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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No )*
Excel Legacy Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
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(Title of Class of Securities)
300665106
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(CUSIP Number)
Gary B. Sabin, 16955 Via Del Campo, Suite 100, San Diego, CA 92127
(619) 485-9400
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 31, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box [ ].
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
(Page 1 of 4 pages)
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Page 2 of 4
SCHEDULE 13D
CUSIP No. 300665106
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gary B. Sabin
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
N/A (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
SC,BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S. Citizen
7 SOLE VOTING POWER
NUMBER OF 3,840,712
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY None
EACH
REPORTING PERSON 9 SOLE DISPOSITIVE POWER
WITH 3,840,712
10 SHARED DISPOSITIVE POWER
None
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,840,712
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.9%
14 TYPE OF REPORTING PERSON*
IN
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Page 3 of 4
1. SECURITY AND ISSUER
Excel Legacy Corporation ("Legacy")
Common Stock
16955 Via Del Campo
Suite 100
San Diego, CA 92127
2. IDENTITY AND BACKGROUND
a) Gary B. Sabin
b) 16955 Via Del Campo, Suite 100
San Diego, CA 92127
c) Chairman, President and Chief Executive Officer of
Excel Realty Trust, Inc. and Excel Legacy Corporation
d) None
e) None
f) U.S. Citizen
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
No funds were used in connection with the acquisition of 842,302 shares of
the common stock, par value $.01 per share, of Excel Legacy Corporation
(the "Legacy Common Stock"). See Item 4 for additional information.
The remaining 2,998,410 shares of Legacy Common Stock acquired by Mr.
Sabin were purchased in a private placement on March 31, 1998 for $2.39
per share, for an aggregate purchase price of $7,166,199.90. Mr. Sabin
borrowed 50% of the purchase price of such shares from Legacy pursuant
to that certain Common Stock Purchase Agreement dated as of December 12,
1997 among Legacy, Mr. Sabin, Richard B. Muir, Graham R. Bullick, Ronald
H. Sabin, David A. Lund, S. Eric Ottesen, Mark T. Burton, David
DeCoursey, James Nakagawa and John Visconsi. In connection with the
loan from Legacy, Mr. Sabin signed a promissory note dated March 31,
1998 in the principal amount of $3,583,100.90, which note bears interest
at the rate of 7.0% per annum, matures on March 31, 2003 and is a
recourse obligation of Mr. Sabin. Mr. Sabin borrowed the remaining
$3,583,099 of the purchase price from BankBoston, N.A. (i) pursuant to a
promissory note dated March 31, 1998 in the principal amount of
$2,500,000, which note bears interest, at Mr. Sabin's option, (X) at the
base rate quoted by BankBoston, N.A. from time to time or (Y) at LIBOR
plus 1.5%, is payable upon demand by BankBoston, N.A. and is secured by
shares of Legacy Common Stock, and (ii) by drawing down $1,083,099 from
a $3,000,000 line of credit with BankBoston, N.A. established pursuant
to that certain Letter Agreement dated March 31, 1998 between Gary B.
Sabin and BankBoston, N.A., and evidenced by a promissory note dated
March 31, 1998 by Gary B. Sabin in favor of BankBoston, N.A. in the
principal amount of $3,000,000. Amounts drawn under the line of credit
are payable upon demand by BankBoston, N.A., bear interest, at Mr.
Sabin's option, (X) at the base rate quoted by BankBoston, N.A. from
time to time or (Y) at LIBOR plus 2.0%, mature on March 31, 1999 and are
secured by shares of Legacy Common Stock.
4. PURPOSE OF TRANSACTION
Pursuant to a Distribution Agreement, dated as of March 31, 1998 (the
"Distribution Agreement"), among Excel Realty Trust, Inc., a Maryland
corporation ("Excel"), ERT Development Corporation, a Delaware corporation,
and Legacy, all of the issued and outstanding shares of Legacy Common Stock
were distributed (the "Distribution") on March 31, 1998 to the holders of
common stock, par value $.01 per share, of Excel (the "Excel Common
Stock"). Pursuant to the Distribution, each Excel stockholder received one
share of Legacy Common Stock for each share of Excel Common Stock held by
such person on March 2, 1998. No consideration was paid by Mr. Sabin in
connection with the acquisition of 842,302 shares of Legacy Common Stock
through the Distribution.
Also on March 31, 1998, Mr. Sabin purchased 2,998,410 shares of Legacy
Common Stock in a private placement. See Item 3 for additional
information.
Mr. Sabin's acquisition of Legacy Common Stock through the Distribution
and the private placement was for investment purposes only.
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Page 4 of 4
5. INTEREST IN SECURITIES OF THE ISSUER
a) The aggregate number of shares of Legacy Common Stock beneficially
owned by Mr. Sabin is 3,840,712, representing approximately 11.9% of
the outstanding shares of Legacy Common Stock as of March 31, 1998.
b) The power to vote and the power to dispose of such shares is as
follows:
Sole power to vote or direct the vote: 3,840,712
Shared power to vote or direct the vote: None
Sole power to dispose or direct the disposition: 3,840,712
Shared power to dispose or direct the disposition. None
c) On March 31, 1998, Mr. Sabin acquired 842,302 shares of Legacy Common
Stock through the Distribution. Also on March 31, 1998, Mr. Sabin
acquired 2,998,410 shares of Legacy Common Stock in a private
placement for $2.39 per share, for an aggregate purchase price of
$7,166,199.90. See Items 3 and 4 for additional information.
d) N/A
e) N/A
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
In connection with Mr. Sabin's purchase of 2,998,410 shares of Legacy
Common Stock in a private placement on March 31, 1998, Mr. Sabin
borrowed 50% of the purchase price of such shares from Legacy pursuant
to that certain Common Stock Purchase Agreement dated as of December 12,
1997 among Legacy, Mr. Sabin, Richard B. Muir, Graham R. Bullick, Ronald
H. Sabin, David A. Lund, S. Eric Ottesen, Mark T. Burton, David
DeCoursey, James Nakagawa and John Visconsi. In connection with the
loan from Legacy, Mr. Sabin signed a promissory note dated March 31,
1998 in the principal amount of $3,583,100.90, which note bears interest
at the rate of 7.0% per annum, matures on March 31, 2003 and is a
recourse obligation of Mr. Sabin. Mr. Sabin borrowed the remaining
$3,583,099 of the purchase price from BankBoston, N.A. (i) pursuant to a
promissory note dated March 31, 1998 in the principal amount of
$2,500,000, which note bears interest, at Mr. Sabin's option, (X) at the
base rate quoted by BankBoston, N.A. from time to time or (Y) at LIBOR
plus 1.5%, is payable upon demand by BankBoston, N.A. and is secured by
shares of Legacy Common Stock, and (ii) by drawing down $1,083,099 from
a $3,000,000 line of credit with BankBoston, N.A. established pursuant
to that certain Letter Agreement dated March 31, 1998 between Gary B.
Sabin and BankBoston, N.A., and evidenced by a promissory note dated
March 31, 1998 by Gary B. Sabin in favor of BankBoston, N.A. in the
principal amount of $3,000,000. Amounts drawn under the line of credit
are payable upon demand by BankBoston, N.A., bear interest, at Mr.
Sabin's option, (X) at the base rate quoted by BankBoston, N.A. from
time to time or (Y) at LIBOR plus 2.0%, mature on March 31, 1999 and are
secured by shares of Legacy Common Stock.
7. EXHIBITS
Exhibit A Common Stock Purchase Agreement dated as of December 12,
1997 among Excel Legacy Corporation, Gary B. Sabin, Richard
B. Muir, Graham R. Bullick, Ronald H. Sabin, David A. Lund,
S. Eric Ottesen, Mark T. Burton, David DeCoursey, James
Nakagawa and John Visconsi.
Exhibit B Promissory Note dated March 31, 1998 by Gary B. Sabin in
favor of Excel Legacy Corporation in the principal amount of
$3,583,100.90.
Exhibit C Pledge Agreement dated March 31, 1998 between Gary B.
Sabin, as Donor and Trustee, and Valerie P. Sabin, as
Trustee, of the Gary B. Sabin Family Trust, under a Trust
Agreement dated May 20, 1982 (Restated January 19, 1995),
and BankBoston, N.A.
Exhibit D Commercial Promissory Note dated March 31, 1998 by Gary B.
Sabin in favor of BankBoston, N.A. in the principal amount
of $2,500,000.
Exhibit E Letter Agreement dated March 31, 1998 between Gary B. Sabin
and BankBoston, N.A.
Exhibit F Pledge Agreement dated March 31, 1998 between Gary B.
Sabin, as Donor and Trustee, and Valerie P. Sabin, as
Trustee, of the Gary B. Sabin Family Trust, under a Trust
Agreement dated May 20, 1982 (Restated January 19, 1995),
and BankBoston, N.A.
Exhibit G Commercial Promissory Note dated March 31, 1998 by Gary B.
Sabin in favor of BankBoston, N.A. in the principal amount
of $3,000,000.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
April 10, 1998 /s/ GARY B. SABIN
- ----------------------------- ----------------------------------
Date Gary B. Sabin
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
the 12th day of December, 1997, is by and among Excel Legacy Corporation, a
Delaware corporation (the "Company"), and Gary B. Sabin, Richard B. Muir, Graham
R. Bullick, Ronald H. Sabin, David A. Lund, S. Eric Ottesen, Mark T. Burton,
David DeCoursey, James Nakagawa and John Visconsi (collectively, the
"Purchasers").
1. PURCHASE AND SALE OF SHARES; CLOSING DATE. The Purchasers hereby
agree to purchase from the Company, and the Company hereby agrees to issue and
sell to the Purchasers, an aggregate of 9,195,224 shares of common stock, par
value $.01 per share (the "Shares"), as set forth on Exhibit A hereto, for a
purchase price of $2.39 per Share (the "Purchase Price"). On the Closing Date
(as defined below), the Company shall deliver to each Purchaser a stock
certificate registered in such Purchaser's name representing the number of
Shares to be purchased by such Purchaser, as set forth on Exhibit A hereto, and
such Purchaser shall concurrently pay the Company the Purchase Price therefor by
delivery to the Company of (a) cash in the amount of 50% of the Purchase Price,
and (b) a promissory note in substantially the form attached hereto as Exhibit B
for the remaining 50% of the Purchase Price.
The sale and purchase of the Shares shall take place at a closing (the
"Closing") at the offices of Latham & Watkins, 701 "B" Street, Suite 2100, San
Diego, California 92101, on the earliest practicable date as of which all of the
conditions set forth in Section 4 hereof have been satisfied or duly waived (the
"Closing Date").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Purchasers and, by acceptance of the Purchase
Price, reconfirms as of the Closing Date, that:
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Company has all requisite power and authority to enter into
and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby.
(c) The Shares have been duly and validly authorized and when sold
and paid for in accordance with this Agreement will be validly issued, fully
paid and nonassessable.
(d) The Company has taken all actions necessary to authorize it to
enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. This Agreement is a legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except for (i) the effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting the rights of creditors
generally, and (ii) limitations imposed by federal or state law or equitable
principles upon the specific enforceability of any of the remedies, covenants or
other provisions of this Agreement and upon the availability of injunctive
relief or other equitable remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby represents and warrants to the Company and, by acceptance of the Shares,
reconfirms as of Closing Date, that:
(a) The Shares to be purchased by such Purchaser are being purchased
solely for such Purchaser's own account and not as nominee or agent for any
other person and not with a view to, or for offer or sale in connection with,
any distribution thereof (within the meaning of the Securities Act of
<PAGE>
1933, as amended (the "Securities Act")) that would be in violation of the
securities laws of the United States or any state thereof.
(b) Such Purchaser is knowledgeable, sophisticated and experienced in
business and financial matters; has previously invested in securities similar to
the Shares and fully understands the limitations on transfer thereof; is able to
bear the economic risk of such Purchaser's investment in the Shares and is
presently able to afford the complete loss of such investment; and has been
afforded access to information about the Company and the Company's financial
condition, results of operations, business, property, management and prospects
sufficient to enable such Purchaser to evaluate his investment in the Shares.
(c) Such Purchaser either (i) is an "accredited investor" (as such
term is defined in Rule 501(a) of Regulation D under the Securities Act), or
(ii) has, either alone or with such Purchaser's "purchaser representative" (as
such term is defined in Rule 501(h) of Regulation D under the Securities Act),
such knowledge and experience in financial matters that he is capable of
evaluating the merits and risks of an investment in the Shares.
(d) This Agreement is a legal, valid and binding obligation of such
Purchaser, enforceable in accordance with its terms, except for (i) the effect
of bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting the rights of creditors generally, and (ii) limitations
imposed by federal or state law or equitable principles upon the specific
enforceability of any of the remedies, covenants or other provisions of this
Agreement and upon the availability of injunctive relief or other equitable
remedies.
4. CLOSING CONDITIONS. Each Purchaser's obligation to purchase and pay
for the Shares to be purchased by such Purchaser shall be subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The Company's representations and warranties contained in Section
2 hereof shall be true at and as of the Closing Date, after giving effect to the
transactions contemplated by this Agreement, as if made on and as of such date.
(b) The Company shall have performed and complied with all
agreements, covenants and conditions contained herein which are required to be
performed or complied with by the Company on or before the Closing Date.
(c) The purchase of and payment for the Shares to be purchased by
such Purchaser (i) shall not be prohibited by any applicable law or governmental
regulation, and (ii) shall not subject such Purchaser to any penalty or other
onerous condition under or pursuant to any applicable law or governmental
regulation.
(d) Simultaneously with the sale to the Purchasers of the Shares, the
Company shall have consummated the asset transfers to the Company and the
distribution of the Company's common stock to the stockholders of Excel Realty
Trust, Inc., substantially as described in or contemplated by the Private
Placement Memorandum prepared by BancBoston Securities Inc.
(e) The Company shall have received all consents, permits and other
authorizations, and made all such filings and declarations, as may be required
from any person or entity pursuant to any law, statute, regulation or rule
(federal, state, local and foreign), or pursuant to any agreement, order or
decree to which the Company is a party or to which it is subject, in connection
with the transactions
2
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contemplated by this Agreement.
5. EXPENSES. Whether or not the Shares are sold, the Company shall pay
or reimburse all expenses relating to this Agreement, including but not limited
to:
(a) the cost of printing and reproducing this Agreement and any other
documents contemplated hereby;
(b) the fees and other charges of Latham & Watkins, counsel to the
Company, in connection herewith;
(c) all fees and expenses (including the fees and expenses of
counsel) in connection with any registration or qualification of the Shares for
offer and sale under the securities or "blue sky" laws of any jurisdictions
requiring such registration or qualification or in connection with obtaining any
exemptions from such requirements;
(d) all out-of-pocket expenses of the Purchasers (including the fees
and expenses of counsel) relating to any amendment, or modification of, or any
waiver, or consent or preservation of rights under this Agreement and any other
documents contemplated hereby; and
(e) all other expenses, including counsel's fees, incurred by the
Company in connection with the transactions contemplated by this Agreement.
6. INDEMNIFICATION. The Company shall, without limitation as to time,
indemnify the Purchasers against, and hold them harmless from, all losses,
claims, damages, liabilities, costs (including the costs of preparation and
attorneys' fees) and expenses (collectively, "Losses") incurred by them pursuant
to any investigation or proceeding against any one or more of the Purchasers
arising out of or in connection with this Agreement (or any other document or
instrument executed herewith or pursuant hereto), whether or not the
transactions contemplated by this Agreement are consummated, which investigation
or proceeding requires the participation of, or is commenced or filed against,
one or more of the Purchasers because of this Agreement or the transactions
contemplated hereby, other than any Losses resulting from action on the part of
the Purchasers which is finally determined in such proceeding to be wrongful and
which (a) is unrelated to any wrongful act by the Company or its
representatives, and (b) was not taken by any of the Purchasers in reliance upon
any of the Company's warranties, covenants or promises herein or in any other
documents contemplated hereby. The obligations of the Company under this
Section 6 shall survive any transfer of the Shares by the Purchasers and the
termination of this Agreement.
7. CONTRIBUTION. If the indemnification provided for in Section 6 from
an indemnifying party is unavailable to any Purchasers in respect of any Losses
referred to therein, then an indemnifying party, in lieu of indemnifying such
persons, shall contribute to the amount paid or payable by such persons as a
result of such Losses in such proportion as is appropriate to reflect the
relative fault of such indemnifying parties and such persons in connection with
the actions which resulted in such Losses as well as any other relevant
equitable considerations. The amount paid or payable by a party as a result of
the Losses referred to above shall be deemed to include, subject to the
limitations set forth in Section 6, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation, lawsuit
or legal or administrative action or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not
3
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take account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. FURTHER ACTION. During the period from the date hereof to the Closing
Date, the Company shall use all reasonable efforts and take all action
reasonably necessary or appropriate to cause its representations and warranties
contained in Section 2 hereof to be true as of the Closing Date, after giving
effect to the transactions contemplated by this Agreement, as if made on and as
of such date.
9. LEGEND. Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Securities
Act, the Shares (and all securities issued in exchange therefor or substitution
thereof) shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT."
10. AMENDMENT AND WAIVER. This Agreement may be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may be given, provided that the same are in writing and signed by each of the
parties hereto.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
13. SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected, it
being intended that all of your rights and privileges shall be enforceable to
the fullest extent permitted by law.
14. ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
THE COMPANY: Excel Legacy Corporation
By: /s/ Gary B. Sabin
-----------------------------------------------
Name: Gary B. Sabin
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4
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Title: Chairman, President and Chief Executive Officer
-----------------------------------------------
PURCHASERS: /s/ Gary B. Sabin
-------------------------------------------------------
Gary B. Sabin
/s/ Richard B. Muir
-------------------------------------------------------
Richard B. Muir
/s/ Graham R. Bullick
-------------------------------------------------------
Graham R. Bullick
/s/ Ronald H. Sabin
-------------------------------------------------------
Ronald H. Sabin
/s/ David A. Lund
-------------------------------------------------------
David A. Lund
/s/ S. Eric Ottesen
-------------------------------------------------------
S. Eric Ottesen
/s/ Mark T. Burton
-------------------------------------------------------
Mark T. Burton
/s/ David DeCoursey
-------------------------------------------------------
David DeCoursey
/s/ James Nakagawa
-------------------------------------------------------
James Nakagawa
/s/ John Visconsi
-------------------------------------------------------
John Visconsi
5
<PAGE>
EXHIBIT A
ALLOCATION OF SHARES
<TABLE>
<CAPTION>
Purchaser Shares Purchased
--------- ----------------
<S> <C>
Gary B. Sabin 2,998,410
Richard B. Muir 999,469
Graham R. Bullick 999,469
Ronald H. Sabin 999,469
David A. Lund 999,469
S. Eric Ottesen 999,469
Mark T. Burton 999,469
David DeCoursey 150,000
James Nakagawa 25,000
John Visconsi 25,000
----------------
Total 9,195,224
</TABLE>
<PAGE>
PROMISSORY NOTE
Principal Amount: $3,583,100.90 March 31, 1998
San Diego, California
1. PROMISE TO PAY. For good and valuable consideration, GARY B. SABIN
("Borrower") promises to pay to Excel Legacy Corporation, a Delaware corporation
("Lender"), or its assigns, the principal amount set forth above (the "Principal
Amount") with interest on the unpaid Principal Amount owing from time to time at
a rate equal to seven percent (7.0%) per annum, computed on the basis of the
actual number of days elapsed and a year of 365 days.
2. PAYMENT SCHEDULE. The entire Principal Amount and all accrued
interest shall be due and payable on the fifth anniversary of the date of this
Note. The indebtedness under this Note may be prepaid, in whole or in part, at
any time without penalty or prepayment premium. All payments shall be made at
16955 Via Del Campo, Suite 100, San Diego, California 92127, or at such other
place as the holder of this Note may from time to time designate. All payments
shall be made in lawful money of the United States.
3. USE OF PROCEEDS. The proceeds of this Note shall be used by Borrower
to purchase shares of common stock of Lender, as contemplated by that certain
Common Stock Purchase Agreement, dated as of December 12, 1997 (the "Purchase
Agreement"), by and among Borrower, Lender and the other parties thereto.
4. RECOURSE OBLIGATION. Notwithstanding anything to the contrary
contained in this Note or in the Purchase Agreement, Borrower hereby agrees that
Lender, in enforcing its rights and remedies hereunder and under the other
documents and instruments executed by Borrower in connection herewith, shall
have recourse to, and the right to proceed against, Borrower and any of his
assets for any obligation, covenant or agreement of any kind whatsoever.
5. EVENT OF DEFAULT. At the option of Lender, it shall be an "Event of
Default" hereunder if (a) Borrower fails to pay when due any sum payable under
this Note, or (b) Borrower fails to perform any obligation or commits a breach
of any agreement set forth in this Note or in the Purchase Agreement. Upon the
occurrence of an Event of Default, at the option of Lender, the entire sum of
principal and interest due under this Note shall become immediately due and
payable.
6. MISCELLANEOUS PROVISIONS. This Note contains the entire agreement
between Borrower and Lender with respect to the subject matter hereof, and no
provision of this Note may be amended, modified, supplemented, waived,
discharged or terminated unless both parties consent thereto in writing. In
case any one or more of the provisions contained in this Note should be held to
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby. Neither this Note nor any of the rights,
interests or obligations hereunder may be assigned, by operation of law or
otherwise, in whole or in part, by Borrower without the prior written consent of
Lender. This Note shall be binding upon and inure to the benefit of Borrower,
Lender and their respective successors and permitted assigns. Time is of the
essence of this Note and the performance of each of the covenants and agreements
contained herein. This Note shall be governed by and construed in accordance
with the laws of the State of California.
IN WITNESS WHEREOF, Borrower has executed this Note as of the date first
written above.
/s/ Gary B. Sabin
-----------------------------------
Name: Gary B. Sabin
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated this 31st day of March, 1998 between GARY B. SABIN,
AS DONOR AND TRUSTEE, and VALERIE P. SABIN, AS TRUSTEE, of the Gary B. Sabin
Family Trust, under a trust agreement dated May 20, 1982 (Restated dated January
19, 1995) ("PLEDGOR") and BANKBOSTON, N.A., a national banking association (the
"BANK").
W I T N E S S E T H:
WHEREAS, the Bank has made a loan to Gary B. Sabin (the "BORROWER")
pursuant to a Commercial Promissory Note of even date herewith (as amended from
time to time, the "NOTE") in the original principal amount of $2,500,000; and
WHEREAS, the willingness of the Bank to enter into the Note and to make
loans thereunder is subject to the condition, among others, that the Pledgor
execute and deliver to the Bank this Pledge Agreement;
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each party hereto, the Pledgor and the Bank agree as follows:
SECTION 1. PLEDGE AND SECURITY INTEREST GRANT. As collateral security for
the prompt payment and performance in full of the obligations owing by the
Borrower to the Bank of every kind and description, direct or indirect, absolute
or contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument they may be evidenced or whether evidenced by any agreement or
instrument, including obligations to perform acts or to refrain from taking
action as well as obligations to pay money (collectively, the "OBLIGATIONS"),
the Pledgor hereby pledges and grants a security interest in favor of the Bank
all of its common voting stock in EXCEL LEGACY CORPORATION, as more particularly
described on Schedule A attached hereto (the "STOCK"), together with any and all
profits, interest, dividends, income, distributions, voting rights, cash and
non-cash proceeds thereof and substitutions therefor (all of the foregoing being
collectively referred to herein as the "PLEDGED COLLATERAL"). The Pledgor
grants the Bank a continuing first lien and security interest in the Pledged
Collateral, and assigns to the Bank any and all of its rights under the Pledged
Collateral.
SECTION 2. REGISTRATION, ETC. OF PLEDGED COLLATERAL. Any stock or
securities held by the Bank as Pledged Collateral hereunder may, at any time
after demand and at the option of the Bank, be registered in the name of the
Bank or its nominee. Prior to demand, the Pledgor shall retain the right to
vote any of the Pledged Collateral, in a manner not inconsistent with the terms
of this Agreement or of the Note, and the Bank hereby grants to the Pledgor its
proxy to enable the Pledgor to so vote any of the Pledged Collateral. After
demand the Bank may, without notice and as applicable, exercise all voting and
corporate rights at any meeting of the shareholders of the issuer of the Pledged
Collateral, and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining
<PAGE>
to the Pledged Collateral as if it were the absolute owner thereof including,
without limitation, the right to exchange, at its discretion, any and all of the
Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, all without
liability except to account for property actually received, but the Bank shall
have no duty to exercise any of the aforesaid rights, privileges or options and
shall not be responsible for any failure to do so or delay in so doing.
SECTION 3. PAYMENTS IN RESPECT OF COLLATERAL. If the Pledgor shall at any
time be entitled to receive or shall receive any cash, stock certificate or
other property, option or right, in respect of, as an addition to, in
substitution or exchange for any of the Pledged Collateral, the Pledgor agrees
that the same shall be deemed to be Pledged Collateral and shall be delivered
directly to the Bank, to be held by the Bank subject to the terms hereof, as
further security for the Obligations, and to take all steps necessary to arrange
for such delivery. If the Pledgor receives any of the foregoing directly, it
hereby agrees to hold such cash or other property in trust for the benefit of
the Bank, and to turn over such cash or other property to the Bank immediately.
The Bank shall have all of the rights set forth herein with respect thereto.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor hereby
represents and warrants to and covenants with the Bank that:
4.1 TITLE. The Pledgor and its beneficiaries are the sole legal and
equitable owners of the Pledged Collateral, and hold good title to the same free
and clear of all liens, charges, encumbrances and security interests or rights
of others of every kind and nature whatsoever, except for the security interest
granted hereunder to the Bank, and shall not assign any interest in the Pledged
Collateral, or any part thereof, or otherwise pledge, encumber, or grant any
option with respect to the Pledged Collateral, or any part thereof, except in
favor of the Bank.
4.2 AUTHORIZATION. The Pledgor has good right and legal authority to
assign, deliver, and/or create a security interest in the Pledged Collateral in
the manner hereby provided or contemplated and will defend its title and the
right, title and security interest of the Bank thereto against all claims of all
persons or entities; the Pledged Collateral is genuine and is what it purports
to be, and the execution, delivery and performance of this Agreement have been
duly authorized. This Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
its terms. Pledgor has previously delivered to the Bank true, correct and
complete copies of the trust agreement and all other documents, instruments and
agreements constituting the Pledgor, as in effect on the date hereof, all of
which are in full force and effect.
4.3 UNRESTRICTED COLLATERAL. The Pledged Collateral is not subject to any
restriction on transfer contained in any agreement, law, regulation, rule or
policy to which the Pledgor is a party or by which the Pledgor is bound, which
would prohibit or restrict the pledge or assignment of the Pledged Collateral
hereunder.
4.4 FURTHER ASSURANCE. The Pledgor shall at all times do, make, execute
and deliver all such additional and further acts and instruments as the Bank may
at any time request in
2
<PAGE>
connection with the administration and enforcement of this Agreement or relative
to the Pledged Collateral or any part thereof, or in order more completely to
vest in and assure to the Bank or make available to it the property and rights
herewith or hereafter granted, assigned or transferred to the Bank in the
Pledged Collateral and to carry into affect the provisions and intent of this
Agreement, including, without limitation, execution and delivery by the Pledgor
of appropriate stock transfer powers.
4.5 NEGATIVE PLEDGE. The Pledgor hereby covenants that it will not sell,
convey or otherwise dispose of any of the Pledged Collateral, or otherwise
liquidate or terminate the Stock, nor will it create, incur or permit to exist
any pledge, assignment, lien, charge, encumbrance or any security interest
whatsoever with respect to any of the Pledged Collateral or the proceeds
thereof.
4.6 MINIMUM MARKET VALUE; ADDITIONAL COLLATERAL. The Pledged Collateral
shall at all times have a market value of not less than an amount equal to the
product of (a) 2.00 multiplied by (b) the outstanding principal balance of the
borrowings under the Note (the "MINIMUM VALUE"). In the event the market value
of the Pledged Collateral is less than the Minimum Value, the Pledgor shall,
within two "Business Days" (as defined in the Note) either immediately (a) repay
a portion of the outstanding principal amount outstanding under the Note, or (b)
pledge and deliver to the Bank any additional shares of the common voting stock
of the Company, in addition to the Pledged Collateral, then owned by the
Pledgor, together with any and all profits, interest, dividends, income,
distributions, cash and non-cash proceeds thereof and substitutions therefor, or
both, with aggregate fair market value at least equal to the amount by which the
outstanding principal amount of the borrowings under the Note exceeds the
Minimum Value.
SECTION 5. DISTRIBUTIONS, ETC. In case, upon the dissolution, winding up,
liquidation or reorganization of the Pledgor, whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Pledgor, any sum
shall be paid or any property shall be distributed upon or with respect to any
of the Pledged Collateral, such sum shall be paid over or such property shall be
distributed to the Bank, to be held as collateral security for the Obligations.
In case any stock dividend shall be declared on any of the Pledged Collateral,
or any share of stock or fraction thereof shall be issued pursuant to any stock
split involving any of the Pledged Collateral, or any distribution of capital
shall be made on any of the Pledged Collateral, or any property shall be
distributed on or with respect to the Pledged Collateral pursuant to
recapitalization or reclassification of the capital of the Pledgor, the shares
or other property so distributed shall be delivered to the Bank to be held as
collateral security for the Obligations.
SECTION 6. REMEDIES.
6.1 RIGHTS OF THE BANK. After demand upon the Note, the Bank shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code or other applicable law and shall have the right, subject to any necessary
prior consent of any governmental authority, at any time or times thereafter to
sell, resell, assign and deliver all or any of the
3
<PAGE>
Pledged Collateral at public or private sale. Unless the Pledged Collateral
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Bank will give the Pledgor at least five (5) days' prior
written notice of the time and place of any public sale thereof or of the time
after which any private sale or any other intended disposition thereof is to be
made, which notice the Pledgor agrees is reasonable. All such sales shall be at
such commercially reasonable price or prices as the Bank shall deem best and
either for cash or on credit or for future delivery, At any such sale or sales
the Bank may purchase any or all of the Pledged Collateral to be sold thereat
upon such terms as the Bank may deem best. Upon any such sale or sales the
Pledged Collateral so purchased shall be held by the purchaser absolutely free
from any claims or rights of whatsoever kind or nature, including any equity of
redemption and any similar rights, all such equity of redemption and any similar
rights being hereby expressly waived and released by the Pledgor. In the event
any consent, approval or authorization of any governmental agency will be
necessary to effectuate any such sale or sales, the Pledgor shall execute all
such applications or other instruments as may be required. The proceeds of any
such sale or sales, together with any other additional collateral security at
the time received and held hereunder, shall be received and applied: first, to
the payment of all costs and expenses of such sale, including reasonable
attorneys' fees; second, to the payment of the Obligations in such order of
priority as the Bank shall determine; and any surplus thereafter remaining shall
be paid to the Pledgor or to whoever may be legally entitled thereto; PROVIDED
that in no event shall the Pledgor be credited with any part of the proceeds of
the sale of the Pledged Collateral until cash payment thereon has actually been
received by the Bank.
6.2 SECURITIES RESTRICTIONS. The Pledgor recognizes that the Bank may be
unable to effect a public sale of all or a part of the Pledged Collateral by
reason of certain prohibitions contained in the Securities Act of 1933 (the
"SECURITIES ACT") or the securities laws of various states (the "BLUE SKY
LAWS"), but may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor agrees that
private sales so made may be at prices and upon other terms less favorable to
the seller than if the Pledged Collateral were sold at public sales, and that
the Bank has no obligation to delay sale of any the Pledged Collateral for the
period of time necessary to permit the Pledged Collateral to be registered for
public sale under the Securities Act or the Blue Sky Laws. The Pledgor agrees
that private sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner.
SECTION 7. RIGHTS OF BANK. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Collateral while any of it is held by the
Bank hereunder, the Bank shall have no duty or liability to anyone to collect
any sums due or other property due in respect thereof or to protect or preserve
any rights of any such party pertaining thereto, and shall be relieved of all
responsibility for the Pledged Collateral upon the surrender of the same to the
Pledgor. No course of dealing between the Pledgor and the Bank, nor any failure
by the Bank to exercise or delay in exercising any right, power or privilege
hereunder or under any of the Obligations, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided and
4
<PAGE>
provided under any of the Obligations are cumulative and are in addition to,
and not exclusive of, any rights or remedies provided by law, including,
without limitation, the rights and remedies of a secured party under the
Uniform Commercial Code.
SECTION 8. BANK AS ATTORNEY-IN-FACT. After demand upon the Note, the Bank
may, but without obligation to do so, as attorney-in-fact for the Pledgor,
demand, sue for and/or collect any money or property at any time due, payable or
receivable to which it may be entitled hereunder, on account of or in exchange
for any of the Pledged Collateral. After demand upon the Note, or in connection
with any sale or other disposition of Pledged Collateral pursuant to this
Agreement, the Bank shall have the right, for and in the name, place and stead
of the Pledgor, as attorney-in-fact for the Pledgor, to execute endorsements,
assignments, or other instruments of conveyance or transfer with respect to all
or any of the Pledged Collateral. The Pledgor shall indemnify and hold harmless
the Bank from and against any liability or damage which the Bank may incur in
the exercise and performance, in good faith, of any of the Bank's powers and
duties set forth herein.
SECTION 9. ASSIGNMENTS, ETC. In the event of a sale or assignment by the
Bank of all or any of the Obligations held by it, the Bank may assign or
transfer its rights and interest under this Agreement in whole or in part to the
purchaser or purchasers of such Obligations, whereupon such purchaser, or
purchasers shall become vested with all of the powers and rights given to the
Bank hereunder, and the Bank shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder with respect to the
rights and interests so assigned,
SECTION 10. NOTICE. Except as otherwise provided herein, notice to or
demand upon the Pledgor or the Bank shall be in writing and deemed to have been
sufficiently given for all purposes hereof if personally delivered or three
business days after being mailed by first class registered or certified mail,
return receipt requested, postage prepaid, to the parties hereto at the address
set forth below;
If to the Pledgor:
Gary S. Sabin, as Donor and Trustee
Valerie P. Sabin, as Trustee
Gary B. Sabin Family Trust as amended and restated
18540 Wild Horse Creek
Poway, California 92064
If to the Bank:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attention: Mary E. Sheehan, Private Bank
5
<PAGE>
SECTION 11. WAIVERS. The Pledgor waives presentment, notice, protest,
notice or acceptance of this Agreement, notice of any loans made, extensions
granted, collateral received or delivered or any other action taken in reliance
thereon, all demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of any of the Obligations or other evidence
of indebtedness for which any of the Pledged Collateral is pledged and all other
demands and notices of any description, and assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Pledged Collateral and to the addition or
release of any party or person primarily or secondarily liable.
SECTION 12. REINSTATEMENT. This Agreement shall continue to be effective,
or be reinstated, as the case may be, if at any time any amount received by the
Bank in respect of the Pledged Collateral is rescinded or must otherwise be
restored or returned by the Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Pledgor or the Borrower or upon the
appointment of any intervenor or conservator of, or trustee or similar official
for, the Pledgor or the Borrower or any substantial part of its respective
properties, or otherwise, all as though such payments had not been made.
SECTION 13. MISCELLANEOUS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal representatives, successors
and assigns, and the term "Bank" shall be deemed to include any other holder or
holders of any of the Obligations. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument. This Agreement, including the
validity hereof and the rights and obligations of the parties hereunder, shall
be construed in accordance with and governed by the laws of The Commonwealth of
Massachusetts.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument by their duly authorized representatives as of the date first
above written.
/s/ Gary B. Sabin
--------------------------------------
Gary B. Sabin, as Donor and Trustee of
the Gary B. Sabin Family Trust
/s/ Janet S. Christensen
- ----------------------------------
Witness
/s/ Valerie P. Sabin
--------------------------------------
Valerie P. Sabin, as Trustee of the
Gary B. Sabin Family Trust
/s/ Janet S. Christensen
- ----------------------------------
Witness
BANKBOSTON, N.A.
By: /s/ Mary E. Sheehan
---------------------------------
Name: Mary E. Sheehan
---------------------------------
Its: Vice President
----------------------------------
7
<PAGE>
SCHEDULE A
PLEDGED COLLATERAL
<TABLE>
<CAPTION>
Issuer Class Certificate Number Number of Shares
------ ----- ------------------ ----------------
<S> <C> <C> <C>
EXCEL LEGACY Common 106,430
CORPORATION
</TABLE>
<PAGE>
COMMERCIAL PROMISSORY NOTE
$2,500,000
Boston, Massachusetts
March 31, 1998
FOR VALUE RECEIVED, GARY B. SABIN promises to pay to the order of
BANKBOSTON, N.A. (together with any successors or assigns, the "BANK"), a
national banking association with its Head Office at 100 Federal Street, Boston,
Massachusetts 02110, ON DEMAND, the principal amount of TWO MILLION FIVE HUNDRED
THOUSAND Dollars ($2,500,000). Interest shall be calculated on the basis of a
360-day year and 30-day months. Accrued interest will be due on demand and on
the first Business Day of each quarter, and, in the event the undersigned has
elected the Eurodollar Rate, on the last day of each interest period.
SECTION 1. INTEREST; PAYMENT TERMS.
1.1. INTEREST; BASE RATE OR EURODOLLAR RATE OPTION. (a) Except as
otherwise provided in Section 1.1(b) or in Section 1.4 hereof, the principal
amount hereof shall bear interest prior to maturity at a rate of interest equal
to the Base Rate in effect from time to time. As used herein, the Base Rate is
the annual rate of interest announced from time to time by the Bank at its head
office as the Bank's "base rate."
(b) Except as otherwise provided in Section 1.4 hereof, at the option
of the undersigned, the undersigned may elect that the entire principal amount
hereof shall bear interest during any particular interest period prior to
maturity at a rate of interest equal to the Eurodollar Rate in effect from time
to time, PROVIDED the undersigned is not in default of its obligations hereunder
at the commencement of such interest period. As used herein, the Eurodollar
Rate shall be the rate quoted by the Bank to the undersigned as the prevailing
rate per annum at which U.S. dollar deposits are offered to the Bank by first
class banks in the interbank Eurodollar market in which it regularly
participates at approximately 10:00 a.m. (Boston time) two Business Days before
(i) the date of this Note, in the case of the initial interest period to be
applicable hereto if this Note will initially bear interest at the Eurodollar
Rate, and (ii) the end of such initial interest period and each subsequent
interest period, in the case of each subsequent interest period to be applicable
hereto, in each case in the amount and for the interest period requested,
adjusted for reserve requirements, plus one and one-half percent (1.5%) per
annum; Eurodollar Rate interest periods may be requested for one, two, three, or
six months, or, if available to the Bank, for nine or twelve months. in each
case by giving the Bank at least three Business Days' prior notice, PROVIDED
that no interest period shall extend beyond the maturity of this Note. In the
event that the undersigned requests that this Note bear interest on a Eurodollar
Rate basis and fails to specify an interest period, the interest period shall be
deemed to be three months. Any election of a Eurodollar Rate basis shall lapse
at the end of the expiring interest period unless extended by a further request
given not later than three Business Days prior to the expiration of the current
interest period. In the event of such lapse, the interest rate applicable to
this Note shall revert to the Base Rate. As used herein, "BUSINESS DAY" means
any day on which banking institutions in Boston, Massachusetts are open for the
transaction of a substantial portion of their
<PAGE>
commercial banking business, and, reference to the Eurodollar Rate, a day on
which dealings in deposits are carried on in the London interbank market.
1.2. PAYMENTS; PREPAYMENTS. All payments hereunder shall be made by the
undersigned to the Bank in United States currency at the Bank's address
specified above (or at such other address as the Bank may specify) on the due
date thereof. The Bank shall use its best efforts to notify the undersigned of
any payment not timely received, but the failure to so notify the undersigned
shall in no way affect any payment or any rights or obligations of the Bank or
the undersigned with respect thereto, Payments received by the Bank prior to
demand will be applied will be applied FIRST to fees, expenses and other amounts
due hereunder (excluding principal and interest), SECOND, to accrued interest;
and THIRD to outstanding principal; after demand, payments will be applied to
the Obligations under this Note as the Bank determines in its sole discretion.
Amounts prepaid may not be reborrowed.
1.3. PREPAYMENT CHARGE. If any payment of principal is made for any
reason on any day other than the last day of an interest period, whether
voluntarily or as a result of acceleration or otherwise, the undersigned shall
reimburse the Bank for any resulting loss or expense incurred by it as a result
of such prepayment, including without limitation any loss reasonably incurred in
obtaining, liquidating or employing of deposits from third parties. The
undersigned shall pay such loss upon presentation by the Bank of a statement of
the amount of such loss, setting forth the Bank's calculation thereof, which
notice and calculation (including the method of calculation) shall be deemed
true and correct absent manifest error.
1.4. RATE AFTER DEMAND. To the extent permitted by applicable law,
interest on amounts due hereunder after demand shall bear interest from and
including the due date thereof until paid, compounded daily and payable on
demand, at a rate per annum equal to four percent (4%) above the greater of the
Base Rate or the Eurodollar Rate.
1.5. CHANGED CIRCUMSTANCES; INCREASED COSTS.
(a) In the event that at any time the Bank shall have determined in
good faith (which determination shall be final and conclusive) that the
determination of a Eurodollar Rate or the application of any such Eurodollar
Rate to the outstanding principal of this Note has been made unlawful or
impractical by compliance by the Bank in good faith with any law or governmental
regulation, guideline, order or other action (whether or not having the force of
law), then the Bank shall forthwith so notify the undersigned. On such date as
the Bank shall designate, the Bank's obligation to quote a Eurodollar Rate shall
cease and this Note shall thereafter bear interest at the Base Rate or at such
other such rate as the undersigned and the Bank shall agree.
(b) In the event that any law, regulation, treaty or official directive
or the interpretation or application thereof by any court or governmental
authority or the compliance with any guideline or request of any central bank or
other governmental authority (whether or not having the force of law):
2
<PAGE>
(i) subjects the Bank to any tax with respect to any amounts
payable hereunder or otherwise with respect to the transactions
contemplated hereunder (except for taxes on the overall net income of the
Bank imposed by the United States of America or any political subdivision
thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, or similar requirement against assets held by, or
deposits in or for the account of, or loans by, the Bank (other than such
requirements the effect of which is included in the determination of the
interest rates for loans made hereunder), or
(iii) imposes upon the Bank any other condition with respect to
the loans made hereunder,
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by the Bank or impose any expense upon the Bank
with respect to this Note, the Bank shall so notify the undersigned. The
undersigned agrees to pay to the Bank the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by the Bank of a statement
of the amount and setting forth the Bank's calculation thereof, which statement
shall be deemed true and correct absent manifest error.
1.6 LATE PAYMENT CHARGE. If a payment of principal or interest
hereunder is not made within 10 days of its due date, the undersigned will pay
on demand a late payment charge equal to 5% of the amount of such payment.
Nothing in the preceding sentence shall affect the Bank's right to accelerate
the maturity of this Note in the event of any default in the payment of this
Note.
SECTION 2. DEFAULTS AND REMEDIES.
2.1. DEFAULT. The occurrence of any of the following events or
conditions shall constitute an "EVENT OF DEFAULT" hereunder:
(a) (i) default in the payment when due of the principal of or interest
on this Note or (ii) any other default in the payment or performance of this
Note or of any other Obligation or (iii) default in the payment or performance
of any obligation of any Obligor to others for borrowed money or in respect of
any extension of credit or accommodation or under any lease;
(b) failure of any representation or warranty herein or in any other
agreement, instrument, document or financial statement delivered to the Bank in
connection herewith to be true and correct in any material respect;
(c) default or breach of any condition under any mortgage, security
agreement, assignment of lease, or other agreement securing, constituting or
otherwise relating to any collateral for the Obligations that continues beyond
any applicable period of grace;
3
<PAGE>
(d) failure to furnish the Bank promptly on request with financial
information about, or to permit inspection by the Bank of any books, records and
properties of, any Obligor;
(e) merger, consolidation, sale of all or substantially all of the
assets or change in control of any Obligor without the prior written consent of
the Bank;
(f) any Obligor generally not paying its debts as they become due; the
death, dissolution, termination of existence or insolvency of any Obligor; the
appointment of a trustee, receiver, custodian, liquidator or other similar
official for such Obligor or any substantial part of its property or the
assignment for the benefit of creditors by any Obligor; or the commencement of
any proceedings under any bankruptcy or insolvency laws by or against any
Obligor that, in the case of any such involuntary proceeding, shall continue
undismissed or unstayed and in effect for a period of 60 days; or
(g) material change in the condition or affairs (financial or
otherwise) of any Obligor or in the value or condition of any collateral
securing this Note that in the reasonable opinion of the Bank will materially
impair its security or increase its risk.
As used herein, "OBLIGATIONS" means any and all obligations of any Obligor to
the Bank of every kind and description, direct or indirect, absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
Instrument, if any, and including obligations to perform acts and refrain from
taking action as well as obligations to pay money; and "OBLIGOR" means each of
the undersigned, any guarantor or any other person primarily or secondarily
liable hereunder or in respect hereof, including any person or entity who has
pledged or granted to the Bank a security interest in, or other lien on,
property on behalf of the undersigned as collateral for the Obligations.
2.2. REMEDIES. Without limitation of any other right or remedy of the
Bank hereunder, upon an Event of Default described in Section 2.1 (f),
immediately and automatically, and upon or after the occurrence of any other
Event of Default, at the option of the Bank, all Obligations of the undersigned
shall become immediately due and payable without notice or demand, and if there
is any collateral for the Obligations, the Bank shall then have in any
jurisdiction where enforcement hereof is sought, the rights and remedies of a
secured party under the Uniform Commercial Code of Massachusetts.
SECTION 3. MISCELLANEOUS.
3.1. RIGHTS CUMULATIVE; WAIVER; AMENDMENT. All rights and remedies of
the Bank are cumulative and are exclusive of any rights or remedies provided by
law or in equity or any other agreement, and may be exercised separately or
concurrently. No delay or omission on the part of the Bank in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note. No waiver of any right or any amendment hereto shall be
effective unless in writing and signed by the Bank nor shall a waiver on one
occasion bar or waive the exercise of any such right on any future occasion.
Each Obligor waives presentment, notice of dishonor, protest, and all other
notices in connection with the delivery,
4
<PAGE>
acceptance, performance, default or enforcement of this Note or of any
collateral for the Obligations, and assents to any extensions or postponements
of the time of payment and to any other indulgences under this Note or with
respect to any such collateral, to any substitutions, exchanges or releases of
any such collateral, and to any additions or releases of any other parties or
persons primarily or secondarily liable hereunder, that from time to time may be
granted by the Bank in connection herewith.
3.2. SECURITY; SET-OFF. The undersigned grants to the Bank, as security
for the full and punctual payment and performance of the Obligations, a
continuing lien on and security interest in all securities or other property
belonging to the undersigned now or hereafter held by the Bank and in all
deposits (general or special, time or demand, provisional or final) and other
sums credited by or due from the Bank to the undersigned or subject to
withdrawal by the undersigned; and regardless of the adequacy of any collateral
or other means of obtaining repayment of the Obligations, the Bank is hereby
authorized at any time and from time to time, without notice to the undersigned
(any such notice being expressly waived by the undersigned) and to the fullest
extent permitted by law, to set off and apply such deposits and other sums
against the Obligations of the undersigned, whether or not the Bank shall have
made any demand under this Note and although such Obligations may be contingent
or unmatured.
3.3. TAXES. The undersigned agrees to indemnify the Bank and hold it
harmless from and against any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the execution, delivery,
and performance of this Note or any collateral for the Obligations.
3.4. EXPENSES. The undersigned will pay on demand all expenses of the
Bank in connection with the preparation, administration, default, collection,
waiver or amendment of the Obligations or in connection with the Bank's
exercise, preservation or enforcement of any of its rights, remedies or options
thereunder, including, without limitation, fees of outside legal counsel or the
allocation costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with any travel or other costs relating to any appraisals or examinations
conducted in connection with the Obligations or any collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate) and be an
Obligation secured by any such collateral.
3.5. INFORMATION. The undersigned shall furnish the Bank from time to
time with such financial statements and other information relating to any
Obligor or any collateral securing this Note as the Bank may require. All such
information shall be true and correct and fairly represent the financial
condition and the operating results of such Obligor as of the date and for the
periods for which the same are furnished. The undersigned shall permit
representatives of the Bank to inspect its properties and its books and records,
and to make copies or abstracts thereof, The undersigned shall promptly notify
the Bank of the existence or upon the occurrence of any of the following events:
(a) default in the payment or performance of any obligation of any Obligor to
others for borrowed money or in respect of any extension of credit or
accommodation or under any lease; (b) merger, consolidation, sale of all or
substantially
5
<PAGE>
all of the assets or change in control of any Obligor; and (c) any material
change in the condition or affairs (financial or otherwise) of any Obligor since
the date of the most recently delivered financial statements of such Obligor.
Each Obligor authorizes the Bank to release and disclose to its affiliates,
agents and contractors any financial statements and other information relating
to said Obligor provided to or prepared by or for the Bank in connection with
any Obligation.
3.6. GOVERNING LAW; CONSENT TO JURISDICTION. This Note is intended to
take effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its conflicts of law rules. The undersigned agrees that any suit for the
enforcement of this Note may be brought in the courts of such state or any
Federal Court sitting in such state and consents to the non-exclusive
jurisdiction of each such court and to service of process in any such suit being
made upon the undersigned by mail at the address specified below. The
undersigned hereby waives any objection that it may now or hereafter have to the
venue of any such suit or any such court or that such suit was brought in an
inconvenient court.
3.7. SEVERABILITY; AUTHORIZATION TO COMPLETE; PARAGRAPH HEADINGS. If
any provision of this Note shall be invalid, illegal or unenforceable, such
provisions shall be severable from the remainder of this Note and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. The Bank is hereby authorized, without further
notice, to fill in any blank spaces on this Note, and to date this Note as of
the date funds are first advanced hereunder. Paragraph headings are for the
convenience of reference only and are not a part of this Note and shall not
affect its interpretation.
3.8. JURY WAIVER. THE BANK (BY ITS ACCEPTANCE OF THIS NOTE) AND THE
UNDERSIGNED AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A)
SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION
BASED UPON, OR ARISING OUT OF, THIS NOTE, ANY RELATED INSTRUMENTS, ANY
COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR
(B) SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH SHALL
BE SUBJECT TO NO EXCEPTIONS. NEITHER THE BANK NOR THE UNDERSIGNED HAS AGREED
WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this Note as of the
date and year first above written.
/s/ Gary B. Sabin
--------------------------------------
Gary B. Sabin
14540 Wild Horse Creek
Poway, CA 02181
/s/ Janet S. Christensen
- -----------------------------------
Witness
<PAGE>
March 31, 1998
Gary B. Sabin
14540 Wild Horse Creek
Poway, CA 02181
Dear Mr. Sabin:
This letter will service to confirm that BankBoston, N.A. (the "Bank")
holds available for Gary B. Sabin a $3,000,000 secured line of credit to extend
through March 31, 1999. All borrowings under this line will be payable on
demand. This line shall be available for personal uses.
At your option borrowing will be priced at the rates we quote you as:
our Base Rate, OR
our 1, 3, 6, or 12-month reserve-adjusted Eurodollar Rate plus 2.00%,
the Eurodollar Rate being determined by the Bank at 10:00 a.m. Boston time on
the day (which shall be a business day) two business days prior to the date of
the requested borrowing. Requests for borrowings at these pricing options must
be received by 11:00 a.m. Boston time on the date of the requested borrowing in
the case of Base Rate Loans, and at least 2 days before the time for determining
the relevant rate in the case of Eurodollar Rate Loans. Eurodollar Rate Loans
may be requested for interest periods of one, two, or three months; and no loan
shall have an interest period that extends beyond the expiration of this line of
credit. All loans will be made by crediting the proceeds thereof to your
deposit account maintained at the Bank.
All Eurodollar Rates will be adjusted for reservices, if any. Borrowings under
the Eurodollar pricing option must be in minimum amounts of $100,000 or greater
multiples of $100,000. If any Eurodollar Rate Loans are paid on a date other
than the last day of the applicable interest period (whether by reason of
voluntary prepayment, acceleration or otherwise), you shall compensate us for
any funding losses and other costs (including lost profits) incurred as a result
of such prepayment. Our willingness to offer Eurodollar Rates is subject to the
availability of funding sources and the continued legality of our offering such
pricing options. You agree to reimburse us for any increased costs (taxes,
regulatory reserves or assessments, etc.) incurred by us in connection with
borrowings at such pricing options.
All borrowings shall be evidenced by, and all principal and interest shall be
payable in accordance with the terms of, a promissory note in the form attached
hereto. You authorize us to record each borrowing and the corresponding
information on the schedule forming a part of such promissory note, and this
schedule, together with our corresponding records of debit and credit, shall
constitute the official record of all borrowings under this facility. You agree
that this record shall be prima facie evidence of the amounts of the borrowings
under this facility.
<PAGE>
The availability of loans under this facility is subject to our usual condition
that we continue to be satisfied with your affairs and to any substantive
changes in governmental regulations or monetary policies.
If the foregoing satisfactorily sets forth the terms and conditions of this line
of credit, please execute and return the enclosed copy of this letter and the
attached promissory note. We are pleased to provide this line and look forward
to the ongoing development of our relationship.
Sincerely,
/s/ Richard J. Marks
Richard J. Marks
Director, Private Bank Lending
Accepted:
By: /s/ Gary B. Sabin
------------------------------
Gary B. Sabin
Date: March 26, 1998
2
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated this 31st day of March, 1998 between GARY B. SABIN,
AS DONOR AND TRUSTEE, and VALERIE P. SABIN, AS TRUSTEE, of the Gary B. Sabin
Family Trust, under a trust agreement dated May 20, 1982 (Restated dated January
19, 1995) ("PLEDGOR") and BANKBOSTON, N.A., a national banking association (the
"BANK").
W I T N E S S E T H:
WHEREAS, the Bank has made a loan to Gary B. Sabin (the "BORROWER")
pursuant to a Commercial Promissory Note of even date herewith (as amended from
time to time, the "NOTE") in the original principal amount of $3,000,000; and
WHEREAS, the willingness of the Bank to enter into the Note and to make
loans thereunder is subject to the condition, among others, that the Pledgor
execute and deliver to the Bank this Pledge Agreement;
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each party hereto, the Pledgor and the Bank agree as follows:
SECTION 1. PLEDGE AND SECURITY INTEREST GRANT. As collateral security for
the prompt payment and performance in full of the obligations owing by the
Borrower to the Bank of every kind and description, direct or indirect, absolute
or contingent, primary or secondary, due or to become due, now existing or
hereafter arising, regardless of how they arise or by what agreement or
instrument they may be evidenced or whether evidenced by any agreement or
instrument, including obligations to perform acts or to refrain from taking
action as well as obligations to pay money (collectively, the "OBLIGATIONS"),
the Pledgor hereby pledges and grants a security interest in favor of the Bank
all of its common voting stock in EXCEL LEGACY CORPORATION, as more particularly
described on Schedule A attached hereto (the "STOCK"), together with any and all
profits, interest, dividends, income, distributions, voting rights, cash and
non-cash proceeds thereof and substitutions therefor (all of the foregoing being
collectively referred to herein as the "PLEDGED COLLATERAL"). The Pledgor
grants the Bank a continuing first lien and security interest in the Pledged
Collateral, and assigns to the Bank any and all of its rights under the Pledged
Collateral.
SECTION 2. REGISTRATION, ETC. OF PLEDGED COLLATERAL. Any stock or
securities held by the Bank as Pledged Collateral hereunder may, at any time
after demand and at the option of the Bank, be registered in the name of the
Bank or its nominee. Prior to demand, the Pledgor shall retain the right to
vote any of the Pledged Collateral, in a manner not inconsistent with the terms
of this Agreement or of the Note, and the Bank hereby grants to the Pledgor its
proxy to enable the Pledgor to so vote any of the Pledged Collateral. After
demand the Bank may, without notice and as applicable, exercise all voting and
corporate rights at any meeting of the shareholders of the issuer of the Pledged
Collateral, and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining
<PAGE>
to the Pledged Collateral as if it were the absolute owner thereof including,
without limitation, the right to exchange, at its discretion, any and all of the
Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, all without
liability except to account for property actually received, but the Bank shall
have no duty to exercise any of the aforesaid rights, privileges or options and
shall not be responsible for any failure to do so or delay in so doing.
SECTION 3. PAYMENTS IN RESPECT OF COLLATERAL. If the Pledgor shall at any
time be entitled to receive or shall receive any cash, stock certificate or
other property, option or right, in respect of, as an addition to, in
substitution or exchange for any of the Pledged Collateral, the Pledgor agrees
that the same shall be deemed to be Pledged Collateral and shall be delivered
directly to the Bank, to be held by the Bank subject to the terms hereof, as
further security for the Obligations, and to take all steps necessary to arrange
for such delivery. If the Pledgor receives any of the foregoing directly, it
hereby agrees to hold such cash or other property in trust for the benefit of
the Bank, and to turn over such cash or other property to the Bank immediately.
The Bank shall have all of the rights set forth herein with respect thereto.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Pledgor hereby
represents and warrants to and covenants with the Bank that:
4.1 TITLE. The Pledgor and its beneficiaries are the sole legal and
equitable owners of the Pledged Collateral, and hold good title to the same free
and clear of all liens, charges, encumbrances and security interests or rights
of others of every kind and nature whatsoever, except for the security interest
granted hereunder to the Bank, and shall not assign any interest in the Pledged
Collateral, or any part thereof, or otherwise pledge, encumber, or grant any
option with respect to the Pledged Collateral, or any part thereof, except in
favor of the Bank.
4.2 AUTHORIZATION. The Pledgor has good right and legal authority to
assign, deliver, and/or create a security interest in the Pledged Collateral in
the manner hereby provided or contemplated and will defend its title and the
right, title and security interest of the Bank thereto against all claims of all
persons or entities; the Pledged Collateral is genuine and is what it purports
to be, and the execution, delivery and performance of this Agreement have been
duly authorized. This Agreement constitutes a legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
its terms. Pledgor has previously delivered to the Bank true, correct and
complete copies of the trust agreement and all other documents, instruments and
agreements constituting the Pledgor, as in effect on the date hereof, all of
which are in full force and effect.
4.3 UNRESTRICTED COLLATERAL. The Pledged Collateral is not subject to any
restriction on transfer contained in any agreement, law, regulation, rule or
policy to which the Pledgor is a party or by which the Pledgor is bound, which
would prohibit or restrict the pledge or assignment of the Pledged Collateral
hereunder.
4.4 FURTHER ASSURANCE. The Pledgor shall at all times do, make, execute
and deliver all such additional and further acts and instruments as the Bank may
at any time request in
2
<PAGE>
connection with the administration and enforcement of this Agreement or relative
to the Pledged Collateral or any part thereof, or in order more completely to
vest in and assure to the Bank or make available to it the property and rights
herewith or hereafter granted, assigned or transferred to the Bank in the
Pledged Collateral and to carry into affect the provisions and intent of this
Agreement, including, without limitation, execution and delivery by the Pledgor
of appropriate stock transfer powers.
4.5 NEGATIVE PLEDGE. The Pledgor hereby covenants that it will not sell,
convey or otherwise dispose of any of the Pledged Collateral, or otherwise
liquidate or terminate the Stock, nor will it create, incur or permit to exist
any pledge, assignment, lien, charge, encumbrance or any security interest
whatsoever with respect to any of the Pledged Collateral or the proceeds
thereof.
4.6 MINIMUM MARKET VALUE; ADDITIONAL COLLATERAL. The Pledged Collateral
shall at all times have a market value of not less than an amount equal to the
product of (a) 2.00 multiplied by (b) the outstanding principal balance of the
borrowings under the Note (the "MINIMUM VALUE"). In the event the market value
of the Pledged Collateral is less than the Minimum Value, the Pledgor shall,
within two "Business Days" (as defined in the Note) either immediately (a) repay
a portion of the outstanding principal amount outstanding under the Note, or (b)
pledge and deliver to the Bank any additional shares of the common voting stock
of the Company, in addition to the Pledged Collateral, then owned by the
Pledgor, together with any and all profits, interest, dividends, income,
distributions, cash and non-cash proceeds thereof and substitutions therefor, or
both, with aggregate fair market value at least equal to the amount by which the
outstanding principal amount of the borrowings under the Note exceeds the
Minimum Value.
SECTION 5. DISTRIBUTIONS, ETC. In case, upon the dissolution, winding up,
liquidation or reorganization of the Pledgor, whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Pledgor, any sum
shall be paid or any property shall be distributed upon or with respect to any
of the Pledged Collateral, such sum shall be paid over or such property shall be
distributed to the Bank, to be held as collateral security for the Obligations.
In case any stock dividend shall be declared on any of the Pledged Collateral,
or any share of stock or fraction thereof shall be issued pursuant to any stock
split involving any of the Pledged Collateral, or any distribution of capital
shall be made on any of the Pledged Collateral, or any property shall be
distributed on or with respect to the Pledged Collateral pursuant to
recapitalization or reclassification of the capital of the Pledgor, the shares
or other property so distributed shall be delivered to the Bank to be held as
collateral security for the Obligations.
SECTION 6. REMEDIES.
6.1 RIGHTS OF THE BANK. After demand upon the Note, the Bank shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code or other applicable law and shall have the right, subject to any necessary
prior consent of any governmental authority, at any time or times thereafter to
sell, resell, assign and deliver all or any of the
3
<PAGE>
Pledged Collateral at public or private sale. Unless the Pledged Collateral
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, the Bank will give the Pledgor at least five (5) days' prior
written notice of the time and place of any public sale thereof or of the time
after which any private sale or any other intended disposition thereof is to be
made, which notice the Pledgor agrees is reasonable. All such sales shall be at
such commercially reasonable price or prices as the Bank shall deem best and
either for cash or on credit or for future delivery, At any such sale or sales
the Bank may purchase any or all of the Pledged Collateral to be sold thereat
upon such terms as the Bank may deem best. Upon any such sale or sales the
Pledged Collateral so purchased shall be held by the purchaser absolutely free
from any claims or rights of whatsoever kind or nature, including any equity of
redemption and any similar rights, all such equity of redemption and any similar
rights being hereby expressly waived and released by the Pledgor. In the event
any consent, approval or authorization of any governmental agency will be
necessary to effectuate any such sale or sales, the Pledgor shall execute all
such applications or other instruments as may be required. The proceeds of any
such sale or sales, together with any other additional collateral security at
the time received and held hereunder, shall be received and applied: first, to
the payment of all costs and expenses of such sale, including reasonable
attorneys' fees; second, to the payment of the Obligations in such order of
priority as the Bank shall determine; and any surplus thereafter remaining shall
be paid to the Pledgor or to whoever may be legally entitled thereto; PROVIDED
that in no event shall the Pledgor be credited with any part of the proceeds of
the sale of the Pledged Collateral until cash payment thereon has actually been
received by the Bank.
6.2 SECURITIES RESTRICTIONS. The Pledgor recognizes that the Bank may be
unable to effect a public sale of all or a part of the Pledged Collateral by
reason of certain prohibitions contained in the Securities Act of 1933 (the
"SECURITIES ACT") or the securities laws of various states (the "BLUE SKY
LAWS"), but may be compelled to resort to one or more private sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgor agrees that
private sales so made may be at prices and upon other terms less favorable to
the seller than if the Pledged Collateral were sold at public sales, and that
the Bank has no obligation to delay sale of any the Pledged Collateral for the
period of time necessary to permit the Pledged Collateral to be registered for
public sale under the Securities Act or the Blue Sky Laws. The Pledgor agrees
that private sales made under the foregoing circumstances shall be deemed to
have been made in a commercially reasonable manner.
SECTION 7. RIGHTS OF BANK. Beyond the exercise of reasonable care to
assure the safe custody of the Pledged Collateral while any of it is held by the
Bank hereunder, the Bank shall have no duty or liability to anyone to collect
any sums due or other property due in respect thereof or to protect or preserve
any rights of any such party pertaining thereto, and shall be relieved of all
responsibility for the Pledged Collateral upon the surrender of the same to the
Pledgor. No course of dealing between the Pledgor and the Bank, nor any failure
by the Bank to exercise or delay in exercising any right, power or privilege
hereunder or under any of the Obligations, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided and
4
<PAGE>
provided under any of the Obligations are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by law, including, without
limitation, the rights and remedies of a secured party under the Uniform
Commercial Code.
SECTION 8. BANK AS ATTORNEY-IN-FACT. After demand upon the Note, the Bank
may, but without obligation to do so, as attorney-in-fact for the Pledgor,
demand, sue for and/or collect any money or property at any time due, payable or
receivable to which it may be entitled hereunder, on account of or in exchange
for any of the Pledged Collateral. After demand upon the Note, or in connection
with any sale or other disposition of Pledged Collateral pursuant to this
Agreement, the Bank shall have the right, for and in the name, place and stead
of the Pledgor, as attorney-in-fact for the Pledgor, to execute endorsements,
assignments, or other instruments of conveyance or transfer with respect to all
or any of the Pledged Collateral. The Pledgor shall indemnify and hold harmless
the Bank from and against any liability or damage which the Bank may incur in
the exercise and performance, in good faith, of any of the Bank's powers and
duties set forth herein.
SECTION 9. ASSIGNMENTS, ETC. In the event of a sale or assignment by the
Bank of all or any of the Obligations held by it, the Bank may assign or
transfer its rights and interest under this Agreement in whole or in part to the
purchaser or purchasers of such Obligations, whereupon such purchaser, or
purchasers shall become vested with all of the powers and rights given to the
Bank hereunder, and the Bank shall thereafter be forever released and fully
discharged from any liability or responsibility hereunder with respect to the
rights and interests so assigned,
SECTION 10. NOTICE. Except as otherwise provided herein, notice to or
demand upon the Pledgor or the Bank shall be in writing and deemed to have been
sufficiently given for all purposes hereof if personally delivered or three
business days after being mailed by first class registered or certified mail,
return receipt requested, postage prepaid, to the parties hereto at the address
set forth below;
If to the Pledgor:
Gary S. Sabin, as Donor and Trustee
Valerie P. Sabin, as Trustee
Gary B. Sabin Family Trust as amended and restated
18540 Wild Horse Creek
Poway, California 92064
If to the Bank:
BankBoston, N.A.
100 Federal Street
Boston, Massachusetts 02110
Attention: Mary E. Sheehan, Private Bank
5
<PAGE>
SECTION 11. WAIVERS. The Pledgor waives presentment, notice, protest,
notice or acceptance of this Agreement, notice of any loans made, extensions
granted, collateral received or delivered or any other action taken in reliance
thereon, all demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of any of the Obligations or other evidence
of indebtedness for which any of the Pledged Collateral is pledged and all other
demands and notices of any description, and assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Pledged Collateral and to the addition or
release of any party or person primarily or secondarily liable.
SECTION 12. REINSTATEMENT. This Agreement shall continue to be effective,
or be reinstated, as the case may be, if at any time any amount received by the
Bank in respect of the Pledged Collateral is rescinded or must otherwise be
restored or returned by the Bank upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Pledgor or the Borrower or upon the
appointment of any intervenor or conservator of, or trustee or similar official
for, the Pledgor or the Borrower or any substantial part of its respective
properties, or otherwise, all as though such payments had not been made.
SECTION 13. MISCELLANEOUS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their legal representatives, successors
and assigns, and the term "Bank" shall be deemed to include any other holder or
holders of any of the Obligations. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument. This Agreement, including the
validity hereof and the rights and obligations of the parties hereunder, shall
be construed in accordance with and governed by the laws of The Commonwealth of
Massachusetts.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument by their duly authorized representatives as of the date first
above written.
/s/ Gary B. Sabin
Gary B. Sabin, as Donor and Trustee of
the Gary B. Sabin Family Trust
/s/ Janet S. Christensen
- -----------------------------------
Witness
/s/ Valerie P. Sabin
----------------------------------------
Valerie P. Sabin, as Trustee of the Gary
B. Sabin Family Trust
/s/ Janet S. Christensen
- -----------------------------------
Witness
BANKBOSTON, N.A.
By: /s/ Mary E. Sheehan
-----------------------------------
Name: Mary E. Sheehan
-----------------------------------
Its: Vice President
------------------------------------
7
<PAGE>
SCHEDULE A
PLEDGED COLLATERAL
<TABLE>
<CAPTION>
Issuer Class Certificate Number Number of Shares
------ ----- ------------------ ----------------
<S> <C> <C> <C>
EXCEL LEGACY Common 2,998,408
CORPORATION
</TABLE>
<PAGE>
COMMERCIAL PROMISSORY NOTE
$3,000,000
Boston, Massachusetts
March 31,1998
FOR VALUE RECEIVED, the undersigned Promises to pay to the order of
BANKBOSTON, N.A. (together with any successors or assigns, the "BANK"), a
national banking association with its Head Office at 100 Federal Street, Boston,
Massachusetts 02110, the aggregate principal amount of all loans made by the
Bank to the undersigned pursuant to the letter agreement between the Bank and
the undersigned dated March 31, 1998, as shown in the schedule attached hereto
(the "NOTE SCHEDULE"), together with interest on each loan from the date such
loan is made until the maturity thereof at the applicable rate set forth in the
Note Schedule. The principal amount of each loan shall be payable on demand or,
if demand is not earlier made, on the last day of the applicable interest
period, if any, indicated it the Note Schedule. Interest on the principal
amount of each loan shall be payable in arrears on the same day as the principal
amount is due, provided that (i) interest on each loan bearing interest at the
Base Rate shall be payable on the first day of each month, beginning on the
first of such dates occurring after the date of such loan and when such loan is
due, and (ii) if the maturity of any loan is more than three months from the
date of such loan, then interest shall be payable at intervals of three months
and when such loan is due. Loans which are shown as bearing interest at the
Base Rate shall bear interest at a rate per annum equal to the rate of interest
announced from time to time by the Bank at its head office as its "BASE RATE".
The applicable floating rate shall change as and when the Base Rate changes, and
changes in the Base Rate shall take effect on the day announced unless otherwise
specified in the announcement. Interest shall be calculated on the basis of a
360-day year for the actual number of days elapsed including holidays and days
on which the Bank is not open for the conduct of banking business.
SECTION 1. PAYMENT TERMS.
1.1 PAYMENTS; PREPAYMENTS. All payments hereunder shall be made by the
undersigned to the Bank in United States currency at the Bank's address
specified above (or at such other address as the Bank may specify), in
immediately available funds, on or before 2:00 p.m. (Boston, Massachusetts time)
on the due date thereof. Payments received by the Bank prior to the occurrence
of an Event of Default (as defined in Section 2) will be applied FIRST to fees,
expenses and other amounts due hereunder (excluding principal and interest);
SECOND, to accrued interest; and THIRD to outstanding principal; after the
occurrence of an Event of Default, payments will be applied to the Obligations
under this Note as the Bank determines in its sole discretion. Subject to
Section 1.2, the undersigned may pay all or a portion of the amount owed earlier
than it is due without premium or other charge.
1.2 PREPAYMENT CHARGE. If any loan made under this Note bears interest
at a fixed rate and any payment of principal is made for any reason on any day
other than the date scheduled therefor, whether voluntarily or as a result of
acceleration or otherwise, the undersigned shall reimburse the Bank for the
loss, if any, including any lost profits, resulting
<PAGE>
from such prepayment, as reasonably determined by the Bank. The undersigned
shall pay such loss upon presentation by the Bank of a statement of the amount
of such loss, setting forth the Bank's calculation thereof, which notice and
calculation (including the method of calculation) shall be deemed true and
correct absent manifest error.
1.3 DEFAULT RATE. To the extent permitted by applicable law, upon and
after the occurrence of an Event of default (whether or not the Bank has
accelerated payment of this Note), interest on principal and overdue interest
shall, at the option of the Bank, be payable on demand at a rate per annum equal
to 4% above the greater of the rate of interest otherwise payable hereunder or
the Base Rate.
1.4 LATE PAYMENT CHARGE. If a payment of principal or interest
hereunder is not made within 10 days of its due date, the Undersigned will pay
on demand a late payment charge equal to 5% of the amount of such payment.
Nothing in the preceding sentence shall affect the Bank's right to accelerate
the maturity of this Note in the event of any default in the payment of this
Note.
(check if 1.5 DEPOSIT ACCOUNT. The undersigned shall maintain with the
applicable) Bank a personal deposit account. The undersigned requests and
__ authorizes the Bank to debit such account for amounts due
hereunder on each date such amounts become due. The undersigned
shall maintain sufficient collected balances in this account to
pay any such amounts as they become due.
SECTION 2. DEFAULTS AND REMEDIES.
2.1 DEFAULT. The occurrence of any of the following events or conditions shall
constitute an "EVENT OF DEFAULT" hereunder:
(a) (i) default in the payment when due of the principal of or
interest on this Note or (ii) any other default in the payment or
performance of this Note or of any other Obligation or (iii) default in the
payment or performance of any obligation of any Obligor to others for
borrowed money or in respect of any extension of credit or accommodation or
under any lease;
(b) failure of any representation or warranty herein or in any
agreement, instrument, document or financial statement delivered to the
Bank in connection herewith to be true and correct in any material respect;
(c) default or breach of any condition under any mortgage,
security agreement, assignment of lease, or other agreement securing,
constituting or otherwise relating to any collateral for the Obligations;
(d) failure to furnish the Bank promptly on request with
financial information about, or to permit inspection by the Bank of any
books, records and properties of, any Obligor;
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(e) merger, consolidation, sale of all or substantially all of
the assets or change in control of any Obligor; or
(f) any Obligor generally not paying its debts as they become
due; the death, dissolution, termination of existence or insolvency of any
Obligor; the appointment of a trustee, receiver, custodian, liquidator or
other similar official for such Obligor or any substantial part of its
property or the assignment for the benefit of creditors by any Obligor; or
the commencement of any proceedings under any bankruptcy or insolvency laws
by or against any Obligor.
As used herein, "OBLIGATION" means any obligation hereunder or otherwise of any
Obligor to the Bank or to any of its affiliates, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising;
and "OBLIGOR" means the undersigned, any guarantor or any other person primarily
or secondarily liable hereunder or in respect hereof, including any person or
entity who has pledged or granted to the Bank a security interest in, or other
lien on, property on behalf of the undersigned as collateral for the
Obligations.
2.2 REMEDIES. Upon an Event of Default described in Section 2.1(f) immediately
and automatically, and upon or after the occurrence of any other Event of
Default at the option of the Bank, all Obligations of the undersigned shall
become immediately due and payable without notice or demand, and the Bank shall
then have in any jurisdiction where enforcement hereof is sought, the rights and
remedies of a secured party under the Uniform Commercial Code of Massachusetts.
All rights and remedies of the Bank are cumulative and are exclusive of any
rights or remedies provided by law or in equity or any other agreement, and may
be exercised separately or concurrently.
SECTION 3. MISCELLANEOUS.
3.1 WAIVER; AMENDMENT. No delay or emission on the part of the Bank in
exercising any right hereunder shall operate as a waiver of such right or of any
other right under this Note. No waiver of any right or any amendment hereto
shall be effective unless in writing and signed by the Bank, nor shall a waiver
on one occasion bar or waive the exercise of any such right on any future
occasion. Without limiting the generality of the foregoing, the acceptance by
the Bank of any late payment shall not be deemed to be a waiver of the Event of
Default arising as a consequence thereof. Each Obligor waivers presentment,
demand, notice, protest, and all other demands and notices in connection with
the delivery, acceptance, performance, default or enforcement of this Note or of
any collateral for the Obligations, and assents to any extensions or
postponements of the time of payment and to any other indulgences under this
Note or with respect to any such collateral, to any substitutions, exchanges or
releases of any such collateral, and to any additions or releases of any other
parties or persons primarily or secondarily liable hereunder, that from time to
time may be granted by the Bank in connection herewith.
3.2 SECURITY; SET-OFF. The undersigned grants to the Bank, as security for the
full and punctual payment and performance of the Obligations, a continuing lien
on and security interest
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in all securities or other property belonging to the undersigned now or
hereafter held by the Bank and in all deposits (general or special, time or
demand, provisional or final) and other sums credited by or due from the Bank to
the undersigned or subject to withdrawal by the undersigned; and regardless of
the adequacy of any collateral or other means of obtaining repayment of the
Obligations, the Bank is hereby authorized at any time and from time to time,
without notice to the undersigned (any such notice being expressly waived by the
undersigned) and to the fullest extent permitted by law, to set off and apply
such deposits and other sums against the Obligations of the undersigned,
although such Obligations may be contingent or unmatured.
3.3 TAXES. The undersigned agrees to indemnify the Bank and hold it harmless
from and against any transfer taxes, documentary taxes, assessments or charges
made by any governmental authority by reason of the execution, delivery, and
performance of this Note or any collateral for the Obligations.
3.4 EXPENSES. The undersigned will pay on demand all expenses of the Bank in
connection with the preparation, administration, default, collection. waiver or
amendment of the Obligations or in connection with the Bank's exercise,
preservation or enforcement of any of its rights, remedies or options
thereunder, including, without limitation, fees of outside legal counsel or the
allocation costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated
with any travel or other costs relating to any appraisals or examinations
conducted in connection with the Obligations or any collateral therefor, and the
amount of all such expenses shall, until paid, bear interest at the rate
applicable to principal hereunder (including any default rate) and be an
Obligation secured by any such collateral.
3.5 BASIC RECORDS. The entries an the records of the Bank (including any
appearing on this Note) shall be prima facie evidence of the aggregate principal
amount outstanding under this Note and interest accrued thereon.
3.6 INFORMATION. The undersigned shall furnish the Bank from time to time with
such financial statements and other information relating to any Obligor or any
collateral securing this Note as the Bank may require. All such information
shall be true and correct and fairly represent the financial condition and the
operating results of such Obligor as of the date and for the periods for which
the same are furnished. The undersigned shall permit representatives of the
Bank to inspect its properties and its books and records, and to make copies or
abstracts thereof. Each Obligor authorizes the Bank to release and disclose to
its affiliates, agents and contractors any financial statements and other
information relating to said Obligor provided to or prepared by or for the Bank
in connection with any Obligation. The undersigned will notify the Bank
promptly of the existence or upon the occurrence of any Event of Default or
event which, with the giving of notice or the passage of time or both, would
become an Event of Default.
3.7 GOVERNING LAW; CONSENT TO JURISDICTION. This Note is intended to take
effect as a sealed instrument and shall be governed by, and construed in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its conflicts of law rules. The undersigned agrees that any suit for the
enforcement of this Note may be brought in the courts of
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such state or any Federal Court sitting in such state and consents to the
non-exclusive jurisdiction of each such court and to service of process in any
such suit being made upon the undersigned by mail at the address specified
below. The undersigned hereby waives any objection that it may now or hereafter
have to the venue of any such suit or any such court or that such suit was
brought in an inconvenient court.
3.8 SEVERABILITY; AUTHORIZATION TO COMPLETE; PARAGRAPH HEADINGS. If any
provision of this Note shall be invalid, illegal or unenforceable, such
provisions shall be severable from the remainder of this Note and the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby. The Bank is hereby authorized, without further
notice, to fill in any blank spaces on this Note, and to date this Note as of
the date funds are first advanced hereunder. Paragraph headings are for the
convenience of reference only and are not a part of this Note and shall not
affect its interpretation.
3.9 JURY WAIVER. THE BANK (BY ITS ACCEPTANCE OF THIS NOTE) AND THE UNDERSIGNED
AGREE THAT NEITHER OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON,
OR ARISING OUT OF, THIS NOTE, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH SHALL BE SUBJECT TO
NO EXCEPTIONS. NEITHER THE BANK NOR THE UNDERSIGNED HAS AGREED WITH OR
REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY
ENFORCED IN ALL INSTANCES.
Address: /s/ Gary B. Sabin
-----------------------------------
18540 Wild Horse Creek Gary B. Sabin
Poway, California 92064
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SCHEDULE
$3,000,000 Note dated March 31, 1998 of Gary B. Sabin, payable to the order of
BANKBOSTON, N.A.
<TABLE>
<CAPTION>
Principal Last day Date & Amount
Date of Amount of Interest Interest of Payment Notation
Loan of Loan Period Rate* Received Made by
---- ------- ------ ---- -------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
