Document:

Put Option Agreement by and between the Company and the Sol and Helen Price

 Exhibit 10.2 
  
 PUT OPTION AGREEMENT 
  
 THIS PUT OPTION AGREEMENT (the “Option Agreement”) is made on December 15, 2003, at San Diego, California, by and between PriceSmart, Inc.
(“PriceSmart”) and the Sol and Helen Price Trust dated February 20, 1970 (the “Trust”). 
  
 Recitals 
  
 A.
Property. PriceSmart, either directly or through one of its majority owned subsidiaries, is the owner of those certain real properties, including all improvements located thereon, described on Exhibit “A” hereto (collectively, the
“Properties”). 
  
 B. Purpose. The Trust holds significant equity
interests in PriceSmart, and as an accommodation to PriceSmart, has agreed to grant PriceSmart the right, but not the obligation, to cause the Trust to purchase one or more of the Properties at agreed upon purchase prices and under specified terms
and conditions. 
  
 Agreement 
  
 NOW, THEREFORE, the parties agree as follows: 
  
 1. Grant of Put Option. The Trust hereby grants to PriceSmart the
right, but not the obligation, to cause the Trust to purchase one or more of the Properties at a price equal to the “total book value” for the respective Property as set forth next to the name of such Property on Exhibit “A”
hereto, less any existing loans or other obligations secured by encumbrances on such Property (which amounts the Trust will either assume, or repay at closing to the extent required by the applicable loan documents), and on other terms and
conditions to be mutually agreed upon by PriceSmart and the Trust within the next sixty (60) day period (or, if the parties cannot so agree, then upon commercially reasonable terms and conditions to be established by arbitration in accordance with
Section 15 below), such terms and conditions to be set forth in a Real Estate Purchase Contract which shall also specifically provide for (i) a closing of escrow within 30 days of PriceSmart’s exercise of the put option contemplated by this
Agreement and (ii) PriceSmart’s right, but not obligation, to lease back one or more of the Properties by causing a majority owned subsidiary of PriceSmart to enter into a 20-year lease agreement at a lease rate of nine percent (9%) of the
purchase price for such Property, with reasonable periodic rent increases, triple net, and with other terms and conditions to be mutually agreed upon by PriceSmart and the Trust within the next sixty (60) day period (or, if the parties cannot so
agree, then upon commercially reasonable terms and conditions to be established by arbitration in accordance with Section 15 below). Notwithstanding the foregoing, PriceSmart’s put option with respect to the two Properties located in Panama
must be exercised with respect to both Properties or neither of the Properties; PriceSmart shall not have the right to cause the Trust to purchase one but not both of the Properties located in Panama. 
  
 The book values and outstanding loan amounts set forth on Exhibit A are
denominated in United States Dollars. It is understood that the book values and outstanding loan amounts as set forth in Exhibit A are for informational purposes only and that the book values and outstanding loan amounts applicable to an exercise of
the option shall be determined as of the date of the closing of the subject transaction. 
  

 Any and all arbitration proceedings initiated under this Section 1 shall be concluded within twenty (20)
days. 
  
 2. Term of Put Option. The term of this put
option shall begin upon the date of this Agreement and end on August 31, 2004. 
  
 3. Consideration for Put Option. This option is granted as an accommodation to PriceSmart, inuring to the benefit of Trust, which holds a significant equity interest in PriceSmart. 
  
 4. Condition of Title. If this put option is exercised, PriceSmart
shall cause the applicable PriceSmart subsidiary(ies) holding title to the Properties to convey such title to the Trust in accordance with the requirements of the Real Estate Purchase Contract contemplated by Section 1 above. 
  
 5. Exercise of Option. This option may be exercised by
PriceSmart’s delivery of written notice to the Trust during the term of this option, stating that the option is exercised, without condition or qualification, specifying the Properties to be sold and, with respect to each such Property, whether
PriceSmart elects to cause its applicable subsidiary to lease such property back. The notice shall be accompanied by three (3) copies of one or more Real Estate Purchase Contracts in the form contemplated by Section 1 above, each originally executed
by PriceSmart or the applicable subsidiary holding title to such Property(ies). Upon receipt thereof during the term of this option, the Trust shall forthwith originally execute each of such Real Estate Purchase Contracts so as to permit closing of
escrow within thirty(30) days following exercise of this put option, and shall deliver one (1) copy so executed to PriceSmart, and one (1) copy so executed to an escrow holder to be mutually agreed upon by the parties. PriceSmart (or its
subsidiaries, as the case may be) and the Trust shall thereafter additionally execute, acknowledge and deliver any and all other documents necessary or appropriate to carry out the terms and conditions of the applicable Real Estate Purchase
Contract(s). 
  
 6. Assignment. PriceSmart may not assign
this option without the Trust’s prior written consent. 
  
 7.
Brokers and Finders. Each party represents and warrants to the other that it has not engaged or dealt with any broker or finder in connection with this Agreement or the transaction contemplated hereby, and agrees to defend, indemnify and hold
the other party harmless from all claims, losses, damages, costs and expenses, including reasonable attorneys’ fees, arising from or related to any assertion to the contrary by any such broker or finder. 
  
 8. Notices. Any notice to be given hereunder by either party to the
other shall be given in writing by personal delivery or by registered or certified mail, postage prepaid, return receipt requested, and shall be deemed communicated as of the date of personal delivery or three (3) days after the date of mailing.
Mailed notices shall be addressed as set forth below, but each party may change the address set forth below by written notice to the other party in accordance with this paragraph. 
  
 To the Trust: 
 Sol and Helen Price Trust dated February 20, 1970 
 7979 Ivanhoe Avenue #520 
 La Jolla, CA 92037 
  

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 To PriceSmart: 
  

PriceSmart, Inc. 
 4649 Morena Blvd.

 San Diego, CA 92117 
  
 9. Time of Essence. Time is of the essence to this Agreement. 
  
 10. Assignment. The Trust may not assign this option without PriceSmart’s prior written consent; provided that
no such consent shall be required for any transfer by the Trust to a trust or other entity controlled by Sol Price [or Robert Price] that has adequate capital to perform the Trust’s obligations under this Agreement. 
  
 11. Entire Agreement. This instrument contains the entire agreement
between the parties related to the option herein granted. Any oral representations or modifications concerning this Agreement shall be of no force or effect. This Agreement may be amended only by a subsequent agreement in writing signed by both of
the parties. 
  
 12. Attorneys’ Fees. In the event of
any controversy, claim or dispute between the parties arising from or related to this Agreement or the breach hereof, the prevailing party shall be entitled to recover from the losing party its reasonable costs, expenses and attorneys’ fees.

  
 13. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto, except as expressly provided above in the paragraph entitled Assignment. 
  
 14. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California applicable to contracts executed in and to be performed entirely within the State of California. 
  
 15. Arbitration. All disputes, controversies, or claims between PriceSmart and the Trust pertaining to this Option Agreement, including but not
limited to the matters referenced in Section 1 of this Option Agreement as well as the construction or application of the other terms of this Option Agreement, shall be resolved by binding arbitration in accordance with the laws of the State of
California for agreements made and to be performed in California. The arbitration shall be administered by the American Arbitration Association (“AAA”) pursuant to its rules most applicable to the particular claims being made, as
determined by the AAA, and as then in effect, except as otherwise provided herein. Any arbitration shall be held in San Diego, California, before three independent and neutral arbitrators appointed under the applicable AAA rules. The arbitrators
shall determine the arbitrability of all disputes, claims and/or issues between PriceSmart and the Trust. The parties shall be entitled to discovery sufficient to adequately arbitrate the claims and defenses, including access to essential documents
and witnesses, as determined by the arbitrator. The arbitrators shall issue a written arbitration decision that will reveal the essential findings and conclusions on which the award is based. 
  

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 Subject to limited judicial review pursuant to California Code of Civil Procedure Section 1286.2, the award of the
arbitrators shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. Any demand for arbitration shall be in writing and must be made within a reasonable time after the claim,
dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date that institution of legal or equitable proceedings based upon such claim, dispute or other matter would be barred by the applicable
statute of limitations. 
  
 IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written. 
  

			
	 THE TRUST:

	
	 SOL AND HELEN PRICE TRUST DATED
 FEBRUARY 20, 1970

		
	 By:
	 	 /s/ SOL PRICE

	 	 	

	 Name:
	 	 Sol Price

	 Its:
	 	 Trustee

	
	 PRICESMART:

	
	 PRICESMART, INC.

		
	 By:
	 	 /s/ ROBERT M. GANS

	 	 	

	 Name:
	 	 Robert M. Gans

	 Its:
	 	 Executive Vice President

  

 4 

 EXHIBIT “A” 
  

															
	 Country

	  	 Location (Store)

	  	 Outstanding
 Loan Amount
As of 8/31/03 -
 Thousands

	  	 Book Values as of
 8/31/03 - Millions

	  	  	  	Land

	  	Bldg

	  	Total

	 Panama
	  	 Los Pueblos - 6201 & David - 6204
	  	$	4,897.0	  	$	2.25	  	$	2.92	  	$	5.17
	 Panama
	  	 Los Pueblos - 6201 & David - 6205
	  	 	2,783.0	  	 	0.23	  	 	4.13	  	 	4.37
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 Total
	  	 	  	$	7,680.0	  	$	2.48	  	$	7.05	  	$	9.53
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 Costa Rica
	  	 Zapote - 6401
	  	$	3,722.4	  	$	1.90	  	$	3.87	  	$	5.77
	 Costa Rica
	  	 Escazu - 6402
	  	 	5,531.3	  	 	1.80	  	 	5.62	  	 	7.42
	 Costa Rica
	  	 Heredia - 6403
	  	 	4,687.5	  	 	1.20	  	 	4.73	  	 	5.93
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 Total
	  	 	  	$	13,941.2	  	$	4.90	  	$	14.22	  	$	19.12
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 El Salvador
	  	 St Elena - 6701
	  	$	2,883.0	  	$	3.40	  	$	3.85	  	$	7.25
	 El Salvador
	  	 Los Heroes - 6702
	  	 	5,000.0	  	 	2.80	  	 	3.87	  	 	6.67
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 Total
	  	 	  	$	7,883.0	  	$	6.20	  	$	7.72	  	$	13.92
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 Dominican Republic
	  	 Santiago 6802
	  	$	—  	  	$	1.87	  	$	4.46	  	$	6.33
	 Trinidad
	  	 Chaguanas - 8001
	  	$	3,567.0	  	$	1.08	  	$	4.84	  	$	5.92
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

	 	  	 Grand Totals
	  	$	33,071.2	  	$	16.53	  	$	38.29	  	$	54.82
	 	  	 	  	
	
	  	
	
	  	
	
	  	
	

  

 5Promissory Note

 Exhibit 10.3 
  
 PROMISSORY NOTE 
  

			
	 $10,000,000
	  	February 23, 2004
	 	  	San Diego, California

  
 FOR VALUE
RECEIVED, the undersigned PRICESMART, INC., a Delaware corporation (“PSMT”), promises to pay to THE PRICE GROUP, LLC, a California limited liability company (“TPG”) or order, at 7979 Ivanhoe Avenue, Suite 520,
La Jolla, California 92037, or such other address as may be directed in writing, the principal sum of Ten Million Dollars ($10,000,000.00) or so much thereof as may be advanced and outstanding, together with interest thereon at a rate of twelve
percent (12%) per annum, computed from the date of each advance on the basis of a three hundred sixty-five day (365) year, actual days elapsed. 
  
 1. Payment of Principal and Interest. Each advance of principal by TPG shall be repaid in full together with interest thereon, within sixty
(60) days after the date of the advance. All unpaid principal and accrued interest, not yet paid shall be due and payable one (1) year from the date hereof. 
  
 2. Credit of Payments. Each payment under this Note shall be credited in the following order: (a) costs, fees, charges and advances paid or
incurred by TPG and for which the PSMT is obligated under the terms herein; (b) interest payable under this Note; and (c) principal under this Note. All installments of principal and interest of this Note shall be payable in lawful money of the
United States of America. 
  
 3. Interest and
Default. From and after the Maturity Date the entire unpaid principal balance and accrued unpaid interest shall automatically bear an annual interest rate equal to the lesser of: (a) fifteen percent (15%) per annum or (b) the maximum
interest rate allowed by law in lieu of the rate provided above herein. 
  
 4. Attorney Fees. PSMT agrees to pay the following costs, expenses, and attorney fees paid or incurred by TPG, or adjudged by a court: (a) reasonable costs of collection and costs, expenses, and attorney fees paid or incurred
in connection with the collection or enforcement of this Note, whether or not suit is filed; (b) reasonable costs, expenses, and attorney fees paid or incurred in connection with representing TPG in any bankruptcy, reorganization, receivership, or
other proceedings affecting creditors’ rights and involving a claim under this Note; and (c) costs of suit and such sum as the court may adjudge as attorney fees in any action to enforce payment of this Note or any part of it. 
  
 5. Waiver. PSMT, endorsers, and all other persons liable or to
become liable on this Note waive presentment, protest, and demand; notice of protest, demand, and dishonor; and all other notices or matters of a like nature. 
  

6. Usury. All agreements between PSMT and TPG are expressly limited, so that in no event or contingency, whether because of the
advancement of the proceeds of this Note, acceleration of maturity of the unpaid principal balance, or otherwise, shall the amount paid or agreed to be paid to TPG for the use, forbearance, or retention of the money to be advanced under this Note
exceed the highest lawful rate permissible under applicable usury laws. If, under any circumstances, fulfillment of any provision of this Note or any other agreement pertaining to this Note, after timely performance of such provision is due, shall
involve exceeding the limit of validity prescribed by law that a court of competent jurisdiction deems applicable, then, ipso facto, the obligations to be fulfilled shall be reduced to the limit of such validity. If, under any circumstances, TPG
shall ever receive as interest an amount that exceeds the highest lawful rate, the amount that would be excessive interest shall be applied to reduce the unpaid principal balance under this Note and not to pay interest, or, if such excessive
interest exceeds the unpaid principal balance under this Note, such excess shall be refunded to PSMT. This provision shall control every other provision of all agreements between PSMT and TPG. 
  

 1 

 7. Forbearance Not a Waiver. If TPG delays in exercising or fails to exercise any of its
rights under this Note, that delay or failure shall not constitute a waiver of any TPG rights or of any breach, default, or failure of condition under this Note. No waiver by TPG of any of its rights or of any such breach, default, or failure of
condition shall be effective, unless the waiver is expressly stated in a writing signed by TPG. 
  
 8. Assignment. This Note inures to and binds the heirs, legal representatives, successors, and assigns of PSMT and TPG. 
  
 9. Severability. If any provision of this Note, or the
application of it to any party or circumstance, is held void, invalid, or unenforceable by a court of competent jurisdiction, the remainder of this Note, and the application of such provision to other parties or circumstances, shall not be affected
thereby, the provisions of this Note being severable in any such instance. 
  
 10. Time is of the Essence. Time is of the essence with respect to all obligations of PSMT under this Note. 
  
 11. Waiver of Jury Trial. TPG AND PSMT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED ON, ARISING
FROM, OR RELATED TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED BY THIS NOTE, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY EITHER PARTY AGAINST THE OTHER, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
PSMT AND TPG AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS NOTE. THIS WAIVER SHALL APPLY TO ANY FUTURE AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS NOTE.

  
 12. Loan Agreement. This Note is given
pursuant to that certain Purchase Order Financing Agreement between the PSMT and TPG dated the same date as this Note, the provisions of which are incorporated herein by reference. 
  
 13. Governing Law. This Note shall be construed and enforceable according to the laws of the
State of California. 
  
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 14. Venue. Any actions arising under this Note shall be heard and resolved in San Diego
County, California. 
  
 Executed as of the date first written above. 

 

			
	PRICESMART, INC
		
	By:	 	/s/ JOHN HEFFNER
	 	 	

	Its:	 	CFO
	Print Name	 	John Heffner
		
	By:	 	/s/ ROBERT M. GANS
	 	 	

	Its:	 	Exec. Vice President
	Print Name	 	Robert M. Gans

  

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