Exhibit 10.6

 

STIPULATION OF SETTLEMENT

 

WHEREAS, seven securities class actions were filed against PriceSmart, Inc.
(“PriceSmart” or the “Company”), Gilbert A. Partida (“Partida”) and Allan C.
Youngberg (“Youngberg”) (collectively the “Defendants”), alleging violations of
the federal securities laws on behalf of a class of certain of PriceSmart’s
shareholders; and

 

WHEREAS, on September 9, 2004 the Court consolidated the various actions,
appointed Donald Tick (“Tick”) as Lead Plaintiff (“Lead Plaintiff”) and
appointed Goodkind Labaton Rudoff & Sucharow LLP (“Goodkind Labaton”) as Lead
Counsel in the consolidated action; and

 

WHEREAS, after over a year of vigorous litigation, and arm’s-length negotiations
assisted by Judge Lawrence Irving, a highly experienced, neutral mediator, Lead
Plaintiff and Defendants agreed to settle this class action; and

 

WHEREAS, based on the extensive investigation by Lead Plaintiff’s counsel,
including (i) interviews with at least half a dozen former PriceSmart employees,
and (ii) Lead Counsel’s conducting confirmatory discovery prior to the
submission of the Stipulation of Settlement to the Court for preliminary
approval consisting of: (1) the review and analysis of documents produced by
PriceSmart relating to the financial records underlying PriceSmart’s restatement
announced in November, 2003; (2) a deposition of former U.S. Attorney Charles La
Bella, who was retained by PriceSmart’s Audit Committee to conduct an
investigation regarding the transactions that were the subject of the
restatement; and (3) Lead Counsel’s analysis of the claims and defenses in this
action (with the assistance of an experienced expert in calculating damages in
securities class action cases) and the various risks attendant to continued
litigation, Lead Plaintiff, Defendants and their respective counsel believe that
the terms of the Settlement set forth herein are fair, reasonable and adequate;

 

NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among Lead Plaintiff
Donald Tick, individually and in his representative capacity, and Defendants
PriceSmart Inc., Gilbert A. Partida and Allan C. Youngberg, by and through their
duly authorized counsel, that this action will be settled, compromised and
dismissed on the merits and with prejudice on the terms and conditions set forth
herein (including the payment by Defendants of $2.35 million in cash), subject
to the approval of the Court.

 

STIPULATION OF SETTLEMENT

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I. INTRODUCTION AND DEFINITIONS

 

  A. Procedural History

 

1. On or about December 9, 2003, Donald Tick as a shareholder of the Company
filed a class action against Defendants.

 

2. Six other substantially similar class actions were filed naming PriceSmart,
Inc., Gilbert A. Partida and Allan C. Youngberg as defendants,

 

Abbreviated Case Name

--------------------------------------------------------------------------------

  

Civil Action Number

--------------------------------------------------------------------------------

  

Date Filed

--------------------------------------------------------------------------------

Dolowich v. PriceSmart Inc.

   3:03-CV-02260    11/17/03

Mikalson v. PriceSmart Inc.

   3:03-CV-02273    11/18/03

Recio v. PriceSmart Inc.

   3:03-CV-02400    12/02/03

Stewart v. PriceSmart Inc.

   3:03-CV-02506    12/15/03

Schnell v. PriceSmart Inc.

   3:03-CV-02559    12/22/03

Performance Capital v. PriceSmart Inc.

   3:03-CV-02561    12/22/03

 

3. On September 9, 2004, the Court, pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995 (“PSLRA”), consolidated the actions,
appointed Donald Tick as Lead Plaintiff in the consolidated class action and
approved his selection of Goodkind Labaton as Lead Counsel.

 

4. Lead Plaintiff filed his Consolidated Amended Class Action Complaint (the
“Complaint”) on November 29, 2004, naming the Defendants listed above.

 

5. The Complaint alleges that during the Class Period, Defendants disseminated
or approved false statements about the PriceSmart business and its prospects,
which they knew or recklessly disregarded were materially false and misleading.
More specifically, the Complaint alleges that as a result of the Company’s
insufficient internal controls to track and control merchandise inventory, the
Company did not accurately report what was in its foreign-based warehouse
stores, and that this was known to the Company’s corporate managers, including
the individual Defendants.

 

6. On November 10, 2003, PriceSmart admitted that it inaccurately recorded
transactions included in its 2002 to 2003 results, and had restated those
results to remove

 

2

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

approximately $29 million of inaccurately reported revenues. Subsequently,
shares of PriceSmart declined from $8.34 to $7.64 on a day of unusually heavy
trading. During the alleged class period, the highest trading price of
PriceSmart stock was $42 per share.

 

7. The Complaint asserts claims for violations of Section 10(b) and 20(a) of the
Securities Exchange Act of 1934 (the “Exchange Act”) on behalf of all persons
and entities who purchased or otherwise acquired shares of PriceSmart between
November 1, 2001 and December 16, 2003 (the “Class Period”).

 

  B. Discovery and Settlement Discussions

 

1. Lead Counsel, on behalf of Lead Plaintiff, conducted and completed a thorough
investigation in this Action. This investigation included: (i) review and
analysis of prospectuses and other documents filed by the Company with the SEC;
(ii) interviews with at least six former PriceSmart employees; and (iii)
confirmatory discovery prior to the submission of the Stipulation of Settlement
to the Court for preliminary approval consisting of: (1) review and analysis of
documents produced by PriceSmart relating to the financial records underlying
PriceSmart’s restatement; and (2) a deposition of Mr. La Bella.

 

2. Following the filing of the Complaint, the Parties in this Action agreed to
participate in non-binding mediation before Judge Lawrence Irving, a retired
United States District Court Judge for the Southern District of California.

 

3. In accordance with Judge Irving’s procedures, Lead Plaintiff and Defendants
submitted comprehensive mediation statements.

 

4. The mediation was held on February 24, 2005, at the offices of Judge Irving
in San Diego, California. Lead Plaintiff and Defendants each made presentations
to Judge Irving in the presence of all Parties, and proceeded to engage in arm’s
length negotiations.

 

5. On February 24, 2005, at the conclusion of the mediation, the Parties reached
an oral agreement-in-principle to settle the Action. Thereafter, the Parties
negotiated a Memorandum of Understanding to preliminarily memorialize the
agreement-in-principle, which was signed on March 2, 2005. The Memorandum of
Understanding contemplated a more formal Settlement Agreement.

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

  C. Settlement Considerations

 

1. Based upon their discovery, investigation and evaluation of the facts and law
relating to the claims alleged in the Complaint, Lead Plaintiff and Lead Counsel
(which have extensive experience in securities class action litigation) have
agreed to settle this Action pursuant to the terms and conditions of this
Settlement Agreement after considering, among other things, (i) the substantial
cash benefits to Class Members (as described in Section II below); (ii) the
possibility that Defendants might move to dismiss the Complaint and the
possibility that the Court might grant some of all of that motion; (iii) the
uncertainty of being able to prove the allegations in the Complaint; (iv) the
attendant risks of litigation, especially in complex actions such as this, as
well as the difficulties and delays inherent in such litigation (including any
appeals); (v) the uncertainty, even if Lead Plaintiff was to establish liability
on the part of Defendants, inherent to the various and competing theories of
damages under the Exchange Act; (vi) their awareness of Defendants’ likely
positions on the various liability and damages issues; (vii) the desirability of
consummating this Settlement Agreement in order to provide certain and effective
relief to Class Members; and (viii) their belief that the Settlement is fair,
reasonable and adequate, and in the best interest of all Class Members.

 

2. Defendants expressly deny any wrongdoing alleged in the Complaint and do not
admit or concede any wrongdoing or liability in connection with any facts or
claims that have been or could have been alleged against them in the Action, but
consider it desirable for the Action to be settled and dismissed because the
proposed Settlement will (i) bring to an end the substantial expenses, burdens,
risks and uncertainties associated with continued litigation of this Action;
(ii) finally put to rest those claims and the underlying matters; and (iii)
confer substantial benefits upon Defendants, Lead Plaintiff and Class Members
including, without limitation, the avoidance of further expense and disruption
of the management and operation of PriceSmart’s business due to the pendency and
defense of this Action.

 

4

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

  D. Definitions

 

As used in this Stipulation of Settlement and the annexed exhibits, the
following terms have the following meanings, unless a section or subsection of
this Stipulation of Settlement or an exhibit otherwise provides:

 

1. “Action” means the action titled In re PriceSmart Inc. Securities Litigation,
Master File No. 03 Cv. 2260 JAH – (BLM) (S.D. Cal.).

 

2. “Administrator” means the third-party agent or administrator whom the Court
shall appoint in the Hearing Order to implement the Notice, claims process,
administration and distribution of the Net Settlement Fund in accordance with
the terms of the proposed Settlement Agreement. Lead Counsel has retained
Complete Claims Solutions as the Administrator.

 

3. “Approval Date” means the date on which a Final Judgment Approving Settlement
and Dismissing Action are entered in the Action.

 

4. “Attorney’s Fees and Expenses” means such amounts as may be awarded to Lead
Counsel to compensate it for its fees and expenses in connection with the
Action, including, without limitation, costs and expenses attributable to
experts and/or consultants retained by Lead Counsel.

 

5. “Authorized Claimant” means a Class Member (or the representative of such
Class Member including, without limitation, agents, administrators, executors,
heirs, successors and assigns), who timely returns a signed Claim Information
Form under the procedures set forth in this Settlement Agreement.

 

6. “Tick” means Lead Plaintiff Donald Tick, both in his individual capacity and
in his capacity as representative of the Class.

 

7. “Claim” means (i) a demand (whether written or oral) or cause of action for
monetary or non-monetary relief or (ii) a demand, cause of action or allegation
in a civil, criminal or administrative proceeding in any judicial, arbitral or
other forum for monetary or non-monetary relief.

 

5

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

8. “Claim Information Form” means the form, completed by the Administrator using
data and information provided by Defendants concerning Class Members’
transactions in shares of PriceSmart during the Class Period, which will be
mailed to Class Members with the Notice and pursuant to which Class Members will
submit a claim by signing, dating and returning it to the Administrator in
accordance with the procedures set forth in this Settlement Agreement. A sample
Claim Information Form proposed by Lead Plaintiff is annexed hereto as Exhibit
B.

 

9. “Class” or “Class Members” means all persons or entities who purchased or
otherwise acquired shares of PriceSmart during the Class Period, provided,
however, that “Class” or “Class Members” does not include (i) the Defendants,
members of the immediate family of any individual Defendants, any entity in
which any Defendant has a controlling interest, and the legal affiliates,
representatives, heirs, controlling persons, successors, and
predecessors-in-interest or assigns of any such excluded party and (ii) any
Class Member who timely files or delivers a completed request to be excluded
form pursuant to Section VIA of this Settlement Agreement.

 

10. “Class Period” means the period of time from November 1, 2001 through
December 23, 2003, inclusive.

 

11. “Complaint” means the Consolidated Amended Class Action Complaint For
Violations of the Federal Securities Laws filed on November 29, 2004.

 

12. “Court” means the United States District Court for the Southern District of
California.

 

13. “Defendants” means PriceSmart Inc., Gilbert A. Partida and Allan C.
Youngberg, and each of them.

 

14. “Defendants’ Counsel” means the law firms of Latham & Watkins LLP (attorneys
for PriceSmart Inc.), Bohm Francis Kegel & Aguilera LLP (attorneys for Gilbert
A. Partida), and Cooley Godward LLP (attorneys for Allan C. Youngberg), and each
of them.

 

15. “Execution Date” means the date on which this Settlement Agreement has been
executed by all Parties.

 

6

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

16. “Fairness Hearing” means the hearing at or after which the Court will make a
final decision whether to approve this Settlement Agreement as fair, reasonable,
and adequate pursuant to Rule 23 of the Federal Rules of Civil Procedure.

 

17. “Final Judgment” means the Final Judgment approving the Settlement and
Settlement Agreement and dismissing this Action, as contemplated in Section XI
of this Settlement Agreement. A copy of the Final Judgment proposed by the
Parties is annexed hereto as Exhibit F.

 

18. “Final Settlement Date” means the date on which the Final Judgment becomes
final. For purposes of this definition, the Final Judgment shall become final
one business day following the later of the following events: (i) the date on
which the time to appeal from the Final Judgment has expired, or (ii) if any
appeal is taken from the Final Judgment, other than an appeal or appeals solely
with respect to Attorneys’ Fees and Reimbursement of Expenses, the date on which
all appeals therefrom, including petitions for rehearing or reargument,
petitions for rehearing en banc and petitions for certiorari or any other form
or review, have been finally disposed of in a manner resulting in an affirmance
of the Final Judgment without any material modification.

 

19. “Goodkind Labaton” means the law firm of Goodkind Labaton Rudoff & Sucharow
LLP.

 

20. “Hearing Order” means the Order to be entered by the Court concerning
notice, administration and the Fairness Hearing, as contemplated in Section IX
of this Settlement Agreement. A copy of the Hearing Order proposed by the
Parties is annexed hereto as Exhibit E.

 

21. “Interest Rate” means interest calculated at the rate of 4% per annum.

 

22. “Lead Counsel” means the law firm of Goodkind Labaton Rudoff & Sucharow LLP.

 

23. “Lead Plaintiff” means Donald Tick, both in his individual capacity and in
his capacity as representative of the Class.

 

7

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

24. “Net Settlement Fund” means the Settlement Fund less (i) any Attorney’s Fees
and Expenses awarded by the Court; (ii) any Notice and Administration Expenses;
and (iii) any Tax Expenses payable from the Settlement Fund.

 

25. “Notice” means the notice to be sent to Class Members pursuant to this
Settlement Agreement. A copy of the Notice proposed by the Parties is annexed
hereto as Exhibit C.

 

26. “Notice and Administration Expenses” means all Court-approved costs
associated with the administration of the Settlement, including, without
limitation, the costs associated with printing and mailing the Notice to Class
Members, publishing the Summary Notice, processing requests for exclusion,
processing withdrawals of requests for exclusion, preparing and processing Claim
Information Forms, and distributing the Net Settlement Fund; provided, however,
that Notice and Administration Expenses shall not include Attorney’s Fees and
Expenses.

 

27. “Partida” means Defendant Gilbert A. Partida.

 

28. “Parties” means the Lead Plaintiff and the Defendants.

 

29. “Plan of Allocation” means the terms and procedures for allocating the Net
Settlement Fund among, and distributing the Net Settlement Fund to, Authorized
Claimants as set forth in the Notice, or such other Plan of Allocation as the
Court shall approve. A copy of the Plan of Allocation proposed by Lead Plaintiff
is annexed hereto as Exhibit A.

 

30. “PriceSmart” means Defendant PriceSmart Inc.

 

31. “Preliminary Approval Hearing” means the hearing at or after which the Court
will make a decision whether the Notice of the Action and the proposed
Settlement Agreement may be given to the Class Members.

 

32. “PSLRA” means the Private Securities Litigation Reform Act of 1995.

 

33. “Qualified Settlement Fund” means a fund within the meaning of Treasury
Regulations § 1.468B-1.

 

34. “Related Parties” means each of the Defendants’ and Lead Plaintiff’s past,
present or future directors, officers, employees, partnerships, partners,
members, principals,

 

8

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

agents, underwriters, insurers, co-insurers, reinsurers, controlling
stockholders, attorneys, accountants or auditors, advisors, banks or investment
banks or bankers, analysts, associates, personal or legal representatives,
predecessors, successors, parents, subsidiaries, divisions, joint ventures,
assigns, executors, administrators, spouses, heirs, related or affiliated
entities, any entity in which any of the Defendants, Lead Plaintiff, and/or any
member of any of their immediate families has a controlling interest, any
members of their immediate families, or any trust of which any of the Defendants
or Lead Plaintiff is the settlor or which is for the benefit of any of them or
member(s) of any of their families.

 

35. “Release” means the release and waiver set forth in Section VII of this
Settlement Agreement.

 

36. “Released Claims” means with respect to the Releasees, defined below, the
release by Lead Plaintiff and all Class Members of all Claims (including
“Unknown Claims” as defined below, and except as may exist with respect to
Claims belonging to the Defendants against their insurers), demands, rights,
liabilities and causes of action of every nature and description whatsoever,
known or unknown, whether or not concealed or hidden, asserted or that could
have been asserted by Lead Plaintiff or any member of the Class against any of
the Defendants and their respective Related Parties arising out of, based upon
or related to the purchase or acquisition of PriceSmart’s publicly traded
securities (including claims for violation of any state, federal or any foreign
country’s securities laws and regulations, any misstatement or omission, any
breach of duty, any negligence or fraud or any other alleged wrongdoing or
misconduct) during the Class Period and that were or could have been asserted in
the Action. In addition, by operation of law and of the Final Judgment,
“Released Claims” also includes the release by Lead Plaintiff and Class Members
of all claims of every nature and description, known and unknown, arising out of
or relating, directly or indirectly, as to any or all Releasees and Parties, to
any or all acts, omissions, nondisclosures, facts, matters, transactions,
occurrences or oral or written statements or representations in connection with
or directly or indirectly relating to the Settlement Agreement or the Settlement
of this Action.

 

9

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

37. “Releasees” means the Defendants, their respective present and former
parents, subsidiaries, divisions and affiliates, the present and former
employees, officers and directors of each of them, the present and former
attorneys, accountants, insurers, partners, principals, and agents of each of
them, and the predecessors, heirs, executors, administrators, successors and
assigns of each, and any person or entity which is or was related to or
affiliated with any Releasee or in which any Releasee has or had a controlling
interest and the present and former employees, officers and directors,
attorneys, accountants, insurers, partners, principals, and agents of each of
them.

 

38. “SEC” means the United States Securities and Exchange Commission.

 

39. “Settlement” means the agreement between and among the Parties to settle,
compromise and dismiss this Action with prejudice and on the merits, under the
terms, conditions, and provisions set forth in this Settlement Agreement.

 

40. “Settlement Agreement” means this Stipulation of Settlement and its
accompanying exhibits, including any subsequent amendments thereto and any
exhibits to such amendments.

 

41. “Settlement Fund” means the fund described in Section II.A of this
Settlement Agreement.

 

42. “Settlement Fund Account” means an interest-bearing account under the
control of Lead Counsel into which the Settlement Fund shall be deposited, which
account shall be an escrow account held at Citibank and maintained as a
Qualified Settlement Fund.

 

43. “Summary Notice” means the published notice of the proposed Settlement. A
copy of the Summary Notice proposed by the Parties is annexed hereto as Exhibit
D.

 

44. “Tax Expenses” means (i) all taxes on the income of the Settlement Fund and
(ii) expenses and costs incurred in connection with the taxation of the
Settlement Fund, including, without limitation, expenses of tax attorneys and
accountants.

 

45. “Unknown Claims” means any Released Claims or Released Defendants’ Claims
that the Plaintiff, any member of the Class, the Defendants, and any other
persons and

 

10

STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

entities whose claims are being released do not know or suspect to exist in
their favor at the time of the release which, if known by him, her, or it might
have affected the decision to compromise, or the decision whether to agree,
object, or not object to this Settlement. Lead Plaintiff, the Defendants, and
any other persons or entities whose claims are being released expressly waives
and relinquishes, and the other member of the Class shall be deemed to have, and
by operation of the Judgment shall have, expressly waived and relinquished, to
the fullest extent permitted by law, the provisions, rights, and benefits
conferred by § 1542 of the California Civil Code, which provides:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS, WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

 

46. “Youngberg” means Defendant Allan C. Youngberg.

 

II. TERMS AND CONDITIONS OF THE SETTLEMENT

 

  A. The Settlement Fund

 

1. The Settlement Fund shall consist of two million three hundred and fifty
thousand dollars ($2,350,000.00), which shall be paid in cash by Defendants into
the Settlement Fund Account. Within ten (10) business days following entry of
the Final Judgment, two million three hundred and fifty thousand dollars
($2,350,000.00) shall be paid by Defendants into the Settlement Fund Account.

 

2. The funds in the Settlement Fund Account shall not be distributed except in
accordance with this Settlement Agreement or by order of the Court, and shall
continue to accrue interest until such time as the funds are distributed in
accordance with this Settlement Agreement and orders of the Court.

 

3. As of the Final Settlement Date, Defendants shall cease to have any interest
in or control over the Settlement Fund.

 

4. Except as provided by operation of Section XI.G below, in no event shall any
money that Defendants have paid into the Settlement Fund be refunded to
Defendants.

 

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STIPULATION OF SETTLEMENT

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5. All necessary steps to enable the Settlement Fund Account to be a Qualified
Settlement Fund shall be taken, including the timely filing by the Administrator
of all elections and statements required pursuant to Treas. Reg. §§ 1.468B-0
through 1.468B-5, or any other relevant statutes, regulations or published
rulings now or hereafter enacted or promulgated, for all taxable years of the
Settlement Fund Account, beginning with the date of its establishment. The
Administrator shall be the Administrator of the Qualified Settlement Fund for
purposes of the Settlement Fund Account. The Administrator, on behalf of the
Settlement Fund Account, shall file or cause to be filed on a timely basis all
required federal, state, and local tax returns and shall, at the direction of
Lead Counsel, pay taxes in a manner consistent with its treatment as a Qualified
Settlement Fund, as provided in Treas. Reg. §§ 1.468B-0 through 1.468B-5. In no
event shall Defendants have any responsibility for filing election or other
required statements, or tax returns, the costs associated therewith, the payment
of any taxes due, or the expenses of notice or administration of the Settlement
Fund Account. Defendants and Lead Counsel shall cooperate with the Administrator
to the extent necessary for the Administrator to comply with the provisions of
this paragraph.

 

6. Upon request by any Defendant, the Administrator shall promptly provide to
Defendants all information requested by Defendants in connection with any tax
returns the Administrator must file or other report or filing it must make with
respect to the Settlement Fund.

 

  B. The Net Settlement Fund

 

1. All Attorney’s Fees and Expenses, Notice and Administrative Expenses, and Tax
Expenses, if any, shall be paid from the Settlement Fund.

 

2. The balance of the Settlement Fund, after all items listed in Section II.B.1
above have been paid, shall be the Net Settlement Fund.

 

3. The Net Settlement Fund shall be distributed to Authorized Claimants pursuant
to a Plan of Allocation, which Lead Plaintiff shall propose and with respect to
which Lead Plaintiff shall seek approval of the Court. A copy of the Plan of
Allocation proposed by Lead Plaintiff is annexed hereto as Exhibit A. It is
understood and agreed to by the Parties that,

 

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STIPULATION OF SETTLEMENT

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notwithstanding any other provision of this Settlement Agreement, any proposed
Plan of Allocation is not a part of this Settlement Agreement, and any order or
proceedings modifying the Plan of Allocation shall not operate to terminate or
cancel this Settlement Agreement or affect the finality of the Final Judgment or
any other orders entered by the Court pursuant to this Settlement Agreement.

 

4. Defendants, Releasees, and their respective counsel shall have no role in or
responsibility for the Plan of Allocation, the form, substance, method or matter
of administration, or distribution of the Net Settlement Fund to Authorized
Claimants, any tax liability that a Class Member may incur as a result of this
Settlement Agreement or as a result of any action taken pursuant to this
Settlement Agreement, the administration or processing of claims, or the
allocation of the Net Settlement Fund, including, without limitation,
determinations as to the timeliness or validity of Claim Information Forms, the
amounts of claims or distribution of the Net Settlement Fund.

 

5. Class Members shall look solely to the Net Settlement Fund for settlement and
satisfaction of all Released Claims.

 

  C. Distribution of the Net Settlement Fund

 

1. To receive a distribution from the Net Settlement Fund pursuant to the Plan
of Allocation, a Class Member must be an Authorized Claimant pursuant to the
procedures set forth in this Settlement Agreement or by order of the Court.

 

2. All distributions to Authorized Claimants shall be in the form of cash from
the Net Settlement Fund pursuant to the Plan of Allocation.

 

III. SUBMISSION OF CLAIMS

 

A. Each Class Member who wishes to participate in the Net Settlement Fund must
return a signed Claim Information Form by first class mail, postmarked no later
than the date set forth in the Notice. A sample Claim Information Form proposed
by the Parties is annexed hereto as Exhibit B. The address to which the Claim
Information Form must be mailed shall be set forth on the Claim Information Form
itself and shall also be printed in the Notice. If a Class Member chooses to
return his, her or its Claim Information Form in a manner other than by
first-class

 

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STIPULATION OF SETTLEMENT

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mail, then it must be actually received at the address on the Claim Information
Form by the date set forth in the Notice, unless (i) that date is extended by
order of the Court or (ii) Lead Counsel or their designee determines that an
extension should be granted; provided, however, that such extension shall not be
more than sixty (60) days after the date set forth in the Notice or the date
ordered by the Court.

 

B. The Claim Information Form must be sworn on oath or made subject to the
penalties of perjury pursuant to 28 U.S.C. § 1746.

 

C. In accordance with procedures set forth in the Notice and the Claim
Information Form, Class Members will have the opportunity to object to the share
transaction information set forth on the Claim Information Form by submitting to
the Claims Administrator appropriate documentation that corrects or modifies
such share transaction information.

 

D. The validity of each claim submitted will be initially determined by the
Administrator, acting under Lead Counsel’s supervision, in accordance with the
Plan of Allocation approved by the Court, who shall promptly advise the Class
Member in writing if the Administrator determines to reject the claim. Neither
Lead Counsel, their designees or agents, nor Defendants shall have any liability
arising out of said determination. In the event a Class Member disagrees with
such determination, the dispute shall be submitted to the Court for summary
resolution.

 

E. All initial determinations as to the validity of a Claim Information Form,
the calculation of the extent to which each Authorized Claimant will participate
in the Net Settlement Fund, the preparation and mailing of distributions to
Authorized Claimants, the distribution of the Settlement Fund and Net Settlement
Fund shall be performed by Lead Counsel, their designees or agents, the
Administrator, or such other persons or entities as Lead Counsel may, in its
sole discretion, deem necessary or advisable to assist it in the administration
of this Settlement Agreement. The administration of the Settlement Fund and Net
Settlement Fund, and decisions on all disputed questions of law and fact with
respect to the validity of any Claim Information Form or regarding rejection of
claims, shall remain under the jurisdiction of the Court. All Parties expressly
waive trial by jury (to the extent such right may exist) with respect to such
determinations.

 

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STIPULATION OF SETTLEMENT

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F. Except as otherwise ordered by the Court, any Class Member who fails to
return a timely and signed Claim Information Form consistent with the procedures
set forth in this Section shall be barred from receiving a distribution from the
Net Settlement Fund, but shall nevertheless be bound by the Release and all
proceedings, orders and judgments in this Action.

 

IV. NOTICE TO THE CLASS

 

A. Subject to the requirements of the Hearing Order and not later than sixty
(60) days before the Fairness Hearing, Lead Plaintiff and Lead Counsel shall
cause to be mailed, by first class mail, postage prepaid, to each person and
entity in the Class who can be identified by reasonable effort, a copy of the
Notice and Claim Information Form substantially in the forms annexed hereto as
Exhibits C and B, respectively.

 

B. In cases of pending litigation, arbitration or mediation against any
Defendant involving any Released Claims, subject to the requirements of the
Hearing Order and not later than sixty (60) days before the Fairness Hearing,
the Parties shall cause to be mailed, by first class mail, postage prepaid, a
copy of the Notice and Claim Information Form (substantially in the forms
annexed hereto as Exhibits C and B, respectively) to all legal counsel known by
Defendants to represent the Class Member, provided, however, that Defendants
shall describe such pending litigation to Lead Counsel within forty-five (45)
days of the Execution Date.

 

C. The Notice shall conform to all applicable requirements of the Federal Rules
of Civil Procedure, the PSLRA, the rules of the Court and any other applicable
law, and shall otherwise be in the manner and form agreed upon by the Parties
and approved by the Court.

 

D. No later than fifty-five (55) days before the Fairness Hearing, the Parties
shall cause the Summary Notice, substantially in the form annexed hereto as
Exhibit D, to be published once in the national edition of The New York Times
and once on a widely circulated national business-oriented wire service.

 

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STIPULATION OF SETTLEMENT

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V. RETENTION OF ADMINISTRATOR

 

A. Defendants acknowledge that Lead Counsel has retained Complete Claims
Solutions as the Administrator to help implement the terms of this Settlement
Agreement.

 

B. The Administrator may assist with various tasks, including, without
limitation: (i) mailing or arranging for the mailing of the Notice and Claim
Information Form to Class Members; (ii) arranging for publication of the Summary
Notice; (iii) arranging for and staffing a toll-free telephone number to assist
Lead Plaintiff in responding to inquiries from Class Members; (iv) answering
written inquiries from Class Members and/or forwarding such inquiries to Lead
Counsel or their designee; (v) providing additional copies of the Notice and
Claim Information Form, upon request, to Class Members; (vi) receiving and
maintaining any Class Member’s request for exclusion from the settlement; (vii)
receiving and maintaining any Class Member’s withdrawal of request for exclusion
from the settlement; (viii) preparing, receiving and processing Claim
Information Forms returned by Class Members; (ix) mailing or causing to be
mailed to Authorized Claimants their distribution from the Net Settlement Fund
under the Plan of Allocation; and (x) otherwise assisting Lead Counsel with
administration and implementation of the Settlement Agreement.

 

C. The Administrator shall apply to the Court for its fees and reimbursement of
expenses in connection with the administration and implementation of the
Settlement Agreement at the time Lead Plaintiff seek Court approval for
distribution of the Net Settlement Fund. All such fees and expenses, which may
include fees and expenses to be charged or incurred in the future in order to
complete the administration and/or implementation of the Settlement Agreement,
shall be paid solely out of the Settlement Fund.

 

D. The Administrator may make additional applications for fees and reimbursement
of expenses in connection with the administration and implementation of the
Settlement Agreement.

 

E. In the event that the Court (or any appellate court) does not grant final
approval to the Settlement, Defendants shall pay the reasonable cost of Notice
and Administrator expenses incurred up to that time.

 

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VI. OBJECTIONS TO SETTLEMENT

 

A. Any Class Member who wishes to be excluded from the Class pursuant to Federal
Rule of Civil Procedure 23(e)(3) in response to the Notice or Summary Notice
must file by first class mail or deliver a completed request for exclusion form
pursuant to the Notice at the address provided in the Notice, postmarked or
delivered no later than twenty-one (21) days before the Fairness Hearing or as
the Court may otherwise direct.

 

B. Any Class Member who has not filed a timely written request for exclusion
from the Class and who wishes to object to the fairness, reasonableness or
adequacy of this Settlement, to any terms of the proposed Settlement Agreement,
to the Plan of Allocation, or to the proposed Attorney’s Fees and Expenses must
serve upon Lead Counsel and Defendants’ Counsel, and must file with the Court no
later than twenty-one (21) days before the Fairness Hearing or as the Court may
otherwise direct, a statement of the objection, as well as the specific reason
or reasons, if any, for each such objection, including any legal support the
Class Member wishes to bring to the Court’s attention and any evidence the Class
Member wishes to introduce in support of the objection.

 

C. Class Members may file an objection on their own or through an attorney hired
at their own expense.

 

D. Any Class Member who files and serves a written objection pursuant to this
Section may appear at the Fairness Hearing, either in person or through an
attorney hired at the Class Member’s own expense, to object to the fairness,
reasonableness or adequacy of the Settlement, to any term of the proposed
Settlement Agreement, to the Plan of Allocation, or to the proposed Attorney’s
Fees and Expenses. Class Members or their attorneys intending to make an
appearance at the Fairness Hearing must serve upon Lead Counsel and Defendants’
Counsel and must file with the Court no later than twenty-one (21) days before
the Fairness Hearing or as the Court may otherwise direct, a notice of intention
to appear.

 

E. Any Class Member who fails to comply with any of the provisions of this
Section shall waive and forfeit any and all rights he, she or it may have to
appear separately and/or object, and shall be bound by all of the terms of this
Settlement Agreement and by all proceedings, orders and judgments in this
Action.

 

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VII. RELEASE AND WAIVER, AND ORDER OF DISMISSAL

 

A. As of the Final Settlement Date, Lead Plaintiff and all Class Members agree
to Release all Released Claims against the Defendants, Releasees and Related
Parties.

 

B. On and after the Final Settlement Date, each Class Member, including Class
Members who are parties to any other actions, arbitrations, or other proceedings
against any of the Defendants, Releasees or Related Parties that are pending on
the Final Settlement Date, on behalf of themselves, their heirs, executors,
administrators, predecessors, successors, assigns, and any person they
represent, for good and sufficient consideration, the receipt and adequacy of
which are hereby acknowledged, shall be deemed to have, and by operation of law
and of the Final Judgment shall have, fully, finally, and forever released,
relinquished, settled, and discharged all Released Claims against each and every
one of the Releasees and Related Parties, and whether or not a Claim Information
Form is signed and returned by, or on behalf of, such Class Member; provided,
however, that nothing in the Final Judgment shall bar any action or claim to
enforce the terms of the Settlement Agreement or the Final Judgment; provided
further, that all Class Members, on behalf of themselves, their heirs,
executors, administrators, predecessors, successors, assigns, and any person
they represent, for good and sufficient consideration, the receipt and adequacy
of which are hereby acknowledged, shall be deemed to have, and by operation of
law and of the Final Judgment shall have, fully, finally, and forever released,
relinquished, settled, and discharged all claims of every nature and
description, known and unknown, arising out of or relating, directly or
indirectly, as to any or all Releasees, Related Parties and Parties, to any or
all acts, omissions, nondisclosures, facts, matters, transactions, occurrences
or oral or written statements or representations in connection with or directly
or indirectly relating to the Settlement Agreement or the Settlement of this
Action.

 

C. With respect to any and all Released Claims, the Parties stipulate and agree
that, by the terms of the Final Judgment each Class Member specifically waives
the benefit of the provisions of Section 1542 of the Civil Code of the State of
California, which provides as

 

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--------------------------------------------------------------------------------

follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.” Class Members acknowledge the significance and consequence of this
wavier of the provision of Section 1542, waive the provisions and protections of
Section 1542, assume full responsibility for any loss that may be incurred by
reason of such waiver, and hereby release unknown and unsuspected claims.

 

D. Notwithstanding the provisions of Section 1542 and all similar provisions in
California or in any other state of the United States or the District of
Columbia or in any foreign jurisdiction, Class Members understand and agree that
this Release is intended to include all Released Claims that Class Members may
have, including those Unknown Claims which Class Members do not now know or
suspect to exist in their favor against the Releasees and Related Parties, and
that this Release extinguishes those Released Claims, including those Unknown
Claims. Class Members may hereafter discover facts in addition to or different
from those that they know or believe to be true with respect to the subject
matter of the Released Claims, but Class Members hereby stipulate and agree that
they have, and shall be deemed to have, on or after the Final Settlement Date,
fully, finally and forever settled and released any and all Released Claims,
including those Unknown Claims, and without regard to subsequent discovery or
existence of such different or additional facts. The foregoing waiver was
separately bargained for and is a key element of the Settlement Agreement.

 

E. The Parties will seek and obtain from the Court a Final Judgment (for which,
as a condition of settlement, the time of appeal has expired without any
modifications in the Final Judgment) as further described in Section X below.
The Final Judgment shall, among other things, (i) approve this Settlement
Agreement as fair, reasonable and adequate; (ii) dismiss the Action with
prejudice and on the merits; and (iii) incorporate the terms of the Release.

 

VIII. ATTORNEY’S FEES AND EXPENSES

 

A. As provided in Section II.B.1 above, Attorney’s Fees and Expenses shall be
paid solely out of the Settlement Fund.

 

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B. Lead Counsel will file a motion with the Court for an award of Attorney’s
Fees and Expenses at the time of the Fairness Hearing, which motion shall seek
an award of attorney’s fees not exceeding thirty (30%) of the Settlement Fund.
Defendants agree to take no position with respect to such motion.

 

C. All Attorney’s Fees and Expenses awarded by the Court or any appellate court
shall be payable to Lead Counsel on the Final Settlement Date.

 

D. Neither the Defendants nor any Releasees shall be liable or obligated to pay
any fees, expenses, costs or disbursements to, or incur any expense on behalf
of, any person, either directly or indirectly, in connection with this Action or
this Settlement Agreement, except as expressly provided for in this Settlement
Agreement.

 

E. None of the Parties may terminate the Settlement Agreement on the basis of
the amount of Attorney’s Fees and Expenses awarded by the Court or any appellate
court.

 

IX. PRELIMINARY APPROVAL HEARING AND HEARING ORDER

 

A. Unless otherwise agreed to by the Parties, within thirty (30) days of
execution of the Settlement Agreement, the Parties shall submit the Settlement
Agreement to the Court and apply for a Hearing Order:

 

1. granting preliminary approval for certification of the Class for settlement
purposes;

 

2. finding that the proposed Settlement is sufficient to warrant the sending of
notice to the Class;

 

3. scheduling the Fairness Hearing to be held on such date as the Court may
direct, to consider the fairness, reasonableness and adequacy of the proposed
Settlement and whether it should be approved by the Court;

 

4. approving the proposed Notice and Summary Notice and the notice methodology
described in this Settlement Agreement;

 

5. directing the Notice to be mailed and the Summary Notice to be published as
described in this Settlement Agreement;

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

6. determining that the notice to be provided to Class Members in this case,
including the Notice, the Summary Notice and the methodology employed to
disseminate all, (i) is the best practicable notice; (ii) is reasonably
calculated, under the circumstances, to apprise Class Members of their right to
object or to exclude themselves from the proposed Settlement; (iii) is
reasonable and constitutes due, adequate and sufficient notice to all persons
entitled to receive notice; and (iv) meets all applicable requirements of the
Federal Rules of Civil Procedure, the PSLRA, the rules of the Court and any
other applicable law;

 

7. providing Class Members with an opportunity to request exclusion from the
Class, pursuant to the Federal Rule of Civil Procedure 23(e)(3);

 

8. requiring each Class Member who wishes to object to the fairness,
reasonableness or adequacy of the Settlement, to any term of this Settlement
Agreement, the Plan of Allocation, or the proposed Attorney’s Fees and Expenses
to do so strictly in accordance with Section VI of this Settlement Agreement;

 

9. directing Lead Counsel or their designated agent to rent one or more post
office boxes to be used for receiving requests for exclusion and any other
communications, and providing that only Lead Counsel, the Administrator,
Defendants’ Counsel, the Court, and their designated agents shall have access to
such post office box or boxes;

 

10. directing Defendants’ Counsel and Lead Counsel promptly to furnish each
other with copies of any and all objections, requests for exclusion, or
withdrawals of requests for exclusion that might come into their possession; and

 

11. any additional provisions that might be necessary to implement and
administer the terms of this Settlement Agreement and the proposed Settlement.

 

B. A copy of the Hearing Order proposed by the Parties is annexed hereto as
Exhibit E.

 

X. FINAL APPROVAL AND FINAL JUDGMENT

 

A. After the Fairness Hearing, and upon the Court’s approval of this Settlement
Agreement, and the certification of the Class for settlement purposes, the
Parties shall seek and obtain from the Court a Final Judgment which shall, among
other things:

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

1. find that the Court has personal jurisdiction over all Class Members and that
the Court has subject matter jurisdiction to approve this Settlement Agreement
and all exhibits thereto;

 

2. approve this Settlement Agreement as fair, reasonable and adequate,
consistent and in compliance with all applicable requirements of the Federal
Rules of Civil Procedure, the PSLRA, the rules of the Court and any other
applicable law, and in the best interests of each of the Parties and the Class
Members; direct the Parties and their counsel to implement and consummate this
Settlement Agreement according to its terms and provisions; and declare this
Settlement Agreement to be binding as to all claims and issues that have or
could have been raised in this Action on Lead Plaintiff and all other Class
Members, as well as their heirs, executors and administrators, successors and
assigns;

 

3. find that the Notice, the Summary Notice and the notice methodology
implemented pursuant to this Settlement Agreement: (i) constituted the best
practicable notice; (ii) constituted notice that was reasonably calculated,
under the circumstances, to apprise Class Members of their right to object to or
exclude themselves from the proposed Settlement and their right to appear at the
Fairness Hearing; (iii) were reasonable and constituted due, adequate and
sufficient notice to all persons entitled to receive notice; and (iv) met all
applicable requirements of the Federal Rules of Civil Procedure, the PSLRA, the
rules of the Court and any other applicable law;

 

4. find that Lead Counsel and the Lead Plaintiff adequately represented the
Class for purposes of entering into and implementing the Settlement;

 

5. dismiss the Action (including all individual claims and Class claims
presented thereby) on the merits and with prejudice, and without fees or costs
to any Party except as provided in this Settlement Agreement;

 

6. permanently bar and enjoin the institution and prosecution by Class Members
of any action against the Defendants in any court asserting a Released Claim;

 

7. incorporate the Release set forth in Section VII above, make the Release
effective as of the date of the Final Settlement Date, and forever discharge the
Releasees, and Related Parties from any and all claims or liabilities arising
from or related to the Released Claims;

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

8. authorize the Parties, without further approval of the Court, to agree to and
adopt such amendments, modifications and expansions of this Settlement Agreement
and all exhibits attached to the Settlement Agreement as (i) are not materially
inconsistent with the Final Judgment and (ii) do not materially limit the rights
of Class Members under the Settlement Agreement;

 

9. award Attorneys’ Fees and Expenses;

 

10. without affecting the finality of the Final Judgment for purposes of appeal,
retain jurisdiction as to all matters relating to the administration,
consummation, enforcement and interpretation of this Settlement Agreement and
the Final Judgment, and for any other necessary purpose; and

 

11. incorporate any other provisions that the Court deems necessary and just.

 

B. A copy of the Final Judgment proposed by the Parties is annexed hereto as
Exhibit F.

 

XI. MODIFICATION OR TERMINATION OF THIS SETTLEMENT

 

A. The terms and provisions of this Settlement Agreement may be amended,
modified or expanded by agreement of the Parties and approval of the Court;
provided, however, that after entry of the Final Judgment, the Parties may by
agreement effect such amendments, modifications or expansions of this Settlement
Agreement and its implementing documents (including all exhibits to the
Settlement Agreement) without notice to or approval by the Court if such changes
are not materially inconsistent with the Court’s Final Judgment and do not (a)
materially limit the rights of Class Members under the Settlement Agreement; or
(b) materially limit the rights of the Releasees under the Settlement Agreement.

 

B. This Settlement Agreement will terminate at the sole option and discretion of
Lead Plaintiff or Defendants if (i) the Court or any appellate court rejects,
modifies or denies approval of any portion of this Settlement Agreement or the
proposed Settlement that the terminating Party reasonably and in good faith
determines is material, including, without

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

limitation, the terms of relief, the findings of the Court, the provisions
relating to Notice, and/or the terms of the Release, except with respect to the
portions of this Settlement Agreement or the proposed Settlement relating to
Attorney’s Fees and Expenses and the Plan of Allocation; or (ii) the Court or
any appellate court does not enter or completely affirm, or alters or expands,
any portion of the Final Judgment, that the terminating Party reasonably and in
good faith believes is material. The terminating Party must exercise the option
to withdraw from and terminate this Settlement Agreement as provided in this
Section no later than twenty (20) days after receiving actual notice of the
event prompting the termination.

 

C. Notwithstanding the preceding Section XI.B, the Parties may not terminate
this Settlement Agreement because of the amount of Attorney’s Fees and Expenses
awarded by the Court or any appellate court.

 

D. Notwithstanding the preceding Section XI.B, the Parties may not terminate
this Settlement Agreement or the proposed Settlement because of any order or
proceedings modifying the Plan of Allocation.

 

E. Not later than seven (7) days before the Fairness Hearing, Defendants also
may unilaterally withdraw from and terminate this Settlement Agreement if valid
and timely requests for exclusion are received from Class Members who, in the
aggregate, purchased an amount greater than seven and one-half percent (7-1/2%)
of the aggregate number of affected shares of PriceSmart purchased by all Class
Members during the Class Period. Requests for exclusion that are not timely
submitted, that are timely and validly withdrawn, or that fail to provide all of
the information required by this Settlement Agreement shall not be counted.
Solely for purposes of this Section XI.E, the Parties stipulate that the
aggregate number of affected shares of PriceSmart purchased by all Class Members
during the Class Period equals 6,812,112 shares.

 

F. If an option to withdraw from and terminate this Settlement Agreement arises
under Sections XI.B or XI.E, (i) neither Defendants nor Lead Plaintiff will be
required for any reason or under any circumstance to exercise that option, and
(ii) any exercise of that option shall be made in good faith.

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

G. If this Settlement Agreement is terminated pursuant to Sections XI.B or XI.E,
then:

 

1. this Settlement Agreement shall be null and void and shall have no force or
effect, and no Party to this Settlement Agreement shall be bound by any of its
terms, except for the terms of this Section XI.G and Section XII.B below;

 

2. this Settlement Agreement, all of its provisions, and all negotiations,
statements, and proceedings relating to it shall be without prejudice to the
rights of Defendants, Lead Plaintiff or any other Class Member, all of whom
shall be restored to their respective positions existing immediately before the
execution of this Settlement Agreement;

 

3. Defendants, Releasees, and their current or former directors, officers,
employees, agents, partners, attorneys and representatives expressly and
affirmatively reserve all defenses, arguments and motions as to all claims that
have been or might later be asserted in the Action;

 

4. Lead Plaintiff and his current and former predecessors, successors, heirs,
agents, attorneys, representatives or assigns, individually and on behalf of the
Class, expressly and affirmatively reserves all motions as to, and arguments in
support of, all claims that have been or might later be asserted in the Action;

 

5. neither this Settlement Agreement, nor the fact of its having been made,
shall be admissible or entered into evidence for any purpose whatsoever;

 

6. Lead Plaintiff shall promptly return to Defendants any monies (including any
interest accrued) in the Settlement Fund Account less any Notice and
Administration Expenses incurred but not yet paid;

 

7. Lead Plaintiff, Lead Counsel, members of the Class and any other plaintiffs’
counsel shall not be entitled to use any of the documents or information
obtained in confirmatory discovery for any purpose in this Action, including
opposing any motion to dismiss or filing an amended complaint; and

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

8. any order or judgment entered after the date of this Settlement Agreement
that relates to this Settlement Agreement shall be deemed vacated and will be
without any force or effect.

 

XII. GENERAL MATTERS AND RESERVATIONS

 

A. The obligation, although not the ability, of the Parties to conclude the
proposed Settlement is and will be contingent upon each of the following:

 

1. occurrence of the Final Settlement Date; and

 

2. any other conditions stated in this Settlement Agreement.

 

B. By executing this Settlement Agreement, Defendants do not intend to release
any claim against any insurer for any costs or expenses hereunder, including
attorney’s fees and costs.

 

C. Lead Counsel represents that it is authorized to enter into this Settlement
Agreement on behalf of Lead Plaintiff and the Class.

 

D. Defendants’ Counsel represent that they are authorized to enter into this
Settlement Agreement on behalf of their respective clients who are Defendants in
this Action.

 

E. This Settlement Agreement sets forth the entire agreement among the Parties
with respect to its subject matter, and it may not be altered or modified except
by written instrument executed by Lead Counsel and Defendants’ Counsel. The
Parties expressly acknowledge that no other agreements, arrangements or
understandings not expressed in this Settlement Agreement exist between or among
them. In entering into this Settlement Agreement, no party has relied upon any
representation or warranty not set forth expressly herein.

 

F. This Settlement Agreement and any ancillary agreements shall be governed by
and interpreted according to the law of the California, excluding its conflict
of laws provisions.

 

G. Any action to enforce this Settlement Agreement shall be commenced and
maintained only in the Court.

 

H. Whenever this Settlement Agreement requires or contemplates that one Party
shall or may give notice to the other, notice shall be provided by facsimile
transmission and/or next-day (excluding Saturday and Sunday) express delivery
service as follows and shall be

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

deemed effective upon such facsimile transmission, or delivery, to the facsimile
number, or address, as the case may be, below:

 

  1. If to Defendants, then to:

 

Peter Benzian, Esq.

LATHAM & WATKINS, LLP

600 West Broadway, Suite 1800

San Diego, California 92101

Telephone: (619) 236-1234

Facsimile: (619) 696-7419

 

Attorneys for PriceSmart Inc.

 

James G. Bohm, Esq.

A. Eric Aguilera

BOHM FRANCIS KEGEL & AGUILERA LLP

695 Town Center Drive, Suite 700

Costa Mesa, California 92626

Telephone: (714) 384-6500

Facsimile: (714) 384-6501

 

Attorneys for Gilbert A. Partida

 

William Grauer, Esq.

Koji Fukumura, Esq.

Dennis Crovella, Esq.

COOLEY & GODWARD LLP

4401 Eastgate Mall

San Diego, California 92121

Telephone: (858) 550-6000

Facsimile: (858) 550-6420

 

Attorneys for Allan C. Youngberg

 

  2. If to Lead Plaintiff or the Class, then to:

 

Jonathan M. Plasse, Esq.

Louis Gottlieb, Esq.

GOODKIND LABATON RUDOFF & SUCHAROW LLP

100 Park Avenue

New York, New York 10017-5563

Telephone: (212) 907-0700

Facsimile: (212) 818-0477

 

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STIPULATION OF SETTLEMENT

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and

 

Lionel Z. Glancey, Esq.

Peter A. Binkow, Esq.

GLANCY BINKOW LLP

1801 Avenue of the Stars, Suite 311

Los Angeles, California

Telephone: (310) 201-9150

Facsimile: (310) 201-9160

 

I. All time periods set forth herein shall be computed in calendar days unless
otherwise expressly provided. In computing any period of time prescribed or
allowed by this Settlement Agreement or by order of the Court, the day of the
act, event, or default from which the designated period of time begins to run
shall not be included. The last day of the period so computed shall be included,
unless it is a Saturday, Sunday or a legal holiday, or, when the act to be done
is the filing of a paper in Court, a day on which weather or other conditions
have made the Office of the Clerk of the Court inaccessible, in which event the
period shall run until the end of the next day that is not one of the
aforementioned days. As used in this Section, “legal holiday” includes New
Year’s Day, the observance of Martin Luther King, Jr.’s birthday, Presidents’
Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans’ Day,
Thanksgiving Day, Christmas Day, or any other day appointed as a federal
holiday.

 

J. The Parties reserve the right, subject to the Court’s approval, to make any
reasonable extensions of time that might be necessary to carry out any of the
provisions of this Settlement Agreement.

 

K. All Parties agree that this Settlement Agreement was drafted by counsel for
the Parties at arm’s-length, and that no parol or other evidence may be offered
to explain, construe, contradict or clarify its terms, the intent of the Parties
or their counsel, or the circumstances under which the Settlement Agreement was
made or executed; provided, however, that there shall be no presumption for or
against any Party that drafted all or any portion of this Settlement Agreement.

 

L. In no event shall the Settlement Agreement, any of its provisions, or any
negotiations, statements or court proceedings relating to its provisions in any
way be construed as, offered as, received as, used as or deemed to be evidence
of any kind in this Action or any proceeding to enforce this Settlement
Agreement. Without limiting the foregoing, neither this

 

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STIPULATION OF SETTLEMENT

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Settlement Agreement nor any related negotiations, statements or court
proceedings shall be construed as, offered as, received as, used as or deemed to
be evidence or an admission or concession of any liability or wrongdoing
whatsoever on the part of any person or entity, including but not limited to
Defendants, or as a waiver by Defendants of any applicable defense or as a
waiver by Lead Plaintiff or the Class of any claims, causes of action or
remedies.

 

M. Defendants expressly deny any wrongdoing alleged in the pleadings and do not
admit or concede any wrongdoing or liability in connection with any facts or
claims that have been or could have been alleged against them in the Action, but
consider it desirable for the Action to be settled and dismissed because this
Settlement will (i) bring to an end the substantial expenses, burdens, risks and
uncertainties associated with continued litigation of this Action; (ii) finally
put to rest those claims and the underlying matters; and (iii) confer
substantial benefits upon Defendants, Lead Plaintiff and Class Members
including, without limitation, the avoidance of further expense and disruption
of the management and operation of PriceSmart’s business due to the pendency and
defense of this Action.

 

N. Lead Plaintiff expressly affirms that the allegations contained in the
Complaint were made in good faith and have a substantial basis in fact, but
considers it desirable for the Action to be settled and dismissed because of the
substantial cash benefits the proposed Settlement will provide to Lead Plaintiff
and Class Members, and to bring to an end the substantial expenses, burdens,
risks and uncertainties associated with continued litigation of this Action.

 

O. No opinion or advice concerning the tax consequences of the proposed
Settlement to individual Class Members is being given or will be given by
Defendants’ Counsel or Lead Counsel, nor is any representation or warranty in
this regard made by virtue of this Settlement Agreement. The Notice will direct
Class Members to consult their own tax advisors regarding the tax consequences
of the proposed Settlement, and any tax reporting obligations they may have with
respect thereto. Each Class Member’s tax obligations, and the determination
thereof, are the sole responsibility of the individual Class Member, and it is
understood that the tax consequences may vary depending on the particular
circumstances of each individual Class Member.

 

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STIPULATION OF SETTLEMENT

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P. The Parties, their successors and assigns, and their attorneys undertake to
implement the terms of this Settlement Agreement in good faith, and to use good
faith in resolving any disputes that may arise in the course of implementing the
terms of this Settlement Agreement.

 

Q. The Parties, their successors and assigns, and their attorneys agree to
cooperate fully with one another in seeking Court approval of this Settlement
Agreement and to use their best efforts to effect the prompt consummation of
this Settlement Agreement and the proposed Settlement.

 

R. This Settlement Agreement may be signed in counterparts, each of which shall
constitute a duplicate original. Execution by facsimile transmission shall be
fully and legally binding on a Party, and the Party so executing shall promptly
provide a fully executed counterpart to each of the other Parties.

 

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STIPULATION OF SETTLEMENT

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S. All Releasees who are not parties to this Settlement Agreement are intended
third-party beneficiaries entitled to enforce the terms of the Release set forth
herein.

 

T. Except with respect to motions and hearings necessary to secure complete and
final approval of this settlement including final judgment and dismissal, Lead
Plaintiff and Lead Counsel will not make any public disclosure or statement
concerning the settlement that goes beyond the information contained in the
notice to class members; however, this restriction will not apply to the fact of
the settlement, the settlement amount or general information concerning the Lead
Plaintiff or Lead Counsel or any direct quotations from any order of the Court.
Nothing in this Settlement shall prevent the Company from making such
disclosures or press releases of this settlement as it may determine in its sole
discretion to be required by the securities laws and other law or regulations,
or in the interest of shareholders. Any violation of this paragraph will not
affect the remaining provisions of this Settlement; will not relieve any party
of its remaining obligations under this Settlement; and will not impair, void,
or affect in anyway the Settlement of this action. Further, the terms of this
paragraph do not act as a waiver of any litigation privilege and the terms of
this paragraph do not apply to any pleadings filed with the Court or statements
made by the parties in support of the Settlement, in any court proceeding.

 

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STIPULATION OF SETTLEMENT

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U. Within 30 days of the Final Settlement Date, Lead Counsel shall return to
Defendant’s Counsel copies of all documents produced by Defendants or certify in
writing that all such documents have been destroyed.

 

Agreed to as of this 12 day of May, 2005.

 

GOODKIND LABATON RUDOFF & SUCHAROW LLP

By:

 

/s/ Louis Gottlieb

--------------------------------------------------------------------------------

   

Jonathan M. Plasse (JP- 7515)

   

Louis Gottlieb (LG- 9169)

   

100 Park Avenue

   

New York, New York 10017-5563

   

(212) 907-0700

   

(212) 818-0477 (fax)

   

Lead Counsel for

   

Lead Plaintiff and the Class

LATHAM & WATKINS LLP

By:

 

/s/ Peter Benzian

--------------------------------------------------------------------------------

   

Peter Benzian (047456)

   

600 West Broadway, Suite 1800

   

San Diego, California 92101

   

Telephone: (619) 236-1234

   

Facsimile: (619) 696-7419

   

Counsel for PriceSmart Inc.

 

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STIPULATION OF SETTLEMENT

--------------------------------------------------------------------------------

BOHM FRANCIS KEGEL & AGUILERA LLP

By:

 

/s/ James G. Bohm

--------------------------------------------------------------------------------

   

James G. Bohm (132430)

   

A. Eric Aguilera (192390)

   

695 Town Center Drive, Suite 700

   

Costa Mesa, California 92626

   

Telephone: (714) 384-6500

   

Facsimile: (714) 384-6501

   

Counsel for Gilbert A. Partida

COOLEY GODWARD LLP

By:

 

/s/ Koji Fukumura

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William Grauer (138339)

   

Koji Fukumura (189719)

   

Dennis Crovella (190781)

   

4401 Eastgate Mall

   

San Diego, California 92121

   

Telephone: (858) 550-6000

   

Facsimile: (858) 550-6420

   

Counsel for Allan C. Youngberg

LEWIS BRISBOIS BISGAARD & SMITH LLP

By:

 

/s/ Richard George

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Richard George

   

Alifya Vasi

   

199 Water Street, 25th Floor

   

New York, N.Y. 10038

   

Telephone: (212) 232-1300

   

Facsimile: (212) 232-1399

    Counsel for National Union Fire Insurance of Pittsburgh, PA

 

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STIPULATION OF SETTLEMENT