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Exhibit
10.5
Execution Version
PUT AGREEMENT
PUT AGREEMENT (the
“Agreement”), dated as of April 9, 2008, by and between
PriceSmart, Inc., a corporation organized under the laws of
Delaware (“ PriceSmart ”), and PSC, S.A., a
corporation organized under the laws of the Republic of Panama
(“ PSC ”).
WHEREAS, PriceSmart and PSC
and certain of their affiliates have entered into a Settlement
Agreement and Release (“ Settlement Agreement ”)
dated as of February 8, 2008 pursuant to which certain
transactions with regard to property interests were entered into,
the termination of all of their relationships and agreements except
as expressly set forth therein was provided for, and their
differences were fully resolved and any and all claims of
whatsoever kind or nature that may have existed between them were
settled, in accordance with and subject to the terms and conditions
set forth therein;
WHEREAS, in connection with
the settlement of matters and claims outstanding between PriceSmart
and certain of its affiliates and PSC and certain of its
affiliates, PriceSmart has agreed to grant to PSC certain put
rights entitling PSC, at its election, to sell to PriceSmart shares
of Common Stock, par value U.S.$0.0001 (the “ Common
Stock ”), of PriceSmart, subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for and in
consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
Section 1. Grant of
Put Rights .
(a) Put Period . PSC
agrees that for the period beginning on the date hereof and ending
sixty (60) calendar days after the date hereof (the “
Put Period ”), it shall exercise commercially
reasonable efforts, with the assistance of an independent broker,
to sell for a price at or in excess of U.S. $25.00 per share any of
the 330,708 shares of Common Stock previously acquired pursuant to
the SPA and held as of the date hereof (the “ Initial
Shares ”).
(b) Grant of Put Right
. Subject to the terms and conditions contained herein, PSC shall
have the right in its sole and absolute discretion to require
PriceSmart to purchase from PSC, any or all of the Initial Shares
not sold by PSC during the Put Period (the “ Remaining
Shares ”) by delivery of a written notice (the “
Put Notice ”) to PriceSmart after the Put Period but
no later than 5:30 p.m. (San Diego time) on the third (3
rd
) Business Day following
the last day of the Put Period specifying the number of Remaining
Shares to be purchased from PSC pursuant to this Agreement (the
“ Put Rights ”). As used herein “
Business Day ” means Monday through Friday, except for
any national holiday in the United States, the Republic of Panama
or the Republic of Costa Rica.
(c) Representations on
Exercise of Put Rights . PSC shall be required to make the
following representations and warranties with respect to any
Remaining Shares it may wish to transfer hereunder, which
representations and warranties must be true and correct as of the
date of the applicable Put Notice and the Payment Date (as defined
below):
(i) PSC is duly organized or
incorporated, validly existing and in good standing under the law
of the jurisdiction of its organization or incorporation and has
all requisite corporate power and authority to conduct its business
as it is now being conducted.
(ii) PSC has the full power,
authority and legal right to enter into this Agreement, to perform
this Agreement and to consummate the transactions contemplated
herein and in the Put Notice and such transactions have been duly
authorized by all necessary action, corporate or otherwise, of such
party.
(iii) PSC is the beneficial
owner of each of the Remaining Shares.
(iv) PSC has good title to
the Remaining Shares to be transferred pursuant to the Put Notice,
has full right, title and authority to sell and assign the
Remaining Shares, and will be transferring all of its right, title
and interest in and to any such Remaining Shares to PriceSmart free
and clear of any and all liens, security interests, encumbrances
and pledges (collectively, the “ Liens
”).
Section 2. Purchase
Price .
(a) Purchase Price .
The aggregate purchase price to he paid by PriceSmart to PSC for
the Remaining Shares upon the exercise of arty Put Rights hereunder
(the “ Purchase Price ”) shall be determined in
accordance with the provisions of this Section 2. The Purchase
Price shall be U.S.$25.00 (the “ Put Price Per Share
”), as adjusted pursuant to Section 2(b) hereof,
multiplied by the aggregate number of Remaining Shares to be sold
by PSC in connection with the exercise of the subject Put
Rights.
(b) Adjustment to Put
Price Per Share . The Put Price Per Share is subject to
adjustment from time to time as follows:
(i) Merger or
Consolidation . If at any time prior to the termination of this
Agreement, there shall be a merger or a consolidation of PriceSmart
with any other entity, whether PriceSmart is the surviving entity
or not, then, as part of such merger or consolidation, lawful
provision shall he made so that the Put Price Per Share is
appropriately adjusted, whether upward or downward, such that any
holder of Put Rights hereunder would receive the same consideration
on exercise of all Put Rights immediately after the merger or
consolidation as would have been received if such Put Rights had
been exercised immediately prior to the merger or consolidation, in
each case regardless of whether the Put Rights are actually
exercisable under the terms of this Agreement. This provision shall
apply to successive mergers or consolidations.
(ii) Split, Subdivision or
Combination of Shares . If PriceSmart, at any time prior to the
termination of this Agreement, shall split, subdivide or combine
the securities as to which Put Rights exist, the Put Price Per
Share shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a
combination or reverse stock split. This provision shall apply to
successive splits, subdivisions and combinations.
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(iii) Reclassification,
Recapitalization, etc. If PriceSmart at any time shall, by
reclassification of securities, recapitalization, or other similar
event affecting the number or character of issued and outstanding
Remaining Shares or other shares of Common Stock (each a “
Recapitalization ”), lawful provision shall be made so
that the Put Price Per Share is appropriately adjusted, whether
upward or downward, such that any holder of Put Rights hereunder
would receive the same consideration on exercise of all Put Rights
immediately after the Recapitalization as would have been received
if such Put Rights h
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