EXHIBIT 10.2

 

TRANSLATION

 

LOAN CONTRACT

 

Between the undersigned, BANCO BILBAO VIZCAYA ARGENTARIA (PANAMA), S.A., a
corporation duly recorded on Microjacket 099364, Roll 9705 and Image 0163 of the
Microfilm (Mercantile) Section of the Public Registry, duly represented in this
proceeding by JENNY G. FONG AND MARINELLY ARCE DE SALAZAR, holders of personal
identity cards No. 8-229856 and 6-269-925, respectively, in their capacity as
joint attorneys-in-fact thereof, on the one hand, hereinafter known as the BANK,
and on the other, Messrs. JESUS VON CHONG AND JULIO WONG, holders of personal
identity cards number 8-25-806 and 8-427-573, respectively, acting in the name
and on behalf of the corporation called PRICESMART PANAMA, S.A., recorded on
Microjacket No. 308071, Roll No. 47,670 and Image No. 0060, duly authorized for
this act by means of a resolution of the General Meeting of Stockholders of said
corporation, adopted at its meeting of                             , of which an
authentic copy is attached to this Contract, hereinafter called THE DEBTOR, a
Loan Contract is entered into which is contained in the following clauses:

 

AMOUNT AND PURPOSE

 

ONE: The BANK states that upon request of the DEBTOR it has opened a loan
facility in favor of the DEBTOR in the amount of THREE MILLION DOLLARS USA (USD
3,000,000.00), legal tender of the United States of America, which amount may be
used by the DEBTOR, solely and exclusively through:

 

XX The contracting of a Loan for a period not longer than five (5) years.

 

It is expressly agreed that, in any case, the sum total of the amounts owed as
loans granted may not exceed the amount of THREE MILLION U.S. DOLLARS (USD
3,000,000.00), legal tender of the United States of America, maximum limit of
this loan.

 

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AVAILABILITY

 

TWO: In order to use any of the amounts of money and credit facilities made
available to the DEBTOR, the said party must sign, accept and deliver to the
BANK the form(s) which the BANK has available to this effect for the DEBTOR, for
this transaction, as well as the promissory note(s) or negotiable document(s) to
be used. Said negotiable or credit document(s) will meet all requirements and be
filled as directed by the BANK. It is also agreed that the signing, acceptance
and delivery of the aforementioned documents by the DEBTOR do not constitute
novation.

 

THREE: Nevertheless, the BANK may refuse to allow the DEBTOR to use any unused
amounts and facilities when, in the opinion of the BANK, the DEBTOR has failed
to comply with this contract or if its financial condition does not sufficiently
guarantee the credits of the BANK, according to the latter’s opinion.

 

FOUR: For the payment of the amounts disbursed by the BANK in connection with
the Loan, the DEBTOR will have a maximum period of FIVE (5) years counted from
the date on which the disbursement is caused.

 

FIVE: To facilitate the payment of the amount disbursed by BANK with respect to
the Loan, the DEBTOR undertakes to draw up a promissory note or negotiable
document in favor of the BANK in the amount disbursed with respect to the Loan.
The BANK may agree to divide the amount disbursed into a number of promissory
notes or negotiable documents.

 

SIX: The BANK may, at its entire discretion, agree to a refinancing of the
already financed promissory note(s) or negotiable document(s) when, in the
opinion of the BANK, this may be convenient to its interests. In this event, the
BANK may accept a new term or terms for the refinanced document(s), which will
be understood to be included in this Loan Contract with respect to all of its
effects.

 

SEVEN: It is understood by the parties that the promissory note(s) or negotiable
document(s) mentioned in the preceding clause constitute simple means to
facilitate the payments and that,

 

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consequently, in no event will this mean a novation of the obligations which are
contracted by virtue of the present Contract.

 

EIGHT: The DEBTOR hereby assumes the position of Principal Payee and obligor of
all of the obligations contracted in favor of the BANK, under the present
contract, and certifies that said obligations shall not be considered
extinguished or diminished because of any act or omission by the BANK, or if,
upon making the presentation thereof for payment it does not receive it and
allows time to elapse, because the DEBTOR expressly waives the notices or
notifications which may correspond thereto, as well as any request for it to
grant its consent for any extension thereof or other act in connection with the
contracted obligations and accept all clauses of all and any documents signed
between the BANK, as principal debtor of said obligations.

 

TERM

 

NINE: The duration of this Contract if FIVE (5) years beginning on April 30,
2003.

 

It is expressly agreed that the BANK may at any time serve notice of termination
by means of a telegram addressed to the DEBTOR and in such a case the Loan
Contract will be understood to be closed beginning on the date of the respective
telegram. In such a case, the DEBTOR may choose to pay within a period of thirty
(30) days the total amount of all sums owed to the BANK or to pay not later than
the term agreed to in the documents mentioned in clause FIVE.

 

Should it select this last alternative, the DEBTOR will continue to be obliged
to fulfill all of the obligations imposed by this contract and the documents
described in clause FIVE until such a time as all sums owed to the BANK are paid
and it will be relieved from its obligations.

 

Notwithstanding the foregoing, if the BANK declares the contract terminated for
the reasons listed in clause TWENTY ONE, the total amount owed by the DEBTOR to
the BANK shall be considered due and payable without need for notification or
prior notice and will be immediately payable to the BANK.

 

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In turn, the DEBTOR may at any time declare the account terminated by paying the
amount owed to date and giving notice to the BANK in writing, upon making the
payment, that it wishes the account to be terminated.

 

INTEREST

 

TEN: On the amount(s) owed by way of loan or loans, the DEBTOR undertakes to pay
interest to the BANK at the rate that results from adding TWO AND ONE HALF (2.5)
BASIC POINTS to the LIBOR1M rate, quoted to the BANK for MONTHLY periods. The
quotation received by the BANK will be regarded as full proof. This rate will be
adjusted MONTHLY by the BANK.

 

The DEBTOR undertakes to pay a minimum interest rate of Five (5%) per cent, per
annum.

 

The DEBTOR agrees to the payment of interest in the manner stipulated and any
variation thereof, on the bases stipulated in this clause. The DEBTOR agrees to
pay, in the event of a variation in the clause regarding interest, the new
interest rate on the amount owing beginning on the date on which the increase or
decrease of the interest rate takes effect. The BANK may communicate to the
DEBTOR the changes in the interest rate in the receipts or other vouchers
regarding the payment of the credit.

 

In the event of default on the payment of the promissory notes financed by the
BANK, the DEBTOR undertakes to pay to the BANK on the amounts due and payable, a
delinquency rate of interest of FOUR (4%) per cent per annum, in addition to the
interest agreed to in this clause or EIGHTEEN (18%) per cent per year, whichever
is higher. Interest will be capitalized if it is not paid at the appropriate
time.

 

The interest corresponding to the loan(s) used by the DEBTOR, financed by the
BANK, will be paid by the DEBTOR not later than the thirtieth (30th) or thirty
first (31st) day of each month.

 

PAYMENTS

 

TWELVE: The DEBTOR, on the due dates, will make all payments due at the offices
of the BANK in Panama City, or at any place designated by it in writing. The
amount of said

 

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payments, whether applicable to the principal, commissions or interest or any
other concept will be paid in legal tender of the United States of America, and
in no other currency, from funds immediately available, free from any income
tax, stamp taxes or taxes of any other nature, as well as from any assessments,
fees, duties, fiscal levies, taxes, deductions or withholdings, present or
future, which may have to be paid with respect to said payments to any
Government or to any political subdivision or fiscal authority of any country,
which will be for the account of the DEBTOR, because in such case the amounts
owing will be increased so that the BANK will always receive the amounts it
would otherwise receive if such rates, taxes, deductions, withholdings, charges,
levies, etc. did not exist.

 

It is also agreed that the DEBTOR assumes and will assume any losses resulting
from political risks, monetary restrictions, devaluations, transfers and the
costs thereof, withholdings, exchange commissions and other similar charges or
monetary, fiscal or economic changes which may affect its debt to the BANK
because the latter must receive the amounts owing to it and the interest and
commissions totally and without any discounts, devaluations or reductions.

 

The DEBTOR agrees that the payments be made by means of debits to the current
account it maintains at BANK, in which the DEBTOR will keep the necessary funds
available on the date of the corresponding payment. In no event will such debits
produce novation.

 

GUARANTEES

 

THIRTEEN: The DEBTOR undertakes to give to the BANK any guarantees that may be
agreed to additionally, if the BANK so requests, specially in such cases when
changes occur in the economic situation of the DEBTOR, or if the value of the
guarantees already offered or given to the BANK has diminished in the opinion of
the BANK.

 

AFFIRMATIVE AGREEMENTS

 

FOURTEEN: During the life of this contract, the DEBTOR undertakes to maintain
its legal existence, not to merge, dissolve or liquidate its assets, without
prior authority in writing from the BANK.

 

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FIFTEEN: Taxes. The DEBTOR undertakes to comply with all laws, rules,
regulations and orders which may be applicable thereto and also to pay all of
its obligations when they become payable on demand and to pay in a timely manner
all of its taxes and levies, whether national or municipal in nature.

 

SIXTEEN: Equity. The DEBTOR undertakes not to allow variations in the percentage
or proportion of ownership of the capital stock of the DEBTOR and not to allow
or record the transfer of the shares of stock, shares or participations which
are currently owned by its shareholders, or partners, without prior consent in
writing form the BANK.

 

SEVENTEEN: Financial Statements. The DEBTOR undertakes to carry accounting
records of its financial condition, inventories, books and files in accordance
with the laws and government regulations and with the generally accepted
accounting principles. It also undertakes to present to the BANK within the
three (3) months following the closing of each fiscal period, a balance sheet
and statement of its financial condition and in regard to the status of each one
of its businesses, as well as a cash flow sheet each semester and each fiscal
year or at any other time that the BANK so requests while this contract is in
effect. Said balance sheets, reports and statements will be audited by persons
who are competent and accepted by the BANK.

 

EIGHTEEN: Compensatory Balances. The DEBTOR will maintain a current account with
confirmed credit balances whose daily average will be equivalent to that agreed
to by the parities. The verification of the confirmed average daily balances
will be made the last day of each quarter.

 

NINETEEN: Application. The DEBTOR authorizes and empowers the BANK to apply any
amounts of money which the DEBTOR has on deposit at the BANK, be these in
current accounts, savings accounts, time deposits, or accounts of any other
kind, whether joint or individual, to the payment of the obligations arising
from this Line of Credit, the BANK being allowed to make debits to such accounts
for the payment of the obligations due.

 

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In the event of expiration of any of the obligations due, the BANK may retain
until such a time as the obligations referred to are paid, the assets, credits
and valuables owned by the DEBTOR which are as of that date in the possession,
control, custody or tenancy of the BANK, which assets will, as of that moment,
be pledged, in addition, in favor of the BANK, which may, consequently, request
the judicial sale thereof in order to collect with privilege the amount owed
from its proceeds or to exercise the right of compensation. It is understood
that the BANK may exercise, against the DEBTOR, simultaneously or successively,
the right of compensation or action of pledge referred to in this paragraph.

 

INFORMATION

 

TWENTY: The DEBTOR fully authorizes the BANK to gather information from third
parties regarding the, economic situation of the DEBTOR and regarding any matter
directly or indirectly related thereto. Similarly, it authorizes (the BANK) to
provide information to third parties. The DEBTOR relieves the BANK and other
banks, firms, lending companies and third parties from any liability concerning
the information they provide. Instead, it instructs them thereby to provide and
obtain any and all information they require or feet they need.

 

The BANK and all other third parties will only be answerable for willful
misconduct or bad faith in the use and handling of said information.

 

EVENTS OF DEFAULT

 

TWENTY ONE: In addition to whatever has been agreed to by the parties in other
clauses of this contract and auxiliary documents, the BANK may declare this
contract terminated and/or due and payable all amounts owing to it by the DEBTOR
and to take judicial action for all sums owed, if any of the following occurs

 

a) Should the DEBTOR fail to pay upon expiration any installment or payment
against capital or interest or commissions agreed to in this contract or in the
credit documents used in the development of this Line of Credit.

 

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b) Should the DEBTOR or any of its sureties or guarantors become insolvent or
become subject to a creditors agreement or if it is declared bankrupt or the
assets or business of the DEBTOR or of its sureties or guarantors are attached
or seized or in any other manner pursued.

 

c) Default by the same persons on any of the clauses or provisions of the
present contract or default on any of the clauses or provisions of the credit
instruments used in the development of this Loan Contract or default on any
other obligation they maintains with the BANK.

 

d) If the DEBTOR has committed or commits in the future omissions or
inaccuracies in its reports to the BANK or in the balance sheet or financial
statements it has supplied or supplies to the BANK.

 

e) If the credit facilities are used in activities other than the ordinary
course of business of the company or for purposes other than those agreed to, or
if they are used, by itself or by others, in investments or businesses other
than those of the current course of business of the DEBTOR.

 

The parties agree that if the BANK declares the contract terminated for the
reasons listed in this clause, the total amount owed by the DEBTOR to the BANK
will be considered due and payable without any need for notification or notice
and will be immediately payable to the BANK.

 

INSURANCE

 

TWENTY TWO: The DEBTOR undertakes to maintain its assets and properties insured
against fire, earthquakes, flooding, damages of any sort, theft and larceny.

 

If the DEBTOR fails to take out the necessary insurance or fails to renew it in
due time, the BANK may do so for the account of the DEBTOR. Any sums due on this
account will earn interest on balances due at the maximum interest rates
allowed, the DEBTOR being obliged to pay them to the BANK upon the latter’s
request. The DEBTOR assigns and conveys to the BANK up to the limit of this
Loan, all moneys on indemnity which in the event of loss it may have to pay to
the insurer and it will consequently endorse and immediately deliver to the BANK
the respective policies and their renewals. In the event of loss, the BANK will
recover the

 

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indemnity provided for in the policies, applying the proceeds thereof to the
payment of the amounts owed thereto and the balance, if any, will be delivered
to the DEBTOR.

 

EXPENSES

 

TWENTY THREE: For the account of the DEBTOR and payable upon request by the BANK
will be any expenses in which it incurs for reason in this contract and any
documents which are issued for the development thereof. Also for the account of
the DEBTOR will be the expenses and lawyers’ fees, notarial fees, deeds, fiscal
and registration fees incurred for reason of this contract, as well as judicial
or extrajudicial costs and fees required to demand compliance with this
contract; also for the account of the DEBTOR will be all expenses and
obligations incurred by the BANK in good faith under the belief that it is
responsible for or is obliged to make such disbursements, whether or not they
are directly or indirectly related to this contract or to the promissory notes,
negotiable documents (instruments); letters of credit, guarantees or any other
document issued for reason of this contract, whether such responsibility or
obligation existed or not and any vouchers submitted by the BANK will constitute
full proof against the DEBTOR. The sums disbursed by the BANK for the account of
the DEBTOR shall earn interest on the balance due, at the interest rate
established by the BANK for this type of disbursement and the interest will
accrue during the time the disbursements made are not reimbursed to the BANK.

 

NOTICES

 

TWENTY FOUR: Any notice which the BANK should or wishes to give to the DEBTOR
for reason of this contract may be given at the following address: PriceSmart
Panama, Esquina de Via Brasil and Via España, Panama.

 

The notice will be understood to have been given once the letter, telex, fax or
telegram has been posted, or deposited or delivered at any office intended for
such communications.

 

WAIVERS

 

TWENTY FIVE: The DEBTOR waives domicile, the steps of executory proceedings and
presentation, and any notice of failure to honor the debt and demand thereon.

 

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ASSIGNABILITY

 

TWENTY SIX: The DEBTOR agrees that the BANK may assign, all or part of the
credits and guarantees referred to in the present contract, to any credit
institution or to any third party, without the need for prior consent by the
DEBTOR or notice from the DEBTOR or notice thereto.

 

JURISDICTION AND APPLICABLE LAW

 

TWENTY SEVEN: The parties agree that any legal proceeding that has to be carried
out in connection with the interpretation, application or termination of this
contract, as well as its auxiliary documents, will be submitted to any competent
court domiciled in Panama City, Republic of Panama or, at the option and
discretion of the BANK, to any courts domiciled in any city or country the BANK
my designate or select in that regard; and irrevocably that any definitive
ruling in any such actions or proceedings will be conclusive and may be demanded
or enforced in any other jurisdiction through a suit on the basis of said ruling
or in any other manner provided by law.

 

The parties also agree that all matters related directly or indirectly to this
contract, as well as its auxiliary documents, will be subject to the laws of the
Republic of Panama except in the case of actions or proceedings instituted by
the BANK at the courts of a different country or jurisdiction, in which case
said actions or proceedings will be subject to the laws of said jurisdiction or
country, without giving effect to the principles of selection of the laws
thereof.

 

ACCEPTANCE

 

TWENTY EIGHT: The BANK accepts the obligations established in its favor in this
contract and other documents related to this Line of Credit.

 

POWERS

 

TWENTY NINE: The person(s) signing and accepting this document on behalf of the
DEBTOR declares(s) that he(they) have the necessary power(s) and authority(ies)
to negotiate and to sign it, as well as the power to bind it.

 

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He(they) similarly declare that all natural or juridical persons who in one way
or the other bind themselves under this contract are corporations duly
registered and existing under the laws of the place where they were constituted
and that on the date of the signing of this contract he(they) has(have) any
knowledge of the existence of any damage or action against said persons before
any court or government institution, which may in any way adversely affect the
financial position or operation thereof.

 

In witness whereof, the present contract is signed in Panama City on 31 of the
month of March, 2003.

 

The DEBTOR

     

The BANK

         /s/    Edda Lia Noriega              

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EDDA LIA NORIEGA

TRADUCTORA PUBLICA AUTORIZADA

RESOLUCION No. 201

             de Agosto de 1970

 

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TRANSLATION

 

GUARANTY

 

The undersigned Jesus Von Chong and Julio Wong, holders of personal identity
documents No. 8-251-806 and No. 8-427-563 respectively acting in the name and on
behalf of PRICESMART REAL ESTATE PANAMA, S.A., hereinafter called the guarantor,
hereby agree to become joint guarantors of the obligations which PRICESMART
PANAMA, S.A. may have in favor of the BILBAO VISCAYA ARGENTARIA (PANAMA), S.A.,
BANK, hereinafter called THE BANK, regardless of their origin, during all the
time they subsist, partially or totally, and state that they will not be
regarded as extinguished or diminished by virtue of any action or omission by
THE BANK, or if upon making the presentation for payment it does not obtain said
payment and allows time to elapse, because the guarantor expressly waives the
notices or notifications that may correspond thereto, as well as the obtention
of its consent for any extension or any other action in connection with the
obligations hereby incurred and accepts all clauses of any and all documents
signed between THE BANK and PRICESMART PANAMA, S.A., as if it were the principal
debtor, including the payment of collection charges or costs in the event of
execution. Similarly and for all legal effects it expressly waives domicile,
presentation, the benefit of excussion, protest, notice of default on any
document, or any future demand in the event of default, the proceedings of
executive suit and as of now relieves THE BANK of the obligation to post bond
for the payment of costs in connection with any execution or suit in connection
with this obligation and agrees to bear all expenses and costs that may be
incurred or caused by any execution or suit resulting from this obligation or
the obligations it guarantees, whether these be judicial or extrajudicial, and
agrees that the amount for which any

 

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suit is filed in connection with the obligations it is guaranteeing will serve
as the basis for auction.

 

Similarly, it authorizes THE BANK to change to its account, if it deems it is
wise, the outstanding balance of this obligation.

 

/s/    Edda Lia Noriega        

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EDDA LIA NORIEGA

TRADUCTORA PUBLICA AUTORIZADA

RESOLUCION No. 201

             de Agosto de 1970

 

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