PLEDGE AND SECURITY AGREEMENT
-----------------------------
Agreement made this 24th day of April, 2003 by and between PRICE FAMILY
CHARITABLE TRUST, a California Trust (the "Creditor") and SAN DIEGO
REVITALIZATION CORPORATION a California non profit public benefit corporation
(the "Debtor").
RECITALS
This Pledge and Security Agreement is being entered into by the parties hereto
pursuant to the terms of a Purchase and Sale Agreement between said parties,
dated April 24, 2003, for the purpose of securing a Promissory Note of the
Debtor payable to the Creditor in the face amount of Nine Million Twenty Nine
Thousand Twenty One and 52/100 Dollars ($9,029,021.52).
NOW, THEREFORE, in consideration of the mutual covenants herein, the parties
hereto agree as follows:
1. CREATION OF SECURITY INTEREST. Debtor hereby grants to Creditor a
security interest in all of the Xxxxx'x right, title, and interest now owned or
acquired in the future in and to the following described collateral (the
"Collateral") in order to secure the payment and performance of the obligations
described in paragraph 3 below:
619,046 shares of PriceSmart, Inc. common stock.
550 shares of PriceSmart Inc. preferred stock
2. BROKERAGE ACCOUNT AND POSSESSION OF STOCK.
A) Debtor agrees that Xxxxx X. Xxxxxx ("Holder") shall maintain an
account with Xxxxxx Xxxxxxx at 0000 Xxxxxxxx Xxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000
in the name of Holder, as Custodian for Debtor ("Broker Account"). The
PriceSmart, Inc., common stock shall be deposited in the Broker Account. Debtor
acknowledges and agrees that under the terms of the Broker Account only the
Holder shall be entitled to give instructions regarding the assets held in the
Broker Account and Debtor shall have no ability to withdraw the Collateral from
the Broker Account. In addition Debtor shall deliver to Holder a stock
certificate for the PriceSmart, Inc. preferred stock with stock power attached
thereto, endorsed in blank by the Debtor.
B) Holder agrees to maintain the Broker Account as the custodian of
Debtor and retain the Collateral in the Broker Account and retain the stock
certificate for the PriceSmart, Inc., preferred stock until either (i) this
Pledge terminates or (ii) he receives written notice from Creditor that an event
of default under the Promissory Note has occurred and Debtor has failed to cure
said default within fifteen (15) days from the date Creditor gives Debtor
written notice of default.
C) In the event of a default, as provided in paragraph 6 herein and
Debtor's failure to cure such default within fifteen (15) days after Creditor
gives Debtor written notice of default, Debtor shall have the right to direct
Holder, and Holder shall be obligated at Debtor's written direction, to sell the
Collateral and pay to Creditor the lesser of (i) the net proceeds of the sale or
(ii) the full amount due under the Promissory Note.
D) Creditor may at any time change the Holder, or appoint additional
Holders.
3. SECURED OBLIGATIONS OF DEBTOR. The Collateral secures and shall
hereafter secure the payment to Creditor of all indebtedness now or hereafter
owed to Creditor by Debtor under a promissory note of even date herewith (the
"Promissory Note") given by Debtor in the face amount of Nine Million Twenty
Nine Thousand Twenty One and 52/100 Dollars ($9,029,021.52), together with any
interest thereon and extensions, modifications, and renewals thereof.
1
4. CASH DISTRIBUTIONS. So long as no default, and no condition or event
which with notice or lapse of time, or both, would constitute a default, shall
have occurred or exist under this Agreement, Debtor shall be entitled to receive
all distributions (including cash and property) with respect to the Collateral;
provided, however, that any distributions from the liquidation of the Collateral
shall be paid to Creditor to the extent of unpaid principal and accrued unpaid
interest under the Promissory Note. Upon the occurrence of a default or any
condition or event which with notice or lapse of time, or both, would constitute
a default hereunder, Creditor shall thereafter receive and may apply all
distributions with respect to the Collateral against the indebtedness secured
hereunder.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents that as of the
effective date of this Pledge and Security Agreement (A) Debtor is the owner of
the Collateral and that Debtor has not otherwise assigned or transferred, and
agrees that Debtor shall not assign or transfer, absolutely or for security, the
Collateral or any interest therein to any other person or entity; (B) there are
no outstanding options, warrants or other agreements with respect to the
Collateral; and (C) the execution and delivery of this Agreement by Debtor will
not result in a violation of any mortgage, indenture, material contract,
instrument, judgment, decree, order, statute, rule or regulation to which Debtor
is subject.
6. DEFAULT AND REMEDIES. Any breach of or event of default under the
Promissory Note or any failure to comply with any of the terms under this
Agreement shall be a default hereunder. Upon any default hereunder, Creditor
shall have the right to exercise its remedies as a secured party with respect to
the Collateral, including, without limitation, the right to use all or any
portion of the Collateral in Creditor's sole and absolute discretion (a) toward
cure of the default; (b) to payment of principal (whether or not otherwise
accelerated) and/or interest; or (c) in such combination thereof as Creditor may
determine. Creditor shall in no event be required to use proceeds of the
Collateral to cure a default.
7. ADMINISTRATION OF COLLATERAL. The provisions set forth below shall
govern the administration of the Collateral:
(a) VOTING. Until there shall have occurred any default hereunder,
Debtor shall be entitled to vote or consent with respect to the Collateral in
any manner not inconsistent with this Agreement, to the extent the Collateral
carries any rights of voting or consent.
(b) FURTHER DOCUMENTS. Debtor will forthwith upon request by Creditor
and in confirmation of the security interest hereby created, execute and deliver
to Creditor such further assignments, transfers, assurances, instruments,
notices and agreements in form and substance as the Creditor shall reasonably
request.
(c) REMEDIES. In addition to any rights and remedies otherwise
available in law or in equity, and in addition to the other provisions of this
Agreement, and any other documents or instruments delivered or to be delivered
in connection herewith or therewith, or any document or instrument now in
existence, or which may hereafter be made, with respect to the Promissory Note,
the provisions set forth below shall, to the extent permitted by applicable law,
govern Creditor's rights to foreclose on the Collateral upon a default
hereunder.
(d) CONDUCT OF SALE. Upon giving written notice of default to Debtor
pursuant to the terms of this Agreement, Creditor may sell as much of the
Collateral as is required to produce net funds sufficient to pay Creditor the
full amount of the Promissory Note.
(e) SALE OR DISPOSITION. Upon any sale or disposition, Creditor shall
have the right to deliver, assign, and transfer to the purchaser thereof the
Collateral so sold or disposed. Each purchaser at any such sale or other
disposition shall hold the Collateral free from any claim or right of whatever
kinds, including any equity or right of redemption of the Debtor. The Debtor
2
specifically waives all rights of redemption, stay or appraisal which it has or
may hereafter have under any rule of law or statute now existing or hereafter
adopted.
(f) ATTORNEY-IN-FACT. Creditor or its designee is hereby appointed
attorney-in-fact for Debtor for the purpose of carrying out the provisions of
this Agreement and taking any action in executing any instrument which Creditor
reasonably may deem necessary and advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and one coupled with an
interest.
8. MISCELLANEOUS.
(a) TERMINATION. This Agreement shall terminate upon Debtor's payment
in full and the performance of the Promissory Note.
(b) AGREEMENT BINDING. This Agreement shall be binding upon Debtor and
its heirs, executors, personal representatives and successors, and shall inure
to the benefit of, and be enforceable by, Creditor and its successors and
assigns. Debtor hereby represents and warrants to Creditor that it has full
legal authority to enter into this Agreement, to pledge the Collateral and to
carry out the provisions hereof and no consent or approval from any other person
or entity is necessary to enter into this Agreement or carry out its terms.
(c) SEVERABILITY. If any provision of this Agreement shall be deemed
or held to be invalid or unenforceable for any reason, such provision shall be
adjusted, if possible, rather than voided, so as to achieve the intent of the
parties to the fullest extent possible. In any event, such provision shall be
severable from, and shall not be construed to have any effect on, the remaining
provisions of this Agreement, which shall continue in full force and effect.
(d) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts, between residents thereof, to be wholly performed within the State
of California. Debtor hereby irrevocably consents to the jurisdiction of the
Courts of the State of California located in San Diego County and of any Federal
Court located in San Diego County, California in connection with any action or
proceeding arising out of or relating to this Agreement.
(e) RIGHTS CUMULATIVE; NO WAIVER. Creditor's options, powers, rights,
privileges, and immunities specified herein or arising hereunder are in addition
to, and not exclusive of, those otherwise created or existing now or at any
time, whether by contract, by statute or by rule of law. Creditor shall not, by
any act, delay, omission or otherwise, be deemed to have modified, discharged or
waived any of Creditor's options, powers, or rights in respect of this
Agreement, and no modification, discharge or waiver of any such option, power,
or right shall be valid unless set forth in writing signed by Creditor or
Creditor's authorized agent, and then only to the extent therein set forth. A
waiver by Creditor of any right or remedy hereunder on any one occasion shall be
effective only in the specific instance and for the specific purpose for which
given, and shall not be construed as a bar to any right or remedy that Creditor
would otherwise have on any other occasion.
(f) ENTIRE AGREEMENT. This Agreement contains the entire agreement
between Debtor and Creditor with respect to the subject matter herein, and
supersedes all prior communications relating thereto, including, without
limitation, all oral statements or representations. No supplement to or
modification of this Agreement shall be binding unless executed in writing by
Debtor and Creditor.
(g) COSTS OF ENFORCEMENT. Debtor shall upon demand pay to Creditor the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of counsel
3
and/or any experts and agents, that Creditor may incur in connection with (a)
the administration of this Agreement, (b) the exercise or enforcement of any of
the rights of Creditor hereunder (including the defense of any claims or
counterclaims asserted against Creditor arising out of this Agreement or the
transactions contemplated hereby) or under any judgment awarded to Creditor in
respect of its rights hereunder (which obligation shall be severable from the
remainder of this Agreement and shall survive the entry of any such judgment),
or (c) the failure by Debtor to perform or observe any of the provisions hereof.
The foregoing shall include any and all expenses and fees incurred by Creditor
in connection with a bankruptcy, reorganization, receivership, or similar
debtor-relief proceeding by or affecting Debtor or the Collateral.
(h) NOTICES. All notices, demands and other communications required or
permitted hereunder shall be in writing, addressed to the parties at the
following addresses:
CREDITOR: Price Family Charitable Trust
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
DEBTOR: San Diego Revitalization Corporation
Xxxxx 000
0000 Xxxxxxx Xxx
Xx Xxxxx, XX 00000
or to such other address as may be designated from time to time by notice to the
other parties in the manner set forth herein.
IN WITNESS WHEREOF, this Agreement is executed by the parties set forth below as
of the date first above written.
DEBTOR:
------
San Diego Revitalization Corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Xxxxx X. Xxxxxx
Its Executive Vice President
CREDITOR:
--------
Price Family Charitable Trust
By /s/ Xxx Xxxxx
------------------------------------
Xxx Xxxxx, Trustee
4
