EXHIBIT 3
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PROMISSORY NOTE
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$31,000,000 January 2, 2004
----------- San Diego, California
FOR VALUE RECEIVED, the undersigned THE 520 GROUP, LLC, a California
limited liability company, (the "Borrower"), promises to pay to THE PRICE GROUP,
LLC, a California limited liability company, (the "Lender") or order, at 0000
Xxxxxxx Xxxxxx, Xxxxx 000, Xx Xxxxx, Xxxxxxxxxx 00000, or such other address as
may be directed in writing, the principal sum of Thirty-One Million
($31,000,000) Dollars, together with interest thereon at a rate equal to the
three (3) month London Interbank Offered Rate (LIBOR), as of the date of this
Note, adjusted every ninety (90) days thereafter, plus three and one-quarter
percent (3.25%); computed from the date hereof on the basis of a three hundred
sixty-five day (365) year, actual days elapsed.
1. PAYMENT OF PRINCIPAL AND INTEREST. Interest only shall be payable in
quarter annual installments on May 20th, August 20th, November 20th, and
February 20th beginning May 20th, 2004 until this Note is paid in full. All
unpaid principal and accrued unpaid interest on this Note shall be due and
payable in full on December 31, 2006.
2. CREDIT OF PAYMENTS. Each payment under this Note shall be credited in
the following order: (a) costs, fees, charges and advances paid or incurred by
Xxxxxx and for which the Borrower is obligated under the terms herein; (b)
interest payable under this Note; and (c) principal under this Note. All
installments of principal and interest of this Note shall be payable in lawful
money of the United States of America.
3. PREPAYMENT. The Borrower may prepay in whole, or from time to time in
part, and without any premium or penalty therefor, the principal amount hereof
then remaining unpaid, together with accrued unpaid interest on this Note. Any
such prepayment shall be applied first to accrued unpaid interest on this Note
and the balance to principal due hereunder.
4. INTEREST AND DEFAULT. From and after the Maturity Date the entire
unpaid principal balance and accrued unpaid interest shall automatically bear an
annual interest rate equal to the lessor of: (a) ten percent (10%) per annum or
(b) the maximum interest rate allowed by law; in lieu of the rate provided above
herein.
5. ACCELERATION. In the event Borrower defaults in the payment of any
installment of interest or principal of this Note when due, and such default is
not cured within ten (10) days after Borrower receives a written notice of
default from Lender, then the entire principal balance and accrued unpaid
interest of this Note shall be immediately due and payable, at the option of the
Lender, without further notice. Failure to exercise said option shall not
constitute a waiver of the right to exercise it in the event of any subsequent
default.
6. ATTORNEY FEES. Xxxxxxxx agrees to pay the following costs, expenses,
and attorney fees paid or incurred by Xxxxxx, or adjudged by a court: (a)
reasonable costs of collection and costs, expenses, and attorney fees paid or
incurred in connection with the collection or enforcement of this Note, whether
or not suit is filed; (b) reasonable costs, expenses, and attorney fees paid or
incurred in connection with representing Lender in any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors' rights
and involving a claim under this Note; and (c) costs of suit and such sum as the
court may adjudge as attorney fees in any action to enforce payment of this Note
or any part of it.
7. WAIVER. Borrower, endorsers, and all other persons liable or to become
liable on this Note waive presentment, protest, and demand; notice of protest,
demand, and dishonor; and all other notices or matters of a like nature.
8. USURY. All agreements between Borrower and Lender are expressly
limited, so that in no event or contingency, whether because of the advancement
of the proceeds of this Note, acceleration of maturity of the unpaid principal
balance, or otherwise, shall the amount paid or agreed to be paid to Lender for
the use, forbearance, or retention of the money to be advanced under this Note
exceed the highest lawful rate permissible under applicable usury laws. If,
under any circumstances, fulfillment of any provision of this Note or any other
agreement pertaining to this Note, after timely performance of such provision is
due, shall involve exceeding the limit of validity prescribed by law that a
court of competent jurisdiction deems applicable, then, ipso facto, the
obligations to be fulfilled shall be reduced to the limit of such validity. If,
under any circumstances, Xxxxxx shall ever receive as interest an amount that
exceeds the highest lawful rate, the amount that would be excessive interest
shall be applied to reduce the unpaid principal balance under this Note and not
to pay interest, or, if such excessive interest exceeds the unpaid principal
balance under this Note, such excess shall be refunded to Borrower. This
provision shall control every other provision of all agreements between Borrower
and Lender.
9. FORBEARANCE NOT A WAIVER. If Lender delays in exercising or fails to
exercise any of its rights under this Note, that delay or failure shall not
constitute a waiver of any Lender rights or of any breach, default, or failure
of condition under this Note. No waiver by Lender of any of its rights or of any
such breach, default, or failure of condition shall be effective, unless the
waiver is expressly stated in writing signed by Xxxxxx.
10. ASSIGNMENT. This Note inures to and binds the heirs, legal
representatives, successors, and assigns of Xxxxxxxx and Xxxxxx; provided,
however, that Borrower may not assign this Note or any proceeds of it, or assign
or delegate any of its rights or obligations, without Xxxxxx's prior written
consent in each instance. Lender, in its sole discretion, may transfer this
Note, and may sell or assign participations or other interests in all or any
part of this Note, all without notice to or the consent of Borrower.
11. SEVERABILITY. If any provision of this Note, or the application of it
to any party or circumstance, is held void, invalid, or unenforceable by a court
of competent jurisdiction, the remainder of this Note, and the application of
such provision to other parties or circumstances, shall not be affected thereby,
the provisions of this Note being severable in any such instance.
12. TIME IS OF THE ESSENCE. Time is of the essence with respect to all
obligations of Borrower under this Note.
13. GOVERNING LAW. This Note shall be construed and enforceable according
to the laws of the State of California.
14. SECURED OBLIGATION. This note is secured by a Pledge and Security
Agreement dated the same date as this Note and made by Borrower, for the benefit
of the Lender. Any default under said Agreement shall be deemed a default under
this Note.
15. DEMAND PAYMENT OPTION. The Lender shall have the right at any time
prior to the maturity date to require the Borrower to repay the entire principal
balance and accrued unpaid interest due under this Note in the event it is
determined by the Lender, in consultation with Price Legacy Corporation (the
"Company"), the Company's Board of Directors and/or the Company's tax advisors
that this Note could jeopardize the Company's status as a real estate investment
trust under the Internal Revenue Code of 1986, as amended. In the event the
Lender elects to exercise its call option under this paragraph 15, the Lender
shall provide the Borrower with written notice of such election, and the
Borrower shall repay the entire principal balance and accrued unpaid interest
due under this Note to the Lender within fifteen (15) days.
Executed as of the date first written above.
BORROWER
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THE 520 GROUP, LLC
By /s/ Xxxxx XxXxxxx
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Xxxxx XxXxxxx - Manager
By /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx - Manager
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