Exhibit 10.6

 

SECOND AMENDMENT TO SHAREHOLDERS’ AGREEMENT

 

This Second Amendment to the Shareholders’ Agreement (“Second Amendment”) is
entered into effective as of November 7, 2003, and is made by and between
PriceSmart, Inc. (“PriceSmart”) and Grupo Gigante, S.A. de C.V. (“Gigante”).
Each of PriceSmart and Gigante are referred to in this Second Amendment as a
“Shareholder,” and collectively as the “Shareholders”. Capitalized terms not
defined herein shall have the meaning ascribed to them in the Shareholders’
Agreement (as defined hereinafter).

 

RECITALS

 

WHEREAS, the Shareholders entered into a Shareholders’ Agreement for PSMT
Mexico, S.A. de C.V., on January 15, 2002 (the “Shareholders’ Agreement”), which
called for the creation of new privately-owned company (“NewCo”), being a
business corporation under the laws of the United Mexican States (“Mexico”), for
the establishment and operation of a business in Mexico, engaged in the sale of
general merchandise, food and related products and services under a warehouse
club business format (the “Merchandise Business System”);

 

WHEREAS, the Shareholders entered into a First Amendment to the Shareholders’
Agreement on January 31, 2002 (the “First Amendment to the Shareholders’
Agreement”), to further define the fees the Shareholders would charge each other
for their respective services; and

 

WHEREAS, the Shareholders now wish to further amend the Shareholders’ Agreement
to 1. reflect the number of stores actually opened, 2. to define the number of
stores to be opened, 3. to modify the responsibilities of each of the parties
regarding the management of the business, and 4. to extend certain periods in
connection with the exercise of rights regarding the transfer of shares.

 

AGREEMENT

 

THEREFORE, in consideration of the mutual promises set forth in this Second
Amendment, and in compliance with Section 26 of the Shareholders’ Agreement, the
Shareholders agree to amend Section 2.1.3, to read (changes are underlined):

 

2.1.3. The forty million U.S. dollars ($40,000,000) of initial capital
contributions represent the currently anticipated required capital contributions
for the construction and operation of not less than three (3) Territory Outlets
over a period of eighteen (18) months. The Shareholders will cause NewCo to use
diligent good faith efforts to obtain bank financing to continue its anticipated
expansion and operation (with pro rata guarantees from PriceSmart and Gigante,
if required). If such financing cannot be obtained by NewCo, each of PriceSmart
and Gigante will contribute, on a pro-rata basis (based on the parties’
respective equity ownerships). Payment of these additional contributions shall
be made as agreed by the Shareholders. After the initial capitalization, upon
agreement of

 

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

PriceSmart and Gigante, each of PriceSmart and Gigante will contribute, on a
pro-rata basis (based on the parties’ respective equity ownerships) additional
capital for the construction of as many Territory Outlets as the parties may
subsequently agree. In the event any capital calls are not satisfied, the
proportionate interest of the non-responding party shall be diluted.

 

The Shareholders further agree to amend Section 6.9 of the Shareholders’
Agreement, to read:

 

6.9. Director General.

 

For so long as each of the Shareholders owns fifty (50%) of the outstanding
shares, the Director General shall be nominated by the Directors appointed by
the holders of Class B Shares (“Series B Directors”). The Director General shall
act as the legal representative of NewCo and in the best interests of NewCo, as
instructed by the board.

 

The Shareholders further agree to amend Section 12.1. of the Shareholders’
Agreement, to read (changes are underlined):

 

12.1. At anytime after the third year anniversary of the execution of this
Agreement, either PriceSmart or Gigante may offer to purchase the other’s
interests in NewCo (“Buy-Sell Offer”). Within fifteen (15) calendar days after
receipt of the Buy-Sell Offer, which shall contain the price per share, the
offeree Shareholder may elect, by written notice to the offeror Shareholder,
either (a) to sell the offeree Shareholder’s Shares to the offeror Shareholder
at the price per share specified in the Buy-Sell Offer, or (b) to purchase the
offeror Shareholder’s shares at the price per share specified in the Buy-Sell
Offer. In the event the offeree Shareholder fails to respond to a written
Buy-Sell Offer within the allotted time, the offeror may purchase the shares of
the offeree Shareholder at ten percent (10%) below the amount of the Buy-Sell
offer. Any such transaction (when the offeree Shareholder has exercised its
option to either buy or sell) shall close on the latter of sixty (60) business
days following receipt of the Buy-Sell Offer or the date on which all necessary
approvals are received. The transfer of the ownership of the shares shall not be
completed until full payment has been completed. Unless full payment is
completed at the execution of the Buy-Sell Agreement, the sales shall be
effected through a “Compraventa con reserva de dominio,” as provided under
Mexican law.

 

The Shareholders further agree to amend Section 13.1 of the Shareholders’
Agreement, to read:

 

13.1 Impasses. If at any time after the third anniversary of this Agreement, the
board of Shareholders (as applicable) reach an impasse, which impasse, if
unresolved, precludes the continuing performance by NewCo under any material
contract to which it is a party or the operation of any significant part of
NewCo’s business, and such impasse is not resolved within fifteen (15) calendar
days thereafter, the issue shall immediately be referred to the chief executives
(or similar officers) of the Shareholders for resolution. If these individuals
are unable to agree upon a resolution within fifteen (15) calendar days

 

Page 2 of 3

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

after referral of such impasse to them, then an impasse is deemed to have been
reached. If an impasse is reached, either PriceSmart or Gigante may offer to
purchase the other’s interests in NewCo and its subsidiaries (“Buy-Sell Offer”).
Within fifteen days after receipt of the Buy-Sell Offer, the offeree Shareholder
must elect, by written notice to the offeror Shareholder, either (a) to sell the
offeree Shareholder’s Shares to the offeror Shareholder at the price per share
specified in the Buy-Sell Offer, or (b) to purchase the offeror Shareholder’s
shares at the price per share specified in the Buy-Sell Offer. Any such
transaction shall close on the latter of sixty (60) calendar days following
receipt of the Buy-Sell Offer or the date on which all necessary approvals are
received, with payment to be made in accordance with Section 12.2 and the
purchasing party having the rights specified in Section 12.3 or 12.4, as the
case may be. If the offeree Shareholder fails to respond to this Buy-Sell Offer,
within the allotted time, the offeror Shareholder shall have the right to seek
specified performance of a sale of the offeree Shareholder’s shares at ten
percent (10%) less than the Buy-Sell offer.

 

IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to
the Shareholders’ Agreement as of the date first written above.

 

PRICESMART:

     

              GIGANTE:

PriceSmart, Inc.

     

Grupo Gigante, S.A. de C.V.

By:  

/s/ ROBERT E. PRICE

      By:  

/s/ ROBERT SALVO

   

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

         

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

Robert E. Price

     

Angel Losada Moreno

Interim President/Interim CEO

     

Chairman and President

and/or Robert Salvo

Chief Executive Officer

 

Page 3 of 3