reported.
The establishment of the Minimum Price and the possible return of a portion
of the investment applies only to optional cash investments in excess of
$10,000. Setting a Minimum Price for a Pricing Period will not affect the
setting of a Minimum Price for any other Pricing Period. We may waive our
16
right to set a Minimum Price for any particular Pricing Period. Neither we nor
the Administrator is required to give you notice of the Minimum Price for any
Pricing Period.
DISCOUNT
The discount rate of 0% to 3% that may be offered with respect to a
particular Purchase Date to participants on purchases of our stock through
dividend reinvestment, optional cash investments up to $10,000, and optional
cash investments in excess of $10,000, may be obtained by contacting the
Administrator at the phone numbers listed or by visiting our website at
www.istarfinancial.com. We will announce the discount rate, if any, by the third
business day before the Purchase Date with respect to dividend reinvestments and
optional cash investments up to $10,000. The discount rate, if any, on optional
cash purchases in excess of $10,000 will be announced at least one business day
before the first day of the Pricing Period.
SHARE SAFEKEEPING AND SHARE CERTIFICATE MAILINGS
You may use the plan's "share safekeeping" service to deposit any common
stock certificates in your possession with the Administrator. Shares deposited
will be recorded in book-entry form and credited to your account. By using the
plan's share safekeeping service, you no longer bear the risks associated with
loss, theft or destruction of stock certificates.
The Administrator will promptly send you a statement confirming each
certificate deposit. Shares deposited and credited to your account with the
Administrator may be transferred or sold in a convenient and efficient manner.
See "Certificates for Shares" and "Sale of Shares" below.
STOCK CERTIFICATES SENT TO THE ADMINISTRATOR FOR SAFEKEEPING SHOULD NOT BE
ENDORSED. To insure against loss resulting from mailing certificates to the
Administrator, the plan provides for mail insurance, free of charge, for
certificates valued at up to $25,000 current market value (maximum coverage)
when mailed first class, using a brown, pre-addressed envelope provided by the
Administrator. Envelopes may be obtained by calling the Administrator at
1-800-317-4445.
If you do not use a brown pre-addressed envelope provided by the
Administrator, you should send certificates to the address listed above by
registered mail, return receipt requested, and insured for possible mail loss
for 2% of the market value (minimum of $20). This represents the approximate
cost to you of replacing certificates if they are lost in the mail. For
information about mailing certificates to the Administrator having a current
market value in excess of $25,000, you should contact the Administrator.
Mail insurance covers the replacement of shares of stock, but in no way
protects you against any loss resulting from fluctuations in the value of the
shares from the time you mail the certificates until the time replacement can be
made. To be eligible for certificate mailing insurance, you must notify the
Administrator of any lost certificate claim within 30 calendar days of the date
the certificates were mailed.
CERTIFICATES FOR SHARES
Common stock purchased under the plan, and any certificated shares you may
deposit for safekeeping, will be recorded in electronic registration form and
credited to your account. The Administrator will report the number of shares
(including fractional shares) credited to your account as promptly as
practicable after each purchase. You may obtain a certificate for all or any
portion of the whole shares credited to your account at any time upon telephone
or written request to the
17
Administrator. Alternatively, you may also request the issuance of a stock
certificate through the Internet. Any remaining whole or fractional shares will
continue to be credited to your account. If you request a certificate for all
shares credited to your account, a certificate will be issued for the whole
shares and a cash payment will be made for any remaining fractional share. That
cash payment will be based upon the then-current market price of the common
stock, less any service fee, any applicable brokerage commission and any other
costs of sale. Withdrawal of shares in the form of a certificate in no way
affects dividend reinvestment or payment of cash dividends on those shares.
SALE OF SHARES
You may direct the Administrator to sell all or a portion of the shares of
common stock credited to your account at any time by giving telephone or written
instructions to the Administrator. Alternatively, you may also request a sale of
your shares through the Internet. The Administrator will make every effort to
process your order on the day it is received. However, your instructions must be
received before 1:00 p.m., New York City time on a business day during which the
Administrator and the relevant securities market are open for your sale order to
be processed on that day.
Sales will be made at the then-current market price of the common stock and
the Administrator will send you a check for the sales proceeds, less any service
fee, any applicable brokerage commission and any other costs of sale.
GIFTS AND TRANSFERS OF SHARES
You may transfer the ownership of all or part of the shares credited to your
account to an account for another person without requiring the issuance of stock
certificates. This could include a gift or private sale. Transfers of less than
all of the shares credited to your account must be made in whole share amounts.
No fractional share may be transferred unless your entire account balance is
transferred. Requests for these transfers must meet the same requirements as are
applicable to the transfer of common stock certificates, including the
requirement of a medallion stamp guarantee. Simply call the Administrator to
obtain the proper instructions, requirements and documents necessary to complete
your transfer. Shares that are transferred will be credited in book-entry form
to the transferee's account. An account will be opened in the name of the
transferee, if the transferee is not already a registered shareholder and the
transferee's account will be enrolled in the plan under the same dividend option
as the transferor unless the transferor specifies differently. The transferee
may change the dividend option after the transfer has been made as described
under "Dividend Options" above. After the transfer, the transferee will receive
an account statement showing the number of shares transferred to and held in the
transferee's account.
STOCK SPLITS, STOCK DIVIDENDS AND RIGHTS OFFERINGS
Any dividends in common stock or split shares of common stock distributed by
us on shares credited to your account or held by you in the form of stock
certificates will be credited to your account. In a rights offering by us, you
will receive rights based upon the total number of whole shares registered in
your name, including shares held by you in stock certificate form and shares
credited in book-entry form to your account.
PLAN REPORTS
Whenever you purchase, sell or deposit shares through the plan, you will
promptly receive from the Administrator a statement with the details of the
transaction. All shares you hold or purchase
18
through the plan are recorded in the same account. After each dividend
reinvestment, you will receive from the Administrator a detailed statement
showing the amount of the latest dividend reinvested, the purchase price per
share, the number of shares purchased and the total shares credited to your
account. The statement also will show all year-to-date account activity,
including purchases, sales and certificate deposits or withdrawals. In addition,
you will receive a comprehensive year-end statement summarizing all activity in
your account for the entire year. You should retain these statements to
establish the cost basis of shares of common stock purchased under the plan for
income tax purposes.
In addition, you will receive copies of the same communications sent to all
other holders of record of our common stock. This includes our annual report to
shareholders, quarterly reports to shareholders, notice of annual meeting and
proxy statement. You will also be furnished with Internal Revenue Service
information for reporting dividends paid and proceeds derived from any sale of
shares credited to your account in the form and manner as the Internal Revenue
Service may require. All notices, statements and reports from the Administrator
to you will be addressed to your latest address of record with the
Administrator. Therefore, you must promptly notify the Administrator of any
change of address.
PLAN COSTS
All costs for the purchase of shares and administration of the plan will be
paid by us with the exception of:
- Costs associated with automatic investments which may be assessed by your
financial institution (as described under "Automatic Investments" above).
- Any costs resulting from your having insufficient funds to effect payment
for initial and/or optional cash investments.
- Those costs associated with your direction to the Administrator to sell
all or a portion of your shares (as described under "Sale of Shares"
above).
- Those costs related to a sale of a fractional share (as described under
"Certificates for Shares" and "Sale of Shares" above).
PLEDGING OF SHARES IN PARTICIPANT'S ACCOUNTS
Except as described under "Gifts and Transfer of Shares" above, common stock
credited to your account may not be pledged or assigned. If you wish to pledge
shares of common stock credited to your account, you must request that
certificates for those shares be issued in your name as described under
"Certificates for Shares" above.
VOTING RIGHTS OF SHARES IN PARTICIPANT'S ACCOUNTS
If you participate in the plan, you, as a holder of our common stock, will
have the same rights as every other holder of our common stock. You will be
provided with all required documentation to vote whole shares of common stock
you hold under the plan. Fractional shares may not be voted. You will receive a
proxy card indicating the number of whole shares directly held under the plan
for voting instructions to us and signing. A properly signed proxy will be voted
according to your instructions, with no vote being recorded for the shares
represented by an abstention.
19
TERMINATION, SUSPENSION OR MODIFICATION OF THE PLAN
We reserve the right to terminate, suspend or modify the plan at any time in
whole, in part, in respect to participants in one or more jurisdictions. All
affected participants will receive notice of any termination, suspension or
modification of the plan.
LIMITATIONS ON LIABILITY
Neither we nor the Administrator (nor any of our agents, representatives,
employees, officers, directors, or subcontractors) will be liable for any act
done in good faith or for any good faith omission to act, including any claim
arising out of a failure to cease reinvesting dividends for your account upon
your death, the prices at which shares are purchased or sold for your account,
the times when purchases or sales are made or fluctuations in the market value
of the common stock. You must recognize that neither we nor the Administrator
can assure a profit or protect against a loss on shares purchased under the
plan. The prices of shares purchased and sold under the plan will be determined
by market conditions. Participants also cannot waive federal securities law
liability.
We are authorized to take any actions to carry out the plan as may be
consistent with the terms and conditions of the plan. We reserve the right to
interpret and regulate the plan as we deem desirable or necessary in connection
with the plan's operations. The establishment and maintenance of the plan does
not constitute assurances with respect to either the value of our common stock,
whether or not we will continue to pay dividends on our common stock or at what
rate any dividends will be paid.
TERMINATION OF A PARTICIPANT
If you do not own at least one whole share registered in your name in stock
certificate form or credited in book-entry form to your account, your
participation in the plan may be terminated. In that event, you would receive a
cash payment for the fractional share remaining in your account based on the
then-current market price of common stock, less any service fee, any applicable
brokerage commission and any other costs of sale.
GOVERNING LAW
The plan and its operations are governed by the laws of the State of New
York and federal securities laws, if applicable.
20
DESCRIPTION OF COMMON STOCK
Our authorized capital stock includes 200,000,000 shares of common stock,
$0.001 par value. At August 1, 2002, 92,068,386 shares of common stock were
outstanding.
Holders of common stock will be entitled to receive distributions on common
stock if, as and when the Board of Directors authorizes and declares
distributions. However, rights to distributions may be subordinated to the
rights of holders of preferred stock, when preferred stock is issued and
outstanding. In the event of our liquidation, dissolution or winding up, each
outstanding share of common stock will entitle its holder to a proportionate
share of the assets that remain after we pay our liabilities and any
preferential distributions owed to preferred stockholders.
Holders of the common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. There is no cumulative voting in the
election of directors.
Holders of shares of common stock have no preference, conversion, sinking
fund, redemption, appraisal or exchange rights or any preemptive rights to
subscribe for any of our securities. All shares of common stock have equal
dividend, distribution, liquidation and other rights.
We may be dissolved if the Board of Directors, by resolution adopted by a
majority of the entire Board of Directors, declares the dissolution advisable
and directs that the proposed dissolution be submitted for consideration at
either an annual or special meeting of stockholders. Dissolution will occur once
it is approved by the affirmative vote of a majority of stockholders entitled to
cast votes on the matter.
Our charter grants the Board of Directors the power to authorize the
issuance of additional authorized but unissued shares of common stock and
preferred stock. The Board of Directors may also classify or reclassify unissued
shares of common stock or preferred stock and authorize their issuance.
Our charter also provides that, to the extent permitted by the General
Corporate Law of Maryland, the Board of Directors may, without any action by the
stockholders, amend our charter from time to time to increase or decrease the
aggregate number of shares of stock or the number of shares of stock of any
class or series that we have authority to issue.
We believe that these powers of the Board of Directors provide increased
flexibility in structuring possible future financings and acquisitions and in
meeting other needs which might arise. Although the Board of Directors does not
intend to do so at the present time, it could authorize the issuance of a class
or series that could delay, defer or prevent a change of control or other
transaction that might involve a premium price for the common stock or otherwise
be in the best interest of the stockholders.
To maintain our REIT qualification under the Internal Revenue Code, no group
of five or fewer individuals can own, actually or constructively, more than 50%
in value of our issued and outstanding stock at any time during the last half of
a taxable year. Additionally, at least 100 persons must beneficially own our
stock during at least 335 days of a taxable year. To help insure that we meet
these tests, our charter provides that no person other than persons who were our
stockholders as of November 3, 1999 or persons exempted by our Board of
Directors may beneficially or constructively own more than 9.8% of the number or
value of the outstanding shares of any class or series of our capital stock.
Each person who is a beneficial or constructive owner of shares of stock and
each person, including the stockholder of record, who is holding shares of stock
for a beneficial or constructive
21
owner must provide us in writing any information with respect to direct,
indirect and constructive ownership of shares of stock as the Board of Directors
deems reasonably necessary to comply with the provisions of the Internal Revenue
Code applicable to a REIT, to determine our status as a REIT, to comply with the
requirements of any taxing authority or governmental agency or to determine any
such compliance.
These restrictions on ownership and transfer will not apply to our stock if
the Board of Directors determines that it is no longer in our best interests to
qualify as a REIT.
These restrictions on ownership and transfer could delay, defer or prevent a
transaction or a change of control of us that might involve a premium price for
shares of our stock or otherwise be in the best interest of our stockholders.
22
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following summary is based upon interpretations of current federal tax
law. It is important for participants to consult their own tax advisors to
determine their particular tax consequences, including state income tax (and
other taxes, such as stock transfer tax) consequences, which vary from state to
state and which may result from participation in the plan and subsequent
disposition of shares acquired pursuant to the plan. Income tax consequences to
participants residing outside the United States will vary from jurisdiction to
jurisdiction.
DIVIDEND REINVESTMENT COMPONENT
Participants in the dividend reinvestment compenent of the plan will be
treated for federal income tax purposes as having received, on the Purchase
Date, a distribution in an amount equal to the fair market value on that date of
the shares acquired with reinvested dividends. Those shares will have a tax
basis equal to the same amount. For federal income tax purposes, the fair market
value of shares acquired under the plan will likely be treated as equal to 100%
of the average of the high and low sale prices of shares on the related Purchase
Date. The fair market value of the shares acquired on that specific date may
vary from the purchase price for the shares determined under the plan if we are
then offering a discount.
The distribution will be taxable as a dividend to the extent of our current
or accumulated earnings and profits. To the extent the distribution is in excess
of our current or accumulated earnings and profits, the distribution will be
treated first as a tax-free return of capital, reducing the tax basis in a
participant's shares, and the distribution in excess of a participant's tax
basis will be taxable as gain realized from the sale of shares.
Alternatively, when the Administrator purchases shares for a participant's
account on the open market with reinvested dividends, a participant must include
in gross income a dividend equal to the actual purchase price to the
Administrator of the shares plus that portion of any brokerage commissions paid
by us which are attributable to the purchase of the participant's shares. The
participant's basis in the shares purchased for his or her or account will be
equal to their purchase price plus allocable brokerage commissions we paid.
DIRECT STOCK PURCHASE COMPONENT
The tax consequences relating to a discount associated with an optional cash
investment are not entirely clear under current law. Nonetheless, the Internal
Revenue Service has indicated in a private ruling that the discount associated
with an optional cash investment will be treated as a distribution to a
participant in a REIT's dividend reinvestment and direct stock purchase plan if
and only if that participant also is enrolled in the dividend reinvestment
component aspect of that plan at the time of the optional cash investment.
Accordingly, if the participant is enrolled in the dividend reinvestment
component, then the participant should be treated as having received a
distribution, upon the purchase of shares directly from us with an optional cash
investment, in an amount equal to the excess, if any, of the fair market value
of the shares on the Purchase Date over the amount of the optional cash
investment. However, if the participant is not enrolled in the dividend
reinvestment component, then the participant should not be treated as having
received a distribution on account of the discount associated with the optional
cash investment. Participants should be aware that the private ruling described
above is not binding on the IRS with respect to the plan and that the tax
characterization of
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discounts on optional cash investment remains unsettled. Notwithstanding the
private ruling described above, we treat the excess value of shares acquired
under the stock purchase program as a distribution, regardless of whether or not
the participants are enrolled in the dividend reinvestment component.
Participants are strongly encouraged to consult their own tax advisors in this
regard.
Shares acquired through the direct stock purchase component under the plan
should have a tax basis equal to the amount of the payment plus the excess, if
any, of the fair market value on the Purchase Date of the shares acquired over
the amount of the payment, but only to the extent such excess is treated as a
distribution taxable as a dividend. The fair market value of the shares acquired
on a Purchase Date may differ from the purchase price determined under the plan
for those shares if we are then offering a discount.
Example:
The following example may be helpful to illustrate the federal income tax
consequences of the optional cash investment feature at a 3% discount from the
purchase price as determined under the plan, where the fair market value for tax
purposes differs from the purchase price and where the participant also is
enrolled in the dividend reinvestment component and where none of the dividends
constitutes a tax-free return of capital.
Cash dividends reinvested................................... $100.00
Assumed purchase price*..................................... $ 20.00
Less 3% discount per share.................................. $ (0.60)
--------
Net purchase price per share................................ $ 19.40
Number of shares purchased ($100.00/$19.40)................. 5.155
Total taxable dividend resulting from transaction
(21.00 X 5.155 - $100.00)**............................. $ 8.25
------------------------
* This price is assumed for illustrative purposes only.
** Assumes the fair market value on Purchase Date equals $21.00.
In the case of shares purchased on the open market with optional cash
investments, participants will be in receipt of a dividend to the extent of any
brokerage commissions we pay. The participant's basis in the shares acquired
with optional cash investments will be the cost of the shares to the
Administrator plus an allocable share of any brokerage commissions we pay.
SHAREHOLDERS SUBJECT TO WITHHOLDING
Under certain backup withholding requirements, dividends that are reinvested
and the proceeds of the sale of any shares under the plan will be subject to a
31% withholding tax if: (1) you fail to certify to the Administrator that you
are not subject to backup withholding and that your taxpayer identification
number on your account is correct (on Form W-8 or W-9); or (2) the IRS notifies
us or the Administrator that you are subject to backup withholding. Any amounts
withheld will be deducted from the dividends and/or from the proceeds of any
sale of shares and the remaining amount will be reinvested or paid as you have
instructed. Some shareholders (including most corporations) are, however, exempt
from the withholding requirements.
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If you are a foreign participant, under withholding requirements of Federal
income tax laws, dividends that are reinvested under the plan will be subject to
the withholding tax unless reduced or eliminated pursuant to an applicable tax
treaty. Any required withholding tax will be deducted from dividends payable to
you and the remaining amount will be reinvested or paid as you have instructed.
If a participant is a foreign shareholder whose dividends are subject to federal
income tax withholding at the 30% rate (or a lower treaty rate), the appropriate
amount will be withheld and the balance in shares will be credited to the
participant's account.
ADDITIONAL INFORMATION
The holding period for shares of common stock purchased under the plan will
begin the day after the date the shares are acquired. You will not realize any
taxable income if you receive certificates for whole shares of common stock
credited to your account. However, any cash payment you receive for the sale of
whole or fractional shares credited to your account will result in gain or loss
measured by the difference between the amount of the cash payment received and
your basis in those shares or fractional share. That gain or loss will be
capital gain or loss if the shares or fractional share are a capital asset in
your hands.
All the dividends paid to you and any brokerage commissions that we pay on
your behalf for the purchase of shares through the plan will be reported to you
and to the Internal Revenue Service on IRS Form 1099-DIV which will be mailed by
January 31. All shares of stock that are sold through the Administrator will be
reported to the IRS as required by law. IRS Form 1099-B will be mailed by
January 31 to all those who sold stock through the plan. The 1099-B form will
only include proceeds you received from the sale of your shares. You are
responsible for calculating the cost basis of the shares you sold and any gain
or loss on the sale.
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RESTRICTIONS ON OWNERSHIP OF SHARES
In order for us to qualify as a REIT for federal income tax purposes, no
more than 50% of the value of our outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (as defined in the law to
include certain entities) during the last half of a taxable year or during a
proportionate part of a shorter taxable year, and our common stock must also be
beneficially owned by 100 or more persons during at least 335 days of a taxable
year or during a proportionate part of a shorter taxable year. In addition, any
single person is prohibited from owning shares in excess of 9.8% of the value of
any class or series of our outstanding capital stock. Because we expect to
continue to qualify as a REIT, our amended and restated charter contains
restrictions intended to ensure compliance with these requirements which
authorizes, but does not require, the Board of Directors to refuse to give
effect to a transfer of common stock which, in its opinion, might jeopardize our
status as a REIT. This provision also renders null and void any purported
acquisition of shares which would result in our disqualification as a REIT. The
provision also gives the Board of Directors the authority to take such actions
as it deems advisable to enforce our stock ownership restrictions. Such actions
might include, but are not limited to, refusing to give effect to, or seeking to
enjoin, a transfer which might jeopardize our status as a REIT. The provision
also requires any shareholder to provide us such information regarding his
direct and indirect ownership of common stock as we may reasonably require.
PLAN OF DISTRIBUTION AND UNDERWRITERS
Pursuant to the plan, we may be requested to approve optional cash
investments in excess of the allowable maximum amounts on behalf of participants
that may be engaged in the securities business. In deciding whether to approve
such a request, we will consider relevant factors including, but not limited to,
whether the plan is then acquiring newly issued shares of common stock or
acquiring shares through open market purchases or privately negotiated
transactions, our need for additional funds, the attractiveness of obtaining
those funds by the sale of common stock under the plan in comparison to other
sources of funds, the purchase price likely to apply to any sale of common
stock, the participant submitting the request, including the extent and nature
of the participant's prior participation in the plan and the number of shares of
common stock held of record by the participant, the aggregate number of requests
that have been submitted by all participants and federal and state securities
laws.
Persons who acquire shares of common stock through the plan and resell them
shortly after acquiring them, including coverage of short positions, under
certain circumstances, may be participating in a distribution of securities that
would require compliance with Regulation M under the Exchange Act and may be
considered to be underwriters within the meaning of the Securities Act. We will
not extend to any person any rights or privileges other than those to which it
would be entitled as a participant, nor will we enter into any agreement with
any person regarding their purchase of shares or any resale or distribution
shares. We may, however, approve requests for optional cash investments by them
in excess of allowable maximum limitations. If requests are submitted for an
aggregate amount in excess of the amount we are willing to accept, we may honor
requests in order of receipt, pro rata or by any other method which we determine
to be appropriate.
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USE OF PROCEEDS
The plan will raise additional capital for us to the extent that the plan
purchases newly-issued shares of common stock or treasury shares from us (rather
than shares acquiring shares in the open market). We do not know the number of
shares of common stock that will ultimately be purchased pursuant to the plan,
or the prices at which the shares will be purchased. We currently intend to
issue new shares to satisfy demand for shares under the plan; therefore, the
plan is expected to raise additional capital for us. We intend to use the net
proceeds from the sale of common stock for one or more of the following:
repayment of indebtedness, investments in assets, working capital, and general
corporate purposes. Pending those uses, we may temporarily invest the net
proceeds in short-term investments consistent with our investment policies.
LEGAL OPINIONS AND EXPERTS
Clifford Chance Rogers & Wells LLP, our counsel, has passed upon the
legality of our common stock offered by this prospectus and all legal matters in
connection with the plan for us. Clifford Chance Rogers & Wells LLP is located
at 200 Park Avenue, New York, New York 10166.
The financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K of iStar Financial Inc. for the year
ended December 31, 1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
27
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended, and we file reports and proxy statements and other
information with the Commission under that act. Our reports, proxy statements
and other information can be inspected and copied at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Copies of those materials can be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, at prescribed rates. Our SEC filings are also available to the public at
the SEC's web site at http://www.sec.gov. Our shares are listed on the New York
Stock Exchange under the ticker symbol "SFI" and all reports, proxy statements
and other information filed by iStar Financial with the NYSE may be inspected at
the NYSE's office 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" some of the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this registration statement and prospectus, and later
information filed with the SEC will automatically update and supersede this
information. We incorporate by reference any future filings, as of the date of
those filings, with the SEC under Section 13(a), 14, or 15(d) of the Securities
and Exchange Act of 1934.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference in this prospectus modifies
or supersedes the statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
registration statement and prospectus.
We incorporate by reference the documents listed below:
- our Annual Report on Form 10-K for the fiscal year ended December 31, 2001
as amended by our Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2001.
- our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2002.
- our Current Report on Form 8-K filed May 20, 2002.
Any person receiving a copy of this prospectus may obtain, without charge,
upon request, a copy of any of the documents incorporated by reference in it
(except for the exhibits to those documents, unless the exhibits are
specifically incorporated by reference into such documents). You may obtain a
copy of each of the above-listed documents at no cost by writing or telephoning
us at the following address:
iStar Financial Inc.
1114 Avenue of the America, 27th Floor
New York, New York 10036
Attention: Investor Relations department
Telephone: (212) 930-9400
Fax: (212) 930-9494
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We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act with respect to the shares of
common stock covered by our dividend reinvestment and direct stock purchase
plan. This prospectus, which constitutes part of the registration statement,
omits some of the information contained in the registration statement and the
exhibits to it on file with the Commission pursuant to the Securities Act and
the rules and regulations of the Commission under that act. The registration
statement, including exhibits thereto, may be inspected and copied at the public
reference facilities maintained by the Commission. Statements contained in this
prospectus as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to the copy of
the contract or other document filed as an exhibit to the registration
statement.
In accordance with Section 2-210 of the Maryland General Corporation Law, as
amended, the Board of Directors has authorized the issuance of some or all of
the shares of any or all of our classes or series of capital stock without
certificates. We have the authority to designate and issue more than one class
or series of capital stock having various preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption. In addition, our amended
and restated charter imposes limitations on the ownership and transfer of our
capital stock. We will furnish a full statement of the relative rights and
preferences of each class or series of our capital stock which has been
designated with preferences and any restrictions on the ownership or transfer of
capital stock to any shareholder upon request and without charge. Written
requests for those copies should be directed to: iStar Financial Inc., One
Embarcadero Center, 33rd Floor, San Francisco, California 94111, Attention:
Geoffrey M. Dugan, Vice President and Assistant General Counsel.
29
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iSTAR FINANCIAL INC.
DIVIDEND REINVESTMENT
AND
DIRECT STOCK PURCHASE PLAN
8,000,000 SHARES OF COMMON STOCK
---------------------
PROSPECTUS
---------------------
August 9, 2002
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