<PAGE>
SCHEDULE 14A
(Rule 14a-101)
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule l4a-11(c) or Rule 14a-12
EXCEL LEGACY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules l4a-6(i)(l) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
EXCEL LEGACY CORPORATION
16955 VIA DEL CAMPO, SUITE 100
SAN DIEGO, CALIFORNIA 92127
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 28, 1999
TO THE STOCKHOLDERS OF EXCEL LEGACY CORPORATION:
Notice is hereby given that the Annual Meeting of Stockholders of Excel
Legacy Corporation (the "Company"), will be held at the Rancho Bernardo Inn,
17550 Bernardo Oaks Drive, San Diego, California, on January 28, 1999, at 10:00
a.m.(PDT), for the following purposes:
1. To elect seven Directors for a one-year term and until their successors
have been duly elected and qualified. The present Board of Directors of the
Company has nominated and recommends for such election as Directors the
following seven persons:
Gary B. Sabin
Richard B. Muir
Kelly D. Burt
Richard J. Nordlund
Robert E. Parsons, Jr.
Robert S. Talbott
John H. Wilmot
2. To transact such other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
The Board of Directors has fixed the close of business on December 4, 1998
as the record date with respect to this solicitation.
Accompanying this Notice is a proxy. WHETHER OR NOT YOU EXPECT TO BE AT
THE MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY.
If you plan to attend the meeting, you may vote in person if you wish, even
though you have previously returned the proxy.
All stockholders are cordially invited to attend the annual meeting.
By Order of the Board of Directors,
Gary B. Sabin
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
San Diego, California
December 22, 1998
<PAGE>
EXCEL LEGACY CORPORATION
16955 VIA DEL CAMPO, SUITE 100
SAN DIEGO, CALIFORNIA 92127
PROXY STATEMENT
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors (the "Board")
of Excel Legacy Corporation, a Delaware corporation (the "Company"), in
connection with the Annual Meeting of Stockholders to be held at 10:00 a.m.
(PDT) on January 28, 1999 (the "Annual Meeting") at the Rancho Bernardo Inn,
17550 Bernardo Oaks Drive, San Diego, California, and at any and all
adjournments or postponements of the Annual Meeting. By signing and returning
the enclosed proxy, you authorize the representatives of the Company named on it
to represent you and vote your shares.
The Company was formed on November 17, 1997 as a wholly-owned subsidiary of
New Plan Excel Realty Trust, Inc. ("New Plan Excel"), formerly Excel Realty
Trust, Inc. ("Excel"), a Maryland corporation and a real estate investment trust
("REIT"). On March 31, 1998, Excel effected a spin-off of the Company through a
special dividend to the holders of Excel common stock of all of the outstanding
common stock of the Company held by Excel (the "Spin-off"). The Company was
formed to pursue opportunities available to those investors that are not
restricted by the federal income tax laws governing REITs or influenced by
Excel's investment and leverage guidelines.
VOTING RIGHTS AND PROXY INFORMATION
All stockholders who find it convenient to do so are cordially invited to
attend the Annual Meeting in person. In any event, please complete, sign, date
and promptly return the proxy. A proxy may be revoked by written notice to the
Secretary of the Company at any time prior to the voting of the proxy, or by
executing a later proxy or by attending the Annual Meeting and voting in person.
Unrevoked proxies will be voted in accordance with the instructions indicated in
the proxies, or if there are no such instructions, such proxies will be voted
for the election of each of the Board's nominees for Director. Shares
represented by proxies that reflect abstentions or include "broker non-votes"
will be treated as present and entitled to vote for purposes of determining the
presence of a quorum. Abstentions and "broker non-votes" do not constitute a
vote "for" or "against" any matter and thus will be disregarded in the
calculation of "votes cast."
It is anticipated that this Proxy Statement will first be mailed to
stockholders on or about December 22, 1998. The Company's 1998 Annual Report to
its stockholders is also enclosed and should be read in conjunction with the
matters set forth in this Proxy Statement.
Stockholders of record at the close of business on December 4, 1998 (the
"Record Date") will be entitled to vote at the Annual Meeting. As of the Record
Date, 33,457,804 shares of common stock, par value $.01 per share, of the
Company ("Common Stock") and 21,281,000 shares of the Series A Liquidating
Preference Convertible Preferred Stock due 2005, par value $.01 per share, of
the Company ("Series A Preferred Stock," and together with the Common Stock,
"Voting Stock") were outstanding. Holders of the Common Stock and Series A
Preferred Stock vote together on all matters submitted to the stockholders for a
vote. Each share of Common Stock is entitled to one vote, and each share of
Series A Preferred Stock is entitled to one vote for each share of Common Stock
into which such share of Series A Preferred Stock is convertible. A majority of
the outstanding shares of the Company entitled to vote, represented in person or
by proxy at the Annual Meeting, constitutes a quorum. A plurality of the votes
cast at the Annual Meeting is required to elect Directors.
2
<PAGE>
The costs of solicitation of proxies will be paid by the Company. In
addition to soliciting proxies by mail, the Company's officers, Directors and
other regular employees, without additional compensation, may solicit proxies
personally or by other appropriate means. It is anticipated that banks, brokers,
fiduciaries, other custodians and nominees will forward proxy soliciting
materials to their principals, and that the Company will reimburse such persons'
out-of-pocket expenses.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Board currently consists of the following seven Directors: Gary B.
Sabin, Richard B. Muir, Kelly D. Burt, Richard J. Nordlund, Robert E. Parsons,
Jr., Robert S. Talbott and John H. Wilmot. The current Directors will serve
until the Annual Meeting and until their respective successors have been duly
elected and qualified. Each of the current seven Directors of the Company has
been nominated and recommended for election to serve as a Director for a term of
one year and until his successor has been duly elected and qualified. Each of
the Director nominees has individually advised the Board that he is able and
willing to serve as a Director of the Company. If no contrary indication is
made, proxies in the accompanying form are to be voted for each of the seven
nominees for Director or, if for any reason any of them become unavailable for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitute nominee or nominees proposed by the Board.
The seven individuals with the highest number of affirmative votes will be
elected to the seven Directorships of the Company.
INFORMATION REGARDING DIRECTORS
Set forth below is certain information concerning each of the seven
nominees to the Board.
NOMINEES FOR ELECTION TO THE BOARD
FOR A ONE-YEAR TERM EXPIRING AT THE
2000 ANNUAL MEETING OF STOCKHOLDERS
Name Age Present Position with the Company
- ---- --- ---------------------------------
Gary B. Sabin 44 Chairman, President and Chief Executive
Officer
Richard B. Muir 43 Director, Executive Vice President and
Secretary
Kelly D. Burt 41 Director and Executive Vice President
--Development
Richard J. Nordlund 53 Director
Robert E. Parsons, Jr. 43 Director
Robert S. Talbott 45 Director
John J. Wilmot 56 Director
3
<PAGE>
GARY B. SABIN has served as Chairman of the Board, President and Chief
Executive Officer of the Company since its formation. Mr. Sabin served as
Chairman, President and Chief Executive Officer of Excel from January 1989 to
September 1998. Mr. Sabin currently serves as Director and President of New
Plan Excel. Mr. Sabin has also served as Chairman, President and Chief
Executive Officer of ERT Development Corporation ("EDV") and Excel
Interfinancial Corporation ("EIC") since their formation. In addition, Mr.
Sabin has served as Chief Executive Officer of various companies since his
founding of Excel's predecessor company and its affiliates starting in 1977. He
has been active for over 20 years in diverse aspects of the real estate
industry, including the evaluation and negotiation of real estate acquisitions,
management, financing and dispositions.
RICHARD B. MUIR has served as Director, Executive Vice President and
Secretary of the Company since its formation. Mr. Muir served as Director,
Executive Vice President and Secretary of Excel from January 1989 to September
1998. Mr. Muir currently serves as Director, Executive Vice President and
Co-Chief Operating Officer of New Plan Excel. Mr. Muir also has served as
Executive Vice President of EDV since its formation. In addition, Mr. Muir has
served as an officer and Director of various affiliates of New Plan Excel since
1978, primarily in administrative and executive capacities, including direct
involvement in and supervision of asset acquisitions, management, financing and
dispositions.
KELLY D. BURT has served as a Director and Executive Vice
President--Development of the Company since May 1998. From 1992 to May 1998, Mr.
Burt served as President and founder of TenantFirst Real Estate Services, Inc.
("TenantFirst"), a real estate development company in San Diego, California that
was acquired by the Company in May 1998. From 1984 to 1992, Mr. Burt was an
Industrial/Office Partner at the San Diego division of Trammell Crow Company, a
real estate development company headquartered in Dallas, Texas.
RICHARD J. NORDLUND has served as a Director of the Company since its
formation and as President of RJN Management, a real estate firm in Santa
Barbara, California, for the past 10 years. From 1978 through 1988, Mr. Nordlund
served as President of First Corporate Services, an investment banking firm in
Minneapolis, Minnesota. He is also associated with Miller & Schroeder Financial,
Inc. Mr. Nordlund's business experience includes 28 years in the investment
banking and mortgage banking industries.
ROBERT E. PARSONS, JR. has served as a Director of the Company since its
formation and of New Plan Excel since January 1989. Mr. Parsons is presently
Executive Vice President and Chief Financial Officer of Host Marriott
Corporation, a company he joined in 1981. He also serves as a Director and
officer of several Host Marriott subsidiaries, and as a Director of Merrill
Financial Corporation,
a privately-held real estate company.
ROBERT S. TALBOTT has served as a Director of the Company since its
formation. Mr. Talbott is an attorney and has served as President of Holrob
Investments, LLC, a company engaged in the acquisition, development, management
and leasing of real property, since 1997. From 1985 through 1997, Mr. Talbott
served as Executive Vice President and President of Horne Properties, Inc.,
where he was involved in the acquisition and development of over 100 shopping
centers. He also serves as a member of the Public Building Authority of
Knoxville, Tennessee, as a member of the Knoxville Industrial Development Board,
as a Director of the Knoxville Chamber of Commerce and as Chairman of the St.
Mary's Foundation.
JOHN H. WILMOT has served as a Director of the Company since its formation
and of New Plan Excel since 1989. Mr. Wilmot, individually and through his
wholly-owned corporations, develops and manages real property, including office
buildings, shopping centers and residential projects primarily in the
Phoenix/Scottsdale area, and has been active in such business since 1976.
4
<PAGE>
MEETINGS OF THE BOARD
During the fiscal year ended July 31, 1998, the Board held one meeting. In
that year, each Director attended at least 75% of the aggregate of all meetings
held by the Board and all meetings held by all committees of the Board on which
such Director served.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Nordlund, Parsons
and Talbott. During the 1998 fiscal year the Audit Committee held no meetings.
The Audit Committee reviews the annual audits of the Company's independent
public accountants, reviews and evaluates internal accounting controls,
recommends the selection of the Company's independent public accountants,
reviews and passes upon (or ratifies) related party transactions, and conducts
such reviews and examinations as it deems necessary with respect to the
practices and policies of, and the relationship between, the Company and its
independent public accountants.
COMPENSATION COMMITTEE. The Compensation Committee consists of Messrs.
Nordlund, Talbott and Wilmot. During the 1998 fiscal year the Compensation
Committee held no meetings. The Compensation Committee reviews compensation of
senior officers of the Company and administers the Company's executive
compensation policies and stock option plans.
EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Sabin,
Muir, Burt and Wilmot. During the 1998 fiscal year the Executive Committee held
one meeting. The Executive Committee has all powers and rights necessary to
exercise the full authority of the Board in the management of the business and
affairs of the Company, except as provided in the Delaware General Corporation
Law or the Company Bylaws.
COMPENSATION OF THE BOARD
Each non-employee Director of the Company receives $6,000 per year for
serving on the Board and an additional $500 for each meeting attended (other
than committee meetings). An additional $4,000 is paid to any non-employee
Director who serves on the Executive Committee. Each Director is eligible to
receive stock options pursuant to the 1998 Stock Option Plan of Excel Legacy
Corporation (the "Legacy Stock Option Plan"). Pursuant to the terms of the
Legacy Stock Option Plan, each of the current Directors will be granted an
option to purchase 3,000 shares of Common Stock if re-elected to the Board at
the Annual Meeting.
Directors also receive reimbursement for travel expenses incurred in
connection with their duties as Directors.
RECOMMENDATION OF THE BOARD
The Board unanimously recommends a vote FOR the nominees set forth above.
Proxies solicited by the Company will be so voted unless stockholders specify
otherwise on the accompanying proxy.
5
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock and
Series A Preferred Stock beneficially owned as of the Record Date by (1) the
executive officers and Directors of the Company, (2) all of the Company's
executive officers and Directors as a group, and (3) all other stockholders
known by the Company to beneficially own more than 5.0% of the Common Stock or
Series A Preferred Stock. Except as otherwise indicated, each individual named
has a business address of 16955 Via Del Campo, Suite 100, San Diego, California
92127, and has sole investment and voting power with respect to the securities
shown.
<TABLE>
<CAPTION>
Number of Shares Number of Shares of
of Common Stock Series A Preferred Stock Percent
Name Beneficially Owned Beneficially Owned Beneficially Owned
- ---- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Gary B. Sabin (1) 3,855,072 -- 11.5% of Common Stock
7.0% of Voting Stock
Richard B. Muir 1,097,909 -- 3.3% of Common Stock
2.0% of Voting Stock
Ronald H. Sabin 1,086,906 -- 3.2% of Common Stock
2.0% of Voting Stock
Mark T. Burton 1,018,300 -- 3.0% of Common Stock
1.9% of Voting Stock
Graham R. Bullick 1,006,605 -- 3.0% of Common Stock
1.8% of Voting Stock
S. Eric Ottesen 1,000,556 -- 3.0% of Common Stock
1.8% of Voting Stock
Kelly D. Burt 888,700 -- 2.7% of Common Stock
1.6% of Voting Stock
John H. Wilmot (2) 110,336 -- *
Richard J. Nordlund (3) 32,468 -- *
James Y. Nakagawa 26,020 -- *
Robert E. Parsons, Jr. (4) 12,123 -- *
Robert S. Talbott (5) 3,000 -- *
Officers and Directors
as a group (12 persons) 10,137,995 -- 30.3% of Common Stock
18.5% of Voting Stock
David A. Lund (6) 1,003,762 -- 3.0% of Common Stock
1.8 % of Voting Stock
6
<PAGE>
Fidelity Management 2,715,790 -- 8.1% of Common Stock
Company (7) 5.0% of Voting Stock
Longleaf Partners 2,280,000 14,600,000 6.8% of Common Stock
Realty Fund (8) 30.8% of Voting Stock
BancBoston Capital Inc. (9) -- 2,681,000 0.0% of Common Stock
4.9% of Voting Stock
The Northwestern Mutual
Life Insurance Company (10) -- 2,000,000 0.0% of Common Stock
3.7% of Voting Stock
Allstate Insurance -- 2,000,000 0.0% of Common Stock
Company (11) 3.7% of Voting Stock
</TABLE>
- -------------------------
* Represents less than 1.0% of the outstanding shares.
(1) Includes shares of Common Stock held by EIC, of which Gary Sabin is
the controlling stockholder.
(2) Mr. Wilmot's business address is 4455 E. Camelback Rd., Phoenix,
Arizona 85018.
(3) Mr. Nordlund's business address is 615 Hot Springs Road, Santa
Barbara, California 93108-1108.
(4) Mr. Parson's business address is Host Marriott Corporation, 10400
Fernwood Road, Washington, D.C. 20058.
(5) Mr. Talbott's business address is 2607 Kingston Pike, Knoxville,
Tennessee 37919.
(6) Mr. Lund resigned as Chief Financial Officer of the Company in October
1998, but is still affiliated with the Company.
(7) Fidelity is a group of funds of which no single fund owns more than
5.0% of the Common Stock. Fidelity's business address is 82 Devonshire
Street, Boston, Massachusetts 02109.
(8) Longleaf Partners Realty Fund's business address is c/o Southeastern
Asset Management, Inc., 6410 Poplar Avenue, 9th Floor, Memphis,
Tennessee 38119.
(9) BancBoston Capital Inc.'s business address is 100 Federal Street,
Boston, Massachusetts 02110. For a discussion of the relationship
between the Company and an affiliate of BancBoston Capital Inc., see
"Certain Relationships and Related Transactions--Private Placements."
(10) The Northwestern Mutual Life Insurance Company's business address is
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
(11) Allstate Insurance Company's business address is Allstate Plaza, 3075
Sanders Road, Suite G5B, Northbrook, Illinois 60062-7127.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth below are the names, positions and ages of the executive officers
and other key employees of the Company:
<TABLE>
<CAPTION>
Name Position with the Company Age
- ---- ------------------------- ---
<S> <C> <C>
Gary B. Sabin Chairman, President and Chief Executive Officer 44
Richard B. Muir Director, Executive Vice President and Secretary 43
Kelly D. Burt Director, Executive Vice President--Development 41
Emmett R. Albergotti Senior Vice President--Retail Development 56
Graham R. Bullick Senior Vice President--Capital Markets 48
Mark T. Burton Senior Vice President--Acquisitions 38
S. Eric Ottesen Senior Vice President, General Counsel 43
and Assistant Secretary
Ronald H. Sabin Senior Vice President--Asset Management 47
James Y. Nakagawa Chief Financial Officer 33
</TABLE>
GARY B. SABIN has served as Chairman of the Board, President and Chief
Executive Officer of the Company since its formation. Mr. Sabin currently
serves as Director and President of New Plan Excel. For a more detailed
discussion of Mr. Sabin's business experience, see "Election of
Directors--Information Regarding Directors."
RICHARD B. MUIR has served as Director, Executive Vice President and
Secretary of the Company since its formation. Mr. Muir currently serves as
Director, Executive Vice President and Co-Chief Operating Officer of New Plan
Excel. For a more detailed discussion of Mr. Muir's business experience, see
"Election of Directors--Information Regarding Directors."
KELLY D. BURT has served as Director and Executive Vice
President--Development of the Company since May 1998. From 1992 to May 1998, Mr.
Burt served as President and founder of TenantFirst. For a more detailed
discussion of Mr. Burt's business experience, see "Election of
Directors--Information Regarding Directors."
EMMETT R. ALBERGOTTI has served as Senior Vice President--Retail
Development of the Company since August 1998. From 1993 to August 1998, Mr.
Albergotti served as Senior Vice President of AMC Realty, Inc., the real estate
arm of AMC Entertainment, Inc., for which he oversaw the acquisition and
development of new theater locations throughout the western United States.
GRAHAM R. BULLICK has served as Senior Vice President--Capital Markets of
the Company since its formation and of New Plan Excel since January 1991.
Previously, Mr. Bullick was associated with Excel as a Director from 1991 to
1992. From 1985 to 1991, Mr. Bullick served as Vice President and Chief
Operations Officer for a real estate investment firm, where his responsibilities
included acquisition and financing of investment real estate projects.
8
<PAGE>
MARK T. BURTON has served as Senior Vice President--Acquisitions of the
Company since its formation and of New Plan Excel since October 1995. Mr. Burton
served as a Vice President of Excel from January 1989 to October 1995. Mr.
Burton has been associated with New Plan Excel and its affiliates since 1983,
primarily in the evaluation and selection of property acquisitions.
S. ERIC OTTESEN has served as Senior Vice President, General Counsel and
Assistant Secretary of the Company since its formation. Mr. Ottesen served as
Senior Vice President, General Counsel and Assistant Secretary of Excel from
September 1996 to September 1998. Mr. Ottesen currently serves as Senior Vice
President--Legal Affairs and Secretary of New Plan Excel. From 1987 to 1995, Mr.
Ottesen was a senior partner in a San Diego law firm.
RONALD H. SABIN has served as Senior Vice President--Asset Management of
the Company since its formation and of New Plan Excel since January 1989. Mr.
Sabin has served as an officer or otherwise been employed by affiliates of New
Plan Excel since 1979, primarily providing property management services. Mr.
Sabin has supervised the management of New Plan Excel's properties for 15 years
and is a licensed real estate broker and a licensed property and casualty
insurance agent. Ronald H. Sabin is the brother of Gary B. Sabin.
JAMES Y. NAKAGAWA has served as Chief Financial Officer of the Company
since October 1998 and as Controller of New Plan Excel since September 1994.
From March 1998 to October 1998, Mr. Nakagawa served as Controller of the
Company. Prior to joining New Plan Excel, Mr. Nakagawa was a manager at Coopers
& Lybrand LLP. Mr. Nakagawa is a certified public accountant.
EXECUTIVE COMPENSATION
The Company was recently formed in connection with the Spin-off. Other
than Mr. Burt, who is the only executive officer of the Company not affiliated
with New Plan Excel, none of the Company's executive officers has received
compensation (other than in the form of option grants under the Legacy Stock
Option Plan) from or on behalf of the Company since its formation. The Company
pays to New Plan Excel a portion of the salary and other compensation for
executive officers of the Company who are shared with New Plan Excel on the
basis of an allocation of their salary and bonus from New Plan Excel. See
"Certain Relationships and Related Transactions--Relationship Between the
Company and New Plan Excel--Administrative Services Agreement."
The following table sets forth certain information concerning the
compensation of the Chief Executive Officer and each of the other executive
officers of the Company whose compensation exceeded $100,000 on an annualized
basis for the period from March 31, 1998 (the date of the Spin-off) through the
remainder of the fiscal year ended July 31, 1998 (the "Compensation Period").
9
<PAGE>
SUMMARY COMPENSATION TABLE
for the 1998 fiscal year
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------------------------------ ----------------------
Name and Other Annual Number of Securities
Principal Position Year Salary Compensation Underlying Options (#)
- ------------------ ---- ------ ------------ ----------------------
<S> <C> <C> <C> <C>
Gary B. Sabin 1998 $82,599(1) -- 800,000
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Kelly D. Burt 1998 150,000(2) $6,000(3) 300,000
EXECUTIVE VICE PRESIDENT--
DEVELOPMENT
</TABLE>
(1) Represents the amount paid by the Company to New Plan Excel under the
Administrative Services Agreement with respect to Mr. Sabin on an
annualized basis. The Company paid to New Plan Excel $27,533 with respect
to Mr. Sabin during the Compensation Period.
(2) Represents the annualized salary of Mr. Burt. Mr. Burt's salary during the
Compensation Period was $50,000.
(3) Includes car allowance and miscellaneous incentive compensation.
OPTION GRANTS. The following table provides certain information concerning
the stock options which the Company granted to the executive officers named in
the Summary Compensation Table above during the fiscal year ended July 31, 1998.
The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
Potential Realizable Value
Individual Grants At Assumed Annual
- ------------------------------------------------------------------------------------------ Rates of Stock
Price
Number of Appreciation for
Securities % of Total Option Term (1)
Underlying Options Exercise or -------------------------
Options Granted to Base Price Expiration
Name Granted Employees Per Share Date 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gary B. Sabin 400,000 11.6% $5.00 31-Mar-2008 $922,608 $2,519,901
400,000 11.6 10.00 31-Mar-2008 0 519,901
Kelly D. Burt 150,000 4.3 5.00 1-May-2008 365,190 1,003,488
150,000 4.3 10.00 1-May-2008 0 253,488
</TABLE>
- -------------------------
(1) These amounts represent assumed rates of appreciation in the price of the
Common Stock during the terms of the options in accordance with rates
specified in applicable federal securities regulations. Actual gains, if
any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. There is no
representation that the rates of appreciation reflected in this table will
be achieved.
10
<PAGE>
LEGACY STOCK OPTION PLAN
In March 1998, the Company adopted the Legacy Stock Option Plan. The
principal purposes of the Legacy Stock Option Plan are to provide incentives for
officers, employees and consultants of the Company and its subsidiaries through
the granting of options ("Options"), thereby stimulating their personal and
active interest in the Company's development and financial success, and inducing
them to remain in the Company's employ. In addition to Options granted to
officers, employees and consultants, the Legacy Stock Option Plan provides for
formula grants of Options ("Director Options") to the Company's Directors.
Under the Legacy Stock Option Plan, not more than 5,250,380 shares of
Common Stock (or the equivalent in other equity securities) will be authorized
for issuance upon the exercise of Options. Furthermore, the maximum number of
shares which may be subject to Options granted under the Legacy Stock Option
Plan to any individual in any calendar year may not exceed 525,000.
The Compensation Committee of the Board administers the Legacy Stock Option
Plan with respect to grants to employees or consultants of the Company and the
full Board administers the Legacy Stock Option Plan with respect to Director
Options. Subject to the terms and conditions of the Legacy Stock Option Plan,
the Board or the Compensation Committee has the authority to select the persons
to whom Options are to be granted, to determine the number of shares to be
subject thereto and the terms and conditions thereof, and to make all other
determinations and to take all other actions necessary or advisable for the
administration of the Legacy Stock Option Plan. Similarly, the Board has
discretion to determine the terms and conditions of Director Options and to
interpret and administer the Legacy Stock Option Plan with respect to Director
Options. The Compensation Committee (and the Board) are also authorized to
adopt, amend and rescind rules relating to the administration of the Legacy
Stock Option Plan.
Pursuant to the terms of the Legacy Stock Option Plan, each Director will
be granted an option to purchase 3,000 shares of Common Stock on the date of
each annual meeting of stockholders after initial election at which the Director
is re-elected to the Board.
On March 31, 1998, the Company issued Options to acquire an aggregate of
3,100,000 shares of Common Stock to its executive officers (other than Mr. Burt,
who was not hired until May 1998) under the Legacy Stock Option Plan, 50.0% of
which have an exercise price of $5.00 per share and 50.0% of which have an
exercise price of $10.00 per share. The Options will become exercisable in five
equal annual installments commencing on the first anniversary of the date of
grant. In May 1998, the Company issued options to purchase 300,000 shares of
Common Stock to Mr. Burt on the same terms.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998, the Compensation Committee was comprised of Messrs.
Nordlund, Talbott and Wilmot. No interlocking relationship exists between any
member of the Compensation Committee and any member of any other company's board
of directors or compensation committee.
COMPENSATION COMMITTEE REPORT
Set forth below in full is the Report of the Compensation Committee
regarding the compensation paid by the Company to its executive officers during
the fiscal year ended July 31, 1998:
The philosophy of the Company's compensation program is to employ, retain
and reward executives capable of leading the Company in achieving its business
objectives. These objectives include enhancing stockholder value, maximizing
financial performance, preserving a strong financial posture, increasing the
Company's assets and positioning its assets and business in geographic markets
offering long-term growth opportunities. The accomplishment of these objectives
is measured against
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the conditions characterizing the industry within which the Company operates.
In implementing the Company's compensation program, it generally is the policy
of the Board to seek to qualify executive compensation for deductibility by the
Company for purposes of Section 162(m) of the Internal Revenue Code of 1986, as
amended, to the extent that such policy is consistent with the Company's overall
objectives and executive compensation policy.
COMPONENTS OF EXECUTIVE COMPENSATION
BASE SALARY is established by the Compensation Committee based on an
executive's job responsibilities, level of experience, individual performance
and contribution to the business, with reference to the competitive marketplace
for executive officers at certain other similar companies. The Compensation
Committee believes that the base salaries paid to executive officers of the
Company are at competitive levels relative to the various markets from which the
Company attracts its executive talent.
ANNUAL CASH INCENTIVE BONUS is established by the Compensation Committee at
the end of the fiscal year and is based on the Company's performance, individual
performance, and compensation surveys. The bonuses are at risk and are not
arithmetically derived using a bonus formula.
LONG-TERM INCENTIVES include awards of stock options, restricted stock, and
performance awards. The objective for the awards is to align closely executive
interests with the longer term interests of stockholders. These awards, which
are at risk and dependent on the creation of incremental stockholder value or
the attainment of cumulative financial targets over several years, represent a
significant portion of the total compensation opportunity provided for the
executive officers. Award sizes are based on individual performance, level of
responsibility, the individual's potential to make significant contributions to
the Company, and award levels at other similar companies.
The Company's executive officers were granted stock options in connection
with the Spin-off (with the exception of Mr. Burt, who was granted stock options
upon his hiring in May 1998). See "Executive Compensation and Other
Information--Option Grants." No other long-term incentives were granted to the
Company's executive officers during the 1998 fiscal year.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER. Amounts earned during the
1998 fiscal year by the Chief Executive Officer, Mr. Gary B. Sabin, are shown in
the Summary Compensation Table. For the 1998 fiscal year no base salary or cash
incentive bonus was paid by the Company to Mr. Sabin. Mr. Sabin's base salary
and cash incentive bonus are paid directly by New Plan Excel in amounts
established by New Plan Excel. For the 1998 fiscal year the Company paid New
Plan Excel a portion of Mr. Sabin's salary pursuant to the Administrative
Services Agreement between New Plan Excel and the Company. With respect to
long-term incentives, during the 1998 fiscal year, Mr. Sabin was awarded 800,000
stock options of the Company. The stock options were granted to Mr. Sabin on
the date of the Spin-off. The options granted to Mr. Sabin will vest in five
equal installments commencing on the first anniversary of the date of the grant.
One-half of the options granted to Mr. Sabin have an exercise price of $5.00 per
share and the other half of the options have an exercise price of $10.00 per
share.
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The foregoing report has been furnished by the Compensation Committee.
Richard J. Nordlund
Robert S. Talbott
John H. Wilmot
November 2, 1998
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP BETWEEN THE COMPANY AND NEW PLAN EXCEL
New Plan Excel was the sole stockholder of the Company prior to the
Spin-off. In connection with the Spin-off, New Plan Excel and EDV transferred to
the Company certain real properties, notes receivable and related assets and
liabilities held by New Plan Excel and EDV.
DISTRIBUTION AGREEMENT. The Company, New Plan Excel and EDV are parties to
a Distribution Agreement, which provides for, among other things, (1) the
division among the Company, New Plan Excel and EDV of certain assets and
liabilities, (2) the Spin-off, and (3) certain other agreements governing the
relationship between the Company, New Plan Excel and EDV following the Spin-off.
Pursuant to the Distribution Agreement, as consideration for the asset
transfers, the Company issued to New Plan Excel (A) 23,412,580 shares of Common
Stock in order to effect the Spin-off, and (B) a promissory note payable to New
Plan Excel in the amount of approximately $26.4 million. Such note bore interest
at the rate of 12.0% per annum, was scheduled to mature in March 2003 and was a
non-recourse obligation secured by a first mortgage on one of the Company's
properties. The note was repaid by the Company in April 1998. In addition, in
connection with the asset transfers, New Plan Excel canceled certain
indebtedness of EDV held by New Plan Excel in the amount of approximately $38.1
million.
ADMINISTRATIVE SERVICES AGREEMENT. The Company and New Plan Excel are
parties to an Administrative Services Agreement, which generally provides that
New Plan Excel will provide management and administrative services to the
Company following the Spin-off, including the ability to use the services of New
Plan Excel's employees in connection with the Company's business. In exchange
for those services, the Company is required to pay New Plan Excel on a monthly
basis the sum of (1) the product of 115.0% of the sum of (A) two-thirds of the
aggregate amount of all wages and salaries paid during the month to New Plan
Excel employees (excluding senior executives) who spend more than 50.0% of their
working time performing services for the Company and are designated in writing
as "Legacy Individuals" for purposes of the Administrative Services Agreement,
and (B) one-third of the aggregate amount of all wages and salaries paid during
the month to New Plan Excel employees (excluding senior executives) that are not
designated as Legacy Individuals and (2) 23.0% of the sum of all current monthly
salaries and one-twelfth of the most recent annual bonuses for the senior
executives of New Plan Excel (who during the 1998 fiscal year included, for
purposes of the Administrative Services Agreement, Gary B. Sabin, Richard B.
Muir, Graham R. Bullick, Mark T. Burton, S. Eric Ottesen, Ronald H. Sabin and
David A. Lund). For the 1998 fiscal year, the Company paid an aggregate of
approximately $170,000 to New Plan Excel under the Administrative Services
Agreement.
Under the Administrative Services Agreement, New Plan Excel is responsible
for continuing to provide employee benefits (other than those provided under the
Legacy Stock Option Plan) to New Plan Excel employees and to Legacy Individuals.
The Administrative Services Agreement may be terminated either by New Plan Excel
or the Company at any time upon 30 days' prior written notice to the other
party. Any individuals independently hired by the Company after the Spin-off as
separate employees of the Company are not subject to the Administrative Services
Agreement.
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TAX SHARING AGREEMENT. The Company and New Plan Excel are parties to a Tax
Sharing Agreement defining the parties' rights and obligations with respect to
tax returns and tax liabilities, including, in particular, federal and state
income tax returns and liabilities for taxable years and other taxable periods
ending on or before the date of the Spin-off. In general, New Plan Excel is
responsible for (1) filing all federal and state income tax returns of New Plan
Excel, the Company and any of their subsidiaries for all taxable years ending on
or before the date of the Spin-off, and (2) paying the taxes relating to such
returns (including any deficiencies proposed by applicable taxing authorities).
INTERCOMPANY AGREEMENT. The Company and New Plan Excel are parties to an
Intercompany Agreement which provides both parties with rights to participate in
certain transactions. During the term of the Intercompany Agreement, the
Company has agreed not to engage in activities or make investments that involve
neighborhood and community shopping centers, power centers, malls or other
conventional retail properties unless it has first provided written notice to
New Plan Excel of the material terms and conditions of such activities or
investments, and New Plan Excel has determined not to pursue such activities or
investments. The Intercompany Agreement expressly permits the Company to engage
in activities or make investments that involve office and industrial properties,
single tenant retail properties, entertainment/retail/mixed-use development
projects, real estate mortgages, real estate derivatives, or entities that
invest primarily in or have a substantial portion of their assets in such real
estate assets. The term of the Intercompany Agreement commenced on March 31,
1998 and will terminate upon the earlier of (1) the tenth anniversary of such
date, or (2) a change in control of either party.
TRANSITIONAL SERVICES AGREEMENT. In connection with the Spin-off, the
Company and New Plan Excel entered into a Transitional Services Agreement
pursuant to which New Plan Excel was obligated to provide certain property
acquisition, management and other services to the Company on a transitional
basis. The fees for such transitional services were based on hourly rates or a
percentage of revenues designed to reflect the actual costs (including indirect
costs) of providing such services. The Transitional Services Agreement
terminated on December 15, 1998.
PRIVATE PLACEMENTS
Upon consummation of the Spin-off, the Company sold (1) 9,195,224 shares of
Common Stock in a private placement to certain of the Company's officers at a
price of $2.39 per share (the estimated market value of the Common Stock as of
the date of the Spin-off based upon the value of the assets transferred to the
Company), for an aggregate purchase price of approximately $22.0 million, and
(2) 21,281,000 shares of Series A Preferred Stock in a private placement to
certain investors at a price of $5.00 per share, for an aggregate purchase price
of approximately $106.4 million. For a list of the purchasers in the foregoing
private placements and the respective amounts of Common Stock and Series A
Preferred Stock purchased, see "Securities Ownership of Certain Beneficial
Owners and Management."
The Company loaned to certain of its officers, in connection with their
purchase of Common Stock described above, approximately 50.0% of the purchase
price therefor (an aggregate amount of approximately $10.9 million). Such loans
bear interest at the rate of 7.0% per annum, mature in March 2003 and are
recourse obligations of such officers.
The Company retained BancBoston Securities Inc. ("BSI"), an affiliate of
BankBoston, N.A., to act as placement agent in connection with the private
placement of Series A Preferred Stock described above. Pursuant to such
engagement, the Company paid to BSI a success fee of approximately $2.3 million
upon consummation of the private placement. As noted in "Securities Ownership of
Certain Beneficial Owners and Management," BancBoston Capital Inc., an affiliate
of BSI, acquired 2,681,000 shares of Series A Preferred Stock in the private
placement.
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OTHER MATTERS
In May 1998, the Company acquired TenantFirst, which was formed and
operated by Kelly D. Burt. As consideration the Company issued to Mr. Burt
850,000 shares of Common Stock and $137,500 in cash. In connection with the
acquisition of TenantFirst, the Company hired Mr. Burt as a Director and
Executive Vice President--Development of the Company.
PERFORMANCE GRAPH
The following performance graph compares the performance of the
Company's Common Stock to the S&P 500 Index and to an index average of the
Company's peer group, composed of comparable publicly-traded companies in the
real estate business, in each case for the period commencing March 31, 1998
through the fiscal year ended July 31, 1998. Such peer group includes:
Crescent Operating, Inc., Forest City Enterprises, Inc. and Wellsford Real
Properties, Inc. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 at March 31, 1998 and that all
dividends were reinvested. The stock price performance shown on the graph is
not necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURNS
<TABLE>
<CAPTION>
COMPANY/INDEX/MARKET 3/31/1998 7/31/1998
- -------------------- --------- ---------
<S> <C> <C>
Excel Legacy Corporation 100.00 94.87
Peer Group 100.00 88.86
S&P Composite 100.00 102.20
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Directors, executive officers and beneficial owners of ten
percent or more of the Common Stock ("Reporting Persons") are required to report
to the Securities and Exchange Commission (the "SEC") on a timely basis the
initiation of their status as a Reporting Person and any changes with respect to
their beneficial ownership of the Common Stock. Regulations promulgated by the
SEC require the Company to disclose in this Proxy Statement any reporting
violations with respect to the 1998 fiscal year which came to the Company's
attention based on a review of the applicable filings required by the SEC to
report such status as an officer or Director or such changes in beneficial
ownership as submitted to the Company. Based solely on its review of such forms
received by it, the Company believes that all filing requirements applicable to
its executive officers, Directors and beneficial owners of more than ten percent
of the Common Stock were complied with during the fiscal year ended July 31,
1998.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company's financial statements for the fiscal year ended July 31, 1998
have been examined by PricewaterhouseCoopers LLP. Representatives of
PricewaterhouseCoopers LLP are expected to be available at the Annual Meeting to
respond to appropriate questions and to make a statement if they desire to do
so. The Company will select independent accountants for the current year
sometime after the Annual Meeting.
OTHER BUSINESS
No other matters are to be presented for action at the Annual Meeting other
than as set forth in this Proxy Statement. If other matters should properly come
before the Annual Meeting, however, the persons named in the accompanying proxy
will vote all proxies in accordance with their best judgment.
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ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended July 31, 1998 is
provided with this Proxy Statement to the stockholders of record as of December
4, 1998. Upon request, the Company will furnish the Annual Report to any
stockholder.
STOCKHOLDER PROPOSALS
Any proposal to be considered for inclusion in the Company's proxy
statement for the next annual meeting of stockholders must be received at the
Company's principal executive offices not later than August 25, 1999 to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting. In addition, pursuant to a new rule of the SEC which
became effective on June 29, 1998, if the Company has not received notice by
November 7, 1999 of any matter a stockholder intends to propose for a vote at
the next annual meeting of stockholders, then a proxy solicited by the Board may
be voted on such matter in the discretion of the proxy holder, without
discussion of the matter in the proxy statement soliciting such proxy and
without such matter appearing as a separate item on the proxy card.
STOCKHOLDERS ARE URGED TO IMMEDIATELY COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
Gary B. Sabin
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
San Diego, California
December 22, 1998
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
EXCEL LEGACY CORPORATION
16955 VIA DEL CAMPO, SUITE 100
SAN DIEGO, CALIFORNIA 92127
The undersigned stockholder(s) of EXCEL LEGACY CORPORATION (the "Company")
hereby constitutes and appoints Gary B. Sabin and Richard B. Muir, and each of
them, attorneys and proxies of the undersigned, each with power of substitution,
to attend, vote and act for the undersigned at the Annual Meeting of
Stockholders of the Company to be held on January 28, 1999, and at any
adjournments or postponements thereof, according to the number of shares of
capital stock of the Company which the undersigned may be entitled to vote, and
with all powers which the undersigned would possess if personally present, as
follows:
THIS PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES SET
FORTH IN THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT, UNLESS THE CONTRARY
IS INDICATED IN THE APPROPRIATE PLACE.
(continued on reverse)
1. Election of Directors:
Gary B. Sabin, Richard B. Muir, Kelly D. Burt, Richard J. Nordlund
Robert E. Parsons, Jr., Robert S. Talbott, and John H. Wilmot
FOR / / WITHHOLD AUTHORITY / /
all nominees to vote for all nominees listed above
listed above
/ / -------------------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
The undersigned revokes any prior proxy at such meeting and ratifies all
that said proxies, or any of them, may lawfully do by virtue hereof. Receipt of
the Notice of Annual Meeting and Proxy Statement is hereby acknowledged.
Dated:
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(Signature(s) of stockholders)
Please sign exactly as name appears
herein. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by
President or other authorized officer.
If a partnership, please sign in
partnership name by authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF EXCEL LEGACY
CORPORATION. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
THE PROXY CARD USING THE ENCLOSED ENVELOPE.
