COMMON STOCK PURCHASE AGREEMENT
BY AND AMONG
PRICESMART, INC.
and
THE INVESTORS LISTED ON
EXHIBIT A ATTACHED HERETO
Dated as of October 22, 2003
TABLE OF CONTENTS
COMMON STOCK PURCHASE AGREEMENT................................................1
1. AGREEMENT TO PURCHASE AND SELL STOCK.......................................1
2. CLOSING....................................................................1
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................2
3.1 Organization, Good Standing and Qualification........................2
3.2 Authorization........................................................2
3.3 Valid Issuance of the Shares.........................................2
3.4 Capitalization.......................................................3
3.5 Noncontravention.....................................................3
3.6 Absence of Certain Changes...........................................4
3.7 No General Solicitation..............................................4
3.8 Disclosure...........................................................5
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS............................5
4.1 Organization and Qualification.......................................5
4.2 Authorization........................................................5
4.3 Purchase for Own Account.............................................5
4.4 Accredited Investor Status...........................................5
4.5 Restricted Securities................................................6
4.6 Due Diligence and No Solicitation....................................6
4.7 Further Limitations on Disposition...................................6
4.8 Legends..............................................................6
5. PRE-CLOSING COVENANTS OF THE PARTIES.......................................7
5.1 General..............................................................7
5.2 Notice of Developments...............................................7
6. POST-CLOSING COVENANTS OF THE PARTIES......................................7
6.1 Listing..............................................................7
7. CONDITIONS TO THE INVESTORs' OBLIGATIONS AT CLOSING........................7
7.1 Representations and Warranties True..................................7
7.2 Compliance with Covenants............................................8
7.3 No Litigation........................................................8
7.4 Securities Exemptions................................................8
7.5 Proceedings..........................................................8
7.6 No Material Adverse Effect...........................................8
8. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.........................8
8.1 Representations and Warranties True..................................9
8.2 Payment of Consideration.............................................9
8.3 No Litigation........................................................9
8.4 Securities Exemptions................................................9
9. Registration Statement for Resale of the Shares............................9
9.1 Registration........................................................9
9.2 Company Obligations.................................................9
9.3 Restrictions on Registrations......................................11
9.4 Investor Obligations and Rights....................................11
9.5 Indemnification....................................................12
9.6 Expenses...........................................................15
10. Termination...............................................................15
10.1 Termination........................................................15
10.2 Effect of Termination..............................................15
11. MISCELLANEOUS.............................................................16
11.1 Survival of Warranties.............................................16
11.2 Specific Performance...............................................16
11.3 Successors and Assigns.............................................16
11.4 Governing Law......................................................16
11.5 Counterparts.......................................................17
11.6 Headings...........................................................17
11.7 Notices............................................................17
11.8 No Finder's Fees...................................................18
11.9 Amendments and Waivers.............................................18
11.10 Attorneys' Fees....................................................18
11.11 Severability.......................................................18
11.12 Entire Agreement...................................................18
11.13 No Third Party Beneficiaries.......................................18
11.14 Public Announcements...............................................19
11.15 Further Assurances.................................................19
11.16 Fees and Expenses..................................................19
11.17 Waiver of Jury Trial...............................................19
SCHEDULES
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Schedule 3.4(b)
EXHIBITS
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EXHIBIT A SCHEDULE OF INVESTORS
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (including any Exhibits and Schedules
hereto, this "AGREEMENT") is made and entered into as of October 22, 2003 by and
among PriceSmart, Inc., a Delaware corporation (the "COMPANY"), and the
investors listed on Exhibit A attached hereto (each an "INVESTOR" and,
collectively, the "INVESTORS"). The Investors and the Company are referred to
herein individually as a "PARTY" and together 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, an aggregate of 500,000 shares (the
"SHARES") of the Company's common stock, par value $.0001 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
contained herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, 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 severally
agrees to purchase from the Company at the Closing, that number of Shares set
forth opposite each such Investor's name on EXHIBIT A attached hereto at a
purchase price of $10.00 per share (the "PURCHASE PRICE").
2. CLOSING. The purchase and sale of the Shares (the "CLOSING") will take
place at the offices of Xxxxxx & Xxxxxxx LLP, 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000,
Xxx Xxxxx, XX 00000 at 10:00 a.m. Pacific Time, on October 29, 2003, or at such
other time and place mutually agreed upon by the Parties, or if any of the
conditions set forth in Section 7 (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 (5)
Business Days (as defined below) 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"). "BUSINESS DAY" means any day, other than a Saturday, Sunday or a day on
which banking institutions in the State of California are authorized or
obligated by law, regulation or executive order to close. At the Closing, the
Company will cause its transfer agent to deliver to each of the Investors (i) a
certificate registered in the Investor's name and in the denominations
designated by such Investor prior to the Closing Date representing the Shares
and (ii) the other documents and certificates to be delivered pursuant to
Section 7 hereof, all against payment of the Purchase Price by wire transfer of
immediately available funds as directed pursuant to instructions delivered by
the Company to the Investors prior to the Closing Date. The number of Shares to
be purchased at the Closing by each Investor and the portion of aggregate
Purchase Price to be paid by each Investor are set forth next to each Investor's
name on EXHIBIT A hereto.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to, and agrees with, the Investors that the statements
in the following paragraphs of this Section 3 are true and correct:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and its Subsidiaries (as defined below) is a corporation, partnership or
limited liability company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all requisite
power and authority to own or lease and operate its properties and to conduct
its business as it is currently being conducted and is proposed to be conducted.
Each of the Company and its Subsidiaries is duly licensed, authorized or
qualified as a foreign corporation, partnership or limited liability company for
the transaction of business and is in good standing under the laws of each other
jurisdiction in which its ownership, lease or operation of property or conduct
of business requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the assets, liabilities,
condition (financial or otherwise), results of operations, prospects or business
of the Company and its Subsidiaries taken as a whole ("MATERIAL ADVERSE
EFFECT"). The Company is not in default under or in violation of any provision
of its amended and restated certificate of incorporation (the "CERTIFICATE OF
INCORPORATION") or its bylaws (the "BYLAWS"). "SUBSIDIARY" means as to any
Person (as defined below), any other Person of which more than 50% of the shares
of the voting stock or other voting interests are owned or controlled, or the
ability to select or elect more than 50% of the directors or similar managers is
held, directly or indirectly, by such first Person or one or more of its
Subsidiaries or by such first Person and one or more of its Subsidiaries.
"PERSON" means any individual, corporation, company, association, partnership,
limited liability company, joint venture, trust, unincorporated organization or
Governmental Authority (as defined below).
3.2 AUTHORIZATION. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. 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 9 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; (ii) the effect of rules of law governing the availability of
equitable remedies; and (iii) the unenforceability under certain circumstances
under law or court decisions of provisions providing for the indemnification of
or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy or prohibited by
law.
3.3 VALID ISSUANCE OF THE SHARES. The Shares have been duly and
validly authorized, reserved for issuance and, when issued, sold and delivered
by the Company in accordance with the terms of this Agreement for the
consideration provided for herein, will have been duly and validly issued, will
be fully paid and nonassessable and will be free of any mortgage, pledge, lien,
security interest, claim, voting agreement, conditional sale agreement, title
retention agreement, restriction, option or encumbrance of any kind, character
or description whatsoever ("LIEN") (other than those that may be created by the
Investors) and free of any
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restrictions on transfer other than restrictions on transfer under applicable
federal and state securities laws and, assuming the truth and correctness of the
Investors' representations and warranties in Section 4 below, will be issued in
compliance with all applicable federal and state securities laws.
3.4 CAPITALIZATION
(a) The entire authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, of which 6,871,913 shares (not
including 413,650 shares held by the Company as treasury shares) were issued and
outstanding as of October 17, 2003, and 2,000,000 shares of preferred stock, par
value $.0001 per share, of which 20,000 shares of the Company's 8% Series A
Cumulative Convertible Redeemable Preferred Stock and 22,000 shares of the
Company's 8% Series B Cumulative Convertible Redeemable Preferred Stock are
issued and outstanding as of the date of this Agreement. Except as set forth in
the SEC Documents (as defined below), there are no outstanding or authorized
warrants, options, purchase rights, subscription rights, conversion rights,
exchange rights or other contracts, commitments or obligations that could
require the Company or any of its Subsidiaries to issue, grant, deliver or sell
or otherwise cause to be issued, granted, delivered or sold or become
outstanding any capital stock of the Company or any of its Subsidiaries, 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 or any
of its Subsidiaries. To the Company's knowledge, there are no voting trusts,
proxies or other agreements or understandings with respect to the voting of the
capital stock of the Company.
(b) Except as set forth on Schedule 3.4(b) hereto, the
registration of the Shares pursuant to Section 9 hereof will not give rise to
any registration rights on behalf of any Person under any agreement or
instrument applicable to the Company. Except as set forth on Schedule 3.4(b)
hereto, other than pursuant to Section 9 hereof, no Person has any right to
require the Company to register securities of the Company under the Securities
Act of 1933, as amended (the "1933 ACT").
3.5 NONCONTRAVENTION.
(a) Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (i) violate any
constitution, statute, regulation, rule, ordinance, code, injunction, judgment,
order, decree, ruling, charge, writ, determination or other restriction ("LAW")
of any government or political subdivision or department thereof, any
governmental regulatory body, commission, board, agency or instrumentality, or
any court or arbitrator or alternative dispute resolution body, in each case
whether federal, state, local or foreign ("GOVERNMENTAL AUTHORITY") to which the
Company or any of its Subsidiaries is subject or any provision of the
Certificate of Incorporation or the Bylaws or the certificate of incorporation
or bylaws or similar constituent documents of the Company's Subsidiaries or (ii)
conflict with, result in a breach or violation of, constitute a default (with or
without notice or the passage of time) under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
give rise to a right to put or to compel a tender offer for outstanding
securities of the Company or any of its Subsidiaries or
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require any notice, consent, waiver or approval under any agreement, contract,
lease, license, loan, debt instrument, note, bond, indenture, mortgage, deed of
trust, joint venture agreement, approval of a Governmental Authority or other
arrangement to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
Company's or its Subsidiaries' assets is subject (or result in the imposition of
any mortgage, pledge, Lien, encumbrance, charge or other security interest upon
any of such assets or properties), except in either case, where such violation,
conflict or default would not have a Material Adverse Effect.
(b) Except for the filing of a Form D with the Securities and
Exchange Commission (the "SEC") and filings which may be required under state
securities laws, for which filings the Company shall be responsible, neither the
Company nor any of its Subsidiaries is required to give any notice to, make any
filing or registration with, or obtain any authorization, consent or approval of
any Governmental Authority in connection with the execution, delivery and
performance by the Company of this Agreement and the transactions contemplated
hereby.
(c) No consent or approval of the Company's stockholders is
required by Law, the Certificate of Incorporation, the Bylaws, the rules and
regulations of the Nasdaq Stock Market, or otherwise, for the execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated hereby.
(d) The execution, delivery and performance of this Agreement
by the Company and the consummation of transactions contemplated hereby will not
constitute a "Change of Control" as such term is defined in any contract,
agreement, indenture, mortgage, note, lease or other instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any
such Subsidiary is bound or to which the properties of the Company or any such
Subsidiary is subject.
3.6 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the reports
required to be filed by the Company under the 1934 Act in the preceding twelve
(12) months (the "SEC DOCUMENTS") or otherwise disclosed in public announcements
or press releases, since August 31, 2002, the Company and its Subsidiaries have
conducted their consolidated business in the ordinary and usual course and there
has been no change to the business, properties, assets, operations, prospects,
results of operations or condition (financial or otherwise) of the Company or
its Subsidiaries (taken as a whole), except for such changes which could not be
reasonably expected to have a Material Adverse Effect.
3.7 NO GENERAL SOLICITATION. Neither the Company, nor any of its
Affiliates (as defined below), 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 ("REGULATION D") promulgated under the 0000 Xxx) in
connection with the offer or sale of the Shares. "AFFILIATE" has the meaning set
forth in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), as in effect on the date hereof. The term "AFFILIATED"
has a correlative meaning.
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3.8 DISCLOSURE. No information that has been provided to the
Investors by the Company or any of its representatives in connection with the
transactions contemplated by this Agreement, and no exhibit, document,
statement, certificate or schedule furnished or to be furnished to the Investors
pursuant to this Agreement, contains or will contain, as the case may be, any
untrue statement of a material fact, or omits or will omit, as the case may be,
to state a material fact necessary to make the statements or facts contained
therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. 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 is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization. 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 (a) applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors' rights generally; (b) the
effect of rules of law governing the availability of equitable remedies; and (c)
the unenforceability under certain circumstances under law or court decisions of
provisions providing for the indemnification of or contribution to a party with
respect to a liability where such indemnification or contribution is contrary to
public policy or prohibited by law.
4.3 PURCHASE FOR OWN ACCOUNT. Except as permitted pursuant to
Section 11.3 hereof, the Shares to be acquired 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 1933 Act, and the Investor has no present intention of
selling or otherwise distributing the same. The Investor does not have any
contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person, with
respect to the Shares. The Investor also represents that it has not been formed
for the specific purpose of acquiring the Shares.
4.4 ACCREDITED INVESTOR STATUS. The Investor is an "accredited
investor" within the meaning of Regulation D. 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. The Investor confirms that it is able (a) to bear the economic risk
of this investment, as well as other risk factors as more fully set forth herein
and in the SEC Documents, (b) to hold the Shares for an indefinite period of
time and (c) to bear a complete loss of the Investor's investment; and the
Investor represents that it has sufficient liquid assets so that the illiquidity
associated with this investment will not cause any undue financial difficulties
or affect the Investor's ability to provide for its current needs and possible
financial contingencies.
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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 promulgated under the 1933 Act ("RULE 144"), 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 9
hereof.
4.6 DUE DILIGENCE AND NO SOLICITATION. The Investor has had a
reasonable opportunity 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.
4.7 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 ANY STATE
SECURITIES LAWS. 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) The legend referred to in Section 4.8(a) above shall be
removed from a certificate representing such Shares if the securities
represented thereby are sold pursuant to an effective registration statement
under the 1933 Act, or there is delivered to the Company such satisfactory
evidence, which may include an opinion of independent counsel, as reasonably
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may be requested by the Company, to confirm that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
of such securities will not violate the registration requirements of the 1933
Act.
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 7 and 8 below).
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. POST-CLOSING COVENANTS OF THE PARTIES.
6.1 LISTING. So long as the Investors or their respective
Affiliates Beneficially Own any Shares, the Company shall use its best efforts
to ensure that the shares of Common Stock continue to be quoted on the Nasdaq
Stock Market; PROVIDED, HOWEVER, this Section 6.1 shall not restrict the Company
from engaging in any reclassification, capital reorganization or other change in
the outstanding shares of Common Stock or any consolidation or merger of the
Company with or into another corporation or any other transaction in which the
stockholders of the Company are required to exchange their shares of Common
Stock for stock or other securities of the Company or any other Person.
"BENEFICIALLY OWN" with respect to any securities means having "beneficial
ownership" of such securities (as determined pursuant to Rule 13d-3 promulgated
under the 1934 Act as in effect on the date hereof, except that a Person shall
be deemed to Beneficially Own all such securities that such Person has the right
to acquire by conversion, exercise of option or otherwise whether such right is
exercisable immediately or after the passage of time). The terms "BENEFICIAL
OWNERSHIP" and "BENEFICIAL OWNER" have correlative meanings.
7. 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 the Closing Date, of each of the
following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Company contained in Section 3 qualified as to materiality
shall be true and correct in all respects, and those not so qualified shall be
true and correct in all material respects 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 (except where such representation and warranty speaks by
its terms as of a different date, in which case it shall be true and correct as
of such date). The Company shall have delivered to the Investors at the Closing
a certificate in form and substance reasonably satisfactory to the Investors
dated the Closing Date and signed by the Chief Executive Officer or an Executive
Vice President and the Chief Financial Officer or Senior Vice President
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of Accounting of the Company to the effect that the condition set forth in this
Section 7.1 has been satisfied.
7.2 COMPLIANCE WITH COVENANTS. The Company shall have performed all
of its obligations hereunder in all material respects and complied with all
agreements, undertakings, covenants and conditions required hereunder to be
performed by it at or prior to the Closing. The Company shall have delivered to
the Investors at the Closing a certificate in form and substance reasonably
satisfactory to the Investors dated the Closing Date and signed by the Chief
Executive Officer or an Executive Vice President and the Chief Financial Officer
or Senior Vice President of Accounting of the Company to the effect that the
condition set forth in this Section 7.2 has been satisfied.
7.3 NO LITIGATION.
(a) No Law shall have been promulgated, enacted or entered
that restrains, enjoins, prevents, materially delays, prohibits or otherwise
makes illegal the performance of this Agreement or the transactions contemplated
hereby.
(b) No action, suit or proceeding shall be pending or
threatened before any Governmental Authority wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (i) prevent, materially delay,
prohibit or otherwise make illegal the consummation of any of the transactions
contemplated by this Agreement, (ii) 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
(iii) 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 qualification requirements of the California
Corporate Securities Law of 1968 (the "CALIFORNIA SECURITIES LAW") and the
registration and/or qualification requirements of all other applicable state
securities laws.
7.5 PROCEEDINGS. All corporate and other proceedings to be taken by
the Company in connection with this Agreement and with respect to the
transactions contemplated hereby to be completed at or prior to the Closing and
documents incident thereto shall have been completed in form and substance
reasonably satisfactory to the Investors, and the Investors shall have received
all such counterpart originals or certified or other copies of this Agreements
and such other documents as it may reasonably request.
7.6 NO MATERIAL ADVERSE EFFECT. No event shall have occurred and no
condition shall have arisen or been created since the date of this Agreement
which has had, or would be reasonably likely to have, a Material Adverse Effect.
8. 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 the Closing Date of each of the
following conditions:
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8.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Investors contained in Section 4 qualified as to materiality
shall have been true and correct in all respects, and those not so qualified
shall have been true and correct in all material respects 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 (except where such representation
and warranty speaks by its terms as of a different date, in which case it shall
be true and correct as of such date).
8.2 PAYMENT OF CONSIDERATION. The Investors shall have paid the
Purchase Price in accordance with the provisions of Section 1.
8.3 NO LITIGATION.
(a) No Law shall have been promulgated, enacted or entered that
restrains, enjoins, prevents, materially delays, prohibits or otherwise makes
illegal the performance of this Agreement or the transactions contemplated
hereby.
(b) No action, suit or proceeding shall be pending or threatened
before any Governmental Authority wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would (i) prevent, delay, prohibit or otherwise
make illegal the consummation of any of the transactions contemplated by this
Agreement, or (ii) 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).
8.4 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 qualification requirements of the California
Securities Law and the registration and/or qualification requirements of all
other applicable state securities laws.
9. Registration Statement for Resale of the Shares.
9.1 REGISTRATION. As promptly as practicable after the Closing but in
any event within ninety (90) days following the Closing Date, the Company shall
prepare and file with the SEC a registration statement on Form S-3 (the
"REGISTRATION STATEMENT"), and maintain effective for the period specified in
Section 9.2(a) for use by the Investors and their respective Affiliates at any
time during such period with respect to the offering and sale or other
disposition of the Shares.
9.2 COMPANY OBLIGATIONS. In the case of each registration effected by
the Company pursuant to this Section 9, the Company will keep the Investors, as
applicable, advised in writing as to the initiation of each registration and as
to the completion thereof. At its expense, the Company will:
(a) use its best efforts to cause such registration to remain
effective at all times until the earlier of (i) such time as the distribution
described in the registration statement relating to the Shares has been
completed and (ii) two (2) years from the Closing Date;
9
(b) prepare and file with the SEC such amendments and
post-effective amendments to such registration statement and supplements to the
prospectus as may be (i) reasonably requested by the holders of a majority of
the Shares, (ii) reasonably requested by any participating holder (to the extent
such request relates to information relating to such holder), or (iii) necessary
to keep such registration effective for the period of time required by this
Section 9;
(c) prepare and deliver to the Investors as many copies of each
preliminary and final prospectus and other documents incident thereto as each of
the Investors from time to time may reasonably request;
(d) immediately notify the Investors, at any time when a
prospectus relating to a registration of Shares is required to be delivered
under the 1933 Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, at the request of the Investors, prepare a supplement or
amendment to such registration statement so that, as thereafter delivered to the
purchasers of such Shares, such prospectus will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated or
necessary to make the statements therein not misleading;
(e) use its best efforts to register or 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 as the
Investors shall reasonably request; PROVIDED, HOWEVER, that the Company shall
not be obligated to qualify as a foreign 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;
(f) otherwise use its best efforts to comply with the securities
laws of the United States and other applicable jurisdictions and all applicable
rules and regulations of the SEC and comparable Governmental Authorities in
other applicable jurisdictions;
(g) notify the Investors (i) when the Registration Statement or
any amendment thereto has been filed or become effective, when the prospectus or
any amendment or supplement thereto has been filed and to furnish the Investors
with copies thereof, (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of the preliminary prospectus or the Final
Prospectus (as defined below) or the initiation or threatening of any
proceedings for such purposes, and (iii) the receipt by the Company of any
notification with respect to the suspending of the qualification of the Shares
for offering or sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(h) with a view to making available the benefits of certain
rules and regulations of the SEC which may permit the sale of restricted
securities to the public without registration, the Company agrees to: (i) make
and keep public information available as those terms are understood and defined
in Rule 144; (ii) use its best efforts to file with the SEC in a timely manner
all reports and other documents required of the Company under the 1933 Act and
10
the 1934 Act at any time after it has become subject to such reporting
requirements; and (iii) so long as an Investor or transferee of an Investor owns
any Shares, furnish to such Investor or transferee of such Investor upon
request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the 1933 Act and the 1934 Act, a copy
of the most recent annual or quarterly report of the Company, and such other
reports and documents so filed as such Investor or transferee of such Investor
may reasonably request in availing itself of any rule or regulation of the SEC
allowing such Investor or transferee of such Investor to sell any such
securities without registration.
9.3 RESTRICTIONS ON REGISTRATIONS. If at any time or from time to
time after the effective date of the Registration Statement, the Company
promptly 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 the 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 9.1
above, the Company's obligation to file the Registration Statement shall be
delayed 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: (a) 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 that
disclosure of such information in a Registration Statement would be materially
detrimental to the business and affairs of the Company; or (b) 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, be
materially 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 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) (i) exceed ninety
(90) days on any one occasion as a result of a Potential Material Event or (ii)
be permitted more than once during any 12-month period.
9.4 INVESTOR OBLIGATIONS AND RIGHTS.
(a) Each of the Investors shall cooperate as reasonably
requested by the Company with the Company in connection with the preparation of
the Registration Statement, and for so long as the Company is obligated to file
and keep effective the Registration Statement, shall provide to the Company, in
writing, for use in the Registration Statement, all such information regarding
such Investor and its plan of distribution of the Shares as may be reasonably
necessary to enable the Company to prepare the Registration Statement and
prospectus covering the Shares, to maintain the currency and effectiveness
thereof and otherwise to comply with all applicable requirements of law in
connection therewith. Each of the Investors shall have the right to prepare any
portions of the Registration Statement requiring information regarding such
Investor and its plan of distribution of the Shares.
11
(b) During such time as an Investor may be engaged in a
distribution of the Shares, such Investor shall comply with Regulation M
promulgated under the 1934 Act and pursuant thereto it shall, among other
things, (i) not engage in any stabilization activity in connection with the
securities of the Company in contravention of such regulation; (ii) distribute
the Shares under the Registration Statement solely in the manner described in
the Registration Statement; and (iii) cease distribution of such Shares pursuant
to such Registration Statement upon receipt of written notice from the Company
that the prospectus covering the Shares contains any untrue statement of a
material fact or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) Each of the Investors hereby covenants with the Company
not to make any sale of the Shares without effectively causing the prospectus
delivery requirements under the 1933 Act to be satisfied unless the sale is made
pursuant to an exemption from registration.
(d) Each of the Investors acknowledges and agrees that the
Shares sold pursuant to the Registration Statement are not transferable on the
books of the Company unless the stock certificate submitted to the transfer
agent evidencing the Shares is accompanied by a certificate reasonably
satisfactory to the Company to the effect that (i) the Shares have been sold in
accordance with this Agreement and the Registration Statement and (ii) the
requirement of delivering a current prospectus has been satisfied.
(e) Following termination of the effectiveness of the
Registration Statement, each of the Investors shall discontinue sales of Shares
pursuant thereto upon receipt of notice from the Company of its intention to
remove from registration the Shares covered thereby which remain unsold, and
each of the Investors shall promptly notify the Company of the number of Shares
registered that remain unsold immediately upon receipt of the notice from the
Company.
(f) Each of 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.
9.5 INDEMNIFICATION.
(a) The Company will indemnify and hold harmless to the
fullest extent permitted by law each of the Investors, as applicable, each of
its Affiliates and each of their respective officers, directors, shareholders,
employees, advisors, agents and partners, and each person controlling each of
the Investors, with respect to each registration which has been effected
pursuant to this Section 9 against all Losses (as defined below) jointly and
severally arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering circular or
other document (including any amendment or supplement thereto or any documents
incorporated by reference therein and any related registration statement,
notification or the like) incident to any such registration, qualification or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any
12
violation by the Company of the 1933 Act or the 1934 Act or any rule or
regulation thereunder applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each of the Investors, each of
its Affiliates and each of their respective officers, directors, shareholders,
employees, advisors, agents and partners, and each person controlling each of
the Investors for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such Losses; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
Losses arise out of or is based on any untrue statement or omission based upon
written information furnished to the Company by the Investors and stated
expressly to be specifically for use therein. "LOSSES" shall mean, collectively,
any and all losses, penalties, judgments, suits, costs, claims, liabilities,
damages and expenses (including, without limitation, reasonable attorneys' fees
and disbursements).
(b) Each of the Investors will, if Shares held by it are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify and hold harmless to the fullest extent
permitted by law the Company, each of its Affiliates and their respective
directors, employees, advisors, agents and officers and each person who controls
the Company, against all Losses arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document made by
such Investor in writing, or any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements by such Investor therein not misleading, and will reimburse the
Company and its directors, officers, partners, persons, or control persons for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such Losses, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Investor
and stated expressly to be specifically for use therein; PROVIDED, HOWEVER, that
the obligations of each of the Investors hereunder shall be limited to an amount
equal to the net proceeds to such Investor of securities sold as contemplated
herein.
(c) Each party entitled to indemnification under this Section
9.5 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld) and the Indemnified Party may participate in such
defense at such party's expense (unless (i) the Indemnifying Party has agreed in
writing to pay such fees or expenses, (ii) the Indemnifying Party shall have
failed to assume the defense of such claim within a reasonable time after
receipt of notice of such claim from the Person entitled to indemnification
hereunder and employ counsel reasonably satisfactory to such Person, (iii) the
Indemnified Party has reasonably concluded (based on the written advice of
counsel) that there may be legal defenses available to it or other Indemnified
Parties that are different from or in addition to those available to the
Indemnifying Party, or (iv) the Indemnified Party shall have reasonably
concluded that there may be a conflict of interest between the Indemnifying
Party and the Indemnified Party in
13
such action, in which case the fees and expenses of counsel shall be at the
expense of the Indemnifying Party), and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 9 unless the
Indemnifying Party is materially prejudiced thereby. If such defense is not
assumed by the Indemnifying Party, the Indemnifying Party will not be subject to
any liability for any settlement made without its consent, but such consent may
not be unreasonably withheld. If the Indemnifying Party assumes the defense, the
Indemnifying Party shall not have the right to settle such action without the
written consent of the Indemnified Party. No Indemnifying Party, in the defense
of any such claim or litigation shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
If the indemnification provided for in this Section 9.5 is held by a court
of competent jurisdiction to be unavailable to an Indemnified Party with respect
to any Losses referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue (or alleged
untrue) statement of a material fact or the omission (or alleged omission) to
state a material fact relates to information supplied by the Indemnifying Party
or by the Indemnified Party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
Notwithstanding anything in this Section 9.5 to the contrary, no Indemnifying
Party (other than the Company) shall be required pursuant to this Section 9.5 to
contribute any amount in excess of the amount by which the net proceeds received
by such Indemnifying Party from the sale of Shares in the offering to which the
Losses of the Indemnified Party relates exceeds the amount of any damages which
such Indemnifying Party has otherwise been required to pay by reason of such
untrue statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9.5 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
(d) The foregoing indemnity agreement of the Company and
Investors is subject to the condition that, insofar as they relate to any Losses
made in a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the registration statement in
question becomes effective or the amended prospectus filed
14
with the SEC pursuant to Rule 424(b) promulgated under the 1933 Act (the "Final
Prospectus"), such indemnity or contribution agreement shall not inure to the
benefit of an Investor if a copy of the Final Prospectus was timely furnished to
such Investor in sufficient quantities for delivery and was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the 1933 Act.
(e) Notwithstanding any other provision of this Agreement, the
obligations of the parties under this Section 9.5 shall survive indefinitely.
9.6 EXPENSES. The Company shall pay all expenses incident to the
registration of the Shares under this Section 9 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.
10. TERMINATION.
10.1 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 November 30, 2003;
(c) by either the Investors or the Company if a court of
competent jurisdiction or a Governmental Authority shall have issued a
non-appealable final judgment, injunction, order, ruling or decree or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; PROVIDED
that the Party seeking to terminate this Agreement pursuant to this clause (c)
shall have used its reasonable best efforts to have such judgment, injunction,
order, ruling or decree lifted, vacated or denied; 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 thirty
(30) days after the giving of written notice to the breaching Party of such
breach.
10.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 10.1, this Agreement shall forthwith become void
and there shall be no
15
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 10.2, PROVIDED that nothing contained in
this Agreement shall relieve any party from liability for any breach of this
Agreement and PROVIDED FURTHER that Section 11 shall survive termination of this
Agreement.
11. MISCELLANEOUS.
11.1 SURVIVAL OF WARRANTIES. The representations and warranties 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 twenty-four (24) months from the Closing Date and shall in no way be
affected by any knowledge or investigation of the subject matter thereof made by
or on behalf of the Investors or the Company, as the case may be.
11.2 SPECIFIC PERFORMANCE. The parties hereto specifically
acknowledge that monetary damages are not an adequate remedy for violations of
this Agreement, and that any party hereto may, in its sole discretion, apply to
a court of competent jurisdiction for specific performance or injunctive or such
other relief as such court may deem just and proper in order to enforce this
Agreement or prevent any violation hereof and, to the extent permitted by
applicable Law and to the extent the party seeking such relief would be entitled
on the merits to obtain such relief, each party waives any objection to the
imposition of such relief.
11.3 SUCCESSORS AND ASSIGNS.
(a) 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.
(b) Nothwithstanding Section 11.3(a) or any other provision to
the contrary in this Agreement, the Investors may assign any and all of their
rights and obligations under Section 9 hereof in connection with the transfer to
such assignee of at least 1,000 Shares.
11.4 GOVERNING LAW.
(a) 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 that
State, without reference to principles of conflict of laws or choice of law
thereof.
(b) The Parties hereto hereby agree that the appropriate and
exclusive forum for any disputes arising out of this Agreement solely between
the Company and any of the Investors shall be the United States District Court
for the Southern District of California, and, if such court will not hear any
such suit, the courts of the state of Delaware, and the parties hereto hereby
irrevocably consent to the exclusive jurisdiction of such courts, and agree to
comply with all requirements necessary to give such courts jurisdiction. The
Parties hereto further agree that the Parties will not bring suit with respect
to any disputes arising out of this Agreement except as
16
expressly set forth below for the execution or enforcement of judgment, in any
jurisdiction other than the above specified courts. Each of the Parties hereto
irrevocably consents to the service of process in any action or proceeding
hereunder by the mailing of copies thereof by registered or certified airmail,
postage prepaid, to the address specified in Section 11.7 hereof. The foregoing
shall not limit the rights of any party hereto to serve process in any other
manner permitted by the law or to obtain execution of judgment in any other
jurisdiction. The Parties further agree, to the extent permitted by law, that
final and unappealable judgment against any of them in any action or proceeding
contemplated above shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which shall be conclusive evidence of the fact
and the amount of indebtedness.
11.5 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.
11.6 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.
11.7 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 four
(4) 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 LLP
00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Investors: To the names and addresses set forth
on the signature pages hereto
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,
17
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.
11.8 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 Company agrees to indemnify and hold harmless each of
the Investors 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.
11.9 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.
11.10 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.
11.11 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.
11.12 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.
11.13 NO THIRD PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the Parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended or shall confer upon
any other Person any legal or equitable right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, except that the provisions of
Section 9.5 shall inure to the benefit of and be enforceable by each Indemnified
Party.
18
11.14 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 and a Schedule 13D and Form 4 by each of
the Investors, as applicable, with the SEC.
11.15 FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of any 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.
11.16 FEES AND EXPENSES. Except as otherwise provided in this
Agreement, each of the Parties shall each bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
11.17 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
THE COMPANY:
------------
PRICESMART, INC.
By:
---------------------------------------
Name: Xxxxxx X. Xxxx
Title: Executive Vice President and General Counsel
THE INVESTORS:
SOL AND XXXXX XXXXX TRUST
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Address: 0000 Xxxxxxx Xxxxxx, #000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Phone: (000) 000-0000
XXXXXX & XXXXXXX XXXXX TRUST 1/10/75
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
By:
----------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Address: 0000 Xxxxxxx Xxxxxx, #000
Xx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Phone: (000) 000-0000
20
SCHEDULE 3.4(b)
Piggyback: Under a Common Stock Purchase Agreement dated April 12, 2002 (the
"IFC Purchase Agreement"), if the Company proposes to register any shares of its
Common Stock in connection with an underwritten public offering, International
Finance Corporation ("IFC") possesses piggyback registration rights to require
the Company to include up to an aggregate of 300,000 shares of the Company's
Common Stock in such registration on the same terms and conditions as the
securities otherwise being sold through the underwriters. These piggyback
registration rights are in effect until the earlier of (1) such time as IFC has
completed the resale of its shares, (2) such time as IFC is able to freely sell
its shares without registration and without regard to volume or manner of sale
and (3) two years from IFC's purchase of the shares.
Other registration rights:
1. Under a Registration Rights Agreement dated June 3, 2000, PSC, S.A. ("PSC")
possesses registration rights with respect to an aggregate of 679,500
shares of the Company's Common Stock. Pursuant to the Registration Rights
Agreement, the Company filed registration statements on Form S-3 on July
27, 2000 and August 8, 2001, which were subsequently declared effective.
PSC has the right to require that the registration statement be kept
effective until PSC or a permitted assignee has completed the distribution
of its shares as described in the registration statements.
2. Under Series A Preferred Stock Purchase Agreements dated January 15, 2002
and January 18, 2002, Grupo Xxxxxxx, X.X. de C.V., The Price Family
Charitable Fund, The Price Family Charitable Trust, The Sol and Xxxxx Xxxxx
Trust, Xxxxxxxxxxx--Close Investment Partnership, L.P., X. Xxxxxxxxxxx
Investment Partnership, L.P., Performance Capital II, Little Wing LP, Trade
Winds Fund Ltd., Terrier Partners LP, Wynnefield Partners Small Cap Value,
LP, Wynnefield Partners Small Cap Value, LP I, and Wynnefield Small Cap
Value Offshore Fund, Ltd. (collectively, the "Series A Investors") possess
registration rights with respect to an aggregate of 533,329 shares of the
Company's Common Stock. Pursuant to the Series A Preferred Stock Purchase
Agreements, the Company filed a registration statement on Form S-3 on
February 26, 2002, which was subsequently declared effective. The Series A
Investors have the right to require that the registration statement be kept
effective until the earlier of (1) such time as the Series A Investors have
completed the distribution of their shares as described in the registration
statement and (2) two years from their purchase of the shares of Series A
Preferred Stock.
3. Under the IFC Purchase Agreement, IFC possesses registration rights with
respect to an aggregate of 300,000 shares of the Company's Common Stock.
Pursuant to the IFC Purchase Agreement, the Company filed a registration
statement on Form S-3 on April 18, 2002, which was subsequently declared
effective. IFC has the right to require that the registration statement be
kept effective until the earlier of (1) such time as IFC is able to freely
sell its shares without registration and without regard to volume or manner
of sale and (2) two years from its purchase of the shares.
4. Under Common Stock Purchase Agreements dated June 24, 2002, Green Hill
Investments, Inc., Chancellor Holdings Limited and Nithyananda Ent. Ltd.
(collectively, the "GCN Investors") possess registration rights with
respect to an aggregate of 47,808 shares of the Company's Common Stock.
Pursuant to the Common Stock Purchase Agreements, the Company filed a
registration statement on Form S-3 on July 19, 2002, which was subsequently
declared effective. The GCN Investors have the right to require that the
registration statement be kept effective until the earlier of (1) such time
as the GCN Investors are able to freely sell their shares without
registration and without regard to volume or manner of sale and (2) two
years from their purchase of the shares.
5. Under a Common Stock Purchase Agreement dated August 9, 2002, PSC possesses
registration rights with respect to an aggregate of 79,313 shares of the
Company's Common Stock. Pursuant to the Common Stock Purchase Agreement,
the Company filed a registration statement on Form S-3 on October 25, 2002,
which was subsequently declared effective. PSC has the right to require
that the registration statement be kept effective until the earlier of (1)
such time as PSC is able to freely sell its shares without registration and
without regard to volume or manner of sale and (2) two years from its
purchase of the shares.
6. Under a Series B Preferred Stock Purchase Agreement dated July 8, 2003, the
Sol and Xxxxx Xxxxx Trust, The Price Family Charitable Fund, The Price
Group LLC, the Xxxxxx & Xxxxxxx Xxxxx Charitable Remainder Trust and the
Xxxxxx & Xxxxxxx Xxxxx Trust 1/10/75 (collectively, the "Series B
Investors") possess registration rights with respect to an aggregate of
1,100,000 shares of the Company's Common Stock. On August 5, 2003, the
Company and the Series B Investors entered into a letter agreement
extending to 180 days the period in which the Company must file a
registration statement on Form S-3 with respect to the registrable shares.
Once filed and declared effective, the Series B Investors have the right to
require that the registration statement be kept effective until the earlier
of (1) such time as the Series B Investors have completed the distribution
of their shares as described in the registration statement and (2) two
years from their purchase of the shares of Series B Preferred Stock.
EXHIBIT A
Schedule of Investors
---------------------
Investor Number of Shares Aggregate Purchase Price
--------------------------------------------------------- ---------------------- ----------------------------
Sol and Xxxxx Xxxxx Trust 330,000 $3,300,000
--------------------------------------------------------- ---------------------- ----------------------------
Xxxxxx & Xxxxxxx Xxxxx Trust 1/10/75 170,000 $1,700,000
--------------------------------------------------------- ---------------------- ----------------------------
TOTAL.................................. 500,000 $5,000,000
--------------------------------------------------------- ---------------------- ----------------------------
