EXHIBIT 11
----------
SECURED LOAN AGREEMENT
BETWEEN
THE 520 GROUP, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY
AND
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
LOAN NO. 100441
ENTERED INTO AS OF JUNE 10, 2004
TABLE OF CONTENTS
Page
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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
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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 ▇▇▇▇▇ 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, ▇▇▇▇▇'▇ 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 ▇▇▇▇-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) ▇▇▇ ▇▇▇▇▇,
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 ▇▇▇▇▇ 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 ▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇, as Trustee of The Sol and ▇▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇ 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 ▇▇▇▇▇ 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 ▇▇▇▇▇ ▇▇▇▇▇▇ 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 ▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇ (or such
other executor or trustee of The Trust, and each successor
trust, as applicable), within ten (10) days following death or
incapacity of ▇▇▇ ▇▇▇▇▇, 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"
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
By:
-----------------------------------
Name:
-----------------------------------
Its:
-----------------------------------
Lender's Address:
-----------------
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
"BORROWER"
THE 520 GROUP, LLC,
a California limited liability company
By:
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Its: Manager
By:
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Manager
Borrower's Address:
-------------------
The 520 Group
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
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 ▇▇▇▇▇ 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 ▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇ 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]
