PRICESMART INC, DEF 14A, 1999-12-10

PRICESMART INC
DEF 14A, 1999-12-10
MISCELLANEOUS RETAIL

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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement

[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

PRICESMART, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)

Payment of filing fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid: NOT APPLICABLE
(2)Form, Schedule or Registration Statement No.: NOT APPLICABLE
(3)Filing Party: NOT APPLICABLE
(4)Date Filed: NOT APPLICABLE

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PRICESMART, INC.

NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT

TO THE STOCKHOLDERS OF PRICESMART, INC.:

Notice is hereby given that the Annual Meeting of the Stockholders of
PriceSmart, Inc. (the "Company"), will be held at 10:00 a.m. on Wednesday,
January 19, 2000 at the Hilton San Diego Mission Valley, 901 Camino del Rio
South, San Diego, California 92108 for the following purposes:

1. To elect directors for the ensuing year, to serve until the next
Annual Meeting of Stockholders and until their successors are elected
and have qualified. The present Board of Directors of the Company has
nominated and recommends for election as directors the following seven
persons:

<TABLE>

<S> <C>
Rafael E. Barcenas Lawrence B. Krause
James F. Cahill Gilbert A. Partida
Katherine L. Hensley Robert E. Price
Leon C. Janks

</TABLE>

2. To transact such other business as may be properly brought before
the Annual Meeting or any adjournment thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. The Board of Directors has fixed the close
of business on November 23, 1999 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. A list of
such stockholders shall be open to the examination of any stockholder at the
Annual Meeting and for a period of ten days prior to the date of the Annual
Meeting at the offices of PriceSmart, Inc., 4649 Morena Blvd., San Diego,
California, 92117.

Accompanying this Notice is a Proxy. WHETHER OR NOT YOU EXPECT TO BE AT
THE ANNUAL MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY. If you plan to attend the Annual Meeting and wish to vote your shares
personally, you may do so at any time before the Proxy is voted.

All stockholders are cordially invited to attend the meeting.

BY ORDER OF THE BOARD OF DIRECTORS

Robert M. Gans
SECRETARY

San Diego, California
December 10, 1999

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PRICESMART, INC.
4649 MORENA BLVD.
SAN DIEGO, CALIFORNIA 92117

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 2000

The Board of Directors of PriceSmart, Inc., a Delaware corporation (the
"Company"), is soliciting the enclosed Proxy for use at the Annual Meeting of
Stockholders of the Company to be held on January 19, 2000 (the "Annual
Meeting"), and at any adjournments thereof. This Proxy Statement will be first
sent to stockholders on or about December 10, 1999. Unless contrary instructions
are indicated on the Proxy, all shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will be
voted for the election of the Board's nominees for directors. As to any other
business which may properly come before the Annual Meeting and be submitted to a
vote of the stockholders, Proxies received by the Board of Directors will be
voted in accordance with the best judgment of the holders thereof.

A Proxy may be revoked by written notice to the Secretary of the
Company at any time prior to the Annual Meeting, by executing a later Proxy or
by attending the Annual Meeting and voting in person.

The Company will bear the cost of solicitation of Proxies. In addition
to the use of mails, Proxies may be solicited by personal interview, telephone
or telegraph, by officers, directors, and other employees of the Company. The
Company also will request persons, firms, and corporations holding shares in
their names, or in the names of their nominees, which are beneficially owned by
others to send or cause to be sent Proxy material to, and obtain Proxies from,
such beneficial owners and will reimburse such holders for their reasonable
expenses in so doing.

The Company's mailing address is 4649 Morena Blvd., San Diego,
California 92117.

VOTING

Stockholders of record at the close of business on November 23, 1999
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.

As of November 23, 1999, 5,094,758 shares of the Company's common
stock, $.0001 par value per share ("Common Stock"), were outstanding,
representing the only voting securities of the Company. Each share of Common
Stock is entitled to one vote.

Votes cast by Proxy or in person at the Annual Meeting will be counted
by the person appointed by the Company to act as Inspector of Election for the
Annual Meeting. The Inspector of Election will treat shares represented by
Proxies that reflect abstentions or include "broker non-votes" as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions or "broker non-votes" do not constitute a vote "for" or
"against" any matter and thus will be disregarded in the calculation of "votes
cast." Any unmarked Proxies, including those submitted by brokers or nominees,
will be voted in favor of the nominees of the Board of Directors, as indicated
in the accompanying Proxy card.

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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of November 23, 1999 by (i) each of
the Company's directors, (ii) each of the Company's Named Executive Officers (as
defined herein), (iii) each person who is known by the Company to own
beneficially more than 5% of the Common Stock and (iv) all directors and
executive officers as a group.

NUMBER OF SHARES PERCENTAGE OF
OF COMMON STOCK COMMON STOCK
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) BENEFICIALLY OWNED
------------------- --------------------- ------------------
<S> <C> <C>
Robert E. Price(3) 1,275,066 25.0%
Gilbert A. Partida(4) 69,594 1.4
Rafael E. Barcenas(5) 10,095 *
James F. Cahill(6) 714,188 14.0
Katherine L. Hensley(7) 12,602 *
Leon C. Janks(8) 11,336 *
Lawrence B. Krause(9) 7,195 *
Robert M. Gans(10) 64,475 1.3
Kurt A. May(11) 25,000 *
Thomas D. Martin(12) 43,427 *
Karen J. Ratcliff(13) 34,000 *
Performance Capital, L.P.(14) 326,500 6.4
767 Third Avenue, 16th Floor
New York, NY 10017
Wynnefield Partners Small Cap Value, L.P.(15) 320,900 6.3
One Penn Plaza, Suite 4720
New York, NY 10119
Sol Price(16) 1,748,624 34.3
7979 Ivanhoe Avenue, Suite 520
La Jolla, CA 92037
All executive officers and 1,650,754 31.2
directors as a group (10 persons)(17)

</TABLE>

- ---------------
* Less than 1%.

(1) Except as indicated, the address of each person named in the table is
c/o PriceSmart, Inc., 4649 Morena Blvd., San Diego, California 92117.

(2) Beneficial ownership of directors, officers and 5% or more stockholders
includes both outstanding Common Stock and shares issuable upon exercise
of options that are currently exercisable or will become exercisable
within 60 days after the date of this table. Except as indicated in the
footnotes to this table and pursuant to applicable community property
laws, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock beneficially owned by
them.

(3) Includes 284,067 shares held by the Robert and Allison Price Trust, of
which Mr. Price is a trustee, 312,500 shares held by the Robert & Allison
Price Charitable Remainder Trust, of which Mr. Price is a trustee, 22,566
shares held by a trust for the benefit of Mr. Price's minor children, of
which Mr. Price is a trustee, and 655,645 shares held by the Price Family
Charitable Fund, of which Mr. Price is a director. Mr. Price disclaims
beneficial ownership of the shares held by the Price Family Charitable
Fund.

(4) Includes 49,000 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.
Also includes 500 shares held by Mr. Partida as custodian for his minor
child (UGMA-CA). Also includes 575 shares held in a tenants in common
account with two other individuals and 1,607 shares held in a tenants in
common account with one other person. Each of the

2
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individuals has dispositive power with respect to the shares in the
account. Also includes 1,205 shares held in an Individual Retirement
Account maintained by Mr. Partida's wife.

(5) Includes 7,379 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(6) Includes 655,645 shares held by the Price Family Charitable Fund, of
which Mr. Cahill is a director. Also includes 54,668 held by a trust for
the benefit of Sol Price's grandchildren, of which Mr. Cahill is a
trustee. Mr. Cahill disclaims beneficial ownership of the shares held by
the Price Family Charitable Fund and the trust described above.

(7) Includes 8,620 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.
Also includes 500 shares held in a trust of which Ms. Hensley is a
beneficiary and for which she serves as trustee.

(8) Includes 8,620 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(9) Includes 3,816 shares held by the Krause Family Limited Partnership, of
which Mr. Krause is a general partner. Also includes 3,379 shares subject
to options that are currently exercisable or will become exercisable
within 60 days after the date of this table.

(10) Includes 8,750 shares held for Mr. Gans' account in a profit sharing and
401(k) plan maintained by his former employer. Also includes 55,725
shares subject to options that are currently exercisable or will become
exercisable within 60 days after the date of this table.

(11) Includes 16,250 shares subject to options that are currently
exercisable or will become exercisable within 60 days after the date of
this table.

(12) Includes 15,018 shares held by a family trust and 28,409 shares subject
to options that are currently exercisable or will become exercisable
within 60 days after the date of this table.

(13) Includes 25,250 shares subject to options that are currently
exercisable or will become exercisable within 60 days after the date of
this table. Ms. Ratcliff resigned from the Company on November 4, 1999.

(14) Includes 7,500 shares held by Performance Capital II, L.P. and 6,200
shares held by Performance Offshore, Ltd.

(15) Includes 120,359 shares held by Wynnefield Partners Small Cap Value,
L.P. - I and 63,520 shares held by Wynnefield Small Cap Value Offshore
Fund, Ltd.

(16) Includes 167,477 shares held by the Sol & Helen Price Trust, of which Mr.
Price is trustee, 911,190 shares held by the Price Family Charitable
Trust, of which Mr. Price is trustee, 655,645 shares held by the Price
Family Charitable Fund, of which Mr. Price is a director, 8,737 shares
held by the Marion Brodie Trust, of which Mr. Price is a trustee, and
5,575 shares held by the Dorothy Goldberg Trust, of which Mr. Price is a
trustee. Mr. Price disclaims beneficial ownership of the shares held by
the Price Family Charitable Fund, the Marion Brodie Trust and the Dorothy
Goldberg Trust.

(17) See notes (3)-(13). Also includes 36,263 shares beneficially owned by
Kevin C. Breen (including 26,868 shares subject to options exercisable
within 60 days after the date of this table) and 3,658 shares
beneficially owned by Allan C. Youngberg.

3
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PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors of the Company has nominated and recommends for
election as directors the following seven persons to serve until the next Annual
Meeting of Stockholders and until their respective successors shall have been
duly elected and shall qualify. All of the nominees are presently directors of
the Company, and following the Annual Meeting there will be no vacancies on the
Board. The enclosed Proxy will be voted in favor of the persons nominated unless
otherwise indicated. If any of the nominees should be unable to serve or should
decline to do so, the discretionary authority provided in the Proxy will be
exercised by the present Board of Directors to vote for a substitute or
substitutes to be designated by the Board of Directors. The Board of Directors
does not believe at this time that any substitute nominee or nominees will be
required. In the event that a nominee for director is proposed at the Annual
Meeting, the enclosed proxy may be voted in favor of or against such nominee or
any other nominee proposed by the Board of Directors.

The table below indicates the name, position with the Company and age
of each nominee for director:

NAME POSITION AGE
---- -------- ---
<S> <C> <C>
Robert E. Price Chairman of the Board 57
Gilbert A. Partida President, Chief Executive Officer and Director 37
Rafael E. Barcenas Director 55
James F. Cahill Director 44
Katherine L. Hensley Director 62
Leon C. Janks Director 50
Lawrence B. Krause Director 69

</TABLE>

INFORMATION REGARDING DIRECTORS

Robert E. Price has been Chairman of the Board of the Company since
July 1994 and served as President and Chief Executive Officer of the Company
from July 1994 until January 1998. Mr. Price also served as Chairman of the
Board of Price Enterprises, Inc. ("PEI"), from July 1994 until November 1999 and
was President and Chief Executive Officer of PEI from July 1994 until September
1997. Mr. Price was Chairman of the Board of Price/Costco, Inc. ("Costco") from
October 1993 to December 1994. From 1976 to October 1993, he was Chief Executive
Officer and a director of The Price Company ("TPC"). Mr. Price served as
Chairman of the Board of TPC from January 1989 to October 1993, and as its
President from 1976 until December 1990.

Gilbert A. Partida has been a director of the Company since July 1997
and has been President and Chief Executive Officer of the Company since January
1998. Mr. Partida was President and Chief Executive Officer of the Greater San
Diego Chamber of Commerce from January 1993 until December 1997. Prior to
joining the Chamber of Commerce, Mr. Partida was an attorney with the law firm
of Gray, Cary, Ames & Frye in San Diego, California from 1987 to 1992.

Rafael E. Barcenas has been a director of the Company since April 1998.
Mr. Barcenas has also been a director and officer of PriceCostco de Panama,
S.A., and P.B. Real Estate, S.A., which are subsidiaries of the Company, since
their formation in September 1995 and July 1997, respectively. Additionally, Mr.
Barcenas has been a principal of BB&M International Trading Group, a Panamanian
company (which is the 49% owner of both PriceCostco de Panama, S.A. and P. B.
Real Estate, S.A.) since March 1995. Mr. Barcenas also has been Vice President
of Boyd, Barcenas, S.A., the largest advertising agency in Panama, since April
1971.

4
<PAGE>

James F. Cahill has been a director of the Company since November 1999
and has served as a director of PEI since August 1997. Additionally, Mr. Cahill
has been Executive Vice President of Price Entities since January 1987. In this
position he has been responsible for the oversight and investment activities of
the financial portfolio of Sol Price, founder of TPC and related entities. Prior
to 1987, Mr. Cahill was employed by TPC for ten years, with his last position
being Vice President of Operations.

Katherine L. Hensley has been a director of the Company since July 1997
and served as a director of PEI from December 1994 until July 1997. She is a
lawyer and a retired partner of the law firm of O'Melveny & Myers in Los
Angeles, California. Ms. Hensley joined O'Melveny & Myers in 1978 and was a
partner from 1986 to February 1992. Ms. Hensley is a trustee of Security First
Trust, an open-end investment management company registered under the Investment
Company Act of 1940.

Leon C. Janks has been a director of the Company since July 1997 and
served as a director of PEI from March 1995 until July 1997. He has been a
partner in the accounting firm of Alder, Green, Hasson & Janks in Los Angeles,
California since 1980. Mr. Janks also serves on the board of directors of Expert
Ease Software, Inc., a privately held corporation. Mr. Janks has extensive
experience in domestic and international business serving a wide variety of
clients in diverse businesses and is a Certified Public Accountant.

Lawrence B. Krause has been a director of the Company since July 1997.
Mr. Krause has been a Professor and the Director of the Korea-Pacific Program at
the Graduate School of International Relations and Pacific Studies at the
University of California, San Diego since 1986. He became a Professor Emeritus
in 1997. Mr. Krause also serves on advisory boards for a number of institutions
including the Institute for International Economics, the Korea Economic
Institute, the Committee on Asian Economic Studies and the U.S. National
Committee for Pacific Economic Cooperation.

INFORMATION REGARDING THE BOARD

BOARD MEETINGS

The Company's Board of Directors held five meetings during fiscal 1999.
Except for Mr. Barcenas (who resides in Panama), no nominee for director who
served as a director during the past year attended fewer than 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings of committees of the Board of Directors on which he or
she served.

COMMITTEES OF THE BOARD

AUDIT COMMITTEE. The Audit Committee, which consists of Messrs. Janks
and Krause and Ms. Hensley, held four meetings during fiscal 1999. The Audit
Committee reviews the annual audits of the Company's independent public
accountants, reviews and evaluates internal accounting controls, recommends the
selection of the Company's independent public accountants, reviews and passes
upon (or ratifies) related party transactions, and conduct such reviews and
examinations as it deems necessary with respect to the practices and policies
of, and the relationship between, the Company and its independent public
accountants.

COMPENSATION COMMITTEE. The Compensation Committee, which consists of
Ms. Hensley and Mr. Krause, held six meetings during fiscal 1999. The
Compensation Committee reviews salaries, bonuses and stock options of executive
officers of the Company, and administers the Company's executive compensation
policies and stock option plans.

NOMINATING COMMITTEE. The Nominating Committee, which consists of Ms.
Hensley and Mr. Price, did not hold any meetings during fiscal 1999. The
Nominating Committee recommends candidates to fill vacancies on the Board of
Directors or any committee thereof, which vacancies may be created by the
departure of any directors, or the expansion of the number of members of the
Board. The Nominating Committee gives appropriate consideration to qualified
persons recommended by stockholders for nomination as directors provided that
such

5
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recommendations are accompanied by information sufficient to enable the
Nominating Committee to evaluate the qualifications of the nominee.

EXECUTIVE COMMITTEE. The Executive Committee, which consists of Messrs.
Price, Partida and Janks, did not hold any meetings during fiscal 1999. The
Executive Committee has all powers and rights necessary to exercise the full
authority of the Board of Directors in the management of the business and
affairs of the Company, except as provided in the Delaware General Corporation
Law or the Bylaws of the Company.

FINANCE COMMITTEE. The Finance Committee, which consists of Messrs.
Janks, Barcenas, Cahill, Krause, Partida and Price and Ms. Hensley, held four
meetings during fiscal 1999. The Finance Committee reviews and makes
recommendations with respect to (i) annual budgets, (ii) investments, (iii)
financing arrangements and (iv) the creation, incurrence, assumption or guaranty
by the Company of any indebtedness, obligation or liability, except, in each
case, for any such transactions entered into in the ordinary course of business
of the Company.

COMPENSATION OF THE DIRECTORS

Each non-employee director of the Company receives $20,000 per year for
serving on the Board of Directors and an additional $5,000 per year for serving
as chairman of any committee of the Board. In addition, non-employee directors
who serve on committees of the Board (in a capacity other than chairman of a
committee) receive $500 for each meeting attended. The chairman or vice chairman
of any committee may receive additional compensation to be fixed by the Board.
Each director is eligible to receive stock grants and stock options pursuant to
the Company's 1997 Stock Option Plan and 1998 Equity Participation Plan. Under
the 1997 Stock Option Plan, non-employee directors are entitled to receive
initial grants of non-qualified stock options to purchase 3,000 shares of Common
Stock upon becoming directors of the Company and additional grants of options to
purchase 1,000 shares of Common Stock on the date of each annual meeting of
stockholders at which the director is reelected to the Board. Non-employee
directors joining the Board after July 1998 are eligible to receive grants of
non-qualified options under the 1998 Equity Participation Plan upon purchases of
shares of the Company's Common Stock. For each such director who has purchased
at least 500 shares of common stock on or after September 1, 1997, such person
automatically shall be granted a non-qualified stock option to purchase a number
of shares of Common Stock equal to the difference between (i) three times the
number of such shares of Common Stock actually purchased and (ii) the number of
shares of Common Stock subject to options previously granted to such director
under the 1998 Equity Participation Plan. No director, however, may receive
options under the 1998 Equity Participation Plan that are exercisable for more
than 8,146 shares of Common Stock.

Directors also receive reimbursement for travel expenses incurred in
connection with their duties as directors.

Mr. Barcenas received a grant of 25,000 nonqualified stock options as
consideration for his services as an officer of PriceCostco de Panama, S.A. and
P.B. Real Estate, S.A.

RECOMMENDATION OF THE BOARD OF DIRECTORS

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE SLATE
OF NOMINEES SET FORTH ABOVE. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THE ACCOMPANYING PROXY.

6
<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company and their ages as of December
1999 are as follows:

NAME POSITION AGE
- ---- -------- ---
<S> <C> <C>
Gilbert A. Partida President and Chief Executive Officer 37
Kevin C. Breen Executive Vice President--Operations 39
Robert M. Gans Executive Vice President, Secretary and General Counsel 50
Thomas D. Martin Executive Vice President--Merchandising 43
Kurt A. May Executive Vice President and Chief Operating Officer 46
Allan C. Youngberg Executive Vice President and Chief Financial Officer 47

</TABLE>

Kevin C. Breen has been Executive Vice President of the Company since
September 1999 and served as Senior Vice President of the Company from August
1997 to August 1999. Mr. Breen previously served as Executive Vice President of
Price Ventures, Inc., a subsidiary of PEI, from February 1997 until August 1997,
overseeing operational and construction management areas for the international
merchandising business. Prior to joining PEI as Vice President in August 1994,
Mr. Breen served as Vice President of Costco from October 1993 to December 1994
and previously served in various management roles for TPC.

Robert M. Gans has been Executive Vice President, General Counsel and
Secretary of the Company since August 1997 and was Executive Vice President and
General Counsel of PEI from October 1994 until July 1997. Mr. Gans graduated
from the UCLA School of Law in 1975 and actively practiced law in private
practice from 1975 until 1994. From 1988 until October 1994, Mr. Gans was the
senior member of the law firm of Gans, Blackmar & Stevens, A.P.C., of San Diego,
California.

Thomas D. Martin has been Executive Vice President of the Company since
October 1998 and served as Senior Vice President of the Company from August 1997
to September 1998. Mr. Martin previously served as Vice President of PEI from
August 1994 until July 1997, directing merchandising strategies and product
sourcing for its international merchandising business, in addition to managing
its trading company activities. Prior to joining PEI as Vice President in August
1994, Mr. Martin served as Vice President of Costco from October 1993 to
December 1994 and had served in various management roles for TPC.

Kurt A. May has been Executive Vice President and Chief Operating
Officer of the Company since October 1998. Prior to joining PriceSmart, Mr. May
was employed by GTE Corporation for twenty-three years, serving in a wide range
of corporate operating functions, including his most recent role as Area
President of GTE's cellular telephone operations since 1995.

Allan C. Youngberg has been Executive Vice President and Chief
Financial Officer of the Company since July 1999. From January 1993 until July
1999, Mr. Youngberg had been Executive Vice President, Chief Financial Officer,
Secretary and Treasurer of Cost-U-Less, Inc. Prior to joining Cost-U-Less, Mr.
Youngberg was President and shareholder of Youngberg & Schumacher, P.S., a
certified public accounting firm in Bellevue, Washington, which Mr. Youngberg
founded in 1984 and sold in December 1992. Mr. Youngberg is a Certified Public
Accountant.

7
<PAGE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following table sets forth certain information concerning
compensation for the fiscal years ended August 31, 1999 and August 31, 1998
received by the Chief Executive Officer and executive officers of the Company
whose compensation exceeded $100,000 for the fiscal year ended August 31, 1999
(the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
---------------------------------------------- ------------------------------------
OTHER NUMBER OF
ANNUAL SECURITIES
NAME AND FISCAL COMPEN- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION OPTIONS(#)(1) COMPENSATION
- ------------------ ---- --------- -------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gilbert A. Partida(2) 1999 $ 256,862 $100,000 $0 0 $ 0
President and Chief 1998 134,711 85,000 0 140,500 10,325
Executive Officer
Robert M. Gans 1999 175,000 0 0 9,850(3)
Executive Vice President, 1998 167,708 40,000 0 82,725 3,583(3)
General Counsel and
Secretary 25,000
Thomas D. Martin 1999 155,000 35,000 0 0 9,850(3)
Executive Vice President-- 1998 155,000 30,000 0 65,772 9,401(3)
Merchandising
Kurt A. May(4) 1999 176,539 50,000 0 81,250 0
Executive Vice President
and Chief Operating Officer
Karen J. Ratcliff(5) 1999 137,500 31,000 0 0 1,529(3)
Former Executive Vice 1998 119,163 20,000 0 76,250 22,012(6)
President-Finance

</TABLE>

- ---------------
(1) In connection with the spin-off of the Company from PEI in August 1997,
the Company granted replacement options ("Replacement Options") to
officers and employees who left PEI to join the Company. The Replacement
Options were granted with exercise prices and with respect to numbers of
shares of the Company's Common Stock designed to retain the intrinsic
value of the options replaced. The number of securities shown for fiscal
1998 in the column under the heading "Number of Securities Underlying
Options" includes Replacement Options covering 46,475 shares of Common
Stock issued to Mr. Gans and Replacement Options covering 15,772 shares
of Common Stock issued to Mr. Martin. The Number of Securities Underlying
Options shown for Mr. Partida include 3,000 shares of Common Stock
underlying options granted to Mr. Partida as an independent member of the
Company's Board prior to his becoming President and Chief Executive
Officer of the Company.

(2) Mr. Partida commenced employment with the Company on January 12, 1998.
The amount shown in the salary column for fiscal 1998 reflects amounts
actually paid to Mr. Partida during fiscal 1998. The amount shown under
the bonus column for Mr. Partida for fiscal 1998 includes a $50,000
signing bonus. The amount shown in the "All Other Compensation" column
for fiscal 1998 includes $10,325 paid to Mr. Partida as director fees
prior to January 12, 1998.

(3) Consists of profit sharing and 401(k) matching contributions made by
the Company under the Company's Retirement Plan.

(4) Mr. May commenced employment with the Company on October 14, 1998.

(5) Ms. Ratcliff commenced employment with the Company on September 29, 1997.
The amount shown in the salary column for 1998 reflects amounts actually
paid to Ms. Ratcliff during fiscal 1998. Ms. Ratcliff resigned from the
Company on November 4, 1999.

8
<PAGE>

(6) Consists of $22,012 reimbursement of losses and expenses incurred by Ms.
Ratcliff in connection with the sale of her home prior to moving to San
Diego to become an employee of the Company.

OPTION GRANTS DURING FISCAL 1999

The following table sets forth certain information with respect to
options to purchase Common Stock granted during the fiscal year ended August 31,
1999 to each of the Named Executive Officers. The Company does not have any
outstanding stock appreciation rights.

NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE OR PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE PER EXPIRATION OPTION TERM(1)
NAME GRANTED (#) FISCAL YEAR(%) SHARE ($/SH) DATE 5% 10%
---- ----------- -------------- ------------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Gilbert A. Partida 0 N/A N/A N/A N/A N/A
Robert M. Gans 0 N/A N/A N/A N/A N/A
Thomas D. Martin 0 N/A N/A N/A N/A N/A
Kurt A. May 81,250 29.0% $16.25 10/19/04 $449,033 $1,018,702
Karen J. Ratcliff 0 N/A N/A N/A N/A N/A

</TABLE>

- ---------------
(1) The potential realizable values are based on an assumption that the stock
price of the Company's Common Stock will appreciate at the annual rate
shown (compounded annually) from the date of grant until the end of the
option term. These values do not take into account amounts required to be
paid as income taxes under the Internal Revenue Code and any applicable
state laws or option provisions providing for termination of an option
following termination of employment, non-transferability or vesting.
These amounts are calculated based on the requirements promulgated by the
Commission and do not reflect the Company's estimate of future stock
price growth of the shares of the Company's Common Stock.

OPTIONS EXERCISED DURING FISCAL 1999 AND OPTION VALUES

The following table sets forth certain information with respect to the
exercise of options to purchase Common Stock during the fiscal year ended August
31, 1999, and the unexercised options held and the value thereof at that date,
for each of the Named Executive Officers.

NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS
SHARES FISCAL YEAR AT FISCAL YEAR END
ACQUIRED END (#) ($)(1)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- -------------- --------------- --------------------------- ---------------------
<S> <C> <C> <C> <C>
Gilbert A. Partida 0 0 28,250/112,250 $519,090/$2,063,520
Robert M. Gans 0 0 34,069/48,656 $844,905/$1,065,575
Thomas D. Martin 0 0 14,031/51,741 $290,933/$1,051,359
Kurt A. May 0 0 0/81,250 $0/$1,523,438
Karen J. Ratcliff 0 0 15,250/61,000 $273,575/$1,094,300

</TABLE>

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

(1) Based on the closing sale price of the Common Stock on Monday, August
31, 1999 ($35.00), as reported by the Nasdaq National Market, less the
option exercise price.

9
<PAGE>

THE RETIREMENT PLAN OF PRICESMART, INC.

In 1998 the Company established a retirement plan (the "Retirement
Plan"). The Retirement Plan has terms and conditions substantially similar to
The PEI Profit Sharing and 401(k) Plan (the "PEI Plan"), of which PriceSmart was
a sponsor from the time of the spin-off of the Company from PEI until the
establishment of the Retirement Plan. The Retirement Plan is a split up of that
portion of the PEI Plan which is attributable to employees of the Company.

The Retirement Plan is designed to be a "qualified" plan under
applicable provisions of the Code, covering all employees who have completed one
year of service, as defined in the Retirement Plan. Under the Retirement Plan,
the Company may, in its discretion, make annual contributions with respect to
its employees which may exceed for each participant the lesser of: (a) 25% of
the participant's compensation for such year, or (b) the greater of (i) 25% of
the defined benefit dollar limitation then in effect under Section 415(b)(1) of
the Code or (ii) $30,000. In addition, participants may make voluntary
contributions. The Retirement Plan also permits employees to defer (in
accordance with Section 401(k) of the Code) a portion of their salary and
contribute those deferrals to the Retirement Plan.

All participants in the Retirement Plan are fully vested in their
voluntary contributions and earnings thereon. Vesting in the remainder of a
participant's account is based upon his or her years of service with the
Company, PEI, Costco, TPC and certain affiliated parties. A participant
initially is 20% vested after the completion of two years of service, and an
additional 20% vested after the completion of each of his or her next four years
of service, so that the participant is 100% vested after the completion of six
years of service. A participant becomes fully vested in his or her entire
account upon retirement due to permanent disability, attainment of age 65 or
death. In addition, the Retirement Plan provides that the Board of Directors of
the Company may at any time declare the Retirement Plan partially or completely
terminated with respect to the employees of the Company in which event the
account of each participant with respect to whom the Retirement Plan is
terminated will become fully vested.

1997 PRICESMART STOCK OPTION PLAN

In August 1997, the Company adopted the 1997 PriceSmart Stock Option
Plan of PriceSmart, Inc. (the "1997 Plan"). The PriceSmart Stock Option Plan was
approved by PEI as sole stockholder of the Company as of August 7, 1997. The
principal purposes of the PriceSmart Stock Option Plan are to provide incentives
for officers, employees and consultants of the Company and its subsidiaries
through the granting of options, thereby stimulating their personal and active
interest in the Company's development and financial success, and inducing them
to remain in the Company's employ. In addition to options granted to officers,
employees or consultants, the PriceSmart Stock Option Plan provides for formula
grants of Options ("Director Options") to the Company's independent non-employee
directors.

The 1997 Plan provides for option grants covering up to 700,000 shares
of the Company's Common Stock. As of November 23, 1999, options to purchase an
aggregate of 665,322 shares of the Company's Common Stock at prices ranging from
$8.59 to $40.88 had been granted under the 1997 Plan (not including shares
subject to options that have been cancelled), and 34,678 shares remained
available for future grant under the 1997 Plan.

1998 EQUITY PARTICIPATION PLAN

In July 1998, the Board of Directors adopted the 1998 Equity
Participation Plan of PriceSmart, Inc. (the "1998 Plan"). The 1998 Plan was
subsequently approved by the Company's stockholders at the 1999 Annual Meeting
of Stockholders. The principal purposes of the 1998 Plan are to provide
incentives for directors, officers, employees and consultants of the Company and
its subsidiaries through the granting of options, restricted stock and other
awards ("Awards"), thereby stimulating their personal and active interest in the
Company's development and financial success, and inducing them to remain in the
Company's employ.

10
<PAGE>

The 1998 Plan provides that the Compensation Committee of the Company's
Board of Directors or a subcommittee thereof (the "Committee") may grant or
issue incentive stock options, non-qualified stock options, stock purchase
rights, stock appreciation rights, restricted stock, deferred stock, dividend
equivalents, performance awards, stock payments and other stock related
benefits, or any combination thereof. Under the stock purchase feature of the
1998 Plan, the Committee may grant to any consultant or employee the right to
purchase shares of Common Stock under the 1998 Plan ("Stock Purchase Rights")
from time to time, in such amounts and subject to such terms and conditions as
the Committee may determine, and, at the discretion of the Committee, such
determinations may include determining categories of employees and the number of
shares to be made available to employees in each such category. The 1998 Plan
further provides that each independent director as of the date of the adoption
by the Board of the 1998 Plan automatically shall be granted, on the date of
such adoption, the Stock Purchase Right to purchase a number of shares of Common
Stock equal to the difference between (i) 2,716 shares of Common Stock and (ii)
the number of shares of Common Stock purchased by such independent director
since September 1, 1997 (other than purchases pursuant to the exercise of an
option granted pursuant to any stock option plan of the Company). A person who
is initially elected to the Board after the adoption by the Board of the Equity
Plan and who is an independent director at the time of such initial election
automatically shall be granted a Stock Purchase Right to purchase 2,716 shares
of Common Stock on the date of such initial election. The purchase price for
shares of Common Stock purchased pursuant to any Stock Purchase Right granted
under the Equity Plan shall be no less than the fair market value of such Common
Stock as of the date of purchase.

Under the 1998 Plan, the Committee may in its discretion allow payment,
in whole or in part, through the delivery of a full recourse, limited recourse
or non-recourse (as determined by the Committee) promissory note bearing
interest (at no less than such rate as shall then preclude the imputation of
interest under the Code) and payable upon such terms as may be prescribed by the
Committee or the Board. The Committee may prescribe the form of such promissory
note and the security to be given for such note. However, Common Stock may not
be purchased pursuant to a Stock Purchase Right by delivery of a promissory note
or by a loan from the Company when or where such loan or other extension of
credit is prohibited by law or by any agreement to which the Company is a party.

The 1998 Plan provides for Awards covering up to 700,000 shares of the
Company's Common Stock. As of November 23, 1999, options to purchase an
aggregate of 589,812 shares of the Company's Common Stock at prices ranging from
$14.75 to $38.94 had been granted under the 1998 Plan (not including shares
subject to options that have been cancelled), 76,683 shares of Common Stock had
been issued under the stock purchase provisions of the 1998 Plan, and 33,505
shares remained available for future grant under the 1998 Plan.

COMPENSATION COMMITTEE MEMBERSHIP, INTERLOCKS AND INSIDER PARTICIPATION

During fiscal year 1999, the Company's Compensation Committee (the
"Committee") consisted of Ms. Hensley and Mr. Krause. There were no insider
participations nor compensation committee interlocks among the members of the
Committee during fiscal 1999. At all times the Committee has been and is
composed solely of independent non-employee directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Committee reviews the compensation of the Chief Executive Officer,
Chief Financial Officer and other Executive Vice Presidents of the Company
("Executive Officers"). The Committee is responsible for reviewing salaries,
bonuses and perquisites (if any) of the Executive Officers. The Committee also
administers the Company's compensation plans for the Company's Executive
Officers, including the Company's stock option plans and the granting of options
and any other awards thereunder.

GENERAL COMPENSATION PHILOSOPHY

The Company's executive compensation policies are designed to meet the
following objectives: (i) to attract and retain talented executives; (ii) to
reward appropriately individual achievement; and (iii) to enhance the financial
performance of the Company, and thus stockholder value, by significantly
aligning the financial interests

11
<PAGE>

of the Company's executives with those of its stockholders. To accomplish these
objectives the Company's executive compensation program consists of: (i) annual
base salaries; (ii) cash bonuses; and (iii) stock option grants and a stock
purchase program aligned with stock option grants.

Executive Officers also participate in other benefit plans available to
employees generally, including the Company's Retirement Plan and a medical plan.

ANNUAL BASE SALARIES AND BONUSES

The Committee determines base salaries of the Executive Vice Presidents
by considering the recommendations of the Chief Executive Officer together with
such factors as job complexity, level of responsibility, how the position
relates to the Company's long-term strategic goals, and the particular
individual's skills, experience, background and performance. While there are no
pre-established weightings given to these factors, particular importance is
placed on attracting and retaining quality individuals in order to establish and
secure an effective executive team for the Company. During the past fiscal year
the Committee approved the base salary of the Company's new Chief Financial
Officer (Allan Youngberg). Additionally, the Committee approved a $50,000
increase to the base salary of the Company's President and Chief Executive
Officer (Gilbert Partida), from $225,000 to $275,000, and a $20,000 increase to
the base salary of the Company's Executive Vice President - Finance (Karen
Ratcliff) from $135,000 to $155,000.

The Company's annual bonus program is designed to reward the Company's
Executive Officers for individual achievement in supporting the fulfillment of
corporate objectives. For the past fiscal year, the Committee awarded bonuses to
the following Executive Vice Presidents: Messrs. May, Gans, Youngberg and Martin
and Ms. Ratcliff.

STOCK OPTIONS AND STOCK PURCHASE PROGRAM

The long-term incentive aspect of the Company's executive compensation
program is realized primarily by the granting of stock options. Stock option
awards are viewed as a particularly effective tool to attract experienced and
talented employees and to encourage their long-term quality performance with the
Company. Since the value of the stock option is dependent upon stock
performance, the stock option program directly aligns employee compensation with
the interests of the Company's stockholders.

Stock options are granted by the Committee based upon the
recommendations of senior management. Stock options generally are granted at a
price equal to the fair market value of a share of the Company's Common Stock as
of the date of Committee approval of the grant or the effective date of grant.
The Company granted two types of options to officers and employees following the
spin-off of the Company from PEI: (i) standard options granted at an exercise
price equal to the average closing sale price of the Company's Common Stock in
the twenty trading days commencing with the sixth day following the spin-off;
and (ii) Replacement Options granted with terms, including exercise price, meant
to preserve the inherent value of PEI options held by individuals employed by
PEI prior to the spin-off. Stock options generally are exercisable at the rate
of 20% per year, thereby providing an incentive for the grantee to remain with
the Company; Replacement Options are exercisable at a rate consistent with the
PEI options that they replaced. In the fiscal year ended August 31, 1998, the
Company expanded its executive compensation program to include an opportunity
for executive officers to purchase stock directly from the Company at fair
market value. The Company provides financing for such purchases and grants
additional options to those executive officers who make such purchases. In
authorizing such stock purchases and in making option grants, the Committee
considers the anticipated future performance of the employee and that
individual's ability to impact positively the achievement of the Company's
objectives. During the past fiscal year the Committee authorized a stock
purchase by Mr. Youngberg and approved a new stock option grant to Mr.
Youngberg.

12
<PAGE>

CHIEF EXECUTIVE OFFICER COMPENSATION

Gilbert A. Partida is the President and Chief Executive Officer of the
Company. The Committee considered Mr. Partida's background, abilities and
potential for successfully implementing the Company's business objectives in its
approval in December 1997 of Mr. Partida's annual base salary ($225,000), which
was increased by $50,000 in January, 1999, in recognition of Mr. Partida's
exceptional performance during the prior year. Mr. Partida's performance bonus
($100,000) for fiscal year 1999 was awarded based upon: (i) the significant
effort extended by Mr. Partida in the effective implementation of the Company's
business goals; and (ii) Mr. Partida's key role in establishing and implementing
new business opportunities for the Company, particularly in Central America and
the Caribbean. The Committee has not commissioned any independent surveys to
determine competitive compensation since the Committee considers Mr. Partida's
total compensation package to be reasonable in view of his position and
responsibilities with the Company, as well as the positive effect Mr. Partida
has had in positioning the Company for growth.

OMNIBUS BUDGET RECONCILIATION ACT IMPLICATIONS FOR EXECUTIVE COMPENSATION

It is the responsibility of the Board (or the Compensation Committee)
to address the issues raised by the tax laws which make certain
non-performance-based compensation to executives of public companies in excess
of $1,000,000 non-deductible to the Company. In this regard, a determination
must be made as to whether any actions with respect to this limit should be
taken by the Company. At this time, it is not anticipated that any executive
officer will receive compensation in excess of this limit. Nevertheless, the
Company has sought to comply with the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended, so that awards granted under the 1998
Plan qualify as "incentive based compensation" that will not count against the
$1,000,000 limit on deductibility. Such compliance included seeking stockholder
approval of the 1998 Plan at the 1999 Annual Meeting of Stockholders. Additional
action will be taken if it is warranted in the future.

SUMMARY

It is believed that the above-described cash compensation program and
long-term incentives (in the form of stock option awards and stock purchase
rights) provides appropriate alignment of the long-term interests of the
Company's Executive Officers, the Company and its stockholders.

Katherine Hensley
Lawrence Krause

EMPLOYMENT CONTRACTS

Gilbert A. Partida entered into an employment agreement with the
Company for a term of two years commencing January 12, 1998. Pursuant to this
agreement, Mr. Partida initially was entitled to receive a base annual salary of
$225,000 and a signing bonus of $50,000. During fiscal 1999, the Compensation
Committee approved an increase in Mr. Partida's base salary to $275,000, which
has been reflected in an amendment to Mr. Partida's employment agreement. Under
his employment agreement, Mr. Partida may not engage in any activities, with or
without compensation, that would interfere with the performance of his duties or
that would be adverse to the Company's interests, without the prior written
consent of the Company. Mr. Partida is eligible to participate in the Company's
bonus plan and to receive all other benefits offered to officers under the
Company's standard company benefits practices and plans. Mr. Partida may
terminate the agreement at any time on 120 days' prior written notice. The
Company may terminate the agreement for cause upon immediate notice thereof, or
upon the death or disability of Mr. Partida. In the event that the Company
terminates the agreement for any reason other than cause, death or disability,
Mr. Partida will be entitled to continuation of his base salary for one year,
payable in conformity with the Company's normal payroll period. If the agreement
is not terminated, then, upon expiration of the agreement, and if Mr. Partida's
employment by the Company does not thereafter continue upon mutually agreeable
terms, Mr. Partida will be entitled to continuation of his base salary for one
year, payable in conformity with the Company's normal payroll period; provided,
however, that the Company's obligation to pay such installments after expiration
of the agreement will cease concurrently with Mr. Partida having

13
<PAGE>

commenced comparable employment with, or Mr. Partida receiving comparable
compensation from, another employer. The foregoing severance benefits are the
exclusive benefits that would be payable to Mr. Partida by reason of his
termination, and the Company is not obligated to segregate any assets or procure
any investment in order to fund such severance benefits. The agreement also
contains confidentiality provisions and other terms and conditions customary to
executive employment agreements.

Kevin C. Breen entered into an employment agreement with the Company
for a term of two years commencing April 1, 1998. Pursuant to this agreement, as
amended, Mr. Breen is entitled to receive a base annual salary of $155,000. Mr.
Breen may not engage in any activities, with or without compensation, that would
interfere with the performance of his duties or that would be adverse to the
Company's interests, without the prior written consent of the Company. Mr. Breen
is eligible to participate in the Company's bonus plan and to receive all other
benefits offered to officers under the Company's standard company benefits
practices and plans. Mr. Breen may terminate the agreement at any time on 90
days' prior written notice. The Company may terminate the agreement for cause
upon immediate notice thereof, or upon the death or disability of Mr. Breen. In
the event that the Company terminates the agreement for any reason other than
cause, death or disability, Mr. Breen will be entitled to the continuation of
his base salary for one year, payable in conformity with the Company's normal
payroll period. If the agreement is not terminated then, upon expiration of the
employment term, Mr. Breen shall be entitled to the continuation of his base
salary for one year, reduced by any compensation he may receive from another
employer during that year. The foregoing severance benefits are the exclusive
benefits that would be payable to Mr. Breen by reason of his termination, and
the Company is not obligated to segregate any assets or procure any investment
in order to fund such severance benefits. The agreement also contains
confidentiality provisions and other terms and conditions customary to executive
employment agreements.

Robert M. Gans entered into an employment agreement with PEI in 1994,
which was amended and subsequently assumed by the Company upon the spin-off of
the Company from PEI. The term of the agreement extends to October 16, 2000.
Pursuant to this agreement, as amended, Mr. Gans is entitled to receive a base
annual salary of $180,000. Mr. Gans may not engage in any activities, with or
without compensation, that would interfere with the performance of his duties or
that would be adverse to the Company's interests, without the prior written
consent of the Company. Mr. Gans is eligible to participate in the Company's
bonus plan and to receive all other benefits offered to officers under the
Company's standard company benefits practices and plans. Mr. Gans may terminate
the agreement at any time on 90 days' prior written notice. The Company may
terminate the agreement for cause upon immediate notice thereof, or upon the
death or disability of Mr. Gans. In the event that the Company terminates the
agreement for any reason other than cause, death or disability, Mr. Gans will be
entitled to the continuation of his base salary for one year, payable in
conformity with the Company's normal payroll period, and to inclusion in the
1997 Stock Option Plan, Profit Sharing and 401(k) Plan and medical plans of the
Company for the remainder of the term of the agreement. If the agreement is not
terminated, then, upon expiration of the employment term, Mr. Gans shall be
entitled to the continuation of his base salary for one year, reduced by any
compensation he may receive from another employer during that year. The
foregoing severance benefits are the exclusive benefits that would be payable to
Mr. Gans by reason of his termination, and the Company is not obligated to
segregate any assets or procure any investment in order to fund such severance
benefits. The agreement also contains confidentiality provisions and other terms
and conditions customary to executive employment agreements.

Thomas D. Martin entered into an employment agreement with the Company
for a term of two years commencing April 1, 1998. Pursuant to this agreement, as
amended, Mr. Martin is entitled to receive a base annual salary of $170,000. Mr.
Martin may not engage in any activities, with or without compensation, that
would interfere with the performance of his duties or that would be adverse to
the Company's interests, without the prior written consent of the Company. Mr.
Martin is eligible to participate in the Company's bonus plan and to receive all
other benefits offered to officers under the Company's standard company benefits
practices and plans. Mr. Martin may terminate the agreement at any time on 90
days' prior written notice. The Company may terminate the agreement for cause
upon immediate notice thereof, or upon the death or disability of Mr. Martin. In
the event that the Company terminates the agreement for any reason other than
cause, death or disability, Mr. Martin will be entitled to the continuation of
his base salary for one year, payable in conformity with the Company's normal
payroll period. If the agreement is not terminated, then, upon expiration of the
employment term, Mr. Martin shall

14
<PAGE>

be entitled to the continuation of his base salary for one year, reduced by any
compensation he may receive from another employer during that year. The
foregoing severance benefits are the exclusive benefits that would be payable to
Mr. Martin by reason of his termination, and the Company is not obligated to
segregate any assets or procure any investment in order to fund such severance
benefits. The agreement also contains confidentiality provisions and other terms
and conditions customary to executive employment agreements.

Kurt A. May entered into an employment agreement with the Company for a
term of two years commencing October 19, 1998. Pursuant to this agreement, as
amended, Mr. May is entitled to receive a base annual salary of $225,000. Mr.
May may not engage in any activities, with or without compensation, that would
interfere with the performance of his duties or that would be adverse to the
Company's interests, without the prior written consent of the Company. Mr. May
is eligible to participate in the Company's bonus plan and to receive all other
benefits offered to officers under the Company's standard company benefits
practices and plans. Mr. May may terminate the agreement at any time on 90 days'
prior written notice. The Company may terminate the agreement for cause upon
immediate notice thereof, or upon the death or disability of Mr. May. In the
event that the Company terminates the agreement for any reason other than cause,
death or disability, Mr. May will be entitled to continuation of his base salary
for one year, payable in conformity with the Company's normal payroll period. If
the agreement is not terminated, then, upon expiration of the agreement, and if
Mr. May's employment by the Company does not thereafter continue upon mutually
agreeable terms, Mr. May will be entitled to continuation of his base salary for
one year, payable in conformity with the Company's normal payroll period;
provided, however that the Company's obligation to pay such installments after
expiration of the agreement will cease concurrently with Mr. May having
commenced comparable employment with, or Mr. May receiving comparable
compensation from, another employer. The foregoing severance benefits are the
exclusive benefits that would be payable to Mr. May by reason of his
termination, and the Company is not obligated to segregate any assets or procure
any investment in order to fund such severance benefits. The agreement also
contains confidentiality provisions and other terms and conditions customary to
executive employment agreements.

Allan C. Youngberg entered into an employment agreement with the
Company for a term of two years commencing July 27, 1999. Pursuant to this
agreement, Mr. Youngberg is entitled to receive a base annual salary of
$190,000. Mr. Youngberg may not engage in any activities, with or without
compensation, that would interfere with the performance of his duties or that
would be adverse to the Company's interests, without the prior written consent
of the Company. Mr. Youngberg is eligible to participate in the Company's bonus
plan and to receive all other benefits offered to officers under the Company's
standard company benefits practices and plans. Mr. Youngberg may terminate the
agreement at any time on 90 days' prior written notice. The Company may
terminate the agreement for cause upon immediate notice thereof, or upon the
death or disability of Mr. Youngberg. In the event that the Company terminates
the agreement during the period from August 13, 1999 to August 12, 2000 for any
reason other than cause, death or disability, Mr. Youngberg will be entitled to
the continuation of his base salary for the remainder of the term of the
agreement payable in conformity with the Company's normal payroll period; if the
Company so terminates the agreement after August 12, 2000, Mr. Youngberg shall
be entitled to the continuation of his base salary for one year, payable in
conformity with the Company's normal payroll period. If the agreement is not
terminated, then, upon expiration of the employment term Mr. Youngberg shall be
entitled to the continuation of his base salary for one year, reduced by any
compensation he may receive from another employer during that year. The
foregoing severance benefits are the exclusive benefits that would be payable to
Mr. Youngberg by reason of his termination, and the Company is not obligated to
segregate any assets or procure any investment in order to fund such severance
benefits. The agreement also contains confidentiality provisions and other terms
and conditions customary to executive employment agreements.

15
<PAGE>

PERFORMANCE GRAPH

The graph below compares the cumulative total stockholder return on the
shares of the Company's Common Stock during fiscal years 1998 and 1999
(commencing on September 2, 1997, the date on which the Company became a
publicly-held corporation) with the cumulative total return of The Nasdaq Stock
Market Index (US)(1) and the Nasdaq Retail Trade Index(2) over the same period
(assuming the investment of $100 in the Common Stock, stocks comprising The
Nasdaq Stock Market Index (US) and the stocks comprising the Nasdaq Retail Trade
Stocks Index on September 2, 1997 and the reinvestment of all dividends).

COMPARISON OF CUMULATIVE TOTAL RETURNS SINCE SEPTEMBER 2, 1997
Among PriceSmart, Inc., The Nasdaq Stock Market Index (US)
and the Nasdaq Retail Trade Stocks Index

9/2/1997 8/31/1998 8/31/1999
<S> <C> <C> <C>
Company Index 100.000 82.971 202.899
Market Index 100.000 92.767 171.920
Industry Index 100.000 85.720 107.419

</TABLE>

- ---------------
(1) The Nasdaq Stock Market Index (US) was prepared by the Center for
Research in Security Prices and includes all U.S. Nasdaq Stock Market
companies.
(2) The Nasdaq Retail Trade Stocks Index was prepared by the Center for
Research in Security Prices and includes all U.S. and foreign companies
quoted and traded on Nasdaq that have a primary Standard Industrial
Classification (SIC) Code in any of the following ranges: 5200-5599,
5700-5799 or 5900-5999.
(3) Stockholder returns over the indicated period should not be considered
indicative of future stockholder returns. The lines on the graph
represent monthly index levels derived from compounded daily returns
including all dividends. The indices are reweighted daily, using market
capitalization on the previous trading day.

CERTAIN TRANSACTIONS

RELATIONSHIP WITH PRICE ENTERPRISES, INC.

On August 29, 1997 (the "Distribution Date") Price Enterprises, Inc.
("PEI") separated its core real estate business and its merchandising businesses
pursuant to a spin-off in which the stockholders of PEI received Common Stock of
the Company through a distribution (the "Distribution"). Pursuant to the
Distribution, the Company acquired the merchandising businesses and PEI retained
the real estate business.

Sol Price, who beneficially owns approximately 34.3% of the Company's
outstanding Common Stock, is the father of Robert E. Price, the Chairman of the
Board of the Company. Sol Price has beneficial ownership

16
<PAGE>

through various family and charitable trusts of approximately 29.6% of PEI's 8
3/4% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred
Stock"), which votes together with the Common Stock with one-tenth of one vote
per share. Robert E. Price, who beneficially owns approximately 25.0% of the
Company's Common Stock and is the Chairman of the Board of the Company also owns
16.4% of PEI's Series A Preferred Stock and served as the Chairman of the Board
of PEI until November 1999.

ARRANGEMENTS WITH PEI RELATING TO THE DISTRIBUTION. For the purpose of
governing certain of the ongoing relationships between the Company and PEI after
the Distribution and to provide mechanisms for an orderly transition, the
Company and PEI have entered into the various agreements, and have adopted
policies, as described below.

The Company and PEI entered into a Distribution Agreement dated as of
August 26, 1997, which provides for, among other things: (i) the division
between the Company and PEI of certain assets and liabilities; (ii) the
Distribution; and (iii) certain other agreements governing the relationship
between the Company and PEI following the Distribution.

PEI and the Company also entered into an Asset Management and
Disposition Agreement dated as of August 26, 1997 calling for PEI to provide
asset management services with respect to certain properties owned by the
Company. Among other things, PEI collects rents and pays operating expenses,
maintains and repairs such properties, prepares month-end financial statements,
hires brokers and prepares brokers' agreements, leases available space within
such properties and disposes of such properties. As consideration for such
services, the Company pays PEI management fees based on annual rents from such
properties, leasing fees based on the gross leasable floor areas of each such
properties, disposition fees based on percentages of the sales prices for
properties that are sold and developer's fees of 3% of all "hard" construction
costs managed by PEI on behalf of the Company. The agreement has a two-year
term; provided that either PEI or the Company may terminate the agreement upon
60 days written notice.

The Company and PEI entered into a Tax Sharing Agreement dated as of
August 26, 1997 defining the parties' rights and obligations with respect to tax
returns and tax liabilities, including, in particular, Federal and state income
tax returns and liabilities, for taxable years and other taxable periods ending
on or before the Distribution Date. In general, PEI is responsible for: (i)
filing all Federal and state income tax returns of PEI, the Company and any of
their subsidiaries for all taxable years ending on or before or including the
Distribution Date and (ii) paying the taxes relating to such returns (including
any deficiencies proposed by applicable taxing authorities), to the extent
attributable to pre-Distribution Date periods. The Company and PEI are each
responsible for filing their own returns and paying their own taxes for
post-Distribution Date periods.

OTHER TRANSACTIONS WITH PEI. The Company leases 42,000 square feet of
office space from PEI to house the Company's headquarters. The Company pays
$25,704 per month pursuant to a two-year lease commencing August 26, 1997 with
five renewal options of two years each, the first of which has been exercised by
the Company. On December 1, 1997, the Company and PEI entered into an Office
Services Agreement which provided that the Company would provide certain office
services (such as receptionist, mail room, telecommunications and voice mail,
utilities and copy services) to PEI, which occupies space in the same building,
for $13,450 per month for the first nine months and $7,600 per month for the
last twelve months of the term of the agreement. On June 1, 1998, PEI and the
Company terminated the Office Services Agreement and amended the headquarters
lease to provide that PEI would provide office services to the Company for a fee
based on a percentage of PEI's estimated expenses for providing such services.
Said agreement by PEI to provide office services to the Company expired August
31, 1999, and on September 1, 1999 a new office Services Agreement was entered
into, under which the Company provided services to PEI through November 3, 1999,
for which PEI reimbursed the Company.

On December 21, 1998, the Company sold to PEI a 2.5-acre parcel of real
estate in Fountain Valley, California for $320,000.

17
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SHARE REPURCHASE PROGRAM

In August and September 1998, the Company repurchased 700,000 shares of
Common Stock to provide shares for the Company's 1998 Equity Participation Plan.
The Company repurchased 500,000 shares pursuant to its share repurchase programs
in block transactions at prevailing market prices. The Company also repurchased
200,000 shares from the Sol & Helen Price Trust, of which Sol Price is trustee,
at a price of $15 per share in a privately negotiated transaction. In November
1998, the Company purchased an additional 277,614 shares in block transactions
at prevailing market prices.

PROMISSORY NOTES

In July 1999, Allan C. Youngberg purchased 3,658 shares of Common Stock
pursuant to the stock purchase feature of the 1998 Plan. In connection with this
purchase, Mr. Youngberg delivered to the Company a recourse promissory note in
the amount of $149,978. The note bears interest at a rate of 5.85% per annum and
has a term of six years. In August 1998, Kevin C. Breen, Thomas D. Martin, and
Karen J. Ratcliff purchased 7,750, 10,000 and 8,750 shares of Common Stock,
respectively, pursuant to the stock purchase feature of the 1998 Plan. These
officers delivered to the Company promissory notes in the amounts of $84,087.50,
$108,500.00, and $94,937.50, respectively. In August 1998, the Gans Blackmar
Stevens Profit Sharing Plan FBO Robert M. Gans purchased 8,750 shares of Common
Stock pursuant to the stock purchase feature of the 1998 Plan and delivered to
the Company a promissory note in the amount of $94,937.50. In October 1998, Kurt
A. May purchased 8,750 shares of Common Stock pursuant to the stock purchase
feature of the 1998 Plan and delivered to the Company a promissory note in the
amount of $86,516. The promissory notes delivered by Messrs. Breen, Martin and
May, Ms. Ratcliff and the Gans Blackmar Stevens Profit Sharing Plan initially
were non-recourse notes and bore interest at a rate of 6% per annum and had
terms of six years. These notes were amended in June 1999 to become recourse
notes, bearing interest at a rate of 5.85%. All of the notes become immediately
due and payable upon the termination of the employee's employment for any
reason.

PANAMA LOAN

In July 1998, the Company's Board of Directors approved an
interest-bearing loan of $5.9 million to the Company's PB Real Estate, S.A.
subsidiary, of which the Company is the 51% owner. The loan is secured by real
property owned by PB Real Estate. PB Real Estate used a portion of the proceeds
of the loan to repay a $3.8 million loan from Chase Manhattan Bank to the
Company's PriceCostco de Panama, S.A. subsidiary (of which the Company is also
the 51% owner). In addition, as contemplated by the Company's Board of Directors
in July 1998, PB Real Estate distributed the remaining $2.1 million of proceeds
from the Company's loan to the shareholders of PB Real Estate in accordance with
their interests. Accordingly, PB Real Estate distributed $1.0 million to BB&M
International Trading Group, of which Rafael E. Barcenas is a principal, in
April 1999 and $1.1 million to the Company in July 1999.

GENERAL

INDEPENDENT ACCOUNTANTS

The Board of Directors has selected Ernst & Young LLP to serve as the
Company's independent accountants for the 2000 fiscal year. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Under Section 16(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), as amended, directors, officers and beneficial owners of 10
percent or more of the Company's Common Stock ("Reporting Persons") are
required to report to the Securities and Exchange Commission (the
"Commission") on a timely basis the initiation of their status as a Reporting
Person and any changes with respect to their beneficial ownership of the
Company's Common Stock. Based solely on its review of such forms received by
it and the written representations of its

18
<PAGE>

Reporting Persons, the Company has determined that no Reporting Persons
known to it were delinquent with respect to their reporting obligations
as set forth in Section 16(a) of the Exchange Act, other than Lawrence
B. Krause, Allan C. Youngberg and Rafael E. Barcenas. Mr. Krause failed
to report on Form 4 the purchase of 500 shares of Common Stock in
September 1998 by a partnership of which he is a general partner. Mr.
Youngberg filed his initial statement of beneficial ownership on Form 3
seven days late. Mr. Barcenas failed to report on Form 4 two purchases
and two sales of Common Stock in June 1999 and July 1999, respectively,
by a corporation of which he is president and the sole stockholder.

STOCKHOLDER PROPOSALS

A proposal to be considered for inclusion in the Company's proxy
statement for the next annual meeting must be received by the Secretary of the
Company not later than August 3, 2000 to be considered for inclusion in the
Company's proxy statement and form of proxy relating to that meeting. A
stockholder proposal submitted after October 17, 2000 will not be considered
timely. Holders of proxies which expressly confer discretionary authority may
vote for or against an untimely proposal.

ANNUAL REPORT

The Annual Report of the Company for the fiscal year ended August 31,
1999 will be mailed to stockholders of record on or about December 10, 1999. The
Annual Report does not constitute, and should not be considered, a part of this
Proxy solicitation material.

If any person who was a beneficial owner of Common Stock of the Company
on the record date for the Annual Meeting of Stockholders desires additional
information, a copy of the Company's Annual Report on Form 10-K will be
furnished without charge upon receipt of a written request identifying the
person so requesting a report as a stockholder of the Company at such date.
Requests should be directed to PriceSmart, Inc., 4649 Morena Blvd., San Diego,
California 92117, Attention: Secretary.

OTHER MATTERS

The Board of Directors does not know of any matter to be presented at
the Annual Meeting which is not listed on the Notice of Annual Meeting and
discussed above. If other matters should properly come before the meeting,
however, the persons named in the accompanying Proxy will vote all Proxies in
accordance with their best judgment.

ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.

By Order of the Board of Directors

Robert M. Gans
Secretary

Dated: December 10, 1999

<PAGE>

PRICESMART, INC.
4649 MORENA BOULEVARD
SAN DIEGO, CALIFORNIA 92117

The undersigned stockholder of PriceSmart, Inc., a Delaware corporation (the
"Company"), hereby appoints Robert M. Gans and Allan C. Youngberg, and each of
them, as proxies for the undersigned with full power of substitution in each of
them, to attend the Annual Meeting of the Stockholders of the Company to be held
on Wednesday, January 19, 2000 at 10:00 a.m. Pacific Standard Time, and any
adjournment or postponement thereof, to cast on behalf of the undersigned all
votes that the undersigned is entitled to cast at such meeting and otherwise to
represent the undersigned at the meeting with all powers possessed by the
undersigned if personally present at the meeting. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and revokes
any proxy heretofore given with respect to such meeting.

The votes entitled to be cast by the undersigned will be cast as instructed
below. If this proxy is executed but no instruction is given, the votes entitled
to be cast by the undersigned will be cast "FOR" the following proposals:

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)

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FOLD AND DETACH HERE

<PAGE>

FOR ALL NOMINEES WITHHOLD
LISTED BELOW AUTHORITY
(except as to vote for all
marked to the nominees listed
contrary below) below

1. ELECTION OF DIRECTORS / / / /

Rafael E. Barcenas Lawrence B. Krause
James F. Cahill Gilbert A. Partida
Katherine L. Hensley Robert E. Price
Leon C. Janks

WITHHELD FOR: (To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)

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

Please mark
your votes as /X/
indicated in
this example

NOTE: The proxies of the undersigned may vote according to their discretion on
any other matter that may properly come before the meeting.

I plan to attend the meeting / /

- ------------------------------------------------
| Please mark, sign, date and return the proxy |
| card promptly using the enclosed envelope. |
- ------------------------------------------------

Signature(s)___________________________________________ Dated_______________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.

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FOLD AND DETACH HERE