Exhibit 10.17(b)
PLEDGE AGREEMENT
This Pledge Agreement is made and entered into as of July 27, 1999,
between Xxxxx X. Xxxxxxxxx (Borrower"), and PriceSmart, Inc., a Delaware
corporation (the "Company").
RECITALS
A. The Company has loaned to Borrower $149,978 as evidenced by a
promissory note dated as of July 27, 1999 (the "Note"), which was used by
Borrower to purchase an aggregate of 3,658 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.
AGREEMEMT
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 obligations 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 REPRESENTATION 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 Collateral
2
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
Agreement.
3
(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: Xxxxx X. Xxxxxxxxx
------------------
------------------
To the Company: PriceSmart, Inc.
0000 Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxx
4
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.
5
(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) ATTORNEY'S FEES. If any legal action, arbitration or other
proceedings 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.
6
(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.
(i) 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
7
pledge hereunder; provided, however, that Borrower shall pay to the
Company the net (after-tax) proceeds from the sale of such 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: /s/ Xxxxxx X. Xxxx /s/ Xxxxx X. Xxxxxxxxx
------------------------------- -----------------------------------
8
