PRICESMART INC, DEF 14A, 2000-12-13

PRICESMART INC
DEF 14A, 2000-12-13
MISCELLANEOUS RETAIL

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<PAGE>

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

<PAGE>

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 24, 2001 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 ten
persons:

Rafael E. Barcenas Lawrence B. Krause
James F. Cahill Jack McGrory
Murray L. Galinson Gilbert A. Partida
Katherine L. Hensley Robert E. Price
Leon C. Janks Edgar A. Zurcher

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 28, 2000 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 15, 2000

<PAGE>

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

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 24, 2001

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 24, 2001 (the "Annual
Meeting"), and at any adjournments thereof. This Proxy Statement will be first
sent to stockholders on or about December 15, 2000. 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 28, 2000
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.

As of November 28, 2000, 6,296,182 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.

<PAGE>

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 October 31, 2000 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.

<TABLE>
<CAPTION>
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)(4) 1,449,380 23.1%
Gilbert A. Partida(5) 81,083 1.3
Rafael E. Barcenas(6) 81,916 1.3
James F. Cahill(3)(7) 888,252 14.2
Murray L. Galinson(3)(8) 834,959 13.3
Katherine L. Hensley(9) 18,302 *
Leon C. Janks(10) 16,336 *
Lawrence B. Krause(11) 10,074 *
Jack McGrory(3)(12) 829,959 13.2
Edgar A. Zurcher(13) 679,500 10.8
Robert M. Gans(14) 64,225 1.0
Kurt A. May(15) 43,400 *
Thomas D. Martin(16) 52,957 *
Allan C. Youngberg (17) 14,758 *
Performance Capital, L.P.(18) 495,550 7.9
767 Third Avenue, 16th Floor
New York, NY 10017
Wynnefield Partners Small Cap Value, L.P.(19) 320,900 5.1
One Penn Plaza, Suite 4720
New York, NY 10119
Sol Price(20) 1,743,424 27.8
7979 Ivanhoe Avenue, Suite 520
La Jolla, CA 92037
PSC, S.A. 679,500 10.8
P.O. Box 0832-1384
World Trade Center
Panama, Republic of Panama
All executive officers and 2,617,862 40.1
directors as a group (10 persons)(21)
</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.

<PAGE>

(3) Robert E. Price, James F. Cahill, Murray L. Galinson, Jack McGrory and Sol
Price are directors of The Price Family Charitable Fund (the "Fund"). As
such, for purposes of this table, they are each deemed to beneficially own
664,382 shares held by the Fund. Each of Robert E. Price, James F. Cahill,
Murray L. Galinson, Jack McGrory and Sol Price has shared voting and
dispositive powers with respect to, and disclaims beneficial ownership of,
the shares held by the Fund. Robert E. Price, James F. Cahill, Murray L.
Galinson, Jack McGrory and Sol Price also are co-managers of the Price
Group LLC. As such, for purposes of this table, they are each deemed to
beneficially own 165,577 shares held by the Price Group, LLC. Each of
Robert E. Price, James F. Cahill, Murray L. Galinson, Jack McGrory and Sol
Price has shared voting and dispositive powers with respect to, and
disclaims beneficial ownership of, the shares held by the Price Group,
LLC. If the percent of the Company's Common Stock beneficially owned by
Robert E. Price, James F. Cahill, Murray L. Galinson, Jack McGrory and Sol
Price were calculated without regard to the shares held by the Fund or the
Price Group LLC, they would own 9.9%, 0.9%, less than 0.1%, 0%, and 14.6%,
respectively, of the Company's Common Stock.

(4) Includes 298,467 shares held by the Robert and Allison Price Trust, of
which Mr. Price is a trustee, 297,600 shares held by the Robert & Allison
Price Charitable Remainder Trust, of which Mr. Price is a trustee, 22,854
shares held by a trust for the benefit of Mr. Price's minor children, of
which Mr. Price is a trustee, 664,382 shares held by the Price Family
Charitable Fund, of which Mr. Price is a director, and 165,577 shares held
by the Price Group, LLC, of which Mr. Price is a co-manager. Mr. Price
disclaims beneficial ownership of the shares held by the Price Family
Charitable Fund and the Price Group, LLC.

(5) Includes 57,250 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 675 shares held in a tenants in common
account with two other individuals and 1,363 shares held in a tenants in
common account with one other person. Each of the 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.

(6) Includes 14,758 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(7) Includes 750 shares subject to options that are currently exercisable or
will become exercisable within 60 days after the date of this table. Also
includes 664,382 shares held by the Price Family Charitable Fund, of which
Mr. Cahill is a director, 53,668 held by a trust for the benefit of Sol
Price's grandchildren, of which Mr. Cahill is a trustee, and 165,577
shares held by the Price Group, LLC, of which Mr. Cahill is a co-manager.
Mr. Cahill disclaims beneficial ownership of the shares held by the Price
Family Charitable Fund, the Price Group, LLC and the trust described
above.

(8) Includes 664,382 shares held by the Price Family Charitable Fund, of which
Mr. Galinson is a director, and 165,577 shares held by the Price Group,
LLC, of which Mr. Galinson is a co-manager. Mr. Galinson disclaims
beneficial ownership of the shares held by The Price Family Charitable
Fund and the Price Group, LLC.

(9) Includes 13,620 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.
Also includes 900 shares held in a trust of which Ms. Hensley is a
beneficiary and for which she serves as trustee.

(10) Includes 13,620 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(11) Includes 4,316 shares held by the Krause Family Limited Partnership, of
which Mr. Krause is a general partner. Also includes 5,758 shares subject
to options that are currently exercisable or will become exercisable
within 60 days after the date of this table.

(12) Includes 664,382 shares held by the Price Family Charitable Fund, of which
Mr. McGrory is a director, and 165,577 shares held by the Price Group,
LLC, of which Mr. McGrory is a co-manager. Mr. McGrory disclaims
beneficial ownership of the shares held by the Price Family Charitable
Fund and the Price Group, LLC.

<PAGE>

(13) Includes 679,500 shares held by PSC, S.A. Mr. Zurcher disclaims beneficial
ownership of the shares held by PSC, S.A.

(14) Includes 8,750 shares held for Mr. Gans' account in a profit sharing and
401(k) plan maintained by his former employer. Also includes 48,837 shares
subject to options that are currently exercisable or will become
exercisable within 60 days after the date of this table.

(15) Includes 32,500 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(16) Includes 21,185 shares held by a family trust and 31,772 shares subject to
options that are currently exercisable or will become exercisable within
60 days after the date of this table.

(17) Includes 10,000 shares subject to options that are currently exercisable
or will become exercisable within 60 days after the date of this table.

(18) Includes 70,300 shares held by Performance Capital II, L.P. and 57,300
shares held by Performance Offshore, Ltd.

(19) 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.

(20) Includes 165,577 shares held by the Price Group, LLC, 907,890 shares held
by the Price Family Charitable Trust, of which Mr. Price is trustee,
664,382 shares held by the Price Family Charitable Fund, of which Mr.
Price is a director, 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 Dorothy
Goldberg Trust and the Price Group, LLC.

(21) See notes (3)-(13). Also includes 36,118 shares beneficially owned by
Kevin C. Breen, all of which are shares subject to options exercisable
within 60 days after the date of this table.

<PAGE>

PROPOSAL 1

ELECTION OF DIRECTORS

The Board of Directors of the Company has nominated and recommends for
election as directors the following ten 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.

In June 2000, the Company acquired the 40% interest in its PSMT Caribe,
Inc. subsidiary held by PSC, S.A. for 679,500 shares of the Company's common
stock. The Company already owned the remaining 60% of PSMT Caribe. In connection
with the Company's acquisition of the 40% minority interest in PSMT Caribe, the
Company agreed to give PSC opportunities to have representation on the board of
directors of PSMT Caribe and the Company's Board of Directors. Accordingly, in
November 2000, the Board of Directors expanded its size to ten members and
elected Murray Galinson, Jack McGrory and Edgar Zurcher to the Board to fill the
vacancies created. Mr. Zurcher is PSC's designee. Pursuant to the terms of the
stock purchase agreement relating to the PSMT Caribe transaction, the Company
also is required to nominate Mr. Zurcher for re-election to the Board at the
2001 Annual Meeting and to use its best efforts to seek his election by the
Company's stockholders.

The table below indicates the name, position with the Company and age of
each nominee for director as of December 15, 2000:

<TABLE>
<CAPTION>
Name Position Age
---- -------- ---
<S> <C> <C>
Robert E. Price Chairman of the Board 58
Gilbert A. Partida President, Chief Executive Officer and Director 38
Rafael E. Barcenas Director 56
James F. Cahill Director 45
Murray L. Galinson Director 63
Katherine L. Hensley Director 63
Leon C. Janks Director 51
Lawrence B. Krause Director 70
Jack McGrory Director 51
Edgar A. Zurcher Director 50
</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

<PAGE>

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 PriceSmart Panama, S.A.
(formerly known as PriceCostco de Panama, S.A.), and PriceSmart Real Estate,
S.A. (formerly known as PB 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 previously owned 49% of both PriceCostco de
Panama, S.A. and P. B. Real Estate, S.A.) from March 1995 until March 2000. Mr.
Barcenas has been Vice President of Boyd, Barcenas, S.A., the largest
advertising agency in Panama since April 1971.

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.

Murray L. Galinson has been a director of the Company since November 2000.
Mr. Galinson served as a director of PEI from August 1994 until November 1999.
Additionally, Mr. Galinson has been Chairman of the Board of San Diego National
Bank since May 1996 and has served as a director of San Diego National Bank
since its inception in 1981. Mr. Galinson also served as President and Chief
Executive Officer of San Diego National Bank from September 1984 to September
1997 and was Chairman of the Board and Chief Executive Officer of SDNB Financial
Corporation from 1985 to 1997.

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.

Jack McGrory has been a director of the Company since November 2000. Mr.
McGrory was President and Chief Executive Officer of PEI from September 1997
until November 1999. Mr. McGrory also serves as a director of the San Diego
Padres, L.P. and was its Executive Vice President and Chief Operating Officer
from September 1999 until August 2000. He is also President of Downtown
Development, Inc., which is responsible for coordinating construction of the new
Padres ballpark and the Padres' commercial real estate activities. From March
1991 through August 1997, Mr. McGrory served as City Manager of San Diego.

Edgar A. Zurcher has been a director of the Company since November 2000.
Mr. Zurcher has also been a director and officer of PSMT Caribe, Inc., a
subsidiary of the Company, since its inception in December 1998. Additionally,
Mr. Zurcher has been a principal of PSC, S.A. (which previously owned 49% of
PSMT Caribe, Inc.) since its inception in September 1998. Mr. Zurcher is also
the managing partner of the law firm Zurcher, Montoya

<PAGE>

and Zurcher in Costa Rica. Additionally, he is Chairman of Banca Promerica
(Costa Rica) and is a director of Banco Promerica (El Salvador) and a director
of Banco Promerica (Honduras).

INFORMATION REGARDING THE BOARD

BOARD MEETINGS

The Company's Board of Directors held twelve meetings during fiscal 2000.
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 five meetings during fiscal 2000. 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 conducts 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, Mr. Galinson and Mr. Krause, held nine meetings during fiscal 2000. 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, held two meetings during fiscal 2000. 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
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, held one meeting during fiscal 2000. 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,
Cahill, Krause, Partida and Price and Ms. Hensley, held five meetings during
fiscal 2000. 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

<PAGE>

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 also 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 will 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.

<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company and their ages as of December 15,
2000 are as follows:

<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
Gilbert A. Partida President and Chief Executive Officer 38
Kevin C. Breen Executive Vice President--Operations 40
Robert M. Gans Executive Vice President, Secretary and General Counsel 51
Thomas D. Martin Executive Vice President--Merchandising 44
Kurt A. May Executive Vice President and Chief Operating Officer 47
Allan C. Youngberg Executive Vice President and Chief Financial Officer 48
</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.

<PAGE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

The following table sets forth certain information concerning compensation
for the fiscal years ended August 31, 2000, August 31, 1999 and August 31, 1998
received by the Chief Executive Officer and the four most highly compensated
executive officers other than the chief executive officer of the Company who
were serving as executive officers at the end of the last completed fiscal year
(the "Named Executive Officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
---------------------------------------------- ------------------------------------
NUMBER OF
OTHER SECURITIES
NAME AND FISCAL ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS(#)(1) COMPENSATION
------------------ ---- --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gilbert A. Partida(2) 2000 $ 274,992 $ 190,000 $ 0 0 $ 9,600(3)
President and Chief 1999 256,862 100,000 0 0 0
Executive Officer 1998 134,711 85,000 0 140,500 10,325

Kurt A. May(4) 2000 222,916 60,000 0 0 2,259(3)
Executive Vice President 1999 176,539 50,000 0 81,250 0
and Chief Operating Officer

Robert M. Gans 2000 179,583 45,000 0 0 9,600(3)
Executive Vice President, 1999 175,000 40,000 0 0 9,850(3)
General Counsel and 1998 167,708 25,000 0 82,725 3,583(3)
Secretary

Allan C. Youngberg (5) 2000 189,999 80,000 0 10,000 0
Executive Vice President 1999 18,756 5,000 0 50,000 0
and Chief Operating Officer

Thomas D. Martin 2000 168,749 45,000 0 0 9,600(3)
Executive Vice 1999 155,000 35,000 0 0 9,850(3)
President--Merchandising 1998 155,000 30,000 0 65,772 9,401(3)
</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. The
amount shown in the salary column for fiscal 1999 reflects amounts
actually paid to Mr. May during fiscal 1999.

<PAGE>

(5) Mr. Youngberg commenced employment with the Company on July 27, 1999. The
amount shown in the salary column for 1999 reflects amounts actually paid
to Mr. Youngberg during fiscal 1999.

OPTION GRANTS DURING FISCAL 2000

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.

<TABLE>
<CAPTION>
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
Kurt A. May 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
Allan C. Youngberg 10,000 .08% $ 39.25 7/18/06 $ 133,500 $ 302,800
Thomas D. Martin 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 2000 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.

<TABLE>
<CAPTION>
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 56,500/84,000 $1,179,430/$1,754,430
Kurt A. May 0 0 16,250/65,000 345,312/1,381,250
Robert M. Gans 7,500 213,575 53,475/21,750 1,436,247/464,220
Allan Youngberg 0 0 10,000/50,000 0/0
Thomas D. Martin 8,000 231,280 27,772/30,000 644,002/631,440
</TABLE>

-----------------------
(1) Based on the closing sale price of the Common Stock on Monday, August 31,
2000 ($37.50), as reported by the Nasdaq National Market, less the option
exercise price.

<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 October 31, 2000, options to purchase an
aggregate of 669,399 shares of the Company's Common Stock at prices ranging from
$8.59 to $41.25 had been granted under the 1997 Plan (not including shares
subject to options that have been cancelled), and 30,601 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.

The 1998 Plan provides that the Compensation Committee of the Company's
Board of Directors or a subcommittee thereof 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

<PAGE>

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 October 31, 2000, options to purchase an aggregate
of 597,361 shares of the Company's Common Stock at prices ranging from $14.75 to
$39.25 had been granted under the 1998 Plan (not including shares subject to
options that have been cancelled), 80,421 shares of Common Stock had been issued
under the stock purchase provisions of the 1998 Plan, and 22,218 shares remained
available for future grant under the 1998 Plan.

COMPENSATION COMMITTEE MEMBERSHIP, INTERLOCKS AND INSIDER PARTICIPATION

During fiscal year 2000, the Company's Compensation 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 2000. At all times the committee has been and is composed solely of
independent non-employee directors.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation 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 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.

<PAGE>

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 a $25,000 increase to the base salary of the Company's
Executive Vice President - Chief Operating Officer (Kurt May) from $200,000 to
$225,000, a $5,000 increase to the base salary of the Company's Executive Vice
President - Secretary and General Counsel (Robert Gans) from $175,000 to
$180,000, a $15,000 increase to the base salary of the Company's Executive Vice
President - Merchandising (Thomas Martin) from $155,000 to $170,000, a $5,000
increase effective as of September 17, 1999 to the base salary of the Company's
Executive Vice President - Operations (Kevin Breen) from $150,000 to $155,000,
and a $15,000 increase effective as of November 1, 2000 to Mr. Breen's base
salary from $155,000 to $170,000.

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, Martin
and Breen.

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 new stock
option grant to Mr. Youngberg.

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
($190,000) for fiscal year 2000 was awarded based upon: (i) the significant
effort extended by

<PAGE>

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 the Caribbean and the
Philippines. 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

AUDIT COMMITTEE REPORT

The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. All committee members satisfy the definition
of independent director as established in the National Association of Securities
Dealers listing standards. The Board of Directors adopted a written charter for
the Audit Committee on August 25, 1997, amended July 13, 2000, which is attached
to this Proxy Statement as Appendix A.

In fulfilling its oversight responsibilities, the committee reviewed with
management the audited financial statements in the Annual Report, including a
discussion of the quality, and not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.

The Company's independent auditors, Ernst & Young LLP, are responsible for
expressing an opinion on the conformity of our audited financial statements with
generally accepted accounting principles. Ernst & Young met with the committee
and expressed its judgment as to the quality, not just the acceptability, of the
Company's accounting principles and discussed other matters as required under
generally accepted auditing standards. In addition, Ernst & Young discussed the
auditors' independence from the Company's and from the Company's management and
delivered to the committee those matters to be set forth in written disclosures
as required by the Independence Standards Board.

The committee discussed with our independent auditors the overall scope
and plan of their audit. The committee meets with the independent auditors, with
and without our management present, to discuss the results of their
examinations, their evaluations of our internal controls, and the overall
quality of our financial reporting.

In reliance on the reviews and discussions referred to above, the
committee has recommended that the audited financial statements be included in
the Annual Report on Form 10-K for the year ended August 31, 2000 for filing
with the Securities and Exchange Commission.

<PAGE>

This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such acts.

Leon C. Janks
Katherine L. Hensley
Lawrence B. Krause

EMPLOYMENT CONTRACTS

Gilbert A. Partida entered into an employment agreement with the Company
for a term of two years commencing January 12, 1998, which, during fiscal 2000,
was extended three years, to January 11, 2003. 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. 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 through January
11, 2003, payable in conformity with the Company's normal payroll period;
provided, however, that the Company's obligation to pay such installments after
such termination shall be reduced by any compensation he may receive from
another employer during that period. 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, which, during fiscal 2000, was
extended one year, to March 31, 2001. Pursuant to this agreement, as amended,
Mr. Breen is entitled to receive a base annual salary of $155,000 and, effective
November 1, 2000, $170,000. 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, and if Mr. Breen's
employment by the Company does not thereafter continue upon mutually agreeable
terms, 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 was extended one year during
fiscal 2001 to October 16, 2001. 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

<PAGE>

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, and if Mr. Gans' employment by the Company does not
thereafter continue upon mutually agreeable terms, 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, which, during fiscal 2000, was
extended one year, to March 31, 2001. 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, and if Mr. Martin's employment by the Company does not
thereafter continue upon mutually agreeable terms, Mr. Martin 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. 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, which, during fiscal 2001, was
extended one year, to October 18, 2001. 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.

<PAGE>

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, and if Mr. Youngberg's employment by the
Company does not thereafter continue upon mutually agreeable terms, 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.

<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, 1999 and 2000
(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

<TABLE>
<CAPTION>
09/02/1997 08/31/1998 08/31/1999 08/31/2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Company Index 100.000 82.971 202.899 217.391
Market Index 100.000 92.674 172.168 262.967
Industry Index 100.000 85.693 103.396 79.752
</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.

<PAGE>

CERTAIN TRANSACTIONS

RELATIONSHIPS WITH THE PRICE FAMILY

Sol Price beneficially owns approximately 27.8% of the Company's
outstanding Common Stock. Sol Price is the father of Robert E. Price, the
Chairman of the Board of the Company. Robert E. Price beneficially owns
approximately 23.1% of the Company's outstanding Common Stock, including shares
that may be deemed to be beneficially owned by Sol Price. Sol Price and Robert
E. Price together beneficially own approximately 37.7% of our outstanding common
stock

RELATIONSHIP WITH PRICE ENTERPRISES, INC. Sol Price has beneficial
ownership through various family and charitable trusts of approximately 29.9% of
the 8 3/4% Series A Cumulative Redeemable Preferred Stock ("Series A Preferred
Stock") of Price Enterprises, Inc. ("PEI"). Robert E. Price beneficially owns
approximately 16.7% of PEI's Series A Preferred Stock, including shares that may
be deemed to be beneficially owned by Sol Price, and served as the Chairman of
the Board of PEI until November 1999. James F. Cahill and Jack McGrory,
directors of the Company, beneficially own approximately 6.3% and 5.6%,
respectively, of the Series A Preferred Stock, including shares that may be
deemed to be beneficially owned by Sol Price and Robert E. Price, and are
directors of PEI. The Series A Preferred Stock votes together with the Common
Stock with one tenth of one vote per share. In addition, holders of the Series A
Preferred Stock currently are entitled to elect a majority of PEI's board of
directors and will have such rights until (1) less than 2,000,000 shares of the
Series A Preferred Stock remain outstanding; (2) Excel Legacy Corporation, which
owns more than 90% of PEI's outstanding shares of common stock, makes an offer
to purchase any and all outstanding shares of the Series A Preferred Stock at a
cash price of $16.00 per share and purchases all shares duly tendered and not
withdrawn; or (3) the board of directors of PEI causes PEI to issue equity
securities without unanimous board approval or causes PEI to fail to pay
specified dividends on the PEI common stock.

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. The 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.

SALE OF TRAVEL BUSINESS. On March 1, 2000, the Company completed the sale
of its domestic travel business to Club-4U, Inc. a California corporation, of
which Sol Price is a director and majority stockholder and of which James F.
Cahill and Murray Galinson are directors, for $1.5 million. Under the purchase
agreement, Club-4U acquired the assets primarily used in connection with the
travel businesses, subject to liabilities under the travel business existing
contracts, resulting in a gain to the Company of approximately $1.1 million.

SALE OF CITY NOTES. In early April 2000, the Company entered into an
agreement to sell to the Price Family Charitable Trust, a California trust, of
which Sol Price and Robert E. Price are trustee and successor trustee,
respectively, up to ten notes receivable from various municipalities and
agencies, known as the "City Notes," for $22.5 million. The Company has sold all
ten City Notes to the Price Family Charitable Trust, resulting in a gain to the
Company of approximately $3.9 million.

USE OF PRIVATE PLANE. From time to time during fiscal 2000, members of the
Company's management used a private plane owned in part by PFD Ivanhoe, Inc. to
travel to business meetings in Central America and the Caribbean. Price Group,
LLC owns 100% of the stock of PFD Ivanhoe, and James F. Cahill is an officer of
PFD

<PAGE>

Ivanhoe. Price Group, LLC's members include Sol Price, Robert E. Price,
James F. Cahill, Murray Galinson and Jack McGrory. When the Company uses the
plane, it reimburses PFD Ivanhoe for a portion of a fixed management fee and
additional expenses PFD Ivanhoe incurs based on the number of hours flown. The
Company also reimburses PFD Ivanhoe for direct charges associated with use of
the plane, including landing fees, international fees and catering. During
fiscal 2000, the Company paid PFD Ivanhoe $227,339 to cover the costs associated
with the Company's use of the plane.

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 and Thomas D. Martin
purchased 7,750 and 10,000 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 and $108,500.00, 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 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.

RELATIONSHIPS WITH RAFAEL BARCENAS

ACQUISITION OF MINORITY INTERESTS IN PANAMA BUSINESS. In March 2000, the
Company acquired sole ownership of the PriceSmart Panama business, which
previously has been 51% owned by the Company and 49% owned by BB&M International
Trading Group ("BB&M"), whose principals are several Panamanian businessmen,
including Rafael Barcenas, a director of PriceSmart. In return for BB&M's 49%
interest, PriceSmart conveyed to BB&M's principals 306,748 shares of PriceSmart
common stock.

SALE OF MINORITY INTEREST IN TRINIDAD AND TOBAGO BUSINESS. In January
2000, the Company sold a five percent interest in PSMT Trinidad/Tobago Limited
("PSMT Trinidad"), which operates the Company's Trinidad and Tobago business, to
Mr. Barcenas for $400,000. Mr. Barcenas subsequently transferred one-half of his
interest in PSMT Trinidad to another individual.

BOYD, BARCENAS, S.A. Boyd, Barcenas, S.A. serves as the Company's
advertising agency in Panama. Rafael E. Barcenas is the Vice President and
General Director of Boyd, Barcenas, S.A. During fiscal 2000, the Company paid
$186,825 to Boyd, Barcenas, S.A. for advertising services.

ZURCHER, MONTOYA AND ZURCHER

Edgar Zurcher, one of the Company's directors, is the managing partner of
the law firm Zurcher, Montoya and Zurcher in Costa Rica. During fiscal 2000 and
2001, Zurcher, Montoya and Zurcher has provided legal services to the Company.

<PAGE>

GENERAL

INDEPENDENT ACCOUNTANTS

The Board of Directors has selected Ernst & Young LLP to serve as the
Company's independent accountants for the 2001 fiscal year. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting. Such
representatives will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.

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 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
Gilbert A. Partida. Mr. Partida failed to report on Form 4 two purchases of
Common Stock in September 1999 and May 2000 and two sales of Common Stock in
December 1999, which shares were held in a tenants-in-common account in which
Mr. Partida has an interest.

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 17, 2001 to be considered for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. A stockholder proposal
submitted after November 10, 2001 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, 2000
will be mailed to stockholders of record on or about December 15, 2000. 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.

<PAGE>

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 15, 2000

<PAGE>

APPENDIX A

AUDIT COMMITTEE CHARTER

ORGANIZATION

This Charter governs the operations of the Audit Committee. The Committee shall
review and reassess the Charter at least annually and obtain the approval of the
Board of Directors. The Committee shall be appointed by the Board of Directors
and shall be comprised of at least three directors, each of whom are independent
of management and the Company. Members of the Committee shall be considered
independent if they have no relationship that may interfere with the exercise of
their independence from management and the Company. All Committee members shall
be financially literate, or shall become financially literate within a
reasonable period of time after appointment to the Committee, and at least one
member shall have accounting or related financial management expertise.

STATEMENT OF POLICY

The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the Board. In so
doing, it is the responsibility of the Committee to maintain free and open
communication between the Committee, independent auditors, the internal auditors
and management of the Company. In discharging its oversight role, the Committee
is empowered to investigate any matter brought to its attention with full access
to all books, records, facilities, and personnel of the Company and the power to
retain outside counsel, or other experts for this purpose.

RESPONSIBILITIES AND PROCESSES

The primary responsibility of the Audit Committee is to oversee the Company's
financial reporting process on behalf of the Board and report the results of
their activities to the Board. Management is responsible for preparing the
Company's financial statements, and the independent auditors are responsible for
auditing those financial statements. The Committee in carrying out its
responsibilities believes its policies and procedures should remain flexible, in
order to best react to changing conditions and circumstances. The Committee
should take the appropriate actions to set the overall corporate "tone" for
quality financial reporting, sound business risk practices, and ethical
behavior.

The following shall be the principal recurring processes of the Audit Committee
in carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.

- The Committee shall have a clear understanding with management
and the independent auditors that the independent auditors are
ultimately accountable to the Board and the Audit Committee,
as representatives of the Company's shareholders. The
Committee shall have the ultimate authority and responsibility
to evaluate and, where appropriate, replace the independent
auditors. The Committee shall discuss with the auditors their
independence from management and the Company and the matters
included in the written disclosures required by the
Independence Standards Board. Annually, the Committee shall
review and recommend to the Board the selection of the
Company's independent auditors, subject to shareholders'
approval.

- The Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their
respective audits including the adequacy of staffing and
compensation. Also, the Committee shall discuss with
management, the internal auditors, and the independent
auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor
and manage business risk, and legal and ethical compliance

A-1

<PAGE>

programs. Further, the Committee shall meet separately with
the internal auditors and the independent auditors, with and
without management present, to discuss the results of their
examinations.

- The Committee shall review the interim financial statements
with management and the independent auditors prior to the
filing of the Company's Quarterly Report on Form 10-Q. Also,
the Committee shall discuss the results of the quarterly
review and any other matters required to be communicated to
the Committee by the independent auditors under generally
accepted auditing standards, The chair of the Committee may
represent the entire Committee for the purposes of this
review.

- The Committee shall review with management and the independent
auditors the financial statements to be included in the
Company's Annual Report on Form 10-K (or the annual report to
shareholders if distributed prior to the filing of Form 10-K),
including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in
the financial statements. Also, the Committee shall discuss
the results of the annual audit and any other matters required
to be communicated to the Committee by the independent
auditors under generally accepted auditing standards.

A-2

<PAGE>

PROXY

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 24, 2001 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
proposal:

(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)

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<PAGE>

<TABLE>

<S> <C> <C>
Please mark your votes as
indicated in this example /X/

FOR ALL NOMINEES LISTED BELOW WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
1. ELECTION OF DIRECTORS / / / /

Rafael E. Barcenas Lawrence B. Krause NOTE: The proxies of the undersigned may
James F. Cahill Jack McGrory vote according to their discretion
Murray L. Galinson Gilbert A. Partida on any other matter that may properly
Katherine L. Hensley Robert E. Price come before the meeting.
Leon C. Janks Edgar A. Zurcher

I plan to attend the meeting. / /

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

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

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

</TABLE>

Signature(s) Date
----------------------------------------- --------------------
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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