Exhibit 10.58

EXECUTION COPY

INVESTMENT NUMBER 11213

OMNIBUS AGREEMENT

among

PSMT PHILIPPINES, INC.

PRICESMART, INC.

and

INTERNATIONAL FINANCE CORPORATION

Dated as of June 27, 2002

 

TABLE OF CONTENTS

Volume I – Preliminary Volume       ARTICLE I 2 Preliminary Provisions  
     Section 1.01. Interpretation 2      Section 1.02. Severability 2
     Section 1.03. Governing Law 2      Section 1.04. Waiver of Priority 2    
Volume II – IFC LOAN AGREEMENT       ARTICLE I 3 Definitions and Interpretation
3      Section 1.01. General Definitions 3      Section 1.02. Financial
Definitions 10      Section 1.03. Financial Calculations 14      Section 1.04.
Interpretation 15      Section 1.05. Business Day Adjustment 15     ARTICLE II
15 The Project, Project Cost and Financial Plan 15      Section 2.01. The
Project 15      Section 2.02. Project Cost and Financial Plan 15     ARTICLE III
16 The Loan 16      Section 3.01. The Loan 16      Section 3.02. Disbursement
Procedure 16      Section 3.03. Interest 16      Section 3.04. Default Rate
Interest 17      Section 3.05. Repayment 18      Section 3.06. Prepayment 18
     Section 3.07. Fees 19      Section 3.08. Currency and Place of Payments 19
     Section 3.09. Allocation of Partial Payments 20      Section 3.10.
Increased Costs 20      Section 3.11. Unwinding Costs 20      Section 3.12.
Suspension or Cancellation by IFC 20      Section 3.13. Cancellation by the
Co-Borrowers 21      Section 3.14. Taxes 21      Section 3.15. Expenses 22    
ARTICLE IV 23 Representations and Warranties 23

 

     Section 4.01. Representations and Warranties 23      Section 4.02. IFC
Reliance 25     ARTICLE V 25 Conditions of Disbursement 25      Section 5.01.
Conditions of First Disbursement 25      Section 5.02. Conditions of All
Disbursements 27      Section 5.03. Co-Borrowers’ Certification 28     ARTICLE
VI 28      Section 6.01. Affirmative Covenants 28      Section 6.02. Negative
Covenants 29      Section 6.03. Reporting Requirements 33      Section 6.04.
Insurance 35     ARTICLE VII 37 Events of Default 37      Section 7.01.
Acceleration after Default 37      Section 7.02. Events of Default 37
     Section 7.03. Bankruptcy 40     ARTICLE VIII 40 Miscellaneous 40
     Section 8.01. Saving of Rights 40      Section 8.02. Term of Agreement 40
     Section 8.03. Applicable Law and Jurisdiction 40      Section 8.04.
Disclosure of Information 42     ANNEX A 43 CO-BORROWERS/PROJECT AUTHORIZATIONS
43     ANNEX B 45 INSURANCE REQUIREMENTS 45     ANNEX C 46 METHODOLOGY 46    
SCHEDULE 1 50 FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY 50     SCHEDULE 2
52 FORM OF REQUEST FOR DISBURSEMENT (LOAN) 52     SCHEDULE 3 55 FORM OF LOAN
DISBURSEMENT RECEIPT 55     SCHEDULE 4 56 FORM OF SERVICE OF PROCESS LETTER 56

 

SCHEDULE 5 58 MATTERS TO BE COVERED IN LOCAL COUNSEL’S LEGAL OPINION 58    
SCHEDULE 5 59     SCHEDULE 6 60 FORM OF LETTER TO EACH CO-BORROWER'S AUDITORS 60
    SCHEDULE 7 62 FORM OF CO-BORROWERS’ CERTIFICATION ON DISTRIBUTION OF
DIVIDENDS 62     SCHEDULE 8 63 FORM OF PROGRESS REPORT RE: PROJECT
IMPLEMENTATION 63     SCHEDULE 9 64 INFORMATION TO BE INCLUDED IN ANNUAL REVIEW
OF OPERATIONS 64     SCHEDULE 10 65 FORM OF ANNUAL MONITORING REPORT 65    
Volume III – MORTGAGE AGREEMENT       ARTICLE I 80 Definitions and Rules of
Interpretation        Section 1.01. Certain Defined Terms 80      Section 1.02.
Additional Definitions 80      Section 1.03. Rules of Interpretation 81    
ARTICLE II 81 Representations and Warranties        Section 2.01.
Representations and Warranties of PSPH 81      Section 2.02. Continuing
Representations 82     ARTICLE III 82 Real Estate Mortgage        Section 3.01.
Creation of the Real Estate Mortgage 82      Section 3.02. Real Assets 82
     Section 3.03. Registration of Real Estate Mortgage 83      Section 3.04.
First Priority Ranking of the Mortgage 83     ARTICLE IV 83

 

Chattel Mortgage        Section 4.01. Creation of the Chattel Mortgage 83
     Section 4.02. The Chattel 84      Section 4.03. Registration of Chattel
Mortgage 84      Section 4.04. First Priority Ranking of the Mortgage 85
     Section 4.05. Use of Assets 85     ARTICLE V 85 Covenants and Undertakings
of the Borrower        Section 5.01. Execution and Registration of Deeds in
General 85      Section 5.02. Affirmative Covenants 86      Section 5.03.
Negative Covenants 87     ARTICLE VI 87 Rights and Remedies of IFC  
     Section 6.01. Right to Act for PSPH 87      Section 6.02. Rights in Eminent
Domain 88      Section 6.03. Unauthorized Sale and other Disposition of Assets
88      Section 6.04. Unauthorized Liens 88      Section 6.05. Events of Default
89      Section 6.06. Waiver of Redemption Right 89     ARTICLE VII 89 Power of
Attorney        Section 7.01. Appointment and Authority of Attorney-in-Fact 89
     Section 7.02. Ratification of Attorney’s Acts 90      Section 7.03. Power
of Attorney Coupled with Interest 90      Section 7.04. Expenses of
Attorney-in-Fact 91     ARTICLE VIII 91 Release of Mortgage and Required
Collateral Value        Section 8.01. Release 91      Section 8.02. Required
Value of Assets; Partial Release 91     ARTICLE IX 91 Miscellaneous Provisions  
     Section 9.01. (a) Continuing Security 91                           (b)
Partial Security 91      Section 9.02. Rescission of Payment 91      Section
9.03. (a) Application of Proceeds of Mortgage 92

 

                          (b) Conversion to Required Currency 92      Section
9.04. Further Assurances 92      Section 9.05. Taxes, Fees, etc. in Execution,
Registration etc. 92      Section 9.06. (a) Rights and Remedies Cumulative 92
                          (b) No Waiver 92                           (c)
Amendments, etc. with respect to the Loans 92      Section 9.07. Severability 92
     Section 9.08. Notice 93      Section 9.09. Benefit of Mortgage Agreement 93
     Section 9.10. Discharge of Mortgage 93      Section 9.11. Lender without
Obligations 93      Section 9.12. Governing Law 93      Section 9.13. Heading
Descriptive 93      Section 9.14. Applicability of IFC Loan Agreement 93    
ANNEX A 94 PART 1 – PRESENT REAL ASSETS   PART 2 – FUTURE REAL ASSETS      
ANNEX B 99 PART 1 – PRESENT CHATTEL   PART 2 – FUTURE CHATTEL       ANNEX C 128
    SCHEDULE OF EXECUTION OF MORTGAGE SUPPLEMENTS       EXHIBIT A   MORTGAGE
SUPPLEMENT       Volume IV – PLEDGE AGREEMENT       ARTICLE I   Definitions and
Rules of Interpretation 132      Section 1.01. Certain Defined Terms 132
     Section 1.02. Additional Definitions 132      Section 1.03 Terms Defined in
UCC 132      Section 1.04 Rules of Interpretation 132     ARTICLE II 132
Representations and Warranties        Section 2.01 Representations and
Warranties of PSMT 132      Section 2.02 Continuing Representations 134

 

ARTICLE III 134 Pledge        Section 3.01 Creation of the Pledge 134
     Section 3.02 Delivery and Other Perfection 135      Section 3.03 First
Priority Ranking of the Pledge 135     ARTICLE IV 135 Covenants and Undertakings
       Section 4.01 Execution of Deeds in General and Delivery of Pledged
Collateral 136      Section 4.02 Affirmative Covenants 136      Section 4.03
Negative Covenants 136     ARTICLE V 137 Dividends, Voting and Other Rights  
     Section 5.01 Dividends 137      Section 5.02 Voting Other Rights 137    
ARTICLE VI 137 Rights and Remedies of IFC        Section 6.01 Remedies Following
Events of Default, Etc. 137      Section 6.02 Private Sale 138      Section 6.03
Attorney-in-Fact 139     ARTICLE VII 139 Termination       ARTICLE VIII 139
Miscellaneous        Section 8.01 Preservation of Rights 139      Section 8.02
Preservation of Pledge Collateral 139      Section 8.03 (a) Continuing Security
139                          (b) Partial Security 139      Section 8.04
Rescission of Payment 140      Section 8.05 (a) Application of Proceeds of
Pledge 140                          (b) Conversion to Required Currency 140
     Section 8.06 Deficiency 140      Section 8.07 Further Assurances 140
     Section 8.08 Taxes, Fees, etc. on Execution, Registration, etc. 140

 

     Section 8.09 (a) Rights and Remedies Cumulative 140
                          (b) No Waiver 140                           (c)
Amendments, etc. with respect to the Loans 141      Section 8.10 Severability
141      Section 8.11 Notice 141      Section 8.12 Benefit of Pledge Agreement
141      Section 8.13 Discharge of Pledge 141      Section 8.14 Lender Without
Obligations 141      Section 8.15 Governing Law; Jurisdiction 141      Section
8.16 Applicability of IFC Loan Agreement 141     SCHEDULE 1 142 FILINGS,
REGISTRATION, RECORDINGS, CONSENTS, APPROVALS, NOTICES AND ACKNOWLEDGEMENTS
REQUIRED UNDER APPLICABLE LAW       ANNEX A 143 PLEDGED SHARES       Volume V –
MISCELLANEOUS; EXECUTION       ARTICLE I 144 Miscellaneous Provisions  
     Section 1.01. Headings Descriptive 144      Section 1.02. Notices 144
     Section 1.03. English Language 144      Section 1.04. Successors and
Assignees 144      Section 1.05. Amendments, Waivers and Consents 145
     Section 1.06. Governing Law 145      Section 1.07. Counterparts 145

 

Volume I – Preliminary Volume

            OMNIBUS AGREEMENT, dated as of June_________, 2002, among:          
  (1) PRICESMART, INC., a corporation organized and existing under the laws of
the State of Delaware, United States of America (“PSMT”);             (2) PSMT
PHILIPPINES, INC., a corporation organized and existing under the laws of the
Republic of Philippines (“PSPH”),               (“PSMT” and “PSPH” together the
“Co-Borrowers”); and              (3) INTERNATIONAL FINANCE CORPORATION, an
international organization established by Articles of Agreement among its member
countries including the Republic of Philippines (“IFC”).          

W I T N E S S E T H:

WHEREAS:

       (A)       Co-Borrowers have requested for debt financing from IFC for the
Project;

       (B)       by the IFC Loan Agreement comprising Volume II of this Omnibus
Agreement (the “IFC Loan Agreement”) between the Co-Borrowers and IFC, IFC has
agreed to lend to the Co-Borrowers up to US$12,500,000.00 (the “Loan”), for the
sole purpose of financing of the Project;

       (C)       the IFC Loan Agreement contemplates the execution, delivery and
implementation of the Mortgage Agreement comprising Volume III of this Omnibus
Agreement (the “Mortgage Agreement”), the creation and perfection of the
Mortgage under said Volume III, the execution, delivery and implementation of
the Pledge Agreement comprising Volume IV of this Omnibus Agreement (the “Pledge
Agreement”), and the creation and perfection of the Pledge under said Volume IV;

       (D)      it is a condition precedent to the obligation of IFC under the
IFC Loan Agreement that the Mortgage Agreement and the Pledge Agreement shall
have been entered into by the parties hereto and shall have become
unconditionally and fully effective in accordance with the terms hereof;

       (E)       to induce IFC to make the Loan thereunder, the Borrower has
agreed to enter into this Omnibus Agreement and be bound by all covenants and
obligations provided for herein.

       NOW, THEREFORE, the parties hereto hereby agree as follows:

ARTICLE I
Preliminary Provisions

       Section 1.01. Interpretation. (a) For avoidance of doubt, when used in an
agreement comprising a Volume of this Omnibus Agreement, (i) the phrase “this
Agreement” shall refer only to such agreement comprising such Volume, and not to
the Omnibus Agreement or any other Volume thereof, (ii) references to “herein”,
“hereof’, “hereto”, and similar references refer only to such Volume, and (iii)
references to “Annex”, “Schedule” and similar referenences refer only to the
Annexes or Schedules of such Volume. “Volume” shall mean a volume of this
Omnibus Agreement.

       (b) Unless otherwise defined herein, all capitalized terms used in this
Preliminary Volume (including the recitals hereto) that are undefined herein and
are defined in the IFC Loan Agreement (including those terms incorporated
therein by reference to another document) shall have the respective meanings
assigned to them in the IFC Loan Agreement.

 

       Section 1.02. Severability. If any provision of this Omnibus Agreement
(including any Volume thereof) is prohibited or unenforceable in any
jurisdiction, such prohibition or unenforceability shall not invalidate the
remaining provisions and Volumes of the Omnibus Agreement, or affect such
provisions in any other jurisdiction.

       Section 1.03. Governing Law. The provisions of this Volume I shall be
governed by and construed in accordance with the same governing law and rules of
construction as are stipulated to apply to Volume II of this Omnibus Agreement.

       Section 1.04. Waiver of Priority. IFC hereby waives the preference
created under Article 2244(14) of the Civil Code of the Philippines arising in
relation to the Loan Agreement by virtue of the notarization of this Omnibus
Agreement, provided that any other rights and preferences arising under any
other Volume in relation to such notarization are not waived or otherwise
affected.

 

3

 

Volume II - IFC LOAN AGREEMENT

       IFC LOAN AGREEMENT, between the Co-Borrowers and IFC:

ARTICLE I
Definitions and Interpretation

       Section 1.01. General Definitions. Wherever used in this Agreement, the
following terms have the meanings opposite them:

          “Accounting Principles” United States Generally Accepted Accounting
Principles (US-GAAP) promulgated by the Financial and Accounting Standards
Board, together with pronouncements thereon from time to time, and applied on a
consistent basis;           “Affiliate” any Person directly or indirectly
controlling, controlled by or under common control with, one or both of the
Co-Borrowers (for purposes of this definition, “control” means the power to
direct the management or policies of a Person, directly or indirectly, whether
through the ownership of shares or other securities, by contract or otherwise,
provided that the direct or indirect ownership of fifteen per cent. (15%) or
more of the voting share capital of a Person is deemed to constitute control of
that Person, and “controlling” and “controlled” have corresponding meanings);  
        “Alabang Store” the PSMT store located on property leased by PSPH in
Filinvest Corporate City, Alabang, Muntinlupa City, the Philippines, and covered
under TCT No. 6604 issued by the Registrar of Deeds of Muntinlupa City in the
name of Filinvest Alabang, Inc;           “Amending Agreement (Escrow)” the
amendment agreement dated on or about the date hereof between PSMT, The Bank of
New York and IFC amending certain of the terms and conditions of the Escrow
Account Agreement and providing for, amongst other things, an increase in the
Minimum Amount (as defined therein) so as to provide for twelve (12) months’
lease payments payable by PSPH for the Ortigas Store and the Alabang Store;    
      “Amending Agreement (Share Retention)” the amendment agreement dated on or
about the date hereof among the parties to the Share Retention Agreement and
PSMT Jamaica amending certain of the terms and conditions of the Share Retention
Agreement and providing for, amongst other things, certain share retention
obligations of PSMT in relation to PSPH and PSMT Jamaica;           “Amended
Escrow Account Agreement” the Escrow Account Agreement as amended by the
Amending Agreement (Escrow);           “Amended Share Retention Agreement” the
Share Retention Agreement as amended by the Amending Agreement (Share
Retention);

 

4                     “Annual Monitoring Report” a report substantially in the
form provided in Schedule 10 (Form of Annual Monitoring Report) (as the same may
be amended or supplemented from time to time);            “Aseana Store” the
PSMT store located on property leased by PSPH at Aseana Business Park, Barangay
Tambo, Parañaque City, Metro Manila, the Philippines;           “Auditors” Ernst
& Young in the case of PSMT and Punongbayan & Araullo in the case of PSPH or
such other firms as either Co-Borrower shall appoint from time to time as its
auditors pursuant to Section 6.01(d) (Affirmative Covenants);          
“Authority” any national, supranational, regional or local government or
governmental, administrative, fiscal, judicial, or government-owned body,
department, commission, authority, tribunal, agency or entity, or central bank
(or any Person, whether or not government owned and howsoever constituted or
called, that exercises the functions of a central bank);          
“Authorization” any consent, registration, filing, agreement, notarization,
certificate, license, approval, permit, authority or exemption from, by or with
any Authority, whether given by express action or deemed given by failure to act
within any specified time period and all corporate, creditors' and shareholders'
approvals or consents;           “Authorized Representative” any natural person
who is duly authorized by each Co-Borrower to act on its behalf for the purposes
specified in, and whose name and a specimen of whose signature appear on, the
Certificate of Incumbency and Authority most recently delivered by each
Co-Borrower to IFC;           “Base Fixed Rate” for each Disbursement, the rate
determined in accordance with Section 3.03(c) (Interest) and with the
methodology set out in Annex C (Methodology);            “Business Day” a day
when banks are open for business in New York, New York and Manila, the
Philippines or, solely for the purpose of determining the Disbursement Interest
Rate, London, England;           “Capital Lease Obligations” the obligations of
any Person as of the date of determination, to pay rent and other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on the balance sheet of such
Person pursuant to the Accounting Principles;           “Certificate of
Incumbency and Authority” a certificate provided to IFC by each of the
Co-Borrowers in the form of Schedule 1 (Form of Certificate of Incumbency and
Authority);

 

5                     “Charter” with respect to each Co-Borrower, its memorandum
and articles of association, by-laws or other constitutive document (as the case
may be);           “Congressional Store” the PSMT store located on property
leased by PSPH, located at 8888 Congressional Avenue, Ramon Magsaysay Bago
Bantay, Quezon City, the Philippines;           “Common Stock Purchase
Agreement” the common stock purchase agreement dated April 12, 2002 entered into
between PSMT and IFC providing for the terms and conditions pursuant to which
IFC shall purchase the common stock of PSMT;           “Derivative Transaction”
any swap agreement, cap agreement, collar agreement, futures contract, forward
contract or similar arrangement with respect to interest rates, currencies or
commodity prices;           “Disbursement” any Disbursement of the Loan;        
  “Disbursement Interest Rate” for each Disbursement, a rate of interest equal
to the sum of:             (i) the Spread; and             (ii) the Base Fixed
Rate;           “Dollars” and “$” the lawful currency of the United States of
America;           “E Class Corporation” a private company incorporated in the
Philippines with a thirty eight per cent. (38%) shareholding in PSPH as of the
date hereof;           “Environmental Compliance Certificate” any of the
environmental compliance certificates required to be obtained by PSPH pursuant
to the laws of the Philippines;           “Environmental, Health and Safety
Guidelines” the IFC General Health and Safety Guidelines, dated July 1998 and
the World Bank General Environmental Guidelines, dated July 1998, a copy of
which has been delivered to, and receipt of which has been acknowledged by, the
Co-Borrowers by letter dated January 14, 2002 and is incorporated herein by
reference;           “Environmental and Social Policies” the IFC Operational
Policy on Environmental Assessment (OP 4.01), dated October 1998 and the IFC
Policy Statement on Forced Labor and Harmful Child Labor, dated March 1998,
copies of which have been delivered to, and receipt of which has been
acknowledged by, the Co-Borrowers by letter dated January 14, 2002 and is
incorporated herein by reference;           “Environmental Side Letter” the side
letter agreement dated on or about the date hereof between PSMT, PSMT Jamaica
and IFC pursuant to which PSMT and PSMT Jamaica undertake to comply with certain
environmental covenants (as stated therein) in relation to PSMT’s operations in
Jamaica;

 

6                      “ERS” the Environmental Review Summary for PSPH dated
January 16, 2002 prepared by IFC and approved by the Co-Borrowers;          
“Event of Default” any one of the events specified in Section 7.02 (Events of
Default);           “Escrow Account” the escrow account set up and maintained
pursuant to the terms of the Amended Escrow Account Agreement;           “Escrow
Account Agreement” the Escrow Account Agreement dated January 26, 2001 entered
into between PSMT, The Bank of New York and IFC;           “First Metro
Investment Corporation” the wholly-owned investment subsidiary of the Metrobank
Group based in the Philippines with a ten per cent. (10%) shareholding in PSPH
as of the date hereof;           “Financial Plan” the proposed sources of
financing for the Project set out in Section 2.02(b) (Project Cost and Financial
Plan);           “Financial Year” the accounting year of PSMT which commences
each year on September 1 and ends on the following August 31, or such other
period as PSMT, with IFC’s consent, from time to time designates as its
accounting year;           “Fort Bonifacio Store” the PSMT store located on
property leased by PSPH at the corner of 32nd Street and 5th Avenue, Fort
Bonifacio Global City, Taguig, Metro Manila, the Philippines;           “IFC
Security” the security created by or pursuant to the Security Documents to
secure all amounts owing by the Co-Borrowers to IFC under this Agreement;      
     “Increased Costs” the amount certified in an Increased Costs Certificate to
be the net incremental costs of, or reduction in return to, IFC in connection
with the making or maintaining of the Loan that result from:             (i) any
change in any applicable law or regulation or directive (whether or not having
force of law) or in its interpretation or application by any Authority charged
with its administration; or             (ii) compliance with any request from,
or requirement of, any central bank or other monetary or other Authority which
in either case after the date of this Agreement:               (A) imposes,
modifies or makes applicable any reserve, special deposit or similar
requirements against assets held by, or deposits with or for the account of, or
loans made by IFC;               (B) imposes a cost on IFC as a result of IFC
having made the Loan or reduces the rate of return on the overall capital of IFC
that it would have achieved had IFC not made the Loan;                (C)
changes the basis of taxation on payments

 

7                           received by IFC in respect of the Loan (otherwise
than by a change in taxation in the overall net income of IFC); or              
(D) imposes on IFC any other condition regarding the making or maintaining of
the Loan;           “Increased Costs Certificate” a certificate provided from
time to time by IFC certifying the amount of, and circumstances giving rise to,
the Increased Costs;           “Interest Payment Date” June 15 and December 15
in any year;            “Interest Period” each period of six (6) months
beginning on an Interest Payment Date and ending on the day immediately before
the next following  Interest Payment Date, except in the case of the first
period applicable to each Disbursement when it means the period beginning on the
date on which that Disbursement is made and ending on the day immediately before
the next following Interest Payment Date;           “Interest Rate Setting Date”
for each Disbursement, the date on which the Base Fixed Rate is set in
accordance with Section 3.03(d) (Interest);           “Investment Policies” the
Investment Policies of PSMT dated November 1998 and provided to IFC by way of
facsimile on April 25, 2002;           “LAC Loan Agreements” the loan agreements
dated January 26, 2001 among PSMT, certain of its Affiliates and IFC, pursuant
to which IFC agreed to lend the aggregate amount of up to thirty two million
Dollars consisting of an A Loan in the amount of twenty-two million Dollars
($22,000,000) and a B Loan in the amount of ten million Dollars ($10,000,000);  
        “LIBOR” shall have the meaning set forth in Annex C (Methodology);      
    “Lien” any mortgage, pledge, charge, assignment, hypothecation, security
interest, title retention, preferential right, trust arrangement, right of
set-off, counterclaim or banker’s lien, privilege or priority of any kind having
the effect of security, any designation of loss payees or beneficiaries or any
similar arrangement under or with respect to any insurance policy or any
preference of one creditor over another arising by operation of law;          
“Loan” the loan specified in Section 3.01(The Loan) or, as the context requires,
its principal amount from time to time outstanding;           “Loan
Consolidation Date” the first Interest Payment Date after the Loan has been
fully disbursed (or the undisbursed balance of the Loan has been canceled
pursuant to Section 3.12 (Suspension or Cancellation by IFC) or Section 3.13
(Cancellation by the Co-Borrowers);           “Loan Currency” Dollars;

 

8                     “Loan Interest Rate” beginning on the Loan Consolidation
Date, the rate at which interest is payable on the Loan, as determined in
accordance with Section 3.03(f) (Interest);           “Material Adverse Effect”
a material adverse effect on:             (i) one or both Co-Borrowers, their
assets or properties;             (ii) the business prospects or financial
condition of one or both Co-Borrowers;             (iii) the implementation of
the Project, the Financial Plan or the carrying on of the business or operations
of one or both Co-Borrowers; or             (iv) the ability of the Co-Borrowers
to comply with their obligations under this Agreement or any other Transaction
Document;          

“Nimfa Villegas Litigation”

the litigation relating to the Congressional Store docketed as Civil Case
Number: Q-02-46304 entitled Nimfa E. Villegas v. Register of Deeds, et al, and
pending before the Regional Trial Court of the National Capital Judicial Region,
Branch 96, Quezon City, the Philippines;           “Official” any officer of a
political party or candidate for political office in the Philippines or any
officer or employee (i) of the government (including any legislative, judicial,
executive or administrative department, agency or instrumentality thereof) or
(ii) of a public international organization;           “Omnibus Agreement” the
agreement termed as such and comprised of this Agreement and the Security
Documents;           “Ortigas Store” the PSMT store located on property leased
by PSPH located at Ortigas Avenue Ext. Bgy. Sta. Rosario, Pasig City, the
Philippines, and covered under TCT No. PT-115821, issued by the Registrar of
Deeds of Pasig City in the name of Constress Philippines, Inc.;          
“Parallel Lender(s)” Metro Bank and other local banks satisfactory to IFC;      
    “Parallel Loan(s)” the loan(s) specified in the Parallel Loan Agreement(s),
or, as the context requires, the relevant principal amounts form time to time
outstanding;           “Parallel Loan Agreement(s)” the loan agreement(s)
entered or to be entered into between (each of) the Parallel Lender(s) and the
Co-Borrowers providing for the Parallel Loan(s);           “Peso” or “Php” the
lawful currency of the Philippines;           “Person” any natural person,
corporation, company, partnership, firm, voluntary association, joint venture,
trust, unincorporated organization, Authority or any other entity whether acting
in an individual, fiduciary or other capacity;           “Philippines” The
Republic of the Philippines;

 

9                     “Potential Event of Default” any event or circumstance
which would, with notice, lapse of time, the making of a determination or any
combination thereof, become an Event of Default;            “Preferred Shares”
those shares described as “8% Series A Cumulative Convertible Redeemable Series
A Preferred Stock” in (i) the Series A Preferred Stock and Warrant Purchase
Agreement dated January 15, 2002, between PSMT and Grupo Gigante, S.A. de C.V.,
and (ii) the Series A Preferred Stock and Warrant Purchase Agreement dated April
11, 2002 between PSMT and IFC;            “Prohibited Payments” any offer, gift,
payment, promise to pay or authorization of the payment of any money or anything
of value, directly or indirectly, to or for the use or benefit of any Official
(including to or for the use or benefit of any other Person if either of the
Co-Borrowers knows, or has reasonable grounds for believing, that the other
Person would use such offer, gift, payment, promise or authorization of payment
for the benefit of any such Official), for the purpose of influencing any act or
decision or omission of any Official in order to obtain, retain or direct
business to, or to secure any improper benefit or advantage for, either of the
Co-Borrowers, any of their Affiliates or any other Person; provided that any
such offer, gift, payment, promise or authorization of payment shall not be
considered a Prohibited Payment if, in IFC’s reasonable opinion, it (i) is
lawful under applicable written laws and regulations, or (ii) is made for the
purpose of expediting or securing the performance of a routine governmental
action (as such term is construed under applicable law);           “Project” the
project described in Section 2.01 (The Project);           “PSMT Jamaica”
PriceSmart Jamaica Limited, a private company incorporated as such under the
laws of Jamaica;           “Pledge Agreement” the pledge agreement dated on or
about the date pursuant to which PSMT pledges in favour of IFC its entire
shareholding in PSPH as security for the Loan;          

“Share Retention Agreement”

the Share Retention Agreement dated January 26, 2001 and entered into, amongst
others, PSMT and IFC;           “Security Documents” the documents providing for
the IFC Security consisting of:             (i) a first ranking mortgage over
the immovable assets (including leasehold rights relating thereto) and equipment
(and insurances thereon) of PSPH in the Ortigas Store and the Alabang Store;

 

10                        (ii) a first ranking chattel mortgage over the movable
assets of PSPH (and insurances thereon) in the Ortigas Store and the Alabang
Store;             (iii) a first ranking security interest over the Escrow
Account; and             (iv) the Pledge Agreement;           “Spread per annum”
three and one half per cent (3.5%);           “Subsidiary” with respect to any
Person, any entity:             (i) of whose capital at least fifty per cent.
(50%) is owned, directly or indirectly, by that Person;              (ii) for
which that Person may nominate or appoint a majority of the members of the board
of directors or such other body performing similar functions; or            
(iii) which is otherwise effectively controlled by that Person;          
“Taxes” any present or future taxes, withholding obligations, duties and other
charges of whatever nature levied by any Authority;          

“Transaction Documents” (i) the Omnibus Agreement;             (ii) the Common
Stock Purchase Agreement;               (iii) the Amended Share Retention
Agreement;             (iv) the Amended Escrow Account Agreement; and          
  (v) the Environmental Side Letter;            “World Bank” the International
Bank for Reconstruction and Development, an international organization
established by Articles of Agreement among its member countries.          
       Section 1.02. Financial Definitions. (a) Wherever used in this Agreement,
unless the context otherwise requires, the following terms have the meanings
opposite them:           “Back-to-Back Loans” bank loans or other advances from
PSMT or its Subsidiaries to its wholly-owned subsidiaries that are
collateralized by cash or cash-equivalent deposits of PSMT or its Subsidiaries;
          “Cash Generation” for any period, the aggregate of:             (i)
Consolidated Net Income after deduction of taxes, workers and employees’
participation in profits, and provisions for losses during the relevant period;
plus             (ii) depreciation and amortization for the relevant period;
plus/minus             (iii) net working capital applications; minus            
 (iv) any foreign exchange gain or loss or any other non-cash items included in
such net income after tax; plus

 

11                       (v) any deferred taxes or other non-cash changes or
provisions charged against Net Income; plus             (vi) to the extent that
the PSMT charges all pre-opening expenses in the year in which such expenses are
incurred, expenses related to the pre-opening of particular deep-discount
membership warehouses, owned and operated by either Co-Borrower;          
“Consolidated” or  “Consolidated Basis” (with respect to any financial
statements to be provided, or any financial calculation to be made, under or for
the purposes of  this Agreement and any other Transaction Document) the method
referred to in Section 1.03(d) (Financial Calculations); and the entities whose
accounts are to be consolidated with the accounts of the PSMT including all of
its Subsidiaries;           “Current Assets” as of the relevant date of
calculation, Consolidated cash (including cash in the Escrow Account),
marketable securities, trade and other receivables realizable within one year,
prepaid expenses which are to be charged to income within one year, but
excluding funds from any disbursement of the Loan and other Project loans
temporarily on hand pending application to the Project;            “Current
Liabilities” as of the relevant date of calculation, Consolidated liabilities
falling due on demand or within one year (including the portion of Long-term
Debt falling due within one year), but excluding liabilities for the Project to
the extent they are to be paid off with the proceeds of the Loan and any other
Project loans that were excluded from the calculation of Current Assets;        
  “Current Ratio” the result obtained by dividing Current Assets by Current
Liabilities;            “Debt” the aggregate of all obligations (whether actual
or contingent) but (excluding Back-to-Back Loans) of the Co-Borrowers to pay or
repay money (other than that constituting trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices,
operating lease obligations and other items commonly considered current payables
under Accounting Principles) including, without limitation:             (i) all
Indebtedness for Borrowed Money;             (ii) the aggregate amount then
outstanding of all liabilities of any party to the extent the Co-Borrowers
guarantees them or otherwise directly or indirectly obligates itself to pay
them;              (iii) all liabilities of the Co-Borrowers (actual or
contingent) under any conditional sale or a transfer with recourse or obligation
to repurchase, including, without limitation, by way of discount or factoring of
book debts or receivables; and             (iv) all liabilities of the
Co-Borrowers (actual or contingent) under their respective Charters, any
resolution of its shareholders, or any agreement or other document binding on
the Co-Borrowers to redeem any of its shares

 

12                       (v) all Capital Lease Obligations of the Co-Borrowers;
         

“Debt to Equity Ratio”

the result obtained by dividing Debt by Shareholders’ Equity;          
“Indebtedness for Borrowed Money ” all obligations (excluding Back-to-Back
Loans) of the Co-Borrowers to repay money (other than that constituting trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices, operating lease obligations and other items
commonly considered current payables under Accounting Principles) including,
without limitation, with respect to:             (i) borrowed money;            
 (ii) the outstanding principal amount of any bonds, debentures, notes, loan
stock, commercial paper, acceptance credits, bills or promissory notes drawn,
accepted, endorsed or issued by the Co-Borrowers;             (iii) any credit
to the Co-Borrowers from a supplier of goods or services under any installment
purchase or other similar arrangement with respect to goods or services (except
trade accounts that are payable in the ordinary course of business and included
in Current Liabilities);              (iv) non-contingent obligations of the
Co-Borrowers to reimburse any other Person with respect to amounts paid by that
Person under a letter of credit or similar instrument (excluding any letter of
credit or similar instrument issued for the benefit of the Co-Borrowers with
respect to trade accounts that are payable in the ordinary course of business
and included in Current Liabilities);             (v) amounts raised under any
other transaction having the financial effect of a borrowing and which would be
classified as a borrowing (and not as an off-balance sheet financing) under the
Accounting Principles including, without limitation, under leases or similar
arrangements entered into primarily as a means of financing the acquisition of
the asset leased;             (vi) the amount of the Co-Borrowers’ obligations
pursuant to Derivative Transactions entered into in connection with other Debt
of the Co-Borrowers, provided that for the avoidance of double counting and for
so long as any such Derivative Transaction is in effect, that Debt will be
included in Indebtedness for Borrowed Money pursuant to the terms of the
relevant Derivative Transaction and not the terms of the agreement providing for
that Debt when it was incurred; and             (vii) any premium payable on a
mandatory redemption or replacement of any of the foregoing obligations;        
  “Interest Expense” as of the relevant date of calculation, all interest
(excluding interest on Back-to-Back Loans) and charges paid or payable by the
Co-

 

13                       Borrowers, on the aggregate Indebtedness for Borrowed
Money during the period immediately preceding the date of calculation;          
“Long-term Debt” that part of the Debt or Consolidated Indebtedness for Borrowed
Money (excluding Back-to-Back Loans) the final maturity of which, by its terms
or the terms of any agreement relating to it, falls due more than one year after
the date of its incurrence;           “Long-term Debt Service
Coverage Ratio” the ratio obtained by dividing:             (i) the sum of the
Cash Generation for the Financial Year preceding the date of calculation;      
        by             (ii) the Long-term Debt Service Payments (principal and
interest) due for payment in the Financial Year having the highest scheduled
total annual Consolidated Long-term Debt principal payments by the Co-Borrowers
during the life of the Loan;           “Long-term Debt  Service Payments” as of
the relevant date for calculation, for the Co-Borrowers, the aggregate of:      
      (i) the amount of the payments of principal of all Long-term Debt (in
accordance with the respective terms thereof) during the period for which the
calculation is being made; and             (ii) the Interest Expense for such
period;           “Long-term Debt
to Equity Ratio” the result obtained by dividing Long-term Debt by Shareholders’
Equity;            “Net Fixed Assets” the aggregate amount of assets which at
any time would be reflected as Net Fixed Assets of the Co-Borrowers (taken as a
whole) on the balance sheet of the Co-Borrowers prepared in accordance with
Accounting Principles;             “Net Income” as of the relevant date for
calculation, the difference between revenues generated through the sale of goods
delivered and services rendered, and the costs incurred in the process of
production and delivery of those goods and services, during any Financial Year.
(At IFC’s sole discretion, extraordinary items, like goodwill and others, will
be excluded from the above calculation, and reasonable expense provisioning for
doubtful collection of receivables and inventory obsolescence will be included
in the above calculation.);

 

14                      “Net Working Capital” the amount by which Current Assets
exceed Current Liabilities, but for this purpose excluding from the Current
Liabilities the portion of Long-term Debt falling due within one year of the
relevant date for calculation;           “Non-Cash Items” for any period, the
net aggregate amount (which may be a positive or negative number) of all
non-cash expenses and non-cash credits which have been subtracted or, as the
case may be, added in calculating net income during that period, including,
without limitation, depreciation, amortization, deferred taxes, provisions for
severance pay of staff and workers, and credits resulting from revaluation of
the assets’ book value;           “Shareholders’ Equity” the aggregate of:      
      (i) the amount paid up or credited as paid up on the share capital of the
Co-Borrowers; and              (ii) the amount standing to the credit of the
reserves of the Co-Borrowers (including, without limitation, any share premium
account, capital redemption reserve funds and any credit balance on the
accumulated profit and loss account);             after deducting from that
aggregate (A) any debit balance on the profit and loss account or impairment of
the issued share capital of the Co-Borrowers (except to the extent that
deduction with respect to that debit balance or impairment has already been
made), (B) amounts set aside for dividends or taxation (including deferred
taxation), and (C) amounts attributable to capitalized items such as goodwill,
trademarks, deferred charges, licenses, patents and other intangible assets; and
           “Short-term Debt” all Consolidated Indebtedness for Borrowed Money
(as of the relevant date of calculation) other than Consolidated Long-term Debt.
         

       Section 1.03. Financial Calculations. (a) All financial calculations to
be made under, or for the purposes of, this Agreement and any other Transaction
Document shall be determined in accordance with the Accounting Principles and,
except as otherwise required to conform to any provision of this Agreement,
shall be calculated from the then most recently issued quarterly financial
statements which the Co-Borrowers are obligated to furnish to IFC under Section
6.03(a) (Reporting Requirements).

       (b)       Where quarterly financial statements are used for the purpose
of making certain financial calculations and those statements are with respect
to the last quarter of a Financial Year then, at IFC’s option, those
calculations may instead be made from the audited financial statements for the
relevant Financial Year.

       (c)       If any material adverse change in the financial condition of
either Co-Borrowers has occurred after the end of the period covered by the
financial statements used to make the relevant financial calculations, that
material adverse change shall also be taken into account in calculating the
relevant figures.

       (d)       If a financial calculation is to be made under or for the
purposes of this Agreement or any other Transaction Document on a Consolidated
Basis, that calculation shall be made by reference to the sum of all amounts of
similar nature reported in the relevant financial

15

 

statements of each of the entities whose accounts are to be consolidated with
the accounts of the Co-Borrowers plus or minus the consolidation adjustments
customarily applied to avoid double counting of transactions among any of those
entities, including the Co-Borrowers.

       Section 1.04. Interpretation. In this Agreement, unless the context
otherwise requires:

       (a)       headings are for convenience only and do not affect the
interpretation of this Agreement;

       (b)       words importing the singular include the plural and vice versa;

       (c)       a reference to an Annex, Article, party, Schedule or Section is
a reference to that Article or Section of, or that Annex, party or Schedule to,
this Agreement;

       (d)       a reference to a document includes an amendment or supplement
to, or replacement or novation of, that document but disregarding any amendment,
supplement, replacement or novation made in breach of this Agreement;

       (e)       a reference to a party to any document includes that party’s
successors and permitted assigns; and

       (f)       any references in this Agreement to this Agreement or to any
other agreement or document shall be construed as a reference to this Agreement
or such other agreement or document including all schedules, annexes or exhibits
thereto.        

       Section 1.05. Business Day Adjustment. When the day on or by which a
payment is due to be made is not a Business Day, that payment shall be made on
or by the next succeeding Business Day. Interest, fees and charges (if any)
shall continue to accrue for the period from the due date that is not a Business
Day to that next succeeding Business Day.

ARTICLE II

The Project, Project Cost and Financial Plan

     Section 2.01. The Project. The project to be financed consists of the
construction, equipping and placing into operation and the provision of working
capital for five (5) deep discount membership-shopping warehouses to be located
in Metro Manila, the Philippines as further described in the letter of
information dated 14 February 2002 provided to IFC by the Co-Borrowers.

     Section 2.02. Project Cost and Financial Plan. (a) The total estimated cost
of the Project, including an increase of not less than the equivalent of seven
million five hundred thousand Dollars ($7,500,000) for working capital, is the
equivalent of forty eight million two hundred thousand Dollars ($48,200,000), as
follows:

--------------------------------------------------------------------------------

Project Cost  US$ Millions    %  

--------------------------------------------------------------------------------

Building and construction       25.2                52                    
Furniture, fixtures and equipment   12.0       25                   Pre-opening
expenses   3.5       7                   Working capital   7.5       16      

--------------------------------------------------------------------------------

     

--------------------------------------------------------------------------------

  Total Project Cost   48.2       100.0  

--------------------------------------------------------------------------------

16

 

(b) The proposed sources of financing for the Project are as follows:

           

--------------------------------------------------------------------------------

> > Financial Plan

US$ Millions   %

--------------------------------------------------------------------------------

DEBT               IFC Loan     12.5                26     Parallel Lenders  
11.5       24  

--------------------------------------------------------------------------------

EQUITY PSMT   12.6       26   E-Class Corporation   9.2       19   First Metro
Investment Corporation   2.4       5   Total Financing   48.2       100.0  

--------------------------------------------------------------------------------

 

ARTICLE III

The Loan

       Section 3.01. The Loan. Subject to the provisions of this Agreement, IFC
agrees to lend, and the Co-Borrowers agree to jointly and severally borrow, the
Loan being twelve million five hundred thousand Dollars ($12,500,000).

       Section 3.02. Disbursement Procedure. (a) The Co-Borrowers shall request
Disbursements by delivering to IFC, at least ten (10) Business Days prior to the
proposed date of the Disbursement, a Disbursement request substantially in the
form of Schedule 2 (Form of Request for Disbursement) and a receipt
substantially in the form of Schedule 3 (Form of Loan Disbursement Receipt).

       (b)       Each Disbursement shall be made by IFC at a bank in New York,
New York for further credit to PSPH’s accounts at a bank in the Philippines, or,
in IFC’s sole discretion, directly to PSPH’s account at a bank in the
Philippines, or at any other place acceptable to IFC, all as specified by the
Co-Borrowers in the relevant Disbursement request.

       (c)       Each Disbursement (other than the last one) shall be made in an
amount of not less than one million Dollars ($1,000,000).

Section 3.03. Interest. Subject to the provisions of Section 3.04 (Default Rate
Interest), the Co-Borrowers shall pay interest on the Loan in accordance with
this Section 3.03:

       (a)       Interest on any Disbursement or, as the case may be, the Loan
shall accrue from day to day, be pro-rated on the basis of a 360-day year for
the actual number of days in the relevant Interest Period and be payable in
arrears on the Interest Payment Date immediately following the end of that
Interest Period; provided that with respect to any Disbursement made less than
fifteen (15) days before an Interest Payment Date, interest on that Disbursement
shall be payable commencing on the second Interest Payment Date following the
date of that Disbursement.

17

 

       (b)       Up to the Loan Consolidation Date, the Co-Borrowers shall pay
interest on the amount of each Disbursement outstanding from time to time at the
Disbursement Interest Rate applicable to that Disbursement.

       (c)       For the purpose of determining the Disbursement Interest Rate
applicable to each Disbursement, IFC shall, on the relevant Interest Rate
Setting Date, determine the Base Fixed Rate for that Disbursement using the
methodology set out in Annex C (Methodology), add the Spread and promptly notify
the Co-Borrowers of the Disbursement Interest Rate applicable to that
Disbursement.

       (d)       For each Disbursement, the Co-Borrowers shall specify the date
on which to determine the applicable Base Fixed Rate, which date shall be two
(2) Business Days before the proposed date of such Disbursement. In the event
the conditions of disbursement relevant to that Disbursement have not been
fulfilled to IFC’s satisfaction or have been waived by IFC by the rate-setting
date specified in the relevant request for Disbursement, then, after the
relevant conditions of disbursement have been fulfilled to IFC’s satisfaction or
have been waived by IFC, the Co-Borrowers shall specify a new date on which to
determine the Base Fixed Rate, which shall be two (2) Business Days before the
new proposed date of the requested Disbursement.

       (e)       The Co-Borrowers may at any time in connection with any
proposed Disbursement (but not more than once in any calendar month) request
from IFC an indication of what the Disbursement Interest Rate would be for such
a Disbursement as of the date of that request. As promptly as practicable after
that request, IFC shall advise the Co-Borrowers of the indicative Disbursement
Interest Rate.

       (f)       Beginning on the Loan Consolidation Date, the Co-Borrowers
shall pay interest at the Loan Interest Rate on the full amount of the Loan
outstanding from time to time. The “Loan Interest Rate” shall be the rate
calculated by IFC equal to the weighted average of the Loan Disbursement
Interest Rates, the weighting being based on the principal amount of each
Disbursement in relation to the entire principal amount of the Loan and the
average being rounded up to the nearest two decimal places. IFC shall determine
the Loan Interest Rate not less than two (2) Business Days before the Loan
Consolidation Date and promptly notify the Co-Borrowers of that rate.

       (g)       The determination by IFC of each Disbursement Interest Rate or
the Loan Interest Rate, as the case may be, shall be final and conclusive and
shall bind the Co-Borrowers (unless the Co-Borrowers can show to IFC’s
satisfaction that the determination involves manifest error).

       Section 3.04. Default Rate Interest. (a) Without limiting the remedies
available to IFC under this Agreement or otherwise (and to the maximum extent
permitted by applicable law), if the Co-Borrowers fail to make any payment of
principal or interest (including interest payable pursuant to this Section) or
any other payment provided for in Section 3.07 (Fees) when due as specified in
this Agreement (whether at stated maturity or upon acceleration), the
Co-Borrowers shall pay interest on the amount of that payment due and unpaid at
the rate which shall be the sum of two per cent. (2%) per annum and the Loan
Interest Rate on or after the Loan Consolidation Date.

       (b)       If a payment default referenced in Section 3.04(a) occurs prior
to the Loan Consolidation Date, then the Co-Borrowers shall pay interest on (i)
any unpaid amount of principal or interest (including interest payable pursuant
to this Section) relating to a particular Disbursement at the rate which shall
be sum of two per cent. (2%) per annum and the corresponding Disbursement
Interest Rate; and (ii) on any other unpaid amount at the rate which shall be
sum of two per cent. (2%) per annum and the Disbursement Interest Rate
applicable to the first Disbursement.

18

 

       (c)       Interest at the rate referred to in Section 3.04(a) shall
accrue from the date on which payment of the relevant overdue amount became due
until the date of actual payment of that amount (as well after as before
judgment), and shall be payable on demand or, if not demanded, on each Interest
Payment Date falling after any such overdue amount became due.

       Section 3.05. Repayment. (a) The Co-Borrowers shall repay the Loan on the
following dates and in the following amounts:

     

> Date Payment Due

Principal Amount Due ($)

--------------------------------------------------------------------------------

June 15, 2005 833,333.00  

--------------------------------------------------------------------------------

December 15, 2005 833,333.00  

--------------------------------------------------------------------------------

June 15, 2006 833,333.00  

--------------------------------------------------------------------------------

December 15, 2006 833,333.00  

--------------------------------------------------------------------------------

June 15, 2007 833,333.00  

--------------------------------------------------------------------------------

December 15, 2007 833,333.00  

--------------------------------------------------------------------------------

June 15, 2008 833,333.00  

--------------------------------------------------------------------------------

December 15, 2008 833,333.00  

--------------------------------------------------------------------------------

June 15, 2009 833,333.00  

--------------------------------------------------------------------------------

December 15, 2009 833,333.00  

--------------------------------------------------------------------------------

June 15, 2010 833,333.00  

--------------------------------------------------------------------------------

December 15, 2010 833,333.00  

--------------------------------------------------------------------------------

June 15, 2011 833,333.00  

--------------------------------------------------------------------------------

December 15, 2011 833,333.00  

--------------------------------------------------------------------------------

June 15, 2012 333,338.00  

--------------------------------------------------------------------------------

 

       (b)       The dates for repayment of principal of the Loan are intended
to coincide with Interest Payment Dates.

       (c)       Upon each Disbursement, the amount disbursed shall be allocated
for repayment on each of the respective dates for repayment of principal set out
in the table in Section 3.05(a) in amounts which are pro rata to the amounts of
the respective installments shown opposite those dates in those tables (with IFC
adjusting these allocations as necessary so as to achieve whole numbers in each
case).

       Section 3.06. Prepayment. Subject to Section 3.10(b) (Increased Costs),
Section 3.14 (Taxes), Section 3.15 (Expenses), Section 6.01(Affirmative
Covenants) and Section 6.04(c) (Insurance):

       (a)       the Co-Borrowers may prepay on any Interest Payment Date all or
any part of the Loan, on not less than thirty (30) days’ and not more than sixty
(60) days’ prior notice to IFC, but only if:

19

 

  (i) the Co-Borrowers simultaneously pay:               (A) the prepayment
premium specified in Section 3.06(b); and               (B) all accrued interest
and Increased Costs (if any) on the amount of the Loan to be prepaid, together
with all other amounts then due and payable under this Agreement, including the
amount payable under Section 3.11 (Unwinding Costs), if the prepayment is not
made on an Interest Payment Date;             (ii) for a partial prepayment,
that prepayment is in an amount not less than one million Dollars ($1,000,000);
and             (iii) if requested by IFC, the Co-Borrowers have delivered to
IFC, prior to the date of prepayment, evidence satisfactory to IFC that all
necessary Authorizations with respect to the prepayment have been obtained.    
     

       (b)       On the date of any prepayment of the Loan in accordance with
Section 3.06(a), the Co-Borrowers shall pay a prepayment premium consisting of
an amount in Dollars equal to, at the Co-Borrowers’ option, either: (i) one and
one-half per cent (1½%) of the prepaid amount multiplied by the number of years
from the prepayment date to the scheduled final maturity date of the Loan; or
(ii) IFC’s redeployment cost as determined by IFC in accordance with the
methodology set out in Section (B) of Annex C (Methodology). The determination
by IFC of the prepayment premium shall be final and conclusive and bind the
Co-Borrowers (unless the Co-Borrowers show, to the satisfaction of IFC, that
such determination involved manifest error).

       (c)       Amounts of principal prepaid under this Section shall be
applied by IFC to all the respective outstanding installments of principal of
the Loan on a pro-rata basis.

       (d)       Upon delivery of a notice in accordance with Section 3.06(a),
the Co-Borrowers shall make the prepayment in accordance with the terms of that
notice.

       (e)       Any principal amount of the Loan prepaid under this Agreement
may not be re-borrowed.

       Section 3.07. Fees. (a) The Co-Borrowers shall pay to IFC a commitment
fee at the rate of one-half of one per cent. (½%) per annum on that part of the
Loan which from time to time has not been disbursed or canceled. The commitment
fee shall:

  (i) begin to accrue on the date of this Agreement;             (ii) be pro
rated on the basis of a 360-day year for the actual number of days elapsed; and
            (iii) be payable semi-annually, in arrears, on the Interest Payment
Dates in each year, the first such payment to be due on June 15, 2005.

       (b)       The Co-Borrowers shall also pay to IFC a front-end fee on the
Loan of one hundred eighty seven thousand five hundred Dollars ($187,500), to be
paid upon the earlier of (x) the date which is thirty (30) days after the date
of this Agreement and (y) the date immediately preceding the date of the first
Disbursement;

       Section 3.08. Currency and Place of Payments. (a) The Co-Borrowers shall
make all payments of principal, interest, fees, and any other amount due to IFC
under this Agreement in the Loan Currency, in same day funds, to the account of
IFC at Citibank N.A., 111 Wall Street, New York, New York, U.S.A.,
ABA#021000089, for credit to IFC’s account number 36085579, or at such other
bank or account in New York as IFC from time to time designates. Payments must
be received in IFC’s designated account no later than 1:00 p.m. New York time.

20

 

       (b)       The tender or payment of any amount payable under this
Agreement (whether or not by recovery under a judgment) in any currency other
than the Loan Currency shall not novate, discharge or satisfy the obligation of
the Co-Borrowers to pay in the Loan Currency all amounts payable under this
Agreement except to the extent that (and as of the date when) IFC actually
receives funds in the Loan Currency in the account specified in, or pursuant to,
Section 3.08(a).

       (c)       The Co-Borrowers shall indemnify IFC against any losses
resulting from a payment being received or an order or judgment being given
under this Agreement in any currency other than the Loan Currency or any place
other than the account specified in, or pursuant to, Section 3.08(a). The
Co-Borrowers shall, as a separate obligation, pay such additional amount as is
necessary to enable IFC to receive, after conversion to the Loan Currency at a
market rate and transfer to that account, the full amount due to IFC under this
Agreement in the Loan Currency and in the account specified in, or pursuant to,
Section 3.08(a).

       (d)       Notwithstanding the provisions of Section 3.08(a) and Section
3.08(b), IFC may require the Co-Borrowers to pay (or reimburse IFC) for any
Taxes, fees, costs, expenses and other amounts payable under Section 3.14(a)
(Taxes) and Section 3.15 (Expenses) in the currency in which they are payable,
if other than the Loan Currency.

       Section 3.09. Allocation of Partial Payments. If at any time IFC receives
less than the full amount then due and payable to it under this Agreement, IFC
may allocate and apply the amount received in any way or manner and for such
purpose or purposes under this Agreement as IFC in its sole discretion
determines, notwithstanding any instruction that the Co-Borrowers may give to
the contrary.

       Section 3.10. Increased Costs. (a) On each Interest Payment Date, the
Co-Borrowers shall pay, in addition to interest, the amount which IFC from time
to time notifies to the Co-Borrowers in an Increased Costs Certificate as being
the aggregate Increased Costs of IFC accrued and unpaid prior to that Interest
Payment Date.

       (b)       If the Co-Borrowers are required to pay any Increased Costs
pursuant to sub-section (a) above, they may prepay, in whole but not in part,
that part of the Loan with respect to which the Increased Costs are being
incurred. Such prepayment shall be made in accordance with Section 3.06
(Prepayment) except that the provisions with respect to the minimum prepayment
amount set forth in Section 3.06(a)(ii), the prepayment premium set forth in
Section 3.06(b) and the allocation of the principal amount prepaid set forth in
Section 3.06(c) shall not apply.

       Section 3.11. Unwinding Costs. (a) If IFC incurs any cost, expense or
loss as a result of the Co-Borrowers failing to borrow in accordance with a
request for Disbursement made pursuant to Section 3.02 (Disbursement Procedure),
or to prepay in accordance with a notice of prepayment then the Co-Borrowers
shall immediately pay to IFC the amount which IFC from time to time notifies to
the Co-Borrowers as being the amount of those costs, expenses and losses
incurred.

       (b)       For the purposes of this Section, “costs, expenses or losses”
include any premium, penalty or expense incurred to liquidate or obtain third
party deposits or borrowings in order to make, maintain or fund all or any part
of the Loan.

       Section 3.12. Suspension or Cancellation by IFC. (a) IFC may, by notice
to the Co-Borrowers, suspend the right of the Co-Borrowers to Disbursements or
cancel the undisbursed portion of the Loan in whole or in part:

  (i) if the first Disbursement has not been made by September 30, 2002;

21

 

  (ii) if the right of IFC to any subscription under the Common Stock Purchase
Agreement is suspended or canceled pursuant to the provisions of the Common
Stock Purchase Agreement;              (iii) if any Event of Default has
occurred and is continuing or if the Event of Default specified in Section
7.02(g) (Events of Default) is, in the reasonable opinion of IFC, imminent;    
        (iv) if any event or condition has occurred which has or can be
reasonably expected to have a Material Adverse Effect; or             (v) on or
after August 31, 2004.

       (b)       Upon the giving of any such notice, the right of the
Co-Borrowers to any further Disbursements shall be suspended or canceled, as the
case may be. The exercise by IFC of its right of suspension shall not preclude
IFC from exercising its right of cancellation, either for the same or any other
reason specified in Section 3.12(a). Upon any cancellation the Co-Borrowers
shall, subject to paragraph (d) of this Section 3.12, pay to IFC all fees and
other amounts accrued (whether or not then due and payable) under this Agreement
up to the date of that cancellation. A suspension shall not limit any other
provision of this Agreement.

       (c)       Any portion of the Loan that is canceled under this Section
3.12 may not be re-borrowed.

       (d)       In the case of partial cancellation of the Loan pursuant to
paragraph (a) of this Section 3.12, or Section 3.13(a) (Cancellation by the
Co-Borrowers), interest on the amount then outstanding of the Loan remains
payable as provided in Section 3.03 (Interest).

       Section 3.13. Cancellation by the Co-Borrowers. (a) The Co-Borrowers may,
by notice to IFC, irrevocably request IFC to cancel the undisbursed portion of
the Loan on the date specified in that notice (which shall be a date not earlier
than thirty (30) days after the date of that notice).

       (b)       IFC shall, by notice to the Co-Borrowers, cancel the
undisbursed portion of the Loan effective as of that specified date if, subject
to Section 3.12(d):

  (i) IFC has received all fees and other amounts accrued (whether or not then
due and payable) under this Agreement up to such specified date; and            
 (ii) if any amount of the Loan is then outstanding, IFC is reasonably satisfied
that the Co-Borrowers has sufficient long-term funding available, on terms
satisfactory to IFC, to cause the Project to proceed as scheduled.

       (c)       Any portion of the Loan that is canceled under this Section
3.13 may not be re-borrowed.

       Section 3.14. Taxes. (a) The Co-Borrowers shall pay or cause to be paid
all Taxes other than taxes, if any, payable on the overall income of IFC on or
in connection with the payment of any and all amounts due under this Agreement
that are now or in the future levied or imposed by any Authority of the Country
or by any organization of which the Country is a member or any jurisdiction
through or out of which a payment is made.

       (b)       All payments of principal, interest, fees and other amounts due
under this Agreement shall be made without deduction for or on account of any
Taxes.

       (c)       If the Co-Borrowers are prevented by operation of law or
otherwise from making or causing to be made those payments without deduction,
the principal or (as the case may be) interest, fees or other amounts due under
this Agreement shall be increased to such amount as may be necessary so that IFC
receives the full amount it would have received (taking into account any Taxes
payable on amounts payable by the Co-Borrowers under this subsection) had those
payments been made without that deduction.

22

 

       (d)       If Section 3.14(c) applies and IFC so requests, the
Co-Borrowers shall deliver to IFC official tax receipts evidencing payment (or
certified copies of them) within thirty (30) days of the date of that request.

       (e)       If the Co-Borrowers are required to gross up any Taxes pursuant
to sub-section (a) above, they may prepay, in whole but not in part, that part
of the Loan with respect to which the gross up obligations are being incurred.
Such prepayment shall be made in accordance with Section 3.06 (Prepayment)
except that the provisions with respect to the minimum prepayment amount set
forth in Section 3.06(a)(ii), the prepayment premium set forth in Section
3.06(b) and the allocation of the principal amount prepaid set forth in Section
3.06(c) shall not apply.

       Section 3.15. Expenses. (a) The Co-Borrowers shall pay or, as the case
may be, reimburse IFC or its assignees any amount paid by them on account of,
all taxes (including stamp taxes), duties, fees or other charges payable on or
in connection with the execution, issue, delivery, registration or notarization
of the Transaction Documents and any other documents related to this Agreement
or any other Transaction Document.

       (b)       The Co-Borrowers shall pay to IFC or as IFC may direct:

  (i) the fees and expenses of IFC’s technical and market consultants incurred
in connection with the investment by IFC provided for under this Agreement;    
         (ii) the fees and expenses of IFC’s counsel in the Philippines and
elsewhere (as IFC shall notify the Co-Borrowers) incurred in connection with:  
            (A) the preparation of the investment by IFC provided for under this
Agreement and any other Transaction Document;               (B) the preparation
and/or review, execution and, where appropriate, translation and registration of
the Transaction Documents and any other documents related to them;              
(C) the giving of any legal opinions required by IFC under this Agreement and
any other Transaction Document;               (D) the administration by IFC of
the investment provided for in this Agreement or otherwise in connection with
any amendment, supplement or modification to, or waiver under, any of the
Transaction Documents;               (E) the registration (where appropriate)
and the delivery of the evidences of indebtedness relating to the Loan and its
disbursement; and               (F) the occurrence of any Event of Default or
Potential Event of Default;             (iii) in 2002 and in each calendar year
thereafter upon receipt of a statement from IFC, the amount of ten thousand
Dollars ($10,000) on account of IFC’s expenses in carrying out its annual
supervision review of the Co-Borrowers and the Project; and             (iv) the
costs and expenses incurred by IFC in relation to efforts to enforce or protect
its rights under any Transaction Document, or the exercise of its rights or
powers consequent upon or arising out of the occurrence of any Event of Default
or Potential Event of Default, including legal and other professional
consultants’ fees on a full indemnity basis.

    

     

     

     

     

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ARTICLE IV

Representations and Warranties

       Section 4.01. Representations and Warranties. Each Co-Borrower represents
and warrants for itself and for and on behalf of the other that:

       (a)       in the case of PSMT, it is a company duly incorporated and
validly existing under the laws of the State of Delaware, United States of
America, and in the case of PSPH it is a company duly incorporated and validly
existing under the laws of the Philippines, and each has the corporate power,
and has obtained all required Authorizations, to own its assets, conduct its
business as presently conducted and to enter into, and comply with its
obligations under, the Transaction Documents to which it is a party;

       (b)       each Transaction Document to which the it is a party has been
duly authorized and executed by it and constitutes its valid and legally binding
obligation enforceable in accordance with its terms;

       (c)       neither the making of any Transaction Document to which it is a
party nor (when all the Authorizations referred to in Section
5.01(e) (Conditions of Disbursement) have been obtained) the compliance with its
terms will conflict with or result in a breach of any of the terms, conditions
or provisions of, or constitute a default or require any consent under, any
indenture, mortgage, agreement or other instrument or arrangement to which it is
a party or by which it is bound, or violate any of the terms or provisions of
the its Charter or any Authorization, judgment, decree or order or any statute,
rule or regulation applicable to it;

       (d)        to the best of the its knowledge, after due inquiry:

             (i) the Authorizations specified in Annex A (Co-Borrowers/Project
Authorizations) are all the Authorizations (other than Authorizations that are
of a routine nature and are obtained in the ordinary course of business) needed
by PSPH to conduct its business, carry out the Project and execute, and comply
with its obligations under, this Agreement and each of the other Transaction
Documents to which it is a party;             (ii) all Authorizations specified
in Section (1) of Annex A (Co-Borrowers/Project Authorizations) have been
obtained and are in full force and effect; and             (iii) the
Co-Borrowers have applied (or are making arrangements to apply) for all
Authorizations specified in Section (2) of Annex A (Co-Borrowers/Project
Authorizations), and have no reason to believe that they will not obtain those
Authorizations in a timely manner;          

       (e)       PSMT’s Charter has not been amended since August 29, 1997 and
PSPH’s Charter has not been amended since September 6, 2000;

       (f)       neither Co-Borrower nor any of their respective property enjoys
any right of immunity from set-off, suit or execution with respect to its assets
or its obligations under any Transaction Document;

       (g)       PSMT owns fifty- two per cent. (52%) of the issued share
capital of PSPH as at the date hereof;

       (h)       since February 28, 2002, neither Co-Borrower:

  (i) has suffered any change that has a Material Adverse Effect or incurred any
substantial loss or liability;             (ii) has undertaken or agreed to
undertake any substantial obligation outside of the ordinary course of business;
         

24

 

       (i)       the Consolidated financial statements of PSMT and
unconsolidated financial statements of PSPH for the period ending on February
28, 2002:

  (i) have been prepared in accordance with the Accounting Principles, and
present fairly the financial condition of each Co-Borrower as of the date on
which they were prepared and the results of each Co-Borrower’s operations during
the period then ended;             (ii) disclose all liabilities (contingent or
otherwise) of the Co-Borrowers, and the reserves, if any, for such liabilities
and all unrealized or anticipated liabilities and losses arising from
commitments entered into by the Co-Borrowers (whether or not such commitments
have been disclosed in such financial statements);          

       (j)       neither Co-Borrower is a party to, or committed to enter into,
any contract which would or might affect the judgment of a prospective investor
;

       (k)       there are no outstanding Liens on any of PSPH’s assets other
than (i) Liens arising by operation of law, (ii) a mortgage in favour of
Metrobank on the Fort Bonifacio Store, and (iii) Liens, if any, allowed under
Section 6.02(g)(ii) (Negative Covenants), and no contracts or arrangements,
conditional or unconditional, exist for the creation by PSPH (or PSMT as the
case may be) of any other Lien except for the IFC Security;

       (l)       all tax returns and reports of the Co-Borrowers required by law
to be filed have been duly filed and all Taxes, obligations, fees and other
governmental charges upon the Co-Borrowers, or their properties, or their income
or assets, which are due and payable or to be withheld, have been paid or
withheld, other than those presently payable without penalty or interest;

       (m)       neither Co-Borrower is engaged in nor, to the best of its
knowledge, after due inquiry, threatened by, any litigation, arbitration or
administrative proceedings, the outcome of which could reasonably be expected to
have a Material Adverse Effect other than the ongoing Nimfa Villegas Litigation;

       (n)       to the best of its knowledge and belief, after due inquiry,
neither Co-Borrower is in violation of any statute or regulation of any
Authority;

       (o)       no judgment or order has been issued which has or may
reasonably be expected to have a Material Adverse Effect; and

       (p)       except as identified in the ERS:

  (i) to the best of its knowledge and belief, after due inquiry, neither
Co-Borrower is in violation of any of the Environmental, Health and Safety
Guidelines or of the Environmental and Social Policies; and             (ii)
neither Co-Borrower has received or is aware of any complaint, order, directive,
claim, citation or notice from any Authority with respect to any matter of the
Co-Borrowers’ compliance with the relevant environmental, health and safety laws
and regulations in effect in the Philippines or with respect to any aspect of
its compliance with any matter covered by the Environmental, Health and Safety
Guidelines or the Environmental and Social Policies such as, without limitation,
air emissions, discharges to surface water or ground water, noise emissions,
solid or liquid waste disposal, or the use, generation, storage, transportation
or disposal of toxic or hazardous substances or wastes;          

25

 

       (q)       neither Co-Borrower, nor any of its Affiliates, nor any Person
acting on its or their behalf, has made, with respect to the Project or any
transaction contemplated by this Agreement, any Prohibited Payment; and

       (r)       none of the representations and warranties in this Section 4.01
omits any matter the omission of which makes any of such representations and
warranties misleading.

       Section 4.02. IFC Reliance. Each of the Co-Borrowers acknowledges that it
makes the representations and warranties in Section 4.01 (Representations and
Warranties) with the intention of inducing IFC to enter into this Agreement and
that IFC enters into this Agreement on the basis of, and in full reliance on,
each of such representations and warranties.

ARTICLE V

Conditions of Disbursement

       Section 5.01. Conditions of First Disbursement. The obligation of IFC to
make the first Disbursement is subject to the fulfillment prior to or
concurrently with the making of that first Disbursement of the following
conditions:

       (a)       the following agreements, each in form and substance
satisfactory to IFC, have been entered into by all parties to them and have
become (or, as the case may be, remain) unconditional and fully effective in
accordance with their respective terms (except for this Agreement having become
unconditional and fully effective, if that is a condition of any of those
agreements), and IFC has received a copy of each of those agreements to which it
is not a party:

  (i) each Transaction Document; and             (ii) the Parallel Loan
Agreement(s).

       (b)       all contractual arrangements for implementation of the Project,
at an aggregate cost not exceeding the estimated Project cost pursuant to
Section 2.02 (Project Cost and Financial Plan) shall have been executed by the
parties thereto;

       (c)       the Co-Borrowers have certified to IFC that each Co-Borrower is
existing and in good standing and no amendment has been made to their respective
Charter since August 29, 1997 with respect to PSMT and September 6, 2000 with
respect to PSPH, or if any such amendment was made, IFC has received a copy of
each such Co-Borrower’s amended Charter and determined, in its reasonable
judgment, that it is not inconsistent with the provisions of any Transaction
Document and does not have or may not reasonably be expected to have a Material
Adverse Effect;

       (d)       the IFC Security has been duly created and perfected as first
ranking security interests in all assets and rights which are the subject of the
Security Documents;

       (e)       the Co-Borrowers have obtained, and provided to IFC copies of,
all Authorizations listed in Section (1) and Section (2) of Annex A
(Co-Borrowers/Project Authorizations), and such other Authorizations not listed
in those Sections that may become necessary for:

  (i) the Loan and the Parallel Loan(s);             (ii) the business of the
Co-Borrowers as it is contemplated to be carried on;             (iii) the
Project and the implementation of the Financial Plan;             (iv) the due
execution, delivery, validity and enforceability of, and performance by the
Co-Borrowers of their obligations under, this Agreement and the other

26

 

    Transaction Documents and any other documents necessary or desirable to the
implementation of any of those agreements or documents; and             (v) the
remittance to IFC or its assigns in Dollars of all monies payable with respect
to the Transaction Documents;          

       and all those Authorizations are in full force and effect;

       (f)        IFC has received the following legal opinions:

  (i) PSPH’s counsel in the Philippines, concurred in by IFC’s counsel in the
Philippines on the matters set out in Schedule 5 Part I;             (ii) PSMT’s
counsel in California on the matters set out in Schedule 5 Part II; and        
    (iii) IFC’s counsel in New York on the matters set out in Schedule 5 Part
III;

       (g)       IFC has received a certification from the Auditors of PSPH
confirming that, as at a date not earlier than sixty (60) days prior to the date
of first Disbursement, PSPH is in compliance with the provisions of Section
6.01(c) (Affirmative Covenants) and containing a brief description of the
systems and records in place;

       (i)       IFC has received copies of all insurance policies required to
be obtained pursuant to Section 6.04 (Insurance) and Annex B (Insurance
Requirements) prior to the date of first Disbursement, and a certification of
the Co-Borrowers’ insurers or insurance agents confirming that such policies are
in full force and effect and all premiums then due and payable under those
policies have been paid;

       (j)       IFC has received the fees specified in Section 3.07 (Fees)
required to be paid before the date of the first Disbursement;

       (k)       if IFC so requires, IFC has received the reimbursement of all
invoiced fees and expenses of IFC’s counsel as provided in Section 3.15(b)(ii)
(Expenses) or confirmation that those fees and expenses have been paid directly
to that counsel;

       (l)       IFC has received a copy of the authorization to the Auditors
referred to in Section 6.01(e) (Affirmative Covenants) together with a
confirmation from the Auditors that they shall provide IFC with all necessary
original Financial Statements and other accounting information to be provided to
IFC pursuant to the terms of this Agreement;

       (m)       IFC has received a Certificate of Incumbency and Authority for
each of the Co-Borrowers;

       (n)       each Co-Borrower has delivered to IFC evidence, substantially
in the form of Schedule 4 (Form of Service of Process Letter), of appointment of
an agent for service of process pursuant to Section 8.03(d) (Applicable Law and
Jurisdiction);

       (o)       the Co-Borrowers and IFC have agreed on the form of the Annual
Monitoring Report;

       (p)       there shall be been made arrangements satisfactory to IFC, in
its sole discretion, for installing and implementing the accounting and cost
control systems and management information systems and books of account and
other records, which together is capable of generating information which
adequately reflect truly and fairly the financial condition of each of the
Co-Borrowers and the result of its respective operations in conformity with the
Accounting Principles; and

       (q)       the Auditors have delivered to IFC a certification confirming
that based on the Auditor’s valuation (performed on a cost basis), Co-Borrowers
shall be in compliance with Section 6.01(j)(i) and (iii) after giving effect to
the Disbursement.

27

 

       Section 5.02. Conditions of All Disbursements. The obligation of IFC to
make any Disbursement, including the first Disbursement, is also subject to the
conditions that:

        (a)        no Event of Default and no Potential Event of Default has
occurred and is continuing;

       (b)       the proceeds of that Disbursement are, at the date of the
relevant request, needed by the Co-Borrowers for the purposes of the Project, or
will be needed for that purpose within six (6) months of that date;

       (c)       since the date of this Agreement nothing has occurred which has
or can reasonably be expected to have a Material Adverse Effect including, but
not limited to, any material adverse adjudication (as determined by IFC in its
reasonable opinion) in relation to the Nimfa Villegas Litigation and that no new
litigation shall have been commenced or be ongoing;

       (d)       since the date of this Agreement neither Co-Borrower has
incurred any material loss or liability (except such liabilities as may be
incurred in accordance with Section 6.02 (Negative Covenants));

       (e)       the representations and warranties made in Article IV
(Representations and Warranties) are true and correct in all material respects
on and as of the date of that Disbursement with the same effect as if those
representations and warranties had been made on and as of the date of that
Disbursement (but in the case of Section 4.01(c) (Representations and
Warranties), without the words in parentheses);

       (f)       the proceeds of that Disbursement are not in reimbursement of,
or to be used for, expenditures in the territories of any country which is not a
member of the World Bank or for goods produced in or services supplied from any
such country;

       (g)       IFC has received (if it so requires) a legal opinion or
opinions in form and substance satisfactory to IFC, of IFC’s counsel in the
Philippines, and concurred in by counsel for the Co-Borrowers, with respect to
any matters relating to that Disbursement;

       (h)       after giving effect to that Disbursement, neither Co-Borrower
would be in violation of:

  (i) its Charter;             (ii) any provision contained in any document to
which such Co-Borrower is a party (including this Agreement) or by which such
Co-Borrower is bound; or             (iii) any law, rule, regulation,
Authorization or agreement or other document binding on such Co-Borrower
directly or indirectly limiting or otherwise restricting its borrowing power or
authority or its ability to borrow;

       (i)       (without limiting the generality of Section 5.02(h)), after
taking into account the amount of that Disbursement and any other Long-term Debt
incurred by the Co-Borrowers and of any amounts of Shareholders’ Equity paid
into the Co-Borrowers after the date of the latest financial statements of the
Co-Borrowers due pursuant to Section 6.03(a) (Reporting Requirements), the
Current Ratio would not be less than 1.2 and the Long-term Debt to Equity Ratio
would not exceed 50:50, provided that, with respect to any Disbursement
requested to be made prior to the date of the first financial statements due
pursuant to Section 6.03(a) (Reporting Requirements), the calculation of the
Current Ratio and Long-term Debt to Equity Ratio and Long-term Debt Service
Coverage Ratio shall be made on the basis of such information as IFC may
reasonably request, verified, if IFC so requires, by the Auditors;

       (j)       that Disbursement is made pro rata with the disbursement each
of the Parallel Loans provided for in the Parallel Loan Agreements and any other
senior loan forming part of the Financial Plan;

       (k)       no material change shall have occurred to the Financial Plan;
and

       (l)       payment of all fees, costs and expenses payable to IFC pursuant
to the terms of this Agreement shall have been paid to IFC (or to such other
party as IFC may designation for these purposes).

28

 

       Section 5.03. Co-Borrowers’ Certification. The Co-Borrowers shall deliver
to IFC with respect to each request for Disbursement:

       (a)       certifications, in the form included in Schedule 2 (Form of
Request for Disbursement), relating to the conditions specified in Section 5.02
(Conditions of All Disbursements) (other than the condition in Section 5.02(g))
expressed to be effective as of the date of that Disbursement, and in the case
of Section 5.02(d), also certified by the Auditors if IFC so requires; and

       (b)       such evidence as IFC may reasonably request of the proposed
utilization of the proceeds of that Disbursement or the utilization of the
proceeds of any prior Disbursement.

ARTICLE VI

Particular Covenants

       Section 6.01. Affirmative Covenants. Unless IFC otherwise agrees, the
Co-Borrowers shall:

       (a)       carry out the Project and conduct their business with due
diligence and efficiency and in accordance with sound engineering, financial and
business practices;

       (b)       cause the financing specified in the Financial Plan to be
applied exclusively to the Project;

       (c)       maintain an accounting and control system, management
information system and books of account and other records, which together
adequately reflect truly and fairly the financial condition of the Co-Borrowers
and the results of their operations in conformity with the Accounting
Principles;

       (d)       maintain at all times a firm of independent public accountants
acceptable to IFC as auditors of the Co-Borrowers;

       (e)       irrevocably authorize, in the form of Schedule 6 (Form of
letter to Co-Borrowers’ Auditors), the Auditors (whose fees and expenses shall
be for the account of the Co-Borrowers) to communicate directly with IFC at any
time regarding the Co-Borrowers’ accounts and operations, and provide to IFC a
copy of that authorization, and, no later than thirty (30) days after any change
in Auditors, issue a similar authorization to the new Auditors and provide a
copy thereof to IFC;

       (f)       upon IFC’s request, such request to be made with reasonable
prior notice to the Co-Borrowers, except if an Event of Default or Potential
Event of Default is continuing or if special circumstances so require, permit
representatives of IFC, during normal office hours, to:

  (i) visit the Project site and any of the premises where the business of the
Co-Borrowers is conducted;             (ii) inspect all facilities, plant and
equipment comprised in the Project;             (iii) have access to the
Co-Borrowers’ books of account and records; and              (iv) have access to
those employees and agents of the Co-Borrowers who have or may have knowledge of
matters with respect to which IFC seeks information;

       (g)       design, construct, operate, maintain and monitor all of its
sites, plant, equipment and facilities:

  (i) in accordance with the Environmental and Social Policies and the 
Environmental, Health and Safety Guidelines; and

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        (ii) in compliance with the ERS, as well as applicable environmental,
occupational health and safety requirements, and any child labor and forced
labor laws, rules and regulations (including any international treaty
obligations, if any) of the government of the Philippines and the local
authorities;

       (h)       obtain and maintain in force (and where appropriate, renew in a
timely manner) all Authorizations, including without limitation the
Authorizations specified in Annex A (Co-Borrowers/Project Authorisations), which
are necessary for the implementation of the Project, the carrying out of the
Co-Borrowers’ business and operations generally and the compliance by each of
the Co-Borrowers with all its obligations under the Transaction Documents; and
comply with all the conditions and restrictions contained in, or imposed on the
Co-Borrowers by, those Authorizations;

       (i)       from time to time, execute, acknowledge and deliver or cause to
be executed, acknowledged and delivered such further instruments, in form and
substance satisfactory to IFC, as may reasonably be requested by IFC for
creating, perfecting, registering or maintaining in full force and effect the
IFC Security or for re-registering the IFC Security or otherwise to enable each
of the Co-Borrowers to comply with its obligations under the Transaction
Documents; and

       (j)       in relation to the IFC Security:

            (i) ensure that the value of the collateral provided by the IFC
Security (other than the Pledge Agreement) is at all times at least one point
five (1.5) times the total amount then outstanding under the Loan;            
(ii) at its expense, provide IFC at the expiry of every consecutive one (1) year
period from the date hereof and at such other times as IFC may require, an
independent appraiser’s valuation of such collateral, such appraiser to be
appointed by or to be satisfactory to IFC;             (iii) in the event that
the appraiser appointed pursuant to (ii) above assigns a market value to the
collateral provided by the IFC Security which is less than one point five (1.5)
times the total amount then outstanding under the Loan, the Co-Borrowers shall
have the option to either deliver additional security, in form and substance
acceptable to IFC, thereby addressing this shortfall or shall within sixty (60)
days (and no later than ninety (90) days), prepay in accordance with Section
3.06(a) (Prepayment) (but without any prepayment premium pursuant to Section
3.06(b) (Prepayment) being payable) an amount of the Loan so as to ensure the
value of the collateral provided by the IFC Security represents at least one
point five (1.5) times the total amount then outstanding under the Loan; and    
         (iv) from time to time, execute, acknowledge and deliver or cause to be
executed, acknowledged and delivered such further instruments as may reasonably
be requested by IFC for perfecting or maintaining in full force and effect the
IFC Security or for re-registering the IFC Security or otherwise to enable the
Co-Borrowers to comply with their obligations under the Transaction Documents.

       Section 6.02. Negative Covenants. Unless IFC otherwise agrees, neither
Co-Borrower shall directly or indirectly:

       (a)       declare or pay any dividend or make any distribution on its
share capital (other than dividends or distributions payable on the Preferred
Shares), or purchase, redeem or otherwise acquire any shares or capital stock of
the Co-Borrowers or any option over them unless the proposed payment or
distribution is out of retained earnings and the Co-Borrower, no earlier than
sixty (60) days nor later than thirty (30) days prior to doing so, certifies to
IFC in writing, in the form attached as Schedule 7 (Form of Co-Borrowers’
Certification on Distribution of Dividends), that:

  (i) no Event of Default or Potential Event of Default has occurred and is
continuing; and

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  (ii) after giving effect to any such action:               (A) the Current
Ratio will not be less than 1.2;               (B) the Long-term Debt to Equity
Ratio will not be in excess of 50:50; and               (C) the Long-term Debt
Service Coverage Ratio will not be less than 1.3;                 provided
always that:                 (A)  the retained earnings out of which any of the
payments or distributions referred to in this sub-section may be made should in
no event include any amount resulting from the revaluation of any of the
Co-Borrowers’ assets; and                 (B) the Co-Borrowers shall not make
any payments or distributions of the type referred to in this sub-section if,
after giving effect to it, the Co-Borrowers could not certify the matters
referred to in Section 6.02(a)(i) and (ii) (Negative Covenants);

       (b)       incur expenditures or commitments for expenditures for fixed or
other non-current assets, other than those required for carrying out the Project
or necessary for repairs, replacements and maintenance of satisfactory operating
conditions that are essential to the Co-Borrowers’ business or operations,
unless after giving effect to such expenditures or commitments for expenditures,
the Co-Borrowers will be in compliance with the ratio set forth in Section
6.02(a) (Negative Covenants) above in the preceding Financial Year;

       (c)        incur, assume or permit to exist any Debt except:

  (i) the Loan;             (ii) other Debt specified in the Financial Plan;    
         (iii) additional Long-term Debt which would not result in the Long-term
Debt to Equity Ratio exceeding 50:50 and the Long-term Debt Service Coverage
Ratio exceeding 1.3;             (iv) Short-term Debt incurred in the ordinary
course of business which, when aggregated with contingent liabilities arising
from the discounting of trade receivables, would not result at the time it is
incurred in the Current Ratio falling below 1.2;             (v) additional Debt
of the Co-Borrowers, but only if and to the extent that such Debt is
subordinated in full, in payment and liquidation, to the Loan; and             
(vi) Long-term Debt or Short-term Debt obtained to replace any existing
Long-term Debt or, as the case may be, any Short-term Debt component of then
outstanding Debt, but then only to the extent that such new Debt is on terms and
conditions (as to interest rate, other costs and tenor) at least as favorable to
the Co-Borrowers as those of the Debt being replaced;

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       (d)       enter into any Capital Lease Obligations, except Capital Lease
Obligations with respect to which the aggregate capital lease payments of the
Co-Borrowers do not exceed the equivalent of two million Dollars ($2,000,000) in
any Financial Year (“Permitted Lease Amount”) and only to the extent that, when
such Permitted Lease Amount is treated as Long-term Debt, the Co-Borrowers’
Long-term Debt to Equity Ratio would not be in excess of 50:50 and the Long-term
Debt Service Coverage Ratio would not be less than 1.3;

       (e)       enter into any Derivative Transactions or assume the
obligations of any party to any Derivative Transaction; provide however that the
foregoing shall not apply to the following types of Derivative Transactions
entered into by the Co-Borrowers so long as the currency and the amounts
associated with such Derivative Transactions reasonably reflect the risk and/or
exposure such Derivative Transactions are designed to hedge:

  (i) forward foreign exchange contracts (including non-deliverable forward
foreign exchange contracts)             (ii) currency swaps; and            
(iii) interest-rate swaps;

       (f)       enter into any agreement or arrangement to guarantee or, in any
way or under any condition, assume or become obligated for all or any part of
any financial or other obligation of another Person, except guarantees in the
ordinary course of business in favor of its Subsidiaries so long as after any
such guarantee the Co-Borrowers will be in compliance with the financial ratios
set forth in Section 6.02(a);

       (g)       create or permit to exist any Lien on any property, revenues or
other assets, present or future, of the Co-Borrowers, except for:

  (i) the IFC Security;             (ii) Liens securing other lenders in
relation to the Project provided that, after giving effect to such lending,:    
          (A) the Current Ratio will not be less than 1.2;               (B) the
Long-term Debt to Equity Ratio will not be in excess of 50:50; and              
(C) the Long-term Debt Service Coverage Ratio will not be less than 1.3,        
    (iii) the security granted by PSMT under the LAC Loan Agreements;          
  (iv) the naming of IFC as loss payee/beneficiary under the Co-Borrowers’
insurance policies;              (v) any Lien arising from any tax, assessment
or other governmental charge or other Lien arising by operation of law, in each
case if the obligation underlying any such Lien is not yet due or, if due, is
being contested in good faith by appropriate proceedings so long as:            
  (A) those proceedings do not involve any substantial danger of the sale,
forfeiture or loss of any part of the Project, title thereto or any interest
therein, nor interfere in any material respect with the use or disposition
thereof or the implementation of the Project or the carrying on of the business
of the Co-Borrowers; and

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    (B) the Co-Borrowers have set aside adequate reserves sufficient to promptly
pay in full any amounts that the Co-Borrowers may be ordered to pay on final
determination of any such proceedings; and             (vi) any Liens over the
property of an Affiliate (other than PSPH or the Co-Borrowers (as defined
therein) under the LAC Loan Agreements) of PSMT;             (vii) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens
arising in the ordinary course of business;             (viii) Liens related to
money purchase obligations incurred in the ordinary course of business so long
as such Liens only attach to property related to money purchase obligations and
secure only such property; and             (ix) easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business which do not materially interfere with the ordinary conduct of the
businesses of the Co-Borrowers’ conducted thereon;

       (h)       enter into any transaction with any Person (including
Affiliates of the Co-Borrowers) except in the ordinary course of business on the
basis of arm’s-length arrangements (including, without limitation, transactions
whereby the Co-Borrowers might pay more than the ordinary commercial price for
any purchase or might receive less than the full ex-works commercial price
(subject to normal trade discounts) for its products);

       (i)       establish any sole and exclusive purchasing or sales agency;

       (j)       in relation to PSPH only, enter into any partnership,
profit-sharing or royalty agreement or other similar arrangement whereby PSPH’s
income or profits are, or might be, shared with any other Person. For the
avoidance of doubt, PSMT may enter into such partnerships, profit-sharing or
royalty agreements or other similar arrangements in the ordinary course of
PSMT’s business provided that:

  (i) notwithstanding the payment of any sums payable under such partnerships,
profit-sharing or royalty agreements or other similar arrangements, the
financial ratios set out in sub-section (a) above are achieved; and            
(ii) in the event of an Event of Default or Potential Event of Default having
occurred, all sums to be paid under any such partnership, profit-sharing or
royalty agreement or other similar arrangement may continue to accrue but shall
not be paid until the Event of Default or Potential Event of Default has been
cured;

       (k)       enter into any management contract or similar arrangement
whereby its business or operations are managed by any other Person;

       (l)       form or have any Subsidiary except for those Subsidiaries which
are in similar lines of business as that of the Co-Borrowers:

       (m)       make or permit to exist loans or advances to, or deposits
(except commercial bank deposits in the ordinary course of business) with, other
Persons or enterprise other than short-term marketable securities acquired
solely to give temporary employment to the Co-Borrowers’ idle funds in
accordance with, at the option of IFC, either the Investment Policies or
investments rated AA or better by Standard & Poor’s, provided always that, that
after taking into account such advances or credit facilities the Current Ratio
shall not fall below 1.2;

       (n)       change its Charter in any manner which would be inconsistent
with the provisions of any Transaction Document;

       (o)       change its Financial Year;

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       (p)       change the nature or scope of the Project or change the nature
of either or both Co-Borrowers’ present and/or contemplated business or
operations;

       (q)       sell, transfer, lease or otherwise dispose of all or a
substantial part of its assets, other than inventory, whether in a single
transaction or in a series of transactions, related or otherwise other than:

  (i) fixed assets of the Co-Borrowers with an aggregate value of less than ten
per cent. (10%) of the existing Net Fixed Assets in any Financial Year; and    
        (ii) assets that have become worn out or obsolete and are replaced or
upgraded or that are no longer required for the purposes of carrying out the
Project,

in each case in the ordinary course of business and in a manner consistent with
the Transaction Documents;

        (r)       undertake or permit any merger, spin-off, consolidation or
reorganization;

       (s)       terminate, amend or grant any waiver with respect to any
provision of:

  (i) any of the agreements listed in Section 5.01(a) (Conditions of
Disbursement); or             (ii)   any document evidencing or securing any
other senior loan set forth in the Financial Plan;

       (t)       prepay (whether voluntarily or involuntarily) or repurchase any
Long-term Debt (other than the Loan and the IFC loan provided under the LAC Loan
Agreements) pursuant to any provision of any agreement or note with respect to
that Long-term Debt unless:

  (i) that Long-term Debt is refinanced using new Long-term Debt on terms and
conditions (as to interest rate, other costs and tenor) at least as favorable to
the Co-Borrowers as those of the Long-term Debt being refinanced; or            
(ii) the Co-Borrowers gives IFC at least thirty (30) days’ advance notice of its
intention to make the proposed prepayment and, if IFC so requires, the
Co-Borrowers contemporaneously prepays a proportion of the Loan equivalent to
the proportion of the part of the Long-term Debt being prepaid, such prepayment
to be made in accordance with the provisions of Section 3.06 (Prepayment) except
that the provisions with respect to the advance notice for prepayment set out in
Section 3.06(a), the minimum prepayment amount set forth in Section 3.06(a)(ii)
and the prepayment premium set forth in Section 3.06(b) shall not apply;

 provided that, after taking into account such prepayment for refinancing, the
Debt to Equity Ratio does not exceed 50:50 and the Current Ratio shall not be
less than 1.2;

       (u)       use the proceeds of any Disbursement in the territories of any
country which is not a member of the World Bank or for reimbursements of
expenditures in those territories or for goods produced in or services supplied
from any such country;

       (v)       terminate, waive or materially amend any license agreements or
trademarks or any other intellectual property rights with respect to the
Project; and

       (w)       with respect to PSMT, amend the Investment Policies unless such
amendment is in accordance with PSMT’s internal procedures and is promptly
delivered to IFC.

       Section 6.03. Reporting Requirements. Unless IFC otherwise agrees, the
Co-Borrowers shall:

       (a)       as soon as available but in any event within sixty (60) days
after the end of the first three quarters of each Financial Year, deliver to
IFC:

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  (i) two (2) copies of their complete financial statements for such quarter
prepared on a Consolidated Basis, in accordance with the Accounting Principles;
            (ii) for such period as IFC shall require, provide quarterly
monitoring reports, in form and substance satisfactory to IFC, on the
construction and management of the Ortigas Store and the Alabang Store;        
     (iii) during implementation of the Project, a report, in the form attached
as Schedule 8 (Form of Project Report re: Project implementation), on the
progress in implementation of the Project, including any factors that have or
could reasonably be expected to have a Material Adverse Effect;             (iv)
a statement of all transactions during that quarter between each Co-Borrower and
each of its Affiliates, if any, and a certification by an Authorized
Representative that those transactions were on the basis of arm’s-length
arrangements;

       (b)       as soon as available but in any event within one hundred and
twenty (120) days after the end of each Financial Year, deliver to IFC:

  (i) two (2) copies of its complete and audited financial statements for that
Financial Year (which are in agreement with its books of account and prepared,
on a Consolidated Basis, in accordance with the Accounting Principles, together
with the Auditors’ audit report on them, all in form satisfactory to IFC;      
      (ii) a management letter and such other communication from the Auditors
commenting, with respect to that Financial Year, on, among other things, the
adequacy of the Co-Borrowers’ financial control procedures, accounting systems
and management information system;              (iii) a report by the Auditors
certifying that, on the basis of its financial statements, the relevant
Co-Borrower was in compliance with the covenants contained in Section 6.02
(Negative Covenants) as of the end of that Financial Year or, as the case may
be, detailing any non-compliance; and             (iv) a report by the
Co-Borrowers on its operations during that Financial Year, in the form of, and
addressing the topics listed in, Schedule 9 (Information to be included in
annual review of operations); and              (v) a statement by the
Co-Borrowers of all transactions between the Co-Borrowers and each of its
Affiliates, if any, during that Financial Year, and a certification by an
Authorized Representative that those transactions were on the basis of
arm’s-length arrangements;

       (c)       as soon as available but no later than sixty (60) days after
the end of the first six months of each Financial Year and after the end of each
Financial Year, provide to IFC a semi-annual report regarding Project
implementation, including a description of Cash Generation and the funds raised
from other sources of funds, invested in the Project;

       (d)       deliver to IFC, promptly following receipt, a copy of any
management letter or other communication sent by the Auditors (or any other
accountants retained by the Co-Borrowers) to the Co-Borrowers or its management
in relation to the Co-Borrowers’ financial, accounting and other systems,
management or accounts, if not provided pursuant to Section 6.03(b)(ii)
(Reporting Requirements);

       (e)       within ninety (90) days after the end of each Financial Year,
deliver to IFC an Annual Monitoring Report, confirming compliance with the
applicable national or local requirements, the Environmental and Social
Policies, the Environmental, Health and Safety Guidelines, and Section 6.01(g)

35

 

(Affirmative Covenants) or, as the case may be, detailing any non-compliance
together with details of the action being taken to ensure compliance and
advising IFC as to whether any modification of the form of the Annual Monitoring
Report is necessary based on any changes in the Project;

       (f)       as soon as possible but no later than three (3) days after its
occurrence, notify IFC of any incident or accident which has or may reasonably
be expected to have an adverse effect on the environment, health or safety,
including, without limitation, explosions, spills or workplace accidents which
result in death, serious or multiple injury or major pollution, specifying, in
each case, the nature of the incident or accident, the on-site and off-site
impacts arising or likely to arise therefrom and the measures the Co-Borrowers
are taking or plan to take to address those impacts, and keep IFC informed of
the on-going implementation of those measures;

       (g)       give a fifteen (15) day prior notice to IFC, of either
Co-Borrower’s notification to its shareholders, of any meeting of its
shareholders, such notice to include the agenda of the meeting; and, as soon as
available, deliver to IFC two (2) copies of:

  (i) all notices, reports and other communications of the Co-Borrowers to its
shareholders, whether any such communication has been made on an individual
basis or by way of publication in a newspaper or other communication medium; and
            (ii) the minutes of all shareholders’ meetings within thirty (30)
days of said shareholders’ meeting;

       (h)       promptly notify IFC of any proposed change in the nature or
scope of the Project or the business or operations of the Co-Borrowers and of
any event or condition which has or may reasonably be expected to have a
Material Adverse Effect;

       (i)       promptly upon becoming aware of any litigation or
administrative proceedings before any Authority or arbitral body which has or
may reasonably be expected to have a Material Adverse Effect, notify IFC by
facsimile of that event specifying the nature of that litigation or those
proceedings and the steps the Co-Borrowers are taking or propose to take with
respect thereto;

       (j)       promptly upon the occurrence of an Event of Default or
Potential Event of Default, notify IFC by facsimile specifying the nature of
that Event of Default or Potential Event of Default and any steps the
Co-Borrowers are taking to remedy it;

       (k)       provide to IFC, in a timely manner, the insurance certificates
and other information referred to in Section 6.04 (d) (Insurance); and

       (l)       promptly provide to IFC such other information as IFC from time
to time requests about each of the Co-Borrowers, their respective assets and the
Project.

       Section 6.04. Insurance.

       (a)        Insurance Requirements and Co-Borrowers’ Undertakings. Unless
IFC otherwise agrees, the Co-Borrowers shall:

            (i) insure and keep insured, with financially sound and reputable
insurers, all its assets and business against all insurable losses to include
the insurances specified in Annex B (Insurance Requirements) and any insurance
required by law;             (ii) punctually pay any premium, commission and any
other amounts necessary for effecting and maintaining in force each insurance
policy;             (iii) promptly notify the relevant insurer of any claim by
the Co-Borrowers under any policy written by that insurer and diligently pursue
that claim;          

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            (iv) comply with all warranties under each policy of insurance;    
        (v) not do or omit to do, or permit to be done or not done, anything
which might prejudice the Co-Borrowers’, or, where IFC is a loss payee or an
additional named insured, IFC’s right to claim or recover under any insurance
policy; and             (vi) not vary, rescind, terminate, cancel or cause a
material change to any insurance policy required to be maintained under this
Agreement unless the same is replaced by other insurance satisfying the
requirement of this Section 6.04;             provided always that if at any
time and for any reason any insurance required to be maintained under this
Agreement shall not be in full force and effect, then IFC shall thereupon or at
any time while the same is continuing be entitled (but have no such obligation)
on its own behalf to procure that insurance at the expense of the Co-Borrowers
and to take all such steps to minimize hazard as IFC may consider expedient or
necessary.          

       (b)        Policy Provisions. Each insurance policy required to be
obtained pursuant to this Section shall be on terms and conditions acceptable to
IFC, and shall contain provisions to the effect that:

            (i) no policy can expire nor can it be canceled or suspended by the
Co-Borrowers or the insurer for any reason (including failure to renew the
policy or to pay the premium or any other amount) unless IFC and, in the case of
expiration or if cancellation or suspension is initiated by the insurer, the
Co-Borrowers receive at least thirty (30) days’ notice (or such lesser period as
IFC may agree with respect to cancellation, suspension or termination in the
event of war and kindred peril) prior to the effective date of termination,
cancellation or suspension;             (ii) IFC and all contractors working at
the Project site are named as additional named insured on all liability
policies;             (iii) where relevant, all its provisions (except those
relating to limits of liability) shall operate as if they were a separate policy
covering each insured party; and              (iv) on every insurance policy on
the Co-Borrowers’ assets which are the subject of the IFC Security and for
business interruption or delayed start-up (including, but not limited to, for
civil riot and commotion), IFC is named as loss payee for any claim of, or any
series of claims arising with respect to the same event whose aggregate amount
is, the equivalent of five hundred thousand Dollars ($500,000) or more;        
 

       (c)        Application of Proceeds.

  (i) At its discretion, IFC may remit the proceeds of any insurance paid to it
to the Co-Borrowers to repair or replace the relevant damaged assets or may
apply those proceeds towards any amount payable to IFC under this Agreement,
including to repay or prepay all or any part of the Loan in accordance with
Section 3.06 (Prepayment) except that the provisions with respect to the advance
notice for prepayment set out in Section 3.06(a), the minimum prepayment amount
set forth in Section 3.06(a)(ii) and the prepayment premium set forth in Section
3.06(b) shall not apply to any such prepayment.             (ii) Each of the
Co-Borrowers shall use any insurance proceeds it receives (whether from IFC or
directly from the insurers) for loss of or damage to any asset solely to replace
or repair that asset.

       (d)        Reporting Requirements. Unless IFC otherwise agrees, the
Co-Borrowers shall provide to IFC the following:

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            (i) as soon as possible after its occurrence, notice of any event
which entitles the Co-Borrowers to claim for an aggregate amount exceeding the
equivalent of five hundred thousand Dollars ($500,000) under any one or more
insurance policies;             (ii) within thirty (30) days after any insurance
policy is issued to the Co-Borrowers, a copy of that policy incorporating any
loss payee provisions required under Section 6.04(b)(iv) (unless that policy has
already been provided to IFC pursuant to Section 5.01(i) (Conditions of First
Disbursement);             (iii) not less than ten (10) days prior to the expiry
date of any insurance policy (or, for insurance with multiple renewal dates, not
less than ten (10) days prior to the expiry date of the policy on the principal
asset), a certificate of renewal from the insurer, insurance broker or agent
confirming the renewal of that policy and the renewal period, the premium, the
amounts insured for each asset or item and any changes in terms or conditions
from the policy’s issue date or last renewal, and confirmation from the insurer
that provisions naming IFC as loss payee or additional named insured, as
applicable remain in effect;             (iv) such evidence of premium payment
as IFC may from time to time request; and             (v) any other information
or documents on each insurance policy as IFC requests from time to time.      

ARTICLE VII

Events of Default

       Section 7.01. Acceleration after Default. If any Event of Default occurs
and is continuing (whether it is voluntary or involuntary, or results from
operation of law or otherwise), IFC may, by notice to the Co-Borrowers, require
the Co-Borrowers to repay the Loan or such part of the Loan as is specified in
that notice. On receipt of any such notice, the Co-Borrowers shall immediately
repay the Loan (or that part of the Loan specified in that notice) and pay all
interest accrued on it, the prepayment premium specified in Section 3.06(b)
(Prepayment) on the amount of the Loan whose payment is accelerated and any
other amounts then payable under this Agreement. Each of the Co-Borrowers waives
any right it might have to further notice, presentment, demand or protest with
respect to that demand for immediate payment.

       Section 7.02. Events of Default. It shall be an Event of Default if:

       (a)        the Co-Borrowers fail to pay when due any part of the
principal of, or interest on, the Loan and such failure continues for a period
of five (5) days;

       (b)       the Co-Borrowers fail to pay when due any part of the principal
of, or interest on, the Parallel Loan(s) and such failure continues for the
relevant period of grace provided for in the Parallel Loan Agreement(s);

       (c)       the Co-Borrowers fail to pay when due any part of the principal
of, or interest on, any loan from IFC to one or both Co-Borrowers other than the
Loan and any such failure continues for the relevant period of grace provided
for in the agreement providing for that loan;

       (d)       either Co-Borrower fails to comply with any of its obligations
under this Agreement or any other Transaction Document or any other agreement
between one or both Co-Borrowers and IFC (other than for the payment of the
principal of, or interest on, the Loan or any other loan from IFC to either or

38

 

both Co-Borrowers), and any such failure continues for a period of thirty (30)
days after the date on which IFC notifies the relevant Co-Borrower(s) of that
failure;

       (e)       any party to a Transaction Document (other than IFC or the
Co-Borrowers) fails to observe or perform any of its obligations under that
Transaction Document, and any such failure continues for a period of thirty (30)
days after the date on which IFC notifies the Co-Borrowers of that failure or
either Co-Borrower becomes aware of such failure;

       (f)       any representation or warranty made in Article IV
(Representations and Warranties) or in connection with the execution of, or any
request (including a request for Disbursement) under, this Agreement or any
other Transaction Document is found to be incorrect in any material respect;

       (g)       any Authority condemns, nationalizes, seizes, or otherwise
expropriates all or any substantial part of the property or other assets of
either or both Co-Borrowers or of its share capital, or assumes custody or
control of that property or other assets or of the business or operations of the
Co-Borrowers or of its share capital, or takes any action for the dissolution or
disestablishment of either Co-Borrower or any action that would prevent either
Co-Borrower or its officers from carrying on all or a substantial part of its
business or operations;

       (h)       a decree or order by a court is entered against either or both
Co-Borrowers:

  (i) adjudging it bankrupt or insolvent;             (ii) approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of, or with respect to, such Co-Borrower under any applicable law;            
(iii) appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Co-Borrower or of any substantial part of its
property or other assets; or             (iv) ordering the winding up or
liquidation of its affairs;               or any petition is filed seeking any
of the above and is not dismissed within thirty (30) days; 

       (i)       either Co-Borrower:

  (i) requests a moratorium or suspension of payment of debts from any court;  
          (ii) institutes proceedings or takes any form of corporate action to
be liquidated, adjudicated bankrupt or insolvent;             (iii) consents to
the institution of bankruptcy or insolvency proceedings against it;            
(iv) files a petition or answer or consent seeking reorganization or relief
under any applicable law, or consents to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Co-Borrower or of any substantial part of its
property;              (v) makes a general assignment for the benefit of
creditors; or         (vi) admits in writing its inability to pay its debts
generally as they become due or otherwise becomes insolvent;

       (j)       an attachment or analogous process is levied or enforced upon
or issued against any of the assets of any Co-Borrower for an amount in excess
of the equivalent of five hundred thousand Dollars ($500,000) and is not
discharged within thirty (30) days;

39

 

       (k)       any other event occurs which under any applicable law would
have an effect analogous to any of those events listed in Section 7.02(g),
Section 7.02(h) or Section 7.02(i);

       (l)       either Co-Borrower fails to pay any of its Debt (other than the
Loan or any other loan from IFC to one or both Co-Borrowers) or to perform any
of its obligations under any agreement pursuant to which there is outstanding
any Debt, and any such failure continues for more than any applicable period of
grace or any such Debt becomes prematurely due and payable or is placed on
demand;

       (m)       any Authorization necessary for either Co-Borrower to perform
and observe its obligations under any Transaction Document, or to carry out the
Project, is not obtained when required or is rescinded, terminated, lapses or
otherwise ceases to be in full force and effect, including with respect to the
remittance to IFC or its assignees, in the Loan Currency, of any amounts payable
under any Transaction Document, and is not restored or reinstated within thirty
(30) days of notice by IFC to the Co-Borrowers requiring that restoration or
reinstatement;

       (n)       any Security Document or any of its provisions:

  (i) is revoked, terminated or ceases to be in full force and effect or ceases
to provide the security intended, without, in each case, the prior consent of
IFC;             (ii) becomes unlawful or is declared void; or             (iii)
is repudiated or its validity or enforceability is challenged by any Person and
any such repudiation or challenge continues for a period of thirty (30) days
during which period such repudiation or challenge has no effect;

       (o)       any Transaction Document (other than a Security Document) or
any of its provisions:

  (i) is revoked, terminated or ceases to be in full force and effect without,
in each case, the prior consent of IFC, and that event, if capable of being
remedied, is not remedied to the satisfaction of IFC within thirty (30) days of
IFC’s notice to the Co-Borrowers; or             (ii) becomes unlawful or is
declared void;

       (p)       any Transaction Document (other than a Security Document) is
repudiated or the validity or enforceability of any of its provisions at any
time is challenged by any Person and such repudiation or challenge is not
withdrawn within thirty (30) days of IFC’s notice to the Co-Borrowers requiring
that withdrawal; provided that no such notice shall be required or, as the case
may be, the notice period shall terminate if and when such repudiation or
challenge becomes effective; or

       (q)       any contract material to the completion of the Project or the
lease agreements pertaining to the Ortigas Store and the Alabang Store:

  (i) is breached by any party to it and such breach has or could reasonably be
expected to have a Material Adverse Effect; or             (ii) is revoked,
terminated or ceases to be in full force and effect without the prior consent of
IFC, or performance of any of the material obligations under any such agreement
becomes unlawful or any such agreement is declared to be void or is repudiated
or its validity or enforceability at any time is challenged by any party to it;
or

       (r)       a final judgment, a final order or a final arbitral award for
the payment of sums in excess of five hundred thousand Dollars ($500,000) in
relation to either Co-Borrower (which remains unpaid for a period of thirty (30)
days) or for the voiding of any leases is rendered against either or both
Co-Borrowers or any of its properties.

40

 

       Section 7.03. Bankruptcy. If either Co-Borrower is liquidated or declared
bankrupt, the Loan, all interest accrued on it and any other amounts payable
under this Agreement will become immediately due and payable without any
presentment, demand, protest or notice of any kind, all of which each
Co-Borrower waives.

ARTICLE VIII

Miscellaneous

       Section 8.01. Saving of Rights. (a) The rights and remedies of IFC in
relation to any misrepresentation or breach of warranty on the part of the
Co-Borrowers shall not be prejudiced by any investigation by or on behalf of IFC
or any of the Participants into the affairs of the Co-Borrowers, by the
execution or the performance of this Agreement or by any other act or thing
which may be done by or on behalf of IFC in connection with this Agreement and
which might, apart from this Section, prejudice such rights or remedies.

       (b)       No course of dealing or waiver by IFC in connection with any
condition of Disbursement of the Loan under this Agreement shall impair any
right, power or remedy of IFC with respect to any other condition of
Disbursement, or be construed to be a waiver thereof; nor shall the action of
IFC with respect to any Disbursement affect or impair any right, power or remedy
of IFC with respect to any other Disbursement.

       (c)       Unless otherwise notified to the Co-Borrowers by IFC and
without prejudice to the generality of Section 8.01(b), the right of IFC to
require compliance with any condition under this Agreement which may be waived
by IFC with respect to any Disbursement is expressly preserved for the purposes
of any subsequent Disbursement.

       (d)       No course of dealing and no failure or delay by IFC in
exercising, in whole or in part, any power, remedy, discretion, authority or
other right under this Agreement or any other agreement shall waive or impair,
or be construed to be a waiver of or an acquiescence in, such or any other
power, remedy, discretion, authority or right under this Agreement, or in any
manner preclude its additional or future exercise; nor shall the action of IFC
with respect to any default, or any acquiescence by it therein, affect or impair
any right, power or remedy of IFC with respect to any other default.

       Section 8.02. Term of Agreement. This Agreement shall continue in force
until all monies payable under it have been fully paid in accordance with its
provisions.

       Section 8.03. Applicable Law and Jurisdiction. (a) This Agreement is
governed by, and shall be construed in accordance with, the laws of the State of
New York, United States of America.

       (b)       Each Co-Borrower irrevocably agrees that any legal action, suit
or proceeding arising out of or relating to this Agreement or any other
Transaction Document to which it is a party may be brought by IFC in the courts
of the United States of America located in the Southern District of New York. By
the execution of this Agreement, each Co-Borrower irrevocably submits to the
non-exclusive jurisdiction of any such court in any such action, suit or
proceeding. Final judgment against the Co-Borrowers in any such action, suit or
proceeding shall be conclusive and may be enforced in any other jurisdiction,
including the Country, by suit on the judgment, a certified or exemplified copy
of which shall be conclusive evidence of the judgment, or in any other manner
provided by law.

       (c)       Nothing in this Agreement shall affect the right of IFC to
commence legal proceedings or otherwise sue the Co-Borrowers in the Philippines
or any other appropriate jurisdiction, or concurrently in more than one
jurisdiction, or to serve process, pleadings and other legal papers upon the
Co-Borrowers in any manner authorized by the laws of any such jurisdiction.

       (d)       Each Co-Borrower hereby irrevocably designates, appoints and
empowers CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, NY
10011 as its authorized agent solely to

41

 

receive for and on its behalf service of summons or other legal process in any
action, suit or proceeding IFC may bring in the State of New York.

       (e)       As long as this Agreement or any other Transaction Document to
which the Co-Borrowers are a party remains in force, each Co-Borrower shall
maintain a duly appointed and authorized agent to receive for and on its behalf
service of any summons, complaint or other legal process in any action, suit or
proceeding IFC may bring in New York, New York, United States of America, with
respect to this Agreement or that other Transaction Document. Each Co-Borrower
shall keep IFC advised of the identity and location of such agent.

       (f)       Each Co-Borrower also irrevocably consents, if for any reason
the Co-Borrower’s authorized agent for service of process of summons, complaint
and other legal process in any action, suit or proceeding is not present in New
York, New York, to the service of such papers being made out of those courts by
mailing copies of the papers by registered United States air mail, postage
prepaid, to the Co-Borrowers at their addresses specified pursuant to Section
1.02 (Notices), Volume V, Miscellaneous; Execution. In such a case, IFC shall
also send by facsimile, or have sent by facsimile, a copy of the papers to the
Co-Borrowers.

       (g)       Service in the manner provided in this Section 8.05 in any
action, suit or proceeding will be deemed personal service, will be accepted by
the Co-Borrowers as such and will be valid and binding upon the Co-Borrowers for
all purposes of any such action, suit or proceeding.

       (h)       Each Co-Borrower irrevocably waives to the fullest extent
permitted by applicable law:

  (i) any objection which it may have now or in the future to the laying of the
venue of any action, suit or proceeding in any court referred to in this
Section; and             (ii) any claim that any such action, suit or proceeding
has been brought in an inconvenient forum.

       (i)       To the extent that any Co-Borrower may be entitled in any
jurisdiction to claim for itself or its assets immunity in respect of its
obligations under this Agreement or any other Transaction Document to which each
such Co-Borrower is a party from any suit, execution, attachment (whether
provisional or final, in aid of execution, before judgment or otherwise) or
other legal process or to the extent that in any jurisdiction that immunity
(whether or not claimed) may be attributed to it or its assets, each Co-Borrower
irrevocably agrees not to claim and irrevocably waives such immunity to the
fullest extent permitted now or in the future by the laws of such jurisdiction.

       (j)       Each Co-Borrower hereby acknowledges that IFC shall be entitled
under applicable law, including the provisions of the International
Organizations Immunities Act, to immunity from a trial by jury in any action,
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby or any other Transaction Document to which each
such Co-Borrower is a party, brought against IFC in any court of the United
States of America. Each Co-Borrower hereby waives any and all rights to demand a
trial by jury in any action, suit or proceeding arising out of or relating to
this Agreement or any other Transaction Document to which each such Co-Borrower
is a party or the transactions contemplated by this Agreement or those
Transaction Documents, brought against IFC in any forum in which IFC is not
entitled to immunity from a trial by jury.

       (k)       To the extent that any Co-Borrower may, in any suit, action or
proceeding brought in any of the courts referred to in Section 8.03(b) or
elsewhere arising out of or in connection with this Agreement or any other
Transaction Document to which each such Co-Borrower is a party, be entitled to
the benefit of any provision of law requiring IFC in such suit, action or
proceeding to post security for the costs of such Co-Borrower, or to post a bond
or to take similar action, each Co-Borrower hereby irrevocably waives such
benefit, in each case to the fullest extent now or in the future permitted under
the laws of the Country or, as the case may be, the jurisdiction in which such
court is located.

       (l)       To the extent that any Co-Borrower may, in any suit, action or
proceeding brought in any courts referred to in Section 8.03(b) or a court in
the Philippines or elsewhere arising out of or in connection with this Agreement
or any other Transaction Document to which each such Co-Borrower is a

42

 

party, be entitled to the benefit of any provision of law requiring IFC in such
suit, action or proceeding to post security for the costs of such Co-Borrower,
or to post a bond or to take similar action, each Co-Borrower hereby irrevocably
waives such benefit, in each case to the fullest extent now or in the future
permitted under the laws of the jurisdiction in which the court in question is
located.

       Section 8.04. Disclosure of Information. (a) IFC may disclose any
documents or records of, or information about, this Agreement or any other
Transaction Document, or the assets, business or affairs of the Co-Borrowers to:

  (i) its outside counsel, auditors and rating agencies; or             (ii) any
other Person as IFC may deem appropriate in connection with any proposed sale,
transfer, assignment or other disposition of IFC’s rights under this Agreement
or any Transaction Document or otherwise for the purpose of exercising any
power, remedy, right, authority, or discretion relevant to this Agreement or any
other Transaction Document.

       (b)       Each Co-Borrower acknowledges and agrees that, notwithstanding
the terms of any other agreement between the Co-Borrowers and IFC, a disclosure
of information by IFC in the circumstances contemplated by Section 8.06(a) does
not violate any duty owed to the Co-Borrowers under this Agreement or under any
such other agreement.

43

 

ANNEX A

Page 1 of 1

CO-BORROWERS/PROJECT AUTHORIZATIONS

Section (1). Authorizations Already Obtained

    (a) Board of Investments (“BOI”) certificate of compliance with
pre-qualification requirements under the Retail Trade Liberalization Act of 2000
    (b) Bangko Sentral ng Pilipinas (“BSP”) Certification(s) of Inward
Remittance (as required under Section 5, Retail Trade Act, and Section 3, Rule
VII, Implementing Rules and Regulations of the Retail Trade Act , or “IRR”)    
(c) Charter documents for each Co-Borrower     (d)

Environmental Compliance Certificate for the Ortigas Store

    (e) BOI approval for the Fort Bonifacio Store (Section 4, Rule VII, IRR)    
(f) Certificates of Zoning Compliance from the local Authorities in each city in
the Philippines where the Co-Borrowers have a store/branch     (g) Proof of
submission of the most recent verified statement under oath issued by the
Corporate Secretary of PSMT (which statement must be submitted annually to the
BOI) stating (i) the number and location of stores of the enterprise and the
status of operations; and (ii) the maintenance of required minimum capital
(Section 5, Rule VII, IRR; the “Verified Annual Statement”)     (h) Proof of
submission of quarterly verified statement under oath (the “Verified Quarterly
Statement”) as of 31 March 2002 submitted to the BOI attesting to the ratio of
local and imported inventory, for the last three quarters (Section 3, Rule IX,
IRR)     Section (2). Authorizations to be Obtained Prior to First Disbursement
    (a) Proof of submission of Quarterly Verified Statement under oath submitted
to the BOI attesting to the ratio of local and imported inventory, for the last
three quarters, if applicable (Section 3, Rule IX, IRR)     (b) Approval of the
Loan from the BSP     (c) Registration of (i) lease agreements for the Ortigas
Store and the Alabang Store, and (ii) the real estate mortgage and chattel
mortgage created under the Security Documents with the pertinent Registrars of
Deeds, and annotation thereon on any title certificates over the underlying land
    (d) Documentary stamp tax return in respect of the Omnibus Agreement     (e)
BOI approval for each of the Alabang Store and the Ortigas Store (Section 4,
Rule VII, IRR)       (f) Environmental Compliance Certificate for the Alabang
Store     Section (3). Authorizations to be Obtained no later than the date
stated below

44

 

(a) Submission of copies of the signed Loan Agreement to the BSP, no later than
two weeks after the date hereof     (b) Confirmation from the BSP that the Loan
Agreement is in accordance with the BSP’s approval thereof to be obtained within
three months following the date in (a) above     (c) Notation of each
Disbursement with the BSP, prior to the last day of the month within which each
such Disbursement is made     (d) Registration of the Loan with the BSP within
one month from the earlier of (1) full disbursement of the Loan, and (2)
cancellation of the remaining undrawn portion thereof     (e) Registration of
each Mortgage Supplement (as such term is defined in the Security Documents),
executed pursuant to the Security Documents with the Registrar of Deeds for
Muntinlupa or otherwise (as appropriate), and annotations relating thereto on
title certificates of the Co-Borrowers, in accordance with the Security
Documents     (f) BOI approval for each of the Aseana Store and the
Congressional Store, prior to the opening of the Aseana Store, and prior BOI
approval for opening additional stores/branches (Section 4, Rule VII, IRR)    
(g) Submission to the BOI of Verified Quarterly Statements and Verified Annual
Statements as the same fall due     (h) BSP certificate of inward remittance for
additional capital (if any)     (i) Environmental Compliance Certificate for any
new stores     (j) Department of Trade and Industry (through the BOI) approval
of lease contracts for land where any store is located (as applicable) under
Republic Act No. 7652 otherwise known as the Investors’ Lease Act.

45

 

ANNEX B

Page 1 of 1

INSURANCE REQUIREMENTS

         

1.

CONSTRUCTION PHASE             a) Construction All Risks, based on full contract
value and including:               i) riot and strike               ii) debris
removal               iii) extra expenses               iv) maintenance        
      v) third party liability               vi) civil commotion
(insurrection/rebellion)             b) Marine cargo             c) Marine delay
in start-up (depending on shipping schedule, and any assessed exposure)        
  2. OPERATIONAL PHASE             a) Fire and named perils or All Risks, based
on replacement cost of assets             b) machinery breakdown ( if
applicable)             c) business interruption             d) third party
liability             e) civil commotion (insurrection/rebellion)           3.
AT ALL TIMES             Such insurances as required by local legislation.

46

 

ANNEX C
Page 1 of 4

METHODOLOGY

(FOR DETERMINATION OF THE BASE FIXED RATE FOR EACH LOAN DISBURSEMENT AND
CALCULATION OF THE REDEPLOYMENT COSTS)

      Section (A)   Methodology for Determination of the Base Fixed Rate      
The Base Fixed Rate for each Disbursement is the weighted average of the swap
rates for all maturities in that Disbursement, as determined as follows (see
also attached example of calculation):       (1)   The amount of each
Disbursement is first allocated for repayment across equal amounts on each of
the maturity dates specified in the repayment schedule appearing in Section
3.05(a) (Repayment) (each such amount an “Installment”).        (2)   Each
Installment has a Tenor (a “Tenor”) equal to the period commencing from the date
of the relevant Disbursement to the date on which such Installment has been
allocated for repayment.       (3)   On the Interest Rate Setting Date for the
relevant Disbursement, IFC determines the fixed rate swap equivalent for each
Installment (a “Fixed Rate Swap Equivalent”), i.e., the fixed interest rate
payable in the swap market against receipt of interest at LIBOR, in respect of a
specified maturity matching the Tenor of that Installment.       For the
purposes of this Annex C:       (a)    “LIBOR” means the British Bankers’
Association London interbank offered rate for deposits in the Loan Currency;    
  (b)   the swap market information used to determine the Fixed Rate Swap
Equivalent for each Installment is obtained from the Telerate rate fixing page
for the Loan Currency (currently page 42276), on the Interest Rate Setting Date;
and if that information cannot be obtained from the Telerate Service, IFC shall
obtain that information from the relevant rate-fixing page available on the
Reuters Service or, if not available, on the Bloomberg Financial Markets
Service;

47

 

ANNEX C
Page 2 of 4

           (c)   if all the services referred to in the preceding paragraph
cease to be available, or if none of them contains the necessary swap market
information, whether on the relevant Interest Rate Setting Date or generally,
then IFC will determine the Fixed Rate Swap Equivalent for each Installment:    
           (i)   to the extent available, from a live screen of a financial
markets information provider that IFC, in its reasonable opinion, considers
appropriate, the information to be obtained on the Interest Rate Setting Date as
of 11:00 a.m., New York time; or               (ii)   using whatever equivalent
reasonable means of calculation that IFC, in its reasonable opinion, considers
appropriate; and           (d)   swap market rates shall be interpolated on a
straight-line basis so as to match the actual Tenor of each Installment.        
  (4)   The Fixed Rate Swap Equivalent for each Installment is then allocated a
weight based on the Tenor and amount of that Installment (a “Weight”). Each such
Weight is expressed as a percentage, i.e., the percentage which the product of
the amount of an Installment times its Tenor represents of the sum of all those
products calculated for all the Installments in the relevant Disbursement.      
   
(5)
  Each Weight so determined is then multiplied by its corresponding Fixed Rate
Swap Equivalent and the products so obtained for all Installments are added
together to obtain the weighted average swap rate (the “Weighted Average Swap
Rate”).            (6)   The Weighted Average Swap Rate for the relevant
Disbursement is then converted to the rate basis used for the Loan (i.e., actual
number of days/360) and rounded up to the nearest two decimal places to produce
the Base Fixed Rate for that Disbursement.           Section (B)   Methodology
for Calculation of the Redeployment Cost           1.   The redeployment cost
equals the amount in excess of zero, if any, obtained by deducting (x) the
Present Value of the Available Income Stream of the amount to be prepaid from
(y) the Present Value of the Original Income Stream of the amount to be prepaid.

48

 

ANNEX C
Page 3 of 4

2.

For the purpose of this Section:             (a) the “Original Income Stream of
the amount to be prepaid” means the aggregate amount of interest originally
scheduled to be paid on the principal amount to be prepaid from the date of
prepayment until the final maturity date of the Loan, calculated at the Loan
Interest Rate. If the relevant prepayment occurs before the Loan Consolidation
Date, the applicable interest rate shall be the weighted average of all
Disbursement Interest Rates then in effect, calculated using the methodology set
forth in Section 3.03(f) (Interest);             (b) the “Available Income
Stream of the amount to be prepaid” means the aggregate amount of interest that
would have accrued, from the date of prepayment until the final maturity date of
the Loan, on the principal amount to be prepaid had such amount been disbursed
on the prepayment date, calculated at an interest rate equal to the sum of (i)
the Spread and (ii) the Base Fixed Rate applicable to such hypothetical
disbursement, determined two (2) business days prior to the date of prepayment
in accordance with Annex C, Section (A); and             (c) the “Present Value”
of the relevant Income Stream is the value of the Original Income Stream or, as
the case may be, the Available Income Stream discounted back to the date of
prepayment from each of the relevant Interest Payment Dates at a discount rate
equal to the Base Fixed Rate determined pursuant to paragraph (b) above.        
      3. The determination by IFC of the redeployment cost shall be final and
conclusive and bind the Borrower (unless the Borrower shows to IFC’s
satisfaction that the determination involves manifest error).                4.
The determination by IFC of the redeployment cost shall be final and conclusive
and bind the Borrower (unless the Borrower shows to IFC’s satisfaction that the
determination involves manifest error).

49

 

ANNEX C
Page 4 of 4

EXAMPLE

Applicable Swap Rates (from Telerate page 42276)

Rate Setting Date: 7 Feb 1998 Effective Date: 9 Feb 1998 Quote Basis: Semi
Annual, 30/360 (by market convention)     Maturity   Offered Rate
                   3 mo 0 3.100 %                    1 Years 1 3.200 %
                  2 Years 2 3.300 %                    3 Years 3 3.400 %
                   4 Years 4 3.500 %                    5 Years 5 3.600 %
Interpolated 6 Years 6 3.650 %                   7 Years 7 3.700 % Interpolated
8 Years 8 3.800 % Interpolated 9 Years 9 3.900 %                   10 Years 10
4.000 % Interpolated 11 Years 11 4.100 %                    12 Years 12 4.200 %

Calculation of the Redeployment Cost on Prepayment of $15,000,000
Prepayment Date: 9 February, 1998
Same repayment schedule as in example in Section (A) of Annex C

Step 1. Determine Base Fixed Rate for a hypothetical Disbursement of principal
amount to be prepaid (i.e., $15,000,000) as of prepayment date (9 February,
1998).

Step 2. Add Loan Spread (3.00%) to Base Fixed Rate and then calculate income
stream for principal amount prepaid as Loan would be priced as of the prepayment
date.

Step 3. Using the Loan Interest Rate, calculate the income stream for the
principal amount prepaid.

Step 4. Calculate Present Value of each income stream.

Step 5. Subtract the Present Value of the Available Income Stream from the
Present Value of the Original Income Stream. The result, if in excess of zero,
is the redeployment cost.

50

 

SCHEDULE 1
Page 1 of 2

FORM OF CERTIFICATE OF INCUMBENCY AND AUTHORITY

[PSMT’s Letterhead]

[Date]

International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America

Attention: Director, Central and East Asia Department

Ladies and Gentlemen:

Certificate of Incumbency and Authority

       With reference to the Loan Agreement between us, dated ________, ___ (the
“Loan Agreement”), I, the undersigned [Chairman/Director] of [Name of
Co-Borrowers], (the “Co-Borrowers”), duly authorized to do so, hereby certify
that the following are the names, offices and true specimen signatures of the
persons [each] [any two] of whom are, and will continue to be, authorized:

       (a)       to sign on behalf of the Co-Borrowers the requests for the
disbursement of funds provided for in Section 3.02 (Disbursement Procedure) of
the Loan Agreement;

       (b)       to sign the certifications provided for in Section 5.02
(Conditions of First Disbursement) and Section 5.03 (Conditions of All
Disbursements) of the Loan Agreement; and

51

 

SCHEDULE 1
Page 1 of 2

       (c)       to take any other action required or permitted to be taken,
done, signed or executed under the Loan Agreement or any other agreement to
which IFC and the Co-Borrowers may be parties.

          *Name   Office   Specimen Signature          

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

         

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

     You may assume that any such person continues to be so authorized until you
receive authorized written notice from the Co-Borrowers that they, or any of
them, is no longer so authorized.

      Yours truly,         [NAME OF CO-BORROWERS]               By      

--------------------------------------------------------------------------------

    [Chairman/Director]      

52

 

SCHEDULE 2
Page 1 of 3

FORM OF REQUEST FOR DISBURSEMENT (LOAN)

[PSMT’s Letterhead]

[Date]

International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America

Attention: Director, Central and East Asia Department

Ladies and Gentlemen:

Investment No. 11213
Request for Loan Disbursement No. [      ]

1.       Please refer to the Loan Agreement (the “Loan Agreement”) dated
___________, ___, between PSMT Philippines, Inc. and PriceSmart, Inc. (together
the “Co-Borrowers”) and International Finance Corporation (“IFC”). Terms defined
in the Loan Agreement have their defined meanings whenever used in this request.

2.       The Co-Borrowers irrevocably requests the disbursement on ____________,
____ (or as soon as practicable thereafter) of the amount of ____________
(____________) under the Loan (the “Disbursement”) in accordance with the
provisions of Section 3.02 (Disbursement Procedure) of the Loan Agreement. You
are requested to pay such amount to the account in [New York/Philippines] of
[Name of Co-Borrowers] [Name of correspondent Bank], Account No. ____________ at
[Name and Address of Bank] [for further credit to the Co-Borrowers’ Account No.
________ at [Name and address of Bank] in [city and country].

53

 

SCHEDULE 2
Page 2 of 3

3.       There is enclosed a signed [, stamped,] but undated receipt for the
amount of the Disbursement. The Co-Borrowers authorize IFC to date such receipt
with the date of actual disbursement by IFC .

4.       For the purpose of Section 5.02 (Conditions of All Disbursements) and
Section 5.03 (Co-Borrowers’ Certification) of the Loan Agreement, the
Co-Borrowers certify as follows:

  (a) no Event of Default and no Potential Event of Default has occurred and is
continuing;             (b) the proceeds of the Disbursement are at the date of
this request needed by the Co-Borrowers for the purpose of the Project, or will
be needed for such purpose within three (3) months of such date;             (c)
since the date of the Loan Agreement nothing has occurred which has or could
reasonably be expected to have a Material Adverse Effect;             (d) since
[insert date] [the date of the Loan Agreement] neither Co-Borrower has incurred
any material loss or liability (except such liabilities as may be incurred by
the Co-Borrowers in accordance with Section 6.02 (Negative i) of the Loan
Agreement);              (e) the representations and warranties made in Article
IV (Representations and Warranties) of the Loan Agreement are true on the date
of this request and will be true on the date of Disbursement with the same
effect as if such representations and warranties had been made on and as of each
such date [(but in the case of Section 4.01(c), without the words in
parenthesis)];             (f) the proceeds of the Disbursement are not in
reimbursement of, or to be used for, expenditures in the territories of any
country which is not a member of the World Bank or for goods produced in or
services supplied from any such country;             (g) after giving effect to
the Disbursement, neither Co-Borrower will be in violation of:               (i)
its Charter;               (ii) any provision contained in any document to which
either Co-Borrower is a party (including the Loan Agreement) or by which either
Co-Borrower is bound; or

54

 

SCHEDULE 2
Page 3 of 3

              (iii) any law, rule, regulation, Authorization or agreement or
other document binding on the Co-Borrowers directly or indirectly, limiting or
otherwise restricting the Co-Borrowers’ borrowing power or authority or its
ability to borrow; and             (h) after giving effect to the Disbursement:
              (i) the Current Ratio would not be less than 1.2; and            
  (ii) the Long-term Debt to Equity Ratio would not exceed 50:50,            
(i) that Disbursement is being made pro rata with the disbursement each of the
Parallel Loans provided for in the Parallel Loan Agreements and any other senior
loan forming part of the Financial Plan;

       The above certifications are effective as of the date of this Request for
Disbursement and shall continue to be effective as of the date of the
Disbursement. If any of these certifications is no longer valid as of or prior
to the date of the requested Disbursement, the Co-Borrowers undertake to
immediately notify IFC.

      Yours truly,         [NAME OF CO-BORROWERS]               By      

--------------------------------------------------------------------------------

    Authorized Representative      

Copy to: Manager, Financial Operations Unit
          International Finance Corporation

55

 

SCHEDULE 3
Page 1 of 1

FORM OF LOAN DISBURSEMENT RECEIPT

[PSMT’s Letterhead]

International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America

Attention: Manager, Financial Operations Unit

Ladies and Gentlemen:

Investment No. 11213
Disbursement Receipt No. [         ] (Loan)

       We, PSMT Philippines, Inc. and PriceSmart, Inc., hereby acknowledge
receipt on the date hereof, of the sum of ___________ (___) disbursed to us by
International Finance Corporation (“IFC”) under the Loan of __________ (___)
provided for in the Loan Agreement dated ______, ____ between our company and
IFC.

      Yours truly,         [NAME OF CO-BORROWERS]               By      

--------------------------------------------------------------------------------

    Authorized Representative***      

56

 

SCHEDULE 4
Page 1 of 2

FORM OF SERVICE OF PROCESS LETTER

[Letterhead of Agent for Service of Process]

[Date]

International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
Attention: Director, Central and East Asia Department

                     Re: New York, New York State, United States of America Dear
Sirs:

       Reference is made to Section 5.01(n) of the Loan Agreement to be entered
into (the “Loan Agreement”) between PriceSmart, Inc. and PS Philippines, Inc.
(together the “Co-Borrowers”) and International Finance Corporation (“IFC”).
Unless otherwise defined herein, capitalized terms used herein shall have the
meaning specified in the Loan Agreement.

       Pursuant to Section 8.05(d) (Applicable Law and Jurisdiction) of the Loan
Agreement, the Co-Borrowers have irrevocably designated and appointed the
undersigned, [CT Corporation System,] with offices currently located at [111
Eighth Avenue, 13th Floor, New York, New York 10011,] as its authorized agent to
receive for and on its behalf service of process in any legal action or
proceeding with respect to the Loan Agreement and the other Transaction
Documents to which it is a party in the courts of the United States of America
for the Southern District of New York.

       The undersigned hereby informs you that it has irrevocably accepted that
appointment as process agent as set forth in Section 8.05(d) of the Loan
Agreement from _______ until December 31, 2012 and agrees with you that the
undersigned (i) shall inform IFC promptly in writing of any change of its
address in New York, (ii) shall perform its obligations as such process agent in
accordance with the relevant provisions of Section 8.05 (Applicable Law and
Jurisdiction) of the Loan Agreement, and (iii) shall forward promptly to the
Co-Borrowers any legal process received by the undersigned in its capacity as
process agent.

57

 

SCHEDULE 4
Page 2 of 2

       As process agent, the undersigned and its successor or successors agree
to discharge the above-mentioned obligations and will not refuse fulfillment of
such obligations as provided under Section 8.05 (d) of the Loan Agreement.

      Yours truly,         [CT Corporation System]               By      

--------------------------------------------------------------------------------

    Title:      

cc: [Co-Borrowers]

58

 

SCHEDULE 5
Page 1 of 2

MATTERS TO BE COVERED IN LEGAL OPINIONS

PART I: The legal opinion of counsel in the Philippines should cover the
following matters:

  (a) the organization, existence and corporate power and authority of PSPH and
its authorized and subscribed share capital;         (b) in relation to PSPH,
the matters referred to in subsections (a), (c), (d), and (e) of Section 5.01
(Conditions of First Disbursement) of the Loan Agreement;         (c) the title
of PSPH to, or other interest of PSPH in, the assets which are the subject of
the IFC Security;         (d) the title of PSPH’s shareholders in their shares
in the PSPH;         (e) with respect to PSPH, the authorization, execution,
validity and enforceability of this Agreement and each of the other Transaction
Documents and any other documents necessary or desirable to the implementation
of any of those agreements or documents;         (f) the compliance with all
obligations referred to in Section 3.16(a) (Expenses);         (g) the
priorities or privileges, if any, that creditors of PSPH, other than IFC, may
have by reason of law;         (h) IFC’s repatriation rights in respect of the
Loan; and         (i) such other matters relating to the transactions
contemplated by this Agreement as IFC reasonably requests.

59

 

SCHEDULE 5
Page 2 of 2

PART II: The legal opinion of PSMT’s counsel in San Diego, California should
cover the following matters:

  (a) the organization, existence and corporate power and authority of PSMT and
its authorized and subscribed share capital;         (b) the matters referred to
in subsections (a), (c), (d), and (e) of Section 5.01 (Conditions of First
Disbursement) of the Loan Agreement;         (c) the title of PSMT to, or other
interest of PSMT in, the assets which are the subject of the IFC Security;      
  (d) the authorization, execution, validity and enforceability of this
Agreement and each of the other Transaction Documents and any other documents
necessary or desirable to the implementation of any of those agreements or
documents;         (e) the compliance with all obligations referred to in
Section 3.16(a) (Expenses);         (f) the priorities or privileges, if any,
that creditors of PSMT, other than IFC, may have by reason of law;         (g)
such other matters relating to the transactions contemplated by this Agreement
as IFC reasonably requests.       PART III: The legal opinion of IFC’s counsel
in New York should cover the following matters:         (a) the authorization,
execution, validity and enforceability of this Agreement, the Amended Escrow
Account Agreement and the Pledge Agreement and any other documents necessary or
desirable to the implementation of any of those agreements or documents;        
(b) the security interest pursuant to the Pledge Agreement has been duly created
and perfected as first ranking security interests in all assets and rights which
are the subject of the Pledge Agreement;         (c) the security interest
pursuant to the Original Escrow Agreement remains perfected as a first ranking
security interest in all assets and rights which are the subject of the Original
Escrow Agreement; and         (d) such other matters relating to the
transactions contemplated by this Agreement as IFC reasonably requests.      

60

 

SCHEDULE 6
Page 1 of 2

FORM OF LETTER TO EACH CO-BORROWER’S AUDITORS

[PSMT/PSPH’s Letterhead]

[Date]

[NAME OF AUDITORS]
[ADDRESS]

 

Ladies and Gentlemen:

       We hereby authorize and request you to give to International Finance
Corporation of 2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, United
States of America (“IFC”), all such information as IFC may reasonably request
with regard to the financial statements of the undersigned company, both audited
and unaudited. We have agreed to supply that information and those statements
under the terms of an Loan Agreement between the undersigned company and IFC to
be entered into shortly hereaft (the “Loan Agreement”). For your information we
enclose a copy of the latest draft of the Loan Agreement.

       We authorize and request you to send two copies of the audited accounts
of the undersigned company to IFC to enable us to satisfy our obligation to IFC
under Section 6.03(b)(i) (Affirmative Covenants) of the Loan Agreement. When
submitting the same to IFC, please also send, at the same time, a copy of your
full report on such accounts in a form reasonably acceptable to IFC.

     Please note that under Section 6.03(b)(ii) and (iii) and Section 6.03(c) of
the Loan Agreement, we are obliged to provide IFC with:

       (a)       a copy of the annual and any other management letter or other
communication from you to the undersigned company or its management commenting
on, among other things, the adequacy of the undersigned company’s financial
control procedures and accounting and management information system; and

       (b)       a report by you certifying that, based upon its audited
financial statements, the undersigned company was in compliance with the
financial covenants contained in Section 6.02 (Negative Covenants) of the Loan
Agreement as at the end of the relevant Financial Year or, as the case may be,
detailing any non-compliance.

       Please also submit each such communication and report to IFC with the
audited accounts.

       For our records, please ensure that you send to us a copy of every letter
which you receive from IFC immediately upon receipt and a copy of each reply
made by you immediately upon the issue of that reply.

      Yours truly,         [NAME OF CO-BORROWERS]               By      

--------------------------------------------------------------------------------

    Authorized Representative      

61

 

Enclosure

      cc:

Director
[Name of Department]
International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America

62

 

SCHEDULE 7
Page 1 of 2

FORM OF CO-BORROWERS’ CERTIFICATION ON DISTRIBUTION OF DIVIDENDS

[PSMT’s Letterhead]

International Finance Corporation
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433 [Date]   Attention: _______________ Re:
[Country/_________]        

Dear Sirs:

1.       Please refer to the Loan Agreement (the “Loan Agreement”) dated
____________, ____ between PriceSmart, Inc. and PSMT Philippines, Inc. (together
the “Co-Borrowers”) and International Finance Corporation (“IFC”). Terms defined
in the Loan Agreement have their defined meanings whenever used in this request.

2.       This is to inform you that [PSMT/PSPH] plans a distribution of
dividends to its shareholders in the aggregate amount of ______________
(______), such distribution to commence on or about _________, ___. Pursuant to
Section 6.02(a) (Negative Covenants) of the Loan Agreement, the Co-Borrowers
hereby certify that, as at the date hereof:

  (a) the proposed distribution will be entirely out of retained earnings and
such retained earnings do not include any amount resulting from the revaluation
of any of the Co-Borrowers’ assets;             (b) no Event of Default or
Potential Event of Default has occurred and is continuing;             (c) after
giving effect to the proposed distribution:               (i) the Current Ratio
would be at least 1.2;               (ii) the Long-term Debt to Equity Ratio
will not be in excess of 50:50; and               (iii) the Long-term Debt
Service Coverage Ratio will not be less than 1.3.

3.       The Co-Borrowers undertake not to give effect to the proposed
distribution or any part thereof if, at the time of so doing or after giving
effect to it, the Co-Borrowers could not certify the matters referred to in
section 2 of this certification.

      Yours truly,         [NAME OF CO-BORROWERS]               By      

--------------------------------------------------------------------------------

    Authorized Representative      

63

 

SCHEDULE 8
Page 1 of __

FORM OF PROGRESS REPORT RE: PROJECT IMPLEMENTATION

The Co-Borrowers shall provide an overview of the Project and highlight the
major events during the period covered in a manner similar to, and deemed
acceptable by IFC, the overview provided pursuant to PSMT’s obligations under
the LAC Agreements.

The Co-Borrowers shall provide such further information in relation to such
overview as IFC may reasonably require.

64

 

SCHEDULE 9
Page 1 of 1

INFORMATION TO BE INCLUDED IN ANNUAL REVIEW OF OPERATIONS

      [(1) Sponsors and Shareholdings. Information on significant changes in
share ownership of Co-Borrowers, the reasons for such changes, and the identity
of major new shareholders.       (2) Country Conditions and Government Policy.
Report on any material changes in local conditions, including government policy
changes, that directly affect the Co-Borrowers (e.g. changes in government
economic strategy, taxation, foreign exchange availability, price controls, and
other areas of regulations.)       (3) Management and Technology. Information on
significant changes in (i) the Co-Borrowers’ senior management or organizational
structure, and (ii) technology used by the Co-Borrowers, including technical
assistance arrangements.       (4) Corporate Strategy. Description of any
changes to the Co-Borrowers’ corporate or operational strategy, including
changes in products, degree of integration, and business emphasis.       (5)
Markets. Brief analysis of changes in Co-Borrowers’ market conditions (both
domestic and export), with emphasis on changes in market share and degree of
competition.       (6) Operating Performance. Discussion of major factors
affecting the year’s financial results (sales by value and volume, operating and
financial costs, profit margins, capacity utilization, capital expenditure,
etc.).       (7) Financial Condition. Key financial ratios for previous year,
compared with ratios covenanted in the Loan Agreement.

65

 

SCHEDULE 10

FORM OF ANNUAL MONITORING REPORT

 

Environmental and Social Performance
Annual Monitoring Report (AMR)

PSPH
PHILIPPINES
IFC PROJECT NUMBER 11213

 

REPORTING PERIOD: FROM ___________ TO_____________

AMR SUBMISSION DATE: ____________

66

 

ANNUAL MONITORING REPORT
TABLE OF CONTENTS

      Section Title Page Number       1. Preparation Instructions 67 2. PS PHILS
Certification 68 3. Significant Incidents Report 69 4. Other Information and
Feedback 69 5. Sampling and Measurement Reports 71       Annexes   1. Potable
Water Monitoring Report   2. Liquid Effluent Discharges Monitoring Report   3.
Occupational Health and Safety Incidents Report   4. Solid Waste Generation and
Disposal Report         Attachments     A Pollution Prevention and Abatement
Handbook, Part III: Monitoring  

67

 

SECTION 1: PREPARATION INSTRUCTIONS

1.1 PS PHILS Obligation To Report Environmental and Social Performance

IFC’s Investment Agreement covenants require PS PHILS to prepare an Annual
Monitoring Report (AMR) for PS PHILS facilities and operations. This document
comprises IFC’s preferred format for environmental and social performance
reporting.

1.2 When PS PHILS is Required To Report

IFC’s Investment Agreement requires designated PS PHILS personnel to complete
and submit annual environmental and social monitoring reports in compliance with
the schedule stipulated in the Investment Agreement.

The following PS Phils locations are covered by the AMR reporting requirements:

 * Fort Bonifacio Store
 * Ortigas Store
 * Congressional Store
 * Alabang Store
 * Aseana Store

1.3 What PS PHILS is Required to Report

PS PHILS must report qualitative (see Sections 2, 3 and 4) and quantitative (see
Section 5) project performance data each year of the investment for the
environmental and social monitoring parameters included in this report format.
Specifically, the AMR must incorporate the following elements.

1.3.1 Certification of the validity and representative ness of the information
provided in the AMR (Section 2);       1.3.2 A description of all significant
environmental, health & safety, and social incidents that occurred during the
reporting period (Section 3);       1.3.3 Provision of additional information
about PS PHILS activities that IFC should know about (e.g. awards, initiatives,
etc.) (Section 4);        1.3.4 Quantitative performance monitoring data
summaries1 in comparison to appropriate World Bank Group (WBG) and International
Finance Corporation (IFC) guidelines, and Philippine requirements (Section 5);
and,       1.3.5 An explanation of all violations of WBG/IFC guidelines or
Philippine regulatory limits that have occurred, the cause of the exceedance,
and the corresponding corrective measures planned or underway to prevent future
occurrences (Section 6).            

--------------------------------------------------------------------------------

  1 AMRs should incorporate data summaries only. Raw analytical data upon which
summaries are based should not be submitted with this AMR but must be preserved
by the sponsor and presented to IFC upon demand.

68

 

SECTION 2: PS PHILS CERTIFICATION

      2.1 IFC Project Identification: PS PHILS       2.2 IFC Project Sponsor:
PSMT Philippines Inc (PS Phils) and PSMT       2.3 IFC Investment Number: 11213
      2.4 AMR reporting period: From _______________ to _______________      
2.5 PS PHILS authorized representative:
________________________________________________________________       2.6
Contact telephone #: (country code-city code-local telephone
number):_____________________________________________       2.7 Contact fax #:
(country code-city code-local telephone
number):_____________________________________________       2.8 Contact e-mail
address: _____________________________________________       2.9 PS PHILS web
page addresses (if applicable): www.___________._______       2.10 I certify
that the data contained in this AMR completely and accurately represent PS PHILS
operations during this reporting period. I further certify that analytical data
summaries2 incorporated into Section 5 are based upon data collected and
analyzed in a manner consistent with the World Bank Group’s Pollution Prevention
and Abatement Handbook, Monitoring.3    

   

--------------------------------------------------------------------------------

PS PHILS Employee Name Signature

     

--------------------------------------------------------------------------------

  2 Raw analytical data upon which summaries are based should not be submitted
with this AMR but must be preserved by PS PHILS and presented to IFC upon
demand. 3 See Attachment A

69

 

SECTION 3: REPORT OF SIGNIFICANT EVENTS AND ISSUES

3.1 Reporting Events

PS PHILS personnel are required to report all environmental, health and safety
and social events4 that may have caused damage; brought about injuries or
fatalities or other health problems; attracted the attention of outside parties;
generated nuisance complaints (e.g. for littering, noise or traffic congestion),
affected site employees or adjacent populations; affected cultural property; or
created potential liabilities for PS Phils.

Indicate in the table below whether any such incident has occurred at PS Phils
sites during the reporting period.

--------------------------------------------------------------------------------

Site Incident to report (Yes/No)

--------------------------------------------------------------------------------

Fort Bonifacio Store  

--------------------------------------------------------------------------------

Ortigas Store  

--------------------------------------------------------------------------------

Congressional Store  

--------------------------------------------------------------------------------

Alabang Store  

--------------------------------------------------------------------------------

Aseana Store  

--------------------------------------------------------------------------------

3.2 Describing Events

Please provide separate reports for each incident that occurred during the
reporting period. Attach photographs, plot plans, newspaper articles and all
relevant supporting information that IFC will need to understand the incident
and its resolution.

The description of each significant event should contain the following sections:

  a) Date of event   b) Description of the event5   c) Affected people or
environment   d) Corrective actions   e) Reports sent to IFC and/or to
Philippine regulatory agencies   f) Repairs, clean up or other remedial measures
  g) Provide actual or estimated cost of repair, clean up or other remedial
measures   h) Lessons learned and included in employee training; preventive
measures or process changes instituted to prevent reoccurrence   i) Any limiting
factors which hinder PS Phils’ ability to prevent the type of incident from
re-occurring.

SECTION 4: OTHER INFORMATION AND FEEDBACK

Provide any additional information including the following6.

--------------------------------------------------------------------------------

  4 Examples of significant incidents follow. Chemical and/or hydrocarbon
materials spills; fire, explosion or unplanned releases; industrial injuries;
fatalities including transportation; ecological damage/destruction; local
population disruption; disruption of emissions or effluent treatment;
legal/administrative notice of violation; penalties, fines, or increase in
pollution charges; negative media attention; chance cultural finds; labor unrest
or disputes. 5Provide additional sheets as needed to completely describe the
significant incident. 6Provide additional sheets as needed for complete
information.

70

 

--------------------------------------------------------------------------------

    |_| Describe ongoing public consultation or community development
initiatives:     |_| In detail, describe print or broadcast media attention
given to PS PHILS during this reporting period:     |_| In detail, describe
interactions with non-governmental organizations (NGOs) or public scrutiny of PS
PHILS:     |_| Describe training and management initiatives on environmental or
social issues     |_| Describe PS PHILS public relations efforts on
environmental or social issues

71

 

SECTION 5: SAMPLING AND MEASUREMENT REPORTS

For each of the five PS Phils sites, please provide the following data.

5.1 POTABLE WATER SUPPLY

PS PHILS is required to collect representative samples of potable water supplied
for PS PHILS personnel and all PS PHILS processes, submit these samples for
laboratory analysis and report the results to IFC.

The reporting format for water supply testing appears in Annex 1

5.2 WASTEWATER DISCHARGES

For sites where PS Phils has installed its own wastewater treatment system (e.g.
Ortigas and Congressional), PS Phils is required to collect representative
samples of wastewater discharges, submit these samples for laboratory analysis
and report the results to IFC. This allows IFC to verify the performance of the
treatment system. Please indicate below which sites have dedicated wastewater
treatment systems.

--------------------------------------------------------------------------------

   Site Dedicated system? Discharges to?

--------------------------------------------------------------------------------

  Fort Bonifacio Store    

--------------------------------------------------------------------------------

  Ortigas Store Yes  

--------------------------------------------------------------------------------

  Congressional Store Yes  

--------------------------------------------------------------------------------

  Alabang Store    

--------------------------------------------------------------------------------

  Aseana Store    

--------------------------------------------------------------------------------

The reporting format for wastewater testing appears in Annex 2.

5.3 OCCUPATIONAL HEALTH AND SAFETY

PS PHILS personnel are required to monitor, record, and report occupational
health and safety incidents and workplace conditions and report results to IFC.

The reporting format for occupational health and safety appears in Annex 3

5.4 SOLID WASTE MANAGEMENT

PS PHILS personnel are required to monitor collection and disposal of solid
waste and report the measurement results to IFC. This should include data on
recycling volumes.

The reporting format for solid waste management appears in Annex 4

5.5 NON-COMPLIANCE TO PHILIPPINE OR IFC REQUIREMENTS

If any of the above reports indicate non-compliance to Philippine regulations or
IFC guideline limits, please indicate (1) the likely reason for the
non-compliance and (2) the corrective actions PS Phils proposes to ensure
compliance.

72

 

--------------------------------------------------------------------------------

Annex 1. Potable Water Monitoring Report

--------------------------------------------------------------------------------

Please provide analysis for each store

---------------------------------------------------------------------------------------------------------------------------------------------------
 Sample Collection     Required Laboratory Analysis for Collected Samples        WBG/IFC          PS PHILS        Philippine         PS PHILS
   and Analysis                                                                  Maximum       Performance in     Regulatory      Performance in
     Frequency                                                                   Levels(7)      WBG/IFC units  Limits and Units  Philippine units
                                                                                               Annual average                   Annual average of
                                                                                                  of weekly                       weekly samples
                                                                                                   samples
---------------------------------------------------------------------------------------------------------------------------------------------------

                                  Store: Fort Bonifacio, Ortigas, Congressional, Alabang, Aseana (please specify)
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Potable Water Weekly  Monitoring Parameters
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Reporting Year                                                                   Year:                       Year:
---------------------------------------------------------------------------------------------------------------------------------------------------
     Annually      PH                                                             7.0-8.5
---------------------------------------------------------------------------------------------------------------------------------------------------
     Annually      Fecal coliform bacteria, Most Probable Number (MPN) or        < 1 /100 ml       /100 mls
                   plate count (PC)
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Potable Water Annual  Monitoring Parameters
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Reporting Year                                                                   Year:                       Year:
---------------------------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------------------------
                   Toxic substances
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Arsenic                                                       0.05 mg/l          mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Cadmium                                                       0.01 mg/l          mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Cyanide (as CN)                                               0.05 mg/l          mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Lead                                                          0.1 mg/l           mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Mercury                                                      0.001 mg/l          mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------
      Annual       Selenium                                                      0.01 mg/l          mg/l
---------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

7Source: International Standards for Drinking Water, World Health Organization,
1971.

73

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

|_| Data Interpretation and Corrective Actions for Non-Compliance:

74

 

--------------------------------------------------------------------------------

Annex 2. Liquid Effluent Monitoring Report

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Please provide analysis for each store with a dedicated wastewater treatment
facility

---------------------------------------------------------------------------------------------------------------------------------------------------
 Sample Collection     Required Laboratory Analysis for Collected Samples     WBG/IFC Maximum     PS PHILS        Philippine         PS PHILS
   and Analysis                                                                   Levels       Performance in     Regulatory      Performance in
     Frequency                                                                                  WBG/IFC units  Limits and Units  Philippine units
                                                                                               Annual average                   Annual average of
                                                                                                 of monthly                      monthly samples
                                                                                                   samples
----------------------------------------------------------------------------------------------------------------------------------------------------
                                  Store: Fort Bonifacio, Ortigas, Congressional, Alabang, Aseana (please specify)
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Liquid Effluent Monitoring Parameters
---------------------------------------------------------------------------------------------------------------------------------------------------
                   Reporting Year                                                             Year:                             Year:
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       PH                                                               6-9
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       Biochemical oxygen demand (BOD5)                               50 mg/L                  mg/L
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       Chemical oxygen demand (COD)                                  250 mg/L                  mg/L
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       Oil and grease                                                 10 mg/L                  mg/L
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       Total suspended solids (TSS)                                   50 mg/L                  mg/L
---------------------------------------------------------------------------------------------------------------------------------------------------
    Annually       Total coliform bacteria, Most Probable Number (MPN) or      <= 400 /100 ml          /100 mls
                   plate count (PC)
---------------------------------------------------------------------------------------------------------------------------------------------------

|_| Data Interpretation and Corrective Actions for Non-Compliance:

75

 

--------------------------------------------------------------------------------

Annex 3. Occupational Health and Safety Incidents Report

PS PHILS EMPLOYEES

--------------------------------------------------------------------------------

|_|       Incident statistics reporting for PS PHILS personnel.

---------------------------------------------------------------------------------------------------------------------------------------------------------
 PS PHILS Occupational Health and         Number of       PS PHILS Occupational Health and Safety Incident Details(8)
       Safety Incidents                 Incidents this
                                       Reporting Period
---------------------------------------------------------------------------------------------------------------------------------------------------------

                                                          1.  Date(s) of  fatality: _________________________________
Fatalities                               __________
                                                          2. Cause of fatality: ___________________________________________________

                                                          3. Corrective or preventive measures to prevent reoccurrence:
                                                          ____________________________________________________________________

---------------------------------------------------------------------------------------------------------------------------------------------------------

                                                          1.  Date(s) of lost time accidents: _________________________________
Total Lost Time Accidents(9)             __________
                                                          2. Cause(s) of lost time accident(s):
                                                          _______________________________________________________________________

                                                          3. Corrective or preventive measures to prevent reoccurrence:
                                                          _______________________________________________________________________

---------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

8Provide additional sheets as needed.
9Incapacity to work for at least one full workday beyond the day on which the
accident or illness occurred.

 

76

 

---------------------------------------------------------------------------------------------------------------------------------------------------------
 PS PHILS Occupational Health and         Number of       PS PHILS Occupational Health and Safety Incident Details(8)
       Safety Incidents                Incidents this
                                      Reporting Period
---------------------------------------------------------------------------------------------------------------------------------------------------------

                                                          1.       Total lost workdays this reporting period: _____________
Total number of lost workdays(10)        __________       2.       Total lost workdays last reporting period: _____________
resulting from incidents.                                 3.       Total lost workdays next to last reporting period: _____________

                                                          1.       Total man-hours worked this reporting period: _____________
                                                          2.       Incidence = total lost workdays/total hours worked
Total man-hours worked (total                             3.       Incidence this reporting period: __________
hours worked by all employees)                            4.       Incidence last reporting period: __________
during the reporting period and                           5.       Incidence next to last reporting period: __________
Incidence calculation.

---------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

10Lost workdays are the number of workdays (consecutive or not) beyond the date
of injury or onset of illness that the employee was away from work or limited to
restricted work activity because of an occupational injury or illness.

77

 

|_| Fire Safety Monitoring

--------------------------------------------------------------------------------------------------------------------------------------------
    PS PHILS Fire Safety    Mandatory Frequency      Date(s)        Observed       Corrective Actions and Schedule
   Verification Activities                          Performed    Deficiencies(11)       For Implementation(12)
--------------------------------------------------------------------------------------------------------------------------------------------

1.   Fire Drills            Minimum: three (3)/year

--------------------------------------------------------------------------------------------------------------------------------------------

2.   Inspection and
     certification of fire  Minimum: one (1)/year
     detection and
     suppression electrical
     and mechanical systems.

--------------------------------------------------------------------------------------------------------------------------------------------

3.   Portable fire          Minimum: two (2)
     extinguisher           inspections/year
     inspection,
     refilling/recharging.
--------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

11Attach additional sheets as needed to fully describe observed deficiencies.
12Attach additional sheets as needed to fully describe corrective actions and
implementation.

78

 

--------------------------------------------------------------------------------

Annex 4. Solid Waste Generation and Disposal Report

--------------------------------------------------------------------------------

|_|       Please provide analysis for each store

--------------------------------------------------------------------------------------------------------------------------------------------------------------
                Waste Type                  Quantities Generated(13)         Method of Storage(14)                   Disposal Method(15)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Store: Fort Bonifacio, Ortigas, Congressional, Alabang, Aseana (please specify)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Paper and carton product
         containers
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Plastic packaging
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Other transportation packaging
         (e.g. wooden pallets)
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Office and domestic waste
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Car tires
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Photographic chemicals
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Food waste
--------------------------------------------------------------------------------------------------------------------------------------------------------------
|X|      Other (specify)
--------------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

13Provide total weight (metric tons) or volume (m3)/month and total weight
(metric tons) or volume (m3)/year.
14State how collected waste is stored on site (e.g. drums, bins, other
containers, etc.) and any treatment rendered (e.g. solidification, filtration,
etc.).
15Specify if (1) re-used, (2) sold, (3) collected for recycling (and by whom),
collected for disposal (and by whom and where disposed to e.g. municipal
landfill)

79

 

ATTACHMENT A
POLLUTION PREVENTION AND ABATEMENT HANDBOOK – PART III, MONITORING

 

 

 

http://wbln0018.worldbank.org/essd/essd.nsf/Docs/PPAH

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Volume III MORTGAGE AGREEMENT

       MORTGAGE AGREEMENT between PSPH and IFC.

ARTICLE I.
Definitions and Rules of Interpretation

       Section 1.01. Certain Defined Terms. Unless otherwise defined herein, all
capitalized terms used in this Mortgage Agreement that are undefined herein and
are defined in the IFC Loan Agreement (including those terms incorporated
therein by reference to another document) shall have the respective meanings
assigned to them in the IFC Loan Agreement.

       Section 1.02. Additional Definitions. In addition to the terms defined
pursuant to Section 1.01 whenever used in this Mortgage Agreement, unless the
context otherwise requires, the following terms have the following meanings:

“Appraisal Report” means any of the appraisal reports referred to in Section
5.02(b);     “Assets”

means the Real Assets and the Chattel owned and to be owned by PSPH;

    “Chattel” means the assets of PSPH referred to in Section 4.02, including
without limitation, all of the Chattel listed in Annex “B” of this Mortgage
Agreement;      “Chattel Mortgage” means the mortgage or mortgages created and
to be created by PSPH over the Chattel pursuant to Article IV and other
provisions of this Mortgage Agreement;     “Collateral” refers to all property,
rights, title and interest of any kind or character covered by, or purported to
be covered by, this Mortgage Agreement; "Collateral Stores" means the Ortigas
Store and the Alabang Store;     “Collateral Store Sites” means the land area
where the Collateral Stores are located including all ancillary areas;    
“Future Chattel” means the Chattel other than those classified as Present
Chattel, including without limitation those listed in Part 2 of Annex “B” of
this Mortgage Agreement;      “Future Real Assets” means the Real Assets other
than those classified as Present Real Assets, including without limitation those
listed in Part 2 of Annex “A” of this Mortgage Agreement;     “IFC Loan
Agreement” has the meaning ascribed thereto in Recital (B) of the Omnibus
Agreement;     “Mortgage Supplement” means a document in substantially the form
of Exhibit “A” to be executed and registered pursuant to Sections 3.03 (b) and
4.03 (b);     “Mortgages” means the Real Estate Mortgage and the Chattel
Mortgage, together with the rights, benefits and remedies of IFC inherent
therein or provided for herein;    

81

 

    “Present Chattel” means the Chattel that exist and are owned by PSPH at the
time of the execution of this Agreement, including without limitation those
listed in Part 1 of Annex “B” of this Mortgage Agreement;      “Present Real
Assets” means the Real Assets that exist and are owned by PSPH at the time of
execution of this Agreement, including without limitation those listed in Part 1
of Annex “A” of this Mortgage Agreement;      “Property” means any right or
interest in or to property of any kind whatsoever, whether real, personal or
mixed and whether tangible or intangible, and regardless of whether owned or in
existence at the date of the execution of the IFC Loan Agreement, or thereafter
acquired or created     “Real Assets” means the real assets owned and to be
owned by PSPH referred to in Section 3.02, including without limitation, those
listed in Annex “A” of this Mortgage Agreement;     “Real Estate Mortgage” means
the mortgage or mortgages created and to be created by PSPH pursuant to Article
III and other provisions of this Mortgage Agreement;     “Required Collateral
Value” has the meaning ascribed thereto in Section 8.02 of this Mortgage
Agreement; and     “Secured Obligations” means collectively, (a) the obligations
of the Co-Borrowers to IFC to pay the principal of and interest and fees (and
all other amounts owing) on the Loan and under the Loan Agreement, and (b) all
other obligations and liabilities of the Co-Borrowers to IFC, whether direct or
indirect, absolute or contingent, due or to become due, under this Mortgage
Agreement or any other Transaction Document.

       Section 1.03. Rules of Interpretation. In this Mortgage Agreement, unless
the context otherwise requires, the rules of interpretation set forth in Section
1.04 of the IFC Loan Agreement shall govern mutatis mutandis, as if this
Mortgage Agreement were the “Agreement” referred to therein.

ARTICLE II.
Representations and Warranties

       Section 2.01. Representations and Warranties of PSPH. Without limiting
the generality of Section 4.01 of the IFC Loan Agreement, PSPH further
represents and warrants, as of the date hereof that:

  (a) Ownership of Assets. PSPH (i) is the legal and beneficial owner, with
good, valid, indefeasible and marketable rights, interest and title, of the
Present Real Assets and thePresent Chattel; and (ii) will be the legal and
beneficial owner, with good, valid, indefeasible and marketable rights, interest
and title to the Future Real Assets and Future Chattel;         (b) Freedom of
Assets from Liens. The Present Real Assets and Present Chattel are and will be,
and the Future Real Assets and Future Chattel will be, free from any Liens
(including liens or retained security titles of conditional vendors) of any
nature whatsoever;         (c) Government Approvals. no order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any Authorities (except for the (x)
registration with the appropriate Authorities of the Mortgages over the Present
Real Assets and Present Chattel after the execution of this Agreement, and (y)
registration with the appropriate Government Authorities of the Mortgages on the
Future

82

 

          Real Assets and Future Chattel after the execution of the Mortgage
Supplements, unless the applicable law permits the automatic attachment and
perfection of the Lien of the Mortgages on the Future Real Assets and Future
Chattel upon their coming into existence and the acquisition by PSPH of
ownership thereof), is required, (i) to authorize the execution, delivery and
performance of this Agreement or (ii) for the legality, validity, binding effect
and enforceability against PSPH and all third parties of this Agreement and the
Mortgages;          (d) Priority of Mortgages. that, subject to the
registrations stated in subsection (c) of this Section, the Mortgage constitutes
a Lien of first rank in favour of IFC in and to the Assets, enforceable as such
against PSPH, its creditors, and all third parties (except liens that are
mandatorily preferred under the laws of the Philippines).      

        Section 2.02. Continuing Representations. The representations and
warranties contained in Section 2.01 shall survive the execution of this
Mortgage Agreement and shall be deemed repeated on the date of each Disbursement
of the Loan.

ARTICLE III.
Real Estate Mortgage

       Section 3.01. Creation of the Real Estate Mortgage.

            (a) As security for the timely payment, discharge, observance and
performance of all of the Secured Obligations, PSPH:                      (i)
hereby creates, establishes and constitutes a first ranking Real Estate Mortgage
on the Present Real Assets in favour and for the benefit of IFC; and            
 

       (ii) hereby (x) agrees to and, to the fullest extent permitted by law,
does create, establish and constitute a first ranking Real Estate Mortgage in
favour and for the benefit of IFC on the Future Real Assets, upon their coming
into existence and the acquisition by PSPH, as the case may be, of ownership of
such Future Real Assets, and (y) further agrees that, to the fullest extent
permitted by law and without prejudice to the obligation of PSPH to execute and
register the Mortgage Supplements, a first ranking Real Estate Mortgage on the
Future Real Assets shall be created, established and constituted upon the
execution of the corresponding Mortgage Supplement under Section 3.03(b) in
respect of each such Future Real Asset over which a first ranking Real Estate
Mortgage is not created under the immediately preceding sub-clause (x), and that
such first ranking Real Estate Mortgage shall be subject to the same terms and
conditions of this Mortgage Agreement as are applicable to the Real Estate
Mortgage on the Present Real Assets.

            (b) The Real Estate Mortgage (i) shall extend to the PSPH’s
interests from time to time in any of the Real Assets which are not fully paid
for by PSPH at the time of their coming into existence and upon the acquisition
by PSPH of ownership thereof, and (ii) shall include all Property of every
nature and description taken in exchange, substitution or replacement of the
Real Assets, which shall be subject to the Lien of such mortgage in the same
manner and to the same extent as if now existing and included in the Real Estate
Mortgage on the Present Real Asset             (c) The Real Estate Mortgage is
and shall be constituted in favour and for the benefit of IFC and shall stand as
security for the Secured Obligations in the principal amount of
US$12,500,000.00.                  Section 3.02. Real Assets. The Real Assets
shall include all the Real Assets listed in Annex “A” (regardless of whether
initially covered by the Chattel Mortgage), and shall consist of:            
(i) PSPH’s leasehold rights over the Collateral Stores Sites;

83

 

  (ii) the Collateral Stores, including all buildings, machinery, equipment,
fixtures, structures, installations and other improvements and immovable
property constructed, acquired and/or permanently attached or located now, or in
the future, at or to either of the Collateral Stores or the Collateral Store
Sites;         (iii) all equipment and other movable assets located at the
Collateral Stores, and similar property acquired by PSPH (regardless of whether
initially covered by the Chattel Mortgage) which are at any time in the future
attached to any of the Collateral Stores or the Collateral Store Sites so as to
become immovable by incorporation or by destination, i.e., by reason of their
attachment to the Real Assets;         (iv) all rights, benefits, loss proceeds,
indemnities, insurance payments and other payments received by or due to PSPH in
lieu of, or inherent to, or in connection with, the Real Assets; and         (v)
all property of every nature and description taken in exchange, substitution or
replacement of any of the Real Assets.              Section 3.03. Registration
of Real Estate Mortgage.         (a) Prior to the initial Disbursement of the
Loan PSPH shall, at its own cost and expense, (i) cause the Real Estate Mortgage
on the Present Real Assets to be registered with the Registers of Deeds for
Pasig City and Muntinlupa in the Philippines, (ii) perform such other acts,
deeds, registrations, deposits and formalities necessary or advisable to give
full effect to, ensure the validity and first ranking priority (subject to the
provisions of Section 4.04 hereof) of, and render enforceable against PSPH, its
creditors and all third parties, such Real Estate Mortgage and this Mortgage
Agreement, and (iii) furnish IFC with evidence, satisfactory to IFC, that such
registrations and all acts, deeds, deposits and formalities, as required under
the preceding sub-sections (i) and (ii) of this Section 3.03(a) have been made
and performed.         (b) In accordance with the schedule set forth in Annex
“C”, and at such other times as may be required by IFC, PSPH and IFC shall
execute a Mortgage Supplement, and, within thirty (30) calendar days from such
execution, PSPH shall, at its own cost and expense, (i) cause the Real Estate
Mortgage on the Future Real Assets covered by such Mortgage Supplement to be
registered with the Registers of Deeds in Pasig City and Muntinlupa, (ii)
perform such other acts, deeds, registrations, deposits and formalities
necessary or advisable to give full effect to, ensure the validity and first
ranking priority (subject to the provisions of Section 4.04 hereof) of, and
render enforceable against PSPH, its creditors and all third parties, such Real
Estate Mortgage and Mortgage Supplement, and (iii) furnish IFC evidence
satisfactory to IFC that such registration and all acts, deeds, deposits and
formalities, as required under the preceding subsections (i) and (ii) of this
Section 3.03(b) have been made and performed.

        Section 3.04. First Priority Ranking of the Mortgage. The Lien of IFC
under this Agreement is and shall at all times constitute a Lien of first rank
in favor of IFC in and to the Real Assets, prior and superior to all other
Liens, except liens that are mandatorily preferred under the Laws of the
Philippines.

ARTICLE IV.
Chattel Mortgage

       Section 4.01. Creation of the Chattel Mortgage.

  (a) As security for the timely payment, discharge, observance and performance
of all of the Secured Obligations, PSPH:                  (i) hereby creates,
establishes and constitutes a first ranking Chattel Mortgage on the Present
Chattel in favour and for the benefit of IFC; and

                                                                 

84

 

           (ii) hereby (x) agrees to and, to the fullest extent permitted by
law, does create, establish and constitute a first ranking Chattel Mortgage in
favour and for the benefit of IFC on the Chattel, upon their coming into
existence and the acquisition by PSPH, as the case may be, of ownership of such
Chattel, and (y) further agrees that, to the fullest extent permitted by law and
without prejudice to the obligation of PSPH to execute and register the Mortgage
Supplements, a first ranking Chattel Mortgage on the Future Chattel shall be
created, established and constituted upon the execution of the corresponding
Mortgage Supplement under Section 4.03(b) in respect of each such Future Chattel
over which a first ranking Chattel Mortgage is not created under the immediately
preceding sub-clause (x), and that such first ranking Chattel Mortgage shall be
subject to the same terms and conditions of this Mortgage Agreement as are
applicable to the Chattel Mortgage on the Present Chattel.         (b) The
Chattel Mortgage (i) shall extend to the PSPH’s interests from time to time in
any of the Chattel which are not fully paid for by PSPH at the time of their
coming into existence and upon the acquisition by PSPH of ownership thereof, and
(ii) shall include all Property of every nature and description taken in
exchange, substitution or replacement of the Chattel, which shall be subject to
the Lien of such mortgage in the same manner and to the same extent as if now
existing and included in the Chattel Mortgage on the Present Chattel.        
(c) The Chattel Mortgage is and shall be constituted in favour and for the
benefit of IFC and shall stand as security for the Secured Obligations in the
principal amount of US$12,500,000.00.              Section 4.02. The Chattel.
The Chattel shall include all the Chattel listed in Annex “B”, and shall consist
of the following:         (i) all equipment and other movable assets, and all
supplies, inventories, merchandise, and stock in trade, as well as all
additions, replacements and substitutions thereof, acquired or used in
connection with the retail business of PSPH, and located at the Collateral
Stores, together with all attachments, component parts, equipment and
accessories installed thereon or affixed thereto, regardless of where the same
are located;         (ii) all Assets located at the Collateral Stores, to the
extent that such assets are not covered or coverable under the Real Estate
Mortgage;         (iii) all Assets which are covered by the Real Estate
Mortgage, but are at any time in the future, for any reason, dismantled or
removed and become immobilized;         (iv) all rights, benefits, loss
proceeds, indemnities, insurance payments and other payments received by or due
to PSPH in lieu of, or inherent to, or in connection with, the Chattel,        
(v) all of PSPH’s right, title and interests in and to any contracts entered
into by PSPH relative to the construction, operation and maintenance of the
Collateral Stores, including, but not limited to, any contracts leasing any part
of, or space within, the Collateral Stores to any Persons; and         (vi) all
property of every nature and description whether now owned or hereafter acquired
in exchange, substitution or replacement of any of the Chattel.      
       Section 4.03. Registration of Chattel Mortgage.         (a) Prior to the
initial Disbursement of the Loan, PSPH shall, at its own cost and expense, (i)
cause the Chattel Mortgage on the Present Chattel to be registered with the
appropriate Registers of Deeds of Pasig City, Muntinlupa City and the principal
place of business of PSPH, (ii) perform such other acts, deeds, registrations,
deposits and formalities necessary or advisable to give full effect to, ensure
the validity and first ranking priority (subject to the provisions of Section
4.04 hereof) of, and render      

85

 

    enforceable against PSPH, its creditors and all third parties, such Chattel
Mortgage and this Mortgage Agreement, and (iii) furnish IFC with evidence,
satisfactory to IFC, that such registrations and all acts, deeds, deposits and
formalities, as required under the preceding sub-sections (i) and (ii) of this
Section 4.03(a) have been made and performed.         (b) In accordance with the
schedule set forth in Annex “C”, and at such other times as may be required by
IFC, PSPH and IFC shall execute a Mortgage Supplement, and, within thirty (30)
calendar days from such execution, PSPH shall, at its own cost and expense, (i)
cause the Chattel Mortgage on the Future Chattel covered by such Mortgage
Supplement to be registered with the appropriate Registers of Deeds in the
Philippines, (ii) perform such other acts, deeds, registrations, deposits and
formalities necessary or advisable to give full effect to, ensure the validity
and first ranking priority (subject to the provisions of Section 4.04 hereof)
of, and render enforceable against PSPH, its creditors and all third parties,
such Chattel Mortgage and Mortgage Supplement, and (iii) furnish IFC evidence
satisfactory to IFC that such registration and all acts, deeds, deposits and
formalities, as required under the preceding subsections (i) and (ii) of this
Section 4.03(b) have been made and performed.      

       Section 4.04. First Priority Ranking of the Mortgage. The Lien of IFC
under this Agreement is and shall at all times constitute a Lien of first rank
in favor of IFC in and to the Assets, prior and superior to all other Liens,
except liens that are mandatorily preferred under the laws of the Philippines.

       Section 4.05. Use of Assets. So long as no Event of Default shall have
occurred and be continuing, PSPH shall be entitled to use and possess the Assets
and to exercise its rights, title and interest therein, to the extent that such
use, possession or exercise is not prohibited or restricted by the Security
Agreement and (and without in any way limiting the provisions of) the other
Transaction Documents and does not otherwise constitute a Default (in which case
such prohibition or restriction shall prevail over the terms of this Section
4.05.

ARTICLE V
Covenants and Undertakings of the Borrower

       PSPH undertakes and agrees with IFC that throughout the continuance of
this Mortgage Agreement and so long as any amount of the Secured Obligations
remains outstanding, unless IFC otherwise agrees in writing, PSPH shall comply
with its affirmative and negative undertakings as set forth in Article VI of the
IFC Loan Agreement, all of which affirmative and negative undertakings are
incorporated by reference herein as if fully set forth herein, in accordance
with the terms thereof.

       Section 5.01. Execution and Registration of Deeds in General. In
consideration of the express intention of the parties hereto that the Mortgages
shall cover the Assets of PSPH, whether such Assets now exist or at any time
hereafter come into existence and are now or at any time hereafter acquired by
PSPH whether any such later acquisition is by way of addition thereto or
substitution of any component part thereof, together with all rights and
interests of PSPH therein, PSPH shall, from time to time and at their own cost
and expense:

  (a) execute, deliver and register such mortgages, deeds, assignments, consents
and assurances, including the Mortgage Supplements, satisfactory to IFC, as may
be necessary or advisable or, without prejudice to the obligation of PSPH to do
so without being required by IFC, as required by IFC, for the purpose of
mortgaging (with first ranking priority), conveying and/or transferring to IFC
for its benefit, any Assets hereafter coming into existence or acquired by PSPH
upon the terms, provisions and conditions of this Mortgage Agreement as fully
and completely to all legal intents and purposes as if owned by PSPH on the date
of execution hereof and specifically described herein; and         (b) execute,
deliver and register such renewals, amendments, supplements and instruments,
satisfactory to IFC, as may be necessary, advisable or, without prejudice to the
     

86

 

    obligation of PSPH to do so without being required by IFC, as required by
IFC, for the purpose of perfecting, confirming and/or maintaining the validity,
first priority and enforceability of the Mortgages.

       Section 5.02. Affirmative Covenants. Without limiting any rights of IFC
under the Transaction Documents, unless IFC shall otherwise agree in writing and
for as long as any amount of the Secured Obligations shall remain outstanding,
PSPH shall:

  (a) Defense of Title and Possession. (i) warrant and defend its title to,
interest in and/or possession of the Assets against the claims and demands of
all Persons whomsoever, except the rightful claims of IFC pursuant to this
Mortgage Agreement, and (ii) promptly and in any case within five (5) Business
Days after it or any of its officers obtains knowledge of any litigation or
governmental proceedings which could materially and adversely affect the Real
Assets, furnish IFC a notice of such litigation or proceedings, giving full
details thereof and containing a description of the action that PSPH has taken
or proposes to take with respect thereto;             (b) Appraisal. at its own
cost and expense, cause the Assets to be appraised in accordance with Section
6.01(j)(ii) of the Loan Agreement, and promptly after every such appraisal
provide IFC with a copy of the appraisal report (the “Appraisal Report”); and  
          (c) Further Acts. at all times, and at its own expense, do everything
necessary in the reasonable judgment of IFC to               (i) create and
perfect the Mortgage with respect to Future Assets covered by this Mortgage
Agreement (including, without limitation, any registration in respect of
supplements to this Mortgage Agreement in accordance with the requirements of
the laws in the Philippines);               (ii) maintain the Lien of IFC under
this Mortgage Agreement in full force and effect at all times, including the
priority thereof;               (iii) keep the Assets, in good condition and
preserve and protect the same, except for ordinary wear and tear, promptly make
or cause to be made thereon repairs, restorations and replacements or, in
general, do or cause to be done all such acts and things as may be required or
necessary for the preservation and maintenance of the Assets; and              
(iv) promptly inform IFC in writing of any loss or damage affecting the Assets,
together with details of the extent of such loss and damage, and of any event
which is likely to materially reduce its value.             (d) Inspections.
permit, at PSPH’s expense, the officers or designated representatives of IFC, at
such times and to such extent as IFC may request:               (i) to visit and
inspect the Assets;               (ii) to inspect and examine the records of
PSPH relating to the Assets from time to time during regular business hours, and
promptly furnish IFC such information as IFC may, from time to time, reasonably
request;             (e) Taxes, Duties, Fees. except when contested in good
faith by appropriate proceedings and for which an appropriate reserve has been
established (provided that taxes, assessments and governmental charges are paid
promptly, if after final determination of any such action or proceeding, the
tax, assessment or charge is upheld), PSPH shall pay and discharge on time:    
          (i) all taxes (including stamp taxes, value-added taxes, transfer
taxes), fees, expenses, or other charges payable on or in connection with (x)
the execution,          

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      issue, delivery, registration, or notarization, or for the legality,
validity, or enforceability, of this Mortgage Agreement and any other documents
related thereto; and (y) provide IFC copies of the official receipts for such
payments.               (ii) all taxes, assessments and governmental charges
levied or assessed on the Assets and provide IFC with copies of the official
receipts for such payments.             (f) Appraised Value of Assets. maintain
the value of the Assets at no less than the required amount under Section 7.02
(the “Required Collateral Value”), provided that if the value of the Assets goes
below the Required Collateral Value, then within sixty (60) days from PSPH’s
receipt of notice of such occurrence from IFC, PSPH shall make appropriate
arrangements with IFC to either (i) prepay a portion of the Secured Obligations,
or (ii) include additional properties as Assets, so that the Assets can meet the
Required Collateral Value.                  Section 5.03. Negative Covenants.
Without limiting any rights of IFC under any other Transaction Documents, unless
IFC shall otherwise agree in writing and for as long as any amount of the
Secured Obligations shall remain outstanding, PSPH shall not:             (a)
sell, assign, transfer, alienate, encumber, lease or otherwise dispose of any of
the Assets except for sale of the stock in trade, merchandise and inventory of
the Collateral Stores in the ordinary course of business;             (b) use or
permit to be used the Assets other than for the intended purpose thereof;      
      (c) create, incur, assume or permit to exist any Lien, other than the
Mortgages on, or with respect to the Assets;             (d) use, maintain,
operate or occupy, or allow the use, maintenance, operation or occupancy of any
part of the Assets for any purpose which:               (i) may be dangerous,
unless safeguarded as required by law;               (ii) violates any legal
requirement in any material respect;               (iii) may constitute a public
or private nuisance resulting in a Material Adverse Effect; or              
(iv) may make void, voidable, or cancelable, or increase the premium of, any
insurance then in force with respect to the Assets or any part thereof.        
 

ARTICLE VI
Rights and Remedies of IFC

       Section 6.01. Right to Act for PSPH.

        (a) PSPH hereby irrevocably appoints IFC as its attorney-in-fact, with
right of substitution, for the purpose of carrying out the provisions of this
Mortgage Agreement and taking any action and executing any instruments which IFC
may deem necessary or advisable, to create and perfect, and preserve the
validity, perfection and priority of (subject to Section 4.04) the security
interest in favor of IFC under this Mortgage Agreement, including without
limitation registering the Mortgages and executing and registering Mortgage
Supplements should PSPH default in the performance of their obligations under
Sections 3.03.

88

 

  (b) IFC shall, in the exercise of its rights and remedies hereunder, have the
right, but not the obligation, to advance such sums of money as are necessary to
give full effect to the provisions of the preceding paragraph and interest shall
accrue on any such sums so advanced by IFC, from the time so advanced until
fully paid by PSPH, at the default rate prescribed under the IFC Loan Agreement.
     

       Section 6.02. Rights in Eminent Domain.

            (a) In the event that the Philippines, or any Person duly authorized
by law to acquire property by eminent domain, shall expropriate, condemn,
confiscate, seize or requisition the title to or use of any of the Assets, then
(i) all sums of money paid and payable to PSPH on account or in consideration of
any such expropriation, condemnation, confiscation, seizure or requisition of
the Assets or any part thereof shall be delivered to IFC for application against
the Secured Obligations, and (ii) all rights and benefits accruing to PSPH, or
any movable or immovable assets given in exchange for the Assets so
expropriated, condemned, confiscated, seized or requisitioned shall be deemed
part of the Assets and covered by the Mortgages. Except as aforesaid, this
Section shall be without prejudice to any other rights and remedies that IFC may
have hereunder, under any other Transaction Documents or under any law, statute
or regulation now or hereafter in force.             (b) PSPH hereby agrees and
undertakes not to agree to any settlement or any compensation whatsoever in lieu
of expropriation, condemnation, seizure or requisition of any of the Assets,
without the prior written consent of IFC.             (c) If for any reason and
notwithstanding the provisions of subsection (a) of this Section, any such
monies, rights, benefits and/or assets are directly received by PSPH, PSPH, as
the case may be, shall hold or cause the same to be held for IFC, in trust, as
security for the payment of the Secured Obligations and promptly thereafter, and
without prejudice to any other rights and remedies that IFC may have hereunder,
under any other Transaction Documents or under any law, statute or regulation
now or hereafter in force, deliver or cause to be delivered the same to IFC and,
in the case of monies, for application against the Secured Obligations.        
         Section 6.03. Unauthorized Sale and other Disposition of Assets.      
      (a) To the extent permitted by law, if notwithstanding the provisions of
Section 5.03 or of any other provision of any other Transaction Documents
prohibiting or restricting the same, any of the Assets shall be sold, assigned,
transferred, alienated, leased or in any other manner disposed of otherwise than
in accordance with the terms hereof or with the prior written consent of IFC,
any third party who may have acquired title to or possession of any such Assets
shall be deemed not to have acquired the same in good faith and IFC shall be
entitled to exercise such rights and remedies as may be available to it by law
under the circumstances to recover possession of such Assets. The foregoing
shall be without prejudice to the rights and remedies of IFC under the other
Transaction Documents.         (b) For all intents and purposes, the Mortgages
shall continue in full force and effect under the terms and conditions hereof
until the Secured Obligations shall have been repaid in full, notwithstanding
any unauthorized sale, assignment, transfer, alienation, lease or other
disposition of any Assets.

       Section 6.04. Unauthorized Liens. If notwithstanding the provisions of
Section 5.03 hereof, PSPH shall create or permit to exist any Lien, other than
the Mortgages, on any of the Assets in favor of any third party without the
prior written consent of IFC, the same shall, without prejudice to any rights
and remedies that IFC may have hereunder or under any other Transaction
Documents or under any law, statute or regulation now or hereafter in force, be
and remain junior in rank to the Mortgages hereby created until all the Secured
Obligations are fully paid, notwithstanding any extension of the term or
amendment and modification of any of the terms, provisions and conditions hereof
and notwithstanding any additional

89

 

mortgages or other Liens at any time created as security for the same amounts
hereby secured or any other amounts at a later date advanced by IFC to PSPH, all
of which shall be and at all times remain a first ranking and senior security,
in relation to such Lien created by PSPH in favor of such third party.

       Section 6.05. Events of Default.

        (a) If an Event of Default shall occur and be continuing, IFC shall have
all the rights and remedies available to it under this Mortgage Agreement and
the other Transaction Documents with respect thereto.         (b) Commencement
of Foreclosure Proceedings. If an Event of Default shall occur and be
continuing, IFC shall have the right, upon advance written notice to PSPH, to
immediately commence proceedings to foreclose the Real Estate Mortgage or the
Chattel Mortgage or both, and such foreclosure may be carried out, at the option
of IFC, either judicially or extra-judicially, in accordance with applicable
law.         (c) Delivery of Possession of Assets. Promptly upon receipt of
notification that foreclosure proceedings have been commenced, PSPH shall turn
over possession of the Assets being foreclosed upon to IFC, or as IFC shall
otherwise direct; provided, that if PSPH shall fail to turn over possession of
any of such Assets as required hereunder, IFC shall be entitled and authorized
to the extent permitted by law to repossess the same wherever they may be
located by whichever means IFC shall determine and, to enter for that purpose
any premises where such Assets may be located and transport them, at the expense
of PSPH, to the place otherwise determined by IFC for turning over possession
thereof.         (d) Waiver of Benefits in General. PSPH agrees, to the full
extent that it may lawfully so agree, that neither it nor anyone claiming
through or under it, will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension, period, redemption, or any other
benefit under any law now or hereafter in force in the locality where the Assets
subject to the Lien hereof are situated, in order to prevent, hinder or delay
the enforcement or foreclosure of the Mortgages pursuant to this Mortgage
Agreement, or the absolute sale of the Assets or any part thereof, or the final
and absolute transfer or possession thereof, immediately after such sale, to the
purchasers of any such Assets; and PSPH for itself and all who may at any time
claim through or under it, hereby waive, to the fullest extent that they may
lawfully do so, the benefit of all such laws.         (e) Foreclosure Sale. In
the event that the Real Estate Mortgage or the Chattel Mortgage shall be
foreclosed, whether judicially or extra-judicially, any sheriff conducting the
sale at auction, or where a direct sale is permitted by law, such sheriff, IFC
or its duly appointed representative or any other authorized person shall, at
the option of such Person or representative exercised in a commercially
reasonable manner, sell the Assets individually, in groups or as a whole lot.

       Section 6.06. Waiver of Redemption Right. The Borrower hereby waives and
relinquish, to the extent permitted by law, all rights, present and future, that
they may have by law or otherwise to redeem any of the Assets that may have been
sold, whether in a judicial or extra-judicial foreclosure, and whether the sale
took place at public auction or was a direct sale.

ARTICLE VII
Power of Attorney

       Section 7.01. Appointment and Authority of Attorney-in-fact. PSPH hereby
irrevocably appoints IFC as its attorney-in-fact, with right of substitution, so
that IFC or any other Person empowered and duly authorized by IFC shall, upon
the occurrence of an Event of Default be authorized to the fullest extent
permitted by law, without need of further authorization from PSPH, and in
preservation and/or for the enforcement of the rights of IFC hereunder:

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        (a) Sale of Assets. to effect the sale of any of the Assets in one or
more transactions, in accordance with Act No. 3135 as amended and/or Act No.
1508 as amended and/or Rule 68 of the Rules of Court, and, to the extent
permitted by law, in such other manner as may reasonably be determined by such
attorney-in-fact, including the direct sale without public auction of any such
Assets at such price, and upon such terms as may be determined by such
attorney-in-fact;         (b) Entry of Premises. to enter upon any premises
where the Assets or any of them may be located without the need for a court
order or other form of authority otherwise than upon the authority granted
herein;         (c) Possession of Assets. to take and retain actual possession
and control of any such Assets as receivers without bond or otherwise, and
transport any of them to any location as determined by such attorney-in-fact;  
      (d) Repairs, Improvements, etc. to make any repairs, additions and
improvements on and to the Assets at the expense of PSPH as such
attorney-in-fact shall deem proper or necessary;         (e) Administration of
Assets. to perform acts of administration over any or all of the Assets
including, but not limited to, collecting and receiving rental payments from
third parties leasing any part of or any space within the Collateral Stores;    
    (f) Conclusion of Agreements. to conclude any agreement and collect any
monies under such agreements or otherwise due to PSPH in respect of, or
generated through the usage of, any of the Assets;         (g) Exercise of
Rights. to exercise any of the rights of PSPH arising under or in connection
with this Mortgage Agreement and the Mortgages, and to designate or delegate to
another Person in substitution of such attorney-in-fact, the exercise of such
rights of PSPH, and under such terms as such attorney-in-fact shall deem proper
or necessary;         (h) Collection of Monies. to collect, claim and receive
all monies and avail of all benefits that accrue, and that may become due and
payable to the Borrower under this Mortgage Agreement and the Mortgages;        
(i)

Institution of Suits. to institute and maintain such suits and proceedings as
such attorney-in-fact shall deem expedient to prevent any impairment of the
Assets or to preserve and protect the interest of IFC;         (j) Execution of
Deed of Sale. to execute and deliver such deeds of conveyance or sale as may be
necessary or proper for the purpose of conveying full title and ownership, free
from any claims and rights of PSPH, to the Assets, after foreclosure thereof;
and         (k) Other Acts. in general, to sign such agreements and documents
and perform such acts and things required, necessary or, in the opinion of such
attorney-in-fact, advisable, to fully enforce the rights of IFC under this
Mortgage Agreement and the Mortgages.

       Section 7.02. Ratification of Attorney’s Acts. To the extent permitted by
law, PSPH agrees to and hereby ratifies any and all acts and things performed or
done by IFC or any of its representatives in each case, whether as PSPH’s
attorney-in-fact or otherwise, in the exercise of any or all powers granted to
IFC hereunder.

       Section 7.03. Power of Attorney Coupled with Interest. This special power
of attorney shall be deemed coupled with an interest, and cannot be revoked by
PSPH until all of the Secured Obligations have been paid in full or satisfied.
Upon the occurrence of an Event of Default, PSPH shall abstain from exercising
any rights which shall be inconsistent with the exercise of the rights and
functions herein granted to IFC as PSPH’s attorney-in-fact, provided, however,
that nothing herein shall prevent PSPH, prior to the exercise by IFC of any such
rights, powers and remedies and functions in accordance with this Mortgage

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Agreement, from undertaking the PSPH’s operations in the ordinary course of
business to the extent not prohibited or restricted by the Transaction
Documents. To the extent that PSPH shall receive any monies in respect of any of
the Assets, notwithstanding the provisions of this Section, it shall be deemed
to have received such funds for the account of IFC and shall hold the same in
trust and promptly pay the same to IFC.

       Section 7.04. Expenses of Attorney-in-Fact. All costs, expenses, charges
and fees paid or incurred by IFC and/or its representatives, successors and
assignees in the exercise of any of the powers herein granted shall be for the
account of PSPH, and PSPH undertakes promptly on demand to reimburse IFC and/or
its representatives, successors and assignees, as the case may be, for any
monies paid by any of them with interest at default rate prescribed under the
IFC Loan Agreement, from the date the same shall have been incurred until
actually paid.

ARTICLE VIII
Release of Mortgage and Required Collateral Value

       Section 8.01 Release. Upon the full payment of the Secured Obligations,
this Mortgage Agreement shall terminate, and IFC, at the written request and
expense of PSPH, will promptly execute and deliver to PSPH, the proper
instrument (in substantially the form in Exhibit B) acknowledging the
termination of this Mortgage Agreement, and will promptly release from the
Mortgage such of the Assets in the possession of IFC as have not been
theretofore sold or otherwise foreclosed, applied or released pursuant to this
Mortgage Agreement.

       Section 8.02 Required Value of Assets; Partial Release. PSPH shall ensure
that the appraised value of the Assets shall, at any given time, equal at least
one hundred fifty percent (150%) of the aggregate amount of all the Secured
Obligations outstanding at such given time (the “Required Collateral Value”).

ARTICLE IX
Miscellaneous Provisions

       Section 9.01. (a) Continuing Security. PSPH hereby duly notes and agrees
that the security hereby created in favor of IFC in the form of a Real Estate
Mortgage and the Chattel Mortgages in accordance with the provisions of this
Mortgage Agreement shall be a continuing security and shall remain in full force
and effect until all of the Secured Obligations shall have been fully paid in
accordance with the provisions of the other Transaction Documents and this
Mortgage Agreement. Accordingly, the validity and enforceability of the
Mortgages hereunder shall not be affected or impaired by any of the following:
any extension of time, forbearance or concession given to any of the
Co-Borrowers; any assertion of, or failure to assert, or delay in asserting, any
right, power or remedy against the Co-Borrowers, or in respect of any other
security for any of the Secured Obligations; any modification or amplification
of the provisions of the other Transaction Documents or this Mortgage Agreement
or of any other agreement between any or both of the Co-Borrowers and IFC; any
failure of any or both of the Co-Borrowers to comply with any requirement of any
law, regulation or order; the dissolution, liquidation, reorganization or any
other alteration of the legal structure of any or both of the Co-Borrowers; any
purported or actual assignment of the Loan by IFC to any other Person; or any
other circumstance (other than complete payment and performance by the
Co-Borrowers of all the Secured Obligations) which might otherwise constitute a
legal or equitable discharge of a security.

       (b)       Partial Security. It is hereby agreed that the security created
in accordance with the provisions of this Mortgage Agreement shall be construed
as a partial security for the Secured Obligations, and is in addition to any
other security that IFC may, now or in the future, obtain to secure the same
obligations. Accordingly, in the event that the monies at any time realized by
IFC in the judicial or extra-judicial foreclosure of the Real Estate Mortgage on
any of the Real Assets or the Chattel Mortgage on any of the Chattel and/or in
the exercise of any of their rights and powers hereunder shall not be sufficient
to pay and discharge all the Secured Obligations, any remaining unpaid balance
thereof shall remain due and payable on demand by IFC, until fully paid and all
rights, powers and remedies of IFC in respect thereof are hereby reserved.

       Section 9.02. Rescission of Payment. This Mortgage Agreement shall
continue to be effective or

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be reinstated, as the case may be, if at any time, payment, or a part thereof,
of the Secured Obligations, is rescinded or must otherwise be restored or
returned by IFC, upon the insolvency, bankruptcy or reorganization of any of the
Co-Borrowers or otherwise, all as though such payment had not been made.

       Section 9.03. (a) Application of Proceeds of Mortgage. All monies
realized and received by IFC in the exercise of its rights, powers and remedies
hereunder, including without limitation, any proceeds of insurance,
expropriation or otherwise in respect of the Assets pursuant to the provisions
of this Mortgage Agreement shall be applied in accordance with Section 3.10
(Allocation of Partial Payments) of the IFC Loan Agreement. For the avoidance of
doubt, it is understood that the Co-Borrowers shall remain liable to the extent
of any deficiency between the amount of the proceeds of the Assets and the
aggregate amount of the Secured Obligations.

       (b)       Conversion to Required Currency. To the extent that the amounts
due and payable to IFC are in a currency or currencies other than the currency
of payment required under the IFC Loan Agreement, such currency or currencies
shall for the purposes hereof be converted into the required currency of
payment.

       Section 9.04. Further Assurances. From time to time while this Mortgage
Agreement is in force and effect, PSPH shall promptly, at the request of IFC,
execute such documents, acts or powers as IFC may deem necessary or advisable to
give full effect to any of its provisions.

       Section 9.05. Taxes, Fees, etc. on Execution, Registration, etc. PSPH
shall pay all taxes (including stamp taxes), duties, fees, expenses or other
charges payable on or in connection with the execution, issue, delivery,
registration and notarization of this Mortgage Agreement and any document, act
and registration performed pursuant hereto, and shall, upon notice from IFC
reimburse IFC for any such taxes, duties, fees, expenses or other charges paid
after notice to PSPH by IFC.

       Section 9.06.      (a) Rights and Remedies Cumulative. The rights, powers
and remedies of IFC provided for in this Mortgage Agreement are not exclusive
of, but are in addition to, any other rights and remedies that IFC may have in
law or under any other Transaction Documents. In addition, such rights, powers
and remedies of IFC hereunder are granted for the exclusive benefit of IFC, and
it is IFC’s prerogative to exercise any of such rights, powers and remedies in
its discretion, but it shall have no obligation to do so; nor shall IFC be
liable to PSPH or any other Person for any action taken or not taken by it
pursuant to this Mortgage Agreement. One or more exercises of the powers and
rights herein granted shall not extinguish or exhaust such powers until the
Assets and all other property now or hereafter subject hereto or to any
instrument now or hereafter evidencing, securing or relating to the Secured
Obligations, is sold or the Secured Obligations are paid in full. If the Secured
Obligations are now or hereafter further secured by any mortgages, chattel
mortgages, pledges, contracts of guaranty, assignments or other security, IFC
may exhaust the remedies granted under any of the said security instruments,
either concurrently or independently, and in such order as IFC, in the exercise
of its absolute discretion, may determine.

       (b)       No Waiver. No course of dealing and no delay in exercising, or
omission to exercise, any right, power or remedy accruing to IFC or its
attorney-in-fact upon any default or other circumstance under the Real Estate
Mortgage, the Chattel Mortgage and/or this Mortgage Agreement shall impair any
such right, power or remedy or be construed to be a waiver thereof or an
acquiescence therein; nor shall the action of IFC or its attorney-in-fact in
respect of such default or circumstance, or any acquiescence by it thereto,
affect or impair any right, power or remedy of IFC or its attorney-in-fact in
respect of any other default or circumstance, whether similar or not.

       (c)       Amendments, etc. with respect to the Loans. PSPH shall remain
obligated hereunder, and the Assets shall remain subject to the Lien created
hereunder, notwithstanding that, without any reservation of rights against PSPH,
the Transaction Documents and any other documents executed and delivered in
connection therewith may be amended, supplemented or terminated, in whole or
part from time to time, and any guarantee or other collateral security at any
time held by IFC for the payment of the Secured Obligations may be sold,
exchanged, waived, surrendered or released. IFC shall not have any obligation to
PSPH to protect, secure, perfect any other Lien at any time held by it as
security for the Secured Obligations or any property subject thereto.

       Section 9.07. Severability. If any provision, term or condition of this
Mortgage Agreement or the

93

 

application thereof to any Person or circumstance shall for any reason be held
invalid or unenforceable, then, without prejudice to the provisions of Section
9.06, the same shall not adversely affect or impair the validity and
enforceability of the other provisions, terms and conditions hereof nor the
application of any such provisions, terms and conditions to any other Person or
in any other circumstance.

       Section 9.08. Notice. Any notice, request or other communication to be
given or made under this Agreement shall be given in accordance with Section
1.02, Volume V, Miscellaneous; Execution.

       Section 9.09. Benefit of Mortgage Agreement. This Mortgage Agreement
shall be binding upon and inure to the benefit of each party hereto, its
successors, assigns and transferees; provided, however, that PSPH may not assign
or otherwise transfer all or any of its rights and obligations under this
Mortgage Agreement without the prior written consent of IFC. IFC may, at any
time in conjunction with the assignment and transfer of any part of the Loan,
transfer by way of assignment or novation, if not automatically occurring by
operation of law, all or any part of its rights, benefits or obligations under
the Real Estate Mortgage, the Chattel Mortgage and/or this Mortgage Agreement,
without PSPH being in any way discharged from their obligations hereunder and
without this Mortgage Agreement or the Mortgage created hereunder being deemed
cancelled or terminated.

       Section 9.10. Discharge of Mortgage. Subject to Section 9.02, IFC agrees
to release the Assets from the Mortgages at the request of PSPH when the Secured
Obligations shall have been fully paid and performed. Notwithstanding the
foregoing, all indemnities of PSPH herein shall survive such release and any
termination of this Mortgage Agreement. All taxes, fees and other costs imposed
in connection with such release and termination shall be for the account of
PSPH, and the payment thereof shall form part of the Secured Obligations.

       Section 9.11. Lender Without Obligations. Notwithstanding anything
contained herein, this Mortgage Agreement and the Mortgages are only intended as
security for the Secured Obligations and IFC shall not be obligated to perform
or discharge, nor does IFC undertake to perform or discharge, any obligation,
duty, or liability of PSPH under or relating to any of the Assets.

       Section 9.12. Governing Law. This Mortgage Agreement and the rights and
obligations of the parties hereunder shall be construed in accordance with and
be governed by the laws of the Philippines.

       Section 9.13. Headings Descriptive. The headings of the Articles,
Sections and subsections of this Mortgage Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Mortgage Agreement.

       Section 9.14. Applicability of IFC Loan Agreement. In amplification of,
and notwithstanding any other provisions of this Mortgage Agreement, in
connection with its obligations hereunder, IFC has all of the rights, powers,
privileges, exculpations, protections and indemnities as are provided for or
referred to in the IFC Loan Agreement.

94

ANNEX “A”

Part 1 — PRESENT REAL ASSETS

Present Real Assets include:

          1. Ortigas Store Present Real Assets:             a. A building with a
total area of 6513 square meters, made of 200 mm CMU with steel reinforcements
seismically attached to a structural steel framing made of hot-rolled steel
beams and rafters. The main Sales Area covers a floor area of exactly 5,000
square meters with the rest serving as auxillary areas like the Generator room,
Electrical room, Refrigeration & Air-conditioning facilities and others.        
    b. Improvements on the land leased for the Ortigas Store Site consisting of
a parking area and general site that is fully paved with highway-grade
asphalt with a thickness of 250 mm. The parking lot capacity is 345 parking
spaces with a loading dock capable of handling two container trailers
simultaneously.             c. Other Ortigas Store Present Real Assets:        
 

                  Description                                                                          Item #
                  Warehouse Equipment:
                  Dock Seals   TPW 801                                                                  12652
                  PVC Weatherseals                                                                      90828
                  Dock Levelors w/ weatherseals. 6.6" x 8' x 30000lbs TH1086.5                          12653
                  Dock Lights RHF-40-P                                                                  90773
                  Formmelt Galvanized Metal Hood                                                       410186
                  Pnuematic Tube System 5 drops                                                         47663
                  Service Central / Center                                                              90829
                  Charger Stands  Deka Model RBS 18-25                                                  12312
                  Storage Freezer Steel Drive (7 bays 2 deep 4 high)                                    90861
                  Wedge Anchors                                                                         12490
                  Protectors for Steel PC-6                                                             90772
                  Cart Corrals #4300-15                                                                 12285
                  Safe & Vault ( Model SVM 6030PCD)                                                     12294
                  Great Western Order
                  -------------------
                  Eye wash station                                                                      90710
                  Warehouse Local FFE
                  -------------------
                  Phone System
                  Alarm System
                  Trash Facility Needs
                  2 X 6 Boards-Slats
                  Fencing
                  Speed Bumps
                  Food Service-Pizza
                  ------------------
                  SS Pot Sink 34"x106" - 3 compartment includes:  -3N2028-2D20                          51365

95

                  Faucets for 24.0  -  USF-12-S                                                         51365
                  Rotary Drains for 24.0 - US-LD-1-5                                                    51365
                  SS Corner Guards - 3 1/2" x 3 1/2" x 4' - CS 5144-C                                   51585
                  Smallwares Package
                  ------------------
                  PriceSmart Food Service Identity "Big" Sign - 5 pc Aluminum KD
                  Bakery
                  ------
                  Leventi Convection Oven   10 tray Electic Oven
                  Cabling (All Departments)                                                             90509
                  Refrigeration Equipment
                  -----------------------
                  MID-12E Meat Cases for Refrigeration (Per Pricemart Specifications)                   53614
                  D6-12LE Dairy Cases for Refrigeration                                                 53617
                  HC4E-126 Coils for Refrigeration                                                      53619
                  HC4E 252BK Alt Coils                                                                  90865
                  MK44-420EDL MM T Coils                                                                90866
                  HC6A 222BB Al T Coils                                                                 90867
                  MK36 354 Air B T Coils                                                                90868
                  HC6E 234BK Al T Coils                                                                 90869
                  Gal 36 135 A 115/1 kPSC Coils                                                         90870
                  Installation Materials for Machine Room                                               90872
                  Bohn Coil Model # ADT070 AJ                                                           90873
                  Mach. Rm. W/compres., coil, tank                                                      90876
                  Installation Labor, start up
                  Refrigeration Panels and Accessories
                  ------------------------------------
                  Control Panel for Air Cooled                                                         908711
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Steel Beams for Refrg. Rooms                                                          90880
                  Steel Girt                                                                           908925
                  Steel Flat Bars                                                                      908926
                  Foamed Angles                                                                        908930
                  Tie Rod Assy                                                                         908927
                  Steel Bent Clips                                                                     908928
                  Bolts                                                                                908929
                  Columns                                                                              908921
                  Durs Doors/Cooler Doors                                                               90881
                  Duro Last Roof                                                                        90882
                  Sliding Doors with Rails                                                              90884
                  Glass Windows                                                                         97945
                  Plastic Curtains                                                                      90885
                  Anthony Glass Doors                                                                   90894
                  Anthony Glass Door Frames                                                             90895
                  Single Ballast for Anthony Doors                                                      90896
                  Metal Pull Boxes (Grey)                                                               9676
                  Doors
                  -----
                  Hollow Metal Door                                                                     90775
                  Hardware - Finished                                                                   90778
                  Prefinished Wood Doors                                                                90779
                  Wall Louvers @ Generators                                                             90780
                  Stanley Magic Doors with Hardware                                                     90781

96

                  Toilet Partitions                                                                     90784
                  Atlas Rolite Doors- Insulated Polyurethane                                            90788
                  Glass and Aluminum Store front Doors                                                  90832
                  Generator
                  ---------
                  800RIZD-4 Kohler Gen-Set - 800 KW                                                     90678

Part 2 — FUTURE REAL ASSETS

Future Real Assets include:

         

1.

Ortigas Store Future Real Assets:             a. Leasehold rights of PSPH under
the Lease Agreement dated 9 January 2001 between Constress Philippines, Inc. as
lessor and PSPH as lessee, for a total area of 20,000 square meters located
along Ortigas Avenue Extension, Barangay Sta. Rosario, Pasig City, acknowledged
in Makati City before Gabriel P. De Jesus, notary public, and recorded in said
notary public's notarial register as Doc No. 381, Page No. 77, Book No. II,
Series of 2001, duly registered with the Registry of Deeds of Pasig City;      
    2. Alabang Store Future Real Assets:             a. Leasehold rights of PSPH
under the Lease Agreement dated 17 May 2002 between Filinvest Alabang, Inc. as
lessor and PSPH as lessee, for a total area of 20,000 square meters along the
Alabang-Zapote Road, Muntinlupa City, acknowledged in Muntinlupa City before
Jovito M. Salvador, notary public, and recorded in said notary public's notarial
register as Doc No. 316, Page No. 24, Book No. VI, Series of 2002, duly
registered with the Registry of Deeds of Muntinlupa City.             b. A
building with a total area of 6513 square meters, made of 200 mm CMU with steel
reinforcements seismically attached to a structural steel framing made of
hot-rolled steel beams and rafters. The main Sales Area covers a floor area of
exactly 5,000 square meters with the rest serving as auxillary areas like the
Generator room, Electrical room, Refrigeration & Air-conditioning facilities and
others.             c. Improvements on the land leased for the Alabang Store
Site consisting of a parking area and general site that is fully paved with
highway-grade asphalt with a thickness of 250 mm. The parking lot capacity is
345 parking spaces with a loading dock capable of handling two container
trailers simultaneously.             d. Other Alabang Store Future Real Assets:
         

                                                    Description                                        Item #
                  Warehouse Equipment
                  -------------------
                  Dock Seals   TPW 801                                                                  12652
                  PVC Weatherseals                                                                      90828
                  Dock Levelors w/ weatherseals. 6.6" x 8' x 30000lbs TH1086.5                          12653
                  Dock Lights RHF-40-P                                                                  90773

97

                  Formmelt Galvanized Metal Hood                                                       410186
                  Pnuematic Tube System 5 drops                                                         47663
                  Service Central / Center                                                              90829
                  Charger Stands  Deka Model RBS 18-25                                                  12312
                  Storage Freezer Steel Drive (7 bays 2 deep 4 high)                                    90861
                  Wedge Anchors                                                                         12490
                  Protectors for Steel PC-6                                                             90772
                  Cart Corrals #4300-15                                                                 12285
                  Safe & Vault ( Model SVM 6030PCD)                                                     12294
                  Great Western Order
                  -------------------
                  Eye wash station                                                                      90710
                  Warehouse Local FFE
                  -------------------
                  Phone System
                  Alarm System
                  Trash facility needs
                  2 X 6 Boards - Slats
                  Fencing
                  Speed Bumps
                  Food Service-Pizza
                  SS Pot Sink 34"x106" - 3 compartment includes:  -3N2028-2D20                          51365
                  Faucets for 24.0  -  USF-12-S                                                         51365
                  Rotary Drains for 24.0 - US-LD-1-5                                                    51365
                  SS Corner Guards - 3 1/2" x 3 1/2" x 4' - CS 5144-C                                   51585
                  Smallwares Package
                  ------------------
                  PriceSmart Food Service Identity "Big" Sign - 5 pc Aluminum KD
                  Bakery
                  ------
                  Leventi Convection Oven   10 tray Electic Oven
                  Cabling (All Departments)                                                             90509
                  Refrigeration Equipment
                  MID-12E Meat Cases for Refrigeration (Per Pricemart Specifications)                   53614
                  D6-12LE Dairy Cases for Refrigeration                                                 53617
                  HC4E-126 Coils for Refrigeration                                                      53619
                  HC4E 252BK Alt Coils                                                                  90865
                  MK44-420EDL MM T Coils                                                                90866
                  HC6A 222BB Al T Coils                                                                 90867
                  MK36 354 Air B T Coils                                                                90868
                  HC6E 234BK Al T Coils                                                                 90869
                  Gal 36 135 A 115/1 kPSC Coils                                                         90870
                  Installation Materials for Machine Room                                               90872
                  Bohn Coil Model # ADT070 AJ                                                           90873
                  Mach. Rm. W/compres., coil, tank                                                      90876
                  Installation Labor, start up
                  Refrigeration Panels and Accessories
                  ------------------------------------
                  Control Panel for Air Cooled                                                         908711
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Steel Beams for Refrg. Rooms                                                          90880
                  Steel Girt                                                                           908925
                  Steel Flat Bars                                                                      908926

98

                  Foamed Angles                                                                        908930
                  Tie Rod Assy                                                                         908927
                  Steel Bent Clips                                                                     908928
                  Bolts                                                                                908929
                  Columns                                                                              908921
                  Durs Doors/Cooler Doors                                                               90881
                  Duro Last Roof                                                                        90882
                  Sliding Doors with Rails                                                              90884
                  Glass Windows                                                                         97945
                  Plastic Curtains                                                                      90885
                  Anthony Glass Doors                                                                   90894
                  Anthony Glass Door Frames                                                             90895
                  Single Ballast for Anthony Doors                                                      90896
                  Metal Pull Boxes (Grey)                                                               9676
                  Doors
                  -----
                  Hollow Metal Door                                                                     90775
                  Hardware - Finished                                                                   90778
                  Prefinished Wood Doors                                                                90779
                  Wall Louvers @ Generators                                                             90780
                  Stanley Magic Doors with Hardware                                                     90781
                  Toilet Partitions                                                                     90784
                  Atlas Rolite Doors- Insulated Polyurethane                                            90788
                  Glass and Aluminum Store front Doors                                                  90832
                  Generator
                  ---------
                  800RIZD-4 Kohler Gen-Set - 800 KW                                                     90678

99

 

ANNEX “B”

Part 1 — PRESENT CHATTEL

Present Chattel include:

         

1.

Ortigas Store Present Chattel:             a. Leasehold rights of PSPH under the
Lease Agreement dated 9 January 2001 between Constress Philippines, Inc. as
lessor and PSPH as lessee, for a total area of 20,000 square meters located
along Ortigas Avenue Extension, Barangay Sta. Rosario, Pasig City, acknowledged
in Makati City before Gabriel P. De Jesus, notary public, and recorded in said
notary public's notarial register as Doc No. 381, Page No. 77, Book No. II,
Series of 2001.             b. All supplies, inventories, merchandise, and stock
in trade, as well as all additions, replacements and substitutions thereof,
acquired or used in connection with the retail business of PSPH, and located at
the Ortigas Store, together with all attachments, component parts, equipment and
accessories installed thereon or affixed thereto, regardless of where the same
are located.             c. Other Ortigas Store Present Chattel          

                                                    Description                                        Item #
                  Warehouse Equipment:
                  Membership Cabinets / Counter                                                         37737
                  Photo Lab Cabinets                                                                    48419
                  Travel Desk
                  Application Counter                                                                   90828
                  Shrink Wrap Machine  Model STC2016
                  Manual Pallet Jack Model L50 Fourway                                                  12309
                  Manual Pallet Jack parts
                  Forklift Batteries  Deka Model 18-P137-15                                             12304
                  Forklift Chargers  Deka Model 880C3-18/950                                            12306
                  Transfer Cart  Model TC-24-PP Batt. Powered                                           12308
                  Philidelphia Scientific Watering System                                               90503
                  Mobile Pressure 10 Gal. Tank  INJ-T10M                                               905031
                  Forklifts  Model RC 3020-30                                                          302030
                  Forklifts w/ Frz Cond  RC 3020-30                                                    302031
                  Electric Pallet Jack
                  Baler  30/60 HD 2200                                                                  57696
                  M74 Upright  34" x 180"                                                              919040
                  M74 Upright  34" x 120"                                                              919030
                  M 74 Upright  34" x 60"                                                              919044
                  M74 Upright  34" x 48                                                                919048
                  Beam LBN 125 x 40  108"     (Cross Beams)                                            919061
                  Beams LBN 125 x 40  132"   (Cross Beams)                                             919062
                  Beams LBN 125 x 40  130"   (Cross Beams)                                             919063
                  Beams LBN 125 x 40  118"   (Cross Beams)                                             919064
                  Beams LBN 125 x 40  96"      (Cross Beams)                                           919065

100

                  Beams LBN 125 x 40  92"      (Cross Beams)                                           919066
                  Beams LBN 125 x 40  78"      (Cross Beams)                                           919067
                  Beams LBN  125 x 40  72"     (Cross Beams)                                           919068
                  Beams LBN  125 x 40  48"     (Cross Beams)                                           919069
                  Spacers DTZ300 12" long                                                               90862
                  End Cap Arms                                                                          90863
                  Safety Load Locks                                                                     90864
                  Wire Decking 31.5 x 25X 53.00"                                                       312553
                  Wire Decking 31.5 x 38.00"                                                            29209
                  Wire Decking 31.5 x 45.00"                                                           919045
                  Wire Decking  31.25"x42" Freezer                                                     362542
                  Collapsible Stacking Baskets - Item # 6000-30=30" x 32 x 34 "                         12492
                  Register Stands  Model Kcuu3500  ,3500 LT                                             12278
                  Beltrac Post w/Rubberized Base - 3000LT                                               29200
                  Carts #1200-50                                                                        12284
                  Tennant Floor Scrubber                                                                90500
                  Flats - Platform trucks TR-2000                                                       12283
                  Sign Package
                  ------------
                  Sign-Atencion Members                                                                 90712
                  Annual Fee Sign                                                                       90719
                  Members Benefits Wall                                                                 90720
                  Merchandise Return Sign                                                               90722
                  How to Read  a Tire Sign                                                              90724
                  Food Court Sign                                                                       90727
                  Frutas y Verduras Sign                                                                91944
                  Sign-Entrance                                                                         91995
                  Sign-Instal De Llantas                                                                91998
                  Sign-Precious de Llantas                                                              92902
                  Sign-Como Hacer Su Copra                                                              92905
                  Sign#14-1 Hour Photo                                                                  97904
                  Signs-Salida de Emerg.                                                                97905
                  Sign-Photo Center Prices                                                              90906
                  #16 Panaderia, Pollo Rostiza                                                         106493
                  #19 Aisle Sign                                                                       106494
                  #23 Store Hours Sign                                                                 106600
                  #26 Handicap Parking Sign                                                            106602
                  #27 No Parking Sign                                                                  106603
                  #28 Receiving Information Sign                                                       106604
                  #30 Chock Wheels - Sign                                                              106606
                  #33 Fire Exit - Sign                                                                 106608
                  #35 Caution Forklift- Sign                                                           106608
                  #38 Attentions Members - Sign                                                        106611
                  #40 Think Safety - Sign                                                              106612
                  #44 Det Installaion Price Sign                                                       106614
                  #15 Sign - Pharmacy                                                                  106620
                  #17 Sign - Pharmacy                                                                  106621
                  Sign#16 48'x96' w/no text only logo                                                  160016
                  48'x120' Blank Pieces of Sign w/no logo                                              161600
                  48'X96' Metal Sheets w/out frame                                                     166100
                  #24 Sign - Store Info                                                                 24100
                  #29 Sign - Receiving w/Arrow                                                         291000

101

                  #32 Sign - Cardboard Only                                                            321000
                  #39 Sign-Car Battery Sign                                                            400400
                  New Item Board                                                                       551711
                  Not Allowed Sign                                                                     662230
                  Pylon Signage, 1 Hr Photo                                                            721990
                  Signs 5B-Exit                                                                        876431
                  Sign #43A How to read a Tire                                                         907241
                  #13 Sign-Membership                                                                  929041
                  Bread Racks - six shelf - two (2) bay
                  Bread Trays - White
                  Steam Cleaner - Model 680                                                             12286
                  Receiving Scale - 4x4 -5K Floor Scale w/ indicator
                  Additional Rolling Scale 4x4 - 5K Floor Scale w/indicator
                  Great Western Order
                  -------------------
                  Twine 4/550 ft Tubes                                                                  32514
                  Shrink Wrap                                                                           37488
                  Magnetic Tape 100 x 1/2"                                                              37778
                  Two way Rail Clip                                                                     38013
                  Cutters                                                                               38014
                  Blades                                                                                38022
                  Clear Sign 9x11                                                                       45154
                  Clear Sign 4.5"x6"                                                                    48170
                  High Length Freezer Coat                                                              48178
                  1/16" Wire Crimps SW-116-C                                                            48192
                  Hip Length Freezer Coat                                                               48213
                  Heatrac Cowhide Gloves                                                                90713
                  Full length Freezer Coat                                                              97908
                  Warehouse Local FFE
                  -------------------
                  Warehouse Office Cabinettry
                  Office desks and chairs
                  Fire Extinguisher
                  Produce Bins
                  Pillow Bins
                  Wine Boxes
                  Man Cages
                  Employee and Tire Center Lockers
                  Currency Counters
                  CD Fixtures
                  Local Sign Package
                  Egg Racks
                  Spoil Racks
                  T - Bars
                  Clothing Steel
                  Clothing Displays
                  Safety Ladder
                  MPU Shelving
                  Bag Check Area
                  Produce Cooler Mirrors and Acrylic Shelves
                  Membership Booths
                  Membership Office PBX
                  Light Boxes

102

                  Timekeeping and Payroll System
                  Miscellaneous Fixtures
                  Food Service-Pizza
                  Cooler Shelving  36" 3 Shelf Alum. Cooling rack  - CC1836E-SEP-36"                    51340
                  Cooler Shelving  48" 3 Shelf Alum. Cooling rack  - CC1848E-SBP - 48"                  51342
                  9.0              Refrig. Pizza Prep w/shelf - CPT -67                                 51354
                  24" x 30" SS Table w/casters - P/C -2 SLS-30                                          51356
                  Manual Dough Prss. 110v 190lb - DP-1100                                               51357
                  Dough Press Stand      UT-1200                                                        61006
                  Pizza Cutting Guide - EQ-18-6                                                         61007
                  24"x24" Aluminum Pizza Cutting Table with poly top   P/C-2MCCT24                      51375
                  Undershelf for Pizza Table                                                           513751
                  Pizza Display 60"x24"x52"h     P/C-PDT-602-4                                          51374
                  Pizza Pan 18"                                                                         51595
                  18" Perf. Cooking sheets                                                              51596
                  Gas - Double Deck Conveyor Pizza Oven    P220FS-d-G                                   90685
                        International Start-up and Warranty for the Pizza Oven
                  Exhaust Hood 7'x5'x2' - 18 ga. SS w/backsplash                                        51359
                  Exhaust Fan - 110v/60h/1ph                                                            51360
                  30" x 96" Poly Top Table w/casters and backsplash                                     51361
                  Solid Wall Shelf 12" x 48"                                                            90433
                  Table Mount Utility Drawer                                                            90697
                  Aluminum Undershelf for Table - 30 x 96                                              513601
                  Reach-in Freezer - One section                                                        51363
                  Hand sink 15"x19"x26" SS includes soap dispenser                                      51364
                  Edlund Can opener 17" Bar - S-11-C                                                    51370
                  Dough Carts - DC-63 w/lids and tops                                                   51371
                  Hot Dog Cooker - RB-78-33SC                                                           51373
                  SS Service Counter - 149" long - P-S Custom                                           51378
                  Churro Display Case -  HFD-3                                                          51380
                  Cup Dispenser - C3400CH-18"                                                           51574
                  SS Beverage Dispenser Counter 44"x78" - P/C-BC-78                                     51577
                  Soda/Ice Dispenser  - 220205081BC-50                                                  61003
                  Ice Cuber - 802CAS251-30                                                              61004
                  SS Condiment Counter 24" x 96" - P/C-CC-9624-2A                                       51578
                  Condiment Dispenser - 67590                                                           51579
                  Double Straw Dispenser - 3802-28                                                      51594
                  San Jamar Lid holder - LC2100                                                         51581
                  Vector Fly Trap System                                                                97269
                  Mobile Pizza Rack 20 tier aluminium   MPR-12                                          51583
                  Cuno Filter - Water Filter for Dispensing Unit   4S                                   58578
                  Cuno Replacement Cartridges    S8112-5                                                58579
                  Pre Filter                                                                            58879
                  Smallwares Package
                  ------------------
                  Napkin Dispenser                                                                      90727
                  Bag Dispenser Stand S                                                                 82292
                  Bag Dispenser Stand B                                                                 48369
                  12 oz. Fluted Cheese Shaker                                                           51599
                  Dough Docker                                                                          51600
                  Plastic Handle Pizza Cutter                                                           51600
                  Pizza Cutter 4' Diam. Plstc                                                           51604

103

                  Turner/Scraper 3" x 8"                                                                51605
                  10.5oz Stainless Ladle                                                                51606
                  Solid Hasting Spoon
                  Handle Cutter/Scraper 6" x 3"
                  Rubber Spatulas/Dzn                                                                   51609
                  24oz. Oil Squeeze Bottles                                                             51610
                  Dial Pocket Thermometer                                                               51611
                  Extra Long Oven Mitts                                                                516101
                  1/2 Size Cover with Handle Plastic                                                    51618
                  1/2 Size 6" Deep Plastic Pan Plastic                                                  51621
                  Cambro Food Box                                                                       51622
                  18" Pizza Peel                                                                        51623
                  2.5" Deep Full Size Pan                                                               51624
                  1/4 Size Pan 6" Deep S.S                                                              51628
                  Steam Table Pan 4" Deep - Perforated                                                  51630
                  16" Heavy Duty Tongs - 1/2dozen                                                       51631
                  12" Heavy Duty Tongs - (1/2 doz.)                                                     51632
                  5lb scale (1oz.)                                                                     516290
                  81.0              Plymold Seating 24"x44" - 4  seat arrangment    F81217              51637
                  Trash Unit - Blue - LRD 32                                                            35917
                  Gallon Dome Top w/chain    LRD -32                                                    35916
                  Digital Photo Menu Boards 36" x 48" ea. - 6 Boards                                    39608
                  Coca-Cola Kick Panel 77"x24 3/4" - AD97250                                            61008
                  Black Celtic Sign 12" x 36" - 2mm                                                     90761
                  Engraved Condiment Signs                                                              54020
                  Open/Close Signs                                                                      54021
                  Onion Slicer                                                                          90891
                  Onion Dicer                                                                           90989
                  Bag Dispensers Stand S                                                                82292
                  Bag Dispensers Stand B                                                                48369
                  Fresh Food
                  Rotisserie Chicken
                  ------------------
                  Rotisserie Ovens - Stacked Unit, Electric, 70-3#Bird Capacity, 75 minute cook
                  BKI Elec. Rotisserie Unit MSR-2                                                       61638
                  Extra Spit Kits for above (12) per set                                                61638
                  Full Size Holding Cabinet (HC-72)                                                     90600
                  4'-0" Self-Serve Unit        ssw-4                                                    90650
                  SS sliding Door for Self Serve Unit
                  Table Mount Utility Drawer                                                            90697
                  24" x 96" Alum. Table                                                                 90665
                  30" x 96"  Alum Table with Poly Top, backsplash and locking casters                   51361
                  Polished Alum. Undershelf for Alum. Table                                             63400
                  Solid Wall Shelf 12" x 48"                                                            90433
                  Enclosed Rotissery Racks                                                              90661
                  Alum. 18" x 26" Pans                                                                  51625
                  Utensil Wash Sink Double Compartment -  FN2424-1                                      90672
                  Tongs 16"                                                                             51631
                  Shoulder length baking gloves                                                         51613
                  Poultry Sherar 4 1/2" Locking                                                         90706
                  Poultry Sherar 4 1/2" Locking                                                        907551
                  W/Polished Undershelft                                                               906651

104

                  Meat Scissors
                  5" Boning Knife                                                                      907550
                  Vector Fly Trap System                                                                97269
                  Meat Thermometer                                                                      90696
                  Poultry Pliers
                  Bakery
                  ------
                  Panem Retarder/Proofer    2 Chamber 24 trays
                  Leventi Oven Stand / Inner Rack
                  Upright Refrigerated Cake Cases (4 ft. wide)
                  Prep Rack 20 Shelf                                                                    63405
                  Oven Rack 15 Shelf
                  Bear programmable mixer 60 Quart - 60 quart
                  60 Qt mixing bowl
                  Bowl Truck
                  18"x26" Aluminum Bun Pan
                  Muffin Pans
                  Muffin Racks 12 Shelf
                  Bakery Scale Printer AC 3000                                                          90815
                  Custom Software                                                                       90816
                  Pin Connectors                                                                       905091
                  Master Communication Board                                                            90809
                  DP Heat Pad Cover
                  Shrink Wrap Mach Synthesis 760                                                        64000
                  Noeprene Rubber for Vacuum Pack Machine                                              350008
                  2 x 3 Table for Scale
                  30"x96"  Alum. Table w/poly Top                                                       51361
                  Polished Alum. Undershelf                                                             63400
                  Table Mount Drawer Utility                                                            63401
                  Utensil Wash Sink 24"x24"x14"d w/faucet -1N24-PS                                      90663
                  Bakery Gloves                                                                        341090
                  Panem Refrigerated Working Table  - 3 Doors
                  Vector Fly System                                                                     97269
                  Set of Commercial Rubber Spatulas - 1/2  Dozen - 2x16/10                              90704
                  SS straight Spatula 3" Width                                                          90699
                  Filling Sleeves
                  Cutting Knife
                  Spray Bottles - 24 oz.                                                                51636
                  25lb Scale x 1lb.                                                                     51629
                  5.5 oz. Scooper (Ice Cream Type) - Muffin Scoop - 5.5 oz. Scooper                    634102
                  18" x 48" x 54" 3 Shelf Dry Storage - Shelving                                        51351
                  Basting Brushes                                                                       90694
                  Centorfold Flim for Shrink Wrap Machine  16 x 4370
                  Six Shelf Bakery racks                                                                12295
                  50"x36" Wire Shelves                                                                  12296
                  18x48x54-3 Shelf dry                                                                  51351
                  Water proof cover                                                                    908141
                  Reach in Refrigerator                                                                 90660
                  Fresh Meat
                  BIRO AFMG 24 Mixer w/footswitch - Model 175                                           90651
                  BIRO 4003 Meat Band Saw - Hi Yield 16                                                 90652
                  Ishida DP3000 Scale/Printer and Hand Wrap Station w/ left and right wing and          90813
                  key mnt.

105

                  Replacement Heating Element                                                           90812
                  Ground Beef Test Analizer                                                             90853
                  Hobart 403 Tenderizer                                                                 90622
                  Manual Stuffer
                  Nylon Gong Brush
                  Gong Brush  (Red)                                                                     91956
                  Gong Brush  (White)                                                                  919560
                  Gonb Brush (Yellow)                                                                  919561
                  Grinder Plates
                  #42 Grinder Plates 1/8"                                                               90732
                  # 42 Grinder Plates 3/8"                                                              90733
                  Grinder Knifes #42                                                                    90734
                  Blade Block for Saw                                                                   90804
                  Scaper Fiber                                                                          90822
                  Steel Wheel Block Scaper                                                              90823
                  Block Scraper - SS Blade Fibrox handle                                                90992
                  Plastic Bone Dust Scapers                                                             90993
                  DP 3000 Water Proof Cover - For Scale                                                 90814
                  Handwrap Head Pad Cover                                                               90745
                  Software - Custom                                                                     90816
                  Thermal Head for AC                                                                   90817
                  Work Table 30" x 96" w/ splash, poly top, and locking casters - aluminum              51361
                  Lug Dolly (2) w/casters  (6 lug) w/ casters                                           90981
                  Meat Racks-6 Tier - ALR-6
                  Meat Tubs-Grey - WHPL-8 -18x26                                                        90668
                  Utility Cart With Casters - Model # 311                                               90669
                  One compartment sink w/drain, faucet and side board                                   90677
                  Table Mount Platter Rack                                                              90132
                  Table Mount Tray Rack  15x96                                                          90675
                  Platter Cart 10 Slot  Meat Platter Cart w/ Casters                                    58569
                  Plastic 12" x 30" Platters - Meat/Seafood                                             58570
                  Vector Electoronic Fly System
                  6" Boning Knife                                                                       90693
                  10" Steak Knife                                                                       90691
                  10" Double Scabard - Aluminum                                                         90700
                  10" Regular Cut Steel                                                                 90990
                  Electric Knive Sharpener                                                             907050
                  Kevlar Mesh Gloves                                                                    90658
                  Hi Spectrum T-8 Lamps                                                                 91917
                  126" Scallp Saw Blades                                                                90735
                  126" Saw Blades 24"                                                                  907124
                  Mineral Oil - 1 Gal.                                                                  90747
                  Squeegie 24:                                                                          9654
                  Heavy Duty Plastic Aprons                                                             9656
                  Two Tier Poly Top Table for Grinder                                                   9657
                  Solid Wall Shelves for Meat Room Tables  12" x 48"                                    90433
                  Replacement Heating Element                                                           90812
                  Red Aprons                                                                           140638
                  White Butcher Smocks                                                                 140639
                  SS Chains for Scabbards                                                              907001
                  16" PVC Film

106

                  18" PVC Film
                  Custom Thermal Labels
                  USDA Select Labels
                  Red Vexar 30" x 70'  - For Meat Cases
                  12" x 30" Steak Paper
                  Installation and Handling
                  Fish Program
                  ------------
                  Stainless Fish Fixtures
                  44 Gallon Bone Baller w/lid
                  Black Plastic Dolly for Bone Barrel
                  Cuno Filter System                                                                    58578
                  Cuno Replacement Filters                                                              58579
                  Custom Software                                                                       90816
                  AC 3000 Printer/Scale                                                                 90811
                  Insulated White Bin with White Tray
                  Clear Acrylic Sneeze Guards                                                          130343
                  Ice Flakier 800lb Capacity                                                           130344
                  Ice Storage Bin Top                                                                  130345
                  Ice Storage bin                                                                      130346
                  Plastic Ice Shovel                                                                   140637
                  Cuno Water Filtration System Pre Filter                                              585801
                  Water Proof Cover for Scale                                                          908141
                  Slicing Deli
                  ------------
                  Berke Semi Automatic Slicer - 919FS                                                  687992
                  Mini Pack Floor Vacuum Machine                                                        68801
                  Hand Slicer
                  Seal Wire                                                                            908161
                  Teflon Tape - 10'                                                                     90821
                  Cut Off Wire                                                                         908162
                  AC3000 Deli Scale/Printer                                                             90811
                  Custom Software                                                                       90816
                  Water Proof Cover for Scales                                                         908141
                  Work Table 30" x 96" w/ splash, poly top, and locking  casters - 5SLSB30              51361
                  Table Mount Platter Holder/Rack                                                       90132
                  Solid Wall shelf for Deli Tables - 12"x48"                                            90433
                  Table Mount Utility Draware                                                           90697
                  Two Compartment Sink w/Right Hand drain board   -  2N24-RD24                          90676
                  Platter Cart 10 Slot - Meat                                                           58569
                  Plastic Platters 12" x 30" - Meat/Seafood                                             58570
                  8" Collector for Slicer                                                               90659
                  Lube Oil                                                                              90793
                  12" Double Handle Cheese Knife                                                        90991
                  Vector Fly Trap System                                                                97269
                  Hi Spectrum T-8 Lamps                                                                 91917
                  Heavy Duty Plastic Apron                                                              9656
                  Blue Aprons                                                                          548291
                  White Butcher Smocks                                                                 900911
                  10x12 Vacuum Bags 1M
                  Black Vexaar 30" x 70"
                  Squeegie 24"                                                                          9654
                  Two Tier Poly Top table for Grinder                                                   9657

107

                  Produce
                  -------
                  Produce Scale/Printer - AC 3000 Ishida                                                90815
                  Custom Software                                                                       90816
                  Water Proof Cover                                                                    908141
                  Table Top Handwrap                                                                    90801
                  Vector Fly System                                                                     97269
                  Hi Spectrum T-8 Lamps                                                                 91917
                  One Compartment Sink w/left hand board faucet and drain- 1N24LD24PS                   90663
                  24" x 72" Table w/Poly Top                                                           247299
                  Back Room
                  ---------
                  4x4 5K Floor Scale w/indicator                                                       901017
                  Toggle Switch                                                                         9661
                  Sanitech Propare Pressure Washer                                                     901020
                  Spare Pilot Gas Orfice                                                               901021
                  Spare Flame Sensor Rod                                                               901022
                  Spare Fan Nozzle                                                                     901023
                  Vector Fly System                                                                     97269
                  Replacement Black Lights                                                             901025
                  Replacement Adhesive Boards                                                          901026
                  Stainless Steel Double Compartment Sink 18" w/ sideboards/backsplash 2N24282D18      242821
                  Solid Wall Shelf for above sink  12X48                                                90433
                  Mini Pack Digit Shrink Machine                                                        12291
                  22" 75ga - 3,500 ' Shrink Film
                  Photo Equipment
                  ---------------
                  Noritsu
                  QSS2611MDPM Main Body                                                                 42611
                  Photo Lab Machine                                                                     49811
                  Pallat of Photo Lab Accessories                                                      261110
                  Auto Detacher                                                                        261240
                  Photo One Hour Lab Sink  se4056                                                       51337
                  One Hour Photo Lab Stand                                                              90755
                  One Hour Photo lab Accessories                                                        90756
                  Tire Center
                  -----------
                  Coats 1025 Wheel Balancer - Model 1050                                                63087
                  Coats 5050A Euro Tire Changer - Model 5060A                                           63088
                  Coats 4040A Standard Tire Changer - Model 4050A                                       65649
                  1R 5HP Compressor for Tire Center - IR2475NSFP                                        63091
                  Pad Rack Auto Lift HR6                                                                63092
                  AMMCO  2240 Frame Lift                                                                63205
                  Tire Center Hand Tools & Accessories
                  ------------------------------------
                  Torque Wrench w/Ext. #07902                                                           23658
                  U-Vex Safety Glasses GRN5AK31                                                         63096
                  Bolt Snap 4J197                                                                       63097
                  60Ft Yellow Plastic Chain                                                             63098
                  Chrome Valves WESCV250                                                                63200
                  Pull A Sterm Tool WES ST69                                                            63201
                  Sidewall Brush WESD WSB                                                               63203
                  COMBI Adptr/Special Euro Wheel                                                        63204
                  Stering Wheel Prot. Box of 250                                                        63206
                  47102 Complete Tire Repair Kit                                                        63207
                  Save A Stud Tool Set                                                                  63208

108

                  Lincoln 2 Ton Hydraulic Jack                                                          63209
                  Seat Covers JDI-SC5                                                                   63215
                  Wall Bracket JDI 90-015                                                               63216
                  Floormats JDI FM3                                                                     63217
                  Air Filters 3/4"                                                                      63219
                  3/4" Regulator #SCH REG75                                                             63220
                  Transmission Funnel HUF 6-1461                                                        63221
                  Auto In Line Lubricator 07951                                                         63222
                  Saf-T-Step 1 Galloon NAC-5                                                            63223
                  5030 Branick TC 550 Tire Dolly                                                        63224
                  Branick TC 550 Tire Dolly                                                             63225
                  1/2 x 5 Extension 2245 E                                                              63226
                  Flip Soc MM DP 2092DT                                                                 63228
                  SAE Flip Socket 2046DT                                                                63229
                  Hose Reel 3/8 x 50 Lincold 268                                                        63230
                  Blow Gun DIL 5114                                                                     63231
                  Tire Slick 1 gal ENV STML 1                                                           63232
                  Wheel Clamp ESC MX                                                                    63233
                  13 pc. Set 1/2" Impact Socket                                                         63234
                  14 pc. 1/2" Impact Socket                                                             63235
                  5 Ton Floor Jack HEI 68052                                                            63236
                  Astro Jack Stands (1 Pair)                                                            63237
                  Tube Test Tank HUD 5-3109                                                             63238
                  CP 731-2 Tire Wrench                                                                  63239
                  CP 746-2 1/2" dr. HD                                                                  63241
                  4/Way Wrench KEN T56                                                                  63800
                  4/Way Wrench STD KEN T57                                                              63801
                  Hub Cap Tool KEN T68                                                                  63802
                  Air Tool Oil MAV 085                                                                  63803
                  RIM Wheel Weight Gauge                                                                63804
                  Wonder Vac                                                                            63806
                  4-Way tool SCH 3522                                                                   63808
                  Truck Tire Valve SCH 501                                                              63809
                  Tread Depth Tool SCH 599                                                              63810
                  Valve Tool SCH 940                                                                    63811
                  Valve Tool SCH 992                                                                    63812
                  Valve Core Tool x2-111                                                                63813
                  Coupler 1/4 Fem A-3                                                                   63814
                  Coupler A-13                                                                          63815
                  Nipple/Male 1/4 A-3D                                                                  63818
                  Nipple/Female A-3E                                                                    63819
                  Chrome/Valve TR-416                                                                   63821
                  Air Chuck/Clip 6293                                                                   63822
                  Dual Foot Gauge X2-10 #54837                                                          63823
                  Milton Air Inflator Gauge                                                             63824
                  Snap-in Valves 413                                                                    63825
                  Tubeless Tire Snap 415                                                                63826
                  Snap-in Valves 418                                                                    63827
                  Snap-in Valves 423                                                                    63828
                  Wheel Weights 50 Box 50                                                               63829
                  Wheel Weights 75 Box 50                                                               63830

109

                  Wheel Weights 5 Box 50                                                                63831
                  Wheel Weights 1 onz Box 50                                                            63832
                  Wheel Weights 1.25 onz Box 50                                                         63833
                  Wheel Weights 1.5 onz Box 50                                                          63834
                  Wheel Weights 1.75 onz Box 50                                                         63835
                  Wheel Weights 2 onz. Box 50                                                           63836
                  Wheel Weights 2.75 onz. Box 50                                                        63839
                  Wheel Weights 3 onz.                                                                  63840
                  Wheel Weights 3.25 onz. Box 25                                                        63841
                  Wheel Weights 3.5 onz. Box 25                                                         63842
                  Wheel Weights 3.75 onz Box 25                                                         63843
                  Wheel Weights 4 onz. Box 25                                                           63844
                  Wheel Weights Aluma. 25 Plain                                                         63845
                  Wheel Weights Aluma. 5 Plain                                                          63846
                  Aluma 75 Wheel Weights 50/box                                                         63847
                  Aluma  1 pl Wheel Weights 50/box                                                      63848
                  Aluma 1.25 Wheel Weights 50/box                                                       63849
                  Aluma 1.5 Wheel Weights 50/box                                                        63850
                  Aluma 1.75 Wheel Weights 50/box                                                       63852
                  Aluma 2pl Wheel Weights 50/box                                                        63853
                  Aluma 2.25 Wheel Weights 50/box                                                       63854
                  Aluma 2.5 Wheel Weights 50/box                                                        63855
                  BTS 1 oz. Light Trucks LT1                                                            63856
                  BTS 1.5 oz. Light Truck LT1                                                           63857
                  BTS 2 onz. Light Truck LT1                                                            63858
                  BTS 2.5 onz. Light Truck                                                              63859
                  BTS 3 onz. Light Truck                                                                63860
                  BTS 3.5 onz Light Truck                                                               63861
                  BTS 4 onz. Light Truck                                                                63862
                  LT1-4 5 onz.  Box 25                                                                  63863
                  BTS 5 onz. Light Trucks LT1                                                           63864
                  BTS 6 onz. Light Trucks                                                               63865
                  CWW040 Alloy Wheel Wgts w/bins                                                        63866
                  X-109 W/W Tool                                                                        63867
                  200624 Wheel Weights                                                                  63868
                  SWA 3/8 x 4 Whip Hose                                                                 63869
                  SWA 3/8 x 10  Whip Hose                                                               63870
                  USC 11W White Crayon                                                                  63872
                  JD1MRC Magnet Roof Cap                                                                63873
                  KentG35 Hammer                                                                        63874
                  T15 Wire Rim Brush                                                                    63875
                  PAT19-100 Repair Video                                                                63876
                  6127 Safety Coil Hose                                                                 63878
                  TT-HB 1 tool Ser Remover                                                              63880
                  AST JS3T Jack Stand                                                                   63882
                  BER10R Locking Plier                                                                  63883
                  Vise Grip Pliers BER7R                                                                63884
                  Bead up for all passenger Tires                                                       63885
                  GDL50505 5 Gal Air Tank                                                               63887
                  Special Application Sockets                                                           63888
                  Working Bench 72x28"                                                                  63889

110

                  Bench Vise 5"                                                                         63890
                  FRN2A092 Wheel Chock                                                                  63891
                  IRT231P32 231 Cover                                                                   63892
                  Foam Cover                                                                            63893
                  Wheel Weights 2.25 oz. 50 ct.                                                        638361
                  T-5.00 Weights                                                                       638651
                  Installation Charges
                  Refrigeration Equipment
                  MID 8E Meat Cases                                                                     90855
                  MID 8E Meat Cases                                                                     90855
                  D6L Deli Cases - C28LE                                                                90856
                  LCVZ10410 Air Cool Cond. W/Legs                                                       90871
                  Condensing Unit R05295                                                                90874
                  Refrigeration Panels and Accessories
                  ------------------------------------
                  Light Tubes                                                                           9677
                  Cord Plugs                                                                            9678
                  Pipe Cape                                                                             9679
                  Pipe Hangers                                                                          9680
                  PVC Glue                                                                              9681
                  PVC Tubing                                                                            9682
                  Solder Flux                                                                           9683
                  Solder                                                                                9684
                  Black Steel Pipe                                                                      9686
                  Steel Channel Iron                                                                    9687
                  Steel Plate                                                                           9688
                  Steel Angle Iron                                                                      9689
                  Teflon Tape                                                                           9690
                  Electrical Clamps and Straps                                                          90906
                  Weather Proof Elect. Box                                                              90908
                  Weather Proof Box Covers                                                              90909
                  Tie Wraps Diff. Sizes                                                                 90910
                  Receptacals (Contractors)                                                             90911
                  4" Elec. Boxes and Misc. Covers                                                       90912
                  Alum. Flexible Tubes/Diff. Sizes                                                      90913
                  Electrical Couplings                                                                  90914
                  Lights Fixtures                                                                       90915
                  Threaded Pipe Nipples                                                                 90917
                  Stainless Steel Covers                                                                90918
                  K.O. Seals/Diff. Sizes                                                                90919
                  Heat Tape                                                                             90920
                  Book of #'s and letters                                                               90921
                  Misc. Hardware-Screws, Nuts                                                           90922
                  Wire Forks and Joints                                                                 90926
                  Communication Cables                                                                  90927
                  Wire Pulling Compound                                                                 90928
                  Light Fixture Lens Cover                                                              90929
                  Alum. Flex Fittings                                                                   90930
                  Electrical Fittings                                                                   90931
                  Copper Fittings                                                                       90933
                  Insulation/ Different Sizes                                                           90934
                  Hanging Brackets                                                                      90935

111

                  Plastic Snap in Bushings                                                              90936
                  Galvanized Pipe Fittings                                                              90937
                  PVC Fittings                                                                          90938
                  Selfoss (18"sq.)                                                                      90940
                  Tape-Diff. Colors and Sizes                                                           90941
                  Sand Cloth                                                                            90942
                  Valves-Different Sizes                                                                90944
                  Loose Roll #3 Black Wire                                                              90946
                  Clamps-Different Sizes                                                                90947
                  Struts Different Sizes                                                                90949
                  3/4" Unions                                                                           90950
                  Copper Tubing                                                                         90951
                  Liquid Tight Flex Fittings                                                            90953
                  100' Fish Tape                                                                        90954
                  Flexable Copper Tubing                                                                90956
                  Insulation Adhesive                                                                   90958
                  Electric Drill                                                                        90959
                  Grinder Wheels                                                                        90960
                  6lb. Sledge Hammer                                                                    90963
                  Impact Wrench                                                                         90964
                  4" Grinder                                                                            90965
                  Electrical Conduit                                                                    90966
                  5'x4' Gang Box w/handler                                                              90967
                  Fiberglass Ladders                                                                    90968
                  Electrical Wire Diff. Sizes                                                           90969
                  36" Prybar                                                                            90970
                  5 gal. Water Cooler                                                                   90971
                  Alum. Conduit Body Diff. Sizes                                                        90972
                  Skill Saw                                                                             90973
                  4" Level w/Case                                                                       90975
                  Caulkin Guns                                                                          90976
                  Electrical Cords                                                                      90977
                  Refrigerant R507                                                                      90996
                  1" Liquidtight Flex                                                                   91932
                  Bags of Wire Connectors                                                               91933
                  3/4" PVC Tape                                                                         91934
                  6" Lifting Bar                                                                        91938
                  Electric Concrete Drill                                                               91940
                  Misc. Refrigeration Access.                                                           91941
                  Post Hole Digger                                                                      91942
                  Silicone Paint                                                                        91943
                  Sawzall                                                                               91957
                  Double Channel Brackets                                                               91958
                  R507 Refrigerant (AZ50)                                                               90996
                  6 Gallon Wet/Dry Vacuum                                                              108190
                  Boxes of Nails                                                                       108185
                  Respirator                                                                           108002
                  Work Light                                                                           108177
                  Bags of Terry Towels                                                                 108176
                  5 Gal Buckets                                                                        108178
                  Paint Tray Kits                                                                      108182

112

                  Paint Brush Sets                                                                     108186
                  Pad Locks                                                                            108184
                  MIS Equipment
                  Warehouse- San Diego
                  --------------------
                  Copy Machines
                  Local Printers / cables / local bought PC's
                  Central
                  -------
                  MIS Equipment- from San Diego
                  MIS Equipment- local bought Pc's, printers, fax machines
                  Sharp Copier
                  Light Fixtures
                  --------------
                  Type A1 - Single 1000W MH Polestar Fix - PT3C10M27NLSW                                90835
                  Type A3 - Twin MH Mtd. On 20' Polestar Fixt.                                         440027
                  Type B Wallpack II 175W - PT24000MH27SISw - Type B                                    90840
                  Type D - PrismAire Retail Fix.  - GMVR400/VBU - Type D                                90844
                  Type E -  Tril. Fill, exit sign - WL2K175MH27WH - Type E                              90844
                  Type G - Prismlight Fixt. - RA4000MH27H739A-CS                                        90845
                  Type G1 - Parkpack 70W MH Ceiliing Mount                                              90847
                  Type N  -   Prismaire Retail. Fixt 250 - MASLRU10SBK                                  90851
                  Type A2 - Single 400W Polestar                                                        90893
                  Type S 400W PrisFex w /beam                                                           90898
                  Type Z Wallpack II 70 W MH 277V - WL2K70DMH2TTT                                      227027
                  Type W1  Panelvue 400W Pipe - PANL4000MHHMTTW                                        400300
                  Type W Panelview 400W - Signlighter                                                  400600
                  Type Y Bantan 2000 175W MH - BA17DMH2CG                                              471727
                  Preventive Maintenance and Service - First Year Contracts
                  Central
                  -------
                  Built in Cabinetry / Cubicle work
                  Expat- Coutry Manager/In charge of Const.  Vehicles
                  Expat- Operation Managers Vehicles

2. Alabang Store Present Chattel:             a. Leasehold rights of PSPH under
the Lease Agreement dated 17 May 2002 between Filinvest Alabang, Inc. as lessor
and PSPH as lessee, for a total area of 20,000 square meters along the
Alabang-Zapote Road, Muntinlupa City, acknowledged in Muntinlupa City before
Jovito M. Salvador, notary public, and recorded in said notary public's notarial
register as Doc No. 316, Page No. 24, Book No. VI, Series of 2002.          

Part 2 — FUTURE CHATTEL

Future Chattel include:

1.

Alabang Store Future Chattel:

            a. All supplies, inventories, merchandise, and stock in trade, as
well as all additions, replacements and substitutions thereof, to be acquired or
used in connection with the retail business of PSPH, and to be located at the
Alabang Store, together with all attachments, component parts, equipment and
accessories installed thereon or affixed thereto, regardless of where the same
are to or will be located.          

113

 

  b. Other Alabang Store Future Chattel:          

                  Description                                                                          Item #

                  Warehouse Equipment:
                  Dock Seals   TPW 801                                                                  12652
                  PVC Weatherseals                                                                      90828
                  Dock Levelors w/ weatherseals. 6.6" x 8' x 30000lbs TH1086.5                          12653
                  Dock Lights RHF-40-P                                                                  90773
                  Formmelt Galvanized Metal Hood                                                       410186
                  Pnuematic Tube System 5 drops                                                         47663
                  Membership Cabinets /  Counter                                                        37737
                  Photo Lab Cabinets                                                                    48419
                  Service Central / Center                                                              90829
                  Travel Desk
                  Application Counter                                                                   90828
                  Shrink Wrap Machine  Model STC2016
                  Manual Pallet Jack Model L50 Fourway                                                  12309
                  Manual Pallet Jack parts
                  Charger Stands  Deka Model RBS 18-25                                                  12312
                  Forklift Batteries  Deka Model 18-P137-15                                             12304
                  Forklift Chargers  Deka Model 880C3-18/950                                            12306
                  Transfer Cart  Model TC-24-PP Batt. Powered                                           12308
                  Philidelphia Scientific Watering System                                               90503
                  Mobile Pressure 10 Gal. Tank  INJ-T10M                                               905031
                  Forklifts  Model RC 3020-30                                                          302030
                  Forklifts w/ Frz Cond  RC 3020-30                                                    302031
                  Electric Pallet Jack
                  Baler  30/60 HD 2200                                                                  57696
                  M74 Upright  34" x 180"                                                              919040
                  M74 Upright  34" x 120"                                                              919030
                  M 74 Upright  34" x 60"                                                              919044
                  M74 Upright  34" x 48                                                                919048
                  Beam LBN 125 x 40  108"     (Cross Beams)                                            919061
                  Beams LBN 125 x 40  132"   (Cross Beams)                                             919062
                  Beams LBN 125 x 40  130"   (Cross Beams)                                             919063
                  Beams LBN 125 x 40  118"   (Cross Beams)                                             919064
                  Beams LBN 125 x 40  96"      (Cross Beams)                                           919065
                  Beams LBN 125 x 40  92"      (Cross Beams)                                           919066
                  Beams LBN 125 x 40  78"      (Cross Beams)                                           919067
                  Beams LBN  125 x 40  72"     (Cross Beams)                                           919068
                  Beams LBN  125 x 40  48"     (Cross Beams)                                           919069
                  Storage Freezer Steel Drive (7 bays 2 deep 4 high)                                    90861
                  Spacers DTZ300 12" long                                                               90862
                  Wedge Anchors                                                                         12490
                  End Cap Arms                                                                          90863
                  Safety Load Locks                                                                     90864
                  Protectors for Steel PC-6                                                             90772
                  Wire Decking 31.5 x 25X 53.00"                                                       312553
                  Wire Decking 31.5 x 38.00"                                                            29209
                  Wire Decking 31.5 x 45.00"                                                           919045

114

                  Wire Decking  31.25"x42" Freezer                                                     362542
                  Collapsible Stacking Baskets - Item # 6000-30=30" x 32 x 34 "                         12492
                  Register Stands  Model Kcuu3500  ,3500 LT                                             12278
                  Beltrac Post w/Rubberized Base - 3000LT                                               29200
                  Cart Corrals #4300-15                                                                 12285
                  Carts #1200-50                                                                        12284
                  Safe & Vault ( Model SVM 6030PCD)                                                     12294
                  Tennant Floor Scrubber                                                                90500
                  Flats - Platform trucks TR-2000                                                       12283
                  Sign Package
                  ------------
                  Sign-Atencion Members                                                                 90712
                  Annual Fee Sign                                                                       90719
                  Members Benefits Wall                                                                 90720
                  Merchandise Return Sign                                                               90722
                  How to Read  a Tire Sign                                                              90724
                  Food Court Sign                                                                       90727
                  Frutas y Verduras Sign                                                                91944
                  Sign-Entrance                                                                         91995
                  Sign-Instal De Llantas                                                                91998
                  Sign-Precious de Llantas                                                              92902
                  Sign-Como Hacer Su Copra                                                              92905
                  Sign#14-1 Hour Photo                                                                  97904
                  Signs-Salida de Emerg.                                                                97905
                  Sign-Photo Center Prices                                                              90906
                  #16 Panaderia, Pollo Rostiza                                                         106493
                  #19 Aisle Sign                                                                       106494
                  #23 Store Hours Sign                                                                 106600
                  #26 Handicap Parking Sign                                                            106602
                  #27 No Parking Sign                                                                  106603
                  #28 Receiving Information Sign                                                       106604
                  #30 Chock Wheels - Sign                                                              106606
                  #33 Fire Exit - Sign                                                                 106608
                  #35 Caution Forklift- Sign                                                           106608
                  #38 Attentions Members - Sign                                                        106611
                  #40 Think Safety - Sign                                                              106612
                  #44 Det Installation Price Sign                                                      106614
                  #15 Sign - Pharmacy                                                                  106620
                  #17 Sign - Pharmacy                                                                  106621
                  Sign#16 48'x96' w/no text only logo                                                  160016
                  48'x120' Blank Pieces of Sign w/no logo                                              161600
                  48'X96' Metal Sheets w/out frame                                                     166100
                  #24 Sign - Store Info                                                                 24100
                  #29 Sign - Receiving w/Arrow                                                         291000
                  #32 Sign - Cardboard Only                                                            321000
                  #39 Sign-Car Battery Sign                                                            400400
                  New Item Board                                                                       551711
                  Not Allowed Sign                                                                     662230
                  Pylon Signage, 1 Hr Photo                                                            721990
                  Signs 5B-Exit                                                                        876431
                  Sign #43A How to read a Tire                                                         907241
                  #13 Sign-Membership                                                                  929041

115

                  Bread Racks - six shelf - two (2) bay
                  Bread Trays - White
                  Steam Cleaner - Model 680                                                             12286
                  Receiving Scale - 4x4 -5K Floor Scale w/ indicator
                  Additional Rolling Scale 4x4 - 5K Floor Scale w/indicator
                  Great Western Order
                  -------------------
                  Twine 4/550 ft Tubes                                                                  32514
                  Shrink Wrap                                                                           37488
                  Magnetic Tape 100 x 1/2"                                                              37778
                  Two way Rail Clip                                                                     38013
                  Cutters                                                                               38014
                  Blades                                                                                38022
                  Clear Sign 9x11                                                                       45154
                  Clear Sign 4.5"x6"                                                                    48170
                  High Length Freezer Coat                                                              48178
                  1/16" Wire Crimps SW-116-C                                                            48192
                  Hip Length Freezer Coat                                                               48213
                  Eye wash station                                                                      90710
                  Heatrac Cowhide Gloves                                                                90713
                  Full length Freezer Coat                                                              97908
                  Warehouse Local FFE
                  -------------------
                  Warehouse Office Cabinettry
                  Office desks and chairs
                  Phone System
                  Alarm System
                  Trash facility needs
                  Fire Extinguisher
                  Produce Bins
                  Pillow Bins
                  Wine Boxes
                  2 X 6 Boards - Slats
                  Fencing
                  Man Cages
                  Employee and Tire Center Lockers
                  Currency Counters
                  CD Fixtures
                  Speed Bumps
                  Local Sign Package
                  Egg Racks
                  Spoil Racks
                  T - Bars
                  Clothing Steel
                  Clothing Displays
                  Safety Ladder
                  MPU Shelving
                  Bag Check Area
                  Produce Cooler Mirrors and Acrylic Shelves
                  Membership Booths
                  Membership Office PBX
                  Light Boxes
                  Timekeeping and Payroll System

116

                  Miscellaneous Fixtures
                  Food Service-Pizza
                  Cooler Shelving  36" 3 Shelf Alum. Cooling rack  - CC1836E-SEP-36"                    51340
                  Cooler Shelving  48" 3 Shelf Alum. Cooling rack  - CC1848E-SBP - 48"                  51342
                  9.0              Refrig. Pizza Prep w/shelf - CPT -67                                 51354
                  24" x 30" SS Table w/casters - P/C -2 SLS-30                                          51356
                  Manual Dough Prss. 110v 190lb - DP-1100                                               51357
                  Dough Press Stand      UT-1200                                                        61006
                  Pizza Cutting Guide - EQ-18-6                                                         61007
                  24"x24" Aluminum Pizza Cutting Table with poly top   P/C-2MCCT24                      51375
                  Undershelf for Pizza Table                                                           513751
                  Pizza Display 60"x24"x52"h     P/C-PDT-602-4                                          51374
                  Pizza Pan 18"                                                                         51595
                  18" Perf. Cooking sheets                                                              51596
                  Gas - Double Deck Conveyor Pizza Oven    P220FS-d-G                                   90685
                        International Start-up and Warranty for the Pizza Oven
                  Exhaust Hood 7'x5'x2' - 18 ga. SS w/backsplash                                        51359
                  Exhaust Fan - 110v/60h/1ph                                                            51360
                  30" x 96" Poly Top Table w/casters and backsplash                                     51361
                  Solid Wall Shelf 12" x 48"                                                            90433
                  Table Mount Utility Drawer                                                            90697
                  Aluminum Undershelf for Table - 30 x 96                                              513601
                  Reach-in Freezer - One section                                                        51363
                  Hand sink 15"x19"x26" SS includes soap dispenser                                      51364
                  SS Pot Sink 34"x106" - 3 compartment includes:  -3N2028-2D20                          51365
                  Faucets for 24.0  -  USF-12-S                                                         51365
                  Rotary Drains for 24.0 - US-LD-1-5                                                    51365
                  Edlund Can opener 17" Bar - S-11-C                                                    51370
                  Dough Carts - DC-63 w/lids and tops                                                   51371
                  Hot Dog Cooker - RB-78-33SC                                                           51373
                  SS Service Counter - 149" long - P-S Custom                                           51378
                  Churro Display Case -  HFD-3                                                          51380
                  Cup Dispenser - C3400CH-18"                                                           51574
                  SS Beverage Dispenser Counter 44"x78" - P/C-BC-78                                     51577
                  Soda/Ice Dispenser  - 220205081BC-50                                                  61003
                  Ice Cuber - 802CAS251-30                                                              61004
                  SS Condiment Counter 24" x 96" - P/C-CC-9624-2A                                       51578
                  Condiment Dispenser - 67590                                                           51579
                  Double Straw Dispenser - 3802-28                                                      51594
                  San Jamar Lid holder - LC2100                                                         51581
                  Vector Fly Trap System                                                                97269
                  Mobile Pizza Rack 20 tier aluminium   MPR-12                                          51583
                  Cuno Filter - Water Filter for Dispensing Unit   4S                                   58578
                  Cuno Replacement Cartridges    S8112-5                                                58579
                  Pre Filter                                                                            58879
                  SS Corner Guards - 3 1/2" x 3 1/2" x 4' - CS 5144-C                                   51585
                  Smallwares Package
                  ------------------
                  Napkin Dispenser                                                                      90727
                  Bag Dispenser Stand S                                                                 82292
                  Bag Dispenser Stand B                                                                 48369
                  12 oz. Fluted Cheese Shaker                                                           51599

117

                  Dough Docker                                                                          51600
                  Plastic Handle Pizza Cutter                                                           51600
                  Pizza Cutter 4' Diam. Plstc                                                           51604
                  Turner/Scraper 3" x 8"                                                                51605
                  10.5oz Stainless Ladle                                                                51606
                  Solid Hasting Spoon
                  Handle Cutter/Scraper 6" x 3"
                  Rubber Spatulas/Dzn                                                                   51609
                  24oz. Oil Squeeze Bottles                                                             51610
                  Dial Pocket Thermometer                                                               51611
                  Extra Long Oven Mitts                                                                516101
                  1/2 Size Cover with Handle Plastic                                                    51618
                  1/2 Size 6" Deep Plastic Pan Plastic                                                  51621
                  Cambro Food Box                                                                       51622
                  18" Pizza Peel                                                                        51623
                  2.5" Deep Full Size Pan                                                               51624
                  1/4 Size Pan 6" Deep S.S                                                              51628
                  Steam Table Pan 4" Deep - Perforated                                                  51630
                  16" Heavy Duty Tongs - 1/2dozen                                                       51631
                  12" Heavy Duty Tongs - (1/2 doz.)                                                     51632
                  5lb scale (1oz.)                                                                     516290
                  81.0              Plymold Seating 24"x44" - 4  seat arrangment    F81217              51637
                  Trash Unit - Blue - LRD 32                                                            35917
                  Gallon Dome Top w/chain    LRD -32                                                    35916
                  Digital Photo Menu Boards 36" x 48" ea. - 6 Boards                                    39608
                  Coca-Cola Kick Panel 77"x24 3/4" - AD97250                                            61008
                  Black Celtic Sign 12" x 36" - 2mm                                                     90761
                  Engraved Condiment Signs                                                              54020
                  Open/Close Signs                                                                      54021
                  PriceSmart Food Service Identity "Big" Sign - 5 pc Aluminum KD
                  Onion Slicer                                                                          90891
                  Onion Dicer                                                                           90989
                  Bag Dispensers Stand S                                                                82292
                  Bag Dispensers Stand B                                                                48369
                  Fresh Food
                  Rotisserie Chicken
                  ------------------
                  Rotisserie Ovens - Stacked Unit, Electric, 70-3#Bird Capacity, 75 minute cook
                  BKI Elec. Rotisserie Unit MSR-2                                                       61638
                  Extra Spit Kits for above (12) per set                                                61638
                  Full Size Holding Cabinet (HC-72)                                                     90600
                  4'-0" Self-Serve Unit        ssw-4                                                    90650
                  SS sliding Door for Self Serve Unit
                  Table Mount Utility Drawer                                                            90697
                  24" x 96" Alum. Table                                                                 90665
                  30" x 96"  Alum Table with Poly Top, backsplash and locking casters                   51361
                  Polished Alum. Undershelf for Alum. Table                                             63400
                  Solid Wall Shelf 12" x 48"                                                            90433
                  Enclosed Rotissery Racks                                                              90661
                  Alum. 18" x 26" Pans                                                                  51625
                  Utensil Wash Sink Double Compartment -  FN2424-1                                      90672
                  Tongs 16"                                                                             51631

118

                  Shoulder length baking gloves                                                         51613
                  Poultry Sherar 4 1/2" Locking                                                         90706
                  Poultry Sherar 4 1/2" Locking                                                        907551
                  W/Polished Undershelft                                                               906651
                  Meat Scissors
                  5" Boning Knife                                                                      907550
                  Vector Fly Trap System                                                                97269
                  Meat Thermometer                                                                      90696
                  Poultry Pliers
                  Bakery
                  ------
                  Leventi Convection Oven   10 tray Electic Oven
                  Panem Retarder/Proofer    2 Chamber 24 trays
                  Leventi Oven Stand / Inner Rack
                  Upright Refrigerated Cake Cases (4 ft. wide)
                  Prep Rack 20 Shelf                                                                    63405
                  Oven Rack 15 Shelf
                  Bear programmable mixer 60 Quart - 60 quart
                  60 Qt mixing bowl
                  Bowl Truck
                  18"x26" Aluminum Bun Pan
                  Muffin Pans
                  Muffin Racks 12 Shelf
                  Bakery Scale Printer AC 3000                                                          90815
                  Custom Software                                                                       90816
                  Cabling (All Departments)                                                             90509
                  Pin Connectors                                                                       905091
                  Master Communication Board                                                            90809
                  DP Heat Pad Cover
                  Shrink Wrap Mach Synthesis 760                                                        64000
                  Noeprene Rubber for Vacuum Pack Machine                                              350008
                  2 x 3 Table for Scale
                  30"x96"  Alum. Table w/poly Top                                                       51361
                  Polished Alum. Undershelf                                                             63400
                  Table Mount Drawer Utility                                                            63401
                  Utensil Wash Sink 24"x24"x14"d w/faucet -1N24-PS                                      90663
                  Bakery Gloves                                                                        341090
                  Panem Refrigerated Working Table  - 3 Doors
                  Vector Fly System                                                                     97269
                  Set of Commercial Rubber Spatulas - 1/2  Dozen - 2x16/10                              90704
                  SS straight Spatula 3" Width                                                          90699
                  Filling Sleeves
                  Cutting Knife
                  Spray Bottles - 24 oz.                                                                51636
                  25lb Scale x 1lb.                                                                     51629
                  5.5 oz. Scooper (Ice Cream Type) - Muffin Scoop - 5.5 oz. Scooper                    634102
                  18" x 48" x 54" 3 Shelf Dry Storage - Shelving                                        51351
                  Basting Brushes                                                                       90694
                  Centorfold Flim for Shrink Wrap Machine  16 x 4370
                  Six Shelf Bakery racks                                                                12295
                  50"x36" Wire Shelves                                                                  12296
                  18x48x54-3 Shelf dry                                                                  51351

119

                  Water proof cover                                                                    908141
                  Reach in Refrigerator                                                                 90660
                  Fresh Meat
                  ----------
                  BIRO AFMG 24 Mixer w/footswitch - Model 175                                           90651
                  BIRO 4003 Meat Band Saw - Hi Yield 16                                                 90652
                  Ishida DP3000 Scale/Printer and Hand Wrap Station w/ left and right wing and          90813
                  key mnt.
                  Replacement Heating Element                                                           90812
                  Ground Beef Test Analizer                                                             90853
                  Hobart 403 Tenderizer                                                                 90622
                  Manual Stuffer
                  Nylon Gong Brush
                  Gong Brush  (Red)                                                                     91956
                  Gong Brush  (White)                                                                  919560
                  Gonb Brush (Yellow)                                                                  919561
                  Grinder Plates
                  #42 Grinder Plates 1/8"                                                               90732
                  # 42 Grinder Plates 3/8"                                                              90733
                  Grinder Knifes #42                                                                    90734
                  Blade Block for Saw                                                                   90804
                  Scaper Fiber                                                                          90822
                  Steel Wheel Block Scaper                                                              90823
                  Block Scraper - SS Blade Fibrox handle                                                90992
                  Plastic Bone Dust Scapers                                                             90993
                  DP 3000 Water Proof Cover - For Scale                                                 90814
                  Handwrap Head Pad Cover                                                               90745
                  Software - Custom                                                                     90816
                  Thermal Head for AC                                                                   90817
                  Work Table 30" x 96" w/ splash, poly top, and locking casters - aluminum              51361
                  Lug Dolly (2) w/casters  (6 lug) w/ casters                                           90981
                  Meat Racks-6 Tier - ALR-6
                  Meat Tubs-Grey - WHPL-8 -18x26                                                        90668
                  Utility Cart With Casters - Model # 311                                               90669
                  One compartment sink w/drain, faucet and side board                                   90677
                  Table Mount Platter Rack                                                              90132
                  Table Mount Tray Rack  15x96                                                          90675
                  Platter Cart 10 Slot  Meat Platter Cart w/ Casters                                    58569
                  Plastic 12" x 30" Platters - Meat/Seafood                                             58570
                  Vector Electoronic Fly System
                  6" Boning Knife                                                                       90693
                  10" Steak Knife                                                                       90691
                  10" Double Scabard - Aluminum                                                         90700
                  10" Regular Cut Steel                                                                 90990
                  Electric Knive Sharpener                                                             907050
                  Kevlar Mesh Gloves                                                                    90658
                  Hi Spectrum T-8 Lamps                                                                 91917
                  126" Scallp Saw Blades                                                                90735
                  126" Saw Blades 24"                                                                  907124
                  Mineral Oil - 1 Gal.                                                                  90747
                  Squeegie 24:                                                                          9654
                  Heavy Duty Plastic Aprons                                                             9656
                  Two Tier Poly Top Table for Grinder                                                   9657

120

                  Solid Wall Shelves for Meat Room Tables  12" x 48"                                    90433
                  Replacement Heating Element                                                           90812
                  Red Aprons                                                                           140638
                  White Butcher Smocks                                                                 140639
                  SS Chains for Scabbards                                                              907001
                  16" PVC Film
                  18" PVC Film
                  Custom Thermal Labels
                  USDA Select Labels
                  Red Vexar 30" x 70'  - For Meat Cases
                  12" x 30" Steak Paper
                  Installation and Handling
                  Fish Program
                  ------------
                  Stainless Fish Fixtures
                  44 Gallon Bone Baller w/lid
                  Black Plastic Dolly for Bone Barrel
                  Cuno Filter System                                                                    58578
                  Cuno Replacement Filters                                                              58579
                  Custom Software                                                                       90816
                  AC 3000 Printer/Scale                                                                 90811
                  Insulated White Bin with White Tray
                  Clear Acrylic Sneeze Guards                                                          130343
                  Ice Flakier 800lb Capacity                                                           130344
                  Ice Storage Bin Top                                                                  130345
                  Ice Storage bin                                                                      130346
                  Plastic Ice Shovel                                                                   140637
                  Cuno Water Filtration System Pre Filter                                              585801
                  Water Proof Cover for Scale                                                          908141
                  Slicing Deli
                  ------------
                  Berke Semi Automatic Slicer - 919FS                                                  687992
                  Mini Pack Floor Vacuum Machine                                                        68801
                  Hand Slicer
                  Seal Wire                                                                            908161
                  Teflon Tape - 10'                                                                     90821
                  Cut Off Wire                                                                         908162
                  AC3000 Deli Scale/Printer                                                             90811
                  Custom Software                                                                       90816
                  Water Proof Cover for Scales                                                         908141
                  Work Table 30" x 96" w/ splash, poly top, and locking  casters - 5SLSB30              51361
                  Table Mount Platter Holder/Rack                                                       90132
                  Solid Wall shelf for Deli Tables - 12"x48"                                            90433
                  Table Mount Utility Draware                                                           90697
                  Two Compartment Sink w/Right Hand drain board   -  2N24-RD24                          90676
                  Platter Cart 10 Slot - Meat                                                           58569
                  Plastic Platters 12" x 30" - Meat/Seafood                                             58570
                  8" Collector for Slicer                                                               90659
                  Lube Oil                                                                              90793
                  12" Double Handle Cheese Knife                                                        90991
                  Vector Fly Trap System                                                                97269
                  Hi Spectrum T-8 Lamps                                                                 91917
                  Heavy Duty Plastic Apron                                                              9656

121

                  Blue Aprons                                                                          548291
                  White Butcher Smocks                                                                 900911
                  10x12 Vacuum Bags 1M
                  Black Vexaar 30" x 70"
                  Squeegie 24"                                                                          9654
                  Two Tier Poly Top table for Grinder                                                   9657
                  Produce
                  -------
                  Produce Scale/Printer - AC 3000 Ishida                                                90815
                  Custom Software                                                                       90816
                  Water Proof Cover                                                                    908141
                  Table Top Handwrap                                                                    90801
                  Vector Fly System                                                                     97269
                  Hi Spectrum T-8 Lamps                                                                 91917
                  One Compartment Sink w/left hand board faucet and drain- 1N24LD24PS                   90663
                  24" x 72" Table w/Poly Top                                                           247299
                  Back Room
                  ---------
                  4x4 5K Floor Scale w/indicator                                                       901017
                  Toggle Switch                                                                         9661
                  Sanitech Propare Pressure Washer                                                     901020
                  Spare Pilot Gas Orfice                                                               901021
                  Spare Flame Sensor Rod                                                               901022
                  Spare Fan Nozzle                                                                     901023
                  Vector Fly System                                                                     97269
                  Replacement Black Lights                                                             901025
                  Replacement Adhesive Boards                                                          901026
                  Stainless Steel Double Compartment Sink 18" w/ sideboards/backsplash 2N24282D18      242821
                  Solid Wall Shelf for above sink  12X48                                                90433
                  Mini Pack Digit Shrink Machine                                                        12291

                  22" 75ga - 3,500 ' Shrink Film
                  Photo Equipment
                  ---------------
                  Noritsu
                  QSS2611MDPM Main Body                                                                 42611
                  Photo Lab Machine                                                                     49811
                  Pallat of Photo Lab Accessories                                                      261110
                  Auto Detacher                                                                        261240
                  Photo One Hour Lab Sink  se4056                                                       51337
                  One Hour Photo Lab Stand                                                              90755
                  One Hour Photo lab Accessories                                                        90756
                  Tire Center
                  -----------
                  Coats 1025 Wheel Balancer - Model 1050                                                63087
                  Coats 5050A Euro Tire Changer - Model 5060A                                           63088
                  Coats 4040A Standard Tire Changer - Model 4050A                                       65649
                  1R 5HP Compressor for Tire Center - IR2475NSFP                                        63091
                  Pad Rack Auto Lift HR6                                                                63092
                  AMMCO  2240 Frame Lift                                                                63205
                  Tire Center Hand Tools & Accessories
                  ------------------------------------
                  Torque Wrench w/Ext. #07902                                                           23658
                  U-Vex Safety Glasses GRN5AK31                                                         63096
                  Bolt Snap 4J197                                                                       63097
                  60Ft Yellow Plastic Chain                                                             63098
                  Chrome Valves WESCV250                                                                63200

122

                  Pull A Sterm Tool WES ST69                                                            63201
                  Sidewall Brush WESD WSB                                                               63203
                  COMBI Adptr/Special Euro Wheel                                                        63204
                  Stering Wheel Prot. Box of 250                                                        63206
                  47102 Complete Tire Repair Kit                                                        63207
                  Save A Stud Tool Set                                                                  63208
                  Lincoln 2 Ton Hydraulic Jack                                                          63209
                  Seat Covers JDI-SC5                                                                   63215
                  Wall Bracket JDI 90-015                                                               63216
                  Floormats JDI FM3                                                                     63217
                  Air Filters 3/4"                                                                      63219
                  3/4" Regulator #SCH REG75                                                             63220
                  Transmission Funnel HUF 6-1461                                                        63221
                  Auto In Line Lubricator 07951                                                         63222
                  Saf-T-Step 1 Galloon NAC-5                                                            63223
                  5030 Branick TC 550 Tire Dolly                                                        63224
                  Branick TC 550 Tire Dolly                                                             63225
                  1/2 x 5 Extension 2245 E                                                              63226
                  Flip Soc MM DP 2092DT                                                                 63228
                  SAE Flip Socket 2046DT                                                                63229
                  Hose Reel 3/8 x 50 Lincold 268                                                        63230
                  Blow Gun DIL 5114                                                                     63231
                  Tire Slick 1 gal ENV STML 1                                                           63232
                  Wheel Clamp ESC MX                                                                    63233
                  13 pc. Set 1/2" Impact Socket                                                         63234
                  14 pc. 1/2" Impact Socket                                                             63235
                  5 Ton Floor Jack HEI 68052                                                            63236
                  Astro Jack Stands (1 Pair)                                                            63237
                  Tube Test Tank HUD 5-3109                                                             63238
                  CP 731-2 Tire Wrench                                                                  63239
                  CP 746-2 1/2" dr. HD                                                                  63241
                  4/Way Wrench KEN T56                                                                  63800
                  4/Way Wrench STD KEN T57                                                              63801
                  Hub Cap Tool KEN T68                                                                  63802
                  Air Tool Oil MAV 085                                                                  63803
                  RIM Wheel Weight Gauge                                                                63804
                  Wonder Vac                                                                            63806
                  4-Way tool SCH 3522                                                                   63808
                  Truck Tire Valve SCH 501                                                              63809
                  Tread Depth Tool SCH 599                                                              63810
                  Valve Tool SCH 940                                                                    63811
                  Valve Tool SCH 992                                                                    63812
                  Valve Core Tool x2-111                                                                63813
                  Coupler 1/4 Fem A-3                                                                   63814
                  Coupler A-13                                                                          63815
                  Nipple/Male 1/4 A-3D                                                                  63818
                  Nipple/Female A-3E                                                                    63819
                  Chrome/Valve TR-416                                                                   63821
                  Air Chuck/Clip 6293                                                                   63822
                  Dual Foot Gauge X2-10 #54837                                                          63823
                  Milton Air Inflator Gauge                                                             63824

123

                  Snap-in Valves 413                                                                    63825
                  Tubeless Tire Snap 415                                                                63826
                  Snap-in Valves 418                                                                    63827
                  Snap-in Valves 423                                                                    63828
                  Wheel Weights 50 Box 50                                                               63829
                  Wheel Weights 75 Box 50                                                               63830
                  Wheel Weights 5 Box 50                                                                63831
                  Wheel Weights 1 onz Box 50                                                            63832
                  Wheel Weights 1.25 onz Box 50                                                         63833
                  Wheel Weights 1.5 onz Box 50                                                          63834
                  Wheel Weights 1.75 onz Box 50                                                         63835
                  Wheel Weights 2 onz. Box 50                                                           63836
                  Wheel Weights 2.75 onz. Box 50                                                        63839
                  Wheel Weights 3 onz.                                                                  63840
                  Wheel Weights 3.25 onz. Box 25                                                        63841
                  Wheel Weights 3.5 onz. Box 25                                                         63842
                  Wheel Weights 3.75 onz Box 25                                                         63843
                  Wheel Weights 4 onz. Box 25                                                           63844
                  Wheel Weights Aluma. 25 Plain                                                         63845
                  Wheel Weights Aluma. 5 Plain                                                          63846
                  Aluma 75 Wheel Weights 50/box                                                         63847
                  Aluma  1 pl Wheel Weights 50/box                                                      63848
                  Aluma 1.25 Wheel Weights 50/box                                                       63849
                  Aluma 1.5 Wheel Weights 50/box                                                        63850
                  Aluma 1.75 Wheel Weights 50/box                                                       63852
                  Aluma 2pl Wheel Weights 50/box                                                        63853
                  Aluma 2.25 Wheel Weights 50/box                                                       63854
                  Aluma 2.5 Wheel Weights 50/box                                                        63855
                  BTS 1 oz. Light Trucks LT1                                                            63856
                  BTS 1.5 oz. Light Truck LT1                                                           63857
                  BTS 2 onz. Light Truck LT1                                                            63858
                  BTS 2.5 onz. Light Truck                                                              63859
                  BTS 3 onz. Light Truck                                                                63860
                  BTS 3.5 onz Light Truck                                                               63861
                  BTS 4 onz. Light Truck                                                                63862
                  LT1-4 5 onz.  Box 25                                                                  63863
                  BTS 5 onz. Light Trucks LT1                                                           63864
                  BTS 6 onz. Light Trucks                                                               63865
                  CWW040 Alloy Wheel Wgts w/bins                                                        63866
                  X-109 W/W Tool                                                                        63867
                  200624 Wheel Weights                                                                  63868
                  SWA 3/8 x 4 Whip Hose                                                                 63869
                  SWA 3/8 x 10  Whip Hose                                                               63870
                  USC 11W White Crayon                                                                  63872
                  JD1MRC Magnet Roof Cap                                                                63873
                  KentG35 Hammer                                                                        63874
                  T15 Wire Rim Brush                                                                    63875
                  PAT19-100 Repair Video                                                                63876
                  6127 Safety Coil Hose                                                                 63878
                  TT-HB 1 tool Ser Remover                                                              63880
                  AST JS3T Jack Stand                                                                   63882

124

                  BER10R Locking Plier                                                                  63883
                  Vise Grip Pliers BER7R                                                                63884
                  Bead up for all passenger Tires                                                       63885
                  GDL50505 5 Gal Air Tank                                                               63887
                  Special Application Sockets                                                           63888
                  Working Bench 72x28"                                                                  63889
                  Bench Vise 5"                                                                         63890
                  FRN2A092 Wheel Chock                                                                  63891
                  IRT231P32 231 Cover                                                                   63892
                  Foam Cover                                                                            63893
                  Wheel Weights 2.25 oz. 50 ct.                                                        638361
                  T-5.00 Weights                                                                       638651
                  Installation Charges
                  Refrigeration Equipment
                  MID-12E Meat Cases for Refrigeration (Per Pricemart Specifications)                   53614
                  D6-12LE Dairy Cases for Refrigeration                                                 53617
                  HC4E-126 Coils for Refrigeration                                                      53619
                  MID 8E Meat Cases                                                                     90855
                  MID 8E Meat Cases                                                                     90855
                  D6L Deli Cases - C28LE                                                                90856
                  HC4E 252BK Alt Coils                                                                  90865
                  MK44-420EDL MM T Coils                                                                90866
                  HC6A 222BB Al T Coils                                                                 90867
                  MK36 354 Air B T Coils                                                                90868
                  HC6E 234BK Al T Coils                                                                 90869
                  Gal 36 135 A 115/1 kPSC Coils                                                         90870
                  LCVZ10410 Air Cool Cond. W/Legs                                                       90871
                  Installation Materials for Machine Room                                               90872
                  Bohn Coil Model # ADT070 AJ                                                           90873
                  Condensing Unit R05295                                                                90874
                  Mach. Rm. W/compres., coil, tank                                                      90876
                  Installation Labor, start up
                  Refrigeration Panels and Accessories
                  ------------------------------------
                  Control Panel for Air Cooled                                                         908711
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Refrigeration panels and accessories                                                  50595
                  Steel Beams for Refrg. Rooms                                                          90880
                  Steel Girt                                                                           908925
                  Steel Flat Bars                                                                      908926
                  Foamed Angles                                                                        908930
                  Tie Rod Assy                                                                         908927
                  Steel Bent Clips                                                                     908928
                  Bolts                                                                                908929
                  Columns                                                                              908921
                  Durs Doors/Cooler Doors                                                               90881
                  Duro Last Roof                                                                        90882
                  Sliding Doors with Rails                                                              90884
                  Glass Windows                                                                         97945
                  Plastic Curtains                                                                      90885

125

                  Anthony Glass Doors                                                                   90894
                  Anthony Glass Door Frames                                                             90895
                  Single Ballast for Anthony Doors                                                      90896
                  Metal Pull Boxes (Grey)                                                               9676
                  Light Tubes                                                                           9677
                  Cord Plugs                                                                            9678
                  Pipe Cape                                                                             9679
                  Pipe Hangers                                                                          9680
                  PVC Glue                                                                              9681
                  PVC Tubing                                                                            9682
                  Solder Flux                                                                           9683
                  Solder                                                                                9684
                  Black Steel Pipe                                                                      9686
                  Steel Channel Iron                                                                    9687
                  Steel Plate                                                                           9688
                  Steel Angle Iron                                                                      9689
                  Teflon Tape                                                                           9690
                  Electrical Clamps and Straps                                                          90906
                  Weather Proof Elect. Box                                                              90908
                  Weather Proof Box Covers                                                              90909
                  Tie Wraps Diff. Sizes                                                                 90910
                  Receptacals (Contractors)                                                             90911
                  4" Elec. Boxes and Misc. Covers                                                       90912
                  Alum. Flexible Tubes/Diff. Sizes                                                      90913
                  Electrical Couplings                                                                  90914
                  Lights Fixtures                                                                       90915
                  Threaded Pipe Nipples                                                                 90917
                  Stainless Steel Covers                                                                90918
                  K.O. Seals/Diff. Sizes                                                                90919
                  Heat Tape                                                                             90920
                  Book of #'s and letters                                                               90921
                  Misc. Hardware-Screws, Nuts                                                           90922
                  Wire Forks and Joints                                                                 90926
                  Communication Cables                                                                  90927
                  Wire Pulling Compound                                                                 90928
                  Light Fixture Lens Cover                                                              90929
                  Alum. Flex Fittings                                                                   90930
                  Electrical Fittings                                                                   90931
                  Copper Fittings                                                                       90933
                  Insulation/ Different Sizes                                                           90934
                  Hanging Brackets                                                                      90935
                  Plastic Snap in Bushings                                                              90936
                  Galvanized Pipe Fittings                                                              90937
                  PVC Fittings                                                                          90938
                  Selfoss (18"sq.)                                                                      90940
                  Tape-Diff. Colors and Sizes                                                           90941
                  Sand Cloth                                                                            90942
                  Valves-Different Sizes                                                                90944
                  Loose Roll #3 Black Wire                                                              90946
                  Clamps-Different Sizes                                                                90947
                  Struts Different Sizes                                                                90949

126

                  3/4" Unions                                                                           90950
                  Copper Tubing                                                                         90951
                  Liquid Tight Flex Fittings                                                            90953
                  100' Fish Tape                                                                        90954
                  Flexable Copper Tubing                                                                90956
                  Insulation Adhesive                                                                   90958
                  Electric Drill                                                                        90959
                  Grinder Wheels                                                                        90960
                  6lb. Sledge Hammer                                                                    90963
                  Impact Wrench                                                                         90964
                  4" Grinder                                                                            90965
                  Electrical Conduit                                                                    90966
                  5'x4' Gang Box w/handler                                                              90967
                  Fiberglass Ladders                                                                    90968
                  Electrical Wire Diff. Sizes                                                           90969
                  36" Prybar                                                                            90970
                  5 gal. Water Cooler                                                                   90971
                  Alum. Conduit Body Diff. Sizes                                                        90972
                  Skill Saw                                                                             90973
                  4" Level w/Case                                                                       90975
                  Caulkin Guns                                                                          90976
                  Electrical Cords                                                                      90977
                  Refrigerant R507                                                                      90996
                  1" Liquidtight Flex                                                                   91932
                  Bags of Wire Connectors                                                               91933
                  3/4" PVC Tape                                                                         91934
                  6" Lifting Bar                                                                        91938
                  Electric Concrete Drill                                                               91940
                  Misc. Refrigeration Access.                                                           91941
                  Post Hole Digger                                                                      91942
                  Silicone Paint                                                                        91943
                  Sawzall                                                                               91957
                  Double Channel Brackets                                                               91958
                  R507 Refrigerant (AZ50)                                                               90996
                  6 Gallon Wet/Dry Vacuum                                                              108190
                  Boxes of Nails                                                                       108185
                  Respirator                                                                           108002
                  Work Light                                                                           108177
                  Bags of Terry Towels                                                                 108176
                  5 Gal Buckets                                                                        108178
                  Paint Tray Kits                                                                      108182
                  Paint Brush Sets                                                                     108186
                  Pad Locks                                                                            108184
                  MIS Equipment
                  -------------
                  Warehouse- San Diego
                  Copy Machines
                  Local Printers / cables / local bought PC's
                  Central
                  -------
                  MIS Equipment- from San Diego
                  MIS Equipment- local bought Pc's, printers, fax machines
                  Sharp Copier

127

                  Light Fixtures
                  --------------
                  Type A1 - Single 1000W MH Polestar Fix - PT3C10M27NLSW                                90835
                  Type A3 - Twin MH Mtd. On 20' Polestar Fixt.                                         440027
                  Type B Wallpack II 175W - PT24000MH27SISw - Type B                                    90840
                  Type D - PrismAire Retail Fix.  - GMVR400/VBU - Type D                                90844
                  Type E -  Tril. Fill, exit sign - WL2K175MH27WH - Type E                              90844
                  Type G - Prismlight Fixt. - RA4000MH27H739A-CS                                        90845
                  Type G1 - Parkpack 70W MH Ceiliing Mount                                              90847
                  Type N  -   Prismaire Retail. Fixt 250 - MASLRU10SBK                                  90851
                  Type A2 - Single 400W Polestar                                                        90893
                  Type S 400W PrisFex w /beam                                                           90898
                  Type Z Wallpack II 70 W MH 277V - WL2K70DMH2TTT                                      227027
                  Type W1  Panelvue 400W Pipe - PANL4000MHHMTTW                                        400300
                  Type W Panelview 400W - Signlighter                                                  400600
                  Type Y Bantan 2000 175W MH - BA17DMH2CG                                              471727
                  Doors
                  -----
                  Hollow Metal Door                                                                     90775
                  Hardware - Finished                                                                   90778
                  Prefinished Wood Doors                                                                90779
                  Wall Louvers @ Generators                                                             90780
                  Stanley Magic Doors with Hardware                                                     90781
                  Toilet Partitions                                                                     90784
                  Atlas Rolite Doors- Insulated Polyurethane                                            90788
                  Glass and Aluminum Store front Doors                                                  90832
                  Generator
                  ---------
                  800RIZD-4 Kohler Gen-Set - 800 KW                                                     90678
                  Preventive maintenance and service-first year contracts

                  Central

                  Built in Cabinetry / Cubicle work
                  Expat- Coutry Manager/In charge of Const.  Vehicles
                  Expat- Operation Managers Vehicles

128

 

ANNEX “C”

SCHEDULE OF EXECUTION OF MORTGAGE SUPPLEMENTS

    1. The first Mortgage Supplement shall be executed on a date that is not
more than thirty (30) days prior to the date of the first Disbursement.     2.
Until both the Collateral Stores are complete and open for business operations,
the next Mortgage Supplement shall be executed on about the date that is three
(3) months after the execution of the Mortgage Supplement mentioned in No. 1
above, and each succeeding Mortgage Supplement shall be executed on or about the
date that is three months after the immediately preceding Mortgage Supplement.  
  3. From the time that both Collateral Stores are complete and open for
business, Mortgage Supplements shall be executed on the anniversary of the date
of the last Mortgage Supplement under No. 2 above.

129

 

EXHIBIT “A”

No.

MORTGAGE SUPPLEMENT

       This Mortgage Supplement No. [*] (the “Supplement”) dated as of [*], is
entered into by and between:

    (1) PSMT PHILIPPINES, INC., a corporation organized and existing under the
laws of the Republic of Philippines (the “PSPH”), and     (2) INTERNATIONAL
FINANCE CORPORATION, an international organization established by Articles of
Agreement among its member countries including the Republic of the Philippines
(“IFC”).    

       WHEREAS, PSPH and IFC have executed and registered a Mortgage Agreement
constituting Volume III to an Omnibus Agreement dated as of [*] (the “Omnibus
Agreement”), to secure the Obligations of the Co-Borrowers under Volume II
thereof, IFC Loan Agreement and the Mortgage Agreement;

       WHEREAS, the Mortgage Agreement has been supplemented by the following
Mortgage Supplements: [*], [*] and [*];

       WHEREAS, the Mortgage Agreement provides that PSPH and IFC shall execute
and register Mortgage Supplements for the purposes stated therein; and

       WHEREAS, in fulfillment of the continuing Obligation of the Co-Borrowers
under the IFC Loan Agreement and the Security Documents, PSPH desires to execute
this Mortgage Supplement with IFC.

       NOW THEREFORE, the parties hereto agree as follows:

1. Unless otherwise defined in this Mortgage Supplement, (i) capitalized terms
shall have the meanings set forth in Article I of the IFC Loan Agreement and
Section 1.02 of the Mortgage Agreement unless the context otherwise requires,
and (ii) the principles of construction set forth in said Article I of the IFC
Loan Agreement and Section 1.03 of the Mortgage Agreement shall apply.     2.
Borrower hereby confirms that (i) certain of the Assets identified and described
as [Future Real Assets/Future Chattel] in the Mortgage Agreement have come into
existence or have been acquired in ownership by PSPH as of the date hereof
(those certain assets to be herein called the “New Assets”), and (ii) the New
Assets are now identified and more fully described in Schedule A to this
Mortgage Supplement.     3. Borrower hereby acknowledges and agrees (i) that the
[Real Estate Mortgage or the Chattel Mortgage, as may be applicable, has been
granted, created, established and constituted on the New Assets in favor of IFC
and (ii) that such Mortgages are subject to the same provisions, terms and
conditions of the, Mortgage Agreement

130

 

  as are applicable to the Mortgage on the [Present Real Assets/Present Chattel]
thereunder, as fully and completely for all legal intents and purposes as if
owned by PSPH on the date of execution of the, Mortgage Agreement     4. The
parties hereto confirm that the New Assets serve as security for payment of the
Secured Obligations to the extent of the amount stated in Section 3.01(c) of the
Mortgage Agreement.     5. PSPH undertakes, at its own cost and expense, to
register this Mortgage Supplement with the register of deeds and, where
necessary, other appropriate government agencies, in the Philippines in
accordance with Section [*] of the Mortgage Agreement.    

       IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representative to execute and deliver this Supplement as of the date first above
written.

          INTERNATIONAL FINANCE CORPORATION         By:      

--------------------------------------------------------------------------------

    Name:     Position:                 PSMT PHILIPPINES, INC.         By:      

--------------------------------------------------------------------------------

    Name:     Position:      

Signed in the presence of

________________________________          ________________________________

AFFIDAVIT OF GOOD FAITH

We swear that the Chattel Mortgage embodied in the foregoing
Mortgage Supplement is made for the purpose of securing the obligations
specified therein, and for not other purpose, and that the same are just
and valid obligations not entered into for the purpose of fraud.

          PSMT PHILIPPINES, INC.               By:
________________________________________        
Name:______________________________________        
Title:_______________________________________

131

 

          INTERNATIONAL FINANCE CORPORATION               By:
________________________________________        
Name:______________________________________        
Title:_______________________________________

 

ACKNOWLEDGMENT AND CERTIFICATION OF OATH

REPUBLIC OF THE PHILIPPINES)

                      ) S.S.

     Before me, a notary public for [*], on this [*] day of [*], 200[*]
at [*], Philippines, personally appeared:

      Name Community Tax Certificate
No./ Passport No.
Issued at/on       PSMT Philippines, Inc.
Represented by:           International Finance
Corporation
Represented by:          

all known to me and to me known to be the same persons who executed the
foregoing Affidavit of Good Faith and made oath to the truth thereof and
executed the foregoing Mortgage Supplement No. [*], who signed the foregoing
Mortgage Supplement No. [*] in the presence of two witnesses, all of whom are
known to me and by me known to be the same persons who executed the said
instrument and they acknowledged to me that the same was their free and
voluntary act, and the free and voluntary act of the corporations they
respectively represent.

This Mortgage Supplement No. [*] relates to Volume III of the Omnibus Agreement
dated as of [*] among the same parties and consists of [*] pages, including the
pages of this Acknowledgment and Schedule A thereto and is signed by the parties
thereto and their instrumental witnesses on the signature page and on the left
margin of the other pages thereof.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
this [*] day of [*], 200[*] at [*], Philippines.

Doc No.
Page No.
Book No.

Series of

132

 

Volume IV PLEDGE AGREEMENT

       PLEDGE AGREEMENT between PSMT and IFC.

ARTICLE I.
Definitions and Rules of Interpretation

       Section 1.01. Certain Defined Terms. Unless otherwise defined herein, all
capitalized terms used in this Pledge Agreement that are undefined herein and
are defined in the IFC Loan Agreement (including those terms incorporated
therein by reference to another document) shall have the respective meanings
assigned to them in the IFC Loan Agreement.

     Section 1.02. Additional Definitions. In addition to the terms defined
pursuant to Section 1.01 whenever used in this Pledge Agreement, unless the
context otherwise requires, the following terms have the following meanings:

“Permitted Share Lien” has the meaning ascribed to it in Section 2.01(b).    
“Pledge” means the pledge created or to be created pursuant to Article III,
together with the rights, benefits and remedies of IFC inherent therein and
provided for herein.     “Pledged Collateral” has the meaning ascribed to it in
Section 3.01.     “Pledged Shares” has the meaning ascribed to it in Section
3.01(a).      “Secured Obligations” means, collectively, (a) the obligations of
the Co-Borrowers to IFC to pay the principal of and interest and fees (and all
other amounts owing) on the Loan and (b) all other obligations and liabilities
of the Co-Borrowers to IFC, whether direct or indirect, absolute or contingent,
due or to become due, under this Pledge Agreement or any other Transaction
Document.     “UCC” means the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of New York.

       Section 1.03. Terms Defined in UCC. Except as otherwise defined herein
and unless the context otherwise requires, terms used in this Agreement shall
have the meanings assigned to them in the UCC.

       Section 1.04. Rules of Interpretation. In this Pledge Agreement, unless
the context otherwise requires, the rules of interpretation set forth in Section
1.04 of the IFC Loan Agreement shall govern mutatis mutandis, as if this Pledge
Agreement were the “Agreement” referred to therein.

ARTICLE II
Representations and Warranties

       Section 2.01. Representations and Warranties of PSMT. Without limiting
the generality of Section 4.01 of the IFC Loan Agreement, PSMT further
represents and warrants, as of the date hereof that:

  (a) Ownership of Assets. PSMT is the legal and beneficial owner, with good,
valid, indefeasible and marketable rights, interest and title, of the Pledged
Collateral;         (b) Freedom of Assets from Liens. The Pledged Collateral are
and will be free from any Liens (including liens or retained security titles of
conditional vendors) of any nature whatsoever and no warrants, options or other
rights to acquire the same exist in favor of any other Person and no voting
trusts, proxies or other commitments, understandings or arrangements exist with
respect to the Pledged Shares, including without limitation the      

133

 

    ability to vote, transfer, or receive dividends in respect of, the Pledged
Shares, except for the pledge and security interest in favor of IFC created or
provided for herein, which pledge and security interest constitute a first
priority perfected pledge and security interest in and to all of the Pledged
Shares (the “Permitted Share Lien”);         (c) Government Approvals. This
Agreement creates in favor of IFC a legal, valid and enforceable, and upon the
delivery of the Pledged Collateral to IFC and the other filings, registrations,
recordings, consents, approvals, notices, acknowledgments and other actions
described in Schedule 1, first-priority perfected security interest in the
Pledged Collateral, securing the payment and performance of the Secured
Obligations. Other than the filings, registrations, recordings, consents,
approvals, notices, acknowledgments and other actions described in Schedule 1,
no filings, registrations, recordings, consents, approvals, notices,
acknowledgments or other actions by or with any Authority or other Person are
necessary (a) for the execution, delivery and performance by PSMT of this
Agreement, (b) for the validity and enforceability of this Agreement, (c) in
order to perfect, protect and preserve the security interest (and the priority
thereof) of IFC in the Pledged Collateral created or intended to be created by
this Agreement or (d) for the exercise by IFC of the rights, powers, remedies
and privileges granted pursuant to this Pledge Agreement with respect to the
Pledged Collateral. No mortgage or financing statement or other instrument of
record covering all or any part of the Pledged Collateral has been filed or
registered in any recording office;         (d) Priority of Mortgages. The
Pledge constitutes a Lien of first rank in favour of IFC in and to the Assets,
enforceable as such against PSMT, its creditors, and all third parties (except
Liens that are mandatorily preferred under law);         (e) Transferability.
There are and will be no restrictions on the transferability by IFC of any
Pledged Collateral transferred or delivered by PSMT hereunder to IFC or with
respect to the foreclosure, transfer or disposition thereof by IFC, whether
through contractual restrictions, restrictions in PSMT’s Charter Documents, or
otherwise, other than (a) any such restriction contained herein or (b) as a
result of the application of Applicable Law affecting the foreclosure and
exercise of rights and remedies hereunder;         (f) Shares Not Subject to
Restrictions.The Pledged Shares represented by the certificates identified in
Annex A hereto are duly authorized, validly existing, fully paid and
non-assessable and none of such Pledged Shares is or will be subject to any
contractual restriction, or any restriction under the Charter of PSPH, upon the
transfer of such Pledged Shares.         (g) Percentage Ownership. On the date
of execution hereof, the Pledged Shares represented by the certificates
identified in Annex A hereto constitute [fifty-two (52%)] percent of the issued
and outstanding shares of capital stock of PSPH,

134

 

    all of which are registered in the name of PSMT, and said Annex A correctly
identifies, as at the date hereof, the class and par value of the shares
comprising such Pledged Shares and the number of shares (and registered owner
thereof) represented by such certificate(s).         (h) Records and Books. PSPH
maintains its books and records with respect to the Pledged Shares at its
principal place of business.         (i) Form Of Pledge. This Pledge Agreement
is in proper legal form under the Laws of the Philippines and is capable of
enforcement in the Philippines in accordance with its terms.

       Section 2.02. Continuing Representations. The representations and
warranties contained in Section 2.01 shall survive the execution of this Pledge
Agreement and shall be deemed repeated on the date of each Disbursement of the
Loan.

ARTICLE III
Pledge

       Section 3.01. Creation Of The Pledge. As collateral security for the
prompt payment and performance in full when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations, PSMT hereby pledges and
grants to IFC, a continuing first priority pledge and security interest in all
of PSMT’s right, title and interest in and to the following property, whether
now existing or hereafter coming into existence (all being collectively referred
to herein as “Pledged Collateral”):

  (a) the shares of capital stock of PSPH represented by the certificate(s)
identified in Annex A hereto (the “Pledged Shares”);         (b) all shares,
securities, moneys or property representing a dividend on any of the Pledged
Shares, or representing a distribution or return of capital upon or in respect
of the Pledged Shares, or resulting from a split-up, revision, reclassification
or other like change of the Pledged Shares or otherwise received in exchange
therefor, and any subscription warrants, rights or options issued to the holders
of, or otherwise in respect of, the Pledged Shares;         (c) in the event of
any consolidation or merger in which PSPH is not the surviving corporation, (i)
all shares (A) of each class of the capital stock of the successor corporation
formed by or resulting from such consolidation or merger and (B) received in
consideration of, or in exchange for, the Pledged  Shares and (ii) all other
consideration (including, without limitation, all personal property, tangible or
intangible) received in exchange for the Pledged Shares; and         (d) all
other tangible and intangible personal property of PSMT relating to the Pledged
Shares, including, without limitation, all proceeds, profits, income, benefits,
substitutions and replacements of and to any of the property of PSMT described
in the preceding clauses of this Section 3.01.

135

 

       Section 3.02. Delivery And Other Perfection. PSMT shall:

 

(a)

forthwith either (x) transfer and deliver to IFC or its authorized designee such
shares or securities (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock powers duly
executed in blank), all of which thereafter shall be held by the Pledgee,
pursuant to the terms of this Pledge Agreement, as part of the Pledged Shares or
(y) take such other action as IFC or its authorized designee shall deem
necessary or appropriate to duly record the Lien created hereunder in such
shares, securities, moneys or property; and         (b) give, execute, deliver,
file and/or record any financing statement, notice, instrument, document,
agreement or other papers that may be necessary or desirable (in the judgment of
IFC or its authorized designee) to create, preserve, perfect or validate the
pledge and security interest granted pursuant hereto or to enable IFC to
exercise and enforce its rights hereunder with respect to such pledge and
security interest, including, without limitation, whenever an Event of Default
has occurred and is continuing, causing any or all of the Pledged Shares to be
transferred of record into the name of IFC or its nominee;

       Section 3.03. First Priority Ranking of the Pledge. The Lien of IFC under
this Pledge Agreement is and shall at all times constitute a Lien of first rank
in favor of IFC in and to the Pledged Collateral, prior and superior to all
other Liens, except liens that are mandatorily preferred under Applicable Law.

ARTICLE IV
Covenants and Undertakings

       PSMT undertakes and agrees with IFC that throughout the continuance of
this Pledge Agreement and so long as any amount of the Secured Obligations
remains outstanding, unless IFC otherwise agrees in writing, PSMT shall comply
with its affirmative and negative undertakings as set forth in Article VI of the
IFC Loan Agreement, all of which affirmative and negative undertakings are
incorporated by reference herein as if fully set forth herein, in accordance
with the terms thereof.

       Section 4.01. Execution of Deeds in General and Delivery of Pledged
Collateral. In consideration of the express intention of the parties hereto that
the Pledge shall cover the Pledged Collateral, whether such Pledged Collateral
now exist or at any time hereafter come into existence and are now or at any
time hereafter acquired by PSMT whether any such later acquisition is by way of
addition thereto or substitution of any component part thereof, together with
all rights and interests of PSMT therein, PSMT shall, from time to time and at
its own cost and expense:

  (a) execute, deliver and register such pledges, deeds, assignments, consents
and assurances, including the Pledge Agreement Supplement, satisfactory to IFC,
as may be necessary or advisable or, without prejudice to the obligation of PSMT
to do so without being required by IFC, as required by IFC, for the purpose of
pledging (with first ranking priority), conveying and/or transferring to IFC for
its benefit, any Pledged Collateral hereafter coming into existence or acquired
by PSMT upon the terms, provisions and conditions of this Pledge Agreement as
fully and completely to all legal intents and purposes as if owned by PSMT on
the date of execution hereof and specifically described herein;

136

 

  (b) upon acquiring any Pledged Collateral hereafter, as soon as possible but
not later than ten (10) Business Days after its acquisition thereof, comply with
the requirements of 3.02 with respect to such additional Pledged Collateral.
PSMT hereby agrees that all such Pledged Collateral listed shall for all
purposes under this Pledge Agreement, be covered by the Pledge and agrees to
take, and authorizes IFC to take, such further action as may be necessary or
that IFC may deem reasonably advisable in order to establish and perfect the
security interest granted under this Pledge Agreement and the Pledge Agreement
Supplement with respect to such Pledged Collateral; and         (c) execute,
deliver and register such renewals, amendments, supplements and instruments,
satisfactory to IFC, as may be necessary, advisable or, without prejudice to the
obligation of PSMT to do so without being required by IFC, as required by IFC,
for the purpose of perfecting, confirming and/or maintaining the validity, first
priority and enforceability of the pledge of the Pledged Collateral.

       Section 4.02. Affirmative Covenants. Without limiting any rights of IFC
under the Transaction Documents, unless IFC shall otherwise agree in writing and
for as long as any amount of the Secured Obligations shall remain outstanding:

  (a) Defence of Title. PSMT shall defend, all at its own expense, PSMT’s
respective title and the existence, perfection and first priority of IFC’s
security interest in the Pledged Shares against all adverse claims.          
(b) Percentage Ownership of PSPH. PSMT shall hold legal and beneficial title to
shares of stock amounting to at least fifty-two (52%) percent of the issued and
outstanding capital of PSPH.           (c) Taxes, Duties, Fees. Except when
contested in good faith by appropriate proceedings and for which an appropriate
reserve has been established (provided that taxes, assessments and governmental
charges are paid promptly, if after final determination of any such action or
proceeding, the tax, assessment or charge is upheld), PSMT shall pay and
discharge on time:             (i) all taxes (including stamp taxes, value-added
taxes, transfer taxes), fees, expenses, or other charges payable on or in
connection with (x) the execution, issue, delivery, registration, or
notarization, or for the legality, validity, or enforceability, of this Pledge
Agreement and any other documents related thereto; and (y) provide IFC copies of
the official receipts for such payments.             (ii) all taxes, assessments
and governmental charges levied or assessed on the Pledged Collateral and
provide IFC with copies of the official receipts for such payments.          
(d) Books and Records. PSMT shall keep full and accurate books and records
relating to the Pledged Shares, and stamp or otherwise mark such books and
records in such manner as IFC may reasonably require in order to reflect the
pledge and security interest granted by this Agreement;             (e)
Inspection. PSMT shall permit representatives of IFC, at any time during normal
business hours to inspect and make abstracts from its books and records
pertaining to the Pledged Shares, in such manner as IFC may require; and        
  (f) Material Communication. PSMT shall promptly deliver to IFC a copy of each
material written notice or other material communication PSMT receives in respect
of the Pledged Shares.      

      Section 4.03. Negative Covenants. Without limiting any rights of IFC under
any other

137

 

Transaction Documents, unless IFC shall otherwise agree in writing and for as
long as any amount of the Secured Obligations shall remain outstanding:

  (a) Other Financing Statements And Liens. Without the prior written consent of
IFC, PSMT shall not file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to the Pledged Shares in which IFC is not named as the
sole secured party.         (b) Voting Trusts, Proxies, Other Arrangements. PSMT
shall not enter into any voting trust, grant any proxies or enter into any other
commitment, understanding or arrangement with respect to the Pledged Shares
(including without limitation the ability to vote, transfer or receive dividends
in respect of, the Pledged Shares), except for the Permitted Share Lien.        
(c) Sale or Disposition of Pledged Shares. PSMT shall not voluntarily sell,
assign, exchange or otherwise dispose of the Pledged Shares or any interest
therein.         (d) Liens of Pledged Collateral. Except for the Permitted Share
Lien, PSMT shall not permit or suffer to exist any Lien on the Pledged
Collateral.         (e) Amendment, Modification or Waiver of Pledged Collateral.
PSMT shall not consent to any amendment, modification or waiver with respect to
any Pledged Collateral or any agreement or document creating or governing any
Pledged Collateral, including the Charter of PSPH.         (f) Books and
Records. Without at least 30 days’ prior written notice to IFC, PSMT shall not
maintain any of its books and records with respect to the Pledged Collateral at
any office or maintain its principal place of business at any place other than
at the current address of PSMT.

     ARTICLE V
Dividends,Voting and Other Rights

       Section 5.01. Dividends. For as long as no Event of Default shall have
occurred and be continuing, PSMT shall be entitled to receive and retain any
dividends on the Pledged Shares paid in cash out of earned surplus to the extent
not inconsistent with this Pledge Agreement and the IFC Loan Agreement.

       Section 5.02. Voting/Other Rights. So long as no Event of Default shall
have occurred and be continuing, PSMT shall have the right to exercise all
voting, consensual and other powers of ownership pertaining to the Pledged
Shares for all purposes not inconsistent with the terms of this Pledge
Agreement, the IFC Loan Agreement or any other instrument or agreement referred
to herein or therein, provided that PSMT agrees that it will not vote the
Pledged Shares in any manner that is inconsistent with the terms of this Pledge
Agreement, the IFC Loan Agreement or any of the other Transaction Documents.

ARTICLE VI
Rights and Remedies of IFC

       Section 6.01. Remedies Following Events of Default, Etc. During the
period during which an Event of Default shall have occurred and be continuing:

  (a) Delivery of Pledged Collateral. PSMT shall immediately deliver all Pledged
Collateral (and/or such representations or evidences thereof) not otherwise
already in the possession of IFC, to IFC at such place or places as IFC shall
specify;

138

 

  (b) Rights and Remedies under UCC. IFC shall have all of the rights and
remedies with respect to the Pledged Collateral of a secured party under UCC
(whether or not said Code is in effect in the jurisdiction where the rights and
remedies are asserted) and such additional rights and remedies to which a
secured party is entitled under the Laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted, including, without limitation,
the right, to the maximum extent permitted by Law, to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged Shares as if
IFC were the sole and absolute owner thereof and PSMT agrees to take all such
action as may be appropriate to give effect to such right;         (c)
Collection. IFC in its discretion may, in its name or in the name of PSMT,
demand, sue for, collect or receive any money or property at any time payable or
receivable on account of or in exchange for any of the Pledged Collateral, but
shall be under no obligation to do so;         (d) Dividends. Whether or not IFC
exercises any available right to declare the Secured Obligation due and payable
or seeks or pursues any other relief or remedy available to it under Applicable
Law or under this Pledge Agreement, the IFC Loan Agreement or any other
Transaction Document, all dividends and other distributions on the Pledged
Shares shall be paid directly to IFC and retained by it as part of the Pledged
Shares, subject to the terms of this Pledge Agreement or the IFC Loan Agreement,
and, if IFC shall so request in writing, PSMT agrees to execute and deliver to
IFC the appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is no longer
continuing, any such dividend or distribution theretofore paid to IFC shall,
upon request of PSMT (except to the extent theretofore applied to the Secured
Obligations), be promptly returned by IFC to PSMT.

        (e) Sale of Pledged Collateral. IFC may, upon ten Business Days’ prior
written notice to PSMT of the time and place, with respect to the Pledged
Collateral or any part thereof that shall then be or shall thereafter come into
the possession, custody or control of IFC or any of its agent, sell, lease,
assign or otherwise dispose of all or any part of such Pledged Collateral, at
any exchange, broker’s board or any other place or places as IFC deems best, and
for cash or for credit or for future delivery (without thereby assuming any
credit risk), at public or private (to the extent permitted by Applicable Law)
sale, without demand of performance or notice of intention to effect any such
disposition or of the time or place thereof (except such notice as is required
above or by applicable statute and cannot be waived), and IFC or anyone else may
be the purchaser, lessee, assignee or recipient of any or all of the Pledged
Collateral so disposed of at any public sale (or, to the extent permitted by
Applicable Law, at any private sale) and thereafter hold the same absolutely,
free from any claim or right of whatsoever kind, including any right or equity
of redemption (statutory or otherwise), of PSMT or PSPH, any such demand, notice
and right or equity being hereby expressly waived and released to the fullest
extent permitted under Applicable Law. IFC may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for the sale, and such sale
may be made at any time or place to which the sale may be so adjourned.

       Section 6.02. Private Sale. IFC shall incur no liability as a result of
the sale of the Pledged Collateral, or any part thereof, at any private sale
pursuant to Section 6.01(e) hereof conducted in a commercially reasonable
manner. PSMT hereby waives any claims against IFC or any of its agent arising by
reason of the fact that the price at which the Pledged Collateral may have been
sold at such a private sale was less than the price that might have been
obtained at a public sale or was less than the aggregate amount

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of the Secured Obligations, even if IFC accepts the first offer received and
does not offer the Pledged Collateral to more than one offeree.

       Section 6.03 Attorney-in-Fact. Without limiting any rights or powers
granted by this Pledge Agreement to IFC while no Event of Default has occurred
and is continuing, upon the occurrence and during the continuance of any Event
of Default, IFC or its authorized agent is hereby appointed the attorney-in-fact
of PSMT for the purpose of carrying out the provisions of this Article VI and
taking any action and executing any instruments that IFC may deem necessary or
advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as IFC shall be entitled under this
Article VI to make collections in respect of the Pledged Collateral, IFC shall
have the right and power to receive, endorse and collect all checks made payable
to the order of PSMT representing any dividend, payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same.

ARTICLE VII
Termination

     When all Secured Obligations shall have been indefeasibly paid in full (and
the IFC Loan Agreement shall have been terminated or expired) or the Pledged
Collateral disposed of in accordance with Section 6.02(e) hereof, this Pledge
Agreement shall terminate, and IFC shall (at the expense of PSMT) (i) forthwith
cause to be assigned, transferred, delivered and released against receipt but
without any recourse, warranty or representation whatsoever, any remaining
Pledged Collateral and money received in respect thereof, to or on the order of
PSMT and (ii) execute and deliver to PSMT upon such termination such termination
statements and such other documentation as shall be reasonably requested by PSMT
to effect the termination and release of the Lien of this Pledge Agreement on
the Pledged Collateral.

ARTICLE VIII
Miscellaneous

     Section 8.01 Preservation of Rights. IFC shall not be required to take
steps necessary to preserve any rights against prior parties to any of the
Pledged Collateral.

     Section 8.02. Preservation of Pledged Collateral. IFC may (but need not)
pay or secure payment of any tax or other claim that may be secured by or result
in a Lien on any Pledged Collateral. IFC may do any other thing that it in good
faith believes is necessary to preserve, protect or maintain the Pledged
Collateral or to enhance its value. PSMT shall immediately reimburse IFC for any
reasonable payment or expense (including reasonable attorneys’ fees and
expenses) IFC or its authorized agent may incur pursuant to this Section 8.02.

     Section 8.03. (a) Continuing Security. PSMT hereby duly notes and agrees
that the security hereby created in favor of IFC in the form of a pledge in
accordance with the provisions of this Pledge Agreement shall be a continuing
security and shall remain in full force and effect until all of the Secured
Obligations shall have been fully paid in accordance with the provisions of the
other Transaction Documents and this Pledge Agreement. Accordingly, the validity
and enforceability of the pledge hereunder shall not be affected or impaired by
any of the following: any extension of time, forbearance or concession given to
any of the Co-Borrowers; any assertion of, or failure to assert, or delay in
asserting, any right, power or remedy against the Co-Borrowers, or in respect of
any other security for any of the Secured Obligations; any modification or
amplification of the provisions of the other Transaction Documents or this
Pledge Agreement or of any other agreement between any or both of the
Co-Borrowers and IFC; any failure of any or both of the Co-Borrowers to comply
with any requirement of any law, regulation or order; the dissolution,
liquidation, reorganization or any other alteration of the legal structure of
any or both of the Co-Borrowers; any purported or actual assignment of the Loan
by IFC to any other Person; or any other circumstance (other than complete
payment and performance by the Co-Borrowers of all the Secured Obligations)
which might otherwise constitute a legal or equitable discharge of a security.

     (b) Partial Security. It is hereby agreed that the security created in
accordance with the

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provisions of this Pledge Agreement shall be construed as a partial security for
the Secured Obligations, and is in addition to any other security that IFC may,
now or in the future, obtain to secure the same obligations. Accordingly, in the
event that the monies at any time realized by IFC in the sale of the Pledged
Collateral and/or in the exercise of any of their rights and powers hereunder
shall not be sufficient to pay and discharge all the Secured Obligations, any
remaining unpaid balance thereof shall remain due and payable on demand by IFC,
until fully paid and all rights, powers and remedies of IFC in respect thereof
are hereby reserved.

       Section 8.04. Rescission of Payment. So long as this Pledge Agreement
shall not have terminated pursuant to Article VII, for the avoidance of doubt,
this Pledge Agreement shall continue to be effective or be reinstated, as the
case may be, in respect of any payment, or a part thereof, of the Secured
Obligations that is rescinded or must otherwise be restored or returned by IFC,
upon the insolvency, bankruptcy or reorganization of any of the Co-Borrowers or
otherwise, all as though such payment had not been made.

       Section 8.05. (a) Application of Proceeds of Pledge. All monies realized
and received by IFC in the exercise of its rights, powers and remedies hereunder
shall be applied in accordance with Section 3.10 (Allocation of Partial
Payments) of the IFC Loan Agreement.

       (b) Conversion to Required Currency. To the extent that the amounts due
and payable to IFC are in a currency or currencies other than the currency of
payment required under the IFC Loan Agreement, such currency or currencies shall
for the purposes hereof be converted into the required currency of payment.

       Section 8.06. Deficiency. If the proceeds of sale, collection or other
realization of or upon the Pledged Collateral pursuant to Section 6.01(e) hereof
are insufficient to cover the costs and expenses of such realization and the
payment in full of the Secured Obligations, IFC shall retain all rights and
remedies under this Pledge Agreement and the IFC Loan Agreement, and the
Co-Borrowers shall remain liable, with respect to any deficiency.

       Section 8.07. Further Assurances. From time to time while this Pledge
Agreement is in force and effect, PSMT shall promptly, at the request of IFC,
execute such documents, acts or powers as IFC may deem necessary or advisable to
give full effect to any of its provisions.

       Section 8.08. Taxes, Fees, etc. on Execution, Registration, etc. PSMT
shall pay all taxes (including stamp taxes), duties, fees, expenses or other
charges payable on or in connection with the execution, issue, delivery,
registration and notarization of this Pledge Agreement and any document, act and
registration performed pursuant hereto, and shall, upon notice from IFC
reimburse IFC for any such taxes, duties, fees, expenses or other charges paid
after notice to PSMT from IFC.

       Section 8.09. (a) Rights and Remedies Cumulative. The rights, powers and
remedies of IFC provided for in this Pledge Agreement are not exclusive of, but
are in addition to, any other rights and remedies that IFC may have in law or
under any other Transaction Documents. In addition, such rights, powers and
remedies of IFC hereunder are granted for the exclusive benefit of IFC, and it
is IFC’s prerogative to exercise any of such rights, powers and remedies in its
discretion, but it shall have no obligation to do so; nor shall IFC be liable to
PSMT or any other Person for any action taken or not taken by it pursuant to
this Pledge Agreement. One or more exercises of the powers and rights herein
granted shall not extinguish or exhaust such powers until the Pledged Collateral
and all other property now or hereafter subject hereto or to any instrument now
or hereafter evidencing, securing or relating to the Secured Obligations, is
sold or the Secured Obligations are paid in full. If the Secured Obligations are
now or hereafter further secured by any mortgages, chattel mortgages, pledges,
contracts of guaranty, assignments or other security, IFC may exhaust the
remedies granted under any of the said security instruments, either concurrently
or independently, and in such order as IFC, in the exercise of its absolute
discretion, may determine.

       (b)       No Waiver. No course of dealing and no delay in exercising, or
omission to exercise, any right, power or remedy accruing to IFC or its
attorney-in-fact upon any default or other circumstance under this Pledge
Agreement shall impair any such right, power or remedy or be construed to be a
waiver thereof or an acquiescence therein; nor shall the action of IFC or its
attorney-in-fact in respect of such

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default or circumstance, or any acquiescence by it thereto, affect or impair any
right, power or remedy of IFC or its attorney-in-fact in respect of any other
default or circumstance, whether similar or not.

       (c)       Amendments, etc. with respect to the Loans. PSMT shall remain
obligated hereunder, and the Pledged Collateral shall remain subject to the Lien
created hereunder, notwithstanding that, without any reservation of rights
against PSMT, the Transaction Documents and any other documents executed and
delivered in connection therewith may be amended, supplemented or terminated, in
whole or part from time to time, and any guarantee or other collateral security
at any time held by IFC for the payment of the Secured Obligations may be sold,
exchanged, waived, surrendered or released. IFC shall not have any obligation to
PSMT to protect, secure or perfect any other Lien at any time held by it as
security for the Secured Obligations or any property subject thereto.

       Section 8.10. Severability. If any provision, term or condition of this
Pledge Agreement or the application thereof to any Person or circumstance shall
for any reason be held invalid or unenforceable, then, without prejudice to the
provisions of Section 8.09 the same shall not adversely affect or impair the
validity and enforceability of the other provisions, terms and conditions hereof
nor the application of any such provisions, terms and conditions to any other
Person or in any other circumstance.

       Section 8.11 Notice. Any notice, request or other communication to be
given or made under this Agreement shall be given in accordance with Section
1.02, Volume V, Miscellaneous; Execution.

       Section 8.12 Benefit of Pledge Agreement. This Pledge Agreement shall be
binding upon and inure to the benefit of each party hereto, its successors,
assigns and transferees; provided, however, that PSMT may not assign or
otherwise transfer all or any of its rights and obligations under this Pledge
Agreement without the prior written consent of IFC. IFC may, at any time in
conjunction with the assignment and transfer of any part of the Loan, transfer
by way of assignment or novation, if not automatically occurring by operation of
law, all or any part of its rights, benefits or obligations under the Pledge or
this Pledge Agreement, without PSPH being in any way discharged from their
obligations hereunder and without this Pledge Agreement or the Pledge created
hereunder being deemed cancelled or terminated. Any purported assignment or
transfer in violation of this Section shall be void.

       Section 8.13 Discharge of Pledge. Subject to Section 8.04 (Rescission of
Payment) and Article VII (Termination), IFC agrees to release the Pledged
Collateral from the Pledge at the request of PSMT when the Secured Obligations
shall have been fully and indefeasibly paid and performed. Notwithstanding the
foregoing, all indemnities of PSMT herein shall survive such release and any
termination of this Pledge Agreement. All taxes, fees and other costs imposed in
connection with such release and termination shall be for the account of PSMT,
and the payment thereof shall form part of the Secured Obligations.

       Section 8.14. Lender Without Obligations. Notwithstanding anything
contained herein, this Pledge Agreement and the Pledges are only intended as
security for the Secured Obligations and IFC shall not be obligated to perform
or discharge, nor does IFC undertake to perform or discharge, any obligation,
duty, or liability of PSMT under or relating to any of the Pledged Collateral.

       Section 8.15. Governing Law; Jurisidiction. The provisions of this Pledge
Agreement shall be governed by and construed in accordance with the same
governing law and rules of construction as are stipulated to apply to Volume II,
IFC Loan Agreement. The provisions of Section 8.03 of Volume II, IFC Loan
Agreement, shall apply in its entirety to this Pledge Agreement, with all
references therein to the Co-Borrower applicable to PSMT.

       Section 8.16. Applicability of IFC Loan Agreement. In amplification of,
and notwithstanding any other provisions of this Pledge Agreement, in connection
with its obligations hereunder, IFC has all of the rights, powers, privileges,
exculpations, protections and indemnities as are provided for or referred to in
the IFC Loan Agreement.

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SCHEDULE 1

FILINGS, REGISTRATIONS, RECORDINGS, CONSENTS, APPROVALS, NOTICES AND
ACKNOWLEDGEMENTS REQUIRED UNDER APPLICABLE LAW.

1.UCC –1 Financing statement

(in respect of any pledge collateral not comprised of shares of stock with
certificates delivered to IFC)

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ANNEX “A”

PLEDGED SHARES

-------------------------------------------------------------------------------------------------------------
        Class /Par Value            Certificate Number         Number of Shares           % of total PSPH
                                                                                              equity
-------------------------------------------------------------------------------------------------------------
Common/PHP100.00                            002                                     1
-------------------------------------------------------------------------------------------------------------
Common/PHP100.00                            003                                     1
-------------------------------------------------------------------------------------------------------------
Common/PHP100.00                            008                                     1
-------------------------------------------------------------------------------------------------------------
Common/PHP100.00                            009                               584,997
-------------------------------------------------------------------------------------------------------------
Total                                                                         585,000                    52%
-------------------------------------------------------------------------------------------------------------

144

 

Volume V – MISCELLANEOUS; EXECUTION

       This Agreement between IFC and the Co-Borrowers:

ARTICLE I
Miscellaneous Provisions

       Section 1.01. Headings Descriptive. The headings of the Articles,
Sections and subsections of this Omnibus Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Omnibus Agreement.

       Section 1.02. Notices. Any notice, request or other communication to be
given or made under this Omnibus Agreement or any Volume hereof shall be in
writing. Subject to Section 6.03(i) and Section 6.03(h) (Reporting Requirements)
and Section 8.03(f) (Applicable Law and Jurisdiction) of Volume II, IFC Loan
Agreement, any such communication may be delivered by hand, airmail, facsimile
or established courier service to the party’s address specified below or at such
other address as such party notifies to the other party from time to time, and
will be effective upon receipt.

  For the Co-Borrowers:             PriceSmart, Inc.
4649 Morena Blvd.
San Diego, CA 92117-3650             Attention:    General Counsel    
Facsimile:    (858) 581-4707           For IFC:             INTERNATIONAL
FINANCE CORPORATION
2121 Pennsylvania Avenue, N.W.
Washington, D.C. 20433
United States of America             Attention:    Director, East Asia and
Pacific Department     Facsimile:    (202) 974-4340             With a copy (in
the case of communications relating to payments) sent to the attention of the
Senior Manager, Financial Operations Unit, at:             Facsimile:
   202-974-4371        

       Section 1.03. English Language. (a) All documents to be provided or
communications to be given or made under this Agreement shall be in the English
language.

       (b)       To the extent that the original version of any document to be
provided, or communication to be given or made, to IFC under this Omnibus
Agreement or any other Transaction Document is in a language other than English,
that document or communication shall be accompanied by an English translation
certified by an Authorized Representative to be a true and correct translation
of the original. IFC may, if it so requires, obtain an English translation of
any document or communication received in another language other than English at
the cost and expense of the Co-Borrowers. IFC may deem any such English
translation to be the governing version between the Co-Borrowers and IFC.

       Section 1.04. Successors and Assignees. This Omnibus Agreement binds and
benefits the respective successors and assignees of the parties. However, the
Co-Borrowers may not assign or delegate any of its rights or obligations under
this Omnibus Agreement without the prior consent of IFC.

145

 

       Section 1.05. Amendments, Waivers and Consents. Any amendment or waiver
of, or any consent given under, any provision of this Omnibus Agreement or any
Volume thereof shall be in writing and, in the case of an amendment, signed by
the parties.

       Section 1.06. Governing Law. The provisions of this Volume V shall be
governed by and construed in accordance with the same governing law and rules of
construction as are stipulated to apply to Volume II of this Omnibus Agreement.

       Section 1.07. Counterparts. This Agreement may be executed in several
counterparts, each of which is an original, but all of which together constitute
one and the same agreement.

146

 

       IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
in their respective names as of the date first above written.

          PRICESMART, INC.
(as to Volumes I, II, IV and V)         By:
________________________________________         Name: Ariel F. Aguirre        
Title: Authorized Representative                 PSMT PHILIPPINES, INC.
(as to Volumes I, II, III and V)         By:
________________________________________         Name: William S. Go, Sr.      
  Title: Chairman                 INTERNATIONAL FINANCE CORPORATION
(as to Volumes I,II, III, IV and V)         By:
________________________________________         Name:           Title:      

Signed in the presence of

________________________________          ________________________________

147

 

AFFIDAVIT OF GOOD FAITH

       We swear that the Chattel Mortgage embodied in the Volume III of the
foregoing Omnibus Mortgage Agreement is made for the purpose of securing the
obligations specified therein, and for not other purpose, and that the same are
just and valid obligations not entered into for the purpose of fraud.

          PSMT PHILIPPINES, INC.         By:
________________________________________         Name: William S. Go, Sr.      
  Title: Chairman                 INTERNATIONAL FINANCE CORPORATION         By:
________________________________________         Name:           Title:      

ACKNOWLEDGMENT AND CERTIFICATION OF OATH

REPUBLIC OF THE PHILIPPINES)

                      ) S.S.

     Before me, a notary public for ________, on this ________ day of
________, 2002 at ________, Philippines, personally appeared:

      Name Community Tax Certificate
No./ Passport No.
Issued at/on       PSMT Philippines, Inc.
Represented by:
William S. Go, Sr. 00629160 Manila/
28 February 2002       International Finance
Corporation
Represented by:       all known to me and to me known to be the same persons who
executed the foregoing Affidavit of Good Faith and made oath to the truth
thereof.   Name Community Tax Certificate
No./ Passport No.
Issued at/on       PriceSmart, Inc.
Represented by:
Ariel F. Aguirre 15078010 Pasig City/
28 January 2002  

148

 

PSMT Philippines, Inc.
Represented by:
William S. Go, Sr. 00629160 Manila/
28 February 2002       International Finance
Corporation
Represented by:    

being the authorized officer of PSMT Philippines, Inc., a party to the foregoing
Omnibus Agreement, including the Mortgage Agreement comprising Volume III
thereof, who signed the foregoing Omnibus Agreement in the presence of two
witnesses, all of whom are known to me and by me known to be the same persons
who executed the said instrument and they acknowledged to me that the same was
their free and voluntary act, and the free and voluntary act of PSMT
Philippines, Inc.

This Omnibus Agreement dated as of _________ between PriceSmart, Inc., PSMT
Philippines, Inc. and the International Finance Corporation relates in part to
the Mortgage Agreement covering Real Assets and Chattel identified and described
in the Annex thereto, and consists of ______ pages, including the page of this
Acknowledgement and the pages comprising the Mortgage Agreement are signed by
the parties thereto and their instrumental witnesses on the signature page and
on the left margin of each of the other pages thereof.

       IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal this ___ day of ________, 2002 at _________, Philippines.

Doc No.
Page No.
Book No.
Series of

149

 

District of Columbia) ss:

       I, __________________, the undersigned Notary Public, acknowledge that
______________, to me known and known by me to be the _______________ of
International Finance Corporation, and the _______________ of PriceSmart, Inc.,
each executed the foregoing document in the name and on behalf of International
Finance Corporation and Pricesmart, Inc, respectively, and acknowledged the
signing thereof to be ____ voluntary act and deed.

Washington, D.C., this ____ day of _______2002.

     

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  My commission expires ______________