EXHIBIT 10.39
EXECUTION COPY
DATED AS OF JUNE 21, 2000
PSMT TRINIDAD/TOBAGO LIMITED
PRICESMART (TRINIDAD) LIMITED
AND
PS OPERATIONS LIMITED
(COLLECTIVELY THE 'BORROWER')
AND
ROYAL MERCHANT BANK AND FINANCE COMPANY LIMITED
(THE `BANK')
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TERM LOAN AGREEMENT
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PREPARED BY ________________________
TIMOTHY HAMEL-SMITH
ATTORNEY AT LAW
M. HAMEL-SMITH & CO
19 ST. VINCENT STREET
PORT OF SPAIN
TRINIDAD
TEL: INT (868) 623-4237
FAX: INT (868) 627-8564
E-MAIL: mhs@trinidadlaw.com
WEBSITE: http://www.trinidadlaw.com
ALL RIGHTS RESERVED. M. HAMEL-SMITH & CO. 2000
TERM LOAN AGREEMENT
INDEX TO CLAUSES
1 Definitions and Interpretation
2 The Loan
3 Purpose
4 Conditions
5 Drawdown
6 Repayment, Prepayment and Cancellation
7 Interest
8 Fees and Expenses
9 Payments
10 Representations and Warranties
11 Undertakings
12 Default
13 Indemnities
14 Taxes
15 Changes in Circumstances
16 General
Schedule Conditions Precedent
TERM LOAN AGREEMENT
THIS AGREEMENT is dated June 21, 2000 and made
AMONG:
(1) PSMT TRINIDAD/TOBAGO LIMITED (registered in Trinidad and Tobago under
number P-1676 (95)), PRICESMART (TRINIDAD) LIMITED (registered in Trinidad and
Tobago under number P-1649 (95)), and PS OPERATIONS LIMITED (registered in
Trinidad and Tobago under number P-1675 (95)) (hereinafter collectively referred
to as the 'Borrower'); and
(2) ROYAL MERCHANT BANK AND FINANCE COMPANY LIMITED (the `BANK')
IT IS AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement, unless the context otherwise requires:
`AGREEMENT' means this Loan Agreement as the same may from time to time
be supplemented or amended;
'AMORTISED INSTALLMENTS' means the 28 equal quarterly amortised
installments of principal and interest combined (currently
US$308,623.62) necessary to repay the Loan with interest at the
Interest Rate with quarterly rests over a period of 7 years;
'BORROWER' means, collectively, PSMT Trinidad/Tobago Limited,
PriceSmart (Trinidad) Limited and PS Operations Limited;
`BUSINESS DAY' means a day (not being Saturday or Sunday) on which
banks in Trinidad and Tobago are open for business of the kind
contemplated by this Agreement;
`COMPANY' individually, PriceSmart (Trinidad) Limited
`DOLLARS', `UNITED STATES DOLLARS' `USD' AND `US$' mean the lawful
currency for the time being of the United States of America;
`ENCUMBRANCE' means any mortgage charge (whether fixed or floating)
pledge lien hypothecation assignment security interest title retention
or other encumbrance or security agreement or security or preferential
arrangement of any kind;
`EVENT OF DEFAULT' means any of the events or circumstances described
in Clause 12.1;
`FINANCIAL INDEBTEDNESS' means Indebtedness incurred in respect of:
(a) money borrowed, raised or deposited;
(b) any bond bill of exchange note loan stock debenture
commercial paper or similar security or instrument;
(c) acceptance, documentary credit or guarantee
facilities;
(d) deferred payments for assets or services acquired but
excluding trade credit in the ordinary course of
business not exceeding 90 days;
(e) rental payments under leases, whether in respect of
land buildings machinery equipment or otherwise,
entered into primarily as a method of raising finance
or financing the acquisition of the relevant asset;
(f) payments under hire purchase contracts;
(g) factored debts, to the extent that there is recourse;
(h) guarantees bonds standby letters of credit or other
instruments issued in connection with the performance
of contracts or obligations;
(i) interest rate or currency swaps and similar financial
transactions;
(j) guarantees indemnities or other assurances against
financial loss in respect of Indebtedness of any
person falling within any of paragraphs (a) to (i)
inclusive above; and
(k) amounts raised or obligations incurred under any
other transaction having the commercial effect of any
of the above
`GUARANTEE' means the guarantee and indemnity to be granted by the
Guarantor guaranteeing and indemnifying the Bank in respect of the
obligations of the Borrower under this Agreement;
`GUARANTOR' means PriceSmart, Inc.;
`INDEBTEDNESS' means any obligation for the payment or repayment of
money, whether present or future, actual or contingent, sole or joint;
`INTEREST PERIOD' means each period of 90 calendar days commencing with
the date falling 90 calendar days after the date of this Agreement and
ending on the Repayment Date;
`LIBOR' means, in respect of any Interest Period or other period and in
relation to the Loan or any unpaid sum, the rate per annum determined
by the Bank to be the rate at which US$ deposits for the relevant
Interest Period or other period and in an amount comparable to the Loan
or other such sum (as the case may be) were offered to the Bank by its
agent in the London Interbank Market at or about 11.00 am London time
on the first day of such Interest Period or other period;
`LOAN' the aggregate principal of the Loan Amount for the time being
outstanding under this Agreement;
`LOAN AMOUNT 'means the sum of Six Million Dollars (US$6,000,000.00);
`MARGIN' means four per cent (4%) per annum;
`MATERIAL CONSENT' means, in relation to the Borrower and any Guarantor
any approval, authorisation, consent, exemption, licence, permission or
registration by, of or from any governmental or regulatory, or other
authority or person, necessary or appropriate for (i) the carrying on
by it of its business and (ii) the execution, delivery and performance
of this Agreement and any Related Document and the use of the Loan
proceeds;
`MORTGAGE DEBENTURE' means a deed of mortgage debenture to be granted
by the Borrower and the Company in favour of the Lender creating a
mortgage over the Property and a charge
and assignment over all the Borrower's undertaking and assets both
present and future to secure the obligations of the Borrower under
this Agreement.
`PAYMENT DATE' means the last day of each Interest Period;
`PERMITTED ENCUMBRANCE' means any encumbrance referred to in Clause
11.2(b);
`POTENTIAL DEFAULT' means any event which, with the giving of notice or
any certificate or the lapse of time, or the making of any
determination, or the satisfaction of any other condition (or any
combination thereof), might/would constitute an Event of Default;
`PROPERTY' means the Company's property on which it is currently
constructing a warehouse/store off Endeavour Flyover in Chaguanas,
Trinidad and which is more particularly described in the Schedule to
the Mortgage Debenture;
`RELATED DOCUMENT' means any document or instrument required by this
Agreement to be executed delivered or produced by the Borrower or the
Guarantor including, but not limited to, the Guarantee and the Mortgage
Debenture, drafts of which are attached hereto as exhibits "A" and "B"
respectively;
`REPAYMENT DATE' means the date falling 7 years after the date of this
Agreement;
`TAXES' includes all present and future taxes, levies, imposts, duties,
fees, charges or withholdings of whatever nature and wherever levied,
charged or assessed, together with any interest thereon and any fines
surcharge or penalties in respect thereof lawfully imposed by any
Trinidad and Tobago governmental entity.
1.2 INTERPRETATION
(1) In this Agreement, unless otherwise expressly provided, any reference
to:
(a) the Borrower, a Guarantor and/or the Bank shall be construed
so as to include their respective successors and assigns from
time to time;
(b) a time of day is a reference to Trinidad and Tobago time,
unless otherwise expressly stated;
(c) a `person' shall be construed as a reference to any
individual, firm, company, body corporate, government, state,
state entity, association or partnership (whether or not
having separate legal personality) or any two or more of the
foregoing;
(d) this Agreement or to any other document or instrument, is a
reference to this Agreement, or to that other document or
instrument, as the same may have been, or may from time to
time be, amended or supplemented;
(e) the liquidation, winding-up, dissolution or the appointment of
a receiver, manager or administrator, of or in relation to a
company or body corporate or any of its assets, shall be
construed so as to include any equivalent or analogous
proceedings or, as the case may be, person under the law of
the jurisdiction in which it is incorporated or any
jurisdiction in which it carries on business or has assets or
liabilities;
(f) a Clause or a Schedule is a reference to a clause of or a
Schedule to this Agreement;
(g) any statutory provision shall include a reference to such
provision as from time to time re-enacted, amended, extended
or replaced.
(2) Fees, costs and expenses payable under or pursuant to this Agreement
shall be exclusive of any value added tax or similar taxes chargeable
on them, which shall accordingly be payable in addition.
(3) In this Agreement, words, including, without limitation defined terms,
importing the singular shall include the plural and vice versa.
(4) Headings in and the list of contents of this Agreement are for ease of
reference only and shall not affect its interpretation.
(5) Where the Borrower consists of two or more parties:
(i) such expression shall in this Term Loan Agreement mean and include
such two or more parties and each of them or (as the case may require)
any of them;
(ii) all covenants charges agreements and undertakings expressed or
implied on the part of the Borrower in this Term Loan Agreement shall
be deemed to be joint and several covenants charges agreements and
undertakings by each of such parties; and
(iii) each shall be bound even if any other of them intended or
expressed to be bound by this Term Loan Agreement shall not be so
bound.
2 THE LOAN
Subject to the terms and conditions of this Agreement the Bank agrees to make
available to the Borrower a loan in the maximum aggregate principal amount equal
to the Loan Amount.
3 PURPOSE
(1) The Loan Amount shall be used by the Borrower to partly finance the
construction of one warehouse/store on the Property.
(2) The Borrower shall not use any part of the Loan for any purpose except
that permitted in this Clause. However, failure by the Borrower to
comply with this Clause shall not prejudice any rights of the Bank,
which shall not be responsible for monitoring or ensuring the use or
application by the Borrower of any part of the Loan.
4 CONDITIONS
4.1 CONDITIONS FOR ADVANCING THE LOAN
The Bank shall not be obliged to advance the Loan Amount, until it shall have
received, in each case in form and substance satisfactory to it, the documents,
items and evidence specified in the Schedule and shall have notified the
Borrower accordingly.
4.2 ADDITIONAL CONDITIONS FOR ADVANCING THE LOAN
The obligation of the Bank to advance the Loan Amount is subject to the further
conditions precedent that:
(a) at the time of advancing the Loan Amount, the representations
and warranties set out in Clause 10.1 are true and correct on
and as of each such time as if each were made with reference
to the facts and circumstances existing at such time; and
(b) at the time of advancing the Loan Amount, no Event of Default
or Potential Default shall have occurred and be continuing or
would result from the making of such Advance.
5 DRAWDOWN
5.1 PAYMENT OF THE LOAN AMOUNT
Subject as otherwise provided in this Agreement, the Loan Amount shall be made
available in two tranches by the Bank crediting the Loan to such bank account of
the Borrower as it shall specify to the Bank for this purpose. The first tranche
in the sum of three million Dollars (US$3,000,000.00) shall be disbursed on the
date of this Agreement and the remaining three million Dollars (US$3,000,000.00)
will be disbursed upon presentation by the Borrower of a valuation of the
Property acceptable to the Bank which certifies that the value of the Property,
at the date of the drawdown of the balance of the Loan, is not less than 166.67%
of the Loan Amount.
6 REPAYMENT, PREPAYMENT AND CANCELLATION
6.1 REPAYMENT
The Borrower shall repay to the Bank the Loan in full by the Amortised
Instalments on each Payment Date (provided that the final instalment shall
always include the balance of the Loan).
6.2 PREPAYMENT
(1) The Borrower may (provided that it shall have given to the Bank not
less than 90 calendar days' prior notice specifying the date and
intended amount of the prepayment) prepay to the Bank on any Payment
Date the whole or any part of the Loan Amount but, if in part, being
the minimum amount of five hundred thousand Dollars (US$500,000.00) and
an integral multiple of five hundred thousand Dollars (US$500,000.00).
(2) Prepayments under this Agreement shall be made together with accrued
interest thereon and all other amounts payable under and in relation to
this Agreement and any Related Document.
(3) No amount prepaid under this Agreement may be redrawn.
(4) Any notice of prepayment given by the Borrower under this Agreement
shall be irrevocable and the Borrower shall be bound to prepay the
relevant amount(s) in accordance with such notice. The Borrower may not
prepay all or any part of the Loan Amount except in accordance with the
express terms of this Agreement.
(5) Any prepayment shall be applied against and shall reduce or, if
applicable, extinguish the Amortised Instalments in inverse order of
maturity.
7 INTEREST
7.1 INTEREST
The Borrower shall pay to the Bank interest on the Loan in respect of each
Interest Period at the rate per annum determined by the Bank to be the aggregate
of:
(a) the Margin; plus
(b) LIBOR relative to that Interest Period.
7.2 PAYMENT
The Borrower shall pay interest on the Loan Amount on each Payment Date as part
of the Amortised Installments.
7.3 DEFAULT INTEREST
The Borrower shall, on demand by the Bank, pay to the Bank interest on sums
(including, but without limitation, default interest) not paid on their
respective due dates under this Agreement from the due date up to the date of
actual payment (as well after as before judgment) at a rate determined by the
Bank to be two per cent (2%) per annum above the aggregate of:
(a) the Margin; and
(b) LIBOR in each case for such successive periods not exceeding 3
months as the Bank may determine from time to time in respect
of amounts comparable with the sum not paid (provided that, if
any unpaid sum is of principal repayable prior to the last day
of an Interest Period relating thereto, LIBOR applicable to
such unpaid sum for the remaining period up to the last day of
that Interest Period shall remain LIBOR applicable to it at
the beginning of such Interest Period).
7.4 BASIS OF CALCULATION
All interest and other payments of an annual nature under this Agreement shall
accrue from day to day and be calculated on the basis of the actual number of
days elapsed and a 360 day year. Any certificate or determination by the Bank as
to any rate of interest payable under this Agreement shall, in the absence of
manifest error, be conclusive and binding on the Borrower.
7.5 NOTIFICATION
The Bank shall give to the Borrower not less than ten (10) days' notice of each
rate of interest determined by it under Clause 7 and its sub-sections.
8 FEES AND EXPENSES
8.1 MANAGEMENT FEE
The Borrower shall pay to the Bank a management fee in Dollars of five thousand
Dollars (US$5000.00) per annum, as from and including the date of this
Agreement, until and including the last day of the Repayment Date. Such fee
shall accrue from day to day, shall be calculated on the basis of the actual
number of days elapsed and a 360 day year and shall be paid annually in advance
commencing with the date of this Agreement and on the Repayment Date or, if
earlier, on final repayment of the Loan.
8.2 ARRANGEMENT FEE
The Borrower shall pay to the Bank an arrangement fee equal to one and one-half
per cent (1.5%) of the Loan Amount payable on disbursement.
8.3 EXPENSES
(1) The Borrower shall pay, on demand and on a full indemnity basis, to the
Bank the amount of all reasonable costs and expenses (including but not
limited to legal and out-of-pocket expenses) which the Bank properly
incurs in connection with the preparation, negotiation, execution and
delivery of this Agreement and any Related Document.
(2) The Borrower shall pay, on demand and on a full indemnity basis, to the
Bank, all costs and expenses (including but not limited to legal and
out-of-pocket expenses) incurred by it in connection with any actual or
proposed amendment or extension of or any waiver or consent under this
Agreement and in contemplation of or otherwise in connection with the
enforcement (or attempted enforcement) of, or preservation (or
attempted preservation) of any rights under, this Agreement and/or any
Related Document or otherwise in respect of any monies from time to
time owing under this Agreement.
8.4 DUTIES
The Borrower shall pay all stamp, documentary, registration or other similar
duties or Taxes (including any payable by the Bank) imposed in or by Trinidad
and Tobago on or in connection with this Agreement and/or any Related Document
and/or any other document referred to herein and shall indemnify the Bank
against any liability arising by reason of any delay or omission by the Borrower
to pay such duties or Taxes.
8.5 PAYMENT BY DEDUCTION
The Bank shall be entitled to effect payment (to the extent not already
discharged) of all fees expenses and other sums due and payable by the Borrower
under this Clause 8 out of and by deduction from the Loan Amount and the
Borrower hereby irrevocably authorises the Bank to do so.
9 PAYMENTS
9.1 PAYMENTS
(1) All payments to be made by the Borrower under this Agreement shall be
made in full, without any set-off or counterclaim whatsoever, and free
and clear of any deductions or withholdings, in immediately available,
freely transferable, cleared funds in Dollars not later than 11.00 am
on the due date to such account of the Bank as it may from time to time
notify to the Borrower.
(2) In the case of a partial payment by the Borrower, the Bank may
appropriate such payment towards such of the obligations of the
Borrower under this Agreement as the Bank may decide. The Borrower
waives any right to make an appropriation in respect of a partial
payment. Any appropriation by the Bank shall apply to the exclusion of
any actual or purported appropriation by the Borrower.
9.2 BUSINESS DAYS
Save as otherwise provided in this Agreement, if any payment would otherwise be
due on a day which is not a Business Day, the next following Business Day shall
be substituted for such day unless such Business Day shall be in a new calendar
month, in which case such payment shall instead be made on the immediately
preceding Business Day. Interest and fees shall be adjusted accordingly.
9.3 ACCOUNTS
Account(s) maintained by the Bank in connection with the Loan shall (save for
manifest error) be PRIMA FACIE evidence of the amounts from time to time owing
by the Borrower to the Bank under this Agreement.
10 REPRESENTATIONS AND WARRANTIES
10.1 REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Bank that:
(a) it is a limited liability company duly incorporated and
validly existing under the laws of Trinidad and Tobago and has
power to carry on its business and to own its property and
other assets;
(b) it has power and authority to execute, deliver and perform its
obligations under this Agreement and any Related Document and
to use the Loan Amount; all necessary
action has been taken (and not revoked) to authorise the
execution delivery and performance of this Agreement and
any Related Document; and subject to all applicable
insolvency laws this Agreement constitutes, and any Related
Document is or when executed and delivered will be, its
valid and legally binding obligation enforceable in
accordance with the terms thereof;
(c) the execution delivery and performance of this Agreement and
any Related Document and the use of the Loan Amount do not and
will not:
(i) contravene any law, regulation, directive, judgment
or order to which it is subject; or
(ii) result in any actual or potential breach of or
default under any obligation agreement instrument or
Consent to which it is a party or by which it is
bound or which it requires to carry on its business;
or
(iii) contravene any provision of its articles and/or
by-laws and/or statutes and/or constitutional
documents; or
(iv) result in any limitation on its powers to borrow or
incur Financial Indebtedness being exceeded; or
(v) result in the creation or imposition of or oblige it
to create any Encumbrance on its undertaking or any
of its assets rights or revenues;
(d) its obligations under this Agreement and any Related Document
are its direct, general and unconditional obligations and rank
at least pari passu with all other of its present and future
unsecured and unsubordinated Indebtedness (with the exception
of any obligations which are mandatorily preferred by law and
not by contract);
(e) no litigation, arbitration or administrative proceeding, and
without limitation no dispute with any statutory or
governmental authority, is current or pending, or to its
knowledge threatened, against it or any of its assets which
would have a material adverse effect on its business, assets
or financial condition or its ability to observe or perform
its obligations under this Agreement or any Related Document
having regard to all its other obligations;
(f) no Event of Default has occurred and is continuing;
(g) it is not in default in the payment of any due and payable
Taxes; or in the filing, registration or recording of any
document or under any legal or statutory obligation or
requirement, which default would have a material adverse
effect on its business, assets or financial condition or its
ability to observe or perform its obligations under this
Agreement or any Related Document;
(h) it is not (nor would with the giving of notice or lapse of
time be) in breach of, or in default under, any agreement
relating to Financial Indebtedness to which it is a party or
by which it is bound, which would be likely to have a material
adverse effect on its business, assets or financial condition
or its ability to observe or perform its obligations under
this Agreement or any Related Document, having regard to all
its other obligations;
(i) there exists no Encumbrance other than any Permitted
Encumbrance over the whole or any part of the present or
future undertaking, assets, rights or revenues (including
uncalled capital) of itself or any of its Subsidiaries and no
obligation to create any such Encumbrance;
(j) the latest report and financial statements of the Borrower
have been prepared in accordance with accounting principles
and practices generally accepted in Trinidad and Tobago,
consistently applied, and give a true and fair view of the
financial condition, assets and liabilities of the Borrower at
the date to which such financial statements have been
prepared; and since that date there has been no material
adverse
change in the financial condition or the business, assets
or operations of the Borrower which would be likely to have
a material adverse effect on its business, assets or
financial condition or its ability to observe or perform
its obligations under this Agreement or any Related
Document having regard to all its other obligations;
(k) it has obtained and complied with all Material Consents (and
the same are in full force and effect);
(l) it is not necessary that this Agreement be filed, registered,
recorded or enrolled with any court, public office or other
authority in any jurisdiction or that any stamp, documentary,
registration or similar Tax or duty be paid on or in relation
to this Agreement or any Related Document other than
Bond/Covenant duty and duties collateral thereto;
(m) all factual information supplied to the Bank in contemplation
or for the purpose of this Agreement or the Facility was true
and accurate in all material respects as at its date and did
not omit anything material. No change has occurred since the
date on which such information was supplied which renders the
same untrue or misleading in any material respect, and all
projections and statements of belief and opinion given by the
Borrower to the Bank were made honestly and in good faith
after due and careful enquiry and remain valid.
10.2 REPETITION
The representations and warranties in Clause 10.1 will be deemed to be repeated
by each Borrower on and as of each date on which the Loan is drawn down and on
and as of each Payment Date as if made with reference to the facts and
circumstances existing at such respective date.
10.3 EFFECT OF INVESTIGATION
The rights and remedies of the Bank in respect of any misrepresentation or
breach of warranty on the part of the Borrower shall not be prejudiced or
affected by any investigation of the Borrower or any other person by or on
behalf of the Bank or without limitation any other act or matter which, but for
this provision, would or might prejudice or affect any such rights or remedies.
11 UNDERTAKINGS
11.1 GENERAL UNDERTAKINGS
Each Borrower undertakes with the Bank that, so long as any part of the Loan or
any monies or obligations are outstanding under this Agreement:
(a) it will ensure that its obligations under this Agreement shall
at all times rank at least pari passu with all its other
present and future unsecured and unsubordinated Indebtedness
(with the exception of any obligations which are mandatorily
preferred by law and not by contract);
(b) it will prepare financial statements in respect of each
financial period in accordance with Clause 11.4 and cause the
same to be audited by its auditors and deliver two copies of
the same to the Bank promptly and in any event not later than
120 days after the end of the relevant financial period;
(c) it will deliver to the Bank two copies promptly, and in any
event not later than 45 days after the relevant period, of
management accounts relating to it containing financial
information (in no less detail than such as having been
prepared prior to the date of this Agreement) in respect of
successive quarterly periods during each of its financial
years;
(d) it will provide the Bank with copies of all notices and other
communications despatched to its shareholders (or any class
thereof) or its creditors (or any class thereof) when
despatched;
(e) it will provide the Bank with such financial and other
information concerning its business, assets and affairs as the
Bank may from time to time reasonably require except that it
will not be obliged to provide any such information which is
secret or confidential to it or if disclosure requires the
consent of any third party, which it will on request use best
endeavours to obtain;
(f) it will obtain, maintain in full force and effect and comply
with all Material Consents and any conditions thereof;
(g) it will not make or permit any material change in the nature
of its business or commence any new type of business
materially different from its business at the date of this
Agreement;
(h) it will maintain insurances on or in relation to its business
and assets with underwriters and insurance companies of repute
against such risks of the kinds customarily insured against
by, and in amounts reasonably and commercially prudent for,
companies carrying on similar businesses;
(i) it will promptly inform the Bank, promptly upon becoming aware
of the same, of any occurrence or circumstance of which it
becomes aware which would be likely to adversely affect its
ability to perform its obligations under this Agreement or any
Related Document and of any Event of Default or Potential
Default;
(j) it will from time to time, forthwith on request by the Bank,
deliver to it a certificate signed by two of its directors
(acting without personal liability except in the case of
wilful default or misconduct) confirming that, save as may be
notified in detail in such certificate, no Event of Default or
Potential Default has occurred and is then subsisting and,
without limitation, to be accompanied by such evidence as to
the information and matters contained in such certificate as
the Bank may from time to time reasonably require;
(k) it will provide the Bank with annual profit and loss
projections, cash flow projections and capital expenditure
budgets within thirty (30) days of the start of the year to
which these projections pertain.
11.2 NEGATIVE PLEDGE
(1) Each Borrower undertakes with the Bank that, so long as the Loan or any
monies or obligations are outstanding under this Agreement, it will
not:
(a) create or permit to subsist any Encumbrance other than any
Permitted Encumbrance over all or any part of its present or
future undertaking, assets, rights or revenues;
(b) sell or otherwise dispose of any of its assets on terms
whereby it is, or may be, leased to or acquired by it (except
for sale and lease-backs of any asset on normal arm's length
commercial terms and in the normal course of business) or sell
or otherwise dispose of any of its receivables on recourse
terms (except for the discounting of bills or notes in the
ordinary course of business), in any such case in
circumstances where the transaction is entered into primarily
as a method of raising finance or of financing the acquisition
of an asset, unless such sale or disposal is to a related
entity.
(2) Paragraph (1) above shall not apply to any Encumbrance:
(a) created or outstanding with the prior written consent of the
Bank provided that, unless permitted by any other exception
below, the aggregate principal amount secured by such
Encumbrance will not be increased without further such
consent;
(b) arising by operation of law and not as a result of any default
or omission on the part of the Borrower having regard to the
custom in the relevant trade for settlement of accounts;
(c) arising under any retention of title arrangements entered into
in the ordinary course of trading and not entered into
primarily for the purpose of securing any Financial
Indebtedness;
(d) over goods or documents of title to goods arising in the
ordinary course of documentary credit transactions;
(e) provided that simultaneously with the creation of such
Encumbrance the obligations of the Borrower under this
Agreement are equally and rateably secured by a comparable
Encumbrance on other assets reasonably acceptable to the Bank
in form and substance satisfactory to it;
(f) on assets acquired after the date of this Agreement, or on
assets of a body corporate which becomes a Subsidiary by
acquisition after the date of this Agreement, provided that:
(i) any such Encumbrance is in existence prior to such
acquisition and is not created in contemplation of
such acquisition; and
(ii) the amount secured by such Encumbrance does not
exceed, at any time, the maximum amount secured or
agreed to be secured by it (in accordance with the
original terms on which such Encumbrance was created)
as at the date of acquisition; and
(iii) such Encumbrance is discharged within a period of 3
months after the acquisition or (only in the case of
an acquisition of a body corporate) where the terms
of such Encumbrance do not permit repayment of the
amount secured by such Encumbrance within such
period, on the earliest date or dates permitted by
the terms of such Encumbrance for such repayment; and
(iv) no guarantee is given by the Borrower in respect of
such Encumbrance or the amount secured by it;
(g) created in favour of a plaintiff or defendant in any action,
or the court or tribunal before which such action is brought,
as security for costs or expenses where the Borrower is
prosecuting or defending such action in its bona fide
interests;
(h) pursuant to any order of attachment, distraint, garnishee
order, injunction restraining disposal of assets or similar
legal process arising in connection with legal proceedings;
(i) securing Indebtedness incurred to refinance other indebtedness
permitted to be secured under paragraphs (a) to (h) above
inclusive and/or this paragraph (i), provided that the
aggregate principal amount of the Indebtedness secured by such
Encumbrance is not increased and such Encumbrance does not
extend to any assets other than those which were subject to
the Encumbrance securing the refinanced Indebtedness.
11.3 DISPOSALS
(1) Each Borrower undertakes with the Bank that, so long as any monies or
obligations are outstanding under this Agreement, it will not either in
a single transaction or in a series of transactions, whether related or
not and whether voluntarily or involuntarily, sell, transfer, lease or
otherwise dispose of all or any substantial part of its assets.
(2) Paragraph (1) above shall not apply to:
(a) disposals made with the prior written consent of the Bank,
which consent shall not be unreasonably withheld or delayed;
(b) disposals made in the ordinary course of business/trading of
the disposing entity for not less than market value on an
arm's length basis;
(c) disposals of property or assets in exchange for other property
or assets of a comparable type and value;
(d) disposals of cash in acquiring any asset at not more than
market value;
(e) disposals of property or assets so long as such disposals will
not in the opinion of the Bank have a material adverse effect
on the ability of the Borrower to perform its obligations
under this Agreement and/or any Related Document.
11.4 FINANCIAL STATEMENTS
Each Borrower will ensure that all audited financial statements prepared by it
and delivered pursuant to this Agreement shall be prepared in accordance with
accounting principles and practices generally accepted in Trinidad and Tobago,
consistently applied in respect of each financial period or giving details of
any inconsistency, on an individual and if applicable consolidated basis and
that such financial statements shall contain a balance sheet giving a true and
fair view of the state of affairs of the Borrower as at the end of the period to
which they relate and a profit and loss account giving a true and fair view of
its profit or loss for such period.
12 DEFAULT
12.1 EVENTS OF DEFAULT
There shall be an Event of Default if:
(a) the Borrower fails to pay within five (5) Business Days after
the due date, in the currency and manner provided in this
Agreement, any sum payable by it under this Agreement or any
Related Document when due. The Borrower shall not be deemed to
be in default if it has received less than ten (10) days'
notice of any revised interest rate made pursuant to Clause 7
and its sub-sections, and its otherwise timely payment fails
to take account of such revised interest rate; or
(b) the Borrower commits any breach of any provision of Clauses
11.1(a), 11.1(f), 11.2, or 11.3; or
(c) the Borrower commits any material breach of any other
provision of this Agreement or any Related Document and either
such breach is in the reasonable opinion of the Bank not
capable of remedy or such breach is in the reasonable opinion
of the Bank capable of remedy and is not remedied within 21
days after the earlier of the date of notice by the Bank
requiring such remedy or the date on which the Borrower first
becomes aware of the breach; or
(d) any representation or warranty made or deemed to be made or
repeated by the Borrower in or pursuant to this Agreement or
any Related Document is or proves to have been untrue or
incorrect in any material respect when made or when deemed to
be repeated with reference to the facts and circumstances
existing at such time; or
(e) any Financial Indebtedness of the Borrower, excluding
Financial Indebtedness owed to its parent corporations,
exceeding in aggregate twenty thousand Dollars (US$20,000.00),
or its equivalent in any currency, is not paid when due OR
within any applicable grace period or becomes due prior to its
stated maturity (and, in the case of a guarantee or an
indemnity, is called) and is not, in the reasonable opinion of
the Bank, being disputed promptly and in good faith; or
(f) any Encumbrance to secure any Financial Indebtedness of the
Borrower exceeding in aggregate ten thousand Dollars
(US$10,000.00) or its equivalent in any other currency becomes
enforceable; or
(g) an encumbrancer takes possession, or a receiver,
administrative receiver, manager or sequestrator, is appointed
of the whole or any substantial part of the undertaking assets
rights or revenues of the Borrower or a distress or other
process is levied or enforced upon any of the assets rights or
revenues of the Borrower and any such action is not lifted or
discharged within 14 days; or
(h) a petition is presented to, or any order is made by, any
competent court for the appointment of an administrator in
relation to the Borrower; or
(i) the Borrower is adjudicated or found to be insolvent, stops or
suspends payment of its respective debts; is (or is deemed to
be) unable to or admits inability to pay its respective debts
as they fall due; or proposes or enters into any voluntary
arrangement or any composition or other arrangement for the
benefit of its creditors generally or proceedings are
commenced in relation to the Borrower under any law regulation
or procedure relating to reconstruction or adjustment of
debts; or
(j) any petition is presented by any person; any order is made by
any competent court, any resolution is passed by the Borrower
for its winding-up, dissolution or for the appointment of a
liquidator of the Borrower (except for the purpose of a
solvent amalgamation or reconstruction on terms and conditions
which shall have first been approved by the Bank); or
(k) the Borrower, or any of them, ceases to carry on the whole or
substantially the whole of its business; or
(l) this Agreement or any Related Document is or becomes (or is
alleged to be) unlawful or unenforceable in any respect; or
(m) any Material Consent is withdrawn or revoked or expires or is
modified or made subject to any condition which in the
reasonable opinion of the Bank may materially and adversely
affect the Borrower or its ability to perform or comply with
any of its obligations under this Agreement or any Related
Document; or
(n) any Borrower becomes a Subsidiary of any other person or one
person or more than one person acting in concert (within the
meaning of The Code on Takeovers and Mergers), not having such
control at the date of this Agreement, obtain(s) control (as
defined in section 4 of the Companies Act 1995) of the
Borrower. Notwithstanding the foregoing the Guarantor or any
one or more of its Subsidiaries may acquire or increase its
shareholding in any of the Borrowers; or
(o) the guarantee and indemnity of any Guarantor is not (or is
alleged by such person not to be) valid and in full force and
effect; or
(p) any event described in paragraphs (g) to (k) inclusive above
or any analogous event occurs to or in respect of any
Guarantor; or
(q) any other event, series of events or any circumstances whether
related or not (including but without limitation any adverse
change in the business, assets or financial condition of the
Borrower occur(s) or arise(s)) which, in the reasonable
opinion of the Bank, would be likely to have a material
adverse effect on the Borrower or its ability or willingness
to perform or comply with any of its obligations under this
Agreement and/or any Related Document.
12.2 RIGHTS ON A DEFAULT
The Bank may (without prejudice to any of its rights) upon and at any time after
the happening of an Event of Default, so long as the same is continuing, by
notice to the Borrower declare that:
(a) the Loan has become immediately due and payable, whereupon the
Borrower shall forthwith repay the same together with all
interest accrued and all other sums payable under this
Agreement; and/or
(b) the Loan has become due and payable on demand, whereupon the
Loan and all interest and other sums payable under this
Agreement shall at all times after such declaration be due and
payable forthwith on demand.
13 INDEMNITIES
13.1 INDEMNITIES
Each Borrower shall on demand indemnify the Bank against any liability, loss or
expense which the Bank shall certify as incurred by it as a consequence of:
(a) any default in payment by the Borrower of any sum under this
Agreement when due;
(b) the occurrence of any Event of Default;
(c) any repayment or prepayment of the Loan Amount or part thereof
being received otherwise than on the last day of an Interest
Period;
(d) the early breaking, termination or reversing (in whole or in
part) of any agreement or arrangement entered into by the Bank
with the Borrower or any third party for the purpose of or in
connection with fixing, capping the rate of or otherwise
hedging interest payable under this Agreement; or
including in any such case, but not limited to, any loss of profit and any loss
or expense incurred in maintaining or funding the Loan or other sum or in
liquidating or re-employing deposits from third parties acquired or contracted
for in order to effect or maintain the same.
13.2 CURRENCY
If, under any applicable law or regulation, or pursuant to a judgment or order
being made or registered against, or the liquidation of, the Borrower, or
without limitation for any other reason, any payment under or in connection with
this Agreement is made or falls to be satisfied in a currency (the `payment
currency') other than the currency in which such payment is expressed to be due
under or in connection with this Agreement (the `contractual currency') then, to
the extent that the amount of such payment actually received by the Bank, when
converted into the contractual currency at the rate of exchange, falls short of
the amount due under or in connection with this Agreement, the Borrower, as a
separate and independent obligation, shall indemnify and hold harmless the Bank
against the amount of such shortfall. To the extent that the amount of such
payment actually received by the Bank, when so converted, exceeds the amount due
under or in connection with this Agreement, the Bank shall pay to the Borrower,
provided that it is then in compliance with its obligations under this
Agreement, an amount equal to the excess. For the purposes of this Clause, the
`rate of exchange' means the rate at which the Bank is able, on or about the
date of such payment, to purchase, in accordance with its normal practice, the
contractual currency with the payment currency and shall take into account (and
the Borrower shall be liable for) any premium and other costs of exchange
including any Taxes incurred by reason of any such exchange.
14 TAXES
14.1 GROSSING UP PAYMENTS
All payments to be made by the Borrower under this Agreement shall be made free
and clear of and without deduction for or on account of Taxes, unless the
Borrower is required to make such a payment subject to the deduction or
withholding of Taxes, in which case the amount payable by the Borrower, in
respect of which such deduction or withholding is required to be made, shall be
increased to the extent necessary to ensure that, after the making of such
deduction or withholding, the Bank receives and retains (free from any liability
in respect of any such deduction or withholding) a net amount equal to the sum
which it would have received and so retained had no such deduction or
withholding been made or required to be made.
14.2 NOTIFICATION
If at any time the Borrower is required by law to make any deduction or
withholding from any sum payable by it under this Agreement (or if subsequently
there is any change in the rates at which or the manner in which such deductions
or withholdings are calculated), it shall promptly notify the Bank upon becoming
aware of the same.
14.3 TAX RECEIPTS
If the Borrower is required to make any deduction or withholding from any
payment hereunder, it shall pay the full amount required to be deducted or
withheld to the relevant taxation or other authority within the time allowed for
such payment under applicable law and shall deliver to the Bank, within thirty
(30) days after it has made such payment to the applicable authority, an
original official receipt issued by such authority, and any other appropriate
evidence of the payment to such authority of all amounts so required to be
deducted or withheld.
14.4 INDEMNITY
Each Borrower shall indemnify and hold harmless the Bank against, and reimburse
it on demand, the amount of any Taxes so deducted withheld or accounted for and
paid by the Borrower whether or not such Taxes were correctly or legally
assessed or demanded.
15 GENERAL
15.1 SET-OFF
(1) The Bank may, without prior notice to the Borrower, apply any credit
balance (whether or not then due and in whatever currency) which is at
any time held by any office or branch of the Bank for the account of
the Borrower in or towards satisfaction of any sum then due and payable
from the Borrower under this Agreement and in respect of which a
default in payment has occurred. The Bank will promptly notify the
Borrower of such application.
(2) For the purposes of exercising any rights under this Clause, or any
rights under the general law, the Bank may convert or translate all or
any part of such a credit balance into another currency applying, a
rate which in its opinion fairly reflects prevailing rates of exchange.
(3) The Bank is not obliged to exercise any of its rights under this
Clause, which shall be without prejudice and in addition to any rights
under the general law.
(4) In this Clause `rights under the general law' means any right of set
off, combination or consolidation of accounts, lien or similar right
which the Bank has under any applicable law.
15.2 ASSIGNMENT
(1) This Agreement shall be binding upon, and enure for the benefit of,
each of the parties hereto and their respective successors and
permitted assigns (and any person to whom the Bank shall transfer or
novate any rights and/or obligations under this Agreement).
(2) The Borrower may not assign or transfer any of its rights, benefits or
obligations under this Agreement without the express written consent of
the Bank.
(3) The Bank may assign all or any part of its rights or benefits or
transfer all or any part of its obligations, under this Agreement or
any Related Document. The Borrower shall enter into all documents
specified by the Bank to be necessary to give effect to any such
assignment or transfer.
(4) The Bank may disclose, on a confidential basis to any actual or
potential assignee or transferee of any rights, benefits or obligations
under this Agreement or any Related Document, such information about
the Borrower and any Subsidiary of the Borrower (and so that the
Borrower shall procure any further requisite consent from each
Subsidiary) and their respective business and financial condition as
the Bank shall reasonably consider appropriate.
15.3 NOTICES
(1) Every notice demand or other communication under this Agreement shall
be in writing and may be delivered by courier/messenger or by letter or
facsimile transmission (confirmed by a personally delivered letter)
despatched as follows:
(a) IF TO THE BANK, as follows:
Royal Merchant Bank and Finance Company Limited
Level 8, 55 Independence Square
Port of Spain
Facsimile 868-624-5212
for the attention of The Managing Director;
(b) IF TO THE BORROWER, as follows:
PSMT Trinidad/Tobago Limited, PriceSmart (Trinidad) Limited,
and PS Operations Limited
c/o PriceSmart
Endeavour Road and Narsaloo Ramaya Road
Endeavour Flyover
off Uriah Butler Highway
Chaguanas
Facsimile 868 671 1865
for the attention of The General Manager
WITH A COPY TO:
PriceSmart Inc
c/o Robert Gans
4649 Morena Boulevard
San Diego CA 92117
USA
Facsimile 858 581 4707
for the attention of Mr. Bob Gans
or (in any case) to such other address and/or facsimile number as may
be notified in accordance with this Clause by the relevant party to the
other party for such purpose.
(2) Every notice or other communication shall, subject as otherwise
provided in this Agreement, be deemed to have been received if
delivered by courier/messenger or dispatched by facsimile transmission
at the time of delivery or dispatch (subject in the case of notice
dispatched by facsimile to it being confirmed by a letter delivered by
courier) if during normal business hours in the place of intended
receipt on a working day in that place and otherwise at the opening of
business in that place on the next succeeding such working day.
15.4 WAIVERS
No delay or omission on the part of the Bank in exercising any right or remedy
under this Agreement shall impair that right or remedy, or operate as or be
taken to be a waiver of it, nor shall any single partial or defective exercise
by the Bank, or any such right or remedy, preclude any other or further exercise
under this Agreement of that or any other right or remedy. The remedies provided
in this Agreement are cumulative and are not exclusive of any remedies provided
by law.
15.5 SEVERANCE
If at any time any of the provisions of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under any law or regulation of any
jurisdiction, neither the legality, validity and enforceability of the remaining
provisions of this Agreement nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction shall be in any way
affected or impaired as a result.
15.6 COUNTERPARTS
This Agreement may be executed in any number of counterparts, in which case this
Agreement will be as effective as if all signatures on the counterparts were on
a single copy of this Agreement.
15.7 LANGUAGE
All notices or communications under or in connection with this Agreement
(including without limitation documents to be delivered pursuant to Clause 4.1)
shall be in English or, if in any other language, accompanied by a translation
into English certified as the Bank may require. In the event of any conflict
between the English text and the text in any other language, the English text
shall prevail.
15.8 LAW AND JURISDICTION
(1) This Agreement shall be governed by and construed in accordance with
Trinidad and Tobago law.
(2) The Borrower irrevocably agrees for the exclusive benefit of the Bank
that the courts of Trinidad and Tobago shall have jurisdiction to hear
and determine any suit action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement
and for such purposes hereby irrevocably submits to the jurisdiction of
such courts.
(3) Nothing contained in this Clause shall limit the right of the Bank to
take proceedings against the Borrower in any other court of competent
jurisdiction, nor shall the taking of any such proceedings in one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not (unless precluded by
applicable law).
(4) The Borrower irrevocably waives any objection which it may have now or
in the future to the courts of Trinidad and Tobago being nominated for
the purpose of subclause (2) above and agrees not to claim that any
such court is not a convenient or appropriate forum.
AS WITNESS this Agreement has been duly executed the day and year first above
written.
SIGNED FOR AND ON BEHALF OF
PSMT TRINIDAD /
TOBAGO LIMITED
BY /s/ Kurt A. May
----------------
Name: Kurt A. May
Title: President
SIGNED FOR AND ON BEHALF OF
PRICESMART (TRINIDAD)
LIMITED
BY /s/ Kurt A. May
----------------
Name: Kurt A. May
Title: President
SIGNED FOR AND ON BEHALF OF
PS OPERATIONS LIMITED
BY /s/ Kurt A. May
----------------
Name: Kurt A. May
Title: President
SIGNED FOR AND ON BEHALF OF
ROYAL MERCHANT
BANK AND FINANCE
COMPANY LIMITED
BY
-----------------------
Name:
Title:
SCHEDULE
CONDITIONS PRECEDENT
In this Schedule, `certified' means certified by a director or another duly
authorised officer of the Borrower as being a true complete and up-to-date copy
as at a date no earlier than the date of this Agreement.
(1) A certified copy of the articles and by-laws or other constitutional
documents and the register of members of each Borrower.
(2) A certified copy of a resolution of the board of directors of each
Borrower approving this Agreement and any Related Document required to
be delivered under this Agreement to which it is expressed to be a
party, authorising the person(s) executing the same to do so and
authorising a person or persons to sign all notices or other
communications to be given or made by or on behalf of each Borrower
under this Agreement or any such Related Document.
(3) A certified copy of the constitutional documents of the Guarantor and
the Company.
(4) Certified copies of resolutions of each of the board of directors of
the Guarantor and the Company approving any Related Document to which
it is expressed to be a party and authorising the person or persons
signing the same to do so.
(5) A specimen signature, appropriately notarised, of each person
authorised to sign by the resolutions referred to in paragraphs (2) and
(4) above.
(6) Each fee payable pursuant to Clause 8 to the extent due and payable and
not advanced out of the Loan.
(7) This Agreement, the Mortgage Debenture and the Guarantee duly executed
by the relevant parties.
(8) Any Material Consent necessary or expedient, in the opinion of the
Bank, for the entering into and performance of this Agreement or any
Relevant Document by any person and/or the use of the Loan Amount by
the Borrower.
(9) A valuation by a competent professional acceptable to the Bank, which
certifies that the value of the Property, at the date of the drawdown
of the balance of the Loan, is not less than 166.67% of the Loan
Amount.
(10) A copy, certified to the satisfaction of the Bank, of any other consent
licence document opinion or assurance which the Bank considers
necessary or desirable in connection with the execution delivery and
performance of this Agreement any Related Document and the transactions
contemplated thereby.