<PAGE>
As filed with the Securities and Exchange Commission on December 9, 1998
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
EXCEL LEGACY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 33-0781747
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
----------
16955 VIA DEL CAMPO, SUITE 240
SAN DIEGO, CALIFORNIA 92127
(619) 485-9400
(Address of principal executive offices, Zip Code, and telephone number)
1998 STOCK OPTION PLAN OF
EXCEL LEGACY CORPORATION
(Full title of the plan)
----------
GARY B. SABIN Copies to:
CHAIRMAN OF THE BOARD, PRESIDENT SCOTT N. WOLFE, ESQ.
AND CHIEF EXECUTIVE OFFICER LATHAM & WATKINS
16955 VIA DEL CAMPO, SUITE 240 701 "B" STREET, SUITE 2100
SAN DIEGO, CALIFORNIA 92127 SAN DIEGO, CALIFORNIA 92101
(619) 485-9400 (619) 236-1234
(Name, address including zip code, and telephone
number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF BEING OFFERING OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE PER SHARE PRICE(2) FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 5,250,380 (2) $33,338,745 $9,269.
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) A maximum of 5,250,380 shares of common stock were reserved for issuance
under The 1998 Stock Option Plan of Excel Legacy Corporation (the "1998
Plan"). All shares reserved for issuance under the 1998 Plan are being
registered hereunder.
(2) This estimate is made pursuant to Rule 457(h) solely for purposes of
calculating the registration fee, and is determined according to the
following offering price information: (i) under the 1998 Plan, 1,940,000
shares of common stock are subject to outstanding options with an exercise
price of $10.00 per share, 1,940,000 shares of common stock are subject to
outstanding options with an exercise price of $5.00 per share, 5,000 shares
of common stock are subject to outstanding options with an exercise price
of $2.92 per share and the remaining 1,365,380 shares of common stock are
reserved for issuance upon exercise of options to be granted in the future.
Pursuant to Rule 457(h), for all shares of common stock being registered
hereunder with an exercise price which cannot be presently determined
(1,365,380 shares of common stock under the 1998 Plan), the Proposed
Maximum Offering Price is $3.09375 per share of common stock, which is
based on the average of the high and low prices for the Company's common
stock as reported on the American Stock Exchange on December 4, 1998.
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- --------------------------------------------------------------------------------
1
<PAGE>
PART I
ITEM 1. PLAN INFORMATION.
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
Not required to be filed with this Registration Statement.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended July
31, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1998;
(c) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") since
filing of the Annual Report on Form 10-K; and
(d) The description of the Company's common stock, par value $.01 per
share (the "Common Stock"), contained in the Registration Statement on Form
10 filed by the Company pursuant to the Exchange Act on December 12, 1997,
as amended by Amendment No. 1 to Form 10 filed by the Company on February
10, 1998, as further amended by Amendment No. 2 to Form 10 filed by the
Company on March 12, 1998, as further amended by Amendment No. 3 to Form 10
filed by the Company on March 23, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date this Registration Statement is
filed with the Securities and Exchange Commission (the "Commission") and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be a part of it from the respective dates of
filing of such documents. Any statement contained in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles Eighth and Ninth of the Amended and Restated Certificate
of Incorporation of the Company (the "Company Certificate") and Article VIII
of the Amended and Restated Bylaws of Company (the "Company Bylaws," with
Articles Eighth and Ninth of the Company Certificate and Article VIII of the
Company Bylaws hereinafter referred to as the "Director Liability and
Indemnification Provisions") limit the personal liability of the Company's
directors to the Company or its stockholders for monetary damages for breach
of fiduciary duty.
The Director Liability and Indemnification Provisions define and
clarify the rights of certain individuals, including the Company's directors
and officers, to indemnification by the Company in the event of personal
liability or expenses incurred by them as a result of certain litigation
against them. Such provisions are consistent with Section 102(b)(7) of the
General Corporation Law of the State of Delaware (the "DGCL"), which is
designed, among other things, to encourage qualified individuals to serve as
directors of Delaware corporations by permitting Delaware corporations to
include in their articles or certificates of incorporation a provision
limiting or eliminating directors' liability for monetary damages and with
other existing DGCL provisions permitting indemnification of certain
individuals, including directors and officers. The limitations of liability
in the Director Liability and Indemnification Provisions may not affect
claims arising under the federal securities laws.
In performing their duties, directors of a Delaware corporation are
obligated as fiduciaries to exercise their business judgment and act in what
they reasonably determine in good faith, after appropriate consideration, to
be the best interests of the corporation and its stockholders. Decisions
made on that basis are protected by the "business judgment rule." The
business judgment rule is designed to protect directors from personal
liability to the corporation or its stockholders when business decisions are
subsequently challenged. However, the expense of defending lawsuits, the
frequency with which unwarranted litigation is brought against directors and
the inevitable uncertainties with respect to the outcome of applying the
business judgment rule to particular facts and circumstances mean that, as a
practical matter, directors and officers of a corporation rely on indemnity
from, and insurance procured by, the corporation they serve as a financial
backstop in the event of such expenses or unforeseen liability. The Delaware
legislature has recognized that adequate insurance and indemnity provisions
are often a condition of an individual's willingness to serve as director of
a Delaware corporation. The DGCL has for some time specifically permitted
corporations to provide indemnity and procure insurance for its directors and
officers.
Set forth below is a description of the Director Liability and
Indemnification Provisions. Such description is intended as a summary only
and is qualified in its entirety by reference to the Company Certificate and
the Company Bylaws.
2
<PAGE>
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES. Article Ninth
of the Company Certificate protects directors against monetary damages for
breaches of their fiduciary duty of care, except as set forth below. Under
the DGCL, absent Article Ninth directors could generally be held liable for
gross negligence for decisions made in the performance of their duty of care
but not for simple negligence. Article Ninth eliminates director liability
for negligence in the performance of their duties, including gross
negligence. Directors remain liable for breaches of their duty of loyalty to
the Company and its stockholders, as well as acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law
and transactions from which a director derives improper personal benefit.
Article Ninth does not eliminate director liability under Section 174 of the
DGCL, which makes directors personally liable for unlawful dividends or
unlawful stock repurchases or redemptions and expressly sets forth a
negligence standard with respect to such liability.
While Article Ninth provides directors with protection from awards
of monetary damages for breaches of the duty of care, it does not eliminate
the directors' duty of care. Accordingly, Article Ninth will have no effect
on the availability of equitable remedies such as an injunction or rescission
based upon a director's breach of the duty of care. The provisions of
Article Ninth which eliminate liability as described above will apply to
officers of the Company only if they are directors of the Company and are
acting in their capacity as directors, and will not apply to officers of the
Company who are not directors. The elimination of liability of directors for
monetary damages in the circumstances described above may deter persons from
bringing third-party or derivative actions against directors to the extent
such actions seek monetary damages.
INDEMNIFICATION AND INSURANCE. Under Section 145 of the DGCL,
directors and officers as well as other employees and individuals may be
indemnified against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation--a "derivative action")
if they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the Company, and with respect to any
criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. A similar standard of care is applicable in the case
of derivative actions, except that indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense or settlement
of such an action, and the DGCL requires court approval before there can be
any indemnification where the person seeking indemnification has been found
liable to the Company.
Article VIII of the Company Bylaws provides that all directors and
officers of the Company are entitled to indemnification as set forth in the
Company Certificate.
Article Eighth of the Company Certificate provides that each person
who was or is made a party to, or is involved in any action, suit or
proceeding by reason of the fact that he is or was a director, officer of
employee of the Company will be indemnified by the Company against all
expenses and liabilities, including counsel fees, paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Company, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Article Eighth also provides that the right
of indemnification shall be in addition to and not exclusive of all other
right to which such director, officer or employee may be entitled.
Policies of insurance may be obtained and maintained by the Company
under which its directors and officers will be insured against certain
expenses in connection with the defense of, and certain liabilities which
might be imposed as a result of, actions, suits or proceedings to which they
are parties by reason of being or having been such directors or officers.
The Company has entered into indemnification agreements with its
executive officers and directors pursuant to which the Company has agreed to
indemnify these officers and directors exclusive of any other rights of
indemnification or advancement of expenses pursuant to the DGCL, the Company
Certificate and the Company Bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
3.1 Amended and Restated Certificate of Incorporation of the
Company, incorporated by reference to Exhibit 3.1 to the
Company's Registration Statement on Form
S-11 (File No.333-55715).
3.2 Amended and Restated Bylaws of the Company, incorporated
by reference to Exhibit 3.2 to the Company's Registration
Statement on Form S-11 (File No. 333-55715).
5.1 Opinion of Latham & Watkins.
10.1 1998 Stock Option Plan of Excel Legacy Corporation.
23.1 Consent of PricewaterhouseCoopers, LLP.
23.2 Consent of Latham & Watkins (included in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page hereto).
3
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the information
set forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to Section
13 or 15(d) of the Exchange Act that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on December 8, 1998.
EXCEL LEGACY CORPORATION
By: /s/ Gary B. Sabin
-----------------
Gary B. Sabin
Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. Each person whose signature appears below authorizes Gary B.
Sabin and Richard B. Muir, and either of them, with full power of substitution
and resubstitution, his true and lawful attorneys-in-fact, for him in any and
all capacities, to sign any amendments (including post-effective amendments or
supplements) to this Registration Statement and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gary B. Sabin Chairman of the Board, Chief December 8, 1998
-------------------------- Executive Officer, and
Gary B. Sabin President (Principal
Executive Officer)
/s/ Richard B. Muir Executive Vice President, December 8, 1998
-------------------------- Secretary and Director
Richard B. Muir
/s/ Kelly D. Burt Executive Vice December 8, 1998
-------------------------- President--Development and
Kelly D. Burt Director
/s/ James Y. Nakagawa Chief Financial Officer December 8, 1998
-------------------------- (Principal Financial and
James Y. Nakagawa Accounting Officer)
/s/ Richard J. Nordlund Director December 8, 1998
--------------------------
Richard J. Nordlund
/s/ Robert E. Parsons, Jr. Director December 8, 1998
--------------------------
Robert E. Parsons, Jr.
/s/ Robert S. Talbott Director December 8, 1998
--------------------------
Robert S. Talbott
/s/ John H. Wilmot Director December 8, 1998
--------------------------
John H. Wilmot
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
-------
<S> <C>
3.1 Amended and Restated Certificate of Incorporation of the Company,
incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form
S-11 (File No.333-55715).
3.2 Amended and Restated Bylaws of the Company, incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement
on Form S-11 (File No. 333-55715).
5.1 Opinion of Latham & Watkins.*
10.1 1998 Stock Option Plan of Excel Legacy Corporation.*
23.1 Consent of PricewaterhouseCoopers, LLP.*
23.2 Consent of Latham & Watkins (included in Exhibit 5.1).*
24.1 Power of Attorney (included on signature page hereto).*
</TABLE>
* Filed herewith.
6
<PAGE>
EXHIBIT 5.1
OPINION OF LATHAM & WATKINS
December 9, 1998
Excel Legacy Corporation
16955 Via Del Campo, Suite 110
San Diego, California 92127
Re: Form S-8 Registration Statement;
5,250,380 Shares of Common Stock
Ladies and Gentlemen:
In connection with the registration by Excel Legacy Corporation, a
Delaware corporation (the "Company"), of 5,250,380 shares of common stock,
par value $.01 per share (the "Shares"), of the Company to be issued pursuant
to The 1998 Stock Option Plan of Excel Legacy Corporation (the "Plan") under
the Securities Act of 1933, as amended (the "Act"), on a Registration
Statement on Form S-8 filed with the Securities and Exchange Commission on
December 9, 1998 (as amended from time to time, the "Registration
Statement"), you have requested our opinion with respect to the matters set
forth below.
In our capacity as your counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be
taken by the Company in connection with the authorization, issuance and sale
of the Shares, and for the purposes of this opinion, have assumed such
proceedings will be timely completed in the manner presently proposed. In
addition, we have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
and the conformity to authentic original documents of all documents submitted
to us as copies.
We are opining herein as to the effect on the subject transaction
only of the General Corporation Law of the State of Delaware, and we express
no opinion with respect to the
<PAGE>
Excel Legacy Corporation
December 9, 1998
Page 2
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or any other laws, or as to any matters of municipal law or the
laws of any other local agencies within the state.
Subject to the foregoing, it is our opinion that as of the date
here of the Shares have been duly authorized, and, upon the exercise of
options and the payment for the Shares in accordance with the terms set forth
in the Plan, the Shares will be validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
EXHIBIT 10.1
ANNEX III
THE 1998 STOCK OPTION PLAN
OF
EXCEL LEGACY CORPORATION
Excel Legacy Corporation, a Delaware corporation, has adopted The 1998
Stock Option Plan of Excel Legacy Corporation (this "Plan"), effective
March 24, 1998, for the benefit of its eligible employees, consultants and
directors.
The purposes of this Plan are as follows:
(1) To provide an additional incentive for directors, key Employees
and consultants to further the growth, development and financial success of
the Company by personally benefiting through the ownership of Company stock
which recognizes such growth, development and financial success.
(2) To enable the Company to obtain and retain the services of
directors, key Employees and consultants considered essential to the long
range success of the Company by offering them an opportunity to own stock in
the Company which will reflect the growth, development and financial success
of the Company.
ARTICLE I
DEFINITIONS
1.1 GENERAL. Wherever the following terms are used in this Plan
they shall have the meanings specified below, unless the context clearly
indicates otherwise.
1.2 AWARD LIMIT. "Award Limit" shall mean 525,000 shares of Common
Stock, as adjusted pursuant to Section 7.3.
1.3 BOARD. "Board" shall mean the Board of Directors of the Company.
1.4 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.5 COMMITTEE. "Committee" shall mean the Compensation Committee of
the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 6.1.
1.6 COMMON STOCK. "Common Stock" shall mean the common stock of
the Company, par value $.01 per share.
1.7 COMPANY. "Company" shall mean Excel Legacy Corporation, a
Delaware corporation.
1.8 CORPORATE TRANSACTION. "Corporate Transaction" shall mean any
of the following stockholder-approved transactions to which the Company is a
party:
(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is
to change the State in which the Company is incorporated, form a holding
company or effect a similar reorganization as to form whereupon this Plan and
all Options are assumed by the successor entity;
(b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or
(c) any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred
or issued to a person or persons different from those who held such
securities immediately prior to such merger.
III-1
<PAGE>
1.9 DIRECTOR. "Director" shall mean a member of the Board.
1.10 DISTRIBUTION. "Distribution" shall mean the distribution of
Common Stock to the stockholders of Excel Realty Trust, Inc.
1.11 EMPLOYEE. "Employee" shall mean any officer or other employee
(as defined in accordance with Section 3401(c) of the Code) of the Company,
or of any corporation which is a Subsidiary.
1.12 EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
1.13 FAIR MARKET VALUE. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares
were not traded on the trading day previous to such date, then on the next
preceding date on which a trade occurred, or (ii) if Common Stock is not
traded on an exchange but is quoted on Nasdaq or a successor quotation
system, the closing price of a share of Common Stock on the trading day
previous to such date as reported by Nasdaq or such successor quotation
system; or (iii) if Common Stock is not publicly traded on an exchange and
not quoted on Nasdaq or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in
the case of Options granted to Directors) acting in good faith.
1.14 INCENTIVE STOCK OPTION. "Incentive Stock Option" shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.
1.15 INDEPENDENT DIRECTOR. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.
1.16 NON-QUALIFIED STOCK OPTION. "Non-Qualified Stock Option" shall
mean an Option which is not designated as an Incentive Stock Option by the
Committee.
1.17 OPTION. "Option" shall mean a stock option granted under
Article[nb]III of this Plan. An Option granted under this Plan shall, as
determined by the Committee, be either a Non-Qualified Stock Option or an
Incentive Stock Option; PROVIDED, HOWEVER, that Options granted to
Independent Directors and consultants shall be Non-Qualified Stock Options.
1.18 OPTIONEE. "Optionee" shall mean an Employee, consultant or
Director granted an Option under this Plan.
1.19 PLAN. "Plan" shall mean The 1998 Stock Option Plan of Excel
Legacy Corporation.
1.20 QDRO. "QDRO" shall mean a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.
1.21 RULE 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.
1.22 SECTION 162(m) PARTICIPANT. "Section 162(m) Participant" shall
mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated
or a future fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.
1.23 SUBSIDIARY. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
III-2
<PAGE>
1.24 TERMINATION OF CONSULTANCY. "Termination of Consultancy" shall
mean the time when the engagement of an Optionee as a consultant to the
Company or a Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, by resignation, discharge, death or
retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company or any Subsidiary. The Committee,
in its absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Consultancy, including, but not by way
of limitation, the question of whether a Termination of Consultancy resulted
from a discharge for good cause, and all questions of whether a particular
leave of absence constitutes a Termination of Consultancy. Notwithstanding
any other provision of this Plan, the Company or any Subsidiary has an
absolute and unrestricted right to terminate a consultant's service at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
1.25 TERMINATION OF DIRECTORSHIP. "Termination of Directorship"
shall mean the time when an Optionee who is a Director ceases to be a
Director for any reason, including, but not by way of limitation, a
termination by resignation, failure to be elected, death or retirement. The
Board, in its sole and absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Directorship with respect to
Directors.
1.26 TERMINATION OF EMPLOYMENT. "Termination of Employment" shall
mean the time when the employee-employer relationship between an Optionee and
the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations
where there is a simultaneous reemployment or continuing employment of an
Optionee by the Company or any Subsidiary, (ii) at the discretion of the
Committee, terminations which result in a temporary severance of the
employee-employer relationship, and (iii) at the discretion of the Committee,
terminations which are followed by the simultaneous establishment of a
consulting relationship by the Company or a Subsidiary with the former
employee. The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a
Termination of Employment resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination
of Employment; PROVIDED, HOWEVER, that, unless otherwise determined by the
Committee in its discretion, a leave of absence, change in status from an
employee to an independent contractor or other change in the
employee-employer relationship shall constitute a Termination of Employment
if, and to the extent that with respect to Incentive Stock Options, such
leave of absence, change in status or other change interrupts employment for
the purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section. Notwithstanding any other
provision of this Plan, the Company or any Subsidiary has an absolute and
unrestricted right to terminate an Employee's employment at any time for any
reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE II
SHARES SUBJECT TO PLAN
2.1 SHARES SUBJECT TO PLAN.
(a) The shares of stock subject to Options shall be Common Stock.
The aggregate number of such shares which may be issued upon exercise of such
Options or rights or upon any such awards under the Plan shall not exceed
5,250,380. The shares of Common Stock issuable upon exercise of such Options
may be either previously authorized but unissued shares or treasury shares.
(b) The maximum number of shares which may be subject to Options
granted under the Plan to any individual in any fiscal year shall not exceed
the Award Limit. To the extent required by Section 162(m) of the Code, shares
subject to Options which are canceled continue to be counted against the
Award Limit and if, after grant of an Option, the price of shares subject to
such Option is reduced, the transaction is
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treated as a cancellation of the Option and a grant of a new Option and both
the Option deemed to be canceled and the Option deemed to be granted are
counted against the Award Limit.
2.2 ADD-BACK OF OPTIONS. If any Option to acquire shares of Common
Stock under this Plan expires or is canceled without having been fully
exercised, or is exercised in whole or in part for cash as permitted by this
Plan, the number of shares subject to such Option but as to which such Option
was not exercised prior to its expiration, cancellation or exercise may again
be optioned hereunder, subject to the limitations of Section 2.1.
Furthermore, any shares subject to Options which are adjusted pursuant to
Section 7.3 and become exercisable with respect to shares of stock of another
corporation shall be considered cancelled and may again be optioned
hereunder, subject to the limitations of Section 2.1. Shares of Common Stock
which are delivered by the Optionee or withheld by the Company upon the
exercise of any Option under this Plan, in payment of the exercise price
thereof, may again be optioned hereunder, subject to the limitations of
Section 2.1. Notwithstanding the provisions of this Section 2.2, no shares of
Common Stock may again be optioned if such action would cause an Incentive
Stock Option to fail to qualify as an incentive stock option under Section
422 of the Code.
ARTICLE III
GRANTING OF OPTIONS
3.1 ELIGIBILITY. Any Employee or consultant selected by the
Committee pursuant to Section 3.4(a)(i) shall be eligible to be granted an
Option. Each Director of the Company shall be eligible to be granted Options
at the times and in the manner set forth in Section 3.4(d).
3.2 DISQUALIFICATION FOR STOCK OWNERSHIP. No person may be granted
an Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or any then existing Subsidiary or parent corporation (within the
meaning of Section 422 of the Code) unless such Incentive Stock Option
conforms to the applicable provisions of Section 422 of the Code.
3.3 QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive Stock
Option shall be granted to any person who is not an Employee.
3.4 GRANTING OF OPTIONS
(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:
(i) Determine which Employees are key Employees and select
from among the key Employees or consultants (including Employees or
consultants who have previously received Options under this Plan)
such of them as in its opinion should be granted Options;
(ii) Subject to the Award Limit, determine the number of
shares to be subject to such Options granted to the selected key
Employees or consultants;
(iii) Subject to Section 3.3, determine whether such Options
are to be Incentive Stock Options or Non-Qualified Stock Options and
whether such Options are to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options,
consistent with this Plan; PROVIDED, HOWEVER, that the terms and
conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.
(b) Upon the selection of a key Employee or consultant to be
granted an Option, the Committee shall instruct the Chief Executive Officer
of the Company to issue the Option and may impose such
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conditions on the grant of the Option as it deems appropriate. Without
limiting the generality of the preceding sentence, the Committee may, in its
discretion and on such terms as it deems appropriate, require as a condition
on the grant of an Option to an Employee or consultant that the Employee or
consultant surrender for cancellation some or all of the unexercised Options
or other rights which have been previously granted to him under this Plan or
otherwise. An Option, the grant of which is conditioned upon such surrender,
may have an Option price lower (or higher) than the exercise price of such
surrendered Option or other award, may cover the same (or a lesser or
greater) number of shares as such surrendered Option or other award, may
contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option or other award.
(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee to disqualify such option from treatment as an
"incentive stock option" under Section 422 of the Code.
(d) During the term of the Plan, each person who is a Director as
of the date of the Distribution automatically shall be granted an Option to
purchase THREE THOUSAND (3,000) shares of Common Stock (subject to adjustment
as provided in Section 7.3) on the date of each annual meeting of
stockholders after such Distribution at which the Director is reelected to
the Board. During the term of the Plan, a person who is initially elected to
the Board after the consummation of the Distribution and who is a Director at
the time of such initial election automatically shall be granted an Option to
purchase THREE THOUSAND (3,000) shares of Common Stock (subject to adjustment
as provided in Section 7.3) on the date of each annual meeting of
stockholders after such initial election at which the Director is reelected
to the Board. Members of the Board who are employees of the Company who
subsequently retire from the Company and remain on the Board, to the extent
that they are otherwise eligible, will receive, after retirement from
employment with the Company, Options as described in the preceding sentence.
ARTICLE IV
TERMS OF OPTIONS
4.1 OPTION AGREEMENT. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain
such terms and conditions as may be necessary to meet the applicable
provisions of Section 162(m) of the Code. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.
4.2 OPTION PRICE. The price per share of the shares subject to each
Option shall be set by the Committee; PROVIDED, HOWEVER, that such price
shall be no less than the par value of a share of Common Stock, unless
otherwise permitted by applicable state law, and (i) in the case of Options
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code, such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted;
(ii) in the case of Incentive Stock Options such price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted (or the date the Option is modified, extended or renewed
for purposes of Section 424(h) of the Code); (iii) in the case of Incentive
Stock Options granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code), such
price shall not be less than 110% of the Fair Market Value of a share of
Common Stock on the date the Option is granted (or the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code);
and (iv) in the case of Options granted to Directors, such price shall equal
100% of the Fair Market Value of a share
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of Common Stock on the date the Option is granted; PROVIDED, HOWEVER, that
the price of each share subject to each Option granted to Directors on the
date of the Distribution shall equal the average of the trading price for the
Common Stock for the twenty days commencing on the sixth day after the
effective date of the Distribution.
4.3 OPTION TERM. The term of an Option shall be set by the
Committee in its discretion; PROVIDED, HOWEVER, that, (i) in the case of
Options granted to Directors, the term shall be ten (10) years from the date
the Option is granted, without variation or acceleration hereunder, but
subject to Section 5.6, and (ii) in the case of Incentive Stock Options, the
term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation
thereof (within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend
the term of any outstanding Option in connection with any Termination of
Employment or Termination of Consultancy of the Optionee, or amend any other
term or condition of such Option relating to such a termination.
4.4 OPTION VESTING
(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in
part for a specified period after it is granted; PROVIDED, HOWEVER, that,
unless the Committee otherwise provides in the terms of the Option or
otherwise, no Option shall be exercisable by any Optionee who is then subject
to Section 16 of the Exchange Act within the period ending six months and one
day after the date the Option is granted; and PROVIDED, FURTHER, that Options
granted to Directors shall become exercisable in cumulative annual
installments of 20% on each of the first, second, third, fourth and fifth
anniversaries of the date of Option grant, without variation or acceleration
hereunder except as provided in Section 7.3(b). At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which
an Option (except an Option granted to a Director) vests.
(b) No portion of an Option which is unexercisable at Termination
of Employment, Termination of Directorship or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee in the case of Options granted to Employees or
consultants either in the Stock Option Agreement or by action of the
Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock
with respect to which "incentive stock options" (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code)
are exercisable for the first time by an Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company and
any parent or subsidiary corporation (within the meaning of Section 422 of
the Code) of the Company) exceeds $100,000, such Options shall be treated as
Non-Qualified Options to the extent required by Section 422 of the Code. The
rule set forth in the preceding sentence shall be applied by taking Options
into account in the order in which they were granted. For purposes of this
Section 4.4(c), the Fair Market Value of stock shall be determined as of the
time the Option with respect to such stock is granted.
4.5 CONSIDERATION. In consideration of the granting of an Option,
the Optionee shall agree, in the written Stock Option Agreement, to remain in
the employ of (or to consult for or to serve as a Director of, as applicable)
the Company or any Subsidiary for a period of at least six months (or such
shorter period as may be fixed in the Stock Option Agreement or by action of
the Committee following grant of the Option) after the Option is granted (or,
in the case of a Director, until the next annual meeting of stockholders of
the Company). Nothing in this Plan or in any Stock Option Agreement hereunder
shall confer upon any Optionee any right to continue in the employ of, or as
a consultant for, the Company or any Subsidiary, or
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as a director of the Company, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever,
with or without good cause.
ARTICLE V
EXERCISE OF OPTIONS
5.1 PARTIAL EXERCISE. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Directors) may require that, by the terms of the Option, a partial
exercise be with respect to a minimum number of shares.
5.2 MANNER OF EXERCISE. All or a portion of an exercisable Option
shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:
(a) A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Directors) stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to
exercise the Option or such portion of the Option;
(b) Such representations and documents as the Committee (or the
Board, in the case of Options granted to Directors), in its absolute
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any
other federal or state securities laws or regulations. The Committee or Board
may, in its absolute discretion, also take whatever additional actions it
deems appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer notices to
agents and registrars;
(c) In the event that the Option shall be exercised pursuant to
Section 7.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Directors), may in its discretion (i) allow a delay in payment up to thirty
(30) days from the date the Option, or portion thereof, is exercised; (ii)
allow payment, in whole or in part, through the delivery of shares of Common
Stock owned by the Optionee, duly endorsed for transfer to the Company with a
Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in
whole or in part, through the surrender of shares of Common Stock then
issuable upon exercise of the Option having a Fair Market Value on the date
of Option exercise equal to the aggregate exercise price of the Option or
exercised portion thereof; (iv) allow payment, in whole or in part, through
the delivery of property of any kind which constitutes good and valuable
consideration; (v) allow payment, in whole or in part, through the delivery
of a full recourse promissory note bearing interest (at no less than such
rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board;
(vi) allow payment, in whole or in part, through the delivery of a notice
that the Optionee has placed a market sell order with a broker with respect
to shares of Common Stock then issuable upon exercise of the Option, and that
the broker has been directed to pay a sufficient portion of the net proceeds
of the sale to the Company in satisfaction of the Option exercise price; or
(vii) allow payment through any combination of the consideration provided in
the foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of a
promissory note, the Committee (or the Board, in the case of Options granted
to Directors) may also prescribe the form of such note and the security to be
given for such note. The Option may not be exercised, however, by delivery of
a promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
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5.3 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company shall
not be required to issue or deliver any certificate or certificates of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions, any of which may be waived by
the Company, in its discretion:
(a) The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or Board shall, in its
absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee (or Board, in the case of
Options granted to Directors) shall, in its absolute, discretion determine to
be necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Directors) may establish from time to time for reasons of
administrative convenience; and
(e) Subject to Section 5.2(d), the receipt by the Company of full
payment for such shares, including payment of any applicable withholding tax.
5.4 RIGHTS AS STOCKHOLDERS. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by
the Company to such holders.
5.5 OWNERSHIP AND TRANSFER RESTRICTIONS. The Committee (or Board,
in the case of Options granted to Directors), in its absolute discretion, may
impose such restrictions on the ownership and transferability of the shares
purchasable upon the exercise of an Option as it deems appropriate. Any such
restriction shall be set forth in the respective Stock Option Agreement and
may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition
of shares of Common Stock acquired by exercise of an Incentive Stock Option
within (i) two years from the date of granting (including the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code)
such Option to such Employee or (ii) one year after the transfer of such
shares to such Employee. The Committee may direct that the certificates
evidencing shares acquired by exercise of an Option refer to such requirement
to give prompt notice of disposition.
5.6 LIMITATIONS ON EXERCISE OF OPTIONS GRANTED TO DIRECTORS. No
Option granted to a Director may be exercised to any extent by anyone after
the first to occur of the following events:
(a) the expiration of twelve (12) months from the date of the
Optionee's death;
(b) the expiration of twelve (12) months from the date of the
Optionee's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code);
(c) the expiration of three (3) months from the date of the
Optionee's Termination of Directorship for any reason other than such
Optionee's death or his permanent and total disability, unless the Optionee
dies within said three-month period; or
(d) The expiration of ten years from the date the Option was
granted.
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<PAGE>
ARTICLE VI
ADMINISTRATION
6.1 COMPENSATION COMMITTEE. The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the
Committee under this Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each
of whom is both a "non-employee director" as defined by Rule 16b-3 and an
"outside director" for purposes of Section 162(m) of the Code. Appointment of
Committee members shall be effective upon acceptance of appointment.
Committee members may resign at any time by delivering written notice to the
Board. Vacancies in the Committee may be filled by the Board.
6.2 DUTIES AND POWERS OF COMMITTEE. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this
Plan and the agreements pursuant to which Options are granted or awarded, and
to adopt such rules for the administration, interpretation, and application
of this Plan as are consistent therewith and to interpret, amend or revoke
any such rules. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration
of the Plan with respect to Options granted to Directors. Any such grant or
award under this Plan need not be the same with respect to each Optionee. Any
such interpretations and rules with respect to Incentive Stock Options shall
be consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and
all rights and duties of the Committee under this Plan except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any
regulations or rules issued thereunder, are required to be determined in the
sole discretion of the Committee.
6.3 MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. The Committee shall
act by a majority of its members in attendance at a meeting at which a quorum
is present or by a memorandum or other written instrument signed by all
members of the Committee.
6.4 COMPENSATION; PROFESSIONAL ASSISTANCE, GOOD FAITH ACTIONS.
Members of the Committee shall receive such compensation, if any, for their
services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Optionees, the Company and all
other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in
good faith with respect to this Plan or Options, and all members of the
Committee and the Board shall be fully protected by the Company in respect of
any such action, determination or interpretation.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 NOT TRANSFERABLE. Options under this Plan may not be sold,
pledged, assigned, or transferred in any manner other than by will or the
laws of descent and distribution or pursuant to a QDRO, unless and until such
options have been exercised, or the shares underlying such options have been
issued, and all restrictions applicable to such shares have lapsed. No Option
or interest or right therein shall be liable for the debts, contracts or
engagements of the Optionee or his successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted
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disposition thereof shall be null and void and of no effect, except to the
extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Optionee, only he may exercise an Option (or
any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to a QDRO. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement
or other agreement, be exercised by his personal representative or by any
person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.
7.2 AMENDMENT, SUSPENSION OR TERMINATION OF THIS PLAN. Except as
otherwise provided in this Section 7.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from
time to time by the Board or the Committee. However, without approval of the
Company's stockholders given within twelve months before or after the action
by the Board or the Committee, no action of the Board or the Committee may,
except as provided in Section 7.3, increase the limits imposed in Section 2.1
on the maximum number of shares which may be issued under this Plan, and no
action of the Board or the Committee may be taken that would otherwise
require stockholder approval as a matter of applicable law, regulation or
rule. Furthermore, no modification of the Award Limit shall be effective
prior to the approval of the Company's stockholders. No amendment, suspension
or termination of this Plan shall, without the consent of the holder of
Options, alter or impair any rights or obligations under any Options
theretofore granted or awarded, unless the award itself otherwise expressly
so provides. No Options may be granted or awarded during any period of
suspension or after termination of this Plan, and in no event may any
Incentive Stock Option be granted under this Plan after the first to occur of
the following events:
(a) The expiration of ten years from the date the Plan is adopted
by the Board; or
(b) The expiration of ten years from the date the Plan is approved
by the Company's stockholders under Section 7.4.
7.3 CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION OR
LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.
(a) Subject to Section 7.3(d), in the event that the Committee (or
the Board, in the case of Options granted to Directors) determines that any
dividend or other distribution (whether in the form of cash, Common Stock,
other securities, or other property), recapitalization, reclassification,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, liquidation, dissolution, or
sale, transfer, exchange or other disposition of all or substantially all of
the assets of the Company (including, but not limited to, a Corporate
Transaction), or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event,
in the Committee's sole discretion (or in the case of Options granted to
Directors, the Board's sole discretion), affects the Common Stock such that
an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan or with respect to an Option,
then the Committee (or the Board, in the case of Options granted to
Directors) shall, in such manner as it may deem equitable, adjust any or all
of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options may be granted
under the Plan, (including, but not limited to, adjustments of the
limitations in Section 2.1 on the maximum number and kind of shares
which may be issued and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, and
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(iii) the grant or exercise price with respect to any Option.
(b) Subject to Section 7.3(d), in the event of any Corporate
Transaction or other transaction or event described in Section 7.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Directors) in its discretion is hereby authorized to take any one or more of
the following actions whenever the Committee (or the Board, in the case of
Options granted to Directors) determines that such action is appropriate in
order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to any
option under this Plan, to facilitate such transactions or events or to give
effect to such changes in laws, regulations or principles:
(i) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Directors) may provide, either by
the terms of the agreement or by action taken prior to the occurrence
of such transaction or event and either automatically or upon the
optionee's request, for either the purchase of any such Option for
an amount of cash equal to the positive difference, if any, between
the amount that could have been obtained upon the exercise of such
Option and the exercise price of such Option, or realization of the
optionee's rights had such Option been currently exercisable or
payable or fully vested or the replacement of such Option with other
rights or property selected by the Committee (or the Board, in the
case of Options granted to Directors) in its sole discretion;
(ii) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Directors) may provide, either by
the terms of such Option or by action taken prior to the occurrence
of such transaction or event, that for a specified period of time
prior to such transaction or event, such Option shall be exercisable
as to all shares covered thereby, notwithstanding anything to the
contrary in (i) Section 4.4 or (ii) the provisions of such Option;
(iii) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Directors) may provide, either by
the terms of such Option or by action taken prior to the occurrence
of such transaction or event, that upon such event, such Option be
assumed by the successor or survivor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar Options
covering the stock of the successor or survivor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices; and
(iv) In its sole and absolute discretion, and on such terms
and conditions as it deems appropriate, the Committee (or the Board,
in the case of Options granted to Directors) may make adjustments in
the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options and/or in the terms and
conditions of (including the grant or exercise price), and the
criteria included in, outstanding Options and Options which may be
granted in the future.
(c) Subject to Section 7.3(d) and 7.8, the Committee (or the Board,
in the case of Options granted to Directors) may, in its discretion, include
such further provisions and limitations in any Option as it may deem
equitable and in the best interests of the Company.
(d) With respect to Options which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation
under Section 162(m)(4)(C), no adjustment or action described in this Section
7.3 or in any other provision of the Plan shall be authorized to the extent
that such adjustment or action would cause the Plan to violate Section
422(b)(1) of the Code or would cause such option to fail to so qualify under
Section 162(m)(4)(C), as the case may be, or any successor provisions
thereto. Furthermore, no such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits
liability under Section 16 or violate the exemptive conditions of
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Rule 16b-3 unless the Committee (or the Board, in the case of Options granted
to Directors) determines that the option is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to any option shall
always be rounded to the next whole number.
7.4 APPROVAL OF PLAN BY STOCKHOLDERS. This Plan will be submitted
for the approval of the Company's stockholders within twelve months after the
date of the Board's initial adoption of this Plan. Options may be granted
prior to such stockholder approval, provided that such Options shall not be
exercisable prior to the time when this Plan is approved by the stockholders,
and provided further that if such approval has not been obtained at the end
of said twelve-month period, all Options previously granted under this Plan
shall thereupon be canceled and become null and void.
7.5 TAX WITHHOLDING. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee
of any sums required by federal, state or local tax law to be withheld with
respect to the issuance, vesting, exercise or payment of any Option. The
Committee (or the Board, in the case of Options granted to Directors) may in
its discretion and in satisfaction of the foregoing requirement allow such
Optionee to elect to have the Company withhold shares of Common Stock
otherwise issuable under such Option (or allow the return of shares of Common
Stock) having a Fair Market Value equal to the sums required to be withheld.
7.6 LOANS. The Committee may, in its discretion, extend one or more
loans to key Employees in connection with the exercise or receipt of an
Option granted under this Plan. The terms and conditions of any such loan
shall be set by the Committee.
7.7 FORFEITURE PROVISIONS. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to Directors) shall
have the right (to the extent consistent with the applicable exemptive
conditions of Rule 16b-3) to provide, in the terms of Options made under the
Plan, or to require the recipient to agree by separate written instrument,
that (i) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of an
Option, or upon the receipt or resale of any Common Stock underlying such
Option, must be paid to the Company, and (ii) the Option shall terminate and
any unexercised portion of such Option (whether or not vested) shall be
forfeited, if (a) a Termination of Employment, Termination of Consultancy or
Termination of Directorship occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Option, or (b) the
recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee
(or the Board, as applicable).
7.8 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND
PERFORMANCE-BASED COMPENSATION. Notwithstanding any other provision of this
Plan, this Plan, and any Option granted to any individual who is then subject
to Section 16 of the Exchange Act, shall be subject to any additional
limitations set forth in any applicable exemptive rule under Section 16 of
the Exchange Act (including any amendment to Rule 16b-3) that are
requirements for the application of such exemptive rule. To the extent
permitted by applicable law, the Plan and Options granted hereunder shall be
deemed amended to the extent necessary to conform to such applicable
exemptive rule. Furthermore, notwithstanding any other provision of this
Plan, any Option which is granted to a Section 162(m) Participant and is
intended to qualify as performance-based compensation as described in Section
162(m)(4)(C) of the Code shall be subject to any additional limitations set
forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described
in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to
the extent necessary to conform to such requirements.
7.9 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The
adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary. Nothing in this Plan shall
be construed to limit the right of the Company (i) to establish any other
forms of incentives or
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compensation for Employees, Directors or Consultants of the Company or any
Subsidiary or (ii) to grant or assume options or other rights otherwise than
under this Plan in connection with any proper corporate purpose including but
not by way of limitation, the grant or assumption of options in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise,
of the business, stock or assets of any corporation, partnership, limited
liability company, firm or association.
7.10 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of
Options under this Plan and the issuance and delivery of shares of Common
Stock and the payment of money under this Plan or under Options granted
hereunder are subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to state and federal
securities law and federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of
counsel for the Company, be necessary or advisable in connection therewith.
Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as
the Company may deem necessary or desirable to assure compliance with all
applicable legal requirements. To the extent permitted by applicable law, the
Plan and Options granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
7.11 TITLES. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.
7.12 GOVERNING LAW. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State
of Delaware without regard to conflicts of laws thereof.
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-8 of our
report dated October 22, 1998, on our audit of the financial statements and
financial statement schedules of Excel Legacy Corporation.
/s/ PRICEWATERHOUSECOOPERS LLP
San Diego, California
December 7, 1998
