Document:

Purchase Order Financing Agreement

 Exhibit 10.4 
  
 Purchase Order Financing Agreement 
  
 This Purchase Order Financing Agreement (“Agreement”) is made this 23rd day of February, 2004 by and between The Price Group,
LLC, a California limited liability company (“TPG”) and PriceSmart Inc., a Delaware corporation (“PSMT”). 
  
 Recitals 
  

	 	A.	PSMT wishes to obtain from TPG purchase order financing for certain merchandise, and TPG is willing to provide such purchase order financing to PSMT. 

  

	 	B.	PSMT and TPG now wish to memorialize the terms and conditions upon which such purchase order financing shall be provided to PSMT by TPG. 

  
 NOW THEREFORE, in consideration of the mutual covenants herein the parties
agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS 
  

	1.01	Definitions – The following defined terms are used in this Agreement: 

  

	 	A.	“Collateral” is defined in Section 3.01. 

  

	 	B.	“Event of Default” is defined in Section 3.04. 

  

	 	C.	“Term” shall mean the period beginning on the date of this Agreement and ending one (1) year thereafter. 

  

	 	D.	“Obligations” is defined in Section 3.02. 

  

	 	E.	“Note” is defined in Section 2.04 

  

	 	F.	“Trade Vendors” is defined in Section 2.01. 

  

	 	G.	“Payment Request” is defined in Section 2.02(A). 

  
 ARTICLE II 
  
 LOAN TERMS 
  

	2.01	Maximum Purchase Order Financing Amount 

  
 TPG shall pay funds to PSMT’s trade vendors (“Trade Vendors”) on behalf of PSMT during the Term, provided that the maximum aggregate amount of the funds so
paid and outstanding at any time may not exceed Ten Million Dollars ($10,000,000.00), subject to Section 2.03. 
  

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	2.02	Payment to Trade Vendors 

  
 TPG shall pay funds to the Trade Vendors, from time to time, pursuant to the following procedure: 
  
 A) PSMT will deliver to TPG purchase orders and/or invoices from the Trade Vendors with written instructions to TPG to pay
such purchase orders/invoices (the “Payment Request”), along with wire instructions for such payment. TPG shall pay funds to the Trade Vendors, in accordance with said written instructions, by wire transfer within one (1) business day
after TPG receives the Payment Request and wire instructions. 
  
 B) Each payment by TPG as provided in paragraph (A) above shall be deemed a payable due by PSMT to TPG effective as of the date funds are so wired from TPG’s account. 
  

	2.03	TPG’s Option to Refuse Payment Advance 

  
 Notwithstanding anything in this Agreement to the contrary, TPG may, at its option (the “Option”), at any time, refuse to pay any purchase order/invoice by
giving PSMT written notice of the exercise of such option (the “Option Notice”). However, if TPG receives a Payment Request, prior to TPG giving the Option Notice, and TPG does not wish to finance the subject purchase order/invoice
pursuant to such Payment Request, TPG must exercise the Option within one (1) business day after TPG’s receipt of such Payment Request, in order not to have to comply with such Payment Request. 
  

	2.04	Repayment of Purchase Order Financing Amounts 

  
 PSMT shall pay to TPG the amounts so paid by TPG to the Trade Vendors no later than sixty (60) days after the date of a particular advance, together with interest on such
advance, and pursuant to other terms and conditions as set forth in an executed promissory note (the “Note”) given by PSMT to TPG, concurrently with the execution and delivery of this Agreement. A copy of the form of the Note is attached
hereto as Exhibit A. 
  

	2.05	No Liability by TPG 

  
 TPG shall have no liability to PSMT, or any other party, in the event funds are not timely paid to Trade Vendors, provided TPG has timely given appropriate wire
instructions to its bank or other institution. 
  

	2.06	No Third Party Beneficiary 

  
 No Trade Vender nor any other third party shall be deemed a third party beneficiary of this Agreement. 
  
 ARTICLE III 
  
 PLEDGE AND SECURITY AGREEMENT 
  

	3.01	Grant of Security Interest 

  
 In consideration of the financial accommodations to be given by TPG under this Agreement, PSMT grants to TPG a security interest in the following described personal
property of PSMT now or hereafter existing or acquired (individually and collectively the “Collateral”): 
  
 “Inventory held in the continental United States including, without limitation, goods, merchandise, and other personal property held or to be held
for sale or lease, display or demonstration, or out on 

  

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lease or consignment, or to be furnished under a contract of service or so furnished, and returns from sale, lease consignment or service.” 

 

	3.02	Secured Obligations of PSMT 

  
 The security interest granted by PSMT to TPG secures payment and performance of all PSMT’s present and future debts, obligations and liabilities to TPG (including
but not limited to PSMT’s obligations under the Note) arising under this Agreement whether absolute or contingent, direct or indirect liquidated or unliquidated (collectively the “Obligations”). 
  

	3.03	Covenants of PSMT 

  
 A) Contemporaneously with the execution of this Agreement, PSMT shall properly complete and deliver to TPG UCC-1 Financing Statements to enable TPG to
perfect TPG’s security interest in the Collateral. PSMT agrees also to execute, file, and record such other statements, notices, and agreements, take such action and obtain such certificates and documents, in accordance with all applicable
laws, statutes, and regulations as may be necessary or advisable to perfect, evidence, and continue TPG’s security interest in the Collateral. 
  
 B) PSMT shall not, without the prior written consent of TPG, (a) sell, offer to sell, or otherwise transfer the Collateral except in the ordinary course
of business, or (b) pledge, mortgage, encumber, or otherwise permit the Collateral to be subject to any lien, security interest, or charge, other than the security interest created by this Agreement. 
  
 C) PSMT shall comply with all laws, statutes, and regulations pertaining to
the Collateral. 
  
 D) PSMT shall pay when due all taxes,
assessments, and liens with regard to the Collateral. PSMT may withhold any such payment or may elect to contest any lien if PSMT is conducting appropriate proceedings in good faith to contest the obligation to pay and so long as TPG’s interest
is not jeopardized. 
  
 E) PSMT irrevocably appoints TPG as
PSMT’s attorney in fact to do any act that PSMT is obligated to do pursuant to this Agreement to preserve or protect the Collateral and to preserve, protect, or establish TPG’s lien on the Collateral. PSMT further irrevocably appoints TPG
to exercise such rights and powers as PSMT might exercise with respect to the Collateral following an Event of Default, as defined below. These powers shall include without limitation the right to: 
  
 (i) Collect by legal proceedings or otherwise, and endorse, receive, and
receipt all payments, proceeds, and other sums and property now or after the date of this Agreement payable on account of the Collateral, 
  
 (ii) Transfer the Collateral to TPG’s own or TPG’s nominee’s name, and 
  
 (iii) Make any compromise or settlement and take any action TPG deems advisable with respect to the Collateral. PSMT agrees
to reimburse TPG on demand for any costs and expenses, including without limitation attorney fees, which TPG may incur while acting as PSMT’s attorney in fact under this Agreement, all of which costs and expenses are included in the Obligations
secured by this Agreement. TPG shall have no obligation to act pursuant to this paragraph and shall not be required to make any presentment, demand, or protest, or give any notice or take any action to preserve any rights against any other person in
connection with the Collateral. 
  

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	3.04	Events of Default 

  
 Any of the following events or conditions shall constitute an Event of Default by PSMT under this Agreement: 
  
 A) Failure to make payments in accordance with the terms of the Note, if the failure continues for five (5) business days
after written notice has been given by TPG to PSMT; 
  
 B) Default
in the performance of any other Obligation or breach of any agreement, representation, or warranty contained in this Agreement if such default is not cured within twenty (20) days after written notice; provided, however, with respect to a
non-monetary breach, if PSMT cannot reasonably cure the breach within such twenty (20) day period, PSMT shall not be in default of this Agreement if PSMT commences to cure the breach within the twenty (20) day period and diligently and in good faith
continues to cure the breach; 
  
 C) Any levy or proceeding
against the Collateral or PSMT’s interest in the Collateral, except if PSMT is conducting appropriate proceedings in good faith to contest the levy or proceeding; or 
  
 D) The filing of a petition by or against PSMT under the provision of the Bankruptcy Code. 
  

	3.05	TPG’s Remedies 

  
 A) On the occurrence of an Event of Default, TPG: 
  
 (i) Shall have and may exercise all rights and remedies accorded to TPG by the California Uniform Commercial Code; 
  
 (ii) May declare all unperformed Obligations, in whole or in
part, of Debtor immediately due and payable without demand or notice; and 
  
 (iii) May require PSMT to take any and all action necessary to make the Collateral available to TPG. 
  
 B) All of TPG’s rights and remedies, whether evidenced by this Agreement or by any other writing, shall be cumulative and may be exercised singularly
or concurrently. Election by TPG to pursue any remedy shall not exclude pursuit of any other remedy. 
  
 C) PSMT expressly waives any constitutional or other right to a judicial hearing prior to the time TPG takes possession or disposes of the Collateral on
an Event of Default as provided above. 
  
 ARTICLE IV

  
 REPRESENTATIONS AND WARRANTIES 
  

	4.01	PSMTs Representations and Warranties 

  
 PSMT represents and warrants to TPG as follows: 
  
 A) PSMT’s Board of Directors has duly authorized the PSMT to enter into this Agreement which is a valid and binding obligation of PSMT. 

 

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 B) The execution, delivery and performance of this Agreement by PSMT does not conflict with and is not in
violation of any applicable law or other agreement of which PSMT is a party and PSMT does not require the consent of any other party to enter into this Agreement. 
  
 C) PSMT is the owner of all right title and interest in the Collateral free and clean of all liens, encumbrances and
security interests except the security interest created by this Agreement. 
  
 D) No defenses, offsets, claims or counterclaims exist against PSMT that may be asserted against TPG in any proceeding to enforce TPG’s rights in the Collateral. 
  
 E) The liens granted to PSMT under this Agreement will constitute a first
priority lien on the Collateral on the filing of a UCC-1 Financing Statement and PSMT’s grant of such lien to TPG does not constitute a fraudulent conveyance under any applicable law. 
  
 ARTICLE V 
  
 MISCELLANEOUS 
  

	5.01	Notices 

  
 All waivers, elections, options, notices, demands, and consents which either party may be required or may desire to give under this Agreement (“Notice”) shall be in writing and shall be effective when
telecopied to the fax numbers indicated below, when personally delivered, or when delivered by overnight express delivery or when delivered by United States Postal Service office or branch or official depository maintained by the United States
Postal Service, by certified or registered mail, postage prepaid, return receipt requested, addressed as follows: 
  

			
	To TPG at:	  	 The Price Group, LLC
 Attn: Joseph R. Satz

Suite 520
 7979 Ivanhoe Ave.
 La Jolla, California 92037
 fax: (858)551-2314

		
	To PSMT:	  	 Until March 26, 2004:
 PriceSmart, Inc
 Attn: Robert Gans
 4949 Morena Blvd
 San Diego, California 92037
 fax: (858)581-4707

		
	 	  	 After March 26, 2004:
 PriceSmart, Inc.
 Attn: Robert Gans
 9740 Scranton Road
 San Diego, CA. 92121-1745

  

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	5.02	Attorneys’ Fees 

  
 If either party hereto files any action or brings any proceeding against the other arising out of this Agreement, or is made a party to any action or proceeding, then,
the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, reasonable attorneys’ fees to be fixed by the court. The “prevailing party” shall be the party who is entitled to recover its
costs of suit, whether or not suit proceeds to final judgment. A party not entitled to recover costs shall not be entitled to recover attorneys’ fees. 
  

	5.03	Integration 

  
 This Agreement and the exhibits attached hereto shall constitute the entire Agreement between TPG and PSMT and supersedes any and all prior written or oral agreements, representations, and warranties between and among
the parties and their agents, all of which are merged into or revoked by this Agreement, with respect to its subject matter. 
  

	5.04	Modification 

  
 No modification, waiver, amendment, discharge, or change of this Agreement shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment,
discharge, or change is or may be sought. 
  

	5.05	Severability 

  
 In the event any term, covenant, condition, provision, or agreement contained herein is held to be invalid, void, or otherwise unenforceable, by any court of competent jurisdiction, such holding shall in no way affect
the validity or enforceability of any other term, covenant, condition, provision, or agreement contained herein. 
  

	5.06	Governing Law 

  
 This Agreement and the obligation of the parties hereunder shall be interpreted, construed, and enforced in accordance with the laws of the State of California. 
  

	5.07	Venue 

  
 Any actions arising under this Agreement shall be heard and resolved in San Diego County, California. 
  

	5.08	Terminology 

  
 All personal pronouns used in this Agreement, whether used in the masculine, feminine, or neuter gender, shall include all other genders; the singular shall include the plural and vice versa. “Business day”
means other than Saturday, Sunday, or holiday. In the event that the time for performance of an act under this Agreement falls on a Saturday, Sunday, or holiday, the date for performance of such act shall be extended to the next business day.

  

	5.09	Counterparts 

  
 This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original agreement, and all of which shall constitute one agreement by each of the parties hereto. 
  

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	5.10	Binding Effect 

  
 Except as otherwise herein provided, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

  

	5.11	Captions 

  
 Article and section titles or captions contained herein are inserted as a matter of convenience and for reference, and in no way define, limit, extend, or describe the scope of this Agreement or any provisions hereof.
All reference to section numbers herein shall mean the sections of this Agreement. 
  

	5.12	Exhibits 

  
 The following exhibits are attached hereto: 
  

	 	Exhibit	A - Form of Promissory Note. 

  
 Executed as of the date first written above. 
  

									
	THE PRICE GROUP, LLC	 	 	 	PRICESMART, INC
					
	by	 	/s/ JIM CAHILL	 	 	 	by	 	/s/ JOHN HEFFNER
	 	 	
	 	 	 	 	 	

	 	 	Manager	 	 	 	 	 	 
					
	by	 	/s/ SOL PRICE	 	 	 	its	 	CFO
	 	 	
	 	 	 	 	 	 
	 	 	Manager	 	 	 	Print Name	 	John Heffner
					
	 	 	 	 	 	 	by	 	/s/ ROBERT M. GANS
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	its	 	Exec. Vice President
	 	 	 	 	 	 	Print Name	 	Robert M. Gans

  

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 EXHIBIT A 
  

PROMISSORY NOTE 
  

			
	$10,000,000	 	                , 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. 
  

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 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. 
  
 14. Venue. Any actions arising under
this Note shall be heard and resolved in San Diego County, California. 
  

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 Executed as of the date first written above. 
  

			
	PRICESMART, INC
		
	By:	 	 
	 	 	

	 Its:
	 	 
	 	 	

	Print Name	 	 
	 	 	

		
	By:	 	 
	 	 	

	 Its:
	 	 
	 	 	

	Print Name	 	 
	 	 	

  

 10First Amendment to Shareholders'

 Exhibit 10.5 
  
 FIRST AMENDMENT TO SHAREHOLDERS’ AGREEMENT 
  
 This First Amendment to the Shareholders’ Agreement (“First Amendment”) memorializes the intent of the
parties as of January 31, 2002, 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 First 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 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’ Agreement provides that each Shareholder shall deposit the amount of ten million U.S.
dollars ($10,000,000) into NewCo’s account within fifteen (15) calendar days after the incorporation of NewCo; 
  
 WHEREAS, the Shareholders wish to clarify the intent of the above-mentioned language and wish to change the date of deposit to within ten (10) business
days after the establishment of NewCo’s bank account; 
  
 WHEREAS, the terms of the Shareholders’ Agreement call for the Shareholders to cause NewCo to enter into the Licensing, Technology Transfer, Training, Management and Sourcing Agreement (the “Licensing and Management
Agreement”) with PriceSmart and Venture Services, Inc. (“Licensors”), by which Licensors will, at Licensors’ actual costs only, which are effectively incurred by Licensors and directly derived from NewCo’s operations, grant
a license to NewCo to utilize certain intellectual property owned by Licensors for the establishment and operation of the Merchandise Business System, and Licensors shall provide certain training, management support and product sourcing services to
NewCo; 
  
 WHEREAS, the terms of the Shareholders’ Agreement
call for the Shareholders to cause NewCo to enter into the Sourcing and Consulting Agreement with Gigante, (“Consulting Agreement”) whereby Gigante shall provide to NewCo, at Gigante’s actual costs only, its expertise regarding
retail/wholesale business, consumer preferences and opportunities in Mexico; 
  
 WHEREAS, the Shareholders wish to replace the concept of “actual cost” in he Shareholders’ Agreement with “Consideration” (as defined herein); 
  
 WHEREAS, the Shareholders’ Agreement provides in Section 1 that all
capitalized terms not defined therein have the respective meanings ascribed to them in the Licensing and Management Agreement; 
  

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 WHEREAS, the terms of the Shareholders’ Agreement call, as provided therein, for each of PriceSmart,
Gigante or TradeCo, to supply to OpCo all goods that are necessary to perform OpCo’s corporate purpose, and that all sourcing/expense reimbursement fees for all such goods will be at landed cost (including proportional rebates and marketing
funds); 
  
 WHEREAS, the Shareholders wish that PriceSmart and
Gigante have the possibility of directing their respective suppliers of goods to OpCo, so said suppliers deal directly with OpCo under the same business conditions as they do with PriceSmart and Gigante, as applicable; 
  
 WHEREAS, the Shareholders wish that TradeCo supplies to OpCo all the goods,
as the latter requests, under market conditions; 
  
 WHEREAS, the
terms of the Shareholders’ Agreement calls for the creation of a six (6) member board of directors for NewCo; 
  
 WHEREAS, the Shareholders wish to have an eight (8) member board of directors for NewCo, with eight (8) alternates; 
  
 WHEREAS, the Shareholders wish that, in addition to the named directors, the
alternate members of the board of directors be allowed to attend meetings of the board, but without a vote, unless substituting a named director; 
  
 WHEREAS, the Shareholders’ Agreement provides that, if a Change of Control should occur in any of the Shareholders, then the other Shareholder must
either buy the NewCo shares of the former or sell its own NewCo shares to the former; and 
  
 WHEREAS, the Shareholders wish that, if a Change of Control should occur in any of the Shareholders, then the other Shareholder may also have the opportunity to keep its NewCo shares, without having to buy the NewCo
shares of the other Shareholder. 
  
 AGREEMENT 

 
 THEREFORE, in consideration of the mutual promises set forth in this First
Amendment, and in compliance with Section 26. of the Shareholders’ Agreement, the Shareholders agree to amend Sections 2.1.2, 3, 4, 5.1, 6.1 and 12.6 of the Shareholders’ Agreement to read as follows: 
  
 2.1.2. Each Shareholder shall subscribe fifty percent (50%) of the capital
stock of NewCo and pay initially for twenty-five (25) NewCo shares at a par value of one thousand ($1,000) Mexican pesos per share, the minimum fixed capital being the amount of $50,000 (fifty thousand 00/100 Mexican pesos). PriceSmart and Gigante
shall complete the capitalization of NewCo by making additional contributions so that their respective total contributions reach twenty million U.S. dollars ($20,000,000) each, or the equivalent in Mexican pesos at the exchange rates quoted by Banco
de México (“tipo de cambio para solventar obligaciones denominadas en moneda extranjera pagaderas en la República Mexicana”) on the dates of the contributions. Each Shareholder shall deposit the amount of ten million
U.S. dollars 

  

 Page 2 of 5 

 
($10,000,000) into NewCo’s account within ten (10) business days after the opening of NewCo’s bank account. The balance of payments necessary for
each Shareholder to reach a total capital contribution of twenty million U.S. Dollars ($20,000,000) apiece shall be deposited into NewCo’s account from time-to-time as required by NewCo and agreed to by the Shareholders. Additional shares shall
be issued as the capital contributions are made. Any portion of a capital contribution, which would result in the issuance of a fractional share shall instead be recorded by NewCo as a premium. 
  

	 	3.	Licensing and Management Agreement 

  
 The Shareholders shall cause NewCo to enter into a Licensing, Technology Transfer, Training, Management and Sourcing Agreement (the “Licensing and
Management Agreement”) with PriceSmart and Venture Services, Inc. (“Licensors”) in a form substantially similar to that attached hereto as Exhibit B. Pursuant to the Licensing and Management Agreement, Licensors will sell to Opco
goods and/or services for an amount not greater than the lowest amount permitted by Mexican law (“Consideration”). Licensors shall also grant a license to NewCo to utilize certain intellectual property owned by Licensors for the
establishment and operation of the Merchandise Business System, and Licensors shall provide certain training, management support and product sourcing services to NewCo. 
  
 Shareholders agree that prior to commencing the implementation of the Merchandise Business System, they will agree which of
the names registered by PriceSmart, and granted for use by OpCo pursuant to the Licensing and Management Agreement, will be used by OpCo and, prior to using any trademark or trade name including the word “PriceSmart” or the word
“Price,” they will first determine who will bear the costs in the event the use of that name is challenged, or if a different name shall be used. 
  

	 	4.	Consulting Agreements 

  
 The Shareholders shall cause NewCo to enter into a sourcing and consulting agreement with Gigante, (“Consulting Agreement”) whereby Gigante
shall provide to NewCo, for a Consideration, its expertise regarding retail/wholesale business, consumer preferences and opportunities in Mexico. 
  

	 	5.	Sourcing Agreements 

  
 PriceSmart shall be OpCo’s exclusive supplier of goods purchased from manufacturers located in the United States, unless such goods are from
suppliers referred to PSMT MEXICO by PriceSmart. Gigante shall be OpCo’s exclusive supplier of goods purchased from manufacturers located in Mexico, unless such goods are from suppliers referred to PSMT MEXICO by Gigante. However, OpCo shall
retain the right to buy from other suppliers if PriceSmart or Gigante (as the case may be) cannot match the price of such goods offered by other suppliers. At OpCo’s request, each of PriceSmart, Gigante or TradeCo may also supply to OpCo goods
that are manufactured outside of the United States or Mexico. PriceSmart and/or Gigante shall: (i) make a good faith best effort to have their respective suppliers deal directly with OpCo or its subsidiaries under the same terms, conditions and
prices as those agreed between that supplier and PriceSmart, or that supplier and Gigante, or if not possible; (ii) sell to 

  

 Page 3 of 5 

 
OpCo goos and services for a Consideration. TradeCo shall always supply to OpCo all the goods, as the latter requests, under market conditions. 

 
 5.1 TradeCo. TradeCo, a wholly owned subsidiary of NewCo, shall operate to
sell products to Gigante in Mexico and to PriceSmart in countries other than Mexico. TradeCo shall charge an amount not to exceed 2% above Consideration on all sales to PriceSmart or Gigante and as the market will bear to any parties other than
PriceSmart or Gigante. TradeCo may not sell to any competitor of Gigante or PriceSmart. 
  
 6.1. Election. The board shall be comprised of (8) directors (“Directors”). The holders of Class A Shares and holders of Class B Shares shall nominate four (4) Directors each. Each Shareholder shall be
entitled to name an alternate for each Director. The alternates appointed by a class of shares may each substitute for any of the Directors appointed by the same class. In addition to the named directors, the alternate members of the board of
directors shall be allowed to attend meetings of the board, but without a vote, unless substituting a named director. The Shareholders agree to the manner that Directors are so elected, reappointed and removed (as described in this Section 6.1, and
as further described below), in lieu of other possible procedures. For so long as there are only two Shareholders, if the percentage of any class of shares decreases relative to that of the other class, then the number of such class’ Directors
shall be decreased and the other class shall be increased according to the following schedule: 
  

			
	 1 share to <12.5% shares
	  	0 Directors
	 12.5% to <25% shares
	  	1 Director
	 25% shares <37.5% shares
	  	2 Directors
	 37.5% to <50%
	  	3 Directors
	 50% shares
	  	4 Directors
	 >50% to 62.5% shares
	  	5 Directors
	 >62.5% to 75% shares
	  	6 Directors
	 >75% to 87.5% shares
	  	7 Directors
	 >87.5% to 100% shares
	  	8 Directors

  
 12.6. Change in
Control. If at any time there occurs a change of shareholder control of a Shareholder, such Shareholder (“Change of Control Shareholder”) shall be required, within three (3) business days, to offer to sell its NewCo shares to the other
Shareholder (“Buy-Sell Offer”). Within fifteen (15) calendar days of 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, (a) to buy the
offeree Shareholder’s Shares at the price per share specified in the Buy-Sell Offer, (b.) to sell the offeror Shareholder’s shares at the price per share specified in the Buy-Sell Offer; or (c) to remain as Shareholder, under the same
conditions set forth herein. For purposes of this Agreement “Change of Control” of a Shareholder shall be deemed to be (i) an acquisition of all or substantially all of the assets of such Shareholder, (ii) a sale of shares of voting
capital stock or a merger, consolidation, reorganization or other combination or acquisition whereby the then-existing shareholders of such Shareholder and their affiliates do not retain at least a majority of the voting power of the shares of such
Shareholder or the other equity of the surviving entity (iii) the acquisition by one person or group (other than the shareholders of such Shareholder existing 

  

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immediately prior to date hereof) of beneficial ownership of at least 30% of the voting power of such Shareholder’s fully-diluted capital stock.

  
 Any such transaction provided in Sections 12.5 and 12.6 (when
the offeree Shareholder has exercised its option to either buy or sell) shall close on the latter of sixty (60) 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. 
  
 In the event Gigante purchases
all of PriceSmart’s shares pursuant to Sections 12.5, 12.6 or 13.1, then Gigante at its sole discretion shall have the right to continue with the use of the name PriceSmart for not more than three (3) years and with the Licensing and Management
Agreement for not more than one year after the acquisition of the Shares sold by the offeror Shareholder or to terminate the Licensing and Management Agreement concurrently with the purchase of PriceSmart’s shares. Gigante shall continue to be
bound as to any Confidential Information (as hereinafter defined), which had been received by Gigante from PriceSmart or NewCo pursuant to Section 18 hereof (but Gigante shall not be in breach of Section 18 only by continuing the operation of
NewCo). 
  
 This First Amendment supports and supersedes any other
document entitled First Amendment to the Shareholders’ Agreement, whether signed or unsigned. 
  
 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to the Shareholders’ Agreement as of the date first written above.

  

									
	 PRICESMART:
 PriceSmart, Inc.
	 	 	 	 GIGANTE:
 Grupo Gigante, S.A. de C.V.

					
	By:	 	 /s/    Gilbert A. Partida
	 	 	 	By:	 	 /s/    Angel Losada Moreno

	 	 	
	 	 	 	 	 	

	 Gilbert A. Partida
 President/CEO
	 	 	 	 Angel Losada Moreno
 Presidente Ejecutivo y/o
 Roberto Salvo Horvilleur
 Director General

			
	 4649 Morena Blvd.
 San Diego, CA 92117
 Fax Number: (619) 581-4707
	 	 	 	 Ejercito Nacional 769-
 A esquina Moliere, Col. Nueva Granada
 Delegación Miguel Hidalgo
 CP 11520 México D.F.
 Fax Number: (52-55) 52 69-8380

  

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