STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT ("Agreement") effective as of the
30th day of September 1998 is entered into by and between the SAN DIEGO
COMMUNITY FOUNDATION CHARITABLE REAL ESTATE FUND, a California corporation
("Borrower") and THE PRICE FAMILY CHARITABLE TRUST, created under Declaration of
Trust dated March I 0, 1984 ("Lender"), and XXXXX XXXXXX ("Holder") with
reference to the facts set forth below.
RECITALS
A. Lender has loaned to Borrower the sum of Eleven Million Two Hundred
Thousand Dollars ("Loan Funds") pursuant to a Loan Agreement executed by and
between Lender and Borrower ("Loan Agreement").
B. Borrower has executed a Promissory Note of even date herewith ("Note")
in favor of Lender in the principal sum of Eleven Million Two Hundred Thousand
Dollars ($11,200,000).
C. On the effective date of this Stock Pledge and Security Agreement
Borrower will purchase with the Loan Funds, and will become the legal and
beneficial owner of, Eight Hundred Thousand (800,000) shares of preferred stock
of Price Enterprises, Inc. a Maryland corporation, hereinafter called the
"Pledged Shares."
D. The execution of this Agreement is a condition precedent to the
obligation of Lender to consummate the Loan Agreement and lend the Loan Funds to
Borrower.
NOW, THEREFORE, in consideration of the recitals and the agreement of the
parties contained herein and for other good and valuable consideration, the
receipt of which are hereby acknowledged, the parties hereby agree as follows:
1. Pledge. Borrower hereby pledges and grants a first priority security
interest to Lender in all of its right, title, and interest in and to the
"Pledged Shares," and except as set forth herein, all renewals, voting rights,
substitutions, additions, replacements, dividends, earnings and proceeds and
products thereof, including without limitation whatever is receivable or
received when the foregoing is sold, collected, exchanged or otherwise dispensed
of, and all future earnings and interest paid or payable thereon (collectively
the "Securities").
2. Brokerage Account and Possession of Stock.
(A) Borrower agrees Xxxxx Xxxxxx, ("Holder") shall open an account with
Xxxx Xxxxxx at its office located at 0000 Xxxxxxx, Xxxxxx Xxxxx, Xx Xxxxx, XX
00000 in the name of Holder, for the benefit of Borrower ("Broker Account").
(B) Upon Closing of the Loan Agreement, Borrower consents, and directs
Lender to deposit the Loan Funds to the Broker Account and further consents and
directs Holder
to direct Broker to disburse the Loan Funds to the sellers of the Eight Hundred
Thousand (800,000) preferred shares of Price Enterprises, Inc. stock ("PREN
Preferred Shares") in exchange for the delivery of said shares into the Broker
Account, which shares immediately upon receipt shall become the Pledged Shares.
(C) If for any reason Eight Hundred Thousand (800,000) PREN Preferred
Shares are not deposited into the Broker Account prior to 5:00 p.m. on the
Closing Date or Postponed Closing Date (as those terms are defined in the Loan
Agreement), the Loan Funds shall become immediately due and payable to Lender.
(D) Borrower acknowledges and agrees that only the Holder shall be entitled
to give instructions regarding the assets, held in the Broker Account and
Borrower shall have no ability to withdraw the Pledged Shares from the Account.
3. Obligations of the Holder To Borrower.
(A) Holder agrees to maintain the Brokerage Account for the benefit of
Borrower and to retain the Pledged Shares in the Broker Account until either (i)
this Pledge terminates under the provisions of Paragraph 5 or (ii) he receives
written notice from Lender that an event of default under the Note has occurred
and Borrower has failed to cure said default within five business days from date
of occurrence.
(B) At any time prior to the Maturity Date of the Note, Borrower shall have
the right to direct Holder, and Holder shall be obligated at Borrower's written
direction, to sell the Securities and pay to Lender the lesser of (i) the net
proceeds of the sale or (ii) the full amount of the Secured Obligations. Upon
such sale of Securities and payment to Lender the Note shall be deemed paid in
full and Lender shall have no further right to collect on the Note.
4. Representations and Warranties. Borrower represents that as of the
effective date of this Pledge Agreement (A) Borrower is the owner of the
Securities and that Borrower has not otherwise assigned or transferred, and
agrees that Borrower shall not assign or transfer, absolutely or for security,
the Securities or any interest therein to any other person or entity; (B) to
Borrower's knowledge there are no outstanding options, warrants or other
agreements with respect to the Securities; (C) to borrower's knowledge the
Securities have been validly issued and are fully paid and non-assessable, and
the holder or holders thereof are not and will not be subject to any personal
liability; (D) any consent, approval or authorization or designation or filing
with any governmental authority on the part of Borrower which is required in
connection with the pledge and security interest granted under this Agreement
has been obtained or effected; and (E) the execution and delivery of this
Agreement by Borrower will not result in a violation of any mortgage, indenture,
material contract, instrument, judgment, decree, order, statute, rule or
regulation to which Borrower is subject.
5. Obligations Secured. This pledge and security interest granted hereunder
secures the faithful performance and payment of all obligations of Borrower to
Lender now e sting or hereafter existing or arising under the Note, and all
extensions, modifications, substitutions,
replacements, and renewals of any of the obligations set forth therein
(collectively the "Secured Obligations"). This pledge shall terminate only upon
performance and payment in full of all of the Secured Obligations, or upon the
written release of the Lender as the Lender shall give in its sole and absolute
discretion.
6. Default and Remedies. Any breach of or event of default under the Note
or any failure to comply with any of the terms under this Agreement shall be a
default hereunder. Upon any default hereunder, Lender shall have the right to
exercise its remedies as a secured party with respect to the Securities,
including, without limitation, the right to debit all or any portion of the
Securities and apply amounts debited in Lender's sole and absolute discretion
(a) toward cure of the default; (b) to payment of principal (whether or not
otherwise accelerated), interest or any other amount owing from Borrower to
Lender, in such order as Lender may determine, without curing the default; or
(c) in such combination thereof as Lender may determine. Lender shall in no
event be required to use proceeds of the Securities to cure a default.
7. Administration of Securities. The provisions set forth below shall
govern the administration of the Securities:
(a) Voting. Until there shall have occurred any default hereunder, Borrower
shall be entitled to vote or consent with respect to the Securities in any
manner not inconsistent with this Agreement, to the extent the Securities carry
any rights of voting or consent. Holder hereby grants to Borrower a proxy to
vote the securities which proxy shall be automatically revoked upon the
occurrence of any default hereunder. Holder agrees to deliver to Borrower such
further evidence of the grant of such proxy as Borrower may request from time to
time.
(b) Distributions. Until there shall have occurred any default hereunder,
Borrower shall be entitled to receive, free and clear of this pledge agreement,
any and a cash dividends paid on the Pledged Shares. Borrower shall not,
however, be entitled to receive any stock dividends or other distributions of
stock, paid on the Pledged Shares. Until there shall have occurred an Event of
Default hereunder, Holder agrees to cause to be distributed to Borrower all cash
dividends paid on the Pledged Shares. Until there shall have occurred an Event
of Default hereunder, in the event any cash dividends come into the possession
of Holder, Holder agrees to immediately remit same to Borrower. Any stock
dividends or stock distributed on the Pledged Shares shall be retained by Holder
in the Broker Account as additional security and shall become part of the
Securities.
(c) Further Documents. Borrower will forthwith upon request by Lender and
in confirmation of the security interest hereby created, execute and deliver to
Lender such further assignments, transfers, assurances, instruments, notices and
agreements in form and substance as the Lender shall reasonably request.
(d) 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 any of the Secured Obligations, the provisions set forth below
shall, to the extent permitted by applicable law, govern Lender's rights to
realize on the Securities upon a default hereunder.
(e) Conduct of Sale.
(i) Any sale of the Pledged Securities shall be made through Holder. Holder
shall not make any sale or other disposition, unless the terms thereof shall be
satisfactory to Lender in its sole and absolute discretion.
(ii) Upon giving written notice of default to Holder pursuant to the terms
of Section 3 of this Agreement, Lender may direct Holder to sell as many of the
Pledged Shares as are required to produce net funds sufficient to pay Lender the
full amount of the Secured Obligations and to transfer the proceeds of such sale
to Lender. Holder shall be obligated to carry out the instructions given to him
by Lender.
(iii) Once Lender has been paid the full amount of the Secured Obligations,
Holder shall pay any funds remaining in the Broker Account to Borrower and close
the Broker Account.
(f) Sale or Disposition. Upon any sale or disposition, Holder shall have
the right to deliver, assign, and transfer to the purchaser thereof the
Securities so sold or disposed of. Each purchaser at any such sale or other
disposition shall hold the Securities free from any claim or right of whatever
kind, including any equity or right of redemption of the Borrower. The Borrower
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.
(g) Attorney-in-Fact. Lender or its designee is hereby appointed
attorney-in-fact for Borrower for the purpose of carrying out the provisions of
this Agreement and taking any action in executing any instrument which Lender
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 Borrower's payment in
full and the performance of the Secured Obligations. Upon such termination,
Lender and Holder shall return any of the securities in their respective
possession that were not sold or otherwise disposed of to satisfy the Secured
Obligations.
(b) Xxxx Xxxxxx Not a Party To The Agreement. Xxxx Xxxxxx is providing
account services only and is not a party to this Agreement.
(c) Successor to Holder. Holder may resign at any time by giving written
notice of his resignation to Lender and Borrower at least 30 days prior to the
effective date of the
resignation. In the event Holder resigns or becomes otherwise unable to perform
his duties, a successor holder shall be appointed by Lender subject to the
approval of Borrower. Lender and Borrower agree that Xxxx Xxxxxx shall be
authorized to transfer the Broker Account to the successor holder upon
presentation of written instructions signed by both Lender and Borrower. Prior
to any transfer of the account to the successor holder, the successor holder
shall execute a counterpart of this agreement.
(d) Indemnification of Holder and Lender. Borrower indemnifies Holder and
Lender against, and holds them harmless from, all losses, damages, liabilities,
claims, causes of action, judgments, court costs, attorneys' fees and other
reasonable expenses which either may suffer or incur other than from the
negligence or willful misconduct of Holder or Lender (i) by reason of this
Agreement or (ii) by reason of the execution of this Agreement or in performance
of any act required or permitted hereunder or by law, or (iii) as a result of
any failure of Borrower to perform Borrower's obligations under this Agreement
or the Note. Borrower's duty to indemnify Holder and Lender shall survive the
termination of this Agreement. Any liability of Borrower hereunder shall be
nonrecourse.
(e) Agreement Binding. This Agreement shall be binding upon Borrower and
Borrower's heirs, executors, personal representatives and successors, and shall
inure to the benefit of, and be enforceable by, Lender and Lender's successors
and assigns. Borrower hereby represents and warrants to Lender that it has full
legal authority to enter into this Agreement, to pledge the Securities 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.
(f) 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.
(g) 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, Borrower 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.
(h) Rights Cumulative, No Waiver. Lender'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. Lender shall not by any
act, delay, omission or otherwise, be deemed to have modified, discharged or
waived any of Lender'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 Lender or Lender's
authorized agent, and then only to the extent therein set forth. A waiver by
Lender 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 Lender would otherwise have on any other occasion.
(i) Entire Agreement. This Agreement contains the entire agreement between
Borrower and Lender with respect to the Securities, 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 Borrower and Lender.
(j) Costs of Enforcement. Borrower shall upon demand pay to Lender the
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of counsel and/or any experts and agents, that Lender may incur in
connection with (a) the administration of this Agreement, (b) the exercise or
enforcement of any of the rights of Lender hereunder (including the defense of
any claims or counterclaims asserted against Lender arising out of this
Agreement or the transactions contemplated hereby) or under any judgment awarded
to Lender 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 Borrower to perform or observe any of
the provisions hereof. The foregoing shall include any and all expenses and fees
incurred by Lender in connection with a bankruptcy, reorganization,
receivership, or similar debtor-relief proceeding by or affecting Borrower or
the Securities.
(k) Notices. All notices, demands and other communications required or
permitted hereunder shall be in writing, addressed to the parties at the
following addresses:
Lender:
Xxx Xxxxx, Trustee
C/O Price Entities
0000 Xxxxxxx Xxxxx 000
Xx Xxxxx, XX 00000
Borrower:
Xxxxxx Xxxxx
San Diego Community Foundation Charitable
Real Estate Fund
0000 Xxxxxxx Xxxxxxxxx Xxxxx 000
Xxx Xxxxx, XX 00000
Holder:
Xxxxx Xxxxxx
0000 Xxxxxxx Xxxxx 000
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. All such communications shall be
deemed effective (a) upon actual delivery if delivered by personal delivery or
certified postage prepaid mail, (b) three business days following deposit, first
class postage prepaid, with the United States Mail, or (c) on the next business
day after timely and proper deposit with an overnight air courier with request
for next business day delivery.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement is executed by the parties set forth
below as of the date first-above written.
BORROWER
THE SAN DIEGO COMMUNITY FOUNDATION
CHARITABLE REAL ESTATE FUND, a
California corporation
By /s/ Xxxxx Xxxx
-----------------------------
Xxxxx Xxxx
Its President
LENDER
THE PRICE FAMILY CHARITABLE TRUST
under agreement dated
March 10, 1984
/s/ Xxx Xxxxx
--------------------------------
By Xxx Xxxxx, Trustee
HOLDER
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
