LOAN AGREEMENT BY AND BETWEEN
CITIBANK
and
PRICSMARLANDCO, S.A., XXXXXXX XX XXXXX RICA, S.A., PSMT CARIBE, INC.,
PRICESMART, INC., P.S.C., S.A., AND VENTURES SERVICES, INC.
THIS LOAN AGREEMENT IS ENTERED INTO, ON THE DATE INDICATED ON THE SIGNATURE
PAGE HERETO, BY AND BETWEEN, on the first part, CITIBANK, N.A. -
INTERNATIONAL BANKING FACILITY, a banking entity established, organized and
existing under the laws of the United States of America ("CREDITOR") and, on
the second part, PRICSMARLANDCO, SOCIEDAD ANONIMA, a corporation organized
and existing under the laws of the country of Costa Rica ("DEBTOR"), and as
guarantors XXXXXXX XX XXXXX RICA, SOCIEDAD ANONIMA, a corporation organized
and existing under the laws of the country of Costa Rica, PRICESMART, INC., a
corporation organized and existing under the laws of Delaware, P.S.C.,
SOCIEDAD ANONIMA, a corporation organized and existing under the laws of
Delaware, P.S.C., SOCIEDAD ANONIMA, a corporation organized and existing
under the laws of Panama, and PSMT CARIBE, INC., a corporation organized and
existing under the laws of the British Virgin Islands ("GUARANTORS"), and
VENTURES SERVICES, INC., a corporation organized and existing under the laws
of Delaware, as technology licensor ("LICENSOR").
RECITALS:
WHEREAS, DEBTOR, PRICSMARLANDCO, SOCIEDAD ANONIMA, Costa Rican corporate
identification number three hyphen one hundred and one hyphen two hundred
twenty nine thousand nine hundred forty-eight (0-000-000,948), domiciled in
San Xxxx, Costa Rica, entity registered in the Mercantile Section of the
Public Registry, book one thousand two hundred two (1,202) page seventy-eight
(78), entry seventy-five (75), has applied to CREDITOR CITIBANK N.A. -
INTERNATIONAL BANKING FACILITY, a bank entity established, organized and
existing under the laws of the United States of America, for a medium term
non-revolving mercantile loan in the amount of five million nine hundred
thousand dollars ($5,900,000.00), legal tender of the United States of
America (the "LOAN");
WHEREAS, THE DEBTOR proposes to use the LOAN for costs of construction,
including furniture, fixture and equipment, of PRICESMART membership shopping
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warehouse with an area of approximately five thousand (5,000) square meters,
on a parcel of land owned by THE DEBTOR in San Xxxx, Costa Rica, Central
America, more accurately described below ("THE PROPERTY");
WHEREAS, THE DEBTOR has offered a security interest in THE PROPERTY,
including any improvements thereto, in favor of THE CREDITOR;
WHEREAS, THE DEBTOR has agreed to continue being responsible for the
operation, management and administration of the PRICESMART mercantile
establishment;
WHEREAS, THE DEBTOR has complied with the following conditions precedent to
the grant of the loan: a) THE DEBTOR has offered loan guarantees acceptable
to THE CREDITOR, b) the parties have reached an agreement concerning the
terms and conditions of the loan and the form and content of documentation
necessary for the completion of this transaction, including but not limited
to credit agreements and insurance policies, c) THE DEBTOR has provided an
appraisal of THE PROPERTY and furniture, fixtures and equipment offered as
security for this loan which was conducted by an expert appraiser selected by
THE CREDITOR, and; d) the appraisal reflected an appraised value in an amount
sufficient to qualify THE PROPERTY TOGETHER WITH FURNITURE, FIXTURES AND
EQUIPMENT as security for the loan in the amount contemplated;
WHEREAS, THE DEBTOR has agreed that THE CREDITOR reserves the right not to
make any disbursement in cash if there is: a) any adverse material change in
the financial condition of THE DEBTOR and/or any of THE GUARANTORS between
the date of the execution of this LOAN AGREEMENT and the date on which the
disbursement becomes due, and; b) if at the time of the disbursement,
political conditions in the Republic of Costa Rica materially and adversely
affect the risks to THE CREDITOR in making the loan disbursement;
WHEREAS, it has been deemed beneficial by THE CREDITOR, THE DEBTOR and each
of THE GUARANTORS, to grant, receive and guarantee, respectively, the loan
set forth in this document, in accordance with the terms and conditions
herein set forth;
THEREFORE, in accordance with the foregoing clauses, and being deemed
beneficial for all the parties hereto, the undersigned enter into this LOAN
AGREEMENT, subject to the following terms and conditions:
AGREEMENT:
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1. DEFINITIONS:
For purposes of this LOAN AGREEMENT, the following terms shall mean:
THE PROPERTY: That property registered in the Public Registry Office,
Province of San Xxxx, real estate registration numbers: 1) four hundred
and eighty-six thousand one hundred and ninety-eight hyphen zero zero zero
(486,198-000), described as parking lot and warehouse, located in San
Xxxx, eighteenth canton, first district, with an area twenty one thousand
three hundred fifty three meters with twenty seven square decimeters
(21,353,27 m2), and the following boundary lines: North: Pricsmarlando,
S.A. and public road South: National Insurance Institute; East: Republic
Tobacco Company; and West: Negocios Nacional Nortenos, S.A. and partially
Pricsmarlando, S.A. 2) four hundred and ninety four thousand eight
hundred fifty six hyphen zero zero zero (494,856-000), described as land
for construction, located in San Xxxx, eighteenth canton, first district,
with an area two thousand two hundred forty nine meters two square
decimeters (2,249,02 m2), and the following boundary lines: North: public
road South: Pricsmarlando, S.A.; East: Republic Tobacco Company; and West:
Pricsmarlando, S.A. and which constitutes the encumbered property that
secures payment under this LOAN AGREEMENT.
LOAN AGREEMENT or AGREEMENT: The agreement stipulated, agreed upon and
subscribed by means of this written instrument.
DISBURSEMENT: The delivery of the DOLLARS lent to THE DEBTOR by THE CREDITOR,
in cash or by means of check, transfer or deposit.
BUSINESS DAY: Any day that the offices of THE CREDITOR are open to the
general public in the cities of New York and San Xxxx, Costa Rica. With
regard to the six (6) month LIBOR RATE, a day on which THE CREDITOR's
banks in the cities of New York and San Xxxx, Costa Rica are all open.
DOLLARS OR DOLLAR: The legal tender of the United States of America.
MATERIAL ADVERSE CHANGE: The negative impact on THE DEBTOR resulting from any
unfavorable action of any kind or nature, including, but not limited to
any disadvantageous determination in any suit, arbitration proceeding,
judicial, extrajudicial or administrative proceedings, or any investigation
of any government or other authority, which may impose a negative and
adverse burden, which may make materially difficult and alter adversely
the financial condition, the business operations, the assets or the
securities of THE DEBTOR. For purposes of this definition, "material
adverse change" shall mean: Any variation related to the business,
financial conditions, or of other nature, operations, results, properties
or perspectives of the DEBTOR and/or Xxxxxxx xx Xxxxx Rica, S.A. and/or
political, economical or financial conditions of the Republic of Costa
Rica, or in the Costa Rican market of debtors of loans or loan securities,
which, in good faith opinion of the CREDITOR, could reasonably be expected
to significantly diminish the BORROWER'S ability to perform its
obligations under THE LOAN.
SELF-GUARANTEED LOAN: That certain loan dated as of May 27, 1999 by and
between Xxxxxxx xx Xxxxx Rica, S.A. and Banco Bilbao Viscaya as amended,
evidenced by
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a Promissory Note. BORROWER, XXXXXXX XX XXXXX RICA, S.A. and each of the
GUARANTORS agree that the SELF-GUARANTEED LOAN will not be materially
modified without Creditor's prior written consent.
FINANCIAL STATEMENT: the balance sheet, profit and loss statement, and the
cash flow statement, including any accompanying note; and in the case of
audited Financial Statements, including the auditors' report and the
report of the President or the managers of THE DEBTOR and each of THE
GUARANTORS.
LEGALLY IN ARREARS: Failure to make a timely payment to interest or to pay
one of the installments to principal as agreed upon, thereby authorizing
THE CREDITOR to consider the loan one hundred percent due and payable.
FISCAL YEAR: The period of time that starts on the first day of September of
every year and ends on the thirty-first day of August of the following
year. If there is any change in the fiscal year of THE DEBTOR or any of
THE GUARANTORS, it shall be communicated, and the appropriate addendum
to this AGREEMENT shall be subscribed.
SIX (6) MONTH LIBOR RATE: Six (6) Month LIBOR Rate on a given date shall mean
the rate offered by Citibank N.A. London Branch to prime banks in the
London interbank market at 11 a.m. (London Time) two London Banking Days
prior to that due date with reference to advances of six months' tenor
of amounts approximately equal to the principal amount of the Advance
then outstanding; further, a "London Banking Day" shall mean a day on
which banks are not required or authorized to close in London.
THE LOAN:
Subject to the terms and conditions stipulated in this LOAN AGREEMENT,
THE CREDITOR agrees to lend to THE DEBTOR, and THE DEBTOR agrees to
borrow from THE CREDITOR, the amount of five million nine hundred
thousand DOLLARS ($5,900,000.00), legal tender of the United States of
America, non-revolving mercantile loan, which THE DEBTOR shall use to
cover the costs of construction including furniture, fixture and
equipment a PRICESMART membership shopping warehouse on THE PROPERTY.
DISBURSEMENT:
THE DEBTOR shall receive from THE CREDITOR the amount of five million nine
hundred thousand DOLLARS ($5,900,000.00), amount that shall be disbursed
subject to: 1) THE DEBTOR offering loan guarantees acceptable to THE
CREDITOR, 2) the parties reaching an agreement concerning the terms and
conditions of the loan and the form and content of documentation
necessary for the completion of this transaction, including but not
limited to credit agreements and insurance policies, 3) THE DEBTOR
providing an appraisal of THE PROPERTY offered as security for this loan
conducted by an expert appraiser selected by THE CREDITOR, and; 4) the
appraisal reflecting an appraised value in an amount sufficient to
qualify THE PROPERTY as security for the loan in the amount
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contemplated.
By its execution of this AGREEMENT, THE CREDITOR expressly acknowledges that
all conditions above have been met.
THE DEBTOR authorizes THE CREDITOR to deduct from this sum the amount
required to cover the structuring fee referenced in Section 4.c. below.
4. INTEREST, FEES AND INCREASE IN COSTS:
REGULAR INTEREST: This loan will accrue interests on the remnant of the
debted amount, equivalent to the Six (6) Month LIBOR Rate plus four
percentage points. The Six (6) Month LIBOR Rate will be reviewed,
adjusted and modified on a monthly basis. The interests will be due and
payable on a monthly basis and will be calculated on the basis of three
hundred sixty days of a calendar year and according to the number of
days that have passed. The interest will start to be counted from today
and will be payable every fifteen day of every month starting on the
fifteen day of November, 1999.
OVERDUE INTEREST: If THE DEBTOR fails to make a principal payment on the
agreed upon date, the DEBTOR will acknowledge interests in the ordinary
rate that in each opportunity will be in force, plus a surcharge of
three percentage points, applicable on the principle due. Said overdue
interest shall also be paid by THE DEBTOR in DOLLARS.
STRUCTURING FEE: THE DEBTOR shall pay, one time only, the amount of
eighty-eight thousand five hundred DOLLARS ($88,500.00) to THE CREDITOR,
as a credit structuring fee, which amount THE DEBTOR authorizes and
requests be deducted from the amount of the disbursement.
TAXES: (a) Any and all payments made hereunder shall be made free and clear of
and without deduction for any present of future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect
hereto, excluding taxes imposed on net income and all income and
franchise taxes and any political subdivisions thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If any taxes
are required by law to be deducted from or in respect of any sum payable
hereunder (i) the sum payable shall be increased as may be necessary so
that after making all required deductions the Bank receives an amount
equal to the sum it would have received had no such deductions been
made, (ii) the DEBTOR shall make such deductions and (iii) the DEBTOR
shall pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law. (b) In addition, the
DEBTOR agrees to pay any present or future documentary stamp or
intangible taxes or any other excise or property taxes, charges or
similar levies which arise from any payments made hereunder or from the
execution, delivery or registration of, or otherwise with respect to,
this agreement (hereinafter referred to as "Other taxes"). (c) The
DEBTOR will indemnify the Bank for the full amount of Taxes or Other
taxes (including, without limitation, any Taxes or Other taxes imposed
by any jurisdiction on amount payable under this Section) paid
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by the Bank and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Bank
makes written demand therefor. (d) Within 30 days after the date of
repayment of Taxes, the DEBTOR will furnish to the Bank the original or
a certified copy of a receipt evidencing payment thereof. If no Taxes
are payable in respect of any payment, the DEBTOR will furnish to the
Bank a certificate from each appropriate taxing authority, or an opinion
of counsel acceptable to the Bank, in either case stating that such
payment is exempt from or not subject to Taxes. (c) Without prejudice to
the survival of another agreement of the DEBTOR hereunder, the
agreements and obligations of the DEBTOR contained in subsections (a)
through (d) above shall survive the payment in full of principal and
interest hereunder.
5. TERM:
The term is five (5) years, commencing the 12th day of October 1999 and
expiring on the 15th day of October 2004.
6. PROCEDURE AND PLACE OF PAYMENT OF THE AMOUNTS OWED:
INSTALLMENTS: THE DEBTOR shall pay to THE CREDITOR the amount of principal
owed, by means of the timely payment of twenty fixed and consecutive
quarterly installments to capital, in arrears, in the amount of two hundred
fifteen thousand one hundred four dollars and sixteen cents ($215,104.16)
each, payable on the fifteen of the initial month of each quarter, starting on
the fifteen day of January 2000, and a twenty-first and final installment in
the amount of one million five hundred and ninety-seven thousand nine hundred
sixteen dollars and sixty-seven cents ($1,597,916.67) on the fifteenth day of
October, 2004, plus any outstanding balance. The quarterly installments
payable to THE CREDITOR shall be debited on each date of payment scheduled
from the current account that THE DEBTOR will have with THE CREDITOR OR ANY
SUBSIDIARY OR AFFILIATE OF THE CREDITOR denominated in Dollars, or paid by
means of check, transfer or any other means to the full satisfaction of THE
CREDITOR. Interest shall be payable on a monthly basis, in accordance with
Section 4 above.
7. CONDITIONS PRECEDENT TO THE DISBURSEMENT OF THE CREDIT:
Prior to the disbursement of the credit, the following Conditions Precedent
must be meet:
A. THE DEBTOR shall have delivered the following to THE CREDITOR:
Three years of financial statements, including balance sheet, profit and
loss statement and cash flow statement, of PRICESMART, INC.
Business plan and cash flow projections for the term of the credit of THE
DEBTOR and XXXXXXX XX XXXXX RICA, S.A. on a consolidated basis.
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Business plan and cash flow projections of PRICESMART, INC. AND PSMT
CARIBE, INC. for 1999-2000 period.
Final plans of the construction and its specifications.
e. Environmental impact assessment, if required by THE CREDITOR.
f. Soil study, if required by THE CREDITOR.
Occupancy permits and other permits and authorizations required for
operation of the mercantile establishment.
Leases, shareholder's agreement and license grants, including: license
agreement, technology transfer, training and sourcing
agreements subscribed by and among PRICESMART, INC., VENTURES
SERVICES, INC. and XXXXXXX XX XXXXX RICA, S.A., and the lease
agreement subscribed by and between PRICSMARLANDCO, S.A. and
XXXXXXX XX XXXXX RICA, S.A. Appraisal of the assets given as a
security, with form and contents acceptable to THE CREDITOR, which
shall be for an amount of no less than eight million six
hundred thousand Dollars ($8,600,000.00) for the real estate and
the personal property located inside the real property, as it is
as of the date hereof. PriceSmart, Inc., Ventures Services, Inc.,
and Xxxxxxx xx Xxxxx Rica, S.A. hereby expressly amend the
Licensing, Technology Transfer, Training and Sourcing Agreement
dated September 14, 1998 in the terms and to grant, in favor of
CREDITOR, the rights indicated in clause 12 point p of this
document.
i. Any other document that may be reasonably required by THE CREDITOR.
B. CITIBANK, N.A. - IBF shall have finalized and signed a Participation
Agreement with BANCA PROMERICA for its participation in the credit, for an
amount of nine hundred thousand Dollars ($900,000.00). Said participation
shall include the collateral on a PARI PASSU basis; however, in an event of
default, CITIBANK, N.A. - International Banking Facility shall have priority
over Banca Promerica, its participation being subordinated to the recovery of
the part of the credit lent by CITIBANK, N.A. - International Banking
Facility. In any case, the insurance of the Overseas Private Investment
Corporation (OPIC) shall not cover Banca Promerica.
SPECIAL CONDITIONS OF THE LOAN:
INSURANCE: THE DEBTOR agrees to deliver to THE CREDITOR proof of insurance
coverage over all the facilities and assets given as security, including
the property and the buildings, improvements and equipment, against every
risk, including but not limited to fire, hurricane, civil riot,
earthquake, floods, liability for accidents and business interruption,
and any other damage, in an amount deemed satisfactory to THE CREDITOR.
The rights derived from the existing insurance policies shall be
assigned in favor of THE CREDITOR effect for the term of this LOAN
AGREEMENT. The application of the amounts paid on any insurance policy
claim to the reduction or satisfaction of any outstanding amount of the
loan, or to the restoration of all or part of the facilities given in
guarantee to THE CREDITOR, shall be without prejudice of any other right
or remedy that THE
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CREDITOR may have as established in this LOAN AGREEMENT. Without notice
being required on the anniversary of each insurance policy, or at the
request of THE CREDITOR, THE DEBTOR shall deliver to THE CREDITOR
duplicates of all the original insurance contracts or policies
subscribed in accordance with the previous provisions, as well as copies
of the receipts of the premiums paid, and a confirmation issued by the
insurer certifying that the policies are in force and fully in effect,
and that THE DEBTOR appears registered as mortgage creditor and
beneficiary of the policies.
b. TITLE INSURANCE: The DEBTOR has provided title insurance policy issued
by Xxxxxxx Title which the CREDITOR acknowledges receipt and deems
acceptable. Such title policy shall be in place in the same terms and
conditions during the term of the Loan Agreement, except otherwise agree
between DEBTOR and CREDITOR.
c. PREPAYMENT: THE DEBTOR reserves the right to repay the loan earlier but,
in such a circumstance, it shall not have any right to any discount or
to the return of interest already paid. Every prepayment shall be
applied to the principal in a reverse order to that of the loan
maturity. All interest due on the prepayment is payable at the same
time. Said prepayment can be total or partial. If THE DEBTOR makes a
partial prepayment, the payment must be in an amount of no less than
two hundred fifteen thousand one hundred four dollars and sixteen cents
($215,104.16.00), and shall not be required to pay any prepayment
penalty. It is understood that an prepayment shall necessarily coincide
with the dates of payment of interest. In any event of prepayment, THE
DEBTOR shall give notice of its intent to THE CREDITOR two business days
prior to the actual payment. THE DEBTOR shall indemnify THE CREDITOR
against any loss, cost or expense incurred by THE CREDITOR as a result
of not honoring a prepayment requested and confirmed by THE DEBTOR.
9. OBLIGATIONS OF THE DEBTOR AND XXXXXXX XX XXXXX RICA, S.A.:
THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. do expressly agree and undertake
for the whole term of the loan and until all the monetary obligations derived
from it have been paid in full and during the term of effectiveness of all
the securities granted under this AGREEMENT, to the following:
EXISTENCE AND OPERATING LICENSES: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A.
shall obtain, preserve and keep in full legal force their corporate
existence and full capacity to operate in Costa Rica, as well as all
types of licenses and permits to operate their activities, including
but not limited to: all local zoning, land use permits and tax approvals
needed to convert the garden/soccer field into a shopping warehouse.
Likewise, THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. shall comply with
all material aspects of the governing laws, regulations, decrees,
resolutions, judgments, opinions and orders or restrictions imposed by
any government, judicial or administrative authority or entity, which
are applicable to the management of their businesses and activities, and
the
8
ownership of their property and assets and related subsidiaries,
including environmental laws, and they shall pay when due all the
material obligations they may have now or in the future during the term
of effectiveness of this loan.
BUSINESS MANAGEMENT: They shall continue conducting and operating their
businesses substantially as described to THE CREDITOR in connection with
this LOAN AGREEMENT. THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. shall
conduct its business in compliance with all applicable laws and
directives of Governmental Bodies having the force of law, including
without limitation Corrupt Practices Laws, and shall implement internal
management and accounting practices and controls adequate to ensure
compliance with applicable Corrupt Practices Laws. For purposes of the
previous sentence, the term "Governmental Body" means any national,
state or local governmental entity, inside or outside Costa Rica, with
de facto or de jure authority over any of the Debtor, GUARANTORS, or
Citibank, and the term "Corrupt Practices Law" means any law prohibiting
(or imposing sanctions for) bribery, kickbacks, or similar business
practices. The DEBTOR shall not use the proceeds of the loan for any
purpose other than meeting the expenses of the project, and shall not
engage in any business in connection with the project other than the
DEBTOR's present business activities and those related to the project
(as each are described in the information provided to OPIC by Citibank)
and other activities similar thereto, without the prior consent of OPIC.
ASSETS AND PROPERTIES: They shall keep all assets and properties they have
used in the management of their businesses, in particular those that
secure payment of the LOAN AGREEMENT, undertaking to maintain the
securities granted under this LOAN AGREEMENT in the same condition they
are; and in particular THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. cannot
alienate, transfer or otherwise dispose of any of the securities to
which this AGREEMENT refers.
BANK BUSINESS: to the extent that the prices and services of THE CREDITOR are
competitive in the local market, THE DEBTOR, XXXXXXX XX XXXXX RICA, S.A.
and their subsidiary and related companies shall strive to obtain their
needed bank services from THE CREDITOR.
AUDITS AND INSPECTIONS: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. agree to
collaborate in the inspections regarding the loans and their securities
which may be conducted by CREDITOR. Futhermore, THE DEBTOR and XXXXXXX
XX XXXXX RICA, S.A. agree to accompany the legal representatives of THE
CREDITOR to inspect THE PROPERTY given as a security, whenever THE
CREDITOR may deem it reasonably necessary.
FINANCIAL STATEMENTS: THE DEBTOR and each of THE GUARANTORS shall submit to
THE CREDITOR, within ninety (90) days following the end of their fiscal
year, their Annual Financial Statements duly audited by a firm of
external auditors accepted by THE CREDITOR. In the case of THE DEBTOR
and XXXXXXX XX XXXXX RICA, S.A., said Financial Statements shall be
consolidated and consolidating. If at any time THE CREDITOR does not
approve
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of the firm of external auditors utilized by THE DEBTOR it shall give
notice to THE DEBTOR and/or any of THE GUARANTORS indicating the
reasons for the disapproval. In said case, THE DEBTOR and/or THE
GUARANTORS shall have thirty days counted from the date of
communication to designate a new company that shall also be subject to
the same examination and approval of THE CREDITOR, which shall not be
unreasonably withheld. If approval is not granted by THE CREDITOR in
this period, THE CREDITOR shall have the right to consider all monetary
obligations in its favor as due and payable jointly and in advance.
INTERNAL FINANCIAL STATEMENTS: THE DEBTOR and each of THE GUARANTORS shall
submit to THE CREDITOR on a quarterly basis within forty-five days
following the end of each quarter, their interim and internal financial
statements. In the case of THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A., they
shall be consolidated and consolidating. All statements shall include an
affidavit by the legal representative, stating compliance with the
undertakings hereunder made, including but not limited to: the respective
financial ratios.
Y2K PREPAREDNESS: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. shall submit to
THE CREDITOR a statement of Y2K preparedness including a duly approved
contingency plan.
PAYMENT OF TAXES: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. shall submit on
time and in the appropriate form all income tax returns and reports,
and pay when due all municipal and property taxes and other government
charges, or those that for any reason have been levied on their
activities and real and personal property, in particular those that are
securities under this instrument. THE DEBTOR and XXXXXXX XX XXXXX RICA,
S.A. shall not be required to pay said taxes while they are contesting,
in good faith, their validity or amount following the appropriate legal
procedures; but they shall reflect in their financial statements the
reserve fund or allowance for payment thereof, if said payment has to
be made.
MAINTENANCE OF CERTAIN FINANCIAL RATIOS: Financial ratios will be reviewed on a
quarterly basis, calculated and measured using a 12 month rolling basis,
commencing with the conclusion of the first full year of operation from the
date of the loan. During the term of the credit, THE DEBTOR y XXXXXXX XX
XXXXX RICA, S.A., shall maintain on a consolidated basis the following
financial ratios: Debt service ratio (defined as: net income + interest +
depreciation + amortization/principal + payment of interest), excluding the
SELF-GUARANTEED LOAN, shall not fall below the level of one point one zero
(1.10) for the year 2000; one point fifteen (1.15) for the year 2001, one
point twenty-five (1.25) for the year 2002 and one point five (1.50)
thereafter. Interest coverage ratio (defined as: Net income + interest +
depreciation + depreciation + amortization/interest payment) excluding the
Self-Guaranteed Loan, shall not fall below the level of one point seven
five (1.75) for the year 2000, two point zero (2.0) for the year 2001, two
point five (2.5) for the year 2002 and three point zero (3.0) thereafter.
Leverage Ratio (defined as:
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total debt - Self-Guaranteed Loan/net worth + Self-Guaranteed Loan)
shall not be greater than the level of three point zero (3.0) for the
year 2000, two point five (2.5) for the year 2001 and two point zero
(2.0) thereafter; The total debt, excluding the Self-Guaranteed Loan
/EBITDA ratio cannot exceed five point zero (5.0) for the year 2000;
four point zero (4.0) for the year 2001; two point seventy-five (2.75)
for the year 2002 and two point five (2.50) thereafter. EBITDA shall be
calculated using the past twelve (12) months at the time of the
calculation, and shall be defined as: the amount (without duplication)
of: net income + depreciation and amortization + interest expense + all
accounting expenses that do not represent a cash expenditure during the
period, including but not limited to: unrealized losses derived from
the exchange differential or monetary corrections and, only when said
expense has been deducted in connection with the determination of the
nets profits + expenses of taxes on profits, only when the expense has
been deducted in connection with the determination of the net income -
accounting income that does not represent cash income during the year,
including but not limited: profits from the exchange difference and
monetary corrections - capital income from their interest in
subsidiaries or affiliates + dividends in cash received from
subsidiaries and affiliates.
NOTICE OF LITIGATION, ADMINISTRATIVE PROCEEDINGS AND TAX RE-QUALIFICATIONS: THE
DEBTOR and each of the GUARANTORS, shall give written notice to THE
CREDITOR, immediately after THE DEBTOR learns of any litigation or
administrative or arbitration proceeding, or tax re-qualifications,
which may affect THE DEBTOR, that is developing adversely or that
threatens to be initiated against it, and which may have an adverse
material effect on the business, assets or financial condition of THE
DEBTOR, or which may affect or which can materially affect the capacity
of THE DEBTOR to comply with its obligations acquired under this
instrument and this LOAN AGREEMENT.
ANNUAL REVIEWS OF THE LOAN: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A., agree
and undertake to respect to respect the annual reviews of the loan to
be conducted by THE CREDITOR, and respect all those additional
requirements that may be necessary to impose on THE DEBTOR and XXXXXXX
XX XXXXX RICA, S.A. as a result of such reviews.
a. THE DEBTOR agrees that each year during the term of the loan, it will
complete and submit OPIC's form of "Self-Monitoring Questionnaire for
Insurance & Financial Projects" (as that form may be amended from time to
time) with respect to the operation of the project. Also, THE DEBTOR agrees
that it will, upon OPIC's request, permit OPIC representatives to inspect
the Debtor's facilities and properties during normal business hours.
KEEPING OF BOOKS AND RECORDS: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A.
undertake to adequately and accurately keep all the books and records
necessary and common in similar companies.
BUSINESS WITH AFFILIATES: Both THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. can
undertake business or transactions with affiliates, provided said business
11
or transactions are undertaken as arm's length transactions.
COMPLIANCE OF ALL THE TERMS AND CONDITIONS ESTABLISHED BY OPIC (OVERSEAS PRIVATE
INVESTMENT CORPORATION), RELATED TO THE ENVIRONMENTAL STANDARDS, LABOR
RIGHTS AND HEALTH AND SECURITY OF THE WORKERS: THE DEBTOR and Xxxxxxx
xx Xxxxx Rica, S.A. must comply with the following requirements: (1)
Labor Rights. THE DEBTOR and Xxxxxxx xx Xxxxx Rica, S.A. agree not to
take any action, and to ensure that no action will be taken by any
contractor (or any subcontractor) performing engineering, procurement
and construction services, contracted for after the date of this
document, or providing operating and management services contracted for
after this date, for the project (each a "contractor" and collectively
the "contractors"), to prevent employees of the DEBTOR and/or Xxxxxxx
xx Xxxxx Rica, S.A. or of any such contractors performing such services
for the project, legally exercise according to the Costa Rican Law,
their right of associations and their right to bargain collectively.
The DEBTOR and Xxxxxxx xx Xxxxx Rica, S.A. agree to observe, and to
cause each contractor to observe, with respect to their respective
employees, applicable laws relating to acceptable conditions of work,
with respect to minimum wages, work schedule and occupational health
and safety. Furthermore, in connection with the project, accept and
agree to cause each contractor (i) not to use forced labor, (ii) not to
employ any person under age fifteen years and not to employ any person
under age eighteen for hazardous activity, and (iii) that all the
employees will have the right to remove themselves from hazardous
situations without jeopardizing their continued employment. In the
event of non-compliance or possible non-compliance with the above
requirements with respect to the employees of the DEBTOR and Xxxxxxx xx
Xxxxx Rica or any contractor comes to the attention of the DEBTOR
and/or Xxxxxxx xx Xxxxx Rica, S.A. it shall give prompt notice thereof
to the Bank and OPIC and, if applicable, to such contractor. It (i)
shall (a) cure such non-compliance or (b) cause such contractor to cure
such non-compliance, in either case to the satisfaction of OPIC, and
(ii) shall terminate the contract with such contractor (the "contract")
unless such non-compliance is cured to the satisfaction of OPIC within
90 days of such notice, or notice thereof from the Bank or OPIC to it,
whichever first occurs. The failure of the DEBTOR and/or Xxxxxxx xx
Xxxxx Rica, S.A. to (a) promptly to notify OPIC and, if applicable, the
contractor of such non-compliance; or (b) (i) to cure such
non-compliance or cause such contractor to cure such non-compliance, in
either case to the satisfaction of OPIC, or (ii) to terminate the
contract, shall constitute a default of the present agreement
permitting the Bank to accelerate the maturity of the Facility Loan.
Notwithstanding the above, the DEBTOR and Xxxxxxx xx Xxxxx Rica, S.A.
and the contractors are not responsible under this Section for the
actions of the Government of Costa Rica. The DEBTOR and Xxxxxxx xx
Xxxxx Rica, S.A. shall comply with (i) International Finance
Corporation's Environmental, Health and Safety Guidelines for Office
Buildings, dated July 1, 1998, and (ii) the provisions of all
applicable environmental, health and safety laws, codes and ordinances,
and all rules and regulations promulgated thereunder, with respect to
the project.
12
Access to the Premises: THE DEBTOR and Xxxxxxx xx Xxxxx Rica, X.X. xxxxx the
CREDITOR with the right of access to the premises when reasonable to
protect the right of THE CREDITOR under the Loan and the Security.
RIGHT TO SETOFF: after the occurrence and during the continuance of any event
of default, the Bank is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the
Bank to or for the credit of the account of the DEBTOR and Xxxxxxx xx
Xxxxx Rica, S.A. against any and all of the obligations of the DEBTOR
now or hereafter existing under this agreement, irrespective or whether
or not the Bank shall have made any demand under this agreement and
although such obligations may be unmatured. The Bank agrees promptly to
notify the DEBTOR after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such
setoff and application. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Bank may have.
10. RESTRICTIONS ON THE DEBTOR AND XXXXXXX XX XXXXX RICA, S.A.:
THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. do expressly agree and undertake
for the whole term of the loan and until all the monetary obligations derived
from it have been paid in full and during the term of effectiveness of all
the guarantees granted under this AGREEMENT, to the following:
STOCK OWNERSHIP: No change in the stock structure shall be made or permitted
if it implies a change in the stock control in THE DEBTOR and/or in
XXXXXXX XX XXXXX RICA, S.A., as long as this AGREEMENT is in effect or
there is any monetary obligation derived from this AGREEMENT or its
securities, not paid on a full or partial basis. Any change which
results in PriceSmart, Inc. have a greater direct or indirect ownership
in THE CREDITOR or XXXXXXX XX XXXXX RICA, S.A., is expressly exempted
from this restriction.
STATUS OF THE DEBTOR AND XXXXXXX XX XXXXX RICA, S.A.: THE DEBTOR and XXXXXXX
XX XXXXX RICA, S.A. shall not adopt any resolution of merger, liquidation
or dissolution or consolidation with any other company or entity; and
they shall not make any investments in subsidiaries, affiliates or third
entities, or guarantee obligations of third parties without the prior
written consent of THE CREDITOR, which shall not be unreasonably
withheld. Neither THE DEBTOR nor XXXXXXX XX XXXXX RICA, S.A. shall
invest in the capital stock or the shares of any subsidiary or
affiliate, except in the regular course of business.
LIMITATION ON TRANSACTIONS: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A.,
excluding capital expenditures, cannot make any of the following
transactions if they exceed two hundred and fifty thousand DOLLARS
($250,000.00) per year, unless they have the express authorization of
THE CREDITOR, which shall not
13
be unreasonably withheld: acquisitions, sales or transfers of assets,
leases or sales, leasing, repurchase or redeeming of shares issued and
outstanding (including stock options and coupons), swaps, revocations or
resolutions, reforms, repurchases of debt and obligations under capital
and operational leases. Notwithstanding the above, Borrower and/or
Xxxxxxx xx Xxxxx Rica, S.A. might enter into a negotiations involving
the sale of adjacent land, property number 494856-000, measuring
2,249.02 m2 for an amount not less than the "release price"; however
Borrower and Xxxxxxx xx Xxxxx Rica, S.A. acknowledge that they will need
Creditor's approval in order to execute any final transaction with such
property. Such approval will be at the sole discretion of Creditor and
in any event, the Creditor will require that all proceeds from the sale
of such property be applied to the outstanding balance of the Loan. For
this purposes, RELEASE PRICE is set at the higher of the appraised value
of said land (US$281,127.50), or 90% of sale price, provided that the
sale price is based on an "arms-length" transaction.
LIMITATION ON CAPITAL EXPENDITURES: THE DEBTOR and XXXXXXX XX XXXXX RICA,
S.A. undertake not to exceed the amount of four hundred thousand DOLLARS
($400,000.00) in their annual capital expenditures. This amount refers
to capital expenditures in addition and incremental to the financing
provided by CITIBANK N.A. --International Banking Facility.
LIMITATION ON ENCUMBRANCES: THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. agree
not to mortgage, pledge or otherwise encumber any of the assets that
they currently own, without the prior express consent of THE CREDITOR,
which shall not be unreasonably withheld.
CONDITIONS ON CONTRACTORS AND SUBCONTRACTORS: THE DEBTOR and XXXXXXX XX XXXXX
RICA, S.A. undertake, during the term of effectiveness of this LOAN
AGREEMENT, not to take any action, and assure that no contractor or
subcontractor of the project may take any action that may prevent or
hinder the employees of THE DEBTOR or any of the contractors or
subcontractors working in the project of THE DEBTOR from or in the
exercise of their rights of association and their rights of joint
claims and defense. They also undertake, during the term of
effectiveness of this LOAN AGREEMENT, to respect and have the
contractors and subcontractors related to the project of THE DEBTOR
respect all the laws that govern work conditions, including but not
limited to those related to minimum wages, work schedules, occupational
health and safety. They further undertake that they and the contractors
or the subcontractors related to the project, (i) shall not force
anybody to hard labor, (ii) shall not employ persons under fifteen
years old, or persons under eighteen years old for dangerous works; and
(iii) all their employees shall have the right to withdraw from
dangerous situations, without thereby affecting their continuity as
such. If THE DEBTOR is aware of any failure to comply with the
provisions indicated in subsections (i), (ii) and (iii) above, whether
in connection with the employees of THE DEBTOR or with any contractor
or subcontractor, THE DEBTOR shall report it immediately to THE
CREDITOR and OPIC and, when appropriate, to the contractor or
subcontractor.
14
Furthermore, THE DEBTOR shall: (a) cure the default or (b) force the
contractor or subcontractor to cure the default, in both cases to the
satisfaction of OPIC, and (ii) Terminate the contract with the
contractor; in both cases unless the default is cured to the
satisfaction of OPIC within ninety calendar days following notice of the
default by THE CREDITOR or OPIC, whichever is first. Notwithstanding the
above, THE DEBTOR and the contractors shall not be responsible, with
respect to the provisions of this subsection, for the actions of the
Government of Costa Rica.
11. REPRESENTATIONS AND WARRANTIES:
For the purpose of inducing THE CREDITOR to execute this LOAN AGREEMENT, the
following representations are made:
THE DEBTOR is a company duly organized under the laws of Costa Rica, with
legal existence as of the date hereof and full legal capacity to execute
this LOAN AGREEMENT and the documents that supplement it.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they have the power and/or authorizations, as required by law, to act in
their individual capacity and to execute this loan agreement and the
documents that supplement it.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they have filed without omission all tax returns required by law and
have paid without omission all taxes resulting from such returns or any
tax assessment, requalification or requirement; and neither THE DEBTOR
nor any of the GUARANTORS are aware of any obligation, assessment,
tax, requirement or requalification with regard to the periods covered
by the returns or communications filed or given before the date hereof,
beyond what appear in such returns and communications, and neither
DEBTOR nor any of the GUARANTORS have been notified by the appropriate
authorities of any deficiency, error or requalification of their
individual tax and/or other obligations of any nature, and neither THE
DEBTOR nor any of the GUARANTORS foresee any likelihood for such an
event.
THE DEBTOR and Xxxxxxx xx Xxxxx Rica, S.A. individually consent to cooperate
with any inspections conducted by the Office of the Superintendent
General of Financial Entities and/or THE CREDITOR directed to verify
compliance with the investment plan that has been submitted and is
included in the credit records concerning this LOAN AGREEMENT and
undertakes and bind themselves to provide to THE CREDITOR any report
with regard to the investment of the loan, as well as updated report of
their financial statements.
THE DEBTOR and XXXXXXX XX XXXXX RICA, S.A. represent and warrant that they
have obtained all the authorizations, licenses and permits necessary to
perform all the activities related to their businesses and commercial
operations, and that they will remain in force during the entire term
of this agreement.
THE DEBTOR and each of the GUARANTORS represent and warrant that all the
15
obligations and covenants hereunder expressed and assumed by them
respectively, are legal and valid obligations, binding on and enforceable
on each with accordance with their respective terms, and they do not
require any additional authorization.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they, as of the date of execution of this instrument, are not in default
under any law, regulation, undertaking, contract, mortgage, trust,
resolution, license or any other instrument, obligation or duty, that binds
or affects them individually or any of their properties, and which may be a
default that significantly and adversely affects their capacity to comply
with or perform any of their obligations under this LOAN AGREEMENT.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
there are no current or threatened litigation, arbitration or claim that
may by itself or together with any other procedure or claim, significantly
and adversely affect their capacity to comply with or perform their
obligations under this LOAN AGREEMENT.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they have fully disclosed to THE CREDITOR all facts concerning what they
know or should reasonably know, would be a material fact to THE CREDITOR
regarding the creditor's decision to execute this agreement.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they have not taken any action or step towards, liquidation, dissolution,
bankruptcy or reorganization, or for the appointment of a receiver, a
trustee, an administrator or a similar officer with respect to any or all
of their assets or income.
THE DEBTOR and each of the GUARANTORS individually represent and warrant that
they do not have any significant or contingent obligation that has not
been duly disclosed to THE CREDITOR.
THE DEBTOR acknowledges and agrees that THE CREDITOR has received the approval
of the Overseas Private Investment Corporation (OPIC) against risks as
inconvertibility of the currency, impossibility or repatriation of the
funds facilitated to the DEBTOR, expropriation and political violence, and
that the terms of this credit are granted under the assumption that said
insurance granted by the OPIC will continue in force in the same terms
during the entire term of the credit. THE DEBTOR agrees that OPIC shall
bear no liability if CREDITOR shall fail to make any disbursement of the
loan (or any part of such disbursement) to THE DEBTOR as would otherwise
be required under this instrument. THE DEBTOR agrees to pay all the
expenses and professional fees related to the processing and issuance of
this insurance, and THE CREDITOR recognizes that all the expenses and
professional fees foreseeable with regard to said insurance are already
included in the charges detailed in this document. THE DEBTOR acknowledges
and agrees that if OPIC makes any payment to CREDITOR in connection with
OPIC's guarantee of the loan, OPIC shall be entitled to require that
CREDITOR transfer
16
to OPIC CREDITOR'S entire interest in the loan and in any collateral
provided for the loan, and THE DEBTOR hereby provides its consent to such
transfer. The representations, statements and warranties set forth in this
clause shall survive the performance of this LOAN AGREEMENT and they shall
be considered repeated on any subsequent day until the loan and any other
amounts due under it have been duly repaid to THE CREDITOR, and all the
obligations herein set forth have been complied.
12. DEFAULT
Any of the following will be considered individually as a default of this
LOAN AGREEMENT:
delay in a payment to principal by THE DEBTOR, as agreed upon;
delay in making one or more monthly payments of interest, as agreed upon;
failure to pay the structuring fee, as agreed upon;
failure to pay any of the obligations of THE DEBTOR and/or XXXXXXX XX XXXXX
RICA, S.A. to any individual or legal entity, when such a failure to
comply persists for more than thirty (30) days after the due date, with the
exception of debts with PriceSmart Inc., in which case the term of default
can be extended to ninety (90) days; and those obligations that are
self-guaranteed loans, and in all other cases, provided the obligations
collected are not being reasonably questioned;
the failure to comply with any monetary or non-monetary obligations set forth in
this AGREEMENT;
THE DEBTOR and/or each of the GUARANTORS file for or initiate proceedings for
dissolution, liquidation or receivership, or are declared in bankruptcy, or
request any meeting of creditors or consent to the appointment of a
receiver, or cease to make payments, with the exception of those debts
that are self-guaranteed;
b. failure to comply with any representation or guarantee made by THE DEBTOR,
XXXXXXX XX XXXXX RICA, S.A. or any of the other GUARANTORS, or the
determination that any warranty or representation is materially incorrect,
or if any of the agreements are not complied with by them;
c. the securities created to secure this loan cannot be registered in the
Public Registry due to causes imputable to THE DEBTOR;
d. this LOAN AGREEMENT or any of the securities provided by THE DEBTOR ceases
to be a valid and perfect security right, or have in the future, due to any
circumstance, a Material Adverse Change on their nature as securities for
THE CREDITOR;
e. any legal or administrative proceeding materially prevents THE DEBTOR
and/or Xxxxxxx xx Xxxxx Rica, S.A. from continuing the regular course of
its business and operations, or they have in the future a Material Adverse
Change on the business, operations and financial statements of THE DEBTOR
AND XXXXXXX XX XXXXX RICA;
f. the validity or effectiveness of this LOAN AGREEMENT or any security issued
17
in connection with it is successfully challenged by any Government
authority, or any third party, whether an individual or a legal entity;
g. the Board of Directors or the senior management of THE DEBTOR and/or XXXXXXX
XX XXXXX RICA, S.A. made decisions that, together with others or on a
separate basis, affect or may affect adversely the net worth of THE DEBTOR,
or the quality, preservation and/or state of the security, in the terms of
the Article 777 of the Civil Code of the Republic of Costa Rica, for which
THE DEBTOR expressly states that the encumbrances hereunder created in favor
of THE CREDITOR, are those appropriate in accordance with the financial
situation of THE DEBTOR as of the date hereof. Accordingly, any
deterioration shall imply that it may have to grant an excess security and
it is in default with regard to the security. For all purposes, THE DEBTOR
recognizes as sufficient to certify such deterioration or imminent
possibility of deterioration the opinion of its external auditors, together
with the opinion of the credit department and the General Management of THE
CREDITOR,
h. a change in the ownership, management or control of THE DEBTOR, or XXXXXXX
XX XXXXX RICA, S.A., without the prior written consent of THE CREDITOR,
excepting increases in direct or indirect ownership by PriceSmart, Inc.;
ANY OF THE GUARANTORS fail to comply with any obligations assumed under this
LOAN AGREEMENT; or
i. if there is any materially adverse or other change in the financial
condition, or in the business or in the business perspectives of THE
DEBTOR and/or XXXXXXX XX XXXXX RICA, S.A. then: THE CREDITOR shall have
the right to have all monetary obligations in its favor as due and
payable earlier, being also empowered at its sole discretion to: (i)
pursue the assets of THE DEBTOR and THE GUARANTORS, on a simultaneous
or a subsidiary basis, at the exclusive judgment of THE CREDITOR, but
in proportion to the guarantees, by means of the enforcement of bills
of exchange and/or notes, or filing action to initiate proceedings in
accordance with its rights; and/or (ii) also in the exclusive judgment
of THE CREDITOR, as expressly accepted by THE DEBTOR, to enforce the
securities received by THE CREDITOR with no need of Court proceedings
to demonstrate the termination of the AGREEMENT or the failure to
comply with the obligations derived from this AGREEMENT. The failure or
delay by THE CREDITOR to enforce or exercise any right under this
AGREEMENT shall not be interpreted as a waiver of that right or any
other right or power it may have under this AGREEMENT or the Law. All
the rights contained in this AGREEMENT and any securities herein
established are cumulative and can be exercised jointly or separately.
Termination, by PriceSmart, Inc., or any other party to the Licensing,
Technology Transfer, Training & Sourcing Agreement, pursuant to Section 12
of said Licensing Agreement. In the event PriceSmart, Inc. elects to
terminate said Licensing Agreement during the term of the Loan, it shall
provide Creditor with
18
written notice of its intent thereof, six months prior to said election and
shall grant creditor the right to substitute Xxxxxxx xx Xxxxx Rica, S.A. in said
agreement or to elect another substitute that shall be acceptable to PriceSmart,
Inc.
13. EARLY TERMINATION
The AGREEMENT may be subject to early termination if;
a. There is any material change in laws or regulations which may materially
affect THE DEBTOR'S ability to comply with the obligations herein agreed
upon; or
b. If the security granted is not considered to be in first position with
regard to other debts of THE DEBTOR and/or XXXXXXX XX XXXXX RICA, S.A. or
c. if there is any materially adverse or other change in the financial
condition, or in the business or in the business perspectives of THE DEBTOR
and/or XXXXXXX XX XXXXX RICA, S.A., or
d. if there is a failure to comply with the obligations set forth in Section
10 above, then: THE CREDITOR shall have the right to have all monetary
obligations in its favor together as due and payable earlier, being
empowered at its sole discretion to; i) pursue the assets of THE DEBTOR
and THE GUARANTORS, on a simultaneous or a subsidiary basis, at the sole
discretion of THE CREDITOR, but in proportion to the guarantees, by means
of the enforcement of bills of exchange and/or notes, or filing action to
initiate proceedings in accordance with its rights; and/or (ii) also in the
sole discretion of THE CREDITOR, as expressly accepted by THE DEBTOR, to
enforce the securities received by THE CREDITOR with no need of Court
proceedings to demonstrate the termination of the AGREEMENT or the failure
to comply with the obligations derived from this AGREEMENT. The failure or
delay by THE CREDITOR to enforce or exercise any right under this AGREEMENT
shall not be interpreted as a waiver of that right or any other right or
power it may have under this AGREEMENT or the Law. All the rights contained
in this AGREEMENT and any securities herein established are cumulative and
can be exercised jointly or separately.
In any of these events, CREDITOR will have the right to immediately collect the
Loan with all consequences thereof.
14. TERM TO CURE DEFAULTS AND REASONS FOR EARLY TERMINATION:
Without prejudice of the provisions of Sections 12. and 13. above, and without
affecting the consequences of the early termination or the default, including
but not limited to: the right to charge overdue interest, THE CREDITOR shall be
required provide, prior to filing any action at Court to which it may be
entitled under the guarantees issued, a cure period in which THE DEBTOR may
correct any defaults, in accordance with the following:
In cases in which there is failure to make timely payment of any amount owing
under
19
the LOAN AGREEMENT, THE CREDITOR shall grant a non-extendable term of ten
(10) calendar days from the date of non-payment to complete the payment in
full and cure default, provided that in such case that this provision cannot
be exercised more than twice per year; otherwise an immediate "Event of
Default" shall occur.
In any other case of default or event of early termination, that is, those
termination conditions that do not involve the failure to pay an amount owing
under this LOAN AGREEMENT, THE CREDITOR shall give notice to THE DEBTOR of
the existence of said default or reason for early termination, granting to
THE DEBTOR a non-extendable term of thirty (30) calendar days to immediately
and definitively cure the cause of the default or the reason for the early
termination.
15. SECURITY:
For purposes of securing payment of the amount of principal owed, the fee,
regular interest, overdue interest if any, the personal and procedural costs of
any eventual proceedings for collection, and all other monetary or other
responsibilities of THE DEBTOR set forth in this LOAN AGREEMENT, and/or the
damages caused by the failure of THE DEBTOR to comply, THE DEBTOR will grant
sufficient security to the satisfaction of THE CREDITOR.
In addition to the above, the following companies do hereby become GUARANTORS of
the monetary obligations of THE DEBTOR as set forth in this LOAN AGREEMENT, in
the proportions hereunder indicated:
XXXXXXX XX XXXXX RICA, S.A. and PSMT CARIBE, INC. on a jointly and absolute
basis for the total amount of the debt.
PRICESMART, INC., for an amount not to exceed sixty percent (60%) of the
principal, that is, the amount of three million five hundred forty thousand
DOLLARS ($3,540,000), plus the appropriate interest, and,
PSC, S.A., for an amount not to exceed forty percent (40%) of the principal,
that is, the amount of two million three hundred sixty thousand DOLLARS
($2,360,000.00), plus the appropriate interest. These companies make the
same waivers and covenants that the THE DEBTOR has made and do hereby give
their authorization to grant extensions or other facilities, without further
consultation or notice, waiving the application of the laws of their domicile
as well as payment demands.
16. REDUCTION OF GUARANTORS' LIABILITIES:
THE CREDITOR shall reduce the liability of each of the GUARANTORS, in
accordance with the following:
Dollar per dollar upon repayment of the credit in accordance with the table of
amortizations, provided that the maximum reduction shall be as follows:
Fifty percent (50%) of the LOAN, or two million nine hundred fifty thousand
dollars ($2,950,000), at such time as the loan to value is equal to or less than
50% and, for
20
the prior 12 month period, the net operating income from the project covered
combined debt service (interest and principal amortization) on the loan at
the minimum 1.50:1 ratio and:
Thirty percent (30%) of the LOAN, or one million seven hundred seventy dollars
($1,770,000), at such time as the loan to value is equal to or less than 30%
and, for the 12 month period, the net operating income from the project
covered combined debt service on the loan at a minimum 1.75:1 ratio.
THE CREDITOR at the express request of each of THE GUARANTORS shall grant these
reductions; otherwise, the guarantees shall remain in force as originally
agreed upon. In any case, this reduction does not apply to the guarantee
issued by XXXXXXX XX XXXXX RICA, S.A., which shall remain in force in the
same terms during the entire term of effectiveness of the debt.
17. WAIVER:
THE DEBTOR and each of THE GUARANTORS waive application of the laws of their
domicile, payment demands and summary proceedings for collection. The
encumbrances include, but are not limited to: any current or future improvement
to THE PROPERTY and/or improvements thereon, including those made by third
parties, as well as any excess area that may exist between the area registered
in the Public Registry and the actual area of the property, all of which is
accepted by THE DEBTOR. In case of a foreclosure auction, the base shall be the
balance of the principle and interest owed at the time the collection
proceedings are initiated, in accordance with the liquidation of THE CREDITOR.
THE DEBTOR expressly and irrevocably waives in favor of THE CREDITOR any benefit
of order in any eventual judicial proceedings. Consequently, THE CREDITOR can,
in the event of a failure to comply with these monetary and non-monetary
obligations, enforce the any security related to this Loan, and collect upon
other assets of THE DEBTOR and/or any of THE GUARANTORS, all of this on a
simultaneous or subsidiary basis, at the exclusive judgement of THE CREDITOR.
The application of payments shall be made at the exclusive discretion of THE
CREDITOR, even after the eventual auction. THE DEBTOR agrees to pay all taxes
levied on the Property and deliver to THE CREDITOR during the entire term of
effectiveness of The Loan Agreement, all communications about taxes that it may
receive as well as the receipts of their effective payment, including any
applicable interest or fine. THE DEBTOR agrees and binds itself not to transfer,
consent to or grant any other encumbrance on the properties, without the prior
written consent of THE CREDITOR, as well as to discharge any other encumbrance
that may be in force over THE PROPERTY while any balance due under this
AGREEMENT is still pending.
18. ADDITIONAL UNDERTAKINGS OF EACH OF THE GUARANTORS:
PriceSmart, Inc. undertakes to maintain a minimum net worth of fifty-five
million DOLLARS ($55,000,000.00) during the entire term of effectiveness of the
debt. Likewise, PRICESMART INC. undertakes to not diminish the interest that it
currently has
21
in PSMT CARIBE, INC., a company established and organized under the laws of the
British Virgin Islands. In turn, PSC, S.A. undertakes to maintain a minimum
net worth of ten million DOLLARS ($10,000,000.00) during the entire term of
effectiveness of the debt. Likewise, PSC, S.A. undertakes to not diminish the
interest that it currently has in PSMT CARIBE, INC., a company established
and organized under the laws of the British Virgin Islands, with the
exception that it may sell any part of its interest therein to PRICESMART,
INC. PSMT Caribe, Inc. undertakes to maintain a minimum net worth of twenty
five million dollars ($25,000,000.00) during the entire term of effectiveness
of the debt. In the event that any of the GUARANTORS anticipate a variance
from any of the above covenants, except wherein PRICESMART, INC. obtains
greater percentage interest in PSMT CARIBE, INC., BORROWER and/or XXXXXXX XX
XXXXX RICA, S.A., such GUARANTORS must obtains CREDITOR'S consent thereto
with an advance sixty (60) days notice, which consent may be withheld at
CREDITOR'S (sole) discretion.
19. HEDGING:
CREDITOR agrees that, prior to LOAN closing, it will not require DEBTOR to
enter into a non-delivery forward contract in order to hedge local currency
devaluation risk, based upon CREDITOR'S current policies and practices
regarding devaluation risk. However, CREDITOR and DEBTOR agree that this
policy will be reviewed on quarterly basis, and, in the event that market
conditions so dictate, CREDITOR reserves the right to require that the DEBTOR
enter into such hedge. DEBTOR acknowledges CREDITOR'S rights in this regard
and agrees to act in good faith in order to mitigate any devaluation risk.
20. ASSIGNMENT AND PARTICIPATION IN THE CREDIT:
THE CREDITOR reserves the right to assign its rights under this LOAN
AGREEMENT on a full or a partial basis, with no further obligation but to
notify such a circumstance to THE DEBTOR. THE CREDITOR reserves the right and
the option to offer participation in this credit at the time of or after
subscription of this AGREEMENT, to a financial institution duly recognized as
a First Rate institution by an international standards or by the Central Bank
of Costa Rica, for the purpose of making the disbursements in excess of any
actually then disbursed by THE CREDITOR. For all legal and judicial purposes,
THE DEBTOR recognizes CITIBANK N.A. - International Banking Facility as sole
creditor of this loan. No notice shall be required if THE CREDITOR offers
participation in this credit to a financial institution.
21. EXPENSES AND PROFESSIONAL FEES:
All the expenses and professional fees, including but not limited to
appraisal and attorney's fees, taxes, rates, legal tax stamps and charges in
connection with the negotiation, preparation, execution, administration and
performance of this LOAN AGREEMENT, its securities and other related acts and
documents, shall be defrayed
22
by THE DEBTOR and be immediately paid by it upon request of THE CREDITOR.
THE DEBTOR agrees and consents to assume and pay the personal and procedural
costs of all and any eventual actions that may be filed by THE CREDITOR
against THE DEBTOR to enforce THE DEBTOR's performance under this AGREEMENT.
22. PARTIAL NULLITY AND FAILURE TO COMPLY WITH OBLIGATIONS:
The nullity or illegality of any of the provisions of this LOAN AGREEMENT
shall not affect the validity, legality and enforceability of the remaining
clauses. All the rights and remedies established in this instrument or in any
security document are cumulative and can be exercised contemporaneously or
successively, in addition and not in exclusion of any other right or remedy
established by law. Failure by THE CREDITOR to demand the exact compliance
with all or any of the obligations of THE DEBTOR under this AGREEMENT does
not imply and cannot be considered as an exemption, modification, acceptance
or waiver of the terms, conditions and rights set forth in the LOAN
AGREEMENT, because in order that such an exemption, modification, acceptance
or waiver be valid, it has to be duly set forth in a writing accepted by both
parties.
23. ABSENCE OF JOINT VENTURE:
Nothing herein stipulated or contained constitutes or may be interpreted as
the creation of a joint venture or partnership for the achievement of a
common purpose by and between THE DEBTOR and THE CREDITOR. THE CREDITOR shall
not assume any liability for any obligation or risk derived from the business
and activities of THE DEBTOR directly or indirectly.
24. STATEMENT OF MUTUAL BENEFIT:
THE CREDITOR and THE DEBTOR, expressly certify that the matters agreed upon by
them in this LOAN AGREEMENT are the result of negotiations and mutual
concessions that favor and benefit them.
25. GOVERNING LAW AND JURISDICTION:
THE CREDITOR and THE DEBTOR shall abide by the laws of the State of New York,
United States of America, for interpretation of this LOAN AGREEMENT. Any
complaint, action or procedure in connection with this LOAN AGREEMENT or its
enforcement shall be subject to the jurisdiction of the U.S.Federal Court in
the State of New York, for which purpose all parties waive application of the
laws of their domicile and residence.
26. COMMUNICATIONS AND NOTICE REQUIREMENTS:
Any communication or notice required by this LOAN AGREEMENT shall be made in
writing by means of certified letter, with receipt acknowledged, at the
domicile
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indicated in this AGREEMENT, and the following addresses:
TO THE CREDITOR:
Citibank, N.A.
General Manager
Oficentro Ejecutivo Sabana Sur,
Numero 0, Xxxxxx Xxxx
Xxx Xxxx, Xxxxx Xxxx
Fax (506) 296--24-58
With a Copy to:
Lic. Xxxxx Xxxxxx Xxxxxx B. and/or Lic. Xxxxxxx Xxxxx Xxxxxx
Xxxxx & Xxxxxxxxx,
Xxxxxxx 0, xxxxx xxxxxx 00 x 00
X.X. 000-0,000
Xxx Xxxx, Xxxxx Xxxx
Fax: (000) 000-00-00
TO THE DEBTOR AND each of THE GUARANTORS:
Xxxxxxx Xxxxxxxx
Vice President Latin America Legal Affairs
PriceSmart, Inc.,
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000
FAX: 000-000-0000
With a copy to:
Lic. Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx & Xxxxxxx
Calle 1a, entre xxxxxxxx 0 x 00
XX 0000-0000,
Xxx Xxxx, Xxxxx Xxxx
FAX: 000-0000
26. SERVICE OF NOTICE
Finally, THE DEBTOR and each of THE GUARANTORS, through their officers
24
duly authorized and indicated in this instrument, state that, without
prejudice of waiving application of the laws of their domicile, they can be
served in case of failure to comply with any obligation hereunder, at the
address indicated in this document, and declare that they can be served
personally or by means of notice at this address, and that they understand
that if their address is inaccurate or non-existent, they can be served by
means of notice published in a newspaper of the State of New York with a
copy published in a newspaper in Costa Rica.
After reading the above, the parties agree on it, and sign on the dates and
places indicated below.
CITIBANK, N.A.-IBF PRICSMARLANDCO, S.A.
Place: San Xxxx, Costa Rica Place: San Xxxx, Costa Rica
Date: Oct. 7, 1999 Date: Oct. 19, 1999
/s/ Xxxxxx Xxxxxxxx Xxxxxxx /s/ Xxxxxx Xxxxxxx Xxxxxx
-------------------------------- ---------------------------------------
Xxxxxx Xxxxxxxx Xxxxxxx Xxxxxx Xxxxxxx Xxxxxx
Treasurer
PRISMAR COSTA RICA, S.A., PRICESMART, INC.,
Place: San Xxxx, Costa Rica Place: San Diego, CA
Date: Oct. 19, 1999 Date: Oct. 10, 1999
/s/ Xxxxxx Xxxxxxx Xxxxxx /s/ Xxxxx X. Xxxxxxxx
-------------------------------- ---------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxx X. Xxxxxxxx
President Executive VP Finance
P.S.C., S.A. VENTURES SERVICES, INC.
(With respect to Sections 7 (h) and 12
(p) of this Agreement.)
Place: Xxx Xxxx, Xxxxx Xxxx Xxxxx: Xxx Xxxxx, XX
Date: Oct. 19, 1999 Date: Oct. 10, 1999
/s/ Xxxxxx Xxxxxxx Xxxxxx /s/ Xxxxx X. Xxxxxxxx
-------------------------------- ---------------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxxx X. Xxxxxxxx
Chief Finance Officer
00
XXXX Xxxxxx, Inc.
Place: San Diego, CA
Date: Oct. 10, 1999
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
Treasurer Chief Financial Officer
26
