<PAGE> 1
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 333-79673
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 1, 1999)
3,378,117 SHARES
EXCEL LEGACY CORPORATION
COMMON STOCK
-------------------------
We are offering and selling 3,378,117 shares of our common stock to a group
of related investors with this prospectus supplement and the accompanying
prospectus. The common stock will be purchased at a negotiated purchase price of
$4.00 per share for a total purchase price of $13,512,468.
Our common stock is listed on the American Stock Exchange under the symbol
XLG. On October 29, 1999, the closing sale price of our common stock as reported
by the American Stock Exchange was $4.188.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE S-6 OF THIS PROSPECTUS SUPPLEMENT FOR FACTORS THAT
SHOULD BE CONSIDERED BEFORE INVESTING IN OUR COMMON STOCK.
-------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus supplement is accurate or complete. Any
representation to the contrary is a criminal offense.
-------------------------
The date of this prospectus supplement is November 1, 1999.
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF
ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT
RELY ON IT. WE ARE NOT MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS AND PROSPECTS MAY HAVE SUBSEQUENTLY CHANGED.
-------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Supplement Summary............................... S-3
Risk Factors................................................ S-6
Forward-Looking Statements.................................. S-14
Use of Proceeds............................................. S-15
Price Range of Common Stock................................. S-15
Dividend Policy............................................. S-15
Capitalization.............................................. S-16
Selected Financial Data..................................... S-17
Information About Legacy.................................... S-18
Management.................................................. S-22
Material Federal Income Tax Considerations To Non-United
States Holders of Common Stock............................ S-24
Plan of Distribution........................................ S-27
Legal Matters............................................... S-27
Experts..................................................... S-27
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Excel Legacy................................................ 2
Ratio of Earnings to Fixed Charges.......................... 2
Use of Proceeds............................................. 3
Description of Debt Securities.............................. 3
Description of Capital Stock................................ 12
Description of Depositary Shares............................ 15
Description of Warrants..................................... 19
Description of Rights....................................... 21
Plan of Distribution........................................ 22
Where You Can Find More Information......................... 23
</TABLE>
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
The following summary may not contain all of the information that may be
important to you. You should read carefully the entire prospectus supplement,
the accompanying prospectus and the documents incorporated by reference into
this prospectus supplement and the accompanying prospectus before making a
decision to invest in our common stock.
When we refer to "we," "our," "us" and "Legacy" in this prospectus
supplement, we mean Excel Legacy Corporation and its subsidiaries unless the
context suggests otherwise. When we refer to "you" or "yours," we mean the
holders of the common stock.
EXCEL LEGACY CORPORATION
Legacy, a Delaware corporation, was formed on November 17, 1997 as a wholly
owned subsidiary of Excel Realty Trust, Inc., a Maryland corporation and a real
estate investment trust. On March 31, 1998, Excel Realty Trust effected a
spin-off of our business through a special dividend of all of our outstanding
common stock to the holders of Excel Realty Trust common stock. Excel Realty
Trust effected this spin-off to allow us to pursue a wider variety of real
estate opportunities including owning, acquiring, developing and managing
retail, entertainment, office, hotel and mixed-use projects and real estate and
other operating companies throughout the United States and Canada.
Our principal executive offices are located at 16955 Via Del Campo, Suite
100, San Diego, California 92127 and our telephone number is (858) 675-9400.
RECENT DEVELOPMENTS
On October 6, 1999, we commenced our previously announced exchange offer to
acquire all of the outstanding common stock of Price Enterprises, Inc., a
Maryland corporation which operates as a real estate investment trust. The
exchange offer is being made pursuant to an agreement between Legacy and Price
Enterprises which was announced on June 2, 1999. Under the terms of the
agreement, we are offering to all Price Enterprises stockholders $8.50 per share
for all shares of Price Enterprises common stock, comprised of $4.25 per share
in cash, $2.75 per share in principal amount of our 9% Convertible Redeemable
Subordinated Secured Debentures due 2004, which will be convertible at any time
into shares of our common stock at $5.50 per share, and $1.50 per share in
principal amount of our 10% Senior Redeemable Secured Notes due 2004. The
exchange offer is currently scheduled to expire at 12:00 Midnight, New York City
time on November 3, 1999, unless extended.
The exchange offer is conditioned upon at least 8,000,000 shares of Price
Enterprises common stock being tendered for exchange and not withdrawn prior to
the expiration date for the exchange offer. Under previously announced
agreements, Sol Price, as trustee of several trusts, and other stockholders of
Price Enterprises have deposited 8,014,970 shares of Price Enterprises common
stock in escrow, with instructions to accept our offer. The aggregate number of
shares placed in escrow represents more than 51% of the voting power of Price
Enterprises.
Following the closing of the exchange offer, Price Enterprises preferred
stock will remain outstanding. We have agreed that the preferred stock will be
entitled to elect a majority of Price Enterprises' board of directors and to
have one designee on our board of
S-3
<PAGE> 4
directors, until such time as less than 2,000,000 shares of Price Enterprises
preferred stock remain outstanding, or we complete a tender offer to acquire any
and all outstanding shares of Price Enterprises preferred stock at a cash price
of $16.00 per share, or in other limited circumstances. Under the previously
announced agreements, no common stock dividend may be paid to us from Price
Enterprises until all Price Enterprises obligations for interest expense on debt
and preferred stock dividends are paid and a $7.5 million annual reserve is in
place. The $7.5 million annual reserve may be used for the improvement and/or
acquisition of properties, the repurchase of Price Enterprises preferred stock
or the reduction of Price Enterprises debt.
The exchange offer is described in our Schedule 14D-1 and Offer to
Exchange/ Prospectus filed with the Securities and Exchange Commission on
October 6, 1999 and amended on October 25, 1999. See "Where You Can Find More
Information" in the accompanying prospectus if you are interested in obtaining a
copy of these materials.
THE OFFERING
<TABLE>
<S> <C>
Common stock offered by Legacy........ 3,378,117 shares
Total common stock outstanding after
this offering......................... 36,835,921 shares
Use of proceeds....................... The net proceeds from this offering
will be used for general corporate
purposes, including working capital,
capital expenditures and acquisitions.
American Stock Exchange symbol........ XLG
</TABLE>
The information above is stated as of October 29, 1999. You should be aware
that the total number of shares of common stock that will be outstanding after
this offering does not include:
- 4,154,000 shares subject to outstanding options with a weighted average
exercise price of $6.75 per share,
- 21,281,000 shares issuable upon conversion of 21,281,000 shares of our
Series B preferred stock,
- 1,096,380 shares reserved for issuance under options that we may grant
under our stock option plan, and
- the shares issuable upon conversion of the 9% Convertible Redeemable
Subordinated Secured Debentures we are offering to all Price Enterprises
stockholders in connection with the exchange offer.
S-4
<PAGE> 5
SUMMARY FINANCIAL DATA
The selected financial data presented below as of July 31, 1998 and for the
period from November 17, 1997 (inception) to July 31, 1998 have been derived
from the audited financial statements of Legacy. The selected financial data
presented below as of December 31, 1998 and June 30, 1999 and for the five
months ended December 31, 1998 and the six months ended June 30, 1999 have been
derived from the unaudited financial statements of Legacy. The selected
financial data presented below as of July 31, 1997, 1996 and 1995 and for the
eight months ended March 31, 1998 and each of the three years in the period
ended July 31, 1997 have been derived from the audited financial statements of
the Excel Legacy Corporation Asset Group. In the opinion of our management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, which consist only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and the results of operations for these periods. Operating results for
the six month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 1999. The
data below should be read in conjunction with our Annual Report on Form 10-K for
the fiscal year ended July 31, 1998, as amended, our Transition Report on Form
10-Q for the five months ended December 31, 1998, and our Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, each of which is incorporated
herein by reference.
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS FIVE MONTHS INCEPTION EIGHT MONTHS
ENDED ENDED (NOVEMBER 17, ENDED YEAR ENDED JULY 31,
JUNE 30, DECEMBER 31, 1997) TO MARCH 31, ---------------------------
1999 1998 JULY 31, 1998 1998 1997 1996 1995
---------- ------------ ------------- ------------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF OPERATIONS
DATA:
Total revenue..................... $ 15,433 $ 15,010 $ 8,145 $ 3,757 $ 6,395 $ 5,032 $ 5,897
Total operating expenses.......... (14,334) (13,754) (5,267) (3,149) (4,565) (4,513) (4,803)
Net income before income taxes.... 1,099 1,256 2,878 (2,385) 1,830 519 1,794
Provision of income taxes......... (413) (535) (1,143) 946 (729) (207) (515)
Net income........................ 686 721 1,735 1,419 1,101 312 779
Earnings before depreciation,
amortization and deferred taxes
("EBDADT")...................... 2,812 2,712 3,001 N/A N/A N/A N/A
Earnings before income taxes,
depreciation and amortization
("EBITDA")...................... 3,178 5,819 5,453 N/A N/A N/A N/A
Net income per share:
Basic........................... $ 0.02 $ 0.02 $ 0.11 N/A N/A N/A N/A
Diluted......................... 0.01 0.01 0.07 N/A N/A N/A N/A
Weighted average number of shares:
Basic........................... 33,458 33,458 15,842 N/A N/A N/A N/A
Diluted......................... 54,755 54,768 25,984 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF AS OF AS OF AS OF JULY 31,
JUNE 30, DECEMBER 31, JULY 31, MARCH 31, ---------------------------
1999 1998 1998 1998 1997 1996 1995
-------- ------------ -------- --------- ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Net real estate........................... $193,525 $190,878 $175,756 (1) $60,350 $61,048 $56,184
Total assets.............................. 290,690 261,296 246,916 (1) 83,687 62,169 59,388
Mortgages and notes payable............... 118,996 90,986 72,714 (1) 35,115 36,754 38,224
Stockholders' equity...................... 167,326 166,640 165,919 (1) -- -- --
Investment by Excel Realty Trust, Inc..... -- -- -- (1) 48,344 25,162 20,903
</TABLE>
- -------------------------
(1) Not applicable as assets were spun-off to Legacy at March 31, 1998.
S-5
<PAGE> 6
RISK FACTORS
Before you invest in our securities, you should be aware that there are
various risks, including those described below. You should consider carefully
these risk factors together with all other information included in or
incorporated by reference into this prospectus supplement and the accompanying
prospectus before you decide to purchase our securities.
Some of the information in this prospectus supplement and the accompanying
prospectus may contain forward-looking statements. Such statements can be
identified by the use of forward-looking words such as "may," "will," "expect,"
"anticipate," "estimate," "continue" or other similar words. These statements
discuss future expectations, contain projections of results of operations or
financial condition or state other "forward-looking" information. When
considering such forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in or incorporated by reference into
this prospectus supplement and the accompanying prospectus. The risk factors
noted in this section and other factors noted throughout this prospectus
supplement and the accompanying prospectus or incorporated herein and therein,
including certain risks and uncertainties, could cause our actual results to
differ materially from those contained in any forward-looking statement.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OUR BUSINESS
Legacy was incorporated in November 1997 and became an independent business
in March 1998 after Excel Realty Trust completed a spin-off of our business.
Accordingly, we have a limited operating history on which to base an evaluation
of our business and prospects. You must consider our prospects in light of the
risks and uncertainties encountered by companies in the early stages of
development, particularly companies in the real estate industry.
OUR TENANTS MAY FACE FINANCIAL DIFFICULTIES AND BE UNABLE TO PAY RENT WHICH MAY,
IN TURN, CAUSE FINANCIAL DIFFICULTIES FOR US
Our financial position may be materially harmed if any of our major
tenants, including AMC Multi-Cinema, Inc. and Lowe's Home Centers, Inc., or any
other significant tenant experiences financial difficulties, such as a
bankruptcy, insolvency or general downturn in the business of the tenant. In
addition, any failure or delay by any of our tenants to make rent payments could
impair our financial condition and materially harm our business. As of August
31, 1999, AMC accounted for approximately 58% of our total rental revenue and
Lowe's accounted for approximately 14% of our total rental revenue. In the
quarterly period ended June 30, 1999, rental revenue accounted for approximately
50% of our total revenue. Although failure on the part of a tenant to materially
comply with the terms of a lease, including failure to pay rent, would give us
the right to terminate the lease, repossess the property and enforce the payment
obligations under the lease, we would then be required to find another tenant to
lease the property. We cannot assure you that we would be able to enforce the
payment obligations against the defaulting tenant, find another tenant or, if
another tenant were found, that we would be able to enter into a new lease on
favorable terms.
S-6
<PAGE> 7
WE MAY FACE SIGNIFICANT COMPETITION FROM DEVELOPERS, OWNERS AND OPERATORS OF
REAL ESTATE PROPERTIES WHICH MAY INHIBIT THE SUCCESS OF OUR BUSINESS
We compete in the acquisition of real estate properties with over 200
publicly-traded REITs as well as other public and private real estate investment
entities, including financial institutions such as mortgage banks and pension
funds, and other institutional investors, as well as individuals. Competition
from these entities may impair our financial condition and materially harm our
business by reducing the number of suitable investment opportunities offered to
us and increasing the bargaining power of prospective sellers of property, which
often increases the price necessary to purchase a property. Many of our
competitors in the real estate sector are significantly larger than us and may
have greater financial resources and more experienced managers than us.
In addition, a large portion of our developed properties are located in
areas where our competitors maintain similar properties. We will need to compete
for tenants based on rental rates, attractiveness and location of properties, as
well as quality of maintenance and management services. Competition from these
and other properties may impair our financial condition and materially harm our
business by:
- interfering with our ability to attract and retain tenants,
- increasing vacancies, which lowers market rental rates and limits our
ability to negotiate favorable rental rates, and
- impairing our ability to minimize operating expenses.
OUR FINANCIAL PERFORMANCE DEPENDS ON REGIONAL ECONOMIC CONDITIONS SINCE MANY OF
OUR PROPERTIES AND INVESTMENTS ARE LOCATED IN ARIZONA, CALIFORNIA AND COLORADO
Of our 14 properties and real estate-related investments, 11 are located in
three states: six in Arizona, three in California and two in Colorado.
Concentrating most of our properties and real estate-related investments in
these states may expose us to greater economic risks than if our properties and
real estate-related investments were located in several geographic regions. Our
revenue from, and the value of, our properties and investments located in these
states may be affected by a number of factors, including local real estate
conditions, such as an oversupply of or reduced demand for real estate
properties, and the local economic climate. High unemployment, business
downsizing, industry slowdowns, changing demographics, and other factors may
adversely impact any of these local economic climates. A general downturn in the
economy or real estate conditions in Arizona, California or Colorado could
impair our financial condition and materially harm our business. Further, due to
the relatively high cost of real estate in the southwestern United States, the
real estate market in that region may be more sensitive to fluctuations in
interest rates and general economic conditions than other regions of the United
States. We do not have any limitations or targets for the concentration of the
geographic location of our properties and, accordingly, the risks associated
with this geographic concentration will increase if we continue to acquire
properties in Arizona, California and Colorado.
S-7
<PAGE> 8
OUR SUBSTANTIAL LEVERAGE MAY BE DIFFICULT TO SERVICE AND COULD ADVERSELY AFFECT
OUR BUSINESS
As of August 31, 1999, we had outstanding borrowings of approximately $34.0
million under our credit facility, with total borrowing capacity of $35.0
million, and additional debt of approximately $64.4 million. This total debt of
$98.4 million represented approximately 37.9% of our total assets at August 31,
1999. After the closing of the exchange offer to Price Enterprises'
stockholders, and assuming all shares of the Price Enterprises common stock are
tendered in the exchange offer, on a pro forma basis our total indebtedness will
increase to approximately $182.0 million (not taking into account Price
Enterprises' total indebtedness of approximately $83.4 million), which will
represent approximately 51.5% of our total assets. Therefore, we are and will
continue to be exposed to the risks normally associated with debt financing
which may materially harm our business, including the following:
- our cash flow may be insufficient to meet required payments of principal
and interest,
- payments of principal and interest on borrowings may leave us with
insufficient cash resources to pay operating expenses,
- we may not be able to refinance debt on our properties at maturity, and
- if refinanced, the terms of refinancing may not be as favorable as the
original terms of the debt.
Our earnings to fixed charges ratio was 1.45 for the six months ended June
30, 1999. On a pro forma basis, our earnings to fixed charges ratio decreases to
0.91. Our interest coverage ratio was 1.17 for the six months ended June 30,
1999. On a pro forma basis, our interest coverage ratio decreases to 1.08.
WE FACE RISKS ASSOCIATED WITH THE PRICE ENTERPRISES EXCHANGE OFFER
We commenced the exchange offer for Price Enterprises common stock with the
expectation that the exchange offer will result in a number of benefits,
including cost savings, operating efficiencies, revenue enhancements, tax
advantages and other synergies. If these benefits and synergies are not
realized, our financial performance and the performance of Price Enterprises
could be adversely impacted. In addition, the closing of the exchange offer is
subject to several conditions, and we cannot assure you that the exchange offer
will be completed. If the exchange offer is completed, we expect that some of
our executive officers will begin to manage the operations of Price Enterprises
along with some members of Price Enterprises' existing operations management
team. We cannot assure you that this integration will be completed rapidly or
that the new management team will be successful in this endeavor. Further, the
process of implementing new management at Price Enterprises could negatively
affect employee morale and influence the decisions of current and prospective
tenants and business partners as a result of uncertainty over the operations of
Legacy and Enterprises following the exchange offer. The inability to
successfully integrate our operations with those of Enterprises could impair our
financial condition and materially harm our business.
In connection with the exchange offer, The Sol and Helen Price Trust will
make a two-year loan to Legacy in the principal amount of up to $30.0 million
secured by the Price Enterprises common stock owned at any time by Legacy. In
order to satisfy our
S-8
<PAGE> 9
obligations under the loan, we may seek to refinance the loan or issue equity to
raise additional funds, neither of which alternatives may be available to us on
favorable terms. To the extent we are unable to meet our obligations under the
loan, The Sol and Helen Price Trust will have the right to take ownership of the
Price Enterprises common stock owned at any time by Legacy other than the shares
securing the debentures and the notes.
WE FACE RISKS ASSOCIATED WITH OUR EQUITY INVESTMENTS IN AND WITH THIRD PARTIES
BECAUSE OF OUR LACK OF CONTROL OVER THE UNDERLYING REAL ESTATE ASSETS
As part of our growth strategy, we may invest in shares of REITs or other
entities that invest in real estate assets. In these cases, we will be relying
on the assets, investments and management of the REIT or other entity in which
we are investing. These entities and their properties will be exposed to the
risks normally associated with the ownership and operation of real estate.
We also may invest in or with other parties through partnerships and joint
ventures. In these cases we will not be the only entity making decisions
relating to the property, partnership, joint venture or other entity. Risks
associated with investments in partnerships, joint ventures or other entities
include:
- the possibility that our partners might experience serious financial
difficulties or fail to fund their share of required investment
contributions,
- that the partners might have economic or other business interests or
goals which are inconsistent with our business interests or goals, and
- that the partners may take action contrary to our instructions or
requests and adverse to our policies and objectives.
Any substantial loss or action of this nature could potentially harm our
business. In addition, we may in some circumstances be liable for the actions of
our third-party partners or co-venturers.
RISING INTEREST RATES MAY ADVERSELY AFFECT OUR CASH FLOW
As of August 31, 1999, we owed approximately $98.4 million under our credit
facility and mortgage debt, of which $36.7 million bore interest at variable
rates. In addition, the loan of up to $30.0 million from The Sol and Helen Price
Trust to Legacy will bear interest at a variable rate. Variable rate debt
creates higher debt payments if market interest rates increase. We may incur
additional debt in the future that also bears interest at variable rates. Higher
debt payments as a result of an increase in interest rates could adversely
affect our cash flow, cause us to default under some debt obligations or
agreements, and materially harm our business.
BECAUSE WE DO NOT HAVE A POLICY PLACING A LIMIT ON THE AMOUNT OF DEBT THAT WE
MAY INCUR, OUR FUTURE BORROWINGS COULD BE SIGNIFICANT AND MAY ADVERSELY AFFECT
OUR CASH FLOW AND RESULTS OF OPERATIONS
We do not have a policy limiting the amount of debt that we may incur.
Accordingly, our management and board of directors have discretion to increase
the amount of our outstanding debt at any time. We could incur higher levels of
debt, resulting in an increase in our total debt payments, which could adversely
affect our cash flow and materially harm
S-9
<PAGE> 10
our business. In addition, if we increase the amount of our debt it may increase
the risk of our default on all of our debt, including the Legacy debentures and
the Legacy notes.
WE COULD INCUR SIGNIFICANT COSTS AND EXPENSES RELATED TO ENVIRONMENTAL PROBLEMS
Various federal, state and local laws and regulations require property
owners or operators to pay for the costs of removal or remediation of hazardous
or toxic substances located on a property. Although we are not aware of any
necessary environmental remediation or other environmental liability on our
portfolio of properties, these laws often impose liability without regard to
whether the owner or operator of the property was responsible for or even knew
of the presence of the hazardous substances. The presence of or failure to
properly remediate hazardous or toxic substances may impair our ability to rent,
sell or borrow against a property. These laws and regulations also impose
liability on persons who arrange for the disposal or treatment of hazardous or
toxic substances at another location for the costs of removal or remediation of
these hazardous substances at the disposal or treatment facility. Further, these
laws often impose liability regardless of whether the entity arranging for the
disposal ever owned or operated the disposal facility. Other environmental laws
and regulations impose liability on owners or operators of property for injuries
relating to the release of asbestos-containing materials into the air. As owners
and operators of property and as potential arrangers for hazardous substance
disposal, we may be liable under the laws and regulations for removal or
remediation costs, governmental penalties, property damage, personal injuries
and related expenses. Payment of these costs and expenses could impair our
financial condition and materially harm our business.
WE COULD FACE SIGNIFICANT COSTS OF COMPLIANCE IF WE ARE CONSIDERED AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT
We are not currently registered as an investment company under the
Investment Company Act of 1940, since our management believes that we either are
not within the definition of investment company under the Investment Company Act
or, alternatively, excluded from regulation under the Investment Company Act by
an exemption. If we are deemed to be an investment company under the Investment
Company Act and fail to qualify for an exemption, we would be unable to conduct
our business as currently conducted, which could materially harm our business.
In the future, we intend to conduct our operations in order to avoid
registration under the Investment Company Act. Therefore, the assets that we may
acquire or sell may be limited by the regulations of the Investment Company Act.
THE COSTS OF COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT COULD ADVERSELY
AFFECT OUR BUSINESS
Under the Americans with Disabilities Act of 1990, all public
accommodations and commercial facilities must meet federal requirements relating
to access and use by disabled persons. Compliance with the Americans with
Disabilities Act requirements could involve removal of structural barriers from
disabled persons' entrances on our properties. Other federal, state and local
laws may require modifications to or restrict further renovations of our
properties with these accesses. Although we believe that our properties are
substantially in compliance with present requirements, noncompliance with the
Americans with Disabilities Act or related laws or regulations could result in
the United States
S-10
<PAGE> 11
government imposing fines or private litigants being awarded damages against us.
If we incur these costs and expenses it could impair our financial condition.
WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS THAT COULD PREVENT AN ACQUISITION
OF OUR BUSINESS AT A PREMIUM PRICE
Some of the provisions of our certificate of incorporation and bylaws could
discourage, delay or prevent an acquisition of our business at a premium price
and could make removal of our management more difficult. These provisions could
reduce the opportunities for our stockholders to participate in tender offers,
including tender offers that are priced above the then current market price of
our common stock. Our certificate of incorporation permits our board of
directors to issue shares of preferred stock in one or more series without
stockholder approval. The preferred stock may be issued quickly with terms that
delay or prevent a change in control of our business. In addition, Section 203
of the Delaware General Corporation Law imposes restrictions on mergers and
other business combinations between us and any holder of 15% or more of our
common stock.
WE EXPECT TO EXPERIENCE VOLATILITY IN THE PRICE OF OUR PUBLICLY TRADED
SECURITIES
The market price of our common stock has fluctuated in the past and is
likely to continue to fluctuate in the future. In addition, the market prices of
securities of other real estate companies has at times in the past been
volatile. Factors that may affect the market price of our publicly traded
securities, many of which are beyond our control, include:
- fluctuations in our operating results,
- analysts' reports and projections,
- changes in the market valuations of other real estate companies,
- the extent of institutional investor interest in our business,
- the reputation of real estate companies generally and the attractiveness
of their securities in comparison to the securities of other businesses,
and
- general financial market conditions.
Fluctuations in the market price of our securities may in turn adversely affect
(1) our ability to complete any targeted acquisitions, (2) our access to capital
and financing and (3) our ability to attract and retain qualified personnel. In
the past, following periods of volatility in the market price of securities of a
particular company, securities class action litigation against that company
often results. We may become involved in this type of litigation in the future.
Litigation is often expensive and diverts management's attention and resources,
each of which could materially harm our business.
OUR EXECUTIVE OFFICERS AND DIRECTORS HAVE SUBSTANTIAL CONTROL OVER OUR VOTING
STOCK AND CAN MAKE DECISIONS THAT COULD ADVERSELY AFFECT OUR BUSINESS
Our present executive officers and directors and their affiliates
beneficially own approximately 30% of our outstanding common stock. As a result,
these stockholders will continue to significantly influence our management and
affairs and all matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions, such as a
merger, consolidation or sale of substantially all of our
S-11
<PAGE> 12
assets. Accordingly, these stockholders also will be in a position to make
decisions which could impair our financial condition and materially harm our
business.
THE LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS
Given the early stage of development of our business, we depend to a large
extent on the performance of our senior management team and other key employees
for strategic business direction and real estate experience. If we lost the
service of any members of our senior management or other key employees it could
materially harm our business. We do not have employment agreements with any of
our senior management or key employees. In addition, we have not obtained
key-man life insurance for any of our senior management or other key employees.
OUR BOARD OF DIRECTORS MAY MAKE CHANGES IN OUR INVESTMENT, FINANCING AND
DISTRIBUTION POLICIES WITHOUT STOCKHOLDER APPROVAL AND IN A MANNER WITH WHICH
YOU MAY NOT AGREE
Our investment, financing, borrowing and distribution policies and our
policies regarding all other activities, growth, debt, capitalization and
operations, will be determined by our board of directors. Although our board of
directors has no present intention to do so, it may amend or revise these
policies at any time without a vote of our stockholders. Our board of directors
may amend these policies in a manner with which you may not agree. A change in
these policies could impair our financial condition and materially harm our
business.
WE DO NOT ANTICIPATE PAYING ANY DIVIDENDS IN THE FORESEEABLE FUTURE
We presently anticipate that we will retain all available funds for use in
the operation and expansion of our business and do not anticipate paying any
dividends in the foreseeable future. Any future payment of dividends to our
stockholders will depend on decisions that will be made by our board of
directors and will depend on then existing conditions, including our financial
condition, contractual restrictions, capital requirements and business
prospects.
OUR MANAGEMENT WILL HAVE SUBSTANTIAL DISCRETION OVER THE USE OF PROCEEDS FROM
THE SALE OF THE SECURITIES AND MAY NOT APPLY THEM EFFECTIVELY
Management will have significant flexibility in applying the net proceeds
from the sale of the securities offered by this prospectus supplement and
accompanying prospectus and may apply the proceeds in ways with which you do not
agree. The failure of management to apply these funds effectively could
materially harm our business. See "Use of Proceeds" for more discussion of our
intended uses of the net proceeds from the sale of the securities offered by
this prospectus supplement and accompanying prospectus.
YEAR 2000 PROBLEMS COULD DISRUPT OUR OPERATIONS
The Year 2000 problem is the result of computer software and embedded chips
using a two-digit format, as opposed to four digits, to indicate the year.
Computer systems may be unable to interpret dates beyond the year 1999, which
could cause a system failure or other computer errors. The failure to correct a
material Year 2000 problem could result in an interruption in, or a failure of,
normal business activities or operations. To the extent
S-12
<PAGE> 13
our software applications contain source codes that are unable to appropriately
interpret the upcoming calendar year 2000, some level of modification, or even
possibly replacement of these applications may be necessary.
We have made an assessment of the impact of the Year 2000 issue on our
internal operations and have developed a plan to bring our computer systems into
compliance before the end of 1999. This plan addresses the modification or
replacement of applications and operating systems to achieve timely Year 2000
compliance and also includes communication and analysis with outside vendors and
other third parties with whom we interface electronically. We do not believe
that the impact of any Year 2000 issues will impair our financial condition or
materially harm our business. However, if modifications and conversions are not
made or completed in a timely manner by either third parties or us, the Year
2000 issue could materially harm our business. To date, we have incurred minimal
expenses related to Year 2000 compliance. We expect to incur approximately
$75,000 of total expenses related to Year 2000 compliance. Since we have adopted
a plan to address Year 2000 issues, we have not developed a comprehensive
contingency plan for dealing with the most reasonably likely worst case
scenario. However, if we identify significant risks in the future or are unable
to meet our anticipated schedule for completion of our Year 2000 compliance, we
will develop contingency plans to the extent necessary at that time.
S-13
<PAGE> 14
FORWARD-LOOKING STATEMENTS
This prospectus supplement, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These statements are indicated by words or phrases such as "believe,"
"may," "will," "anticipate," "estimate," "plan," "project," "continue,"
"expect," "intend" and similar words or phrases. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about us, including factors discussed in our
filings with the Securities and Exchange Commission and the following:
- the effect of economic, credit and capital market conditions in general
and on real estate companies in particular,
- our ability to compete effectively,
- our ability to acquire or develop properties and the risk that potential
acquisitions or developments may not perform in accordance with
expectations,
- fluctuations in our operating results,
- government approvals, actions and initiatives, including the need for
compliance with environmental requirements and the Americans with
Disabilities Act,
- additions or departures of key personnel,
- general economic and business conditions, and
- other risk factors described under "Risk Factors" in this prospectus
supplement.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or future events. In light of
these risks and uncertainties, the forward-looking events and circumstances
discussed in this prospectus supplement may not occur and actual results could
differ materially from those anticipated or implied in the forward-looking
statements.
S-14
<PAGE> 15
USE OF PROCEEDS
The net proceeds to Legacy from the sale of the common stock in this
offering will be approximately $13,512,468. Legacy intends to use these net
proceeds for general corporate purposes, including working capital, capital
expenditures and acquisitions. Pending these uses, Legacy may invest the net
proceeds temporarily in short-term, investment-grade, interest bearing
securities or guaranteed obligations of the U.S. government.
PRICE RANGE OF COMMON STOCK
Legacy's common stock was quoted on the OTC Bulletin Board under the symbol
XLCY from March 30, 1998 to November 16, 1998 and has been listed on the
American Stock Exchange under the symbol XLG from November 17, 1998 to the
present. On December 11, 1998, Legacy changed its fiscal year end to December 31
from July 31 for the fiscal year ended December 31, 1998. The following table
provides the high and low sales prices for Legacy's common stock assuming a
December 31 fiscal year end for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
---- ------
<S> <C> <C>
1998
1st Quarter (commencing March 30, 1998).............. $6.000 $4.875
2nd Quarter.......................................... 6.750 4.297
3rd Quarter.......................................... 5.000 2.500
4th Quarter.......................................... 4.000 1.875
1999
1st Quarter.......................................... 4.000 3.063
2nd Quarter.......................................... 5.688 2.875
3rd Quarter.......................................... 4.750 3.500
4th Quarter (through October 29, 1999)............... 4.563 3.813
</TABLE>
On October 29, 1999, the last reported sales price of Legacy's common stock
on the American Stock Exchange was $4.188 per share. As of October 29, 1999,
there were 1,176 holders of record of Legacy's common stock.
DIVIDEND POLICY
We have never paid and do not anticipate paying any dividends on the common
stock. Any future determination regarding the payment of dividends will be made
at the discretion of our board of directors and will depend on then existing
conditions, including our financial condition, results of operations,
contractual restrictions, capital requirements, business prospects and other
factors as our board of directors may deem relevant.
S-15
<PAGE> 16
CAPITALIZATION
Our capitalization is set forth as of June 30, 1999 in the following table
and is shown on an actual and as adjusted basis to give effect to:
- the sale of Millennia Car Wash assets, and
- the assumption of debt in connection with the exchange offer to acquire
all of the outstanding common stock of Price Enterprises, Inc., and
as further adjusted to reflect the issuance of 3,378,117 shares of common stock
which are being sold in this offering and the application of the net proceeds
from that sale. The information regarding our common stock in the table below
excludes:
- an aggregate of 4,154,000 shares of common stock issuable upon exercise
of outstanding options under our stock option plan,
- 21,281,000 shares of common stock issuable upon conversion of our Series
B preferred stock,
- 1,096,380 shares reserved for issuance under options that we may grant
under our stock option plan, and
- the shares issuable upon conversion of the 9% Convertible Redeemable
Subordinated Secured Debentures we are offering to all Price Enterprises
stockholders in connection with the exchange offer.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
----------------------------------------
AS FURTHER
ACTUAL AS ADJUSTED ADJUSTED
-------- -------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
DEBT:
Mortgages payable......................... $ 87,846 $ 72,738 $ 72,738
Notes payable........................... 30,750 109,298 109,298
-------- -------- --------
Total debt...................... $118,596 $182,036 $182,036
-------- -------- --------
STOCKHOLDERS' EQUITY:
Series B Preferred Stock, $.01 par
value, 50,000,000 shares authorized,
21,281,000 shares issued and
outstanding.......................... 213 213 213
Common stock, $.01 par value,
150,000,000 shares authorized,
33,457,804 shares issued and
outstanding as adjusted and
36,835,921 shares issued and
outstanding as further adjusted...... 335 335 368
Additional paid-in capital.............. 174,508 174,508 187,887
Retained earnings....................... 3,142 3,142 3,142
Notes receivable from affiliates for
common shares........................ (10,872) (10,872) (10,872)
-------- -------- --------
Total stockholders' equity...... $167,326 $167,326 $180,738
-------- -------- --------
Total capitalization....... $285,922 $349,362 $362,774
======== ======== ========
</TABLE>
S-16
<PAGE> 17
SELECTED FINANCIAL DATA
The selected financial data presented below as of July 31, 1998 and for the
period from November 17, 1997 (inception) to July 31, 1998 have been derived
from the audited financial statements of Legacy. The selected financial data
presented below as of December 31, 1998 and June 30, 1999 and for the five
months ended December 31, 1998 and the six months ended June 30, 1999 have been
derived from the unaudited financial statements of Legacy. The selected
financial data presented below as of July 31, 1997, 1996 and 1995 and for the
eight months ended March 31, 1998 and each of the three years in the period
ended July 31, 1997 have been derived from the audited financial statements of
the Legacy Corporation Asset Group. In the opinion of our management, the
unaudited financial statements have been prepared on the same basis as the
audited financial statements and include all adjustments, which consist only of
normal recurring adjustments, necessary for a fair presentation of the financial
position and the results of operations for these periods. Operating results for
the six month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the full year ending December 31, 1999. The
data below should be read in conjunction with our Annual Report on Form 10-K for
the fiscal year ended July 31, 1998, as amended, our Transition Report on Form
10-Q for the five months ended December 31, 1998, and our Quarterly Report on
Form 10-Q for the quarter ended June 30, 1999, each of which is incorporated
herein by reference.
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS FIVE MONTHS INCEPTION EIGHT MONTHS
ENDED ENDED (NOVEMBER 17, ENDED YEAR ENDED JULY 31,
JUNE 30, DECEMBER 31, 1997) TO MARCH 31, ---------------------------
1999 1998 JULY 31, 1998 1998 1997 1996 1995
---------- ------------ ------------- ------------ ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED STATEMENT OF
OPERATIONS DATA:
Total revenue................. $ 15,433 $ 15,010 $ 8,145 $ 3,757 $ 6,395 $ 5,032 $ 5,897
Total operating expenses...... (14,334) (13,754) (5,267) (3,149) (4,565) (4,513) (4,803)
Net income before income
taxes....................... 1,099 1,256 2,878 (2,385) 1,830 519 1,794
Provision of income taxes..... (413) (535) (1,143) 946 (729) (207) (515)
Net income.................... 686 721 1,735 1,419 1,101 312 779
Earnings before depreciation,
amortization and deferred
taxes ("EBDADT")............ 2,812 2,712 3,001 N/A N/A N/A N/A
Earnings before income taxes,
depreciation and
amortization ("EBITDA")..... 3,178 5,819 5,453 N/A N/A N/A N/A
Net income per share:
Basic....................... $ 0.02 $ 0.02 $ 0.11 N/A N/A N/A N/A
Diluted..................... 0.01 0.01 0.07 N/A N/A N/A N/A
Weighted average number of
shares:
Basic....................... 33,458 33,458 15,842 N/A N/A N/A N/A
Diluted..................... 54,755 54,768 25,984 N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF AS OF AS OF AS OF JULY 31,
JUNE 30, DECEMBER 31, JULY 31, MARCH 31, ---------------------------
1999 1998 1998 1998 1997 1996 1995
-------- ------------ ------------- ------------ ------- ------- -------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Net real estate.............. $193,525 $190,878 $175,756 (1) $60,350 $61,048 $56,184
Total assets................. 290,690 261,296 246,916 (1) 83,687 62,169 59,388
Mortgages and notes
payable.................... 118,996 90,986 72,714 (1) 35,115 36,754 38,224
Stockholders' equity......... 167,326 166,640 165,919 (1) -- -- --
Investment by Excel Realty
Trust, Inc................. -- -- -- (1) 48,344 25,162 20,903
</TABLE>
- -------------------------
(1) Not applicable as assets were spun-off to Legacy at March 31, 1998.
S-17
<PAGE> 18
INFORMATION ABOUT LEGACY
GENERAL
Legacy, a Delaware corporation, was formed on November 17, 1997 as a wholly
owned subsidiary of Excel Realty Trust, Inc., a Maryland corporation and a real
estate investment trust. On March 31, 1998, Excel Realty Trust effected a
spin-off of our business through a special dividend of all of our outstanding
common stock to the holders of Excel Realty Trust common stock. Excel Realty
Trust effected this spin-off to allow us to pursue a wider variety of real
estate opportunities including owning, acquiring, developing and managing
retail, entertainment, office, hotel and mixed-use projects and real estate and
other operating companies throughout the United States and Canada.
In connection with this spin-off, Excel Realty Trust transferred real
properties, notes receivable and related assets and liabilities to us. In
addition to operating assets obtained from the spin-off, we intend to pursue
signature real estate projects that have unique locations, concepts or
significant entry barriers associated with them, including:
- developing mixed-use development and entertainment projects that have the
potential for substantial capital gains but which may take several years
to fully develop,
- investing in properties requiring significant restructuring or
redevelopment to create substantial value, such as changing the use,
tenant mix or focus of a property,
- acquiring single tenant properties that can be highly leveraged with
fixed-rate debt that amortizes over the term of the tenant leases,
- acquiring debt or stock of real estate and other operating companies,
including defaulted debt at a discount to the value of the underlying
asset securing the debt,
- acquiring office and industrial sites and properties where aggressive
management and re-development may add significant value, and
- acquiring and developing hotel and hospitality projects in unique
locations.
OUR PROPERTIES
At August 31, 1999, our business consisted of the following portfolio of
real properties, notes receivable, and investments in real estate-related
ventures:
- five properties located in Arizona ranging from retail, office and
restaurant space in Scottsdale to a hotel property near the Grand Canyon,
- three properties located in Colorado, including two properties which are
leased to AMC Multi-Cinema, Inc. and contain 24-screen movie theaters and
one property which is vacant land located at the base of Telluride
mountain being considered for condominium development (we sold one of the
movie theater properties in October 1999 as described in footnote (7) to
the following table),
- three properties located in California ranging from a shopping center in
Palm Springs to land in San Diego under construction for office
development,
- two single tenant retail properties located in Indiana and Ohio which are
leased to Lowe's Home Centers, Inc.,
S-18
<PAGE> 19
- four notes receivable relating to real estate projects in Arizona and
California with an aggregate outstanding balance of approximately $23.2
million as of August 31, 1999, and
- ownership interests in a number of real estate-related ventures,
including:
- a 65% ownership interest in a joint venture which owns and operates a
hotel, dinner theater and retail shop located near the Grand Canyon in
northern Arizona,
- a 50% ownership interest in a development company which owns Newport
Centre, a retail and office facility located in Winnipeg, Canada,
- a 23.7% ownership interest in a development company which owns land in
Indianapolis, Indiana, and
- an 80% ownership interest in a full-service car wash company which owns
or leases 19 car wash properties in and around Phoenix, Arizona and San
Antonio, Texas (we sold our interest in this company in October 1999 as
described in footnote (4) to the following table).
The following table describes our portfolio of real estate properties as of
August 31, 1999. Amounts shown for annual minimum rents are based on executed
leases at August 31, 1999. We made no allowances for contractually-based delays
to the commencement of rental payments. Due to the nature of real estate
investments, our actual rental income may differ from amounts shown in the table
below.
<TABLE>
<CAPTION>
TENANTS GLA (SQ FT) ANNUAL RENT
------- -------------- --------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C>
Arizona
Scottsdale Galleria............. (1) 520.5 (1)
Scottsdale City Centre........ various 64.3 $ 824.8
Scottsdale Land............... (2) (2) (2)
Brio Land..................... Roaring Forks 3.7 104.3
Restaurant
Grand Hotel................... (3) (3) (3)
Millennia Car Wash............ (4) (4) (4)
California Desert Fashion
Plaza......................... Saks Fifth 283.9 566.6
Avenue/various
Rancho Bernardo............... (5) (5) (5)
San Diego..................... (6) (6) (6)
Colorado Highlands Ranch(7)..... AMC 110.0 2,413.0
Telluride..................... (8) (8) (8)
Westminster................... AMC 110.0 2,520.0
Indiana Terre Haute(9).......... Lowe's 104.2 557.8
Ohio Middletown(9).............. Lowe's 126.4 650.0
Winnipeg, Canada Newport
Centre(10).................... Bank of 156.9 936.0
Montreal/various
------- --------
Total................. 1,479.9 $8,572.5
======= ========
</TABLE>
S-19
<PAGE> 20
- -------------------------
(1) Property is currently being redeveloped.
(2) Property consists of vacant land adjacent to the Scottsdale Galleria and
the Brio Land.
(3) Legacy holds a 65% ownership interest in Grand Tusayan LLC which owns and
operates a 120-room hotel and restaurant.
(4) Legacy sold its interest in Millennia to a subsidiary of Mace Security
International, Inc. in October 1999 in exchange for 3,500,000 shares of
Mace common stock, a warrant to acquire an additional 62,500 shares of Mace
common stock at an exercise price of $4.00 per share, and the assumption of
certain liabilities of Millennia by Mace's subsidiary. Mace common stock is
traded on the Nasdaq National Market under the symbol "MACE."
(5) Property consists of land currently under development as an office
building.
(6) Property consists of vacant land currently held for sale.
(7) Legacy sold this property in October 1999 for aggregate consideration of
approximately $7.7 million in cash and the assumption of approximately
$18.3 million in liabilities.
(8) Property consists of vacant land being considered for condominium
development.
(9) Single tenant property acquired from Excel Realty Trust in connection with
the spin-off of Legacy.
(10) Property is owned by a Nova Scotia company of which Legacy holds a 50%
ownership interest.
OUR PRINCIPAL TENANTS
Our two largest tenants accounted for approximately 72% of our total
annualized rental revenues as of August 31, 1999. In our most recent quarterly
period rental revenue accounted for approximately 50% of our total revenue. We
show certain information about these tenants as of August 31, 1999 in the
following table (dollars in thousands):
<TABLE>
<CAPTION>
PERCENT OF
NUMBER AREA UNDER ANNUAL TOTAL ANNUAL
TENANT OF LEASES LEASE (SQ. FT.) RENT REVENUES
------ --------- --------------- -------------- ------------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
AMC(1)................... 2 220.0 $4,933.0 58%
Lowe's................... 2 230.6 1,207.8 14
-- ----- -------- --
4 450.6 $6,140.8 72%
== ===== ======== ==
</TABLE>
- -------------------------
(1) In October 1999, Legacy sold to a third party one property under lease to
AMC. The information in this table does not reflect this sale.
As of August 31, 1999, AMC was our largest tenant in terms of total
revenues. AMC's parent corporation, AMC Entertainment, Inc., has guaranteed the
leases under which AMC is the tenant, which guarantee will remain in place for
the full term of the leases. AMC Entertainment is a motion picture exhibitor and
operates approximately 240 theaters. AMC Entertainment is listed on the American
Stock Exchange and, as of December 1998, had credit ratings of B- from Standard
& Poor's Corporation and B3 from Moody's Investors Service, Inc.
S-20
<PAGE> 21
As of August 31, 1999, Lowe's was our second largest tenant in terms of
total revenues. Lowe's is owned by Lowe's Companies, Inc., the nation's second
largest home improvement retailer with over 400 stores. Lowe's Companies is
listed on the New York Stock Exchange and, as of December 1998, had credit
ratings of A from Standard & Poor's and A2 from Moody's.
AMC Entertainment and Lowe's are publicly-traded companies subject to the
reporting requirements of the Securities Exchange Act of 1934, and financial and
other information regarding these companies is on file with the SEC.
OUR EMPLOYEES
As of August 31, 1999, we had approximately 156 employees, including the
employees of our subsidiaries.
OUR HEADQUARTERS
Our principal executive offices are located at 16955 Via Del Campo, Suite
100, San Diego, California 92127 and our telephone number is (858) 675-9400.
S-21
<PAGE> 22
MANAGEMENT
The table below indicates the name, position with Legacy and ages of our
directors, executive officers and other key employees as of August 31, 1999.
<TABLE>
<CAPTION>
NAME POSITION WITH LEGACY AGE
---- -------------------- ---
<S> <C> <C>
Gary B. Sabin............. Chairman, President and Chief Executive 45
Officer
Richard B. Muir........... Director, Executive Vice President and 44
Secretary
Kelly D. Burt............. Director, Executive Vice President -- 42
Development
Richard J. Nordlund....... Director 54
Robert E. Parsons, Jr..... Director 44
Robert S. Talbott......... Director 46
John H. Wilmot............ Director 57
Emmett R. Albergotti...... Senior Vice President -- Retail Development 57
Graham R. Bullick, Senior Vice President -- Capital Markets 49
Ph.D. ..................
Mark T. Burton............ Senior Vice President -- Acquisitions 39
S. Eric Ottesen........... Senior Vice President, General Counsel and 44
Assistant Secretary
James Y. Nakagawa......... Chief Financial Officer 33
</TABLE>
Gary B. Sabin has served as Chairman of the Board of Directors, President
and Chief Executive Officer since our formation. Mr. Sabin served as Director
and President of New Plan Excel from September 1998 to April 1999 and as
Chairman, President and Chief Executive Officer of Excel Realty Trust from
January 1989 to September 1998. In addition, Mr. Sabin has served as Chief
Executive Officer of various companies since his founding of Excel Realty
Trust'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 since our formation. Mr. Muir served as a Director, Executive Vice
President and Co-Chief Operating Officer of New Plan Excel from September 1998
to April 1999 and served as Director, Executive Vice President and Secretary of
Excel Realty Trust from January 1989 to September 1998. In addition, Mr. Muir
served as an officer and director of various affiliates of Excel Realty Trust
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 Director and Executive Vice
President -- Development since May 1998. From 1992 to May 1998, Mr. Burt served
as President and founder of TenantFirst, a real estate development company in
San Diego, California that was acquired by us 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 since our formation and as
President of RJN Management, a real estate firm in Santa Barbara, California,
since 1985. 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.
S-22
<PAGE> 23
Robert E. Parsons, Jr. has served as a Director since our formation. He
served as a Director of Excel Realty Trust and then New Plan Excel from January
1989 to April 1999. 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 since our 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 since our formation. He served as a
Director of Excel Realty Trust and then New Plan Excel from 1989 to April 1999.
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.
Emmett R. Albergotti has served as Senior Vice President -- Retail
Development 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, Ph.D., has served as Senior Vice President -- Capital
Markets since our formation. Mr. Bullick served as Senior Vice
President -- Capital Markets of Excel Realty Trust and then New Plan Excel from
January 1991 to April 1999. Previously, Mr. Bullick was associated with Excel
Realty Trust 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.
Mark T. Burton has served as Senior Vice President -- Acquisitions since
our formation and held the same position with Excel Realty Trust and then New
Plan Excel from October 1995 to April 1999. Mr. Burton also served as a Vice
President of Excel Realty Trust from January 1989 to October 1995. Mr. Burton
was associated with Excel Realty Trust and its affiliates beginning in 1983,
primarily in the evaluation and selection of property acquisitions.
S. Eric Ottesen has served as Senior Vice President, General Counsel and
Assistant Secretary since our formation. Mr. Ottesen served as Senior Vice
President -- Legal Affairs and Secretary of New Plan Excel from September 1998
to April 1999. Mr. Ottesen served as Senior Vice President, General Counsel and
Assistant Secretary of Excel Realty Trust from September 1996 to September 1998.
From 1987 to 1995, Mr. Ottesen was a senior partner in a San Diego law firm.
S-23
<PAGE> 24
James Y. Nakagawa has served as Chief Financial Officer since October 1998.
From March 1998 to October 1998, Mr. Nakagawa served as Controller of Legacy.
Mr. Nakagawa served as Controller of Excel Realty Trust and then New Plan Excel
from September 1994 to April 1999. Prior to joining New Plan Excel, Mr. Nakagawa
was a manager at Coopers & Lybrand LLP. Mr. Nakagawa is a certified public
accountant.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
TO NON-UNITED STATES HOLDERS OF COMMON STOCK
The following is a general discussion of some United States federal income
and estate tax consequences of the ownership and disposition of our common stock
applicable to non-United States holders. A non-United States holder is any
beneficial owner of our common stock that, for United States federal income tax
purposes, is (1) a non-resident alien individual, (2) a foreign corporation, (3)
a foreign partnership or (4) a non-resident fiduciary of a foreign estate or
trust, as these terms are defined in the Internal Revenue Code. This discussion
is based on the Internal Revenue Code and administrative and judicial
interpretations as of the date of this prospectus supplement, all of which are
subject to change either retroactively or prospectively. This discussion does
not address all aspects of United States federal income and estate taxation that
may be relevant to non-United States holders in light of their particular
circumstances and does not address any tax consequences arising under the laws
of any state, local or foreign taxing jurisdiction. For example, this discussion
may not adequately address all aspects of United States federal income and
estate taxation that may be relevant to insurance companies, tax exempt
organizations, financial institutions, broker-dealers or some U.S. expatriates.
Prospective investors are urged to consult with their tax advisors regarding the
United States federal, state and local income and other tax consequences, and
the non-United States tax consequences, of owning and disposing of our common
stock.
An individual may be deemed to be a resident alien, as opposed to a
nonresident alien, by virtue of being present in the United States for at least
31 days in the calendar year and an aggregate of at least 183 days during a
three-year period ending in the current calendar year. In determining whether an
individual is present in the United States for at least 183 days, all of the
days present in the current year, one-third of the days present in the
immediately preceding year, and one-sixth of the days present in the second
preceding year are counted. Resident aliens are subject to United States federal
income and estate tax in the same manner as United States citizens and
residents.
DIVIDENDS
Subject to the discussion below, any dividend paid to a non-United States
holder generally will be subject to United States withholding tax either at a
rate of 30% of the gross amount of the dividend (or a lower rate as may be
specified by an applicable income tax treaty). For purposes of determining
whether tax is to be withheld at a 30% rate or at a reduced rate as specified by
an income tax treaty, Legacy ordinarily will presume that dividends paid to an
address in a foreign country are paid to a resident of the country absent
knowledge that this presumption is not warranted. However, in order to obtain a
reduced rate of withholding pursuant to a tax treaty, a non-United States Holder
must file with Legacy or its paying agent before payment of the dividend a
properly completed and executed IRS Form 1001 (Ownership, Exemption or Reduced
Rate Certificate) (or a successor form). In addition, under United States
Treasury regulations not currently in
S-24
<PAGE> 25
effect, a non-United States holder would be required to file forms accompanied
by a statement from a competent authority of the treaty country in order to
claim the benefits of a tax treaty. Non-United States holders should consult
with their tax advisors regarding their entitlement to benefits under a relevant
income tax treaty. Dividends paid to a holder with an address within the United
States generally will not be subject to this withholding tax, unless Legacy has
actual knowledge that the holder is a non-United States holder.
Dividends received by a non-United States holder that are effectively
connected with a United States trade or business conducted by the non-United
States holder are subject to regular United States income tax in the same manner
as if the non-United States holder were a United States resident, but are not
subject to the 30% withholding tax if the non-United States holder files IRS
Form 4224 (Statement Claiming Exemption from Withholding of Tax on Income
Effectively Connected With the Conduct of Business in the United States) (or a
successor form) each year with Legacy or its paying agent prior to the payment
of the dividends for such year. Effectively connected dividends received by a
corporate non-United States holder may be subject to an additional branch
profits tax at a rate of 30%, or such lower rate as may be specified by an
applicable tax treaty, of the corporate non-United States holder's effectively
connected earnings and profits, subject to adjustments. To the extent a
distribution exceeds current or accumulated earnings or profits, it will be
treated first as a return of the holder's basis and then as a gain from the sale
of a capital asset. Any withholding tax on distributions in excess of Legacy's
current and accumulated earnings and profits is refundable to the non-United
States holder upon filing an appropriate claim with the United States Internal
Revenue Service.
A non-United States holder eligible for a reduced rate of United States
withholding tax under a tax treaty may obtain a refund of any excess amounts
currently withheld by filing an appropriate claim for refund with the IRS.
GAIN ON DISPOSITION OF ORDINARY COMMON STOCK
A non-United States holder generally will not be subject to United States
federal income tax relating to a gain realized upon the sale or a disposition of
our common stock unless: (1) the gain is effectively connected with a United
States trade or business of the non-United States holder, (2) the non-United
States holder is an individual who is present in the United States for a period
or periods aggregating 183 days or more during the taxable year in which the
sale or disposition occurs and other conditions are met, or (3) Legacy is or has
been a United States real property holding corporation within the heading of
Section 897(c)(2) of the Internal Revenue Code at any time within the shorter of
the five-year period preceding the disposition or the holder's holding period
and other conditions are met. Generally, a corporation is a "United States real
property holding corporation" if the fair market value of its "United States
real property interests" equals or exceeds 50% of the sum of the fair market
value of its worldwide real property interests plus its other assets used or
held for use in a trade or business. Although not free from doubt, Legacy
believes that it is a United States real property holding corporation for
federal income tax purposes. If Legacy is a United States real property holding
corporation, any gain realized by a non-United States holder still would not be
subject to United States federal income tax if the shares of Legacy are
"regularly traded" (within the meaning of the applicable regulations) on "an
established securities market" (for example, the American Stock Exchange or the
NASDAQ Stock Market). Legacy believes that its common stock is regularly traded
on an established securities market. If, however, Legacy's common stock is not
so treated, on a sale or disposition by a non-United States
S-25
<PAGE> 26
holder of the common stock, the transferee of such stock will be required to
withhold 10% of the proceeds unless Legacy certifies either that it is not (and
has not been) a United States real property holding corporation or another
exemption from withholding applies. If a non-United States holder falls under
clause (1) above, the non-United States holder will be taxed on the net gain
derived from the sale under regular graduated United States federal income tax
rates and, regarding corporate non-United States holders, may also be subject to
the branch profits tax described above. If an individual non-United States
holder falls under clause (2) above, the non-United States holder generally will
be subject to a 30% tax on the gain derived from the sale, which gain may be
offset by certain United States capital losses recognized within the same
taxable year of such sale.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, Legacy must report to the IRS the amount of dividends paid, the
name and address of the recipient, and the amount, if any, of tax withheld. A
similar report is sent to the holder. Tax treaties or other agreements provide
that the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Unless Legacy has actual knowledge that a holder is a non-United States
person, dividends paid to a holder at an address within the United States may be
subject to backup withholding at a rate of 31% if the holder is not an exempt
recipient as defined in Treasury Regulation Section 1.6049-4(c)(1)(ii), which
includes corporations, and fails to provide a correct taxpayer identification
number and other information to Legacy. Backup withholding will generally not
apply to dividends paid to holders at an address outside the United States
unless Legacy has knowledge that the holder is a United States person.
If the proceeds of the disposition of our common stock by a non-United
States holder are paid over, by or through a United States office of a broker,
the payment is subject to information reporting and to backup withholding at a
rate of 31% unless the disposing holder certifies as to its name, address and
status as a non-United States holder under penalties of perjury or otherwise
establishes an exemption. Generally, United States information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the United States through a non-United States office of
a non-United States broker. However, United States information reporting
requirements, but not backup withholding, will apply to a payment of disposition
proceeds outside the United States if (1) the payment is made through an office
outside the United States of a broker that is either (a) a United States person
for United States federal income tax purposes, (b) a controlled foreign
corporation for United States federal income tax purposes, or (c) a foreign
person which derives 50% or more of its gross income for specified periods from
the conduct of a United States trade or business, and (2) the broker fails to
maintain documentary evidence in its files that the holder is a non-United
States holder and that specified conditions are met or that the holder otherwise
is entitled to an exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to 31% backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
New regulations relating to withholding tax on income paid to foreign
persons will generally be effective for payments made after December 31, 2000,
subject to transition rules. These new withholding regulations modify and, in
general, unify the way in which
S-26
<PAGE> 27
you establish your status as a non-United States beneficial owner eligible for
withholding exemptions including a reduced treaty rate or an exemption from
backup withholding. For example, these new withholding regulations will require
new forms, which you generally will have to provide earlier than you would have
had to provide replacements for expiring existing forms.
ESTATE TAX
An individual non-United States holder who is treated as the owner of our
common stock at the time of his or her death or has made certain lifetime
transfers of an interest in our common stock will be required to include the
value of such our common stock in his or her gross estate for United States
federal estate tax purposes and may be subject to United States federal estate
tax, unless an applicable estate tax treaty provides otherwise.
OTHER TAX CONSEQUENCES
Your state and local tax treatment may not conform to the federal income
tax consequences summarized above. Consequently, you should consult your tax
advisor regarding the effect of state and local tax laws on an investment in our
shares.
PLAN OF DISTRIBUTION
Legacy will sell the common stock offered by this prospectus supplement and
accompanying prospectus directly to a group of related investors. Legacy will
pay no underwriting fees or commissions in connection with this sale.
LEGAL MATTERS
Latham & Watkins, San Diego, California, will pass upon the validity of the
common stock being offered by this prospectus supplement and accompanying
prospectus.
EXPERTS
The financial statements and schedules of Legacy and Excel Legacy
Corporation Asset Group incorporated in this prospectus supplement and
accompanying prospectus by reference to Legacy's Annual Report on Form 10-K/A
for the period from inception (November 17, 1997) to July 31, 1998, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
S-27
<PAGE> 28
PROSPECTUS
$300,000,000
EXCEL LEGACY CORPORATION
Debt Securities
Preferred Stock
Depositary Shares
Common Stock
Warrants
Rights
-------------------------
We may offer and sell from time to time in one or more classes or series
and in amounts, at prices and on the terms that we will determine at the time of
offering, with an aggregate initial offering price of up to $300,000,000:
- debt securities, which may consist of debentures, notes or other types of
debt,
- shares of preferred stock,
- shares of preferred stock represented by depositary shares,
- shares of common stock,
- warrants to purchase debt securities, preferred stock, depositary shares
or common stock, and
- rights to purchase shares of common stock.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest. Our common stock is listed on the American Stock Exchange
under the symbol XLG.
-------------------------
THE SECURITIES WE MAY OFFER INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE S-6 OF THE ACCOMPANYING PROSPECTUS SUPPLEMENT FOR A
DISCUSSION OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN OUR BUSINESS.
-------------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
-------------------------
The date of this prospectus is November 1, 1999
<PAGE> 29
EXCEL LEGACY
Excel Legacy, a Delaware corporation, was formed on November 17, 1997 as a
wholly owned subsidiary of Excel Realty Trust, Inc., a Maryland corporation and
a real estate investment trust. On March 31, 1998, Excel Realty Trust effected a
spin-off of our business through a special dividend of all of our outstanding
common stock to the holders of Excel Realty Trust common stock. Excel Realty
Trust effected this spin-off to allow us to pursue a wider variety of real
estate opportunities including owning, acquiring, developing and managing
retail, entertainment, office, hotel and mixed-use projects and real estate and
other operating companies throughout the United States and Canada.
In connection with this spin-off, Excel Realty Trust transferred real
properties, notes receivable and related assets and liabilities to us. In
addition to operating the assets obtained from the spin-off, we intend to pursue
signature real estate projects that have unique locations, concepts or
significant entry barriers associated with them, including:
- developing mixed-use development and entertainment projects that have the
potential for substantial capital gains but which may take several years
to fully develop,
- investing in properties requiring significant restructuring or
redevelopment to create substantial value, such as changing the use,
tenant mix or focus of a property,
- acquiring single tenant properties that can be highly leveraged with
fixed-rate debt that amortizes over the term of the tenant leases,
- acquiring debt or stock of real estate and other operating companies,
including defaulted debt at a discount to the value of the underlying
asset securing the debt,
- acquiring office and industrial sites and properties where aggressive
management and re-development may add significant value, and
- acquiring and developing hotel and hospitality projects in unique
locations.
Our principal executive offices are located at 16955 Via Del Campo, Suite
100, San Diego, California 92127 and our telephone number is (858) 675-9400.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges are as follows for the periods
indicated:
<TABLE>
<CAPTION>
FIVE MONTHS SIX MONTHS
FROM INCEPTION TO ENDED ENDED
FISCAL YEAR ENDED DECEMBER 31, JUNE 30,
JULY 31, 1998 1998 1999
----------------- ------------ --------------
<S> <C> <C> <C>
Ratio of earnings to fixed
charges........................ 2.61x 1.47x 1.45x
</TABLE>
There were no preferred stock dividends through June 30, 1999. We have
computed the ratio of earnings to fixed charges by dividing income before income
taxes and minority interests plus fixed charges, excluding capitalized interest,
by fixed charges.
2
<PAGE> 30
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities under
this prospectus for general corporate purposes, including working capital,
capital expenditures and acquisitions. We may invest funds not required
immediately for these purposes in short-term investment grade securities.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes the general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. Accordingly, for a description of the terms of any series of debt
securities, you must refer to both the prospectus supplement relating to that
series and the description of the debt securities in this prospectus. A
prospectus supplement may change any of the terms of the debt securities
described in this prospectus.
We may offer under this prospectus up to $300,000,000 aggregate principal
amount of debt securities, or if debt securities are issued at a discount, or in
a foreign currency or composite currency, the principal amount as may be sold
for an initial public offering price of up to $300,000,000.
The debt securities will be issued under an indenture between us and a
trustee chosen by us. We have summarized select portions of the indenture below.
The summary does not restate the indenture in its entirety. The form of the
indenture, which is subject to amendments or supplements as may be adopted from
time to time, has been filed as an exhibit to the registration statement and we
urge you to read the indenture because it, and not this description, defines
your rights as holders of debt securities issued under the indenture.
GENERAL
The debt securities will be our direct obligations, which may be secured or
unsecured, and which may be senior or subordinated indebtedness. We may issue an
unlimited amount of debt securities, in one or more series, under the indenture.
The terms of each series of debt securities will be established by our board of
directors or in a supplemental indenture. We do not have to issue all debt
securities of one series at the same time and, unless described differently in a
prospectus supplement, we may reopen a series, without the consent of the
holders of the debt securities of that series, for issuances of additional debt
securities of that series.
There may be more than one trustee under the indenture, each relating to
one or more series of debt securities. Any trustee may resign or be removed by
us, at which time we will appoint a successor trustee. Each trustee will be a
trustee of a trust under the indenture separate and apart from the trust
administered by any other trustee under the indenture. Except as indicated
elsewhere in this prospectus, any action taken by the trustee may be taken by
the trustee only relating to the series of debt securities for which it is the
trustee.
3
<PAGE> 31
We will provide in a prospectus supplement, including any pricing
supplement, relating to any series of debt securities being offered, the
aggregate principal amount and the following terms of the debt securities:
- the title of the debt securities,
- the total principal amount of the debt securities and any limit on the
total principal amount of the debt securities,
- the date on which we will pay the principal on the debt securities,
- the rate, which may be fixed or variable, or the method used to determine
the rate at which the debt securities will bear interest,
- the date from which interest will accrue, the date on which interest will
be payable and any regular record date for the interest payable on any
interest payment date,
- the place where we will pay, or the method of payment of, principal,
premium and interest on the debt securities and where holders may
surrender the debt securities for conversion, registration of transfer or
exchange,
- any obligation we have to redeem or purchase the debt securities under
any sinking fund or similar provisions or at the option of a holder of
debt securities,
- our right to redeem the debt securities and the date on which and the
price at which and the terms and conditions upon which we may redeem the
debt securities,
- the denominations in which we will issue the debt securities, if other
than denominations of $1,000 and any multiples of $1,000,
- provisions, if any, for the defeasance or discharge of our obligations
relating to the debt securities,
- whether we will issue the debt securities in registered or bearer form,
- the currency in which we will pay principal, premium and interest on the
debt securities,
- if we will pay principal, premium or interest on the debt securities in
one or more currencies other than those in which the debt securities are
denominated, the manner in which we will determine the exchange rate on
the payments,
- the manner in which we will determine the amounts of payment of
principal, premium or interest on the debt securities if these amounts
may be determined by reference to an index based on a currency other than
that in which the debt securities are denominated or designated or by
reference to a commodity, commodity index, stock exchange index or
financial index,
- any addition to, or change or deletion of, any events of default or
covenants in the indenture,
- a discussion of any material or special United States federal income tax
considerations applicable to the debt securities,
4
<PAGE> 32
- any depositaries, trustees, interest rate calculation agents, exchange
rate calculation agents or other agents relating to the debt securities
other than those originally appointed,
- whether we will issue the debt securities in the form of global
securities and whether we will issue the global securities in temporary
or permanent global form,
- any rights of the holders of the debt securities to convert the debt
securities into other securities or property and the terms and conditions
of the conversion,
- any subordination provisions relating to the debt securities,
- any listing of the debt securities on a securities exchange,
- any provisions relating to any security provided for the debt securities,
and
- any other terms of the debt securities that will not be inconsistent with
the indenture.
We may issue debt securities at a discount below their stated principal
amount. Even if we do not issue the debt securities below their stated principal
amount, for United States federal income tax purposes the debt securities may be
deemed to have been issued with a discount because of interest payment
characteristics. We will describe in a prospectus supplement the United States
federal income tax considerations applicable to debt securities issued at a
discount or deemed to be issued at a discount. We will also describe in a
prospectus supplement the special United States federal income tax
considerations or other restrictions or terms applicable to debt securities
issuable in bearer form, offered exclusively to foreigners or denominated in a
foreign currency.
DENOMINATIONS, REGISTRATION, TRANSFER AND EXCHANGE
Unless we specify otherwise in the prospectus supplement, the debt
securities of any series will be issuable only in denominations of $1,000 and
multiples of $1,000, and will be payable only in U.S. dollars.
We may issue the debt securities in whole or in part in the form of one or
more global securities that will be deposited with, or on behalf of, a
depositary identified in the applicable prospectus supplement. We may issue the
global securities in either registered or bearer form and in either temporary or
permanent form. We will describe the specific terms of the depositary
arrangement relating to a series of debt securities in the prospectus
supplement.
You may transfer or exchange certificated debt securities at any office we
maintain for this purpose in accordance with the terms of the indenture. We will
not charge a service fee for any transfer or exchange of certificated debt
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge we are required to pay in connection with a transfer
or exchange.
You may effect the transfer of certificated debt securities and the right
to receive the principal, premium and interest on certificated debt securities
only by surrendering the certificate representing those certificated debt
securities and either reissuance by us or the trustee of the certificate to the
new holder or the issuance by us or the trustee of a new certificate to the new
holder.
5
<PAGE> 33
We are not required to:
- register, transfer or exchange debt securities of any series during a
period beginning at the opening of business 15 days before the day we
transmit a notice of redemption of debt securities of the series selected
for redemption and ending at the close of business on the day of the
transmission, or
- to register, transfer or exchange any debt security so selected for
redemption in whole or in part, except the unredeemed portion of any debt
security being redeemed in part.
COVENANTS
We will describe in the prospectus supplement any restrictive covenants
applicable to an issue of debt securities.
CONSOLIDATION, MERGER OR SALE OF ASSETS
We may not consolidate or merge with or into, or sell, assign, convey or
transfer our properties and assets substantially in their entirety to another
corporation, person or entity unless:
- in the case of a consolidation or merger, (1) we are the surviving
corporation, or (2) the successor corporation is an entity organized and
validly existing under the laws of the United States, any state of the
United States or the District of Columbia and expressly assumes our
obligations under the debt securities and the indenture, and
- immediately after giving effect to the transaction, no event of default
exists.
EVENTS OF DEFAULT
Each of the following is an event of default relating to a series of debt
securities:
- default in the payment of any interest upon any debt security of that
series when it becomes due and payable, and continuance of that default
for a period of 30 days,
- default in the payment of principal of or premium on any debt security of
that series when due and payable,
- default in the deposit of any sinking fund payment, when and as due
relating to any debt security of that series,
- default in the performance or breach by us of any other covenant or
warranty in the indenture, other than a covenant or warranty that has
been included in the indenture solely for the benefit of a series of debt
securities other than that series, which default continues uncured for a
period of 60 days after we receive written notice from the trustee or we
and the trustee receive written notice from the holders of at least 25%
in principal amount of the outstanding debt securities of that series as
provided in the indenture,
- default under any bond, debenture, note, mortgage, instrument or other
debt, including obligations under leases, but not including debt for
which recourse is
6
<PAGE> 34
limited to the property purchased, in an aggregate principal amount
greater than $25.0 million which results in the acceleration of the
maturity of the debt,
- events of bankruptcy, insolvency or reorganization, and
- any other event of default provided relating to debt securities of that
series that is described in the applicable prospectus supplement
accompanying this prospectus.
If an event of default relating to outstanding debt securities of any
series occurs and is continuing, then the trustee or the holders of at least 25%
in principal amount of outstanding debt securities of that series may declare,
in a written notice, the principal amount, or specified amount, plus accrued and
unpaid interest and premium, if payable on all debt securities of that series to
be immediately due and payable. At any time after a declaration of acceleration
relating to debt securities of any series has been made, the holders of a
majority in principal amount of the outstanding debt securities of that series
may rescind and cancel the acceleration if:
- the holders act before the trustee has obtained a judgment or decree for
payment of the money due,
- we have paid or deposited with the trustee a sum sufficient to pay
overdue interest and overdue principal other than the accelerated
interest and principal, and
- we have cured or the holders have waived all events of default, other
than the non-payment of accelerated principal and interest relating to
debt securities of that series, as provided in the indenture.
We refer you to the prospectus supplement relating to any series of debt
securities that are discount securities for the particular provisions relating
to acceleration of a portion of the principal amount of the discount securities
upon the occurrence of an event of default.
The trustee has no obligation to exercise any of its rights or powers under
the indenture at the request of any holder of outstanding debt securities,
unless the trustee receives indemnity satisfactory to it against any loss,
liability or expense. Subject to rights of the trustee, the holders of a
majority in principal amount of the outstanding debt securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee relating to the debt securities of that series.
No holder of any debt security of any series will have any right to
institute any judicial or other proceeding relating to the indenture or for the
appointment of a receiver or trustee, or for any remedy under the indenture,
unless:
- that holder has previously given the trustee written notice of a
continuing event of default relating to debt securities of that series,
and
- the holders of at least a 25% in principal amount of outstanding debt
securities of that series have made written request, and offered
reasonable indemnity, to the trustee to institute the proceeding as
trustee, and the trustee has not received from the holders of a majority
in principal amount of the outstanding debt securities of that series a
direction inconsistent with that request and has failed to institute the
proceeding within 60 days.
The holder of any debt security will have an absolute and unconditional
right to receive payment of the principal, premium and any interest on that debt
security on or
7
<PAGE> 35
after the due dates expressed in that debt security and to institute suit for
the enforcement of payment.
Within 120 days after the end of our fiscal year we will furnish to the
trustee a statement as to compliance with the indenture. The trustee may
withhold notice to the holders of debt securities of any series of any default
or event of default, except in payment on any debt securities of that series,
relating to debt securities of that series if it in good faith determines that
withholding notice is in the interest of the holders of those debt securities.
MODIFICATION AND WAIVER
We may modify the indenture, without prior notice to or consent of any
holders, for any of the following purposes:
- to evidence the succession of another corporation to our rights and the
assumption by the successor of our covenants and obligations in the
indenture and the debt securities,
- to add to the covenants for the benefit of the holders of the debt
securities or to surrender any right or power conferred upon us in the
indenture,
- to add any events of default,
- to add or change any provision of the indenture to permit or facilitate
the issuance of debt securities of any series in bearer form, to permit
bearer securities to be issued in exchange for registered securities, to
permit bearer securities to be issued in exchange for bearer securities
of other denominations or to permit the issuance of debt securities of
any series in uncertificated form, provided that the action will not
adversely affect the interests of the holders of debt securities or
coupons in any material respect,
- to change or eliminate any provision of the indenture, provided that the
change or elimination will become effective only when there is no
outstanding debt security issued under the indenture or coupon of any
series created prior to the modification which is entitled to the benefit
of the provision and as to which the modification would apply,
- to secure the debt securities or to provide that any of our obligations
under the debt securities or the indenture will be guaranteed and the
terms and conditions for the release or substitution of the security or
guarantee,
- to supplement any provisions of the indenture to permit or facilitate the
defeasance and discharge of any series of debt securities, provided that
the action will not adversely affect the interests of the holders of the
debt securities or coupons in any material respect,
- to establish the form or terms of debt securities and coupons as
permitted by the indenture,
- to evidence and provide for a successor or other trustee relating to one
or more series of debt securities and to add or change any provision of
the indenture to provide for or facilitate the administration of the
trusts by more than one trustee, or
8
<PAGE> 36
- to cure any ambiguity, to correct or supplement any provision of the
indenture which may be defective or inconsistent with any other provision
of the indenture or to make any other provisions which will not be
inconsistent with any provision of the indenture; provided these other
provisions will not adversely affect the interest of the holders of
outstanding debt securities or coupons in any material respect.
We may modify and amend the indenture with the written consent of at least
a majority in principal amount of the outstanding debt securities of each series
affected by the modifications or amendments. However, these modifications may
not, without the consent of the holder of each outstanding debt security of each
series affected:
- change the stated maturity of any debt security or coupon,
- reduce the principal amount of any payment to be made on any debt
security or coupon,
- reduce the rate of interest or extend the time for payment of interest or
premium payable upon redemption of any debt security,
- change the coin or currency in which any debt security or any premium or
interest is payable,
- reduce the amount of the principal of a discount security that would be
due and payable upon a declaration of acceleration of the maturity,
- impair the right to institute suit for the enforcement of any payment on
or after the due date of the payment,
- alter any redemption provisions in a manner adverse to the holders of the
debt securities,
- reduce the percentage in principal amount of the outstanding debt
securities,
- modify any of the waiver provisions, except to increase any required
percentage or to provide that other provisions of the indenture cannot be
modified or waived without the consent of the holder of each affected
outstanding debt security, or
- modify any provision described in the applicable prospectus supplement as
requiring the consent of each affected holder of debt securities.
A modification which changes or eliminates any covenant or other provision
of the indenture relating to one or more particular series of debt securities
and coupons, or which modifies the rights of the holder of debt securities and
coupons of that series, will be deemed not to affect the rights of the holders
of debt securities and coupons of any other series.
The holders of at least a majority in principal amount of the outstanding
debt securities of any series, by notice to the trustee, may on behalf of the
holders of all debt securities of that series waive any default and its
consequences under the indenture, except:
- a continuing default in the payment of interest on, premium or the
principal amount of any debt security held by a non-consenting holder, or
- a default of a covenant or provision which cannot be modified or amended
without the consent of the holder of each outstanding debt security of
each series affected.
9
<PAGE> 37
DEFEASANCE OF DEBT SECURITIES AND COVENANTS IN CIRCUMSTANCES
Legal Defeasance. We may be discharged from any and all obligations
relating to the debt securities of any series except for obligations:
- to pay additional amounts, if any, upon the occurrence of specified tax,
assessment or government charge events relating to payments on the debt
securities,
- to register the transfer or exchange of debt securities,
- to replace stolen, lost or mutilated debt securities,
- to maintain paying agencies, and
- to hold money in payment for trust.
We will be discharged upon our deposit with the trustee, in trust, of money
or government obligations that will provide money in an amount sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay and discharge each installment of principal, premium and interest on and
any mandatory sinking fund payments relating to the debt securities of that
series on the stated maturity of those payments.
We may be discharged only if we have delivered to the trustee an opinion of
counsel stating that we have received from, or there has been published by, the
United States Internal Revenue Service a ruling or, since the date of execution
of the indenture, there has been a change in the applicable United States
federal income tax law, in either case to the effect that, the holders of the
debt securities of that series will not recognize income, gain or loss for
United States federal income tax purposes as a result of the deposit, defeasance
and discharge.
Defeasance of Covenants. Upon compliance with specified conditions, we will
not be required to comply with some restrictive covenants contained in the
indenture and any omission to comply with the obligations will not constitute a
default or event of default relating to the debt securities. These conditions
include:
- depositing with the trustee money or government obligations that, through
the payment of interest and principal in accordance with their terms,
will provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent public accountants to pay principal,
premium and interest on and any mandatory sinking fund payments relating
to the debt securities of that series on the date those payments are due,
and
- delivering to the trustee an IRS ruling or an opinion of counsel to the
effect that the holders of the debt securities of the series will not
recognize income, gain or loss for United States federal income tax
purposes as a result of the deposit and related covenant defeasance.
LIMITED LIABILITY OF SOME PERSONS
No past, present or future stockholder, incorporator, employee officer or
director of Excel Legacy or any successor corporation or any of our affiliates
will have any personal liability for our obligations under the indenture or the
debt securities because of his, her or its status as a stockholder,
incorporator, employee officer or director.
10
<PAGE> 38
CONVERSION RIGHTS
We will describe in the applicable prospectus supplement the terms and
conditions, if any, upon which the debt securities are convertible into common
stock or preferred stock. Those terms will include:
- whether the debt securities are convertible into common stock or
preferred stock,
- the conversion price, or manner of calculation,
- the conversion period,
- provisions regarding whether conversion will be at our option or the
option of the holders,
- the events requiring an adjustment of the conversion price, and
- provisions affecting conversion in the event of the redemption of the
debt securities.
PAYMENT AND PAYING AGENTS
The indenture will require us to duly and punctually pay the principal,
premium and interest on the debt securities as provided in the debt securities
and the indenture.
If debt securities of a series are issuable only as registered securities,
we will maintain in each place of payment for that series an office or agency
where:
- holders may present or surrender for payment debt securities of that
series,
- holders may surrender debt securities of that series for registration of
transfer or exchange, and
- we may be served with notices and demands regarding the debt securities
of that series.
If debt securities of a series are issuable as bearer securities, we will
maintain or cause to be maintained:
- in the Borough of Manhattan, the City and State of New York, an office or
agency where holders may present or surrender for payment any registered
securities of that series, where holders may surrender for registration
or transfer any registered securities of that series, where holders may
surrender debt securities of that series for exchange or redemption,
where we may be served with notices and demands regarding the debt
securities of that series and where holders may present or surrender for
payment bearer securities of that series and related coupons in the
circumstances described in the following paragraph and not otherwise,
- subject to any applicable laws or registration, in a place of payment for
that series which is located outside the United States, an office or
agency where holders may present and surrender for payment debt
securities of that series and related coupons; provided that if the debt
securities of that series are listed on any stock exchange located
outside the United States and the stock exchange so requires, we will
maintain a paying agent for the debt securities of that series in any
required city located outside the United States, so long as the debt
securities of that series are listed on that exchange, and
11
<PAGE> 39
- subject to any applicable laws or regulations, in a place of payment for
that series located outside the United States, an office or agency where
holders may surrender any registered securities of that series for
registration of transfer, where holders may surrender for exchange or
redemption debt securities of that series and where we may receive
notices and demands regarding the debt securities of that series.
We will give prompt written notice to the applicable trustee of the
locations, and any change in the locations, of offices or agencies. If at any
time we fail to maintain any required office or agency or fail to furnish the
applicable trustee with the address, holders may make or serve the
presentations, surrenders, notices and demands at the corporate trust office of
the applicable trustee, except that holders may present and surrender bearer
securities of that series and the related coupons for payment at the offices
specified in the applicable debt security. We will appoint the applicable
trustee, as our agent to receive the foregoing presentations, surrenders,
notices and demands. However, in the case of bearer securities, we may appoint
another agent as may be specified in the applicable prospectus supplement.
We will make no payment of principal, premium or interest on bearer
securities at any of our offices or agencies in the United States or by check
mailed to any address in the United States or by transfer to an account
maintained with a bank located in the United States. However, if the debt
securities of a series are denominated and payable in U.S. dollars, we will pay
principal and any premium and interest on the debt securities of that series, if
specified in the applicable prospectus supplement, at the office of our paying
agent in the Borough of Manhattan, the City and State of New York, only if
payment in U.S. dollars of the full amount of the principal, premium, interest
or additional amounts, as the case may be, at all offices or agencies outside
the United States maintained for the purpose by us in accordance with the
indenture is illegal or effectively precluded by exchange controls or other
similar restrictions.
DESCRIPTION OF CAPITAL STOCK
GENERAL
This prospectus describes the general terms of our capital stock. For a
more detailed description of these securities, you should read the applicable
provisions of Delaware law and our charter. When we offer to sell a particular
series of these securities, we will describe the specific terms of the series in
a supplement to this prospectus. Accordingly, for a description of the terms of
any series of securities, you must refer to both the prospectus supplement
relating to that series and the description of the securities described in this
prospectus. A prospectus supplement may change any of the terms of the
securities described in this prospectus.
Under our charter, our authorized capital stock consists of 150,000,000
shares of common stock, par value $0.01 per share, and 50,000,000 shares of
preferred stock, par value $0.01 per share. A certificate of designation
classifies 25,000,000 shares of our preferred stock as Series B preferred stock.
At August 31, 1999, we had outstanding approximately 33,457,804 shares of common
stock and 21,281,000 shares of Series B preferred stock.
12
<PAGE> 40
COMMON STOCK
Subject to any preferential rights of our preferred stock, each holder of
common stock is entitled to one vote per share on all matters submitted to a
vote of stockholders. Holders of common stock are entitled to receive a
proportional share of any dividends that may be declared by our board of
directors, subject to the rights and preferences of preferred stockholders. In
the event of our liquidation, dissolution or winding up, after we pay all debts
and other liabilities and any liquidation preference on the preferred stock,
each holder of common stock would be entitled to share equally in all of our
remaining assets. The common stock is not liable for any calls or assessments
and is not convertible into any other securities. In addition, no redemption or
sinking fund provisions apply to the common stock. All outstanding shares of
common stock are fully paid and nonassessable.
As a corporation organized under the laws of the State of Delaware, we are
subject to Section 203 of the General Corporation Law of the State of Delaware,
known as the DGCL, which restricts our ability to enter into business
combinations with an interested stockholder or a stockholder owning 15% or more
of our outstanding voting stock, or that stockholder's affiliates or associates,
for a period of three years. These restrictions do not apply if:
- prior to becoming an interested stockholder, our board of directors
approves either the business combination or the transaction in which the
stockholder becomes an interested stockholder,
- upon consummation of the transaction in which the stockholder becomes an
interested stockholder, the interested stockholder owns at least 85% of
our voting stock outstanding at the time the transaction commenced,
subject to exceptions, or
- on or after the date a stockholder becomes an interested stockholder, the
business combination is both approved by our board of directors and
authorized at an annual or special meeting of our stockholders by the
affirmative vote of at least two-thirds of the outstanding voting stock
not owned by the interested stockholder.
PREFERRED STOCK
Under our charter, our board of directors is authorized generally without
stockholder approval to issue shares of preferred stock from time to time, in
one or more classes or series. Prior to the issuance of shares of each series,
the board of directors is required by the DGCL and our charter to adopt
resolutions and file a certificate of designation with the Secretary of State of
the State of Delaware. The certificate of designation fixes for each class or
series the designations, powers, preferences, rights, qualifications,
limitations and restrictions, including the following:
- the number of shares constituting each class or series,
- voting rights,
- rights and terms of redemption, including sinking fund provisions,
- dividend rights and rates,
- dissolution,
- terms concerning the distribution of assets,
13
<PAGE> 41
- conversion or exchange terms,
- redemption prices, and
- liquidation preferences.
Holders of our Series B preferred stock are entitled to receive, when, as
and if declared by the board of directors, cumulative cash dividends payable in
an amount per share equal to the cash dividends, if any, on the shares of common
stock into which our shares of Series B preferred stock are convertible. Holders
of the Series B preferred stock are also entitled to a liquidation preference of
$5.00 per share, plus a premium of 7% per annum, in the event of our
liquidation, dissolution or other winding up of our affairs. The shares of
Series B preferred stock are convertible into our common stock at our option or
at the option of the holders at any time, on a one-for-one basis, subject to
adjustments.
All shares of preferred stock offered by this prospectus will, when issued,
be fully paid and nonassessable and will not have any preemptive or similar
rights. Our board of directors could authorize the issuance of additional shares
of preferred stock with terms and conditions which could have the effect of
discouraging a takeover or other transaction that might involve a premium price
for holders of the shares or which holders might believe to be in their best
interests.
We will describe in a prospectus supplement relating to the class or series
of preferred stock being offered the following terms:
- the title and stated value of the preferred stock,
- the number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock,
- the dividend rate(s), period(s) or payment date(s) or method(s) of
calculation applicable to the preferred stock,
- whether dividends are cumulative or non-cumulative and, if cumulative,
the date from which dividends on the preferred stock will accumulate,
- the procedures for any auction and remarketing, if any, for the preferred
stock,
- the provisions for a sinking fund, if any, for the preferred stock,
- the provision for redemption, if applicable, of the preferred stock,
- any listing of the preferred stock on any securities exchange,
- the terms and conditions, if applicable, upon which the preferred stock
will be convertible into common stock, including the conversion price or
manner of calculation and conversion period,
- voting rights, if any, of the preferred stock,
- whether interests in the preferred stock will be represented by
depositary shares,
- a discussion of any material or special United States federal income tax
considerations applicable to the preferred stock,
- the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon the liquidation, dissolution or winding
up of our affairs,
14
<PAGE> 42
- any limitations on issuance of any class or series of preferred stock
ranking senior to or on a parity with the class or series of preferred
stock as to dividend rights and rights upon liquidation, dissolution or
winding up of our affairs, and
- any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
RANK
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will rank, relating to dividends and upon our liquidation,
dissolution or winding up:
- senior to all classes or series of our common stock and to all of our
equity securities ranking junior to the preferred stock,
- on a parity with all of our equity securities the terms of which
specifically provide that the equity securities rank on a parity with the
preferred stock, and
- junior to all of our equity securities the terms of which specifically
provide that the equity securities rank senior to the preferred stock.
The term equity securities does not include convertible debt securities.
REGISTRAR AND TRANSFER AGENT
BankBoston, N.A. is the registrar and transfer agent for our common stock
and preferred stock.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
We may issue depositary shares, each of which will represent a fractional
interest of a share of a particular series of preferred stock, as specified in
the applicable prospectus supplement. We will deposit with a depositary,
referred to as the preferred stock depositary, shares of preferred stock of each
series represented by depositary shares. We will enter into a deposit agreement
with the preferred stock depositary and holders from time to time of the
depositary receipts issued by the preferred stock depositary which evidence the
depositary shares. Subject to the terms of the deposit agreement, each owner of
a depositary receipt will be entitled, in proportion to the holder's fractional
interest in the preferred stock, to all the rights and preferences of the series
of the preferred stock represented by the depositary shares, including dividend,
voting, conversion, redemption and liquidation rights.
Immediately after we issue and deliver the preferred stock to a preferred
stock depositary, we will cause the preferred stock depositary to issue the
depositary receipts on our behalf. You may obtain copies of the applicable form
of deposit agreement and depositary receipt from us upon request. The statements
made in this section relating to the deposit agreement and the depositary
receipts are summaries of the anticipated provisions. These summaries are not
complete and we may modify them in a prospectus supplement. For more detail we
refer you to the deposit agreement itself, which we will file as an exhibit to
the registration statement.
15
<PAGE> 43
DIVIDENDS AND OTHER DISTRIBUTIONS
The preferred stock depositary will distribute all cash dividends or other
cash distributions received relating to the preferred stock to the record
holders of depositary receipts in proportion to the number of the depositary
receipts owned by the holders, subject to the obligations of holders to file
proofs, certificates and other information and to pay the charges and expenses
to the preferred stock depositary.
In the event of a distribution other than in cash, the preferred stock
depositary will distribute property received by it to the record holders of
depositary receipts in proportion to the number of the depositary receipts owned
by the holders, unless the preferred stock depositary determines that it is not
feasible to make the distribution, in which case the preferred stock depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the holders.
No distribution will be made relating to any depositary share that
represents any preferred stock converted into other securities.
WITHDRAWAL OF STOCK
Assuming we have not previously called for redemption or converted the
depositary shares into other securities, upon surrender of the depositary
receipts at the corporate trust office of the preferred stock depositary, the
holders will be entitled to delivery at that office of the number of whole or
fractional shares of the preferred stock and any money or other property
represented by the depositary shares. Holders of depositary receipts will be
entitled to receive shares of the related preferred stock as specified in the
applicable prospectus supplement, but holders of the shares of preferred stock
will no longer be entitled to receive depositary shares.
REDEMPTION OF DEPOSITARY SHARES
Whenever we redeem shares of preferred stock held by the preferred stock
depositary, the preferred stock depositary will concurrently redeem the number
of depositary shares representing shares of the preferred stock so redeemed,
provided we have paid the applicable redemption price for the preferred stock to
be redeemed plus an amount equal to any accrued and unpaid dividends to the date
fixed for redemption. The redemption price per depositary share will be equal to
the corresponding proportion of the redemption price and any other amounts per
share payable relating to the preferred stock. If fewer than all the depositary
shares are to be redeemed, the depositary shares to be redeemed will be selected
pro rata or by any other equitable method determined by us.
From and after the date fixed for redemption:
- all dividends relating to the shares of preferred stock called for
redemption will cease to accrue,
- the depositary shares called for redemption will no longer be deemed to
be outstanding, and
- all rights of the holders of the depositary receipts evidencing the
depositary shares called for redemption will cease, except the right to
receive any moneys payable upon the redemption and any money or other
property to which the holders of the
16
<PAGE> 44
depositary receipts were entitled upon redemption and surrender to the
preferred stock depositary.
VOTING OF THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the preferred stock depositary will mail the
information contained in the notice of meeting to the record holders of the
depositary receipts. Each record holder of these depositary receipts on the
record date, which will be the same date as the record date for the preferred
stock, will be entitled to instruct the preferred stock depositary as to the
exercise of the voting rights pertaining to the amount of preferred stock
represented by the holder's depositary shares. The preferred stock depositary
will vote the amount of preferred stock represented by the depositary shares in
accordance with the instructions, and we will agree to take all reasonable
action necessary to enable the preferred stock depositary to do so. The
preferred stock depositary will abstain from voting the amount of preferred
stock represented by the depositary shares for which it does not receive
specific instructions from the holders of depositary receipts evidencing the
depositary shares. The preferred stock depositary will not be responsible for
any failure to carry out any instruction to vote, or for the manner or effect of
any vote made, as long as the action or non-action is in good faith and does not
result from the preferred stock depositary's negligence or willful misconduct.
LIQUIDATION PREFERENCE
In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up, the holders of each depositary receipt will be entitled to the fraction
of the liquidation preference accorded each share of preferred stock represented
by the depositary shares, as provided in the applicable prospectus supplement.
CONVERSION OF PREFERRED STOCK
The depositary shares will not be convertible into common stock or any of
our other securities or property. Nevertheless, if we so specify in the
applicable prospectus supplement relating to an offering of depositary shares,
holders may surrender depositary receipts to the preferred stock depositary with
written instructions to the preferred stock depositary to instruct us to convert
the preferred stock represented by the depositary shares into whole shares of
common stock, other shares of our preferred stock or other shares of stock. We
have agreed that upon receipt of the instructions and any amounts payable, we
will convert the depositary shares using the same procedures as those provided
for converting preferred stock. If the depositary shares evidenced by a
depositary receipt are to be converted in part only, the preferred stock
depositary will issue a new depositary receipt for any depositary shares not
converted. No fractional shares of common stock will be issued upon conversion,
and if the conversion would result in a fractional share being issued, we will
pay an amount in cash equal to the value of the fractional interest based upon
the closing price of the common stock on the last business day prior to the
conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
We may amend the form of depositary receipt and any provision of the
deposit agreement at any time by agreement between us and the preferred stock
depositary.
17
<PAGE> 45
However, any amendment that materially and adversely alters the rights of the
holders of depositary receipts or that would be materially and adversely
inconsistent with the rights granted to the holders of the related preferred
stock will not be effective unless the holders of at least two-thirds of the
depositary shares evidenced by the depositary receipts then outstanding approve
the amendment. No amendment will impair the right, subject to the exceptions in
the depositary agreement, of any holder of depositary receipts to surrender any
depositary receipt with instructions to deliver to the holder the related
preferred stock and all money and other property, if any, represented by the
depositary receipt, except in order to comply with law. Every holder of an
outstanding depositary receipt at the time any amendment becomes effective will
be deemed, by continuing to hold the receipt, to consent and agree to the
amendment and to be bound by the amended deposit agreement.
We may terminate the deposit agreement upon not less than 30 days' prior
written notice to the preferred stock depositary if a majority of each series of
preferred stock affected by the termination consents to the termination. Upon
termination, the preferred stock depositary will deliver or make available to
each holder of depositary receipts, upon surrender of the depositary receipts
held by the holder, the number of whole or fractional shares of preferred stock
represented by the depositary shares evidenced by the depositary receipts
together with any other property held by the preferred stock depositary relating
to the depositary receipt.
In addition, the deposit agreement will automatically terminate if:
- all outstanding depositary shares have been redeemed,
- there has been a final distribution of the related preferred stock in
connection with our liquidation, dissolution or winding up and the
distribution has been distributed to the holders of depositary receipts
evidencing the depositary shares representing the preferred stock, or
- each share of the related preferred stock has been converted into our
securities which are not represented by depositary shares.
CHARGES OF PREFERRED STOCK DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the deposit agreement. In addition, we will pay the
fees and expenses of the preferred stock depositary in connection with the
performance of its duties under the deposit agreement. However, holders of
depositary receipts will pay the fees and expenses of the preferred stock
depositary for any duties requested by the holders to be performed which are
outside of those expressly provided for in the deposit agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The preferred stock depositary may resign at any time by delivering to us
notice of its election to do so, and we may at any time remove the preferred
stock depositary. Any resignation or removal of the acting preferred stock
depository will take effect upon our appointment of a successor preferred stock
depositary. We must appoint a successor preferred stock depositary within 60
days after delivery of the notice of resignation or removal.
18
<PAGE> 46
MISCELLANEOUS
The preferred stock depositary will forward to holders of depositary
receipts any reports and communications the preferred stock depositary receives
from us relating to the preferred stock.
We will not be liable, nor will the preferred stock depositary be liable,
if we are prevented from or delayed in, by law or any circumstances beyond our
control, performing our obligations under the deposit agreement. Our obligations
and the obligations of the preferred stock depositary under the deposit
agreement will be limited to performing our duties in good faith and without
negligence or willful misconduct. We will not be obligated, nor will the
preferred stock depositary be obligated, to prosecute or defend any legal
proceeding relating to any depositary receipts, depositary shares or shares of
preferred stock represented by depositary shares unless satisfactory indemnity
is furnished to us. We may rely, and the preferred stock depositary may rely, on
written advice of counsel or accountants, or information provided by persons
presenting shares of preferred stock represented by depositary shares for
deposit, holders of depositary receipts or other persons we believe in good
faith to be competent to give this information, and on documents we believe in
good faith to be genuine and signed by a proper party.
In the event the preferred stock depositary receives conflicting claims,
requests or instructions from holders of depositary receipts, on the one hand,
and us, on the other hand, the preferred stock depositary will be entitled to
act on these claims, requests or instructions received from us.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt securities, preferred stock,
depositary shares or common stock. We may issue warrants independently or
together with any other securities we offer under a prospectus supplement. The
warrants may be attached to or separate from the securities. We will issue each
series of warrants under a separate warrant agreement that we will enter into
with a bank or trust company, as warrant agent. We will describe additional
terms of the warrants and the applicable warrant agreements in the prospectus
supplement.
DEBT WARRANTS
We will describe in the applicable prospectus supplement the terms of the
debt warrants being offered, the warrant agreement relating to the debt warrants
and the debt warrant certificates representing the debt warrants, including:
- the title of the debt warrants,
- the aggregate number of the debt warrants,
- the price or prices at which the debt warrants will be issued,
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants, and the
procedures and conditions relating to the exercise of the debt warrants,
- the designation and terms of any related debt securities with which the
debt warrants are issued, and the number of the debt warrants issued with
each security,
19
<PAGE> 47
- the date, if any, on and after which the debt warrants and the related
debt securities will be separately transferable,
- the principal amount of debt securities purchasable upon exercise of each
debt warrant, and the price at which the principal amount of the debt
securities may be purchased upon exercise,
- the date on which the right to exercise the debt warrants will commence,
and the date on which the right will expire,
- the maximum or minimum number of the debt warrants which may be exercised
at any time,
- a discussion of the material United States federal income tax
considerations applicable to the exercise of the debt warrants, and
- any other terms of the debt warrants and terms, procedures and
limitations relating to the exercise of the debt warrants.
Holders may exchange debt warrant certificates for new debt warrant
certificates of different denominations, and may exercise debt warrants at the
corporate trust office of the warrant agent or any other office indicated in the
applicable prospectus supplement. Prior to the exercise of their debt warrants,
holders of debt warrants will not have any of the rights of holders of the
securities purchasable upon the exercise and will not be entitled to payments of
principal, premium or interest on the securities purchasable upon the exercise
of debt warrants.
OTHER WARRANTS
We will describe in the applicable prospectus supplement the terms of the
preferred stock warrants, depositary shares warrants and common stock warrants
being offered, including:
- the title of the warrants,
- the securities for which the warrants are exercisable,
- the price or prices at which the warrants will be issued,
- the number of the warrants issued with each share of preferred stock,
common stock or depositary share,
- any provisions for adjustment of the number or amount of shares of
preferred stock, common stock or depositary shares receivable upon
exercise of the warrants or the exercise price of the warrants,
- the date on and after which the warrants and the related preferred stock,
common stock or depositary shares will be separately transferable,
- any special United States federal income tax considerations,
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants,
- the date on which the right to exercise the warrants will commence, and
the date on which the right will expire, and
- the maximum or minimum number of the warrants which may be exercised at
any time.
20
<PAGE> 48
EXERCISE OF WARRANTS
Each warrant will entitle the holder of the warrant to purchase for cash at
the exercise price provided in the applicable prospectus supplement the
principal amount of debt securities or shares of preferred stock, common stock
or depositary shares being offered. Holders may exercise warrants at any time up
to the close of business on the expiration date provided in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants are void.
Holders may exercise warrants as described in the prospectus supplement
relating to the warrants being offered. Upon receipt of payment and the warrant
certificate properly completed and duly executed at the corporate trust office
of the warrant agent or any other office indicated in the prospectus supplement,
we will, as soon as practicable, forward the debt securities, depositary shares
or shares of preferred stock or common stock purchasable upon the exercise of
the warrant. If less than all of the warrants represented by the warrant
certificate are exercised, we will issue a new warrant certificate for the
remaining warrants.
DESCRIPTION OF RIGHTS
We may issue rights to our stockholders to purchase shares of our common
stock. Each series of rights will be issued under a separate rights agreement to
be entered into between us and a bank or trust company as rights agent. The
rights agent will act solely as our agent in connection with the certificates
relating to the rights of the series of certificates and will not assume any
obligation or relationship of agency or trust for or with any holders of rights
certificates or beneficial owners of rights.
The prospectus supplement will provide the terms of the rights to be
issued, including:
- the date of determining the stockholders entitled to the rights
distribution,
- the aggregate number shares of common stock purchasable upon exercise of
the rights,
- the exercise price,
- the aggregate number of rights being issued,
- the date, if any, on and after which the rights may be transferable
separately,
- the date on which the right to exercise the rights will commence and the
date on which the right will expire,
- any special United States federal income tax consequences, and
- any other terms of the rights, including terms, procedures and
limitations relating to the distribution, exchange and exercise of the
rights.
21
<PAGE> 49
PLAN OF DISTRIBUTION
We may sell the securities (1) through underwriters or dealers, (2) through
agents, or (3) directly to one or more purchasers. We may distribute the
securities from time to time in one or more transactions at:
- a fixed price or prices, which may be changed,
- market prices prevailing at the time of sale,
- prices related to the prevailing market prices, or
- negotiated prices.
We may solicit directly offers to purchase the securities being offered by
this prospectus. We may also designate agents to solicit offers to purchase the
securities from time to time. We will name in a prospectus supplement any agent
involved in the offer or sale of our securities.
If we utilize a dealer in the sale of the securities being offered by this
prospectus, we will sell the securities to the dealer, as principal. The dealer
may then resell the securities to the public at varying prices to be determined
by the dealer at the time of resale.
If we utilize an underwriter in the sale of the securities being offered by
this prospectus, we will execute an underwriting agreement with the underwriter
at the time of sale and we will provide the name of any underwriter in the
prospectus supplement which the underwriter will use to make resales of the
securities to the public. In connection with the sale of the securities, we, or
the purchasers of securities for whom the underwriter may act as agent, may
compensate the underwriter in the form of underwriting discounts or commissions.
The underwriter may sell the securities to or through dealers, and the
underwriter may compensate those dealers in the form of discounts, concessions
or commissions.
We will provide in the applicable prospectus supplement any compensation we
pay to underwriters, dealers or agents in connection with the offering of the
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Dealers and agents participating in the
distribution of the securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and
agents against civil liabilities, including liabilities under the Securities
Act, or to contribute to payments they may be required to make in respect
thereof.
If we so specify in the applicable prospectus supplement, we will authorize
underwriters, dealers and agents to solicit offers by institutions to purchase
the securities under contracts providing for payment and delivery on future
dates. The institutions with which the contracts may be made include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others. The purchaser's obligations
under the contracts will not be subject to any conditions except that:
(1) the purchase of the securities will not at the time of delivery be
prohibited under the laws of the jurisdiction to which the purchaser is
subject, and
22
<PAGE> 50
(2) if the securities are also being sold to underwriters, we will have
sold to the underwriters the securities not sold for delayed delivery.
The underwriters, dealers and agents will not be responsible for the
validity or performance of the contracts. We will provide in the prospectus
supplement relating to the contracts the price to be paid for the securities,
the commissions payable for solicitation of the contracts and the date in the
future for delivery of the securities.
The underwriters, dealers and agents may engage in transactions with us, or
perform services for us, in the ordinary course of business.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, proxy statements and other information we file at the
Securities and Exchange Commission's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Securities and Exchange Commission's
regional offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call the Securities and Exchange Commission at
1-800-SEC-0300 for further information on the public reference rooms. You may
also access filed documents at the Securities and Exchange Commission's web site
at www.sec.gov.
We have filed a registration statement on Form S-3 and related exhibits
with the Securities and Exchange Commission under the Securities Act of 1933.
The registration statement contains additional information about us and the
securities. You may inspect the registration statement and exhibits without
charge and obtain copies from the Securities and Exchange Commission at
prescribed rates at the locations above.
The Securities and Exchange Commission allows us to incorporate by
reference the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the Securities and Exchange Commission will
automatically update and supersede this information. We incorporate by reference
the following documents we filed with the Securities and Exchange Commission:
- Our Annual Report on Form 10-K for the fiscal year ended July 31, 1998
and Amendment Nos. 1 and 2 thereto on Form 10-K/A,
- Our Quarterly Report on Form 10-Q for the quarter ended October 31, 1998,
- Our Transition Report on Form 10-Q for the transition period from August
1, 1998 to December 31, 1998,
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999
and Amendment No. 1 thereto on Form 10-Q/A,
- Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999,
23
<PAGE> 51
- Our Current Reports on Form 8-K filed with the Securities and Exchange
Commission on December 18, 1998, May 14, 1999, June 4, 1999 and September
1, 1999,
- The description of our common stock contained in our Registration
Statement on Form 8-A filed with the Securities and Exchange Commission
on November 13, 1998, and
- All documents filed by us with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 after the date of this prospectus and before the termination of
this offering.
You may request a free copy of any of the documents incorporated by
reference in this prospectus by writing or telephoning us at the following
address:
Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, CA 92127
(858) 675-9400
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the dates on the front of these documents.
24
<PAGE> 52
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,378,117 SHARES
EXCEL LEGACY CORPORATION
COMMON STOCK
------------------------
PROSPECTUS SUPPLEMENT
------------------------
November 1, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
