EXHIBIT 10.2
PLEDGE AGREEMENT
This Pledge Agreement is made and entered into as of __________,
1998, between _________________ ("Borrower"), and PriceSmart, Inc., a
Delaware corporation (the "Company").
RECITALS
A. The Company has loaned to Borrower $_______________ as
evidenced by a promissory note dated as of August 7, 1998 (the "Note"), which
was used by Borrower to purchase an aggregate of ___________ shares of the
Company's common stock (the "Pledged Shares") pursuant to the terms of The
1998 Equity Participation Plan of PriceSmart, Inc.
B. Borrower desires to grant a security interest in the Pledged
Shares to the Company to secure payment of the Note.
AGREEMENT
Now, therefore, in consideration of the above recitals and the
mutual covenants hereinafter set forth, the parties hereto agree as follows:
1. CREATION OF SECURITY INTEREST. Borrower hereby grants to the
Company a security interest in all of Borrower's right, title and interest in
and to the following collateral (the "Collateral") to secure the payment and
performance by the Borrower of all obligation owed to the Company pursuant to
the Note, this Agreement and any extensions, modifications and renewals
thereof:
(a) The Pledged Shares;
(b) All securities, certificates and instruments representing or
evidencing ownership of the Collateral hereunder, and all proceeds and
products of any
Collateral hereunder, including without limitation, stock, cash, property
or other dividends, securities, rights and other property now or hereafter
at any time or from time to time received, receivable or otherwise
distributed or distributable in respect of or in exchange for any or all
of such Collateral; and
(c) Any substituted or additional Collateral required to be
supplied under the terms of this Pledge Agreement.
2. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants:
(a) Borrower is (or to the extent that this Pledge Agreement
states that the Collateral is to be acquired after the date hereof, will
be) the sole owner of the Collateral; that the security interest hereunder
in the Collateral is a first, prior and perfected security interest; that
there are no security interests, liens or encumbrances upon, or adverse
claims of title to, or any other interest whatsoever in, the Collateral or
any portion thereof except that created by this Pledge Agreement; and that
no financing statement covering the Collateral or any portion thereof
exists or is on file in any public office; and
(b) Borrower has full right, power and authority to enter into
this Pledge Agreement and no consent of, or registration or filing with,
any person or entity, including the California Corporations Commissioner or
any other governmental officer or entity, is required.
3. COVENANTS OF BORROWER. Borrower covenants that:
(a) Borrower will deliver to the Company each item of Collateral
hereunder immediately upon Borrower's acquisition thereof, and will defend
the
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Collateral against all claims and demands of all persons at any time
claiming the same or any interest therein; and
(b) If, while this Pledge Agreement is in effect, any stock
dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation or other change in the capital structure is declared
or made, or proposed to be declared or made, by the Company or any issuer
of the Collateral, all substituted and additional securities issued with
respect to the Collateral shall be endorsed in blank by Borrower promptly
upon receipt thereof or otherwise appropriately transferred to the Company
in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Company to be held under the terms of
this Pledge Agreement in the same manner as and as part of the Collateral.
Borrower shall have the right to exercise any subscription or other rights
with respect to any Collateral, with the prior written approval of such
exercise by the Company; provided, however, that any securities which may
be issued upon exercise of any such rights shall be delivered to the
Company, with any necessary stock power, endorsed in blank and with
signatures guaranteed, to be included in the Collateral.
4. DEFAULTS AND REMEDIES.
(a) The occurrence of any one or more of the following events or
conditions affecting Borrower shall constitute a default under this Pledge
Agreement:
(i) Borrower fails to pay any indebtedness, perform any
obligation required to be performed by her, or discharge her liability
to the Company in accordance with the terms of the Note; or
(ii) Borrower fails to perform any obligation under this
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Agreement.
(b) Upon the occurrence of a default hereunder, the Company may,
at its option, without notice to or demand upon Borrower, do any one or
more of the following:
(i) Exercise any or all of the rights and remedies
provided for by the applicable Uniform Commercial Code, specifically
including, without limitation, the right to recover the attorneys'
fees incurred by the Company in the enforcement of this Pledge
Agreement or in connection with Borrower's redemption of the
Collateral;
(ii) Sell the Collateral, or any portion thereof, at any
public or private sale or on any securities exchange or other
recognized market, for cash, upon credit or for future delivery, as
the Company shall deem appropriate;
(iii) Enforce one or more remedies hereunder, successively
or concurrently, and such action shall not operate to estop or prevent
the Company from pursuing any other or further remedy it may have.
5. MISCELLANEOUS PROVISIONS.
(a) NOTICES. Notices, requests and other communications
hereunder shall be in writing and may be delivered personally or sent by
telegram, telex or first class mail to the parties addressed as follows:
To Borrower: ____________________
____________________
____________________
To the Company: PriceSmart, Inc.
0000 Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxx
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Such notices, requests and other communications sent as provided
hereinabove shall be effective when received by the addressee thereof, but
if sent by registered or certified mail, postage prepaid, shall be
effective exactly three (3) business days after being deposited in the
United States mail. The parties hereto may change their addresses by
giving notice thereof to the other parties hereto in conformity with this
section.
(b) HEADINGS. The various headings in this Pledge Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Pledge Agreement or any provision hereof.
(c) CHOICE OF LAW. This Pledge Agreement shall be construed in
accordance with and all disputes hereunder shall be governed by the laws of
the State of California, without giving effect to the conflicts of law
principals thereof.
(d) AMENDMENTS. This Pledge Agreement or any provision hereof
may be changed, waived, or terminated only by a statement in writing signed
by the party against which such change, waiver or termination is sought to
be enforced.
(e) NO WAIVER. No delay in enforcing or failure to enforce any
right under this Pledge Agreement by the Company shall constitute a waiver
by the Company of such right. No waiver by the Company of any default
hereunder shall be effective unless in writing, nor shall any waiver
operate as a waiver of any other default or of the same default on a future
occasion.
(f) TIME OF THE ESSENCE. Time is of the essence of each
provision of this Pledge Agreement of which time is an element.
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(g) BINDING AGREEMENT. All rights of the Company hereunder
shall inure to the benefit of its successors and assigns. Borrower shall
not assign any of its interest under this Pledge Agreement without the
prior written consent of the Company. Any purported assignment
inconsistent with this provision shall, at the option of the Company, be
null and void.
(h) DEFINITIONS. All terms not defined herein shall have the
meaning set forth in the applicable Uniform Commercial Code, except where
the context otherwise requires.
(i) ENTIRE AGREEMENT. This Pledge Agreement, together with any
other agreement executed in connection herewith, is intended by the parties
as a final expression of their agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance rendered under this Pledge
Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of
the nature of the performance and opportunity for objection.
(j) ATTORNEYS' FEES. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Pledge Agreement, or
because of an alleged dispute, breach or default in connection with any of
the provisions of this Pledge Agreement, each of the parties hereto shall
be responsible for payment of any attorneys' fees and other costs incurred
by them in that action or proceeding, without regard to whomever is the
prevailing party in such action or proceeding.
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(k) SEVERABILITY. If any provision of this Pledge Agreement
should be found to be invalid or unenforceable, all of the other provisions
shall nonetheless remain in full force and effect to the maximum extent
permitted by law.
(l) POWER OF ATTORNEY. Borrower hereby appoints and constitutes
the Company as Borrower's attorney-in-fact for purposes of (i) collecting
any Collateral, and (ii) conveying any item of Collateral to any purchaser
thereof. This power of attorney is coupled with an interest and is
irrevocable by Borrower.
(m) COUNTERPARTS. This Pledge Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which shall together constitute one and the same agreement.
(n) TERMINATION OF PLEDGE. This Pledge Agreement and the
security interest and pledge hereunder shall not terminate until the full
and final payment and performance of all indebtedness and obligations
secured hereunder. At such time, the Company shall reassign and deliver to
Borrower all of the Collateral hereunder which has not been sold, disposed
of, retained or applied by the Company in accordance with the terms hereof.
Such reassignment and redelivery shall be without warranty by or recourse
to the Company, and shall be at the expense of Borrower. Without limiting
the generality of the foregoing, the security interest and pledge hereunder
shall not be terminated by the transfer of any of the Collateral hereunder
from the Company to Borrower, or any person designated by Borrower, for the
purpose of ultimate sale, exchange, presentation, collection, renewal or
registration of transfer or for any other purpose.
(o) RELEASE OF COLLATERAL. Borrower shall be permitted to sell
any of the shares of Collateral and the Company shall release such shares
from Borrower's
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pledge hereunder; provided, however, that Borrower shall pay to the
Company the net (after-tax) proceeds from the sale of such shares.
(p) EXPIRATION OF RELATED OPTION. As stated in Section 3.3 (g)
of the Non-Qualified Stock Option Agreement issued to Borrower as of August
7, 1998, the subject Option may not be exercised to any extent after the
first to occur of certain events (as specified in Section 3.3(g)), which
events include the effective date of the sale, transfer or other
disposition of any of the Pledged Shares.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be duly executed the day and year first above written.
PRICESMART, INC. BORROWER
By_________________________ _____________________________
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PLEDGE AGREEMENT
AMOUNT
BORROWER DATE DATE OF NOTE BORROWED PLEDGED SHARES
---------- ------ ------------ ----------- --------------
Xxxxxx X. Xxxx 8/7/98 8/7/98 $ 94,937.50 8,750
Xxxxx X. Xxxxxxxx 8/7/98 8/7/98 $ 94,937.50 8,750
Xxxxxx X. Xxxxxx 8/7/98 8/7/98 $108,500.00 10,000
Xxxx X. May 10/19/98 10/19/98 $ 86,516.00 8,750
