<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): NOVEMBER 5, 1999
EXCEL LEGACY CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 0-23503 33-0781747
<S> <C> <C>
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of Incorporation)
</TABLE>
16955 VIA DEL CAMPO, SUITE 100
SAN DIEGO, CALIFORNIA 92127
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (858) 675-9400
<PAGE> 2
This Current Report on Form 8-K is filed by Excel Legacy Corporation, a
Delaware corporation (the "Company"), in connection with the matters described
herein.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On November 5, 1999, the Company announced that it had accepted the
tender of shares of common stock of Price Enterprises, Inc., a Maryland
corporation ("Enterprises"), pursuant to the Company's exchange offer (the
"Offer") described in the Offer to Exchange/Prospectus dated October 6, 1999
(the "Offer to Exchange"). The Company has accepted for payment 12,154,289
shares of Enterprises common stock (the "Tendered Shares") pursuant to the
Offer, which represents approximately 91.3% of the outstanding shares of
Enterprises common stock and approximately 77.5% of Enterprises' voting power.
The Offer expired at 12:00 Midnight, New York City time, on Wednesday, November
3, 1999 (the "Expiration Date"). All shares of common stock validly tendered and
not properly withdrawn prior to the Expiration Date were accepted by the
Company.
The Company acquired the Tendered Shares for a total of $8.50 per
share, consisting of $4.25 per share in cash, $2.75 per share in principal
amount of the Company's 9% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") and $1.50 per share in principal amount
of the Company's 10% Senior Redeemable Secured Notes due 2004 (the "Notes"). The
per share consideration was determined through arm's length negotiations and
fixed pursuant to an agreement, dated May 12, 1999, as amended, among the
Company, Sol Price, as trustee of several trusts, and several other stockholders
of Enterprises (the "Stockholders Agreement") and an agreement, dated June 2,
1999, as amended, by and between the Company and Enterprises (the "Company
Agreement").
The Company paid a total of approximately $52.9 million in cash and
issued an aggregate of approximately $33.3 million in principal amount of
Debentures and approximately $18.1 million in principal amount of Notes to
acquire the Tendered Shares. The Debentures were issued pursuant to an
Indenture, dated as of November 5, 1999, between the Company and Norwest Bank
Minnesota, National Association (the "Debenture Indenture"). The Notes were
issued pursuant to an Indenture, dated as of November 5, 1999, between the
Company and Norwest National Bank Minnesota, National Association (the "Notes
Indenture"). The Notes and Debentures are secured by a first priority security
interest in 117.647 shares of Enterprises common stock for each $1,000 principal
amount issued. The cash consideration was funded from the Company's general
working capital, borrowing from the Company's credit facility and the proceeds
of three recent transactions:
(1) On August 23, 1999, the Company sold to Wal Mart Real Estate
Business Trust eight properties that were previously under lease to Wal Mart
Stores, Inc., for aggregate consideration of approximately $35.0 million
comprised of approximately $11.0 million in cash and the assumption of
approximately $24.0 million in liabilities.
(2) On October 25, 1999, the Company sold a property located in
Highlands Ranch, Colorado to HRAMC LLC for aggregate consideration of
approximately $25.3 million comprised of approximately $7.7 million in cash and
the assumption of $17.6 million in liabilities.
(3) On November 12, 1999, The Sol and Helen Price Trust (the "Trust")
loaned the Company approximately $27.3 million pursuant to a Note Purchase
Agreement, dated as of October 6, 1999, between the Company and the Trust (the
"Note Purchase Agreement"). The loan is secured by a second priority security
interest in the shares of Enterprises common stock which secure the Debentures
and the Notes and a first priority security interest in any other shares of
Enterprises common stock which the Company owns at any time.
Pursuant to the Company Agreement, Enterprises' board of directors has
been reduced from six to five members and Gary B. Sabin, Richard B. Muir and
Simon M. Lorne were appointed to Enterprises'
1
<PAGE> 3
board and Jack McGrory and James F. Cahill were retained as members of
Enterprises' board. Robert E. Price, Paul A. Peterson, Murray L. Galinson, and
Anne L. Evans resigned from Enterprises' board. Enterprises' board appointed
Gary B. Sabin as Chief Executive Officer and President of Enterprises and the
senior officers of the Company as the senior officers of Enterprises. Jack
McGrory has also been appointed to the Company's board of directors and named
Chairman of the Board of Enterprises.
Under the Company Agreement, the Company has agreed that the holders of
Enterprises preferred stock will be entitled to elect a majority of Enterprises'
board of directors and to have one designee on the Company's board of directors,
until: (a) less than 2,000,000 shares of Enterprises preferred stock remain
outstanding, (b) the Company makes an offer to purchase any and all outstanding
shares of Enterprises preferred stock at a cash price of $16.00 per share, and
purchases all shares duly tendered and not withdrawn, or (c) the directors of
Enterprises (i) issue any equity securities without unanimous approval of
Enterprises' board or (ii) fail to pay dividends on Enterprises common stock in
an amount necessary to maintain Enterprises' status as a REIT, or in an amount
equal to the excess, if any, of Enterprises' adjusted funds from operations,
less preferred stock dividends, over $7.5 million.
The foregoing description of the Offer to Exchange, the Stockholders
Agreement, the Company Agreement, the Debentures Indenture, the Notes Indenture
and the Note Purchase Agreement is qualified in its entirety by reference to the
Offer to Exchange, the Stockholders Agreement, the Company Agreement, the
Debentures Indenture, the Notes Indenture and the Note Purchase Agreement, which
are incorporated by reference into this Form 8-K as Exhibit 10.1, Exhibit 10.2,
Exhibit 10.3, Exhibit 10.4, Exhibit 10.5 and Exhibit 10.6, respectively.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The following financial statements of Enterprises are
incorporated by reference as follows:
- The financial statements and notes thereto contained
in Enterprises' Annual Report on Form 10-K for the
year ended December 31, 1998, as amended, filed with
the Commission on March 29, 1999 (File No. 0-20449).
- The financial statements and notes thereto contained
in Enterprises' Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999 filed with the Commission
on August 4, 1999 (File No. 0-20449).
(b) Pro Forma Financial Information.
The following pro forma financial information is incorporated
by reference to the Offer to Exchange/Prospectus dated October 6, 1999
filed as Exhibit (a)(1) to the Company's Tender Offer Statement on
Schedule 14D-1, filed with the Commission on October 6, 1999:
- Excel Legacy Corporation Unaudited Pro Forma
Operating and Financial Information:
- Pro Forma Consolidated Condensed Balance
Sheets (Unaudited) -- June 30, 1999;
2
<PAGE> 4
- Pro Forma Consolidated Condensed Statements
of Income (Unaudited) -- For the Six Months
Ended June 30, 1999 and the Twelve Months
Ended December 31, 1998; and
- Notes and Management's Assumptions to Pro
Forma Consolidated Condensed Financial
Statements (Unaudited); and
- Price Enterprises, Inc. Unaudited Pro Forma Operating
and Financial Information:
- Pro Forma Consolidated Condensed Balance
Sheets (Unaudited) -- June 30, 1999;
- Pro Forma Consolidated Condensed Statements
of Income (Unaudited) -- For the Six Months
Ended June 30, 1999 and the Twelve Months
Ended December 31, 1998; and
- Notes and Management's Assumptions to Pro
Forma Consolidated Condensed Financial
Statements (Unaudited).
(c) Exhibits. The following exhibits are filed as part of this
report:
10.1 Offer to Exchange/Prospectus dated October 6, 1999
(incorporated by reference to Exhibit (a)(1) to the
Company's Tender Offer Statement on Schedule 14D-1 as
filed with the Commission on October 6, 1999).
10.2 Agreement, dated May 12, 1999, as amended, between
the Company and the other individuals and entities
listed on the signature pages thereto (incorporated
by reference to Annex A to the Offer to
Exchange/Prospectus dated October 6, 1999, filed as
Exhibit (a)(1) to the Company's Tender Offer
Statement on Schedule 14D-1 as filed with the
Commission on October 6, 1999).
10.3 Agreement, dated June 2, 1999, as amended, between
the Company and Enterprises (incorporated by
reference to Annex B to the Offer to
Exchange/Prospectus dated October 6, 1999, filed as
Exhibit (a)(1) to the Company's Tender Offer
Statement on Schedule 14D-1 as filed with the
Commission on October 6, 1999).
10.4 Indenture, dated as of November 5, 1999, between the
Company and Norwest Bank Minnesota, National
Association, for 9.0% Convertible Redeemable
Subordinated Secured Debentures due 2004, including
form of Debenture and form of Pledge Agreement.
10.5 Indenture, dated as of November 5, 1999, between the
Company and Norwest Bank Minnesota, National
Association, for 10.0% Senior Redeemable Secured
Notes due 2004, including form of Note and form of
Pledge Agreement.
3
<PAGE> 5
10.6 Note Purchase Agreement, dated as of October 6, 1999,
between the Company and The Sol and Helen Price
Trust, including form of Secured Promissory Note and
form of Pledge Agreement.
4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 12, 1999 EXCEL LEGACY CORPORATION
By: /s/ Richard B. Muir
----------------------------------
Richard B. Muir
Executive Vice President and
Secretary
5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.1 Offer to Exchange/Prospectus dated October 6, 1999 (incorporated by
reference to Exhibit (a)(1) to the Company's Tender Offer Statement
on Schedule 14D-1 as filed with the Commission on October 6, 1999).
10.2 Agreement, dated May 12, 1999, as amended, between the Company and
the other individuals and entities listed on the signature pages
thereto (incorporated by reference to Annex A to the Offer to
Exchange/Prospectus dated October 6, 1999, filed as Exhibit (a)(1)
to the Company's Tender Offer Statement on Schedule 14D-1 as filed
with the Commission on October 6, 1999).
10.3 Agreement, dated June 2, 1999, as amended, between the Company and
Enterprises (incorporated by reference to Annex B to the Offer to
Exchange/Prospectus dated October 6, 1999, filed as Exhibit (a)(1)
to the Company's Tender Offer Statement on Schedule 14D-1 as filed
with the Commission on October 6, 1999).
10.4 Indenture, dated as of November 5, 1999, between the Company and
Norwest Bank Minnesota, National Association, for 9.0% Convertible
Redeemable Subordinated Secured Debentures due 2004, including form
of Debenture and form of Pledge Agreement.
10.5 Indenture, dated as of November 5, 1999, between the Company and
Norwest Bank Minnesota, National Association, for 10.0% Senior
Redeemable Secured Notes due 2004, including form of Note and form
of Pledge Agreement.
10.6 Note Purchase Agreement, dated as of October 6, 1999, between the
Company and The Sol and Helen Price Trust, including form of Secured
Promissory Note and form of Pledge Agreement.
</TABLE>
<PAGE> 1
EXHIBIT 10.4
- --------------------------------------------------------------------------------
EXCEL LEGACY CORPORATION, as Issuer
$36,599,767
9.0% Convertible Redeemable Subordinated Secured Debentures
due November 5, 2004
--------------------
INDENTURE
Dated as of November 5, 1999
-----------------------
Norwest Bank Minnesota, National Association, as Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE................................... 1
Section 1.01. Definitions............................................................. 1
Section 1.02. Other Definitions....................................................... 3
Section 1.03. Incorporation by Reference of Trust Indenture Act....................... 3
Section 1.04. Rules of Construction................................................... 4
ARTICLE 2. THE SECURITIES............................................................... 4
Section 2.01. Form and Dating......................................................... 4
Section 2.02. Execution and Authentication............................................ 5
Section 2.03. Registrar, Paying Agent and Conversion Agent............................ 5
Section 2.04. Paying Agent to Hold Money in Trust..................................... 5
Section 2.05. Securityholder Lists.................................................... 6
Section 2.06. Transfer and Exchange................................................... 6
Section 2.07. Replacement Securities.................................................. 6
Section 2.08. Outstanding Securities.................................................. 7
Section 2.09. Treasury Securities..................................................... 7
Section 2.10. Temporary Securities.................................................... 7
Section 2.11. Cancellation............................................................ 7
Section 2.12. Defaulted Interest...................................................... 8
ARTICLE 3. REDEMPTION................................................................... 8
Section 3.01. Notices to Trustee...................................................... 8
Section 3.02. Selection of Securities to be Redeemed.................................. 8
Section 3.03. Notice of Redemption.................................................... 8
Section 3.04. Effect of Notice of Redemption.......................................... 9
Section 3.05. Deposit of Redemption Price............................................. 9
Section 3.06. Securities Redeemed in Part............................................. 10
ARTICLE 4. COVENANTS.................................................................... 10
Section 4.01. Payment of Securities................................................... 10
Section 4.02. SEC Reports............................................................. 10
Section 4.03. Compliance Certificate.................................................. 10
Section 4.04. Stay, Extension and Usury Laws.......................................... 11
Section 4.05. Continued Existence..................................................... 11
Section 4.06. Taxes................................................................... 11
ARTICLE 5. SUCCESSORS................................................................... 11
Section 5.01. When Company May Merge, etc............................................. 11
Section 5.02. Successor Corporation Substituted....................................... 12
ARTICLE 6. DEFAULTS AND REMEDIES........................................................ 12
Section 6.01. Events of Default....................................................... 12
Section 6.02. Acceleration............................................................ 14
Section 6.03. Other Remedies.......................................................... 14
Section 6.04. Waiver of Past Defaults................................................. 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 6.05. Control by Majority..................................................... 15
Section 6.06. Limitation on Suits..................................................... 15
Section 6.07. Rights of Holders to Receive Payment.................................... 15
Section 6.08. Collection Suit by Trustee.............................................. 16
Section 6.09. Trustee May File Proofs of Claim........................................ 16
Section 6.10. Priorities.............................................................. 16
Section 6.11. Undertaking for Costs................................................... 16
ARTICLE 7. TRUSTEE...................................................................... 17
Section 7.01. Duties of Trustee....................................................... 17
Section 7.02. Rights of Trustee....................................................... 18
Section 7.03. Individual Rights of Trustee............................................ 18
Section 7.04. Trustee's Disclaimer.................................................... 18
Section 7.05. Notice of Defaults...................................................... 18
Section 7.06. Reports by Trustee to Holders........................................... 19
Section 7.07. Compensation and Indemnity.............................................. 19
Section 7.08. Replacement of Trustee.................................................. 19
Section 7.09. Successor Trustee by Merger, etc........................................ 20
Section 7.10. Eligibility; Disqualification........................................... 20
Section 7.11. Preferential Collection of Claims Against Company....................... 21
Section 7.12. Sections Applicable to Registrar, Paying Agent and Conversion Agent..... 21
ARTICLE 8. DISCHARGE OF INDENTURE....................................................... 21
Section 8.01. Termination of Company's Obligations.................................... 21
Section 8.02. Application of Trust Money.............................................. 23
Section 8.03. Repayment to Company.................................................... 23
Section 8.04. Reinstatement........................................................... 23
ARTICLE 9. AMENDMENTS................................................................... 24
Section 9.01. Without Consent of Holders.............................................. 24
Section 9.02. With Consent of Holders................................................. 24
Section 9.03. Compliance with Trust Indenture Act..................................... 25
Section 9.04. Revocation and Effect of Consents....................................... 25
Section 9.05. Notation on or Exchange of Securities................................... 26
Section 9.06. Trustee Protected....................................................... 26
ARTICLE 10. CONVERSION.................................................................. 26
Section 10.01. Conversion Privilege................................................... 26
Section 10.02. Conversion Procedure................................................... 26
Section 10.03. Fractional Shares...................................................... 27
Section 10.04. Taxes on Conversion.................................................... 27
Section 10.05. Company to Provide Stock............................................... 27
Section 10.06. Adjustment for Change in Capital Stock................................. 28
Section 10.07. Adjustment for Rights Issue............................................ 28
Section 10.08. Adjustment for Other Distributions..................................... 29
Section 10.09. Adjustment for Common Stock Issue...................................... 30
Section 10.10. Adjustment for Convertible Securities Issue............................ 31
Section 10.11. Current Market Price................................................... 32
Section 10.12. Consideration Received................................................. 32
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 10.13. When Adjustment May Be Deferred........................................ 32
Section 10.14. When No Adjustment Required............................................ 32
Section 10.15. Notice of Adjustment................................................... 33
Section 10.16. Voluntary Reduction.................................................... 33
Section 10.17. Notice of Certain Transactions......................................... 33
Section 10.18. Reorganization of Company.............................................. 34
Section 10.19. Company Determination Final............................................ 34
Section 10.20. Trustee's Disclaimer................................................... 34
ARTICLE 11. SUBORDINATION............................................................... 35
Section 11.01. Agreement to Subordinate............................................... 35
Section 11.02. Certain Definitions.................................................... 35
Section 11.03. Liquidation; Dissolution; Bankruptcy................................... 35
Section 11.04. Default on Senior Debt................................................. 36
Section 11.05. Acceleration of Securities............................................. 36
Section 11.06. When Distribution Must Be Paid Over.................................... 37
Section 11.07. Notice by Company...................................................... 37
Section 11.08. Subrogation............................................................ 37
Section 11.09. Relative Rights........................................................ 37
Section 11.10. Subordination May Not Be Impaired by Company........................... 38
Section 11.11. Distribution or Notice to Representative............................... 38
Section 11.12. Rights of Trustee and Paying Agent..................................... 38
ARTICLE 12. COLLATERAL AND SECURITY..................................................... 38
Section 12.01. Pledge Agreement....................................................... 38
Section 12.02. Recording and Opinions................................................. 39
Section 12.03. Release of Collateral.................................................. 40
Section 12.04. Certificates of the Company............................................ 40
Section 12.05. Certificates of the Trustee............................................ 40
Section 12.06. Authorization of Actions to Be Taken by the Trustee Under the Pledge
Agreement............................................................ 41
Section 12.07. Authorization of Receipt of Funds by the Trustee Under the Pledge
Agreement............................................................ 41
Section 12.08. Termination of Security Interest....................................... 41
ARTICLE 13. MISCELLANEOUS............................................................... 41
Section 13.01. Trust Indenture Act Controls........................................... 41
Section 13.02. Notices................................................................ 41
Section 13.03. Communication by Holders with Other Holders............................ 42
Section 13.04. Certificate and Opinion as to Conditions Precedent..................... 42
Section 13.05. Statements Required in Certificate or Opinion.......................... 42
Section 13.06. Rules by Trustee and Agents............................................ 43
Section 13.07. Legal Holidays......................................................... 43
Section 13.08. No Recourse Against Others............................................. 43
Section 13.09. Counterparts........................................................... 43
Section 13.10. Variable Provisions.................................................... 43
Section 13.11. Governing Law.......................................................... 44
Section 13.12. No Adverse Interpretation of Other Agreements.......................... 44
Section 13.13. Successors............................................................. 44
Section 13.14. Severability........................................................... 44
Section 13.15. Table of Contents, Headings, Etc....................................... 44
</TABLE>
iii
<PAGE> 5
EXHIBITS
Exhibit A Form of Debenture
Exhibit B Form of Pledge Agreement
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- ---------------- -----------------
<S> <C>
310(a)(1) ............................................. 7.10
(a)(2) ............................................. 7.10
(a)(3) ............................................. N.A.
(a)(4) ............................................. N.A.
(b) ............................................. 7.08; 7.10; 13.02
(c) ............................................. N.A.
311(a) ............................................. 7.11
X(b) ............................................. 7.11
(c) ............................................. N.A.
312(a) ............................................. 2.05
(b) ............................................. 13.03
(c) ............................................. 13.03
313(a) ............................................. 7.06
(b)(1) ............................................. N.A.
(b)(2) ............................................. 7.06
(c) ............................................. 7.06; 13.02
(d) ............................................. 7.06
314(a) ............................................. 4.02; 13.02
(b) ............................................. N.A.
(c)(1) ............................................. 13.04
(c)(2) ............................................. 13.04
(c)(3) ............................................. N.A.
(d) ............................................. 12.03, 12.04, 12.05
(e) ............................................. 13.05
(f) ............................................. N.A.
315(a) ............................................. 7.01(b)
(b) ............................................. 7.05; 13.02
(c) ............................................. 7.01(a)
(d) ............................................. 7.01(c)
(e) ............................................. 6.11
316(a)(last sentence)............................................. 2.09
(a)(1)(A) ............................................. 6.05
(a)(1)(B) ............................................. 6.04
(a)(2) ............................................. N.A.
(b) ............................................. 6.07
317(a)(1) ............................................. 6.08
(a)(2) ............................................. 6.09
(b) ............................................. 2.04
318(a) ............................................. 13.01
N.A. means not applicable.
</TABLE>
- ----------------
* This Cross-Reference Table is not part of the Indenture.
v
<PAGE> 7
INDENTURE, dated as of November 5, 1999, between Excel Legacy
Corporation, a Delaware corporation ("Company"), and Norwest Bank Minnesota,
National Association ("Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's 9.0% Convertible
Redeemable Subordinated Secured Debentures due November 5, 2004 ("Securities"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"capital stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock.
"Collateral Agent" means the "Debentures Collateral Agent" as such term
is defined in the Pledge Agreement.
"Company" means the party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder" means a person in whose name a Security is
registered.
"Indenture" means this Indenture as amended from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
1
<PAGE> 8
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Material Subsidiary" means any subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act of 1933 and the Exchange Act, as amended, (as such Regulation is
in effect on the date hereof), and any other subsidiary of the Company which is
material to the business, earnings, prospects, assets or condition, financial or
otherwise, of the Company and its subsidiaries taken as a whole.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Chairman of the Board, the President, the Treasurer, a
Vice-President, the principal executive officer, the principal financial officer
and/or the principal accounting officer of the Company. See Sections 13.04 and
13.05.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee. See Sections 13.04 and 13.05.
"person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement dated as of the date of
this Indenture and substantially in the form attached as Exhibit B hereto, as
such agreement may be amended, modified or supplemented from time to time.
"Pledged Collateral" means the "Debentures Pledged Collateral" as such
term is defined in the Pledge Agreement.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"Quoted Price" of the Common Stock is the last reported sales price of
the Common Stock as reported by Nasdaq, National Market System, or if the Common
Stock is listed on a securities exchange, the last reported sales price of the
Common Stock on such exchange which shall be for consolidated trading if
applicable to such exchange or if neither so reported or listed, the last
reported bid price of the Common Stock.
2
<PAGE> 9
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture in the form of Exhibit A hereto.
"subsidiary" of any specified person means (i) a corporation a majority
of whose capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly owned by such person or by such
person and a subsidiary or subsidiaries of such person or (ii) any other person
(other than a corporation) in which such person or such person and a subsidiary
or subsidiaries of such person or a subsidiary or subsidiaries of such person
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Bankruptcy Law"............................................... 6.01
"Common Stock"................................................. 10.01
"Conversion Agent"............................................. 2.03
"Custodian..................................................... 6.01
"Debt"......................................................... 11.02
"Event of Default"............................................. 6.01
"Legal Holiday"................................................ 13.07
"Officer"...................................................... 13.10
"Paying Agent"................................................. 2.03
"Payment Default".............................................. 6.01
"Registrar".................................................... 2.03
"Representative"............................................... 11.02
"Senior Debt".................................................. 11.02
"U.S. Government Obligations".................................. 8.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
3
<PAGE> 10
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles;
(3) references to "generally accepted accounting principles" shall
mean generally accepted accounting principles in effect as of the time
when and for the period as to which such accounting principles are to
be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular; and
(6) provisions apply to successive events and transactions.
ARTICLE 2.
THE SECURITIES
Section 2.01. Form and Dating.
The Securities shall be substantially in the form of Exhibit A, which
is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
4
<PAGE> 11
Section 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities upon a
written order of the Company signed by two Officers. The aggregate principal
amount of Securities outstanding at any time may not exceed that amount except
as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same right as an Agent to deal with the Company or
an Affiliate.
Section 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain in the Borough of Manhattan, City of New
York, State of New York, and in such other locations as it shall determine (i)
an office or agency where securities may be presented for registration of
transfer or for exchange ("Registrar"), (ii) an office or agency where
Securities may be presented for payment ("Paying Agent"), and (iii) an office or
agency where Securities may be presented for conversion ("Conversion Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents. The term
"Paying Agent" includes any additional paying agent; the term "Conversion Agent"
includes any additional conversion agent. The Company may change any Paying
Agent, Registrar, Conversion Agent or co-registrar without prior notice. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar, Paying Agent or Conversion Agent, the Trustee shall act as
such. The Company or any of its subsidiaries may act as Conversion Agent, Paying
Agent, Registrar or co-registrar.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Securities, and will notify the Trustee
of any default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The
5
<PAGE> 12
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
the Company or a subsidiary) shall have no further liability for the money. If
the Company or a subsidiary acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Securityholders all money held by
it as Paying Agent.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each interest payment date and at such other times
as the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of
Securityholders.
Section 2.06. Transfer and Exchange.
Where Securities are presented to the Registrar or a co-registrar with
a request to register a transfer or to exchange them for an equal principal
amount of Securities of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met.
To permit registrations of transfers and exchanges, the Company shall issue and
the Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer tax or similar
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.06, 9.05
or 10.02).
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities during a period beginning at the opening of business
15 days before the day of any selection of Securities for redemption under
Section 3.02 and ending at the close of business on the day of selection, or
(ii) to register the transfer or exchange of any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
Section 2.07. Replacement Securities.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder shall be required to provide
an indemnity bond sufficient in the judgment of both to protect the Company, the
Trustee, any Agent or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge for its expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all the benefits provided under this Indenture equally
and proportionately with all other Securities duly issued hereunder.
6
<PAGE> 13
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.
Securities that the Company or any Affiliate of the Company offers to purchase
or acquire pursuant to an exchange offer, tender offer or otherwise shall not be
deemed to be owned by the Company or such Affiliate until legal title passes to
the Company or such Affiliate.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
As promptly as is reasonably practicable, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any Securities surrendered to them for registration of transfer,
exchange, payment or conversion. The Trustee shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement,
conversion or cancellation and shall dispose of canceled Securities in
accordance with its normal practices. The Company may not issue new Securities
to replace Securities that it has paid or that have been delivered to the
Trustee for cancellation or that any Securityholder has converted pursuant to
Article 10.
7
<PAGE> 14
Section 2.12. Defaulted Interest.
If the Company fails to make a payment of interest on the Securities,
it shall pay such defaulted interest plus any interest payable on the defaulted
interest in any lawful manner. It may pay such defaulted interest, plus any such
interest payable on it, to the persons who are Securityholders on a subsequent
special record date. The Company shall fix any such record date (which shall be
at least 5 and not more than 30 days before the payment date) and payment date.
At least 15 days before any such record date, the Company shall mail to
Securityholders a notice that states the record date, payment date, and amount
of such interest to be paid. Interest to be paid prior to the expiration of the
30-day grace period specified in Section 6.01 shall be paid to Securityholders
on the regular payment date for the interest payment that has not been made.
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of paragraph 5, it shall notify the Trustee of the
redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section at
least 50 days before the redemption date (unless a shorter notice period shall
be satisfactory to the Trustee).
Section 3.02. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method that
complies with the requirements of any exchange on which the Securities are
listed and that the Trustee considers fair and appropriate. The Trustee shall
make the selection not more than 75 days and not less than 30 days before the
redemption date from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them it selects shall be in amounts of $1,000 or integral multiples of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder whose Securities
are to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
8
<PAGE> 15
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued in the name of the Holder thereof;
(4) the conversion price;
(5) the name and address of the Paying Agent and Conversion Agent;
(6) that Securities called for redemption may be converted at any
time before the close of business on the day prior to the redemption
date;
(7) that Holders who want to convert Securities must satisfy the
requirements in paragraph 7 of the Securities;
(8) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest;
(9) that interest on Securities called for redemption ceases to
accrue on and after the redemption date;
(10) the paragraph of the Securities pursuant to which the
Securities are being redeemed; and
(11) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at its expense.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
Security.
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Securities to be redeemed on that date (subject to
the rights of Holders of record on the relevant record date to receive interest
due on an interest payment date which may occur prior to the date of
redemption). The Trustee or the Paying Agent shall return to the Company any
money not required for that purpose.
9
<PAGE> 16
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. Principal and
interest shall be considered paid on the date due if the Paying Agent (other
than the Company or a subsidiary) holds on that date money designated for and
sufficient to pay all principal and interest then due and such Paying Agent is
not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture; provided, however, that money held by the Paying
Agent for the benefit of holders of Senior Debt pursuant to the provisions of
Article 11 hereof shall not be considered paid within the meaning of this
Section 4.01.
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by the Securities, compounded semiannually;
and (ii) overdue installments of interest (without regard to any applicable
grace period) at the same rate, compounded semiannually.
Section 4.02. SEC Reports.
The Company shall deliver to the Trustee and to the Holders within 15
days after it files them with the SEC copies of the annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company also shall comply with the other provisions of TIA
Section 314(a). The Company shall timely comply with its reporting and filing
obligations under the applicable federal securities law.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee, within 105 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the covenants
and conditions contained in, this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his knowledge the
Company has kept, observed, performed and fulfilled each and every covenant, and
complied with the conditions, contained in this Indenture and is not in default
in the performance or observance of any of the terms, provisions and conditions
hereof (or, if a Default
10
<PAGE> 17
or Events of Default shall have occurred, describing all such Defaults or Events
of Default of which he may have knowledge) and that to the best of his knowledge
no event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Securities are
prohibited. See Section 13.10.
The Company will, so long as any of the Securities are outstanding
deliver to the Trustee, forthwith upon becoming aware of (i) any Default, Event
of Default or default in the performance of any covenant, agreement or condition
in this Indenture or (ii) any event of default under any other mortgage,
indenture or instrument as that term is used in Section 6.01(4), an Officers'
Certificate specifying such Default, Event of Default or default.
Section 4.04. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
Section 4.05. Continued Existence.
Subject to Article 5, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation and will refrain from taking any action that would cause its
existence as a corporation to cease, including without limitation any action
that would result in its liquidation, winding up or dissolution.
Section 4.06. Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
ARTICLE 5.
SUCCESSORS
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets to, any person unless:
(1) the person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or
11
<PAGE> 18
other disposition shall have been made, is a corporation organized and
existing under the laws of the United States, any state thereof or the
District of Columbia;
(2) the corporation formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made,
assumes by supplemental indenture in a form reasonably satisfactory to
the Trustee all the obligations of the Company under the Securities and
this Indenture, except that it need not assume the obligations of the
Company as to conversion of Securities if, pursuant to Section 10.18,
the Company or another person enters into a supplemental indenture
obligating it to deliver the securities, cash or other assets
deliverable upon conversion of Securities; and
(3) immediately after the transaction no Default or Event of Default
exists.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
person has been named as the Company herein; provided, however, that the
predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Security
when the same becomes due and payable, whether or not such payments
shall be prohibited by Article 11, and the Default continues for a
period of 30 days after the date due and payable;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at maturity, upon
redemption or otherwise, whether or not such payments shall be
prohibited by Article 11;
12
<PAGE> 19
(3) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities, this Indenture or the
Pledge Agreement and the Default continues for the period and after the
notice specified below, whether or not such payments shall be
prohibited by Article 11;
(4) an event of default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company
or any subsidiary (or the payment of which is guaranteed by the Company
or a subsidiary), whether such indebtedness or guarantee now exists or
shall be created hereafter, if (a) either (i) such event of default
results from the failure to pay when due principal of or interest on
such indebtedness within the grace period provided for in such
indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (ii) as a result of such event of
default the maturity of such indebtedness has been accelerated prior to
its expressed maturity and (b) the principal amount of such
indebtedness, together with the principal amount of any other such
indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $1,000,000 or more;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any subsidiary which remains undischarged for a period
(during which execution shall not be effectively stayed) of 30 days,
provided that the aggregate of all such judgments exceeds $500,000.
(6) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors,
or
(E) generally is unable to pay its debts as the same become due;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material Subsidiary
in an involuntary case,
(B) appoints a Custodian of the Company or any Material
Subsidiary or for all or substantially all of its property, or
13
<PAGE> 20
(C) orders the liquidation of the Company or any Material
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or State Law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (3) (other than Defaults under Section 4.05,
5.01 or 10.01 which Defaults shall be Events of Default with the notice but
without the passage of time specified in this paragraph) or (5) is not an Event
of Default until the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Securities notify the Company of the Default and the
Company does not cure the Default within 30 days after receipt of the notice.
The notice must specify the Default, demand that it be remedied and state that
the notice is a "Notice of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (6) and (7) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Securities by notice to the Company and the Trustee, may
declare the unpaid principal of and accrued interest on all the Securities to be
due and payable. Upon such declaration the principal and interest shall be due
and payable immediately. If an Event of Default specified in clause (6) or (7)
of Section 6.01 occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
then outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (i) the rescission would not conflict with any judgment
or decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of the
acceleration, and (iii) the Company has delivered an Officers' Certificate to
the Trustee to the effect of clauses (i) and (ii) above.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a
14
<PAGE> 21
continuing Default or Event of Default in the payment of the principal of or
interest on any Security or a Default or Event of Default under Article 10. When
a Default or Event of Default is waived, it is cured and ceases; but no such
waiver shall extend to any subsequent or other Default or impact any right
consequent thereon.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may 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 it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, is unduly prejudicial to the rights of
other Securityholders, or would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this Indenture or
the Securities only if:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Securities do not give the Trustee a
direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder;
provided that a Holder shall not have the right to institute any such suit for
the enforcement of payment if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver or loss of the Lien of the
Indenture upon any property subject to such Lien.
15
<PAGE> 22
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to bring suit for the enforcement of the right to convert
the Security shall not be impaired or affected without the consent of the
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Securities and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the costs
and, to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its property. Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to holders of Senior Debt to the extent required by Article
11;
Third: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest,
respectively; and
Fourth: to the Company.
Except as otherwise provided in Section 2.12, the Trustee may fix a
record date and payment date for any payment to Securityholders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and
16
<PAGE> 23
the court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
17
<PAGE> 24
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent (other than an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers, provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
Section 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or any Statement in the Securities
other than its authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Securityholders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Security (including any
failure to make any mandatory redemption payment required hereunder), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
18
<PAGE> 25
Section 7.06. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section 13.10, the
Trustee shall mail to Securityholders a brief report dated as of such reporting
date that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed. The Company shall notify the Trustee when the Securities are listed on
any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred by it. Such expenses may include the reasonable compensation
and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
19
<PAGE> 26
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07. Notwithstanding the replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring trustee with respect to
expenses and liabilities incurred by it prior to such replacement.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee, provided that such successor shall otherwise be qualified and eligible
to act as a Trustee pursuant to the provisions of this Article.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee shall always have a combined
capital and surplus as stated in Section 13.10. The Trustee is subject to TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9). Section 13.10 lists any excluded indenture or
trust agreement.
20
<PAGE> 27
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
Section 7.12. Sections Applicable to Registrar, Paying Agent and Conversion
Agent.
The term "Trustee" as used in Sections 7.01, 7.02, 7.03, 7.04 and 7.07
shall (unless the context otherwise requires) be construed as extending to and
including the Trustee acting in its capacity, if any, as Paying Agent, Registrar
and Conversion Agent.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 and 8.03 shall survive) when all
outstanding Securities theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, subject to Section 8.04, the Company may terminate all
of its obligations under this Indenture (except the Company's obligations under
Sections 7.07 and 8.03) if:
(1) the Securities mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption;
(2) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations sufficient without investment of such
money or reinvestment of interest or proceeds from such U.S. Government
Obligation to pay principal and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder. The Company may make the deposit only during the one-year
period and only if Article 11 permits it;
(3) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent certified public accountants
expressing their opinion that the money or U.S. Government Obligations
so deposited, without investment of such money or reinvestment of
interest or proceeds on such U.S. Government Obligations, will provide
cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Securities to maturity or
redemption, as the case may be;
(4) the Company delivers to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such
21
<PAGE> 28
Opinion of Counsel shall confirm that, the holders of the outstanding
Securities will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amount and in the same manner and at the
same time as would have been the case if such defeasance had not
occurred;
(5) no Default or Event of Default or event which with notice or
lapse of time or both would become an Event of Default shall have
occurred and be continuing on the date of such deposit and after giving
effect thereto or, insofar as subsections (6) and (7) of Section 6.01
are concerned, at any time during the period ending on and including
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period);
(6) such defeasance shall not result in a breach or violation of, or
constitute a default under any agreement or instrument to which the
Company or any of its subsidiaries is bound, and shall not be
prohibited by Article 11;
(7) the Company delivers to the Trustee an Opinion of Counsel to the
effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, except that if a court were to rule under any such law in
any case or proceeding that the trust funds remained property of the
Company, no opinion is given as to the effect of such laws on the trust
funds except the following: (A) assuming such trust funds remained in
the Trustee's possession prior to such court ruling to the extent not
paid to holders of the Securities, the Trustee will hold, for the
benefit of such holders, a valid and perfected security interest in
such trust funds that is not avoidable in bankruptcy or otherwise and
(B) such holders will be entitled to receive adequate protection of
their interest in such trust funds if such trust funds are used;
(8) the Company delivers to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the holders of the Securities over the other creditors of
the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;
(9) the Company delivers to the Trustee an Opinion of Counsel
stating that neither the trust nor the Trustee will be required to
register as an investment company under the Investment Company Act of
1940, as amended; and
(10) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to the defeasance and discharge
of the Securities as contemplated by this Article 8 have been complied
with.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06,
2.07, 4.01, 7.07, 8.03, 8.04 and in Article 10, shall survive until the
Securities are no longer outstanding. Thereafter, only the Company's obligations
in Sections 7.07 and 8.03 shall survive.
22
<PAGE> 29
After a deposit made pursuant to this Section 8.01 and satisfaction of
the conditions set forth herein, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under this Indenture except
for those surviving obligations specified above.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged. In order to have money available on a
payment date to pay principal or interest on the Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
Section 8.02. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on the
Securities. Money and securities so held in trust are not subject to Article 11.
Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
Subject to applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years after
the date upon which such payment shall have become due; provided, however, that
the Company shall have first caused notice of such payment to the Company to be
mailed to each Securityholder entitled thereto no less than 30 days prior to
such payment. After payment to the Company, Securityholders entitled to the
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
Section 8.04. Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application and (ii) the Holders of at least a majority in principal amount of
the then outstanding Securities so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02; provided, however, that if the Company makes any
payment of interest on or principal of any Security following the reinstatement
of its obligations, the Company shall be subrogated to the
23
<PAGE> 30
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENTS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Sections 5.01 and 10.18;
(3) to provide for uncertificated Securities in addition to
certificated Securities; or
(4) to make any change that does not adversely affect the rights
hereunder of any Securityholder.
Section 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Securities with the written consent of the Holders of at least
a majority in principal amount of the then outstanding Securities. Subject to
Sections 6.04 and 6.07, the Holders of a majority in principal amount of the
Securities then outstanding may also waive compliance in a particular instance
by the Company with any provision of this Indenture or the Securities. However,
without the consent of each Securityholder affected, an amendment or waiver
under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment or waiver;
(2) reduce the rate of or change the time for payment of interest on
any Security;
(3) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this sentence);
(6) make any change that adversely affects the right to convert any
Security;
(7) make any change in Article 11 that adversely affects the rights
of any Securityholder; or
24
<PAGE> 31
(8) waive a default in the payment of the principal of, or interest
on, any Security or any Default under Article 10.
An amendment or waiver under this Section may not make any change that
adversely affects the rights under Article 11 of any holder of an issue of
Senior Debt unless the holders of the issue pursuant to its terms consent to the
change or the change is otherwise permissible.
To secure a consent of the Holders under this Section, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment
or waiver.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall be set forth
in a supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives the
notice of revocation before the date on which the Trustee receives an Officer's
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented to the amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
After an amendment or waiver becomes effective it shall bind every
Securityholder, unless it is of the type described in any of clauses (1) through
(8) of Section 9.02. In such case, the amendment or waiver shall bind each
Holder of a Security who has consented to it and every subsequent Holder of a
Security that evidences the same debt as the consenting Holder's Security.
25
<PAGE> 32
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or
waiver on any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Section 9.06. Trustee Protected.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
13.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
CONVERSION
Section 10.01. Conversion Privilege.
A Holder of a Security may convert it into Common Stock at any time
during the period stated in paragraph 7 of the Securities. The number of shares
issuable upon conversion of a Security is determined as follows: Divide the
principal amount to be converted by the conversion price in effect on the
conversion date. Round the result to the nearest 1/100th of a share.
The initial conversion price is stated in paragraph 7 of the
Securities. The conversion price is subject to adjustment.
A Holder may convert a portion of a Security if the portion is $1,000
or an integral multiple of $1,000. Provisions of this Indenture that apply to
conversion of all of a Security also apply to conversion of a portion of it.
"Common Stock" means Common Stock of the Company as it exists on the
date of this Indenture or as it may be constituted from time to time.
Section 10.02. Conversion Procedure.
To convert a Security a Holder must satisfy the requirements in
paragraph 7 of the Securities. The date on which the Holder satisfies all those
requirements is the conversion date. As soon as practical after the conversion
date, the Company shall deliver through the Conversion Agent a certificate for
the number of full shares of Common Stock issuable upon the conversion and a
check for any fractional share determined pursuant to Section 10.03. The person
in whose name the certificate is registered shall become the stockholder of
record on and after the conversion date.
26
<PAGE> 33
No payment or adjustment will be made for accrued interest on a
converted Security or dividends on any Common Stock issued. However, interest
will be paid on any interest payment date with respect to Securities surrendered
for conversion after a record date for the payment of interest to the registered
Holder on such record date.
If a Holder converts more than one Security at the same time, the
number of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.
Upon a surrender of a Security that is converted in part, the Company
shall issue and the Trustee shall authenticate for the Holder a new Security
equal in principal amount to the unconverted portion of the Security
surrendered.
If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that is not a Legal Holiday.
Section 10.03. Fractional Shares.
The Company will not issue a fractional share of Common Stock upon
conversion of a Security. Instead the Company will deliver its check for the
current market value of the fractional share. The current market value of a
fraction of a share is determined as follows: Multiply the current market price
(as set forth below) of a full share by the fraction. Round the result to the
nearest cent.
The current market price of a share of Common Stock is the Quoted Price
of the Common Stock on the last trading day prior to the conversion date. In the
absence of such a quotation, the Company shall determine the current market
price on the basis of such quotations as it considers appropriate.
Section 10.04. Taxes on Conversion.
If a Holder of a Security converts it, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such tax
which is due because the shares are issued in a name other than the Holder's
name.
Section 10.05. Company to Provide Stock.
The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury,
solely for the purpose of issuance upon conversion of Securities as herein
provided, enough shares of Common Stock to permit the conversion of the
Securities in full.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be duly authorized, validly issued, fully paid and
non-assessable when issued.
27
<PAGE> 34
The Company will take all reasonable necessary actions to comply with
all securities laws regulating the offer and delivery of shares of Common Stock
upon conversion of Securities and will take all reasonable necessary actions to
list such shares on each national securities exchange on which the Common Stock
is listed.
Section 10.06. Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
capital stock;
then the conversion privilege and the conversion price in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted shall be entitled to receive the number of shares of
capital stock of the Company which he would have owned immediately following
such action if he had converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted conversion price between
the classes of capital stock. After such allocation, the conversion privilege
and the conversion price of each class of capital stock shall thereafter be
subject to adjustment on terms comparable to those applicable to Common Stock in
this Article.
Section 10.07. Adjustment for Rights Issue.
If the Company distributes any rights or warrants to substantially all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per share
on that record date, the conversion price shall be adjusted in accordance with
the formula:
28
<PAGE> 35
N x P
-----
O + M
-----
C' = C x O + N
where:
C' = the adjusted conversion price.
C = the current conversion price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record
date.
The adjustment shall be made successively whenever any such rights or
warrants are issued and shall become effective immediately after the record date
for the determination of stockholders entitled to receive the rights or
warrants. If at the end of the period during which such warrants or rights are
exercisable, not all warrants or rights shall have been exercised, the
conversion price shall be immediately readjusted to what it would have been if
"N" in the above formula had been the number of shares actually issued.
Section 10.08 Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets or debt securities or any rights or warrants to purchase assets, debt
securities or other securities of the Company, the conversion price shall be
adjusted in accordance with the formula:
M - F
-----
C' = C x M
where:
C' = the adjusted conversion price.
C = the current conversion price.
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The
Board of Directors shall determine the fair market value.
29
<PAGE> 36
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section does not apply to regular cash dividends or cash
distributions paid out of consolidated current earnings as shown on the books of
the Company. Also, this Section does not apply to rights or warrants referred to
in Section 10.07.
Section 10.09. Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per
share less than the current market price per share on the date the Company fixes
the offering price of such additional shares, the conversion price shall be
adjusted in accordance with the formula:
O + P
M
-----
C' = C x A
where:
C' = the adjusted conversion price.
C = the then current conversion price.
O = the number of shares outstanding immediately prior to the issuance
of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This Section does not apply to (i) any of the transactions described in
Sections 10.07, 10.08 and 10.10, (ii) the conversion of Securities, or the
conversion, exchange or exercise of other securities convertible or exchangeable
for Common Stock, (iii) Common Stock issued to the Company's employees under
bona fide employee benefit plans adopted by the Board of Directors and approved
by the holders of Common Stock when required by law, if such Common Stock would
otherwise be covered by this Section (but only to the extent that the aggregate
number of shares excluded hereby and issued after the date of this Indenture
shall not exceed 5% of the Common Stock outstanding at the time of the adoption
of each such plan, exclusive of antidilution adjustments thereunder), (iv)
Common Stock issued to acquire, or in the acquisition of, all or any portion of
a business as a going concern, in an arm's length transaction between the
30
<PAGE> 37
Company and an unaffiliated third party, whether such acquisition shall be
effected by purchase of assets, exchange of securities, merger, consolidation or
otherwise, or (v) Common Stock issued in a bona fide public offering pursuant to
a firm commitment underwriting.
Section 10.10. Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable
or exercisable for Common Stock (other than the Securities or securities issued
in transactions described in Sections 10.07 and 10.08) for a consideration per
share of Common Stock initially deliverable upon conversion, exchange or
exercise of such securities less than the current market price per share on the
date of issuance of such securities, the conversion price shall be adjusted in
accordance with this formula:
O + P
M
-----
C' = C x O + D
where:
C' = the adjusted conversion price.
C = the then current conversion price.
O = the number of shares outstanding immediately prior to the issuance
of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of such
securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for or upon exercise of such securities at the initial
conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance. If all of the
Common Stock deliverable upon conversion, exchange or exercise of such
securities have not been issued when such securities are no longer outstanding,
then the conversion price shall promptly be readjusted to the conversion price
which would then be in effect had the adjustment upon the issuance of such
securities been made on the basis of the actual number of shares of Common Stock
issued upon conversion, exchange or exercise of such securities.
This Section does not apply to (i) convertible securities issued to
acquire, or in the acquisition of, all or any portion of a business as a going
concern, in an arm's length transaction between the Company and an unaffiliated
third party, whether such acquisition shall be effected by purchase of assets,
exchange of securities, merger, consolidation or otherwise, or (ii) convertible
securities issued in a bona fide public offering pursuant to a firm commitment
underwriting.
31
<PAGE> 38
Section 10.11. Current Market Price.
In Sections 10.07, 10.08, 10.09 and 10.10, the current market price per
share of Common Stock on any date shall equal 95% of the average of the Quoted
Prices of the Common Stock for 30 consecutive trading days ending on the last
full trading day prior to the date in question. In the absence of one or more
such quotations, the Company shall determine the current market price on the
basis of such quotations as it considers appropriate.
Section 10.12. Consideration Received.
For purposes of any computation respecting consideration received
pursuant to Sections 10.09 and 10.10, the following shall apply:
(1) in the case of the issuance of shares of Common Stock for cash,
the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or
other expenses incurred by the Company for any underwriting of the
issue or otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors (irrespective of the
accounting treatment thereof), whose determination shall be conclusive,
and described in a Board resolution which shall be filed with the
Trustee; and
(3) in the case of the issuance of securities convertible into or
exchangeable or exercisable for shares, the aggregate consideration
received therefor shall be deemed to be the consideration received by
the Company for the issuance of such securities plus the additional
minimum consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (1) and (2) of
this Section).
Section 10.13. When Adjustment May Be Deferred.
No adjustment in the conversion price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
conversion price. Any adjustments that are not made shall be carried forward and
taken into account in any subsequent adjustment.
All calculations under this Article shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be.
Section 10.14. When No Adjustment Required.
No adjustment need be made for a transaction referred to in Sections
10.06, 10.07, 10.08, 10.09 or 10.10 if all Securityholders are entitled to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and notice
on which holders of Common Stock participate in the transaction.
32
<PAGE> 39
No adjustment need be made for rights to purchase Common Stock pursuant
to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Securities become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
Section 10.15. Notice of Adjustment.
Whenever the conversion price is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment. The Company shall file with
the Trustee a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. The certificate shall be conclusive evidence that the adjustment is correct.
Section 10.16. Voluntary Reduction.
The Company from time to time may reduce the conversion price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period, provided, that in no event may the
conversion price be less than the par value of a share of Common Stock.
Whenever the conversion price is reduced, the Company shall mail to
Securityholders and the Trustee a notice of the reduction. The Company shall
mail the notice at least 15 days before the date the reduced conversion price
takes effect. The notice shall state the reduced conversion price and the period
it will be in effect.
A reduction of the conversion price does not change or adjust the
conversion price otherwise in effect for purposes of Sections 10.06, 10.07,
10.08, 10.09 and 10.10.
Section 10.17. Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an adjustment in
the conversion price pursuant to Sections 10.06, 10.07, 10.08, 10.09 or
10.10 and if the Company does not let Securityholders participate
pursuant to Section 10.14;
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 10.18; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Securityholders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination,
33
<PAGE> 40
reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution. The Company shall mail the notice at least 15 days before such
date. Failure to mail the notice or any defect in it shall not affect the
validity of the transaction.
Section 10.18. Reorganization of Company.
If the Company is a party to a transaction subject to Section 5.01, or
a merger which reclassifies or changes its outstanding Common Stock, upon
consummation of such transaction the Securities shall automatically become
convertible into the kind and amount of securities, cash or other assets which
the Holder of a Security would have owned immediately after the consolidation,
merger, transfer or lease if the Holder had converted the Security immediately
before the effective date of the transaction. Concurrently with the consummation
of such transaction, the person obligated to issue securities or deliver cash or
other assets upon conversion of the Securities shall enter into a supplemental
indenture so providing and further providing for adjustments which shall be as
nearly equivalent as may be practical to the adjustments provided for in this
Article. The successor Company shall mail to Securityholders a notice describing
the supplemental indenture.
If securities deliverable upon conversion of Securities, as provided
above, are themselves convertible into the securities of an affiliate of the
formed, surviving, transferee or lessee corporation, that issuer shall join in
the supplemental indenture which shall so provide.
If this Section applies, Section 10.06 does not apply.
Section 10.19. Company Determination Final.
Subject to Section 10.15, any determination that the Company or the
Board of Directors must make pursuant to Section 10.03, 10.06, 10.08, 10.09,
10.10, 10.11, 10.12 or 10.14 is conclusive.
Section 10.20. Trustee's Disclaimer.
The Trustee has no duty to determine when an adjustment under this
Article should be made, how it should be made or what it should be. The Trustee
has no duty to determine whether any provisions of a supplemental indenture
under Section 10.18 are correct. The Trustee makes no representation as to the
validity or value of any securities or assets issued upon conversion of
Securities. The Trustee shall not be responsible for the Company's failure to
comply with this Article. Each Conversion Agent other than the Company shall
have the same protection under this Section as the Trustee.
34
<PAGE> 41
ARTICLE 11.
SUBORDINATION
Section 11.01. Agreement to Subordinate.
The Company agrees, and each Securityholder by accepting a Security
agrees, that the indebtedness evidenced by the Securities is subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full of all Senior Debt, and that the subordination is for
the benefit of the holders of Senior Debt; provided, however, that (a)
substantially concurrently herewith, the Company and the Collateral Agent, for
the benefit of the Holders, are entering into the Pledge Agreement, (b)
notwithstanding any provision of this Article 11 to the contrary, (i) the
Collateral Agent may exercise remedies under the Pledge Agreement in accordance
with its terms, and (ii) in the event of any such exercise of remedies, the
Collateral Agent shall be entitled to receive and apply any proceeds of any
Pledged Collateral towards the indebtedness evidenced by the Securities prior to
the application of the same toward repayment of Senior Debt.
Section 11.02. Certain Definitions.
"Debt" of any person means any indebtedness, contingent or in respect
of borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or representing
the balance deferred and unpaid of the purchase price of any property or
interest therein, except any such balance that constitutes a trade payable, if
and to the extent such indebtedness would appear as a liability upon a balance
sheet of such person prepared on a consolidated basis in accordance with
generally accepted accounting principles.
"Representative" means the indenture trustee or other trustee, agent or
representative for an issue of Senior Debt.
"Senior Debt" means all Debt (present or future) created, incurred,
assumed or guaranteed by the Company (and all renewals, extensions or refundings
thereof), unless the instrument under which such Debt is created, incurred,
assumed or guaranteed expressly provides that such Debt is not senior or
superior in right of payment to the Securities. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (i) any Debt of the
Company to any of its subsidiaries, (ii) any liability for Federal, state, local
or other taxes owed or owing by the Company, (iii) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), or
(iv) any obligations with respect to any capital stock.
Section 11.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
35
<PAGE> 42
(1) holders of Senior Debt shall be entitled to receive payment in full
in cash of the principal of and interest (including interest accruing after the
commencement of any such proceeding) to the date of payment on the Senior Debt
before Securityholders shall be entitled to receive any payment of principal of
or interest on Securities; and
(2) until the Senior Debt is paid in full in cash, any distribution to
which Securityholders would be entitled but for this Article shall be made to
holders of Senior Debt as their interests may appear, except that
Securityholders may receive securities that are subordinated to Senior Debt to
at least the same extent as the Securities.
For purposes of this Article 11, a distribution may consist of cash,
securities or other property, by set-off or otherwise.
Section 11.04. Default on Senior Debt.
Upon the final maturity of any Senior Debt by lapse of time,
acceleration or otherwise, all such Senior Debt shall first be paid in full, or
such payment duly provided for in cash or in a manner satisfactory to the
holders of such Senior Debt, before any payment is made by the Company or any
person acting on behalf of the Company on account of the principal or interest
of the Securities.
The Company may not pay principal of or interest on the Securities and
may not acquire any Securities for cash or property (other than capital stock of
the Company or other securities of the Company that are subordinated to Senior
Debt to at least the same extent as the Securities) if:
(1) a default on Senior Debt occurs and is continuing that permits
holders of such Senior Debt to accelerate its maturity, and
(2) the default is the subject of judicial proceedings or the Company
receives a notice of the default from a person who may give it pursuant to
Section 11.12. If the Company receives any such notice, a subsequent notice
received within nine months thereafter relating to the same issue of Senior Debt
shall not be effective for purposes of this Section.
The Company shall resume payments on the Securities and may acquire
them when:
(a) the default is cured or waived, or
(b) 120 days pass after the notice is given if the default is not the
subject of judicial proceedings,
if this Article otherwise permits the payment or acquisition at that time.
Section 11.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration. The Company shall pay the Securities when 120 days pass after the
acceleration occurs if this Article permits the payment at
36
<PAGE> 43
that time; provided, however, that if no Senior Debt is outstanding at the time
of such acceleration, the Company shall pay the Securities in accordance with
the provisions of Article 6.
Section 11.06. When Distribution Must Be Paid Over.
In the event that the Company shall make any payment to the Trustee on
account of the principal or interest on the Securities at a time when such
payment is prohibited by Section 11.03 or 11.04, such payment shall be held by
the Trustee, in trust for the benefit of, and shall be paid forthwith over and
delivered to, the holders of Senior Debt (pro rata as to each of such holders on
the basis of the respective amounts of Senior Debt held by them) or their
representative or the trustee under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Senior Debt
remaining unpaid to the extent necessary to pay all Senior Debt in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
If a distribution is made to Securityholders that because of this
Article should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Debt and pay it over
to them as their interests may appear.
Section 11.07. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of principal of or
interest on the Securities to violate this Article, but failure to give such
notice shall not affect the subordination of the Securities to the Senior Debt
provided in this Article. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
Section 11.08. Subrogation.
After all Senior Debt is paid in full and until the Securities are paid
in full, Securityholders shall be subrogated to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Securityholders have been applied to the
payment of Senior Debt. A distribution made under this Article to holders of
Senior Debt which otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company on Senior
Debt.
Section 11.09. Relative Rights.
This Article defines the relative rights of Securityholders and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on the Securities in accordance with their terms;
37
<PAGE> 44
(2) affect the relative rights of Securityholders and creditors of the
Company other than holders of Senior Debt or, as between the Company and the
Trustee, the obligations of the Company to the Trustee; or
(3) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Debt to receive distributions otherwise payable to
Securityholders.
If the Company fails because of this Article to pay principal of or
interest on Security on the due date, the failure is still a Default or Event of
Default.
Section 11.10. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of
the indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 11.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Section 11.12. Rights of Trustee and Paying Agent.
The Trustee or Paying Agent may continue to make payments on the
Securities until it receives notice of facts that would cause a payment of
principal of or interest on the Securities to violate this Article. Only the
Company, a Representative or a holder of an issue of Senior Debt that has no
Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
ARTICLE 12.
COLLATERAL AND SECURITY
Section 12.01. Pledge Agreement.
The due and punctual payment of the principal of and interest, if any,
on the Securities when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Securities and performance of all other
obligations of the Company to the Holders of Securities or the Trustee under
this Indenture and the Securities, according to the terms hereunder or
thereunder, shall be secured as provided in the Pledge Agreement which the
Company has entered into simultaneously with the execution of this Indenture and
which is attached as Exhibit B hereto. Each Holder of Securities, by its
acceptance thereof, consents and agrees to the terms of the Pledge Agreement
(including, without limitation,
38
<PAGE> 45
the provisions providing for foreclosure and release of Pledged Collateral) as
the same may be in effect or may be amended from time to time in accordance with
its terms and authorizes and directs the Collateral Agent to enter into the
Pledge Agreement and to perform its obligations and exercise its rights
thereunder in accordance therewith. The Company shall deliver to the Trustee
copies of all documents delivered to the Collateral Agent pursuant to the Pledge
Agreement, and shall do or cause to be done all such acts and things as may be
necessary or proper, or as may be required by the provisions of the Pledge
Agreement, to assure and confirm to the Trustee and the Collateral Agent the
security interest in the Pledged Collateral contemplated hereby, by the Pledge
Agreement or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture and of the
Securities secured hereby, according to the intent and purposes herein
expressed. The Company shall take, or shall cause its Subsidiaries to take, upon
request of the Trustee, any and all actions reasonably required to cause the
Pledge Agreement to create and maintain, as security for the Obligations of the
Company hereunder, a valid and enforceable perfected Lien in and on all the
Pledged Collateral, in favor of the Collateral Agent for the benefit of the
Holders of Securities, superior to and prior to the rights of all third persons
and subject to no Liens other than the security interests granted to third
persons as expressly contemplated by the Pledge Agreement.
Section 12.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Pledge Agreement, and reciting with respect to the security
interests in the Pledged Collateral, the details of such action, or (ii) stating
that, in the opinion of such counsel, no such action is necessary to make such
Lien effective.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on September 1 in each year beginning with September 1, 2000, an Opinion of
Counsel, dated as of such date, either (i) (A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Pledge
Agreement and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Securities and the Collateral Agent and the Trustee hereunder
and under the Pledge Agreement with respect to the security interests in the
Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
Section 314(b).
39
<PAGE> 46
Section 12.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 12.03,
Pledged Collateral may be released from the Lien and security interest created
by the Pledge Agreement at any time or from time to time in accordance with the
provisions of the Pledge Agreement or as provided hereby.
(b) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Securities shall have been accelerated
(whether by declaration or otherwise) and the Trustee shall have delivered a
notice of acceleration to the Collateral Agent, no release of Pledged Collateral
pursuant to the provisions of the Pledge Agreement shall be effective as against
the Holders of Securities.
(c) The release of any Pledged Collateral from the terms of this
Indenture and the Pledge Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Pledge
Agreement. To the extent applicable, the Company shall cause TIA Section 313(b),
relating to reports, and TIA Section 314(d), relating to the release of property
or securities from the Lien and security interest of the Pledge Agreement and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Pledge Agreement, to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent person,
which person shall be an independent engineer, appraiser or other expert
selected or approved by the Trustee and the Collateral Agent in the exercise of
reasonable care.
Section 12.04. Certificates of the Company.
The Company shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the Pledge
Agreement, (i) all documents required by TIA Section 314(d) and (ii) an Opinion
of Counsel, which may be rendered by internal counsel to the Company, to the
effect that such accompanying documents constitute all documents required by TIA
Section 314(d). The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
Section 12.05. Certificates of the Trustee.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Pledge Agreement and has delivered the certificates and
documents required by the Pledge Agreement and Sections 12.03 and 12.04 hereof,
the Trustee shall determine whether it has received all documentation required
by TIA Section 314(d) in connection with such release and, based on such
determination and the Opinion of Counsel delivered pursuant to Section 13.04(b),
shall deliver a certificate to the Collateral Agent setting forth such
determination.
40
<PAGE> 47
Section 12.06. Authorization of Actions to Be Taken by the Trustee Under the
Pledge Agreement.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of
Securities, direct, on behalf of the Holders of Securities, the Collateral Agent
to, take all actions it deems necessary or appropriate in order to (a) enforce
any of the terms of the Pledge Agreement and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder. The
Trustee shall have power to institute and maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Pledged Collateral by any
acts that may be unlawful or in violation of the Pledge Agreement or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders of Securities
in the Pledged Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of Securities or of the Trustee).
Section 12.07. Authorization of Receipt of Funds by the Trustee Under the Pledge
Agreement.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Securities distributed under the Pledge Agreement, and to make
further distributions of such funds to the Holders of Securities according to
the provisions of this Indenture.
Section 12.08. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Securities, or upon Legal Defeasance, the Trustee shall, at
the request of the Company, deliver a certificate to the Collateral Agent
stating that such Obligations have been paid in full, and instruct the
Collateral Agent to release the Liens pursuant to this Indenture and the Pledge
Agreement.
ARTICLE 13.
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 13.02. Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail to the other's address stated in Section 13.10. The Company or the Trustee
by notice to the other may designate additional or different address for
subsequent notices or communications.
41
<PAGE> 48
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
Section 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
42
<PAGE> 49
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Section 13.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules and set reasonable requirements for its functions.
Section 13.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be open. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 13.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities, the Indenture or the Pledge Agreement or for any claim based on, in
respect of or by reason of such obligations or their creation. Each
Securityholder by excepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Securities.
Section 13.09. Counterparts.
This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
Section 13.10. Variable Provisions.
"Officer" means Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
The Company initially appoints the Trustee as Conversion Agent, Paying
Agent, Registrar and authenticating agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal
year ending on December 31, 1999.
The reporting date for Section 7.06 is May 15 of each year. The first
reporting date is May 15, 2000.
The Trustee shall always have a combined capital and surplus of at
least $100,000,000 as set forth in its most recent published annual report of
condition.
43
<PAGE> 50
The Company's address is:
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attn: Gary B. Sabin, President and
Chief Executive Officer
Facsimile No.: (858) 675-9405
The Trustee's address is:
Norwest Bank Minnesota, National Association
Corporate Trust Services
Sixth & Marquette
MAC-N9303-120
Minneapolis, Minnesota 55479
Facsimile No.: (612) 667-9825
Section 13.11. Governing Law.
The internal laws of the State of New York shall govern this Indenture
and the Securities, without regard to the conflicts of laws provisions thereof.
Section 13.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 13.13. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 13.14. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 13.15. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signature Page Follows]
44
<PAGE> 51
[Indenture Signature Page]
SIGNATURES
Dated: as of November 5, 1999 EXCEL LEGACY CORPORATION,
a Delaware corporation
By: /s/ Richard B. Muir
-------------------------------
Name: Richard B. Muir
Title: Executive Vice President
Dated: as of November 5, 1999 NORWEST BANK MINNESOTA,
National Association
By: /s/ Jane Y. Schweiger
-------------------------------
Name: Jane Y. Schweiger
Title: Corporate Trust Officer
45
<PAGE> 52
Exhibit A
(Face of Security)
CUSIP 30665 AA 4
No. ___ $ _____________
9.0% CONVERTIBLE REDEEMABLE SUBORDINATED SECURED DEBENTURE
DUE NOVEMBER 5, 2004
EXCEL LEGACY CORPORATION
promises to pay to
_____________
or registered assigns,
the principal sum of _____________ Dollars on November 5, 2004
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
This is one of the Securities described in the
within-mentioned Indenture. Additional provisions of this Security are
set forth on the other side of this Security.
Authenticated: Dated:
Norwest Bank Minnesota, National Association, Excel Legacy Corporation
as Trustee
By ________________________ By _____________________
Authorized Signature
OR
as Authenticating Agent
By ________________________
Authorized Signature
(Back of Security)
A-1
<PAGE> 53
9.0% Convertible Redeemable Subordinated Secured Debenture
due November 5, 2004
1. Interest. Excel Legacy Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. The Company will pay interest semiannually on
February 15 and August 15 of each year. Interest on the Securities will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from August 15, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered holders of
Securities at the close of business on the record date for the next interest
payment date even though Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. It may mail an interest check to a
holder's registered address.
3. Paying Agent, Registrar and Conversion Agent. The Trustee will act
as Conversion Agent, Paying Agent and Registrar. The Company may change any
Paying Agent, Registrar, Conversion Agent or co-registrar without prior notice.
The Company or any of its subsidiaries may act in any such capacity.
4. Indenture and Pledge Agreement. The Company issued the Securities
under an Indenture dated as of November 5, 1999 ("Indenture") between the
Company and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA") as
in effect on the date of the Indenture. The Securities are subject to, and
qualified by, all such terms, certain of which are summarized hereon, and
Securityholders are referred to the Indenture and such Act for a statement of
such terms. The Securities are general obligations of the Company limited to
$36,599,767 in aggregate principal amount. The Securities are secured by a
pledge of certain shares of common stock, par value $.0001 per share, of Price
Enterprises, Inc., a Maryland corporation, pursuant to the Pledge Agreement
referred to in the Indenture.
5. Optional Redemption. On or after November 5, 2001, the Company may
redeem all or some of the Securities from time to time at the redemption price
of 100% of the principal amount of such Securities plus accrued interest to the
redemption date.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. In the event of a redemption of less than all of the Securities, the
Securities will be chosen for redemption by the Trustee, generally pro rata or
by
A-2
<PAGE> 54
lot. On and after the redemption date interest ceases to accrue on Securities or
portions of them called for redemption.
If this Security is redeemed subsequent to a record date with respect
to any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest will be paid to the person in whose name
this Security is registered at the close of business on such record date.
7. Conversion. A holder of a Security may convert it into Common Stock
of the Company at any time before the close of business (New York time) on the
day prior to the maturity date. If the Security is called for redemption, the
holder may convert it at any time before the close of business (New York time)
on the day prior to the redemption date (unless the Company shall default in
payment due upon redemption thereof). The initial conversion price of $5.50 per
share is subject to adjustment in certain events. To determine the number of
shares issuable upon conversion of a Security, divide the principal amount to be
converted by the conversion price in effect on the conversion date. On
conversion, no payment or adjustment for interest will be made. However,
interest will be paid on any interest payment date with respect to Securities
surrendered for conversion after a record date for the payment of interest to
the registered holder on such record date. The Company will deliver a check for
any fractional share.
To convert a Security a holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if
required by the Registrar or Conversion Agent, and (4) pay any transfer or
similar tax if required. A holder may convert a portion of a Security if the
portion is $1,000 or an integral multiple of $1,000.
The conversion price is subject to adjustment as set forth in the
Indenture in certain events. No adjustment in the conversion price will be
required unless such adjustment would require a change of at least 1% in the
price then in effect; but any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
The Company from time to time may voluntarily reduce the conversion
price for a period of time, provided that the conversion price is not less than
the par value of a share of Common Stock.
If the Company is a party to a consolidation or merger or a transfer or
lease of all or substantially all of its assets, the Securities automatically
become convertible into the kind and amount of securities, cash or other assets
which the Holder of a Security would have owned immediately after such
transaction if the Holder had converted the Security immediately before the
effective date of the transaction.
8. Subordination. The Securities are subordinated to Senior Debt, as
defined in the Indenture. To the extent provided in the Indenture, Senior Debt
must be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security
A-3
<PAGE> 55
agrees, to the subordination and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Security or portion
of a Security selected for redemption (except the unredeemed portion of any
Security being redeemed in part). Also, it need not exchange or register the
transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
10. Persons Deemed Owners. Except as provided in paragraph 2, the
registered holder of a Security may be treated as its owner for all purposes.
11. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Securities may be amended with the consent of the holders of at
least a majority in principal amount of the then outstanding Securities, and any
existing default may be waived with the consent of the holders of a majority in
principal amount of the then outstanding Securities. Without the consent of any
Securityholder, the Indenture or the Securities may be amended to cure any
ambiguity, defect or inconsistency, to provide for assumption of the Company's
obligations to Securityholders or to make any change that does not adversely
affect the rights of any Securityholder.
12. Defaults and Remedies. An Event of Default is: default for 30 days
in payment of interest on the Securities; default in payment of principal on
them; failure by the Company for 30 days after notice to it to comply with any
of its other agreements in the Indenture or the Securities or, in the case of
failure by the Company to maintain its corporate existence or to comply with the
restrictions on consolidation, merger or transfer or lease of substantially all
its assets or the provisions regarding conversion of Securities, with such
notice but without such passage of time; certain defaults under and
accelerations prior to maturity of other indebtedness; certain final judgments
which remain undischarged; and certain events of bankruptcy or insolvency. If an
Event of Default occurs and is continuing, the Trustee or the holders of at
least 25% in principal amount of the then outstanding Securities may declare all
the Securities to be due and payable immediately, except that in the case of an
Event of Default arising from certain events of bankruptcy or insolvency, all
outstanding Securities become due and payable without further action or notice.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice is in their interests. The Company must furnish an annual
compliance certificate to the Trustee.
A-4
<PAGE> 56
13. Trustee Dealings with the Company. Subject to certain limitations
imposed by the TIA, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
14. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
15. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
16. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
17. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture, which has in it the text of this
Security in larger type. Requests may be made to:
Treasurer, Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
A-5
<PAGE> 57
ASSIGNMENT FORM
To Assign this Security, fill in the form below:
I or we assign and transfer this Security to
__________________
[__________________]
(Insert assignee's social security
or tax I.D. number)
__________________________________
__________________________________
__________________________________
__________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
_________________________,
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the box:
_____
[_____]
To convert only part of this Security, state the amount ($1,000 or integral
multiples thereof):
__________________
[$ ]
If you want the stock certificate made out in another person's name, fill in the
form below:
__________________
[__________________]
(insert other person's social
security or tax I.D. number)
__________________________________
__________________________________
__________________________________
__________________________________
Print or type other person's name, address and zip code)
__________________________________
__________________________________
Date: ____________ Your Signature: _______________________
_______________________
(Sign exactly as your name appears
on the other side of this Security)
A-6
<PAGE> 58
Exhibit B
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of
November 5, 1999 by Excel Legacy Corporation, a Delaware corporation (the
"Pledgor"), having its principal office at 16955 Via Del Campo, Suite 100, San
Diego, California, in favor of Norwest Bank Minnesota, National Association (the
"Debentures Collateral Agent"), having an office at Sixth & Marquette,
MAC-N9303-120, Minneapolis, Minnesota, as collateral agent in favor of the
holders (the "Holders") of the Pledgor's 9.0% Convertible Redeemable
Subordinated Secured Debentures due 2004 (the "Debentures"). Capitalized terms
used and not defined herein shall have the meanings given to such terms in the
Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Pledgor is the legal and beneficial owner of certain
shares of common stock, par value $.0001 per share (the "Common Stock"), of
Price Enterprises, Inc., a Maryland corporation (the "Issuer");
WHEREAS, the Pledgor and Norwest Bank Minnesota, National Association,
as trustee, have entered into that certain indenture dated as of November 5,
1999 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Indenture"), pursuant to which the Pledgor proposes to issue,
from time to time, up to $36,599,767 in aggregate principal amount of the
Debentures;
WHEREAS, the terms of the Indenture require that the Pledgor (i) pledge
to the Debentures Collateral Agent for the benefit of the Holders, and grant to
the Debentures Collateral Agent for the benefit of the Holders a security
interest in, the Debentures Pledged Collateral (as defined herein) and (ii)
execute and deliver this Agreement in order to secure the payment and
performance by the Pledgor of all of the Obligations of the Pledgor under the
Indenture and the Debentures (the "Obligations"); and
WHEREAS, the Pledgor and The Sol and Helen Price Trust have entered
into that certain Note Purchase Agreement dated as of October 1, 1999 (the
"Price Note Purchase Agreement") pertaining to the Secured Promissory Note (the
"Price Note") issued thereunder, and the Pledgor and James F. Cahill (the "Price
Note Collateral Agent") have entered a Pledge Agreement of even date therewith
(the "Price Note Pledge Agreement") pursuant to which Pledgor has granted to the
Price Note Collateral Agent, as collateral agent for the holders of the Price
Note, a security interest (the "Price Note Security Interest") in, among other
things, the Debentures Pledged Shares.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
<PAGE> 59
SECTION 1. Pledge. The Pledgor hereby pledges to the Debentures
Collateral Agent for its benefit and for the ratable benefit of the Holders, and
grants to the Debentures Collateral Agent for the ratable benefit of the Holders
a continuing first priority security interest in, all of the Pledgor's right,
title and interest in the following (the "Debentures Pledged Collateral"):
(i) The shares of Common Stock (the "Debentures Pledged Shares")
from time to time identified on a certificate (a "Debentures Collateral
Identification Certificate") in the form attached hereto as Exhibit A, and all
products and proceeds of any of the Debentures Pledged Shares, including,
without limitation, all dividends, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Debentures Pledged Shares or any of the foregoing.
(ii) Each Debentures Collateral Identification Certificate (i)
shall have been completed to identify the principal amount of Debentures to be
issued at such time (for purposes of said Debentures Collateral Identification
Certificate, the "Incremental Debentures"), (ii) shall have been completed to
identify a number of Debentures Pledged Shares equal to 117.647 shares of Common
Stock for each $1,000 principal amount of Incremental Debentures (the
"Incremental Debentures Pledged Shares"), as well as the appropriate
certificate(s) evidencing the Incremental Debentures Pledged Shares, (iii) shall
have been duly executed by the Pledgor, and (iv) shall include an Acknowledgment
of Price Note Collateral Agent duly executed by the Price Note Collateral Agent.
The pledge and security interest made and granted in this Section 1 is
made and granted for the purpose of securing all of the Obligations under the
Indenture and the Debentures (including, without limitation, interest and any
other Obligations accruing after the date of any filing by the Pledgor of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceeding with respect to the Pledgor).
The Pledgor agrees that it shall not be entitled to issue Debentures
at any time under the Indenture unless and until it shall have provided to the
Debentures Collateral Agent a Debentures Collateral Identification Certificate
(and the accompanying Incremental Debentures Pledged Shares) in connection
therewith.
SECTION 2. Delivery of Pledged Collateral. Pledgor hereby agrees that all
certificates or instruments representing or evidencing the Debentures Pledged
Collateral shall be immediately delivered to and held at all times by the
Debentures Collateral Agent pursuant hereto. All Debentures Pledged Shares shall
be in suitable form for transfer by delivery, or issued in the name of Pledgor
and accompanied by instruments of transfer or assignment duly executed in blank
and undated, and in either case having attached thereto all requisite federal or
state stock transfer tax stamps, all in form and substance satisfactory to the
Debentures Collateral Agent.
SECTION 3. Price Notes Security Interest. The Debentures Collateral Agent
acknowledges the security interest and pledge of the Debentures Pledged
Collateral pursuant to the Price Note Pledge Agreement. Until the earlier to
occur of the termination of this Agreement or the Price Note Pledge Agreement,
the Debentures Collateral Agent agrees to hold the Debentures Pledged Collateral
for itself and for the Price Note Collateral Agent, in order to perfect the
security interest in the Debentures Pledged Collateral for itself under this
Agreement and for the Price Note Collateral Agent under the Price Note Pledge
Agreement. The Debentures Collateral Agent shall not be required to hold, and
agrees that it will not hold, the Debentures Pledged Collateral for any person
other than the Holders and the Price Note Collateral Agent in order to perfect a
security interest in the Debentures Pledged Collateral.
B-2
<PAGE> 60
SECTION 4. Release.
(a) General. Subject to the receipt by the Debentures Collateral
Agent of a Release Certificate as described in Section 4(b) below, following the
repurchase, redemption or defeasance from time to time by the Pledgor of any or
all of the Debentures or the conversion of any or all of the Debentures into
Common Stock as provided by the Indenture (and upon receipt by the Debentures
Collateral Agent of evidence reasonably satisfactory to it of the principal
amount of Debentures so repurchased, redeemed, defeased or converted and subject
to the satisfaction of any additional applicable conditions set forth in the
Indenture, including the furnishing of a certificate of the Trustee to the
Debentures Collateral Agent as required by Section 12.07 of the Indenture), the
Debentures Collateral Agent shall release from the pledge and security interest
created by Section 1 of this Agreement a number of Debentures Pledged Shares
equal to 117.647 Debentures Pledged Shares for each $1,000 in principal amount
of Debentures subject to such repurchase, redemption, defeasance or conversion.
In connection with such release, the Debentures Collateral Agent also shall take
such steps as the Pledgor reasonably may request in order to evidence the
termination of said pledge and security interest in the Debentures Pledged
Shares so released. Any shares released pursuant to this Section 4 shall no
longer be deemed to be "Debentures Pledged Shares" or "Debentures Pledged
Collateral" for purposes of this Agreement.
(b) Release Certificate. The Debentures Collateral Agent shall not
release any Debentures Pledged Shares unless and until the Pledgor shall have
provided to the Debentures Collateral Agent a Release Certificate and
accompanying Acknowledgment of Price Note Collateral Agent in the form attached
hereto as Exhibit B duly executed by each of the Pledgor and the Price Note
Collateral Agent. The Release Certificate shall indicate whether all obligations
owed by Pledgor under the Price Note and the Price Note Purchase Agreement have
been satisfied in full, the amount of Debentures Pledged Shares to be released
and the party to whom such shares shall be delivered. Any Debentures Pledged
Shares required to be released pursuant to Section 4(a) of this Agreement or
upon the termination of this Agreement shall be released and delivered by the
Debentures Collateral Agent in accordance with the instructions contained in an
applicable Release Certificate.
(c) For purposes of this Agreement, any reference to a Release
Certificate shall be deemed to include an accompanying Acknowledgment of Price
Note Collateral Agent, unless no such acknowledgment is required as provided by
the following sentence. From and after the date the Price Notes Collateral Agent
provides to the Debentures Collateral Agent a Payment Certificate in the form
attached hereto as Exhibit C, which certificate shall indicate that all
obligations of the Pledgor under the Price Note and the Price Note Purchase
Agreement have been satisfied in full, then any Release Certificate provided by
the Pledgor to the Debentures Collateral Agent need not be accompanied by an
Acknowledgment of Price Note Collateral Agent.
SECTION 5. Representations and Warranties. The Pledgor hereby makes all
representations and warranties applicable to the Pledgor contained in the
Indenture. The Pledgor further represents and warrants that:
(a) The Pledgor is the legal, record and beneficial owner of the
Debentures Pledged Collateral, free and clear of any Lien or claims of any
person other than the security interest created under this Agreement and the
Price Note Security Interest.
(b) This Agreement has been duly executed and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms.
B-3
<PAGE> 61
(c) Upon (i) the delivery to the Debentures Collateral Agent of the
Debentures Pledged Collateral, and (ii) the filing of Uniform Commercial Code
(the "UCC") financing statements in the Secretary of State's office for the
State of California referencing Pledgor as debtor thereunder, the Debentures
Collateral Agent (as agent for the Holders) as the secured party thereunder, and
the Debentures Pledged Collateral as the collateral thereunder, the pledge of
the Debentures Pledged Collateral pursuant to this Agreement shall create a
valid and perfected security interest in the Debentures Pledged Collateral,
securing the payment of the Obligations for the benefit of the Debentures
Collateral Agent and the Holders, and enforceable as such against all creditors
of the Pledgor and any persons purporting to purchase any of the Debentures
Pledged Collateral from the Pledgor.
(d) Upon (i) the delivery to the Debentures Collateral Agent of the
Debentures Pledged Collateral, the delivery to the Senior Notes Collateral Agent
(as defined in the Price Note Pledge Agreement) of the Senior Notes Pledged
Collateral (as defined in the Price Note Pledge Agreement) and the delivery to
the Price Note Collateral Agent of the Price Note Pledged Collateral (as defined
in the Price Note Pledge Agreement) other than the Debentures Pledged Collateral
and the Senior Notes Pledged Collateral, and (ii) the filing of UCC financing
statements in the Secretary of State's office for the State of California
referencing Pledgor as debtor thereunder, the Price Note Collateral Agent (as
agent for the holders of the Price Note) as the secured party thereunder, and
the Price Note Pledged Collateral as the collateral thereunder, the pledge of
the Price Note Pledged Collateral (which includes the Debentures Pledged
Collateral and the Senior Notes Pledged Collateral) pursuant to the Price Note
Pledge Agreement shall create a valid and perfected security interest in the
Debentures Pledged Collateral, securing the payment of the obligations of the
Pledgor under the Price Note and the Price Note Purchase Agreement for the
benefit of the Price Note Collateral Agent and the holders of the Price Note,
and enforceable as such against all creditors of the Pledgor and any persons
purporting to purchase any of the Price Note Pledged Collateral from the
Pledgor.
SECTION 6. Further Assurance. Pledgor will at all times cause the security
interests granted pursuant to this Agreement to constitute valid perfected
security interests in the Debentures Pledged Collateral, enforceable as such
against all creditors of Pledgor and (except as otherwise specifically provided
herein) any persons purporting to purchase any Debentures Pledged Collateral
from Pledgor. The Pledgor will, promptly upon request by the Debentures
Collateral Agent, execute and deliver or cause to be executed and delivered, or
use its best efforts to procure, all substitute stock certificates, stock
powers, proxies, tax stamps, assignments, instruments and other documents, all
in form and substance satisfactory to the Debentures Collateral Agent, deliver
any instruments to the Debentures Collateral Agent and take any other actions
that are necessary or, in the reasonable opinion of the Debentures Collateral
Agent, desirable to perfect, continue the perfection of, or protect the first
priority of the Debentures Collateral Agent's security interest in, the
Debentures Pledged Collateral, to protect the Debentures Pledged Collateral
against the rights, claims, or interests of third persons, to enable the
Debentures Collateral Agent to exercise or enforce its rights and remedies
hereunder, or otherwise to effect the purposes of this Agreement. The Pledgor
also hereby authorizes the Debentures Collateral Agent to file any financing or
continuation statements with respect to the Debentures Pledged Collateral
without the signature of the Pledgor to the extent permitted by applicable law.
The Pledgor will pay all costs incurred in connection with any of the foregoing.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Debentures Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
Indenture; provided, however, that the Pledgor shall not exercise or shall
refrain from exercising any such
B-4
<PAGE> 62
right if such action would have a material adverse effect on the value of the
Debentures Pledged Collateral or any part thereof or be inconsistent with or
violate any provisions of this Agreement or the Indenture.
(b) So long as no Event of Default shall have occurred and be
continuing, and subject to the other terms and conditions of the Indenture, the
Pledgor shall be entitled to receive, and to utilize (subject to the provisions
of the Indenture) free and clear of the Lien of this Agreement, all cash
dividends paid from time to time in respect of the Debentures Pledged Shares
(other than the dividends described in Section 7(c)(ii) below).
(c) Any and all (i) dividends, other distributions, interest and
principal payments paid or payable in the form of instruments and/or other
property (other than cash dividends permitted under Section 7(b) hereof)
received, receivable or otherwise distributed in respect of, or in exchange for,
any Debentures Pledged Collateral, (ii) dividends and other distributions paid
or payable in cash in respect of any Debentures Pledged Shares in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and (iii) cash paid,
payable or otherwise distributed in redemption of, or in exchange for, any
Debentures Pledged Collateral, shall in each case be forthwith delivered to the
Debentures Collateral Agent to hold as Debentures Pledged Collateral and shall,
if received by the Pledgor, be received in trust for the benefit of the
Debentures Collateral Agent and the Holders, be segregated from the other
property and funds of the Pledgor and be forthwith delivered to the Debentures
Collateral Agent as Debentures Pledged Collateral in the same form as so
received (with any necessary endorsements).
(d) The Debentures Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to exercise the voting and other rights that it is entitled to
exercise pursuant to Sections 7(a) and 7(b) above.
(e) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Pledgor to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7(a) shall cease, and all such rights shall thereupon become vested in
the Debentures Collateral Agent, which, to the extent permitted by law, shall
thereupon have the sole right to exercise such voting and other consensual
rights, and (ii) all dividends payable in respect of the Debentures Pledged
Collateral shall be paid to the Debentures Collateral Agent and the Pledgor's
right to receive such cash payments pursuant to Sections 7(b) hereof shall
immediately cease.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Debentures Collateral Agent all such proxies, dividend and
interest payment orders and other instruments as the Debentures Collateral Agent
may reasonably request for the purpose of enabling the Debentures Collateral
Agent to exercise the voting and other rights that it is entitled to exercise
pursuant to Section 7(e) above.
(g) All payments of interest, principal or premium and all dividends
and other distributions that are received by the Pledgor contrary to the
provisions of this Section 7 shall be received in trust for the benefit of the
Debentures Collateral Agent and the Holders, shall be segregated from the other
property or funds of the Pledgor and shall be forthwith delivered to the
Debentures Collateral Agent as Debentures Pledged Collateral in the same form as
so received (with any necessary endorsements).
SECTION 8. Covenants. The Pledgor hereby covenants and agrees with the
Debentures Collateral Agent and the Holders that it will comply with all of the
obligations, requirements and restrictions
B-5
<PAGE> 63
applicable to the Pledgor contained in the Indenture. The Pledgor further
covenants and agrees, from and after the date of this Agreement and until the
Obligations have been paid in full, that it will not (i) sell, assign, transfer,
convey or otherwise dispose of, or grant any option or warrant with respect to,
any of the Debentures Pledged Collateral without the prior written consent of
the Debentures Collateral Agent, (ii) create or permit to exist any Lien upon or
with respect to any of the Debentures Pledged Collateral, other than the
security interest granted under this Agreement and the Price Note Security
Interest, and Pledgor at all times will be the sole beneficial owner of the
Debentures Pledged Collateral, (iii) other than the Price Note Pledge Agreement,
enter into any agreement or understanding that purports to or that may restrict
or inhibit the Debentures Collateral Agent's rights or remedies hereunder,
including, without limitation, the Debentures Collateral Agent's right to sell
or otherwise dispose of the Debentures Pledged Collateral, or (iv) fail to pay
or discharge any tax, assessment or levy of any nature not later than five days
prior to the date of any proposed sale under any judgement, writ or warrant of
attachment with regard to the Debentures Pledged Collateral.
SECTION 9. Power of Attorney. In addition to all of the powers granted to the
Debentures Collateral Agent pursuant to Section 12.06 of the Indenture, the
Pledgor hereby appoints and constitutes the Debentures Collateral Agent as the
Pledgor's attorney-in-fact to exercise all of the following powers upon and at
any time after the occurrence of an Event of Default: (i) collection of proceeds
of any Debentures Pledged Collateral; (ii) conveyance of any item of Debentures
Pledged Collateral to any purchaser thereof; (iii) giving of any notices or
recording of any Liens under Section 6 hereof; (iv) making of any payments or
taking any acts under Section 10 hereof and (v) paying or discharging taxes or
Liens levied or placed upon or threatened against the Debentures Pledged
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Debentures Collateral Agent in its
sole discretion, and such payments made by the Debentures Collateral Agent to
become the obligations of the Pledgor to the Debentures Collateral Agent, due
and payable immediately without demand. The Debentures Collateral Agent's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate, for the Debentures Collateral Agent's own account, any checks or
instruments in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document, transfer title to any item of
Debentures Pledged Collateral, sign the Pledgor's name on all financing
statements or any other documents deemed necessary or appropriate to preserve,
protect or perfect the security interest in the Debentures Pledged Collateral
and to file the same, prepare, file and sign the Pledgor's name on any notice of
Lien, and prepare, file and sign the Pledgor's name on a proof of claim in
bankruptcy or similar document against any customer of the Pledgor, and to take
any other actions arising from or incident to the powers granted to the
Debentures Collateral Agent in this Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Pledgor.
SECTION 10. Collateral Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Debentures Collateral Agent may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Debentures Collateral Agent incurred in connection therewith shall be payable by
the Pledgor under Section 15 hereof.
B-6
<PAGE> 64
SECTION 11. No Assumption of Duties; Reasonable Care. The rights and powers
granted to the Debentures Collateral Agent hereunder are being granted in order
to preserve and protect the Debentures Collateral Agent's and the Holders'
security interest in and to the Debentures Pledged Collateral granted hereby and
shall not be interpreted to, and shall not, impose any duties on the Debentures
Collateral Agent in connection therewith. Further, the rights and powers granted
to the Debentures Collateral Agent hereunder are being granted in order to
permit the Debentures Collateral Agent to hold the Debentures Pledged Collateral
for the Price Note Collateral Agent, in order to perfect the security interest
in the Debentures Pledged Collateral for the Price Note Collateral Agent under
the Price Note Pledge Agreement. The Debentures Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the
Debentures Pledged Collateral in its possession if the Debentures Pledged
Collateral is accorded treatment substantially equal to that which the
Debentures Collateral Agent accords its own property, it being understood that
the Debentures Collateral Agent shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Debentures Pledged
Collateral, whether or not the Debentures Collateral Agent has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against any parties with respect to any Debentures Pledged Collateral.
SECTION 12. Subsequent Changes Affecting Collateral. The Pledgor represents to
the Debentures Collateral Agent and the Holders that the Pledgor has made its
own arrangements for keeping informed of changes or potential changes affecting
the Debentures Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting rights),
and the Pledgor agrees that the Debentures Collateral Agent and the Holders
shall have no responsibility or liability for informing the Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto. The Pledgor covenants that it will not, without the
prior written consent of the Debentures Collateral Agent, vote to enable, or
take any other action to permit, the Issuer to sell or otherwise dispose of, or
grant any option with respect to, any of the Debentures Pledged Collateral or
create or permit to exist any Lien upon or with respect to any of the Debentures
Pledged Collateral (except that the Pledgor may create and permit to exist the
Price Note Security Interest in accordance with Section 3 of this Agreement).
The Pledgor will defend the right, title and interest of the Debentures
Collateral Agent and the Holders in and to the Debentures Pledged Collateral
against the claims and demands of all persons.
SECTION 13. Remedies Upon Default. If any Event of Default shall have occurred
and be continuing, the Debentures Collateral Agent and the Holders shall have,
in addition to all other rights given by law or by this Agreement or the
Indenture, all of the rights and remedies with respect to the Debentures Pledged
Collateral of a secured party under the UCC as in effect in the State of
California at that time. The Debentures Collateral Agent may, without notice and
at its option, transfer or register, and the Pledgor shall register or cause to
be registered upon request therefor by the Debentures Collateral Agent, the
Debentures Pledged Collateral or any part thereof on the books of the Issuer
into the name of the Debentures Collateral Agent or the Debentures Collateral
Agent's nominee(s), with or without any indication that such Debentures Pledged
Collateral is subject to the security interest hereunder. In addition, (i) with
respect to any Debentures Pledged Collateral that shall then be in or shall
thereafter come into the possession or custody of the Debentures Collateral
Agent, the Debentures Collateral Agent may sell or cause the same to be sold at
any broker's board or at public or private sale, in one or more sales or lots,
at such price or prices as the Debentures Collateral Agent may deem best, for
cash or on credit or for future delivery, without assumption of any credit risk,
and (ii) with respect to any Debentures Pledged Collateral that shall be in or
shall thereafter come into the possession or custody of the Price Note
Collateral Agent, the Debentures Collateral Agent may instruct and otherwise
work with the Price Note Collateral Agent to
B-7
<PAGE> 65
sell or cause the same to be sold at any broker's board or at public or private
sale, in one or more sales or lots, at such price or prices as the Debentures
Collateral Agent may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any or all Debentures
Pledged Collateral so sold shall thereafter hold the same absolutely, free from
any claim, encumbrance or right of any kind whatsoever (except that with respect
to any such collateral consisting of Price Note Pledged Collateral, the
Debentures Collateral Agent may instruct or otherwise work with the Price Note
Collateral Agent to sell such collateral subject to Liens in favor of the
Debentures Collateral Agent). Unless any of the Debentures Pledged Collateral
threatens to decline speedily in value or is or becomes of a type sold on a
recognized market, the Debentures Collateral Agent will give Pledgor reasonable
notice of the time and place of any public sale thereof, or of the time after
which any private sale or other intended disposition is to be made. Any sale of
the Debentures Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial finance
companies, or other financial institutions disposing of property similar to the
Debentures Pledged Collateral shall be deemed to be commercially reasonable. Any
requirements of reasonable notice shall be met if such notice is mailed to the
Pledgor as provided below in Section 19.1, at least ten days before the time of
the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is, to the extent permitted by law, waived. The
Debentures Collateral Agent or any Holder may, in its own name or in the name of
a designee or nominee, buy any of the Debentures Pledged Collateral at any
public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other disposition
of the Debentures Pledged Collateral.
SECTION 14. Irrevocable Authorization and Instruction to the Issuer. The Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by the Issuer from the Debentures Collateral Agent that (i) states that
an Event of Default has occurred and (ii) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so
complying.
SECTION 15. Fees and Expenses. The Pledgor will upon demand pay to the
Debentures Collateral Agent the amount of any and all reasonable fees and
expenses (including, without limitation, the reasonable fees and disbursements
of its counsel, of any investment banking firm, business broker or other selling
agent and of any other experts and agents retained by the Debentures Collateral
Agent) that the Debentures Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Debentures
Pledged Collateral, (iii) the exercise or enforcement of any of the rights of
the Debentures Collateral Agent and the Holders hereunder or (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof.
SECTION 16. Interest Absolute. All rights of the Debentures Collateral Agent and
the Holders and the security interests created hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Indenture;
B-8
<PAGE> 66
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or of
this Agreement.
SECTION 17. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Debentures Pledged Collateral and any
cash held shall be applied by the Debentures Collateral Agent in the following
order of priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Debentures
Collateral Agent, and all expenses, liabilities and advances incurred or made by
the Debentures Collateral Agent in connection therewith, and any other
unreimbursed fees and expenses for which the Debentures Collateral Agent is to
be reimbursed pursuant to Section 15 hereof;
second, to the ratable payment (based on the principal amount of
Debentures deemed by the Indenture to be outstanding at the time of
distribution) of accrued but unpaid interest on such outstanding Debentures;
third, to the ratable payment (based on the principal amount of
Debentures deemed by the Indenture to be outstanding at the time of
distribution) of unpaid principal of such outstanding Debentures;
fourth, to the ratable payment (based on the principal amount of
Debentures deemed by the Indenture to be outstanding at the time of
distribution) of all other Obligations, until all Obligations shall have been
paid in full; and
fifth, to the payment to all persons who may be entitled by law thereto
(including, without limitation, the Price Note Collateral Agent until such time
as the Debentures Collateral Agent has received written notice from the Price
Note Collateral Agent that the obligations of the Pledgor under the Price Note
and the Price Note Purchase Agreement have been satisfied in full), or as a
court of competent jurisdiction may direct, until all obligations to such
persons shall have been paid in full; and
finally, to payment to the Pledgor or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
B-9
<PAGE> 67
SECTION 18. Uncertificated Securities. Notwithstanding anything to the contrary
contained herein, if any Debentures Pledged Shares (whether now owned or
hereafter acquired) are uncertificated Debentures Pledged Shares, the Pledgor
shall promptly notify the Debentures Collateral Agent, and shall promptly take
all actions required to perfect the security interest of the Debentures
Collateral Agent under applicable law. The Pledgor further agrees to take such
actions as the Debentures Collateral Agent deems necessary or desirable to
effect the foregoing and to permit the Debentures Collateral Agent to exercise
any of its rights and remedies hereunder, and agrees to provide an Opinion of
Counsel reasonably satisfactory to the Debentures Collateral Agent with respect
to any such pledge of uncertificated Debentures Pledged Shares promptly upon
request of the Debentures Collateral Agent.
SECTION 19. Miscellaneous Provisions.
Section 19.1 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner as set forth in Section 13.02 of the Indenture, and delivered to the
addresses set forth in such Section, or, in the case of the Debentures
Collateral Agent, to: Norwest Bank Minnesota, National Association, Sixth &
Marquette, MAC-N9303-120, Minneapolis, Minnesota, Attention: Corporate Trust
Services, Telecopy No. (612) 667-9825.
Section 19.2 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Pledgor to the Debentures Collateral Agent to
take any action or omit to take any action under this Agreement, the Pledgor
shall deliver to the Debentures Collateral Agent an Officer's Certificate and/or
an Opinion of Counsel in accordance with the requirements of Section 13.04 of
the Indenture.
Section 19.3 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor, the Issuer or any subsidiary thereof. No such pledge,
security or debt agreement may be used to interpret this Agreement.
Section 19.4 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 19.5 No Recourse Against Others. No director, officer,
employee, stockholder or affiliate, as such, of the Pledgor or the Issuer shall
have any liability for any obligations of the Pledgor under this Agreement or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder, by accepting a Debenture, waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Debentures.
Section 19.6 Headings. The headings of the Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 19.7 Counterpart Originals. This Agreement may be signed in two
or more counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be executed
and delivered by telecopy, if such delivery is promptly followed by the original
manually signed copy sent by overnight courier.
B-10
<PAGE> 68
Section 19.8 Benefits of Agreement. Nothing in this Agreement, express
or implied, shall give to any person, other than the parties hereto and their
successors hereunder, and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Agreement. The parties hereto acknowledge that
the Price Note Collateral Agent is entitled to rely on any Debentures Collateral
Identification Certificate which may be delivered under this Agreement.
Section 19.9 Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Pledgor from any provision of this Agreement shall be effective only if made or
given in compliance with all of the terms and provisions of the Indenture
necessary for amendments or waivers of, or consents to any departure by the
Pledgor from any provision of the Indenture, as applicable; provided, however,
that no amendment or waiver of any provision of this Agreement may adversely
affect the rights of the Price Note Collateral Agent hereunder or under the
Acknowledgment of Debentures Collateral Agent included within any Debentures
Collateral Identification Certificate delivered pursuant to this Agreement
without the prior written consent of the Price Note Collateral Agent. Neither
the Debentures Collateral Agent nor any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Debentures
Collateral Agent or any Holder to exercise, or delay in exercising, any right,
power or privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Debentures Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Debentures Collateral Agent or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
Section 19.10 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Indenture shall have the meaning set forth in the
applicable UCC, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with the Indenture and is not
dealt with herein with more specificity, the Indenture shall control with
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Agreement shall not
be relevant to determine the meaning of this Agreement even though the accepting
or acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
Section 19.11 Continuing Security Interest; Transfer of Debentures.
This Agreement shall create a continuing security interest in the Debentures
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full of all the Obligations and all the fees and expenses owing to
the Debentures Collateral Agent and the fulfillment of the conditions set forth
in Section 19.17, (ii) be binding upon the Pledgor, its successors and assigns,
and (iii) inure, together with the rights and remedies of the Debentures
Collateral Agent hereunder, to the benefit of the Debentures Collateral Agent,
the Holders and their respective successors, transferees and assigns.
Section 19.12 Reinstatement. This Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Debentures
Collateral Agent or any Holder in respect of the Obligations is rescinded or
must otherwise be restored or returned by the Debentures Collateral Agent or any
Holder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Pledgor or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Pledgor or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
B-11
<PAGE> 69
Section 19.13 Survival of Provisions. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Pledgor of the Obligations and the fulfillment of
the conditions set forth in Section 19.17.
Section 19.14 Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 19.15 Authority of the Collateral Agent.
(a) The Debentures Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Debentures
Collateral Agent by the terms hereof, together with such powers as are
reasonably incident thereto. The Debentures Collateral Agent may perform any of
its duties hereunder or in connection with the Debentures Pledged Collateral by
or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of counsel concerning all such matters. Neither
the Debentures Collateral Agent nor any director, officer, employee, attorney or
agent of the Debentures Collateral Agent shall be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Debentures Collateral Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons. The Pledgor agrees to
indemnify and hold harmless the Debentures Collateral Agent, the Holders and any
other person from and against any and all costs, expenses (including the
reasonable fees and disbursements of counsel (including, the allocated costs of
inside counsel)), claims and liabilities incurred by the Debentures Collateral
Agent, the Holders or such person hereunder, unless such claim or liability
shall be due to willful misconduct or gross negligence on the part of the
Debentures Collateral Agent, the Holders or such person.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Debentures Collateral Agent under this Agreement with respect to any action
taken by the Debentures Collateral Agent or the exercise or non-exercise by the
Debentures Collateral Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Debentures Collateral Agent and the Holders, be
governed by the Indenture and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Debentures
Collateral Agent and the Pledgor, the Debentures Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders with full and valid
authority so to act or refrain from acting, and the Pledgor shall not be
obligated or entitled to make any inquiry respecting such authority.
Section 19.16 Resignation or Removal of the Collateral Agent. Until
such time as the Obligations shall have been paid in full, the Debentures
Collateral Agent may at any time, by giving written notice to the Pledgor and
Holders, resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor
Debentures Collateral Agent and (ii) the acceptance of such appointment by such
successor Debentures Collateral Agent. As promptly as practicable after the
giving of any such notice, the Holders shall appoint a successor Debentures
Collateral Agent, which successor Debentures Collateral Agent shall be
reasonably acceptable to the Pledgor. If no successor Debentures Collateral
Agent shall be appointed and shall have accepted such appointment within 90 days
after the Debentures Collateral Agent gives the aforesaid notice of resignation,
the Debentures Collateral Agent may apply to any court of competent jurisdiction
to appoint a successor Debentures
B-12
<PAGE> 70
Collateral Agent to act until such time, if any, as a successor shall have been
appointed as provided in this Section 19.16. Any successor so appointed by such
court shall immediately and without further act be superseded by any successor
Debentures Collateral Agent appointed by the Holders, as provided in this
Section 19.16. Simultaneously with its replacement as Debentures Collateral
Agent hereunder, the Debentures Collateral Agent so replaced shall deliver to
its successor all documents, instruments, certificates and other items of
whatever kind (including, without limitation, the certificates and instruments
evidencing the Debentures Pledged Collateral and all instruments of transfer or
assignment) held by it pursuant to the terms hereof. The Debentures Collateral
Agent that has resigned shall be entitled to fees, costs and expenses to the
extent incurred or arising, or relating to events occurring, before its
resignation or removal.
Section 19.17 Release; Termination of Agreement. Subject to the
provisions of Section 19.12 hereof and the penultimate sentence of this Section
19.17, this Agreement shall terminate (i) upon full and final payment and
performance of the Obligations (and upon receipt by the Debentures Collateral
Agent of the Pledgor's written certification that all such Obligations have been
satisfied, the Trustee's written certification as required by Section 12.05 of
the Indenture, and such other evidence reasonably satisfactory to the Debentures
Collateral Agent that such Obligations have been satisfied, and the satisfaction
of any additional applicable conditions set forth in the Indenture) and payment
in full of all fees and expenses owing by the Pledgor to the Debentures
Collateral Agent or (ii) on the day after the first anniversary of the
defeasance of all of the Obligations pursuant to Article 8 of the Indenture
(other than those surviving Obligations specified therein). At such time, the
Debentures Collateral Agent shall upon receipt of a Release Certificate as
provided for by Section 4(b) above, reassign and redeliver all of the Debentures
Pledged Collateral hereunder that has not been sold, disposed of, retained or
applied by the Debentures Collateral Agent in accordance with the terms of such
Release Certificate. Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not terminate unless and until a Release Certificate is
provided to the Debentures Collateral Agent as provided above. Such reassignment
and redelivery shall be without warranty by or recourse to the Debentures
Collateral Agent, except as to the absence of any prior assignments by the
Debentures Collateral Agent of its interest in the Debentures Pledged
Collateral, and shall be at the expense of the Pledgor.
Section 19.18 Final Expression. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
Section 19.19 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Damages.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF CALIFORNIA, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
PLEDGOR, THE DEBENTURES COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF CALIFORNIA.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN PARAGRAPH
(vi) BELOW, THE PLEDGOR, THE DEBENTURES COLLATERAL AGENT AND THE HOLDERS AGREE
THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT
B-13
<PAGE> 71
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK, BUT THE PLEDGOR, THE DEBENTURES COLLATERAL AGENT
AND THE HOLDERS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE PLEDGOR WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE PLEDGOR AGREES THAT THE DEBENTURES COLLATERAL AGENT
SHALL, IN ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE
DEBENTURES PLEDGED COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE DEBENTURES COLLATERAL AGENT TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE
DEBENTURES COLLATERAL AGENT. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE DEBENTURES COLLATERAL
AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
IN FAVOR OF THE DEBENTURES COLLATERAL AGENT. THE PLEDGOR WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE DEBENTURES COLLATERAL
AGENT HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iv) THE PLEDGOR, THE DEBENTURES COLLATERAL AGENT AND THE
HOLDERS EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN SECTION 13.02 OF THE INDENTURE, SUCH
SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE DEBENTURES
COLLATERAL AGENT OR ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGOR IN
ANY OTHER JURISDICTION.
(vii) THE PLEDGOR HEREBY AGREES THAT NEITHER THE DEBENTURES
COLLATERAL AGENT NOR ANY HOLDER SHALL HAVE ANY LIABILITY TO
B-14
<PAGE> 72
THE PLEDGOR (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES
SUFFERED BY THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE DEBENTURES COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE,
THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE
DEBENTURES COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE, CONSTITUTING
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE DEBENTURES COLLATERAL AGENT OR ANY HOLDER
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE PLEDGOR WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE DEBENTURES COLLATERAL AGENT OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS,
TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE DEBENTURES
COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS AGREEMENT OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, THE DEBENTURES COLLATERAL AGENT
AND THE HOLDERS.
Section 19.20 Acknowledgments. The Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) neither the Debentures Collateral Agent nor any Holder has any
fiduciary relationship to the Pledgor, and the relationship between the
Debentures Collateral Agent and the Holders, on the one hand, and the Pledgor,
on the other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Holders or among the Pledgor
and the Holders.
[Signature Page Follows]
B-15
<PAGE> 73
[Pledge Agreement Signature Page]
PLEDGOR:
EXCEL LEGACY CORPORATION
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
DEBENTURES COLLATERAL AGENT:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:
-----------------------------------------
Name:
Title:
B-16
<PAGE> 74
EXHIBIT A
[FORM OF DEBENTURES COLLATERAL IDENTIFICATION CERTIFICATE]
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October 1, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 1, 1999 (the "Price Note Purchase Agreement"), a
security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Debentures Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is issuing $33,311,000 principal
amount of Debentures in accordance with the Debentures Indenture (for purposes
of this Certificate, the "Incremental Debentures");
(b) In accordance with Section 3 of the Debentures Pledge Agreement
and Section 3(a) of the Price Note Pledge Agreement, Pledgor confirms that the
property identified on Schedule 1 hereto constitutes Incremental Debentures
Pledged Shares pledged to the Debentures Collateral Agent, and that such
Incremental Debentures Pledged Shares, together with any Incremental Debentures
Pledged Shares identified in any previous Debentures Collateral Identification
Certificate, constitute "Debentures Pledged Shares" for purposes of the
Debentures Pledge Agreement and the Price Note Pledge Agreement.
(c) The Pledgor consents to the agreements of the Debentures
Collateral Agent and the Price Note Collateral Agent confirmed below in this
Certificate, and the Pledgor waives any right to object to the performance of
any of said agreements.
(d) Pledgor acknowledges and agrees that the Debentures Collateral
Agent and the Price Note Collateral Agent shall rely upon the foregoing
certifications in taking actions under the Debentures Pledge Agreement and the
Price Note Pledge Agreement, respectively.
<PAGE> 75
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
November 12, 1999.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
<PAGE> 76
ACKNOWLEDGMENT OF DEBENTURES COLLATERAL AGENT
The undersigned hereby certifies and confirms to the Price Note
Collateral Agent as follows:
(a) The undersigned is the "Collateral Agent" under the Debentures
Pledge Agreement referenced above,
(b) The Debentures Collateral Agent acknowledges the security
interest and pledge of the Debentures Pledged Collateral pursuant to the Price
Note Pledge Agreement. Until the earlier to occur of the termination of the
Debentures Pledge Agreement or the Price Note Pledge Agreement, the Debentures
Collateral Agent agrees to hold the Debentures Pledged Collateral for itself and
for the Price Note Collateral Agent, in order to perfect the security interest
in the Debentures Pledged Collateral for itself under the Debentures Pledge
Agreement and for the Price Note Collateral Agent under the Price Note Pledge
Agreement. The Debentures Collateral Agent shall not be required to hold, and
agrees that it will not hold, the Debentures Pledged Collateral for any person
other than the Holders and the Price Note Collateral Agent in order to perfect a
security interest in the Debentures Pledged Collateral.
(c) The Debentures Collateral Agent agrees to not release any
Debentures Pledged Collateral except pursuant to a Release Certificate and, if
applicable, an accompanying Acknowledgment of Price Note Collateral Agent, as
provided for by Section 4 of the Debentures Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
By:
-----------------------------------------
Name:
Title:
<PAGE> 77
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Debentures Collateral Agent under the
Debentures Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The security interest granted in favor of the undersigned, as
Price Note Collateral Agent, in the property described in (i) Schedule 1
attached to this Certificate or (ii) any previous Debentures Collateral
Identification Certificate executed by the Price Note Collateral Agent, is
subject and subordinate to the security interest granted in such property to the
Debentures Collateral Agent under the Debentures Pledge Agreement. Said priority
shall be applicable irrespective of the time or order of attachment or
perfection of the respective security interests or the time of filing of any
financing statements pertaining thereto, or any statutes, rules of law, or court
decisions to the contrary.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 78
EXHIBIT B
[FORM OF RELEASE CERTIFICATE]
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
`
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Debentures Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is repurchasing, redeeming or
defeasing Debentures, or the holders thereof are converting Debentures, in the
aggregate principal amount of:
$_________________________________________;
and, in accordance with Section 4 of the Debentures Pledge
Agreement, instructs the Debentures Collateral Agent to release from
the pledge and security interest created by Section 1 of the
Debentures Pledge Agreement the following number of Debentures
Pledged Shares (equal to 117.647 Debentures Pledged Shares for each
$1,000 in principal amount of Debentures subject to such repurchase,
redemption, defeasance or conversion):
_____________________________________; shares.
(b) Pledgor represents to the Debentures Collateral Agent and
instructs as follows (check applicable box):
<PAGE> 79
[ ] The Pledgor has satisfied all obligations under the Price
Note and the Price Note Purchase Agreement. The Pledgor
instructs the Debentures Collateral Agent to deliver the
Debentures Pledged Shares to the Pledgor in accordance with
the Debentures Pledge Agreement.
[ ] The Pledgor has not satisfied all obligations under the Price
Note and the Price Note Purchase Agreement. The Pledgor
instructs the Debentures Collateral Agent to deliver the
Debentures Pledged Shares to the Price Note Collateral Agent.
The Pledgor waives any right to receive the Debentures
Pledged Shares from the Debentures Collateral Agent.
(c) Pledgor acknowledges and agrees that the Debentures Collateral
Agent shall rely upon the foregoing certifications in taking actions under the
Debentures Pledge Agreement.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
________, ______.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
<PAGE> 80
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Debentures Collateral Agent under the
Debentures Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The representation of the Pledgor in Paragraph (b) of the above
Release Certificate is true and correct, and the Debentures Pledged Shares which
are the subject of the above Release Certificate shall be delivered in
accordance with the instructions contained in said Paragraph.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 81
EXHIBIT C
[FORM OF PAYMENT CERTIFICATE]
This Certificate is provided by James F. Cahill, (the "Price Notes
Collateral Agent"), pursuant to:
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
The Price Note Collateral Agent hereby certifies and confirms to the
Debentures Collateral Agent as follows:
The Pledgor has satisfied all obligations under the Price Note and
the Price Note Purchase Agreement. The Debentures Collateral Agent shall, from
and after the date of this Certificate, deliver the Debentures Pledged Shares to
the Pledgor in accordance with the Debentures Pledge Agreement and the Price
Note Collateral Agent hereby waives any right to receive the Debentures Pledged
Shares from the Debentures Collateral Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 1
EXHIBIT 10.5
- --------------------------------------------------------------------------------
EXCEL LEGACY CORPORATION, as Issuer
$19,963,509
10.0% Senior Redeemable Secured Notes
due November 5, 2004
----------------------------
INDENTURE
Dated as of November 5, 1999
----------------------------
Norwest Bank Minnesota, National Association, as Trustee
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.......................................1
Section 1.01. Definitions.................................................................1
Section 1.02. Other Definitions...........................................................3
Section 1.03. Incorporation by Reference of Trust Indenture Act...........................3
Section 1.04. Rules of Construction.......................................................4
ARTICLE 2. THE SECURITIES...................................................................4
Section 2.01. Form and Dating.............................................................4
Section 2.02. Execution and Authentication................................................4
Section 2.03. Registrar and Paying Agent..................................................5
Section 2.04. Paying Agent to Hold Money in Trust.........................................5
Section 2.05. Securityholder Lists........................................................5
Section 2.06. Transfer and Exchange.......................................................6
Section 2.07. Replacement Securities......................................................6
Section 2.08. Outstanding Securities......................................................6
Section 2.09. Treasury Securities.........................................................7
Section 2.10. Temporary Securities........................................................7
Section 2.11. Cancellation................................................................7
Section 2.12. Defaulted Interest..........................................................7
ARTICLE 3. REDEMPTION.......................................................................8
Section 3.01. Notices to Trustee..........................................................8
Section 3.02. Selection of Securities to be Redeemed......................................8
Section 3.03. Notice of Redemption........................................................8
Section 3.04. Effect of Notice of Redemption..............................................9
Section 3.05. Deposit of Redemption Price.................................................9
Section 3.06. Securities Redeemed in Part.................................................9
ARTICLE 4. COVENANTS........................................................................9
Section 4.01. Payment of Securities.......................................................9
Section 4.02. SEC Reports................................................................10
Section 4.03. Compliance Certificate.....................................................10
Section 4.04. Stay, Extension and Usury Laws.............................................10
Section 4.05. Continued Existence........................................................11
Section 4.06. Taxes......................................................................11
ARTICLE 5. SUCCESSORS......................................................................11
Section 5.01. When Company May Merge, etc................................................11
Section 5.02. Successor Corporation Substituted..........................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 6. DEFAULTS AND REMEDIES...........................................................12
Section 6.01. Events of Default..........................................................12
Section 6.02. Acceleration...............................................................13
Section 6.03. Other Remedies.............................................................14
Section 6.04. Waiver of Past Defaults....................................................14
Section 6.05. Control by Majority........................................................14
Section 6.06. Limitation on Suits........................................................14
Section 6.07. Rights of Holders to Receive Payment.......................................15
Section 6.08. Collection Suit by Trustee.................................................15
Section 6.09. Trustee May File Proofs of Claim...........................................15
Section 6.10. Priorities.................................................................15
Section 6.11. Undertaking for Costs......................................................16
ARTICLE 7. TRUSTEE.........................................................................16
Section 7.01. Duties of Trustee..........................................................16
Section 7.02. Rights of Trustee..........................................................17
Section 7.03. Individual Rights of Trustee...............................................17
Section 7.04. Trustee's Disclaimer.......................................................18
Section 7.05. Notice of Defaults.........................................................18
Section 7.06. Reports by Trustee to Holders..............................................18
Section 7.07. Compensation and Indemnity.................................................18
Section 7.08. Replacement of Trustee.....................................................19
Section 7.09. Successor Trustee by Merger, etc...........................................20
Section 7.10. Eligibility; Disqualification..............................................20
Section 7.11. Preferential Collection of Claims Against Company..........................20
Section 7.12. Sections Applicable to Registrar and Paying Agent..........................20
ARTICLE 8. DISCHARGE OF INDENTURE..........................................................20
Section 8.01. Termination of Company's Obligations.......................................20
Section 8.02. Application of Trust Money.................................................22
Section 8.03. Repayment to Company.......................................................22
Section 8.04. Reinstatement..............................................................23
ARTICLE 9. AMENDMENTS......................................................................23
Section 9.01. Without Consent of Holders.................................................23
Section 9.02. With Consent of Holders....................................................23
Section 9.03. Compliance with Trust Indenture Act........................................24
Section 9.04. Revocation and Effect of Consents..........................................24
Section 9.05. Notation on or Exchange of Securities......................................25
Section 9.06. Trustee Protected..........................................................25
ARTICLE 10. COLLATERAL AND SECURITY........................................................25
Section 10.01. Pledge Agreement..........................................................25
Section 10.02. Recording and Opinions....................................................26
Section 10.03. Release of Collateral.....................................................26
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 10.04. Certificates of the Company...............................................27
Section 10.05. Certificates of the Trustee...............................................27
Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the Pledge
Agreement...............................................................27
Section 10.07. Authorization of Receipt of Funds by the Trustee Under the Pledge
Agreement...............................................................28
Section 10.08. Termination of Security Interest..........................................28
ARTICLE 11. MISCELLANEOUS..................................................................28
Section 11.01. Trust Indenture Act Controls..............................................28
Section 11.02. Notices...................................................................28
Section 11.03. Communication by Holders with Other Holders...............................29
Section 11.04. Certificate and Opinion as to Conditions Precedent........................29
Section 11.05. Statements Required in Certificate or Opinion.............................29
Section 11.06. Rules by Trustee and Agents...............................................29
Section 11.07. Legal Holidays............................................................30
Section 11.08. No Recourse Against Others................................................30
Section 11.09. Counterparts..............................................................30
Section 11.10. Variable Provisions.......................................................30
Section 11.11. Governing Law.............................................................31
Section 11.12. No Adverse Interpretation of Other Agreements.............................31
Section 11.13. Successors................................................................31
Section 11.14. Severability..............................................................31
Section 11.15. Table of Contents, Headings, Etc..........................................31
</TABLE>
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Pledge Agreement
iii
<PAGE> 5
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- ---------------- -----------------
<S> <C>
310 (a) (1) ................................................ 7.10
(a) (2) ................................................ 7.10
(a) (3) ................................................ N.A.
(a) (4) ................................................ N.A.
(b) ................................................ 7.08; 7.10; 11.02
(c) ................................................ N.A.
311 (a) ................................................ 7.11
X (b) ................................................ 7.11
(c) ................................................ N.A.
312 (a) ................................................ 2.05
(b) ................................................ 11.03
(c) ................................................ 11.03
313 (a) ................................................ 7.06
(b) (1) ................................................ N.A.
(b) (2) ................................................ 7.06
(c) ................................................ 7.06; 11.02
(d) ................................................ 7.06
314 (a) ................................................ 4.02; 11.02
(b) ................................................ N.A.
(c) (1) ................................................ 11.04
(c) (2) ................................................ 11.04
(c) (3) ................................................ N.A.
(d) ................................................ 10.03, 10.04, 10.05
(e) ................................................ 11.05
(f) ................................................ N.A.
315 (a) ................................................ 7.01(b)
(b) ................................................ 7.05; 11.02
(c) ................................................ 7.01(a)
(d) ................................................ 7.01(c)
(e) ................................................ 6.11
316 (a)(last sentence)............................................. 2.09
(a) (1) (A) ................................................ 6.05
(a) (1) (B) ................................................ 6.04
(a) (2) ................................................ N.A.
(b) ................................................ 6.07
317 (a) (1) ................................................ 6.08
(a) (2) ................................................ 6.09
(b) ................................................ 2.04
318 (a) ................................................ 11.01
N.A. means not applicable.
</TABLE>
- ----------------
* This Cross-Reference Table is not part of the Indenture.
iv
<PAGE> 6
INDENTURE, dated as of November 5, 1999, between Excel Legacy
Corporation, a Delaware corporation ("Company"), and Norwest Bank Minnesota,
National Association ("Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's 10.0% Senior
Redeemable Secured Notes due November 5, 2004 ("Securities"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Affiliate" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"capital stock" means any and all shares, interests, participations or
other equivalents (however designated) of corporate stock.
"Collateral Agent" means the "Senior Notes Collateral Agent" as such
term is defined in the Pledge Agreement.
"Company" means the party named as such above until a successor
replaces it in accordance with Article 5 and thereafter means the successor.
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" or "Securityholder" means a person in whose name a Security is
registered.
"Indenture" means this Indenture as amended from time to time.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
<PAGE> 7
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Material Subsidiary" means any subsidiary of the Company which is a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under the
Securities Act of 1933 and the Exchange Act, as amended, (as such Regulation is
in effect on the date hereof), and any other subsidiary of the Company which is
material to the business, earnings, prospects, assets or condition, financial or
otherwise, of the Company and its subsidiaries taken as a whole.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by two Officers, one
of whom must be the Chairman of the Board, the President, the Treasurer, a
Vice-President, the principal executive officer, the principal financial officer
and/or the principal accounting officer of the Company. See Sections 11.04 and
11.05
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
See Sections 11.04 and 11.05.
"person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge Agreement dated as of the date of
this Indenture and substantially in the form attached as Exhibit B hereto, as
such agreement may be amended, modified or supplemented from time to time.
"Pledged Collateral" means the "Senior Notes Pledged Collateral" as
such term is defined in the Pledge Agreement.
"principal" of a debt security means the principal of the security plus
the premium, if any, on the security.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities described above issued under this
Indenture in the form of Exhibit A hereto.
2
<PAGE> 8
"subsidiary" of any specified person means (i) a corporation a majority
of whose capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly owned by such person or by such
person and a subsidiary or subsidiaries of such person or (ii) any other person
(other than a corporation) in which such person or such person and a subsidiary
or subsidiaries of such person or a subsidiary or subsidiaries of such person
directly or indirectly, at the date of determination thereof has at least
majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of execution of this Indenture.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Bankruptcy Law"............................................... 6.01
"Custodian..................................................... 6.01
"Event of Default"............................................. 6.01
"Legal Holiday"................................................ 11.07
"Officer"...................................................... 11.10
"Paying Agent"................................................. 2.03
"Payment Default".............................................. 6.01
"Registrar".................................................... 2.03
"U.S. Government Obligations".................................. 8.01
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Securities means the Company.
3
<PAGE> 9
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles;
(3) references to "generally accepted accounting principles" shall
mean generally accepted accounting principles in effect as of the time
when and for the period as to which such accounting principles are to
be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular; and
(6) provisions apply to successive events and transactions.
ARTICLE 2.
THE SECURITIES
Section 2.01. Form and Dating.
The Securities shall be substantially in the form of Exhibit A, which
is part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Section 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Security is authenticated, the Security shall
nevertheless be valid.
4
<PAGE> 10
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue up to the
aggregate principal amount stated in paragraph 4 of the Securities upon a
written order of the Company signed by two Officers. The aggregate principal
amount of Securities outstanding at any time may not exceed that amount except
as provided in Section 2.07.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same right as an Agent to deal with the Company or
an Affiliate.
Section 2.03. Registrar and Paying Agent
The Company shall maintain in the Borough of Manhattan, City of New
York, State of New York, and in such other locations as it shall determine (i)
an office or agency where securities may be presented for registration of
transfer or for exchange ("Registrar"), and (ii) an office or agency where
Securities may be presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent. The
Company may change any Paying Agent, Registrar or co-registrar without prior
notice. The Company shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its subsidiaries may act as Paying Agent, Registrar or
co-registrar.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal or interest on the Securities, and will notify the Trustee
of any default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company or a subsidiary) shall have no further liability for
the money. If the Company or a subsidiary acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the
Securityholders all money held by it as Paying Agent.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the
5
<PAGE> 11
Registrar, the Company shall furnish to the Trustee on or before each interest
payment date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
Section 2.06. Transfer and Exchange.
Where Securities are presented to the Registrar or a co-registrar with
a request to register a transfer or to exchange them for an equal principal
amount of Securities of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are met.
To permit registrations of transfers and exchanges, the Company shall issue and
the Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange (except as
otherwise expressly permitted herein), but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer tax or similar
governmental charge payable upon exchanges pursuant to Sections 2.10, 3.06 or
9.05).
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities during a period beginning at the opening of business
15 days before the day of any selection of Securities for redemption under
Section 3.02 and ending at the close of business on the day of selection, or
(ii) to register the transfer or exchange of any Security so selected for
redemption in whole or in part, except the unredeemed portion of any Security
being redeemed in part.
Section 2.07. Replacement Securities.
If the Holder of a Security claims that the Security has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the Trustee's requirements are met. If
required by the Trustee or the Company, such Holder shall be required to provide
an indemnity bond sufficient in the judgment of both to protect the Company, the
Trustee, any Agent or any authenticating agent from any loss which any of them
may suffer if a Security is replaced. The Company may charge for its expenses in
replacing a Security.
Every replacement Security is an additional obligation of the Company
and shall be entitled to all the benefits provided under this Indenture equally
and proportionately with all other Securities duly issued hereunder.
Section 2.08. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
6
<PAGE> 12
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or an Affiliate of the Company shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities which the Trustee knows are so owned shall be so disregarded.
Securities that the Company or any Affiliate of the Company offers to purchase
or acquire pursuant to an exchange offer, tender offer or otherwise shall not be
deemed to be owned by the Company or such Affiliate until legal title passes to
the Company or such Affiliate.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
As promptly as is reasonably practicable, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
canceled Securities in accordance with its normal practices. The Company may not
issue new Securities to replace Securities that it has paid or that have been
delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company fails to make a payment of interest on the Securities,
it shall pay such defaulted interest plus any interest payable on the defaulted
interest in any lawful manner. It may pay such defaulted interest, plus any such
interest payable on it, to the persons who are Securityholders on a subsequent
special record date. The Company shall fix any such record date (which shall be
at least 5 and not more than 30 days before the payment date) and payment date.
At least 15 days before any such record date, the Company shall mail to
Securityholders a notice that states the record date, payment date, and amount
of such interest to be paid. Interest to be paid prior to the expiration of the
30-day grace period specified in Section 6.01 shall be paid to Securityholders
on the regular payment date for the interest payment that has not been made.
7
<PAGE> 13
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to the optional
redemption provisions of paragraph 5, it shall notify the Trustee of the
redemption date and the principal amount of Securities to be redeemed.
The Company shall give each notice provided for in this Section at
least 50 days before the redemption date (unless a shorter notice period shall
be satisfactory to the Trustee).
Section 3.02. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method that
complies with the requirements of any exchange on which the Securities are
listed and that the Trustee considers fair and appropriate. The Trustee shall
make the selection not more than 75 days and not less than 30 days before the
redemption date from Securities outstanding not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them it selects shall be in amounts of $1,000 or integral multiples of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder whose Securities
are to be redeemed at such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued in the name of the Holder thereof;
(4) the name and address of the Paying Agent;
(5) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price plus accrued interest;
8
<PAGE> 14
(6) that interest on Securities called for redemption ceases to
accrue on and after the redemption date; and
(7) the paragraph of the Securities pursuant to which the Securities
are being redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give notice of redemption
in the Company's name and at its expense.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
Security.
Section 3.05. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price of
and accrued interest on all Securities to be redeemed on that date (subject to
the rights of Holders of record on the relevant record date to receive interest
due on an interest payment date which may occur prior to the date of
redemption). The Trustee or the Paying Agent shall return to the Company any
money not required for that purpose.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Security equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities
on the dates and in the manner provided in the Securities. Principal and
interest shall be considered paid on the date due if the Paying Agent (other
than the Company or a subsidiary) holds on that date money designated for and
sufficient to pay all principal and interest then due and such Paying Agent is
not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.
To the extent lawful, the Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on (i)
overdue principal, at the rate borne by the
9
<PAGE> 15
Securities, compounded semiannually; and (ii) overdue installments of interest
(without regard to any applicable grace period) at the same rate, compounded
semiannually.
Section 4.02. SEC Reports.
The Company shall deliver to the Trustee and to the Holders within 15
days after it files them with the SEC copies of the annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. The Company also shall comply with the other provisions of TIA
Section 314(a). The Company shall timely comply with its reporting and filing
obligations under the applicable federal securities law.
Section 4.03. Compliance Certificate.
The Company shall deliver to the Trustee, within 105 days after the end
of each fiscal year of the Company, an Officers' Certificate stating that a
review of the activities of the Company and its subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under, and complied with the covenants
and conditions contained in, this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of his knowledge the
Company has kept, observed, performed and fulfilled each and every covenant, and
complied with the conditions, contained in this Indenture and is not in default
in the performance or observance of any of the terms, provisions and conditions
hereof (or, if a Default or Events of Default shall have occurred, describing
all such Defaults or Events of Default of which he may have knowledge) and that
to the best of his knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of or interest, if any, on
the Securities are prohibited. See Section 11.10.
The Company will, so long as any of the Securities are outstanding
deliver to the Trustee, forthwith upon becoming aware of (i) any Default, Event
of Default or default in the performance of any covenant, agreement or condition
in this Indenture or (ii) any event of default under any other mortgage,
indenture or instrument as that term is used in Section 6.01(4), an Officers'
Certificate specifying such Default, Event of Default or default.
Section 4.04. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law has been
enacted.
10
<PAGE> 16
Section 4.05. Continued Existence.
Subject to Article 5, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence as
a corporation and will refrain from taking any action that would cause its
existence as a corporation to cease, including without limitation any action
that would result in its liquidation, winding up or dissolution.
Section 4.06. Taxes.
The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings.
ARTICLE 5.
SUCCESSORS
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets to, any person unless:
(1) the person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made,
is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia;
(2) the corporation formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made,
assumes by supplemental indenture in a form reasonably satisfactory to
the Trustee all the obligations of the Company under the Securities and
this Indenture; and
(3) immediately after the transaction no Default or Event of Default
exists.
The Company shall deliver to the Trustee prior to the consummation of
the proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for, and may exercise every right and
11
<PAGE> 17
power of, the Company under this Indenture with the same effect as if such
successor person has been named as the Company herein; provided, however, that
the predecessor Company in the case of a sale, assignment, transfer, lease,
conveyance or other disposition shall not be released from the obligation to pay
the principal of and interest on the Securities.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on any Security
when the same becomes due and payable and the Default continues for a
period of 30 days after the date due and payable;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) the Company fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities, this Indenture or the
Pledge Agreement and the Default continues for the period and after the
notice specified below;
(4) an event of default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company
or any subsidiary (or the payment of which is guaranteed by the Company
or a subsidiary), whether such indebtedness or guarantee now exists or
shall be created hereafter, if (a) either (i) such event of default
results from the failure to pay when due principal of or interest on
such indebtedness within the grace period provided for in such
indebtedness (which failure continues beyond any applicable grace
period) (a "Payment Default") or (ii) as a result of such event of
default the maturity of such indebtedness has been accelerated prior to
its expressed maturity and (b) the principal amount of such
indebtedness, together with the principal amount of any other such
indebtedness under which there is a Payment Default or the maturity of
which has been so accelerated, aggregates $1,000,000 or more;
(5) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the
Company or any subsidiary which remains undischarged for a period
(during which execution shall not be effectively stayed) of 30 days,
provided that the aggregate of all such judgments exceeds $500,000.
(6) the Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case,
12
<PAGE> 18
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors,
or
(E) generally is unable to pay its debts as the same become due;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material Subsidiary
in an involuntary case,
(B) appoints a Custodian of the Company or any Material
Subsidiary or for all or substantially all of its property, or
(C) orders the liquidation of the Company or any Material
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
Federal or State Law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (3) (other than Defaults under Section 4.05 or
5.01 which Defaults shall be Events of Default with the notice but without the
passage of time specified in this paragraph) or (5) is not an Event of Default
until the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities notify the Company of the Default and the Company does
not cure the Default within 30 days after receipt of the notice. The notice must
specify the Default, demand that it be remedied and state that the notice is a
"Notice of Default."
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (6) and (7) of Section 6.01) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of the
then outstanding Securities by notice to the Company and the Trustee, may
declare the unpaid principal of and accrued interest on all the Securities to be
due and payable. Upon such declaration the principal and interest shall be due
and payable immediately. If an Event of Default specified in clause (6) or (7)
of Section 6.01 occurs, such an amount shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. The Holders of a majority in principal amount of the
then outstanding Securities by notice to the Trustee may rescind an acceleration
and its consequences if (i) the rescission would not conflict with any judgment
or decree, (ii) all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has
13
<PAGE> 19
become due solely because of the acceleration, and (iii) the Company has
delivered an Officers' Certificate to the Trustee to the effect of clauses (i)
and (ii) above.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
The Holders of a majority in principal amount of the then outstanding
Securities by notice to the Trustee may waive an existing Default or Event of
Default and its consequences except a continuing Default or Event of Default in
the payment of the principal of or interest on any Security. When a Default or
Event of Default is waived, it is cured and ceases; but no such waiver shall
extend to any subsequent or other Default or impact any right consequent
thereon.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then outstanding
Securities may 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 it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, is unduly prejudicial to the rights of
other Securityholders, or would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Securityholder may pursue a remedy with respect to this Indenture or
the Securities only if:
(1) the Holder gives to the Trustee notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
14
<PAGE> 20
(5) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Securities do not give the
Trustee a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of another
Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Security to receive payment of principal and interest on the
Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of the Holder;
provided that a Holder shall not have the right to institute any such suit for
the enforcement of payment if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver or loss of the Lien of the
Indenture upon any property subject to such Lien.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid on the Securities and interest on overdue principal
and interest and such further amount as shall be sufficient to cover the costs
and, to the extent lawful, expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee and
the Securityholders allowed in any judicial proceedings relative to the Company,
its creditors or its property. Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of
any Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Securityholder in
any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind,
15
<PAGE> 21
according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Third:. to the Company.
Except as otherwise provided in Section 2.12, the Trustee may fix a
record date and payment date for any payment to Securityholders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in principal
amount of the then outstanding Securities.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are specifically
set forth in this Indenture and no others.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section.
16
<PAGE> 22
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel, or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent (other than an agent who is an
employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers, provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
Section 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to Sections
7.10 and 7.11.
17
<PAGE> 23
Section 7.04. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or any Statement in the Securities
other than its authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Securityholders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment on any Security (including any
failure to make any mandatory redemption payment required hereunder), the
Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of Securityholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after the reporting date stated in Section 11.10, the
Trustee shall mail to Securityholders a brief report dated as of such reporting
date that complies with TIA Section 313(a). The Trustee also shall comply with
TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which the Securities are
listed, if any. The Company shall notify the Trustee when the Securities are
listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
expenses incurred by it. Such expenses may include the reasonable compensation
and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
18
<PAGE> 24
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(3) a Custodian or public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Securities may appoint
a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 10% in principal amount of the then outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to
19
<PAGE> 25
the successor Trustee, subject to the lien provided for in Section 7.07.
Notwithstanding the replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring trustee with respect to expenses and liabilities
incurred by it prior to such replacement.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee, provided that such successor shall otherwise be qualified and eligible
to act as a Trustee pursuant to the provisions of this Article.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a). The Trustee shall always have a combined
capital and surplus as stated in Section 11.10. The Trustee is subject to TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9). Section 11.10 lists any excluded indenture or
trust agreement.
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
Section 7.12. Sections Applicable to Registrar and Paying Agent.
The term "Trustee" as used in Sections 7.01, 7.02, 7.03, 7.04 and 7.07
shall (unless the context otherwise requires) be construed as extending to and
including the Trustee acting in its capacity, if any, as Paying Agent and
Registrar.
ARTICLE 8.
DISCHARGE OF INDENTURE
Section 8.01. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except that the
Company's obligations under Section 7.07 and 8.03 shall survive) when all
outstanding Securities theretofore authenticated and issued have been delivered
to the Trustee for cancellation and the Company has paid all sums payable
hereunder. In addition, subject to Section 8.04, the Company may terminate all
of its obligations under this Indenture (except the Company's obligations under
Sections 7.07 and 8.03) if:
(1) the Securities mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory
to the Trustee for giving the notice of redemption;
20
<PAGE> 26
(2) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations sufficient without investment of such
money or reinvestment of interest or proceeds from such U.S. Government
Obligation to pay principal and interest on the Securities to maturity
or redemption, as the case may be, and to pay all other sums payable by
it hereunder. The Company may make the deposit only during the one-year
period;
(3) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent certified public accountants
expressing their opinion that the money or U.S. Government Obligations
so deposited, without investment of such money or reinvestment of
interest or proceeds on such U.S. Government Obligations, will provide
cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Securities to maturity or
redemption, as the case may be;
(4) the Company delivers to the Trustee an Opinion of Counsel
stating that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the
date of this Indenture, there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the holders of the
outstanding Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance and will be
subject to federal income tax on the same amount and in the same manner
and at the same time as would have been the case if such defeasance had
not occurred;
(5) no Default or Event of Default or event which with notice or
lapse of time or both would become an Event of Default shall have
occurred and be continuing on the date of such deposit and after giving
effect thereto or, insofar as subsections (6) and (7) of Section 6.01
are concerned, at any time during the period ending on and including
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period);
(6) such defeasance shall not result in a breach or violation of, or
constitute a default under any agreement or instrument to which the
Company or any of its subsidiaries is bound;
(7) the Company delivers to the Trustee an Opinion of Counsel to the
effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, except that if a court were to rule under any such law in
any case or proceeding that the trust funds remained property of the
Company, no opinion is given as to the effect of such laws on the trust
funds except the following: (A) assuming such trust funds remained in
the Trustee's possession prior to such court ruling to the extent not
paid to holders of the Securities, the Trustee will hold, for the
benefit of such holders, a valid and perfected security interest in
such trust funds that is not avoidable in bankruptcy or otherwise and
(B) such holders will be entitled to receive adequate protection of
their interest in such trust funds if such trust funds are used;
21
<PAGE> 27
(8) the Company delivers to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
preferring the holders of the Securities over the other creditors of
the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others;
(9) the Company delivers to the Trustee an Opinion of Counsel
stating that neither the trust nor the Trustee will be required to
register as an investment company under the Investment Company Act of
1940, as amended; and
(10) the Company delivers to the Trustee an Officers' Certificate
stating that all conditions precedent to the defeasance and discharge
of the Securities as contemplated by this Article 8 have been complied
with.
However, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06,
2.07, 4.01, 7.07, 8.03 and 8.04, shall survive until the Securities are no
longer outstanding. Thereafter, only the Company's obligations in Sections 7.07
and 8.03 shall survive.
After a deposit made pursuant to this Section 8.01 and satisfaction of
the conditions set forth herein, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under this Indenture except
for those surviving obligations specified above.
"U.S. Government Obligations" means direct obligations of the United
States of America for the payment of which the full faith and credit of the
United States of America is pledged. In order to have money available on a
payment date to pay principal or interest on the Securities, the U.S. Government
Obligations shall be payable as to principal or interest on or before such
payment date in such amounts as will provide the necessary money. U.S.
Government Obligations shall not be callable at the issuer's option.
Section 8.02. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on the
Securities.
Section 8.03. Repayment to Company.
The Trustee and the Paying Agent shall promptly pay to the Company upon
request any excess money or securities held by them at any time.
Subject to applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years after
the date upon which such payment shall have become due; provided, however, that
the Company shall have first caused notice of such payment to the Company to be
mailed to each Securityholder entitled thereto no less than 30 days prior to
such payment. After payment to the Company, Securityholders entitled to the
money must look to the
22
<PAGE> 28
Company for payment as general creditors unless an applicable abandoned property
law designates another person.
Section 8.04. Reinstatement.
If (i) the Trustee or Paying Agent is unable to apply any money in
accordance with Section 8.02 by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application and (ii) the Holders of at least a majority in principal amount of
the then outstanding Securities so request by written notice to the Trustee, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.01 until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02; provided, however, that if the Company makes any
payment of interest on or principal of any Security following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money or U.S. Government
Obligations held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENTS
Section 9.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Section 5.01;
(3) to provide for uncertificated Securities in addition to
certificated Securities; or
(4) to make any change that does not adversely affect the rights
hereunder of any Securityholder.
Section 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee may amend this
Indenture or the Securities with the written consent of the Holders of at least
a majority in principal amount of the then outstanding Securities. Subject to
Sections 6.04 and 6.07, the Holders of a majority in principal amount of the
Securities then outstanding may also waive compliance in a particular instance
by the Company with any provision of this Indenture or the Securities. However,
without the consent of each Securityholder affected, an amendment or waiver
under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment or waiver;
23
<PAGE> 29
(2) reduce the rate of or change the time for payment of interest on
any Security;
(3) reduce the principal of or change the fixed maturity of any
Security or alter the redemption provisions with respect thereto;
(4) make any Security payable in money other than that stated in the
Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this sentence);
or
(6) waive a default in the payment of the principal of, or interest
on, any Security.
To secure a consent of the Holders under this Section, it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment or waiver under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing the amendment
or waiver.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall be set forth
in a supplemental indenture that complies with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made on
any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of a Security if the Trustee receives the
notice of revocation before the date on which the Trustee receives an Officer's
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented to the amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date unless consents from Holders of the principal amount of
Securities required hereunder for such amendment or waiver to be effective shall
have also been given and not revoked within such 90-day period.
24
<PAGE> 30
After an amendment or waiver becomes effective it shall bind every
Securityholder, unless it is of the type described in any of clauses (1) through
(6) of Section 9.02. In such case, the amendment or waiver shall bind each
Holder of a Security who has consented to it and every subsequent Holder of a
Security that evidences the same debt as the consenting Holder's Security.
Section 9.05. Notation on or Exchange of Securities.
The Trustee may place an appropriate notation about an amendment or
waiver on any Security thereafter authenticated. The Company in exchange for all
Securities may issue and the Trustee shall authenticate new Securities that
reflect the amendment or waiver.
Section 9.06. Trustee Protected.
The Trustee shall sign any amended or supplemental indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
may not sign an amendment or supplemental indenture until the Board of Directors
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully
protected in relying upon, in addition to the documents required by Section
11.04 hereof, an Officer's Certificate and an Opinion of Counsel stating that
the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
COLLATERAL AND SECURITY
Section 10.01. Pledge Agreement.
The due and punctual payment of the principal of and interest, if any,
on the Securities when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Securities and performance of all other
obligations of the Company to the Holders of Securities or the Trustee under
this Indenture and the Securities, according to the terms hereunder or
thereunder, shall be secured as provided in the Pledge Agreement which the
Company has entered into simultaneously with the execution of this Indenture and
which is attached as Exhibit B hereto. Each Holder of Securities, by its
acceptance thereof, consents and agrees to the terms of the Pledge Agreement
(including, without limitation, the provisions providing for foreclosure and
release of Pledged Collateral) as the same may be in effect or may be amended
from time to time in accordance with its terms and authorizes and directs the
Collateral Agent to enter into the Pledge Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith. The
Company shall deliver to the Trustee copies of all documents delivered to the
Collateral Agent pursuant to the Pledge Agreement, and shall do or cause to be
done all such acts and things as may be necessary or proper, or as may be
required by the provisions of the Pledge Agreement, to assure and confirm to the
Trustee and the Collateral Agent the security interest in the Pledged Collateral
contemplated hereby, by the Pledge Agreement or any part thereof, as from time
to time constituted, so as to render the same
25
<PAGE> 31
available for the security and benefit of this Indenture and of the Securities
secured hereby, according to the intent and purposes herein expressed. The
Company shall take, or shall cause its Subsidiaries to take, upon request of the
Trustee, any and all actions reasonably required to cause the Pledge Agreement
to create and maintain, as security for the Obligations of the Company
hereunder, a valid and enforceable perfected Lien in and on all the Pledged
Collateral, in favor of the Collateral Agent for the benefit of the Holders of
Securities, superior to and prior to the rights of all third persons and subject
to no Liens other than the security interests granted to third persons as
expressly contemplated by the Pledge Agreement.
Section 10.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Pledge Agreement, and reciting with respect to the security
interests in the Pledged Collateral, the details of such action, or (ii) stating
that, in the opinion of such counsel, no such action is necessary to make such
Lien effective.
(b) The Company shall furnish to the Collateral Agent and the Trustee
on September 1 in each year beginning with September 1, 2000, an Opinion of
Counsel, dated as of such date, either (i) (A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Pledge
Agreement and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Securities and the Collateral Agent and the Trustee hereunder
and under the Pledge Agreement with respect to the security interests in the
Pledged Collateral, or (ii) stating that, in the opinion of such counsel, no
such action is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
Section 314(b).
Section 10.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Pledged Collateral may be released from the Lien and security interest created
by the Pledge Agreement at any time or from time to time in accordance with the
provisions of the Pledge Agreement or as provided hereby.
(b) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Securities shall have been accelerated
(whether by declaration
26
<PAGE> 32
or otherwise) and the Trustee shall have delivered a notice of acceleration to
the Collateral Agent, no release of Pledged Collateral pursuant to the
provisions of the Pledge Agreement shall be effective as against the Holders of
Securities.
(c) The release of any Pledged Collateral from the terms of this
Indenture and the Pledge Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Pledge
Agreement. To the extent applicable, the Company shall cause TIA Section 313(b),
relating to reports, and TIA Section 314(d), relating to the release of property
or securities from the Lien and security interest of the Pledge Agreement and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Pledge Agreement, to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent person,
which person shall be an independent engineer, appraiser or other expert
selected or approved by the Trustee and the Collateral Agent in the exercise of
reasonable care.
Section 10.04. Certificates of the Company.
The Company shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the Pledge
Agreement, (i) all documents required by TIA Section 314(d) and (ii) an Opinion
of Counsel, which may be rendered by internal counsel to the Company, to the
effect that such accompanying documents constitute all documents required by TIA
Section 314(d). The Trustee may, to the extent permitted by Sections 7.01 and
7.02 hereof, accept as conclusive evidence of compliance with the foregoing
provisions the appropriate statements contained in such documents and such
Opinion of Counsel.
Section 10.05. Certificates of the Trustee.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Pledge Agreement and has delivered the certificates and
documents required by the Pledge Agreement and Sections 10.03 and 10.04 hereof,
the Trustee shall determine whether it has received all documentation required
by TIA Section 314(d) in connection with such release and, based on such
determination and the Opinion of Counsel delivered pursuant to Section 11.04(b),
shall deliver a certificate to the Collateral Agent setting forth such
determination.
Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the
Pledge Agreement.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of
Securities, direct, on behalf of the Holders of Securities, the Collateral Agent
to, take all actions it deems necessary or appropriate in order to (a) enforce
any of the terms of the Pledge Agreement and (b) collect and receive any and all
amounts payable in respect of the Obligations of the Company hereunder. The
Trustee shall have power to institute and maintain such suits and proceedings as
it may deem expedient to prevent any impairment of the Pledged Collateral by any
acts that may be unlawful or in violation of the
27
<PAGE> 33
Pledge Agreement or this Indenture, and such suits and proceedings as the
Trustee may deem expedient to preserve or protect its interests and the
interests of the Holders of Securities in the Pledged Collateral (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders of
Securities or of the Trustee).
Section 10.07. Authorization of Receipt of Funds by the Trustee Under the Pledge
Agreement.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Securities distributed under the Pledge Agreement, and to make
further distributions of such funds to the Holders of Securities according to
the provisions of this Indenture.
Section 10.08. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Securities, or upon termination of the Company's obligations
in accordance with Article 8, the Trustee shall, at the request of the Company,
deliver a certificate to the Collateral Agent stating that such Obligations have
been paid in full, and instruct the Collateral Agent to release the Liens
pursuant to this Indenture and the Pledge Agreement.
ARTICLE 11.
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 11.02. Notices.
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail to the other's address stated in Section 11.10. The Company or the Trustee
by notice to the other may designate additional or different address for
subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
28
<PAGE> 34
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
All other notices or communications shall be in writing.
Section 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
29
<PAGE> 35
Section 11.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in the State of New York are not required to be open. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
Section 11.08. No Recourse Against Others.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities, the Indenture or the Pledge Agreement or for any claim based on, in
respect of or by reason of such obligations or their creation. Each
Securityholder by excepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issue of the
Securities.
Section 11.09. Counterparts.
This Indenture may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
Section 11.10. Variable Provisions.
"Officer" means Chairman of the Board, the President, any Vice
President, the Treasurer, the Secretary, any Assistant Treasurer or any
Assistant Secretary of the Company.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The first certificate pursuant to Section 4.03 shall be for the fiscal
year ending on December 31, 1999.
The reporting date for Section 7.06 is May 15 of each year. The first
reporting date is May 15, 2000.
The Trustee shall always have a combined capital and surplus of at
least $100,000,000 as set forth in its most recent published annual report of
condition.
The Company's address is:
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attn: Gary B. Sabin, President and
Chief Executive Officer
Facsimile No.: (858) 675-9405
30
<PAGE> 36
The Trustee's address is:
Norwest Bank Minnesota, National Association
Corporate Trust Services
Sixth & Marquette
MAC-N9303-120
Minneapolis, Minnesota 55479
Facsimile No.: (612) 667-9825
Section 11.11. Governing Law.
The internal laws of the State of New York shall govern this Indenture
and the Securities, without regard to the conflicts of laws provisions thereof.
Section 11.12. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 11.13. Successors.
All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of the Trustee in this Indenture shall
bind its successor.
Section 11.14. Severability.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.15. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signature Page Follows]
31
<PAGE> 37
[Indenture Signature Page]
SIGNATURES
Dated: as of November 5, 1999 EXCEL LEGACY CORPORATION,
a Delaware corporation
By: /s/ Richard B. Muir
--------------------------------
Name: Richard B. Muir
Title: Executive Vice President
Dated: as of November 5, 1999 NORWEST BANK MINNESOTA,
National Association
By: /s/ Jane Y. Schweiger
--------------------------------
Name: Jane Y. Schweiger
Title: Corporate Trust Officer
32
<PAGE> 38
Exhibit A
(Face of Security)
CUSIP 300665 AB 2
No. ___ $ _____________
10.0% SENIOR REDEEMABLE SECURED NOTE
DUE NOVEMBER 5, 2004
EXCEL LEGACY CORPORATION
promises to pay to
_____________
or registered assigns,
the principal sum of _____________ Dollars on November 5, 2004
Interest Payment Dates: February 15 and August 15
Record Dates: February 1 and August 1
This is one of the Securities described in the
within-mentioned Indenture. Additional provisions of this Security are
set forth on the other side of this Security.
Authenticated: Dated:
Norwest Bank Minnesota, National Association, Excel Legacy Corporation
as Trustee
By ________________________ By _____________________
Authorized Signature
OR
as Authenticating Agent
By ________________________
Authorized Signature
A-1
<PAGE> 39
(Back of Security)
10.0% Senior Redeemable Secured Note
due November 5, 2004
1. Interest. Excel Legacy Corporation, a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Security at
the rate per annum shown above. The Company will pay interest semiannually on
February 15 and August 15 of each year. Interest on the Securities will accrue
from the most recent date to which interest has been paid or, if no interest has
been paid, from August 15, 1999. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered holders of
Securities at the close of business on the record date for the next interest
payment date even though Securities are canceled after the record date and on or
before the interest payment date. Holders must surrender Securities to a Paying
Agent to collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may pay principal and
interest by check payable in such money. It may mail an interest check to a
holder's registered address.
3. Paying Agent and Registrar. The Trustee will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without prior notice. The Company or any of its subsidiaries may act in any such
capacity.
4. Indenture and Pledge Agreement. The Company issued the Securities
under an Indenture dated as of November 5, 1999 ("Indenture") between the
Company and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the "TIA") as
in effect on the date of the Indenture. The Securities are subject to, and
qualified by, all such terms, certain of which are summarized hereon, and
Securityholders are referred to the Indenture and such Act for a statement of
such terms. The Securities are general obligations of the Company limited to
$19,963,509 in aggregate principal amount. The Securities are secured by a
pledge of certain shares of common stock, par value $.0001 per share, of Price
Enterprises, Inc., a Maryland corporation, pursuant to the Pledge Agreement
referred to in the Indenture.
5. Optional Redemption. The Company may redeem all or some of the
Securities at any time and from time to time at the redemption price of 100% of
the principal amount of such Securities plus accrued interest to the redemption
date.
6. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each holder of
Securities to be redeemed at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. In the event of a redemption of less than all of the Securities, the
Securities will be chosen for redemption by the Trustee, generally pro rata or
by
A-2
<PAGE> 40
lot. On and after the redemption date interest ceases to accrue on Securities or
portions of them called for redemption.
If this Security is redeemed subsequent to a record date with respect
to any interest payment date specified above and on or prior to such interest
payment date, then any accrued interest will be paid to the person in whose name
this Security is registered at the close of business on such record date.
7. Denominations, Transfer, Exchange. The Securities are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Securities may be registered and Securities may be
exchanged as provided in the Indenture. The Registrar may require a holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Security or portion
of a Security selected for redemption (except the unredeemed portion of any
Security being redeemed in part). Also, it need not exchange or register the
transfer of any Securities for a period of 15 days before a selection of
Securities to be redeemed.
8. Persons Deemed Owners. Except as provided in paragraph 2, the
registered holder of a Security may be treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions, the Indenture
or the Securities may be amended with the consent of the holders of at least a
majority in principal amount of the then outstanding Securities, and any
existing default may be waived with the consent of the holders of a majority in
principal amount of the then outstanding Securities. Without the consent of any
Securityholder, the Indenture or the Securities may be amended to cure any
ambiguity, defect or inconsistency, to provide for assumption of the Company's
obligations to Securityholders or to make any change that does not adversely
affect the rights of any Securityholder.
10. Defaults and Remedies. An Event of Default is: default for 30 days
in payment of interest on the Securities; default in payment of principal on
them; failure by the Company for 30 days after notice to it to comply with any
of its other agreements in the Indenture or the Securities or, in the case of
failure by the Company to maintain its corporate existence or to comply with the
restrictions on consolidation, merger or transfer or lease of substantially all
its assets, with such notice but without such passage of time; certain defaults
under and accelerations prior to maturity of other indebtedness; certain final
judgments which remain undischarged; and certain events of bankruptcy or
insolvency. If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Securities
may declare all the Securities to be due and payable immediately, except that in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable without further
action or notice. Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, holders of a majority in principal amount of the
then outstanding Securities may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Securityholders notice of any
A-3
<PAGE> 41
continuing default (except a default in payment of principal or interest) if it
determines that withholding notice is in their interests. The Company must
furnish an annual compliance certificate to the Trustee.
11. Trustee Dealings with the Company. Subject to certain limitations
imposed by the TIA, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. The waiver and release are part of the consideration for the
issue of the Securities.
13. Authentication. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
15. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Securityholder upon written request and without
charge a copy of the Indenture, which has in it the text of this Security in
larger type. Requests may be made to:
Treasurer, Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
A-4
<PAGE> 42
ASSIGNMENT FORM
To Assign this Security, fill in the form below:
I or we assign and transfer this Security to
__________________
[__________________]
(Insert assignee's social security or tax I.D. number)
_________________________
_________________________
_________________________
_________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint _________________________, agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Dated: _________________________ Signed: _____________________________
(Sign exactly as your name
appears on the other side of
this Security)
A-5
<PAGE> 43
Exhibit B
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of
November 5, 1999 by Excel Legacy Corporation, a Delaware corporation (the
"Pledgor"), having its principal office at 16955 Via Del Campo, Suite 100, San
Diego, California, in favor of Norwest Bank Minnesota, National Association (the
"Senior Notes Collateral Agent"), having an office at Sixth & Marquette,
MAC-N9303-120, Minneapolis, Minnesota, as collateral agent in favor of the
holders (the "Holders") of the Pledgor's 10.0% Senior Redeemable Secured Notes
due 2004 (the "Senior Notes"). Capitalized terms used and not defined herein
shall have the meanings given to such terms in the Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Pledgor is the legal and beneficial owner of certain
shares of common stock, par value $.0001 per share (the "Common Stock"), of
Price Enterprises, Inc., a Maryland corporation (the "Issuer");
WHEREAS, the Pledgor and Norwest Bank Minnesota, National Association,
as trustee, have entered into that certain indenture dated as of November 5,
1999 (as amended, amended and restated, supplemented or otherwise modified from
time to time, the "Indenture"), pursuant to which the Pledgor proposes to issue,
from time to time, up to $19,983,509 in aggregate principal amount of the Senior
Notes;
WHEREAS, the terms of the Indenture require that the Pledgor (i) pledge
to the Senior Notes Collateral Agent for the benefit of the Holders, and grant
to the Senior Notes Collateral Agent for the benefit of the Holders a security
interest in, the Senior Notes Pledged Collateral (as defined herein) and (ii)
execute and deliver this Agreement in order to secure the payment and
performance by the Pledgor of all of the Obligations of the Pledgor under the
Indenture and the Senior Notes (the "Obligations"); and
WHEREAS, the Pledgor and The Sol and Helen Price Trust have entered
into that certain Note Purchase Agreement dated as of October 1, 1999 (the
"Price Note Purchase Agreement") pertaining to the Secured Promissory Note (the
"Price Note") issued thereunder, and the Pledgor and James F. Cahill (the "Price
Note Collateral Agent") have entered a Pledge Agreement of even date therewith
(the "Price Note Pledge Agreement") pursuant to which Pledgor has granted to the
Price Note Collateral Agent, as collateral agent for the holders of the Price
Note, a security interest (the "Price Note Security Interest") in, among other
things, the Senior Notes Pledged Shares.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
B-1
<PAGE> 44
SECTION 1. Pledge. The Pledgor hereby pledges to the Senior Notes Collateral
Agent for its benefit and for the ratable benefit of the Holders, and grants to
the Senior Notes Collateral Agent for the ratable benefit of the Holders a
continuing first priority security interest in, all of the Pledgor's right,
title and interest in the following (the "Senior Notes Pledged Collateral"):
(i) The shares of Common Stock (the "Senior Notes Pledged Shares")
from time to time identified on a certificate (a "Senior Notes Collateral
Identification Certificate") in the form attached hereto as Exhibit A, and all
products and proceeds of any of the Senior Notes Pledged Shares, including,
without limitation, all dividends, cash, options, warrants, rights, instruments,
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Senior Notes Pledged Shares or any of the foregoing
(ii) Each Senior Notes Collateral Identification Certificate (i)
shall have been completed to identify the principal amount of Senior Notes to be
issued at such time (for purposes of said Senior Notes Collateral Identification
Certificate, the "Incremental Senior Notes"), (ii) shall have been completed to
identify a number of Senior Notes Pledged Shares equal to 117.647 shares of
Common Stock for each $1,000 principal amount of Incremental Senior Notes (the
"Incremental Senior Notes Pledged Shares"), as well as the appropriate
certificate(s) evidencing the Incremental Senior Notes Pledged Shares, (iii)
shall have been duly executed by the Pledgor, and (iv) shall include an
Acknowledgment of Price Note Collateral Agent duly executed by the Price Note
Collateral Agent.
The pledge and security interest made and granted in this Section 1 is
made and granted for the purpose of securing all of the Obligations under the
Indenture and the Senior Notes (including, without limitation, interest and any
other Obligations accruing after the date of any filing by the Pledgor of any
petition in bankruptcy or the commencement of any bankruptcy, insolvency or
similar proceeding with respect to the Pledgor).
The Pledgor agrees that it shall not be entitled to issue Senior
Notes at any time under the Indenture unless and until it shall have provided to
the Senior Notes Collateral Agent a Senior Notes Collateral Identification
Certificate (and the accompanying Incremental Senior Notes Pledged Shares) in
connection therewith.
B-2
<PAGE> 45
SECTION 2. Delivery of Pledged Collateral. Pledgor hereby agrees that all
certificates or instruments representing or evidencing the Senior Notes Pledged
Collateral shall be immediately delivered to and held at all times by the Senior
Notes Collateral Agent pursuant hereto. All Senior Notes Pledged Shares shall be
in suitable form for transfer by delivery, or issued in the name of Pledgor and
accompanied by instruments of transfer or assignment duly executed in blank and
undated, and in either case having attached thereto all requisite federal or
state stock transfer tax stamps, all in form and substance satisfactory to the
Senior Notes Collateral Agent.
SECTION 3. Price Notes Security Interest. The Senior Notes Collateral Agent
acknowledges the security interest and pledge of the Senior Notes Pledged
Collateral pursuant to the Price Note Pledge Agreement. Until the earlier to
occur of the termination of this Agreement or the Price Note Pledge Agreement,
the Senior Notes Collateral Agent agrees to hold the Senior Notes Pledged
Collateral for itself and for the Price Note Collateral Agent, in order to
perfect the security interest in the Senior Notes Pledged Collateral for itself
under this Agreement and for the Price Note Collateral Agent under the Price
Note Pledge Agreement. The Senior Notes Collateral Agent shall not be required
to hold, and agrees that it will not hold, the Senior Notes Pledged Collateral
for any person other than the Holders and the Price Note Collateral Agent in
order to perfect a security interest in the Senior Notes Pledged Collateral.
SECTION 4. Release.
(a) General. Subject to the receipt by the Senior Notes Collateral
Agent of a Release Certificate as described in Section 4(b) below, following the
repurchase, redemption or defeasance from time to time by the Pledgor of any or
all of the Senior Notes (and upon receipt by the Senior Notes Collateral Agent
of evidence reasonably satisfactory to it of the principal amount of Senior
Notes so repurchased, redeemed or defeased and subject to the satisfaction of
any additional applicable conditions set forth in the Indenture, including the
furnishing of a certificate of the Trustee to the Senior Notes Collateral Agent
as required by Section 10.07 of the Indenture), the Senior Notes Collateral
Agent shall release from the pledge and security interest created by Section 1
of this Agreement a number of Senior Notes Pledged Shares equal to 117.647
Senior Notes Pledged Shares for each $1,000 in principal amount of Senior Notes
subject to such repurchase, redemption or defeasance. In connection with such
release, the Senior Notes Collateral Agent also shall take such steps as the
Pledgor reasonably may request in order to evidence the termination of said
pledge and security interest in the Senior Notes Pledged Shares so released. Any
shares released pursuant to this Section 4 shall no longer be deemed to be
"Senior Notes Pledged Shares" or "Senior Notes Pledged Collateral" for purposes
of this Agreement.
(b) Release Certificate. The Senior Notes Collateral Agent shall not
release any Senior Notes Pledged Shares unless and until the Pledgor shall have
provided to the Senior Notes Collateral Agent a Release Certificate and
accompanying Acknowledgment of Price Note Collateral Agent in the form attached
hereto as Exhibit B duly executed by each of the Pledgor and the Price Note
Collateral Agent. The Release Certificate shall indicate whether all obligations
owed by Pledgor under the Price Note and the Price Note Purchase Agreement have
been satisfied in full, the amount of Senior Notes Pledged Shares to be released
and the party to whom such shares shall be delivered. Any Senior Notes Pledged
Shares required to be released pursuant to Section 4(a) of this Agreement or
upon the termination of this Agreement shall be released and delivered by the
Senior Notes Collateral Agent in accordance with the instructions contained in
an applicable Release Certificate.
(c) For purposes of this Agreement, any reference to a Release
Certificate shall be deemed to include an accompanying Acknowledgment of Price
Note Collateral Agent, unless no such acknowledgment is required as provided by
the following sentence. From and after the date the Price Notes
B-3
<PAGE> 46
Collateral Agent provides to the Senior Notes Collateral Agent a Payment
Certificate in the form attached hereto as Exhibit C, which certificate shall
indicate that all obligations of the Pledgor under the Price Note and the Price
Note Purchase Agreement have been satisfied in full, then any Release
Certificate provided by the Pledgor to the Senior Notes Collateral Agent need
not be accompanied by an Acknowledgment of Price Note Collateral Agent.
SECTION 5. Representations and Warranties. The Pledgor hereby makes all
representations and warranties applicable to the Pledgor contained in the
Indenture. The Pledgor further represents and warrants that:
(a) The Pledgor is the legal, record and beneficial owner of the
Senior Notes Pledged Collateral, free and clear of any Lien or claims of any
person other than the security interest created under this Agreement and the
Price Note Security Interest.
(b) This Agreement has been duly executed and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms.
(c) Upon (i) the delivery to the Senior Notes Collateral Agent of
the Senior Notes Pledged Collateral, and (ii) the filing of Uniform Commercial
Code (the "UCC") financing statements in the Secretary of State's office for the
State of California referencing Pledgor as debtor thereunder, the Senior Notes
Collateral Agent (as agent for the Holders) as the secured party thereunder, and
the Senior Notes Pledged Collateral as the collateral thereunder, the pledge of
the Senior Notes Pledged Collateral pursuant to this Agreement shall create a
valid and perfected security interest in the Senior Notes Pledged Collateral,
securing the payment of the Obligations for the benefit of the Senior Notes
Collateral Agent and the Holders, and enforceable as such against all creditors
of the Pledgor and any persons purporting to purchase any of the Senior Notes
Pledged Collateral from the Pledgor.
(d) Upon (i) the delivery to the Senior Notes Collateral Agent of
the Senior Notes Pledged Collateral, the delivery to the Debentures Collateral
Agent (as defined in the Price Note Pledge Agreement) of the Debentures Pledged
Collateral (as defined in the Price Note Pledge Agreement) and the delivery to
the Price Note Collateral Agent of the Price Note Pledged Collateral (as defined
in the Price Note Pledge Agreement) other than the Debentures Pledged Collateral
and the Senior Notes Pledged Collateral, and (ii) the filing of UCC financing
statements in the Secretary of State's office for the State of California
referencing Pledgor as debtor thereunder, the Price Note Collateral Agent (as
agent for the holders of the Price Note) as the secured party thereunder, and
the Price Note Pledged Collateral as the collateral thereunder, the pledge of
the Price Note Pledged Collateral (which includes the Debentures Pledged
Collateral and the Senior Notes Pledged Collateral) pursuant to the Price Note
Pledge Agreement shall create a valid and perfected security interest in the
Senior Notes Pledged Collateral, securing the payment of the obligations of the
Pledgor under the Price Note and the Price Note Purchase Agreement for the
benefit of the Price Note Collateral Agent and the holders of the Price Note,
and enforceable as such against all creditors of the Pledgor and any persons
purporting to purchase any of the Price Note Pledged Collateral from the Pledgor
SECTION 6. Further Assurance. Pledgor will at all times cause the security
interests granted pursuant to this Agreement to constitute valid perfected
security interests in the Senior Notes Pledged Collateral, enforceable as such
against all creditors of Pledgor and (except as otherwise specifically provided
herein) any persons purporting to purchase any Senior Notes Pledged Collateral
from Pledgor. The Pledgor will, promptly upon request by the Senior Notes
Collateral Agent, execute and deliver or cause to be executed
B-4
<PAGE> 47
and delivered, or use its best efforts to procure, all substitute stock
certificates, stock powers, proxies, tax stamps, assignments, instruments and
other documents, all in form and substance satisfactory to the Senior Notes
Collateral Agent, deliver any instruments to the Senior Notes Collateral Agent
and take any other actions that are necessary or, in the reasonable opinion of
the Senior Notes Collateral Agent, desirable to perfect, continue the perfection
of, or protect the first priority of the Senior Notes Collateral Agent's
security interest in, the Senior Notes Pledged Collateral, to protect the Senior
Notes Pledged Collateral against the rights, claims, or interests of third
persons, to enable the Senior Notes Collateral Agent to exercise or enforce its
rights and remedies hereunder, or otherwise to effect the purposes of this
Agreement. The Pledgor also hereby authorizes the Senior Notes Collateral Agent
to file any financing or continuation statements with respect to the Senior
Notes Pledged Collateral without the signature of the Pledgor to the extent
permitted by applicable law. The Pledgor will pay all costs incurred in
connection with any of the foregoing.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Senior Notes Pledged Shares or any
part thereof for any purpose not inconsistent with the terms of this Agreement
or the Indenture; provided, however, that the Pledgor shall not exercise or
shall refrain from exercising any such right if such action would have a
material adverse effect on the value of the Senior Notes Pledged Collateral or
any part thereof or be inconsistent with or violate any provisions of this
Agreement or the Indenture.
(b) So long as no Event of Default shall have occurred and be
continuing, and subject to the other terms and conditions of the Indenture, the
Pledgor shall be entitled to receive, and to utilize (subject to the provisions
of the Indenture) free and clear of the Lien of this Agreement, all cash
dividends paid from time to time in respect of the Senior Notes Pledged Shares
(other than the dividends described in Section 7(c)(ii) below).
(c) Any and all (i) dividends, other distributions, interest and
principal payments paid or payable in the form of instruments and/or other
property (other than cash dividends permitted under Section 7(b) hereof)
received, receivable or otherwise distributed in respect of, or in exchange for,
any Senior Notes Pledged Collateral, (ii) dividends and other distributions paid
or payable in cash in respect of any Senior Notes Pledged Shares in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and (iii) cash paid,
payable or otherwise distributed in redemption of, or in exchange for, any
Senior Notes Pledged Collateral, shall in each case be forthwith delivered to
the Senior Notes Collateral Agent to hold as Senior Notes Pledged Collateral and
shall, if received by the Pledgor, be received in trust for the benefit of the
Senior Notes Collateral Agent and the Holders, be segregated from the other
property and funds of the Pledgor and be forthwith delivered to the Senior Notes
Collateral Agent as Senior Notes Pledged Collateral in the same form as so
received (with any necessary endorsements).
(d) The Senior Notes Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to exercise the voting and other rights that it is entitled to
exercise pursuant to Sections 7(a) and 7(b) above.
(e) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Pledgor to exercise the voting and other
consensual rights that it would otherwise be entitled to
B-5
<PAGE> 48
exercise pursuant to Section 7(a) shall cease, and all such rights shall
thereupon become vested in the Senior Notes Collateral Agent, which, to the
extent permitted by law, shall thereupon have the sole right to exercise such
voting and other consensual rights, and (ii) all dividends payable in respect of
the Senior Notes Pledged Collateral shall be paid to the Senior Notes Collateral
Agent and the Pledgor's right to receive such cash payments pursuant to Sections
7(b) hereof shall immediately cease.
(f) Upon the occurrence and during the continuance of an Event of
Default, the Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Senior Notes Collateral Agent all such proxies, dividend and
interest payment orders and other instruments as the Senior Notes Collateral
Agent may reasonably request for the purpose of enabling the Senior Notes
Collateral Agent to exercise the voting and other rights that it is entitled to
exercise pursuant to Section 7(e) above.
(g) All payments of interest, principal or premium and all dividends
and other distributions that are received by the Pledgor contrary to the
provisions of this Section 7 shall be received in trust for the benefit of the
Senior Notes Collateral Agent and the Holders, shall be segregated from the
other property or funds of the Pledgor and shall be forthwith delivered to the
Senior Notes Collateral Agent as Senior Notes Pledged Collateral in the same
form as so received (with any necessary endorsements).
SECTION 8. Covenants. The Pledgor hereby covenants and agrees with the Senior
Notes Collateral Agent and the Holders that it will comply with all of the
obligations, requirements and restrictions applicable to the Pledgor contained
in the Indenture. The Pledgor further covenants and agrees, from and after the
date of this Agreement and until the Obligations have been paid in full, that it
will not (i) sell, assign, transfer, convey or otherwise dispose of, or grant
any option or warrant with respect to, any of the Senior Notes Pledged
Collateral without the prior written consent of the Senior Notes Collateral
Agent, (ii) create or permit to exist any Lien upon or with respect to any of
the Senior Notes Pledged Collateral, other than the security interest granted
under this Agreement and the Price Note Security Interest, and Pledgor at all
times will be the sole beneficial owner of the Senior Notes Pledged Collateral,
(iii) other than the Price Note Pledge Agreement, enter into any agreement or
understanding that purports to or that may restrict or inhibit the Senior Notes
Collateral Agent's rights or remedies hereunder, including, without limitation,
the Senior Notes Collateral Agent's right to sell or otherwise dispose of the
Senior Notes Pledged Collateral, or (iv) fail to pay or discharge any tax,
assessment or levy of any nature not later than five days prior to the date of
any proposed sale under any judgement, writ or warrant of attachment with regard
to the Senior Notes Pledged Collateral.
SECTION 9. Power of Attorney. In addition to all of the powers granted to the
Senior Notes Collateral Agent pursuant to Section 10.06 of the Indenture, the
Pledgor hereby appoints and constitutes the Senior Notes Collateral Agent as the
Pledgor's attorney-in-fact to exercise all of the following powers upon and at
any time after the occurrence of an Event of Default: (i) collection of proceeds
of any Senior Notes Pledged Collateral; (ii) conveyance of any item of Senior
Notes Pledged Collateral to any purchaser thereof; (iii) giving of any notices
or recording of any Liens under Section 6 hereof; (iv) making of any payments or
taking any acts under Section 10 hereof and (v) paying or discharging taxes or
Liens levied or placed upon or threatened against the Senior Notes Pledged
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Senior Notes Collateral Agent in its
sole discretion, and such payments made by the Senior Notes Collateral Agent to
become the obligations of the Pledgor to the Senior Notes Collateral Agent, due
and payable immediately without demand. The Senior Notes Collateral Agent's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate, for the Senior Notes Collateral Agent's own account, any checks
or instruments in the name of the Pledgor, execute and give receipt for any
certificate of ownership or any document, transfer title to any item of Senior
Notes Pledged Collateral, sign the Pledgor's name on all financing statements or
any other
B-6
<PAGE> 49
documents deemed necessary or appropriate to preserve, protect or perfect the
security interest in the Senior Notes Pledged Collateral and to file the same,
prepare, file and sign the Pledgor's name on any notice of Lien, and prepare,
file and sign the Pledgor's name on a proof of claim in bankruptcy or similar
document against any customer of the Pledgor, and to take any other actions
arising from or incident to the powers granted to the Senior Notes Collateral
Agent in this Agreement. This power of attorney is coupled with an interest and
is irrevocable by the Pledgor.
SECTION 10. Collateral Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Senior Notes Collateral Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses of
the Senior Notes Collateral Agent incurred in connection therewith shall be
payable by the Pledgor under Section 15 hereof.
SECTION 11. No Assumption of Duties; Reasonable Care. The rights and powers
granted to the Senior Notes Collateral Agent hereunder are being granted in
order to preserve and protect the Senior Notes Collateral Agent's and the
Holders' security interest in and to the Senior Notes Pledged Collateral granted
hereby and shall not be interpreted to, and shall not, impose any duties on the
Senior Notes Collateral Agent in connection therewith. Further, the rights and
powers granted to the Senior Notes Collateral Agent hereunder are being granted
in order to permit the Senior Notes Collateral Agent to hold the Senior Notes
Pledged Collateral for the Price Note Collateral Agent, in order to perfect the
security interest in the Senior Notes Pledged Collateral for the Price Note
Collateral Agent under the Price Note Pledge Agreement. The Senior Notes
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Senior Notes Pledged Collateral in its
possession if the Senior Notes Pledged Collateral is accorded treatment
substantially equal to that which the Senior Notes Collateral Agent accords its
own property, it being understood that the Senior Notes Collateral Agent shall
not have any responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Senior Notes Pledged Collateral, whether or not the Senior Notes
Collateral Agent has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Senior Notes Pledged Collateral.
SECTION 12. Subsequent Changes Affecting Collateral. The Pledgor represents to
the Senior Notes Collateral Agent and the Holders that the Pledgor has made its
own arrangements for keeping informed of changes or potential changes affecting
the Senior Notes Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting rights),
and the Pledgor agrees that the Senior Notes Collateral Agent and the Holders
shall have no responsibility or liability for informing the Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto. The Pledgor covenants that it will not, without the
prior written consent of the Senior Notes Collateral Agent, vote to enable, or
take any other action to permit, the Issuer to sell or otherwise dispose of, or
grant any option with respect to, any of the Senior Notes Pledged Collateral or
create or permit to exist any Lien upon or with respect to any of the Senior
Notes Pledged Collateral (except that the Pledgor may create and permit to exist
the Price Note Security Interest in accordance with Section 3 of this
Agreement). The Pledgor will defend the right, title and interest of the Senior
Notes Collateral Agent and the Holders in and to the Senior Notes Pledged
Collateral against the claims and demands of all persons.
SECTION 13. Remedies Upon Default. If any Event of Default shall have occurred
and be continuing, the Senior Notes Collateral Agent and the Holders shall have,
in addition to all other rights given by law or by this Agreement or the
Indenture, all of the rights and remedies with respect to the Senior Notes
Pledged Collateral of a secured party under the UCC as in effect in the State of
California at that time. The Senior Notes Collateral Agent may, without notice
and at its option, transfer or register, and the Pledgor shall
B-7
<PAGE> 50
register or cause to be registered upon request therefor by the Senior Notes
Collateral Agent, the Senior Notes Pledged Collateral or any part thereof on the
books of the Issuer into the name of the Senior Notes Collateral Agent or the
Senior Notes Collateral Agent's nominee(s), with or without any indication that
such Senior Notes Pledged Collateral is subject to the security interest
hereunder. In addition, (i) with respect to any Senior Notes Pledged Collateral
that shall then be in or shall thereafter come into the possession or custody of
the Senior Notes Collateral Agent, the Senior Notes Collateral Agent may sell or
cause the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price or prices as the Senior Notes
Collateral Agent may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk, and (ii) with respect to any Senior Notes
Pledged Collateral that shall be in or shall thereafter come into the possession
or custody of the Price Note Collateral Agent, the Senior Notes Collateral Agent
may instruct and otherwise work with the Price Note Collateral Agent to sell or
cause the same to be sold at any broker's board or at public or private sale, in
one or more sales or lots, at such price or prices as the Senior Notes
Collateral Agent may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any or all Senior Notes
Pledged Collateral so sold shall thereafter hold the same absolutely, free from
any claim, encumbrance or right of any kind whatsoever (except that with respect
to any such collateral consisting of Price Note Pledged Collateral, the Senior
Notes Collateral Agent may instruct or otherwise work with the Price Note
Collateral Agent to sell such collateral subject to Liens in favor of the Senior
Notes Collateral Agent). Unless any of the Senior Notes Pledged Collateral
threatens to decline speedily in value or is or becomes of a type sold on a
recognized market, the Senior Notes Collateral Agent will give Pledgor
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or other intended disposition is to be made.
Any sale of the Senior Notes Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, insurance companies, commercial
finance companies, or other financial institutions disposing of property similar
to the Senior Notes Pledged Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such notice is
mailed to the Pledgor as provided below in Section 19.1, at least ten days
before the time of the sale or disposition. Any other requirement of notice,
demand or advertisement for sale is, to the extent permitted by law, waived. The
Senior Notes Collateral Agent or any Holder may, in its own name or in the name
of a designee or nominee, buy any of the Senior Notes Pledged Collateral at any
public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other disposition
of the Senior Notes Pledged Collateral.
SECTION 14. Irrevocable Authorization and Instruction to the Issuer. The Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by the Issuer from the Senior Notes Collateral Agent that (i) states
that an Event of Default has occurred and (ii) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so
complying.
SECTION 15. Fees and Expenses. The Pledgor will upon demand pay to the Senior
Notes Collateral Agent the amount of any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and disbursements of its
counsel, of any investment banking firm, business broker or other selling agent
and of any other experts and agents retained by the Senior Notes Collateral
Agent) that the Senior Notes Collateral Agent may incur in connection with (i)
the administration of this Agreement, (ii) the custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Senior Notes
Pledged Collateral, (iii) the exercise or enforcement of any of the rights of
the Senior Notes Collateral Agent and the Holders hereunder or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.
B-8
<PAGE> 51
SECTION 16. Interest Absolute. All rights of the Senior Notes Collateral Agent
and the Holders and the security interests created hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Indenture;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or of
this Agreement.
SECTION 17. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Senior Notes Pledged Collateral and any
cash held shall be applied by the Senior Notes Collateral Agent in the following
order of priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Senior Notes
Collateral Agent, and all expenses, liabilities and advances incurred or made by
the Senior Notes Collateral Agent in connection therewith, and any other
unreimbursed fees and expenses for which the Senior Notes Collateral Agent is to
be reimbursed pursuant to Section 15 hereof;
second, to the ratable payment (based on the principal amount of Senior
Notes deemed by the Indenture to be outstanding at the time of distribution) of
accrued but unpaid interest on such outstanding Senior Notes;
third, to the ratable payment (based on the principal amount of Senior
Notes deemed by the Indenture to be outstanding at the time of distribution) of
unpaid principal of such outstanding Senior Notes;
fourth, to the ratable payment (based on the principal amount of Senior
Notes deemed by the Indenture to be outstanding at the time of distribution) of
all other Obligations, until all Obligations shall have been paid in full; and
fifth, to the payment to all persons who may be entitled by law thereto
(including, without limitation, the Price Note Collateral Agent until such time
as the Senior Notes Collateral Agent has received written notice from the Price
Note Collateral Agent that the obligations of the Pledgor under the Price Note
and the Price Note Purchase Agreement have been satisfied in full), or as a
court of competent jurisdiction may direct, until all obligations to such
persons shall have been paid in full; and
finally, to payment to the Pledgor or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
B-9
<PAGE> 52
SECTION 18. Uncertificated Securities. Notwithstanding anything to the contrary
contained herein, if any Senior Notes Pledged Shares (whether now owned or
hereafter acquired) are uncertificated Senior Notes Pledged Shares, the Pledgor
shall promptly notify the Senior Notes Collateral Agent, and shall promptly take
all actions required to perfect the security interest of the Senior Notes
Collateral Agent under applicable law. The Pledgor further agrees to take such
actions as the Senior Notes Collateral Agent deems necessary or desirable to
effect the foregoing and to permit the Senior Notes Collateral Agent to exercise
any of its rights and remedies hereunder, and agrees to provide an Opinion of
Counsel reasonably satisfactory to the Senior Notes Collateral Agent with
respect to any such pledge of uncertificated Senior Notes Pledged Shares
promptly upon request of the Senior Notes Collateral Agent.
SECTION 19. Miscellaneous Provisions.
Section 19.1 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner as set forth in Section 11.02 of the Indenture, and delivered to the
addresses set forth in such Section, or, in the case of the Senior Notes
Collateral Agent, to: Norwest Bank Minnesota, National Association, Sixth &
Marquette, MAC-N9303-120, Minneapolis, Minnesota, Attention: Corporate Trust
Services, Telecopy No. (612) 667-9825.
Section 19.2 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Pledgor to the Senior Notes Collateral Agent
to take any action or omit to take any action under this Agreement, the Pledgor
shall deliver to the Senior Notes Collateral Agent an Officer's Certificate
and/or an Opinion of Counsel in accordance with the requirements of Section
11.04 of the Indenture.
Section 19.3 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor, the Issuer or any subsidiary thereof. No such pledge,
security or debt agreement may be used to interpret this Agreement.
Section 19.4 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 19.5 No Recourse Against Others. No director, officer,
employee, stockholder or affiliate, as such, of the Pledgor or the Issuer shall
have any liability for any obligations of the Pledgor under this Agreement or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder, by accepting a Senior Note, waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Senior Notes.
Section 19.6 Headings. The headings of the Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 19.7 Counterpart Originals. This Agreement may be signed in two
or more counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be executed
and delivered by telecopy, if such delivery is promptly followed by the original
manually signed copy sent by overnight courier.
B-10
<PAGE> 53
Section 19.8 Benefits of Agreement. Nothing in this Agreement, express
or implied, shall give to any person, other than the parties hereto and their
successors hereunder, and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Agreement. The parties hereto acknowledge that
the Price Note Collateral Agent is entitled to rely on any Senior Notes
Collateral Identification Certificate which may be delivered under this
Agreement.
Section 19.9 Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Pledgor from any provision of this Agreement shall be effective only if made or
given in compliance with all of the terms and provisions of the Indenture
necessary for amendments or waivers of, or consents to any departure by the
Pledgor from any provision of the Indenture, as applicable; provided, however,
that no amendment or waiver of any provision of this Agreement may adversely
affect the rights of the Price Note Collateral Agent hereunder or under the
Acknowledgment of Senior Notes Collateral Agent included within any Senior Notes
Collateral Identification Certificate delivered pursuant to this Agreement
without the prior written consent of the Price Note Collateral Agent. Neither
the Senior Notes Collateral Agent nor any Holder shall be deemed, by any act,
delay, indulgence, omission or otherwise, to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. Failure of the Senior Notes
Collateral Agent or any Holder to exercise, or delay in exercising, any right,
power or privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Senior Notes Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Senior Notes Collateral Agent or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
Section 19.10 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Indenture shall have the meaning set forth in the
applicable UCC, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with the Indenture and is not
dealt with herein with more specificity, the Indenture shall control with
respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Agreement shall not
be relevant to determine the meaning of this Agreement even though the accepting
or acquiescing party had knowledge of the nature of the performance and
opportunity for objection.
Section 19.11 Continuing Security Interest; Transfer of Senior Notes.
This Agreement shall create a continuing security interest in the Senior Notes
Pledged Collateral and shall (i) remain in full force and effect until the
payment in full of all the Obligations and all the fees and expenses owing to
the Senior Notes Collateral Agent and the fulfillment of the conditions set
forth in Section 19.17, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure, together with the rights and remedies of the Senior
Notes Collateral Agent hereunder, to the benefit of the Senior Notes Collateral
Agent, the Holders and their respective successors, transferees and assigns.
Section 19.12 Reinstatement. This Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Senior
Notes Collateral Agent or any Holder in respect of the Obligations is rescinded
or must otherwise be restored or returned by the Senior Notes Collateral Agent
or any Holder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Pledgor or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Pledgor or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
B-11
<PAGE> 54
Section 19.13 Survival of Provisions. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Pledgor of the Obligations and the fulfillment of
the conditions set forth in Section 19.17.
Section 19.14 Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 19.15 Authority of the Collateral Agent.
(a) The Senior Notes Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Senior Notes
Collateral Agent by the terms hereof, together with such powers as are
reasonably incident thereto. The Senior Notes Collateral Agent may perform any
of its duties hereunder or in connection with the Senior Notes Pledged
Collateral by or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel concerning all such
matters. Neither the Senior Notes Collateral Agent nor any director, officer,
employee, attorney or agent of the Senior Notes Collateral Agent shall be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Senior Notes Collateral
Agent and its directors, officers, employees, attorneys and agents shall be
entitled to rely on any communication, instrument or document believed by it or
them to be genuine and correct and to have been signed or sent by the proper
person or persons. The Pledgor agrees to indemnify and hold harmless the Senior
Notes Collateral Agent, the Holders and any other person from and against any
and all costs, expenses (including the reasonable fees and disbursements of
counsel (including, the allocated costs of inside counsel)), claims and
liabilities incurred by the Senior Notes Collateral Agent, the Holders or such
person hereunder, unless such claim or liability shall be due to willful
misconduct or gross negligence on the part of the Senior Notes Collateral Agent,
the Holders or such person.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Senior Notes Collateral Agent under this Agreement with respect to any
action taken by the Senior Notes Collateral Agent or the exercise or
non-exercise by the Senior Notes Collateral Agent of any option, right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Agreement shall, as between the Senior Notes Collateral Agent and
the Holders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Senior Notes Collateral Agent and the Pledgor, the Senior Notes Collateral Agent
shall be conclusively presumed to be acting as agent for the Holders with full
and valid authority so to act or refrain from acting, and the Pledgor shall not
be obligated or entitled to make any inquiry respecting such authority.
Section 19.16 Resignation or Removal of the Collateral Agent. Until
such time as the Obligations shall have been paid in full, the Senior Notes
Collateral Agent may at any time, by giving written notice to the Pledgor and
Holders, resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor Senior
Notes Collateral Agent and (ii) the acceptance of such appointment by such
successor Senior Notes Collateral Agent. As promptly as practicable after the
giving of any such notice, the Holders shall appoint a successor Senior Notes
Collateral Agent, which successor Senior Notes Collateral Agent shall be
reasonably acceptable to the Pledgor. If no successor Senior Notes Collateral
Agent shall be appointed and shall have accepted such appointment within 90 days
after the Senior Notes Collateral Agent gives the aforesaid notice of
resignation, the Senior Notes Collateral Agent may apply to any court of
competent jurisdiction to appoint
B-12
<PAGE> 55
a successor Senior Notes Collateral Agent to act until such time, if any, as a
successor shall have been appointed as provided in this Section 19.16. Any
successor so appointed by such court shall immediately and without further act
be superseded by any successor Senior Notes Collateral Agent appointed by the
Holders, as provided in this Section 19.16. Simultaneously with its replacement
as Senior Notes Collateral Agent hereunder, the Senior Notes Collateral Agent so
replaced shall deliver to its successor all documents, instruments, certificates
and other items of whatever kind (including, without limitation, the
certificates and instruments evidencing the Senior Notes Pledged Collateral and
all instruments of transfer or assignment) held by it pursuant to the terms
hereof. The Senior Notes Collateral Agent that has resigned shall be entitled to
fees, costs and expenses to the extent incurred or arising, or relating to
events occurring, before its resignation or removal.
Section 19.17 Release; Termination of Agreement. Subject to the
provisions of Section 19.12 hereof and the penultimate sentence of this Section
19.17, this Agreement shall terminate (i) upon full and final payment and
performance of the Obligations (and upon receipt by the Senior Notes Collateral
Agent of the Pledgor's written certification that all such Obligations have been
satisfied, the Trustee's written certification as required by Section 10.05 of
the Indenture, and such other evidence reasonably satisfactory to the Senior
Notes Collateral Agent that such Obligations have been satisfied, and the
satisfaction of any additional applicable conditions set forth in the Indenture)
and payment in full of all fees and expenses owing by the Pledgor to the Senior
Notes Collateral Agent or (ii) on the day after the first anniversary of the
defeasance of all of the Obligations pursuant to Article 8 of the Indenture
(other than those surviving Obligations specified therein). At such time, the
Senior Notes Collateral Agent shall upon receipt of a Release Certificate as
provided for by Section 4(b) above, reassign and redeliver all of the Senior
Notes Pledged Collateral hereunder that has not been sold, disposed of, retained
or applied by the Senior Notes Collateral Agent in accordance with the terms of
such Release Certificate. Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not terminate unless and until a Release
Certificate is provided to the Senior Notes Collateral Agent as provided above.
Such reassignment and redelivery shall be without warranty by or recourse to the
Senior Notes Collateral Agent, except as to the absence of any prior assignments
by the Senior Notes Collateral Agent of its interest in the Senior Notes Pledged
Collateral, and shall be at the expense of the Pledgor.
Section 19.18 Final Expression. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
Section 19.19 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Damages.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF CALIFORNIA, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
PLEDGOR, THE SENIOR NOTES COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH
THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF CALIFORNIA.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN PARAGRAPH
(vi) BELOW, THE PLEDGOR, THE SENIOR NOTES COLLATERAL AGENT AND THE HOLDERS AGREE
THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT
B-13
<PAGE> 56
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK, BUT THE PLEDGOR, THE SENIOR NOTES COLLATERAL
AGENT AND THE HOLDERS ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO
BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK. THE PLEDGOR WAIVES IN
ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
CONSIDERING THE DISPUTE INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) THE PLEDGOR AGREES THAT THE SENIOR NOTES COLLATERAL AGENT
SHALL, IN ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE SENIOR
NOTES PLEDGED COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE THE SENIOR NOTES COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE SENIOR
NOTES COLLATERAL AGENT. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY
PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE SENIOR NOTES
COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE SENIOR NOTES COLLATERAL AGENT. THE PLEDGOR WAIVES
ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE SENIOR
NOTES COLLATERAL AGENT HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(iv) THE PLEDGOR, THE SENIOR NOTES COLLATERAL AGENT AND THE
HOLDERS EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT
WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN SECTION 11.02 OF THE INDENTURE, SUCH
SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SENIOR NOTES
COLLATERAL AGENT OR ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGOR IN
ANY OTHER JURISDICTION.
(vii) THE PLEDGOR HEREBY AGREES THAT NEITHER THE SENIOR NOTES
COLLATERAL AGENT NOR ANY HOLDER SHALL HAVE ANY LIABILITY TO
B-14
<PAGE> 57
THE PLEDGOR (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES
SUFFERED BY THE PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY
THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS
BINDING ON THE SENIOR NOTES COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE,
THAT SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE SENIOR
NOTES COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE, CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) THE PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE SENIOR NOTES COLLATERAL AGENT OR ANY
HOLDER OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS
THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE PLEDGOR WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE SENIOR NOTES COLLATERAL AGENT OR ANY
HOLDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN
POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE SENIOR NOTES COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION
THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, THE
SENIOR NOTES COLLATERAL AGENT AND THE HOLDERS.
Section 19.20 Acknowledgments. The Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) neither the Senior Notes Collateral Agent nor any Holder has any
fiduciary relationship to the Pledgor, and the relationship between the Senior
Notes Collateral Agent and the Holders, on the one hand, and the Pledgor, on the
other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Holders or among the Pledgor
and the Holders.
[Signature Page Follows]
B-15
<PAGE> 58
[Pledge Agreement Signature Page]
PLEDGOR:
EXCEL LEGACY CORPORATION
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
SENIOR NOTES COLLATERAL AGENT:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:
-----------------------------------------
Name:
Title:
B-16
<PAGE> 59
EXHIBIT A
FORM OF SENIOR NOTES COLLATERAL IDENTIFICATION CERTIFICATE
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Senior Notes
due 2004 (the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October 1, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 1, 1999 (the "Price Note Purchase Agreement"), a
security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Senior Notes Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is issuing $18,126,000 principal
amount of Senior Notes in accordance with the Senior Notes Indenture (for
purposes of this Certificate, the "Incremental Senior Notes");
(b) In accordance with Section 3 of the Senior Notes Pledge
Agreement and Section 3(b) of the Price Note Pledge Agreement, Pledgor confirms
that the property identified on Schedule 1 hereto constitutes Incremental Senior
Notes Pledged Shares pledged to the Senior Notes Collateral Agent, and that such
Incremental Senior Notes Pledged Shares, together with any Incremental Senior
Notes Pledged Shares identified in any previous Senior Notes Collateral
Identification Certificate, constitute "Senior Notes Pledged Shares" for
purposes of the Senior Notes Pledge Agreement and the Price Note Pledge
Agreement.
(c) The Pledgor consents to the agreements of the Senior Notes
Collateral Agent and the Price Note Collateral Agent confirmed below in this
Certificate, and the Pledgor waives any right to object to the performance of
any of said agreements.
<PAGE> 60
(d) Pledgor acknowledges and agrees that the Senior Notes
Collateral Agent and the Price Note Collateral Agent shall rely upon the
foregoing certifications in taking actions under the Senior Notes Pledge
Agreement and the Price Note Pledge Agreement, respectively.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of November
12, 1999.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
--------------------------------------------
Name: Gary B. Sabin
Title: President and Chief Executive Officer
<PAGE> 61
ACKNOWLEDGMENT OF SENIOR NOTES COLLATERAL AGENT
The undersigned hereby certifies and confirms to the Price Note
Collateral Agent as follows:
(a) The undersigned is the "Collateral Agent" under the Senior Notes
Pledge Agreement referenced above,
(b) The Senior Notes Collateral Agent acknowledges the security
interest and pledge of the Senior Notes Pledged Collateral pursuant to the Price
Note Pledge Agreement. Until the earlier to occur of the termination of the
Senior Notes Pledge Agreement or the Price Note Pledge Agreement, the Senior
Notes Collateral Agent agrees to hold the Senior Notes Pledged Collateral for
itself and for the Price Note Collateral Agent, in order to perfect the security
interest in the Senior Notes Pledged Collateral for itself under the Senior
Notes Pledge Agreement and for the Price Note Collateral Agent under the Price
Note Pledge Agreement. The Senior Notes Collateral Agent shall not be required
to hold, and agrees that it will not hold, the Senior Notes Pledged Collateral
for any person other than the Holders and the Price Note Collateral Agent in
order to perfect a security interest in the Senior Notes Pledged Collateral.
(c) The Senior Notes Collateral Agent agrees to not release any
Senior Notes Pledged Collateral except pursuant to a Release Certificate and, if
applicable, an accompanying Acknowledgment of Price Note Collateral Agent, as
provided for by Section 4 of the Senior Notes Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
By:
-----------------------------------------
Name:
Title:
<PAGE> 62
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Senior Notes Collateral Agent under
the Senior Notes Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The security interest granted in favor of the undersigned, as
Price Note Collateral Agent, in the property described in (i) Schedule 1
attached to this Certificate or (ii) any previous Senior Notes Collateral
Identification Certificate executed by the Price Note Collateral Agent, is
subject and subordinate to the security interest granted in such property to the
Senior Notes Collateral Agent under the Senior Notes Pledge Agreement. Said
priority shall be applicable irrespective of the time or order of attachment or
perfection of the respective security interests or the time of filing of any
financing statements pertaining thereto, or any statutes, rules of law, or court
decisions to the contrary.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 63
EXHIBIT B
[FORM OF RELEASE CERTIFICATE]
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Senior Notes
due 2004 (the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Senior Notes Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is repurchasing, redeeming or
defeasing Senior Notes in the aggregate principal amount of:
$____________________________________________;
and, in accordance with Section 4 of the Senior Notes Pledge Agreement,
instructs the Senior Notes Collateral Agent to release from the pledge and
security interest created by Section 1 of the Senior Notes Pledge Agreement the
following number of Senior Notes Pledged Shares (equal to 117.647 Senior Notes
Pledged Shares for each $1,000 in principal amount of Senior Notes subject to
such repurchase, redemption or defeasance):
_______________________________________ shares.
(b) Pledgor represents to the Senior Notes Collateral Agent and
instructs as follows (check applicable box):
<PAGE> 64
[ ] The Pledgor has satisfied all obligations under the Price Note
and the Price Note Purchase Agreement. The Pledgor instructs
the Senior Notes Collateral Agent to deliver the Senior Notes
Pledged Shares to the Pledgor in accordance with the Senior
Notes Pledge Agreement.
[ ] The Pledgor has not satisfied all obligations under the Price
Note and the Price Note Purchase Agreement. The Pledgor
instructs the Senior Notes Collateral Agent to deliver the
Senior Notes Pledged Shares to the Price Note Collateral Agent.
The Pledgor waives any right to receive the Senior Notes
Pledged Shares from the Senior Notes Collateral Agent.
(c) Pledgor acknowledges and agrees that the Senior Notes Collateral
Agent shall rely upon the foregoing certifications in taking actions under the
Senior Notes Pledge Agreement.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
________, ______.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
<PAGE> 65
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Senior Notes Collateral Agent under the Senior
Notes Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The representation of the Pledgor in Paragraph (b) of the above
Release Certificate is true and correct, and the Senior Notes Pledged Shares
which are the subject of the above Release Certificate shall be delivered in
accordance with the instructions contained in said Paragraph.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 66
EXHIBIT C
[FORM OF PAYMENT CERTIFICATE]
This Certificate is provided by James F. Cahill, (the "Price Notes
Collateral Agent"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Senior Notes
due 2004 (the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
The Price Note Collateral Agent hereby certifies and confirms to the
Senior Notes Collateral Agent as follows:
The Pledgor has satisfied all obligations under the Price Note and the
Price Note Purchase Agreement. The Senior Notes Collateral Agent shall, from and
after the date of this Certificate, deliver the Senior Notes Pledged Shares to
the Pledgor in accordance with the Senior Notes Pledge Agreement and the Price
Note Collateral Agent hereby waives any right to receive the Senior Notes
Pledged Shares from the Senior Notes Collateral Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 1
EXHIBIT 10.6
Excel Legacy Corporation
16955 Via del Campo
Suite 100
San Diego, CA 92127
October 6, 1999
Re: Note Purchase Agreement
Gentlemen:
This Agreement will confirm our agreement as to the terms and
conditions on which we (the "Lender") agree to extend a loan of up to $30
million to Legacy. Capitalized terms in this Agreement have the meaning
indicated in item 7 below.
1. Availability. On and subject to the terms contained in this letter
agreement, up to $30 million in funds shall be made available by the Lender to
Legacy in order to facilitate Legacy's purchase of common stock of Enterprises.
2. Note. The obligation of Legacy to repay any funds borrowed under
this Agreement is to be evidenced by the Note. As indicated in the Note, and in
the provisions of this Agreement below (and, to the extent set forth in the Note
or below in this Agreement, subject to the additional provisions so set forth):
A. The Note will be payable with interest on the outstanding
principal balance of the Note at a rate that is 150 basis
points (i.e., 1.5%) in excess of LIBOR for a one-month period
(which shall, at any time when no amount is outstanding under
the Note, initially be the rate for such period published two
business days preceding the applicable Closing (as defined
below) and which shall vary each month based on the rate for
such period published two business days in advance of the
first business day of each month).
<PAGE> 2
B. Interest on the Note shall be payable monthly on the 5th day
of each month commencing on the first day of the first month
after any amount of the loan has been extended and outstanding
for 30 calendar days. Interest shall be calculated on the
basis of actual calendar days elapsed and a 365-day year.
C. Principal may be prepaid at any time or times, in part or in
full, but to the extent not previously paid shall be due and
payable in full on November 1, 2004 (the "Maturity Date").
D. Payment of principal and interest shall be secured by the
Collateral, which also secures the senior notes and
convertible debentures issued in the Exchange Offer.
3. Borrowings. The initial borrowing of funds under this Agreement
shall take place at a Closing (as described below), to occur on 3 business days'
notice from Legacy to the Lender but not later than November 15, 1999 (if at
all). Thereafter, additional borrowings may be made under this Agreement on 5
business days' notice from Legacy to the Lender, and in each instance shall take
place at a Closing as described below. Borrowings shall only be made under this
Agreement for the purpose of funding a purchase of common stock of Enterprises
by Legacy for consideration that is not less than that described in the Exchange
Offer, and a maximum of $2.25 shall be advanced for each share purchased. Legacy
irrevocably authorizes the Lender to make or cause to be made, at the time of
any borrowing under this Agreement (or at the time of receipt of any payment of
principal), an appropriate notation on the grid attached to the Note reflecting
the amount of such borrowing (or the amount of such payment). The outstanding
amount of the Note set forth on such grid shall be prima facie evidence of the
principal amount thereof outstanding, but the failure to record, or any error in
so recording, shall not limit or otherwise affect the obligations of Legacy to
make payments of principal of or interest on the Note when due.
4. Closings. At each Closing under this Agreement:
A. The Lender shall transfer to Legacy, or as Legacy may direct,
against delivery of the documents identified in this item 4,
the amount of funds identified in the relevant preceding
notice from Legacy to the Lender as described above in Item 3.
B. At the initial Closing, Legacy shall execute and deliver to
the Lender, or as the Lender may direct, the executed Note, in
the form of Exhibit A. At each subsequent Closing, an
appropriate notation shall be made on the grid attached to the
Note reflecting the amount of funds transferred as described
in clause 4A above.
2
<PAGE> 3
C. Legacy shall deliver to the Collateral Agent, as security (or
additional security if there has previously been a Closing)
for the payment of the Note, all Collateral not previously
delivered to the Collateral Agent (including Collateral
purchased with the funds transferred as described in clause 4A
above) other than Collateral which is required to be delivered
to the Debenture Collateral Agent or the Senior Notes
Collateral Agent (as such terms are defined in the Pledge
Agreement) in accordance with the Pledge Agreement.
D. Legacy shall deliver to the Lender, or as the Lender may
direct, an Officer's Certificate in the form of Exhibit "B" to
this Agreement confirming that at the time there exists no
Default or Event of Default under this Agreement.
E. Legacy shall deliver to Lender an opinion of Latham & Watkins,
San Diego, California, counsel to Legacy, in the form of
Exhibit "C" to this Agreement, confirming (subject to the
limitations set forth therein) that the Note has been duly and
validly executed, issued and delivered by Legacy, and is
binding on Legacy in accordance with its terms, and that the
Lender is entitled to the benefits of the provisions hereof
with respect to, and holds a perfected security interest in,
the Collateral.
5. Security Interest. Legacy hereby grants to the Lender a security
interest in the Collateral to secure the performance of Legacy's obligations
under the Note issued under this Agreement and held by the Lender, subject,
however, to the prior rights of holders of the senior notes and the convertible
debentures, as described in the Exchange Offer and issued in the Exchange Offer
or thereafter issued as partial payment for the purchase of shares of common
stock of Enterprises, with respect to the Collateral, and as more fully
described in the Pledge Agreement to be entered into between Legacy, the Lender
and the Collateral Agent concurrently with the execution of this Agreement.
6. Remedies. Without limiting the rights of the Lender or of the
Collateral Agent in any respect, if there shall be an Event of Default, then the
entirety of the then outstanding principal balance of the Note then outstanding,
together with all accrued and unpaid interest thereon, shall be immediately due
and payable in full, and the Collateral Agent shall take such action or actions
as are specified in the Pledge Agreement with respect to the Collateral.
7. Definitions. As used in this Agreement, the terms set forth below
have the meanings indicated:
An "Affiliate" of any specified person is any other person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as
3
<PAGE> 4
used with respect to any person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person, whether through the ownership of voting securities or
by agreement or otherwise.
"Collateral" means the "Price Note Pledged Collateral" as such term is
defined in the Pledge Agreement.
"Collateral Agent" means the "Price Note Collateral Agent" as such term
is defined in the Pledge Agreement.
A "Default" is any event which is, or after notice or passage of time
would be, an Event of Default.
"Enterprises" means Price Enterprises, Inc., a Maryland corporation.
An "Event of Default" means the occurrence of any of the following:
(1) Legacy fails to make payment of any interest that is due on
the Note on the fifth day of a month, and the Default
continues for a period of 10 days after the date due and
payable;
(2) Legacy defaults in the payment of the principal amount of the
Note when the same becomes due and payable, whether at
maturity or otherwise;
(3) Legacy, or any of its Affiliates, materially fails to observe
or perform any covenant, condition or agreement required to be
observed or performed by it pursuant to this Agreement, the
Pledge Agreement, the stockholders agreement as described in
the Exchange Offer or the company agreement as described in
the Exchange Offer, and the Default continues for 10 days
after notice;
(4) Legacy fails to pay when due any (i) interest or principal due
on any senior notes issued in the Exchange Offer, or (ii)
interest or principal due on any debentures issued in the
Exchange Offer, and the Default continues for a period of 10
days after the date due and payable;
(5) (a) Legacy, or any of its Affiliates that are controlled by
Legacy, fails to pay when due any interest or principal on any
outstanding bank debt, or debt that is secured by a mortgage,
or debt issued pursuant to an Indenture, or other
4
<PAGE> 5
debt in principal amount in excess of $500,000, or (b) any
person or entity fails to pay when due any interest or
principal on any outstanding bank debt, debt that is secured
by a mortgage, or debt issued pursuant to an Indenture, or
other debt in principal amount in excess of $500,000, the
payment of which is guaranteed by Legacy or any Affiliate
controlled by Legacy, and under either (a) or (b) the default
continues for 30 days after the date due and payable;
(6) the maturity of the principal amount of any outstanding bank
debt, or debt that is secured by a mortgage, or debt issued
pursuant to an indenture, or other debt in principal amount in
excess of $500,000, of Legacy, or any of its Affiliates that
are controlled by Legacy, or any person or entity for whom
Legacy or any such Affiliate has guaranteed the payment of
such debt, is accelerated by the holder thereof or pursuant to
the terms under which it is issued by reason of, or in
response to, any default thereunder;
(7) (a) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent
jurisdiction against Legacy or any Affiliate that is
controlled by Legacy (except any judgment to the extent an
insurance company has accepted liability in writing for the
amount of such judgment) and such remains undischarged for a
period (during which execution shall not be effectively
stayed) of 60 days or (b) a fine or other amount shall become
final and payable by Legacy or any Affiliate that is
controlled by Legacy pursuant to any administrative,
governmental or regulatory authority or proceeding and such
fine or other amount remains unpaid for 60 days after notice,
provided that the aggregate of all such judgments (referred to
in clause (a) above) and fines and amounts (referred to in
clause (b) above) in excess of insurance coverage exceeds
$100,000;
(8) Legacy, or any Affiliate that is controlled by Legacy,
pursuant to or within the meaning of any bankruptcy law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against
it in an involuntary case or proceeding,
5
<PAGE> 6
(C) consents to the filing of a petition seeking
reorganization or relief under any applicable
bankruptcy law, or to the appointment of a custodian
of it or for all or substantially all of its
property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing its inability to pay its debts
generally as they become due;
(9) a court of competent jurisdiction enters an order or decree
under any bankruptcy law that:
(A) is for relief against Legacy or any Affiliate that is
controlled by Legacy in an involuntary case,
(B) appoints a custodian of Legacy or any Affiliate that
is controlled by Legacy or for all or substantially
all of its property, or
(C) orders the liquidation of Legacy or any Affiliate
that is controlled by Legacy,
and the order or decree remains unstayed and in effect for 90
days; or
(10) The Pledge Agreement shall cease for any reason to be in full
force and effect, or Legacy, or any person acting by or on
behalf of Legacy, shall deny or disaffirm its obligations
under such agreement.
"Exchange Offer" means the exchange offer of Legacy for common stock
of Enterprises as described in the Registration Statement on Form S-4
(Registration No. 333-80339) initially filed with the Securities and Exchange
Commission by Legacy on or about June 9, 1999 and thereafter amended.
"Legacy" means Excel Legacy Corporation, a Delaware corporation.
"Lender" means The Sol and Helen Price Trust.
6
<PAGE> 7
"LIBOR" means the London Interbank Offered Rate as published in the
Western Edition of The Wall Street Journal.
"Note" means the Secured Promissory Note of Legacy in the form
attached as Exhibit "A" to this Agreement.
"Pledge Agreement" means the agreement dated October 6, 1999 among
the Collateral Agent and Legacy providing for the grant of a security interest
in the Collateral to the Collateral Agent and the Lender and related matters, in
the form attached hereto as Exhibit "D."
8. Notices. Notices provided hereunder, or given pursuant hereto, shall
be given by messenger or courier service (with appropriate receipt requested) or
by certified or registered mail, return receipt requested, and shall be
effective one day after the date on which sent if given by messenger or courier
service, and five days after the date on which sent if given by certified or
registered mail. Such notices shall be addressed as follows:
If to Legacy:
Excel Legacy Corporation
16955 Via del Campo
Suite 100
San Diego, CA 92127
Attention: Gary B. Sabin
With a copy to:
Latham & Watkins
701 "B" Street, Suite 2100
San Diego, CA 92101-8197
Attention: Scott N. Wolfe, Esq.
If to the Lender:
The Sol and Helen Price Trust
7979 Ivanhoe, Suite 520
La Jolla, CA 92037
Attention: Sol Price
With a copy to:
Munger, Tolles & Olson LLP
355 South Grand Avenue
35th Floor
7
<PAGE> 8
Los Angeles, CA 90071-1560
Attention: Simon M. Lorne, Esq.
or, in any case, to such other or additional person or persons and address or
addresses as may be set forth in a notice given in accordance with the foregoing
provision.
9. Applicable Law. This Agreement is made under and shall be enforced
in accordance with the internal laws of the State of California without regard
to the laws and rules of said state relating to conflicts of laws.
10. Time of Essence. Time is of the essence of all provisions in this
Agreement in which a date or period of time is set forth or established.
11. Entire Agreement. This Agreement contains the entire and complete
Agreement of the parties hereto related to the subject matter hereof, replaces
and supersedes any and all prior representations and understandings of either
party to the other relating to the subject matter hereof, and shall not be
modified by parol evidence or otherwise except by a subsequent writing duly
executed by the parties hereto.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
13. Modification. This Agreement may not be modified, altered or
amended, except by an Agreement in writing signed by the parties hereto.
14. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. If, however, any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity and the remaining provisions of
this Agreement shall remain unaffected and in full force and effect.
15. Waiver. Any failure by a party hereto, at any time or times
hereafter, to require strict performance by the other party or parties hereto of
any provisions of this Agreement shall not waive, affect or diminish any right
of such party thereafter to demand strict compliance and performance herewith.
Any suspension or waiver by a party hereto of a default under this Agreement
shall not suspend, waive or affect any other default under this Agreement
whether the same is prior or subsequent thereto and whether of the same or of a
different type. Neither any of the undertakings, agreements, warranties,
covenants and representations contained in this Agreement nor any default under
this Agreement shall be deemed to have been suspended or waived by a party
hereto, unless such suspension or waiver is by an instrument in writing signed
by an authorized officer of the party, specifying the specific suspension or
waiver.
8
<PAGE> 9
16. Public Disclosures. Each party hereto agrees not to issue any press
release, make any filing or otherwise give publicity to the contents of this
Agreement except to the extent it is reasonably required to do so by law or
regulation and, in any event, without first giving the other party or parties
hereto reasonable opportunity to review, and to make reasonable revisions to,
the content of such public disclosure.
17. Section Titles and Table of Contents. The section titles contained
in this Agreement are merely for convenience and shall be without substantive
meaning or content.
18. Rules of Construction.
Unless the context otherwise requires:
(1) The words "herein," "hereof," "hereinabove,"
"hereinbelow," "therein," "thereof," and words of similar import
refer to the document as a whole, and not to the particular phrase,
clause, sentence, paragraph, section or division of the document in
which such word is used.
(2) An accounting term not otherwise defined has the
meaning ascribed to it in generally accepted accounting principles
as in effect from time to time.
(3) Words in the singular include the plural and words
in the plural include the singular.
(4) Words expressed in one gender, masculine, feminine
or neuter, include all other genders.
* * *
If the foregoing provisions accurately reflect our
agreement, please so
9
<PAGE> 10
indicate by executing this Agreement as indicated in the space below, at which
point it shall become a binding agreement between us.
Very truly yours,
The Sol and Helen Price Trust
By /s/ Sol Price
-------------------------------
ACCEPTED AND AGREED:
Excel Legacy Corporation
By: /s/ Gary B. Sabin
-------------------------------
Gary B. Sabin
Its: President and Chief Executive Officer
10
<PAGE> 11
EXHIBIT A
SECURED PROMISSORY NOTE
$30,000,000 ______________ __, 1999
FOR VALUE RECEIVED, the undersigned EXCEL LEGACY CORPORATION ("Maker"),
a Delaware corporation, hereby promises to pay to the order of THE SOL AND HELEN
PRICE TRUST ("Holder"), at 7979 Ivanhoe, Suite 520, La Jolla, California 92037,
or at such other place as Holder may designate in writing,
(a) prior to or at the Maturity Date, the principal sum of THIRTY
MILLION DOLLARS ($30,000,000) or, if less, the outstanding principal
balance of this Note; and
(b) interest on the principal balance of this Note from time to time
outstanding, at such times and at the rate provided in that certain
Note Purchase Agreement, dated as of __________, 1999, by and between
Maker and Holder (the "Agreement").
This Note evidences borrowings under and has been issued by Maker in
accordance with the terms of the Agreement. Holder is entitled to the benefits
of the Agreement and the Pledge Agreement, and may enforce the agreements of
Maker contained therein, and may exercise the remedies provided for thereby or
otherwise available in respect thereof, all in accordance with the respective
terms thereof. All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Agreement.
Maker irrevocably authorizes Holder to make or cause to be made, at the
time of any borrowing under the Agreement or at the time of receipt of any
payment of principal of this Note, an appropriate notation on the grid attached
to this Note reflecting the amount of such borrowing or the amount of such
payment, as applicable. The outstanding amount of this Note set forth on such
grid shall be prima facie evidence of the principal amount outstanding, but the
failure to record, or any error in so recording, shall not limit or otherwise
affect the obligations of Maker to make payments of principal and interest on
this Note when due.
Maker has the right and, under certain circumstances, the obligation,
to prepay the whole or part of the principal of this Note on the terms and
conditions specified in the Agreement and the Pledge Agreement.
<PAGE> 12
If any one or more Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Agreement and the Pledge Agreement.
No delay or omission on the part of Holder in exercising any right
hereunder shall operate as a waiver of such right or of any other rights of
Holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar or waiver of the same or any other right on any further occasion. Maker
hereby waives presentment, demand for payment, protest, notice of protest,
notice of dishonor and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note.
THIS NOTE AND THE OBLIGATIONS OF MAKER HEREUNDER SHALL FOR ALL PURPOSES
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
CALIFORNIA (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). MAKER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON MAKER BY MAIL AT THE ADDRESS SPECIFIED
IN [Paragraph] 8 OF THE AGREEMENT. MAKER HEREBY WAIVES ANY OBJECTION THAT MAKER
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR
THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
If Holder commences any litigation or takes any enforcement or
collection action to enforce this Note or to collect amounts due hereunder,
Maker shall pay (if Holder is the prevailing party) all costs of such litigation
or enforcement or collection action, including, without limitation, reasonable
attorneys' fees.
IN WITNESS WHEREOF, Maker has executed this Note as of the date and at
the place first set forth above.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By
--------------------------------------
Its
--------------------------------------
<PAGE> 13
EXHIBIT B
EXCEL LEGACY CORPORATION
Certificate of Officer
This certificate is provided by the undersigned (the "Officer"),
_____________ _________ the Chief _____________ Officer [Chief Financial Officer
or Chief Executive Officer] of Excel Legacy Corporation, a Delaware corporation
(the "Company") pursuant to the Note Purchase Agreement (the "Agreement") dated
September __, 1999 (the "Agreement") between the Company and The Sol and Helen
Price Trust (the "Lender").
The Officer hereby certifies and confirms to the Lender as follows:
1. This certificate is provided by the Officer in connection with
a borrowing of funds by the Company from the Lender as
provided in Sections 3 and 4 of the Agreement, in order to
induce the Lender to lend such funds to the Company.
2. In delivering this certificate, the Officer has specifically
reviewed the definition of "Event of Default" in the Agreement
and has considered those provisions of the Agreement in
relation to his knowledge of the Company and its affairs.
3. As of the date of this certificate no event has occurred, and
no condition exists, that is an Event of Default (as defined
in the Agreement) regarding the Company.
4. As of the date of this certificate no event has occurred, nor
does any condition exist, which, with the passage of time or
the giving of notice (or both) would become an Event of
Default (as defined in the Agreement) regarding the Company.
Executed by the undersigned at __________________, ________________
this ___ day of _________________, _______.
The Officer:
_________________________________________
<PAGE> 14
EXHIBIT C
___________, 1999
The Sol and Helen Price Trust
7979 Ivanhoe, Suite 520
La Jolla, California 92037
Re: Excel Legacy Corporation; Note Purchase Agreement
dated as of ______, 1999 between Excel Legacy
Corporation and The Sol and Helen Price Trust
Ladies and Gentlemen:
We have acted as counsel to Excel Legacy Corporation, a Delaware
corporation (the "Borrower"), in connection with that certain Note Purchase
Agreement dated as of _______, 1999 (the "Purchase Agreement") between The Sol
and Helen Price Trust (the "Lender") and the Borrower and the other Loan
Documents (as defined below). This opinion is rendered to you pursuant to Item
4E of the Purchase Agreement. Capitalized terms defined in the Purchase
Agreement, used herein and not otherwise defined herein, shall have the meanings
given them in the Purchase Agreement.
As such counsel, we have examined such matters of fact and questions
of law as we have considered appropriate for purposes of rendering the opinions
expressed below, except where a statement is qualified as to knowledge or
awareness, in which case we have made no or limited inquiry as specified below.
We have examined, among other things, the following:
(a) the Purchase Agreement;
(b) the Secured Promissory Note (the "Note") dated as of
___________, 1999 of the Borrower;
<PAGE> 15
________, 1999
Page 2
(c) the Pledge Agreement (the "Pledge Agreement") dated as of
________, 1999 between James F. Cahill (the "Price Note Collateral Agent") and
the Borrower; and
(d) a photocopy of the UCC-1 financing statement naming the Borrower
as debtor and the Lender as secured party, together with all schedules and
exhibits to such financing statement, to be filed in the Office of the Secretary
of State of the State of California, a copy of which is attached hereto as
Exhibit A and incorporated herein by this reference (the "Financing Statement").
The documents described in subsections (a) - (c) above are referred
to herein collectively as the "Loan Documents." As used in this opinion, the
"UCC" shall mean the Uniform Commercial Code as now in effect in the State of
California.
In our examination, we have assumed the genuineness of all
signatures (other than those of officers of the Borrower on the Loan Documents),
the legal capacity of all natural persons executing documents, the authenticity
of all documents submitted to us as originals, and the conformity to authentic
original documents of all documents submitted to us as copies. In addition, we
have assumed that the parties to the Loan Documents have not entered into any
agreements of which we are unaware which modify the terms of the Loan Documents
or have otherwise expressly or by implication waived, or agreed to any
modification of the Loan Documents.
We have been furnished with, and with your consent have relied upon,
certificates of officer(s) of the Borrower with respect to certain factual
matters. In addition, we have obtained and relied upon such certificates and
assurances from public officials as we have deemed necessary.
We are opining herein as to the effect on the subject transactions
only of the federal laws of the United States and the internal laws of the State
of California, and we express no opinion with respect to the applicability
thereto, or the effect thereon, of the laws of any other jurisdiction, or as to
any matters of municipal law or the laws of any other local agencies within any
state or any laws which are applicable to the subject transactions or the
parties thereto because of the nature or extent of their business. Our opinions
are based upon our consideration of only those statutes, rules and regulations
which, in our experience, are normally applicable to borrowers and lenders in
secured loan transactions. Whenever a statement herein is qualified by "to the
best of our knowledge" or a similar phrase, it is intended to indicate that
those attorneys in this firm who have rendered legal services in connection with
the Loan Documents do not have current actual knowledge of the inaccuracy of
such statement. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of any such
statement, and no inference that we have any knowledge of any matters pertaining
to such statement should be drawn from our representation of the Borrower.
<PAGE> 16
________, 1999
Page 3
Subject to the foregoing and the other matters set forth herein, and
in reliance thereon, it is our opinion that, as of the date hereof:
1. The execution, delivery and performance by the Borrower of the
Note has been duly authorized by all necessary corporate action of the Borrower.
2. The Note constitutes a legally valid and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its terms.
3. The provisions of the Pledge Agreement are effective to create a
valid security interest in favor of the Price Note Collateral Agent in that
portion of the collateral described in Section 1 of the Pledge Agreement which
is subject to Article 9 of the UCC (the "Price Note Pledged Collateral") as
security for the payment, to the extent set forth therein, of all obligations of
the Borrower to the Lender under the Loan Documents.
4. The Financing Statement is in appropriate form for filing in the
Office of the Secretary of State of the State of California. Upon (a) delivery
of the certificates representing (i) the Debentures Pledged Shares to the
Debentures Collateral Agent, (ii) the Senior Notes Pledged Shares to the Senior
Notes Collateral Agent, and (iii) the Price Note Pledged Shares, other than the
Debentures Pledged Shares and the Senior Notes Pledged Shares, to the Price Note
Collateral Agent, in the State of California, pursuant to the Pledge Agreement
with undated stock powers duly endorsed to the Debentures Collateral Agent, the
Senior Notes Collateral Agent and the Price Note Collateral Agent, as
applicable, or in blank by an effective endorsement, and (b) the proper filing
of the Financing Statement in the Office of the Secretary of State of the State
of California, the security interest in favor of the Price Note Collateral Agent
in the Price Note Pledged Shares will be perfected to the extent a security
interest in such Price Note Pledged Shares can be perfected in the State of
California under the provisions of the UCC.
The opinions expressed in paragraph 2 do not include any opinions
with respect to the creation, validity, perfection or priority of any security
interest or lien or any opinions with respect to compliance with laws relating
to permissible rates of interest. The opinions expressed above are further
subject to the following limitations, qualifications and exceptions:
(a) such opinions are subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally including, without limitation, the
effect of Section 548 of the federal Bankruptcy Code and comparable provisions
of state law, and the effect of Section 547 of the federal Bankruptcy Code;
<PAGE> 17
________, 1999
Page 4
(b) enforceability of the Loan Documents is subject to the effect of
general principles of equity, including without limitation concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief regardless of
whether considered in a proceeding in equity or at law;
(c) certain rights, remedies and waivers contained in the Loan
Documents may be limited or rendered ineffective by applicable California laws
or judicial decisions governing such provisions, but such laws or judicial
decisions do not render the Loan Documents invalid or unenforceable as a whole;
(d) we express no opinion as to the validity or enforceability of
any provision of the Loan Documents that permit the Lender to increase the rate
of interest, collect a late charge or prepayment premium or impose penalties or
forfeitures in the event of a delinquency or default;
(e) the unenforceability under certain circumstances, under
California or federal law or court decisions, of provisions expressly or by
implication waiving broadly or vaguely stated rights, unknown future rights,
defenses to obligations or rights granted by law, where such waivers are against
public policy or prohibited by law;
(f) the unenforceability under certain circumstances of provisions
to the effect that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to or with any other right
or remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more other remedies, that any right or remedy may be
exercised without notice, or that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or remedy;
(g) the unenforceability under certain circumstances of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy or prohibited by law;
(h) the effect of Section 1717 of the California Civil Code, which
provides that, where a contract permits one party to the contract to recover
attorneys' fees, the prevailing party in any action to enforce any provision of
the contract shall be entitled to recover its reasonable attorneys' fees;
(i) the effect of California law, which provides that a court may
refuse to enforce, or may limit the application of, a contract or any clause
thereof which the court finds as a matter of law to have been unconscionable at
the time it was made or contrary to public policy;
<PAGE> 18
________, 1999
Page 5
(j) we express no opinion with respect to the enforceability by a
federal court of any forum selection clause provisions contained in the Loan
Documents;
(k) the effect of Section 631(d) of the California Code of Civil
Procedure, which provides that a court may, in its discretion upon just terms,
allow a trial by jury although there may have been a waiver of trial by jury;
(l) Section 552 of the federal Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case under the
federal Bankruptcy Code may be subject to a security interest arising from a
security agreement entered into by the debtor before the commencement of such
case;
(m) the unenforceability under certain circumstances of contractual
provisions respecting self-help or summary remedies without notice or
opportunity for hearing or correction;
(n) the effect of the provisions of the UCC which require a secured
party, in any disposition of personal property collateral, to act in good faith
and in a commercially reasonable manner;
(o) we have assumed that the Price Note Pledged Shares are
"certified securities" as defined in the UCC and at all times shall be held by
the Lender in the State of California;
(p) we have assumed that the Borrower has "rights" in the Price Note
Pledged Collateral and that "value" has been given as contemplated by Section
9203 of the UCC;
(q) we express no opinion as to the creation, validity or perfection
of any security interest that is not governed by, or that is excluded from
coverage by, Division 8 and 9 of the UCC and we express no opinion as to the
priority of any security interest or lien. In particular, we express no opinion
as to the priority of any security interest versus the rights of any party which
may now have or hereafter acquire a perfected security interest in the Price
Note Pledged Shares by means other than the filing of a Financing Statement. In
addition, we express no opinion as to whether the Borrower has the ability to
convey the Price Note Pledged Shares free of any adverse claim;
(r) we call to your attention the fact that the perfection of a
security interest in "proceeds" (as defined in the UCC) of collateral is
governed and restricted by Section 9306 of the UCC; and
(s) we call to your attention the fact that under the UCC, with
certain limited exceptions, the effectiveness of the Financing Statement will
lapse five years after the date of filing thereof.
<PAGE> 19
________, 1999
Page 6
To the extent that the obligations of the Borrower may be dependent
upon such matters, we assume for purposes of this opinion that: (i) all parties
to the Loan Documents other than the Borrower are duly incorporated, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation; (ii) all parties to the Loan Documents other than the Borrower
have the requisite power and authority to execute and deliver the Loan Documents
and to perform their respective obligations under the Loan Documents to which
they are a party; (iii) the Loan Documents to which such parties other than the
Borrower is a party have been duly authorized, executed and delivered by such
parties, (iv) the Loan Documents to which such parties other than the Borrower
is a party constitute their legally valid and binding obligations, enforceable
against them in accordance with their terms; and (v) all parties to the Loan
Documents have complied with any applicable requirement to file returns and pay
taxes under the Franchise Tax Law of the State of California.
This opinion is rendered only to you and is solely for your benefit
in connection with the transactions covered hereby. This opinion may not be
relied upon by you for any other purpose, or furnished to, quoted to or relied
upon by any other person, firm or corporation for any purpose, without our prior
written consent.
Very truly yours,
<PAGE> 20
EXHIBIT D
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of October 6, 1999 by Excel Legacy Corporation, a Delaware corporation (the
"Pledgor"), having its principal office at 16955 Via Del Campo, Suite 100, San
Diego, California, in favor of James F. Cahill (the "Price Note Collateral
Agent"), as collateral agent in favor of the holders (the "Holders") of the
Pledgor's Secured Promissory Note (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 6, 1999 (the "Purchase Agreement"). Capitalized
terms used and not defined herein shall have the meanings given to such terms in
the Purchase Agreement.
W I T N E S S E T H:
WHEREAS, the Pledgor is the legal and beneficial owner of the shares
of common stock, par value $.0001 per share (the "Common Stock"), of Price
Enterprises, Inc., a Maryland corporation (the "Issuer"), set forth on Schedule
I hereto (the "Price Note Pledged Shares");
WHEREAS, the terms of the Purchase Agreement require that the
Pledgor (i) pledge to the Price Note Collateral Agent for the benefit of the
Holders, and grant to the Price Note Collateral Agent for the benefit of the
Holders a security interest in, the Price Note Pledged Shares and certain other
"Price Note Pledged Collateral" (as defined herein) and (ii) execute and deliver
this Agreement in order to secure the payment and performance by the Pledgor of
any principal, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable by the Pledgor under the Price Note and
the Purchase Agreement (the "Obligations");
WHEREAS, the Pledgor and Norwest Bank Minnesota, National
Association (the "Debentures Collateral Agent"), have entered into (i) that
certain Indenture dated November 5, 1999 (the "Debentures Indenture") pertaining
to the Pledgor's 9.0% Convertible Redeemable Subordinated Secured Debentures due
2004 (the "Debentures") and (ii) a Pledge Agreement of even date therewith (the
"Debentures Pledge Agreement") pursuant to which Pledgor has granted to the
Debentures Collateral Agent, as collateral agent for the holders of the
Debentures, a security interest (the "Debentures Security Interest") in, among
other things, a portion of the Price Note Pledged Shares; and
WHEREAS, the Pledgor and Norwest Bank Minnesota, National
Association (the "Senior Note Collateral Agent"), have entered into (i) that
certain Indenture dated November 5, 1999 (the "Senior Note Indenture")
pertaining to the Pledgor's 10.0% Senior Redeemable Secured Notes due 2004 (the
"Senior Notes") and (ii) a Pledge Agreement of even date therewith (the "Senior
Note Pledge Agreement") pursuant to which Pledgor has granted to the Senior
Notes Collateral Agent, as collateral agent for the holders of the Senior Notes,
a security interest (the "Senior Note Security Interest") in, among other
things, a portion of the Price Note Pledged Shares.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
<PAGE> 21
SECTION 1. Pledge. The Pledgor hereby pledges to the Price Note Collateral Agent
for its benefit and for the ratable benefit of the Holders, and grants to the
Price Note Collateral Agent for the ratable benefit of the Holders a continuing
security interest in, all of Pledgor's right, title and interest in the
following (the "Price Note Pledged Collateral"):
(a) the Price Note Pledged Shares (including, without limitation,
the Debentures Pledged Shares (as such term is defined in the Debentures Pledge
Agreement) and the Senior Notes Pledged Shares (as such term is defined in the
Senior Noted Pledge Agreement)) and the certificates representing such Price
Note Pledged Shares, and all products and proceeds of any of such Price Note
Pledged Shares, including, without limitation, all dividends, cash, options,
warrants, rights, instruments, subscriptions and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Price Note Pledged Shares or any of the
foregoing; and
(b) all additional shares of, and all securities convertible into
and all warrants, options or other rights to purchase, Common Stock of the
Issuer from time to time acquired by the Pledgor in any manner, and the
certificates representing such additional shares (any such additional shares and
other items shall constitute part of the Price Note Pledged Shares under and as
defined in this Agreement), and all products and proceeds of any of the
foregoing, including, without limitation, all dividends, cash, options,
warrants, rights, instruments, subscriptions, and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the foregoing.
The pledge and security interest made and granted herein is made and
granted for the purpose of securing all of the Obligations (including, without
limitation, interest and any other obligations accruing after the date of any
filing by the Pledgor of any petition in bankruptcy or the commencement of any
bankruptcy, insolvency or similar proceeding with respect to the Pledgor).
SECTION 2. Delivery of Pledged Collateral. Pledgor hereby agrees that all
certificates or instruments representing or evidencing the Price Note Pledged
Collateral shall be immediately delivered to and held at all times by the Price
Note Collateral Agent, or as he may direct, pursuant hereto in the State of
California or to the Debentures Collateral Agent and the Senior Notes Collateral
Agent in accordance with the provisions of Section 3 below. All Price Note
Pledged Shares shall be in suitable form for transfer by delivery, or issued in
the name of Pledgor and accompanied by instruments of transfer or assignment
duly executed in blank and undated, and in either case having attached thereto
all requisite federal or state stock transfer tax stamps, all in form and
substance satisfactory to the Price Note Collateral Agent; provided, however,
that the Price Note Pledged Shares and such accompanying instruments of transfer
or assignment shall be subject to delivery to the Debentures Collateral Agent
and the Senior Note Collateral Agent in accordance with the provisions of
Section 3 below.
SECTION 3. Senior Security Interests
(a) Debentures and Debentures Security Interest. The Price Note
Collateral Agent acknowledges that Pledgor has the right from time to time under
the Debentures Indenture, and subject to requirements of Section 2.02 thereof,
to issue Debentures. The Price Note Collateral Agent further acknowledges that,
until such time as the Obligations with respect to the Purchase Agreement and
the Price Note have been satisfied in full and the obligations of Pledgor under
the Debentures Indenture and the Debentures have been paid in full, all
Debentures shall be secured by a number of shares of Common Stock equal to
117.647 for each $1,000 in principal amount of Debentures outstanding (the
"Debentures Pledged Shares"), and the certificates representing such Debentures
Pledged Shares, and all products and proceeds of any such shares, including,
without limitation, all dividends, cash, options, warrants, rights, instruments,
2
<PAGE> 22
subscriptions and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares. In order to further implement these understandings, the parties
agree as follows:
(i) In connection with any issuance of Debentures pursuant to
the Debentures Indenture, Pledgor shall deliver to the Price Note Collateral
Agent a certificate (a "Debentures Collateral Identification Certificate") in
the form attached hereto as Exhibit A. The Debentures Collateral Identification
Certificate (A) shall have been completed to identify the principal amount of
Debentures to be issued at such time (for purposes of said Debentures Collateral
Identification Certificate, the "Incremental Debentures"), (B) shall have been
completed to identify a portion of the Price Note Pledged Shares equal to
117.647 shares of Common Stock for each $1,000 principal amount of Incremental
Debentures (the "Incremental Debentures Pledged Shares"), as well as the
appropriate certificate(s) evidencing the Incremental Debentures Pledged Shares,
(C) shall have been duly executed by the Pledgor, and (D) shall include an
Acknowledgment of Debentures Collateral Agent duly executed by the Debentures
Collateral Agent.
(ii) Substantially concurrently with its receipt of any such
Debentures Collateral Identification Certificate, the Price Note Collateral
Agent shall execute the Acknowledgment of Price Note Collateral Agent included
in said Debentures Collateral Identification Certificate and shall deliver the
same (and all products and proceeds of any such shares), together with the stock
certificate evidencing the Incremental Debentures Pledged Shares, to the
Debentures Collateral Agent. Any such Debentures Pledged Shares (and all
products and proceeds of any such shares) thereafter shall constitute Debentures
Pledged Collateral unless and until the Debentures Security Interest therein has
been released in accordance with the provisions of the Debentures Pledge
Agreement. In the event that the Debentures Security Interest is released with
respect to particular Debentures Pledged Shares prior to the payment in full of
the Price Note, the Pledgor agrees that such Debentures Pledged Shares (and all
products and proceeds of any such shares) shall be delivered to the Price Note
Collateral Agent hereunder and shall continue to constitute Price Note Pledged
Shares hereunder. If for any reason Pledgor shall come into possession of such
Debentures Pledged Shares (and all products and proceeds of any such shares)
prior to the payment in full of the Obligations, Pledgor promptly shall deliver
the same to the Price Note Collateral Agent.
(iii) Upon request by the Pledgor and the delivery to the Price
Note Collateral Agent of a Release Certificate in the form attached hereto as
Exhibit C, the Price Note Collateral Agent, if applicable, shall execute the
Acknowledgment of Price Note Collateral Agent included in said Release
Certificate and shall deliver the same to the Debentures Collateral Agent.
(b) Senior Notes and Senior Notes Security Interest. The Price Note
Collateral Agent acknowledges that Pledgor has the right from time to time under
the Senior Notes Indenture, and subject to requirements of Section 2.02 thereof,
to issue Senior Notes. The Price Note Collateral Agent further acknowledges
that, until such time as the Obligations with respect to the Purchase Agreement
and the Price Note have been satisfied in full and the obligations of Pledgor
under the Senior Notes Indenture and the Senior Notes have been paid in full,
all Senior Notes shall be secured by a number of shares of Common Stock equal to
117.647 for each $1,000 in principal amount of Senior Notes outstanding (the
"Senior Notes Pledged Shares"), and the certificates representing such Senior
Notes Pledged Shares, and all products and proceeds of any such shares,
including, without limitation, all dividends, cash, options, warrants, rights,
instruments, subscriptions and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of such shares. In order to further implement these understandings,
the parties agree as follows:
3
<PAGE> 23
(i) In connection with any issuance of Senior Notes pursuant to
the Senior Notes Indenture, Pledgor shall deliver to the Price Note Collateral
Agent a certificate (a "Senior Notes Collateral Identification Certificate") in
the form attached hereto as Exhibit B. The Senior Notes Collateral
Identification Certificate (A) shall have been completed to identify the
principal amount of Senior Notes to be issued at such time (for purposes of said
Senior Notes Collateral Identification Certificate, the "Incremental Senior
Notes"), (B) shall have been completed to identify a portion of the Price Note
Pledged Shares equal to 117.647 shares of Common Stock for each $1,000 principal
amount of Incremental Senior Notes (the "Incremental Senior Notes Pledged
Shares"), as well as the appropriate certificate(s) evidencing the Incremental
Senior Notes Pledged Shares, (C) shall have been duly executed by the Pledgor,
and (D) shall include an Acknowledgment of Senior Notes Collateral Agent duly
executed by the Senior Notes Collateral Agent.
(ii) Substantially concurrently with its receipt of any such
Senior Notes Collateral Identification Certificate, the Price Note Collateral
Agent shall execute the Acknowledgment of Price Note Collateral Agent included
in said Senior Notes Collateral Identification Certificate and shall deliver the
same (and all products and proceeds of any such shares), together with the stock
certificate evidencing the Incremental Senior Notes Pledged Shares, to the
Senior Notes Collateral Agent. Any such Senior Notes Pledged Shares (and all
products and proceeds of any such shares) thereafter shall constitute Senior
Notes Pledged Collateral unless and until the Senior Notes Security Interest
therein has been released in accordance with the provisions of the Senior Notes
Pledge Agreement. In the event that the Senior Notes Security Interest is
released with respect to particular Senior Notes Pledged Shares prior to the
payment in full of the Price Note, the Pledgor agrees that such Senior Notes
Pledged Shares (and all products and proceeds of any such shares) shall be
delivered to the Price Note Collateral Agent hereunder and shall continue to
constitute Price Note Pledged Shares hereunder. If for any reason Pledgor shall
come into possession of such Senior Notes Pledged Shares (and all products and
proceeds of any such shares) prior to the payment in full of the Obligations,
Pledgor promptly shall deliver the same to the Price Note Collateral Agent.
(iii) Upon request by the Pledgor and the delivery to the Price
Note Collateral Agent of a Release Certificate in the form attached hereto as
Exhibit D, the Price Note Collateral Agent, if applicable, shall execute the
Acknowledgment of Price Note Collateral Agent included in said Release
Certificate and shall deliver the same to the Senior Notes Collateral Agent.
4
<PAGE> 24
SECTION 4. Nonrecourse Notes. Notwithstanding anything in this Agreement, the
Purchase Agreement or the Price Note (collectively, the "Loan Documents") to the
contrary, it is expressly understood and agreed that neither Pledgor, Issuer nor
any of their directors, officers, employees, stockholders or affiliates shall
assume, or be held to, any personal liability for payment of the amounts
evidenced or secured by the Loan Documents, or, except as otherwise expressly
set forth below, for the performance or breach of any of the other Obligations,
covenants, representations and warranties contained in the Loan Documents and
that in the event of any default under the Loan Documents, the recourse of the
Holders and the Price Note Collateral Agent shall be limited to such Price Note
Pledged Collateral, and neither the Holders nor the Price Note Collateral Agent
shall take any action against Pledgor, Issuer or any of their directors,
officers, employees, stockholders or affiliates except such action as may be
necessary (a) to subject to the satisfaction of the Price Note the Pledged
Collateral, or (b) to protect the Price Note Pledged Collateral from waste or
damage; provided, however, that notwithstanding the foregoing, nothing in this
Agreement shall be construed to release the Pledgor from personal liability on
account of fraud, intentional misrepresentation or breach by the Pledgor of this
Agreement (as opposed to a Default under, or breach of, the Purchase Agreement).
Each Holder, by accepting a Price Note, agrees to the foregoing.
SECTION 5. Representations and Warranties. The Pledgor hereby makes all
representations and warranties applicable to the Pledgor contained in the
Purchase Agreement. The Pledgor further represents and warrants that:
(a) The Pledgor is the legal, record and beneficial owner of the
Price Note Pledged Collateral, free and clear of any Lien (as defined below) or
claims of any person (as defined below) other than the security interest created
under this Agreement (and, in the case of any Debentures Pledged Collateral and
Senior Notes Pledged Collateral, the Debentures Security Interest and the Senior
Notes Security Interest, respectively).
(b) For purposes of this Agreement, "Lien" means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (the
"UCC") (or equivalent statutes) of any jurisdiction. For purposes of this
Agreement, the term "person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
(c) This Agreement has been duly executed and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms.
(d) Upon (i) the delivery to the Price Note Collateral Agent of the
Price Note Pledged Collateral (other than any Debentures Pledged Collateral or
Senior Notes Pledged Collateral), (ii) the delivery to the Debentures Collateral
Agent of any Debentures Pledged Collateral in accordance with Section 3 of this
Agreement, (iii) the delivery to the Senior Notes Collateral Agent of any Senior
Notes Pledged Collateral in accordance with Section 3 of this Agreement and (iv)
the filing of the UCC financing statements in the Secretary of State's office
for the State of California referencing Pledgor as debtor thereunder, the Price
Note Collateral Agent (as agent for the Holders) as the secured party
thereunder, and the Price Note Pledged Collateral as the collateral thereunder,
the pledge of the Price Note Pledged Collateral pursuant to this Agreement shall
create a valid and perfected security interest in the Price Note
5
<PAGE> 25
Pledged Collateral, securing the payment of the Obligations for the benefit of
the Price Note Collateral Agent and the Holders, and enforceable as such against
all creditors of the Pledgor and any persons purporting to purchase any of the
Price Note Pledged Collateral from the Pledgor.
SECTION 6. Further Assurance. Pledgor will at all times cause the security
interests granted pursuant to this Agreement to constitute valid perfected
security interests in the Price Note Pledged Collateral, enforceable as such
against all creditors of Pledgor and (except as otherwise specifically provided
herein) any persons purporting to purchase any Price Note Pledged Collateral
from Pledgor. The Pledgor will, promptly upon request by the Price Note
Collateral Agent, execute and deliver or cause to be executed and delivered, or
use its best efforts to procure, all substitute stock certificates, stock
powers, proxies, tax stamps, assignments, instruments and other documents, all
in form and substance satisfactory to the Price Note Collateral Agent, deliver
any instruments to the Price Note Collateral Agent and take any other actions
that are necessary or, in the reasonable opinion of the Price Note Collateral
Agent, desirable to perfect, continue the perfection of, or protect the Price
Note Collateral Agent's security interest in, the Price Note Pledged Collateral,
to protect the Price Note Pledged Collateral against the rights, claims, or
interests of third persons, to enable the Price Note Collateral Agent to
exercise or enforce its rights and remedies hereunder, or otherwise to effect
the purposes of this Agreement. The Pledgor also hereby authorizes the Price
Note Collateral Agent to file any financing or continuation statements with
respect to the Price Note Pledged Collateral without the signature of the
Pledgor to the extent permitted by applicable law. The Pledgor will pay all
costs incurred in connection with any of the foregoing.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing, the Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Price Note Pledged Shares or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
Purchase Agreement; provided, however, that the Pledgor shall not exercise or
shall refrain from exercising any such right if such action would have a
material adverse effect on the value of the Price Note Pledged Collateral or any
part thereof or be inconsistent with or violate any provisions of this Agreement
or the Purchase Agreement.
(b) So long as no Event of Default shall have occurred and be
continuing, and subject to the other terms and conditions of the Pledge
Agreement, the Pledgor shall be entitled to receive, and to utilize (subject to
the provisions of the Purchase Agreement) free and clear of the Lien of this
Agreement, all cash dividends paid from time to time in respect of the Price
Note Pledged Shares (other than the dividends described in Section 7(c)(ii)
below).
(c) Any and all (i) dividends, other distributions, interest and
principal payments paid or payable in the form of instruments and/or other
property (other than cash dividends permitted under Section 7(b) hereof)
received, receivable or otherwise distributed in respect of, or in exchange for,
any Price Note Pledged Collateral, (ii) dividends and other distributions paid
or payable in cash in respect of any Price Note Pledged Shares in connection
with a partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and (iii) cash paid,
payable or otherwise distributed in redemption of, or in exchange for, any Price
Note Pledged Collateral, shall in each case be forthwith delivered to the Price
Note Collateral Agent to hold as Price Note Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the benefit of the Price Note
Collateral Agent and the Holders, be segregated from the other property and
funds of the Pledgor and be forthwith delivered to the Price Note Collateral
Agent as Price Note Pledged Collateral in the same form as so received (with any
necessary endorsements).
6
<PAGE> 26
(d) The Price Note Collateral Agent shall execute and deliver (or
cause to be executed and delivered) to the Pledgor all such proxies and other
instruments as the Pledgor may reasonably request for the purpose of enabling
the Pledgor to exercise the voting and other rights that it is entitled to
exercise pursuant to Sections 7(a) and 7(b) above.
(e) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of the Pledgor to exercise the voting and other
consensual rights that it would otherwise be entitled to exercise pursuant to
Section 7(a) shall cease, and all such rights shall thereupon become vested in
the Price Note Collateral Agent with respect to any Price Note Pledged Shares
then in its possession (and with respect to any other Price Note Pledged Shares
which the Price Note Collateral Agent then is entitled to possess pursuant to
this Agreement), which, to the extent permitted by law, shall thereupon have the
sole right to exercise such voting and other consensual rights, and (ii) all
dividends payable in respect of such Price Note Pledged Collateral shall be paid
to the Price Note Collateral Agent and the Pledgor's right to receive such cash
payments pursuant to Sections 7(b) hereof shall immediately cease. The Price
Note Collateral Agent acknowledges that following an Event of Default under the
Debentures Pledge Agreement or the Senior Notes Pledge Agreement, the Debentures
Collateral Agent and the Senior Notes Collateral Agent, respectively, shall have
the right to exercise voting rights with respect to Price Note Pledged Shares
then in their respective possession (and with respect to any other Price Note
Pledged Shares which the Debentures Collateral Agent or the Senior Notes
Collateral Agent then are entitled to possess pursuant to this Agreement).
(f) Upon the occurrence and during the continuance of an Event of
Default, the Pledgor shall execute and deliver (or cause to be executed and
delivered) to the Price Note Collateral Agent all such proxies, dividend and
interest payment orders and other instruments as the Price Note Collateral Agent
may reasonably request for the purpose of enabling the Price Note Collateral
Agent to exercise the voting and other rights that it is entitled to exercise,
and receive the payments and distributions that it is entitled to receive,
pursuant to Section 7(e) above.
(g) All payments of interest, principal or premium and all dividends
and other distributions that are received by the Pledgor contrary to the
provisions of this Section 7 shall be received in trust for the benefit of the
Price Note Collateral Agent and the Holders, shall be segregated from the other
property or funds of the Pledgor and shall be forthwith delivered to the Price
Note Collateral Agent as Price Note Pledged Collateral in the same form as so
received (with any necessary endorsements); provided that any such payments
pertaining to the Debentures Pledged Collateral or the Senior Notes Pledged
Collateral instead shall be delivered to the Debentures Collateral Agent or the
Senior Notes Pledged Collateral Agent, for holding pursuant to Debentures Pledge
Agreement and the Senior Notes Pledge Agreement, respectively.
SECTION 8. Covenants. The Pledgor hereby covenants and agrees with the Price
Note Collateral Agent and the Holders that it will comply with all of the
obligations, requirements and restrictions applicable to the Pledgor contained
in the Purchase Agreement. The Pledgor further covenants and agrees, from and
after the date of this Agreement and until the Obligations have been paid in
full, that it will not (i) sell, assign, transfer, convey or otherwise dispose
of, or grant any option or warrant with respect to, any of the Price Note
Pledged Collateral without the prior written consent of the Price Note
Collateral Agent, (ii) create or permit to exist any Lien upon or with respect
to any of the Price Note Pledged Collateral other than the security interest
granted under this Agreement (and, with respect to the Debentures Pledged
Collateral and the Senior Notes Pledged Collateral, respectively, the Debentures
Security Interest and the Senior Notes Security Interest created in accordance
with Section 3 of this Agreement), and Pledgor at all times will be the sole
beneficial owner of the Price Note Pledged Collateral, (iii) other than the
Debentures
7
<PAGE> 27
Pledge Agreement and the Senior Note Pledge Agreement, enter into any agreement
or understanding that purports to or that may restrict or inhibit the Price Note
Collateral Agent's rights or remedies hereunder, including, without limitation,
the Price Note Collateral Agent's right to sell or otherwise dispose of the
Price Note Pledged Collateral, or (iv) fail to pay or discharge any tax,
assessment or levy of any nature not later than five days prior to the date of
any proposed sale under any judgement, writ or warrant of attachment with regard
to the Price Note Pledged Collateral.
SECTION 9. Power of Attorney. In addition to all of the powers granted to the
Price Note Collateral Agent pursuant to Section 5 of the Purchase Agreement, the
Pledgor hereby appoints and constitutes the Price Note Collateral Agent as the
Pledgor's attorney-in-fact to exercise all of the following powers upon and at
any time after the occurrence of an Event of Default: (i) collection of proceeds
of any Price Note Pledged Collateral then in the possession of the Price Note
Collateral Agent (and any other Price Note Pledged Collateral which the Price
Note Collateral Agent then is entitled to possess pursuant to the terms of this
Agreement), or any part thereof; (ii) conveyance of any item of Price Note
Pledged Collateral then in the possession of the Price Note Collateral Agent
(and any other Pledged Collateral which the Price Note Collateral Agent then is
entitled to possess pursuant to the terms of this Agreement), or any part
thereof, to any purchaser thereof; (iii) giving of any notices or recording of
any Liens under Section 6 hereof; (iv) making of any payments or taking any acts
under Section 10 hereof and (v) paying or discharging taxes or Liens levied or
placed upon or threatened against the Price Note Pledged Collateral then in the
possession of the Price Note Collateral Agent (and any other Pledged Collateral
which the Price Note Collateral Agent then is entitled to possess pursuant to
the terms of this Agreement), or any part thereof, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by the
Price Note Collateral Agent in its sole discretion, and such payments made by
the Price Note Collateral Agent to become the obligations of the Pledgor to the
Price Note Collateral Agent, due and payable immediately without demand. The
Price Note Collateral Agent's authority hereunder shall include, without
limitation, the authority to endorse and negotiate, for the Price Note
Collateral Agent's own account, any checks or instruments in the name of the
Pledgor, execute and give receipt for any certificate of ownership or any
document, transfer title to any item of Price Note Pledged Collateral then in
the possession of the Price Note Collateral Agent (and any other Pledged
Collateral which the Price Note Collateral Agent then is entitled to possess
pursuant to the terms of this Agreement), or any part thereof, sign the
Pledgor's name on all financing statements or any other documents deemed
necessary or appropriate to preserve, protect or perfect the security interest
in such Price Note Pledged Collateral and to file the same, prepare, file and
sign the Pledgor's name on any notice of Lien, and prepare, file and sign the
Pledgor's name on a proof of claim in bankruptcy or similar document against any
customer of the Pledgor, and to take any other actions arising from or incident
to the powers granted to the Price Note Collateral Agent in this Agreement. This
power of attorney is coupled with an interest and is irrevocable by the Pledgor.
SECTION 10. Collateral Agent May Perform. If the Pledgor fails to perform any
agreement contained herein, the Price Note Collateral Agent may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Price Note Collateral Agent incurred in connection therewith shall be payable by
the Pledgor under Section 15 hereof.
SECTION 11. No Assumption of Duties; Reasonable Care. The rights and powers
granted to the Price Note Collateral Agent hereunder are being granted in order
to preserve and protect the Price Note Collateral Agent's and the Holders'
security interest in and to the Price Note Pledged Collateral granted hereby and
shall not be interpreted to, and shall not, impose any duties on the Price Note
Collateral Agent in connection therewith. The Price Note Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation of
the Price Note Pledged Collateral in its possession if the Price Note Pledged
Collateral is accorded treatment substantially equal to that which the Price
Note Collateral Agent
8
<PAGE> 28
accords its own property, it being understood that the Price Note Collateral
Agent shall not have any responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Price Note Pledged Collateral, whether or not the Price
Note Collateral Agent has or is deemed to have knowledge of such matters, or
(ii) taking any necessary steps to preserve rights against any parties with
respect to any Price Note Pledged Collateral.
SECTION 12. Subsequent Changes Affecting Collateral. The Pledgor represents to
the Price Note Collateral Agent and the Holders that the Pledgor has made its
own arrangements for keeping informed of changes or potential changes affecting
the Price Note Pledged Collateral (including, but not limited to, rights to
convert, rights to subscribe, payment of dividends, payments of interest and/or
principal, reorganization or other exchanges, tender offers and voting rights),
and the Pledgor agrees that the Price Note Collateral Agent and the Holders
shall have no responsibility or liability for informing the Pledgor of any such
changes or potential changes or for taking any action or omitting to take any
action with respect thereto. The Pledgor covenants that it will not, without the
prior written consent of the Price Note Collateral Agent, vote to enable, or
take any other action to permit, the Issuer to sell or otherwise dispose of, or
grant any option with respect to, any of the Price Note Pledged Collateral or
create or permit to exist any Lien upon or with respect to any of the Price Note
Pledged Collateral (except that, with respect to the Debentures Pledged
Collateral and the Senior Notes Pledged Collateral, respectively, the Pledgor
may create and permit to exist the Debentures Security Interest and the Senior
Notes Security Interest in accordance with Section 3 of this Agreement). The
Pledgor will defend the right, title and interest of the Price Note Collateral
Agent and the Holders in and to the Price Note Pledged Collateral against the
claims and demands of all persons.
SECTION 13. Remedies Upon Default. If any Event of Default shall have occurred
and be continuing, the Price Note Collateral Agent and the Holders shall have,
in addition to all other rights given by law or by this Agreement or the
Purchase Agreement, all of the rights and remedies with respect to the Price
Note Pledged Collateral of a secured party under the UCC as in effect in the
State of California at that time. The Price Note Collateral Agent may, without
notice and at its option, transfer or register, and the Pledgor shall register
or cause to be registered upon request therefor by the Price Note Collateral
Agent, the Price Note Pledged Collateral then in the possession of the Price
Note Collateral Agent (and any other Price Note Pledged Collateral which the
Price Note Collateral Agent then is entitled to possess pursuant to the terms of
this Agreement), or any part thereof, on the books of the Issuer into the name
of the Price Note Collateral Agent or the Price Note Collateral Agent's
nominee(s), with or without any indication that such Price Note Pledged
Collateral is subject to the security interest hereunder. In addition, (i) with
respect to any Price Note Pledged Collateral that shall then be in or shall
thereafter come into the possession or custody of the Price Note Collateral
Agent, the Price Note Collateral Agent may sell or cause the same to be sold at
any broker's board or at public or private sale, in one or more sales or lots,
at such price or prices as the Price Note Collateral Agent may deem best, for
cash or on credit or for future delivery, without assumption of any credit risk,
and (ii) with respect to any Price Note Pledged Collateral that shall then be in
or shall thereafter come into the possession or custody of the Debentures
Collateral Agent or the Senior Notes Collateral Agent, the Price Note Collateral
Agent may instruct and otherwise work with the Debentures Collateral Agent or
the Senior Notes Collateral Agent, as appropriate, to sell or cause the same to
be sold at any broker's board or at public or private sale, in one or more sales
or lots, at such price or prices as the Price Note Collateral Agent may deem
best, for cash or on credit or for future delivery, without assumption of any
credit risk. The purchaser of any or all Price Note Pledged Collateral so sold
shall thereafter hold the same absolutely, free from any claim, encumbrance or
right of any kind whatsoever (except that with respect to any such collateral
consisting of Debentures Pledged Collateral or Senior Notes Pledged Collateral,
the Price Note Collateral Agent may instruct the Debentures Collateral Agent and
the Senior Notes Collateral Agent to sell such collateral subject to Liens in
favor of the Price Note Collateral Agent).
9
<PAGE> 29
Unless any of the Price Note Pledged Collateral threatens to decline speedily in
value or is or becomes of a type sold on a recognized market, the Price Note
Collateral Agent will give Pledgor reasonable notice of the time and place of
any public sale thereof, or of the time after which any private sale or other
intended disposition is to be made. Any sale of the Price Note Pledged
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Price Note Pledged Collateral
shall be deemed to be commercially reasonable. Any requirements of reasonable
notice shall be met if such notice is mailed to the Pledgor as provided below in
Section 19.1, at least ten days before the time of the sale or disposition. Any
other requirement of notice, demand or advertisement for sale is, to the extent
permitted by law, waived. The Price Note Collateral Agent or any Holder may, in
its own name or in the name of a designee or nominee, buy any of the Price Note
Pledged Collateral at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and reasonable attorneys'
fees and disbursements) of, or incident to, the enforcement of any of the
provisions hereof shall be recoverable from the proceeds of the sale or other
disposition of the Price Note Pledged Collateral.
SECTION 14. Irrevocable Authorization and Instruction to the Issuer. The Pledgor
hereby authorizes and instructs the Issuer to comply with any instruction
received by the Issuer from the Price Note Collateral Agent that (i) states that
an Event of Default has occurred and (ii) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuer shall be fully protected in so
complying.
SECTION 15. Fees and Expenses. The Pledgor will upon demand pay to the Price
Note Collateral Agent the amount of any and all reasonable fees and expenses
(including, without limitation, the reasonable fees and disbursements of its
counsel, of any investment banking firm, business broker or other selling agent
and of any other experts and agents retained by the Price Note Collateral Agent)
that the Price Note Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Price Note
Pledged Collateral, (iii) the exercise or enforcement of any of the rights of
the Price Note Collateral Agent and the Holders hereunder or (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof.
SECTION 16. Interest Absolute. All rights of the Price Note Collateral Agent and
the Holders and the security interests created hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Purchase Agreement
or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Purchase Agreement;
(c) any exchange, surrender, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to departure
from any guarantee, for all or any of the Obligations; or
(d) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor in respect of the Obligations or of
this Agreement.
10
<PAGE> 30
SECTION 17. Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any sale of, or other
realization upon, all or any part of the Price Note Pledged Collateral and any
cash held shall be applied by the Price Note Collateral Agent in the following
order of priorities:
first, to payment of the expenses of such sale or other realization,
including reasonable compensation to agents and counsel for the Price Note
Collateral Agent, and all expenses, liabilities and advances incurred or made by
the Price Note Collateral Agent in connection therewith, and any other
unreimbursed fees and expenses for which the Price Note Collateral Agent is to
be reimbursed pursuant to Section 15 hereof;
second, to the ratable payment (based on the principal amount of the
Price Note deemed by the Purchase Agreement to be outstanding at the time of
distribution) of accrued but unpaid interest on such outstanding Price Note;
third, to the ratable payment (based on the principal amount of the
Price Note deemed by the Purchase Agreement to be outstanding at the time of
distribution) of unpaid principal of such outstanding Price Note;
fourth, to the ratable payment (based on the principal amount of the
Price Note deemed by the Purchase Agreement to be outstanding at the time of
distribution) of all other Obligations, until all Obligations shall have been
paid in full; and
fifth, to the payment to all persons who may be entitled by law
thereto, or as a court of competent jurisdiction may direct, until all
obligations to such persons shall have been paid in full; and
finally, to payment to the Pledgor or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.
SECTION 18. Uncertificated Securities. Notwithstanding anything to the contrary
contained herein, if any Price Note Pledged Shares (whether now owned or
hereafter acquired) are uncertificated Price Note Pledged Shares, the Pledgor
shall promptly notify the Price Note Collateral Agent, and shall promptly take
all actions required to perfect the security interest of the Price Note
Collateral Agent under applicable law. The Pledgor further agrees to take such
actions as the Price Note Collateral Agent deems necessary or desirable to
effect the foregoing and to permit the Price Note Collateral Agent to exercise
any of its rights and remedies hereunder, and agrees to provide an opinion of
counsel reasonably satisfactory to the Price Note Collateral Agent with respect
to any such pledge of uncertificated Price Note Pledged Shares promptly upon
request of the Price Note Collateral Agent.
SECTION 19. Miscellaneous Provisions.
Section 19.1 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner as set forth in Section 8 of the Purchase Agreement, and delivered to
the addresses set forth therein, or, in the case of the Price Note Collateral
Agent, to: James F. Cahill, 7979 Ivanhoe Avenue, Suite 520, La Jolla, CA 92037,
Telecopy No. (858) 551-2314.
11
<PAGE> 31
Section 19.2 No Adverse Interpretation of Other Agreements. This
Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor, the Issuer or any subsidiary thereof. No such pledge,
security or debt agreement may be used to interpret this Agreement.
Section 19.3 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Section 19.4 No Recourse Against Others. No director, officer,
employee, stockholder or affiliate, as such, of the Pledgor or the Issuer shall
have any liability for any obligations of the Pledgor under this Agreement or
for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder, by accepting a Price Note, waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Price Note.
Section 19.5 Headings. The headings of the Sections of this Agreement
have been inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
Section 19.6 Counterpart Originals. This Agreement may be signed in two
or more counterparts. Each signed copy shall be an original, but all of them
together represent one and the same agreement. Each counterpart may be executed
and delivered by telecopy, if such delivery is promptly followed by the original
manually signed copy sent by overnight courier.
Section 19.7 Benefits of Agreement. Nothing in this Agreement, express
or implied, shall give to any person, other than the parties hereto and their
successors hereunder, and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
Section 19.8 Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Pledgor from any provision of this Agreement shall be effective only if made or
given in compliance with all of the terms and provisions of the Purchase
Agreement necessary for amendments or waivers of, or consents to any departure
by the Pledgor from any provision of, the Purchase Agreement, as applicable, and
neither the Price Note Collateral Agent nor any Holder shall be deemed, by any
act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. Failure of the Price Note
Collateral Agent or any Holder to exercise, or delay in exercising, any right,
power or privilege hereunder shall not operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Price Note Collateral Agent or any Holder of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy that the Price Note Collateral Agent or such Holder would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any rights or remedies provided by law.
Section 19.9 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Purchase Agreement shall have the meaning set forth in
the applicable UCC, except where the context otherwise requires. To the extent a
term or provision of this Agreement conflicts with the Purchase Agreement and is
not dealt with
12
<PAGE> 32
herein with more specificity, the Purchase Agreement shall control with respect
to the subject matter of such term or provision. Acceptance of or acquiescence
in a course of performance rendered under this Agreement shall not be relevant
to determine the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
Section 19.10 Continuing Security Interest; Transfer of Notes. This
Agreement shall create a continuing security interest in the Price Note Pledged
Collateral and shall (i) remain in full force and effect until the payment in
full of all the Obligations and all the fees and expenses owing to the Price
Note Collateral Agent, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure, together with the rights and remedies of the Price
Note Collateral Agent hereunder, to the benefit of the Price Note Collateral
Agent, the Holders and their respective successors, transferees and assigns.
Section 19.11 Reinstatement. This Agreement shall continue to be
effective or be reinstated if at any time any amount received by the Price Note
Collateral Agent or any Holder in respect of the Obligations is rescinded or
must otherwise be restored or returned by the Price Note Collateral Agent or any
Holder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Pledgor or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Pledgor or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
Section 19.12 Survival of Provisions. All representations, warranties
and covenants of the Pledgor contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Pledgor of the Obligations.
Section 19.13 Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Purchase Agreement.
Section 19.14 Authority of the Collateral Agent.
(a) The Price Note Collateral Agent shall have and be entitled to
exercise all powers hereunder that are specifically granted to the Price Note
Collateral Agent by the terms hereof, together with such powers as are
reasonably incident thereto. The Price Note Collateral Agent may perform any of
its duties hereunder or in connection with the Price Note Pledged Collateral by
or through agents or employees and shall be entitled to retain counsel and to
act in reliance upon the advice of counsel concerning all such matters. Neither
the Price Note Collateral Agent nor any director, officer, employee, attorney or
agent of the Price Note Collateral Agent shall be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Price Note Collateral Agent and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any communication,
instrument or document believed by it or them to be genuine and correct and to
have been signed or sent by the proper person or persons. The Pledgor agrees to
indemnify and hold harmless the Price Note Collateral Agent, the Holders and any
other person from and against any and all costs, expenses (including the
reasonable fees and disbursements of counsel (including, the allocated costs of
inside counsel)), claims and liabilities incurred by the Price Note Collateral
Agent, the Holders or such person hereunder, unless such claim or liability
shall be due to willful misconduct or gross negligence on the part of the Price
Note Collateral Agent, the Holders or such person.
(b) The Pledgor acknowledges that the rights and responsibilities of
the Price Note Collateral Agent under this Agreement with respect to any action
taken by the Price Note Collateral Agent
13
<PAGE> 33
or the exercise or non-exercise by the Price Note Collateral Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Price Note
Collateral Agent and the Holders, be governed by the Purchase Agreement and by
such other agreements with respect thereto as may exist from time to time among
them, but, as between the Price Note Collateral Agent and the Pledgor, the Price
Note Collateral Agent shall be conclusively presumed to be acting as agent for
the Holders with full and valid authority so to act or refrain from acting, and
the Pledgor shall not be obligated or entitled to make any inquiry respecting
such authority.
Section 19.15 Resignation or Removal of the Collateral Agent. Until
such time as the Obligations shall have been paid in full, the Price Note
Collateral Agent may at any time, by giving written notice to the Pledgor and
Holders, resign and be discharged of the responsibilities hereby created, such
resignation to become effective upon (i) the appointment of a successor Price
Note Collateral Agent and (ii) the acceptance of such appointment by such
successor Price Note Collateral Agent. As promptly as practicable after the
giving of any such notice, the Holders shall appoint a successor Price Note
Collateral Agent, which successor Price Note Collateral Agent shall be
reasonably acceptable to the Pledgor. If no successor Price Note Collateral
Agent shall be appointed and shall have accepted such appointment within 90 days
after the Price Note Collateral Agent gives the aforesaid notice of resignation,
the Price Note Collateral Agent may apply to any court of competent jurisdiction
to appoint a successor Price Note Collateral Agent to act until such time, if
any, as a successor shall have been appointed as provided in this Section 19.15.
Any successor so appointed by such court shall immediately and without further
act be superseded by any successor Price Note Collateral Agent appointed by the
Holders, as provided in this Section 19.15. Simultaneously with its replacement
as Price Note Collateral Agent hereunder, the Price Note Collateral Agent so
replaced shall deliver to its successor all documents, instruments, certificates
and other items of whatever kind (including, without limitation, the
certificates and instruments evidencing the Price Note Pledged Collateral and
all instruments of transfer or assignment) held by it pursuant to the terms
hereof. The Price Note Collateral Agent that has resigned shall be entitled to
fees, costs and expenses to the extent incurred or arising, or relating to
events occurring, before its resignation or removal.
Section 19.16 Release; Termination of Agreement. Subject to the
provisions of Section 19.11 hereof, this Agreement shall terminate upon full and
final payment and performance of the Obligations (and upon receipt by the Price
Note Collateral Agent of the Pledgor's written certification that all such
Obligations have been satisfied, and such other evidence reasonably satisfactory
to the Price Note Collateral Agent that such Obligations have been satisfied,
which may include a certification from the Holders, and the satisfaction of any
additional applicable conditions set forth in the Purchase Agreement) and
payment in full of all fees and expenses owing by the Pledgor to the Price Note
Collateral Agent. At such time, the Price Note Collateral Agent shall, at the
request of the Pledgor, reassign and redeliver to the Pledgor all of the Price
Note Pledged Collateral hereunder (other than Price Note Pledged Collateral that
has been delivered to the Debentures Collateral Agent or the Senior Notes
Collateral Agent in accordance with Section 3 hereof and which has not been
returned to the Price Note Collateral Agent) that has not been sold, disposed
of, retained or applied by the Price Note Collateral Agent in accordance with
the terms hereof. Such reassignment and redelivery shall be without warranty by
or recourse to the Price Note Collateral Agent, except as to the absence of any
prior assignments by the Price Note Collateral Agent of its interest in the
Price Note Pledged Collateral, and shall be at the expense of the Pledgor.
Further, at such time, the Price Note Collateral Agent shall, at the request of
the Pledgor, execute and deliver to the Debentures Collateral Agent and the
Senior Notes Collateral Agent the Payment Certificates in the forms attached
hereto as Exhibit E and Exhibit F, respectively.
14
<PAGE> 34
Section 19.17 Final Expression. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
Section 19.18 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Damages.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER
THE LAWS OF THE STATE OF CALIFORNIA, AND ANY DISPUTE ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THE
PLEDGOR, THE PRICE NOTE COLLATERAL AGENT AND THE HOLDERS IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAWS PROVISIONS) AND DECISIONS OF THE STATE OF CALIFORNIA.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH AND IN PARAGRAPH
(vi) BELOW, THE PLEDGOR, THE PRICE NOTE COLLATERAL AGENT AND THE HOLDERS AGREE
THAT ALL DISPUTES BETWEEN OR AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN
CALIFORNIA, BUT THE PLEDGOR, THE PRICE NOTE COLLATERAL AGENT AND THE HOLDERS
ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF CALIFORNIA. THE PLEDGOR WAIVES IN ALL DISPUTES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS
OF FORUM NON CONVENIENS.
(iii) THE PLEDGOR AGREES THAT THE PRICE NOTE COLLATERAL AGENT
SHALL, IN ITS OWN NAME OR IN THE NAME AND ON BEHALF OF ANY HOLDER, HAVE THE
RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE PRICE
NOTE PLEDGED COLLATERAL IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE THE PRICE NOTE COLLATERAL AGENT TO REALIZE ON SUCH PROPERTY, OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE PRICE NOTE
COLLATERAL AGENT. THE PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE PRICE NOTE COLLATERAL AGENT TO
REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR
OF THE PRICE NOTE COLLATERAL AGENT. THE PLEDGOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH THE PRICE NOTE COLLATERAL AGENT HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
(iv) THE PLEDGOR, THE PRICE NOTE COLLATERAL AGENT AND THE
HOLDERS EACH WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING OUT
15
<PAGE> 35
OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED
IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(v) THE PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE PLEDGOR AT ITS ADDRESS SET FORTH IN SECTION 8 OF THE PURCHASE AGREEMENT,
SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) BUSINESS DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE PRICE NOTE
COLLATERAL AGENT OR ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE PLEDGOR IN
ANY OTHER JURISDICTION.
(vii) THE PLEDGOR HEREBY AGREES THAT NEITHER THE PRICE NOTE
COLLATERAL AGENT NOR ANY HOLDER SHALL HAVE ANY LIABILITY TO THE PLEDGOR (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY THE PLEDGOR IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS
CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS AGREEMENT, OR ANY ACT,
OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY
A FINAL AND NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON THE PRICE NOTE
COLLATERAL AGENT OR SUCH HOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS ON THE PART OF THE PRICE NOTE COLLATERAL AGENT OR
SUCH HOLDER, AS THE CASE MAY BE, CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(viii) THE PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY THE PRICE NOTE COLLATERAL AGENT OR ANY HOLDER
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE PLEDGOR WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE PRICE NOTE COLLATERAL AGENT OR ANY HOLDER
IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS,
TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE PRICE NOTE
COLLATERAL AGENT OR ANY HOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS AGREEMENT OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN THE PLEDGOR, THE PRICE NOTE COLLATERAL AGENT
AND THE HOLDERS.
Section 19.19 Acknowledgments. The Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
16
<PAGE> 36
(b) neither the Price Note Collateral Agent nor any Holder has any
fiduciary relationship to the Pledgor, and the relationship between the Price
Note Collateral Agent and the Holders, on the one hand, and the Pledgor, on the
other hand, is solely that of a secured party and a creditor; and
(c) no joint venture exists among the Holders or among the Pledgor
and the Holders.
[Signature Page Follows]
17
<PAGE> 37
[Pledge Agreement Signature Page]
PLEDGOR:
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
PRICE NOTE COLLATERAL AGENT:
--------------------------------------------
JAMES F. CAHILL,
as Price Note Collateral Agent
18
<PAGE> 38
SCHEDULE I
PLEDGED SHARES
<TABLE>
<CAPTION>
Number of Price Note Share Certificate
Issuer Pledged Shares(1) Number(s)
------ -------------------- -----------------
<S> <C> <C>
Price Enterprises, Inc. 3,918,939 0830
Price Enterprises, Inc. 2,132,470 0831
Price Enterprises, Inc. 6,102,880 0832
</TABLE>
- ------------------------------
(1) Notations shall be made from time to time on this Schedule I by the parties
to the Pledge Agreement with respect to any Price Note Pledged Shares which are
the subject of any Debentures Collateral Identification Certificate or Senior
Notes Collateral Identification Certificate and upon redelivery, if applicable,
of any shares that were previously the subject of any such certificates.
<PAGE> 39
EXHIBIT A
DEBENTURES COLLATERAL IDENTIFICATION CERTIFICATE
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October 6, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 6, 1999 (the "Price Note Purchase Agreement"), a
security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Debentures Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is issuing $33,311,000 principal
amount of Debentures in accordance with the Debentures Indenture (for purposes
of this Certificate, the "Incremental Debentures");
(b) In accordance with Section 3 of the Debentures Pledge Agreement
and Section 3(a) of the Price Note Pledge Agreement, Pledgor confirms that the
property identified on Schedule 1 hereto constitutes Incremental Debentures
Pledged Shares pledged to the Debentures Collateral Agent, and that such
Incremental Debentures Pledged Shares, together with any Incremental Debentures
Pledged Shares identified in any previous Debentures Collateral Identification
Certificate, constitute "Debentures Pledged Shares" for purposes of the
Debentures Pledge Agreement and the Price Note Pledge Agreement.
(c) The Pledgor consents to the agreements of the Debentures
Collateral Agent and the Price Note Collateral Agent confirmed below in this
Certificate, and the Pledgor waives any right to object to the performance of
any of said agreements.
(d) Pledgor acknowledges and agrees that the Debentures Collateral
Agent and the Price Note Collateral Agent shall rely upon the foregoing
certifications in taking actions under the Debentures Pledge Agreement and the
Price Note Pledge Agreement, respectively.
<PAGE> 40
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
November 12, 1999.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
<PAGE> 41
ACKNOWLEDGMENT OF DEBENTURES COLLATERAL AGENT
The undersigned hereby certifies and confirms to the Price Note
Collateral Agent as follows:
(a) The undersigned is the "Collateral Agent" under the Debentures
Pledge Agreement referenced above,
(b) The Debentures Collateral Agent acknowledges the security
interest and pledge of the Debentures Pledged Collateral pursuant to the Price
Note Pledge Agreement. Until the earlier to occur of the termination of the
Debentures Pledge Agreement or the Price Note Pledge Agreement, the Debentures
Collateral Agent agrees to hold the Debentures Pledged Collateral for itself and
for the Price Note Collateral Agent, in order to perfect the security interest
in the Debentures Pledged Collateral for itself under the Debentures Pledge
Agreement and for the Price Note Collateral Agent under the Price Note Pledge
Agreement. The Debentures Collateral Agent shall not be required to hold, and
agrees that it will not hold, the Debentures Pledged Collateral for any person
other than the Holders and the Price Note Collateral Agent in order to perfect a
security interest in the Debentures Pledged Collateral.
(c) The Debentures Collateral Agent agrees to not release any
Debentures Pledged Collateral except pursuant to a Release Certificate and, if
applicable, an accompanying Acknowledgment of Price Note Collateral Agent, as
provided for by Section 4 of the Debentures Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
By:
-----------------------------------------
Name:
Title:
<PAGE> 42
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Debentures Collateral Agent under the
Debentures Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The security interest granted in favor of the undersigned, as
Price Note Collateral Agent, in the property described in (i) Schedule 1
attached to this Certificate or (ii) any previous Debentures Collateral
Identification Certificate executed by the Price Note Collateral Agent, is
subject and subordinate to the security interest granted in such property to the
Debentures Collateral Agent under the Debentures Pledge Agreement. Said priority
shall be applicable irrespective of the time or order of attachment or
perfection of the respective security interests or the time of filing of any
financing statements pertaining thereto, or any statutes, rules of law, or court
decisions to the contrary.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 43
EXHIBIT B
SENIOR NOTES COLLATERAL IDENTIFICATION CERTIFICATE
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Notes due 2004
(the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October 6, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 6, 1999 (the "Price Note Purchase Agreement"), a
security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Senior Notes Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is issuing $18,126,000 principal
amount of Senior Notes in accordance with the Senior Notes Indenture (for
purposes of this Certificate, the "Incremental Senior Notes");
(b) In accordance with Section 3 of the Senior Notes Pledge
Agreement and Section 3(b) of the Price Note Pledge Agreement, Pledgor confirms
that the property identified on Schedule 1 hereto constitutes Incremental Senior
Notes Pledged Shares pledged to the Senior Notes Collateral Agent, and that such
Incremental Senior Notes Pledged Shares, together with any Incremental Senior
Notes Pledged Shares identified in any previous Senior Notes Collateral
Identification Certificate, constitute "Senior Notes Pledged Shares" for
purposes of the Senior Notes Pledge Agreement and the Price Note Pledge
Agreement.
(c) The Pledgor consents to the agreements of the Senior Notes
Collateral Agent and the Price Note Collateral Agent confirmed below in this
Certificate, and the Pledgor waives any right to object to the performance of
any of said agreements.
<PAGE> 44
(d) Pledgor acknowledges and agrees that the Senior Notes Collateral
Agent and the Price Note Collateral Agent shall rely upon the foregoing
certifications in taking actions under the Senior Notes Pledge Agreement and the
Price Note Pledge Agreement, respectively.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
November 12, 1999.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name: Gary B. Sabin
Title: President and
Chief Executive Officer
<PAGE> 45
ACKNOWLEDGMENT OF SENIOR NOTES COLLATERAL AGENT
The undersigned hereby certifies and confirms to the Price Note
Collateral Agent as follows:
(a) The undersigned is the "Collateral Agent" under the Senior Notes
Pledge Agreement referenced above,
(b) The Senior Notes Collateral Agent acknowledges the security
interest and pledge of the Senior Notes Pledged Collateral pursuant to the Price
Note Pledge Agreement. Until the earlier to occur of the termination of the
Senior Notes Pledge Agreement or the Price Note Pledge Agreement, the Senior
Notes Collateral Agent agrees to hold the Senior Notes Pledged Collateral for
itself and for the Price Note Collateral Agent, in order to perfect the security
interest in the Senior Notes Pledged Collateral for itself under the Senior
Notes Pledge Agreement and for the Price Note Collateral Agent under the Price
Note Pledge Agreement. The Senior Notes Collateral Agent shall not be required
to hold, and agrees that it will not hold, the Senior Notes Pledged Collateral
for any person other than the Holders and the Price Note Collateral Agent in
order to perfect a security interest in the Senior Notes Pledged Collateral.
(c) The Senior Notes Collateral Agent agrees to not release any
Senior Notes Pledged Collateral except pursuant to a Release Certificate and, if
applicable, an accompanying Acknowledgment of Price Note Collateral Agent, as
provided for by Section 4 of the Senior Notes Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
By:
-----------------------------------------
Name:
Title:
<PAGE> 46
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Senior Notes Collateral Agent under
the Senior Notes Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The security interest granted in favor of the undersigned, as
Price Note Collateral Agent, in the property described in (i) Schedule 1
attached to this Certificate or (ii) any previous Senior Notes Collateral
Identification Certificate executed by the Price Note Collateral Agent, is
subject and subordinate to the security interest granted in such property to the
Senior Notes Collateral Agent under the Senior Notes Pledge Agreement. Said
priority shall be applicable irrespective of the time or order of attachment or
perfection of the respective security interests or the time of filing of any
financing statements pertaining thereto, or any statutes, rules of law, or court
decisions to the contrary.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
November 12, 1999.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 47
EXHIBIT C
[FORM OF RELEASE CERTIFICATE]
[FOR DEBENTURES PLEDGED SHARES]
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October 6, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October 6, 1999 (the "Price Note Purchase Agreement"), a
security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Debentures Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is repurchasing, redeeming or
defeasing Debentures, or the holders thereof are converting Debentures, in the
aggregate principal amount of:
$_________________________________________;
and, in accordance with Section 4 of the Debentures Pledge
Agreement, instructs the Debentures Collateral Agent to release from
the pledge and security interest created by Section 1 of the
Debentures Pledge Agreement the following number of Debentures
Pledged Shares (equal to 117.647 Debentures Pledged Shares for each
$1,000 in principal amount of Debentures subject to such repurchase,
redemption, defeasance or conversion):
_____________________________________ shares.
(b) Pledgor represents to the Debentures Collateral Agent and
instructs as follows (check applicable box):
<PAGE> 48
[ ] The Pledgor has satisfied all obligations under the Price Note
and the Price Note Purchase Agreement. The Pledgor instructs
the Debentures Collateral Agent to deliver the Debentures
Pledged Shares to the Pledgor in accordance with the Debentures
Pledge Agreement.
[ ] The Pledgor has not satisfied all obligations under the Price
Note and the Price Note Purchase Agreement. The Pledgor
instructs the Debentures Collateral Agent to deliver the
Debentures Pledged Shares to the Price Note Collateral Agent.
The Pledgor waives any right to receive the Debentures Pledged
Shares from the Debentures Collateral Agent.
(c) Pledgor acknowledges and agrees that the Debentures Collateral
Agent shall rely upon the foregoing certifications in taking actions under the
Debentures Pledge Agreement.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
________, ______.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
<PAGE> 49
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Debentures Collateral Agent under the
Debentures Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The representation of the Pledgor in Paragraph (b) of the above
Release Certificate is true and correct, and the Debentures Pledged Shares which
are the subject of the above Release Certificate shall be delivered in
accordance with the instructions contained in said Paragraph.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 50
EXHIBIT D
[FORM OF RELEASE CERTIFICATE]
[FOR SENIOR NOTES PLEDGED SHARES]
This Certificate is provided by Excel Legacy Corporation, a Delaware
corporation (the "Pledgor"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Notes due 2004
(the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
Pledgor hereby certifies and confirms to the Senior Notes Collateral
Agent and the Price Note Collateral Agent as follows:
(a) Concurrently herewith, Pledgor is repurchasing, redeeming or
defeasing Senior Notes in the aggregate principal amount of:
$_________________________________________;
and, in accordance with Section 4 of the Senior Notes Pledge Agreement,
instructs the Senior Notes Collateral Agent to release from the pledge and
security interest created by Section 1 of the Senior Notes Pledge Agreement the
following number of Senior Notes Pledged Shares (equal to 117.647 Senior Notes
Pledged Shares for each $1,000 in principal amount of Senior Notes subject to
such repurchase, redemption or defeasance):
_____________________________________ shares.
(b) Pledgor represents to the Senior Notes Collateral Agent and
instructs as follows (check applicable box):
<PAGE> 51
[ ] The Pledgor has satisfied all obligations under the Price Note
and the Price Note Purchase Agreement. The Pledgor instructs
the Senior Notes Collateral Agent to deliver the Senior Notes
Pledged Shares to the Pledgor in accordance with the Senior
Notes Pledge Agreement.
[ ] The Pledgor has not satisfied all obligations under the Price
Note and the Price Note Purchase Agreement. The Pledgor
instructs the Senior Notes Collateral Agent to deliver the
Senior Notes Pledged Shares to the Price Note Collateral Agent.
The Pledgor waives any right to receive the Senior Notes
Pledged Shares from the Senior Notes Collateral Agent.
(c) Pledgor acknowledges and agrees that the Senior Notes Collateral
Agent shall rely upon the foregoing certifications in taking actions under the
Senior Notes Pledge Agreement.
IN WITNESS WHEREOF, Pledgor has executed this Certificate as of
________, ______.
EXCEL LEGACY CORPORATION,
a Delaware corporation
By:
-----------------------------------------
Name:
Title:
<PAGE> 52
ACKNOWLEDGMENT OF PRICE NOTE COLLATERAL AGENT
The undersigned certifies to the Senior Notes Collateral Agent under the Senior
Notes Pledge Agreement referenced above as follows:
(a) The undersigned is the "Collateral Agent" under the Price Note
Pledge Agreement referenced above,
(b) The representation of the Pledgor in Paragraph (b) of the above
Release Certificate is true and correct, and the Senior Notes Pledged Shares
which are the subject of the above Release Certificate shall be delivered in
accordance with the instructions contained in said Paragraph.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 53
EXHIBIT E
[FORM OF PAYMENT CERTIFICATE]
[TO DEBENTURES COLLATERAL AGENT]
This Certificate is provided by James F. Cahill, (the "Price Notes
Collateral Agent"), pursuant to:
(i) that certain Pledge Agreement (the "Debentures Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Debentures Collateral Agent"), pursuant to which
Pledgor has granted to the Debentures Collateral Agent, as collateral agent for
the holders of the Pledgor's 9.0% Convertible Redeemable Subordinated Secured
Debentures due 2004 (the "Debentures") issued pursuant to an Indenture (the
"Debentures Indenture") dated as of November 5, 1999 by and between Pledgor and
the Debentures Collateral Agent, a security interest (the "Debentures Security
Interest") in certain property of the Pledgor (the "Debentures Pledged
Collateral"), including certain shares (the "Debentures Pledged Shares") of the
common stock, par value $.0001 per share of Price Enterprises Inc., a Maryland
corporation ("the Common Stock"), in order to secure the obligations of the
Pledgor under the Debentures Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
The Price Note Collateral Agent hereby certifies and confirms to the
Debentures Collateral Agent as follows:
The Pledgor has satisfied all obligations under the Price Note and
the Price Note Purchase Agreement. The Debentures Collateral Agent shall, from
and after the date of this Certificate, deliver the Debentures Pledged Shares to
the Pledgor in accordance with the Debentures Pledge Agreement and the Price
Note Collateral Agent hereby waives any right to receive the Debentures Pledged
Shares from the Debentures Collateral Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________,_____.
-----------------------------------------
JAMES F. CAHILL
<PAGE> 54
EXHIBIT F
[FORM OF PAYMENT CERTIFICATE]
[TO SENIOR NOTES COLLATERAL AGENT]
This Certificate is provided by James F. Cahill, (the "Price Notes
Collateral Agent"), pursuant to:
(i) that certain Pledge Agreement (the "Senior Notes Pledge Agreement")
dated as of November 5, 1999 by and between Pledgor and Norwest Bank Minnesota,
National Association (the "Senior Notes Collateral Agent"), pursuant to which
Pledgor has granted to the Senior Notes Collateral Agent, as collateral agent
for the holders of the Pledgor's 10.0% Senior Redeemable Secured Notes due 2004
(the "Senior Notes") issued pursuant to an Indenture (the "Senior Notes
Indenture") dated as of November 5, 1999 by and between Pledgor and the Senior
Notes Collateral Agent, a security interest (the "Senior Notes Security
Interest") in certain property of the Pledgor (the "Senior Notes Pledged
Collateral"), including certain shares (the "Senior Notes Pledged Shares") of
the common stock, par value $.0001 per share of Price Enterprises Inc., a
Maryland corporation ("the Common Stock"), in order to secure the obligations of
the Pledgor under the Senior Notes Indenture; and
(ii) that certain Pledge Agreement (the "Price Note Pledge Agreement")
dated as of October __, 1999 by and between Pledgor and James F. Cahill (the
"Price Note Collateral Agent"), pursuant to which the Pledgor has granted to the
Price Note Collateral Agent, as collateral agent in favor of the holders of the
Pledgor's Secured Promissory Notes (the "Price Note") issued pursuant to that
certain Note Purchase Agreement by and between the Pledgor and The Sol and Helen
Price Trust dated as of October __, 1999 (the "Price Note Purchase Agreement"),
a security interest in certain property of the Pledgor (the "Price Note Pledged
Collateral"), including all of the shares of Common Stock of Price Enterprises,
Inc. (the "Price Note Pledged Shares"), in order to secure the obligations of
the Pledgor under the Price Note and the Price Note Purchase Agreement.
The Price Note Collateral Agent hereby certifies and confirms to the
Senior Notes Collateral Agent as follows:
The Pledgor has satisfied all obligations under the Price Note and
the Price Note Purchase Agreement. The Senior Notes Collateral Agent shall, from
and after the date of this Certificate, deliver the Senior Notes Pledged Shares
to the Pledgor in accordance with the Senior Notes Pledge Agreement and the
Price Note Collateral Agent hereby waives any right to receive the Senior Notes
Pledged Shares from the Senior Notes Collateral Agent.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________, _____.
-----------------------------------------
JAMES F. CAHILL
