-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UKc6GXZsgulsMrYXy2xoL+rNJrzBzpNuefmDAQccR8q1DczrlvTRt/KUXdkXuUfq eFim6EAihJ5uCMyVql6qnA== 0001188112-04-000965.txt : 20040623 0001188112-04-000965.hdr.sgml : 20040623 20040623144955 ACCESSION NUMBER: 0001188112-04-000965 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20040623 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: 520 GROUP LLC CENTRAL INDEX KEY: 0001274490 IRS NUMBER: 810632131 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 7979 IVANHOE AVE 520 STREET 2: C/O PRICE ENTITIES CITY: LA JOLLA STATE: CA ZIP: 92307 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRICE LEGACY CORP CENTRAL INDEX KEY: 0000929647 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 330628740 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43425 FILM NUMBER: 04877141 BUSINESS ADDRESS: STREET 1: 17140 BERNARDO CENTER DRIVE, SUITE 300 CITY: SAN DIEGO STATE: CA ZIP: 92128 BUSINESS PHONE: 8586759400 MAIL ADDRESS: STREET 1: 17140 BERNARDO CENTER DRIVE, SUITE 300 CITY: SAN DIEGO STATE: CA ZIP: 92128 FORMER COMPANY: FORMER CONFORMED NAME: PRICE ENTERPRISES INC DATE OF NAME CHANGE: 19940907 SC 13D/A 1 tsc13da-2960.txt SC 13D/A SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 13D/A (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 3)(1) PRICE LEGACY CORPORATION ---------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, PAR VALUE $0.0004 PER SHARE ---------------------------------------------------------------------------- (Title of Class of Securities) 74144P502 ---------------------------------------------------------------------------- (CUSIP Number) MARK DAITCH THE 520 GROUP, LLC 7979 IVANHOE AVENUE, SUITE 520 LA JOLLA, CALIFORNIA 92037 TELEPHONE (858) 551-2321 ---------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JUNE 16, 2004 ---------------------------------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [_] Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 11 pages) - ---------------------------- 1 The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 2 OF 11 PAGES - -------------------------------------------------------------------------------- NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) The 520 Group, LLC 81-0632131 - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS 4 WC, OO - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 California - -------------------------------------------------------------------------------- SOLE VOTING POWER NUMBER OF 7 SHARES -------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 9,043,296 (See Item 5) OWNED BY -------------------------------------------------- SOLE DISPOSITIVE POWER EACH REPORTING 9 PERSON -------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 9,043,296 (See Item 5) - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 9,043,296 (See Item 5) - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 24.7% (See Item 5) - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON* 14 OO - Limited Liability Company - -------------------------------------------------------------------------------- * See instructions before filling out! CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 3 OF 11 PAGES - -------------------------------------------------------------------------------- NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Barry McComic - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS 4 OO - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - -------------------------------------------------------------------------------- SOLE VOTING POWER NUMBER OF 7 SHARES -------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 9,043,296 (See Item 5) OWNED BY -------------------------------------------------- SOLE DISPOSITIVE POWER EACH REPORTING 9 PERSON -------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 9,043,296 (See Item 5) - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 9,043,296 (See Item 5) - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 24.7% (See Item 5) - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON* 14 IN - -------------------------------------------------------------------------------- * See instructions before filling out! CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 4 OF 11 PAGES - -------------------------------------------------------------------------------- NAME OF REPORTING PERSONS 1 I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Mark Daitch - -------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [X] - -------------------------------------------------------------------------------- SEC USE ONLY 3 - -------------------------------------------------------------------------------- SOURCE OF FUNDS 4 OO - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED 5 PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States of America - -------------------------------------------------------------------------------- SOLE VOTING POWER NUMBER OF 7 3,405 (See Item 5) SHARES -------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 9,043,296 (See Item 5) OWNED BY -------------------------------------------------- SOLE DISPOSITIVE POWER EACH REPORTING 9 3,405 (See Item 5) PERSON -------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 9,043,296 (See Item 5) - -------------------------------------------------------------------------------- AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 9,046,701 (See Item 5) - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] - -------------------------------------------------------------------------------- PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 24.7% (See Item 5) - -------------------------------------------------------------------------------- TYPE OF REPORTING PERSON* 14 IN - -------------------------------------------------------------------------------- * See instructions before filling out! CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 5 OF 11 PAGES This Amendment No. 3 to Schedule 13D relates to the common stock, par value $0.0004 per share, of Price Legacy Corporation ("Price Legacy Common Stock"), a Maryland corporation ("Price Legacy"), and further amends the Schedule 13D, filed by The 520 Group, LLC, a California limited liability company (the "520 Group"), with the Securities and Exchange Commission (the "SEC") on December 29, 2003 (the "Original 13D"), as amended by Amendment No. 1 thereto, filed by the 520 Group with the SEC on January 8, 2004, and Amendment No. 2 thereto, filed by the 520 Group with the SEC on March 19, 2004 (the Original 13D, as so amended, being the "Schedule 13D"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Schedule 13D. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Item 3 of the Schedule 13D is hereby amended to add the following information: On June 16, 2004, the 520 Group borrowed $50,000,000 from Wells Fargo Bank, National Association ("Wells Fargo") (the "Wells Fargo Loan"), pursuant to a Secured Loan Agreement, dated as of June 10, 2004 (the "Wells Fargo Loan Agreement"), by and between the 520 Group, as borrower, and Wells Fargo, as lender. The proceeds from the Wells Fargo loan were used to repay a portion of the Price Group Loan, the PFCF Loan, and the SHPT Loan (collectively, the "Existing Loans").(2) After giving effect to such repayments, the aggregate outstanding principal balance of the Existing Loans is approximately $29,000,000. On June 22, 2004, the 520 Group donated warrants to acquire 625,000 shares of Price Legacy Common Stock to a charitable organization. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Item 5 of the Schedule 13D is hereby amended and restated as follows: (a)-(b) The 520 Group presently beneficially owns, in the aggregate, 9,043,296 shares of Price Legacy Common Stock, which represent approximately 24.7% of the outstanding Price Legacy Common Stock.(3) Of these 9,043,296 shares, the 520 Group has sole voting and dispositive power over all of them and shared voting and dispositive power over none; provided that if the Managers were deemed to beneficially own any of these shares, then the 520 Group would be deemed to share voting and dispositive power over such shares with the Managers, and the Managers would be deemed to share voting and dispositive power over such shares with the 520 Group. Mr. McComic does not beneficially own any Price Legacy Common Stock, except to the extent that he may be deemed to beneficially own, by virtue of his position as a manager of the 520 Group, any Price Legacy Common Stock that is beneficially owned by the 520 Group. Mr. Daitch directly beneficially owns 3,405 shares of Price Legacy Common Stock, which represent less than 0.1% of the outstanding Price Legacy Common Stock, and over which he has sole voting and dispositive power. Other than - ---------------------------- 2 For a description of the Existing Loans, please refer to Amendment No. 1 to this Schedule 13D, filed by the 520 Group with the SEC on January 8, 2004. Certain promissory notes and pledge and security agreements executed in connection with the Existing Loans were filed as Exhibits 3 through 7 hereto, and all descriptions herein of the Prior Loans are qualified by reference to such promissory notes and pledge and security agreements in their entirety. 3 All calculations of percentage ownership in this Schedule 13D are based on approximately 36,645,994 shares of Price Legacy Common Stock estimated to be issued and outstanding as of June 8, 2004, as reported in the Amendment No. 1 to Form S-3, filed by Price Legacy with the SEC on June 14, 2004. CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 6 OF 11 PAGES these 3,405 shares, Mr. Daitch does not beneficially own any Price Legacy Common Stock, except to the extent that he may be deemed to beneficially own, by virtue of his position as a manager of the 520 Group, any Price Legacy Common Stock that is beneficially owned by the 520 Group. The information set forth in Item 2 above is incorporated herein in its entirety in response to this Item 5(b). Except for Price Legacy securities that are directly owned by the 520 Group, the 520 Group disclaims beneficial ownership of all Price Legacy securities that may be deemed to be beneficially owned by any of the Managers. Each of the Managers disclaims beneficial ownership of all Price Legacy securities that may be deemed to be beneficially owned by the 520 Group or by any other Manager. (c) The information set forth in Item 3 above is incorporated herein in its entirety in response to this Item 5(c). The information set forth in Item 6 below is incorporated herein in its entirety in response to this Item 5(c). (d)-(e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Item 6 of the Schedule 13D is hereby amended to add the following information: The information set forth in Item 3 above is incorporated herein in its entirety in response to this Item 6. The 520 Group's obligations under the Wells Fargo Loan are secured by shares of Price Legacy Common Stock pledged by the 520 Group to Wells Fargo (the "Pledged Securities") under a Securities Pledge and Security Agreement, dated as of June 10, 2004 (the "Wells Fargo Pledge Agreement"), by and between the 520 Group, as pledgor, and Wells Fargo, as pledgee. In connection therewith, the 520 Group also granted to Wells Fargo, pursuant to the Wells Fargo Pledge Agreement, a security interest in the 520 Group's rights under that certain Amended and Restated Registration Rights Agreement, dated as of March 11, 2004 (the "Amended Registration Rights Agreement"), by and among the 520 Group, The Price Group LLC, a California limited liability company (the "Price Group"), and Price Legacy.(4) The Pledged Securities are held in a securities account that is subject to a Securities Account Control Agreement, dated as of June 10, 2004 (the "Control Agreement"), by and among the 520 Group, Wells Fargo, as the secured party, and Wells Fargo Institutional Securities, LLC, as securities intermediary. Under the Control Agreement, the 520 Group may not withdraw any Pledged Securities from such securities account without Wells Fargo's prior written consent. In addition, the Wells Fargo Pledge Agreement prohibits the 520 Group from selling, assigning, transferring, exchanging or otherwise disposing of any of the Pledged Securities without Wells Fargo's prior written consent. Pursuant to the Wells Fargo Pledge Agreement, the 520 Group has appointed Wells Fargo as its proxyholder to vote the Pledged Securities from and after a default under - ---------------------------- 4 As previously disclosed in Amendment No. 2 to this Schedule 13D, filed by the 520 Group with the SEC on March 19, 2004, the Amended Registration Rights Agreement granted to the 520 Group certain registration rights with respect to certain Price Legacy Common Stock held by the 520 Group. The Amended Registration Rights Agreement was incorporated into this Schedule 13D by reference as Exhibit 10 hereto, and all descriptions herein of the Amended Registration Rights Agreement are qualified by reference thereto in its entirety. CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 7 OF 11 PAGES the Wells Fargo Loan Agreement. Prior to such a default, however, the 520 Group may continue to vote the Pledged Securities. As of June 16, 2004, the Pledged Securities consisted of 6,249,999 shares of Price Legacy Common Stock. Under the terms of the Wells Fargo Pledge Agreement, for so long as the Wells Fargo Loan is outstanding, (i) the Pledged Securities must consist of no less than 1,000,000 shares of Price Legacy Common Stock, (ii) the market value of the Pledged Securities, in the aggregate, must not be less than $11,500,000, and (iii) the market value of the Pledged Securities, in the aggregate, must equal or exceed 200% of the then outstanding principal balance of the Wells Fargo Loan. The Wells Fargo Pledge Agreement also provides that, in the event the market value of the Pledged Securities is less than $11,500,000 or 200% of the then outstanding principal balance of the Wells Fargo Loan, Wells Fargo may require the 520 Group to remedy the situation by either repaying principal or adding additional shares of Price Legacy Common Stock to the Pledged Securities, as appropriate. Conversely, under the Wells Fargo Pledge Agreement, (i) the 520 Group may request the release of an appropriate portion of the Pledged Securities if the market value of the Pledged Securities, in the aggregate, exceeds 225% of the outstanding principal balance of the Wells Fargo Loan, (ii) Wells Fargo is required to release an appropriate portion of the Pledged Securities whenever the 520 Group makes permitted principal payments in excess of $10,000,000, and (iii) Wells Fargo is required to release all of the Pledged Securities upon repayment in full of the Wells Fargo Loan. As a result, the number of shares of Price Legacy Common Stock held by the 520 Group that constitute Pledged Securities may vary from time to time depending upon, among other things, changes in the outstanding principal balance of the Wells Fargo Loan (including by reason of repayment of principal) and changes in the market value of Price Legacy Common Stock. The 520 Group's obligations under the Wells Fargo Loan are guaranteed by (i) Sol Price, an individual, pursuant to a Repayment Guaranty, dated as of June 10, 2004, by Mr. Price in favor of Wells Fargo (the "Sol Guarantee"), (ii) the Price Group, pursuant to a Repayment Guaranty, dated as of June 10, 2004, by the Price Group in favor of Wells Fargo (the "Price Group Guarantee"), and (iii) the Sol and Helen Price Trust ("SHPT"), pursuant to a Repayment Guaranty, dated as of June 10, 2004, by SHPT in favor of Wells Fargo (the "SHPT Guarantee"). The foregoing description of the Wells Fargo Loan, and the agreements and other documents executed in connection therewith, is qualified in its entirety by reference to the Wells Fargo Loan Agreement, the promissory note executed in connection therewith, the Wells Fargo Pledge Agreement, the Control Agreement, the Sol Guarantee, the Price Group Guarantee, and the SHPT Guarantee, which are being filed with this Schedule 13D as, respectively, Exhibits 11 through 17 hereto, and which are hereby incorporated herein in their entirety in response to this Item 6. ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. Item 7 of the Schedule 13D is hereby amended and to add the following information: Exhibit No. Description of Exhibit ----------- ---------------------- 11 Secured Loan Agreement, dated as of June 10, 2004, by and between The 520 Group, LLC and Wells Fargo Bank, National Association. 12 Promissory Note, dated as of June 10, 2004, in the principal amount of $50,000,000, by The 520 Group, LLC in favor of Wells Fargo Bank, National Association. CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 8 OF 11 PAGES 13 Securities Pledge and Security Agreement, dated as of June 10, 2004, by and between The 520 Group, LLC and Wells Fargo Bank, National Association. 14 Securities Account Control Agreement, dated as of June 10, 2004, by and among The 520 Group, LLC, Wells Fargo Bank, National Association, and Wells Fargo Institutional Securities, LLC. 15 Repayment Guarantee, dated as of June 10, 2004, by Sol Price in favor of Wells Fargo Bank, National Association. 16 Repayment Guarantee, dated as of June 10, 2004, by The Price Group LLC in favor of Wells Fargo Bank, National Association. 17 Repayment Guarantee, dated as of June 10, 2004, by the Sol and Helen Price Trust in favor of Wells Fargo Bank, National Association. CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 9 OF 11 PAGES SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete, and correct. Dated: June 23, 2004 THE 520 GROUP, LLC /s/ Mark Daitch ------------------------------------ By: Mark Daitch Title: Manager BARRY MCCOMIC /s/ Barry McComic ------------------------------------ MARK DAITCH /s/ Mark Daitch ------------------------------------ CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 10 OF 11 PAGES EXHIBIT INDEX Exhibit No. Description of Exhibit ----------- ---------------------- 1 Agreement to Assign Purchase Agreement, dated as of December 18, 2003, by and between The Price Group LLC and The 520 Group, LLC (incorporated by reference to Exhibit 1 to the Schedule 13D filed by The 520 Group, LLC with the SEC on December 29, 2003). 2 Assignment, dated as of December 18, 2003, by and between The Price Group LLC and The 520 Group, LLC (incorporated by reference to Exhibit 2 to the Schedule 13D filed by The 520 Group, LLC with the SEC on December 29, 2003). 3 Promissory Note, in the principal amount of $31,000,000, executed and delivered as of January 2, 2004, by The 520 Group, LLC in favor of The Price Group LLC (incorporated by reference to Exhibit 3 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). 4 Promissory Note, in the principal amount of $43,000,000, executed and delivered as of January 2, 2004, by The 520 Group, LLC in favor of the Price Family Charitable Fund (incorporated by reference to Exhibit 4 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). 5 Promissory Note, in the principal amount of $5,000,000, executed and delivered as of January 2, 2004, by The 520 Group, LLC in favor of the Sol & Helen Price Trust (incorporated by reference to Exhibit 5 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). 6 Pledge and Security Agreement, dated as of January 2, 2004, by and between The 520 Group, LLC and The Price Group LLC (incorporated by reference to Exhibit 6 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). 7 Pledge and Security Agreement, dated as of January 2, 2004, by and between The 520 Group, LLC and the Price Family Charitable Fund (incorporated by reference to Exhibit 7 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). 8 Registration Rights Agreement, dated as of September 18, 2001, by and among Warburg, Pincus Equity Partners, L.P., Warburg, Pincus Netherlands Equity Partners I, C.V., Warburg, Pincus Netherlands Equity Partners II, C.V., Warburg, Pincus Netherlands Equity Partners III, C.V., The Price Group LLC, and Price Enterprises, Inc. (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by Price Legacy Corporation with the SEC on September 19, 2001). 9 Agreement to File Schedule 13D Jointly, by and among the Reporting Persons, as required by Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 9 to Amendment No. 1 to Schedule 13D, filed by The 520 Group, LLC with the SEC on January 8, 2004). CUSIP NO. 74144P502 SCHEDULE 13D/A PAGE 11 OF 11 PAGES 10 Amended and Restated Registration Rights Agreement, dated as of March 11, 2004, by and among The 520 Group, LLC, The Price Group LLC, and Price Legacy Corporation (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2003, filed by Price Legacy Corporation with the SEC on March 15, 2004). 11 Secured Loan Agreement, dated as of June 10, 2004, by and between The 520 Group, LLC and Wells Fargo Bank, National Association (filed herewith). 12 Promissory Note, dated as of June 10, 2004, in the principal amount of $50,000,000, by The 520 Group, LLC in favor of Wells Fargo Bank, National Association (filed herewith). 13 Securities Pledge and Security Agreement, dated as of June 10, 2004, by and between The 520 Group, LLC and Wells Fargo Bank, National Association (filed herewith). 14 Securities Account Control Agreement, dated as of June 10, 2004, by and among The 520 Group, LLC, Wells Fargo Bank, National Association, and Wells Fargo Institutional Securities, LLC (filed herewith). 15 Repayment Guarantee, dated as of June 10, 2004, by Sol Price in favor of Wells Fargo Bank, National Association (filed herewith). 16 Repayment Guarantee, dated as of June 10, 2004, by The Price Group LLC in favor of Wells Fargo Bank, National Association (filed herewith). 17 Repayment Guarantee, dated as of June 10, 2004, by the Sol and Helen Price Trust in favor of Wells Fargo Bank, National Association (filed herewith). EX-11 2 tex11-2960.txt EX-11 EXHIBIT 11 ---------- SECURED LOAN AGREEMENT BETWEEN THE 520 GROUP, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY AND WELLS FARGO BANK, NATIONAL ASSOCIATION LOAN NO. 100441 ENTERED INTO AS OF JUNE 10, 2004
TABLE OF CONTENTS Page ---- ARTICLE 1. DEFINITIONS....................................................................................1 1.1 DEFINED TERMS..................................................................................1 1.2 EXHIBITS INCORPORATED..........................................................................5 ARTICLE 2. LOAN...........................................................................................5 2.1 LOAN...........................................................................................5 2.2 RECOURSE; COLLATERAL...........................................................................5 2.3 LOAN FEE; ETC..................................................................................6 2.4 NOTE...........................................................................................6 2.5 PURPOSE........................................................................................6 2.6 INTEREST; PAYMENTS.............................................................................6 2.7 PRINCIPAL PAYMENTS.............................................................................6 (a) Limitations of Prepayment; Exit Fee....................................................6 (b) Scheduled Mandatory Payments...........................................................6 (c) Required Remargin......................................................................7 (d) Credit for Payments; No Re-Borrowing...................................................7 2.8 MATURITY DATE..................................................................................7 2.9 GUARANTIES.....................................................................................7 2.10 NO ASSIGNMENT..................................................................................7 ARTICLE 3. DISBURSEMENT...................................................................................7 3.1 CONDITIONS PRECEDENT...........................................................................7 (a) Compliance.............................................................................7 (b) Documentation..........................................................................7 (c) Pledged Securities.....................................................................7 (d) Registration Rights Agreement; S-3; PLRE Acknowledgement...............................7 (e) Legal Opinions.........................................................................8 (f) Approval of Lender's Counsel...........................................................8 (g) Fees and Expenses......................................................................8 3.2 ACCOUNT; DISBURSEMENT AUTHORIZATION............................................................8 ARTICLE 4. REPRESENTATIONS AND WARRANTIES.................................................................8 4.1 AUTHORITY/ENFORCEABILITY.......................................................................8 4.2 BINDING OBLIGATIONS............................................................................9 4.3 FORMATION AND ORGANIZATIONAL DOCUMENTS; ETC....................................................9 4.4 NO VIOLATION...................................................................................9 4.5 LITIGATION.....................................................................................9 4.6 FINANCIAL CONDITION............................................................................9 4.7 NO MATERIAL ADVERSE CHANGE.....................................................................9 4.8 ACCURACY.......................................................................................9 4.9 TAX LIABILITY..................................................................................9 4.10 NO SUBORDINATION...............................................................................9 4.11 PERMITS; FRANCHISES............................................................................9 4.12 OTHER OBLIGATIONS..............................................................................9 4.13 OTHER INDEBTEDNESS............................................................................10 4.14 BUSINESS LOAN.................................................................................10 4.15 TAX SHELTER REGULATIONS.......................................................................10 4.16 PLRE STOCK....................................................................................10 4.17 REIT QUALIFICATION............................................................................10 ARTICLE 5. COVENANTS OF BORROWER.........................................................................10 5.1 NET CASH LIQUIDITY............................................................................10 5.2 MERGER, CONSOLIDATION, SALE OF ASSETS.........................................................10 5.3 EXPENSES......................................................................................10 5.4 ERISA COMPLIANCE..............................................................................10
TABLE OF CONTENTS (continued) Page ---- 5.5 EXISTENCE; BUSINESS; LIENS....................................................................11 5.6 TAXES AND OTHER LIABILITIES...................................................................11 5.7 NOTICE........................................................................................11 5.8 INSURANCE.....................................................................................11 5.9 LIMITATIONS ON DISTRIBUTIONS, ETC.............................................................11 5.10 PLRE STOCK; REGISTRATION RIGHTS; ETC..........................................................11 5.11 FORMATION AND ORGANIZATIONAL DOCUMENTS; ETC...................................................12 ARTICLE 6. REPORTING COVENANTS...........................................................................12 6.1 FINANCIAL AND OTHER INFORMATION...............................................................12 6.2 BOOKS AND RECORDS.............................................................................13 ARTICLE 7. DEFAULTS AND REMEDIES.........................................................................13 7.1 DEFAULT.......................................................................................13 (a) Monetary..............................................................................13 (b) Performance of Obligations............................................................13 (c) Attachment............................................................................13 (d) Representations and Warranties........................................................13 (e) Voluntary Bankruptcy; Insolvency; Dissolution.........................................13 (f) Involuntary Bankruptcy................................................................13 (g) Guarantors; Etc.......................................................................14 (h) Member Dispute........................................................................14 (i) Key Person at Borrower................................................................14 (j) Key Person at Guarantor...............................................................14 (k) Change in Ownership...................................................................14 (l) Other Indebtedness....................................................................14 (m) Reconfirmation of Guaranty............................................................14 (n) PLRE Status...........................................................................14 (o) Registration Rights Agreement.........................................................14 (p) Guarantor Net Worth...................................................................14 (q) Guarantor Indebtedness to Total Capitalization........................................14 7.2 ACCELERATION UPON DEFAULT; REMEDIES...........................................................15 7.3 RIGHT OF CONTEST..............................................................................15 ARTICLE 8. MISCELLANEOUS PROVISIONS......................................................................15 8.1 INDEMNITY.....................................................................................15 8.2 FORM OF DOCUMENTS.............................................................................15 8.3 NOTICES.......................................................................................15 8.4 RELATIONSHIP OF PARTIES.......................................................................15 8.5 ATTORNEYS' FEES AND EXPENSES; ENFORCEMENT.....................................................16 8.6 IMMEDIATELY AVAILABLE FUNDS...................................................................16 8.7 LENDER'S CONSENT..............................................................................16 8.8 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION......................................16 8.9 WAIVER OF RIGHT TO TRIAL BY JURY..............................................................17 8.10 SEVERABILITY..................................................................................17 8.11 NO WAIVER; SUCCESSORS.........................................................................17 8.12 TIME..........................................................................................17 8.13 HEADINGS......................................................................................17 8.14 GOVERNING LAW.................................................................................17 8.15 INTEGRATION; INTERPRETATION...................................................................17 8.16 JOINT AND SEVERAL LIABILITY...................................................................18 8.17 COUNTERPARTS..................................................................................18
-ii- SECURED LOAN AGREEMENT THIS SECURED LOAN AGREEMENT ("Agreement") is entered into as of June 10, 2004, by and between THE 520 GROUP, LLC, a California limited liability company ("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Lender"). R E C I T A L Borrower desires to borrow from Lender, and Lender agrees to loan to Borrower, the extension of credit for which provision is made herein. NOW, THEREFORE, Lender and Borrower agree as follows: ARTICLE 1. DEFINITIONS 1.1 DEFINED TERMS. The following capitalized terms generally used in this Agreement shall have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement are defined in such sections. "AFFILIATE" means any Person (other than the Lender): (a) directly or indirectly controlling, controlled by, or under common control with, the Borrower; (b) directly or indirectly owning or holding five percent (5.0%) or more of any equity interest in the Borrower; or (c) five percent (5.0%) or more of whose voting stock or other equity interest is directly or indirectly owned or held by the Borrower. For purposes of this definition, "control" (including with correlative meanings, the terms "controlling", "controlled by" and "under common control with") means the possession directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or by contract or otherwise. The Affiliates of a Person shall include any officer or director of such Person. In no event shall the Lender be deemed to be an Affiliate of the Borrower. "AGREEMENT" - shall have the meaning given to such term in the preamble hereto. "BANKRUPTCY CODE" - means the Bankruptcy Reform Act of 1978 (11 USC ss. 101-1330) as now or hereafter amended or recodified. "BORROWER" - means THE 520 GROUP, LLC, a California limited liability company. "BUSINESS DAY" - means a day of the week (but not a Saturday, Sunday or holiday) on which the offices of Lender are open to the public for carrying on substantially all of Lender's business functions. Unless specifically referenced in this Agreement as a Business Day, all references to "days" shall be to calendar days. "CAPITALIZED LEASE OBLIGATION" means obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP. The amount of a Capitalized Lease Obligation is the capitalized amount of such obligation determined in accordance with GAAP. "CASH EQUIVALENTS" mean any of the following: (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year after the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within ninety (90) days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from any two national rating agencies (namely, Standard & Poor's Rating Services, Moody's Investors Service, Fitch Ratings, or such other nationally recognized rating service as may be approved by Administrative Agent) and not listed for possible down-grade in Credit Watch published by Standard & Poor's; (c) commercial paper, other than commercial paper issued by PLRE or any of its Affiliates, maturing no more than ninety (90) days after the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or P-1 from either Standard & Poor's or Moody's; (d) domestic and Eurodollar certificates of deposit or time deposits or bankers' acceptances maturing within ninety (90) days after the date of acquisition thereof, overnight securities repurchase agreements, or reverse repurchase agreements secured by any of the foregoing types of securities or debt instruments issued, in each case, any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia or Canada having combined capital and surplus of not less than Two Hundred Fifty Million Dollars ($250,000,000); (e) securities listed on the New York Stock Exchange (f) securities listed on the American Stock Exchange; and (g) securities (other than PLRE Stock) listed on the NASDAQ. "DEFAULT" - shall have the meaning given to such term in SECTION 7.1. "DERIVATIVES CONTRACT" means any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement. Not in limitation of the foregoing, the term "Derivatives Contract" includes any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or liabilities under any such master agreement. "DERIVATIVES TERMINATION VALUE" means, in respect of any one or more Derivatives Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Derivatives Contracts (which may include the Lender). "EXISTING INDEBTEDNESS" - means the Indebtedness in the maximum aggregate principal amount of $29,000,000 owing by Borrower to The Trust, The Price Group, and The Price Family Charitable Fund. "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant Page 2 segment of the accounting profession, which are applicable to the circumstances as of the date of determination. "GUARANTOR" - means (a) The Price Group, (b) The Trust, (c) Sol Price, an individual, and (d) any other person or entity who, or which, in any manner, is or becomes obligated to Lender under any guaranty now or hereafter executed in connection with respect to the Loan (collectively or severally as the context thereof may suggest or require). "GUARANTY", "GUARANTEED" or to "GUARANTEE" as applied to any obligation means and includes: (a) a guaranty (other than by endorsement of negotiable instruments for collection in the ordinary course of business), directly or indirectly, in any manner, of any part or all of such obligation, or (b) an agreement, direct or indirect, contingent or otherwise, and whether or not constituting a guaranty, the practical effect of which is to assure the payment or performance (or payment of damages in the event of nonperformance) of any part or all of such obligation whether by: (i) the purchase of securities or obligations, (ii) the purchase, sale or lease (as lessee or lessor) of property or the purchase or sale of services primarily for the purpose of enabling the obligor with respect to such obligation to make any payment or performance (or payment of damages in the event of nonperformance) of or on account of any part or all of such obligation, or to assure the owner of such obligation against loss, (iii) the supplying of funds to or in any other manner investing in the obligor with respect to such obligation, (iv) repayment of amounts drawn down by beneficiaries of letters of credit, or (v) the supplying of funds to or investing in a Person on account of all or any part of such Person's obligation under a Guaranty of any obligation or indemnifying or holding harmless, in any way, such Person against any part or all of such obligation. As the context requires, "GUARANTY" shall also mean the repayment guaranties executed and delivered by Guarantors in connection with the Loan. "INDEBTEDNESS", means, with respect to a Person, at the time of computation thereof, all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed; (b) all obligations and liabilities of such Person (including trade debt incurred in the ordinary course of business), whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property, or (iv) which would, in conformity with GAAP, be properly classified as liabilities on the balance sheet of such Person; (c) Capitalized Lease Obligations of such Person; (d) all reimbursement obligations of such Person under or in respect of any letters of credit or acceptances (whether or not the same have been presented for payment); (e) all Off Balance Sheet Liabilities of such Person; (f) net obligations under any Derivative Contract in an amount equal to the Derivatives Termination Value thereof; (g) all Indebtedness of other Persons which (i) such Person has Guaranteed or is otherwise recourse to such Person or (ii) is secured by a Lien on any property of such Person; and (h) the pro rata share (based on ownership share) of the Indebtedness of each Unconsolidated Affiliate of such Person. "LENDER" - means WELLS FARGO BANK, NATIONAL ASSOCIATION. "LIEN" as applied to the property of any Person means: (a) any security interest, encumbrance, mortgage, deed to secure debt, deed of trust, pledge, lien, charge or lease constituting a Capitalized Lease Obligation, conditional sale or other title retention agreement, or other security title or encumbrance of any kind in respect of any property of such Person, or upon the income or profits therefrom; (b) any arrangement, express or implied, under which any property of such Person is transferred, sequestered or otherwise identified for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to the payment of the general, unsecured creditors of such Person; (c) the filing of any financing statement under the UCC or its equivalent in any jurisdiction; and (d) any agreement by such Person to grant, give or otherwise convey any of the foregoing. Page 3 "LOAN" - means the principal sum that Lender agrees to lend and Borrower agrees to borrow pursuant to the terms and conditions of this Agreement: FIFTY MILLION AND NO/100THS DOLLARS ($50,000,000). "LOAN DOCUMENTS" - means those documents, as hereafter amended, supplemented, replaced or modified, properly executed and in recordable form, if necessary, listed in EXHIBIT A as Loan Documents. "MATURITY DATE" - means July 1, 2007. "NET CASH LIQUIDITY" - means (a) the sum of unencumbered and unrestricted cash and Cash Equivalents per GAAP, LESS (b) all Unsecured Indebtedness of Guarantors in excess of $1,000,000. "NONRECOURSE INDEBTEDNESS" means, with respect to a Person, Indebtedness for borrowed money in respect of which recourse for payment (except for customary exceptions for fraud, misapplication of funds, environmental indemnities, and other similar customary exceptions to recourse liability in a form reasonably acceptable to the Agent) is contractually limited to specific assets of such Person encumbered by a Lien securing such Indebtedness. "NOTE" - means that certain Note of even date herewith, in the original principal amount of the Loan, executed by Borrower and payable to the order of Lender, as hereafter amended, supplemented, replaced or modified. "OFF BALANCE SHEET LIABILITIES" means, with respect to any Person, (a) any repurchase obligation or liability, contingent or otherwise, of such Person with respect to any accounts or notes receivable sold, transferred or otherwise disposed of by such Person, (b) any repurchase obligation or liability, contingent or otherwise, of such Person with respect to property or assets leased by such Person as lessee and (c) all obligations, contingent or otherwise, of such Person under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing if the transaction giving rise to such obligation (i) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (ii) does not (and is not required pursuant to GAAP to) appear as a liability on the balance sheet of such Person. "OTHER RELATED DOCUMENTS" - means those documents, as hereafter amended, supplemented, replaced or modified from time to time, properly executed and in recordable form, if necessary, listed in EXHIBIT A as Other Related Documents. "PARTICIPANT" - shall have the meaning given to such term in SECTION 8.8. "PERSON" - means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, or a government or any agency or political subdivision thereof. "PLEDGED SECURITIES" - means the publicly traded shares of common stock in PLRE [NASDAQ: PLRE] from time to time pledged by Borrower to Lender as collateral security for the Loan, which Pledged Securities shall at no time have a market value less than two hundred percent (200%) of the then outstanding principal balance under the Loan. "PLRE" - means Price Legacy Corporation, a Maryland corporation. "PLRE Stock" means all of the following: PLRE Common Stock [NASDAQ: PLRE], PLRE Series A Preferred Stock [NASDAQ: PLREO], and PLRE Series 1 Preferred Stock [NASDAQ: PLREP]. "POTENTIAL DEFAULT" - means an event or condition which, with the giving of notice or the passage of time, or both, would constitute a Default. Page 4 "REGISTRATION RIGHTS AGREEMENT" - means the Amended and Restated Registration Rights Agreement, dated as of March 11, 2004, among the The Price Group, Borrower and PLRE. "SECURITIES ACCOUNT" - means a blocked securities account with and controlled by Wells Fargo Institutional Securities, LLC, account number [REDACTED], for the deposit of the Pledged Securities and all proceeds thereon. "SECURITIES PLEDGE AGREEMENT" - means the Securities Pledge and Security Agreement executed by Borrower concurrently herewith with respect to the Pledged Securities. "TANGIBLE NET WORTH" - means, for any Person and as of a given date, such Person's total equity, MINUS (to the extent contained in determining stockholders' equity of such Person): (a) the amount of any write-up in the book value of any assets reflected in any balance sheet resulting from revaluation thereof or any write-up in excess of the cost of such assets acquired, and (b) the aggregate of all amounts appearing on the assets side of any such balance sheet for franchises, licenses, permits, patents, patent applications, copyrights, trademarks, service marks, trade names, goodwill, treasury stock, experimental or organizational expenses and other like assets which would be classified as intangible assets under GAAP, all determined on a consolidated basis in accordance with GAAP. "THE PRICE GROUP" - means The Price Group, LLC, a California limited liability company. "THE TRUST" - means Sol Price, as Trustee of The Sol and Helen Price Trust u/d/t dated 2/20/70. "TOTAL CAPITALIZATION" means, in respect to a Person, as of the date of determination thereof, total assets of such Person as determined in accordance with GAAP, LESS (i) intangibles assets and the book value of the investments in each Unconsolidated Affiliate, PLUS (ii) the pro rata share (based on ownership share) of such Person of the assets (similarly defined) in each of the Unconsolidated Affiliates. "UNCONSOLIDATED AFFILIATES" means, as of the date of determination thereof, an investment which is accounted for under the equity method of accounting and whose financial results would not be consolidated under GAAP with the financial results of The Trust or The Price Group. Unconsolidated Affiliates shall include TPG Sherman and any investment by The Trust and/or The Price Group which exceeds $1,500,000, but shall not include any investment by The Price Group in entities in which McComic Consolidated, Inc. or ORA Investors Series B, LLC, are investors. "UNSECURED INDEBTEDNESS" - means, with respect to a Person, all Indebtedness of such Person that is not secured by any Lien on any real or personal property pursuant to which the holder of such Indebtedness is looking to such security as the primary source of full repayment thereof. 1.2 EXHIBITS INCORPORATED. EXHIBIT A attached hereto, is hereby incorporated into this Agreement. ARTICLE 2. LOAN 2.1 LOAN. By and subject to the terms of this Agreement and each other document identified on EXHIBIT A hereto as a Loan Document, Lender agrees to lend to Borrower and Borrower agrees to borrow from Lender up to the principal sum of FIFTY MILLION AND NO/100THS DOLLARS ($50,000,000). The Loan shall be non-revolving, namely, principal repayments shall not be available for reborrowing by Borrower. 2.2 RECOURSE; COLLATERAL. The Loan shall be fully recourse to Borrower. The Loan will be secured by the Pledged Securities in accordance with the Securities Pledge Agreement. Without limiting the foregoing and except to the extent otherwise provided in the Guaranty, the Loan is not recourse to any member, partner, employee, agent, investor or Affiliate of Borrower. Page 5 2.3 LOAN FEE; ETC. Upon, and in consideration of, the execution by Lender of this Agreement, Borrower shall pay to Lender a non-refundable loan fee in the amount of $250,000, together with a non-refundable administration fee of $5,000. 2.4 NOTE. The Loan shall be evidenced by the Note. 2.5 PURPOSE. The proceeds of the Loan shall be used by Borrower to repay certain indebtedness of Borrower to each of The Price Family Charitable Fund, a California nonprofit corporation, The Price Group, and The Trust. 2.6 INTEREST; PAYMENTS. Except as otherwise provided in any Loan Document, interest shall accrue upon the outstanding principal balance at the rate(s) provided in the Note, and such interest shall be payable monthly as required therein. 2.7 PRINCIPAL PAYMENTS. (a) LIMITATIONS OF PREPAYMENT; EXIT FEE. (I) BORROWER SHALL HAVE THE RIGHT TO PREPAY ALL OR A PORTION OF THE LOAN FOR ANY REASON WHATSOEVER (SUBJECT TO OTHER APPLICABLE PROVISIONS HEREOF), PROVIDED, HOWEVER, THAT IF SUCH PREPAYMENT OCCURS FOR ANY REASON WHATSOEVER, INCLUDING AN ACCELERATION BY LENDER FOLLOWING A BORROWER DEFAULT OR IN CONNECTION WITH A BORROWER REPAYMENT AS REQUIRED BY THE TERMS OF THE SECURITIES PLEDGE AGREEMENT, (A) PRIOR TO SEPTEMBER 10, 2004, THEN IN CONNECTION WITH SUCH PREPAYMENT BORROWER SHALL PAY TO LENDER, CONCURRENTLY WITH SUCH PREPAYMENT, AN AMOUNT EQUAL TO ONE-QUARTER OF ONE PERCENT (0.25%) OF THE PRINCIPAL AMOUNT OF THE LOAN WHICH IS BEING PREPAID, (B) OR AFTER SEPTEMBER 10, 2004 BUT PRIOR TO DECEMBER 10, 2004, THEN IN CONNECTION WITH SUCH PREPAYMENT BORROWER SHALL PAY TO LENDER, CONCURRENTLY WITH SUCH PREPAYMENT, AN AMOUNT EQUAL TO ONE-EIGHTH OF ONE PERCENT (0.125%) OF THE PRINCIPAL AMOUNT OF THE LOAN WHICH IS BEING PREPAID. (II) ADDITIONALLY, AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BORROWER SHALL BE OBLIGATED AT ALL TIMES TO PAY ANY FIXED RATE PRICE ADJUSTMENT (AS DEFINED IN EXHIBIT A TO THE NOTE) RESULTING FROM A PREPAYMENT OF ANY PORTION OF THE LOAN MADE PRIOR TO THE END OF A FIXED RATE PERIOD (AS DEFINED IN EXHIBIT A TO THE NOTE), WHETHER SUCH REPAYMENT IS VOLUNTARY, REQUIRED UNDER THE TERMS OF THIS AGREEMENT, OR OTHERWISE. (b) SCHEDULED MANDATORY PAYMENTS. Borrower shall make mandatory principal payments under the Loan as follows: DATE AMOUNT ---- ------ On or before July 1, 2006 $5,000,000 On or before October 1, 2006 $7,500,000 On or before January 1, 2007 $10,000,000 On or before April 1, 2007 $12,500,000 On or before the Maturity Date All remaining outstanding principal With respect to such mandatory principal payments, if principal payments are made prior to the date of the required principal payment (or in excess of an amount due on a mandatory payment date), then the applicable amount of such earlier principal payment (or excess, as applicable) will be credited to the next required payment. Page 6 (c) REQUIRED REMARGIN. From time to time, Borrower shall repay principal outstanding under the Loan as and when required pursuant to the terms of the Securities Pledge Agreement. (d) CREDIT FOR PAYMENTS; NO RE-BORROWING. Any payment made upon the outstanding principal balance of the Loan shall be credited as of the Business Day received, provided such payment is received by Lender no later than 11:00 a.m. (Pacific Standard Time or Pacific Daylight Time, as applicable) and constitutes immediately available funds. Any principal payment received after said time, or which does not constitute immediately available funds, shall be credited upon such funds having become unconditionally and immediately available to Lender. Principal amounts prepaid may not be reborrowed. 2.8 MATURITY DATE. On the Maturity Date all sums due and owing under this Agreement and the other Loan Documents shall be payable in full. All payments due to Lender under this Agreement, whether at the Maturity Date or otherwise, shall be paid in immediately available funds. 2.9 GUARANTIES. All obligations of Borrower to Lender under the Loan Documents shall be guaranteed, jointly and severally, by Guarantors, and such guaranties shall be evidenced by and subject to the terms of a form of guaranty to be furnished by Lender. 2.10 NO ASSIGNMENT. This Loan is not assignable by Borrower to any other person or entity. ARTICLE 3. DISBURSEMENT 3.1 CONDITIONS PRECEDENT. Lender's obligation to make any disbursements or take any other action under the Loan Documents shall be subject at all times to satisfaction of each of the following conditions precedent: (a) COMPLIANCE. The representations and warranties contained herein shall be true on and as of the date of the signing of this Agreement and on the date such action is to be taken, with the same effect as though such representations and warranties had been made on and as of such dates, and on such dates no Potential Default or Default shall exist. (b) DOCUMENTATION. Prior to taking any such action hereunder, Borrower shall have executed and delivered to Lender or shall have caused to be executed and delivered to Lender all Loan Documents and Other Related Documents, which Loan Documents and Other Related Documents shall be in form and substance satisfactory to Lender in its sole and absolute discretion, and Lender shall have received such other documents, instruments, policies, forms of evidence and other materials as Lender may request under the terms of the Loan Documents. (c) PLEDGED SECURITIES. The Pledged Securities shall have been (i) registered in compliance with Securities Act of 1933 in a manner approved by Lender and which permits unrestricted sale of such Pledged Securities by each of Borrower and Lender and (ii) deposited into the Securities Account by delivering the original certificates evidencing such Pledged Securities to Lender, along with a fully executed stock power in blank. (d) REGISTRATION RIGHTS AGREEMENT; S-3; PLRE ACKNOWLEDGEMENT. (i) Lender shall have reviewed and approved a Registration Rights Agreement between and among Borrower and PLRE, which agreement (i) permits a registered sale of the Pledged Securities by each of Borrower and Lender, and (ii) obligates PLRE to maintain such registration in a current condition under all applicable state and federal securities laws; and Page 7 (ii) Lender shall have received and approved a fully executed acknowledgment agreement from PLRE which confirms, amongst other things, that (A) Lender is entitled to rights as "Permitted Transferee" under Registration Rights Agreement prior to a foreclosure on the Pledged Securities (i.e., as pledgee of Borrower), including right to be a recipient of the PLRE indemnification contained within the Registration Rights Agreement, (B) all of Borrower's and the Price Group's PLRE Stock is covered by the registration rights agreement, (C) Lender may be a co-addressee (or get reliance letters) with respect to any legal opinion/comfort letter delivered to the "Holders" under and pursuant to the Registration Rights Agreement, (D) PLRE will not consent to any amendment of the Registration Rights Agreement without Lender's prior written consent; and (E) PLRE will not accept a demand for registration from any "Permitted Transferee" under the Registration Rights Agreement without Lender's prior written consent; and (iii) Borrower and Lender shall each have received a satisfactory waiver from PLRE permitting (A) the pledge by Borrower to Lender of the Pledged Securities, and (B) the ultimate sale, if necessary, by Lender of the Pledged Securities, in one large block of shares to single purchaser or otherwise. (e) LEGAL OPINIONS. Lender shall have received legal opinions dated as of the date of funding of the Loan addressed to Lender from counsel to Borrower, PLRE and each Guarantor, which counsel shall be acceptable to Lender and which opinions shall be in form reasonably satisfactory to Lender, and which shall cover, amongst other things, good standing, due authorization, execution, delivery, enforceability and perfection of liens and collateral, as well as (i) PLRE's due incorporation and good standing and continuing qualification with the "5/50" rule applicable to real estate investment trusts as defined in Section 856 of the Internal Revenue Code (or any successor provision thereto), and (ii) no violation with PLRE's charter documents is or would be caused by a transfer by Lender or Borrower, in one large block of shares to a single purchaser or otherwise, of all or a portion of the Pledged Securities. (f) APPROVAL OF LENDER'S COUNSEL. All legal matters incidental to such action shall be satisfactory to counsel to Lender. (g) FEES AND EXPENSES. Borrower shall have paid to Lender, in accordance with Section 2.3, the Loan Fee and the administration fee, along with those costs and expenses for which Lender has requested reimbursement at closing in accordance with the provisions of Section 5.2. 3.2 ACCOUNT; DISBURSEMENT AUTHORIZATION. The proceeds of the Loan, when qualified for disbursement, shall be deposited into an account of Borrower with Lender or otherwise disbursed to or for the benefit or account of Borrower under the terms of this Agreement; PROVIDED, HOWEVER, that any direct disbursements from the Loan which are made by means of wire transfer, shall be subject to the provisions of any funds transfer agreement which is identified in EXHIBIT A hereto. Disbursements hereunder may be made by Lender upon the written request of Borrower or any person who has been authorized by Borrower to request such disbursements until such time as written notice of Borrower's revocation of such authority is received by Lender at the address herein. ARTICLE 4. REPRESENTATIONS AND WARRANTIES As a material inducement to Lender's entry into this Agreement, Borrower represents and warrants to Lender as of the date hereof and continuing thereafter that: 4.1 AUTHORITY/ENFORCEABILITY. Borrower is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to borrow as contemplated by the Loan Documents. Page 8 4.2 BINDING OBLIGATIONS. Borrower is authorized to execute, deliver and perform its obligations under the Loan Documents and Other Related Documents, and such obligations shall be valid and binding obligations of Borrower. 4.3 FORMATION AND ORGANIZATIONAL DOCUMENTS; ETC. Borrower has delivered to Lender all formation and organizational documents of Borrower and of all Guarantors, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender. Borrower shall immediately provide Lender with copies of any amendments or modifications of the aforementioned formation or organizational documents. Borrower's sole business is the ownership of PLRE Stock. 4.4 NO VIOLATION. Borrower's execution, delivery, and performance under the Loan Documents and Other Related Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is bound or regulated; or (c) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity. 4.5 LITIGATION. Except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Borrower's knowledge threatened, against Borrower. 4.6 FINANCIAL CONDITION. All financial statements and information heretofore and hereafter delivered to Lender by Borrower or any Guarantor, including, without limitation, information relating to the financial condition of Borrower, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Borrower acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports. 4.7 NO MATERIAL ADVERSE CHANGE. There has been no material adverse change in the financial condition of Borrower and/or Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Borrower has not entered into any material transaction which is not disclosed in such financial statements. 4.8 ACCURACY. All reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission. 4.9 TAX LIABILITY. Borrower has filed all required federal, state, county and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such taxes and assessments. 4.10 NO SUBORDINATION. There is no agreement, indenture, contract or instrument to which Borrower is a party or by which Borrower may be bound that requires the subordination in right of payment of any of Borrower's obligations subject to this Agreement to any other obligation of Borrower. 4.11 PERMITS; FRANCHISES. Borrower possesses, and will hereafter possess, all permits, memberships, franchises, contracts and licenses required and all trademark rights, trade names, trade name rights, patents, patent rights and fictitious name rights necessary to enable it to conduct the business in which it is now engaged without conflict with the rights of others. 4.12 OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed money, any purchase money obligation or any other material lease, commitment, contract, instrument or obligation. Page 9 4.13 OTHER INDEBTEDNESS. Borrower has no other Indebtedness other than the Existing Indebtedness, which Existing Indebtedness is secured by PLRE Stock which is other than the Pledged Securities. 4.14 BUSINESS LOAN. The Loan is a business loan transaction in the stated amount solely for the purpose of carrying on the business of Borrower and none of the proceeds of the Loan will be used for the personal, family or agricultural purposes of the Borrower. 4.15 TAX SHELTER REGULATIONS. Neither the Borrower, any Guarantor, nor any subsidiary of any of the foregoing intends to treat the Loan or the transactions contemplated by this Agreement and the other Loan Documents as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). If the Borrower, or any other party to the Loan determines to take any action inconsistent with such intention, the Borrower will promptly notify the Lender thereof. If the Borrower so notifies the Lender, the Borrower acknowledges that Lender may treat its Loan as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender (or Lenders, as applicable), will maintain the lists and other records, including the identity of the applicable party to the Loan as required by such Treasury Regulation. 4.16 PLRE STOCK. All PLRE Stock owned by Borrower is covered by and subject to the provisions of the Registration Rights Agreement, and is capable of registration by the holder thereof in accordance with the provisions of such Registration Rights Agreement. 4.17 REIT QUALIFICATION. PLRE is a qualified real estate investment trust as defined in Section 856 of the Internal Revenue Code (or any successor provision thereto). ARTICLE 5. COVENANTS OF BORROWER Borrower covenants that so long as any credit remains available hereunder, and until payment in full of all amounts owing under the Loan Documents: 5.1 NET CASH LIQUIDITY. Net Cash Liquidity for Borrower and Guarantors, in the aggregate, shall not any time be less than Fifteen Million Dollars ($15,000,000). 5.2 MERGER, CONSOLIDATION, SALE OF ASSETS. Borrower shall not merge into or consolidate with any corporation or other entity, or sell, lease, assign, transfer or otherwise dispose of all or substantially all of its assets other than in the ordinary course of business. 5.3 EXPENSES. Borrower shall immediately pay Lender upon demand all costs and expenses incurred by Lender in connection with: (a) the preparation of this Agreement, all other Loan Documents and Other Related Documents contemplated hereby (including outside counsel and allocated costs of internal counsel) in an amount not to exceed $35,000; (b) the administration of this Agreement, the other Loan Documents and Other Related Documents for the term of the Loan; and (c) the enforcement or satisfaction by Lender of any of Borrower's obligations under this Agreement, the other Loan Documents or the Other Related Documents. For all purposes of this Agreement, Lender's costs and expenses shall include, without limitation, all legal fees and expenses, accounting fees and auditor fees. If any of the services described above are provided by an employee of Lender, Lender's costs and expenses for such services shall be calculated in accordance with Lender's standard charge for such services. 5.4 ERISA COMPLIANCE. Borrower shall at all times comply with the provisions of ERISA with respect to any retirement or other employee benefit plan to which it is a party as employer, and as soon as possible after Borrower knows, or has reason to know, that any Reportable Event (as defined in ERISA) with respect to any such plan of Borrower has occurred, it shall furnish to Lender a written statement setting forth details as to such Reportable Event and the action, if any, which Borrower proposes to take with respect thereto, together with a copy of the notice of such Reportable Event furnished to the Pension Benefit Guaranty Corporation. Page 10 5.5 EXISTENCE; BUSINESS; LIENS. Borrower shall preserve and maintain its existence and all of its rights, privileges and franchises; conduct its business in an orderly, efficient, and regular manner; and comply with the requirements of all applicable laws, rules, regulations and orders of a governmental authority. The business of Borrower shall be limited to the ownership of PLRE Stock, and Borrower shall incur no other Indebtedness or grant other liens, other than the Existing Debt. 5.6 TAXES AND OTHER LIABILITIES. Borrower shall pay and discharge when due any and all indebtedness, obligations, assessments and taxes, both real and personal, owed by or relating to Borrower and Borrower's properties (including federal and state income taxes), except such as Borrower may in good faith contest or as to which a bona fide dispute may arise, provided provision is made to the satisfaction of Lender for eventual payment thereof in the event that it is found that the same is an obligation of Borrower. 5.7 NOTICE. Borrower shall promptly give notice in writing to Lender of: (a) any litigation pending or threatened against Borrower or any Guarantor; (b) the occurrence of any breach or default in the payment or performance of any obligation owing by Borrower or any Guarantor to any person or entity, other than Lender; (c) any change in the name of Borrower or any change in its identity or organizational structure; (d) any uninsured or partially uninsured loss through fire, theft, liability damage; (e) any termination or cancellation of any insurance policy which Borrower is required herein to maintain, or (f) a default (or receipt of notice thereof) with respect to any other indebtedness of Borrower or a Guarantor. 5.8 INSURANCE. Borrower shall maintain and keep in force insurance of the types and in amounts customarily carried in lines of business similar to Borrower's, including but not limited to fire, extended coverage, public liability, damage and workers' compensation, carried in companies and in amounts satisfactory to Lender, and deliver to Lender from time to time at Lender's request schedules setting forth all insurance then in effect. 5.9 LIMITATIONS ON DISTRIBUTIONS, ETC. Following the occurrence and during the continuance of a Potential Default or Default, neither Borrower nor The Price Group shall distribute any money or other property to any member of such Person, whether in the form of earnings, income or other proceeds or otherwise, nor shall either such Person repay any principal or interest on any loan or other advance made to such Person by any member thereof, nor shall either such Person loan or advance any funds to any such member. 5.10 PLRE STOCK; REGISTRATION RIGHTS; ETC. (a) With the exception of the PLRE Stock pledged in connection with the Existing Indebtedness, Neither Borrower nor any Guarantor, without the prior written consent of Lender, shall pledge or encumber any PLRE Stock owned by such Person, from time to time, to or for the benefit of any Person other than Lender. (b) Borrower shall not (i) exercise any registration rights under the Registration Rights Agreement, or (ii) enter into any "lock-up" or other agreement restricting in any manner Borrower's right to sell or otherwise transfer PLRE Stock, or (iii) amend, modify or terminate the Registration Rights Agreement, in any case without the prior written consent of Lender, which consent may be conditioned upon Lender's satisfaction that any such act shall not have an adverse impact on Borrower's ability to repay the Loan or on the collateral securing the Loan. (c) Borrower nor any Borrower Affiliate shall take any action (including, without limitation, a sale of PLRE Stock) which could invalidate or terminate the Registration Rights Agreement or Lender's ability, as a "Holder" and a "Permitted Transferee" under such Agreement, to demand registration rights. Page 11 (d) Borrower shall not sell or otherwise transfer any PLRE Stock to any Person who might qualify as a "Permitted Transferee" under the Registration Rights Agreement, unless such Person executes an agreement, in a form approved by Lender, covenanting not to exercise any rights to register the PLRE Stock under the Registration Rights Agreement while any portion of the Loan remains outstanding. (e) Neither Borrower nor any Borrower Affiliate will sell, convey, encumber or otherwise transfer PLRE Stock if, at such time, (i) under the terms of Section 2(j) of the Registration Rights Agreement a "Holder" (as such term is defined in the Registration Rights Agreement) could be required to conduct a Rule 144 sale, and (ii) such action by Borrower or Affiliate, in Lender's reasonable opinion, could effectively preclude, delay or inhibit Lender's realization on any or all of the Pledged Securities. (f) Borrower shall cause PLRE to comply with the Registration Rights Agreement, including the obligation to maintain such registration in a current condition under all applicable state and federal securities laws. (g) Within five (5) days following Lender's request therefor, Borrower shall deliver a fully executed and valid Form 144 with respect to the Pledged Securities and, in the event that Borrower fails to provide such Form 144, Borrower authorizes Lender to rely upon and submit to the Securities and Exchange Commission the Form 144 delivered to Lender concurrently with the closing hereunder. (h) WITHIN THIRTY (30) DAYS FOLLOWING THE EFFECTIVE DATE, Lender shall have reviewed and approved, and PLRE shall have filed an S-3 registration statement (or an amendment or supplement to an existing S-3, as applicable) covering the Pledged Securities which (A) permits the Pledged Securities to be sold by, or at the direction of, the Lender, and (B) specifically names Lender and Wells Fargo Institutional Securities, LLC, as pledgees of Borrower with respect to the Pledged Securities. 5.11 FORMATION AND ORGANIZATIONAL DOCUMENTS; ETC. Borrower shall not amend or modify (or cause, permit, or consent to the amendment or modification of) the organizational documents of Borrower or of any Guarantor, without the prior written consent of Lender. WITHIN NINETY (90) DAYS FOLLOWING THE EFFECTIVE DATE, Borrower shall extend the term of its operating agreement to a date not earlier than the Maturity Date hereunder, and shall provide evidence of same to Lender. ARTICLE 6. REPORTING COVENANTS 6.1 FINANCIAL AND OTHER INFORMATION. (a) Not later than one hundred twenty (120) days after and as of the end of each fiscal year, Borrower shall provide for Borrower and each Guarantor, unaudited financial statements prepared on a cash basis, but including such GAAP adjustments as are necessary in order to evidence compliance with the financial covenants contained herein; (b) Not later than fifteen (15) days following submission thereof to the Internal Revenue Service and not less frequently than annually, Borrower shall provide, for Borrower and each Guarantor, a copy of each tax return or other tax filing, amendment thereto, or extension thereof; (c) Not later than thirty (30) days following and as of the end of each calendar quarter, commencing October 1, 2004, Borrower shall provide, in a form approved by Lender, calculations together with supporting documentation evidencing compliance with SECTION 5.1, SECTION 7.1(P) and SECTION 7.1(Q) hereof, such calculations to be certified by Kathy Hillan or a responsible officer of Borrower and each applicable Guarantor as may be approved by Lender from time to time; and Page 12 (d) From time to time such other financial information with respect to Borrower, each Guarantor and any Affiliate of Borrower or a Guarantor as Lender may reasonably request. 6.2 BOOKS AND RECORDS. Borrower shall maintain complete books of account and other records in accordance with GAAP, and permit any representative of Lender, at any reasonable time, to inspect, audit and examine such books and records and to make copies of the same. ARTICLE 7. DEFAULTS AND REMEDIES 7.1 DEFAULT. The occurrence of any one or more of the following shall constitute an event of default ("DEFAULT") under this Agreement and the other Loan Documents: (a) MONETARY. Borrower's failure to pay (i) any amount due on the Maturity Date, (ii) any principal when due (whether upon demand, at maturity, a scheduled amortization payment, by reason of acceleration or otherwise), or (iii) any other amount due (whether upon demand, at maturity, by reason of acceleration or otherwise) under this Agreement or any other Loan Document; PROVIDED, HOWEVER, with respect to any sums due under this subsection (iii), other than on the Maturity Date, no Default shall occur if such sums are received by Lender within three (3) days following notice from Lender demanding such payment; or (b) PERFORMANCE OF OBLIGATIONS. Borrower's failure to perform any obligation in addition to those in SECTION 7.1(A) above under any of the Loan Documents and the continuation of such failure for more than thirty (30) days after written notice to Borrower from Lender requesting that Borrower cure such failure; PROVIDED, HOWEVER, that if a longer or shorter cure period is specifically provided for the remedy of such failure, or if a date certain is set for performance of a certain obligation, Borrower's failure to perform will not constitute a Default until such date as the specified cure period expires or such date certain occurs; or (c) ATTACHMENT. The sequestration or attachment of, or any levy or execution upon, any assets of Borrower which sequestration, attachment, levy or execution is not released expunged or dismissed prior to the earlier of thirty (30) days or the sale of the assets affected thereby; or (d) REPRESENTATIONS AND WARRANTIES. (i) The material failure of any representation or warranty of Borrower in any of the Loan Documents; or (ii) any material adverse change in the financial condition of Borrower or any Guarantor from the financial condition represented to Lender as of the later of: (A) the date hereof; or (B) the date upon which the financial condition of such party was first represented to Lender; or (e) VOLUNTARY BANKRUPTCY; INSOLVENCY; DISSOLUTION. (i) The filing of a petition by Borrower for relief under the Bankruptcy Code, or under any other present or future state or federal law regarding bankruptcy, reorganization or other debtor relief law; (ii) the filing of any pleading or an answer by Borrower in any involuntary proceeding under the Bankruptcy Code or other debtor relief law which admits the jurisdiction of the court or the petition's material allegations regarding Borrower's insolvency; (iii) a general assignment by Borrower for the benefit of creditors; or (iv) Borrower applying for, or the appointment of, a receiver, trustee, custodian or liquidator of Borrower or any of its assets; or (f) INVOLUNTARY BANKRUPTCY. The failure of Borrower to effect a full dismissal of any involuntary petition under the Bankruptcy Code or under any other debtor relief law that is filed against Borrower or in any way restrains or limits Borrower or Lender regarding the Loan prior to the earlier of the entry of any court order granting relief sought in such involuntary petition, or thirty (30) days after the date of filing of such involuntary petition; or Page 13 (g) GUARANTORS; ETC.. The occurrence of any of the events specified in SECTION 7.1(E) or SECTION 7.1(F) as to any person or entity other than Borrower, including, without limitation, any Guarantor, which is in any manner obligated to Lender under the Loan Documents; or (h) MEMBER DISPUTE. Any member dispute which Lender determines, in its reasonable discretion, shall have a material adverse effect on the Loan or on the ability of Borrower or its members to perform their obligations under the Loan Documents, which event is not (or cannot be) cured to Lender's satisfaction within fifteen (15) Business Days after the occurrence thereof; (i) KEY PERSON AT BORROWER. The retirement, death, incapacity, termination or withdrawal of Mark Daitch or Barry McComic as managers of Borrower, and Borrower's failure to provide a substitute or replacement acceptable to Lender within sixty (60) days after the occurrence of any such retirement, death, incapacity, termination or withdrawal; or (j) KEY PERSON AT GUARANTOR. The retirement, death, incapacity or withdrawal of Sol Price and Robert Price as managers of The Price Group, and The Price Group's failure to provide a substitute or replacement acceptable to Lender within sixty (60) days after the occurrence of any such retirement, death, incapacity, termination or withdrawal; or (k) CHANGE IN OWNERSHIP. Without limiting Lender's approval rights set forth in SECTION 5.11 above, any change in the ownership of Borrower or The Price Group, in either case whereby, for a period in excess of fifteen (15) Business days, (i) Ivanhoe Shelf Company, LLC, San Diego Revitalization Corporation and The San Diego Foundation fail to own at least fifty-one percent (51%) of Borrower, or (ii) The Trust fails to own at least ninety percent (90%) of The Price Group; or (l) OTHER INDEBTEDNESS. Any (i) monetary default or (ii) non-monetary default resulting in acceleration, of other Indebtedness of Borrower or any Guarantor in excess of $5,000,000; or (m) RECONFIRMATION OF GUARANTY. Failure by Robert Price (or such other executor or trustee of The Trust, and each successor trust, as applicable), within ten (10) days following death or incapacity of Sol Price, to fully reconfirm and reaffirm (pursuant to documentation acceptable to Lender) the Guaranty provided by The Trust; or (n) PLRE STATUS. PLRE, for a period in excess of fifteen (15) Business days, (i) ceases to be a listed in good standing company on the NASDAQ or other national exchange, or (ii) ceases to be a qualified real estate investment trust as defined in Section 856 of the Internal Revenue Code (or any successor provision thereto); or (o) REGISTRATION RIGHTS AGREEMENT. The termination or failure to be maintained of a registration of the Pledged Securities, for any reason, pursuant to the Registration Rights Agreement, or any other breach or default by PLRE under the Registration Rights Agreement, which failure or breach is not cured (or capable of being cured) to Lender's satisfaction within fifteen (15) Business Days; or (p) GUARANTOR NET WORTH. The failure, at any time, of each of The Trust and The Price Group to maintain, separately and not on an aggregate basis, a Tangible Net Worth in an amount greater than or equal to $100,000,000, which failure is not cured (or capable of being cured) to Lender's satisfaction within fifteen (15) Business Days; or (q) GUARANTOR INDEBTEDNESS TO TOTAL CAPITALIZATION. The failure, at any time, of either the Trust or The Price Group to maintain a ratio of Indebtedness to Total Capitalization of less than or equal to sixty percent (60%), which failure is not cured (or capable of being cured) to Lender's satisfaction within fifteen (15) Business Days. Page 14 7.2 ACCELERATION UPON DEFAULT; REMEDIES. Upon the occurrence of any Default specified in this Article, Lender may, at its sole option, declare all sums owing to Lender under the Note, this Agreement and the other Loan Documents immediately due and payable. Upon such acceleration, Lender may, in addition to all other remedies permitted under this Agreement and the other Loan Documents and at law or equity, apply any sums in the Account to the sums owing under the Loan Documents and any and all obligations of Lender to fund further disbursements under the Loan shall terminate. 7.3 RIGHT OF CONTEST. Borrower may contest in good faith any claim, demand, levy or assessment by any person other than Lender which would constitute a Default, if Borrower pursues the contest diligently and in a manner which Lender determines will not be prejudicial to Lender nor impair the rights of Lender under the Loan Documents. ARTICLE 8. MISCELLANEOUS PROVISIONS 8.1 INDEMNITY. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) WHICH LENDER MAY INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (i) THE FAILURE OF BORROWER TO PERFORM ANY OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; (ii) ANY FAILURE AT ANY TIME OF ANY OF BORROWER'S REPRESENTATIONS OR WARRANTIES TO BE TRUE AND CORRECT; OR (iii) ANY WRONGFUL ACT OR OMISSION BY BORROWER IN MATERIAL BREACH OF THIS AGREEMENT. BORROWER SHALL PAY TO LENDER UPON DEMAND (OR, IF BORROWER DISPUTES ITS OBLIGATION TO PAY AMOUNTS HEREUNDER, IMMEDIATELY UPON RESOLUTION OF SUCH DISPUTE, IF LENDER IS THE PREVAILING PARTY) ANY AMOUNTS OWING UNDER THIS INDEMNITY. INTEREST SHALL ACCRUE ON SUCH SUM (EXCLUSIVE OF ATTORNEYS' FEES AND COSTS) FROM THE DATE OF THE ORIGINAL DEMAND AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER'S DUTY TO INDEMNIFY LENDER SHALL SURVIVE THE REPAYMENT OF THE LOAN. 8.2 FORM OF DOCUMENTS. The form and substance of all documents, instruments, and forms of evidence to be delivered to Lender under the terms of this Agreement and any of the other Loan Documents shall be subject to Lender's approval and shall not be modified, superseded or terminated in any respect without Lender's prior written approval. 8.3 NOTICES. All notices, demands, or other communications under this Agreement and the other Loan Documents shall be in writing and shall be delivered to the appropriate party at the address set forth on the signature page of this Agreement (subject to change from time to time by written notice to all other parties to this Agreement). All notices, demands or other communications shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, except that notice of a Default may be sent by certified mail, return receipt requested, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid. Notices so sent shall be effective three (3) days after mailing, if mailed by first class mail, and otherwise upon receipt; PROVIDED, HOWEVER, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. 8.4 RELATIONSHIP OF PARTIES. The relationship of Borrower and Lender under the Loan Documents is, and shall at all times remain, solely that of borrower and lender, and Lender neither undertakes nor assumes any responsibility or duty to Borrower or to any third party, except as expressly provided in this Agreement and the other Loan Documents. Page 15 8.5 ATTORNEYS' FEES AND EXPENSES; ENFORCEMENT. If any attorney is engaged by Lender or Borrower following a Potential Default to enforce or defend any provision of this Agreement, any of the other Loan Documents or Other Related Documents, or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, and including, without limitation, any fees and expenses incurred in any bankruptcy proceeding of the Borrower, then the prevailing party shall be entitled to recover from the other, immediately upon demand, the amount of all reasonable attorneys' fees and expenses and all costs incurred by such party in connection therewith. 8.6 IMMEDIATELY AVAILABLE FUNDS. Unless otherwise expressly provided for in this Agreement, all amounts payable by Borrower to Lender shall be payable only in United States currency, immediately available funds. 8.7 LENDER'S CONSENT. Wherever in this Agreement there is a requirement for Lender's consent and/or a document to be provided or an action taken "to the satisfaction of Lender", it is understood by such phrase that Lender shall exercise its consent, right or judgment in a reasonable manner given the specific facts and circumstance applicable at the time. 8.8 LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION. (a) Borrower agrees that Lender may elect, at any time, to sell, assign or grant participations in all or any portion of its rights and obligations under the Loan Documents, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender's sole discretion ("PARTICIPANT"). Borrower further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to: (a) any party connected with the Loan (including, without limitation, the Borrower, any partner or member of Borrower, any constituent partner or member of Borrower and any Guarantor); and/or (b) any lending relationship other than the Loan which Lender may have with any party connected with the Loan. In the event of any such sale, assignment or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves. In connection with any such sale, assignment or participation, Borrower further agrees that the Loan Documents shall be sufficient evidence of the obligations of Borrower to each purchaser, assignee, or participant, and upon written request by Lender, Borrower shall enter into such amendments or modifications to the Loan Documents as may be reasonably required in order to evidence any such sale, assignment or participation. The indemnity obligations of Borrower under the Loan Documents shall also apply with respect to any purchaser, assignee or participant. (b) Anything in this Agreement to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Agreement, including this Section, any lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from its obligations thereunder. (c) Notwithstanding anything to the contrary set forth herein or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, the parties hereto acknowledge and agree that (i) any obligations of confidentiality contained herein and therein do not apply and have not applied from the commencement of discussions between the parties to the tax treatment and tax structure of the transactions contemplated by the Loan Documents (and any related transactions or arrangements), and (ii) each party (and each of its employees, representatives, or other agents) may disclose to any and all parties as required, without limitation of any kind, the Page 16 tax treatment and tax structure of the transactions contemplated by the Loan Documents and all materials of any kind (including opinions or other tax analyses) that are provided to such party relating to such tax treatment and tax structure, all within the meaning of Treasury Regulations Section 1.6011-4; provided, however, that each party recognizes that the privilege each has to maintain, in its sole discretion, the confidentiality of a communication relating to the transactions contemplated by the Loan Documents, including a confidential communication with its attorney or a confidential communication with a federally authorized tax practitioner under Section 7525 of the Internal Revenue Code, is not intended to be affected by the foregoing. 8.9 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. 8.10 SEVERABILITY. If any provision or obligation under this Agreement and the other Loan Documents shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that provision shall be deemed severed from the Loan Documents and the validity, legality and enforceability of the remaining provisions or obligations shall remain in full force as though the invalid, illegal, or unenforceable provision had never been a part of the Loan Documents, PROVIDED, HOWEVER, that if the rate of interest or any other amount payable under the Note or this Agreement or any other Loan Document, or the right of collectibility therefore, are declared to be or become invalid, illegal or unenforceable, Lender's obligations to make advances under the Loan Documents shall not be enforceable by Borrower. 8.11 NO WAIVER; SUCCESSORS. No waiver shall be implied from any failure of Lender to take, or any delay by Lender in taking, action concerning any Default or failure of condition, or from any previous waiver of any similar or unrelated Default or failure of condition. Any waiver or approval hereunder must be in writing and shall be limited to its specific terms. The terms and provisions hereof shall bind and inure to the benefit of the heirs, successors and assigns of the parties. 8.12 TIME. Time is of the essence of each and every term of this Agreement. 8.13 HEADINGS. All article, section or other headings appearing in this Agreement and any of the other Loan Documents are for convenience of reference only and shall be disregarded in construing this Agreement and any of the other Loan Documents. 8.14 GOVERNING LAW. This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of California, except to the extent preempted by federal laws. Borrower and all persons and entities in any manner obligated to Lender under the Loan Documents consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 8.15 INTEGRATION; INTERPRETATION. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein Page 17 and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing. 8.16 JOINT AND SEVERAL LIABILITY. The liability of all persons and entities obligated in any manner under this Agreement and any of the Loan Documents shall be joint and several. 8.17 COUNTERPARTS. To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK) Page 18 IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of the date appearing on the first page of this Agreement. "LENDER" WELLS FARGO BANK, NATIONAL ASSOCIATION By: ----------------------------------- Name: ----------------------------------- Its: ----------------------------------- Lender's Address: ----------------- WELLS FARGO BANK, NATIONAL ASSOCIATION 401 B Street, Suite 304 San Diego, California 92101 Attention: Melissa Murphy "BORROWER" THE 520 GROUP, LLC, a California limited liability company By: ----------------------------------- Name: Mark Daitch Its: Manager By: ----------------------------------- Name: Barry McComic Its: Manager Borrower's Address: ------------------- The 520 Group 7979 Ivanhoe Avenue, Ste. 520 La Jolla, CA 92037 Attention: Jack McGrory Page 19 Loan No. 100441 EXHIBIT A - DOCUMENTS EXHIBIT A to SECURED LOAN AGREEMENT between THE 520 GROUP, LLC, a California limited liability company, as "BORROWER", and WELLS FARGO BANK, NATIONAL ASSOCIATION, as "LENDER", dated as of June 10, 2004. 1. LOAN DOCUMENTS. The documents numbered 1.1 through 1.7 inclusive, and amendments, modifications and supplements thereto which have received the prior written consent of Lender, together with any documents executed in the future that are approved by Lender and that recite that they are "Loan Documents" for purposes of this Agreement are collectively referred to herein as the Loan Documents. 1.1 This Agreement. 1.2 The Note of even date herewith in the original principal amount of the Loan made by Borrower payable to the order of Lender. 1.3 The Securities Pledge Agreement of even date herewith executed by Borrower for the benefit of Lender with respect to the Pledged Securities. 1.4 Repayment Guaranty of even date herewith executed by The Price Group for the benefit of Lender. 1.5 Repayment Guaranty of even date herewith executed by Sol Price for the benefit of Lender. 1.6 Repayment Guaranty of even date herewith executed by The Trust for the benefit of Lender. 1.7 Securities Account Control Agreement of even date herewith executed by Borrower, Lender, and Wells Fargo Institutional Securities, LLC. 2. OTHER RELATED DOCUMENTS (WHICH ARE NOT LOAN DOCUMENTS): 2.1 Form FR U-1 (purpose statement). 2.2 Form 144 2.3 Authorizing certificates and resolutions of Borrower and Guarantors 2.4 Legal opinions from Borrower's, Guarantors', and PLRE's counsel. 2.5 Funds Transfer Agreement. 2.6 [Other] EX-12 3 tex12-2960.txt EX-12 EXHIBIT 12 ---------- PROMISSORY NOTE (Secured) $50,000,000.00 San Diego, California June 10, 2004 FOR VALUE RECEIVED, the undersigned The 520 Group, LLC, a California limited liability company ("Borrower"), promise(s) to pay to the order of Wells Fargo Bank, National Association ("Lender"), at the Disbursement and Operations Center in El Segundo, California, or at such other place as may be designated in writing by Lender, the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) or so much thereof as may from time to time be owing hereunder by reason of advances by Lender to or for the benefit or account of Borrower, with interest thereon, per annum, at one or more of the Effective Rates calculated in accordance with the terms and provisions of the Fixed Rate Agreement attached hereto as Exhibit A and a Fixed Rate Notice described on Exhibit B attached hereto (based on a 360-day year and charged on the basis of actual days elapsed). All sums owing hereunder are payable in lawful money of the United States of America, in immediately available funds. Interest accrued on this note ("Note") shall be due and payable on the first day of each month commencing with the first month after the date of this Note. Borrower shall make principal payments pursuant to Section 2.7 of that certain Secured Loan Agreement of even date herewith. The outstanding principal balance of this Note, together with all accrued and unpaid interest, shall be due and payable in full on July 1, 2007 ("Maturity Date"). This Note is secured by, among other things, a Securities Pledge and Security Agreement dated concurrently herewith. If any interest payment required hereunder is not received by Lender (whether by direct debit or otherwise) on or before the fifteenth (15th) calendar day of the month in which it becomes due, Borrower shall pay, at Lender's option, a late or collection charge equal to four percent (4%) of the amount of such unpaid interest payment. This Note is made pursuant to the Loan Agreement (hereinafter defined). Should a Default (as defined in the Loan Agreement) occur, the holder of this Note, at holder's option, may declare all sums owing under this Note immediately due and payable; provided, however, that if any document related to this Note provides for automatic acceleration of payment of sums owing hereunder, all sums owing hereunder shall be automatically due and payable in accordance with the terms of that document. If, following a Potential Default, any attorney is engaged by Lender to enforce or defend any provision of this Note, or as a consequence of any Default, with or without the filing of any legal action or proceeding, then Borrower shall pay to Lender immediately upon demand all attorneys' fees and all costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance owing hereunder as if such unpaid attorneys' fees and costs had been added to the principal. No previous waiver and no failure or delay by Lender in acting with respect to the terms of this Note or the Loan Agreement shall constitute a waiver of any breach, default, or failure of condition under this Note, the Loan Agreement or the obligations evidenced thereby. A waiver of any term of this Note, the Loan Agreement or the obligations evidenced thereby must be made in writing and shall be limited to the express written terms of such waiver. In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the loan evidenced by this Note, the terms of this Note shall prevail. - -------------------------------------------------------------------------------- The 520 Group Page 1 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA - -------------------------------------------------------------------------------- If this Note is executed by more than one person or entity as Borrower, the obligations of each such person or entity shall be joint and several. No person or entity shall be a mere accommodation maker, but each shall be primarily and directly liable hereunder. Except as otherwise provided in any agreement executed in connection with this Note, Borrower waives: presentment; demand; notice of dishonor; notice of default or delinquency; notice of acceleration; notice of protest and nonpayment; notice of costs, expenses or losses and interest thereon; notice of late charges; and diligence in taking any action to collect any sums owing under this Note or in proceeding against any of the rights or interests in or to properties securing payment of this Note. Time is of the essence with respect to every provision hereof. This Note shall be construed and enforced in accordance with the laws of the State of California, except to the extent that federal laws preempt the laws of the State of California, and all persons and entities in any manner obligated under this Note consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. All notices or other communications required or permitted to be given pursuant to this Note shall be given to the Borrower or Lender at the address and in the manner provided for in the Loan Agreement. The Loan Documents contain or expressly incorporate by reference the entire agreement of the parties with respect to the matters contemplated therein and supersede all prior negotiations or agreements, written or oral. The Loan Documents shall not be modified except by written instrument executed by all parties. Any reference to the Loan Documents includes any amendments, renewals or extensions now or hereafter approved by Lender in writing. EXHIBITS A and B are attached hereto and incorporated herein by reference. "BORROWER" The 520 Group, LLC, a California limited liability company By:__________________________________________ Barry McComic, Manager By:__________________________________________ Mark Daitch, Manager - -------------------------------------------------------------------------------- The 520 Group Page 2 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT A - -------------------------------------------------------------------------------- FIXED RATE AGREEMENT EXHIBIT A to Promissory Note Secured by Deed of Trust ("Note"), dated June 10, 2004, made by The 520 Group, LLC, a California limited liability company, as Borrower, to the order of Wells Fargo Bank, National Association, as Lender. R E C I T A L S Borrower has requested and Lender has agreed to provide a fixed rate option as a basis for calculating the effective rate of interest on amounts owing under this Note. Borrower acknowledges the following: (i) it understands the process of exercising the fixed rate option as provided herein; (ii) amounts owing under this Note may bear interest at different rates and for different time periods; and (iii) absent the terms and conditions hereof, it would be extremely difficult to calculate Lender's additional costs, expenses, and damages in the event of a Default or prepayment by Borrower hereunder. Given the above, Borrower agrees that the provisions herein (including, without limitation, the Fixed Rate Price Adjustment defined below) provide for a reasonable and fair method for Lender to recover its additional costs, expenses and damages in the event of a Default or prepayment by Borrower. 1. RATES AND TERMS DEFINED. Various rates and terms not otherwise defined herein are defined and described as follows: "ALTERNATE RATE" is a rate of interest per annum five percent (5%) in excess of the applicable Effective Rate in effect from time to time. "APPLICABLE LIBO RATE" is the rate of interest, rounded upward to the nearest whole multiple of one-hundredth of one percent (.01%), equal to the sum of: (a) One and One-Half Percent (1.5000%) plus (b) the LIBO Rate, which rate is divided by one (1.00) minus the Reserve Percentage: Applicable LIBO Rate = 1.5000% + LIBO Rate ---------------------- (1 - Reserve Percentage) "BUSINESS DAY(S)" means a day of the week (but not a Saturday, Sunday or holiday) on which the offices of Lender are open to the public for carrying on substantially all of Lender's business functions. "FIXED RATE" is the Applicable LIBO Rate as accepted by Borrower as an Effective Rate for a particular Fixed Rate Period and Fixed Rate Portion. "FIXED RATE COMMENCEMENT DATE" means the date upon which the Fixed Rate Period commences. "FIXED RATE NOTICE" is a written notice in the form shown on Exhibit B attached to this Note which requests a Fixed Rate for a particular Fixed Rate Period and the Fixed Rate Portion. "FIXED RATE PERIOD" is the period or periods of (a) one (1) month, two (2) months, three (3) months or six (6) months; or (b) any other period which ends at the Maturity Date, which periods are selected by Borrower and confirmed in the Fixed Rate Notice; provided that no Fixed Rate Period shall extend beyond the Maturity Date. "FIXED RATE PORTION" is the portion or portions of the principal balance of this Note which Borrower selects to have subject to a Fixed Rate, each of which is an amount: (a) equal to the unpaid principal - -------------------------------------------------------------------------------- The 520 Group Page 3 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT A - -------------------------------------------------------------------------------- balance of this Note not subject to a Fixed Rate; and (b) is not less than One Hundred Thousand and 00/100ths Dollars ($100,000.00) and is an even multiple of Two Hundred Fifty Thousand and 00/100ths Dollars ($250,000.00). In the event Borrower is subject to a principal amortization schedule under the terms and conditions of the Loan Documents, the Fixed Rate Portion shall in no event exceed the maximum outstanding principal balance which will be permissible on the last day of the Fixed Rate Period selected. "LIBO RATE" is the rate of interest, rounded upward to the nearest whole multiple of one-sixteenth of one percent (.0625%), quoted by Lender as the London Inter-Bank Offered Rate for deposits in U.S. Dollars at approximately 9:00 a.m. California time, for a Fixed Rate Commencement Date or a Price Adjustment Date, as appropriate, for purposes of calculating effective rates of interest for loans or obligations making reference thereto for an amount approximately equal to a Fixed Rate Portion and for a period of time approximately equal to a Fixed Rate Period or the time remaining in a Fixed Rate Period after a Price Adjustment Date, as appropriate. "LOAN AGREEMENT" is that certain Secured Loan Agreement dated as of June 10, 2004 between Borrower and Lender. "LOAN DOCUMENTS" are the documents defined as such in the Loan Agreement. "PRIME RATE" is a base rate of interest which Lender establishes from time to time and which serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto. Any change in an Effective Rate due to a change in the Prime Rate shall become effective on the day each such change is announced within Lender. "REGULATORY COSTS" are, collectively, future, supplemental, emergency or other changes in Reserve Percentages, assessment rates imposed by the FDIC, or similar requirements or costs imposed by any domestic or foreign governmental authority and related in any manner to a Fixed Rate. "RESERVE PERCENTAGE" is at any time the percentage announced within Lender as the reserve percentage under Regulation D for loans and obligations making reference to an Applicable LIBO Rate for a Fixed Rate Period or time remaining in a Fixed Rate Period on a Price Adjustment Date, as appropriate. The Reserve Percentage shall be based on Regulation D or other regulations from time to time in effect concerning reserves for Eurocurrency Liabilities as defined in Regulation D from related institutions as though Lender were in a net borrowing position, as promulgated by the Board of Governors of the Federal Reserve System, or its successor. "TAXES" are, collectively, all withholdings, interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed by any domestic or foreign governmental authority and related in any manner to a Fixed Rate. "VARIABLE RATE" is a floating rate of interest per annum equal to the Prime Rate. 2. EFFECTIVE RATE. The "Effective Rate" upon which interest shall be calculated for this Note shall be one or more of the following: 2.1 Provided no Default exists under the Loan Agreement or any of the Loan Documents described therein (this Note is one of the Loan Documents): (a) for those portions of the principal balance of this Note which are not Fixed Rate Portions, the Effective Rate shall be the Variable Rate. - -------------------------------------------------------------------------------- The 520 Group Page 4 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT A - -------------------------------------------------------------------------------- (b) for those portions of the principal balance of this Note which are Fixed Rate Portions, the Effective Rate for the Fixed Rate Period thereof shall be the Fixed Rate selected by Borrower and set in accordance with the provisions hereof, provided, however, if any of the transactions necessary for the calculation of interest at any Fixed Rate requested or selected by Borrower should be or become prohibited or unavailable to Lender, or, if in Lender's good faith judgment, it is not possible or practical for Lender to set a Fixed Rate for a Fixed Rate Portion and Fixed Rate Period as requested or selected by Borrower, the Effective Rate for such Fixed Rate Portion shall remain at or revert to the Variable Rate. 2.2 During such time as a Default exists under the Loan Agreement or any of the Loan Documents; or from and after the date on which all sums owing under this Note become due and payable by acceleration or otherwise; or from and after the date on which the property encumbered by the Securities Pledge Agreement or any portion thereof or interest therein, is sold, transferred, mortgaged, assigned, or encumbered, whether voluntarily or involuntarily, or by operation of law or otherwise, without Lender's prior written consent (whether or not the sums owing under this Note become due and payable by acceleration); or from and after the Maturity Date, then at the option of Lender, the interest rate applicable to the then outstanding principal balance of this Note shall be the Alternate Rate. 3. SELECTION OF FIXED RATE. Provided no Default, breach or failure of condition exists under the Loan Documents, or would exist with passage of time or notice or both, Borrower, at its option and upon satisfaction of the conditions set forth herein, may request a Fixed Rate as the Effective Rate for calculating interest on the portion of the unpaid principal balance and for the period selected in accordance with and subject to the following procedures and conditions: 3.1 Borrower shall deliver to the Disbursement and Operations Center, 2120 East Park Place, Suite 100, El Segundo, California, 90245, with a copy to: Lender, 401 B Street, Suite 304, San Diego, CA 92101, Attention: Melissa Murphy, or such other addresses as Lender shall designate, an original or facsimile Fixed Rate Notice no later than 9:00 A.M. (California time) for each Fixed Rate Portion. Any Fixed Rate Notice pursuant to this Section 3 is irrevocable. Lender is authorized to rely upon the telephonic request and acceptance of Mark Daitch and Barry McComic as Borrower's duly authorized agents, or such additional authorized agents as Borrower shall designate in writing to Lender. Borrower's telephonic notices, requests and acceptances shall be directed to such officers of Lender as Lender may from time to time designate. 3.2 Borrower may elect (A) to convert advances to a Fixed Rate Portion, or (B) to convert a matured Fixed Rate Portion into a new Fixed Rate Portion, provided, however, that the aggregate amount of the advance being converted into or continued as a Fixed Rate Portion shall, in the aggregate, be not less than $100,000.00 and is an even multiple of $250,000.00. The conversion of a matured Fixed Rate Portion back to a or to a new Fixed Rate Portion shall occur on the last Business Day of the Fixed Rate Period relating to such Fixed Rate Portion. Each Fixed Rate Notice shall specify (1) the amount of the Fixed Rate Portion, (2) the Fixed Rate Period, and (3) the Fixed Rate Commencement Date. 3.3 Upon receipt of a Fixed Rate Notice in the proper form requesting a Fixed Rate Portion advance under Sections 3.1 and 3.2 above, Lender shall determine the Fixed Rate applicable to the Fixed Rate Period for such Fixed Rate Portion. Each determination by Lender of the Fixed Rate shall be conclusive and binding upon the parties hereto in the absence of manifest error. Lender shall deliver to Borrower (by facsimile) an acknowledgment of receipt and confirmation of the Fixed Rate Notice; provided, however, that failure to provide such acknowledgment of receipt and confirmation of the Fixed Rate Notice to Borrower shall not affect the validity of such rate. - -------------------------------------------------------------------------------- The 520 Group Page 5 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT A - -------------------------------------------------------------------------------- 3.4 If Borrower does not make a timely election to convert all or a portion of a matured Fixed Rate Portion into a new Fixed Rate Portion in accordance with Section 3.2 above, such Fixed Rate Portion shall be automatically converted back to a Variable Rate upon the expiration of the Fixed Rate Period applicable to such Fixed Rate Portion. 4. FIXED RATE NOTICE. Borrower's selection of a Fixed Rate shall be delivered to Lender in the form of the Fixed Rate Notice shown on Exhibit B attached to this Note. Lender shall confirm Borrower's request made pursuant to such Fixed Rate Notice. Lender's failure to confirm Borrower's request made pursuant to the Fixed Rate Notice shall not release Borrower from Borrower's obligation to pay interest at the Effective Rate pursuant to the terms hereof. 5. TAXES, REGULATORY COSTS AND RESERVE PERCENTAGES. Upon Lender's demand, Borrower shall pay to Lender, in addition to all other amounts which may be, or become, due and payable under this Note and Loan Documents, any and all Taxes and Regulatory Costs, to the extent they are not internalized by calculation of a Fixed Rate. Further, at Lender's option, the Fixed Rate shall be automatically adjusted by adjusting the Reserve Percentage, as determined by Lender in its prudent banking judgment, from the date of imposition (or subsequent date selected by Lender) of any such Regulatory Costs. Lender shall give Borrower notice of any Taxes and Regulatory Costs as soon as practicable after their occurrence, but Borrower shall be liable for any Taxes and Regulatory Costs regardless of whether or when notice is so given. 6. FIXED RATE PRICE ADJUSTMENT. Borrower acknowledges that prepayment or acceleration of a Fixed Rate Portion during a Fixed Rate Period shall result in Lender's incurring additional costs, expenses and/or liabilities and that it is extremely difficult and impractical to ascertain the extent of such costs, expenses and/or liabilities. Therefore, on the date a Fixed Rate Portion is prepaid or the date all sums payable hereunder become due and payable, by acceleration or otherwise ("Price Adjustment Date"), Borrower will pay Lender (in addition to all other sums then owing to Lender) an amount ("Fixed Rate Price Adjustment") equal to the then present value of (a) the amount of interest that would have accrued on the Fixed Rate Portion for the remainder of the Fixed Rate Period at the Fixed Rate set on the Fixed Rate Commencement Date, less (b) the amount of interest that would accrue on the same Fixed Rate Portion for the same period if the Fixed Rate were set on the Price Adjustment Date at the Applicable LIBO Rate in effect on the Price Adjustment Date. The present value shall be calculated by using as a discount rate the LIBO Rate quoted on the Price Adjustment Date. By initialing this provision where indicated below, Borrower confirms that Lender's agreement to make the loan evidenced by this Note at the interest rates and on the other terms set forth herein and in the other Loan Documents constitutes adequate and valuable consideration, given individual weight by Borrower, for this agreement. BORROWER'S INITIALS: ____________ 7. PURCHASE, SALE AND MATCHING OF FUNDS. Borrower understands, agrees and acknowledges the following: (a) Lender has no obligation to purchase, sell and/or match funds in connection with the use of a LIBO Rate as a basis for calculating a Fixed Rate or Fixed Rate Price Adjustment; (b) a LIBO Rate is used merely as a reference in determining a Fixed Rate and Fixed Rate Price Adjustment; and (c) Borrower has accepted a LIBO Rate as a reasonable and fair basis for calculating a Fixed Rate and a Fixed Rate Price Adjustment. Borrower further agrees to pay the Fixed Rate Price Adjustment, Taxes and Regulatory Costs, if any, whether or not Lender elects to purchase, sell and/or match funds. 8. MISCELLANEOUS. As used in this Exhibit, the plural shall mean the singular and the singular shall mean the plural as the context requires. Addresses for the Fixed Rate Notice shall be the same as those for notices under the Loan Agreement executed in connection with this Note. - -------------------------------------------------------------------------------- The 520 Group Page 6 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT A - -------------------------------------------------------------------------------- This Agreement is executed concurrently with and as part of this Note referred to and described first above. "BORROWER" The 520 Group, LLC, a California limited liability company By:________________________________________ Barry McComic, Manager By:________________________________________ Mark Daitch, Manager - -------------------------------------------------------------------------------- The 520 Group Page 7 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EXHIBIT B - -------------------------------------------------------------------------------- FIXED RATE NOTICE Loan No. 100441 ------------------------ TODAY'S DATE: LOAN MATURITY DATE: July 1, 2007 ------------------------- -------------------- TO: WELLS FARGO BANK, N.A. LOAN ADMINISTRATOR: Jackie Alexander DISBURSEMENT AND OPERATIONS CENTER -------------------- FAX # (310) 615-1014 or RELATIONSHIP MANAGER: Melissa Murphy (310) 615-1016 ------------------ ATTENTION: RATE OPTION DESK ================================================================================ BORROWER INTEREST RATE OPTION REQUEST Rate Quote Line (888) 293-2362 x:472 Use One Form Per Transaction LOAN #: 100441 BORROWER NAME: The 520 Group, LLC ------------------- ----------------------------------- RATE SET DATE: FIXED RATE COMMENCEMENT DATE: (1350) ----------------- -------------- FIXED RATE PERIOD (TERM): (i.e. 1, 2, 3 months, etc. as allowed per Note) ------- INDEX: LIBO RATE: % + 1.5000% = % (1350) ---------------- --------------- --------------- ----------------- Quote Spread Applicable Rate FIXED RATE PORTION EXPIRING ON: $ --------------------- ---------------------- 1. AMOUNT ROLLING OVER: $ FROM OBLGN#: -------------- -------- (5522) 2. ADD: AMT TRANSFERRED FROM VARIABLE RATE PORTION $ FROM OBLGN#: TO OBLGN#: -------------- -------- ------- (5522) (5020) 3. ADD: AMT TRANSFERRED FROM OTHER FIXED RATE PORTION $ FROM OBLGN#: TO OBLGN#: -------------- -------- ------- (5522) (5020) ADD: AMT TRANSFERRED FROM OTHER FIXED RATE PORTION $ FROM OBLGN#: TO OBLGN#: -------------- -------- ------- (5522) (5020) 4. LESS: AMT TRANSFERRED TO VARIABLE RATE PORTION $ FROM OBLGN#: TO OBLGN#: -------------- -------- ------- (5522) (5020) $ TOTAL FIXED RATE PORTION: $ ----------------------------------------------------- Borrower confirms, represents and warrants to Lender, (a) that this selection of a Fixed Rate is subject to the terms and conditions of the Note, Fixed Rate Agreement and Loan Documents (as applicable), and (b) that terms, words and phrases used but not defined in this Notice have the meanings attributed thereto in the Note, Fixed Rate Agreement and Loan Documents (as applicable), and (c) that no breach, failure of condition, or Default has occurred or exists, or would exist after notice or passage of time or both, under the Note or Loan Documents. REQUESTED BY (as allowed per documents): TELEPHONE #:( ) ----------------- ----------- PRINT NAME: FAX #:( ) ---------------------------------------------- ----------------- - -------------------------------------------------------------------------------- The 520 Group Page 8 LOAN NO. 100441 NOTEFIXD.CA M (07/01) 3641-1-7-ALEXANJA EX-13 4 tex13-2960.txt EX-13 EXHIBIT 13 ---------- SECURITIES PLEDGE AND SECURITY AGREEMENT SECURITIES PLEDGE AND SECURITY AGREEMENT ("AGREEMENT") is dated as of June 10, 2004, and is entered into by and between THE 520 GROUP, LLC, a California limited liability company ("BORROWER"), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as pledgee ("LENDER"). WITNESSETH: WHEREAS, contemporaneously herewith, Lender has agreed to loan certain funds to Borrower pursuant to a Loan Agreement ("LOAN AGREEMENT") dated as of the date hereof and certain other Loan Documents. (All capitalized terms used and undefined herein shall have the meanings given to them in such Loan Agreement.); WHEREAS, as a condition to the Loan, Lender requires a pledge by Borrower of its interest in the Pledged Securities (namely, consisting of the common stock of PLRE) referred to in the Loan Agreement as security for Borrower's obligations under the Loan Documents (as used herein, "PLEDGED SECURITIES" shall include all rights of the holder and proceeds of the Pledged Securities); WHEREAS, to facilitate perfection and priority of the Lender's security interest in the Pledged Securities, Borrower shall deliver the original share certificates evidencing such Pledged Shares, along with fully executed stock powers in blank with respect thereto, to Wells Fargo Institutional Securities LLC ("WFS") to hold, as collateral security for the Loan, in the WFS securities account referred to in SECTION 1 below, and Borrower, WFS and Lender shall enter into a Securities Account Control Agreement of even date herewith ("CONTROL AGREEMENT"); and WHEREAS, it is a condition precedent to the effectiveness of the Loan Agreement that the parties hereto shall have executed and delivered this Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce Lender to enter into the Loan Agreement and advance the funds thereunder and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereby agree as follows: 1. GRANT OF SECURITY INTEREST. Borrower hereby irrevocably and unconditionally grants a first lien security interest in, and assigns, pledges, and transfers to Lender, the following: (a) Account number 12797957 established by Borrower with WFS subject to this Agreement and the Control Agreement, and all successor and replacement accounts, regardless of the numbers of such accounts or the offices at which such accounts are maintained (the "SECURITIES ACCOUNT") and all rights of Borrower in connection with the Securities Account; and (b) All investment property, security entitlements, financial assets, certificated securities, uncertificated securities, money, deposit, securities accounts, general intangibles, and all other investments or property now or hereafter held in the Securities Account or pledged by Borrower to Lender, including, without limitation, the Pledged Securities, together with all rollovers, renewals or reinvestments of any of the foregoing property, all stock or conversion rights, rights to subscribe, liquidation dividends or preferences, stock dividends, dividends, rights to interest, interest payments, dividends paid in stock, rights under hedge or derivative transactions, equity swaps, caps, floors or collars, new securities or other property which Borrower is or may hereafter become entitled to receive on account of or related to any of the foregoing property; and the proceeds, increase and products of any of the foregoing or replacements thereof or substitutions therefor (including, without limitation, any and all sums on deposit in the Securities Account, and all successor and replacement accounts, regardless of the numbers of such accounts or the offices at which such accounts are maintained and all rights of Borrower in connection with such account); and (c) all of Borrower's rights under the Registration Rights Agreement, all of which property referenced in subsections (a) through (c) above, and all other property at any time pledged to Lender hereunder (whether described herein or not), and all income therefrom and proceeds thereof, are herein collectively referred to as the "COLLATERAL". 2. PERFECTION. In connection with this Agreement, Borrower hereby agrees at all times while the Obligations, as defined herein, are outstanding to hold the Pledged Securities in the Securities Account and to provide the original certificates evidencing such Pledged Securities, along with fully executed stock powers in blank with respect thereto, in order to perfect Lender's lien under this Agreement. 3. OBLIGATIONS SECURED. The Collateral secures and will secure all debts, obligations or liabilities now or hereafter existing, absolute or contingent, to Lender under the Loan Agreement and the other Loan Documents, including any amendments, renewals or replacements thereof (collectively, the "OBLIGATIONS"). 4. MINIMUM COVERAGES; ADDITIONAL PLEDGED SECURITIES; DAILY RE-MARGIN. (a) At all times while the Loan remains outstanding, (i) there shall be not less than one million (1,000,000) common stock shares (adjusted for any stock splits, if applicable) of PLRE constituting the Pledged Securities, (ii) the market value of the Pledged Securities shall not be less than eleven million five hundred thousand dollars ($11,500,000), AND (iii) the market value of the Pledged Securities shall equal or exceed two hundred percent (200%) (each of the foregoing, a "REQUIRED MINIMUM COVERAGE"), as calculated in accordance with Regulation U of the Federal Reserve Board, of the then outstanding principal balance under the Loan. (b) Lender shall monitor and measure compliance with the covenant set forth in subsection (a) above on a daily basis and, in the event that Lender determines that the market value of the Pledged Securities is less than any Required Minimum Coverage, Borrower shall, within two (2) Business Days following written demand from Lender, either (i) repay principal outstanding under the Loan or (ii) deposit or deliver additional registered and unencumbered common stock shares of PLRE into the Securities Account (by delivering the original of any certificates evidencing such shares along with a fully executed stock power in blank), in either case such that, following such repayment or deposit, each Required Minimum Coverage is achieved. Page 2 (c) So long as there then exists no Default or Potential Default under the Loan Agreement, Borrower shall be entitled to disbursements of interest and/or cash dividends earned on financial assets maintained in the Securities Account. 5. RELEASE OF COLLATERAL. (a) In the event that the market value of the Pledged Securities equals or exceeds two hundred twenty-five percent (225%), as calculated in accordance with Regulation U of the Federal Reserve Board, of the then outstanding principal balance under the Loan, for a period of three (3) consecutive calendar months, upon Borrower's request Lender shall transfer to Borrower (and release its lien with respect to) a portion of the Pledged Securities as is appropriate so that the market value of the Pledged Securities, following such release and transfer, is not less than each Required Minimum Coverage; PROVIDED, HOWEVER, that the value of the Pledged Securities, following any such release, shall equal or exceed two hundred five percent (205%) of the then outstanding principal balance of the Loan. (b) If Borrower makes or causes to be made to Lender a permitted principal repayment in excess of ten million dollars ($10,000,000) in accordance with the provisions of the Loan Agreement, then Lender shall release a portion of the Pledged Securities as is appropriate so that the market value of the Pledged Securities, following such release and transfer, are not less than each Required Minimum Coverage. In no event shall Lender's lien on any Collateral be released unless Lender shall have received the appropriate repayment of the principal amount of the Loan and all other sums due Lender under the Loan Documents. Lender shall, in a timely manner, execute and deliver all documents and instruments (reasonably necessary to evidence the release of such lien) prepared by Borrower at Borrower's cost and expense. (c) If Borrower makes or causes to be made to Lender a payment in full of the Loan in accordance with the provisions of the Loan Agreement, then Lender shall release the Pledged Securities. In no event shall Lender's lien on any Collateral be released unless Lender shall have received the appropriate repayment of the principal amount of the Loan and all other sums due Lender under the Loan Documents. Lender shall, in a timely manner, execute and deliver all documents and instruments (reasonably necessary to evidence the release of such lien) prepared by Borrower at Borrower's cost and expense. 6. RIGHTS OF LENDER. (a) Lender shall have no liability hereunder with respect to the Collateral other than as a result of Lender's gross negligence or willful misconduct, it being understood that Lender shall not be liable for failure to collect or realize upon the Obligations or any collateral security or guarantee therefor, or any part thereof, or for any delay in so doing nor shall Lender be under any obligation to take any action whatsoever with regard thereto. If a Default under the Loan Agreement has occurred and is continuing, Lender may, with any notice by Lender as provided for in the Loan Agreement, exercise all rights, privileges or options pertaining to any Collateral as if it were the absolute owner thereof, upon such terms and conditions as it may determine, all without liability except to account for property actually received by it, but Lender shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. Page 3 (b) For the purpose of enabling the Lender to exercise its rights under this SECTION 6 or otherwise in connection with this Agreement, Borrower hereby (i) constitutes and appoints the Lender (and any of the Lender's officers, employees or agents designated by the Lender) its true and lawful attorney in fact, with full power and authority to execute any notice, assignment, endorsement or other instrument or document, and to do any and all acts and things for and on behalf of Borrower, which the Lender may deem necessary or desirable (including, without limitation, exercise of rights under the Registration Rights Agreement) to protect, collect, realize upon and preserve the Pledged Securities, to enforce the Lender's rights with respect to the Pledged Securities and to accomplish the purposes hereof, and (b) revokes all previous proxies with regard to the Pledged Securities and appoints the Lender as its proxyholder with respect to the Pledged Securities to attend and, following a Default under the Loan Agreement, notice of which Default has been provided by Lender to Borrower, vote at any and all meetings of the shareholders, partners or members of PLRE held on or after the date of this proxy and prior to the termination hereof, with full power of substitution to do so and agrees, if so requested, to execute or cause to be executed appropriate proxies therefor. Each such appointment is coupled with an interest and irrevocable so long as any portion of the Loan remains outstanding or the Obligations have not been indefeasibly paid and performed in full. Borrower hereby ratifies, to the extent permitted by law, all that Lender shall lawfully and in good faith do or cause to be done by virtue of and in compliance with this SECTION 6. 7. REMEDIES. (a) GENERAL REMEDIES. Upon the occurrence of any Default under the Loan Agreement or other Loan Documents, notice of which Default has been provided by Lender to Borrower, Lender shall have, in addition to all other rights and remedies granted to it in this Agreement or any other Loan Document, all rights and remedies of a secured party under the Uniform Commercial Code of the State of California ("UCC") and other applicable laws. Without limiting the generality of the foregoing, Borrower agrees that any item of the Pledged Securities may be sold for cash or on credit or for future delivery without assumption of any credit risk, in any number of lots at the same or different times, at any exchange, brokers' board or elsewhere, by public or private sale, and at such times and on such terms, as the Lender shall determine, and Lender may, in its sole discretion, determine the appropriate amount of Pledged Securities to sell in order to satisfy the Obligations in full; PROVIDED, HOWEVER, that Borrower shall be credited with the net proceeds of sale only when such proceeds are finally collected by Lender. Lender shall give Borrower such notice of any private or public sales as may be required by the UCC or other applicable law. Subject to the requirements of applicable law, Borrower agrees that Lender need not give notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place. No notification need be given to Borrower if it has signed, after Default under the Loan Documents which has not been cured within the applicable cure period, if any, a statement renouncing or modifying any right to notification of sale or other intended disposition. Borrower recognizes that Lender may be unable to make a public sale of any or all of the Pledged Securities, by reason of prohibitions contained in applicable securities laws or otherwise, and expressly agrees that a private sale to a restricted group of purchasers for investment and not with a view to any distribution thereof shall be considered a commercially reasonable sale. Lender shall have the right upon any such public sale, and, to the extent permitted by law, upon any such private sale, to purchase the whole or any part of the Pledged Securities so sold, free of any right or equity of Page 4 redemption, which right or equity of redemption Borrower hereby releases to the extent permitted by law. (b) PROCEEDS ACCOUNT. To the extent that any of the Obligations may be contingent, unmatured or unliquidated at such time as there may exist a Default under the Loan Agreement, Lender may, at its election, (a) retain the proceeds of any sale, collection, disposition or other realization upon the Collateral (or any portion thereof) in a special purpose non-interest bearing restricted deposit account (the "PROCEEDS ACCOUNT") created and maintained by Lender for such purpose (as to which Borrower hereby grants a security interest and which shall constitute part of the Collateral hereunder) until such time as Lender may elect to apply such proceeds to the Obligations, and Borrower agrees that such retention of such proceeds by Lender shall not be deemed strict foreclosure with respect thereto, (b) in any manner elected by Lender, estimate the liquidated amount of any such contingent, unmatured or unliquidated claims and apply the proceeds of the Collateral against such amount, or (c) otherwise proceed in any manner permitted by applicable law. Borrower agrees that the Proceeds Account shall be a blocked account and that upon the irrevocable deposit of funds into the Proceeds Account, Borrower shall not have any right of withdrawal with respect to such funds. Accordingly, Borrower irrevocably waives until the termination of this Agreement in accordance with its terms, the right to make any withdrawal from the Proceeds Account and the right to instruct Lender to honor drafts against the Proceeds Account. (c) APPLICATION OF PROCEEDS. Subject to subsection (b) above, the cash proceeds actually received from the sale or other disposition or collection of Collateral, and any other amounts of the Collateral (including any cash contained in the Securities Account) the application of which is not otherwise provided for herein, shall be applied to repay the Obligations. Any surplus thereof which exists after payment and performance in full of the Obligations shall be promptly paid over to Borrower or otherwise disposed of in accordance with the UCC or other applicable law. Borrower shall remain liable to Lender for any deficiency which exists after any sale or other disposition or collection of Collateral. (d) REGISTRATION RIGHTS. If Lender shall determine to exercise its right to sell any or all of the Collateral pursuant to this SECTION 7, and if Lender shall determine, in its sole discretion, that it is necessary or advisable to have the Collateral, or that portion thereof to be sold, registered under the provisions of the Securities Act of 1933, as amended ("SECURITIES ACT"), or in the event that Lender determines that it is necessary or advisable to arrange an underwritten sale of all or a portion of the Collateral, Lender shall have the right to exercise, pre-foreclosure and in Borrower's name or in Lender's name (at Lender's sole discretion), any and all registration rights under the Registration Rights Agreement (with respect to an appropriate amount of Pledged Securities, as determined by Lender in its sole discretion, necessary to sell in order to satisfy the Obligations in full) and to cause, in the name of Borrower or in the name of Lender (in Lender's sole discretion), sales of the Pledged Securities pursuant to such registration, and Borrower shall execute and deliver, and shall use its best efforts to cause PLRE's and Borrower's respective directors and officers to execute and deliver, all such instruments and documents, and to do or cause to be done all such other acts and things as may, in the view of Lender, be advisable to (i) register such Collateral under the provisions of the Securities Act and/or the Registration Rights Agreement (including, without limitation, any necessary or advisable amendment to such Registration Rights Agreement) and to cause the registration Page 5 statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the view of Lender, are necessary or be necessary or advisable, all in conformity with the requirements of the Securities and Exchange Commission applicable thereto, and (ii) enable and facilitate a third-party underwritten sale of such Collateral, including, without limitation, exercise of demand registration rights pursuant to the Registration Rights Agreement. In connection therewith, Borrower authorizes the incurrence of, and agrees to pay, all related "selling costs," as such term is defined in the Registration Rights Agreement. Borrower agrees to comply, and to use its best efforts to cause PLRE to comply, with the provisions of the securities or "Blue Sky" laws of any jurisdiction which Lender shall designate, and to use its best efforts to cause PLRE to make available to its security holders, as soon as practicable, an earnings statement (which need not be audited) which shall satisfy the provisions of Section 11(a) of the Securities Act. Borrower shall cause to be furnished to Lender such number of copies as Lender may request of each preliminary prospectus and prospectus, shall promptly notify Lender of the happening of any event (upon becoming aware thereof) as a result of which any then effective prospectus includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of then existing circumstances and shall cause Lender to be furnished with such number of copies as Lender may reasonably request of such supplement to or amendment of such prospectus as is necessary to eliminate such untrue statement or correct such omission. (e) NO OBLIGATION TO DELAY SALE. Lender shall be under no obligation to delay a private sale of any of the Collateral for the period of time necessary to permit the issuer thereof to register such Collateral for public sale under the Securities Act, or under applicable state securities laws or pursuant to any "black-out" or similar restriction in the Registration Rights Agreement, even if such issuer would agree to do so. (f) FURTHER ACTS. Borrower further agrees to do or to use its best efforts to cause to be done all such other acts and things as may be necessary to make any sales of all or any portion of the Collateral pursuant to this Section valid and binding and in compliance with any and all applicable laws (including the Exchange Act), regulations, orders, writs, injunctions, decrees or awards of any and all Government Authorities having jurisdiction over any such sale or sales. (g) EQUITABLE RELIEF. Borrower acknowledges that a breach of any of the covenants contained in this SECTION 7 will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, agrees that each and every covenant contained in this SECTION 7 shall be specifically enforceable against Borrower, and Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Default has occurred under the provisions of the Loan Agreement. (h) COSTS AND EXPENSES. Borrower shall bear all costs and expenses of carrying out its obligations under this SECTION 7, including any costs associated with a third-party underwritten sale of the Collateral. Page 6 8. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and warrants that, to the best of its knowledge: (a) On the date of delivery to Lender of the Collateral described herein, no party other than Borrower and Lender will have any right, title or interest in and to the Collateral. (b) Borrower has, and on the date of delivery to Lender of any Collateral will continue to have, full power, authority and legal right to own the Collateral and to pledge all of the right, title and interest of Borrower in and to the Collateral. (c) This Agreement has been duly authorized, executed and delivered by Borrower and constitutes a legal, valid and binding obligation of Borrower, enforceable in accordance with its terms. (d) No consent of any other party (including, without limitation, creditors of Borrower) and no consent, license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority, domestic or foreign, is required to be obtained by Borrower in connection with the execution, delivery or performance of this Agreement. (e) The execution, delivery and performance of this Agreement will not violate or conflict with any provision of any applicable law or regulation or of any order, judgment, writ, award or decree of any court, arbitrator or governmental authority, domestic or foreign, or of any material mortgage, indenture, lease, contract, or other agreement, instrument or undertaking to which Borrower is a party or which purports to be binding upon Borrower or upon its assets and will not result in the creation or imposition of any lien, charge or encumbrance on or security interest in any of the assets of Borrower except as contemplated by this Agreement. (f) The pledge, assignment and delivery of the Collateral pursuant to this Agreement will create a valid first lien on and a first perfected security interest in, all right, title or interest of Borrower in or to the Collateral, and the proceeds thereof, subject to no prior pledge, lien, mortgage, hypothecation, security interest, charge, option or encumbrance or to any agreement purporting to grant to any third party a security interest in the property or assets of Borrower which would include, without limitation, the Collateral. (g) Borrower has, and at all times shall have obtained, all permits, licenses, exemptions, and approvals necessary to own the Collateral, and shall maintain compliance with all governmental requirements applicable to the Collateral and the making of the Borrower Loan and all other applicable statues, laws, regulations and ordinances necessary for the transaction of Borrower's business. (h) All financial statements and information heretofore delivered to Lender by Borrower with respect to the Collateral, the financial condition of Borrower and, to the best of Borrower's knowledge, the Property fairly and accurately represent the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Borrower acknowledges and agrees that Lender may request and Page 7 obtain additional information from third parties regarding any of the above, including, without limitation, credit reports of Borrower. (i) To the best of Borrower's knowledge, all reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan, Collateral, the Property or otherwise required by the Loan Documents are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any material misrepresentation or omission. (j) Borrower has filed all required federal, state, county and municipal tax returns and has paid all taxes and assessments owed and payable, and Borrower has no knowledge of any basis for any additional payment with respect to any such taxes and assessments. (k) Borrower is familiar with and in compliance with all governmental requirements for the ownership of the Collateral and the making of the Borrower Loan and will conform to and comply with all governmental requirements applicable thereto. 9. COVENANTS OF BORROWER. Borrower covenants and agrees as follows: (a) Borrower will defend Lender's right, title and security interest in and to the Collateral and the proceeds thereof against the claims and demands of all persons whomsoever; and covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to Lender as Collateral hereunder and will likewise defend Lender's right thereto and security interest therein. (b) Without the prior written consent of Lender, Borrower will not sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the Collateral, nor will it create, incur or permit to exist any pledge, lien, mortgage, hypothecation, security interest, charge, option or any other encumbrance with respect to any of the Collateral, or any interest therein, or any proceeds thereof, except for the lien and security interest provided for by this Agreement. (c) Borrower will not withdraw funds from the Securities Account, or exercise any dominion or control over the Securities Account except in accordance with this Agreement and the Control Agreement. Without in any way limiting the foregoing, Borrower will not invest or cause the investment of any funds in the Securities Account except as may be approved by Lender in writing. (d) Promptly upon receipt or delivery thereof, Borrower shall cause to be delivered to Lender true and complete copies of all written notices, reports and other communications received or delivered by Borrower or any Affiliate, in connection with the Collateral. (e) Upon Lender's request and at Borrower's sole cost and expense, Borrower shall execute, acknowledge and deliver any other instruments and perform any other acts reasonably necessary, desirable or proper, as reasonably determined by Lender, to carry out the purposes of this Agreement. Page 8 10. BORROWER'S WAIVERS AND AUTHORIZATIONS. (a) Borrower hereby expressly waives, to the full extent legally permissible: (i) diligence, presentment, demand for payment and protest; (ii) the benefit of any statute of limitations in connection with the Obligations; (iii) discharge of the Obligations due to any disability of Borrower, or any Person; (iv) any defenses of Borrower or any Person to the Obligations or to any other obligations not arising under the express terms of the documents relating thereto or from a material breach thereof by Lender which under the law has the effect of discharging Borrower or any Person from the Obligations as to which this Agreement is sought to be enforced; (v) the benefit of any act or omission by Lender which directly or indirectly results in or aids the discharge of Borrower or any Person from any of the Obligations, by operation of law or otherwise; (vi) the cessation or limitation from any cause whatsoever, other than payment and performance in full, of the Obligations; (vii) all notices whatsoever, including, without limitation, notice of acceptance of this Agreement and the incurring of the Obligations; and (viii) any requirement that Lender exhaust any right, power or remedy or proceed against the Borrower or any Person or any other security for, or any other guarantor of, or any other party liable for, any of the Obligations or any portion thereof. Borrower specifically agrees that it will not be necessary or required, and Borrower shall not be entitled to require, that Lender file suit or proceed to assert or obtain a claim for personal judgment against any Person for the Obligations or to make any effort at collection or enforcement of the Obligations from any Person or foreclose against or seek to realize upon any security now or hereafter existing for the Obligations or file suit or proceed to obtain or assert a claim for personal judgment against Borrower or any other guarantor or other party liable for the Obligations or make any effort at collection of the Obligations from any such party or exercise or assert any other right or remedy to which Lender is or may be entitled in connection with the Obligations or any security or guaranty relating thereto or assert or file any claim against the assets of any Person, before or as a condition of enforcing the liability of Borrower under this Agreement. (b) Borrower authorizes Lender, either before or after revocation hereof, without notice or demand and without affecting Borrower's other liability hereunder, from time to time and at any time, subject to the terms of the Agreement: 1. to compromise, renew or extend any or all of the terms of the Obligations, including but not limited to the time for payment thereof and the rate of interest applicable thereto; 2. to take and hold security, other than the Pledged Securities, for payment of the Obligations or any part of either thereof, to perfect or fail to perfect any security interest in the Pledged Securities or any such other security, and to exchange, enforce, waive and release the Pledged Securities, or any part thereof, or any such other security; 3. after the occurrence and during the continuance of an Event of Default, to apply the Pledged Securities, or any other security, and direct the order or manner of sale thereof, including, without limitation, a non-judicial sale permitted by the terms of the controlling security agreement or deed of trust, as Lender in its discretion may determine, without any obligation to marshal assets; Page 9 4. to release or compromise the obligations of, or substitute, any pledgor of security for, or guarantor of, the Obligations or any part of either thereof, or any other Person; and 5. to permit or suffer the creation of secured or unsecured credit or debt under Bankruptcy Code Section 364 in a case by or against any other Person; and to permit or suffer the disallowance, avoidance or subordination of any of the Obligations or any other Person or collateral for any of the Obligations. (c) No obligation of Borrower hereunder shall be altered, limited or affected by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any other Person or by any defense which any other Person may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding. Borrower acknowledges and agrees that any interest on the Obligations which accrues after the commencement of any such proceeding (or, if interest on any portion of the Obligations ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on any such portion of the Obligations if said proceedings had not been commenced) shall be included in the Obligations because it is the intention of the parties that the Obligations should be determined without regard to any rule of law or order which may relieve any other Person of any portion of the Obligations. Borrower shall permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Lender, or allow the claim of Lender in respect of, any such interest accruing after the date on which such proceeding is commenced. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment of any of the Obligations or any part thereof is rescinded or must otherwise be restored or returned by Lender upon the insolvency, bankruptcy, reorganization, moratorium or other debtor relief proceeding of Borrower, or otherwise, all as though such payment had not been made. Borrower waives any right of the deferral or modification of Borrower's obligations hereunder by virtue of any such proceeding. 11. FURTHER ASSURANCES. Borrower agrees that at any time and from time to time upon the written request of Lender, Borrower will execute and deliver such further documents and do such further acts and things as Lender may reasonably request in order to effect the purposes of this Agreement. 12. AMENDMENTS; ETC. No amendment, modification, termination or waiver of any provision of this Agreement, and no consent to any departure by Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by Lender and, in the case of any such amendment or modification, by Borrower. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. 13. NOTICES. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and shall be delivered to the appropriate party at the address or facsimile number set forth on the signature page of this Agreement (subject to change from time to time by written notice to all other parties to this Agreement, and provided that any notice sent by facsimile shall be concurrently delivered by an alternate permitted delivery method). All communications shall be deemed served upon delivery Page 10 of, or if mailed, upon the first to occur of receipt or the expiration of three (3) days after the deposit in the United States Postal Service mail, postage prepaid and addressed to the address of Borrower or Lender at the address specified, or if sent by facsimile, upon sender's notification of successful transmission; PROVIDED, HOWEVER, that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. 14. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of Lender in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this Agreement in the event of a default are cumulative to, and not exclusive of, any rights or remedies otherwise available to Lender under the Loan Documents. 15. INDEMNIFICATION. Borrower hereby agrees to indemnify Lender, any Affiliate thereof, and their respective directors, officers, employees, agents, counsel and other advisors (each an "INDEMNIFIED PERSON") against, and hold each of them harmless from, any and all liabilities, obligations, losses, claims, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, including the reasonable fees and disbursements of counsel to an Indemnified Person, which may be imposed on or incurred by any Indemnified Person, or asserted against any Indemnified Person by any third party or by Borrower, in any way relating to or arising out of, in connection with, or as a result of (a) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the transactions contemplated hereby or the Collateral or (b) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by Borrower, including, without limitation, any alleged violations of the Securities Act (the "INDEMNIFIED LIABILITIES"); provided that Borrower shall not be liable to any Indemnified Person for any portion of such Indemnified Liabilities to the extent they are found by a final decision of a court of competent jurisdiction to have resulted from such Indemnified Person's gross negligence or willful misconduct. If and to the extent that the foregoing indemnification is for any reason held unenforceable, Borrower agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. 16. DISCLOSURE OF INFORMATION. Borrower acknowledges that Lender has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Obligations of Borrower to Lender and any obligations with respect thereto, including this Agreement. In connection therewith, Lender may disclose all documents and information which Lender now has or hereafter acquires relating to Borrower and this Agreement, whether furnished by Borrower, Borrower or otherwise. Borrower further agrees that Lender may disclose such documents and information to Borrower. In the event of any such sale, assignment, transfer or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in this Agreement only as and to the extent they agree among themselves. In connection with any such sale, assignment, transfer or participation, Borrower further agrees that this Agreement shall be sufficient evidence of the obligations of Page 11 Borrower to each purchaser, assignee, transferee or participant, and upon written request by Lender, Borrower shall enter into such amendment or modification to this Agreement as may be reasonably required in order to evidence any such sale, assignment, transfer or participation. The indemnity obligations of Borrower under this Agreement shall also apply with respect to any purchaser, assignee, transferee or participant. 17. SEVERABILITY. In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 18. HEADINGS. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 19. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise defined herein or in the Loan Agreement, terms used in Articles 8 and 9 of the UCC are used herein as therein defined. 20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Borrower consents to the jurisdiction of any Federal or State Court within the State of California having proper venue and also consent to service of process by any means authorized by California or Federal Law. 21. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE Page 12 CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY JURY. 22. COUNTERPARTS. This Agreement may be executed in one or more counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. [remainder of page intentionally left blank] Page 13 IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be duly executed and delivered on the day and year first above written. "LENDER" WELLS FARGO BANK, NATIONAL ASSOCIATION By: ---------------------------------- Name: ---------------------------------- Its: ---------------------------------- "BORROWER" THE 520 GROUP, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY By: ---------------------------------- Name: Mark Daitch Its: Manager By: ---------------------------------- Name: Barry McComic Its: Manager Page 14 EX-14 5 tex14-2960.txt EX-14 EXHIBIT 14 ---------- SECURITIES ACCOUNT CONTROL AGREEMENT THIS SECURITIES CONTROL AGREEMENT (this "AGREEMENT") is entered into as of June 10, 2004, by and among THE 520 GROUP, LLC, a California limited liability company ("CUSTOMER"), WELLS FARGO INSTITUTIONAL SECURITIES, LLC; ("INTERMEDIARY"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("SECURED PARTY"). RECITALS A. Customer maintains that certain Securities Account No. [REDACTED] (the "SECURITIES ACCOUNT") with Intermediary pursuant to an agreement between Intermediary and Customer (the "ACCOUNT AGREEMENT"), a copy of which is attached hereto as EXHIBIT A, and Customer has granted to Secured Party a security interest in the Securities Account and all financial assets and other property now or at any time hereafter held in the Securities Account. B. Secured Party, Customer and Intermediary have agreed to enter into this Agreement to perfect Secured Party's security interests in the Collateral, as defined below. NOW, THEREFORE, in consideration of their mutual covenants and promises, the parties agree as follows: 1. DEFINITIONS. As used herein: (a) the term "COLLATERAL" shall mean: (i) the Securities Account; (ii) all financial assets credited to the Securities Account; (iii) all security entitlements with respect to the financial assets credited to the Securities Account; (iv) any and all other investment property or assets maintained or recorded in the Securities Account; and (v) all replacements or substitutions for, and proceeds of the sale or other disposition of, any of the foregoing, including without limitation, cash proceeds; and (b) the terms "INVESTMENT PROPERTY," "ENTITLEMENT ORDER," "FINANCIAL ASSET" and "SECURITY ENTITLEMENT" shall have the respective meanings set forth in the Minnesota Uniform Commercial Code. The parties hereby expressly agree that all property, including without limitation, cash, certificates of deposit and mutual funds, at any time held in the Securities Account is to be treated as a "FINANCIAL ASSET." 2. AGREEMENT FOR CONTROL. Intermediary is authorized by Customer and agrees to comply with all entitlement orders originated by Secured Party with respect to the Securities Account, and all other requests or instructions from Secured Party regarding disposition and/or delivery of the Collateral, without further consent or direction from Customer or any other party. 3. LIMITATION ON CUSTOMER'S RIGHTS WITH RESPECT TO THE COLLATERAL. (a) Until Intermediary is notified otherwise by Secured Party, Intermediary may distribute to Customer or any other party in accordance with Customer's directions that portion of the Collateral which consists of interest and/or cash dividends earned on financial assets maintained in the Securities Account. (b) Without Secured Party's prior written consent, except to the extent permitted by SECTION 3(A) hereof: (i) neither Customer nor any party other than Secured Party may withdraw any Collateral from the Securities Account; and (ii) Intermediary will not comply with any entitlement order or request to withdraw any Collateral from the Securities Account given by any party other than Secured Party. (c) Upon receipt of either written or oral notice from Secured Party: (i) Intermediary shall promptly cease complying with entitlement orders and other instructions concerning the Collateral, including the Securities Account, from all parties other than Secured Party; and (ii) Intermediary shall not make any further distributions of any Collateral to any party other than Secured Party, nor permit any further voluntary changes in the financial assets. 4. INTERMEDIARY'S REPRESENTATIONS AND WARRANTIES. Intermediary represents and warrants to Secured Party that: (a) The Securities Account is maintained with Intermediary solely in Customer's name. (b) Intermediary has no knowledge of any claim to, security interest in or lien upon any of the Collateral, except: (i) the security interests in favor of Secured Party; and (ii) Intermediary's liens securing fees and charges, or payment for open trade commitments, as described in SECTION 4(E) hereof. (c) Attached hereto as EXHIBIT A is a true and complete copy of the Account Agreement. (d) Attached hereto as EXHIBIT B is an accurate and complete statement of the financial assets in the Securities Account as of the date set forth in said statement. (e) Any claim to, security interest in or lien upon any of the Collateral which Intermediary now has or at any time hereafter acquires shall be junior and subordinate to the security interests of Secured Party in the Collateral, except for Intermediary's liens securing: (i) fees and charges owed by Customer with respect to the operation of the Securities Account; and (ii) payment owed to Intermediary for open trade commitments for purchases in and for the Securities Account. 5. AGREEMENTS OF INTERMEDIARY AND CUSTOMER. Intermediary and Customer agree that: (a) Intermediary shall flag its books, records and systems to reflect Secured Party's security interests in the Collateral, and shall provide notice thereof to any party making inquiry as to Customer's accounts with Intermediary to whom or which Intermediary is legally required or permitted to provide information. Page 2 (b) Intermediary shall send copies of all statements relating to the Securities Account simultaneously to Customer and Secured Party. (c) Intermediary shall promptly notify Secured Party if any other party asserts any claim to, security interest in or lien upon any of the Collateral, and Intermediary shall not enter into any control, custodial or other similar agreement with any other party that would create or acknowledge the existence of any such other claim, security interest or lien. (d) Without Secured Party's prior written consent, Intermediary and Customer shall not amend or modify the Account Agreement, other than amendments to reflect ordinary and reasonable changes in Intermediary's fees and charges for handling the Securities Account. (e) Neither Intermediary nor Customer shall terminate the Account Agreement without giving thirty (30) days' prior written notice to Secured Party. 6. AGREEMENT OF CUSTOMER. Customer agrees to indemnify and hold harmless Intermediary, its officers, directors, employees and agents, against claims, liabilities or expenses (including reasonable attorney's fees) arising out of Intermediary's compliance with any instructions from Secured Party with respect to the Securities Account, except if such claims, liabilities or expenses are caused by Intermediary's negligence or willful misconduct. 7. MISCELLANEOUS. (a) This Agreement shall not create any obligation or duty of Intermediary except as expressly set forth herein. (b) As to the matters specifically the subject of this Agreement, in the event of any conflict between this Agreement and the Account Agreement or any other agreement between Intermediary and Customer, the terms of this Agreement shall control. (c) All notices, requests and demands which any party is required or may desire to give to any other party under any provision of this Agreement must be in writing (unless otherwise specifically provided) and delivered to each party at the address or facsimile number set forth below its signature, or to such other address or facsimile number as any party may designate by written notice to all other parties. Each such notice, request and demand shall be deemed given or made as follows: (i) if sent by hand delivery, upon delivery; (ii) if sent by facsimile, upon receipt; and (iii) if sent by mail, upon the earlier of the date of receipt or three (3) days after deposit in the U.S. mail, first class and postage prepaid. (d) The prevailing party in the prosecution or defense of any action arising out of this Agreement, including any action for declaratory relief, shall be reimbursed by the party whose course of action necessitated such prosecution or defense for all costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the prevailing party's in-house counsel), expended or incurred by the prevailing party in connection therewith, whether incurred at the trial or appellate level, in an arbitration proceeding, bankruptcy proceeding or otherwise. Page 3 (e) This Agreement shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Intermediary may not assign its obligations hereunder without Secured Party's prior written consent. This Agreement may be amended or modified only in writing signed by all parties hereto. (f) This Agreement shall terminate upon: (i) Intermediary's receipt of written notice from Secured Party expressly stating that Secured Party no longer claims any security interest in the Collateral; or (ii) termination of the Account Agreement pursuant to SECTION 5(E) hereof and Intermediary's delivery of all Collateral to Secured Party or its designee in accordance with Secured Party's written instructions. (g) This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. (SIGNATURES FOLLOW ON NEXT PAGE) Page 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. INTERMEDIARY: SECURED PARTY: WELLS FARGO INSTITUTIONAL WELLS FARGO BANK, SECURITIES, LLC NATIONAL ASSOCIATION By: ___________________________ By:___________________________________ Name: Kelly Whittle Name:_________________________________ Title: Operations Manager Its:__________________________________ Address: 550 California Street, 3rd Floor Lender's Address: San Francisco, CA 94104 WELLS FARGO BANK, NATIONAL ASSOCIATION Fax: 415 781-1559 401 B Street, Suite 304 San Diego, California 92101 Attention: Melissa Murphy Fax: CUSTOMER: THE 520 GROUP, LLC, a California limited liability company By: ___________________________ Name: Mark Daitch Its: Manager By: ___________________________ Name: Barry McComic Its: Manager Borrower's Address: The 520 Group 7979 Ivanhoe Avenue, Ste. 520 La Jolla, CA 92037 Attention: Jack McGrory Fax: Page 5 EXHIBIT 14 ---------- EXHIBIT A TO SECURITIES CONTROL AGREEMENT [True copy of Account Agreement attached] EXHIBIT 14 ---------- EXHIBIT B TO SECURITIES CONTROL AGREEMENT Financial Assets in the Securities Account as of June 10, 2004 Cash in the amount of $0; and Quantity Issuer/Type of Security CUSIP #/ Certificate # - ------------- ---------------------------------------- ------------------------ 3,631,756 Price Legacy Corporation / Common Stock CUSIP # 74144P 50 2 Certificate # PLC0258 2,618,243 Price Legacy Corporation / Common Stock CUSIP # 74144P 50 2 Certificate # PLC0257 EX-15 6 tex15-2960.txt EX-15 EXHIBIT 15 ---------- REPAYMENT GUARANTY THIS REPAYMENT GUARANTY ("Guaranty") is made as of June 10, 2004, by Sol Price, an individual ("Guarantor") in favor of Wells Fargo Bank, National Association ("Lender"). R E C I T A L S A. Pursuant to the terms of a loan agreement between The 520 Group, LLC, a California limited liability company ("Borrower") and Lender dated as of June 10, 2004 ("Loan Agreement"), Lender has agreed to loan to Borrower the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) ("Loan") for purposes specified in the Loan Agreement. B. The Loan Agreement provides that the Loan shall be evidenced by a promissory note ("Note") made by Borrower payable to the order of Lender in the principal amount of the Loan and shall be secured by a Securities Pledge and Security Agreement dated concurrently herewith. The term "Loan Documents" for purposes hereof shall mean the Loan Agreement, the Note and those other documents described in the Loan Agreement as Loan Documents. THEREFORE, to induce Lender to enter into the Loan Agreement and to make the Loan, and in consideration thereof, Guarantor unconditionally guarantees and agrees as follows: 1. GUARANTY. Guarantor hereby guarantees and promises to pay to Lender or order, on demand, in lawful money of the United States, in immediately available funds, the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) or so much thereof as may be due and owing under the Note or any of the other Loan Documents together with interest and any other sums payable under the Note or any of the other Loan Documents. 2. NET CASH LIQUIDITY. Net Cash Liquidity for Guarantor, together with Borrower and each other "Guarantor" of the Loan, in the aggregate, shall not at any time be less than Fifteen Million Dollars ($15,000,000.00). 3. PLRE STOCK; REGISTRATION RIGHTS. With exception of the PLRE Stock pledged in connection with the Existing Indebtedness, Guarantor shall not, without the prior written consent of Lender, pledge or encumber any PLRE Stock owned by Guarantor, from time to time, to or for the benefit of any Person other than Lender. 4. REMEDIES. If Guarantor fails to promptly perform its obligations under this Guaranty, Lender may from time to time, and without first requiring performance by Borrower or exhausting any or all security for the Loan, bring any action at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all loss, cost, damage, injury and expense sustained or incurred by Lender as a direct or indirect consequence of the failure of Guarantor to perform its obligations hereunder, together with interest thereon at the rate of interest applicable to the principal balance of the Note. 5. RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice to Guarantor or obtaining Guarantor's consent and without affecting the liability of Guarantor, from time to time to: (a) renew or extend all or any portion of Borrower's obligations under the Note or any of the other Loan Documents; (b) declare all sums owing to Lender under the Note and the other Loan Documents due and payable upon the occurrence of a Default as defined in the Loan Agreement under the Loan Documents; (c) make non-material changes in the dates specified for payments of any sums payable in periodic installments under the Note or any of the other Loan Documents; (d) otherwise modify the terms of any of the Loan Documents, except for (i) increases in the principal amount of the Note or changes in the - -------------------------------------------------------------------------------- The 520 Group Page 1 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- manner by which interest rates, fees or charges are calculated under the Note and the other Loan Documents (Guarantor acknowledges that if the Note or other Loan Documents so provide, said interest rates, fees and charges may vary from time to time) or (ii) advancement of the Maturity Date of the Note where no Default has occurred under the Loan Documents; (e) take and hold security for the performance of Borrower's obligations under the Note or the other Loan Documents and exchange, enforce, waive and release any such security; (f) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; (g) release, substitute or add any one or more endorsers of the Note or guarantors of Borrower's obligations under the Note or the other Loan Documents; (h) apply payments received by Lender from Borrower to any obligations of Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not any such obligations are covered by this Guaranty; (i) assign this Guaranty in whole or in part; and (j) assign, transfer or negotiate all or any part of the indebtedness guaranteed by this Guaranty. 6. GUARANTOR'S WAIVERS. Guarantor waives: (a) any defense based upon any legal disability or other defense of Borrower, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Note or any of the other Loan Documents; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any defect in the formation of Borrower or any principal of Borrower; (c) any defense based upon the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any defense of Guarantor based upon Lender's election of any remedy against Guarantor or Borrower or both; (e) any defense based upon Lender's failure to disclose to Guarantor any information concerning Borrower's financial condition or any other circumstances bearing on Borrower's ability to pay all sums payable under the Note or any of the other Loan Documents; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Lender's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (j) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor agrees that the payment of all sums payable under the Note or any of the other Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Note or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor's liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor expressly waives any and all benefits which might otherwise be available to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433, or any of such sections. 7. GUARANTOR'S WARRANTIES. Guarantor warrants and acknowledges that: (a) Lender would not make the Loan but for this Guaranty; (b) there are no conditions precedent to the effectiveness of this Guaranty and this Guaranty shall be in full force and effect and binding on Guarantor regardless of whether Lender obtains other collateral or any guaranties from others or takes any other action contemplated by Guarantor; (c) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower's financial condition, and the status of Borrower's performance of obligations imposed by the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor's risks hereunder and Lender has made no representation to Guarantor as to any such matters; (d) the most recent financial statements of Guarantor previously delivered to Lender are true and correct in all respects, have been prepared in - -------------------------------------------------------------------------------- The 520 Group Page 2 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- accordance with generally accepted accounting principles consistently applied (or other principles acceptable to Lender) and fairly present the financial condition of Guarantor as of the respective dates thereof, and no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof; (e) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantor's business; (f) Guarantor is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to guaranty as contemplated by the Loan Documents; (g) Guarantor is authorized to execute, deliver and perform its obligations under the Loan Documents and Other Related Documents, and such obligations shall be valid and binding obligations of Guarantor; (h) Guarantor has delivered to Lender all formation and organizational documents of Guarantor, and of all Guarantors, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender. Guarantor shall immediately provide Lender with copies of any amendments or modifications of the aforementioned formation or organizational documents; (i) Guarantor's execution, delivery, and performance under the Loan Documents and Other Related Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is bound or regulated; or (c) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity; (j) except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Guarantor's knowledge threatened, against Guarantor; (k) all financial statements and information heretofore and hereafter delivered to Lender by Guarantor, or any Guarantor, including, without limitation, information relating to the financial condition of Guarantor, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Guarantor acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports; (l) there has been no material adverse change in the financial condition of Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Guarantor has not entered into any material transaction which is not disclosed in such financial statements; and (m) all reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission. 8. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been fully discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as Lender deems necessary or appropriate to perfect, preserve and enforce Lender's rights in and to such indebtedness and any security therefor. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor. The foregoing power of attorney is coupled with an interest and cannot be revoked. - -------------------------------------------------------------------------------- The 520 Group Page 3 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- 9. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender's discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender's nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked. Lender or its nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor's rights to any such payments or distributions; provided, however, Guarantor's obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall continue and shall remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery, or (b) full payment and performance of all of the indebtedness and obligations evidenced and secured by the Loan Documents. 10. LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION. Guarantor agrees that Lender may elect, at any time, to sell, assign, or grant participations in all or any portion of its rights and obligations under the Loan Documents and this Guaranty, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender's sole discretion. Guarantor further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to: (a) any party connected with the Loan (including, without limitation, the Guarantor, the Borrower, any partner of Borrower, any constituent partner of Borrower, any other guarantor and any non-borrower trustor); and/or (b) any lending relationship other than the Loan which Lender may have with any party connected with the Loan. In the event of any such sale, assignment or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves. In connection with any such sale, assignment or participation, Guarantor further agrees that the Guaranty shall be sufficient evidence of the obligations of Guarantor to each purchaser, assignee, or participant, and upon written request by Lender, Guarantor shall consent to such amendments or modifications to the Loan Documents as may be reasonably required in order to evidence any such sale, assignment, or participation. Anything in this Guaranty to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Guaranty, including this Section, any lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such lender from its obligations thereunder. 11. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced in Section 1 hereof arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs). - -------------------------------------------------------------------------------- The 520 Group Page 4 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. This Guaranty is independent of the obligations of Borrower under the Note and the other Loan Documents. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty. 12. ATTORNEYS' FEES; ENFORCEMENT. If, following a Potential Default, any attorney is engaged by Lender to enforce or defend any provision of this Guaranty, or any of the other Loan Documents, or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, Guarantor shall pay to Lender, immediately upon demand all attorneys' fees and costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance of the Note as specified therein. 13. RULES OF CONSTRUCTION. The word "Borrower" as used herein shall include both the named Borrower and any other person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term "person" as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term "Guarantor" shall include all such persons. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. 14. CREDIT REPORTS. Each legal entity and individual obligated on this Guaranty hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender's choice, a third party credit report on such legal entity and individual. 15. GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of California, except to the extent preempted by federal laws. Guarantor and all persons and entities in any manner obligated to Lender under this Guaranty consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 16. MISCELLANEOUS. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, nominees, successors and assigns of Guarantor and Lender. The liability of all persons and entities who are in any manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. 17. ADDITIONAL PROVISIONS. Such additional terms, covenants and conditions as may be set forth on any exhibit executed by Guarantor and attached hereto which recites that it is an exhibit to this Guaranty are incorporated herein by this reference. 18. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Lender's consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek - -------------------------------------------------------------------------------- The 520 Group Page 5 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof. 19. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY, AND BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND LENDER HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty. "GUARANTOR" - ----------------------------------------- Sol Price - -------------------------------------------------------------------------------- The 520 Group Page 6 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA EX-16 7 tex16-2960.txt EX-16 EXHIBIT 16 ---------- REPAYMENT GUARANTY THIS REPAYMENT GUARANTY ("Guaranty") is made as of June 10, 2004, by The Price Group LLC, a California limited liability company ("Guarantor") in favor of Wells Fargo Bank, National Association ("Lender"). R E C I T A L S A. Pursuant to the terms of a loan agreement between The 520 Group, LLC, a California limited liability company ("Borrower") and Lender dated as of June 10, 2004 ("Loan Agreement"), Lender has agreed to loan to Borrower the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) ("Loan") for purposes specified in the Loan Agreement. B. The Loan Agreement provides that the Loan shall be evidenced by a promissory note ("Note") made by Borrower payable to the order of Lender in the principal amount of the Loan and shall be secured by a Securities Pledge and Security Agreement dated concurrently herewith. The term "Loan Documents" for purposes hereof shall mean the Loan Agreement, the Note and those other documents described in the Loan Agreement as Loan Documents. THEREFORE, to induce Lender to enter into the Loan Agreement and to make the Loan, and in consideration thereof, Guarantor unconditionally guarantees and agrees as follows: 1. GUARANTY. Guarantor hereby guarantees and promises to pay to Lender or order, on demand, in lawful money of the United States, in immediately available funds, the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) or so much thereof as may be due and owing under the Note or any of the other Loan Documents together with interest and any other sums payable under the Note or any of the other Loan Documents. 2. NET CASH LIQUIDITY. Net Cash Liquidity for Guarantor, together with Borrower and each other "Guarantor" of the Loan, in the aggregate, shall not at any time be less than Fifteen Million Dollars ($15,000,000.00). 3. PLRE STOCK; REGISTRATION RIGHTS. With exception of the PLRE Stock pledged in connection with the Existing Indebtedness, Guarantor shall not, without the prior written consent of Lender, pledge or encumber any PLRE Stock owned by Guarantor, from time to time, to or for the benefit of any Person other than Lender. 4. REMEDIES. If Guarantor fails to promptly perform its obligations under this Guaranty, Lender may from time to time, and without first requiring performance by Borrower or exhausting any or all security for the Loan, bring any action at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all loss, cost, damage, injury and expense sustained or incurred by Lender as a direct or indirect consequence of the failure of Guarantor to perform its obligations hereunder, together with interest thereon at the rate of interest applicable to the principal balance of the Note. 5. RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice to Guarantor or obtaining Guarantor's consent and without affecting the liability of Guarantor, from time to time to: (a) renew or extend all or any portion of Borrower's obligations under the Note or any of the other Loan Documents; (b) declare all sums owing to Lender under the Note and the other Loan Documents due and payable upon the occurrence of a Default as defined in the Loan Agreement under the Loan Documents; (c) make non-material changes in the dates specified for payments of any sums payable in periodic installments under the Note or any of the other Loan Documents; (d) otherwise modify the terms of any of the Loan Documents, except for (i) increases in the principal amount of the Note or changes in the - -------------------------------------------------------------------------------- The 520 Group Page 1 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- manner by which interest rates, fees or charges are calculated under the Note and the other Loan Documents (Guarantor acknowledges that if the Note or other Loan Documents so provide, said interest rates, fees and charges may vary from time to time) or (ii) advancement of the Maturity Date of the Note where no Default has occurred under the Loan Documents; (e) take and hold security for the performance of Borrower's obligations under the Note or the other Loan Documents and exchange, enforce, waive and release any such security; (f) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; (g) release, substitute or add any one or more endorsers of the Note or guarantors of Borrower's obligations under the Note or the other Loan Documents; (h) apply payments received by Lender from Borrower to any obligations of Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not any such obligations are covered by this Guaranty; (i) assign this Guaranty in whole or in part; and (j) assign, transfer or negotiate all or any part of the indebtedness guaranteed by this Guaranty. 6. GUARANTOR'S WAIVERS. Guarantor waives: (a) any defense based upon any legal disability or other defense of Borrower, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Note or any of the other Loan Documents; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any defect in the formation of Borrower or any principal of Borrower; (c) any defense based upon the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any defense of Guarantor based upon Lender's election of any remedy against Guarantor or Borrower or both; (e) any defense based upon Lender's failure to disclose to Guarantor any information concerning Borrower's financial condition or any other circumstances bearing on Borrower's ability to pay all sums payable under the Note or any of the other Loan Documents; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Lender's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (j) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor agrees that the payment of all sums payable under the Note or any of the other Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Note or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor's liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor expressly waives any and all benefits which might otherwise be available to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433, or any of such sections. 7. GUARANTOR'S WARRANTIES. Guarantor warrants and acknowledges that: (a) Lender would not make the Loan but for this Guaranty; (b) there are no conditions precedent to the effectiveness of this Guaranty and this Guaranty shall be in full force and effect and binding on Guarantor regardless of whether Lender obtains other collateral or any guaranties from others or takes any other action contemplated by Guarantor; (c) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower's financial condition, and the status of Borrower's performance of obligations imposed by the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor's risks hereunder and Lender has made no representation to Guarantor as to any such matters; (d) the most recent financial statements of Guarantor previously delivered to Lender are true and correct in all respects, have been prepared in - -------------------------------------------------------------------------------- The 520 Group Page 2 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- accordance with generally accepted accounting principles consistently applied (or other principles acceptable to Lender) and fairly present the financial condition of Guarantor as of the respective dates thereof, and no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof; (e) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantor's business; (f) Guarantor is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to guaranty as contemplated by the Loan Documents; (g) Guarantor is authorized to execute, deliver and perform its obligations under the Loan Documents and Other Related Documents, and such obligations shall be valid and binding obligations of Guarantor; (h) Guarantor has delivered to Lender all formation and organizational documents of Guarantor, and of all Guarantors, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender. Guarantor shall immediately provide Lender with copies of any amendments or modifications of the aforementioned formation or organizational documents; (i) Guarantor's execution, delivery, and performance under the Loan Documents and Other Related Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is bound or regulated; or (c) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity; (j) except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Guarantor's knowledge threatened, against Guarantor; (k) all financial statements and information heretofore and hereafter delivered to Lender by Guarantor, or any Guarantor, including, without limitation, information relating to the financial condition of Guarantor, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Guarantor acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports; (l) there has been no material adverse change in the financial condition of Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Guarantor has not entered into any material transaction which is not disclosed in such financial statements; and (m) all reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission. 8. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been fully discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as Lender deems necessary or appropriate to perfect, preserve and enforce Lender's rights in and to such indebtedness and any security therefor. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor. The foregoing power of attorney is coupled with an interest and cannot be revoked. - -------------------------------------------------------------------------------- The 520 Group Page 3 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- 9. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender's discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender's nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked. Lender or its nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor's rights to any such payments or distributions; provided, however, Guarantor's obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall continue and shall remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery, or (b) full payment and performance of all of the indebtedness and obligations evidenced and secured by the Loan Documents. 10. LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION. Guarantor agrees that Lender may elect, at any time, to sell, assign, or grant participations in all or any portion of its rights and obligations under the Loan Documents and this Guaranty, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender's sole discretion. Guarantor further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to: (a) any party connected with the Loan (including, without limitation, the Guarantor, the Borrower, any partner of Borrower, any constituent partner of Borrower, any other guarantor and any non-borrower trustor); and/or (b) any lending relationship other than the Loan which Lender may have with any party connected with the Loan. In the event of any such sale, assignment or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves. In connection with any such sale, assignment or participation, Guarantor further agrees that the Guaranty shall be sufficient evidence of the obligations of Guarantor to each purchaser, assignee, or participant, and upon written request by Lender, Guarantor shall consent to such amendments or modifications to the Loan Documents as may be reasonably required in order to evidence any such sale, assignment, or participation. Anything in this Guaranty to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Guaranty, including this Section, any lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such lender from its obligations thereunder. 11. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced in Section 1 hereof arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs). - -------------------------------------------------------------------------------- The 520 Group Page 4 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. This Guaranty is independent of the obligations of Borrower under the Note and the other Loan Documents. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty. 12. ATTORNEYS' FEES; ENFORCEMENT. If, following a Potential Default, any attorney is engaged by Lender to enforce or defend any provision of this Guaranty, or any of the other Loan Documents, or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, Guarantor shall pay to Lender, immediately upon demand all attorneys' fees and costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance of the Note as specified therein. 13. RULES OF CONSTRUCTION. The word "Borrower" as used herein shall include both the named Borrower and any other person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term "person" as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term "Guarantor" shall include all such persons. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. 14. CREDIT REPORTS. Each legal entity and individual obligated on this Guaranty hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender's choice, a third party credit report on such legal entity and individual. 15. GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of California, except to the extent preempted by federal laws. Guarantor and all persons and entities in any manner obligated to Lender under this Guaranty consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 16. MISCELLANEOUS. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, nominees, successors and assigns of Guarantor and Lender. The liability of all persons and entities who are in any manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. 17. ADDITIONAL PROVISIONS. Such additional terms, covenants and conditions as may be set forth on any exhibit executed by Guarantor and attached hereto which recites that it is an exhibit to this Guaranty are incorporated herein by this reference. 18. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Lender's consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek - -------------------------------------------------------------------------------- The 520 Group Page 5 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof. 19. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY, AND BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND LENDER HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty. "GUARANTOR" The Price Group LLC, a California limited liability company By:________________________________________ Name and Title By:________________________________________ Name and Title - -------------------------------------------------------------------------------- The 520 Group Page 6 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA EX-17 8 tex17-2960.txt EX-17 EXHIBIT 17 ---------- REPAYMENT GUARANTY THIS REPAYMENT GUARANTY ("Guaranty") is made as of June 10, 2004, by Sol and Helen Price Trust dated February 20, 1970 ("Guarantor") in favor of Wells Fargo Bank, National Association ("Lender"). R E C I T A L S A. Pursuant to the terms of a loan agreement between The 520 Group, LLC, a California limited liability company ("Borrower") and Lender dated as of June 10, 2004 ("Loan Agreement"), Lender has agreed to loan to Borrower the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) ("Loan") for purposes specified in the Loan Agreement. B. The Loan Agreement provides that the Loan shall be evidenced by a promissory note ("Note") made by Borrower payable to the order of Lender in the principal amount of the Loan and shall be secured by a Securities Pledge and Security Agreement dated concurrently herewith. The term "Loan Documents" for purposes hereof shall mean the Loan Agreement, the Note and those other documents described in the Loan Agreement as Loan Documents. THEREFORE, to induce Lender to enter into the Loan Agreement and to make the Loan, and in consideration thereof, Guarantor unconditionally guarantees and agrees as follows: 1. GUARANTY. Guarantor hereby guarantees and promises to pay to Lender or order, on demand, in lawful money of the United States, in immediately available funds, the principal sum of Fifty Million and 00/100ths Dollars ($50,000,000.00) or so much thereof as may be due and owing under the Note or any of the other Loan Documents together with interest and any other sums payable under the Note or any of the other Loan Documents. 2. NET CASH LIQUIDITY. Net Cash Liquidity for Guarantor, together with Borrower and each other "Guarantor" of the Loan, in the aggregate, shall not at any time be less than Fifteen Million Dollars ($15,000,000.00). 3. PLRE STOCK; REGISTRATION RIGHTS. With exception of the PLRE Stock pledged in connection with the Existing Indebtedness, Guarantor shall not, without the prior written consent of Lender, pledge or encumber any PLRE Stock owned by Guarantor, from time to time, to or for the benefit of any Person other than Lender. 4. REMEDIES. If Guarantor fails to promptly perform its obligations under this Guaranty, Lender may from time to time, and without first requiring performance by Borrower or exhausting any or all security for the Loan, bring any action at law or in equity or both to compel Guarantor to perform its obligations hereunder, and to collect in any such action compensation for all loss, cost, damage, injury and expense sustained or incurred by Lender as a direct or indirect consequence of the failure of Guarantor to perform its obligations hereunder, together with interest thereon at the rate of interest applicable to the principal balance of the Note. 5. RIGHTS OF LENDER. Guarantor authorizes Lender, without giving notice to Guarantor or obtaining Guarantor's consent and without affecting the liability of Guarantor, from time to time to: (a) renew or extend all or any portion of Borrower's obligations under the Note or any of the other Loan Documents; (b) declare all sums owing to Lender under the Note and the other Loan Documents due and payable upon the occurrence of a Default as defined in the Loan Agreement under the Loan Documents; (c) make non-material changes in the dates specified for payments of any sums payable in periodic installments under the Note or any of the other Loan Documents; (d) otherwise modify the terms of any of the Loan Documents, except for (i) increases in the principal amount of the Note or changes in the - -------------------------------------------------------------------------------- The 520 Group Page 1 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- manner by which interest rates, fees or charges are calculated under the Note and the other Loan Documents (Guarantor acknowledges that if the Note or other Loan Documents so provide, said interest rates, fees and charges may vary from time to time) or (ii) advancement of the Maturity Date of the Note where no Default has occurred under the Loan Documents; (e) take and hold security for the performance of Borrower's obligations under the Note or the other Loan Documents and exchange, enforce, waive and release any such security; (f) apply such security and direct the order or manner of sale thereof as Lender in its discretion may determine; (g) release, substitute or add any one or more endorsers of the Note or guarantors of Borrower's obligations under the Note or the other Loan Documents; (h) apply payments received by Lender from Borrower to any obligations of Borrower to Lender, in such order as Lender shall determine in its sole discretion, whether or not any such obligations are covered by this Guaranty; (i) assign this Guaranty in whole or in part; and (j) assign, transfer or negotiate all or any part of the indebtedness guaranteed by this Guaranty. 6. GUARANTOR'S WAIVERS. Guarantor waives: (a) any defense based upon any legal disability or other defense of Borrower, any other guarantor or other person, or by reason of the cessation or limitation of the liability of Borrower from any cause other than full payment of all sums payable under the Note or any of the other Loan Documents; (b) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of Borrower or any principal of Borrower or any defect in the formation of Borrower or any principal of Borrower; (c) any defense based upon the application by Borrower of the proceeds of the Loan for purposes other than the purposes represented by Borrower to Lender or intended or understood by Lender or Guarantor; (d) any defense of Guarantor based upon Lender's election of any remedy against Guarantor or Borrower or both; (e) any defense based upon Lender's failure to disclose to Guarantor any information concerning Borrower's financial condition or any other circumstances bearing on Borrower's ability to pay all sums payable under the Note or any of the other Loan Documents; (f) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in any other respects more burdensome than that of a principal; (g) any defense based upon Lender's election, in any proceeding instituted under the Federal Bankruptcy Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code or any successor statute; (h) any defense based upon any borrowing or any grant of a security interest under Section 364 of the Federal Bankruptcy Code; (i) any right of subrogation, any right to enforce any remedy which Lender may have against Borrower and any right to participate in, or benefit from, any security for the Note or the other Loan Documents now or hereafter held by Lender; (j) presentment, demand, protest and notice of any kind; and (k) the benefit of any statute of limitations affecting the liability of Guarantor hereunder or the enforcement hereof. Guarantor agrees that the payment of all sums payable under the Note or any of the other Loan Documents or any part thereof or other act which tolls any statute of limitations applicable to the Note or the other Loan Documents shall similarly operate to toll the statute of limitations applicable to Guarantor's liability hereunder. Without limiting the generality of the foregoing or any other provision hereof, Guarantor expressly waives any and all benefits which might otherwise be available to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2849, 2850, 2899 and 3433, or any of such sections. 7. GUARANTOR'S WARRANTIES. Guarantor warrants and acknowledges that: (a) Lender would not make the Loan but for this Guaranty; (b) there are no conditions precedent to the effectiveness of this Guaranty and this Guaranty shall be in full force and effect and binding on Guarantor regardless of whether Lender obtains other collateral or any guaranties from others or takes any other action contemplated by Guarantor; (c) Guarantor has established adequate means of obtaining from sources other than Lender, on a continuing basis, financial and other information pertaining to Borrower's financial condition, and the status of Borrower's performance of obligations imposed by the Loan Documents, and Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor's risks hereunder and Lender has made no representation to Guarantor as to any such matters; (d) the most recent financial statements of Guarantor previously delivered to Lender are true and correct in all respects, have been prepared in - -------------------------------------------------------------------------------- The 520 Group Page 2 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- accordance with generally accepted accounting principles consistently applied (or other principles acceptable to Lender) and fairly present the financial condition of Guarantor as of the respective dates thereof, and no material adverse change has occurred in the financial condition of Guarantor since the respective dates thereof; (e) Guarantor has not and will not, without the prior written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of all or substantially all of Guarantor's assets, or any interest therein, other than in the ordinary course of Guarantor's business; (f) Guarantor is in compliance with all laws and regulations applicable to its organization, existence and transaction of business and has all necessary rights and powers to guaranty as contemplated by the Loan Documents; (g) Guarantor is authorized to execute, deliver and perform its obligations under the Loan Documents and Other Related Documents, and such obligations shall be valid and binding obligations of Guarantor; (h) Guarantor has delivered to Lender all formation and organizational documents of Guarantor, and of all Guarantors, and all such formation and organizational documents remain in full force and effect and have not been amended or modified since they were delivered to Lender. Guarantor shall immediately provide Lender with copies of any amendments or modifications of the aforementioned formation or organizational documents; (i) Guarantor's execution, delivery, and performance under the Loan Documents and Other Related Documents do not: (a) require any consent or approval not heretofore obtained under any partnership agreement, operating agreement, articles of incorporation, bylaws or other document; (b) conflict with, or constitute a breach or default or permit the acceleration of obligations under any agreement, contract, lease, or other document by which the Borrower is bound or regulated; or (c) violate any statute, law, regulation or ordinance, or any order of any court or governmental entity; (j) except as disclosed to Lender in writing, there are no claims, actions, suits, or proceedings pending, or to Guarantor's knowledge threatened, against Guarantor; (k) all financial statements and information heretofore and hereafter delivered to Lender by Guarantor, or any Guarantor, including, without limitation, information relating to the financial condition of Guarantor, fairly and accurately represent the financial condition of the subject thereof and have been prepared (except as noted therein) in accordance with generally accepted accounting principles consistently applied. Guarantor acknowledges and agrees that Lender may request and obtain additional information from third parties regarding any of the above, including, without limitation, credit reports; (l) there has been no material adverse change in the financial condition of Guarantor since the dates of the latest financial statements furnished to Lender and, except as otherwise disclosed to Lender in writing, Guarantor has not entered into any material transaction which is not disclosed in such financial statements; and (m) all reports, documents, instruments, information and forms of evidence delivered to Lender concerning the Loan or security for the Loan or required by the Loan Documents are accurate, correct and sufficiently complete to give Lender true and accurate knowledge of their subject matter, and do not contain any misrepresentation or omission. 8. SUBORDINATION. Guarantor subordinates all present and future indebtedness owing by Borrower to Guarantor to the obligations at any time owing by Borrower to Lender under the Note and the other Loan Documents. Guarantor assigns all such indebtedness to Lender as security for this Guaranty, the Note and the other Loan Documents. Guarantor agrees to make no claim for such indebtedness until all obligations of Borrower under the Note and the other Loan Documents have been fully discharged. Guarantor further agrees not to assign all or any part of such indebtedness unless Lender is given prior notice and such assignment is expressly made subject to the terms of this Guaranty. If Lender so requests, (a) all instruments evidencing such indebtedness shall be duly endorsed and delivered to Lender, (b) all security for such indebtedness shall be duly assigned and delivered to Lender, (c) such indebtedness shall be enforced, collected and held by Guarantor as trustee for Lender and shall be paid over to Lender on account of the Loan but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty, and (d) Guarantor shall execute, file and record such documents and instruments and take such other action as Lender deems necessary or appropriate to perfect, preserve and enforce Lender's rights in and to such indebtedness and any security therefor. If Guarantor fails to take any such action, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor. The foregoing power of attorney is coupled with an interest and cannot be revoked. - -------------------------------------------------------------------------------- The 520 Group Page 3 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- 9. BANKRUPTCY OF BORROWER. In any bankruptcy or other proceeding in which the filing of claims is required by law, Guarantor shall file all claims which Guarantor may have against Borrower relating to any indebtedness of Borrower to Guarantor and shall assign to Lender all rights of Guarantor thereunder. If Guarantor does not file any such claim, Lender, as attorney-in-fact for Guarantor, is hereby authorized to do so in the name of Guarantor or, in Lender's discretion, to assign the claim to a nominee and to cause proof of claim to be filed in the name of Lender's nominee. The foregoing power of attorney is coupled with an interest and cannot be revoked. Lender or its nominee shall have the right, in its reasonable discretion, to accept or reject any plan proposed in such proceeding and to take any other action which a party filing a claim is entitled to do. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to Lender the amount payable on such claim and, to the full extent necessary for that purpose, Guarantor hereby assigns to Lender all of Guarantor's rights to any such payments or distributions; provided, however, Guarantor's obligations hereunder shall not be satisfied except to the extent that Lender receives cash by reason of any such payment or distribution. If Lender receives anything hereunder other than cash, the same shall be held as collateral for amounts due under this Guaranty. If all or any portion of the obligations guaranteed hereunder are paid or performed, the obligations of Guarantor hereunder shall continue and shall remain in full force and effect in the event that all or any part of such payment or performance is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise under the Bankruptcy Code or other similar laws, irrespective of (a) any notice of revocation given by Guarantor prior to such avoidance or recovery, or (b) full payment and performance of all of the indebtedness and obligations evidenced and secured by the Loan Documents. 10. LOAN SALES AND PARTICIPATIONS; DISCLOSURE OF INFORMATION. Guarantor agrees that Lender may elect, at any time, to sell, assign, or grant participations in all or any portion of its rights and obligations under the Loan Documents and this Guaranty, and that any such sale, assignment or participation may be to one or more financial institutions, private investors, and/or other entities, at Lender's sole discretion. Guarantor further agrees that Lender may disseminate to any such actual or potential purchaser(s), assignee(s) or participant(s) all documents and information (including, without limitation, all financial information) which has been or is hereafter provided to or known to Lender with respect to: (a) any party connected with the Loan (including, without limitation, the Guarantor, the Borrower, any partner of Borrower, any constituent partner of Borrower, any other guarantor and any non-borrower trustor); and/or (b) any lending relationship other than the Loan which Lender may have with any party connected with the Loan. In the event of any such sale, assignment or participation, Lender and the parties to such transaction shall share in the rights and obligations of Lender as set forth in the Loan Documents only as and to the extent they agree among themselves. In connection with any such sale, assignment or participation, Guarantor further agrees that the Guaranty shall be sufficient evidence of the obligations of Guarantor to each purchaser, assignee, or participant, and upon written request by Lender, Guarantor shall consent to such amendments or modifications to the Loan Documents as may be reasonably required in order to evidence any such sale, assignment, or participation. Anything in this Guaranty to the contrary notwithstanding, and without the need to comply with any of the formal or procedural requirements of this Guaranty, including this Section, any lender may at any time and from time to time pledge and assign all or any portion of its rights under all or any of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or assignment shall release such lender from its obligations thereunder. 11. ADDITIONAL, INDEPENDENT AND UNSECURED OBLIGATIONS. This Guaranty is a continuing guaranty of payment and not of collection and cannot be revoked by Guarantor and shall continue to be effective with respect to any indebtedness referenced in Section 1 hereof arising or created after any attempted revocation hereof or after the death of Guarantor (if Guarantor is a natural person, in which event this Guaranty shall be binding upon Guarantor's estate and Guarantor's legal representatives and heirs). - -------------------------------------------------------------------------------- The 520 Group Page 4 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- The obligations of Guarantor hereunder shall be in addition to and shall not limit or in any way affect the obligations of Guarantor under any other existing or future guaranties unless said other guaranties are expressly modified or revoked in writing. This Guaranty is independent of the obligations of Borrower under the Note and the other Loan Documents. Lender may bring a separate action to enforce the provisions hereof against Guarantor without taking action against Borrower or any other party or joining Borrower or any other party as a party to such action. Except as otherwise provided in this Guaranty, this Guaranty is not secured and shall not be deemed to be secured by any security instrument unless such security instrument expressly recites that it secures this Guaranty. 12. ATTORNEYS' FEES; ENFORCEMENT. If, following a Potential Default, any attorney is engaged by Lender to enforce or defend any provision of this Guaranty, or any of the other Loan Documents, or as a consequence of any Default under the Loan Documents, with or without the filing of any legal action or proceeding, Guarantor shall pay to Lender, immediately upon demand all attorneys' fees and costs incurred by Lender in connection therewith, together with interest thereon from the date of such demand until paid at the rate of interest applicable to the principal balance of the Note as specified therein. 13. RULES OF CONSTRUCTION. The word "Borrower" as used herein shall include both the named Borrower and any other person at any time assuming or otherwise becoming primarily liable for all or any part of the obligations of the named Borrower under the Note and the other Loan Documents. The term "person" as used herein shall include any individual, company, trust or other legal entity of any kind whatsoever. If this Guaranty is executed by more than one person, the term "Guarantor" shall include all such persons. When the context and construction so require, all words used in the singular herein shall be deemed to have been used in the plural and vice versa. All headings appearing in this Guaranty are for convenience only and shall be disregarded in construing this Guaranty. 14. CREDIT REPORTS. Each legal entity and individual obligated on this Guaranty hereby authorizes Lender to order and obtain, from a credit reporting agency of Lender's choice, a third party credit report on such legal entity and individual. 15. GOVERNING LAW. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of California, except to the extent preempted by federal laws. Guarantor and all persons and entities in any manner obligated to Lender under this Guaranty consent to the jurisdiction of any federal or state court within the State of California having proper venue and also consent to service of process by any means authorized by California or federal law. 16. MISCELLANEOUS. The provisions of this Guaranty will bind and benefit the heirs, executors, administrators, legal representatives, nominees, successors and assigns of Guarantor and Lender. The liability of all persons and entities who are in any manner obligated hereunder shall be joint and several. If any provision of this Guaranty shall be determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, that portion shall be deemed severed from this Guaranty and the remaining parts shall remain in full force as though the invalid, illegal or unenforceable portion had never been part of this Guaranty. 17. ADDITIONAL PROVISIONS. Such additional terms, covenants and conditions as may be set forth on any exhibit executed by Guarantor and attached hereto which recites that it is an exhibit to this Guaranty are incorporated herein by this reference. 18. ENFORCEABILITY. Guarantor hereby acknowledges that: (a) the obligations undertaken by Guarantor in this Guaranty are complex in nature, and (b) numerous possible defenses to the enforceability of these obligations may presently exist and/or may arise hereafter, and (c) as part of Lender's consideration for entering into this transaction, Lender has specifically bargained for the waiver and relinquishment by Guarantor of all such defenses, and (d) Guarantor has had the opportunity to seek - -------------------------------------------------------------------------------- The 520 Group Page 5 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA - -------------------------------------------------------------------------------- and receive legal advice from skilled legal counsel in the area of financial transactions of the type contemplated herein. Given all of the above, Guarantor does hereby represent and confirm to Lender that Guarantor is fully informed regarding, and that Guarantor does thoroughly understand: (i) the nature of all such possible defenses, and (ii) the circumstances under which such defenses may arise, and (iii) the benefits which such defenses might confer upon Guarantor, and (iv) the legal consequences to Guarantor of waiving such defenses. Guarantor acknowledges that Guarantor makes this Guaranty with the intent that this Guaranty and all of the informed waivers herein shall each and all be fully enforceable by Lender, and that Lender is induced to enter into this transaction in material reliance upon the presumed full enforceability thereof. 19. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS GUARANTY, AND BY ITS ACCEPTANCE HEREOF, LENDER, HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY AND LENDER HEREBY AGREES AND CONSENTS THAT ANY PARTY TO THIS GUARANTY AND LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO AND LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date appearing on the first page of this Guaranty. "GUARANTOR" - ----------------------------------------------------- Sol Price, as Trustee of the Sol and Helen Price Trust dated February 20, 1970 - -------------------------------------------------------------------------------- The 520 Group Page 6 LOAN NO. 100441 RPYMTUN.CA M (03/03) 3641-1-4-ALEXANJA -----END PRIVACY-ENHANCED MESSAGE-----