EXHIBIT 4.1
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and
entered into as of April 19, 2001 by and between PriceSmart, Inc., a Delaware
corporation (the "COMPANY"), and the investors listed on the Schedule of
Investors attached hereto as EXHIBIT A (the "INVESTORS"). The Investors and the
Company are referred to collectively herein as the "PARTIES."
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to sell to the Investors, and the
Investors desire to purchase from the Company, shares of the Company's common
stock, $.0001 par value per share ("COMMON STOCK"), on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties
and covenants herein contained, the Parties agree as follows:
1. AGREEMENT TO PURCHASE AND SELL STOCK. Subject to the terms and
conditions of this Agreement, the Company agrees to sell to each of the
Investors at the Closing (as defined below), and each of the Investors agrees to
purchase from the Company at the Closing, the number of shares of the Company's
Common Stock set forth opposite such Investor's name on the Schedule of
Investors (collectively, the "Shares") at a price of $39.00 per share.
2. CLOSING. The purchase and sale of the Shares (the "Closing")
will take place at the offices of Xxxxxx & Xxxxxxx, 00000 Xxxx Xxxxx Xxxxx,
Xxxxx 000, Xxx Xxxxx, XX 00000 at 10:00 a.m. Pacific Time, on April 19, 2001, or
if any of the conditions set forth in Section 6.1 (other than conditions with
respect to actions the respective Parties will take at the Closing itself) has
not been satisfied, a later date selected by the Investors, which date shall be
within five business days following the satisfaction or waiver of all conditions
to the obligations of the Parties to consummate the transactions to occur at the
Closing (other than conditions with respect to actions the respective Parties
will take at the Closing itself) (such date, the "Closing Date"). At the
Closing, the Company will deliver to each of the Investors a certificate
representing the Shares being purchased by each such Investor against payment of
the purchase price therefor by wire transfer to the Company's bank account in
immediately available funds.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investors that the statements in the
following paragraphs of this Section 3 are true and correct:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company is duly authorized to
conduct business and is in good standing under
1
the laws of each jurisdiction where such qualification is required, except where
the failure to be so qualified would not have a material adverse effect on the
business, financial condition, operations or results of operations of the
Company. The Company is not in default under or in violation of any provision of
its charter or bylaws. The Company has full power and authority to execute and
deliver this Agreement and to perform its obligations hereunder.
3.2 AUTHORIZATION. All corporate action on the part of
the Company necessary for the authorization, execution and delivery of this
Agreement, the performance of the obligations of the Company at the Closing, the
performance of the obligations of the Company under Section 8 hereof and the
issuance and delivery of the Shares, has been taken, and this Agreement has been
duly executed and delivered by the Company and constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and (ii) the effect of rules of law
governing the availability of equitable remedies.
3.3 VALID ISSUANCE OF STOCK. The Shares have been
reserved for issuance and, when issued, sold and delivered in accordance with
the terms of this Agreement for the consideration provided for herein, will be
duly and validly issued, fully paid and nonassessable and will be free of any
liens and free of any restrictions on transfer other than restrictions on
transfer under applicable federal and state securities laws and will be issued
in compliance with all applicable federal and state securities laws.
3.4 CAPITALIZATION. The entire authorized capital stock
of the Company consists of 15,000,000 shares of Common Stock, of which 6,108,085
shares were issued and outstanding as of April 12, 2001, and 2,000,000 shares of
preferred stock, $.0001 par value per share, of which no shares were issued and
outstanding as of April 12, 2001. Except as set forth in SEC Documents (as
defined below) there are no outstanding or authorized warrants, options,
purchase rights, subscription rights, conversion rights, exchange rights or
other contracts or commitments that could require the Company to issue, sell or
otherwise cause to become outstanding any of its capital stock, except for those
granted in the ordinary course of business since the dates of the SEC Documents.
There are no outstanding or authorized stock appreciation, phantom stock, profit
participation or similar rights with respect to the Company. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of the Company.
3.5 NONCONTRAVENTION. Neither the execution and delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction of any government,
governmental agency or court to which the Company is subject or any provision of
the charter or bylaws of the Company or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Company is a party or by which the Company is bound or
to which any of the Company's assets is subject (or result in the imposition of
any mortgage, pledge, lien, encumbrance, charge or other security interest upon
any of such assets), except in
2
either case, where such violation, conflict or default would not have a material
adverse effect on the business, financial condition, operations or results of
operations of the Company. Except for (i) the filing of a Form D with the
Securities and Exchange Commission (the "SEC") and (ii) filings which may be
required under state securities laws, the Company does not need to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
3.6 REPORTS FILED UNDER THE SECURITIES EXCHANGE ACT OF
1934; FINANCIAL STATEMENTS. The Company has timely filed all reports required to
be filed by the Company under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). All such reports filed by the Company in the preceding twelve
(12) months (the "SEC Documents") contain all statements required to be stated
therein in accordance with the 1934 Act and do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. As of their
respective dates (except as they have been correctly amended), the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (a) as may be
otherwise indicated in such financial statements or the notes thereto or (b) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
3.7 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
the SEC Documents or otherwise disclosed in public announcements or press
releases, since August 31, 2000, there has been no change to the business,
properties, assets, operations, prospects, results of operations or condition
(financial or otherwise) of the Company, except for such changes which could not
be reasonably expected to have a material adverse effect on the business,
financial condition, operations or results of operations of the Company.
3.8 NO GENERAL SOLICITATION. Neither the Company, nor any
of its affiliates, nor any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Shares.
3
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each of the
Investors severally and not jointly represents and warrants to the Company that
the statements in the following paragraphs of this Section 4 are true and
correct with respect to such Investor:
4.1 ORGANIZATION AND QUALIFICATION. The Investor has all
requisite power and authority to enter into and perform this Agreement and to
carry out the transactions contemplated by this Agreement.
4.2 AUTHORIZATION. All action on the part of the Investor
necessary for the authorization, execution and delivery of this Agreement and
the performance of all obligations of the Investor hereunder has been taken, and
this Agreement has been duly executed and delivered by the Investor and
constitutes a valid and legally binding obligation of the Investor, enforceable
in accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally and (ii)
the effect of rules of law governing the availability of equitable remedies.
4.3 PURCHASE FOR OWN ACCOUNT. The Shares to be purchased
by the Investor hereunder will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "1933 Act"), and the Investor has no present intention of selling
or otherwise distributing the same. The Investor also represents that it has not
been formed for the specific purpose of acquiring Shares.
4.4 ACCREDITED INVESTOR STATUS. The Investor is an
"accredited investor" within the meaning of Regulation D promulgated under the
1933 Act. By reason of its business and financial experience, sophistication and
knowledge, the Investor is capable of evaluating the risks and merits of the
investment made pursuant to this Agreement.
4.5 RESTRICTED SECURITIES. The Investor understands that
the Shares are characterized as "restricted securities" under the 1933 Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the 1933 Act and applicable
regulations thereunder such securities may be resold without registration under
the 1933 Act only in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144 of the U.S. Securities and
Exchange Commission, as presently in effect, and understands the resale
limitations imposed thereby and by the 1933 Act. The Investor understands that
the Company is under no obligation to register any of the securities sold
hereunder except as provided in Section 8 hereof.
4.6 DUE DILIGENCE AND NO SOLICITATION. The Investor has
had a reasonable opportunity to conduct comprehensive due diligence and to ask
questions of and receive answers from the Company and its officers, and all such
questions have been answered to the full satisfaction of the Investor. At no
time was the Investor presented with or solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio or
television advertisement or any other form of general advertising.
4
4.7 FURTHER LIMITATIONS ON DISPOSITION. Without in any
way limiting the representations set forth above, the Investor further agrees
not to make any disposition of all or any portion of the Shares unless and
until:
(a) there is then in effect a registration
statement under the 1933 Act covering such proposed disposition and such
disposition is made in accordance with such registration statement; or
(b) (i) the Investor shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (ii)
the Investor shall have furnished the Company at the Investor's expense an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such securities under the 1933 Act; provided
that the Company shall not require an opinion of counsel for routine sales of
shares pursuant to Rule 144.
4.8 LEGENDS. It is understood that the certificates
evidencing the Shares will bear the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
(b) Any legend required by the laws of the State
of California, including any legend required by the California Department of
Corporations.
5. PRE-CLOSING COVENANTS OF THE PARTIES.
The Parties agree as follows with respect to the period
between the execution of this Agreement and the Closing:
5.1 GENERAL. Each of the Parties will use its reasonable
best efforts to take all action and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Sections 6 and 7 below).
5
5.2 NOTICE OF DEVELOPMENTS. Each Party will give prompt
written notice to the other of any material adverse development causing a breach
of any of its own representations and warranties in Section 3 or 4 above. No
disclosure by any Party pursuant to this Section 5.2, however, shall be deemed
to cure any misrepresentation, breach of warranty or breach of covenant.
6. CONDITIONS TO THE INVESTORS' OBLIGATIONS AT CLOSING. The
obligations of the Investors under Section 2 of this Agreement with respect to
the Closing are subject to the fulfillment or waiver, on or before the Closing
Date, of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE. The
representations and warranties of the Company contained in Section 3 shall be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of the Closing Date.
6.2 COMPLIANCE WITH COVENANTS. The Company shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing Date.
6.3 SHARES TENDERED. The Company shall have tendered
executed certificates for the Shares.
6.4 NO LITIGATION. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (A) prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect), or (C) affect adversely the right
of the Investors to own the Shares.
6.5 SECURITIES EXEMPTIONS. The offer and sale of the
Shares to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, the qualifications requirement of the
California Corporate Securities Law of 1968 (the "Law") and the registration
and/or qualification requirements of all other applicable state securities laws.
6.6 OPINION OF COMPANY COUNSEL. The Investors shall have
received an opinion of Xxxxxx & Xxxxxxx, outside counsel to the Company, with
respect to the due incorporation, due authorization, validity of the Shares,
1933 Act exemption and the legally valid and binding nature of this Agreement.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligations of the Company to the Investors under this Agreement with respect to
the Closing are subject to the fulfillment or waiver on or before the Closing
Date of each of the following conditions:
6
7.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Investors contained in Section 4 shall be true and correct
on the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
7.2 PAYMENT OF CONSIDERATION. The Investors shall have
delivered to the Company by wire transfer the purchase price for the Shares in
accordance with the provisions of Section 2.
7.3 NO LITIGATION. No action, suit or proceeding shall be
pending or threatened before any court or quasi-judicial or administrative
agency of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling or
charge would (A) prevent consummation of any of the transactions contemplated by
this Agreement, (B) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect), or (C) affect adversely the right
of the Investors to own the Shares.
7.4 SECURITIES EXEMPTIONS. The offer and sale of the
Shares to the Investors pursuant to this Agreement shall be exempt from the
registration requirements of the 1933 Act, the qualifications requirements of
the Law and the registration and/or qualification requirements of all other
applicable state securities laws.
8. REGISTRATION STATEMENT FOR RESALE OF THE SHARES.
8.1 SHELF REGISTRATION STATEMENT. As promptly as
practicable but in no event later than May 31, 2001, the Company will prepare
and file with the SEC a registration statement under the 1933 Act registering
all of the Shares held by the Investors upon the completion of the transactions
contemplated by this Agreement for resale to the public by the Investors,
pursuant to such registration statement and the prospectus included therein (the
"Registration Statement"), free and clear of any restrictions under the 1933 Act
except for prospectus delivery requirements. The Company shall use all
reasonable efforts to cause such Registration Statement to become effective as
promptly as practicable thereafter and, subject to Section 8.2(b) below, to
remain effective until such time as each of the Investors may freely sell the
Shares held by it without registration and without regard to volume or manner of
sale. Each of the Investors shall furnish such information regarding the
distribution of the Shares and such other information relating to the Investor
and its ownership of securities of the Company as the Company may from time to
time reasonably request. Each of the Investors agrees to promptly furnish
additional information required to be disclosed in order to make the information
previously furnished to the Company by the Investor not materially misleading.
Each of the Investors agrees to furnish all such information and to cooperate
with and provide assistance to the Company, as the Company may reasonably
request, in connection with any registration and sale of the Shares.
8.2 COMPANY OBLIGATIONS. From time to time during the
period commencing upon the effectiveness of the Registration Statement and
ending upon the earlier of (x) such time as the Investors may freely sell the
Shares held by them without registration and without regard
7
to volume or manner of sale, or (y) such time as the Investors shall have
advised the Company in writing that they have completed their resale of the
Shares held by them (the "Resale Period"), the Company shall do the following:
(a) Prepare and deliver to the Investors as many
copies of the Prospectus (as hereafter defined) as the Investors may reasonably
request;
(b) Use its reasonable efforts to comply with
all requirements imposed upon it by the 1933 Act, by the 1934 Act and by the
undertakings in the Registration Statement so far as is necessary to permit the
continuance of resales of the Shares by the Investors to the public, free and
clear of any restrictions under the 1933 Act except for prospectus delivery
requirements. If, at any time during the Resale Period, an event shall occur
which makes it necessary to amend or supplement the Registration Statement or
the Prospectus to comply with law or with the rules and regulations of the SEC,
the Company shall promptly notify the Investors of the proposed amendment or
supplement and promptly prepare and furnish to the Investors such number of
copies of an amended or supplemented Registration Statement or Prospectus that
complies with law and with such rules and regulations as the Investors may
reasonably request. Each of the Investors shall suspend its sales of the Shares
pending the preparation and delivery of such amendment or supplement and until
such time as each such amendment or amendments to the Registration Statement
have been declared effective by the SEC. The Company authorizes the Investors,
and any brokers or dealers effecting sales of the Shares for the account of the
Investors, to use the Prospectus, as from time to time amended or supplemented,
in connection with the sale of the Shares in accordance with applicable
provisions of the 1933 Act and state securities laws. For purposes of this
Agreement, the term "PROSPECTUS" means the final prospectus relating to the
Shares most recently included in the Registration Statement or filed by the
Company pursuant to Rule 424 of the 1933 Act and any amendments or supplements
thereto filed by the Company pursuant to Rule 424 of the 1933 Act and shall
include all documents or information incorporated in any such prospectus by
reference;
(c) Promptly advise the Investors (i) when any
post-effective amendment of the Registration Statement is filed with the SEC and
when any post-effective amendment becomes effective; (ii) of any request made by
the SEC for any amendment of or supplement to the Registration Statement or the
Prospectus or for additional information relating thereto; (iii) of any
suspension or threatened suspension of the use of any Prospectus in any state;
and (iv) of any proceedings commenced or threatened to be commenced by the SEC
or any state securities commission that would result in the issuance of any stop
order or other order or suspension of use. The Company agrees to use its
reasonable efforts to prevent or promptly remove any stop order or other order
preventing or suspending the use of the Prospectus during the Resale Period and
to comply with any such request by the SEC to amend or supplement the
Prospectus;
(d) Take such action as shall be necessary to
qualify and maintain the qualification of the Shares covered by such
registration under such state securities or "blue sky" laws for offers and sales
to the public during the Resale Period as the Investors shall reasonably
request; PROVIDED, HOWEVER, that the Company shall not be obligated to qualify
as a foreign
8
corporation to do business under the laws of or become subject to taxation in,
any jurisdiction in which it shall not be then qualified, or to file any general
consent to service of process; and
(e) Cause the Shares to be registered pursuant
to Section 12(b) or 12(g) of the Exchange Act and continually quoted or listed,
subject to notice of issuance, on the Nasdaq National Market or a national
securities exchange, if such exchange is the principal market on which the
Shares are traded, and not subject to any restriction or suspension from trading
on the Nasdaq National Market or such national securities exchange; PROVIDED,
HOWEVER, that the Company may deregister the Company Common Stock registered
pursuant to Section 12(b) or 12(g) of the Exchange Act if such deregistration is
in connection with a merger, dissolution or other transaction in which the
stockholders of the Company receive prior to such deregistration either cash or
securities that are listed on the Nasdaq National Market or a national
securities exchange or some combination of cash and such securities; provided,
FURTHER, that the Company may delist the Shares from trading on the Nasdaq
National Market or national securities exchange if the Company is concurrently
listing such stock on the New York Stock Exchange or the American Stock
Exchange.
8.3 RESTRICTIONS ON REGISTRATIONS. If at any time or from
time to time after the effective date of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material Event
(as defined below), the Investors shall not offer or sell any Shares or engage
in any other transaction involving or relating to Shares, from the time of the
giving of notice with respect to a Potential Material Event until the Investors
receive written notice from the Company that such Potential Material Event
either has been disclosed to the public or no longer constitutes a Potential
Material Event. If a Potential Material Event shall occur prior to the date the
Registration Statement is filed, then notwithstanding Section 8.1 above, the
Company's obligation to file the Registration Statement shall be delayed without
penalty until such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event. "Potential Material
Event" means any of the following: (i) the possession by the Company of material
information not ripe for disclosure in a registration statement, as determined
in good faith by the Chief Executive Officer or the Board of Directors of the
Company that disclosure of such information in a Registration Statement would be
detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Chief Executive Officer or the Board of Directors of the
Company, be adversely affected by disclosure in a registration statement at such
time, which determination shall be accompanied by a good faith determination by
the Chief Executive Officer or the Board of Directors of the Company that the
applicable Registration Statement would be materially misleading absent the
inclusion of such information. In no event shall the suspension of the
Registration Statement (or the permissible delay in filing a Registration
Statement) exceed 90 days as a result of a Potential Material Event.
8.4 INDEMNIFICATION OF THE INVESTORS. The Company shall
indemnify, defend and hold harmless each of the Investors, their officers and
their directors and any controlling persons of the Investors against and in
respect of any losses, claims, damages or liabilities, joint or several
(including legal or other fees and expenses reasonably incurred by any of them
in connection with investigating or defending any such loss, claim, damage or
liability) to which the Investors or any such persons may become subject under
the 1933 Act or otherwise insofar as
9
such losses, claims, damages or liabilities (or actions with respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that any such untrue statement or omission is
based upon written information supplied by the Investor or by any of its
representatives for use in such Registration Statement; provided, however, this
indemnity agreement shall not inure to the benefit of any Investor on account of
any loss, claim, damage, liability or action arising from the sale of the Shares
to any person if such Investor fails to send or give a copy of the Prospectus
(as amended or supplemented) to such person.
8.5 INDEMNIFICATION OF THE COMPANY. Each of the Investors
severally and not jointly shall indemnify, defend and hold harmless the Company,
its officers and its directors and any controlling persons of the Company
against and in respect of any losses, claims, damages or liabilities, joint or
several (including legal or other fees and expenses reasonably incurred by any
of them in connection with investigating or defending any such loss, claim,
damage or liability) to which the Company or any such persons may become subject
under the 1933 Act or otherwise insofar as such losses, claims, damages or
liabilities (or actions with respect thereto) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only in each
case to the extent that any such untrue statement or omission is based upon
written information supplied by the Investor or its representatives for use in
such Registration Statement; provided that in no event shall any indemnification
obligation on the part of any Investor under this Section 8.5 exceed the net
proceeds from the offering received by such Investor.
8.6 CONTRIBUTION. If for any reason the indemnification
provided for in the preceding Sections 8.4 or 8.5 is unavailable to an
indemnified party as contemplated by such clauses, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations; provided that in no event shall any contribution
obligation on the part of any Investor under this Section 8.6 exceed the net
proceeds from the offering received by such Investor.
8.7 PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification under this Section 8 shall be as follows:
(a) NOTICE. The indemnified party shall promptly
give notice to the indemnifying party of any pending or threatened claim giving
rise to indemnification under Sections 8.4 or 8.5 (a "CLAIM"), specifying the
factual basis for the Claim and the approximate amount thereof.
10
(b) CONTROL OF CLAIM AND SETTLEMENT. With
respect to any Claim as to which a person is entitled to indemnification
hereunder, the indemnifying party shall have the right at its own expense to
participate in or assume control of the defense of the Claim, and the
indemnified party shall cooperate fully with the indemnifying party, subject to
reimbursement for actual out-of-pocket expenses incurred by the indemnified
party as the result of a request by the indemnifying party. If the indemnifying
party elects to assume control of the defense of any Claim, the indemnified
party shall have the right to participate in the defense of the Claim at its own
expense. If the indemnifying party does not elect to assume control or otherwise
participate in the defense of any Claim, it shall be bound by the results
obtained by the indemnified party with respect to the Claim. No indemnifying
party shall be liable for any settlement effected without its written consent,
not to be unreasonably withheld or delayed.
(c) SURVIVAL. Notwithstanding any other
provision of this Agreement, the indemnification and contribution obligations of
the parties hereunder shall survive indefinitely.
(d) EXPENSES. The Company shall pay all expenses
incident to the registration of the Shares under this Section 8, including
without limitation, all registration and filing fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, and the fees and disbursements of counsel for the Company and
its independent public accountants. With respect to sales of the Shares, the
Investors shall pay all underwriting discounts and commissions and fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Shares to be sold by the
Investors, the fees and disbursements of counsel retained by the Investors and
transfer taxes, if any.
8.8 COMPLIANCE. The Investors will observe and comply
with the 1933 Act, the 1934 Act and the general rules and regulations
thereunder, as now in effect and as from time to time amended and including
those hereafter enacted or promulgated, in connection with any offer, sale,
pledge, transfer or other disposition of the Shares or any part thereof.
9. TERMINATION.
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual written agreement of the Company
and the Investors;
(b) by either the Investors or the Company
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement) if the Closing shall not have been consummated on or before April 30,
2001;
(c) by either the Investors or the Company if a
court of competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued a non-appealable final order, decree or
ruling or taken any other action having the effect of
11
permanently restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement; or
(d) by either the Investors or the Company
(provided that the terminating party is not then in material breach of any
representation, warranty, covenant or other agreement contained in this
Agreement) in the event of a material breach by the other party of any
representation or warranty contained in this Agreement which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach.
9.2 EFFECT OF TERMINATION. In the event of the
termination of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any Party
hereto (or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such Party) except as set forth in this Section
9.2, provided that nothing contained in this Agreement shall relieve any party
from liability for any breach of this Agreement and provided further that
Section 10 shall survive termination of this Agreement.
10. MISCELLANEOUS.
10.1 SURVIVAL OF WARRANTIES. The representations,
warranties and covenants of the Company and the Investors contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of six months from the Closing Date and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investor or the Company, as the case may be.
10.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the Company and the Investors and their respective
successors, permitted assigns, heirs and personal representatives provided,
that, the Company may not assign its rights or obligations under this Agreement
to any person without the prior written consent of the Investors; provided,
further, that none of the Investors assign its rights or obligations under this
Agreement to any person (other than an Affiliate) without the prior written
consent of the Company.
10.3 GOVERNING LAW. This Agreement shall be governed by
and construed under the internal laws of the State of California as applied to
agreements among California residents entered into and to be performed entirely
within California, without reference to principles of conflict of laws or choice
of law.
10.4 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.5 HEADINGS. The headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement. All references in this Agreement to
sections, paragraphs, exhibits and schedules shall, unless otherwise provided,
refer to sections and paragraphs hereof and exhibits and schedules attached
hereto, all of which exhibits and schedules are incorporated herein by this
reference.
12
10.6 NOTICES. All notices, requests, demands, claims and
other communications hereunder will be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid and addressed to the intended recipient as
set forth below:
To the Company: PriceSmart, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Investor: Whiffletree Partners L.P.
x/x Xxxxxxxx Xxxxxxx Xxxxxxxxxx, X.X.X.
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Benchmark Partners
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service
or ordinary mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set
forth.
10.7 NO FINDER'S FEES. Each party represents that it
neither is nor will be obligated for any finder's or broker's fee or commission
in connection with this transaction. The
13
Company agrees to indemnify and hold harmless the Investor from any liability
for any commission or compensation in the nature of a finder's or broker's
fee (and any asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
10.8 AMENDMENTS AND WAIVERS. Any term of this Agreement
may be amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investors.
For purposes of this Agreement, the Investors shall act in accordance with the
direction of the holders of a majority of the Shares.
10.9 ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
10.10 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
10.11 ENTIRE AGREEMENT. This Agreement, together with all
exhibits and schedules hereto, constitutes the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior negotiations, correspondence, agreements,
understandings duties or obligations between the parties with respect to the
subject matter hereof.
10.12 PUBLIC ANNOUNCEMENTS. The Investors and the Company
shall consult with each other before issuing any press release with respect to
this Agreement or the transactions contemplated hereby and neither shall issue
any such press release or make any such public statement without the prior
consent of the other, which consent shall not be unreasonably withheld;
provided, however, that a Party may, without the prior consent of the other
Party, issue such press release or make such public statement as may upon the
advice of counsel be required by law if it has used commercially reasonable
efforts to consult with the other Party prior thereto. The Parties hereby
consent to the filing of this Agreement by the Company with the SEC.
10.13 FURTHER ASSURANCES. From and after the date of this
Agreement, upon the request of the Investors or the Company, the Company and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
10.14 WAIVER OF JURY TRIAL. THE COMPANY AND THE INVESTORS
HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION, PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS AGREEMENT.
14
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY:
PRICESMART, INC.
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
-----------------------------
Title: Executive Vice President
----------------------------
THE INVESTORS:
Caxton Corporation
Signature:
------------------------
Name:
-----------------------------
Title:
----------------------------
Palisade Capital Management, L.L.C.,
Registered investment Advisor for
Whiffletree Partners L.P.
Signature: /s/ Xxxxxxx Xxxxxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxxxxx
-----------------------------
Title: Managing Director
----------------------------
Benchmark Partners
Signature: /s/ Xxxxxxx Xxxxxxx
------------------------
Name: Xxxxxxx Xxxxxxx
-----------------------------
Title: General Partner
----------------------------
16
EXHIBIT A
SCHEDULE OF INVESTORS
Investor Name Number of Shares
------------- ----------------
Whiffletree Partners L.P.
c/o Palisade Capital Management LLC
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Tax Payer I.D. # 00-0000000 22,700
Benchmark Partners
Attn: Xxxxxxxx XxXxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tax Payer I.D. # 00-0000000 10,000
17
