10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2008

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

COMMISSION FILE NUMBER 0-22793

PriceSmart, Inc.

(Exact name of registrant as specified in its charter)

Delaware	33-0628530
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9740 Scranton Road, San Diego, CA 92121

(Address of principal executive offices)

(858) 404-8800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated filer  x     Non-accelerated filer  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The registrant had 29,685,561 shares of its common stock, par value $0.0001 per share, outstanding at April 4, 2008.

PRICESMART, INC.

INDEX TO FORM 10-Q

		Page
PART I—FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	3
	CONSOLIDATED BALANCE SHEETS AS OF AUGUST 31, 2007 AND FEBRUARY 29, 2008 (UNAUDITED)	4
	UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED FEBRUARY 28, 2007 AND FEBRUARY 29, 2008	5
	UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2007 AND FEBRUARY 29, 2008	6
	UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY FOR THE SIX MONTHS ENDED FEBRUARY 28, 2007 AND FEBRUARY 29, 2008	7
	NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4.	CONTROLS AND PROCEDURES	37
PART II—OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	38
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	39
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	39
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	39
ITEM 5.	OTHER INFORMATION	39
ITEM 6.	EXHIBITS	40

2

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PriceSmart, Inc.’s (“PriceSmart” or the “Company”) unaudited consolidated balance sheet as of February 29, 2008, the consolidated balance sheet as of August 31, 2007, the unaudited consolidated statements of income for the three and six months ended February 29, 2008 and February 28, 2007 and the unaudited consolidated statements of cash flows for the six months ended February 29, 2008 and February 28, 2007 are included elsewhere herein. Also included herein are notes to the unaudited consolidated financial statements.

3

PRICESMART, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

	February 29, 2008			August 31, 2007
ASSETS
Current Assets:
Cash and cash equivalents	$	25,912		$	32,065
Short-term restricted cash		6,693			8,046
Receivables, net of allowance for doubtful accounts of $11 and $3 in 2008 and 2007, respectively		1,888			2,705
Merchandise inventories		109,301			95,979
Prepaid expenses and other current assets		16,510			15,777
Assets of discontinued operations		1,540			1,380
Total current assets		161,844			155,952
Long-term restricted cash		590			477
Notes receivable		2,040			2,086
Property and equipment, net		199,255			179,985
Goodwill		38,609			31,652
Deferred tax assets		20,194			19,535
Other assets		3,538			3,732
Investment in unconsolidated affiliate		—			2,000
Total Assets	$	426,070		$	395,419
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term borrowings	$	3,917		$	3,301
Accounts payable		92,755			80,633
Accrued salaries and benefits		6,383			6,962
Deferred membership income		7,920			6,634
Income taxes payable		2,834			4,593
Accrued reserve for settlement of litigation, including fair market value of put agreement		8,358			5,500
Common stock subject to put agreement		16,988			—
Other accrued expenses		10,686			18,564
Dividend payable		9,391			4,678
Long-term debt, current portion		1,805			1,411
Liabilities of discontinued operations		119			151
Total current liabilities		161,156			132,427
Deferred tax liability		1,663			1,474
Deferred rent		1,895			1,977
Accrued closure costs		2,992			3,072
Long-term income taxes payable		6,504			—
Long-term debt, net of current portion		15,582			8,008
Total liabilities		189,792			146,958
Minority interest		269			3,145
Stockholders’ Equity:
Common stock, $0.0001 par value, 45,000,000 shares authorized; 30,210,255 and 29,815,435 shares issued and 29,691,311 and 29,339,211 shares outstanding (net of treasury shares), respectively		3			3
Additional paid-in capital		354,623			369,848
Tax benefit from stock-based compensation		4,830			3,970
Accumulated other comprehensive loss		(12,762	)		(12,343	)
Accumulated deficit		(99,268	)		(106,087	)
Less: treasury stock at cost; 518,944 shares and 476,224 shares as of February 29, 2008 and August 31, 2007, respectively		(11,417	)		(10,075	)
Total stockholders’ equity		236,009			245,316
Total Liabilities and Stockholders’ Equity	$	426,070		$	395,419

See accompanying notes.

4

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED—AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three Months Ended						Six Months Ended
	Feb. 29, 2008			Feb. 28, 2007			Feb. 29, 2008			Feb. 28, 2007
Revenues:
Sales:
Net warehouse club	$	288,216		$	226,722		$	533,405		$	424,822
Export		340			171			707			266
Membership income		3,975			3,421			7,717			6,662
Other income		1,313			1,543			2,426			2,604
Total revenues		293,844			231,857			544,255			434,354
Operating expenses:
Cost of goods sold:
Net warehouse club		245,333			192,959			453,844			361,457
Export		320			168			669			260
Selling, general and administrative:
Warehouse club operations		26,024			21,749			49,251			42,042
General and administrative		7,870			6,877			15,186			12,845
Preopening expenses		215			23			987			255
Asset impairment and closure costs		14			472			33			663
Provision for settlement of litigation, including changes in fair market value of put agreement		3,386			—			3,386			—
Total operating expenses		283,162			222,248			523,356			417,522
Operating income		10,682			9,609			20,899			16,832
Other income (expense):
Interest income		364			479			774			843
Interest expense		(470	)		(90	)		(529	)		(445	)
Other income (expense), net		(37	)		(36	)		(84	)		(22	)
Total other income (expense)		(143	)		353			161			376
Income from continuing operations before provision for income taxes, loss of unconsolidated affiliate and minority interest		10,539			9,962			21,060			17,208
Provision for income taxes		(890	)		(3,219	)		(4,605	)		(6,192	)
Loss of unconsolidated affiliate		—			(99	)		—			(183	)
Minority interest		(160	)		(128	)		(290	)		(262	)
Income from continuing operations		9,489			6,516			16,165			10,571
Income from discontinued operations, net of tax		27			28			45			46
Net income	$	9,516		$	6,544		$	16,210		$	10,617
Basic income per share:
Continuing operations	$	0.33		$	0.23		$	0.56		$	0.37
Discontinued operations, net of tax		—			—			—			—
Net income	$	0.33		$	0.23		$	0.56		$	0.37
Diluted income per share:
Continuing operations	$	0.33		$	0.22		$	0.56		$	0.36
Discontinued operations, net of tax		—			—			—			—
Net income	$	0.33		$	0.22		$	0.56		$	0.36
Shares used in per share computations:
Basic		28,848			28,477			28,815			28,441
Diluted		29,233			29,224			29,207			29,153
Dividends per share	$	0.32		$	0.32		$	0.32		$	0.32

See accompanying notes.

5

PRICESMART, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED—AMOUNTS IN THOUSANDS)

	Six Months Ended
	February 29, 2008			February 28, 2007
OPERATING ACTIVITIES:
Income from continuing operations	$	16,165		$	10,571
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		5,377			4,758
Allowance for doubtful accounts		8			(15	)
Closure costs		—			663
Gain on sale of property and equipment		(76	)		(5	)
Deposit to escrow account due to settlement of litigation		(6,150	)		—
Provision for settlement of litigation		3,386			—
Deferred income taxes		(471	)		504
Minority interest		290			262
Loss of unconsolidated affiliate		—			183
Stock-based compensation		962			998
Change in operating assets and liabilities:
Change in accounts receivable, prepaids, other current assets, accrued salaries, deferred membership and other accruals		(9,303	)		(2,199	)
Merchandise inventory		(13,322	)		(6,676	)
Accounts payable		18,626			6,601
Net cash provided by continuing activities		15,492			15,645
Net cash (used in) provided by discontinued activities		(81	)		20
Net cash provided by operating activities		15,411			15,665
INVESTING ACTIVITIES:
Additions to property and equipment		(16,355	)		(7,572	)
Deposits to escrow account for land acquisitions (including settlement of litigation)		(647	)		—
Sale of property and equipment		2,839			24
Acquisition of business, net of cash acquired		(11,913	)		—
Proceeds from sale of unconsolidated affiliate		2,000			—
Purchase of Nicaragua minority interest		(10,200	)		—
Net cash used in continuing activities		(34,276	)		(7,548	)
Net cash (used in) provided by discontinued activities		(66	)		77
Net cash used in investing activities		(34,342	)		(7,471	)
FINANCING ACTIVITIES:
Proceeds from bank borrowings		9,580			4,739
Repayment of bank borrowings		(996	)		(18,451	)
Release of (addition to) restricted cash		8,037			(69	)
Proceeds from exercise of stock options		801			187
Tax benefit from exercise of stock options		860			418
Dividends paid		(4,678	)		—
Purchase of treasury stock		(1,342	)		(601	)
Net cash provided by (used in) financing activities		12,262			(13,777	)
Effect of exchange rate changes on cash and cash equivalents		516			(971	)
Net decrease in cash and cash equivalents		(6,153	)		(6,554	)
Cash and cash equivalents at beginning of period		32,065			39,995
Cash and cash equivalents at end of period	$	25,912		$	33,441
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	320		$	558
Income taxes	$	6,969		$	5,359
Supplemental disclosure of non-cash financing activities:
Dividends declared but not paid	$	9,391		$	9,458

See accompanying notes.

6

PRICESMART, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED FEBRUARY 28, 2007 AND FEBRUARY 29, 2008

(UNAUDITED—AMOUNTS IN THOUSANDS)

	Common Stock				Additional Paid-in			Tax Benefit from Stock-Based		Accumulated Other Comprehensive			Accumulated			Less: Treasury Stock				Total Stockholders’
	Shares		Amount		Capital			Compensation		Loss			Deficit			Shares	Amount			Equity
Balance at August 31, 2006	29,404		$	3	$	364,132		$	3,509	$	(13,883	)	$	(109,676	)	438	$	(9,466	)	$	234,619
Purchase of treasury stock	—			—		—			—		—			—		38		(601	)		(601	)
Issuance of restricted stock awards	125			—		—  —			—		—			—		—		—			—
Forfeiture of restricted stock awards	(9	)		—		—			—		—			—		—		—			—
Exercise of stock options	33			—  —		187			—		—			—		—		—			187
Tax benefit from exercise of stock options	—			—		—			393		—			—		—		—			393
Stock-based compensation	—			—  —		998			—		—			—		—		—			998
Dividend payable to stockholders	—			—		—			—		—			(9,458	)	—		—			(9,458	)
Net income	—			—		—			—		—			10,617		—		—			10,617
Translation adjustment	—			—		—			—		(127	)		—		—		—			(127	)
Comprehensive income	—			—		—			—		—			—		—		—			10,490
Balance at February 28, 2007	29,553		$	3	$	365,317		$	3,902	$	(14,010	)	$	(108,517	)	476	$	(10,067	)	$	236,628
Balance at August 31, 2007	29,815		$	3	$	369,848		$	3,970	$	(12,343	)	$	(106,087	)	476	$	(10,075	)	$	245,316
Purchase of treasury stock	—			—		—			—		—			—		43		(1,342	)		(1,342	)
Issuance of restricted stock awards	349			—		—			—		—			—		—		—			—
Forfeiture of restricted stock awards	(7	)		—		—			—		—			—		—		—			—
Exercise of stock options	53			—		801			—		—			—		—		—			801
Tax benefit from exercise of stock options	—			—		—			860		—			—		—		—			860
Stock-based compensation	—			—		962			—		—			—		—		—			962
Common stock subject to put agreement	—			—		(16,988	)		—		—			—		—		—			(16,988	)
Dividend payable to stockholders	—			—		—			—		—			(9,391	)	—		—			(9,391	)
Mark-to-market of interest rate swap	—			—		—			—		(63	)		—		—		—			(63	)
Net income	—			—		—			—		—			16,210		—		—			16,210
Translation adjustment	—			—		—			—		(356	)		—		—		—			(356	)
Comprehensive income	—			—		—			—		—			—		—		—			15,791
Balance at February 29, 2008	30,210		$	3	$	354,623		$	4,830	$	(12,762	)	$	(99,268	)	519	$	(11,417	)	$	236,009

See accompanying notes.

7

PRICESMART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

February 29, 2008

NOTE 1—COMPANY OVERVIEW AND BASIS OF PRESENTATION

PriceSmart, Inc.’s (“PriceSmart” or the “Company”) business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. As of February 29, 2008, the Company had 25 consolidated warehouse clubs in operation in 11 countries and one U.S. territory (four each in Panama and Costa Rica, three each in Guatemala and Trinidad, two each in Dominican Republic, El Salvador, and Honduras and one each in Aruba, Barbados, Jamaica, Nicaragua and the United States Virgin Islands), of which the Company owns at least a majority interest. There was one warehouse club in operation in Saipan, Micronesia licensed to and operated by local business people as of February 29, 2008. The Company principally operates in three segments based on geographic area.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation—The consolidated interim financial statements of the Company included herein include the assets, liabilities and results of operations of the Company’s majority and wholly owned subsidiaries as listed below. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated interim financial statements have been prepared by the Company without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”), and reflect all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary to fairly present the financial position, results of operations, and cash flows for the interim periods presented. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. Management believes that the disclosures made are adequate to make the information presented not misleading. The results for interim periods are not necessarily indicative of the results for the full year. The interim financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007.

The table below indicates the Company’s percentage ownership of and basis of presentation for each subsidiary as of February 29, 2008:

	Ownership		Basis of Presentation
PriceSmart Aruba	90.0	%	Consolidated
PriceSmart Barbados	100.0	%	Consolidated
PSMT Caribe, Inc.:
Costa Rica	100.0	%	Consolidated
Dominican Republic	100.0	%	Consolidated
El Salvador	100.0	%	Consolidated
Honduras	100.0	%	Consolidated
PriceSmart Guam	100.0	%	Consolidated	(1)
PriceSmart Guatemala	100.0	%	Consolidated
PriceSmart Jamaica	100.0	%	Consolidated
PriceSmart Nicaragua	100.0	%	Consolidated
PriceSmart Panama	100.0	%	Consolidated
PriceSmart Trinidad	95.0	%	Consolidated
PriceSmart U.S. Virgin Islands	100.0	%	Consolidated

(1) Entity is treated as discontinued operations in the consolidated financial statements.

Use of Estimates – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

8

Cash and Cash Equivalents – Cash and cash equivalents represent cash and short-term investments with maturities of three months or less when purchased.

Restricted Cash – Short-term restricted cash primarily consists of deposits into escrow accounts for use in the settlement of the lawsuit filed by the PSC Parties (see Note 12—PSC Settlement). Long-term restricted cash represents deposits with federal regulatory agencies in Costa Rica and the Panama for approximately $465,000 and a $125,000 deposit into an escrow account for use in the settlement of the lawsuit filed by the PSC Parties.

Restricted cash of approximately $8.0 million previously pledged as collateral for the Company’s revolving line of credit was released during the quarter.

Merchandise Inventories – Merchandise inventories, which include merchandise for resale, are valued at the lower of cost (average cost) or market. The Company provides for estimated inventory losses and obsolescence between physical inventory counts on the basis of a percentage of sales. The provision is adjusted periodically to reflect the trend of actual physical inventory count results, with physical inventories occurring primarily in the second and fourth fiscal quarters. In addition, the Company may be required to take markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise.

Allowance for Bad Debt – The Company generally does not extend credit to its members, but may do so for specific wholesale, government or other large volume members. The Company maintains an allowance for doubtful accounts based on assessments as to the probability of collection of specific customer accounts, the aging of accounts receivable, and general economic conditions.

Property and Equipment – Property and equipment are stated at cost. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets. The useful life of fixtures and equipment ranges from three to 15 years and that of buildings from ten to 25 years. Leasehold improvements are amortized over the shorter of the life of the improvement or the expected term of the lease. In some locations, leasehold improvements are amortized over a period longer than the initial lease term as management believes it is reasonably assured that the renewal option in the underlying lease will be exercised.

The sale or purchase of property and equipment is recognized upon legal transfer of property. For property and equipment sales, if any long term notes are carried by the Company as part of the sales terms, the sale is reflected at the net present value of current and future cash streams.

Lease Accounting – Certain of our operating leases provide for minimum annual payments that increase over the life of the lease. The aggregate minimum annual payments are expensed on a straight-line basis beginning when we take possession of the property and extending over the term of the related lease including renewal options in some locations when we believe it is reasonably assured that the renewal option in the underlying lease will be exercised. The amount by which straight-line rent exceeds actual lease payment requirements in the early years of the leases is accrued as deferred rent and reduced in later years when the actual cash payment requirements exceed the straight-line expense. In addition to the minimum annual payments, in certain locations, the Company pays additional rent based on a contractually stipulated percentage of sales.

Fair Value Measurements – In accordance with Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements”, we measure the fair value of assets and liabilities on a non recurring basis. We measure fair value assets when impairment issues arise in accordance with the provisions of SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, business units (for goodwill impairment), cash derivatives utilized for interest rate swaps, and Put contracts of stock utilized. We use fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1) or significant other observable (Level 2) inputs, depending on the nature of the item being valued. The Company on a yearly basis discloses the valuation techniques and discloses any change in method of such within the body of each footnote.

Goodwill – Goodwill, resulting from certain business combinations, totaled $38.6 million at February 29, 2008 and $31.7 million at August 31, 2007. The increase in goodwill was due to approximately $7.0 million for the acquisition of the remaining 49% minority interest in PSMT Nicaragua as part of the settlement on the PSC Parties lawsuit (see Note 12—PSC Settlement). The foreign exchange translation losses for goodwill of $81,000 for the first six months of fiscal year 2008, reduced goodwill. The Company reviews previously reported goodwill at the entity reporting level for impairment on an annual basis, or more frequently if circumstances dictate. No impairment of goodwill has been recorded to date.

Derivative Instruments and Hedging Activities – Derivative instruments and hedging activities are accounted for under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. Interest rate swaps are accounted for as cash flow hedges. Under cash flow hedging, the effective portion of the fair value of the derivative, calculated as the net present value of the future cash flows, shall be deferred on the consolidated balance sheet in accumulated comprehensive loss. If any portion of an interest rate swap were determined to be an ineffective hedge, the gains or losses from changes in market value would be recorded directly in the consolidated statement of income. Amounts recorded in accumulated comprehensive loss are released to earnings in the same period that the hedged transaction impacts consolidated earnings. See Note 10—Interest Rate Swap.

9

Revenue Recognition – The Company recognizes merchandise sales revenue when title passes to the customer. Membership income represents annual membership fees paid by the Company’s warehouse club members, which are recognized ratably over the 12-month term of the membership. The historical membership fee refunds have been minimal and, accordingly, no reserve has been established for membership refunds for the periods presented. The Company recognizes and presents revenue-producing transactions on a net basis, as defined within Emerging Issues Task Force EITF Issue No. 06-03 (“EITF 06-03”), “How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That is, Gross versus Net Presentation).” The Company recognizes gift certificates sales revenue when the certificates are redeemed. The outstanding gift certificates are reflected as other accrued expenses in the consolidated balance sheet. The gift certificate activity continues to remain immaterial, as the activity represents less than one hundredth of a percent of the quarterly net warehouse club sales; therefore, no allowance for breakage has been accrued.

Cost of Goods Sold – The Company includes the cost of merchandise, food service and bakery raw materials, and one hour photo supplies in cost of goods sold. The Company also includes the external and internal distribution and handling costs for supplying such merchandise, raw materials and supplies to the warehouse clubs. External costs include inbound freight, duties, drayage, fees, insurance, and non-recoverable value-added tax related to inventory shrink, spoilage and damage. Internal costs include payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense, and building and equipment depreciation at our distribution facilities.

Vendor consideration consists primarily of volume rebates and prompt payment discounts. Volume rebates are generally linked to pre-established purchase levels and are recorded as a reduction of cost of goods sold when the achievement of these levels is confirmed by the vendor in writing or upon receipt of funds. On a quarterly basis, the Company calculates the amount of rebates recorded in cost of goods sold that relates to inventory on hand, and this amount is recorded as a reduction to inventory, if significant. Prompt payment discounts are taken in substantially all cases and, therefore, are applied directly to reduce the acquisition cost of the related inventory, with the resulting impact to cost of goods sold when the inventory is sold.

Selling, General and Administrative – Selling, general and administrative costs are comprised primarily of expenses associated with warehouse club operations. Warehouse club operations include the operating costs of the Company’s warehouse clubs, including all payroll and related costs, utilities, consumable supplies, repair and maintenance, rent expense, building and equipment depreciation, and bank and credit card processing fees. Also included in selling, general and administrative expenses are the payroll and related costs for the Company’s U.S. and regional purchasing and management centers.

Pre-Opening Costs – The Company expenses pre-opening costs (the costs of start-up activities, including organization costs, and rent) as incurred.

Closure Costs – The Company records the costs of closing warehouse clubs as follows: severance costs are accrued when a termination and benefit plan is communicated to the employees; lease obligations are accrued at the cease use date by calculating the net present value of the minimum lease payments net of the fair market value of rental income that is expected to be received for these properties from third parties; gain or loss on the sale of property, buildings and equipment is recognized based on the net present value of cash or future cash received as compensation for such; all other costs are expensed as incurred. In fiscal year 2003, the Company closed two warehouse clubs, one each in the Dominican Republic and Guatemala. During fiscal year 2007, the Company’s original San Pedro Sula location was vacated and the operation was relocated to a new site, which was acquired in fiscal year 2006 in another section of the city. The closure costs recorded in the first six months of fiscal year 2008 relate to these warehouse clubs.

Contingencies and Litigation – In accordance with SFAS 5, “Accounting for Contingencies,” the Company accounts and reports for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements, and (b) the amount of loss can be reasonably estimated.

Common Stock Put Agreement – The Company has recorded in the second quarter of fiscal year 2008 a liability for common stock put agreement (see Note 12—PSC Settlement). The Company utilizes the Black-Scholes method to determine the fair market value of the put agreement, taking the fair market value of the common stock, time to expiration of the put agreement, volatility of the common stock and the risk free interest rate as part of the fair market valuation. The Company has recorded as a period expense the fair market value of the put agreement granted as part of the legal settlement with the PSC Parties (see Note 12—PSC Settlement).

Foreign Currency Translation – In accordance with SFAS 52 “Foreign Currency Translation,” the assets and liabilities of the Company’s foreign operations are primarily translated to U.S. dollars when the functional currency in our international subsidiaries is the local currency, which in many cases is not U.S. dollars. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the exchange rate on the balance sheet date and revenue, costs and expenses are translated at average rates of exchange in effect during the period. The corresponding translation gains and losses are recorded as a component of accumulated other comprehensive income or loss.

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Monetary assets and liabilities in currencies other than the functional currency of the respective entity are revalued to the functional currency using the exchange rate on the balance sheet date. These foreign exchange transaction gains (losses), including repatriation of funds, which are included as a part of the costs of goods sold in the consolidated statement of operations, for the first six months of the fiscal years 2008 and 2007 were approximately $809,000 and $(123,000), respectively.

Stock-Based Compensation – As of February 29, 2008, the Company had four stock-based employee compensation plans. In the first quarter of fiscal year 2006, the Company adopted SFAS 123R, “Share-Based Payment.” The Company had adopted the fair value based method of recording stock options consistent with SFAS 123 for all employee stock options granted subsequent to fiscal year 2002. Under SFAS 123R, the Company is required to select a valuation technique or option-pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company is continuing to use the Black-Scholes model. The adoption of SFAS 123R, applying the “modified prospective method,” as elected by the Company, requires the Company to value stock options granted prior to its adoption of SFAS 123 under the fair value method and expense these amounts over the stock options remaining vesting period. This has resulted in the Company expensing approximately $100,000 and $281,000 for the three and six month periods of fiscal year 2007, respectively. As there were no unvested stock options outstanding that had been granted prior to the Company’s adoption of SFAS 123, no such expenses are recorded in fiscal year 2008. SFAS 123R also requires the Company to estimate forfeitures in calculating the expense relating to stock-based compensation, as opposed to only recognizing these forfeitures and the corresponding reduction in expense as they occur. In addition, SFAS 123R requires the Company to reflect the tax savings resulting from tax deductions in excess of expense reflected as a financing cash flow in its statement of cash flows, rather than as an operating cash flow as in prior periods.

In the second quarter of fiscal years 2008 and 2007, the Company recognized stock compensation expenses of $579,000 and $479,000, respectively. The stock compensation expense for the first six months of fiscal year 2008 consists of $895,000 for restricted stock grants and $67,000 for stock options. The stock compensation expense for the first six months of fiscal year 2007 consists of $527,000 for restricted stock grants and $471,000 for stock options. The remaining unrecognized compensation expense related to unvested awards at February 29, 2008 was approximately $12.1 million and the weighted-average period of time over which this cost will be recognized is 3.5 years.

Cash proceeds, tax benefits and intrinsic value related to total stock options exercised during the first six months of fiscal years 2008 and 2007 are provided in the following table (in thousands):

	Six Months Ended
	February 29, 2008		February 28, 2007
Proceeds from stock options exercised	$	801	$	187
Tax benefit related to stock options exercised	$	64	$	122
Intrinsic value of stock options exercised	$	717	$	338

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants issued in the first six months of fiscal years 2008 and 2007:

	Six Months Ended
	February 29, 2008		February 28, 2007
Risk free interest rate	3.25	%	4.85	%
Expected life	5 years		5 years
Expected volatility	47.83	%	45.88	%
Expected dividend yield	1.2	%	0	%

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The following table summarizes stock options outstanding as of February 29, 2008, as well as activity during the six months then ended:

	Shares		Weighted- Average Exercise Price
Outstanding at August 31, 2007	374,815		$	12.35
Options granted	8,000			23.61
Exercised	(52,385	)		15.28
Forfeited or expired	(32,585	)		33.87
Outstanding at February 29, 2008 (a)	297,845		$	9.79
Exercisable at February 29, 2008	253,445		$	9.39

(a) At February 29, 2008, the weighted-average remaining contractual life of options outstanding was 1.48 years.

At February 29, 2008, and February 28, 2007 the aggregate intrinsic value of stock options outstanding and exercisable was $4.8 million and $396,000, respectively. (The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price).

The weighted-average grant date fair value of stock options granted during the six months of fiscal years 2008 and 2007 was $23.61 and $6.75 respectively.

Total restricted stock grant activity, relating to the 2002 Plan, was as follows for the first six months of fiscal year 2008:

	Grants
Outstanding at August 31, 2007	566,250
Granted	349,850
Cancelled	(7,415	)
Vested	(124,600	)
Outstanding at February 29, 2008	784,085

The Company repurchased from employees 42,720 shares of common stock for approximately $1.3 million based on the stock price at that date of repurchase to cover the employees’ minimum statutory tax withholding requirements related to the vesting of restricted stock grants.

Income Taxes – The Company is required to file federal and state income tax returns in the United States and various other tax returns in foreign jurisdictions. The preparation of these tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company, in consultation with its tax advisors, bases its tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various federal, state and international taxing authorities in the jurisdictions in which the Company files its returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by the Company (“uncertain tax positions”) and therefore require the Company to pay additional taxes. As required under applicable accounting rules, the Company therefore accrues an amount for its estimate of additional income tax liability, including interest and penalties, which the Company could incur as a result of the ultimate or effective resolution of the uncertain tax positions. The Company reviews and updates the accrual for uncertain tax positions as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events.

As required, through August 31, 2007, the Company recorded its accrual for uncertain tax positions based upon SFAS 5, “Accounting for Contingencies,” which required the Company to accrue for the estimated additional amount of taxes for the uncertain tax positions if it was probable the Company would be required to pay such additional taxes. Effective September 1, 2007, the Company was required to adopt and implement the provisions of FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which requires the Company to accrue for the estimated additional amount of taxes for the

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uncertain tax positions when the uncertain tax position does not meet the more likely than not standard for sustaining the position. As a result of the implementation of FIN 48, the Company reclassified uncertain tax positions from other accrued expenses to long-term income taxes payable but did not recognize a cumulative adjustment to the beginning balance of retained earnings in the consolidated financial statements.

As of November 30, 2007 and February 29, 2008, the Company had $16.2 million and $15.7 million, respectively, of aggregate accruals for uncertain tax positions (“gross unrecognized tax benefits”). Of these totals, $7.7 million and $7.0 million, respectively, represent the amount of net unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

The Company did not record a cumulative effect adjustment to retained earnings related to the implementation of FIN 48. While adoption of FIN 48 did not impact the amount of the Company’s accrual for uncertain tax positions, it did impact the manner in which such accrual is classified in the Company’s consolidated financial statements. In connection with the implementation of FIN 48, the Company now records the aggregate accrual for uncertain tax positions as a component of current or long-term income taxes payable and the offsetting amounts as a component of the Company’s net deferred tax assets and liabilities. These liabilities are generally classified as long-term, even if the underlying statute of limitation will expire in the following twelve months. The Company classifies these liabilities as current if it expects to settle them in cash in the next twelve months. As of February 29, 2008, the Company has classified uncertain income tax positions as $6.5 million in long-term income taxes payable, $0.1 million in long-term deferred tax liabilities and $0.4 million as current income taxes payable.

The Company expects changes in the amount of unrecognized tax benefits in the next 12 months as the result of a lapse in various statutes of limitations. As of February 29, 2008, the company reduced the long-term income tax payable as the result of a lapse in the underlying statute of limitations totaling $1 million. The lapse of statutes of limitations in the twelve-month period ending February 28, 2009 will result in a reduction to long-term income taxes payable totaling $2.5 million.

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense in the long-term income tax payable caption on the consolidated balance sheet. As of November 30, 2007 and February 29, 2008, the Company had accrued $3.4 million and $2.7 million respectively, for the payment of interest and penalties. Primarily as a result of the closing of various statutes of limitation, interest expense accrued primarily as a result of income tax matters, before income tax benefit, for the quarter ended February 29, 2008, was a net reversal (i.e. reduction of expense) of $0.6 million.

The Internal Revenue Service (IRS) commenced an examination of the Company’s U.S. income tax return for tax year 2006 in the first quarter of fiscal year 2008. As of February 29, 2008, the IRS had completed most of the fieldwork. The audit closed in March 2008 with no changes to the tax return as filed. The Company also has various audits and appeals pending in foreign jurisdictions. The Company does not anticipate that any adjustments from these audits and appeals would result in a significant change to the consolidated results of operations, financial conditions or liquidity.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As the result of tax, net operating loss carry forwards, the Company is subject to U.S. federal, state and local income tax examination by tax authorities for tax periods subsequent to and including fiscal year 1995. With few exceptions, the Company is no longer subject to non-U.S. income tax examination by tax authorities for tax years before fiscal year 2002. A lapse in these statutes will result in a beneficial impact on the effective tax rate.

Accounting Pronouncements – In March 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133” (“SFAS 161”). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged, but does not require comparative disclosures for earlier periods at initial adoption. The Company will adopt SFAS 161 beginning December 1, 2008. The Company is currently evaluating the impact, if any, the interpretation will have on its consolidated financial statements.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 160, “Non-controlling Interests in Consolidated Financial Statement- an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years beginning on or after December 15, 2008. Early adoption is prohibited. The Company is currently evaluating adoption of the standard. No impact on current consolidated financial statements will occur since the standard will impact future consolidated financial statements only.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) replaces SFAS No. 141, “Business Combinations,” retaining the fundamental requirements of

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SFAS 141 and expanding the scope to apply the same method of accounting to all transactions or events in which one entity obtains control over one or more other businesses. This statement applies prospectively to business combinations or acquisitions after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply this standard before this date. The Company will adopt SFAS 141(R) as of September 1, 2009.

In June 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-11 (“EITF 06-11”), “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Award.” EITF 06-11 requires companies to recognize the tax benefits of dividends on unvested share-based payments in equity (increasing the Financial Accounting Standards (SFAS) No. 123(R) “APIC Pool” of excess tax benefits available to absorb tax deficiencies) and reclassify those tax benefits from additional paid-in capital to the income statement when the related award is forfeited (or is no longer expected to vest). The Company is required to adopt EITF 06-11 for dividends declared after September 1, 2008. The Company has opted for earlier application starting on September 1, 2007 for the income tax benefits of dividends on equity-classified employee share-based compensation that are declared in periods for which consolidated financial statements have not yet been issued. The adoption of EITF 06-11 did not have a material impact on the Company’s consolidated financial condition and operating results.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits companies to measure many financial instruments and certain other items at fair value at specific election dates. The Company will adopt SFAS 159 beginning September 1, 2008. The Company is currently evaluating the impact, if any, the interpretation will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” (“SFAS 157”) establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. SFAS 157 simplifies and codifies related guidance within GAAP. The Company adopted SFAS 157 on September 1, 2007. The adoption of SFAS 157 did not have a material impact on the Company’s consolidated financial condition and operating results.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (SAB) No. 108, Section N, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” Section N provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatement for the purpose of a materiality assessment. The Company adopted SAB No. 108 on September 1, 2007. No prior year misstatements were incurred, therefore the adoption of SAB No. 108 did not have a material impact on the Company’s consolidated financial condition and operating results.

NOTE 3—DISCONTINUED OPERATIONS

In accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the accompanying consolidated financial statements reflect the results of operations and financial position of the Company’s activities in the Philippines and Guam as discontinued operations.

The assets and liabilities of the discontinued operations are presented in the consolidated balance sheets under the captions “Assets of discontinued operations” and “Liabilities of discontinued operations.” The underlying assets and liabilities of the discontinued operations for the periods presented are as follows (in thousands):

	February 29, 2008		August 31, 2007
Cash and cash equivalents	$	69	$	45
Accounts receivable, net		479		441
Prepaid expenses and other current assets		39		6
Other assets		953		888
Assets of discontinued operations	$	1,540	$	1,380
Accrued expenses	$	119	$	151
Liabilities of discontinued operations	$	119	$	151

The Company’s former Guam operation has a deferred tax asset of $2.7 million, primarily generated from NOLs. This deferred tax asset has a 100% valuation allowance, as the Company currently has no plans that would allow it to utilize these losses. Additionally, a significant portion of these losses are limited as to future use due to the Company’s Section 382 change of ownership in October 2004.

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The following table sets forth key components of income from the discontinued operations of the closed warehouse clubs in Guam and the Philippines, (in thousands):

	Three Months Ended				Six Months Ended
	February 29, 2008		February 28, 2007		February 29, 2008		February 28, 2007
Net warehouse club sales	$	—	$	—	$	—	$	—
Pre-tax income from discontinued operations		27		28		45		46
Income tax (provision) benefit		—		—		—		—
Income from discontinued operations	$	27	$	28	$	45	$	46

The pre-tax income from discontinued operations, for the six months ended February 29, 2008 and February 28, 2007 of $45,000 and $46,000, respectively, is the net result of the subleasing activity in Guam.

NOTE 4—PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

	February 29, 2008			August 31, 2007
Land	$	63,401		$	58,924
Building and improvements		129,374			109,706
Fixtures and equipment		73,147			66,275
Construction in progress		2,229			10,790
		268,151			245,695
Less: accumulated depreciation		(68,896	)		(65,710	)
Property and equipment, net	$	199,255		$	179,985

Building and improvements includes net capitalized interest of $1.6 million and $1.3 million as of February 29, 2008 and August 31, 2007, respectively.

In October 2007 (fiscal year 2008), the Company acquired the company that had leased to it the real estate and building upon which the Barbados warehouse club is located for approximately $12.0 million. This acquisition contributed the following property and equipment (in thousands):

Land	$	4,965
Building and improvements		6,948
Fixtures and equipment		85
Total property and equipment	$	11,998

In the first six months of fiscal year 2008, the Company also capitalized approximately $16.4 million in building and improvements, fixtures and equipment and construction in progress, primarily related to the new warehouse club openings in Guatemala (November 2007) and Trinidad (December 2007) and continued improvements in our other warehouse club locations.

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NOTE 5—EARNINGS PER SHARE

Basic income per share is computed based on the weighted average common shares outstanding in the period. Diluted income per share is computed based on the weighted average common shares outstanding in the period and the effect of dilutive securities (options, warrants and rights) except where the inclusion is anti-dilutive (in thousands, except per share data):

	Three Months Ended				Six Months Ended
	February 29, 2008		February 28, 2007		February 29, 2008		February 28, 2007
Net income	$	9,516	$	6,544	$	16,210	$	10,617
Determination of shares:
Average common shares outstanding		28,848		28,477		28,815		28,441
Assumed conversion of:
Stock options		140		138		142		139
Put option(1)		—		—		—		—
Restricted stock grant(2)		245		609		250		573
Diluted average common shares outstanding		29,233		29,224		29,207		29,153
Net income:
Basic income per share	$	0.33	$	0.23	$	0.56	$	0.37
Diluted income per share	$	0.33	$	0.22	$	0.56	$	0.36

(1) The effect of the put agreement entered into as part of the settlement with the PSC Parties (see Note 12) was anti-dilutive during the period. Therefore, no values were reflected in the computation of diluted earnings per share.

(2) Restricted stock was issued to certain employees in the second quarter and first six months of fiscal years 2008 and 2007. The dilutive effect of the restricted stock issued is 3,192 shares and 878 shares for the three month and six month periods, respectively, for the fiscal year 2008. The dilutive effect of the restricted stock issued is 5,900 and 532 for the three month and six month periods, respectively, for the fiscal year 2007.

NOTE 6—DIVIDENDS

On January 24, 2008, the Company’s Board of Directors declared a cash dividend in the total amount of $0.32 per share, of which $0.16 per share is payable on April 30, 2008 to stockholders of record as of the close of business on April 15, 2008 and $0.16 per share is payable on October 31, 2008 to stockholders of record as of the close of business on October 15, 2008.

On February 7, 2007 the Company’s Board of Directors declared a cash dividend, in the total amount of $0.32 per share, with $0.16 per share payable on April 30, 2007 to stockholders of record as of the close of business on April 15, 2007 and $0.16 per share payable on October 31, 2007 to stockholders of record as of the close of business on October 15, 2007. These cash dividends have been paid as of October 2007.

The Company anticipates the ongoing payment of semi-annual dividends in subsequent periods, although the actual declaration of future dividends, the amount of such dividends, and the establishment of record and payment dates is subject to final determination by the Board of Directors in its discretion, after its review of the Company’s financial performance and anticipated capital requirements.

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NOTE 7—ASSET IMPAIRMENT AND CLOSURE COSTS

During fiscal year 2003, the Company closed two warehouse clubs, one each in the Dominican Republic and Guatemala. The decision to close these warehouse clubs resulted from the determination that the locations were not conducive to the successful operation of a PriceSmart warehouse club. In fiscal year 2007, the Company closed its San Pedro Sula, Honduras location and relocated to a new site which was acquired in fiscal year 2006 in another section of the city.

A reconciliation of the changes and related liabilities derived from the closed warehouse clubs as of February 29, 2008 is as follows (in thousands):

	Liability as of August 31, 2007			Charged to Expense	Non-cash Amounts	Cash paid		Liability as of February 29, 2008
Lease obligations	$	3,226	(1)	—	—	(76	)	$	3,150	(2)
Other associated costs		—		33	—	(33	)		—
Total	$	3,226		33	—	(109	)	$	3,150

(1) Amount includes $3,072 million of Accrued closure costs and $154,000 of short-term lease obligations (included within Other accrued expenses) on the Consolidated Balance Sheet as of August 31, 2007.

(2) Amount includes $2,992 million of Accrued closure costs and $158,000 of short-term lease obligations (included within Other accrued expenses) on the Consolidated Balance Sheet as of February 29, 2008.

NOTE 8—COMMITMENTS AND CONTINGENCIES

From time to time, the Company and its subsidiaries are subject to legal proceedings, claims and litigation arising in the ordinary course of business, the outcome of which, in the opinion of management, would not have a material adverse effect on the Company. The Company evaluates such matters on a case by case basis, and vigorously contests any such legal proceedings or claims which the Company believes are without merit.

In accordance with SFAS 5, “Accounting for Contingencies,” the Company accounts and reports for loss contingencies if (a) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements, and (b) the amount of loss can be reasonably estimated.

The SEC issued a formal order of private investigation on January 8, 2004 to investigate the circumstances surrounding a restatement of financial statements for the fiscal year 2002 and the first three quarters of fiscal year 2003. The SEC issued subpoenas to the Company for the production of documents and took testimony, pursuant to subpoena, from several of the Company’s present and former employees, but to the Company’s knowledge there has been no activity relating to this matter for approximately three years. On February 26, 2008 the Company was advised by the U.S. Securities and Exchange Commission, that it may consider the investigation to be closed.

The Company is required to file federal and state tax returns in the United States and various other tax returns in foreign jurisdictions. The preparation of these tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company, in consultation with its tax advisors, bases its tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various taxing authorities in the jurisdictions in which the Company files its returns. As part of these reviews, a taxing authority may disagree with respect to the interpretations the Company used to calculate its tax liability and therefore require the Company to pay additional taxes.

In evaluating the exposure associated with various tax filing positions, exclusive of accounting for income taxes, the Company accrues charges for probable and estimable exposures. At February 29, 2008, the Company believes it has accrued for probable and estimable exposures. As of February 29, 2008 and August 31, 2007, the Company had recorded within other accrued expenses a total of $3.2 million and $3.4 million, respectively, for various tax contingencies unrelated to income tax.

Beginning on September 1, 2007, the Company accrues an amount for its estimate of probable additional income tax liability in accordance with the new provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN 48”). Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. As of

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February 29, 2008, the Company has classified uncertain income tax positions as $6.5 million in long-term income taxes payable, $0.1 million in long-term deferred tax liabilities and $0.4 million as current income taxes payable. The classification of this liability as current, as opposed to long-term, occurs when the Company expects to make a cash payment in the following 12 months.

Except where indicated otherwise above, a reasonable estimate of the possible loss or range of loss cannot be made at this time for the matters described. It is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of the year.

NOTE 9—SHORT-TERM BORROWINGS AND LONG-TERM DEBT

As of February 29, 2008 and August 31, 2007, the Company, together with its majority or wholly-owned subsidiaries, had $3.9 million and $3.3 million, respectively, outstanding in short-term borrowings, at weighted-average interest rates of 8.0% and 8.0%, respectively, which are secured by certain assets of the Company and its subsidiaries and are guaranteed by the Company. Each of the facilities expires during the year and is typically renewed. As of February 29, 2008 and August 31, 2007, the Company had approximately $3.2 million and $9.4 million available on these facilities, respectively.

Additionally, the Company has a bank credit agreement for up to $10.0 million, which can be used as a line of credit or to issue letters of credit. As of February 29, 2008, there were no amounts outstanding or letters of credit issued under this facility.

As of February 29, 2008 and August 31, 2007, the Company, together with its majority or wholly owned subsidiaries, had $17.4 million and $9.4 million, respectively, outstanding in long-term borrowings. The increase during the current period primarily relates to a long-term debt arrangement for $9.0 million to finance the acquisition of the company that had leased to the Company the real estate upon which the Barbados PriceSmart warehouse club is located. This arrangement consists of two underlying loans, one for $4.5 million and the other for $9.0 million Barbados dollars (equivalent to $4.5 million U.S. dollars). On February 13, 2008, the Company entered into an interest rate swap agreement with Citicorp Merchant Bank for a notional amount of $4.5 million as disclosed in Note 10. The carrying amount of the non-cash assets (land, building, fixtures, and equipment) assigned as collateral for long-term debt was $19.5 million and $9.7 million as of February 29, 2008 and August 31, 2007, respectively. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased.

NOTE 10—INTEREST RATE SWAP

On February 13, 2008, the Company entered into an interest rate swap agreement with Citicorp Merchant Bank for a notional amount of $4.5 million. This swap agreement was entered into in order to fix the interest rate of the $4.5 million loan as disclosed in Note 9. The loan has a variable interest rate of LIBOR plus a margin of 1.5%. Under the swap agreement, the Company will pay a fixed rate of 5.22% for a term of approximately five years (February 18, 2008 through May 15, 2013). The notional amount of $4.5 million is scheduled to amortize to $2.25 million over the term of the swap. The LIBOR reset dates for the $4.5 million of term loan debt and the notional amount of $4.5 million on the interest rate swap are effective semi-annually on November 15 and May 15. Since the interest rate swap is fixed at 5.22%, the difference between the actual floating rate (six month LIBOR plus margin of 1.5%) and the fixed rate of 5.22% applied against the notional amount of the swap each quarter is paid to or received from Citicorp Merchant Bank.

As of February 29, 2008, the total notional amount of the Company’s receive-variable/pay-fixed interest rate swap, which was designated as an effective hedge, was $4.5 million and the fair market value recorded in Accumulated comprehensive loss was approximately $63,000.

NOTE 11—ACQUISITION OF BUSINESS

The Company’s business combinations are accounted for under the purchase method of accounting, and include the results of operations of the acquired business from the date of acquisition. Net assets of the acquired business are recorded at their fair value at the date of the acquisition. Any excess of the purchase price over the fair value of tangible net assets acquired is included in goodwill in the accompanying consolidated balance sheets.

In October 2007, the Company acquired all of the common shares of Regan Lodge, the company that had leased to it the real estate and building upon which the Barbados warehouse club is located. The Company acquired this company for approximately $12.0 million. The fair values of the assets acquired and the liabilities assumed in connection with the acquisition were estimated in accordance with SFAS No. 141, “Business Combinations.” The Company used a third-party valuation firm to assist management in estimating these fair values. No goodwill was recorded for this acquisition and no other intangible assets were acquired that would require fair value estimates under SFAS No. 142, “Goodwill and Other Intangible Assets. “

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The purchase price was allocated as follows to the fair values of the net tangible assets acquired (in thousands):

Land	$	4,965
Building and improvements		6,948
Fixtures and equipment		85
Other Assets		14
Liabilities		(170	)
Total Purchase Price, Net of Cash		11,842
Cash Acquired		156
Total Purchase Price	$	11,998

The primary operations of the company acquired was the leasing of the real estate and building upon which the Barbados warehouse club is located. Upon acquisition, these operations will cease; therefore, no pro-forma financial statement of operations are required to be presented.

NOTE 12—PSC SETTLEMENT

On February 11, 2008 the Company announced that it had entered into a Settlement Agreement and Release with PSC, S.A. (“PSC”), Tecnicard, Inc. and Banco de la Produccion, and their affiliates (collectively “PSC Parties”), which resolves the previously disclosed disputes that had been pending between the Company and the PSC Parties. The terms of the Settlement Agreement and Release include: (i) a dismissal of all pending litigation and a mutual release of all claims; (ii) the Company’s acquisition of PSC’s 49% interest in PSMT Nicaragua (BVI), Inc. resulting in the Company being the sole owner of the PriceSmart Nicaragua business; (iii) termination of other agreements between the Company and the PSC Parties resulting in, among other things, banks affiliated with the PSC parties vacating the PriceSmart warehouses by mid-April 2008; (iv) certain real estate conveyances between the parties relating to properties adjacent to the PriceSmart warehouse clubs in Managua, Nicaragua and Zapote, San Jose, Costa Rica, including the Company’s acquisition from PSC of a land parcel at the Zapote site and the Company’s conveyance to PSC of two land parcels at the Managua site; and (v) subject to PSC’s commercially reasonable efforts to sell, during a 60 day period commencing February 8, 2008, 679,500 shares of the Company’s common stock held by PSC at a price at or above $25 per share, the Company and PSC will enter into a Put Agreement covering any of the 679,500 shares that PSC owns at the end of such period. The Put Agreement, in turn, will require PSC to use commercially reasonable efforts to sell the shares subject to the Put Agreement during a period of 60 days from the date of the Put Agreement. At the end of such period, PSC may require the Company to purchase at $25 per share any of those shares which may remain unsold at the conclusion of that period. Edgar A. Zurcher, who had been a director of the Company since November 2000, is President and a director of PSC, S.A. As required by the terms of the Settlement Agreement and Release, Mr. Zurcher resigned from the Company’s board of directors on February 8, 2008.

Payments made by the Company pursuant to the settlement agreement for items (i), (ii), (iii), and (iv) were $17.85 million from available operating funds. Of this amount, $6.4 million was deposited into escrow and recorded as restricted cash, as final release of these funds is subject to performance by the PSC Parties of certain actions. Additional non-cash expenses pursuant to this agreement include the write-off of PSC related accounts receivable that total approximately $528,000.

In accordance with SFAS 5, “Accounting for Contingencies,” in the fourth quarter of fiscal year 2007, the Company established a reserve of $5.5 million related to the potential settlement of this pending litigation. The amount of the reserve was equal to management’s estimate of the potential impact of a global settlement on the Company’s consolidated net income.

In the second quarter of fiscal year 2008, as a result of the executed legal settlement, reserve amounts were recorded for costs associated with the settlement of approximately:

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• $1.2 million in additional settlement costs to the original $5.5 million estimated in fiscal year 2007 for costs determined to be period costs for both the cash and non-cash settlement costs pursuant to the elements of the settlement agreement described at clauses (i) and (iii) of the description of the settlement agreement and release with PSC, S.A. and related entities.

• $1.9 million in costs to record the initial valuation and expense for the Put described at item (v) of the description of the settlement agreement and release with PSC, S.A. and related entities.

• $314,000 for costs associated with the change in the fair market value of the Put between February 8, 2008 and February 29, 2008.

• In accordance with the Company’s accounting policy, the Company recorded the re-classification of approximately $17.0 million from additional paid in capital to the liability account, common stock subject to put agreement, pursuant to item (v) of the description of the settlement agreement and release with PSC, S.A. and related entities.

• The Company recorded an income tax benefit of approximately $1.7 million as a result of the $6.7 million recorded for settlement costs pursuant to item (i) and (iii) of the settlement agreement and release with PSC, S.A. and related entities. In fiscal year 2007, when the Company accrued for the settlement cost, the Company was not able to estimate the tax benefit component of the settlement cost with an adequate level of certainty.

Pursuant to the elements of the agreement described at items (ii) and (iv) above, the Company has recorded the following transactions:

• The Company’s acquisition of PSC’s 49% interest in PSMT Nicaragua (BVI), Inc., resulting in the Company being the sole owner of the PriceSmart Nicaragua business. The Company’s business combinations are accounted for under SFAS 141, “Business Combinations.” An acquisition of a minority interest in a subsidiary is considered a step acquisition. As of the date of the step acquisition the historical basis of the minority interest balance of the selling minority shareholder is reduced to the extent of the percentage interest sold. Net assets of the acquired business are recorded at their fair value at the date of the acquisition. The excess of the purchase price over the fair value of tangible net assets acquired is included in goodwill in the accompanying consolidated balance sheets. The Company recorded the purchase of the remaining 49% minority interest of its Nicaragua subsidiary in February 2008. The consideration provided in connection with this acquisition consisted of $10.2 million. The purchase price of $10.2 million was allocated to minority interest for approximately $3.2 million and to goodwill for approximately $7.0 million, in accordance with SFAS 141.

• The Company recorded the purchase of the acquisition from PSC of a land parcel at the Zapote, Costa Rica warehouse club site for $1.0 million. The Company also recorded the purchase of easement rights relating to properties adjacent to the PriceSmart warehouse club in Managua, Nicaragua for $250,000.

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NOTE 13—UNCONSOLIDATED AFFILIATE

On October 31, 2007, Grupo Gigante S.A. de C.V. acquired all of PriceSmart, Inc.’s 50% interest in PSMT Mexico (a joint venture that had previously operated three PriceSmart warehouse clubs) for $2.0 million, thereby assuming 100% control and ownership of PSMT Mexico. Consequently the Company recorded a $2.6 million impairment charge in fiscal year 2007, related to the write down of the Company’s interest in its Mexico joint venture to its revised net realizable value. The impairment charge included $1.7 million in accumulated unrealized loss associated with currency changes recorded as “Accumulated other comprehensive loss” on the consolidated balance sheet and $892,000 related to the amounts carried as “Investment in unconsolidated subsidiaries.” While the Company believes that the value of the investment previously indicated on the consolidated balance sheet would over time have been realized, there were concerns about the Company’s control of the actions necessary to achieve those outcomes given that a substantial portion of the realizable assets related to refunds from the Mexican tax authorities for pre-paid taxes. The Company, therefore, concluded that it was in the Company’s best interest to complete the divestment of its Mexico holdings and reduce its involvement in activities not related to the future growth of the membership warehouse business in its targeted markets. The Company was relieved of all its obligations under letters of credit granted in favor of Mexican tax authorities totaling $1.9 million in connection with this disposal. In the first quarter of fiscal year 2008, the Company recorded a loss on disposal of $111,000 to write off the equity income of $111,000 recognized for the first two months of the quarter. The income included foreign currency translation gain of $129,000 and a net loss of $18,000.

	As of February 29, 2008			As of August 31, 2007
Current assets	$	—		$	5,776
Noncurrent assets	$	—		$	5,788
Current liabilities	$	—		$	907
Noncurrent liabilities	$	—		$	129
	Six Months Ended
	February 29, 2008			February 28, 2007
Revenues	$	—		$	—
Cost of Goods Sold	$	—		$	—
Net income (loss)	$	(35	)	$	(367	)

NOTE 14—RELATED-PARTY TRANSACTIONS

Use of Private Plane: From time to time members of the Company’s management used a private plane owned in part by PFD Ivanhoe, Inc. (“PFD Ivanhoe”) to travel to business meetings in Central America and the Caribbean. The Price Group owns 100% of the stock of PFD Ivanhoe, and Sol Price is an officer of PFD Ivanhoe. The Price Group’s members include Sol Price, Robert E. Price, Murray Galinson and Jack McGrory (Board member and employee of the Company). If the passengers are solely PriceSmart, Inc. personnel, then the Company reimburses PFD Ivanhoe for a portion of the fixed management fee and additional expenses PFD Ivanhoe incurred as a result of the hours flown including direct charges associated with the use of the plane, landing fees, catering and international fees. The Company reimbursed PFD Ivanhoe based on the amounts the passengers would have paid if they had flown a commercial airline if one or more of the passengers is a Member of The Price Group (including Robert E. Price). This agreement was in place through February 23, 2007. The Company paid approximately $55,000 and $106,000 for the six months ended February 29, 2008 and February 28, 2007, respectively, for these services. On February 23, 2007, the Company entered into an agreement with PFD Ivanhoe to purchase their six and one quarter percent (6.25%) undivided interest in a Citation XLS Aircraft for approximately $658,000. This entitles the Company to 50 hours of flight time per year. The Company still maintains an agreement to reimburse PFD Ivanhoe for use of other aircraft based on the amounts the passengers would have paid if they had flown a commercial airline if one or more of the passengers is a Member of the Price Group (including Robert E. Price).

Relationships with Edgar Zurcher: Edgar Zurcher, who was a director of the Company from November 2000 until February 2008, is a partner in a law firm that the Company utilizes in certain legal matters. The Company incurred legal expenses with this entity of approximately $1,000 and $59,000 during the first six months of fiscal years 2008 and 2007, respectively.

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Mr. Zurcher is also a director of a company that owns 40% of Payless ShoeSource Holdings, Ltd., which rents retail space from the Company. The Company has recorded approximately $398,000 and $399,000 in rental income for this space during the first six months of fiscal years 2008 and 2007, respectively. Mr. Zurcher is also a director of Banco Promerica, from which the Company has recorded approximately $148,000 and $139,000 of rental income in the first six months of fiscal years 2008 and 2007, respectively, for space leased to it by the Company. The Company also received approximately $441,000 in incentive fees on a co-branded credit card the Company has with Banco Promerica in the first six months of fiscal year 2007 and none in fiscal year 2008. In addition, the Company also received approximately $543,000 in Smart credit fees during the first six months of fiscal year 2007, and none in fiscal year 2008, related to the co-branded credit card with Banca Promerica. In the second quarter of fiscal year 2007, the Company received a one-time refund of approximately $500,000 for an accumulated marketing fund related to the co-branded credit card with Banco Promerica. On March 22, 2007, the Company informed certain entities with which Mr. Zurcher is affiliated, that the Company was not renewing the Company’s credit card relationship with those entities (with the possible exception of the Dominican Republic) because the Company had determined that another credit card provider was more suitable for the future needs and expectations of its members. In response, PSC, S.A. and related entities disputed the Company’s right to terminate and not renew the credit card services relationships between the parties notwithstanding expiration of the credit card services agreements by their terms, and threatened to take legal action if the Company proceeded with the terminations. Legal proceedings then commenced, by and against the Company. The parties subsequently agreed to settle their disputes in accordance with the terms of a Settlement Agreement and Release dated February 8, 2008. See Note 12 – PSC Settlement.

Relationships with Price Charities: During the first six months of fiscal year 2008, the Company sold approximately $9,000 of supplies to Price Charities a charitable group affiliated with Robert E. Price and Sol Price. The Company did not sell any supplies to the charitable group in fiscal year 2007.

The Company believes that each of the related party transactions described above were on terms that the Company could have obtained from unaffiliated third parties.

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NOTE 15—SEGMENT REPORTING

The Company is principally engaged in international membership shopping warehouse clubs operating primarily in Central America and the Caribbean. The Company operates in three segments based on geographic area and measures performance based on operating income (loss). Segment amounts are presented after converting to U.S. dollars and consolidating eliminations. Certain revenues and operating costs included in the United States segment have not been allocated, as it is impractical to do so. The Mexico joint venture is not segmented for the periods presented and is included in the United States segment. The Company’s reportable segments are based on management responsibility. For the six month period ended February 29, 2008, the United States Operations operating income includes the $2.2 million charge related to Put agreement pursuant to the PSC Settlement (see Note 12).

	United States Operations			Central American Operations			Caribbean Operations			Total
Six Months Ended February 29, 2008
Total revenue	$	740		$	328,547		$	214,968		$	544,255
Asset impairment and closure cost		—			(97	)		64			(33	)
Operating income (loss)		(838	)		14,793			6,944			20,899
Interest income		577			134			63			774
Interest expense		(2	)		(230	)		(297	)		(529	)
Income tax benefit (expense)		528			(2,864	)		(2,269	)		(4,605	)
Income from continuing operations		270			11,524			4,371			16,165
Income from discontinued operations, net of tax		45			—			—			45
Depreciation and amortization		384			3,002			1,991			5,377
Goodwill		—			33,290			5,319			38,609
Assets of discontinued operations		1,540			—			—			1,540
Identifiable assets		50,455			242,865			132,750			426,070
Six Months Ended February 28, 2007
Total revenue	$	299		$	266,169		$	167,886		$	434,354
Asset impairment and closure cost		—			(283	)		(380	)		(663	)
Operating income		2,611			10,196			4,025			16,832
Interest income		674			92			77			843
Interest expense		(234	)		(103	)		(108	)		(445	)
Income tax expense		(2,855	)		(2,657	)		(680	)		(6,192	)
Income from continuing operations		12			7,298			3,261			10,571
Discontinued operations, net of tax		46			—			—			46
Depreciation and amortization		295			2,745			1,718			4,758
Goodwill		—			26,243			5,459			31,702
Assets of discontinued operations		1,543			—			—			1,543
Identifiable assets		55,644			212,404			95,748			363,796
Year Ended August 31, 2007
Total revenue	$	1,342		$	541,866		$	345,593		$	888,801
Asset impairment and closure cost		—			(1,235	)		(315	)		(1,550	)
Operating income		6,231			13,281			8,464			27,976
Interest income		1,292			221			115			1,628
Interest expense		(261	)		(354	)		(173	)		(788	)
Income tax expense		(3,930	)		(6,905	)		(1,502	)		(12,337	)
Income from continuing operations		428			5,666			6,689			12,783
Discontinued operations, net of tax		143			—			—			143
Depreciation and amortization		(684	)		(5,408	)		(3,357	)		(9,449	)
Goodwill		—			26,279			5,373			31,652
Assets of discontinued operations		1,380			—			—			1,380
Identifiable assets		60,753			225,263			109,403			395,419

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NOTE 16—SUBSEQUENT EVENTS

PSC Settlement

The PSC Parties informed the Company as of March 31, 2008, that they had sold 199,789 shares of the 679,500 shares that are subject to potential put rights (as described in Note—12). As of the same date, the potential put rights with respect to the remaining balance of 479,711 shares have a fair market value of approximately $1.1 million. The change in fair value, as of this date, would result in a decrease of approximately $1.1 million to the amounts expensed in the provision for settlement of pending litigation, including subsequent changes in the fair value of the put agreement. Additionally, this would result in a decrease in the liability recorded as Common stock subject to put agreement by approximately $5.0 million.

Following the execution of certain sections of the settlement agreement, primarily related to the dismissal of pending litigation and a mutual release of all claims by the PSC parties (see Note 12), the Company authorized the escrow agent to release $3.15 million of the settlement funds in escrow to PSC, S.A. on April 2, 2008.

Commitments and Contingencies

On November 10, 2007 the Company entered into a lease agreement for a new primary distribution center in Medley, Florida. The Company will be relocating its current primary Distribution Center operations also located in Medley, Florida, to the new facility. The new facility consists of 126,767 rentable square feet (an approximate 40% increase versus the prior facility) and the term of the lease is for 124 calendar months with two renewal options. The total lease payments over the 124 month life of the lease are approximately $9.2 million. The lease commencement date (which was previously subject to certain conditions to be fulfilled by the landlord) has now been set and begins on April 3, 2008. When the Company surrenders the former premises, which shall be within sixty days after the April 3, 2008 lease commencement for the new premises, the total lease commitments that will terminate at the end of the sixty days are approximately $851,000.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning PriceSmart’s anticipated future revenues and earnings, adequacy of future cash flow and related matters. These forward-looking statements include, but are not limited to, statements or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” and “would” and similar expressions, and the negative thereof. Forward-looking statements are not guarantees of performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements, including foreign exchange risks, political or economic instability of host countries and competition, as well as those risks described in the Company’s reports filed with the Securities and Exchange Commission (the “SEC”) from time to time, including the risk factors referenced in the Form 10-K, filed on November 29, 2007 for the fiscal year ended 2007. See “Part II – Item 1A – Risk Factors.”

The following discussion and analysis compares the results of operations for the three and six month periods ended February 29, 2008 (fiscal year 2008) and February 28, 2007 (fiscal year 2007), and should be read in conjunction with the consolidated financial statements and the accompanying notes included therein.

PriceSmart’s business consists primarily of international membership shopping warehouse clubs similar to, but smaller in size than, warehouse clubs in the United States. The number of warehouse clubs in operation as of February 29, 2008 and February 28, 2007, the Company’s ownership percentages and basis of presentation for financial reporting purposes by each country or territory were as follows:

Country/Territory	Number of Warehouse Clubs in Operation (as of February 29, 2008)	Number of Warehouse Clubs in Operation (as of February 28, 2007)	Ownership		Basis of Presentation
Panama	4	4	100	%	Consolidated
Costa Rica	4	4	100	%	Consolidated
Dominican Republic	2	2	100	%	Consolidated
Guatemala	3	2	100	%	Consolidated
Trinidad	3	2	95	%	Consolidated
El Salvador	2	2	100	%	Consolidated
Honduras	2	2	100	%	Consolidated
Aruba	1	1	90	%	Consolidated
Barbados	1	1	100	%	Consolidated
U.S. Virgin Islands	1	1	100	%	Consolidated
Jamaica	1	1	100	%	Consolidated
Nicaragua	1	1	100	%	Consolidated
Totals	25	23

In November and December 2007, the Company opened its third warehouse club in each of Guatemala and Trinidad.

At the end of February 2008, the total number of the Company’s consolidated warehouse clubs in operation was 25, operating in 11 countries and one U.S. territory, compared to 23 operating in 11 countries and one U.S. territory at the end of February 2007. The average age of the 25 warehouse clubs in operation as of February 29, 2008 was 81 months and was 72 months for the 23 warehouse clubs included in operation as of February 28, 2007. The Company does not anticipate any additional warehouse club openings during fiscal year 2008.

In addition to the warehouse clubs operated directly by the Company or through joint ventures, there is one warehouse club in operation in Saipan, Micronesia licensed to and operated by local business people, from which the Company earns a royalty fee.

In general, the Company’s earnings improve and cash flows from operations increase as sales increase. Although the Company’s cost of goods sold is largely variable with sales, a significant portion of the Company’s selling, general and administrative expenses are fixed or rise relatively slowly in relationship to sales increases. Net warehouse sales levels and operating costs are impacted by economic factors in the Company’s markets including inflation, the effectiveness of the Company’s execution of its business model, and new warehouse openings. Management can positively influence sales and profits by buying and selling merchandise efficiently, pricing merchandise at attractive prices, expanding or re-configuring certain warehouse clubs to provide for expanded merchandise floor space, producing higher sales per square foot and judiciously opening new locations where appropriate. The Company currently is conducting feasibility studies at various locations for potential future warehouse stores. However, the Company has not set a target for any new warehouse openings.

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COMPARISON OF THE THREE MONTHS ENDED FEBRUARY 29, 2008 AND FEBRUARY 28, 2007

Net warehouse club sales increased 27.1% to $288.2 million in the second quarter of fiscal year 2008, from $226.7 million in the second quarter of fiscal year 2007. In general, the Company’s sales continue to be positively impacted by a generally strong economic environment in the markets in which its warehouse clubs operate (in contrast to the U.S. retail market), a growing membership base, and ongoing improvements in the selection and value of merchandise carried in the clubs. The second fiscal quarter includes the historically highest sales month of December. The Company reported that December sales in fiscal year 2008 grew 25.3% compared to December of fiscal year 2007. Approximately 60% of the sales growth experienced from the second quarter of fiscal year 2007 to the second quarter of fiscal year 2008 resulted from increased transactions. The other portion of sales growth is attributable to growth in the value of the average transaction by our members. A portion of the sales growth in the quarter as compared to the prior year resulted from having two additional clubs in operation – one, in Guatemala, was opened on November 14, 2007 and operated for the entirety of the fiscal quarter, and the other, in Trinidad, was opened on December 13, 2007. These two clubs accounted for approximately 600 basis points of the overall sales growth in the quarter. In addition, the month of February had 29 days, adding one more sales day in the quarter as compared to the second quarter of fiscal year 2007. The Company experienced year over year growth in every one of its 12 markets in the quarter. The following table indicates the percent growth in net warehouse club sales in the segments in which the Company operates:

	Three Months Ended
	February 29, 2008				February 28, 2007
	(Amounts in thousands)
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase (Decrease)		Change
Central America	$	173,252	60.1	%	$	138,773	61.2	%	$	34,479	24.8	%
Caribbean		114,964	39.9	%		87,949	38.8	%		27,015	30.7	%
	$	288,216	100.0	%	$	226,722	100.0	%	$	61,494	27.1	%

Comparable warehouse club sales, which are for warehouse clubs open at least 13  ¹/2 full months, increased 19.8% for the 13-week period ended March 2, 2008, compared to the same period last year. The Company reports comparable warehouse club sales on a “same week” basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month that is used for financial reporting purposes. This approach equalizes the number of weekend days and week days in each period for improved sales comparison, as the Company experiences higher warehouse club sales on the weekends. Further, each of the warehouse clubs used in the calculations was open for at least 13  ¹/2 calendar months before its results for the current period were compared with its results for the prior period. For example, the sales related to the new warehouse club opened in Guatemala on November 14, 2007 will not be used in the calculation of comparable warehouse club sales until the month of January 2009. Similarly, the new warehouse club opened in Trinidad on December 13, 2007 will not be used in the calculation of comparable warehouse club sales until the month of February 2009.

The Company’s warehouse club gross profit margin (defined as net warehouse club sales, less associated cost of goods sold) in the second quarter of fiscal year 2008 increased $9.1 million to $42.9 million, or 14.9% of net warehouse club sales, from $33.8 million, or 14.9% of net warehouse club sales. The increase in warehouse club gross profit margin dollars was primarily due to higher sales. As a percentage of sales, warehouse club gross profit margin in the second quarter of fiscal year 2008 was equal to that in the second quarter of fiscal year 2007 as year-on-year improvements in foreign currency exchange effects and cost improvements in merchandise distribution and shrink results were offset by targeted reductions in merchandise margins to provide greater value to PriceSmart members through lower prices. In the current quarter, the Company recorded $225,000 (.08% of sales) in foreign exchange-related gains compared to only $37,000 (.02% of sales) in foreign exchange-related gains in the second quarter of fiscal year 2007.

Membership income, which is recognized into income ratably over the one-year life of the membership, increased 17.6% to $4.0 million in the second quarter of fiscal year 2008 compared to $3.4 million in the second quarter of fiscal year 2007. As a percent of net warehouse club sales, membership income was 1.4% in the second quarter of 2008 compared to 1.5% in the second quarter 2007. The increase in membership income reflects both a 12% increase in the number of membership accounts and a 3% increase in the average membership fee collected as compared to a year ago. Total membership accounts at the end of February 2008 were approximately 573,000, an increase of approximately 63,000 accounts compared to the end of February 2007. The Company experienced year-over-year membership growth in all of its markets. The membership renewal rate for the 12 months ended February 2008 and February 2007 was 84%.

Export sales of $340,000 in the current quarter, compared to export sales of $171,000 in the second quarter of fiscal year 2007, resulted from direct sales to institutional customers (primarily retailers) in the Philippines for which the Company receives a margin of 5-6%.

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Other income consists of commission revenue, rental income, advertising revenue, construction revenue, fees for in-store product demonstrations, and fees earned from licensees. Other income in the second quarter of fiscal year 2008 was $1.3 million compared to $1.5 million in the same period a year ago. The decrease, is primarily a result of $500,000 in non-recurring income, recognized in the second quarter of fiscal year 2007, related to marketing fees earned on the Company’s co-branded credit card agreement with Banco Promerica.

Warehouse club operating expenses increased to $26.0 million, or 9.0% of net warehouse club sales, in the second quarter of fiscal year 2008, from $21.7 million, or 9.6% of net warehouse club sales, in the second quarter of fiscal year 2007. Higher payroll costs, primarily due to wage and benefit increases in the clubs added $1.8 million in expenses in the period compared to the prior year. Higher costs for credit card fees ($644,000) and supplies expense ($195,000) were primarily due to higher sales volumes. Utilities costs increased $576,000 from the same period last year as utility rates in many of our markets rise with the increasing cost of oil. Depreciation expense also increased $403,000, primarily due to the capital investments made in the Dominican Republic (Santo Domingo), Panama (Via Brasil), the acquisition of the company that had leased to the Company the real estate upon which the Barbados PriceSmart warehouse club is located and the construction of two new warehouse clubs. The additional two clubs operating in the quarter, compared to the same period last year, accounted for approximately $1.3 million in total warehouse club operating expense growth.

General and administrative expenses were $7.9 million, or 2.7% of net warehouse club sales, in the second quarter of fiscal year 2008 compared to $6.9 million, or 3.0% of net warehouse club sales, in the second quarter of fiscal year 2007. The Company incurred increased costs related to salaries and related benefits for its corporate and U.S. buying operation totaling $302,000. Professional fees, primarily related to the pending litigation and ultimate settlement with the Promerica entities (see Item 1. Legal Proceedings) and tax consulting services resulted in increased costs of $535,000 in the second quarter of fiscal year 2008, compared the second quarter of fiscal year 2007.

Expenses incurred before a warehouse club is in operation are captured in pre-opening expenses. Pre-opening expenses in the second quarter of fiscal year 2008 of $215,000 were primarily associated with the new warehouse club in Trinidad.

Asset impairment and closure costs for the second quarter of fiscal year 2008 were $14,000, compared to $472,000 in the second quarter of fiscal year 2007. While the costs in both periods are associated with the closed warehouse locations in Guatemala and the Dominican Republic, the decrease in expense from the prior to current year is a result of the loss on the sale of the closed warehouse club location in Eastside Santo Domingo, Dominican Republic in the fiscal year 2007.

Included in the results for the second quarter of fiscal year 2008 are pre-tax charges and income tax benefits related to the Company’s settlement of previously announced disputes pursuant to a Settlement Agreement and Release with PSC, S.A. and related entities dated February 8, 2008, net of a $5.5 million reserve established in the fourth quarter of fiscal year 2007. The amount of the reserve was equal to management’s estimate at that time of the potential impact of a global settlement on PriceSmart’s net income. In the second quarter of fiscal 2008, the Company recorded an additional pre-tax charge of $3.4 million, offset by a benefit to provision for income tax of $1.7 million, resulting in a net reduction in net income in the quarter of $1.7 million. Included in the pre-tax charge of $3.4 million, and not affecting the income tax benefit, is a charge of $2.2 million related specifically to the fair market value of put rights granted by the Company to PSC as part of the overall settlement. The closing price of the Company’s common stock on February 29, 2008 was $24.26. The Settlement Agreement and Release provides that, subject to PSC’s commercially reasonable efforts to sell, during a 60 day period commencing February 8, 2008, 679,500 shares of the Company’s common stock held by PSC at a price at or above $25 per share, the Company and PSC will enter into a Put Agreement covering any of the 679,500 shares that PSC owns at the end of such period. The Put Agreement, in turn, will require PSC to use commercially reasonable efforts to sell the shares subject to the Put Agreement during a period of 60 days from the date of the Put Agreement. At the end of such period, PSC may require the Company to purchase at $25.00 per share any of those shares which may remain unsold at the conclusion of that period. The value of the put rights was initially measured at February 8, 2008 (the date of the settlement) and modified as of February 29, 2008 (the end of the fiscal quarter) based on the closing price of PriceSmart’s common stock on that date using the Black-Scholes method of valuation and applied to 679,500 shares that were subject to the put rights. The Company will continue to employ “mark to market” accounting in valuing the put rights. If PSC is successful in selling all of the subject shares in the open market, or if PSC decides to hold those shares beyond the 120-day period and not exercise its put rights, then the Company will ultimately record no cost associated with the put and realize a $2.2 million gain in the Company’s third and/or fourth quarter of fiscal 2008, offsetting the charge taken in the current (second) quarter. Conversely, if PSC, having used commercially reasonable efforts to sell its shares of the Company’s common stock at or above a price of $25.00 per share during the 120 day period beginning February 8, 2008, were not able to sell all of the subject shares and elected to exercise its put rights, the Company would realize a charge equal to the difference between the then-market value of the shares and $25.00 applied to all of the unsold shares. This charge could be more or less than the charge already recorded and would result in either a further charge to the Company’s reported third quarter earnings or reversal of some portion of the charge already taken.

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As of March 31, 2008, the closing price of PriceSmart common stock was $27.71 and the Company has been informed that 199,789 shares of PriceSmart common stock have been sold by PSC and are no longer subject to the put rights. As a result, the fair market value of the put rights was $1.1 million as of March 31, 2008, or $1.1 million less than the charge recorded in the second quarter.

Operating income for the second quarter of fiscal year 2008 was $10.7 million, or 3.7% of warehouse sales, compared to $9.6 million, or 4.2% of warehouse sales, in the second quarter of fiscal year 2007.

Interest income reflects earnings on cash and cash equivalent balances and restricted cash deposits. Interest income was $364,000 in the second quarter of fiscal year 2008, compared to $479,000 in the second quarter of fiscal year 2007. The decrease reflects generally lower interest rates associated with cash on deposit in the current period, compared to a year ago, as well as lower average cash balances on deposit in the current period compared to last year.

Interest expense reflects borrowings by the Company’s majority or wholly owned foreign subsidiaries to finance the capital requirements of warehouse club operations and on-going working capital requirements. Interest expense increased to $470,000 in the second quarter of fiscal year 2008 from $90,000 in the second quarter of fiscal year 2007. The Company entered into a long-term loan for $4.5 million US. Dollars and $9.0 million Barbados dollar (approximately U.S. $4.5 million) on November 15, 2007 to finance the acquisition of the Company that had leased to the Company the real estate upon which the Barbados PriceSmart warehouse club is located.

Tax expense for the second quarter of fiscal year 2008 was $0.9 million on pre-tax income of $10.5 million, as compared to $3.2 million of tax expense on pre-tax income of $9.9 million for the second quarter of fiscal year 2007. The decrease in the effective tax rate to 8.5% in the second quarter of fiscal year 2008 from 32.3% in the second quarter of fiscal year 2007 is the result of the net reversal of $1.0 million of income tax contingencies related to the closing of applicable statutes of limitation and a net tax benefit of approximately $1.7 million recorded due to the PSC Settlement. Additionally, certain subsidiaries generated pre-tax income for which cash taxes will not apply as the result of net operating loss utilization for which the Company currently has valuation allowances applied. The Company is assessing the need for certain of the valuation allowances based on profitability history and other factors, which may result in a reversal of such valuation allowance and a resulting credit to income in a future period.

Minority interest is the allocation of the joint venture income or loss to the minority stockholders’ respective interest. Minority interest stockholders’ respective share of net income was $160,000 in the second quarter of fiscal year 2008. In the same period last year, the joint ventures for which there was a minority stockholder interest generated income, of which $128,000 was allocated to the minority stockholders’ interest. During the second quarter of fiscal year 2008, the Company acquired the 49% ownership interest of the minority shareholder in its Nicaragua subsidiary. As a result, the Company now records 100% of that subsidiary’s income or loss.

Income from continuing operations for the second quarter of fiscal year 2008 was $9.5 million, compared to $6.5 million in the same quarter last year.

Income from discontinued operations, net of tax represents consolidated income and expenses associated with those operations within the Company that were closed or disposed of and which meet the criteria for such a treatment. Discontinued operations includes the costs associated with the Company’s previously closed warehouse location in Guam. In the second quarters of fiscal year 2008 and 2007, the Company recognized income of $27,000 and $28,000, respectively, resulting from the closed Guam location, which is leased to a subtenant, net of expenses.

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COMPARISON OF THE SIX MONTHS ENDED FEBRUARY 29, 2008 AND FEBRUARY 28, 2007

Net warehouse club sales increased 25.6% to $533.4 million in the first six months of fiscal year 2008, from $424.8 million in the first six months of fiscal year 2007. In general, the Company’s sales continue to be positively impacted by a generally strong economic environment in the markets in which its warehouse clubs operate, a growing membership base, and ongoing improvements in the selection and value of merchandise carried in the clubs. Each of the Company’s warehouse clubs recorded increases in sales from the first six months of fiscal year 2008, compared to the first six months of fiscal year 2007. The Company opened two new warehouse clubs in the period: one in Guatemala which opened on November 14, 2007, and one in Trinidad which opened on December 13, 2007. The following table indicates the percent growth in net warehouse club sales in the Company’s Central America and Caribbean segments:

	Six Months Ended
	February 29, 2008				February 28, 2007
	(Amounts in thousands)
	Amount		% of Net Revenue		Amount		% of Net Revenue		Increase (Decrease)		Change
Central America	$	321,568	60.3	%	$	259,671	61.1	%	$	61,897	23.8	%
Caribbean		211,837	39.7	%		165,151	38.9	%		46,686	28.3	%
	$	533,405	100.0	%	$	424,822	100.0	%	$	108,583	25.6	%

Same-warehouse club sales, which include warehouse clubs open at least 13  ¹/2 full months, increased 21.0% for the 26 weeks ended March 2, 2008 compared to the same period a year earlier. The Company reports comparable warehouse sales on a “same week” basis with 13 weeks in each quarter beginning on a Monday and ending on a Sunday. The periods are established at the beginning of the fiscal year to provide as close a match as possible to the calendar month that is used for financial reporting purposes. This approach equalizes the number of weekend days and week days in each period for improved sales comparison, as the Company experiences higher warehouse club sales on the weekends. Further, each of the warehouse clubs used in the calculation was open at least 13  ¹/2 calendar months before its results for the current period were compared to its results for the prior period. For example, the sales related to the new warehouse club opened in Guatemala on November 14, 2007 will not be used in the calculation of comparable warehouse club sales until the month of January 2009. Similarly, the new warehouse club opened in Trinidad on December 13, 2007 will not be used in the calculation of comparable warehouse club sales until the month of February 2009.

The Company’s warehouse club gross profit margin (defined as net warehouse club sales, less associated cost of goods sold) in the first six months of fiscal year 2008 increased $16.2 million to $79.6 million, or 14.9% of net warehouse sales, from $63.4 million, or 14.9% of net warehouse sales in the prior period. The increase in warehouse gross profit margin dollars was primarily due to higher sales in the current period as compared to the prior period. As a percentage of sales, warehouse club gross profit margin in the first six months of fiscal year 2008 was equal to that in the first six months of fiscal year 2007 as year-on-year improvements in foreign currency exchange effects and cost improvements in merchandise distribution and shrink results were offset by targeted reductions in merchandise margins to provide greater value to PriceSmart members through lower prices. In the current six month period, the Company recorded $809,000 (.16% of sales) in foreign exchange related gains, compared to a foreign exchange related loss of $123,000 (.03% of sales) in the same six month period of fiscal year 2007.

Membership income, which is recognized into income ratably over the one-year life of the membership, increased 14.9% to $7.7 million in the first six months of fiscal year 2008, compared to $6.7 million in the first six months of fiscal year 2007. As a percent of net warehouse club sales, membership income was 1.4% of sales in the current six month period, compared to 1.6% in the same six month period last fiscal year. Total membership accounts at the end of February 2008 were approximately 573,000, an increase of approximately 63,000 accounts compared to the end of February 2007. The Company experienced year-over-year membership growth in all of its markets. The membership renewal rate for the 12 months ended February 2008 and February 2007 was 84%.

Export sales were $707,000 for the first six months of fiscal year 2008, compared to export sales of $266,000 for the first six months of fiscal year 2007. The increase resulted primarily from the increase in direct sales to institutional customers (primarily retailers) in the Philippines in the current period for which the Company receives a margin of 5-6%.

Other income consists of commission revenue, rental income, advertising revenue, construction revenue, fees for in-store product demonstrations, and fees earned from licensees. Other income in the first six months of fiscal year 2008 was $2.4 million, compared to $2.6 million in the same period a year ago. Contributing to the decrease was $500,000 in non-recurring income recognized in the second quarter of fiscal year 2007 related to the marketing fees earned on the Company’s co-branded credit card agreement with Banco Promerica.

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Warehouse club operating expenses increased to $49.3 million, or 9.2% of net warehouse club sales, in the first six months of fiscal year 2008 from $42.0 million, or 9.9% of net warehouse club sales, in the first six months of fiscal year 2007. The increase in warehouse club operating expenses resulted from increased payroll related expenses ($2.8 million), higher bank and credit card fees primarily related to higher sales ($1.2 million), and increased operating costs for utilities, repair and maintenance, and supplies ($1.3 million). The Company also incurred increased marketing costs ($293,000) largely associated with the introduction of its new co-branded credit card in Central America and higher depreciation expense ($545,000) as a result of capital expenditures over the year, including the acquisition of the company that had leased to the Company the real estate upon which the Barbados PriceSmart is located and the construction of two new warehouse clubs, Guatemala and Trinidad, which began operation in November and December, respectively. Across all spending categories, the addition of the two new warehouse clubs added a total of $1.4 million to warehouse club operating costs during the six month period compared to the first six months of fiscal year 2007.

General and administrative expenses were $15.2 million, or 2.8% of net warehouse club sales, in the first six months of fiscal year 2008, compared to $12.8 million, or 3.0% of net warehouse club sales, in the first six months of fiscal year 2007. The Company incurred increased costs ($643,000) for salaries and related benefits, including ex-pat costs, for the Company’s corporate headquarters and U.S. buying operation. Professional fees, primarily related to the pending litigation and ultimate settlement with the Promerica entities (see Item 1. Legal Proceedings) and tax consulting services resulted in increased costs of $1.2 million in the first six months of fiscal year 2008, compared to the first six months of fiscal year 2007. In addition, the first six months of fiscal year 2007 benefited from a $200,000 reserve in excess of estimated claims.

Expenses incurred before a warehouse club is in operation are captured in pre-opening expenses. Pre-opening expenses in the current six month period of $987,000 were related to the opening of the two new warehouse clubs, Guatemala and Trinidad. Pre-opening expense of $255,000 in the prior six month period was primarily associated with the opening of the relocated San Pedro Sula, Honduras location.

Asset impairment and closure costs for the first six months of fiscal year 2008 were $33,000, compared to $663,000 in the first six months of fiscal year 2007. The decrease in expense from the prior to current year is a result of the loss on the sale of the closed warehouse club location in Eastside Santo Domingo, Dominican Republic recognized in the first six months of fiscal year 2007 and related to the original San Pedro Sula, Honduras club which was relocated to a new site and the original building subsequently sold.

Included in the results for the first six months of fiscal year 2008 are pre-tax charges and income tax benefits related to the Company’s settlement of previously announced disputes pursuant to a Settlement Agreement and Release with PSC, S.A. and related entities dated February 8, 2008, net of a $5.5 million reserve established in the fourth quarter of fiscal year 2007. The amount of the reserve was equal to management’s estimate at that time of the potential impact of a global settlement on PriceSmart’s net income. In the second quarter of fiscal 2008, the Company recorded an additional pre-tax charge of $3.4 million, offset by a benefit to provision for income tax of $1.7 million, resulting in a net reduction in net income in the quarter of $1.7 million. Included in the pre-tax charge of $3.4 million, and not affecting the income tax benefit, is a charge of $2.2 million related specifically to the fair market value of put rights granted by the Company to PSC as part of the overall settlement. The closing price of the Company’s common stock on February 29, 2008 was $24.26. The Settlement Agreement and Release provides that, subject to PSC’s commercially reasonable efforts to sell, during a 60 day period commencing February 8, 2008, 679,500 shares of the Company’s common stock held by PSC at a price at or above $25 per share, the Company and PSC will enter into a Put Agreement covering any of the 679,500 shares that PSC owns at the end of such period. The Put Agreement, in turn, will require PSC to use commercially reasonable efforts to sell the shares subject to the Put Agreement during a period of 60 days from the date of the Put Agreement. At the end of such period, PSC may require the Company to purchase at $25.00 per share any of those shares which may remain unsold at the conclusion of that period. The value of the put rights was initially measured at February 8, 2008 (the date of the settlement) and modified as of February 29, 2008 (the end of the fiscal quarter) based on the closing price of PriceSmart’s common stock on that date using the Black-Scholes method of valuation and applied to 679,500 shares that were subject to the put rights. The Company will continue to employ “mark to market” accounting in valuing the put rights. If PSC is successful in selling all of the subject shares in the open market, or if PSC decides to hold those shares beyond the 120-day period and not exercise its put rights, then the Company will ultimately record no cost associated with the put and realize a $2.2 million gain in the Company’s third and/or fourth quarter of fiscal 2008, offsetting the charge taken in the current (second) quarter. Conversely, if PSC, having used commercially reasonable efforts to sell its shares of the Company’s common stock at or above a price of $25.00 per share during the 120 day period beginning February 8, 2008, were not able to sell all of the subject shares and elected to exercise its put rights, the Company would realize a charge equal to the difference between the then-market value of the shares and $25.00 applied to all of the unsold shares. This charge could be more or less than the charge already recorded and would result in either a further charge to the Company’s reported third quarter earnings or reversal of some portion of the charge already taken.

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As of March 31, 2008, the closing price of PriceSmart common stock was $27.71 and the Company has been informed that 199,789 shares of PriceSmart common stock have been sold by PSC and are no longer subject to the put rights. As a result, the fair market value of the put rights was $1.1 million as of March 31, 2008, or $1.1 million less than the charge recorded in the second quarter.

Operating income for the first six months of fiscal year 2008 was $20.9 million, or 3.9% of warehouse sales, compared to $16.8 million, or 4.0% of warehouse sales, in the first six months of fiscal year 2007.

Interest income reflects earnings on cash and cash equivalent balances and restricted cash deposits securing working capital lines of credit. Interest income was $774,000 in the first six months of fiscal year 2008, compared to $843,000 in the first six months of fiscal year 2007. The decrease reflects generally lower interest rates associated with cash on deposit in the current period compared to the year ago period.

Interest expense reflects borrowings by the Company’s majority or wholly owned foreign subsidiaries to finance the capital requirements of warehouse club operations and on-going working capital requirements. Interest expense increased to $529,000 in the first half of fiscal year 2008 from $445,000 in the first half of fiscal year 2007, resulting from an increase in debt held by the Company to finance the land purchase and subsequent construction of the new warehouse club in Guatemala and to finance the purchase of the company that had leased to the Company the real estate upon which the Barbados PriceSmart is located.

Tax expense for the first six months of fiscal year 2008 was $4.6 million on pre-tax income from continuing operations of $21.1 million, compared to $6.2 million of tax expense recorded in the first six months of fiscal year 2007 on a pre-tax income from continuing operations of $17.2 million. The decrease in the effective tax rate to 21.9% in the first six months of fiscal year 2008 from 36% in the first six months of fiscal year 2007 is the result of the net reversal of $1.0 million of income tax contingencies related to the closing of applicable statutes of limitation and a net tax benefit of approximately $1.7 million recorded due to the PSC settlement (see Note 12). Additionally, certain subsidiaries generated pre-tax income for which cash taxes will not apply as the result of net operating loss utilization for which the Company currently has valuation allowances applied. The Company is assessing the need for certain of the valuation allowances based on profitability history and other factors, which may result in a reversal of such valuation allowance and a resulting credit to income in a future period.

Minority interest is the allocation of the joint venture income or loss to the minority stockholders’ respective interest. Minority interest stockholders’ respective share of net income was $290,000 in the first six months of fiscal year 2008. In the same period last year, the joint ventures for which there was a minority stockholder interest generated income, of which $262,000 was allocated to the minority stockholders’ interest. During the second quarter of fiscal year 2008, the Company acquired the 49% ownership interest of the minority shareholder in its Nicaragua subsidiary. As a result, the Company now records 100% of that subsidiary’s income or loss.

Income from continuing operations for the first half of fiscal year 2008 was $16.2 million, compared to $10.6 million in the same period last year.

Income from discontinued operations, net of tax are the consolidated income and expenses associated with those operations within the Company that were closed or disposed of and which meet the criteria for such a treatment. Discontinued operations includes the costs associated with the Company’s previously closed warehouse location in Guam. In the first six month periods of fiscal years 2008 and 2007, the Company recognized income of $45,000 and $46,000, respectively, resulting from the closed Guam location, which is leased to a subtenant, net of expenses.

LIQUIDITY AND CAPITAL RESOURCES

Financial Position and Cash Flow

The Company had $25.9 million in consolidated cash and cash equivalents as of February 29, 2008 compared to $32.1 million in consolidated cash and cash equivalents as of August 31, 2007.

Net cash flows provided by operating activities were $15.4 million in the first six months of fiscal year 2008, compared to cash provided by operations of $15.7 million in the first six months of fiscal year 2007. The decrease was primarily driven by the fact that the increase of net income from operations of $5.6 million was offset by $2.8 million of net cash used in connection with the PSC Settlement, $1.7 million of additional application to working capital and other items.

Net cash used in investing activities was $34.3 million and $7.5 million in the first six months of fiscal years 2008 and 2007, respectively. In the first half of the current period, the additions to property and equipment totaled $16.4 million, primarily associated with the completion of the warehouse clubs in Guatemala and Trinidad. The Company used $10.2 million for the acquisition of the 49% minority interest in the Nicaragua club warehouse. In addition, the Company used approximately $11.9 million for the

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acquisition of the company that had leased to it the real estate and building upon which the Barbados warehouse club is located. The Company generated approximately $4.8 million in cash from investing activities in the first six months of the fiscal year 2008, primarily from the sale of its investment in its Mexico subsidiary and the San Pedro Sula warehouse building in Honduras. In the first half of the fiscal year 2007, the additions to property and equipment totaled $7.6 million, primarily associated with the completion of construction of the Company’s San Pedro Sula warehouse, and the expansion of the Company’s Via Brasil location in Panama City, Panama.

Financing activities provided cash of $12.3 million in the first six months of fiscal year 2008, primarily as a result of acquiring bank loans for $9.6 million and the release of restricted cash previously held as collateral for bank loans of $8.0 million, offset by payments of $4.7 million for dividends. Financing activities resulted in a net cash use of $13.8 million in the first six months of fiscal 2007, primarily as a result of repaying the remaining $17.3 million balance on the long-term debt held by the International Finance Corporation, which included a prepayment of principal in the amount of $14.9 million in September 2006, in addition to the Company’s regularly scheduled principal payment of $2.4 million. The Company drew down from its available lines of short-term loans, with $4.7 million representing the total amount drawn down during the period.

Financing Activities

On November 15, 2007, the Company entered into a long-term loan of $4.5 million with Citibank N.A. and a loan of 9.0 million Barbados dollars (equivalent to $4.5 million U.S. dollars) with Citicorp Merchant Bank Ltd., to finance the purchase of the company that had leased to it the real estate and building upon which the Company’s Barbados warehouse club is located. In addition, the Company drew down $615,000 in additional short-term loans from its facilities in Guatemala. On February 13, 2008, the Company entered into an interest rate swap agreement with Citicorp Merchant Bank for a notional amount of $4.5 million. This swap agreement was entered into to fix the interest rate of the $4.5 million loan with Citibank N.A. The loan has a variable interest rate of LIBOR plus a margin of 1.5%. Under the swap agreement, the Company will pay a fixed rate of 5.22% for a term of approximately five years (February 18, 2008 through May 15, 2013).

Short-Term Borrowings and Long-Term Debt

As of February 29, 2008, the Company, together with its majority or wholly owned subsidiaries, had $3.9 million outstanding in short-term borrowings. As of August 31, 2007, the Company, together with its majority or wholly owned subsidiaries, had $3.3 million in short-term borrowings.

Additionally, the Company has a bank credit agreement for up to $10.0 million, which can be used as a line of credit or to issue letters of credit. As of February 29, 2008, there were no amounts outstanding or letters of credit issued under this facility.

As of February 29, 2008 and August 31, 2007, the Company, together with its majority or wholly owned subsidiaries, had $17.4 million and $9.4 million, respectively, outstanding in long-term borrowings. The increase during the current period primarily relates to a long-term debt arrangement for $9.0 million to finance the acquisition of the company that had leased to the Company the real estate upon which the Barbados PriceSmart warehouse clubs is located. The carrying amount of the non-cash assets (land, building, fixtures, and equipment) assigned as collateral for long-term debt was $19.5 million and $9.7 million as of February 29, 2008 and August 31, 2007, respectively. Certain obligations under leasing arrangements are collateralized by the underlying asset being leased.

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Contractual Obligations

As of February 29, 2008, the Company’s commitments to make future payments under long-term contractual obligations were as follows (in thousands):

	Payments Due by Period
Contractual obligations	Total		Less than 1 Year		1 to 3 Years		4 to 5 Years		After 5 Years
Long-term debt(1)	$	17,387	$	1,804	$	3,640	$	3,615	$	8,328
Operating leases(2, 3)		106,569		7,290		13,784		12,269		73,226
Total	$	123,956	$	9,094	$	17,424	$	15,884	$	81,554

(1) Amounts shown are for the principal portion of the long-term debt payment only.

(2) Amounts shown include $9.2 million in total lease payments for the lease of a new primary distribution center entered into on November 10, 2007 for property located in Medley, Florida. The lease commencement date begins on April 3, 2008. The total lease payments are scheduled to run over 124 months.

(3) Amounts shown include $851,000 in total lease payments subsequent to sixty days after April 3, 2008 for the lease of its current primary distribution center operations also located in Medley, Florida, which will terminate within sixty days after the April 3, 2008 lease commencement of the new primary distribution center lease.

Critical Accounting Estimates

The preparation of the Company’s consolidated financial statements requires that management make estimates and judgments that affect the financial position and results of operations. Management continues to review its accounting policies and evaluate its estimates, including those related to contingencies and litigation, deferred taxes, merchandise inventories, goodwill, long-lived assets, stock-based compensation and warehouse closure costs. The Company bases its estimates on historical experience and on other assumptions that management believes to be reasonable under the present circumstances. These accounting policies, under different conditions or using different estimates, could show materially different results on the Company’s consolidated financial condition and results of operations.

Contingencies and Litigation: In the ordinary course of business, the Company is periodically named as a defendant in various lawsuits, claims and pending actions and is exposed to tax risks (other than income tax). The principal risks that the Company insures against are workers’ compensation, general liability, vehicle liability, property damage, employment practices, errors and omissions, fiduciary liability and fidelity losses. If a potential loss arising from these lawsuits, claims, actions and non income tax issues is probable and reasonably estimable, the Company records the estimated liability based on circumstances and assumptions existing at the time in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies.” While the Company believes the recorded liabilities are adequate, there are inherent limitations in the estimation process whereby future actual losses may exceed projected losses, which could materially adversely affect the Company’s results of operations or financial condition.

In the second quarter of fiscal year 2008, as a result of the executed legal settlement, reserve amounts were recorded for costs associated with the settlement of approximately:

• $1.2 million in additional settlement costs to the original $5.5 million estimated in fiscal year 2007 for costs determined to be period costs for both the cash and non-cash settlement costs pursuant to the elements of the settlement agreement described at clauses (i) and (iii) of the description of the settlement agreement and release with PSC, S.A. and related entities.

• $1.9 million in costs to record the initial valuation and expense for the Put described at item (v) of the description of the settlement agreement and release with PSC, S.A. and related entities.

• $314,000 for costs associated with the change in the fair market value of the Put between February 8, 2008 and February 29, 2008.

• In accordance with the Company’s accounting policy, the Company recorded the re-classification of approximately $17.0 million from additional paid in capital to the liability account, common stock subject to put agreement, pursuant to item (v) of the description of the settlement agreement and release with PSC, S.A. and related entities.

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• The Company recorded an income tax benefit of approximately $1.7 million as a result of the $6.7 million recorded for settlement costs pursuant to item (i) and (iii) of the settlement agreement and release with PSC, S.A. and related entities. In the fiscal year 2007, when the Company accrued for the settlement cost, the Company was not able to estimate the tax benefit component of the settlement cost with an adequate level of certainty.

Income Taxes: A valuation allowance is recorded to reduce deferred tax assets to the amount that is more likely than not to be realized. As of February 29, 2008, the Company evaluated its deferred tax assets and liabilities and determined that, in accordance with SFAS No. 109, “Accounting for Income Taxes,” a valuation allowance is necessary for certain foreign deferred tax asset balances, primarily because of the existence of significant negative objective evidence, such as the fact that certain subsidiaries are in a cumulative loss position for the past three years, and the determination that certain net operating loss carryforward periods are not sufficient to realize the related deferred tax assets. The Company factored into its analysis the inherent risk of forecasting revenue and expenses over an extended period of time and also considered the potential risks associated with its business. As a result of this review, the Company concluded that a full valuation allowance was required with respect to deferred tax assets in several of its subsidiaries, as well as certain U.S. deferred tax assets.

The Company had federal and state tax net operating loss carry-forwards, or NOLs, at February 29, 2008 of approximately $45.8 million and $5.9 million, respectively. In calculating the tax provision, and assessing the likelihood that the Company will be able to utilize the deferred tax assets, the Company considered and weighed all of the evidence, both positive and negative, and both objective and subjective. The Company factored in the inherent risk of forecasting revenue and expenses over an extended period of time and considered the potential risks associated with its business. Because of the Company’s U.S. income from continuing operations and based on projections of future taxable income in the United States, the Company was able to determine that there was sufficient positive evidence to support the conclusion that it was more likely than not that the Company would be able to realize substantially all of its U.S. NOLs by generating taxable income during the carry-forward period. However, if the Company does not achieve its projections of future taxable income in the United States, the Company could be required to take a charge to earnings related to the recoverability of these deferred tax assets. Due to the deemed change of ownership (as defined in section 382 of the Internal Revenue Code) in October 2004, there are annual limitations in the amount of U.S. profits that may be offset by NOLs. The NOLs generated prior to the deemed ownership change date, as well as a significant portion of the losses generated as a result of the PSMT Philippines disposal in August 2005, are limited on an annual basis. The Company does not believe this will impact the recoverability of these NOLs. Due to their shorter recovery period and limitations applicable under section 383 of the Internal Revenue code regarding changes of ownership, the Company has maintained valuation allowances on U.S. foreign tax credits (generated before the date of the deemed ownership change) and all capital loss carry-forwards.

The Company is required to file federal and state tax returns in the United States and various other tax returns in foreign jurisdictions. The preparation of these tax returns requires the Company to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by the Company. The Company, in consultation with its tax advisors, bases its tax returns on interpretations that are believed to be reasonable under the circumstances. The tax returns, however, are subject to routine reviews by the various taxing authorities in the jurisdictions in which the Company files its returns. As part of these reviews, a taxing authority may disagree with respect to the interpretations the Company used to calculate its tax liability and therefore require the Company to pay additional taxes.

Beginning on September 1, 2007, the Company accrues an amount for its estimate of probable additional tax liability in accordance with the new provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN 48”). Under FIN 48, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than 50% likelihood of being sustained. As of February 29, 2008, the Company has classified uncertain income tax positions as $6.5 million in long-term income taxes payable, $0.1 million in long-term deferred tax liabilities and $0.4 million as current income taxes payable. The classification of this liability as current, as opposed to long-term, occurs when the Company expects to make a cash payment in the following 12 months.

Merchandise Inventory: The Company records its inventory at the lower of cost (average cost) or market. The Company provides for estimated inventory losses between physical inventory counts on the basis of a percentage of sales. The provision is adjusted monthly to reflect the trend of actual physical inventory count results, with physical inventories occurring primarily in the second and fourth fiscal quarters. In addition, the Company monitors slow-moving inventory to determine if provisions should be taken for expected markdowns below the carrying cost of certain inventory to expedite the sale of such merchandise.

Goodwill: Statement of Financial Accounting Standards No. 142, “Accounting for Goodwill and Other Intangible Assets,” requires that the Company test goodwill for impairment based on a comparison of fair values to the carrying values of its reporting units (subsidiaries). The determination of fair value for a reporting unit involves the use of assumptions and estimates such as the future performance of the operations of the reporting unit and discount rates used to determine the current value of expected future cash flows of the reporting unit. Any change in these assumptions and estimates, and other factors such as inflation rates, competition and general economic conditions, could cause the calculated fair value of the operating unit to decrease significantly.

34

Long-lived Assets: The Company periodically evaluates its long-lived assets for indicators of impairment. Management’s judgments are based on market and operational conditions at the time of the evaluation and can include management’s best estimate of future business activity. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair market value consistent with SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional impairment charges. The Company recorded an approximately $897,000 impairment charge in fiscal year 2007 to write-down the long-lived assets of the San Pedro Sula, Honduras location as a result of vacating the warehouse location and moving to another section of the city. The Company has not recorded any significant impairment charges during fiscal 2008.

Stock-Based Compensation: In the first quarter of fiscal year 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment.” The Company had adopted the fair value based method of recording stock options consistent with SFAS 123 for all employee stock options granted subsequent to fiscal year 2002. Under SFAS 123R, the Company is required to select a valuation technique or option-pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company is continuing to use the Black-Scholes model. The adoption of SFAS 123R, applying the “modified prospective method,” as elected by the Company, requires the Company to value stock options granted prior to its adoption of SFAS 123 under the fair value method and expense these amounts over the stock options remaining vesting period. A change in the model used or in the assumptions used in the Black-Scholes model could impact the expenses we record under SFAS 123R.

Warehouse Closure Costs: The Company provides estimates for warehouse club closing costs when it is appropriate to do so based on the applicable accounting principles. The Company has established lease obligation liabilities for its closed leased warehouse clubs. The lease obligations are based on the present value of the rent liabilities, reduced by the estimated income from the subleasing of these properties. The Company is continually evaluating the adequacy of its closed warehouse club lease obligations based upon the status of existing or potential subleasing activity and makes appropriate adjustments to the lease obligations as a result of these evaluations. Future circumstances may result in the Company’s actual future closing costs or the amount recognized upon sale or sublease of the property to differ materially from the original estimates.

Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (SFAS ) No. 160, “Non-controlling Interests in Consolidated Financial Statement- an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years beginning on or after December 15, 2008. Early adoption is prohibited. The Company is currently evaluating adoption of the standard. No impact on current consolidated financial statements will occur since the standard will impact future consolidated financial statements only.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (SFAS ) No. 141(R), “Business Combinations” (“SFAS 141(R)”). SFAS 141(R) replaces SFAS No. 141, “Business Combinations,” retaining the fundamental requirements of SFAS 141 and expanding the scope to apply the same method of accounting to all transactions or events in which one entity obtains control over one or more other businesses. This statement applies prospectively to business combinations or acquisitions after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply this standard before this date. The Company will adopt SFAS 141 as of September 1, 2009.

In June 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-11 (“EITF 06-11”), “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Award.” EITF 06-11 requires companies to recognize the tax benefits of dividends on unvested share-based payments in equity (increasing the Financial Accounting Standards (SFAS) No. 123(R) “APIC Pool” of excess tax benefits available to absorb tax deficiencies) and reclassify those tax benefits from additional paid-in capital to the income statement when the related award is forfeited (or is no longer expected to vest). The Company is required to adopt EITF 06-11 for dividends declared after September 1, 2008. The Company has opted for earlier application starting on September 1, 2007 for the income tax benefits of dividends on equity-classified employee share-based compensation that are declared in periods for which financial statements have not yet been issued. The adoption of EITF 06-11 did not have a material impact on the Company’s consolidated financial condition and operating results.

35

In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (SFAS ) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits companies to measure many financial instruments and certain other items at fair value at specific election dates. The Company will adopt SFAS 159 beginning September 1, 2008. The Company is currently evaluating the impact, if any, the interpretation will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” (“SFAS 157”) establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. SFAS 157 simplifies and codifies related guidance within GAAP. The Company adopted SFAS 157 on September 1, 2007. The adoption of SFAS 157 did not have a material impact on the Company’s consolidated financial condition and operating results.

In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (SAB) No. 108, Section N, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.” Section N provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatement for the purpose of a materiality assessment. The Company adopted SAB No. 108 on September 1, 2007 and no prior year misstatements were incurred; therefore, the adoption of SAB No. 108 did not have a material impact on the Company’s consolidated financial condition and operating results.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No.133” (“SFAS 161”). This Statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application eand also encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company will adopt SFAS 161 beginning December 1, 2008. The Company is currently evaluating the impact, if any, the interpretation will have on its consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company, primarily through majority or wholly owned subsidiaries, conducts operations primarily in Central America and the Caribbean, and as such is subject to both economic and political instabilities that cause volatility in foreign currency exchange rates or weak economic conditions. As of February 29, 2008, the Company had a total of 25 consolidated warehouse clubs operating in 11 foreign countries and one U.S. territory, 18 of which operate under currencies other than the U.S. dollar. For each of the quarters ended February 29, 2008 and February 28, 2007, approximately 79% of the Company’s net warehouse club sales were in foreign currencies. The Company may enter into additional foreign countries in the future or open additional locations in existing countries, which may increase the percentage of net warehouse club sales denominated in foreign currencies.

Despite the current weakness in the U.S. dollar, foreign currencies in most of the countries where the Company operates have historically devalued against the U.S. dollar and are expected to continue to devalue. For example, the Dominican Republic experienced a currency devaluation of approximately 81% between the end of the fiscal year ended August 31, 2002 and the end of the year ended August 31, 2003 and 13% (significantly higher at certain points of the year) between the year ended August 31, 2003 and the year ended August 31, 2004. There can be no assurance that the Company will not experience any other materially adverse effects on the Company’s business, financial condition, operating results, cash flow or liquidity, from currency devaluations in other countries, as a result of the economic and political risks of conducting an international merchandising business.

Foreign exchange transaction gains/(losses), which are included as a part of the costs of goods sold in the consolidated statement of operations, were approximately $809,000 and ($123,000) for the six months ended February 29, 2008 and 2007, respectively. Translation adjustment gains/(losses) from the Company’s share of non-U.S. denominated majority or wholly owned subsidiaries and investment in affiliate, resulting from the translation of the assets and liabilities of these companies into U.S. dollars were ($356,000) and $1.5 million for the six months and year ended February 29, 2008 and August 31, 2007, respectively.

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The following is a listing of each country or territory where the Company currently operates and their respective currencies, as of February 29, 2008:

Country/Territory	Number of Warehouse Clubs In Operation	Currency
Panama	4	U.S. Dollar
Costa Rica	4	Costa Rican Colon
Guatemala	3	Guatemalan Quetzal
Trinidad	3	Trinidad Dollar
Dominican Republic	2	Dominican Republic Peso
El Salvador	2	U.S. Dollar
Honduras	2	Honduran Lempira
Aruba	1	Aruba Florin
Barbados	1	Barbados Dollar
U.S. Virgin Islands	1	U.S. Dollar
Jamaica	1	Jamaican Dollar
Nicaragua	1	Nicaragua Cordoba Oro
Totals(1)	25

⁽¹⁾ The Company does not anticipate any warehouse club openings during the fiscal year 2008.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decision regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the quarter covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our internal controls over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company and its subsidiaries are subject to legal proceedings, claims and litigation arising in the ordinary course of business, the outcome of which, in the opinion of management, would not have a material adverse effect on the Company. The Company evaluates such matters on a case by case basis, and vigorously contests any such legal proceedings or claims which the Company believes are without merit.

The SEC issued a formal order of private investigation on January 8, 2004 to investigate the circumstances surrounding a financial restatement associated with fiscal year 2002 and the first three quarters of fiscal year 2003. The SEC issued subpoenas to the Company for the production of documents and took testimony, pursuant to subpoena, from several of the Company’s present and former employees. On February 26, 2008 the Company was advised by the Securities and Exchange Committee that it may consider the investigation to be closed.

On February 11, 2008 the Company announced that it had entered into a Settlement Agreement and Release with PSC, S.A. (“PSC”), Tecnicard, Inc. and Banco de la Produccion, and their affiliates (collectively “PSC Parties”), which resolves the previously disclosed disputes that had been pending between the Company and the PSC Parties. The terms of the Settlement Agreement and Release include: (i) a dismissal of all pending litigation and a mutual release of all claims; (ii) the Company’s acquisition of PSC’s 49% interest in PSMT Nicaragua (BVI), Inc. resulting in the Company being the sole owner of the PriceSmart Nicaragua business; (iii) termination of other agreements between the Company and the PSC Parties resulting in, among other things, banks affiliated with the PSC parties vacating the PriceSmart warehouses by mid-April, 2008; (iv) certain real estate conveyances between the parties relating to properties adjacent to the PriceSmart warehouse clubs in Managua, Nicaragua and Zapote, San Jose, Costa Rica, including the Company’s acquisition from PSC of a land parcel at the Zapote site and the Company’s conveyance to PSC of two land parcels at the Managua site; and (v) subject to PSC’s commercially reasonable efforts to sell, during a 60 day period commencing February 8, 2008, 679,500 shares of the Company’s common stock held by PSC at a price at or above $25 per share, the Company and PSC will enter into a Put Agreement covering any of the 679,500 shares that PSC owns at the end of such period. The Put Agreement, in turn, will require PSC to use commercially reasonable efforts to sell the shares subject to the Put Agreement during a period of 60 days from the date of the Put Agreement. At the end of such period, PSC may require the Company to purchase at $25.00 per share any of those shares which may remain unsold at the conclusion of that period. Payments made by the Company pursuant to this Agreement for items (i), (ii), (iii), and (iv) totaled $17.85 million from available operating funds. Edgar A. Zurcher, a director of the Company since November 2000, is President and a director of PSC, S.A. As required by the terms of the Settlement Agreement and Release, Mr. Zurcher resigned from the Company’s board of directors on February 8, 2008.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended August 31, 2007.

Available Information

PriceSmart, Inc.’s website or internet address is www.pricesmart.com. On this website the Company makes available, free of charge, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after electronically filing such material with or furnishing it to the SEC. The Company’s SEC reports can be accessed through the investor relations section of its website under “SEC Filings.” All of the Company’s filings with the SEC may also be obtained at the SEC’s Public Reference Room at Room 1580, 100 F Street NE, Washington, DC 20549. For information regarding the operation of the SEC’s Public Reference Room, please contact the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company’s Annual Meeting of Stockholders was held on February 26, 2008, at the Company’s headquarters, 9740 Scranton Road, San Diego, CA, 92121. Stockholders of record at the close of business on January 7, 2008, were entitled to notice of and to vote in person or by proxy at the Annual Meeting. As of the record date there were 29,347,774 shares outstanding and entitled to vote. The matter presented for vote received the required votes for approval and had the following total votes for, against and withheld.

1. To elect directors for the ensuing year, to serve until the next Annual Meeting of Stockholders and until their successors are elected and qualified:

	Votes For	Votes Against or Withheld
Gonzalo Barrutieta(1)	24,816,858	—
Murray L. Galinson	24,499,854	418,292
Katherine L. Hensley	24,816,720	101,426
Leon C. Janks	24,816,858	101,288
Lawrence B. Krause	24,816,727	101,419
Jose Luis Laparte	24,454,069	464,077
Jack McGrory	24,454,080	464,066
Robert E. Price	20,107,269	4,810,877
Keene Wolcott	24,494,267	423,879

(1) Pursuant to the discretionary authority provided in the Proxy Statement mailed on January 22, 2008, the proxy holders voted the shares represented by the proxies for Gonzalo Barrutieta, the substitute nominee designated by the Board of Directors to replace one of the Board’s nominees, Edgar Zurcher, who became unavailable to serve as a Director.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(a) Exhibits:

3.1(1)	Amended and Restated Certificate of Incorporation of the Company.
3.2(2)	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company.
3.3(3)	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the Company.
3.4(1)	Amended and Restated Bylaws of the Company.
10.1*	Seventh Amendment to Employment Agreement between the Company and William Naylon, dated January 1, 2008.
10.2*	Eighth Amendment to Employment Agreement between the Company and John Hildebrandt, dated January 1, 2008.
10.3*	Eighth Amendment to Employment Agreement between the Company and Jose Louis Laparte, dated January 1, 2008.
10.4*	Tenth Amendment to Employment Agreement between the Company and Edward Oats, dated January 1, 2008.
10.5*	Eleventh Amendment to Employment Agreement between the Company and Brud Drachman, dated January 1, 2008.
10.6*	Twelfth Amendment to Employment Agreement between the Company and Thomas Martin, dated January 1, 2008.
10.7*	Nineteenth Amendment to Employment Agreement between the Company and Robert M. Gans, dated January 1, 2008.
10.8	International Loan Swap Agreement with Citibank, N.A. dated as of February 13, 2008.
10.9	Settlement Agreement and Release entered into as of February 8, 2008 by and among PriceSmart, Inc. and PSMT entities (collectively known as PriceSmart) and PSC, S.A. and PSC entities (collectively known as “PSC Parties”).
10.10	Lease Agreement between Flagler Development Company, LLC and PriceSmart, Inc.
10.11	Promissory Note entered into between PSMT Barbados and Citibank, N.A. dated November 15, 2007.
10.12	Loan Agreement entered into between PSMT Barbados and Citicorp Merchant Bank Limited dated November 15, 2007.
31.1*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Identifies management contract or compensatory plan or arrangement.

** These certifications are being furnished solely to accompany this Report pursuant to 18 U.S.C. 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to be incorporated by reference into any filing of PriceSmart, Inc., whether made before or after the date hereof, regardless of any general incorporation language in such filing.

(1) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended August 31, 1997 filed with the Commission on November 26, 1997.

(2) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2004 filed with the Commission on April 14, 2004.

(3) Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended August 31, 2004 filed with the Commission on November 24, 2004.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		PRICESMART, INC.
Date:	April 9, 2008	By:	/s/ ROBERT E. PRICE
			Robert E. Price Chief Executive Officer (Authorized Officer)
Date:	April 9, 2008	By:	/s/ JOHN M. HEFFNER
			John M. Heffner Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)

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EX-10.1

Exhibit 10.1

SEVENTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Seventh Amendment to Employment Agreement is made and entered into as of January 1, 2008 by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and William Naylon (“Executive”).

Recitals

A) On January 16, 2002 an Employment Agreement (“Agreement”) was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on six prior occasions;

C) Employer and Executive now desire to further amend the Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $247,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $262,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. Section 3.1 of the Agreement which provides:

3.1 Term. The term of Executive’s employment hereunder shall commence on January 16, 2002 and shall continue until January 31, 2008 unless sooner terminated or extended as hereinafter provided.

is hereby amended, effective January 1, 2008, to provide as follows:

3.1 Term. The term of Executive’s employment hereunder shall commence on January 16, 2002 and shall continue until January 31, 2009 unless sooner terminated or extended as hereinafter provided.

3. All other terms of the Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
William Naylon	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.2

Exhibit 10.2

EIGHTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Eighth Amendment to Employment Agreement is made and entered into as of January 1, 2008, by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and John Hildebrandt (“Executive”).

Recitals

A) On June 1, 2001 an Employment Agreement was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on seven prior occasions;

C) Employer and Executive now desire to further amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $212,200 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $218,600 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
John Hildebrandt	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.3

Exhibit 10.3

EIGHTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Eighth Amendment to Employment Agreement is made and entered into as of January 1, 2008, by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and Jose Luis Laparte (“Executive”).

Recitals

A) On June 3, 2004 an Employment Agreement was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on seven prior occasions;

C) Employer and Executive now desire to amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which currently provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $382,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $400,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
Jose Luis Laparte	By:
	Name:	Robert M. Gans
	Its:	Executive Vice President

EX-10.4

Exhibit 10.4

TENTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Tenth Amendment to Employment Agreement is made and entered into as of January 1, 2008, by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and Edward Oats (“Executive”).

Recitals

A) On January 11, 2000 an Employment Agreement was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on nine prior occasions;

C) Employer and Executive now desire to further amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which, as amended, provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $188,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $193,700 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
Edward Oats	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.5

Exhibit 10.5

ELEVENTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Eleventh Amendment to Employment Agreement is made and entered into as of January 1, 2008 by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and Brud Drachman (“Executive”).

Recitals

A) On January 11, 2000 an Employment Agreement was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on ten prior occasions;

C) Employer and Executive now desire to further amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which, as amended, provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $188,000 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $193,700 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
Brud Drachman	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.6

Exhibit 10.6

TWELFTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Twelfth Amendment to Employment Agreement is made and entered into as of January 1, 2008, by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and Thomas Martin (“Executive”).

Recitals

A) On March 31, 1998 an Employment Agreement was made and entered into by and between Employer and Executive.

B) Said Employment Agreement has been amended on eleven prior occasions;

C) Employer and Executive now desire to amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $228,200 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $241,892 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
Thomas Martin	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.7

Exhibit 10.7

NINETEENTH AMENDMENT TO EMPLOYMENT AGREEMENT

This Nineteenth Amendment to Employment Agreement is made and entered into as of January 1, 2008, by and between PriceSmart, Inc., a Delaware Corporation (“Employer”) and Robert M. Gans (“Executive”).

Recitals

A) On September 20, 1994 an Employment Agreement was made and entered into by and between Executive and Price Enterprises, Inc.

B) Said Employment Agreement has been assigned to Employer and amended on eighteen prior occasions;

C) Employer and Executive now desire to further amend the Employment Agreement, as set forth hereinbelow:

Agreement

1. Section 2.1 of the Agreement which provides:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $265,300 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

is hereby amended, effective January 1, 2008, to provide as follows:

2.1 Salary. For Executive’s services hereunder, Employer shall pay as base salary to Executive the amount of $273,300 during each year of the Employment Term. Said salary shall be payable in equal installments in conformity with Employer’s normal payroll period. Executive shall receive such salary increases, if any, as Employer, in its sole discretion, shall determine.

2. All other terms of the Employment Agreement, as amended, shall remain unaltered and fully effective.

Executed in San Diego, California, as of the date first written above.

EXECUTIVE	EMPLOYER PRICESMART, INC.
Robert M. Gans	By:
	Name:	Jose Luis Laparte
	Its:	President

EX-10.8

Exhibit 10.8

ISDA®

International Swap Dealers Association, Inc.

2002 MASTER AGREEMENT

Dated as of February 13, 2008

CITIBANK, N.A.		PSMT (BARBADOS) INC.
	and

have entered and/or anticipate entering into one or more transactions (each a “Transaction) that are or will be governed by this 2002 Master Agreement, which includes the schedule (the “Schedule), and the documents and other confirming evidence (each a “Confirmation) exchanged between the parties or otherwise effective for the purpose of confirming or evidencing those Transactions. This 2002 Master Agreement and the Schedule are together referred to as this “Master Agreement.

Accordingly, the parties agree as follows:-

Interpretation

(a) Definitions. The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.

(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.

(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement), and the parties would not otherwise enter into any Transactions.

2. Obligations

(a) General Conditions.

(i) Each party will make each payment or delivery specified in each Confirmation to be made by it, subject to the other provisions of this Agreement.

(ii) Payments under this Agreement will be made on the due date for value on that date in the place of the account specified in the relevant Confirmation or otherwise pursuant to this Agreement, in freely transferable funds and in the manner customary for payments in the required currency. Where settlement is by delivery (that is, other than by payment), such delivery will be made for receipt on the due date in the manner customary for the relevant obligation unless otherwise specified in the relevant Confirmation or elsewhere in this Agreement.

Copyright © 2002 by International Swaps and Derivatives Association, Inc.

compensation in respect of that obligation or deferred obligation, as the case may be, pursuant to Section 9(h)(ii)(1) or (2), as appropriate. The fair market value of any obligation referred to in clause (b) above will be determined as of the originally scheduled date for delivery, in good faith and using commercially reasonable procedures, by the party obliged to make the determination under Section 6(e) or, if each party is so obliged, it will be the average of the Termination Currency Equivalents of the fair market values so determined by both parties.

“Waiting Period” means:

(a) in respect of an event or circumstance under Section 5(b)(i), other than in the case of Section 5(b)(i)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of three Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance; and

(b) in respect of an event or circumstance under Section 5(b)(ii), other than in the case of Section 5(b)(ii)(2) where the relevant payment, delivery or compliance is actually required on the relevant day (in which case no Waiting Period will apply), a period of eight Local Business Days (or days that would have been Local Business Days but for the occurrence of that event or circumstance) following the occurrence of that event or circumstance.

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

CITIBANK, N.A.	PSMT (BARBADOS) INC.
By:	By:	/s/ Atul Patel

Print Name:	Print Name:	Atul Patel
Title:	Title:	TREASURER

28...ISDA® 2002

Execution Version

Reference No. CB13-426

SCHEDULE

to the

ISDA 2002 Master Agreement

dated as of February 13, 2008,

between

CITIBANK, N.A.,

a national banking association organized

under the laws of the United States

(“Party A”)

and

PSMT (BARBADOS) INC.,

a corporation organized and existing

under the laws of Barbados

(“Party B”)

Part 1

Termination Provisions

In this Agreement:

(a) “Specified Entity” means for the purpose of Section 5(a)(v) of this Agreement, (i) in relation to Party A, Citigroup Global Markets Limited, Citigroup Global Markets Inc., Citigroup Forex Inc., Citigroup Global Markets Commercial Corp., Citicorp Securities Services, Inc., Citigroup Global Markets Deutschland AG & Co. KGaA, Citigroup Energy Inc., Citibank Japan Ltd., and Citigroup Financial Products Inc. (individually a “Section 5(a)(v) Affiliate”) and (ii) in relation to Party B, any Affiliate of Party B.

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(b) “Specified Transaction” will have the meaning specified in Section 14 of this Agreement. For purposes of clause (c) of such definition, Specified Transaction includes any securities options, margin loans, short sales, and any other similar transaction now existing or hereafter entered into between Party A (or any Section 5(a)(v) Affiliate) and Party B (or any Affiliate of Party B).

(c) The “Cross Default” provisions of Section 5(a)(vi) will apply to Party A and will apply to Party B.

For purposes of Section 5(a)(vi), the following provisions apply:

“Specified Indebtedness shall have the meaning set forth in Section 14 of this Agreement, provided, however, that Specified Indebtedness shall not include deposits received in the course of a party’s ordinary banking business.

“Threshold Amount” means,

(i) with respect to Party A, 2% of the stockholders’ equity of Party A; and

(ii) with respect to Party B, USD$2,000,000.00

including the U.S. Dollar equivalent on the date of any default, event of default or other similar condition or event of any obligation stated in any other currency.

For purposes of the above, stockholders’ equity shall be determined by reference to the relevant party’s most recent consolidated (quarterly, in the case of a U.S. incorporated party) balance sheet and shall include, in the case of a U.S. incorporated party, legal capital, paid-in capital, retained earnings and cumulative translation adjustments. Such balance sheet shall be prepared in accordance with accounting principles that are generally accepted in such party’s country of organization.

(d) The “Credit Event Upon Merger” provisions of Section 5(b)(v) of this Agreement will apply to Party A and will apply to Party B.

(e) The “Automatic Early Termination” provisions of Section 6(a) will not apply to Party A and will not apply to Party B; provided, however, that with respect to a party, where the Event of Default specified in Section 5(a)(vii)(1), (3), (4), (5), (6) or to the extent analogous thereto, (8) is governed by a system of law which does not permit termination to take place after the occurrence of the relevant Event of Default, then the Automatic Early Termination provisions of Section 6(a) will apply to such party.

(f) “Termination Currency” will have the meaning specified in Section 14 of this Agreement.

(g) “Additional Termination Event” will not apply.

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Part 2

Tax Representations

(a) Payer Representations. For the purpose of Section 3(e) of this Agreement, Party A will make the following representation and Party B will make the following representation:

It is not required by any applicable law, as modified by the practice of any relevant governmental revenue authority, of any Relevant Jurisdiction to make any deduction or withholding for or on account of any Tax from any payment (other than interest under Section 9(h) of this Agreement) to be made by it to the other party under this Agreement. In making this representation, it may rely on (i) the accuracy of any representations made by the other party pursuant to Section 3(f) of this Agreement, (ii) the satisfaction of the agreement contained in Section 4(a)(i) or 4(a)(iii) of this Agreement and the accuracy and effectiveness of any document provided by the other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of the other party contained in Section 4(d) of this Agreement, except that it will not be a breach of this representation where reliance is placed on clause (ii) above and the other party does not deliver a form or documents under Section 4(a)(iii) by reason of material prejudice to its legal or commercial position.

(b) Payee Representations. For the purpose of Section 3(f) of the Agreement, Party A and Party B make the representations specified below, if any:

The following representation will apply to Party A:

It is a national banking association organized under the laws of the United States and its U.S. taxpayer identification number is 13-5266470. It is “exempt” within the meaning of Treasury Regulation sections 1.6041-3(p) and 1.6049-4(c) from information reporting on Form 1099 and backup withholding.

The following representation will apply to Party B:

Each payment received or to be received by it in connection with this Agreement will not be effectively connected with the conduct of a trade or business in the United States.

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Part 3

Agreement to Deliver Documents

For the purpose of Section 4(a) of this Agreement:

I. Tax forms, documents or certificates to be delivered are:

Party required to deliver document	Form/Document/ Certificate	Date by which to be delivered
(i) Party B	As required under Section 4(a)(i) of the Agreement, IRS Form W-9, IRS Form W-8BEN, IRS Form W-8ECI, IRS Form W-8EXP and/or IRS Form W-8IMY, whichever is relevant.	Promptly upon execution of this Agreement; and promptly upon learning that any form previously provided by Party B has become obsolete or incorrect.

II. Other documents to be delivered are:

Party required to deliver document	Form/Document/Certificate	Date by which to be delivered	Covered by Section 3(d)
(a) Party A and Party B	Evidence reasonably satisfactory to the other party of the (i) authority of such party to enter into the Agreement and any Transactions and (ii) the authority and genuine signature of the individual signing the Agreement on behalf of such party to execute the same.	As soon as practicable after execution of this Agreement and, if requested by the other party, as soon as practicable after execution of any Confirmation of any other Transaction.	Yes

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(b) Party A	The party’s Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices — FFIEC 031	Upon request provided, however, that such financials are “deemed” to be delivered hereunder on the date the same shall be posted on the Citibank.com website (www.citibank.corn)	Yes
(c) Party B	The party’s annual report containing audited consolidated financial statements prepared in accordance with accounting principles that are generally accepted in such party’s country of organization and certified by independent certified public accountants for each fiscal year.	As soon as available and in any event within 120 days (or as soon as practicable after becoming publicly available) after the end of each of its fiscal years, provided, however this delivery obligation will only apply during the term of any Transaction under this Agreement.	Yes
(d) Party B	The party’s unaudited consolidated financial statements, the consolidated balance sheet and related statements of income for each fiscal quarter prepared in accordance with accounting principles that are generally accepted in Party B’s country of organization.	As soon as available and in any event within 60 days (or as soon as practicable after becoming publicly available) after the end of each of its fiscal quarters, provided, however this delivery obligation will only apply during the term of any Transaction under this Agreement.	Yes

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(e) Party B	A letter from the Process Agent in the City of New York designated pursuant to paragraph (b) of Part 4 of this Schedule in which such Process Agent agrees to act as agent for service of process with respect to this Agreement and each Transaction and to forward promptly to Party B all process received by such Process Agent.	As soon as practicable after execution of this Agreement and the first Confirmation of a Transaction.	Yes
(f) Party B	Such other documents as Party A may reasonably request in connection with any Transaction.	Promptly upon request by Party A.	Yes

Part 4

Miscellaneous

(a) Addresses for Notices. For the purpose of Section 12(a) of this Agreement:

Address for notices or communications to Party A:

With respect to a particular Transaction, all notices or communications to Party A shall be sent to the address or facsimile number indicated in the Confirmation of that Transaction.

In addition, in the case of notices or communications relating to Section 5, 6, 11 or 13 of this Agreement, a copy of any such notice or communication shall be addressed to the attention of:

Address:	Capital Markets Document Unit 388 Greenwich Street New York, New York 10013
Attention:	Director Derivatives Operations
Facsimile No.:	212 657 3992

6

(For all purposes)

In addition, in the case of notices or communications relating to Section 5, 6, 11 or 13 of this Agreement, a second copy of any such notice or communication shall be addressed to the attention of Party A’s legal department as follows:

Address:	Legal Department 388 Greenwich Street 17th Floor New York, New York 10013
Attention:	Senior Deputy General Counsel, Citi Markets and Banking
Facsimile No.:	212 816 5550

Address for notices or communications to Party B:

Address:	9740 Scranton Road, Suite # 125, San Diego, CA 92121
Attention:	Atul C. Patel (Senior Vice President, Treasurer)
Facsimile No:	858-404-8838 or 858-404-8858

(b) Process Agent. For the purpose of Section 13(c) of this Agreement:

Party B appoints as its Process Agent: CT Corporation

(c) Offices. The provisions of Section 10(a) will apply to this Agreement.

(d) Multibranch Party. For the purpose of Section 10(b) of this Agreement:

Party A is a Multibranch Party and may enter into a Transaction through any of the following offices: New York, London, Singapore and Sydney.

Party B is not a Multibranch Party

(e) Calculation Agent. The Calculation Agent will be Party A unless otherwise specified in a Confirmation in reference to the relevant Transaction.

(f) Credit Support Document. None.

(g) Credit Support Provider. Not Applicable.

7

(h) Governing Law. This Agreement will be governed by and construed inaccordance with the laws of the State of New York (without reference to choice of law doctrine)

(i) Jurisdiction. Section 13(b)(i) of the Agreement is hereby amended by deleting in line 2 of paragraph 2 the word “non-” and by deleting paragraph (iii) thereof. The following shall be added at the end of Section 13(b): “Nothing in this provision shall prohibit a party from bringing an action to enforce a money judgment in any other jurisdiction.”

(j) “Affiliate” will have the meaning specified in Section 14 of this Agreement, provided, however that except as set forth in Part 1(g)(ii) in relation to Party B “Affiliate” shall be not applicable.

(k) Absence of Litigation. For the purpose of Section 3(c): “Specified Entity” means in relation to Party A, any Affiliate of Party A, and in relation to Party B, not applicable.

(1) No Agency. The provisions of Section 3(g) will apply to this Agreement.

(m) Additional Representation will apply. For the purpose of Section 3 of this Agreement, the following will constitute an Additional Representation:

“(h) Relationship Between Parties. Each party will be deemed to represent to the other party on the date on which it enters into a Transaction that (absent a written agreement between the parties that expressly imposes affirmative obligations to the contrary for that Transaction):

(1) No Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that Transaction and as to whether that Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that Transaction; it being understood that information and explanations related to the terms and conditions of a Transaction shall not be considered investment advice or a recommendation to enter into that Transaction. It has not received from the other party any assurance or guarantee as to the expected results of that Transaction.

(2) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of that Transaction. It is also capable of assuming, and assumes, the financial and other risks of that Transaction.

8

(3) Status of Parties. The other party is not acting as a fiduciary for or an advisor to it in respect of that Transaction.

(i) Eligible Contract Participant Representation. (a) It is an “eligible contract participant” within the meaning of Section 1(a)(12) of the Commodity Exchange Act, as amended (the “CEA”), (b) this Agreement and each Transaction is subject to individual negotiation by each party, and (c) neither this Agreement nor any Transaction will be executed or traded on a “trading facility” within the meaning of Section 1a(33) of the CEA.

(j) Financial Institution. Party A represents that it is a “financial institution” as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991 or Regulation EE promulgated by the Federal Reserve Board thereunder.

(k) ERISA. The assets that are used in connection with the execution, delivery and performance of this Agreement and the Transactions entered into pursuant hereto are not the assets of an employee benefit or other plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan described in Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), an entity whose underlying assets include “plan assets” by reason of Department of Labor regulation section 2510.3-101, or a governmental plan that is subject to any federal, state, or local law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.”

(n) “Netting of Payments” Either party may notify the other in writing, not less than one Local Business Day in advance of one or more Scheduled Payment Dates, that with regard to payments due on that date, Multiple Transaction Payment Netting will apply. Except to the extent that such advance written notice shall have been given, subparagraph Multiple Transaction Payment Netting will not apply for purposes of Section 2(c) of this Agreement. Provided however, that for each of the following groups of Transactions, Party A and Party B hereby elect to net payments of all amounts payable on the same day in the same currency (and through the same Office of Party A) by specifying that Section 2(c) of the Agreement will apply with respect to each of the following groups of Transactions:

(i) FX Transactions entered into by the parties; and

(ii) Currency Option Transactions entered into by the parties.

The starting date for the election commences upon entering the first Transaction under the Agreement with respect to either of the above groups of Transactions.

9

Part 5

Other Provisions

(a) Waiver of Right to Trial by Jury. Each party hereby irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to this Agreement.

(b) Severability. Except as otherwise provided in Sections 5(b)(i) or 5(b)(ii) in the event that any one or more of the provisions contained in this Agreement should be held invalid, illegal, or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor, in good faith negotiations, to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

(c) Netting. In the event that any Terminated Transaction cannot be aggregated and netted against all other Terminated Transactions under Section 6(e) of the Agreement, such excluded Terminated Transactions shall be aggregated and netted amongst themselves to the fullest extent permitted by law.

(d) Confirmation Procedures. For each Transaction that Party A and Party B enter hereunder, Party A shall promptly send to Party B a Confirmation setting forth the terms of such Transaction. Party B shall execute and return the Confirmation to Party A or request correction of any error within five Business Days of receipt. Failure of Party B to respond within such period shall not affect the validity or enforceability of such Transaction and shall be deemed to be an affirmation and acceptance of such terms.

(e) Escrow Payments. If by reason of the time difference between the cities in which payments are to be made, it is not possible for simultaneous payments to be made on any date on which both parties are required to make payments hereunder, either party may at its option and in its sole discretion notify the other party that payments on that date are to be made in escrow. In this case the deposit of the payment due earlier on that date shall be made by 2:00 p.m. (local time at the place for the earlier payment) on that date with an escrow agent selected by the party giving the notice, accompanied by irrevocable payment instructions (i) to release the deposited payment to the intended recipient upon receipt by the escrow agent of the required deposit of the corresponding payment from the other party on the same date accompanied by the irrevocable payment instructions to the same effect or (ii) if the required deposit of the corresponding payment is not made on that same date, to return the payment deposited to the party that paid it into escrow. The party that elects to have payments made in escrow shall pay the costs of the escrow arrangements and shall cause those arrangements to provide that the intended recipient of the payment due to be deposited first shall be entitled to interest on that deposited payment for each day in the period of its deposit at the rate offered by the escrow agent for that day for overnight deposits in the relevant currency in the office where it holds that deposited payment (at 11:00 am, local time on that day) if that payment is not released by 5:00 p.m. on the date it is deposited for any reason other than the intended recipients’ failure to make the escrow deposit it is required to make hereunder in a timely fashion.

10

(f) Recording of Conversations. Each party hereto consents to the recording of its telephone conversations relating to this Agreement or any potential Transaction. To the extent that one party records telephone conversations (the “Recording Party”) and the other party does not (the “Non-Recording Party”), the Recording Party shall, in the event of any dispute, make a complete and unedited copy of such party’s tape of the entire day’s conversations with the Non-Recording Party’s personnel available to the Non-Recording Party. The Recording Party’s tapes may be used by either party in any forum in which a dispute is sought to be resolved and the Recording Party will retain tapes for a consistent period of time in accordance with the Recording Party’s policy unless one party notifies the other that a particular transaction is under review and warrants further retention.

(g) Limitation of Liability. No party shall be required to pay or be liable to the other party for any consequential, indirect or punitive damages, opportunity costs or lost profits.

(h) 2002 Master Agreement Protocol. The parties agree that the definitions and provisions contained in Annexes 1 to 16 and Section 6 of the 2002 Master Agreement Protocol published by the International Swaps and Derivatives Association, Inc. on 15th July, 2003 are incorporated into and apply to this Agreement.

PART 6

FX Transactions and Currency Option Transactions

(a) The 1998 FX and Currency Option Definitions.

(1) The provisions of the 1998 FX and Currency Option Definitions as published by ISDA, Emerging Markets Traders Association and The Foreign Exchange Committee (the “FX Definitions”), are hereby incorporated herein in its entirety and shall apply to FX Transactions and Currency Option Transactions entered into by the Offices of the parties specified in Part 4 of this Schedule. FX Transactions and Currency Option Transactions are each deemed to be “Transactions” pursuant to the ISDA Master Agreement.

(2) Unless otherwise agreed to by the parties, all FX and Currency Option Transactions entered into between the parties prior to the date of this Agreement shall be deemed to be Transactions for purposes of this Agreement. The confirmation of all FX and Currency Option Transactions via any electronic media, telex, facsimile or writing shall constitute a “Confirmation” as referred to in this Agreement even where not so specified in the Confirmation. Such Confirmations will supplement, form a part of, and be subject to this Agreement.

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(b) Article 3 General Terms Relating to Currency Option Transactions.

The FX Definitions are hereby amended by adding the following new Section 3.9:

Section 3.9 Discharge and Termination of Options. Unless otherwise agreed, any Call or Put written by a party will automatically be terminated and discharged, in whole or in part, as applicable, against a Call or Put, respectively, written by the other party, such termination and discharge to occur automatically upon the payment in full of the last Premium payable in respect of such Currency Option Transaction; provided that such termination and discharge may only occur in respect of Currency Option Transactions with the same material terms, including but not limited to:

(a) each being with respect to the same Put and the same Call (i.e., a Put may only be discharged against another Put and not against a Call);

(b) each having the same Expiration Date and Expiration Time;

(c) each being of the same style (i.e., either both being of American or European Style);

(d) each having the same Strike Price;

(e) neither of which shall have been exercised;

(f) each of which has been entered into by the same pair of Offices of the parties; and

(g) each having the same procedures for exercise;

and, upon the occurrence of such termination and discharge, neither party shall have any further obligation to the other party in respect of the relevant Currency Option Transactions terminated and discharged. In the case of a partial termination and discharge (i.e., where the relevant Currency Option Transactions are for different amounts of the Currency Pair), the remaining portion of the Currency Option Transaction shall continue to be a Currency Option Transaction for all purposes hereunder.

12

IN WITNESS WHEREOF the parties have executed this document on the respective dates specified below with effect from the date specified on the first page of this document.

CITIBANK, N.A.	PSMT (BARBADOS) INC.
By:	By:	/s/ Atul Patel

Print Name: Print Name: Atul Patel

Title: Title: TREASURER

Date: Date: 3/13/08

13

EX-10.9

Exhibit 10.9

SETTLEMENT AGREEMENT AND RELEASE

THIS SETTLEMENT AGREEMENT AND RELEASE, made and entered into as of February 8, 2008 (the “Effective Date”), is by and among PriceSmart, Inc., PSMT Nicaragua, S.A., Inmobiliaria PSMT Nicaragua, S.A., PSMT Nicaragua (BVI), Inc., Pricsmarlandco S.A., PSMT Caribe, Inc., PriceSmart El Salvador, S.A. de C.V., Inmobiliaria PriceSmart El Salvador, S.A. de C.V., Prismar de Costa Rica, S.A., Consultant and Development Services, S.A., PriceSmart Honduras, S.A. de C.V., PriceSmart Dominicana, S.A., PriceSmart Panama, S.A., PriceSmart (Guatemala), S.A. and Ventures Services, Inc. (collectively, “PriceSmart” or the “PriceSmart Parties”) and PSC, S.A., Tecnicard, Inc., Banco de la Producción S.A., Banca Promerica S.A. [Costa Rica], Banco Promerica S.A. [Honduras], Banco Promerica S.A. [El Salvador], Banco de Ahorro y Credito Promerica C. Por A., formerly known as Financiera Promerica, S.A., St. Georges Bank & Company, Inc., Parque Industrial y Servicios de Coyol, S.A., Caribe Hospitality, S.A., Portafolio Inmobiliario S.A., Desarollos Comerciales Centroamericanaos PPF, S.A. (“DCC”), Global Real Estate Holdings, Inc., formerly known as Promerica Property Fund, Inc., Inmobiliaria El Retiro S.A., Promerica, S.A., Procard de El Salvador, S.A. de C.V., Captial & Advice, Inc., formerly known as Promerica Capital Markets, Procard De Costa Rica, S.A., and PremiaCard de Guatemala, S.A. (collectively, “PSC” or the “PSC Parties”).

RECITALS

WHEREAS, certain of the PriceSmart Parties and PSC Parties are adverse to each other in litigation and dispute resolution proceedings in the Arbitrations (as defined below), the Preliminary Injunction Action (as defined below), the Appeal (as defined below), and the Panama Proceedings (as defined below); and

WHEREAS, certain of the PriceSmart Parties and PSC Parties are or have been parties to a number of agreements and maintain joint equity interests in certain property; and

WHEREAS, PriceSmart and PSC now desire to enter into certain transactions with regard to property interests, to provide for termination of all of their relationships and agreements except as expressly set forth herein, and to resolve their differences and settle and compromise any and all claims of whatsoever kind or nature that may exist between them, all in accordance with and subject to the terms and conditions set forth below;

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

The following definitions apply to the stated terms as used in this Settlement Agreement and Release.

Section 1.1. “Agreement” means this Settlement Agreement and Release and all Exhibits expressly referenced herein, including but not limited to the Escrow Agreement and the Put Agreement.

Section 1.2. “Party” or “Parties” means PriceSmart and PSC as those terms are defined above.

Section 1.3. “Arbitrations” means the arbitration styled as In re Consolidated Arbitrations of PriceSmart, Inc. v. PSC, S.A., Tecnicard, Inc., and Banco de la Producción S.A., ICDR Case Nos. 50 180 T 00162 07 and 50 180 T 00251 07; and the arbitration styled PSMT Nicaragua, S.A. v. Banco de la Producción S.A., ICDR Case No. 50 115 T 00293 07.

Section 1.4. “Preliminary Injunction Action” means the case styled as PSC, S.A., Tecnicard, Inc., and Banco de la Producción S.A. v. PriceSmart, Inc., Case No. 07- 21383-COOKE/BROWN (S.D. Fla. 2007).

Section 1.5. “Appeal” means the appeal styled as PSC, S.A., Tecnicard, Inc., and Banco de la Producción S.A. v. PriceSmart, Inc., Case No. 07-14920-G (11th Cir. 2007).

Section 1.6. “Credit Card Agreements” means the Agreement to Issue Dual Purpose PriceSmart Visa Cards entered into by Tecnicard, Inc. and PriceSmart, Inc., effective on May 1, 2006, as modified by the First and Second Amendments (the “Master Credit Card Agreement”), the Revised and Restated Agreement to Issue Co-Branded PriceSmart/Banpro Credit Cards in Nicaragua, entered into by PriceSmart, Inc., Tecnicard, Inc., Banco de la Producción, S.A., and PSMT Nicaragua, S.A., effective on May 2, 2003 (the “Banpro Agreement”), and any other agreement between PSC and PriceSmart and their respective affiliates relating to credit cards.

Section 1.7. “Smart Points” has the meaning set forth in the Credit Card Agreements.

Section 1.8. “Termination Procedures” means Sections 6th (E), 13th (C) of the Master Credit Card Agreement and Paragraph 11th B(2) of the Banpro Agreement.

Section 1.9. “SPA” means the Stock Purchase Agreement between PriceSmart, Inc. and PSC S.A., and the shareholders of PSC S.A. listed therein, dated June 3, 2000.

Section 1.10. “Panama Proceedings” means any and all petitions and other legal or administrative proceedings, suits or actions of any kind filed in Panama by any of the PSC Parties (including but not limited to St. Georges Bank & Company, Inc. and/or Promerica, S.A.) against any of the PriceSmart Parties and/or their employees.

Section 1.11. “Escrow Agreement” means and refers to the Escrow Agreement identified in Section 2.3(a) below.

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Section 1.12. “Put Agreement” means and refers to the Put Agreement identified in Section 2.10 below.

Section 1.13. “Affiliate” means, with respect to any entity, any other entity directly or indirectly controlling, controlled by or under common control with such entity. For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlling,” “controlled by,” and “under common control”), as used with respect to any entity shall mean the possession, directly or indirectly (including through one or more intermediaries), of the power to direct or cause the direction of the management and policies of such entity, through the ownership or control of voting securities, partnership interests or other equity interests or otherwise.

Section 1.14. “Business Day” means Monday through Friday, except for any day that is a National holiday in the United States or in the country in which the applicable transaction is taking place.

ARTICLE II

SETTLEMENT TERMS AND CONDITIONS

Section 2.1. Resolution of Issues.

(a) All issues that are, were, or could have been raised between the Parties in the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, or any other pending action at law or dispute resolution proceeding between any of the PriceSmart Parties and any of the PSC Parties will be resolved on the terms and conditions set forth herein, except as otherwise expressly provided in this Agreement.

(b) PriceSmart will provide to PSC, contemporaneously with the execution of this Agreement, board resolutions and, to the extent required by applicable law (if any), accompanying powers of attorney, from each of the PriceSmart Parties, authorizing the settlement set forth in this Agreement and designating the signatory of each of the PriceSmart Parties authorized to sign this Agreement, including each document necessary or appropriate to fully implement and effectuate the settlement and this Agreement.

(c) PSC will provide to PriceSmart, contemporaneously with the execution of this Agreement, board resolutions and, to the extent required by applicable law (if any), accompanying powers of attorney, from each of the PSC Parties, authorizing the settlement set forth in this Agreement and designating the signatory of each of the PSC Parties authorized to sign this Agreement, including each document necessary or appropriate to fully implement and effectuate the settlement and this Agreement.

Section 2.2. Withdrawals and Dismissals With Prejudice of Pending Proceedings. Within four (4) Business Days after the Effective Date:

(a) counsel for PriceSmart, with any required assistance from counsel for PSC, shall cause to be filed a fully executed Joint Request for Order

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Terminating Arbitration With Prejudice in the form attached hereto as Exhibit 0-1, and the form of Order Terminating Arbitration With Prejudice in the form attached hereto as Exhibit 0-2, in connection with the arbitration in Miami;

(b) counsel for PriceSmart, with any required assistance from counsel for PSC, shall cause to be filed a fully executed Joint Request for Order Terminating Arbitration With Prejudice in the form attached hereto as Exhibit 0-3, and the form of Order Terminating Arbitration With Prejudice in the form attached hereto as Exhibit 0-4, in connection with the arbitration in San Diego;

(c) counsel for PriceSmart, with any required assistance from counsel for PSC, shall cause to be filed a fully executed Joint Notice of Voluntary Dismissal With Prejudice in the form attached hereto as Exhibit 0-5, and the form of the Order of Dismissal With Prejudice in the form attached hereto as Exhibit 0-6, in connection with the Preliminary Injunction Action; and

(d) counsel for PriceSmart, with any required assistance from counsel for PSC, shall cause to be filed a fully executed Joint Notice of Voluntary Dismissal of Appeal With Prejudice in the form attached hereto as Exhibit 0-7, and the form of the Order of Dismissal of Appeal With Prejudice in the form attached hereto as Exhibit 0-8, in connection with the Appeal.

Each Party represents and warrants to the other that it has not filed any actions against the other Party, other than those listed in the documents listed on Exhibits C, 0-1, 0-2, 0-3, 0-4, 0-5, 0-6, 0-7 and 0-8.

Section 2.3. Escrow, Quitclaim Agreements and Deliverables.

(a) Escrow Agreement. Contemporaneously with the execution of this Agreement, PSC, S.A. and PriceSmart, Inc. shall execute and deliver that certain Joint Escrow Instructions and Agreement, dated the date hereof, the form of which is attached hereto as Exhibit A (the “Escrow Agreement”). The Parties shall request that Stewart Title Latin America (the “Escrow Agent”) execute such Escrow Agreement promptly thereafter. Notwithstanding that only PSC, S.A. and PriceSmart, Inc. are executing the Escrow Agreement, all of the PSC Parties agree to be bound by the provisions thereof that are applicable to PSC, S.A., and all of the PriceSmart Parties agree to be bound by the provisions thereof that are applicable to PriceSmart, Inc. The Parties acknowledge and agree that the PriceSmart Parties, on the one hand, and the PSC Parties, on the other hand, will share the costs and expenses of the escrow, including but not limited to the fees of the Escrow Agent, on a 50/50 basis.

(b) Quitclaim Agreements. Contemporaneously with the execution of this Agreement, the applicable Parties will execute and duly notarize as necessary those certain Quitclaim Agreements, the form(s) of which are attached hereto as Exhibits B-1 through B-6.

(c) Quitclaim Agreement. Contemporaneously with the execution of this Agreement, the applicable Parties will execute and duly notarize as

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necessary that certain Quitclaim Agreement, the form of which is attached hereto as Exhibit C, withdrawing and otherwise waiving and releasing all interest any of the PSC Parties and the PriceSmart Parties, respectively, have or might have in the Panama Proceedings. PriceSmart is authorized to cause such Quitclaim Agreement to be filed at its discretion.

(d) Execution Deliverables. The Parties shall execute (and cause to be notarized, as necessary) the following documents concurrently with the execution of this Agreement, and concurrently therewith shall deliver such documents, as applicable, to the other Party, the Managua Notary and/or the Costa Rica Notaries (and, with respect only to the Escrow Agreement and the Put Agreement, to the Escrow Agent), all as more specifically required in this Agreement: (i) this Agreement, (ii) the Escrow Agreement, (iii) the Put Agreement, (iv) the Quitclaim Agreements referred to in Section 2.3 above, (v) the Instrument of Transfer of Shares, Indemnity for Shares Lost, Resolution Of Board of Directors, Declaration of Shares Lost, Director Acceptance Letters, Director Resignation Letters, and Shareholders Resolution, in the forms attached hereto as Exhibits D-1 through D-7, respectively, (vi) the Managua Corner Deed referred to in Section 2.5(a)(i) below, (vii) the Managua Toy Store Deed as referred to in Section 2.5(b)(i) below, (viii) the Managua Easement Agreement referred to in Section 2.5(d)(i) below and the Zapote Easement Agreement referred to in Section 2.6(i) below, (ix) the document referred to as Exhibit J in Section 2.6(a) below, (x) the Assignment and Assumption Agreement referred to in Section 2.6(b) below, (xi) the documents referred to in Section 2.2 above, (xii) the information regarding the Smart Points balances as referred to in Section 2.7(c)(iv) below, (xiii) the complete list of all Members (as defined in the Credit Card Agreements) who have had their memberships renewed in the twelve months preceding the Effective Date by having their membership fees charged to their co-branded or private label credit cards, as referred to in Section 2.7(c)(xi) below, (xiv) the board resolutions and the accompanying powers of attorney referred to in Sections 2.1(b) and (c) above, (xv) the duly executed, and notarized as necessary, Contrato de Cesion de Derechos de Marcas referred to in Section 2.4(d) below, (xvii) the checks required pursuant to Sections 2.9(a) and 2.17 below, and (xvii) any other agreements or documents required by the terms of this Agreement to be executed and delivered contemporaneously with the execution of this Agreement. Also, concurrently with the execution of this Agreement, the Parties shall deliver (by wire transfer or as otherwise provided herein) all payments required hereunder, as applicable, to the other Party or the Escrow Agent, all as more specifically required in this Agreement.

Section 2.4. Sale of PSC's Ownership Interest in PSMT Entities.

(a) PSC and PriceSmart confirm that, effective as of December 1, 2007, PSC sold and PriceSmart purchased PSC's entire interest in PSMT Nicaragua (BVI), Inc. PSC represents to PriceSmart that PSC's entire interest in PSMT Nicaragua (BVI), Inc. was represented by 24,500 shares of stock, par value U.S.$1.00 per share (the “Company Shares”). Contemporaneously with the execution of this Agreement, (y) PriceSmart shall pay to PSC in immediately available funds the sum of TEN MILLION TWO HUNDRED THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S.$10,200,000.00), to be wired to the account designated in wiring instructions

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provided by PSC (but located within the country of Panama), as payment in full for the Company Shares, and (z) PSC confirms such sale and transfer of the Company Shares to PriceSmart, Inc., free of any encumbrances, by executing each of those certain instruments, documents and resolutions relating to the transfer of the Company Shares referenced in Section 2.3(d)(v) above. PSC disclaims any ownership or other interest in PSMT Nicaragua (BVI), Inc.

(b) In further exchange for the consideration being provided to PSC under this Agreement, PSC agrees to transfer and deliver to PriceSmart, Inc., contemporaneously with execution of this Agreement, the 2 shares of PriceSmart Dominicana, S.A. held by PSC, endorsed in blank or in favor of PriceSmart, Inc. or accompanied by an executed stock power, and to execute all and any documents necessary to effectuate such transfer, free and clear of any encumbrances. Upon the transfer of the shares contemplated in this paragraph, PSC disclaims any ownership or other interest, nothing excepted, in PriceSmart Dominicana, S.A. In the event that PSC is not able to deliver the original share certificates, duly endorsed or accompanied by an executed stock power, to PriceSmart, PSC nevertheless disclaims any ownership or other interest, nothing excepted, in PriceSmart Dominicana, S.A., and PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims by or liabilities to any person or entity claiming to own or have an interest in the shares of PriceSmart Dominicana, S.A. transferred hereunder to PriceSmart. In addition, in such event, PSC will execute and deliver any documents required by applicable law to confirm the foregoing transfer.

(c) In further exchange for the consideration being provided to PSC under this Agreement, PSC agrees to transfer, or to arrange for and cause the transfer, to PriceSmart, Inc., contemporaneously with execution of this Agreement, the 2 shares of PriceSmart Honduras, S.A. de C.V. held by Compania Distribuidora Farmaceutica, S.A., endorsed in blank or in favor of PriceSmart, Inc. or accompanied by an executed stock power, and to execute and/or cause to be executed all and any documents necessary to effectuate such transfer, free and clear of any encumbrances. Upon the transfer of the shares contemplated in this paragraph, PSC disclaims any ownership or other interest, nothing excepted, in PriceSmart Honduras, S.A. de C.V. In the event that PSC is not able to deliver the original share certificates, duly endorsed or accompanied by an executed stock power, to PriceSmart, PSC nevertheless disclaims any ownership or other interest, nothing excepted, in PriceSmart Honduras, S.A. de C.V., and PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims by or liabilities to any person or entity claiming to own or have an interest in the shares of PriceSmart Honduras, S.A. transferred hereunder to PriceSmart. In addition, in such event, PSC will execute and deliver any documents required by applicable law to confirm the foregoing transfer.

(d) PSC will duly execute, and notarize as necessary, the Contrato De Cesion De Derechos De Marcas attached hereto as Exhibit E, and deliver same to PriceSmart contemporaneously with the execution of this Agreement, in addition to providing the release set forth in Section 2.11(a)(ii) below.

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Section 2.5. Conveyance of Real Property Interests and Grant of Easements in Managua, Nicaragua.

(a) Corner Pad.

(i) Contemporaneously with the execution of this Agreement, the Parties shall execute a Compraventa in the form attached hereto as Exhibit G-1 (the “Managua Corner Deed”) agreeing to convey, grant, bargain and sell to PSC, subject to obtaining all necessary governmental approvals, all that certain lot, piece or parcel of land constituting approximately 991.105 square meters and depicted as “1” on the attached Exhibit F (the “Corner Pad”), in fee simple, subject to all matters of record as of the date hereof, except for any and all private party monetary liens (except that such conveyance will be subject to the encumbrance in favor of PSC that currently exists and is in the process of being released). Ownership of the Corner Pad shall be conveyed to PSC upon the Managua Closing (as defined in the Escrow Agreement), which involves the real property in Managua, Nicaragua, entirely depicted on the attached Exhibit F (the “Managua Property”). PSC hereby agrees that, from and after the Managua Closing, PSC and any successor-in-interest shall maintain, at all times and at its expense, in good repair and Class “A” condition, the Corner Pad and any improvements constructed thereon.

(ii) Notwithstanding subsection 2.5(a)(i), PriceSmart shall reserve in the Managua Corner Deed a perpetual easement over the Corner Pad to repair, replace, use and maintain any existing utility equipment upon or beneath the Corner Pad.

(iii) Notwithstanding subsection 2.5(a)(i), PriceSmart shall have the right to approve of PSC’s use, construction or material change to exterior appearance upon the Corner Pad from time to time, but shall not unreasonably withhold, condition or delay its approval. If PriceSmart fails to disapprove any proposed use, change in use or material change to the exterior appearance of any building within ten (10) Business Days after written request for approval, or fails to provide a reasonably detailed explanation of the reason for disapproval within such ten (10) day period, then such use, change in use and/or material change in exterior appearance (as applicable) shall be deemed approved. Without limiting other reasons for which PriceSmart may reasonably disapprove a use, change in use and/or change in exterior appearance, PriceSmart may disapprove such matter if (i) it is not reasonably consistent with a Class “A” shopping center (including, without limitation, from a use and aesthetics viewpoint), (ii) it materially interferes with the views of the Managua Property owned by PriceSmart from roadways adjacent to the Managua Property, (iii) it materially interferes with access to and from the Managua Property owned by PriceSmart, or (iv) it creates any additional parking burden upon the portions of the Managua Property owned by PriceSmart. Any such matter shall be deemed to create an additional parking burden upon the portions of the Managua Property owned by PriceSmart unless PSC develops, maintains and operates parking facilities on the Corner Pad or Toy Store Pad (as defined below) that (x) are at least consistent with parking facilities customarily included in new projects that are (i) developed in the vicinity of the Corner Pad and (ii) similar in scope and use to PSC’s

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actual and planned development and use of the Corner Pad and Toy Store Pad and (y) satisfy all applicable requirements of applicable laws, including local ordinances. Without limiting the foregoing, PriceSmart shall also have the right to disapprove any of the following uses: cell phone stores or service centers, entertainment facilities such as bowling alleys, arcades and movie theaters, “adult” entertainment, bars (except as an incidental part of a sit-down restaurant), massage parlors, casinos and gambling halls, car washes and automobile repair shops.

(iv) PSC shall provide written notice to PriceSmart at least sixty (60) calendar days prior to installing, constructing, erecting or placing any signage on the Corner Pad or making any material alteration or change to any then-existing signage on the Corner Pad. Such notice by PSC shall include reasonably detailed plans for the installation, construction, erection or placement of signage or for any material changes to the then-existing signage (the “Initial Plans”) as well as a reasonable good faith estimated budget and completion schedule for completing such signage. PriceSmart may elect by written notice to PSC, no later than ten (10) Business Days after receipt of such notice from PSC, to require PSC to modify such Initial Plans (such modified plans, the “Modified Plans”) to include in the structure of the proposed signage (a) the installation or placement of signage relating to the PriceSmart warehouse located on the Managua Property (the “PriceSmart Signage”) that is of a size determined by PriceSmart, but no larger than, and is in a location that is no less prominent than, the signage that PSC includes for itself in such Modified Plans, and (b) access to electrical utilities located on the Corner Pad for purposes of illuminated signage. PSC shall then deliver to PriceSmart such Modified Plans, together with a reasonable good faith estimated budget and completion schedule for completing such signage and for the PriceSmart Costs (as defined below). PriceSmart shall have ten (10) Business Days after PriceSmart receives such Modified Plans and related documents to provide written notice to PSC of its election not to proceed with the PriceSmart Signage, in which event PSC may proceed with its Initial Plans. If PriceSmart fails to provide PSC with written notice within such ten (10) Business Day period, then PriceSmart shall be deemed to have elected to proceed with the PriceSmart Signage. PSC shall pay the costs of designing, developing and constructing such signage, except that PriceSmart shall reimburse PSC for any incremental portion of such costs that is fairly attributable to designing, developing and constructing such signage pursuant to the Modified Plans rather than the Initial Plans (the “PriceSmart Cost”). PSC shall cause the companies designing, installing, constructing, erecting or placing the signage to work with the Parties to determine the PriceSmart Cost. The Parties shall cooperate in good faith to finalize the design, construction and installation of such signage as promptly as is commercially practicable. Each Party hereby agrees to maintain its signage fascia (in contrast to common signage elements such as a signage pylon or monument), at all times, in good repair and Class “A” condition at its sole cost. Each party shall pay for the costs of such maintenance of common signage elements, such as signage pylon or monument, which shall be maintained in good repair by PSC, and any electrical utility costs to illuminate the sign in the same percentage represented by dividing the area (in square meters) available to such Party for its signage fascia by the sum of the areas available for both Party’s signage fascia. A copy of any invoice received by either Party relating to the signage shall be promptly provided to the other Party, and each Party shall promptly pay

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its share of the amount payable pursuant to the terms of this Agreement. In the event that the PriceSmart Signage is located on the Corner Pad, PSC hereby agrees to grant to PriceSmart a permanent easement for reasonable access to the Corner Pad to install, remove, replace, perform maintenance on or otherwise repair the PriceSmart Signage; provided that such access does not interfere with, damage or otherwise alter the signage relating to PSC and provided further that any such maintenance or repair shall be paid and/or shared as provided above. In the event that PSC fails to maintain the common signage elements in good repair, PSC hereby agrees to grant to PriceSmart a permanent easement for reasonable access to and over the Corner Pad to install, remove, replace, perform maintenance on or otherwise repair the common signage elements, and PSC shall reimburse PriceSmart for its share of such costs pursuant to the procedure set forth above.

(b) Toy Store Pad.

(i) Contemporaneously with the execution of this Agreement, the Parties shall execute a Compraventa in the form attached hereto as Exhibit G-2 (the “Managua Toy Store Deed” and collectively with the Managua Corner Deed, the “Managua Property Deeds”) agreeing to convey, grant, bargain and sell to PSC, subject to obtaining all necessary governmental approvals, all that certain lot, piece or parcel of land constituting approximately 518.232 square meters and depicted as “2” on the attached Exhibit F (the “Toy Store Pad”), in fee simple, subject to all matters of record as of the date hereof, except for any and all private party monetary liens (except that such conveyance will be subject to the encumbrance in favor of PSC that currently exists and is in the process of being released); provided, however, for the avoidance of doubt (A) that none of the real property designated on Exhibit F as parking spaces or other land outside the area upon which the existing building is actually located shall be included in the property being conveyed as the Toy Store Pad and (B) that PSC acknowledges that the building on the Toy Store Pad is owned by the current tenant and not by PriceSmart. Ownership of the Toy Store Pad shall be conveyed to PSC upon the Managua Closing (the “Toy Store Conveyance”). PSC hereby agrees that, from and after the Managua Closing, PSC and any successor-in-interest shall maintain, at all times and at its expense, in good repair and Class “A” condition, the Toy Store Pad and any improvements constructed thereon, except as otherwise set forth herein; provided that nothing in this Agreement shall prohibit PSC, in its sole discretion, from demolishing or removing any improvements on the Toy Store Pad, and provided further that such demolition or removal by PSC does not materially interfere with PriceSmart's business operations or access to and from the Managua Property.

(ii) PriceSmart represents and warrants that the Toy Store Lease (as defined in Section 2.5(b)(iii) below) is the only lease or rental agreement applicable to the Toy Store Pad, and that the Toy Store Lease has not been amended, modified, supplemented or otherwise changed. Contemporaneously with the Toy Store Conveyance, PriceSmart shall convey, sell, assign and transfer to PSC, and PSC hereby agrees to assume the obligations under, the Toy Store Lease, including rights to receive rents and income, as adjusted for prepayments, prorations, deposits and other adjustments as provided in the Escrow Agreement. PriceSmart hereby agrees to indemnify and hold

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PSC harmless from any claims by or liabilities to any current or prior tenant of the Toy Store Pad relating to matters or events occurring prior to the Toy Store Conveyance contemplated in Section 2.5(b)(i) above with respect to the Toy Store Lease, and, except to the extent resulting from a breach of the representation and warranty contained in the first sentence of this paragraph, PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims by or liabilities, other than those relating to PriceSmart’s failure to comply with Section 2.5(b)(iii), to any current tenant of the Toy Store Pad relating to matters or events occurring from and after such Toy Store Conveyance with respect to the Toy Store Lease.

(iii) In connection with the conveyance of the Toy Store Pad, the Parties acknowledge that the Toy Store Pad is subject to that certain Lease Agreement dated February 17, 2006 between Toys S.A. (the “Current Tenant”) and Inmobiliaria PSMT Nicaragua, S.A. (the “Toy Store Lease”), pursuant to which PriceSmart provides the Current Tenant with access to and use of certain parking spaces surrounding the Toy Store Pad upon property owned by PriceSmart. Notwithstanding subsection 2.5(b)(i), PriceSmart hereby agrees to continue to provide the Current Tenant the right to use the parking spaces currently being provided by PriceSmart to the Current Tenant, but only to the extent such parking spaces are required to be provided under the Toy Store Lease as it exists as of the Effective Date. PriceSmart hereby agrees to indemnify and hold PSC harmless from any claims by or liabilities to the Current Tenant under the Toy Store Lease relating to PriceSmart’s failure to comply with this Section 2.5(b)(iii).

(iv) Notwithstanding Section 2.5(b)(i), PriceSmart shall have the right to approve of PSC’s change in use and construction upon the Toy Store Pad from time to time (including, without limitation, any material changes to the exterior appearance thereof), but shall not unreasonably withhold, condition or delay its approval. If PriceSmart fails to disapprove any proposed change in use or material change to the exterior appearance of the building within ten (10) Business Days after written request for approval, or fails to provide a reasonably detailed explanation of the reason for disapproval within such ten (10) day period, then such change in use and/or material change in exterior appearance (as applicable) shall be deemed approved. Without limiting other reasons for which PriceSmart may reasonably disapprove a change in use and/or material change in exterior appearance, PriceSmart may disapprove such matter if (i) it is not reasonably consistent with a Class “A” shopping center (including, without limitation, from a use and aesthetics viewpoint), (ii) it materially interferes with the views of the Managua Property owned by PriceSmart from roadways adjacent to the Managua Property, (iii) it materially interferes with access to and from the Managua Property owned by PriceSmart, or (iv) it creates any additional parking burden upon the portions of the Managua Property owned by PriceSmart. Any such matter shall be deemed to create an additional parking burden upon the portions of the Managua Property owned by PriceSmart unless PSC develops, maintains and operates parking facilities on the Corner Pad or Toy Store Pad that (x) are at least consistent with parking facilities customarily included in new projects that are (i) developed in the vicinity of the Toy Store Pad and (ii) similar in scope and use to PSC’s actual and planned development and use of the Corner Pad and Toy Store Pad and (y) satisfy all applicable requirements of applicable

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laws, including local ordinances. Without limiting the foregoing, PriceSmart shall also have the right to disapprove any of the following uses: cell phone stores or service centers, entertainment facilities such as bowling alleys, arcades and movie theaters, “adult” entertainment, bars (except as an incidental part of a sit-down restaurant), massage parlors, casinos and gambling halls, car washes and automobile repair shops.

PriceSmart Parking Pad Use Restrictions. PriceSmart hereby agrees to restrict the use of that certain lot, piece or parcel of land retained by PriceSmart in fee ownership, constituting approximately 700 square meters and depicted as “3” on the attached Exhibit F (the “PriceSmart Parking Pad”), for parking purposes only and to maintain, at all times and at its expense, the PriceSmart Parking Pad in good repair and Class “A” condition.

(d) Access Easements.

(i) Contemporaneously with the execution of this Agreement, the Parties shall execute an Easement Agreement in the form attached hereto as Exhibit H (the “Managua Easement Agreement”) pursuant to which PSC agrees to create, grant and convey to, or execute for the benefit of, PriceSmart, (A) a perpetual, non-exclusive easement for purposes of ingress and egress of vehicular (excluding commercial and industrial delivery vehicles, which shall not be deemed to include pickup trucks) and pedestrian traffic and street access to and from Carretera Road at Point “4” (as depicted on the attached Exhibit F) across the Main Access Driveway owned by PSC (as depicted on the attached Exhibit F), continually to and from the corner of the North Entry (as depicted on the attached Exhibit F) and then over the North Entry between the Corner Pad and the Toy Store Pad to Point “5” (to the boundary line of the property owned by PriceSmart) (the easement described in this subsection (A) being referred to as the “Perpetual Access Easement”); and (B) a perpetual (subject to termination as set forth in subparagraph (ii) below), non-exclusive easement for purposes of ingress and egress of vehicular (including, without limitation, commercial and industrial delivery vehicles) and pedestrian traffic and street access to and from Carretera Road at Point “4” across the Main Access Driveway, continually to and from the corner of the South Entry (as depicted on the attached Exhibit F) and then over the South Entry southerly of the PriceSmart Parking Pad to Point “6” (to the boundary line of the property owned by PriceSmart (the easement described in this subsection (B) being referred to as the “Truck Access Easement” and collectively with the Perpetual Access Easement, the “Access Easements”).

(ii) PSC hereby agrees to use commercially reasonable efforts to obtain all necessary governmental approvals (the “Access Approvals”) for PriceSmart to construct a driveway for purposes of vehicular (including, without limitation, commercial and industrial delivery trucks) and pedestrian traffic and street ingress and egress to and from the Managua Property and Carretera Road next to the Corner Pad, depicted as “7” on the attached Exhibit F (the “New Access”). PSC shall be solely responsible for its own expenses and any fees or costs incurred in connection with obtaining the Access Approvals. PriceSmart hereby agrees to cooperate in good faith with PSC in connection with obtaining the Access Approvals, including, but not limited

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to, providing such grants of authority as may be reasonably required for PSC to perform its obligations under this Section. PriceSmart hereby agrees to use commercially reasonable efforts to construct at PriceSmart’s sole expense a driveway at the New Access no later than ninety (90) calendar days after PriceSmart has received reasonable evidence of the grant of the Access Approvals. Upon completion of the New Access, the Truck Access Easement shall automatically terminate and be of no further force or effect, provided, however, that if PSC is unable to obtain the Access Approvals (for any reason), the Truck Access Easement shall remain in full force and effect. Promptly after completion of construction of the New Access, the Parties hereby agree to execute and PSC shall have the right to cause to be filed with the appropriate authority with which real property transfer documents are customarily filed in the related jurisdiction any documents reasonably necessary to effect termination of the Truck Access Easement.

(iii) In the event that the grant of all or any portion of the Access Easements cannot be effected on or before the Effective Date due to the requirement to obtain necessary governmental approvals (or for any other reason), then the Parties hereby agree that pending the grant of the Access Easements PriceSmart shall have the right to use such Access Easements as of the Effective Date and to retain such right until such time as the Access Easements have been granted pursuant to all applicable governmental requirements.

(iv) For and in consideration of PSC’s undertakings pursuant to this Section 2.5(d) and Section 2.5(e), PriceSmart shall deliver to PSC, concurrently with the Effective Date, the sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S.$250,000.00) by wire transfer of immediately available funds for deposit into an account designated in wiring instructions provided by PSC (but located in the country of Panama).

(e) Conveyance Documentation and Closing Prorations. On or before the Effective Date, PriceSmart shall select a notary who is reasonably acceptable to PSC (the “Managua Notary”) and who shall be responsible for executing and filing, or causing to be filed, the Managua Property Deeds and the Managua Easement Agreement with the Registrar of the Public Registry of the Department of Managua in Nicaragua (the “Managua Registry”) and with each other authority with which real property transfer documents are customarily filed in the related jurisdiction. Upon selection, the Managua Notary shall send a confirmation letter to PriceSmart, with a copy to PSC and the Escrow Agent, acknowledging that such Managua Notary has reviewed this Agreement and accepts the responsibilities of the Managua Notary set forth herein. Contemporaneously with the Effective Date, the authorized representatives of PriceSmart and PSC shall appear before the Managua Notary who shall (i) execute the Managua Property Deeds and the Managua Easement Agreement in the protocol book of the Managua Notary, (ii) issue a certified original Public Deed of each of the Managua Property Deeds and the Managua Easement Agreement as executed in the protocol book (each, a “Managua Testimonio”) and (iii) file each Managua Testimonio with the Managua Registry. The Managua Notary shall send to the Escrow Agent a legalized copy of each Managua Testimonio with its corresponding copy of the presentation slip for registration before the Managua Registry. To the extent local laws and customs require the Managua Property

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Deeds and the Managua Easement Agreement to be revised from the forms attached hereto in order to be accepted by each such authority, the Parties agree to make such revisions as are reasonably necessary. Notwithstanding anything to the contrary contained herein, PSC covenants that it shall not convey, encumber or otherwise transfer any of the real property encumbered by the Managua Easement Agreement until the earlier to occur of that date that is one (1) year after the Effective Date or the date PriceSmart receives confirmation that the deed containing the Managua Easement Agreement has been duly recorded.

All current real property taxes and assessments, amounts payable under existing agreements and rents arising from the Corner Pad and the Toy Store Pad shall be prorated between the Parties as of the date of the Managua Closing, based upon the latest available tax information and paid through the Escrow Agent, all as more particularly set forth in the Escrow Agreement. If the prorations and credits made under the Managua Closing Statement (as defined in the Escrow Agreement) shall prove to be incorrect or incomplete for any reason, then either Party shall be entitled to an adjustment to correct the same; provided, however, that any adjustment shall be made, if at all, within ninety (90) days after the Managua Closing (except with respect to taxes and assessments, in which case such adjustment shall be made within thirty (30) days after the information necessary to perform such adjustment is available), and if a Party fails to request an adjustment to the Managua Closing Statement by a written notice delivered to the other Party within the applicable period set forth above (such notice to specify in reasonable detail the items within the Managua Closing Statement that such Party desires to adjust and the reasons for such adjustment), then the prorations and credits set forth in the Managua Closing Statement shall be binding and conclusive against such Party. In the event of any adjustment to the Managua Closing Statement pursuant to this paragraph, the Party owing an amount pursuant to such adjustment shall pay to the other Party the amount of such adjustment within five (5) Business Days of the determination of the amount of such adjustment (to the extent such amount is not paid at the Managua Closing).

(f) Use Restrictions; Easement Related Rights; Right of First Refusal. The Parties acknowledge and agree that the internal laws of the Republic of Nicaragua may not provide for restrictive covenants to run with the land, but that the mutual promises and covenants granted in this Agreement are reliant upon, and would be of substantially diminished value without, the Parties and any successors and/or assigns being bound by and honoring the restrictions and limitations upon the Managua Property set forth in the last sentence of Section 2.5(a)(i), the last sentence of Section 2.5(b)(i), and Sections 2.5(a)(iii), 2.5(a)(iv), 2.5(b)(iv), 2.5(c) and 2.5(d)(iii). Consequently, the Parties are concurrently herewith entering into rights of first refusal, with the rights of first refusal for the Corner Pad and the Toy Store Pad being contained within the Managua Property Deeds and with the right of first refusal for the PriceSmart Parking Pad being contained in the Managua Easement Agreement, affecting each of the Corner Pad, the Toy Store Pad and the PriceSmart Parking Pad, granting to each other, as applicable, a right of first refusal to purchase such property should a Party desire to convey such property to another party (the “Right of First Refusal”). At such time, if the Party holding such Right of First Refusal (the “ROFR Party”) does not elect to exercise such

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right in connection with a bona fide transfer to an unrelated third party (as more particularly described in such Right of First Refusal), then the other Party (the Party entering into an agreement with a third party for the conveyance or other transfer of such property) shall provide within any agreements setting forth the terms of the conveyance transaction, any conveyance documents and any similar agreements that (i) such third party transferee and any of its successors and/or assigns shall be bound by and will honor all of the restrictions and limitations upon the Managua Property set forth herein, as agreed to by PriceSmart and PSC, but excluding the Right of First Refusal (which shall no longer be applicable), unless such restrictions and limitations have otherwise been terminated in writing by the Parties, (ii) if such third party transferee or any of its successors and/or assigns desire to convey such property to any other party, any agreements setting forth the terms of such conveyance transaction, any conveyance documents or any similar agreements shall include provisions requiring such future transferee to be bound by and honor all of the restrictions and limitations upon the Managua Property as set forth herein (including, without limitation, all of the provisions of subparagraphs (i) through (iv) of this paragraph), but excluding the Right of First Refusal (which shall no longer be applicable), unless such restrictions and limitations have otherwise been terminated in writing by the Parties, (iii) the remedies of the Party that is not a party to such agreement for a breach of any of the restrictions and limitations upon the Managua Property as set forth herein shall not be limited or reduced in any manner as a result of such transaction (except for the termination of the Right of First Refusal as set forth above), and (iv) the Party that is not a party to such agreements, conveyance documents or similar agreements, as applicable, is a third-party beneficiary of the restrictions and limitations described in (i), (ii) and (iii) of this paragraph and may enforce against such third party transferee such restrictions and limitations. Notwithstanding the foregoing, in the event of a transfer that is not a bona fide transfer to an unrelated third party, the Right of First Refusal shall also continue to apply.

Section 2.6. Conveyance of Zapote Real Property Interests.

(a) Contemporaneously with the execution of this Agreement, the Parties shall execute and deliver, or shall cause the trustee under that certain Fideicimoso PPF-Pricsmarlandco Trust Agreement dated August 12, 1999 (the “Trust Agreement”) to execute and deliver, to the Costa Rica Notaries (as defined below) (with copies thereof being delivered to each Party), a Finiquito Parcial de Contrato de Fideicomiso (the “Transfer of Beneficial Interests”) in the form attached hereto as Exhibit J, amending the Trust Agreement to provide (1) that PriceSmart shall be the sole named beneficiary with regard to all that certain lot, piece or parcel of land of approximately 2,250 square meters lying, being and situated in Zapote, the Republic of Costa Rica (the “Zapote Property”), subject to all matters of record as of the date hereof, except for any and all private party monetary liens (including, without limitation, that certain Cedula Hipotecarea in the amount of $1.2 million, which shall be paid off by PSC on or before the Zapote Closing (as defined in the Escrow Agreement), and PSC shall deliver to PriceSmart the Cedula Hipotecarea, marked “Cancelled”), and (2) that the provisions of Paragraph Setimo K of the Trust Agreement have been deleted. To the extent local laws and customs require the Transfer of Beneficial Interests to be revised from the form attached hereto in order to be accepted with each such authority, the Parties agree to

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make such revisions as reasonably necessary. On or before the Effective Date, PriceSmart and PSC shall select two notaries (the “Costa Rica Notaries”) who jointly shall be responsible for executing and filing, or causing to be filed, acting as co-notaries, the Transfer of Beneficial Interest with the Registrar of the Public Registry of the Republic of Costa Rica (the “Costa Rica Registry”) and with each other authority with which real property transfer documents are customarily filed in the related jurisdiction. Upon selection, the Costa Rica Notaries shall send a confirmation letter to PriceSmart, with a copy to PSC and the Escrow Agent, acknowledging that such Costa Rica Notaries have reviewed this Agreement and accept the responsibilities set forth herein. Contemporaneously with the Effective Date, the authorized representatives of PriceSmart and PSC shall appear before the Costa Rica Notaries who shall (i) execute the Transfer of Beneficial Interest in the protocol book of the Costa Rica Notaries, (ii) issue a certified original Public Deed of the Transfer of Beneficial Interest as executed in the protocol book (the “Costa Rica Testimonio”) and (iii) file the Costa Rica Testimonio with the Costa Rica Registry. Any of the Costa Rica Notaries shall send to the Escrow Agent a legalized copy of the Costa Rica Testimonio with its corresponding copy of the presentation slip for registration before the Costa Rica Registry.

All current real property taxes and assessments, amounts payable under existing agreements and rents arising from the Zapote Property shall be prorated between the Parties as of the date of the Zapote Closing, based upon the latest available tax information and paid through the Escrow Agent, all as more particularly set forth in the Escrow Agreement. If the prorations and credits made under the Zapote Closing Statement (as defined in the Escrow Agreement) shall prove to be incorrect or incomplete for any reason, then either Party shall be entitled to an adjustment to correct the same; provided, however, that any adjustment shall be made, if at all, within ninety (90) days after the Zapote Closing (except with respect to taxes and assessments, in which case such adjustment shall be made within thirty (30) days after the information necessary to perform such adjustment is available), and if a Party fails to request an adjustment to the Zapote Closing Statement by a written notice delivered to the other Party within the applicable period set forth above (such notice to specify in reasonable detail the items within the Zapote Closing Statement that such Party desires to adjust and the reasons for such adjustment), then the prorations and credits set forth in the Zapote Closing Statement shall be binding and conclusive against such Party. In the event of any adjustment to the Zapote Closing Statement pursuant to this paragraph, the Party owing an amount pursuant to such adjustment shall pay to the other Party the amount of such adjustment within five (5) Business Days of the determination of the amount of such adjustment (to the extent such amount is not paid at the Zapote Closing).

(b) Contemporaneously with the Zapote Closing, PSC shall convey, sell, assign and transfer to PriceSmart, and PriceSmart hereby agrees to assume the obligations under, that certain Lease for “Local Diez” (Location 10) located in the Centro Comercial Plaza de Convenciones dated May 31, 2004 between Desarrollos Comerciales Centroamericanos PPF, S.A. and Sociedad Anonima de Vehiculos Automores (the “Car Dealership Lease”) and that certain Lease for the Burger King located in the Centro Comercial Plaza de Convenciones dated November 12, 2002 between Desarrollos Comerciales Centroamericanos PPF, S.A. and Valle del Occidente

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Sociedad Anonima (the “Restaurant Lease”, and together with the Car Dealership Lease”, the “Zapote Leases”), including rights to receive rents and income, as adjusted for prepayments, prorations, deposits and other adjustments as provided in the Escrow Agreement, pursuant to that certain Assignment and Assumption of Leases, the form of which is attached hereto as Exhibit K.

(c) For and in consideration of PSC’s undertakings pursuant to Section 2.6(a) and Section 2.6(b), PriceSmart shall deliver to the Escrow Agent (but directly into the Subescrow, as defined in the Escrow Agreement), contemporaneously with the Effective Date, the sum of ONE MILLION AND NO/100 UNITED STATES DOLLARS (U.S.$1,000,000.00) (the “Zapote Property Purchase Price”) by wire transfer of immediately available funds for deposit into an escrow account (the “Escrow Account”), as more particularly set forth in the Escrow Agreement. Upon the Zapote Closing, the Escrow Agent shall be authorized pursuant to the Escrow Agreement to deliver the Zapote Property Purchase Price (as defined below), minus any and all prorations, to the account designated in wiring instructions provided by PSC (but located in the country of Costa Rica).

(d) For and in consideration of PSC’s undertakings pursuant to this Section 2.6(d), PriceSmart shall deliver to the Escrow Agent, contemporaneously with the Effective Date, for deposit into the Escrow Account by wire transfer of immediately available funds the sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S.$250,000.00) (the “Zapote Escrow Amount”). For and in consideration of PriceSmart’s undertakings pursuant to this Section 2.6(d), PSC shall use commercially reasonable efforts to cause each of the car dealership and the restaurant to agree to terminate its respective lease to which the Zapote Property is currently subject (each, a “Zapote Lease”) and to vacate the Zapote Property pursuant to the terms of such Zapote Lease; provided that PSC shall have no further obligations under this Section 2.6(d) in the event the lease is not terminated and the related property is not vacated and surrendered on or before twelve (12) months after the Effective Date, in the case of the car dealership, and thirty-six (36) months after the Effective Date, in the case of the restaurant. PriceSmart shall comply promptly and in good faith with all reasonable requests of PSC in connection with PSC’s efforts pursuant to this Section 2.6(d), including, but not limited to, allowing PSC entry and access to the Zapote Property upon forty-eight (48) hours notice, allowing the tenants to take reasonable measures to vacate the related premises and executing any reasonable documents necessary to effect such lease terminations; provided that PSC shall reimburse PriceSmart within ten (10) days written demand from PriceSmart for any costs or expenses incurred in connection with the foregoing such requests by PSC; and provided, further, that PriceSmart shall not be obligated to take any action that could foreseeably expose PriceSmart to litigation or similar claims. PriceSmart shall not take any actions that would restrict the ability of PSC to terminate the Zapote Leases or cause the Zapote Property to be vacated and surrendered.

(e) In connection with the termination of the Zapote Leases pursuant to Section 2.6(d) above, PSC hereby agrees that upon termination of the Zapote Leases within the time periods set forth in Section 2.6(d) above, PSC shall deliver each leased premises to PriceSmart in a substantially level-grade condition, free of any and all substantial debris and/or improvements.

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(f) As more fully described in the Escrow Agreement, and subject to the provisions of Section 2.6(h) below, if the Zapote Lease with the car dealership has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) above, then on or before twelve (12) months after the Effective Date, PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously to PriceSmart) to release to PSC ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $125,000.00) of the Zapote Escrow Amount (the “Car Dealership Amount”). Unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC (the “Car Dealership Objection Period”), a written statement from either (at PriceSmart’s option) Edgar Zurcher Gurdian or an accountant from one of PriceWaterhouseCoopers, KPMG International or Deloitte and Touche stating that either the Zapote Lease with the car dealership has not been terminated or that the premises leased thereunder have not been vacated and surrendered in accordance with Sections 2.6(d) and (e) above, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing conditions, then the Escrow Agent shall release the Car Dealership Amount to PSC, subject to Section 2.6(h) below. If PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an accountant from one of the above-referenced firms, the Escrow Agent shall hold the Car Dealership Amount in Escrow, and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountant, with the same procedure set forth above applying to such second demand). In the event (A) PSC does not provide such written demand upon the Escrow Agent on or before twelve (12) months after the Effective Date or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or an accountant as provided above and such disputed items are not cured prior to that date that is twelve (12) months after the Effective Date, then the Escrow Agent shall release to PriceSmart the Car Dealership Amount. As more fully described in the Escrow Agreement, and subject to the provisions of Section 2.6(h) below, if the Zapote Lease with the restaurant has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) above, then on or before thirty-six (36) months after the Effective Date, PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously to PriceSmart) to release to PSC ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $125,000.00) of the Zapote Escrow Amount (the “Restaurant Amount”). Unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC (the “Restaurant Objection Period”), a written statement from either (at PriceSmart’s option) Edgar Zurcher Gurdian or an accountant from one of PriceWaterhouseCoopers, KPMG International or Deloitte and Touche stating that either the Zapote Lease with the restaurant has not been terminated or that the premises leased thereunder have not been vacated and surrendered in accordance with Sections 2.6(d) and (e) above, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing

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conditions, then the Escrow Agent shall release the Restaurant Amount to PSC, subject to Section 2.6(h) below. If PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an accountant from one of the above-referenced firms, the Escrow Agent shall hold the Restaurant Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountant, with the same procedure set forth above applying to such second demand). In the event (A) PSC does not provide such written demand upon the Escrow Agent on or before thirty-six (36) months after the Effective Date or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or an accountant as provided above and such disputed items are not cured prior to that date that is thirty-six (36) months after the Effective Date, then the Escrow Agent shall release to PriceSmart the Restaurant Amount. The Parties intend that PSC will be paid (a) the Car Dealership Amount only if the Zapote Lease with the car dealership has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) on or before twelve (12) months after the Effective Date and (b) the Restaurant Amount only if the Zapote Lease with the restaurant has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) above on or before thirty-six (36) months after the Effective Date. PriceSmart will pay the costs of Mr. Zurcher or such accountant, unless Mr. Zurcher or such accountant determines that PSC was not entitled to the requested release, in which event PSC will pay the costs of Mr. Zurcher or such accountant.

(g) PSC represents and warrants that the Zapote Leases are the only leases or rental agreements applicable to the Zapote Property, and that the Zapote Leases have not been amended, modified, supplemented or otherwise changed. PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims by or liabilities to the current or any prior tenants under the Zapote Leases or of the Zapote Property (i) relating to matters or events occurring prior to the Zapote Closing contemplated in Section 2.6(a) above with respect to the Zapote Leases, and (ii) relating to any matters or events occurring after the Zapote Closing contemplated in Section 2.6(a) above based on, or arising out of, PSC’s efforts to cause the tenants under the Zapote Leases, or either of them, to terminate their respective leases and to vacate and surrender the premises. Except to the extent resulting from a breach of the representation and warranty contained in the first sentence of this paragraph, PriceSmart hereby agrees to indemnify and hold PSC harmless from any claims by or liabilities, other than those described in clause (i) or (ii) of this paragraph or in subparagraph (h) below, to any current tenant under the Zapote Leases relating to matters or events occurring from and after such Zapote Closing with respect to the Zapote Leases.

(h) Notwithstanding anything to the contrary contained in this Section 2.6, if after the Zapote Closing contemplated in Section 2.6(a) above the tenants under either or both of the Zapote Leases fail to pay any rent or other amounts due (the “default amounts”) under the respective lease prior to the earlier of the termination date of such lease or the respective dates set forth in Section 2.6(d), then any payments of the Zapote Escrow Amount due to PSC under Section 2.6(f) will be reduced by the default

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amounts with respect to such lease, and such default amounts shall be paid by the Escrow Agent to PriceSmart pursuant to the terms of the Escrow Agreement. During each of the Car Dealership Objection Period and the Restaurant Objection Period, as applicable, if such default amounts exist, PriceSmart may provide to Escrow Agent written notice (which notice shall simultaneously be delivered to PSC) of such default amounts for the applicable Zapote Lease. Upon request from PSC, PriceSmart will assign to PSC the rights of PriceSmart to enforce such leases, at the sole cost and expense of PSC, and PSC shall indemnify and hold PriceSmart harmless from any claims by or liabilities to the tenants under the Zapote Leases resulting from PSC’s actions in so enforcing such leases. If, after PriceSmart receives any such default amounts from the Escrow Agent, any of the tenants under either or both of the Zapote Leases then pay PriceSmart all or any portion of the amounts previously received by PriceSmart from the Escrow Agent for the default amounts, PriceSmart will remit such payment to PSC within ten (10) days of receipt.

(i) Contemporaneously with the execution of this Agreement, the Parties shall execute an Easement Agreement in the form attached hereto as Exhibit P (the “Zapote Easement Agreement”) pursuant to which PriceSmart agrees to create, grant and convey to, or execute for the benefit of, PSC a perpetual, non-exclusive easement for purposes of ingress and egress of vehicular (excluding commercial and industrial delivery vehicles with a length greater than twenty-eight (28) feet or having a total weight, including the weight of any cargo, of 25,000 pounds or more) and pedestrian traffic and street access to and from Ruta 204 at Point “1” (as depicted on the attached Exhibit I) across the driveway owned by PriceSmart (as depicted on the attached Exhibit I), continually to and from the corner of the PSC Entry at Point “2” (as depicted on the attached Exhibit I). In the event that the grant of all or any portion of the easement set forth above in this subparagraph (i) cannot be effected on or before the Effective Date due to the requirement to obtain necessary governmental approvals (or for any other reason), then the Parties hereby agree that pending the grant of such easement, PSC shall have the right to use such easement as of the Effective Date and to retain such right until such time as such easement has been granted pursuant to all applicable governmental requirements.

(j) The Parties agree to negotiate with each other in good faith after the Effective Date regarding PriceSmart potentially granting to PSC an easement for purposes of egress of vehicular traffic from and over the exit from the PSC property at Point “3” (as depicted on the attached Exhibit I) across the driveway owned by PriceSmart (as depicted on Exhibit I) continually to Point “4” (as depicted on the attached Exhibit I) and then continually from such Point 4 back to Point 1. The foregoing agreement to negotiate shall not obligate either Party to reach an agreement on any such easement.

Section 2.7. Termination of Certain Agreements.

(a) Except as expressly provided otherwise in Sections 2.7(c), 2.7(d), 2.7(e), 2.7(g), 2.7(h) and 2.8 below, effective upon execution of this Agreement by all Parties, all agreements between any of the PriceSmart Parties and any of the PSC Parties, other than agreements entered into pursuant to this Agreement (collectively, the

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“Terminated Agreements”), are hereby cancelled and terminated, and no Party shall have any further rights or obligations under the Terminated Agreements. No additional documentation shall be necessary to effect the cancellation and termination of the Terminated Agreements.

(b)

(i) For and in consideration of PSC’s cancellation and termination of the Terminated Agreements, including but not limited to the SPA, pursuant to Section 2.7(a) above, the releases and settlement of claims, and other mutual covenants contained in this Agreement, PriceSmart shall deliver to the Escrow Agent, contemporaneously with the Effective Date, for deposit into the Escrow Account by wire transfer of immediately available funds, the sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $3,150,000) (the “Miscellaneous Escrow Funds”). As more fully described in the Escrow Agreement, PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously in writing to PriceSmart with copies of all attachments), attaching (A) an Order Terminating Arbitration With Prejudice (or other applicable documents resulting in the Arbitrations having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to both of the Arbitrations, (B) an Order of Dismissal With Prejudice (or other applicable documents resulting in the Preliminary Injunction Action having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to the Preliminary Injunction Action, and (C) an Order of Dismissal of Appeal With Prejudice (or other applicable documents resulting in the Appeal having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to the Appeal, to release to PSC TWO MILLION ONE HUNDRED ELEVEN THOUSAND THREE HUNDRED NINETY-FIVE AND NO/100 UNITED STATES DOLLARS (U.S. $2,111,395.00) of the Miscellaneous Escrow Funds to the account designated in wiring instructions provided by PSC (but located within the country of Panama), with the remaining ONE MILLION THIRTY-EIGHT THOUSAND SIX HUNDRED FIVE AND NO/100 UNITED STATES DOLLARS (U.S. 1,038,605) of the Miscellaneous Escrow Funds being released to PSC to the account located in Miami, Florida set forth in the Escrow Agreement; unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC, a written objection, which objection must be based upon (A) an Order Terminating Arbitration With Prejudice (or other applicable documents resulting in the Arbitrations having been dismissed with prejudice) not having been executed and issued by the applicable forum with respect to one or more of the Arbitrations, (B) an Order of Dismissal With Prejudice (or other applicable documents resulting in the Preliminary Injunction Action having been dismissed with prejudice) not

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having been executed and issued by the applicable forum with respect to the Preliminary Injunction Action and/or (C) an Order of Dismissal of Appeal With Prejudice (or other applicable documents resulting in the Appeal having been dismissed with prejudice) not having been executed and issued by the applicable forum with respect to the Appeal, then the Escrow Agent shall release the Miscellaneous Escrow Funds to PSC; if PriceSmart timely provides to the Escrow Agent such written notice of objection, the Escrow Agent shall hold the Miscellaneous Escrow Funds in Escrow and the procedure set forth above shall again be applicable (i.e., PSC may provide a second demand after curing any issues raised by PriceSmart, with the same confirmation procedure set forth above applying to such second demand); in the event (A) PSC does not provide such written demand upon the Escrow Agent on or before December 31, 2008 or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written notice of objection and such disputed items are not cured on or before December 31, 2008, then the Escrow Agent shall release to PriceSmart the Miscellaneous Escrow Funds. Notwithstanding the foregoing, in connection with the current proceedings in Panama, as a condition to obtaining a release of the Miscellaneous Escrow Funds, PSC only needs to deliver a properly executed and notarized Quitclaim Agreement in the form attached hereto as Exhibit C. PSC covenants to perform all other actions within its control in connection with the obtaining of the final release of such proceedings. However, until such proceedings have been completely dismissed, then PSC shall indemnify and hold harmless PriceSmart and its employees from any claim, cost or liability resulting from such proceedings and arising after the Effective Date.

(ii) Concurrently with the Effective Date (including, without limitation, the delivery by PSC to PriceSmart of the fully executed and notarized Managua Easement Agreement), PriceSmart will pay to PSC ONE MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $1,000,000.00) to the account designated in wiring instructions provided by PSC (but located within the country of Panama).

(iii) The sum of U.S. $4,150,000.00 is being paid pursuant to this Section 2.7(b) on behalf of the entities, in the amounts, listed below:

PriceSmart Panama, S.A.	$	139,501
Prismar de Costa Rica, S.A.	$	1,038,605
PriceSmart El Salvador, S.A. de C.V.	$	368,627
PriceSmart Honduras, S.A. de C.V.	$	260,251
PriceSmart Dominicana S.A.	$	268,016
PSMT Nicaragua, S.A.	$	2,075,000

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(c) Notwithstanding anything to the contrary contained in this Agreement, (i) the Termination Procedures of the Credit Card Agreements shall survive, provided that PSC’s obligations pursuant to the Termination Procedures shall terminate as of May 2, 2008; (ii) PSC represents that, as of January 31, 2008, it ceased accruing any Smart Points (as defined in the Credit Card Agreements) or like benefit on behalf of the cardholders, and that, as of January 31, 2008, it ceased issuing Smart Points vouchers, and the Parties agree that the termination dates for the Master Credit Card Agreement and the Banpro Agreement shall be deemed to be May 1, 2007; (iii) PSC agrees to honor any vouchers redeemed by Members (as defined in the Credit Card Agreements) at PriceSmart warehouses for merchandise and reimburse PriceSmart for said redemptions pursuant to the formula and terms set forth in the Credit Card Agreements; (iv) concurrently with the execution of this Agreement, PSC shall deliver to PriceSmart a summary of all Smart Points balances outstanding and vouchers issued and unreimbursed by PSC, with respect to each customer, as of the date of execution of this Agreement, (v) as of the Effective Date, PSC represents and warrants to PriceSmart that the total dollar exposure of the sum of all Smart Points balances outstanding and unredeemed and unexpired vouchers equals U.S. $188,026.63 (the “Smart Points Balance Amount”), (vi) PSC covenants that it will terminate all dual purpose cards within thirty (30) days after the Effective Date; (vii) PSC represents and warrants that it has ceased automatically charging and will not automatically charge in the future for membership fees on the co-branded or private label credit cards, (viii) PSC represents and warrants that, as of April 30, 2007, in the countries of Costa Rica, Honduras, El Salvador and the Dominican Republic, PSC has ceased charging and collecting PriceSmart membership dues, (ix) PSC represents and warrants that, as of May 30, 2007, PSC has ceased charging and collecting PriceSmart membership dues in the country of Panama, (x) PSC represents and warrants that to the extent that PSC has charged membership renewal fees since the date that PSC was provided notice of termination of the Credit Card Agreements, PSC has previously paid to PriceSmart all such sums collected for PriceSmart membership renewal charges assessed, and (xi) concurrently with the execution of this Agreement, PSC shall provide PriceSmart with a complete list of all Members who have had their memberships renewed in the twelve months preceding the Effective Date by having their membership fees charged to their co-branded or private label credit cards. Concurrently with the Effective Date, PSC shall deliver to the Escrow Agent the Smart Points Balance Amount. PriceSmart may provide at anytime until May 31, 2008 a written demand upon the Escrow Agent (which shall be given simultaneously to PSC, together with an invoice and the original of the Smart Checks or vouchers) to release to PriceSmart an amount equal to the amount of vouchers redeemed by PriceSmart after October 31, 2007 and through May 1, 2008 and which have not been previously reimbursed by PSC to PriceSmart (the “Smart Points Claim Amount”). In addition, such demand may include a claim for reimbursement from the Smart Points Balance Amount equal to the damages incurred by PriceSmart due to a breach by PSC of any of its representations or warranties set forth above in this subparagraph (c) (the “Offset Damages Amount”). Any such demand by PriceSmart for the Offset Damages Amount shall be accompanied by evidence of the breach by PSC of such representations or warranties. Unless PSC provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PriceSmart (the “Smart Balance Objection Period”), a written statement from an accountant from one of

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Price WaterhouseCoopers, KPMG International or Deloitte and Touche stating that PriceSmart’s claim is inaccurate, together with a reasonably detailed explanation of the reasons such claim is inaccurate, then the Escrow Agent shall release the Smart Points Claim Amount plus the Offset Damages Amount to PriceSmart. If PSC timely provides to the Escrow Agent such statement from one of the above-referenced firms, the Escrow Agent shall hold the Smart Points Balance Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PriceSmart may send a second demand after curing any issues raised by such accountant, with the same procedure set forth above applying to such second demand). In the event (A) PriceSmart does not provide such written demand upon the Escrow Agent on or before May 31, 2008 or (B) PriceSmart does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PSC by timely delivering to the Escrow Agent a written statement from an accountant as provided above and such disputed items are not cured on or before May 31, 2008, then the Escrow Agent shall release to PSC the Smart Points Balance Amount. Any remaining balance of the Smart Points Balance Amount after the payment of the Smart Points Claim Amount plus the Offset Damages Amount to PriceSmart shall be released immediately by the Escrow Agent to PSC. PSC will pay the costs of such accountant, unless such accountant determines that PriceSmart was not entitled to the requested release, in which event PriceSmart will pay the costs of such accountant. For the avoidance of doubt, the Parties agree that PSC shall have no obligation to reimburse PriceSmart for any vouchers redeemed by PriceSmart on or prior to October 31, 2007.

(d) Nothing in Section 2.7(a) above shall affect the rights of PSC to offer banking or financial services in warehouses owned or operated by PriceSmart through that date that is sixty (60) days after the Effective Date for all warehouses in Nicaragua, Honduras, Costa Rica, El Salvador, Panama and the Dominican Republic, and any provisions contained in the Terminated Agreements relating or incidental to such rights shall not be terminated prior to such date, provided that PSC is in compliance with this Agreement, is in compliance with the Branch Leases (defined below) save with respect to payment of rent, is not interfering with the business activities of PriceSmart and does not hold itself or any of its Affiliates out as the official bank or credit card provider of PriceSmart.

(e) PriceSmart agrees to prepay, on or prior to the Effective Date, the amount outstanding under the loan and related agreements reflected in the Testimony of Public Deed—Banco De La Produccion, Sociedad Anonima -PSMT Nicaragua Sociedad Anonim 2004-09, dated February 5, 2004. PSC agrees that there shall be no prepayment penalty, however characterized, with respect to such prepayment. PSC covenants to cause Banco De La Produccion, within three (3) Business Days of receipt of such prepayment, to return to PriceSmart (i) the applicable promissory note, duly cancelled, and (ii) such documentation as is customarily provided in the applicable jurisdiction to evidence the cancellation of the guaranties from PriceSmart, Inc. and Prismar de Costa Rica, S.A.

(f) PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims by or liabilities incurred by PriceSmart to the former and/or current shareholders of PSC based on, arising out of or related to termination of the SPA

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pursuant to this Agreement. PriceSmart hereby releases the former and/or current shareholders of PSC from any claims by or liabilities to PriceSmart based on, arising out of or related to termination of the SPA pursuant to this Agreement.

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(g) Notwithstanding anything to the contrary contained in this Agreement, bank accounts currently maintained by PriceSmart Parties, as identified on Exhibit L hereto, shall remain in full force and effect according to their terms, unless and until closed by the applicable PriceSmart Party(ies) in accordance with their terms.

(h) Notwithstanding anything to the contrary contained in this Agreement, the (i) Trust Agreement as referred to in, and amended pursuant to, Section 2.6(a) above, and (ii) the Registration Rights Agreement dated as of June 3, 2000 by and between PriceSmart, Inc. and PSC, S.A. shall remain valid and binding and in full force and effect.

Section 2.8. Cancellation of Certain Accounts Receivable. The Parties hereby agree that any and all amounts or debts due and payable as of October 31, 2007 under the Terminated Agreements as between one or more of the PSC Parties and one or more of the PriceSmart Parties shall be waived, forgiven, and cancelled effective upon execution of this Agreement by all Parties; provided, however, that the foregoing (i) shall not in any manner affect the obligations of PSC (x) to make the payments in lieu of rent referred to in Section 2.9(a) hereof, or (y) to make any payments due under Section 2.7(c) hereof, or (z) to make any other payments due to PriceSmart under this Agreement after October 31, 2007, and (ii) shall not in any manner affect the obligations of PriceSmart as referred to in Section 2.7(e) above.

Section 2.9. Termination of Property Rights in PriceSmart Warehouses.

(a) For and in consideration of the payment to be made by PriceSmart pursuant to Section 2.9(b) below, PSC hereby agrees, effective no later than that date that is sixty (60) days after the Effective Date for all warehouses in Nicaragua, Honduras, Costa Rica, El Salvador, Panama and the Dominican Republic, to terminate and relinquish all rights it may have (whether under the Terminated Agreements, individual lease agreements with PriceSmart, local laws or otherwise) to occupy and conduct banking or financial services in warehouses owned or operated by PriceSmart. In furtherance of the foregoing, PSC hereby agrees to cancel and terminate all lease agreements (the “Branch Leases”) and to vacate and surrender all leased premises with all of PSC’s property and fixtures removed in a reasonable manner, as described in the Branch Leases, no later than that date that is sixty (60) days after the Effective Date. Each of the Parties hereby acknowledges that its respective obligations under the Branch Leases, save with respect to rent (which shall continue until sixty (60) days after the Effective Date), shall continue in full force and effect until the earlier of sixty (60) days after the Effective Date or the earlier vacating and surrender of the leased premises along with written notice from PSC to PriceSmart that the related leased premises have been so vacated and surrendered with all of PSC’s property and fixtures removed in a reasonable manner. Concurrently with the Effective Date, PSC shall pay to PriceSmart, in lieu of rent due and owing as of the Effective Date plus all rent that would have accrued through

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that date that is sixty (60) days after the Effective Date, an amount equal to the sum of NINETY-TWO THOUSAND FOUR HUNDRED SEVENTY AND 33/100 DOLLARS (U.S. $92,470.33) (representing all such amounts accruing through April 8, 2008). Such payment shall be made by delivery of certified cashier’s checks (or its local equivalent) payable to PriceSmart, Inc. PriceSmart will reasonably cooperate with PSC in connection with PSC’s removal of all of PSC’s property and fixtures as required above, and PSC will reasonably cooperate with PriceSmart in connection with such removal so as to not unreasonably interfere with PriceSmart’s continued business operations in the warehouses. PriceSmart may limit the timing of such removal to after PriceSmart’s normal business hours, but PriceSmart shall then be required to provide PSC access and entry after normal business hours.

(b) For and in consideration of relinquishing its rights as contemplated in Section 2.9(a) above, including termination of the Branch Leases, the releases and settlement of claims, and other mutual covenants contained in this Agreement, PriceSmart shall deliver to the Escrow Agent contemporaneously with the Effective Date by wire transfer immediately available funds in the sum of TWO MILLION AND NO/100 UNITED STATES DOLLARS (U.S.$2,000,000.00) (the “Branch Lease Escrow Amount”). As more fully described in the Escrow Agreement, (i) PSC may provide a written demand upon the Escrow Agent within three (3) Business Days after that date that is sixty (60) days after the Effective Date (which shall be given simultaneously to PriceSmart) confirming that all the Branch Leases governing warehouse site(s) have been terminated and the premises leased thereunder have been vacated and surrendered with all of PSC’s property and fixtures removed in a reasonable manner by sixty (60) days after the Effective Date, and requesting the release of the Branch Lease Escrow Amount less the sum of ONE HUNDRED THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $100,000) (such remainder being referred to as the “Termination Amount”) to PSC, to the account designated in wiring instructions provided by PSC (but located within the country of Panama); unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC, a written statement from either, at PriceSmart’s option, Edgar Zurcher Gurdian or an accountant from one of PriceWaterhouseCoopers, KPMG International or Deloitte and Touche stating that either any of such Branch Leases have not been vacated or that any of such premises have not been surrendered with all of PSC’s property and fixtures removed in a reasonable manner, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing condition, then the Escrow Agent shall release the Termination Amount from the Branch Lease Escrow Amount to PSC; if PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an accountant from one of the above-referenced firms, the Escrow Agent shall hold the Termination Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountants, with the same procedure set forth above applying to such second demand), and (ii) in the event that (A) PSC does not provide written demand to the Escrow Agent within three (3) Business Days after that date that is sixty (60) days after the Effective Date confirming that all Branch Leases have been terminated and the premises leased thereunder have been vacated and surrendered within sixty (60) days after the Effective Date with all of PSC’s property and fixtures removed in a reasonable manner or (B) PSC

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does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or an accountant as provided above and such disputed items are not cured prior to that date that is sixty (60) days after the Effective Date, the Escrow Agent shall release the Branch Lease Escrow Amount to PriceSmart. Notwithstanding the immediately preceding sentence, if PSC has caused its property and fixtures to be substantially removed within sixty (60) days after the Effective Date, but PriceSmart has provided a written statement from either Mr. Zurcher or an accountant from one of the above-referenced accounting firms as provided above based solely on there being some minor items that have not yet been removed, then PSC shall have until five (5) Business Days after the giving to PSC of such written statement to cure such minor items and to submit another demand for release of the Termination Amount (and the procedures set forth above shall again be applicable, but there will be no further cure periods after the expiration of such five (5) Business Day period). In addition, the Parties agree that PSC shall not be required to remove items that would be unreasonable to remove, such as, by example only, electrical outlets installed in the floor of the premises. If the Termination Amount is released to PSC as provided above, the remaining amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS (U.S.$100,000) shall be held by the Escrow Agent and can be drawn on by PriceSmart (by notice to the Escrow Agent, with such notice being simultaneously given to PSC) to pay costs incurred by PriceSmart to return any of the premises to the condition required by the applicable Branch Leases. If PriceSmart has not made demand for payment of any such amount within thirty (30) days after release of the Termination Amount to PSC, then any portion of such amount for which PriceSmart has not made such demand shall be released to PSC after the expiration of such thirty (30) day period. PriceSmart will pay the costs of Mr. Zurcher or such accountant, unless Mr. Zurcher or such accountant determines that PSC was not entitled to the requested release, in which event PSC will pay the costs of Mr. Zurcher or such accountant. The Branch Lease Escrow Amount is being paid on behalf of the entities in the amounts listed below:

PriceSmart Panama, S.A.	$	533,333
Prismar de Costa Rica, S.A.	$	533,333
PriceSmart El Salvador, S.A. de C.V.	$	266,667
PriceSmart Honduras, S.A. de C.V.	$	266,667
PriceSmart Dominicana S.A.	$	266,667
PSMT Nicaragua, S.A.	$	133,333

(c) PSC hereby agrees to indemnify and hold PriceSmart harmless from any claims or liabilities relating to the termination of the Branch Leases contemplated in Section 2.9(a) above.

Section 2.10. Stock Sale and Put Agreement.

(a) Contemporaneously with the execution of this Agreement, the Parties shall execute that certain Put Agreement, the form of which is attached hereto as Exhibit M (the “Put Agreement”). PSC agrees that for the period of sixty (60) calendar days beginning on the Effective Date (the “Stock Sale Period”) it will exercise

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commercially reasonable efforts, with the assistance of an independent broker, to sell for a price at or in excess of U.S.$25.00 per share, any of the 679,500 shares of common stock, par value U.S.$0.0001 (the “Common Stock”), of PriceSmart, Inc. previously acquired by PSC pursuant to the SPA and still held by PSC as of the Effective Date (the “SPA Shares”). For avoidance of doubt, only the SPA Shares shall be subject to the Put Agreement, and PSC shall be deemed to have sold SPA Shares upon PSC’s sale of the first 679,500 shares of Common Stock sold by it from or after the Effective Date. If, at the conclusion of the Stock Sale Period, PSC has been unsuccessful in selling all or any portion of the SPA Shares at U.S. $25.00 per share or more and PSC has timely delivered written notice of the number of unsold SPA Shares held by PSC, each of PSC and PriceSmart hereby authorize delivery by the Escrow Agent of its respective signed counterpart of the Put Agreement to the other Party and the Put Agreement shall become effective at such time without any further action by any Party. Concurrently with the execution of the Put Agreement, the Parties agree to entrust the executed but undated Put Agreement to the Escrow Agent for safekeeping until such time, if any, as the Stock Sale Period has concluded and PSC provides written notice to the Escrow Agent and PriceSmart within three (3) Business Days after the conclusion of the Stock Sale Period of the number of unsold SPA Shares then held by PSC. Any such statement shall be accompanied by evidence of the determination of the number of unsold SPA Shares then held by PSC. In the event such notice is timely delivered to the Escrow Agent and PriceSmart, the Escrow Agent shall enter the date of the delivery of such notice as the date of the Put Agreement, enter in the Put Agreement the number of unsold SPA Shares set forth in PSC’s notice, and release executed counterparts of the Put Agreement to each Party, and the Escrow Agent shall have no further obligations with respect to the Put Agreement. The Parties hereby release the executed counterparts of the Put Agreement subject to the terms of this Section 2.10 and the Escrow Agreement. In the event the notice of unsold SPA shares is not timely delivered by PSC, the Escrow Agent, PSC and PriceSmart shall have no further obligations with respect to the Put Agreement. Under the Put Agreement, PSC shall agree that for the period beginning upon the date of the Put Agreement and ending sixty (60) calendar days thereafter (the “Put Period”), it will exercise commercially reasonable efforts, with the assistance of an independent broker, to sell for a price at or in excess of U.S.$25.00 per share the remaining SPA Shares. If, at the conclusion of the Put Period, PSC has been unsuccessful in selling all or any portion of the SPA Shares, PSC may, upon written notice to PriceSmart no later than the end of the third Business Day following the conclusion of the Put Period, require PriceSmart to purchase the remaining SPA Shares at a price of U.S.$25.00 per share (the “Put Right”). In the event PSC fails to provide written notice of its exercise of the Put Right by the end of the third Business Day following the date of the conclusion of the Put Period, the Put Right shall terminate immediately and automatically and PriceSmart shall have no further obligation to purchase any shares from PSC. If PSC timely exercises the Put Right, PriceSmart shall purchase from PSC, within twenty-one (21) calendar days from receipt of PSC's notice exercising its Put Right, the number of then unsold SPA Shares set forth in PSC's notice at a price of U.S.$25.00 per share pursuant to the terms of the Put Agreement. The per share amounts and prices referenced in this Section are subject to adjustment as provided in the Put Agreement.

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(b) PriceSmart represents that the shares of Common Stock owned by PSC are subject to a registration statement that is currently effective under the Securities Act of 1933, as amended (the “1933 Act”) and are freely tradable. PriceSmart shall maintain the effective status of such registration statement under the 1933 Act during the Stock Sale Period and the Put Period.

Section 2.11. Releases of PriceSmart and PSC.

(a) Release of PriceSmart.

(i) With the exception of any claims based on or arising out of this Agreement, and any obligations expressly excepted from any release hereunder, the PSC Parties, for and on behalf of themselves, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “PSC Releasors”), generally release and forever acquit and discharge the PriceSmart Parties, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (including, without limitation, Sherry Bahrambeygui) (the “PriceSmart Releasees”), of and from, and covenant not to institute legal, equitable, or administrative proceedings of any kind against any of the PriceSmart Releasees with respect to, any and all actions, causes of action, claims, liabilities, suits, demands, obligations, indebtedness, injuries, direct and indirect damages, costs, losses, expenses (including attorneys’ fees and costs) of any nature, either known or unknown, latent or patent, discovered or undiscovered, and whether contingent or liquidated, that the PSC Releasors, or any of them, may have had, may now have or claim to have, or may hereafter have or claim to have against the PriceSmart Releasees, or any of them, by reason of any matter, cause or thing whatsoever on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences, from the beginning of time to the Effective Date, including but not limited to on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences prior to the Effective Date relating to the subject matters of the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, or any other action at law, or in equity, or dispute resolution proceeding pending between the Parties; provided, for the avoidance of doubt, that the foregoing shall not be construed to release any obligations arising out of or related to this Agreement, including but not limited to the Escrow Agreement or the Put Agreement, and any obligations that by the express terms of this Agreement are not terminated hereby. For the avoidance of doubt, the Parties expressly acknowledge and agree that information (regardless of the manner in which such information was communicated, whether in documents, electronically or otherwise, and including but not limited to credit card customer information) obtained by any of the PriceSmart Releasees or any of the Credomatic Releasees (as defined in Section

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2.12(a) hereof) before the Effective Date, regardless of whether used before and/or after the Effective Date, shall not give rise to a claim of any kind, nothing excepted, against any of the PriceSmart Releasees, any and all such claims being fully released hereunder. The foregoing release shall expressly not apply to any personal banking relationships between individuals who are PriceSmart Releasees and banks affiliated with PSC.

(ii) Except for shares of Common Stock owned currently or in the future by PSC, and except for the rights of PSC as the owner of the Company Shares, the shares of PriceSmart Dominicana, S.A. and the shares of PriceSmart Honduras, S.A. de C.V. (which shares are to be purchased by PriceSmart pursuant to Section 2.4 above), PSC hereby waives any right, title or interest it may have in PriceSmart, Inc., any of the other PriceSmart Parties, or any Affiliate of PriceSmart, Inc. and in any intellectual property owned by or licensed to PriceSmart, Inc., any of the other PriceSmart Parties, or an Affiliate of PriceSmart, Inc., including but not limited to the terms “PriceSmart,” Smart Points,” “Smartchecks,” “Smartcredit,” “Diamond Member,” and/or “Business Member”. PSC will immediately discontinue all use of any such intellectual property, including without limitation any trademarks, service marks or trade names of PriceSmart, Inc., any of the other PriceSmart Parties, or an Affiliate of PriceSmart, Inc. Notwithstanding the foregoing, for a period of thirty (30) days after the Effective Date, the existence of the PriceSmart intellectual property on cards previously issued by PSC and remaining in circulation shall not constitute a violation of this provision.

(b) Release of PSC.

(i) With the exception of any claims based on or arising out of this Agreement, and any obligations expressly excepted from any release hereunder, the PriceSmart Parties, for and on behalf of themselves, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “PriceSmart Releasors”), generally release and forever acquit and discharge the PSC Parties, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (including, without limitation, Oscar de la Guardia) (the “PSC Releasees”), of and from, and covenant not to institute legal, equitable, or administrative proceedings of any kind against any of the PSC Releasees with respect to, any and all actions, causes of action, claims, liabilities, suits, demands, obligations, indebtedness, injuries, direct and indirect damages, costs, losses, expenses (including attorneys’ fees and costs) of any nature, either known or unknown, latent or patent, discovered or undiscovered, and whether contingent or liquidated, that the

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PriceSmart Releasors, or any of them, may have had, may now have or claim to have, or may hereafter have or claim to have against the PSC Releasees, or any of them, by reason of any matter, cause or thing whatsoever on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences, from the beginning of time to the Effective Date, including but not limited to on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences prior to the Effective Date relating to the subject matters of the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, or any other action at law, or in equity, or dispute resolution proceeding pending between the Parties; provided, for the avoidance of doubt, that the foregoing shall not be construed to release any obligations arising out of or related to this Agreement, including but not limited to the Escrow Agreement or the Put Agreement, and any obligations that by the express terms of this Agreement are not terminated hereby. For the avoidance of doubt the Parties expressly acknowledge and agree that information (regardless of the manner in which such information was communicated, whether in documents, electronically or otherwise, and including but not limited to PriceSmart membership information) obtained by any of the PSC Releasees before the Effective Date, regardless of whether used before and/or after the Effective Date, shall not give rise to a claim of any kind, nothing excepted, against any of the PSC Releasees, any and all such claims being fully released hereunder. The foregoing release shall expressly not apply to any personal banking relationships between individuals who are PriceSmart Releasors and banks affiliated with PSC.

(ii) Notwithstanding anything to the contrary contained in this Agreement, the release contained in Section 2.11(a) of this Agreement shall not release or otherwise apply in any manner to the claims of PriceSmart, Inc. in Honduras relating to the loss of deposits at Banco Promerica in Tegucigalpa Honduras, to the extent that such claims have been assigned by PriceSmart, Inc. to National Union Fire Ins. Co. of Pittsburgh, PA. (the Assignment and Release executed by PriceSmart, Inc. in favor of National Union Fire Ins. Co. of Pittsburgh, PA is attached hereto for ease of identification as Exhibit N (the "Assignment and Release").

(iii) Except to the extent relating to any of the matters waived by PSC pursuant to Section 2.11(a)(ii) above, PriceSmart hereby waives any right, title or interest it may have in PSC, S.A., any of the other PSC Parties, or any Affiliate of PSC, S.A., and in any intellectual property owned by PSC, S.A., or any of the other PSC Parties, or an Affiliate of PSC, S.A.

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Section 2.12. Releases of PSC and Credornatic.

(a) Release of Credomatic. PSC, S.A., for and on behalf of itself and its agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “PSC Releasors”), generally releases and forever acquits and discharges Credomatic International Corporation and all of its subsidiaries and affiliates, including but not limited to Credomatic de Guatemala, S.A., Credomatic de Honduras, S.A., Credomatic de El Salvador, S.A. de C.V., Credito, S.A., Credomatic de Costa Rica, S.A., Credomatic de Panama, S.A., Credomatic, S.A., Grupo Credomatic, BAC Credomatic Holding Company Ltd., BAC International Bank, Inc., and each of their respective affiliated entities and subsidiaries, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “Credomatic Releasees”), of and from, and covenant not to institute legal, equitable, or administrative proceedings of any kind against any of the Credomatic Releasees with respect to, any and all actions, causes of action, claims, liabilities, suits, demands, obligations, indebtedness, injuries, direct and indirect damages, costs, losses, expenses (including attorneys’ fees and costs) of any nature, either known or unknown, latent or patent, discovered or undiscovered, and whether contingent or liquidated, that the PSC Releasors, or any of them, may have had, may now have or claim to have, or may hereafter have or claim to have against the Credomatic Releasees, or any of them, by reason of any matter, cause or thing whatsoever on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences, prior to the Effective Date relating to the subject matters of the Arbitrations, the Preliminary Injunction Action, or the Appeal. For the avoidance of doubt the Parties and Credomatic (as defined in Section 2.12(c) hereof) expressly acknowledge and agree that information (regardless of the manner in which such information was communicated, whether in documents, electronically or otherwise, and including but not limited to credit card customer information) obtained by any of the PriceSmart Releasees or any of the Credomatic Releasees before the Effective Date, regardless of whether used before and/or after the Effective Date, shall not give rise to a claim of any kind, nothing excepted, against any of the Credomatic Releasees, any and all such claims being fully released hereunder.

(b) Release of PSC. Credomatic International Corporation (“Credomatic”), for and on behalf of itself and its agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “Credomatic Releasors”), generally releases and forever acquits and discharges the PSC Parties, and each of them, and their respective agents, employees, officers, directors, shareholders, partners, members, managers, administrators, insurers, representatives, attorneys, affiliates, subsidiaries, predecessors, successors, parents, principals, heirs and assigns, and each of them (the “PSC Releasees”), of and from, and covenant not to institute legal, equitable, or administrative proceedings of any kind against any of the PSC Releasees with respect to, any and all actions, causes of action, claims, liabilities, suits, demands, obligations, indebtedness, injuries, direct and indirect damages, costs, losses, expenses (including attorneys’ fees

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and costs) of any nature, either known or unknown, latent or patent, discovered or undiscovered, and whether contingent or liquidated, that the Credomatic Releasors, or any of them, may have had, may now have or claim to have, or may hereafter have or claim to have against the PSC Releasees, or any of them, by reason of any matter, cause or thing whatsoever on account of, or in any way arising out of, or based in whole or in part on, any actions, events or non-occurrences prior to the Effective Date relating to the subject matters of the Arbitrations, the Preliminary Injunction Action, or the Appeal. For the avoidance of doubt the Parties and Credomatic expressly acknowledge and agree that information (regardless of the manner in which such information was communicated, whether in documents, electronically or otherwise, and including but not limited to credit card customer information) obtained by any of the PSC Releasees before the Effective Date, regardless of whether used before and/or after the Effective Date, shall not give rise to a claim of any kind, nothing excepted, against any of the PSC Releasees, any and all such claims being fully released hereunder.

(c) Limited Participation of Credomatic. For the avoidance of doubt, the Parties and Credomatic acknowledge and agree that Credomatic is not a party to this Agreement except as and to the extent set forth in Sections 2.12 and 2.13(a) hereof, and that nothing else contained in this Agreement shall affect and/or create any rights and/or obligations of any kind as between Credomatic and any other Party, including but not limited to the PSC Parties.

(d) Indemnity. PSC, S.A. and Credomatic each agree to indemnify and hold each other harmless from and against all claims and liabilities, losses, damages or injuries and all reasonable costs and expenses (including, without limitation, costs of any lawsuit and reasonable counsel fees related thereto) suffered or incurred by PSC, S.A. or Credomatic arising from any breach by the other party of its respective releases set forth above in this Section 2.12.

(e) PriceSmart Reliance. It is acknowledged that PriceSmart is relying upon the releases set forth above in this Section 2.12, and that PriceSmart may pursue its remedies hereunder for any breach of the releases set forth above, as if such releases were made for the benefit of PriceSmart.

Section 2.13. Unknown Claims and Waivers.

(a) Unknown Claims and Injuries. Each Party and Credomatic understands and acknowledges that there is a risk that, subsequent to the execution of this Agreement, it will become aware of and/or incur damages or losses that it deems in some way attributable to prior actions or inactions by another Party or Credomatic, but that are unknown and unanticipated at the time that this Agreement is executed, or that damages presently known may become progressive, greater or more serious than is now known, expected or anticipated, or that facts alleged in the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, or any other action at law or dispute resolution proceeding pending between the Parties are found hereafter to be different from the facts now believed by such Party and/or Credomatic to be true. Each Party and Credomatic expressly accepts such risks and agrees that (i) this Agreement is

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and will remain effective notwithstanding such risks, if they materialize, and (ii) this Agreement shall apply to all such unknown or unanticipated damages or losses, all such presently known damages that progressively increase or become more serious and all such unknown facts. The foregoing shall not be construed to release the Parties from any obligations under this Agreement.

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(b) Waiver of Defenses. Inasmuch as the Parties hereto acknowledge agree that, in their common desire to enter into this Agreement without undue delay, certain formalities required in countries other than the United States of America for the legal efficacy of the provisions in this Agreement and/or the exhibits hereto relating to such countries may not have been fully complied with, each and all Parties hereto expressly release, relinquish and waive, and agree not to assert, any and all claims and defenses, both in the United States and in the affected country(ies), in any way based on, related to and/or arising out of any such alleged failure to comply with all such formalities.

Section 2.14. Resignation by Officers and Directors. For good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, immediately upon execution of this Agreement by all Parties all persons serving as directors and/or officers in any of the PriceSmart Parties as designees of any of the PSC Parties shall and hereby do resign from such positions with immediate effect. For good and sufficient consideration, the receipt and sufficiency of which are hereby acknowledged, PSC and Edgar Zurcher Gurdian agree that immediately upon execution of this Agreement by all Parties Mr. Zurcher shall and hereby does resign from the Board of Directors of PriceSmart, Inc. with immediate effect. None of the individuals resigning shall seek to be reappointed, or accept a nomination to be reappointed, to a position as a director and/or officer in any of the PriceSmart Parties, unless PriceSmart, Inc. otherwise consents in writing.

Section 2.15. No Disparagement. Each Party shall cause its and its affiliates’ respective officers, directors and principals to refrain from making remarks either orally or in writing, generally, specifically, or by implication, to the press, the electronic broadcast media or to any other third person, regarding any facts or opinions which might tend to reflect adversely on the other Party or any individual or entity including any officers, directors, employees and agents of the other Party. The Parties agree that all statements in the nature of mixed fact and opinion shall be construed as opinions for purposes of determining whether there has been a violation of this section.

Section 2.16. Confidentiality. For a period of thirty (30) months from the Effective Date, PriceSmart agrees not to disclose to any third party any list or compilation intended to specifically identify PSC customers. For a period of thirty (30) months from the Effective Date, PSC agrees not to disclose to any third party any list or compilation specifically intended to identify PriceSmart members. These restrictions shall not apply to any generic lists of PriceSmart members or PSC customers which are not designed to specifically highlight or call out PSC customers or PriceSmart members, as the case may be. The restrictions in this Section only apply to disclosures by PSC or PriceSmart made from and after the Effective Date. Without limiting the foregoing, any

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disclosures made by PSC or PriceSmart prior to the Effective Date (and any use of such information made by third parties as a result of such disclosures by PSC or PriceSmart, irrespective of when such use by third parties is made) shall not be subject to the restrictions contained in this Section, and shall be subject to the releases in Sections 2.11 and 2.12 above. In addition, nothing contained in this Section 2.16 shall imply that either Party has any legal right to disclose any such list or compilation after the expiration of such thirty (30) month period.

Section 2.17. Smart Points Reimbursements. The Parties agree that PSC owes PriceSmart certain reimbursements for previous under-invoicing by PriceSmart in connection with the Smart Points program in Honduras. Concurrently with the Effective Date, PSC will pay to PriceSmart, FIVE HUNDRED NINETY- SIX THOUSAND ONE HUNDRED SEVENTY-EIGHT AND 20/100 COSTA RICAN LEMPIRAS by delivery of a certified cashier’s check (or its local equivalent) payable to PriceSmart Honduras, S.A. de C.V.

ARTICLE III

REMEDIES

Section 3.1. Indemnification. Each and all of the PriceSmart Parties agree to indemnify and hold each and all of the PSC Parties, and each and all of the PSC Parties agree to indemnify and hold each and all of the PriceSmart Parties, harmless from and against all claims and liabilities, losses, damages or injuries and all reasonable costs and expenses (including, without limitation, costs of any lawsuit and reasonable counsel fees related thereto) suffered or incurred by the indemnified Party or Parties arising from any breach by the Indemnifying Party of any representation, warranty, covenant, agreement or other provision of this Agreement. It is expressly agreed that this indemnification will cover and apply to both first party claims, for breaches of this Agreement, and third party claims as provided in this Agreement, for claims asserted by a third party against an indemnified Party hereto. Without limiting the foregoing, if any legal action (to the extent permitted hereunder), arbitration or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, breach or default in connection with any representation, warranty, covenant, agreement or other provision of this Agreement, the prevailing Party shall be entitled to recover from the non-prevailing Party its reasonable attorneys’ fees, including its attorneys’ fees incurred in arbitration, on appeal, court costs, expert costs, paraprofessional costs, and all other reasonable expenses, even if not taxable as court costs, incurred in the action or proceeding, in addition to any other relief to which such Party may be entitled. Wherever in this Agreement a Party agrees to indemnify any other Party, the provisions of this Section 3.1 and Section 3.2, as applicable, shall also apply.

Section 3.2. Indemnification Procedures. In the case of third-party claims, if any action or proceeding (an “Action”) is threatened or commenced against a Party entitled to indemnification pursuant to Section 3.1 or to any other applicable indemnification provision in this Agreement (the “Indemnitee”), then such Indemnitee will give written notice thereof to the party obligated to indemnify such Action (the “Indemnifying Party”) as promptly as practicable; provided, however, that any delay in

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giving such written notice will not constitute a breach of this Agreement and will not excuse the Indemnifying Party’s obligations under this Article III (including such other indemnification provision in this Agreement as may apply) except to the extent, if any, that the Indemnifying Party is prejudiced by such delay. The Indemnifying Party will be entitled, if it so elects in writing within ten (10) calendar days after receipt of such notice, to take control of the defense and investigation of such Action and to employ and engage attorneys of its choice reasonably acceptable to the Indemnitee to handle and defend the same, at the Indemnifying Party’s sole cost and expense; provided, however, that such Indemnitee may, at such Indemnitee’s own cost and expense, participate, through attorneys or otherwise, in such investigation, study and defense of such Action and any appeal arising therefrom; and provided, further, that no settlement of an Action that involves a remedy other than the payment of money by the Indemnifying Party will be entered into by the Indemnifying Party without the prior written consent of the Indemnitee, which consent will not be unreasonably withheld. In the event the Indemnifying Party does not elect to take control of the defense within ten (10) days after its receipt of notice from the Indemnitee, the Indemnitee shall have the right to defend such Action at the cost and expense of the Indemnifying Party, but no settlement thereof may be made without the approval of the Indemnifying Party, which approval shall not be unreasonably withheld. In the event legal counsel cannot jointly represent the Indemnitee and the Indemnifying Party with regard to the investigation, study or defense of any Action without obtaining a waiver from either the Indemnitee or the Indemnifying Party, the Indemnitee shall have the right to obtain independent legal counsel at the cost and expense of the Indemnifying Party. All indemnifying and indemnified Parties shall keep each other fully advised of all developments, shall provide each other with copies of all documents exchanged in court, and shall cooperate fully with each other in all respects in connection with any such defense as is made.

Section 3.3. Specific Performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that each other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in the United States District Court for the Southern District of Florida or in any State court located in the County of Miami-Dade, in addition to and without prejudice to any other remedy to which it may be entitled, at law or in equity. For the avoidance of doubt, the Parties acknowledge and agree that only the remedies of injunctive relief and specific performance can be sought in court, and that with respect to all other rights and remedies, for breach of this Agreement or otherwise, their sole and exclusive remedy will be final and binding arbitration as set forth in Section 4.8 below.

ARTICLE IV

MISCELLANEOUS

Section 4.1. Adequate Consideration. The Parties agree and acknowledge that the compensation, actions and covenants specified in this Agreement received, or to be received, by them from each other represent adequate consideration to support a full, complete, final, and binding compromise of matters involving disputed issues described herein regardless of whether too much or too little may have been exchanged.

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Section 4.2. Each Party to Bear Its Own Fees and Costs. The parties agree that each Party, except as otherwise provided in Sections 3.1 and 3.2 hereof, shall bear its own attorneys' fees and costs and all other expenses and fees arising in connection with or related in any way to the negotiation of, execution of, and performance of its obligations under, this Agreement and to the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, and any other actions at law or dispute resolution proceedings currently pending between the Parties, and all related matters.

Section 4.3. No Admission of Liability. It is understood and agreed by the Parties that this Agreement and the consideration set forth herein are made in compromise of disputed claims and that, by agreeing to this compromise and settlement, no Party is making or shall be construed to have made an admission of liability as to any claim or demand made by any other Party.

Section 4.4. Covenant Not to Sue. Each PriceSmart Party and each PSC Party covenants and agrees not to institute or pursue legal, equitable or administrative proceedings of any kind ("Legal Proceedings") or encourage or assist a third party in instituting or pursuing Legal Proceedings, or be a voluntary party to or participate in any manner whatsoever in or otherwise bring, assist in bringing, or encourage any Legal Proceedings, against, a PSC Party or a PriceSmart Party, respectively, for any matters released by, or dismissed in connection with, this Agreement, or referred to in the Arbitrations, the Preliminary Injunction Action, the Appeal or the Panama Proceedings. The Parties further covenant and agree that any Party violating this paragraph is solely liable, without limitation to any other right or remedy available to the aggrieved Party, for any and all attorneys' fees and expenses (whether or not allowed by law) of the other Parties as a result of any such violation; provided that nothing stated herein shall be construed to release the Parties from any obligations under this Agreement or to prohibit the Parties from enforcing their rights under this Agreement.

Section 4.5. Compliance with Law; Taxes. Except as expressly noted below, each of the Parties hereto shall perform its obligations under this Agreement in compliance in all material respects with all applicable laws, regulations and other requirements of all governmental authorities having jurisdiction over the Parties or the subject matter of such activities. The Parties will equally split and pay all transfer taxes payable in connection with the conveyances of real property interests pursuant to this Agreement. The Parties acknowledge and agree that no Party hereunder is providing any advice of any kind to any other Party hereunder concerning Taxes or any matters related thereto, and that each Party is solely responsible for all and any Taxes applicable to that Party based on, relating to or arising out of any of the matters addressed or referred to in this Agreement.

Section 4.6. Complete Agreement. This Agreement is intended by the Parties as a final and complete expression of their agreement and understanding with respect to its subject matter. Except to the extent expressly agreed herein with respect to the

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continued obligations of the Parties under other agreements, this Agreement, together with the Escrow Agreement, constitutes the complete Agreement between the Parties and supersedes all prior or contemporaneous agreements or representations, written or oral, concerning the subject matters of this Agreement, and no other act, document, usage or custom shall be deemed to amend or modify this Agreement. The terms of this Agreement are contractual, and may not be changed, modified, altered, interlineated, or supplemented, except by agreement in writing signed by the Party against whom enforcement of the change, modification, alteration, interlineation, or supplementation is sought. Nor may any covenant, representation, warranty, or other provision hereof be waived, except by agreement in writing signed by the Party against whom enforcement of the waiver is sought. No Party has made any representations upon which any other Party has relied that are not contained in this Agreement. The Parties acknowledge to one another that no promise, inducement or agreement not contained herein has been expressed or made to any of them in connection with this Agreement.

Section 4.7. No Assignment. Except as set forth in Section 2.11(b)(ii) hereof, the Parties expressly represent and warrant that they have not assigned or transferred to any person, firm, corporation, partnership, association, or other entity whatsoever any or all of the rights, duties, or obligations embodied or released in this Agreement.

Section 4.8. Applicable Law, Arbitration, and Forum Selection. THIS AGREEMENT AND THE RIGHTS, DUTIES, AND OBLIGATIONS OF THE PARTIES TO THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, PERFORMED, AND ENFORCED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA. To the fullest extent permitted by applicable law, each Party agrees that all disputes and claims, nothing excepted save as set forth in Section 3.3 above, concerning the validity, interpretation, scope, enforceability, performance, termination and/or breach of this Agreement (“Disputes”) shall be referred for final and binding resolution to arbitration in Miami, Florida, U.S.A., under the UNCITRAL Rules (“Rules”) as administered by the American Arbitration Association. The Parties hereby agree that arbitration hereunder shall, save as set forth in Section 3.3 above, be the Parties’ exclusive remedy and that the arbitration decision and award, if any, shall be final and binding upon, and enforceable against, the Parties, and may be confirmed by the judgment of a court of competent jurisdiction. In the event of any conflict between the Rules and this Section, this Section shall govern. Nothing contained in Section 3.3 or in this Section shall be read to compel a Party seeking injunctive relief and/or specific performance to file an action in court, and any Party wishing to seek such relief may equally do so in arbitration, pursuant to the terms hereof, should it so choose and should arbitration provide the particular remedy sought.

Section 4.9. Counterparts. The Parties agree that this Agreement may be executed in counterparts, and deliveries of this Agreement and the documents to be executed hereunder may be made by facsimile transmission or by email bearing the signature(s) of the Parties and showing proper notarials, if applicable. Facsimile transmissions and email transmissions of executed copies of this Agreement and the documents to be executed hereunder shall have the same effect as originals. In the event of delivery by facsimile transmission or by email, the Parties will promptly follow up

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with delivery of originals. Notwithstanding the foregoing, all documents required to be originally executed and/or notarized in the applicable jurisdiction must be delivered as originals. For the avoidance of doubt the Parties agree that (i) on behalf of the PSC Parties, in addition to execution by all the PSC, Parties, Ramiro Ortiz Mayorga, Sr., John Keith and Edgar Zurcher Gurdian will execute this Agreement, and an authorized signator of PSC will initial every page hereof (but excluding the exhibits hereto) and (ii) on behalf of the PriceSmart Parties, in addition to execution by all the PriceSmart Parties, Robert Price and Jack McGrory will execute this Agreement, and an authorized signator of PriceSmart will initial every page hereof (but excluding the exhibits hereto). The individuals listed in subparagraphs (i) and (ii) above shall not be assuming any personal liability by signing this Agreement and shall not be deemed to have made any representations, warranties or covenants in their individual capacity.

Section 4.10. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced as a result of any rule of law or public policy, all other terms and other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

Section 4.11. General Provisions.

(a) To the extent that any covenant in this Agreement requires action by a person other than the Party provided for herein, each such Party hereby agrees to cause such person to comply with and satisfy such covenant.

(b) The Parties hereby agree to cooperate by, among other things, entering into additional agreements as reasonably requested by any Party in order to effectuate the intent of the Parties as represented in this Agreement and the transactions contemplated herein. Without limiting the foregoing, in the event that any document contemplated to be executed pursuant to this Agreement does not comply with the requirements of the local jurisdiction, the Parties agree to make such revisions as are reasonably required to so comply with local jurisdiction requirements. In addition, the Parties agree to take such additional actions as are reasonably required pursuant to the laws of the applicable countries in order to effectuate the intent of the Parties as set forth in this Agreement. Without limiting the foregoing, the Parties agree that, if any documents attached as exhibits hereto are interpreted in a manner inconsistent with the general intent of the Parties as set forth in this Agreement or conflict with this Agreement in any manner, then the terms (and intent) of this Agreement shall prevail.

(c) The language of this Agreement is a product of the mutual effort of the Parties. This Agreement shall be construed fairly as to all Parties, and it shall not be construed for or against any of the Parties on the basis of the extent to which that Party participated in drafting it.

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(d) No waiver of any breach hereof or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar or dissimilar nature. No course of dealing shall be effective to amend, modify, or change any provision of this Agreement.

(e) All rights and remedies of each Party hereto is cumulative of each other and of every other right or remedy such Party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies.

(f) All covenants and agreements and other provisions set forth in this Agreement and made by or on behalf of any of the Parties hereto shall bind and inure to the benefit of the successors, heirs and permitted assigns of such Party, whether or not so expressed.

(g) Each of the undersigned Parties represents that it is authorized to sign this Agreement and perform its obligations hereunder and that this Agreement shall be binding upon them and enforceable in accordance with its terms.

(h) PSC represents that it has the authority to, and by the execution of this Agreement does, terminate and cancel the SPA in its entirety, and acknowledges that no PriceSmart Party has any further obligation, nothing excepted, to any PSC Party or to any former or present shareholder of PSC, S.A. to abide by any of the SPA’s terms or otherwise based on, derived from or in any way relating to the SPA.

(i) Each of PSC and PriceSmart shall cause any of its respective Affiliates that are not a party to this Agreement to authorize and take any action required to be taken by such Affiliate in order to perform any obligation of PSC or PriceSmart, as the case may be, under this Agreement. The PriceSmart Parties and the PSC Parties respectively represent and warrant that their respective Affiliates that are Parties to this Agreement accurately reflect all those Affiliates that have any interests in the matters addressed herein, and hereby respectively agree to indemnify and hold each other harmless in the event that any of their respective Affiliates not a Party hereto asserts a claim or interest against the other Party or one of its Affiliates based on or arising out of the matters addressed herein.

(j) The execution, delivery and performance by any of the PriceSmart Parties of this Agreement will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under (i) any provision of any such PriceSmart Party’s certificate of incorporation, bylaws or other governing documents as they shall be in effect; (ii) any provision of any judgment, decree or order to which such PriceSmart Party is a party or by which it is bound; (iii) any material contract, obligation or commitment to which such PriceSmart Party is a party or by which it is bound; or (iv) any applicable statute, rule or governmental regulation.

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(k) The execution, delivery and performance by any of the PSC Parties of this Agreement will not violate or be in conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under (i) any provision of any such PSC Party’s certificate of incorporation, bylaws or other governing documents as they shall be in effect; (ii) any provision of any judgment, decree or order to which such PSC Party is a party or by which it is bound; (iii) any material contract, obligation or commitment to which such PSC Party is a party or by which it is bound; or (iv) any applicable statute, rule or governmental regulation.

(1) All of the Company Shares are free and clear of all liens, encumbrances and any liabilities, except as may be created hereby. Other than the Company Shares, the shares of Common Stock held by PSC, two (2) shares of PriceSmart Dominicana, S.A. and two (2) shares of PriceSmart Honduras, S.A., PSC does not own any shares of capital stock of, or any other interest in, any of the PriceSmart Parties. In addition, PSC has no options, warrants or other rights to acquire shares of capital stock of, or any other interest in, the PriceSmart Parties.

(m) The Parties expressly acknowledge and agree that this Agreement is not binding on any Party unless and until it has been signed by each and every one of them.

(n) Except as contemplated by this Agreement, this Agreement confers no rights upon any person and/or entity that is not a signatory hereto.

(o) To the extent that any document entered into in pursuant to this Agreement conflicts with the terms or intent of this Agreement, the terms of this Agreement shall control, and the Parties agree to make such revisions as are reasonably necessary to such documents to reflect the intent of the Parties as set forth in this Agreement.

Section 4.12. Notices. All notices, requests, demands, claims and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by confirmed facsimile with a copy sent by another means specified herein; the Business Day after it is sent, if sent for next day delivery to a domestic address by recognized overnight delivery service (e.g., Federal Express); and five (5) Business Days after the date mailed by certified or registered mail, postage prepaid, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to:

If to a PriceSmart Party, addressed to:

PriceSmart, Inc.

9740 Scranton Road

San Diego, California 92121-1745

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Attn: General Counsel

Telephone: (858) 404-8821

Fax: (858) 404-8828

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with a copy to:

Latham & Watkins LLP

600 West Broadway, Suite 1800

San Diego, California 92101-3375

Attn: Robert Burwell

Telephone: (619) 236-1234

Fax: (619) 696-7419

If to a PSC Party, addressed to:

Promerica International

3191 Coral Way, Suite 801

Miami, Florida 33145

Fax.: (305) 461-9632

Attn: Francisco Martinez

with a copy to:

Hunton and Williams

1111 Brickell Avenue, Suite 2500

Miami, FL 33131

Fax: (305) 810-2460

Attn: Fernando Alonso

or to such other place and with such other copies as each of PriceSmart or PSC may designate as to itself by written notice to the other (in accordance with this Section 4.12).

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement, or caused this Agreement to be executed by their duly authorized representatives, to become effective on the day and year first above written.

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement, or caused this Agreement to be executed by their duly authorized representatives, to become effective on the day and year first above written.

PriceSmart, Inc.
By:	/s/ Robert M. Gans
Name:	Robert M. Gans
Title:	Exec. Vice President
PSMT Nicaragua, S.A.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary
Inmobiliaria PSMT Nicaragua, S.A.,
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary
PSMT Nicaragua (BVI), Inc.
By:	/s/ Robert M. Gans
Name:	Robert M. Gans
Title:	Authorized Representative
Pricsmarlandco S.A.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary

[Signatures Continue on the Following Page]

S-1

PSMT Caribe, Inc.
By:	/s/ Robert M. Gans
Name:	Robert M. Gans
Title:	Director
PriceSmart El Salvador, S.A. de C.V.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary
Inmobiliaria PriceSmart El Salvador, S.A. de C.V.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary
Prismar de Costa Rica, S.A.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Secretary
Consultant and Development Services, S.A.
By:	/s/ J. Ernesto Grijalva
Name:	J. Ernesto Grijalva
Title:	Authorized Signatory

[Signatures Continue on the Following Page]

S-2

PriceSmart Honduras, S.A. de C.V.
By:	/s/ Grijalva
Name:	Grijalva
Title	Secretary
PriceSmart Dominicana, S.A.
By:	/s/ Grijalva
Name:	Grijalva
Title	Secretary
PriceSmart Panama, S.A.
By:	/s/ Grijalva
Name:	Grijalva
Title	Secretary

[Signatures Continue on the Following Page]

S-3

PriceSmart (Guatemala), S.A.
By:	/s/ Grijalva
Name:	Grijalva
Title:	Secretary
Ventures Services, Inc.
By:	/s/ Robert M. Gans
Name:	Robert M. Gans
Title:	CEO
For and on behalf of PriceSmart:
By:	/s/ Robert Price
Name:	Robert Price
By:	/s/ Jack McGrory
Name:	Jack McGrory
PSC, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Tecnicard, Inc.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:

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S-4

Banco de la Producción S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Banca Promerica S.A. (Costa Rica)
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Banco Promerica S.A. (Honduras)
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Banco Promerica S.A. (El Salvador)
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Banco de Ahorro y Credito Promerica C. Por A., formerly known as Financiera Promerica, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:

[Signatures Continue on the Following Page]

S-5

St. Georges Bank & Company, Inc.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Parque Industrial y Servicios de Coyol, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Caribe Hospitality, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Capital & Advice, Inc., formerly known as Promerica Capital Markets
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Portafolio Inmobiliario S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:

[Signatures Continue on the Following Page]

S-6

Desarollos Comerciales Centroamericanaos PPF, S.A. (“DCC”)
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Global Real Estate Holdings, Inc., formerly known as Promerica Property Fund, Inc.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Inmobiliaria El Retiro S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Promerica, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
Procard de El Salvador, S.A. de C.V.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:

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S-7

Procard De Costa Rica, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
PremiaCard de Guatemala, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:
For and on behalf of PSC, and also in their personal capacities for purposes of Section 2.14 above:
By:	/s/ Edgar Zurcher Gurdian
Name:	Edgar Zurcher Gurdian
By:	/s/ Ramiro Ortiz Mayorga, Sr.
Name:	Ramiro Ortiz Mayorga, Sr.
By:	/s/ John Keith
Name:	John Keith
Credomatic International Corporation
By:	/s/ Juan Carlos Paez
Name:	Juan Carlos Paez
Title:	COO

S-8

EXHIBIT A

Form of Escrow Agreement

[to be inserted]

Exhibit

EXHIBIT B-1 to B-6

Form of Quitclaim Agreements

[to be inserted]

Exhibit

EXHIBIT C

Form of Panama Quitclaim Agreement

[to be inserted]

Exhibit

EXHIBIT D-1

Form of Instrument of Transfer of Shares

[to be inserted]

Exhibit

EXHIBIT D-2

Form of Indemnity for Shares Lost

[to be inserted]

Exhibit

EXHIBIT D-3

Form of Resolution of Board of Directors

[to be inserted]

Exhibit

EXHIBIT D-4

Form of Declaration of Shares Lost

[to be inserted]

Exhibit

EXHIBIT D-5

Form of Director Acceptance Letters

[to be inserted]

Exhibit

EXHIBIT D-6

Form of Director Resignation Letters

[to be inserted]

Exhibit

EXHIBIT D-7

Form of Shareholders Resolution

[to be inserted]

Exhibit

EXHIBIT E

Form of Contrato de Cesion de Derechos de Marcas

[to be inserted]

Exhibit

EXHIBIT F

Diagram of Site

[to be inserted]

Exhibit

EXHIBIT G-1

Form of Managua Corner Deed

[to be inserted]

Exhibit

EXHIBIT G-2

Form of Managua Toy Store Deed

[to be inserted]

Exhibit

EXHIBIT H

Form of Managua Easement Agreement

[to be inserted]

Exhibit

EXHIBIT I

Depiction of Zapote Property and Easement

Exhibit

EXHIBIT J

Form of Finiquito Parcial (Transfer of Beneficial Interests)

[to be inserted]

Exhibit

EXHIBIT K

Form of Assignment and Assumption of Lease

[to be inserted]

Exhibit

EXHIBIT L

List of Bank Accounts

[to be inserted]

Exhibit

EXHIBIT M

Form of Put Agreement

[to be inserted]

Exhibit

EXHIBIT N

National Union Assignment and Release

[to be inserted]

Exhibit

EXHIBIT O-1

Joint Request for Order Terminating Arbitration With Prejudice

(Miami Arbitration)

[to be inserted]

Exhibit

EXHIBIT O-2

Order Terminating Arbitration With Prejudice

(Miami Arbitration)

[to be inserted]

Exhibit

EXHIBIT O-3

Joint Request for Order Terminating Arbitration With Prejudice

(San Diego Arbitration)

[to be inserted]

Exhibit

EXHIBIT O-4

Order Terminating Arbitration With Prejudice

(San Diego Arbitration)

[to be inserted]

Exhibit

EXHIBIT O-5

Joint Notice of Voluntary Dismissal With Prejudice

(Preliminary Injunction Action)

Exhibit

EXHIBIT O-6

Order of Dismissal With Prejudice

(Preliminary Injunction Action)

Exhibit

EXHIBIT O-7

Joint Notice of Voluntary Dismissal of Appeal With Prejudice

(Appeal)

Exhibit

EXHIBIT O-8

Order of Dismissal of Appeal With Prejudice

(Appeal)

Exhibit

EXHIBIT P (SECTION 2.6(i)

ZAPOTE EASEMENT AGREEMENT

Exhibit

JOINT ESCROW INSTRUCTIONS AND AGREEMENT

This JOINT ESCROW INSTRUCTIONS AND AGREEMENT (this “Agreement”) is made as of February 8, 2008, by and among PriceSmart, Inc. (“PriceSmart”), PSC, S.A. (“PSC”), and Stewart Title Latin America (“Escrow Agent” and collectively with PriceSmart and PSC, the “Parties” and each, a “Party”).

RECITALS

WHEREAS, PriceSmart, PSC and their affiliates are entering into that certain Settlement Agreement and Release dated as of the date hereof (the “Master Settlement Agreement”; all capitalized terms not defined herein shall have the same meaning set forth in the Master Settlement Agreement) to enter into certain transactions with regard to property interests, to provide for termination of all of their relationships and agreements except as expressly set forth in the Master Settlement Agreement, and to resolve their differences and settle and compromise any and all claims of whatsoever kind or nature that may exist between them, in accordance with and subject to the terms and conditions set forth in the Master Settlement Agreement; and

WHEREAS, pursuant to the terms of the Master Settlement Agreement, PriceSmart and PSC are required to make certain deposits into Escrow (as defined below) in order to, among other things, facilitate the transactions contemplated in the Master Settlement Agreement;

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

AGREEMENT

1. Opening of Escrow. PSC and PriceSmart hereby appoint the Escrow Agent to act as such and authorize and instruct the Escrow Agent to deliver the monies and documents deposited into escrow as herein provided, and the Escrow Agent agrees to act as agent, subject to the terms and conditions set forth herein. Contemporaneously with the execution of this Agreement, PriceSmart and PSC shall open an escrow account (the “Escrow Account”) with Escrow Agent (the “Escrow”), located at Stewart Title Latin America, 1990 Post Oak Boulevard, Suite 100, Houston, Texas 77056, Attn: Christopher Hill, by delivering to Escrow Agent a copy of this Agreement that has been executed by all parties other than Escrow Agent. Escrow Agent will execute copies of this Agreement and promptly return fully executed copies hereof to PriceSmart and PSC. Escrow shall be deemed open, and Escrow Agent hereby agrees to hold, invest and disburse the funds deposited with Escrow Agent pursuant to this Agreement (the “Escrow Funds”), in accordance with the terms of this Agreement, upon Escrow Agent’s execution hereof. All wire transfers to be made hereunder or pursuant to the Master Settlement Agreement will be made to Comerica Bank, 2015 Manhattan Beach Boulevard, Redonda Beach, California 90278-1205, ABA No. 111000753, SWIFT No. MNBDUS33, Account Name: Stewart Title Latin America, Account No.: 18811066557, Reference: PriceSmart/PSC Settlement, except that ONE MILLION AND NO/100 UNITED STATES DOLLARS (U.S.

2. Closing of Escrow.

a. Corner Pad and Toy Store Pad. On or before the Effective Date, PriceSmart shall select a notary who is reasonably acceptable to PSC (the “Managua Notary”) and who shall be responsible for executing and filing, or causing to be filed, the Managua Property Deeds and the Managua Easement Agreement with the Registrar of the Public Registry of the Department of Managua in Nicaragua (the “Managua Registry”) and with each other authority with which real property transfer documents are customarily filed in the related jurisdiction. Upon selection, the Managua Notary shall send a confirmation letter to PriceSmart, with a copy to PSC and the Escrow Agent, acknowledging that such Managua Notary has reviewed this Agreement and accepts the responsibilities of the Managua Notary set forth herein. Contemporaneously with the Effective Date, the authorized representatives of PriceSmart and PSC shall appear before the Managua Notary who shall (i) execute the Managua Property Deeds and the Managua Easement Agreement in the protocol book of the Managua Notary, (ii) issue a certified original Public Deed of each of the Managua Property Deeds and the Managua Easement Agreement as executed in the protocol book (each, a “Managua Testimonio”) and (iii) file each Managua Testimonio with the Managua Registry. The Managua Notary shall send to the Escrow Agent a legalized copy of each Managua Testimonio with its corresponding copy of the presentation slip for registration before the Managua Registry. The Managua Notary, on behalf of PSC and PriceSmart, shall be responsible for communicating with the appropriate governmental officials from time to time on the progress of all necessary governmental approvals. Upon receipt by the Managua Notary of the recorded Managua Property Deeds and the recorded Managua Easement Agreement (or the deed that contains the Managua Easement Agreement), in each case, with the proper corresponding registration annotation on the document and sealed by the Managua Registry, providing official confirmation that title to the Corner Pad and the Toy Store Pad has been transferred to PSC and that the easement rights under the Managua Easement Agreement have been granted to PriceSmart, the Managua Notary shall have two (2) Business Days to provide legalized copies of the Managua Property Deeds and the Managua Easement Agreement (or the deed that contains the Managua Easement Agreement) to the Escrow Agent and simultaneously to PriceSmart the original Testimonio of the Managua Easement Agreement and legalized copies of the Managua Property Deeds, and to PSC the original Testimonios of the Managua Property Deeds and a legalized copy of the Managua Easement Agreement. Within two (2) Business Days of Escrow Agent’s receipt of the legalized copies of the recorded Managua Property Deeds and the recorded Managua Easement Agreement (or the deed that contains the Managua Easement Agreement) and provided that PriceSmart and PSC have delivered to Escrow Agent the information necessary for Escrow Agent to do so, Escrow Agent hereby agrees to prepare and deliver to PriceSmart and PSC an estimated closing statement (the “Managua Closing Statement”) for review and approval, which shall set forth the

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costs payable under Section 2.5 of the Master Settlement Agreement and the prorations and credits provided for herein (and PriceSmart and PSC shall cooperate and deliver such information as Escrow Agent shall reasonably request in order to prepare the same). Except as otherwise provided herein, any revenue or expense amount which cannot be ascertained with certainty as of the Managua Closing (as defined below) shall be tentatively prorated on the basis of PriceSmart’s and PSC’s reasonable estimates of such amount. Each Party shall notify Escrow Agent within two (2) Business Days after its receipt of such Managua Closing Statement of any items which it disputes, and the Parties shall attempt in good faith to reconcile differences not later than one (1) Business Day before the Managua Closing. The Managua Closing shall not occur until such disputes have been reconciled. Subject to the immediately preceding sentence, the disbursement of all funds and documents contemplated herein relating to the Corner Pad, the Toy Store Pad and the Managua Easement Agreement (or the deed containing the Managua Easement Agreement) (the “Managua Closing”) shall occur within seven (7) Business Days of Escrow Agent’s receipt of the legalized copies of the recorded Managua Property Deeds and the recorded Managua Easement Agreement (or the deed containing the Managua Easement Agreement).

b. Zapote Property. On or before the Effective Date, PriceSmart and PSC shall select two (2) notaries (the “Costa Rica Notaries”) who shall jointly be responsible for executing and filing, or causing to be filed, the Transfer of Beneficial Interest with the Registrar of the Public Registry of the Republic of Costa Rica (the “Costa Rica Registry”) and with each other authority with which real property transfer documents are customarily filed in the related jurisdiction. Upon selection, the Costa Rica Notaries shall send a confirmation letter to PriceSmart, with a copy to PSC and the Escrow Agent, acknowledging that such Costa Rica Notaries have reviewed this Agreement and accept their responsibilities set forth herein. Contemporaneously with the Effective Date, the authorized representatives of PriceSmart and PSC shall appear before the Costa Rica Notaries who shall (i) execute the Transfer of Beneficial Interest in the protocol book of the Costa Rica Notaries, (ii) issue a certified original Public Deed of the Transfer of Beneficial Interest as executed in the protocol book (the “Costa Rica Testimonio”) and (iii) file the Costa Rica Testimonio with the Costa Rica Registry. Any of the Costa Rica Notaries shall send to the Escrow Agent a legalized copy of the Costa Rica Testimonio with its corresponding copy of the presentation slip for registration before the Costa Rica Registry. The Costa Rica Notaries, on behalf of PSC and PriceSmart, shall be responsible for communicating with the appropriate governmental officials from time to time on the progress of all necessary governmental approvals. Upon receipt by the Costa Rica Notaries of the recorded Transfer of Beneficial Interest with the proper corresponding registration annotation on the document and sealed by the Costa Rica Registry, providing official confirmation of the acceptance of the Transfer of Beneficial Interest, either of the Costa Rica Notaries shall immediately provide legalized copies of the Transfer of Beneficial Interest to the Escrow Agent and simultaneously to PriceSmart the original Costa Rica Testimonio, and to PSC a legalized copy of the Transfer of Beneficial Interest. Within two (2) Business Days of Escrow Agent’s receipt of the legalized copies of the recorded Transfer of Beneficial Interest and provided that PriceSmart and PSC have delivered to Escrow Agent the information necessary for Escrow Agent to do so, Escrow Agent hereby agrees to prepare and deliver to PriceSmart and PSC an estimated closing statement (the “Zapote Closing Statement”) for review and approval, which shall set forth the costs payable under Section 2.6 of the Master Settlement Agreement and the prorations and credits provided for herein (and PriceSmart and PSC shall cooperate and deliver

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such information as Escrow Agent shall reasonably request in order to prepare the same). Except as otherwise provided herein, any revenue or expense amount which cannot be ascertained with certainty as of the Zapote Closing (as defined below) shall be tentatively prorated on the basis of PriceSmart’s and PSC’s reasonable estimates of such amount. Each Party shall notify Escrow Agent within two (2) Business Days after its receipt of such Zapote Closing Statement of any items which it disputes, and the parties shall attempt in good faith to reconcile differences not later than one (1) Business Day before the Zapote Closing. The Zapote Closing shall not occur until such disputes have been reconciled. Subject to the immediately preceding sentence, the disbursement of all funds and documents contemplated herein relating to the Transfer of Beneficial Interest (the “Zapote Closing”) shall occur within seven (7) Business Days of Escrow Agent’s receipt of the legalized copies of the recorded Transfer of Beneficial Interest. Upon the Zapote Closing, the Escrow Agent is hereby authorized to deliver from the Subescrow Account the Zapote Property Purchase Price, adjusted for any and all prorations, to the account designated in wiring instructions provided by PSC (but located in the country of Costa Rica).

3. Deposits.

a. Zapote Property. Pursuant to Section 2.6(c) of the Master Settlement Agreement, contemporaneously with the Effective Date, PriceSmart shall deposit into the Subescrow Account the sum of ONE MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $1,000,000.00) (the “Zapote Property Purchase Price”), and Escrow Agent shall deliver such sum to PSC upon the Zapote Closing pursuant to Section 2b. above.

b. Lease Terminations. Pursuant to Section 2.6(d) of the Master Settlement Agreement, contemporaneously with the Effective Date, PriceSmart shall deposit into the Escrow the sum of TWO HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $250,000.00), and Escrow Agent shall deliver such sum in accordance with Section 2.6(f) of the Master Settlement Agreement as follows:

(1) If the Zapote Lease with the car dealership has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement, then on or before twelve (12) months after the Effective Date of the Master Settlement Agreement, PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously to PriceSmart) to release to PSC ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S.$125,000.00) of the Zapote Escrow Amount (the “Car Dealership Amount”), Unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC (the “Car Dealership Objection Period”), a written statement from either (at PriceSmart’s option) Edgar Zurcher Gurdian or an accountant from one of Price WaterhouseCoopers, KPMG International or Deloitte and Touche stating that either the Zapote Lease with the car dealership has not been terminated or that the premises leased thereunder have not been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing conditions, then the Escrow Agent shall release the Car Dealership Amount to PSC, subject to the provisions of Section 3b.(3) below. If PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an

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accountant from one of the above-referenced firms, the Escrow Agent shall hold the Car Dealership Amount in Escrow, and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountant, with the same procedure set forth above applying to such second demand). In the event (A) PSC does not provide such written demand upon the Escrow Agent on or before twelve (12) months after the Effective Date of the Master Settlement Agreement or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or an accountant as provided above and such disputed items are not cured prior to that date that is twelve (12) months after the Effective Date of the Master Settlement Agreement, then the Escrow Agent shall release to PriceSmart the Car Dealership Amount.

(2) If the Zapote Lease with the restaurant has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement, then on or before thirty-six (36) months after the Effective Date of the Master Settlement Agreement, PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously to PriceSmart) to release to PSC ONE HUNDRED TWENTY-FIVE THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $125,000.00) of the Zapote Escrow Amount (the “Restaurant Amount”). Unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC (the “Restaurant Objection Period”), a written statement from either (at PriceSmart’s option) Edgar Zurcher Gurdian or an accountant from one of PriceWaterhouseCoopers, KPMG International or Deloitte and Touche stating that either the Zapote Lease with the restaurant has not been terminated or that the premises leased thereunder have not been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing conditions, then the Escrow Agent shall release the Restaurant Amount to PSC, subject to the provisions of Section 3b.(3) below. If PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an accountant from one of the above-referenced firms, the Escrow Agent shall hold the Restaurant Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountant, with the same procedure set forth above applying to such second demand). In the event (A) PSC does not provide such written demand upon the Escrow Agent on or before thirty-six (36) months after the Effective Date of the Master Settlement Agreement or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or an accountant as provided above and such disputed items are not cured prior to that date that is thirty-six (36) months after the Effective Date of the Master Settlement Agreement, then the Escrow Agent shall release to PriceSmart the Restaurant Amount. The Parties intend that PSC will be paid (a) the Car Dealership Amount only if the Zapote Lease with the car dealership has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement on or before twelve (12) months after the Effective Date of the Master Settlement Agreement and (b)

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the Restaurant Amount only if the Zapote Lease with the restaurant has been terminated and the premises leased thereunder have been vacated and surrendered in accordance with Sections 2.6(d) and (e) of the Master Settlement Agreement on or before thirty-six (36) months after the Effective Date of the Master Settlement Agreement.

(3) Notwithstanding anything to the contrary contained in this Section 3.b, if after the Zapote Closing the tenants under either or both of the Zapote Leases fail to pay any rent or other amounts due (the “default amounts”) under the respective lease prior to the earlier of the termination date of such lease or the respective dates set forth in Sections 3b.(1) or 3b.(2) above, then any payments of the Zapote Escrow Amount due to PSC under this Section 3.b will be reduced by the default amounts with respect to such lease, and such default amounts shall be paid by the Escrow Agent to PriceSmart. During each of the Car Dealership Objection Period and the Restaurant Objection Period, as applicable, if such default amounts exist, PriceSmart may provide to the Escrow Agent written notice (which notice shall simultaneously be delivered to PSC) of such default amounts for the applicable Zapote Lease. Upon receipt of such notice, the Escrow Agent shall immediately release and disburse the default amount to PriceSmart, without requiring further confirmation from PSC.

(4) Termination of Certain Agreements. Pursuant to Section 2.7(b) of the Master Settlement Agreement, contemporaneously with the Effective Date, PriceSmart shall deposit into the Escrow Account THREE MILLION ONE HUNDRED FIFTY THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $3,150,000) (the “Miscellaneous Escrow Funds”). PSC may provide a written demand upon the Escrow Agent (which shall be given simultaneously in writing to PriceSmart with copies of all attachments), attaching (A) an Order Terminating Arbitration With Prejudice (or other applicable documents resulting in the Arbitrations having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to both of the Arbitrations, (B) an Order of Dismissal With Prejudice (or other applicable documents resulting in the Preliminary Injunction Action having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to the Preliminary Injunction Action, and (C) an Order of Dismissal of Appeal With Prejudice (or other applicable documents resulting in the Appeal having been dismissed with prejudice) that has been executed and issued by the applicable forum with respect to the Appeal, to release to PSC TWO MILLION ONE HUNDRED ELEVEN THOUSAND THREE HUNDRED NINETY-FIVE AND NO/100 UNITED STATES DOLLARS (U.S. $2,111,395) of the Miscellaneous Escrow Funds to the account designated in wiring instructions provided by PSC (but located within the country of Panama), with the remaining ONE MILLION THIRTY-EIGHT THOUSAND SIX HUNDRED FIVE AND NO/100 UNITED STATES DOLLARS (U.S. $1,038,605) of the Miscellaneous Escrow Funds being released to PSC to that certain account with BBVA Miami Branch, One Biscayne Tower, 2 South Biscayne Boulevard, Suite 3301, Miami, Florida 33131, ABA: 0660-10607, Swift Code: BBVAUS3M, Para la Cuenta Numero: 26010, De: Zurcher, Montoya & Zurcher, S.A.); unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC, a written objection, which objection must be based upon (A) an Order Terminating Arbitration With Prejudice (or other applicable documents resulting in the Arbitrations having been dismissed with

prejudice) not having been executed and issued by the applicable forum with respect to one or more of the Arbitrations, (B) an Order of Dismissal With Prejudice (or other applicable documents resulting in the Preliminary Injunction Action having been dismissed with prejudice) not having been executed and issued by the applicable forum with respect to the Preliminary Injunction Action and/or (C) an Order of Dismissal of Appeal With Prejudice (or other applicable documents resulting in the Appeal having been dismissed with prejudice) not having been executed and issued by the applicable forum with respect to the Appeal, then the Escrow Agent shall release the Miscellaneous Escrow Funds to PSC; if PriceSmart timely provides to the Escrow Agent such written notice of objection, the Escrow Agent shall hold the Miscellaneous Escrow Funds in Escrow and the procedure set forth above shall again be applicable (i.e., PSC may provide a second demand after curing any issues raised by PriceSmart, with the same confirmation procedure set forth above applying to such second demand); in the event (A) PSC does not provide such written demand upon the Escrow Agent on or before December 31, 2008 or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PriceSmart by timely delivering to the Escrow Agent a written notice of objection and such disputed items are not cured on or before December 31, 2008, then the Escrow Agent shall release to PriceSmart the Miscellaneous Escrow Funds. Notwithstanding the foregoing, in connection with the current proceedings in Panama, as a condition to obtaining a release of the Miscellaneous Escrow Funds, PSC only needs to deliver a properly executed and notarized Quitclaim Agreement in the form attached to the Master Settlement Agreement as Exhibit C.

c. Smart Points Balance Amount. Pursuant to Section 2.7(c) of the Master Settlement Agreement, contemporaneously with the Effective Date, PSC shall deposit into the Escrow the sum of ONE HUNDRED EIGHTY-EIGHT THOUSAND TWENTY-SIX AND 63/100 UNITED STATES DOLLARS (U.S. $188,026.63) (the “Smart Points Balance Amount”). PriceSmart may provide at anytime until May 31, 2008 a written demand upon the Escrow Agent (which shall be given simultaneously to PSC, together with an invoice and the original of the Smart Checks or vouchers) to release to PriceSmart an amount equal to the amount of vouchers redeemed by PriceSmart after October 31, 2007 and through May 1, 2008 and which have not been previously reimbursed by PSC to PriceSmart (the “Smart Points Claim Amount”). In addition, such demand may include a claim for reimbursement from the Smart Points Balance Amount equal to the damages incurred by PriceSmart due to a breach by PSC of any of its representations or warranties set forth in subsection 2.7(c) of the Master Settlement Agreement (the “Offset Damages Amount”). Any such demand by PriceSmart for the Offset Damages Amount shall be accompanied by evidence of the breach by PSC of such representations or warranties. Unless PSC provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PriceSmart (the “Smart Balance Objection Period”), a written statement from an accountant from one of Price WaterhouseCoopers, KPMG International or Deloitte and Touche stating that PriceSmart’s claim is inaccurate, together with a reasonably detailed explanation of the reasons such claim is inaccurate, then the Escrow Agent shall release the Smart Points Claim Amount plus the Offset Damages Amount to PriceSmart. If PSC timely provides to the Escrow Agent such statement from one of the above-referenced firms, the Escrow Agent shall hold the Smart Points Balance Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PriceSmart may send a second demand after curing any issues raised by such accountant, with the same procedure set forth above

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applying to such second demand). In the event (A) PriceSmart does not provide such written demand upon the Escrow Agent on or before May 31, 2008 or (B) PriceSmart does timely provide such written demand upon the Escrow Agent, but such demand is disputed by PSC by timely delivering to the Escrow Agent a written statement from an accountant as provided above and such disputed items are not cured on or before May 31, 2008, then the Escrow Agent shall release to PSC the Smart Points Balance Amount. Any remaining balance of the Smart Points Balance Amount after the payment of the Smart Points Claim Amount plus the Offset Damages Amount to PriceSmart shall be released immediately by the Escrow Agent to PSC.

d. Termination of Warehouse Rights. Pursuant to Section 2.9(b) of the Master Settlement Agreement, contemporaneously with the Effective Date, PriceSmart shall deposit into the Escrow TWO MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $2,000,000.00) (the “Branch Lease Escrow Amount”). (i) PSC may provide a written demand upon the Escrow Agent within three (3) Business Days after that date that is sixty (60) days after the Effective Date (which shall be given simultaneously to PriceSmart) confirming that all the Branch Leases governing warehouse site(s) have been terminated and the premises leased thereunder have been vacated and surrendered with all of PSC’s property and fixtures removed in a reasonable manner by sixty (60) days after the Effective Date, and requesting the release of the Branch Lease Escrow Amount less the sum of ONE HUNDRED THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $100,000.00) (such remainder being referred to as the “Termination Amount”) to PSC, to the account designated in wiring instructions provided by PSC (but located within the country of Panama); unless PriceSmart provides to the Escrow Agent, within five (5) Business Days after receipt of such demand from PSC, a written statement from either (at PriceSmart’s option) Edgar Zurcher Gurdian or an accountant from one of PriceWaterhouseCoopers, KPMG International or Deloitte and Touche stating that either any of such Branch Leases have not been vacated or that any of such premises have not been surrendered with all of PSC’s property and fixtures removed in a reasonable manner, together with a reasonably detailed explanation of the actions still to be taken to satisfy the foregoing condition, then the Escrow Agent shall release the Termination Amount from the Branch Lease Escrow Amount to PSC; if PriceSmart timely provides to the Escrow Agent such statement from Mr. Zurcher or an accountant from one of the above-referenced firms, the Escrow Agent shall hold the Termination Amount in Escrow and the procedures set forth above shall again be applicable (i.e., PSC may send a second demand after curing any issues raised by Mr. Zurcher or such accountants, with the same procedure set forth above applying to such second demand), and (ii) in the event that (A) PSC does not provide written demand to the Escrow Agent within three (3) Business Days after that date that is sixty (60) days after the Effective Date confirming that all Branch Leases have been terminated and the premises leased thereunder have been vacated and surrendered within sixty (60) days after the Effective Date with all of PSC’s property and fixtures removed in a reasonable manner or (B) PSC does timely provide such written demand upon the Escrow Agent, but such demand has been disputed by PriceSmart by timely delivering to the Escrow Agent a written statement from Mr. Zurcher or such accountant, as provided above and such disputed items are not cured prior to that date that is sixty (60) days after the Effective Date, the Escrow Agent shall release the Branch Lease Escrow Amount to PriceSmart. Notwithstanding the immediately preceding sentence, if PSC has caused its property and fixtures to be substantially removed within sixty (60) days after the Effective Date, but PriceSmart has provided a written statement from either Mr. Zurcher or an accountant from one of the above-referenced accounting firms as provided above based solely on there being some minor items

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that have not yet been removed, then PSC shall have until five (5) Business Days after the giving to PSC of such written statement to cure such minor items and to submit another demand for release of the Termination Amount (and the procedures set forth above shall again be applicable, but there will be no further cure periods after the expiration of such five (5) Business Day period). In addition, the Parties agree that PSC shall not be required to remove items that would be unreasonable to remove, such as, by example only, electrical outlets installed in the floor of the premises. If the Termination Amount is released to PSC as provided above, the remaining amount of ONE HUNDRED THOUSAND AND NO/100 UNITED STATES DOLLARS (U.S. $100,000.00) shall be held by the Escrow Agent and can be drawn on by PriceSmart (by notice to the Escrow Agent, with such notice being simultaneously given to PSC), to pay costs incurred by PriceSmart to return any of the premises to the condition required by the applicable Branch Leases. The Escrow Agent shall immediately release to PriceSmart any such amounts set forth in a demand letter from PriceSmart, without requiring further confirmation from PSC. If PriceSmart has not made demand for payment of any such amount within thirty (30) days after release of the Termination Amount to PSC, then any portion of such amount for which PriceSmart has not made such demand shall be released to PSC after the expiration of such thirty (30) day period.

e. Put Agreement. Pursuant to Section 2.10 of the Master Settlement Agreement, PriceSmart and PSC are executing and depositing contemporaneously herewith the executed but undated Put Agreement into Escrow. Escrow Agent hereby agrees to hold such Put Agreement, or take any action required with regard to such Put Agreement, in accordance with the terms and conditions of Section 2.10 of the Master Settlement Agreement. Upon release of the executed counterparts of the Put Agreement pursuant to Section 2.10 of the Master Settlement Agreement, the Escrow Agent shall promptly deliver an original, fully executed Put Agreement to PSC and to PriceSmart.

g. Escrow Accounts. The Escrow Funds shall be invested by Escrow Agent in interest-bearing accounts, which accounts may be withdrawn immediately upon demand and do not carry any early withdrawal penalties or other monetary penalties or charges. For tax purposes, any interest or other income earned with respect to the Escrow Funds shall be deemed the property of PriceSmart pursuant to the terms of the Master Settlement Agreement and this Agreement and shall be credited and paid to PriceSmart.

4. Costs and Prorations.

a. Closing Costs and Escrow Fees. Upon the Managua Closing and the Zapote Closing, except as otherwise provided herein, PriceSmart and PSC shall each pay to Escrow Agent one-half (1/2) of all closing costs in connection with the applicable transfer including, without limitation, Escrow fees, registry fees and notary fees. All other costs or expenses in connection with the transfer of the Corner Pad, the Toy Store Pad and the Zapote Property (the “Properties”) not otherwise provided for in this Agreement shall also be shared by PriceSmart and PSC on a 50-50 basis. If there are excess funds left in Escrow after both the Managua Closing and Zapote Closing and the consummation of all other duties of Escrow Agent herein, then Escrow Agent shall reimburse to PriceSmart and PSC, as applicable based upon the Party that overpaid funds into Escrow, the overage within ninety (90) days of the Managua Closing, the Zapote Closing or the consummation of all other duties of Escrow Agent herein, whichever is later.

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b. Transfer Taxes. Notwithstanding the foregoing Section 4a., PriceSmart and PSC will equally split and pay all transfer taxes payable in connection with the conveyances of real property interests pursuant to the Master Settlement Agreement. PriceSmart and PSC acknowledge and agree that neither is providing any advice of any kind to the other concerning taxes or any matters related thereto, and that, except as provided above, each Party is solely responsible for all and any taxes applicable to that Party based on, relating to or arising out of any of the matters addressed or referred to in this Agreement and the Master Settlement Agreement.

c. Zapote Title Fees. If PriceSmart elects to obtain a policy of title insurance, PriceSmart, as transferee of the Zapote Property, shall bear the cost of the premium which would be required for a policy of title insurance insuring PriceSmart in the amount of the Zapote Property Purchase Price.

d. Prorations. All income and expenses for the applicable Property shall be apportioned on an accrual basis and paid through Escrow as of the day of the Managua Closing or the Zapote Closing, as applicable, as if the applicable transferee were vested with title to such Property during the entire day upon which the Managua Closing or Zapote Closing, as applicable, occurs. Such prorated items include without limitation, the following:

(1) Taxes and Assessments. All current real property taxes and all payments and assessments on the Properties shall be prorated through Escrow between the applicable transferor and the applicable transferee, based upon the latest available tax information, using the customary escrow procedures, as of the day of the Managua Closing or the Zapote Closing, as applicable. Any taxes levied upon the Corner Pad or the Toy Store Pad applicable to the period prior to the Managua Closing shall be paid by PriceSmart. From and after the Managua Closing, PSC shall pay any such taxes levied upon the Corner Pad or the Toy Store Pad. Any taxes levied upon the Zapote Property applicable to the period prior to the Zapote Closing shall be paid by PSC. From and after the Zapote Closing, PriceSmart shall pay any such taxes levied upon the Zapote Property. To the extent any taxes are levied upon a Property as part of a larger tax parcel, with respect to prorations, the applicable transferor shall pay the taxes for the period prior to the applicable closing. From and after the applicable closing, the applicable transferee shall pay such portion of the taxes levied upon the land and improvements that are attributable to its Property. Such portion of the taxes levied upon the land (the “Land Tax”) shall be calculated by multiplying the total amount of such Land Tax by a fraction, the numerator of which shall equal the area of land occupied by such Property and the denominator of which shall equal the entire area of land within the tax parcel. Such portion of the taxes levied upon the improvements on the Property (the “Building Tax”) shall be as separately apportioned in the tax bill or, if not separately apportioned, then such Building Tax shall be calculated by multiplying the total amount of such Building Tax by a fraction, the numerator of which shall equal the square meters occupied by such improvements upon the Property and the denominator of which shall equal the square meters of all of the improvements within the tax parcel. From and after the applicable

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closing, until such Property shall become a separate tax parcel, the applicable transferee shall pay to the applicable transferor, at least thirty (30) days before any real property taxes and all payments and assessments become due and payable, such portion, as calculated pursuant to this paragraph, of the Land Tax and the Building Tax attributable to its Property.

(2) Existing Agreements. All amounts payable under any existing agreements (other than “Tenant Leases” (as defined below)) shall be prorated, and as to each service provider, operating expenses payable or paid to such service provider in respect to the billing period of such service provider in which the Managua Closing or the Zapote Closing, as applicable, occurs (the “Current Billing Period”), shall be prorated on a per diem basis based upon the number of days in the Current Billing Period prior to the applicable closing (which shall be allocated to the applicable transferor) and the number of days in the Current Billing Period from and after the applicable closing (which shall be allocated to the applicable transferee), and assuming that all charges are incurred uniformly during the Current Billing Period. If actual bills for the Current Billing Period are unavailable as of the Managua Closing or Zapote Closing, as applicable, then such proration shall be made on an estimated basis upon the most recently issued bills, subject to readjustment upon receipt of actual bills, but in no event later than ninety (90) days after the applicable closing.

(3) Rents. All rentals and other tenant charges and reimbursements (“Rents”) received in respect of the month in which the Managua Closing or Zapote Closing, as applicable, occurs (the “Current Month”), in connection with any leases in effect on a Property (the “Tenant Leases”) as of the applicable closing, shall be prorated on a per diem basis based upon the number of days in the Current Month prior to the Managua Closing or Zapote Closing, as applicable (which shall be allocated to the applicable transferor) and the number of days in the Current Month from and after the Managua Closing or Zapote Closing, as applicable (which shall be allocated to the applicable transferee). If any Rents shall be due but unpaid as of the Managua Closing or the Zapote Closing, as applicable, then the next payment of Rents by such tenant shall be applied, first, to the payment of such past due Rents. If past due Rents exist and the applicable transferee collects any Rents for the Corner Pad, the Toy Store Pad or the Zapote Property, as applicable, following the Managua Closing or Zapote Closing, as applicable, such transferee shall, within ten (10) days after the receipt thereof, deliver to the transferor such amount of the Rents received equal to the amount of such past due Rents.

(4) Payment Obligation. If, after computation of the prorations and other adjustments set forth above in this subsection 4, either the Managua Closing Statement or the Zapote Closing Statement shows that either Party must deposit additional funds into Escrow, such Party shall promptly deposit into Escrow the amount of such additional funds.

(e) Security Deposits. The transferee of a Property shall receive a credit at the Managua Closing or Zapote Closing, as applicable, for the current balance of the security deposits, if any, held by the transferor under the applicable Tenant Leases, and upon such closing, the applicable transferee shall assume full responsibility for all security deposits under the Tenant Leases.

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5. Notices. All notices, requests, demands, claims and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by confirmed facsimile with a copy sent by another means specified herein; the Business Day after it is sent, if sent for next day delivery to a domestic address by recognized overnight delivery service (e.g., Federal Express); and five (5) Business Days after the date mailed by certified or registered mail, postage prepaid, if sent by certified or registered mail, return receipt requested. In each case notice shall be sent to:

If to PriceSmart:	PriceSmart, Inc.
	9740 Scranton Road
	San Diego, California 92121-1745 Attn: General Counsel Telephone: (858) 404-8821
	Fax: (858) 404-8828
with a copy to:	Latham & Watkins LLP
	600 West Broadway, Suite 1800 San Diego, California 92101-3375 Attn: Robert Burwell
	Telephone: (619) 236-1234
	Fax: (619) 696-7419
If to PSC:	PSC, S.A.
	3191 Coral Way, Suite 801 Miami, Florida 33145 Attn: Francisco Martinez Fax: (305) 461-9632
with a copy to:	Hunton and Williams
	1111 Brickell Avenue, Suite 2500 Miami, Florida 33131
	Attn: Fernando Alonso
	Fax: (305) 810-2460
If to Escrow Agent:	Stewart Title Latin America
	1990 Post Oak Boulevard, Suite 100 Houston, Texas 77056
	Attn: Christopher Hill

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with a copy to:	Stewart Title Latin America
	Av. 11 calles 13-15, Edificio Teral II
	Barrio Amon, San Jose, Costa Rica
	Attn: Orlando Lopez
	Fax: (506) 222-7936

or to such other place and with such other copies as each of the Parties may designate as to itself by written notice to the others (in accordance with this Section 5).

6. Complete Agreement. This Agreement, together with the Master Settlement Agreement and its exhibits, is intended by the Parties as a final and complete expression of their agreement and understanding with respect to its subject matter. Except to the extent expressly agreed herein with respect to the continued obligations of the Parties under other agreements, this Agreement, together with the Master Settlement Agreement and its exhibits, constitutes the complete Agreement between the Parties and supersedes all prior or contemporaneous agreements or representations, written or oral, concerning the subject matter of this Agreement, and no other act, document, usage or custom shall be deemed to amend or modify this Agreement. The terms of this Agreement are contractual, and may not be changed, modified, altered, interlineated, or supplemented, except by agreement in writing signed by the Party against whom enforcement of the change, modification, alteration, interlineation, or supplementation is sought. Nor may any covenant, representation, warranty, or other provision hereof be waived, except by agreement in writing signed by the Party against whom enforcement of the waiver is sought. No Party has made any representations upon which any other Party has relied that are not contained in this Agreement. The Parties acknowledge to one another that no promise, inducement or agreement not contained herein has been expressed or made to any of them in connection with this Agreement.

7. No Assignment. The Parties expressly represent and warrant that they have not assigned or transferred to any person, firm, corporation, partnership, association, or other entity whatsoever any or all of the rights, duties, or obligations embodied or released in this Agreement.

8. Counterparts. The Parties agree that this Agreement may be executed in counterparts, and deliveries of this Agreement and the documents to be executed hereunder may be made by facsimile transmission or by email bearing the signature(s) of the Parties and showing proper notarials, if applicable. Facsimile transmissions and email transmissions of executed copies of this Agreement and the documents to be executed concurrently herewith shall have the same effect as originals. In the event of delivery by facsimile transmission or by email, the Parties will promptly follow up with delivery of originals. Notwithstanding the foregoing, all documents required to be originally executed and/or notarized in the applicable jurisdiction must be delivered as originals.

9. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced as a result of any rule of law or public policy, all other terms and other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any Party. Upon such determination that any term or other

13

provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

10. Specific Performance; Applicable Law, Arbitration, and Forum Selection.

a. Specific Performance. Each of the Parties acknowledges and agrees that the other Parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached. Accordingly, each of the Parties agrees that each other Party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in the United States District Court for the Southern District of Florida or in any State court located in the County of Miami-Dade, in addition to and without prejudice to any other remedy to which it may be entitled, at law or in equity. For the avoidance of doubt, the Parties acknowledge and agree that only the remedies of injunctive relief and specific performance can be sought in court, and that with respect to all other rights and remedies, for breach of this Agreement or otherwise, their sole and exclusive remedy will be final and binding arbitration as set forth below.

b. Applicable Law, Arbitration, and Forum Selection. THIS AGREEMENT AND THE RIGHTS, DUTIES, AND OBLIGATIONS OF THE PARTIES TO THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, PERFORMED, AND ENFORCED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA. To the fullest extent permitted by applicable law, each Party agrees that all disputes and claims, nothing excepted save as set forth in Section 10a. above, concerning the validity, interpretation, scope, enforceability, performance, termination and/or breach of this Agreement (“Disputes”) shall be referred for final and binding resolution to arbitration in Miami, Florida, U.S.A., under the UNCITRAL Rules (“Rules”) as administered by the American Arbitration Association. The Parties hereby agree that arbitration hereunder shall, save as set forth in Section 10a., be the Parties’ exclusive remedy and that the arbitration decision and award, if any, shall be final and binding upon, and enforceable against, the Parties, and may be confirmed by the judgment of a court of competent jurisdiction. In the event of any conflict between the Rules and this Section, this Section shall govern. Nothing contained in this Section 10 shall be read to compel a Party seeking injunctive relief and/or specific performance to file an action in court, and any Party wishing to seek such relief may equally do so in arbitration, pursuant to the terms hereof, should it choose and should arbitration provide the particular remedy sought.

c. Escrow Agent Performance. The Escrow Agent shall not be liable for anything that it may do or refrain from doing in connection herewith except its own negligence or misconduct. The Escrow Agent is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of any escrow established pursuant to this Agreement, or any documents, instructions or directions received by the Escrow Agent hereunder; and the undersigned Parties agree to indemnify, protect, defend and hold the Escrow Agent harmless from all losses, costs, damages, liabilities, expenses, and attorneys’ fees suffered or incurred by the Escrow Agent as a result of any and all claims asserted against the Escrow Agent with respect to any act or omission by the Escrow Agent taken in good faith in

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any and all matters covered by this Escrow Agreement in accordance with the instructions or directions set forth herein, except as caused by the Escrow Agent’s negligence or misconduct. In the event any dispute arises with regard to these funds that are the subject of the Escrow, and/or if Escrow Agent deems it necessary to do so, Escrow Agent shall have, and is hereby granted, the right, at its sole discretion, to deposit such funds in the registry of a court having jurisdiction over the disputed matter as noted herein above in Section 10.b., and deduct from the deposit Escrow Agent’s fees and costs, including court costs and attorney fees for the same.

11. Captions. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof.

12. Each Party to Bear Its Own Fees and Costs. PriceSmart and PSC agree that each, except as otherwise provided herein or in the Master Settlement Agreement, shall bear its own attorneys’ fees and costs and all other expenses and fees arising in connection with or related in any way to the negotiation of, execution of, and performance of its obligations under, this Agreement and to the Arbitrations, the Preliminary Injunction Action, the Appeal, the Panama Proceedings, and any other actions at law or dispute resolution proceedings currently pending between PriceSmart and PSC, and all related matters.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement, or caused this Agreement to be executed by their duly authorized representatives, to become effective on the day and year first above written.

PRICESMART:
	PriceSmart, Inc.
	By:	/s/ Robert M. Gans
	Name:	Robert M. Gans
	Title:
PSC:	PSC, S.A.
	By:	/s/ Francisco Martinez
	Name:	Francisco Martinez
	Title:

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ESCROW AGENT:	Stewart Title Latin America
	By:
	Name:
	Title:

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Execution Version

PUT AGREEMENT

PUT AGREEMENT (the “Agreement”), dated as of                     , 2008, by and between PriceSmart, Inc., a corporation organized under the laws of Delaware (“PriceSmart”), and PSC, S.A., a corporation organized under the laws of the Republic of Panama (“PSC”).

WHEREAS, PriceSmart and PSC and certain of their affiliates have entered into a Settlement Agreement and Release (“Settlement Agreement”) dated as of February     , 2008 pursuant to which certain transactions with regard to property interests were entered into, the termination of all of their relationships and agreements except as expressly set forth therein was provided for, and their differences were fully resolved and any and all claims of whatsoever kind or nature that may have existed between them were settled, in accordance with and subject to the terms and conditions set forth therein;

WHEREAS, in connection with the settlement of matters and claims outstanding between PriceSmart and certain of its affiliates and PSC and certain of its affiliates, PriceSmart has agreed to grant to PSC certain put rights entitling PSC, at its election, to sell to PriceSmart shares of Common Stock, par value U.S.$0.0001 (the “Common Stock”), of PriceSmart, subject to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

Section 1. Grant of Put Rights.

(a) Put Period. PSC agrees that for the period beginning on the date hereof and ending sixty (60) calendar days after the date hereof (the “Put Period”), it shall exercise commercially reasonable efforts, with the assistance of an independent broker, to sell for a price at or in excess of U.S. $25.00 per share any of the shares of Common Stock previously acquired pursuant to the SPA and held as of the date hereof (the “Initial Shares”).

(b) Grant of Put Right. Subject to the terms and conditions contained herein, PSC shall have the right in its sole and absolute discretion to require PriceSmart to purchase from PSC, any or all of the Initial Shares not sold by PSC during the Put Period (the “Remaining Shares”) by delivery of a written notice (the “Put Notice”) to PriceSmart after the Put Period but no later than 5:30 p.m. (San Diego time) on the third (3”^I) Business Day following the last day of the Put Period specifying the number of Remaining Shares to be purchased from PSC pursuant to this Agreement (the “Put Rights”). As used herein, “Business Day” means Monday through Friday, except for any national holiday in the United States, the Republic of Panama or the Republic of Costa Rica.

(c) Representations on Exercise of Put Rights. PSC shall be required to make the following representations and warranties with respect to any Remaining Shares it may wish to transfer hereunder, which representations and warranties must be true and correct as of the date of the applicable Put Notice and the Payment Date (as defined below):

(i) PSC is duly organized or incorporated, validly existing and in good standing under the law of the jurisdiction of its organization or incorporation and has all requisite corporate power and authority to conduct its business as it is now being conducted.

(ii) PSC has the full power, authority and legal right to enter into this Agreement, to perform this Agreement and to consummate the transactions contemplated herein and in the Put Notice and such transactions have been duly authorized by all necessary action, corporate or otherwise, of such party.

(iii) PSC is the beneficial owner of each of the Remaining Shares.

(iv) PSC has good title to the Remaining Shares to be transferred pursuant to the Put Notice, has full right, title and authority to sell and assign the Remaining Shares, and will be transferring all of its right, title and interest in and to any such Remaining Shares to PriceSmart free and clear of any and all liens, security interests, encumbrances and pledges (collectively, the “Liens”).

Section 2. Purchase Price.

(a) Purchase Price. The aggregate purchase price to be paid by PriceSmart to PSC for the Remaining Shares upon the exercise of any Put Rights hereunder (the “Purchase Price”) shall be determined in accordance with the provisions of this Section 2. The Purchase Price shall be U.S.$25.00 (the “Put Price Per Share”), as adjusted pursuant to Section 2(b) hereof, multiplied by the aggregate number of Remaining Shares to be sold by PSC in connection with the exercise of the subject Put Rights.

(b) Adjustment to Put Price Per Share. The Put Price Per Share is subject to adjustment from time to time as follows:

(i) Merger or Consolidation. If at any time prior to the termination of this Agreement, there shall be a merger or a consolidation of PriceSmart with any other entity, whether PriceSmart is the surviving entity or not, then, as part of such merger or consolidation, lawful provision shall be made so that the Put Price Per Share is appropriately adjusted, whether upward or downward, such that any holder of Put Rights hereunder would receive the same consideration on exercise of all Put Rights immediately after the merger or consolidation as would have been received if such Put Rights had been exercised immediately prior to the merger or consolidation, in each case regardless of whether the Put Rights are actually exercisable under the terms of this Agreement. This provision shall apply to successive mergers or consolidations.

(ii) Split, Subdivision or Combination of Shares. If PriceSmart, at any time prior to the termination of this Agreement, shall split, subdivide or combine the securities as to which Put Rights exist, the Put Price Per Share shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination or reverse stock split. This provision shall apply to successive splits, subdivisions and combinations.

(iii) Reclassification, Recapitalization, etc. If PriceSmart at any time shall, by reclassification of securities, recapitalization, or other similar event affecting the number or character of issued and outstanding Remaining Shares or other shares of Common Stock (each a “Recapitalization”), lawful provision shall be made so that the Put Price Per Share is appropriately adjusted, whether upward or downward, such that any holder of Put Rights hereunder would receive the same consideration on exercise of all Put Rights immediately after the Recapitalization as would have been received if such Put Rights had been exercised immediately prior to such Recapitalization, in each case regardless of whether the Put Rights are actually exercisable under the terms of this Agreement. This provision shall apply to each successive Recapitalization.

(c) Example of Mechanics. As an example of the mechanics for the determination of the adjustment under Section 2(b)(ii) above, if PSC exercises the Put Right and indicates in its Put Notice that PriceSmart is required to purchase 100,000 of the Remaining Shares, and if prior to the time of the Put Notice PriceSmart effects a 2-for-1 stock split and PSC has been issued two shares of Common Stock for each one share of Common Stock held by PSC, the Put Price Per Share would be U.S.$12.50 and the Purchase Price to be paid by PriceSmart on the Payment Date would be U.S.$2,500,000.00.

Section 3. Payment Date. Upon delivery to PriceSmart by PSC of the Put Notice hereunder, PriceSmart shall be required to make payment to PSC no later than twenty-one (21) calendar days after receipt of such Put Notice (the “Payment Deadline”) and shall provide PSC with no less than five (5) Business Days notice of the date payment shall be made (the “Payment Date”). On the Payment Date, PriceSmart shall make payment of the Purchase Price with respect to the subject Put Right to PSC in accordance with written wire transfer or other payment instructions delivered to PriceSmart by the PSC at least three (3) Business Days prior to the Payment Date. Contemporaneously with such payment by PriceSmart, PSC shall transfer the Remaining Shares subject to the Put Notice to PriceSmart free and clear of any and all Liens affecting title thereto. [At the closing of the purchase and sale of the Remaining Shares subject to the Put Notice, PSC shall deliver to PriceSmart a certificate or certificates endorsed in blank or with blank stock powers duly executed representing such Remaining Shares against payment of the purchase price therefor by check, wire transfer or any combination of the foregoing.] PriceSmart shall correspondingly record the transfers of such Remaining Shares.

Section 4. Failure to Purchase. In the event PriceSmart fails to make payment to PSC on or before the Payment Deadline, PSC shall be entitled to, and PriceSmart shall pay to PSC, interest on the Purchase Price due on such Payment Date from and including the Business Day following the related Payment Date to and including the date of payment of such Purchase Price and interest. Such interest on any late payment shall accrue at the lesser of (a) a per annum rate equal to fifteen (15) percentage points or (b) the maximum amount permitted by applicable law.

Section 5. Effective Date. This Agreement is effective as of the date hereof.

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Section 6. Preservation of Put Rights. PriceSmart hereby covenants and agrees that it shall take all necessary and appropriate action to protect and preserve the rights of PSC under this Agreement, including the economic benefits intended to be furnished to PSC pursuant to this Agreement, and covenants not to take any action that is intended to adversely affect or to circumvent such rights. PriceSmart shall be deemed to represent and warrant as of the date hereof that the Remaining Shares owned by PSC are subject to a registration statement that is currently effective under the Securities Act of 1933, as amended (the “1933 Act”) and are freely tradable, subject to compliance with applicable prospectus delivery requirements. PriceSmart hereby covenants and agrees to maintain the effective status of such registration statement under the 1933 Act during the Put Period.

Section 7. Termination. This Agreement will terminate (without any action by any party hereto) (i) upon the acquisition hereunder by PriceSmart of all of the Remaining Shares owned by PSC if the Put Notice is timely delivered pursuant to Section 1(a) hereof or (ii) at 5:30 p.m. (San Diego time) on the third (3^1-d) Business Day following the last day of the Put Period.

Section 8. Assignment. The rights and obligations in this Agreement may not be assigned in whole, or in part, by either party hereto without the prior written consent of the other party.

Section 9. Indemnification. PSC and PriceSmart agree to indemnify and hold each other harmless from and against all liabilities, losses, damages or injuries and all reasonable costs and expenses (including, without limitation, costs of any lawsuit and reasonable counsel fees related thereto) suffered or incurred by such other party arising from any misrepresentation or breach of any covenant or warranty of such party contained in this Agreement. Without limiting the foregoing, if any legal action or other proceeding is brought for the enforcement of this Agreement or because of an alleged dispute, breach, default or misrepresentation in connection with any provision of this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party its reasonable attorneys’ fees, including its attorneys’ fees incurred on appeal, court costs, expert costs, paraprofessional costs, and all other reasonable expenses, from the non-prevailing party even if not taxable as court costs incurred in the action or proceeding, in addition to any other relief to which such party may be entitled.

Section 10. Notices. All notices or other communications required or permitted by this Agreement shall be effective upon receipt and shall be in writing and delivered personally or by an internationally recognized express courier or sent by facsimile, as follows:

(a) If to PriceSmart, to:

PriceSmart, Inc.

9740 Scranton Road

San Diego, CA 92121

Attn: Robert M. Gans, Esq.

Facsimile: (858) 404-8828

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With a copy to:

Latham & Watkins LLP

12636 High Bluffs Drive

San Diego, CA 92130

Attention: Robert E. Burwell, Esq.

Facsimile: (858) 523-5450

(b) If to PSC, to:

PSC, S.A.

c/o Zurcher Odio & Raven

4th floor Plaza Roble

Escazu, Costa Rica

Attn Mr Edgar Zurcher

Facsimile: (506) 290-1924

With a copy to:

Hunton & Williams LLP

Mellon Financial Center

1111 Brickell Avenue, Suite 2500

Miami, FL 33131

Attention: Fernando Alonso, Esq.

Facsimile: (305) 810-1604

or to such other address as hereafter shall be furnished as provided in this Section 10 by either party hereto to the other party hereto. Any demand, notice or other communication given by personal delivery or internationally recognized express courier shall be conclusively deemed to have been given on the day of actual delivery thereof and, if given by facsimile, on the day of transmittal thereof if given during the normal business hours of the recipient, and on the Business Day during which such normal business hours next occur if not given during such hours on any day.

Section 11. Counterparts. This Agreement may be executed in any number of counterparts, each of which when duly executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

Section 12. Governing Law. THIS AGREEMENT AND THE RIGHTS, DUTIES, AND OBLIGATIONS OF THE PARTIES TO THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED, PERFORMED, AND ENFORCED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA. To the fullest extent permitted by applicable law, each Party agrees that all disputes and claims concerning the validity, interpretation, scope, enforceability, performance, termination and/or breach of this Agreement (“Disputes”) shall be referred for final and binding resolution to arbitration in Miami, Florida, U.S.A., under the UNCITRAL Rules (“Rules”) as administered by the American Arbitration Association. The Parties hereby agree that arbitration hereunder shall be the Parties’ exclusive remedy and that the arbitration decision and award, if any, shall be final and binding upon, and enforceable against, the Parties, and may be confirmed by the judgment of a court of competent jurisdiction. In the event of any conflict between the Rules and this

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Section, this Section shall govern. Nothing in this Section shall be read to compel a Party seeking injunctive relief and/or specific performance to file an action in court, and any Party wishing to seek such relief may equally do so in arbitration, pursuant to the terms hereof, should it so choose and should arbitration provide the particular remedy sought.

Section 13. Entire Agreement; Amendment; Severability. This Agreement and the documents described herein or attached or delivered pursuant hereto set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may only be amended, modified or supplemented in whole or in part at any time by an agreement in writing between the parties executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as a waiver thereof, nor shall any single or partial exercise by either party of any righ)relude any other or future exercise thereof or the exercise of any other right. If any provision of this Agreement is held to be invalid or unenforceable in any jurisdiction, all other provisions shall nonetheless continue in full force and effect.

Section 14. Headings. The section and paragraph headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto, by the hands of their duly authorized officers, execute this Agreement as of the date first set forth above.

PRICESMART, INC.
By:	/s/ ROBERT M. GANS
Name:	ROBERT M. GANS
Title:	EXEC. VICE PRESIDENT
PSC, S.A.
By:	/s/ Francisco Martinez
Name:	Francisco Martinez
Title:

[Put Agreement for PriceSmart Common Stock]

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EX-10.10

Exhibit 10.10

FLAGLER REAL ESTATE SERVICES 10505 N.W.   112^Th   Avenue Suite   14   Miami   Florida   33178   305.805.3000   305.805.3016 F

December 4, 2007

Legal Department

Pricesmart, Inc.

9740 Scranton Road,

San Diego, CA 92121-1745

RE: Lease Agreement between Flagler Development Company, LLC and PriceSmart, Inc.– 10800 NW 100^th Street, Suite 1-12, FL 33178

To Whom It May Concern:

Attached for your file is an executed agreement.

Please be reminded that your company must provide us with a certificate of insurance evidencing the insurance coverage (See Item No. 5 per lease) before your company moves into the premises stated above. Please make sure that the certificate states FLAGLER DEVELOPMENT COMPANY, LLC “As Additional Insured”.

If you have any questions, please feel free to contact the undersigned.

Sincerely,

/s/ Magda Mesa

Magda Mesa

Property Manager

LEASE AGREEMENT

THIS LEASE AGREEMENT (“Lease”) is made as of the date upon which the latter of the parties hereto executes the same as set forth on the execution page hereof (the “Effective Date”), by and between FLAGLER DEVELOPMENT COMPANY, LLC, a Florida limited liability company, an address of which is 10505 N.W. 112^th Avenue, Suite 14, Miami, Florida 33178 (“Landlord”), and PRICESMART, INC., a Delaware corporation, an address of which is 9740 Scranton Road, San Diego, California 92121-1745 Attention: Legal Department (“Tenant”).

WITNESSETH:

1. TERM.

1.1 PROPERTY AND PREMISES.

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord Suites 1 and 12 (the “Premises”), which is deemed to contain 126,767 rentable square feet of space, in the building known as Building #26 located at 10800 NW 100^th Street, Medley, Florida 33178 (the “Building”), which contains 200,709 rentable square feet. The Building is included in a multiple-building business and industrial park known as Flagler Station (f/k/a Beacon Station) (“Park”). The Building and the location of the Premises are as shown on the Site Plan attached hereto as Exhibit A. The legal description of the Building is set forth in Exhibit A-1 attached hereto (the “Building Land”). Within 30 days after the Effective Date of this Lease, Tenant shall have the right to request that Landlord’s architect certify in writing the number of usable square feet in the Premises and in the Building, using the BOMA/SIOR Exterior Wall Methodology for Measuring Floor Area in Industrial Buildings. In the event that Tenant’s architect disagrees with the numbers provided by Landlord’s architect, and in the event Landlord’s architect and Tenant’s architect cannot resolve their differences within ten (10) days thereafter, then in such event, the Premises and the Building shall be re-measured by an independent architect mutually selected by Landlord’s architect and Tenant’s architect whose determination of the rentable square footage of the Premises and the Building shall be binding upon Landlord and Tenant. If the rentable square feet in the Premises or in the Building changes after this Lease is executed by Landlord and Tenant, the Base Rent and any advance rent shall be adjusted by using the new number of rentable square feet in the Premises. If the number of rentable square feet in the Premises or the number of rentable square feet in the Building is changed, Tenant’s Share (as hereinafter defined) shall also be appropriately adjusted.

Presently Tenant is occupying space pursuant to that certain Gran Park Lease Agreement dated April 20, 2000 between Landlord, as landlord, and GTS Terminals, Inc., a New Jersey corporation (“GTS”), as tenant, for Suites 2 and 3 of Building #RB4 located at 10051 NW 99^th Avenue (the “Original Premises”), as assigned by GTS to Tenant pursuant to that certain Assignment and Assumption of Lease dated as of August 1, 2001, (as amended the “Original Lease”). Landlord and Tenant shall execute a Lease Termination Agreement in the form attached as Schedule 1 hereto to evidence the termination of the Original Lease, which termination shall be within sixty (60) days of the Commencement Date (as hereinafter defined).

1.2 COMMON AREAS.

Tenant and its employees and customers will have the nonexclusive right during the Term of this Lease to use the parking areas, streets, driveways, aisles, sidewalks, curbs, delivery passages, loading areas, lighting facilities, and all other areas situated on or in the Park which are designated by Landlord, from time to time, for use by all tenants of the Building or the Park (collectively, the “Common Areas”), in common with Landlord, other tenants of the Park and other persons reasonably designated by Landlord, subject to the Rules and Regulations promulgated by Landlord from time to time in accordance with Section 3.1 hereof.

1.3 LEASE TERM.

The term of this Lease (the “Term”) shall be 124 calendar months. The Term shall commence on the later of (i) March 1, 2008 or (ii) 15 days after Landlord has obtained possession of the Premises from the present tenant as stated below provided that Landlord has completed any work to be performed by Landlord prior to the Tenant taking possession of the Premises (the “Commencement Date”); provided, however, that Tenant shall have no right to possession of the Premises until the “Security Deposit” (as defined herein) has been delivered to Landlord (the Security Deposit shall not be deemed delivered to Landlord if it is in the form of a check until that check has cleared the bank and the full amount of the funds have been credited to Landlord’s account). Prior to entering the Premises, Tenant shall obtain all insurance it is required to obtain by the Lease and shall provide certificates of said insurance to Landlord. Landlord and Tenant shall execute a Memorandum of Lease Commencement substantially in accordance with Exhibit C attached hereto establishing the Commencement Date as soon as it has been determined. Notwithstanding anything herein to the contrary, this Lease and Landlord’s obligations hereunder are contingent upon Landlord securing possession and control of the Premises from the existing tenant. In the event the Commencement Date has not occurred by May 1, 2008 as extended by Force Majeure (as defined herein) or similar events, Tenant shall have the right to terminate this Lease upon written notice to Landlord delivered within ten (10) days after said date.

1.4 RENEWAL TERM.

Tenant shall have two options to renew this Lease as set forth in the attached Rider Number 1.

1.5 RIGHT OF FIRST OFFER.

Provided that Tenant is not then in default beyond applicable grace and cure periods as provided for underthis Lease, if any space contiguous to the Premises becomes vacant and available for lease by Landlord during the Term hereof, Landlord shall promptly advise Tenant of such fact in writing (“Landlord’s Space Notice”) and shall negotiate in good faith with

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Tenant to lease such space to Tenant upon terms and conditions that Landlord is offering other comparable space in the Park (“Right of First Offer”). In the event that Landlord and Tenant are not able, for any reason, to agree on the terms within 15 business days after Landlord’s Space Notice has been delivered to Tenant, Landlord shall be free to rent such space to whomever Landlord wishes and on whatever terms it desires, and Tenant shall have no further rights under this Right of First Offer unless and until the space has been leased to a third party and subsequently vacated by the third party, in which event Landlord shall promptly provide Landlord’s Space Notice again and the foregoing procedure shall be repeated until the end of the Lease Term. In the event that Landlord and Tenant do agree upon terms and conditions for such space, Landlord and Tenant shall promptly execute an amendment to the Lease to incorporate such space. Landlord may show the subject space to and work with potential tenants at any time regarding the space, so long as Landlord has given Tenant the opportunity to exercise its Right of First Offer as described in this Section.

2. RENT AND OTHER CHARGES.

2.1 BASE RENT.

Tenant agrees to pay monthly rent (“Base Rent”) on the first day of each month of the Term, together with any and all rental, sales or use taxes levied by any governmental body for the use or occupancy of the Premises and any rent or other charges payable hereunder in accordance with the following schedule:

Calendar Months	Monthly Base Rent
1-12	$	66,024.48
13-24	$	68,005.21
25-36	$	70,045.37
37-48	$	72,146.73
49-60	$	74,311.13
61-72	$	76,540.47
73-84	$	78,836.68
85-96	$	81,201.78
97-108	$	83,637.83
109-120	$	86,146.97
122-124	$	88,731.38

If the Commencement Date should be a date other than the first day of a calendar month, then the first installment of Base Rent shall be prorated by multiplying the regular monthly installment of Base Rent by a fraction, the numerator of which is the number of days from the Commencement Date through the final day of the month in which the Commencement Date occurs and the denominator of which is the total number of days in the calendar month in which the Commencement Date occurs. In such event, Lease Month 1 would commence on the first day of the calendar month following the month in which the Commencement Date occurs.

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Notwithstanding anything to the contrary contained in this Lease, Base Rent and Operating Expenses for the first four (4) full calendar months of the Term shall be abated. The foregoing abatement shall not alter Tenant’s obligation to deliver all agreed Prepaid Rent and Operating Expenses to Landlord upon execution of this Lease, and such Prepaid Rent shall be applied to the first full calendar month of the Term following the months for which Base Rent is abated.

Base Rent shall be paid without demand, set off or deduction (except as otherwise expressly provided for in this Lease) to Landlord at P.O. Box 861945, Orlando, Florida 328861945 or such other address as Landlord directs in writing.

Tenant shall deliver to Landlord, simultaneous with Tenant’s execution and delivery to Landlord of this Lease, the sum of $101,504.45, representing one month’s prepaid Base Rent and one month’s prepaid Operating Expenses plus sales tax (“Prepaid Rent”), which sum shall be applied to the first full calendar month of the Term that Base Rent and Operating Expenses are due and payable. Base Rent owed for the initial partial calendar month of the Term, if any, will be invoiced by Landlord and paid by Tenant with Tenant’s second monthly rent installment payment due hereunder.

2.2 LATE CHARGES.

If any Base Rent or other payment due under this Lease is not received by Landlord within 10 days after written notice from Landlord that such sum is past due, Tenant shall pay, in addition to such payment a late charge equal to the greater of 5% of the payment which is past due or $250.00. If any payment due from Tenant shall remain overdue for more than 10 days after written notice from Landlord that such sum is past, interest shall accrue daily on the past due amount from the date such amount was due until paid or judgment is entered at a rate equivalent to the lesser of 15% per annum and the highest rate permitted by law. Interest on the past due amount shall be in addition to and not in lieu of the any late charge or any other remedy available to Landlord. Notwithstanding the foregoing, no late charge or interest shall be due and payable on the first 2 instances of late payment in any calendar year unless such payment remains outstanding for more than 10 days after Tenant’s receipt of written notice of the past due amount.

2.3 ADDITIONAL RENT.

All charges payable by Tenant under the terms of this Lease other than Base Rent are called “Additional Rent.” Unless this Lease provides otherwise, all Additional Rent shall be paid with the next monthly installment of Base Rent and shall include all applicable sales or use taxes. The term “Rent” shall mean Base Rent and Additional Rent.

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2.4 OPERATING EXPENSES.

2.4.1 Definitions. For all purposes of this Lease, the following terms shall have the meanings ascribed to them herein.

2.4.1.1 “Operating Expenses” shall mean any reasonable and customary expenses incurred whether by Landlord or by others on behalf of Landlord, arising out of Landlord’s maintenance, operation, repair, replacement (if such replacement is generally regarded in the industry as increasing operating efficiency or is required under any Applicable Law that was not in effect or not applicable to the Park on the Commencement Date) and administration of the Park, Building, Premises and Common Areas, including, without limitation: (i) all real estate, personal property and other ad valorem taxes, and any other levies, charges, local improvement rates, and assessments whatsoever assessed or charged against the Park, Building, Premises and Common Areas, the personal property owned by Landlord and used in the operation of the Park, Building or Common Areas therein contained, including any amounts assessed or charged in substitution for or in lieu of any such taxes, excluding only income or capital gains taxes imposed upon Landlord, and including all fees and costs associated with the appeal of any assessment on taxes; (ii) insurance that Landlord is obligated or permitted to obtain under this Lease and any deductible amount applicable to any claim made by Landlord under such insurance; (iii) security, if any is provided by Landlord; (iv) landscaping and pest control, (v) a reasonable management fee, which shall not exceed 3% of the gross rents of the Building unless higher fees become customary and are being charged in comparable business parks in Miami-Dade County, Florida; (vi) electricity, water, sewer, gas, window washing, janitorial services, trash and debris and other maintenance and utility charges; (vii) wages and benefits, and all taxes thereon, payable to employees of Landlord and Landlord’s property manager whose duties are directly connected with the operation and maintenance of the Premises, Building, Common Areas or Park; and (viii) dues and assessments under any the Declaration If the Park is a multi-building project and any tax expense, insurance expense, or other Operating Expense is not assessed separately or charged specifically to the Building, but is charged against the Park as a whole, Landlord shall reasonably and equitably determine the portion of such Operating Expenses chargeable to the Premises. The Landlord acknowledges and agrees that the Operating Expenses with respect to the Park are the fees paid to the Section 6 Property Owners Association, Inc. pursuant to the Declaration (as defined in Section 3.8) which are allocated first to the Building based upon the acreage of Building Land over the total acreage of all the land in Section 6, Township 53 South, Range 40 East, Miami Dade County, Florida and then based upon Tenant’s Share of the Operating Expenses related to the Building.

Operating Expenses shall, however, exclude:

(i) Depreciation and amortization, except as expressly permitted elsewhere in this Lease;

(ii) Costs of space planning, tenant improvements, marketing expenses, attorneys’ fees, real estate broker commissions, costs, disbursements and other expenses for leasing, renovating, or improving space for tenants or occupants in the Park or Building;

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(iii) Costs of a capital nature including without limitation, capital improvements, replacement of major components of Building systems and capital repairs, capital equipment and capital tools, all as determined under GAAP, except that the annual amortization of these costs shall be included to the extent expressly permitted below:

The annual amortization over the useful life (computed by taking into account a reasonable salvage value) on a straight line basis, of (A) the cost of any nonstructural capital improvements, repairs, and replacements made to the Building by Landlord and that are required by any governmental entity or due to any changes in applicable building codes enacted after the Commencement Date and (B) the cost of any structural or non-structural capital improvements, repairs, and replacements by Landlord that is reasonably intended to achieve a reduction in Operating Costs to the extent the annual amortized cost of such capital improvement for a particular calendar year does not exceed the annual savings in Operating Costs for the same calendar year, as reasonably estimated by Landlord. For purposes of this sub-section (iii) only, “structural” improvements, repairs, or replacements shall be limited to the structural components of the roof, the floors, load bearing walls, if any (excluding any glass), and columns and joists of the Building;

(iv) Costs incurred by Landlord for alterations, additions, or improvements that are considered capital improvements and/or capital replacements (and not expense items) under GAAP to be capitalized and not expensed, except that the annual amortization of these costs shall be included to the extent expressly permitted in sub-section (iii) above;

(v) Costs incurred by Landlord in performing the Tenant Improvements (as defined in the Work Letter attached as Exhibit E hereto (the “Work Letter”)) pursuant to Work Letter;

(vi) Costs (including permits, licenses, and inspection fees) incurred in renovating, improving, decorating, painting, or redecorating vacant space or space for tenants;

(vii) Landlord’s cost of electricity or other goods or services sold or provided to Tenant or other occupants for which Landlord is entitled to be reimbursed by such tenants or other occupants as an additional charge or rental over and above the rental and escalations payable under the lease with such tenants or other occupants;

(viii) Wages, salaries, fees and fringe benefits paid to administrative or executive personnel above the level of Building Manager or paid to officers or partners of Landlord, except as otherwise expressly permitted in this Lease;

(ix) Legal fees arising out of disputes or negotiations with tenants of the Building or Park;

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(x) Fines, penalties or costs incurred due to Landlord’s violation of or failure to timely comply with any governmental law, rule or authority unless Tenant is the cause therefore;

(xi) Cost of correcting defects in or inadequacy of (latent or otherwise) the original design or construction of the Building or in the original Building systems or equipment or for structural replacements due to original defects;

(xii) Costs incurred in providing services which are separately invoiced and charged to Tenant and/or other tenants of the Building or Park (other than as part of the Operating Costs reimbursements);

(xiii) Mark-ups on electricity in excess of Landlord’s costs therefore or any charges for electricity and other utilities consumed by other tenants in quantities above building standard levels;

(xiv) Any rent or other cost or expense paid in connection with any ground lease or underlying leases;

(xv) Interest on debt or amortization payments on mortgages or deeds to secure debt, deeds of trust or any other debt and all costs and charges arising under any loans or indebtedness secured by the Building or the land upon which the Building is located, as well as any costs, fees and other expenses incurred in connection with (A) any financing of any portion of such property or (B) any transfer of financing on any portion of such property or (C) any transfer of Landlord’s interest, including, without limitation, brokerage fees or commissions, loan fees and points, title and escrow charges, attorneys’ fees and transfer taxes (provided, however, that if Landlord is permitted by law to pay a governmental assessment against the Building over a period of time in excess of one (1) year or Landlord is permitted under a contract with a vendor to Landlord to pay an Operating Cost over a period of time in excess of one (1) year, then the actual interest paid to such governmental authority or vendor may be included by Landlord in Operating Costs; provided further, however, that any late payment charges, late payment interest charges, liquidated damages or penalty charges shall not be included in Operating Costs);

(xvi) Prepayments (including prepayments of taxes) when such payments may be and are customarily paid in installments; provided, however, this provision shall not be deemed to prohibit Landlord from taking advantage of all discounts;

(xvii) Costs incurred to clean-up, contain, abate, remove or otherwise remedy hazardous waste materials, asbestos or substance compliance unless such costs resulted from Tenant’s actions;

(xviii) Cost of repairs, restoration and/or other work needed because of fire, windstorm or other casualty or cause insured by Landlord. However, Operating Costs shall include any deductible amount under any such insurance policy maintained by Landlord for the Building to the extent the deductible to be maintained pursuant to Section 5.2 for similar policies maintained by landlords of comparable buildings for similar types of coverage (it being acknowledged that such deductible amounts may be included as an Operating Cost);

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(xix) Any costs incurred by Landlord and payable to subsidiaries or affiliates of Landlord to the extent in excess of the market rate for the services or materials provided, but only to the extent of such excess;

(xx) Items and services that Landlord provides selectively to one or more tenants or occupants of the Building or park, other than Tenant and which Landlord is not obligated to provide Tenant;

(xxi) The cost or repairing or curing defects in other tenants’ tenant improvements;

(xxii) The cost of correcting any code violations in the Building which are violations of applicable codes as of the Commencement Date;

(xxiii) The cost of installing, operating and maintaining any specialty improvement, such as a cafeteria or dining facility or luncheon or recreational club or health club;

(xxiv) Costs and expenses, including, but not limited to attorneys’ fees and expenses, resulting from the negligence or willful misconduct of Landlord or Landlord’s agents, servants or employees acting within the scope of their employment or agency relationship;

(xxv) Any costs or expenses incurred by Landlord as a result of the misuse or neglect of any portion of the Building or property by any other tenant or their contractors, subcontractors, customers, employees, licensees, agents or invitees; and

(xxvi) Costs, damages and/or settlement amounts paid or incurred because Landlord or another tenant violated the terms or conditions of any lease;

(xxvii) Landlord’s general overhead and general administrative expenses not attributable to the operation of the Building or Park;

(xxviii) Any compensation paid to clerks, attendants or other persons in commercial concessions operated by Landlord;

(xxix) Rentals and other related expenses incurred in leasing air conditioning systems, elevators or other equipment ordinarily considered to be of a capital nature, except equipment used in providing janitorial services and which is not affixed to the Building;

(xxx) Advertising, marketing and promotional expenditures;

(xxxi) Any subsidy or other payment made to any tenant or vendor in the Building to subsidize that tenant’s or vendor’s expenses, gross revenues, profits or the like;

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(xxxii) Any bad debt loss, rent loss or reserves for bad debts or rent loss;

(xxxiii) The cost of any item, service or repair to the extend that such cost is paid under any warranty, guaranty or insurance policy maintained or held by Landlord;

(xxxiv) The cost of any work or service performed for or facilities furnished to any tenant of the Building to a greater extent or in a manner more favorable to such tenant than that performed for or furnished to Tenant (but only to the extent of the excess cost over that payable by Tenant); and

(xxxv) Real estate taxes on any undeveloped land within the Park.

Notwithstanding anything to the contrary in this Section 2.4, Tenant’s obligation to pay Operating Expenses, other than taxes and assessments, insurance, utilities, contracts that have obligations that increase based on increases in the Consumer Price Index (CPI), contracts which reflect price increases even after Landlord has accepted the lowest qualified bid from one of at least two bidders, and other expenses that are outside Landlord’s immediate control, shall be capped at cumulative increases of five percent (5%) per year.

2.4.1.2 “Tenant’s Share” shall mean that certain portion of the Operating Expenses that Tenant is obligated to pay to Landlord, which shall be calculated by multiplying annual Operating Expenses by a fraction, the numerator of which shall be the total rentable square footage of the Premises and the denominator of which shall be the total rentable square footage of the Building, which fraction as of the Commencement Date shall be 63.16%, unless otherwise set forth in the Memorandum of Lease Commencement. Tenant’s Share shall be subject to change as and if the rentable square footage of either the Premises or the Building changes.

2.4.2 Payment of Operating Expenses. In addition to the payment of Base Rent, Tenant shall pay Tenant’s Share to Landlord during the Term. Landlord shall provide a good faith estimate of the Operating Expenses for the current calendar year and an estimate of Tenant’s Share, if any (the “Estimate Statement”). Tenant shall remit monthly one-twelfth ( ¹/12^th ) of Tenant’s Share (the “Estimated Payment”) as Additional Rent together with its payments of Base Rent; provided that, if applicable, Landlord may invoice Tenant retroactively for the months of January through the month of issuance of the Estimate Statement. On or before March 31^st of each calendar year, Landlord shall send a statement to Tenant detailing all Operating Expenses for the prior year and setting forth the amount representing the Tenant’s Share, as reconciled for the actual Operating Expenses of the prior year (the “Operating Expense Statement”). If the Operating Expense Statement indicates that the estimated Operating Expenses paid by Tenant during the preceding year exceeded Tenant’s Share, then Tenant shall be given a credit in the amount of the difference between the Estimated Payments made in the preceding year and the Tenant’s Share against its next due installments of Operating Expenses. If the Operating Expense Statement indicates that Tenant’s Share exceeded the Estimated Payments, then Tenant shall remit the difference to Landlord as Additional Rent. Landlord’s failure to provide a statement shall not prejudice Landlord’s right to collect a shortfall or Tenant’s right to receive a credit for over payments.

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2.4.3 Tenant Specific Operating Expenses. If the nature of Tenant’s business within the Premises is such that additional costs are incurred by Landlord for insurance, cleaning, utilities, sanitation, trash removal, pest control, disposal services or other Operating Expenses, Tenant agrees to pay as Additional Rent to Landlord on demand the amount of such additional costs.

2.4.4. Utilities; Janitorial Services.

2.4.4.1 Utilities at the Premises. Landlord represents that as of the Commencement Date, provided there are no changes to the Tenant Improvements, water, electricity, sewer, and telephone utilities in sufficient capacity for customary use shall be connected and immediately available to the Premises and all tap, connection, and/or impact fees shall have been paid in full by Landlord. Tenant shall be solely responsible for and shall promptly pay all charges for gas, heat, light, electricity, security, power, telephone and any other utility or service directly metered or provided to the Premises. In the event the Premises experiences an interruption of electrical, telephone, sewer or water which prevents Tenant from utilizing the Premises to conduct its business (an “Interruption”) which Interruption is caused by Landlord, its agents, employees or contractors and is within the control of Landlord to cure (i.e. not as a result of the inability of Landlord to obtain the applicable utility service through no fault of Landlord) (a “Controllable Interruption.”) Landlord shall commence and diligently pursue the curative action within a commercially reasonable amount of time after written notice from Tenant of a Controllable Interruption. If Landlord fails to correct the Controllable Interruption within 5 business days, then Tenant shall have the right, after written notice to Landlord to expend commercially reasonable market sums to cure the Controllable Interruption and offset said amount against the next payments of Rent due hereunder. In addition, Tenant shall be entitled to an abatement of Rent with respect to a Controllable Interruption as to that portion of the Premises rendered unusable as a result of such Controllable Interruption commencing with the eighth (8th) consecutive day of the Controllable Interruption until such time as the services are restored.

2.4.4.2 Janitorial Services. Tenant shall be solely responsible for and shall promptly pay for all window washing, janitorial service and trash and debris removal charges relating to the Premises.

2.4.5 Tenant’s Review of Operating Expenses. Tenant shall have the right to examine and review Landlord’s books and records pertaining to Operating Expenses (“Tenant’s Review”), at Tenant’s expense, one time during each calendar year provided that (i) Tenant provides Landlord with written notice of its election to conduct Tenant’s Review no later than three (3) months following Tenant’s receipt of the Operating Expense Statement and completes Tenant’s Review within sixty (60) days after giving such notice; (ii) there is no event of default under the Lease as of the date that Tenant delivers such notice or any default that occurs during Tenant’s Review after the giving of notice and that is not cured or in the process of being cured

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within any applicable cure periods, provided, however, that Tenant shall lose the right to perform Tenant’s Review if such default is not cured during the applicable cure period; (iii) Tenant fully and promptly pays all Rent, including Tenant’s Share of Operating Expenses as billed by Landlord pending the outcome of Tenant’s Review; (iv) Tenant’s Review is conducted by a qualified employee of Tenant or by an accounting firm engaged by Tenant on a non-contingency fee basis; (v) Tenant and the person(s) conducting Tenant’s Review agree that they will not divulge the contents of Landlord’s books and records or the result of their examination to any other person, including any other tenant in the Park, other than Tenant’s attorneys, accountants, employees and consultants who have need of the information for purposes of administering this Lease for Tenant or as otherwise required by law. Tenant shall not be entitled to challenge Landlord’s calculation of Operating Expenses in any year(s) prior to the year for which Tenant’s Review is being conducted, all such Operating Expenses to be deemed final and binding on the parties once Tenant’s Review for that year has been conducted or Tenant’s right to conduct Tenant’s Review for such year has elapsed. Tenant’s Review shall be conducted at Landlord’s office where the records are maintained during Landlord’s normal business hours. In the event that Tenant’s Review demonstrates that Landlord has overstated Operating Expenses, Landlord shall reimburse Tenant for any overpayment of Tenant’s Share of such Operating Expenses within thirty (30) days of Landlord’s receipt of reasonably sufficient documentation of such overstatement from Tenant; provided, however, that Tenant’s Review must be completed within the time frames set forth in (i) above or Landlord shall have no obligation to reimburse Tenant for any overstatement of Operating Expenses for that year then under review.

In the event that Tenant’s Review demonstrates that Landlord has overstated the Operating Expenses for the year reviewed by more than five percent (5%), Landlord shall reimburse Tenant for its reasonable out-of-pocket expenses incurred in conducting Tenant’s Review, provided that the amount of such reimbursement shall not exceed the amount of the overstatement of Operating Expenses, in addition to reimbursement of the overstated Operating Expense amount, within thirty (30) days of Landlord’s receipt of documentation reasonably acceptable to Landlord reflecting the cost of Tenant’s Review Tenant’s Review. If Landlord has not overstated Operating Expenses or if any such overstatement is less than five percent (5%), then Tenant’s Review shall be conducted at Tenant’s sole cost and expense.

3. USE OF PROPERTY.

3.1 PERMITTED USES.

Tenant may use the Premises only for the following Permitted Use: warehouse purposes, and related office use. Tenant shall observe the rules and regulations attached to and made a part of this Lease as Exhibit B. Landlord will have the right at all times to change and amend the rules and regulations in any reasonable and non-discriminatory manner as it may deem advisable for the safety, care and operation or use of the Park or the Premises and Landlord shall provide Tenant with written notice including a copy of any such change to the rules and regulations. Tenant shall not create a nuisance or use the Premises for any illegal or immoral purpose.

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3.2 COMPLIANCE WITH LAWS.

3.2.1 Landlord’s Compliance. During the Term of this Lease, Landlord shall be responsible for making any modifications to the Building, Park and Common Areas, including the parking lot and entrances serving the Park and Building, required pursuant to any federal, state or local laws, common law, ordinances, building codes, and rules and regulations of governmental entities having jurisdiction over the Park, including but not limited to the Board of Fire Underwriters and the Americans with Disabilities Act (the “ADA”) and all regulations and orders promulgated pursuant to the ADA (collectively, “Applicable Laws”). Any modifications to the Park and the Building made by Landlord pursuant to the provisions of this paragraph shall initially be at Landlord’s expense, but the cost thereof may be included in Operating Expenses pursuant to Section 2.4 if such cost is permitted to be treated as an Operating Expense under Section 2.4.

3.2.2 Tenant’s Compliance. Tenant shall comply with all Applicable Laws relating to its use or occupancy of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention, and abatement of any violation of Applicable Laws by Tenant in, upon, or connected with the Premises, all at Tenant’s sole expense. Tenant will procure at its own expense all permits and licenses required for the transaction of its business in the Premises. During the Term, Tenant shall, at its sole cost and expense, make any modifications to the Premises that may be required as a result of Tenant’s specific use of or operations at the Premises pursuant to any Applicable Laws.

3.3 HAZARDOUS MATERIAL.

Tenant has advised Landlord that Tenant’s business involves the transport and storage of items that are classified as Hazardous Materials (as hereinafter defined). Throughout the Term, Tenant will prevent the presence, use, generation, release, discharge, storage, disposal, or transportation of any Hazardous Materials (as hereinafter defined) on, under, in, above, to, or from the Premises except that (i) Hazardous Materials may be used in the Premises as necessary for the customary maintenance of the Premises, and (ii) the products and equipment (which may contain Hazardous Materials) listed on attached Exhibit F, may be used and stored in the Premises in connection with Tenant’s Permitted Use, as such list may reasonably modified from time to time with written notice from Tenant to Landlord, provided that all of the same are used, stored, transported and disposed of in strict compliance with (1) Applicable Laws, (2) the terms and conditions of the Declaration, and (3) the Best Management Practices prepared by the Miami-Dade County Department of Environmental Resources Management, a copy of which is attached hereto as Exhibit G and incorporated herein. For purposes of this provision, the term “Hazardous Materials” will mean and refer to any wastes, materials, or other substances of any kind or character that are or become regulated as hazardous or toxic waste or substances, or which require special handling or treatment, under any Applicable Laws.

If Tenant’s activities at the Premises or Tenant’s use of the Premises (a) results in a release of Hazardous Materials by Tenant that is not in compliance with Applicable Laws or permits issued thereunder; (b) gives rise to any claim or requires a response under Applicable

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Laws or permits issued thereunder; (c) causes a significant public health effect; or (d) creates a nuisance, or (e) causes the presence at the Premises of Hazardous Materials in levels that violate Applicable Laws or permits issued thereunder, then Tenant shall, at its sole cost and expense: (i) provide verbal notice thereof to Landlord immediately after Tenant becomes aware of the same as well as notice to Landlord in the manner required by this Lease, which notice shall identify the Hazardous Materials involved and the emergency procedures taken or to be taken; and (ii) promptly take all action in response to such situation required by the governmental agency overseeing the same, provided that Tenant shall first obtain Landlord’s reasonable approval of the non-emergency remediation plan to be undertaken.

Tenant shall at all times indemnify and hold harmless Landlord against and from any and all claims, suits, actions, debts, damages, costs, losses, obligations, judgments, charges and expenses (including reasonable attorneys’ fees) of any nature whatsoever suffered or incurred by Landlord to the extent they were caused by the following activities of Tenant on the Premises during the Term (and any other period when Tenant is in possession of the Premises) and arise from events or conditions which came into existence after the Commencement Date: (i) any release, threatened release, or disposal of any Hazardous Materials by Tenant at the Premises, or (ii) the violation of any Applicable Laws at the Premises by Tenant, pertaining to protection of the environment, public health and safety, air emissions, water discharges, hazardous or toxic substances, solid or hazardous wastes or occupational health and safety. The foregoing obligations of Tenant shall survive the expiration or earlier termination of this Lease.

Landlord represents to Tenant that Landlord has not received written notice from any governmental agency regarding the existence of any Hazardous Materials on or about the Premises, the presence of which violates any Applicable Laws. Landlord shall indemnify, defend, and hold Tenant, and its employees, officers and directors harmless from all claims, liabilities, losses, costs and expenses (including reasonable attorney fees) arising out of the existence of any Hazardous Materials on or about the Premises on the Commencement Date.

3.4 SIGNS.

Tenant shall not place any signs on the Premises, Building or Park except with the prior written consent of Landlord, including consent as to location and design, which may be withheld in Landlord’s sole discretion, provided that Tenant may place prominent exterior signs on the exterior of and in front of the Building in the locations identified on Exhibit D attached hereto, provided that any and all such signs shall be installed and shall be maintained by Tenant, at its sole cost and expense and shall be in compliance with Landlord’s sign criteria (a copy of which is attached hereto as Exhibit D), the Rules and Regulations and all Applicable Laws. Tenant shall be responsible to Landlord for the installation, use, or maintenance of said signs and any damage caused thereby. Tenant agrees to remove all of its signs prior to termination of the Lease and upon such removal to repair all damage incident to such removal.

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3.5 ACCESS.

3.5.1 Landlord’s Access. Landlord shall be entitled at all reasonable times and upon at least 48 hours advance notice (but no notice is required in emergencies) to enter the Premises to examine them and to make such repairs, alterations, or improvements thereto as Landlord is required by this Lease to make. Tenant shall not unduly obstruct any pipes, conduits, or mechanical or other electrical equipment so as to prevent reasonable access thereto. Landlord shall exercise its rights under this section, so as to in good faith reduce as far as possible, interference with Tenant’s use and enjoyment of the Premises. Landlord and its agents have the right to enter the Premises at all reasonable times upon at least 48 hours advance notice to show them to prospective purchasers, lenders, or anyone having a prospective interest in the Building, and, during the last six months of the Term or any renewal thereof, to show them to prospective tenants. During the last six months of the Term, Landlord may place customary “For Sale” or “For Lease” signs on the Premises, Building or Park as Landlord deems necessary. Landlord will have the right at all times to enter the Premises in the event of a bona fide emergency affecting the Premises. Notwithstanding anything to the contrary contained herein, Tenant shall have the right to have representative of Tenant accompany Landlord with respect to any entry to the Premises provided for herein, and Tenant shall have the right to prevent Landlord from gaining access to any secured areas of the Premises except in the event of a bona fide emergency.

3.5.2 Tenant’s Access. Tenant shall have access to the Premises and to the Common Areas required for access to the Premises twenty-four (24) hours per day, seven (7) days per week, 365 (or 366, as the case may be) days per year, subject to reasonable security measures and except in the event of an emergency, casualty, Force Majeure or similar event which causes Landlord to limit access to tenants.

3.6 QUIET POSSESSION.

If Tenant pays all Rent and fully performs all of its obligations under this Lease, Tenant shall be entitled to peaceful and quiet enjoyment of the Premises for the full Term without interruption or interference by Landlord or any person claiming by, through or under Landlord.

3.7 INTENTIONALLY OMITTED.

3.8 COVENANTS AND RESTRICTIONS.

Tenant hereby acknowledges and agrees that the Building, and Tenant’s occupancy thereof, is subject to that certain Declaration of Covenants, Condition, Easements and Restrictions recorded in OR Book 17965, Page 2124, as amended by that certain Supplementary Declaration of Restrictive Covenants dated November 2, 1999 recorded in OR Book 18851, Page 3046, that certain Amendment to Declaration of Covenants, Conditions, Easements and Restrictions dated September 12, 2000 recorded in OR Book 19286, Page 3535, that certain Second Amendment to Declaration of Covenants, Conditions, Easements and Restrictions dated

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June 20, 2003 recorded in OR Book 21379, Page 3906, and that certain Third Amendment to Declaration of Covenants, Conditions, Easements and Restrictions dated September 16, 2004 recorded in OR Book 22703, Page 4693, all of the Public Records of Miami-Dade County, Florida, and as may be further amended pursuant to the terms thereof (the “Declaration”). Landlord agrees that Landlord will not modify or amend the Declaration or record any other similar declaration that would adversely affect Tenant’s rights under this Lease in any material respect.

3.9 PARKING.

Tenant shall have a non-exclusive license to use 149 parking spaces (including handicap spaces) in the parking lot adjacent to the Building. Tenant agrees that it will use good faith efforts to prevent the use by Tenant’s employees and visitors of parking spaces not designated for their use. All motor vehicles (including all contents thereof) shall be parked in such spaces at the sole risk of Tenant, its employees, agents, invitees and licensees, it being expressly agreed and understood that Landlord has no duty to insure any of said motor vehicles (including the contents thereof), and that Landlord is not responsible for the protection and security of such vehicles, or the contents thereof.

4. TENANT ALTERATIONS AND IMPROVEMENTS.

4.1 TENANT IMPROVEMENTS.

Except as expressly provided in this Lease and the Work Letter, Tenant acknowledges and agrees that Landlord has not undertaken to perform any modification, alteration or improvements to the Premises and Tenant further waives any defects (excluding latent defects) in the Premises and acknowledges and accepts (1) the Premises in their “AS IS” condition, and as suitable for the purpose for which they are leased, and (2) the Park and every part and appurtenance thereof as being in good and satisfactory condition. If any improvements, modifications or alterations, beyond those specified in the Work Letter are required for Tenant’s initial occupancy of the Premises, due solely to Tenant’s specific use of the Premises, by any governmental or municipal body or agency or are required by any Applicable Law, Tenant will be solely responsible for the cost of the same. Except as otherwise expressly provided for herein, if, after the Commencement Date, any improvements, modifications or alterations are required by any governmental or municipal body or agency or as a result of any change in any Applicable Law due to Tenant’s specific use of the Premises, Tenant will be responsible for the cost of the same.

4.2 TENANT ALTERATIONS.

Tenant will not make or allow to be made any alterations in or to the Premises without first obtaining the written consent of Landlord, which consent will not be unreasonably withheld, conditioned or delayed. For any such alterations in excess of $100,000.00, Landlord may require Tenant to provide demolition and/or lien and completion bonds in form and amount reasonably satisfactory to Landlord. All Tenant alterations will be accomplished in a good and

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workmanlike manner at Tenant’s sole expense, in conformity with all Applicable Laws by a licensed and bonded contractor approved in advance by Landlord, such approval of contractor not to be unreasonably withheld or delayed. All contractors performing alterations in the Premises shall carry workers’ compensation insurance, commercial general liability insurance, automobile insurance and excess liability insurance in amounts reasonably acceptable to Landlord and shall deliver a certificate of insurance evidencing such coverages to Landlord prior to commencing work in the Premises. Upon completion of any such work, Tenant shall provide Landlord with “as built” plans, copies of all construction contracts, and proof of payment for all labor and materials. Any Tenant alterations to the Premises made by or installed by either party hereto will remain upon and be surrendered with the Premises and become the property of Landlord upon the expiration or earlier termination of this Lease without credit to Tenant; provided, however, that Landlord may, at its option, by providing written notice to Tenant at the time Landlord approves Tenant’s request for Landlord’s consent to its additions and/or alterations, require Tenant to remove any additions and/or repair any alterations (other than any work performed by Landlord prior to the Commencement Date and work performed pursuant to the Work Letter that Landlord has approved in writing and stated that it does not have to be removed at the expiration of the Term) and to restore the Premises to the condition existing at the time Tenant took possession, with all costs of removal, repair, restoration, or alterations to be borne by Tenant. This clause will not apply to moveable equipment, furniture or moveable trade fixtures owned by Tenant, which may be removed by Tenant at the end of the Term if Tenant is not then in default and if such equipment and furniture are not then subject to any other rights, liens and interests of Landlord. Tenant will have no authority or power, express or implied, to create or cause any construction lien or mechanics’ or materialmen’s lien or claim of any kind against the Premises, the Park or any portion thereof. Tenant will promptly cause any such liens or claims to be released by payment, bonding or otherwise within 30 days after request by Landlord, and will indemnify Landlord against losses arising out of any such claim including, without limitation, legal fees and court costs. NOTICE IS HEREBY GIVEN THAT LANDLORD WILL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIAL FURNISHED OR TO BE FURNISHED TO TENANT, OR TO ANYONE HOLDING THE PREMISES THROUGH OR UNDER TENANT, AND THAT NO MECHANICS’ OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS WILL ATTACH TO OR AFFECT THE INTEREST OF LANDLORD IN THE PREMISES. TENANT WILL DISCLOSE THE FOREGOING PROVISIONS TO ANY CONTRACTOR ENGAGED BY TENANT PROVIDING LABOR, SERVICES OR MATERIAL TO THE PREMISES.

Notwithstanding anything to the contrary contained herein, for work which (i) will cost in the aggregate less than $50,000 per project, and (ii) which does not affect the structure of the Building or any of the Building’s electrical, plumbing, HVAC or mechanical systems (“Permitted Alterations”), Tenant shall not be required to obtain the prior written consent of Landlord, however, Landlord must receive no less than ten (10) business days written notice, together with copies of the plans and specifications, prior to the commencement of said Permitted Alterations and Tenant must otherwise comply with the terms of this Section 4.2.

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5. INSURANCE AND INDEMNITY.

5.1 TENANT’S INSURANCE.

Tenant will throughout the Term (and any other period when Tenant is in possession of the Premises) carry and maintain, at its sole cost and expense, the following types of insurance, which shall provide coverage on an occurrence basis, with respect to the Premises, in the amounts specified with deductible amounts reasonably satisfactory to Landlord and in the form hereinafter provided for:

(a) Commercial General Liability Insurance. Commercial general liability insurance covering claims arising from bodily injury and property damage with minimum limits of $1,000,000.00 per occurrence and $2,000,000.00 general aggregate and insuring against legal liability of the insured with respect to the Premises or arising out of the maintenance, use or occupancy thereof. The commercial general liability insurance policy shall include contractual liability coverage.

(b) Comprehensive Automobile Liability Insurance. In the event that Tenant owns or leases vehicles for use in connection with the Premises, comprehensive automobile liability insurance with limits of not less than $1,000,000.00 per occurrence for bodily injury, $500,000.00 per person and $100,000.00 property damage or a combined single limit of $1,000,000.00 covering vehicles owned or leased by Tenant.

(c) Umbrella Coverage. Tenant shall also carry and maintain umbrella liability insurance with a limit of not less than $5,000,000.00 per occurrence.

(d) Property Insurance. Extended or broad form coverage property insurance including plate glass coverage on a replacement cost basis, with coverage equal to not less than 90% of the full replacement value of all personal property, decorations, trade fixtures, furnishings, equipment, alterations, leasehold improvements and betterments made by Tenant, and all other contents located or placed in the premises. In the event any casualty occurs, Tenant agrees to pay the difference between the insurance coverage required to be maintained by this Section 5.1(d) and an insurance policy offering coverage of 100% of the full replacement value of the property described in this subparagraph. Tenant’s policy will also include business interruption/extra expense coverage in amounts sufficient to insure 6 months of interrupted business operations at the Premises. Tenant shall be allowed to self-insure its obligations under this Section 5.1(d). If Tenant self-insures such liabilities, Tenant shall be deemed to have waived any and all claims or potential claims against Landlord for liabilities that would typically be covered by property insurance, including but not limited to business interruption or extra expense insurance coverage, and covenants not to sue Landlord for any such liabilities.

(e) Workers’ Compensation and Employees’ Liability Insurance. Workers’ Compensation Insurance covering all employees of Tenant, as required by the laws of the State of Florida and Employers’ Liability coverage subject to a limit of no less than $100,000.00 each employee, $100,000.00 each accident, and $1,000,000.00 policy limit.

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(f) Policy Form. All policies referred to above shall: (i) be taken out with insurers licensed to do business in Florida having an A.M. Best’s rating of A-, Class 9, or otherwise approved in advance by Landlord; (ii) name Landlord and Landlord’s property manager (if any) as additional insureds on the CGL and automobile liability policies; (iii) be noncontributing with, and shall apply only as primary and not as excess to any other insurance available to Landlord or any mortgagee of Landlord; and (iv) contain an obligation of the insurers and/or the agent/broker to notify Landlord by certified mail not less than 30 days prior to any material change, cancellation, or termination of any such policy. Certificates of insurance on Acord Form 25-S on or before the Commencement Date and thereafter at times of renewal or changes in coverage or insurer shall be delivered to Landlord promptly upon request. If (a) Tenant fails to take out or to keep in force any insurance referred to in this Section 5.1, or should any such insurance not be approved by either Landlord or any mortgagee, and (b) Tenant does not commence and continue to diligently cure such default within 48 hours after notice by Landlord to Tenant specifying the nature of such default, then Landlord has the right, without assuming any obligation in connection therewith, to procure such insurance at the sole cost of Tenant, and all outlays by Landlord shall be paid by Tenant to Landlord without prejudice to any other rights or remedies of Landlord under this Lease. Tenant shall not keep or use in the Premises any article that may be prohibited by any fire or casualty insurance policy in force from time to time covering the Premises or the Building.

5.2 LANDLORD’S INSURANCE.

During the Term, Landlord will carry and maintain the following types of insurance with respect to the Building and Park in such amount or percentage of replacement value as Landlord or its insurance advisor deems reasonable in relation to the age, location, type of construction and physical conditions of the Building and Park and the availability of such insurance at reasonable rates: (i) broad form or extended coverage insurance on the Building (excluding any property with respect to which Tenant and other tenants are obliged to insure pursuant to Section 5.1 or similar sections of their respective leases); (ii) public liability and property damage insurance with respect to Landlord’s operations in the Building; and (iii) such other forms of insurance as Landlord or its mortgagee reasonably considers advisable. Such insurance shall be in such reasonable amounts and with such reasonable deductibles as would be carried by a prudent owner of a similar building, having regard to size, age, and location. Landlord shall have the right to self insure any or all of its liabilities with respect to the Park.

5.3 RELEASE AND WAIVER OF SUBROGATION RIGHTS.

The parties hereto, for themselves and anyone claiming through or under them, hereby release and waive any and all rights of recovery, claim, action or cause of action, against each other, their respective agents, directors, officers and employees, for any property loss or property damage that may occur to the Premises or the Building, and to all property, whether real, personal or mixed, located in the Premises or the Building, by reason of any cause against which the releasing party is actually insured or, regardless of the releasing party’s actual insurance coverage, against which the releasing party is required to be insured pursuant to the

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provisions of Sections 5.1 or 5.2. This mutual release and waiver shall apply regardless of the cause or origin of the loss or damage, including negligence of the parties hereto, their respective agents and employees. Each party agrees to provide the other with reasonable evidence of its insurance carrier’s consent to such waiver of subrogation upon request. This Section 5.3 supersedes any provision to the contrary which may be contained in this Lease.

5.4 INDEMNIFICATION OF THE PARTIES.

5.4.1 Tenant’s Indemnity. Tenant hereby agrees to indemnify, defend and hold harmless Landlord from and against any and all liability for any loss, injury or damage, including, without limitation, all costs, expenses, court costs and reasonable attorneys’ fees, imposed on Landlord by any person whomsoever that occurs (i) in the Premises, except for any such loss, injury or damage that is caused by or results from the negligence or willful misconduct of Landlord, its employees or agents; or (ii) anywhere in the Park outside of the Premises as a result of the negligence or willful misconduct of Tenant, its employees, agents or contractors.

5.4.2 Landlord’s Indemnity. Landlord hereby indemnifies Tenant from, and agrees to hold Tenant harmless against, any and all liability for any loss, injury or damage, including, without limitation, all costs, expenses, court costs and reasonable attorneys’ fees, imposed on Tenant by any person whomsoever, that occurs in the Building or anywhere on the Park and that is caused by or results from the negligence or willful misconduct of Landlord or its employees, agents or contractors.

The provisions of this Section 5.4 shall survive the expiration or earlier termination of this Lease.

6. DAMAGE, DESTRUCTION AND CONDEMNATION

6.1 DESTRUCTION OR DAMAGE TO PREMISES.

If the Premises are at any time damaged or destroyed in whole or in part by fire, casualty or other causes, Landlord shall have 60 days from the date of such damage or destruction to determine and inform Tenant in writing whether Landlord will restore the Premises to substantially the condition that existed immediately prior to the occurrence of the casualty. If Landlord elects to rebuild, Landlord shall complete such repairs within 180 days from the end of the 60-day period. If such repairs have not been completed within that 180-day period, and Tenant desires to terminate the Lease as a result thereof, then Tenant must notify Landlord prior to Landlord’s completion of the repairs of Tenant’s intention to terminate this Lease. Landlord shall then have 10 days after Landlord’s receipt of notice of Tenant’s election to terminate to complete such repairs (as evidenced by a temporary certificate of occupancy or other appropriate certificate from the applicable governmental authority). If Landlord does complete such repairs prior to the expiration of such 10-day cure period, Tenant shall have no such right to terminate this Lease. Tenant shall, upon substantial completion by Landlord, promptly and diligently, and at its sole cost and expense, repair and restore any improvements to the Premises made by Tenant to the condition that existed immediately prior to the occurrence of the casualty. If, in

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Landlord’s reasonable estimation, the Premises cannot be restored within 240 days of such damage or destruction, then Landlord shall notify Tenant in writing of such fact, and either Landlord or Tenant may terminate this Lease as of a date specified in such notice, which date shall not be less than 30 nor more than 60 days after the date such notice is given. Until the restoration of the Premises is complete, there shall be an abatement or reduction of Base Rent and Operating Expenses in the same proportion that the square footage of the Premises so damaged or destroyed and under restoration bears to the total square footage of the Premises, unless the damaging event was caused by the negligence or willful misconduct of Tenant, its employees, officers, agents, licensees, invitees, visitors, customers, concessionaires, assignees, subtenants, contractors or subcontractors, in which event there shall be no such abatement unless Landlord is being covered by Tenant’s or Landlord’s business interruption/extra expense coverage during the restoration.

Notwithstanding the foregoing provisions of this paragraph, if damage to more than 50% of the Premises or destruction of the Premises shall occur within the last year of the Term, as the same may be extended as provided hereinafter either party may terminate this Lease by providing written notice of such intention to terminate within 30 days of the date of such damage or destruction.

6.2 CONDEMNATION.

6.2.1 TOTAL OR PARTIAL TAKING.

If the whole of the Premises, any of the loading doors at the Premises or any material part of the parking area for the Premises or access to the Premises (provided that if 20% or more of the Premises or 40% or more of the parking area are taken, Tenant may deem that all of the Premises are taken), or such portion thereof as will make the Premises unusable, in Tenant’s commercially reasonable judgment, for the purposes leased hereunder, shall be taken by any public authority under the power of eminent domain or sold to public authority under threat or in lieu of such taking, the Term shall cease as of the day possession or title shall be taken by such public authority, whichever is earlier (“Taking Date”), whereupon the Rent and all other charges shall be paid up to the Taking Date with a proportionate refund by Landlord of any Rent and all other charges paid for a period subsequent to the Taking Date. If less than the whole of the Premises, or less than such portion thereof as will make the Premises unusable, in Tenant’s commercially reasonable judgment, as of the Taking Date, is taken, Base Rent and other charges payable to Landlord shall be reduced in proportion to the amount of the Premises taken. If this Lease is not terminated, Landlord shall repair any damage to the Premises caused by the taking to the extent necessary to make the Premises reasonably tenantable within the limitations of the available compensation awarded for the taking (exclusive of any amount awarded for land).

6.2.2 AWARD.

All compensation awarded or paid upon a total or partial taking of the Premises or Building including the value of the leasehold estate created hereby shall belong to and be the property of Landlord without any participation by Tenant; Tenant shall have no claim to any such award based on Tenant’s leasehold interest. However, nothing contained herein shall

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be construed to preclude Tenant, at its cost, from independently prosecuting any claim directly against the condemning authority in such condemnation proceeding for damage to, or cost of removal of, stock, trade fixtures, furniture, and other personal property belonging to Tenant; Tenant’s moving or relocation expenses and the unamortized cost of any improvements made by Tenant, provided, however, that no such claim shall diminish or otherwise adversely affect Landlord’s award or the award of any mortgagee.

7. MAINTENANCE AND REPAIRS.

7.1 LANDLORD’S OBLIGATIONS.

Landlord shall keep the foundation, roof, slab, floor and structural portions of the improvements on the Premises and Building, Building life safety systems, and the entrances, sidewalks, corridors, parking areas and other facilities from time to time comprising the Common Areas, in good order, condition and repair. The cost of maintaining and repairing such items shall be included in Operating Expenses (excluding those capital expenses excluded from Operating Expenses pursuant to Section 2.4.1.1 above). In addition, but subject nevertheless to any applicable waiver of subrogation, Landlord may charge to Tenant as Additional Rent the cost of any repairs of damage to the Building or Common Areas caused by Tenant’s acts or omissions. Landlord shall not be obligated to maintain or repair interior windows, interior doors, or the surfaces of interior non-structural walls of the Premises. Landlord shall be obligated to commence any repairs under this Section 7.1 within a reasonable time after receipt of a notice from Tenant specifying the need for such repairs and thereafter Landlord shall proceed diligently to complete such repairs.

Notwithstanding anything to the contrary contained in this Lease, in the event Emergency Repairs (as hereafter defined), are required for any of the items that Landlord is required to maintain, repair or replace under this Lease, Tenant may perform the same giving only such notice as is practical under the circumstances, and in the event such repairs were the responsibility of Landlord hereunder, Tenant may recover the commercially reasonable cost and expense from Landlord, not to exceed Ten Thousand and No/100 Dollars ($10,000.00) for any single Emergency Repair. For purposes hereof, an “Emergency Repair” shall mean a repair to the Premises that is reasonably necessary to prevent imminent harm to any person or material damage to any portion of the Premises.

7.2 TENANT’S OBLIGATIONS.

7.2.1 Except as specifically provided to the contrary in Section 7.1 above, Tenant shall, at its expense, throughout the Term and all renewals and extensions thereof, maintain in good order, condition and repair the Premises, including but not limited to heating and air conditioning equipment, walls, floors and ceilings, mechanical and electrical systems and equipment, electric light fixtures, bulbs, tubes and tube casings, doors, floor coverings, dock doors, loading ramps, levelers, plumbing system and plumbing fixtures, Tenant’s signs and utility facilities not maintained by Landlord. Landlord shall use reasonable efforts to extend to Tenant the benefit from warranties on such items, if any, that have been made by Landlord’s

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contractors or vendors and to extend to Tenant, as and if available, any bulk buying power that Landlord may have with such contractors or vendors. If any portion of the Premises or any system or equipment in the Premises which Tenant is obligated to repair cannot be fully repaired, Tenant shall promptly replace the same, regardless of whether the benefit of such replacement extends beyond the Term. Landlord shall, at Tenant’s expense, maintain a preventive maintenance contract providing for the regular inspection (at least semi-annual) and maintenance of the heating and air conditioning system by a licensed heating and air conditioning contractor approved by Landlord. The cost of such preventive maintenance contract shall be billed directly by Landlord to Tenant and shall be deemed Additional Rent. Landlord’s maintenance, at Tenant’s expense, of such preventive maintenance contract shall in no way diminish Tenant’s obligation to maintain and repair the heating and air conditioning system. Landlord shall have the right, upon notice to Tenant, to undertake the responsibility for preventive maintenance of any other system or component at Tenant’s expense. Tenant shall be responsible for janitorial services and trash removal from the Premises, at Tenant’s expense. Landlord and Tenant intend that, at all times during the Term, Tenant shall maintain the Premises in the same condition as received. Notwithstanding anything contained in this Section 7.2.1 to the contrary, if it becomes necessary during the Term to replace the heating and air conditioning equipment or the exhaust fans serving the Premises, Landlord shall pay the entire cost of the replacement and Tenant shall reimburse Landlord for Tenant’s share of such replacement cost, on a monthly basis, which share shall be calculated by amortizing the replacement cost (with interest at the prevailing loan rate available to Landlord when the cost is incurred) over a period of one hundred twenty (120) months, with Tenant paying only for the number of months remaining in the Term at the time the HVAC equipment is replaced.

7.2.2 All of Tenant’s obligations to maintain and repair shall be accomplished at Tenant’s sole expense. If Tenant fails to maintain and repair the Premises as required by this Section 7.2.2, Landlord may, on 10 days’ prior notice (except that no notice shall be required in case of emergency), enter the Premises and perform such maintenance or repair on behalf of Tenant. In such cases, Tenant shall reimburse Landlord promptly upon demand for all costs incurred in performing such maintenance or repair plus an administration fee equal to 5% of such costs or expenses.

7.3 CONDITION UPON TERMINATION.

Upon the termination of the Lease, Tenant shall surrender the Premises to Landlord, broom clean and in the same condition and repair as when received, ordinary wear and tear, casualty and condemnation excepted. However, Tenant shall not be obligated to repair any damage that Landlord is required to repair under Section 7.1. Tenant shall repair, at Tenant’s expense, any damage to the Premises or Building caused by the removal of any of Tenant’s personal property, including but not limited to furniture, machinery and equipment. In no event, however, shall Tenant remove any of the following materials or equipment without Landlord’s prior written consent: any power wiring or power panels; lighting or lighting fixtures; millwork and cabinetry; wall coverings; drapes, blinds or other window coverings; carpets or other floor coverings; heaters, air conditioners (other than any portable units installed by Tenant), or any other base building heating or air conditioning equipment; fencing or security gates; plumbing fixtures, water fountains; or other similar building operating equipment and decorations.

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8. DEFAULT AND REMEDIES:

8.1 DEFAULT BY TENANT.

The following will be events of default by Tenant under this Lease:

(a) Failure to pay when due any installment of Rent or any other payment required pursuant to this Lease within five (5) business days following written notice that the same is past due (provided however that in no event shall Landlord be obligated to provide written notice more than twice in any twelve (12) month period);

(b) The filing of a petition for bankruptcy or insolvency under any applicable federal or state bankruptcy or insolvency law; an adjudication of bankruptcy or insolvency or an admission that it cannot meet its financial obligations as they become due, or the appointment or a receiver or trustee for all or substantially all of the assets of Tenant”);

(c) A transfer in fraud of creditors or an assignment for the benefit of creditors;

(d) Any act which results in a lien being filed against the Premises or the Park which is not cured within the applicable time period provided for herein;

(e) The liquidation, termination or dissolution of Tenant;

(f) Failure to cure the breach of any provision of this Lease, other than the obligation to pay Rent, where such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s non-performance is such that more than 30 days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30 day period and thereafter diligently pursues such cure to completion then Tenant shall have an additional reasonable period of time to complete such cure; and

(g) Tenant’s breach of the same provision of this Lease, other than the obligation to pay Rent, more than twice in any 12-month period.

8.2 REMEDIES.

Upon the occurrence of any event of default by Tenant, Landlord shall be entitled to exercise the following remedies in accordance with Florida law:

(a) Landlord may terminate this Lease and dispossess Tenant;

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(b) Landlord may, without terminating or canceling this Lease, declare all Rent to be paid pursuant to this Lease for the remainder of the Term, to be immediately due and payable, and thereupon all Rent due hereunder through the end of the Term shall be accelerated and Landlord shall be entitled to recover the net present value thereof using a discount rate equal to the interest rate of a governmental security having a maturity closest to the then current expiration of the Term (In the event of such acceleration, Landlord shall use commercially reasonable efforts to relet the Premises and shall credit Tenant, up to the amount of accelerated Rent actually received by Landlord, for the amount of rent actually received from such reletting);

(c) Landlord may elect to repossess the Premises and to relet the Premises for Tenant’s account, holding Tenant liable in damages for all expenses incurred in any such reletting and for any difference between the amount of Rent received from such reletting and the amount due and payable under the terms of this Lease; and

(d) Landlord may enter the Premises and take any actions required of Tenant under the terms of this Lease, and Tenant shall reimburse Landlord on demand for any expenses that Landlord may incur in effecting compliance with Tenant’s obligations under this Lease, and Landlord shall not be liable for any damages resulting to Tenant from such action.

The above remedies shall be cumulative and shall not preclude Landlord from pursuing any other remedies permitted by law. Landlord’s election not to enforce one or more of the remedies upon an event of default shall not constitute a waiver.

8.3 COSTS.

Tenant shall pay to Landlord on demand all reasonable costs incurred by Landlord, including reasonable attorneys’ fees and costs (whether incurred in preparation for or at trial, on appeal, or in bankruptcy), incurred by Landlord in enforcing any of the obligations of Tenant under this Lease. In addition, upon any default by Tenant, Tenant shall also be liable to Landlord for the expenses to which Landlord may be put in re-entering the Premises, reletting the Premises and putting the Premises into the condition necessary for such reletting (including reasonable attorneys’ fees and disbursements, marshall’s fees, and brokerage fees, in so doing), and any other expenses reasonably incurred by Landlord.

8.4 WAIVER.

No delay or omission by either party in exercising a right or remedy shall exhaust or impair the same or constitute a waiver of, or acquiescence to, a default.

8.5 DEFAULT BY LANDLORD.

In the event of any default by Landlord, Tenant will give Landlord written notice specifying such default with particularity, and Landlord shall have a period of 30 days following he date of such notice in which to commence the appropriate cure of such default. Unless and until Landlord fails to commence and diligently pursue the appropriate cure of such default after

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such notice or complete same within a reasonable period of time, Tenant shall not have any remedy or cause of action by reason thereof, except as expressly provided herein. Notwithstanding any provision of this Lease, Landlord shall not at any time have any personal liability under this Lease and Tenant’s sole remedy with respect thereto shall be a suit for damages and not a termination of the Lease. In the event of any breach or default by Landlord of any term or provision of this Lease, Tenant agrees to look solely to the equity or interest then-owned by Landlord in the Building and the Park (which includes Landlord’s interest in any proceeds of sale, insurance proceeds, proceeds of condemnation and rents), and in no event shall any deficiency judgment be sought or obtained against Landlord.

9. PROTECTION OF LENDERS

9.1 SUBORDINATION AND ATTORNMENT.

Subject to Tenant entering into a Subordination, Non-Disturbance and Attornment Agreement (“SNDA”) as described below, this Lease shall be subject and subordinated at all times to the terms of each and every ground or underlying lease which now exists or may hereafter be executed affecting the Premises under which Landlord shall claim, and to the liens of each and every mortgage and deed of trust in any amount or amounts whatsoever now or hereafter existing encumbering the Premises, and to all modifications, renewals and replacements thereto. If Landlord’s interest in the Premises is acquired by any ground lessor, mortgagee, or purchaser at a foreclosure sale or transfer in lieu thereof, Tenant shall attorn to the transferee of or successor to Landlord’s interest in the Premises and recognize such transferee or successor as Landlord under this Lease in accordance with the applicable SNDA. Notwithstanding the foregoing, any mortgagee under any mortgage shall have the right at any time to subordinate any such mortgage to this Lease on such terms and subject to such conditions as the mortgagee in its discretion may consider appropriate.

Landlord represents and warrants to Tenant that, as of the date of this Lease, it is the fee simple title holder of the Building and no mortgages or ground leases encumber the same.

After the date of this Lease, any subordination of this Lease to a mortgage or any ground lease shall be conditioned on Tenant obtaining a SNDA from each and every mortgagee and ground lessor, such SNDA to be in form and content reasonably acceptable to Tenant and the applicable mortgagee and ground lessor.

9.2 ESTOPPEL CERTIFICATES.

Within 15 days of receipt of a written request from Landlord, any lender or prospective lender of the Building or Park, or at the request of any purchaser or prospective purchaser of the Building or Park, Tenant shall deliver an estoppel certificate, attaching a true and complete copy of this Lease, including all amendments relative thereto, and certifying with particularly, among other things, (i) a description of any renewal or expansion options, if any; (ii) the amount of rent currently and actually paid by Tenant under this Lease; (iii) that the Lease is in full force and effect as modified; (iv) Tenant is in possession of the Premises; (v) stating

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whether to the best of Tenant’s knowledge, either Landlord or Tenant is in default under the Lease and, if so, summarizing such default(s); and (vi) stating whether Tenant or Landlord has any offsets or claims against the other party and, if so, specifying with particularity the nature and amount of such offset or claim. Landlord shall deliver a similar estoppel certificate within 15 days of receipt of a written request from Tenant, any lender or prospective lender of Tenant or any prospective assignee

9.3 TENANT’S FINANCIAL CONDITION. Within 10 days after written request from Landlord, which request shall only be made in connection with (i) the potential sale, financing or refinancing of the Park or any portion thereof, (ii) a request by Tenant to assign this Lease or sublease and portion of the Premises, or (iii) a default hereunder by Tenant, Tenant shall deliver to Landlord such financial statements as are reasonably required by Landlord to verify the net worth of Tenant, or any assignee, subtenant, or Guarantor of Tenant. Tenant represents and warrants to Landlord that each such financial statement is a true and accurate statement as of the date of such statement. All financial statements shall be confidential and shall be used only for the purposes set forth herein. Landlord waives the foregoing requirement if Tenant is a public company.

10. TELECOMMUNICATIONS.

Tenant acknowledges and agrees that all telephone and telecommunications services desired by Tenant shall be ordered and utilized at the sole expense of Tenant. All installations of telecommunications equipment and wires shall be accomplished pursuant to plans and specifications approved in advance in writing by Landlord, such approval not to be unreasonably withheld, delayed or conditioned. Except as may be otherwise provided for in this Lease, Landlord shall have no responsibility for the maintenance of Tenant’s telecommunications equipment, including wire; nor for any wiring or other infrastructure to which Tenant’s telecommunications equipment may be connected. Tenant agrees that, to the extent any such service is interrupted, curtailed or discontinued from any cause whatsoever, unless such loss, or damage results from any fault, default, negligence, act or omission of Landlord or its agents, servants, employees, or any other person for whom Landlord is in law responsible, Landlord shall have no obligation or liability with respect thereto and it shall be the sole obligation of Tenant at its expense to obtain substitute service.

Landlord shall have the right, upon reasonable prior notice to Tenant, to temporarily interrupt or turn off telecommunications facilities in the event of emergency or as necessary in connection with the operation of the Building or installation of telecommunications equipment for other tenants of the Building. Landlord shall exercise its rights under this paragraph, to the extent possible in the circumstances, in such manner so as to minimize interference with Tenant’s use and enjoyment of the Premises.

Any and all telecommunications equipment installed in the Premises or elsewhere in the Building by or on behalf of Tenant, including wiring or other facilities for telecommunications transmittal, shall be removed prior to the expiration or earlier termination of the Term, by Tenant at its sole cost.

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In the event that Tenant wishes at any time to utilize the services of a telephone or telecommunications provider whose equipment is not then servicing the Building, no such provider shall be permitted to install its lines or other equipment within the Building without first securing the prior written approval of Landlord. Landlord’s approval shall not be deemed any kind of warranty or representation by Landlord, including, without limitation, any warranty or representation as to the suitability, competence, or financial strength of the provider. Without limitation of the foregoing standard, unless all of the following conditions are satisfied to Landlord’s satisfaction, it shall be reasonable for Landlord to refuse to give its approval: (i) Landlord shall incur no expense whatsoever with respect to any aspect of the provider’s provision of its services, including without limitation, the costs of installation, materials and services; (ii) prior to commencement of any work in or about the Building by the provider, the provider shall supply Landlord with such written indemnities, insurance, financial statements, and such other items as Landlord reasonably determines to be necessary to protect its financial interests and the interests of the Building relating to the proposed activities of the provider; (iii) the provider agrees to abide by such rules and regulations, building and other codes, job site rules and such other requirements as are reasonably determined by Landlord to be necessary to protect the interests of the Building, the tenants of the Building and Landlord, in the same or similar manner as Landlord has the right to protect itself and the Building with respect to alterations as described in Section 4.2 of this Lease; (iv) Landlord reasonably determines that there is sufficient space in the Building for the placement of all of the provider’s equipment and materials; (v) the provider agrees to abide by Landlord’s requirements, if any, that provider use existing Building conduits and pipes or use building contractors (or other contractors approved by Landlord); (vi) Landlord receives from the provider such compensation as is reasonably determined by Landlord to compensate it for space used in the Building for the storage and maintenance of the provider’s equipment, for the fair market value of a provider’s access to the Building, and the costs which may reasonably be expected to be incurred by Landlord; (vii) the provider agrees to deliver to Landlord detailed “as built” plans immediately after the installation of the provider’s equipment is complete; and (viii) all of the foregoing matters are documented in a written license or other agreement between Landlord and the provider, the form and content of which is reasonably satisfactory to Landlord.

Notwithstanding any provision of the preceding paragraphs to the contrary, the refusal of Landlord to grant its approval to any prospective telecommunications provider shall not be deemed a default or breach by Landlord of its obligation under this Lease unless and until Landlord is adjudicated to have acted recklessly or maliciously with respect to Tenant’s request for approval, and in that event, Tenant shall still have no right to terminate the Lease or claim an entitlement to rent abatement, but may as Tenant’s sole and exclusive recourse seek a judicial order of specific performance compelling Landlord to grant its approval as to the perspective provider in question. The provisions of this paragraph may be enforced solely by Tenant and Landlord, are not for the benefit of any other party, and specifically but without limitation, no telephone or telecommunications provider shall be deemed a third party beneficiary of this Lease.

Tenant shall not utilize any wireless communications equipment (other than usual and customary cellular telephones), including antennae and satellite receiver dishes, within the Premises or the Building, without Landlord’s prior written consent such approval not to be unreasonably withheld, delayed or conditioned.

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In the event that telecommunications equipment, wiring and facilities installed by or at the request of Tenant within the Premises, or elsewhere within the Building causes interference to equipment used by another party, Tenant shall assume all liability related to such interference, Tenant shall use reasonable efforts, and shall cooperate with Landlord and other parties, to promptly eliminate such interference. In the event that Tenant is unable to do so, Tenant shall substitute alternative equipment which remedies the situation. If such interference persists, Tenant shall discontinue the use of such equipment, and, at Landlord’s discretion, remove such equipment according to foregoing specifications.

11. MISCELLANEOUS PROVISIONS.

11.1 LANDLORD’S LIABILITY; CERTAIN DUTlES.

As used in the Lease, the term “Landlord” means only the owner of the fee title to the Building or the leasehold estate under a ground lease of the Building at the time in question. Each landlord is obligated to perform the obligations of Landlord under this Lease only during the time such landlord owns such interest or title. Any landlord who transfers its title or interest is relieved of all liability with respect to the obligations of Landlord under this Lease to be performed on or after the date of transfer, provided that such transfer is not for the primary purpose of avoiding such obligations. However, each landlord shall deliver to its transferee all funds previously paid by Tenant if such funds have not yet been applied under the terms of this Lease.

11.2 SECURITY DEPOSIT.

Upon Tenant’s execution of this Lease, Tenant shall deposit with Landlord a cash security deposit in the amount of $73,926.00 (the “Security Deposit”). The Security Deposit represents security for the faithful performance and observance by Tenant of each and every term and covenant of this Lease. Landlord may apply all or part of the Security Deposit to any unpaid Rent or other charges due from Tenant or to cure any other default of Tenant. The Security Deposit shall not constitute liquidated damages. If Landlord uses any part of the Security Deposit, Tenant shall restore the Security Deposit to its full amount within 10 days after Landlord’s written request. No interest shall be paid to Tenant on the Security Deposit. Landlord shall not be required to keep the Security Deposit separate from its other accounts, and no trust relationship is created with respect to the Security Deposit. Landlord shall not be obligated to return the Security Deposit to Tenant upon the expiration or earlier termination of the Lease unless and until all of the following events occur: (i) the payment in full of all Rent due pursuant to the Lease; (ii) the repair of any and all damage to the Premises as required by Tenant pursuant to the terms of this Lease; and (iii) the reconciliation of Operating Expenses for the months in which the Tenant was in occupancy for the year in which the Lease expires or terminates, which reconciliation shall be completed by Landlord and provided to Tenant within sixty (60) days of the expiration or termination of this Lease. Tenant shall have the right to

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conduct a Tenant’s Review of such reconciliation as provided in Section 2.4.5. Tenant and Landlord acknowledge and agree that the existing security deposit held by Landlord with respect to the Original Lease will be credited against the Security Deposit required herein, subject to the adjustment of such security deposit, if required, pursuant to the terms of the Original Lease.

11.3 INTERPRETATION.

The captions of the Articles or Sections of this Lease are to assist the parties in reading this Lease and are not a part of the terms or provisions of this Lease. Whenever required by the context of this Lease, the singular shall include the plural and the plural shall include the singular. The masculine, feminine and neuter genders shall each include the other. In any provision relating to the conduct, acts or omissions of Tenant the term “Tenant” shall include Tenant’s agents, employees, contractors, invitees, successors or others using the Premises, Building or Park with Tenant’s expressed or implied permission. This Lease will not be construed more or less favorably with respect to either party as a consequence of the Lease or various provisions hereof having been drafted by one of the parties hereto.

11.4 INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS.

This Lease is the only agreement between the parties pertaining to the lease of the Premises and no other agreements either oral or otherwise are effective unless embodied herein. All amendments to this Lease shall be in writing and signed by all parties. Any other attempted amendment shall be void.

11.5 NOTICES.

Any notice or document (other than rent) required or permitted to be delivered by the terms of this Lease shall be in writing and delivered by hand delivery, certified mail (with postage prepaid and return receipt requested) or guaranteed overnight delivery service. Notices to Tenant shall be delivered to the address specified in the introductory paragraph of this Lease, with copies to: the Premises and to Michael T. Lynott, Esq., Greenberg Traurig, P.A., 1221 Brickell Avenue, Miami, Florida 33131. Notices to Landlord shall be delivered to the address specified in the introductory paragraph of this Lease, with a copy to Flagler Development Company, LLC, 10151 Deerwood Park Boulevard, Building 100, Suite 330, Jacksonville, Florida 32256, Attention: Legal Department. All notices shall be effective upon delivery or attempted delivery. Either party may change its notice address upon notice to the other party, given in accordance herewith by an authorized officer, partner, or principal.

11.6 RADON GAS NOTICE.

Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Level of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department.

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11.7 WAIVERS.

All waivers must be in writing and signed by the waiving party. Either party’s failure to enforce any provision of this Lease or Landlord’s acceptance of Rent shall not be a waiver and shall not prevent Landlord or Tenant, as applicable, from enforcing that provision or any other provision of this Lease in the future. No statement on a payment check from Tenant or in a letter accompanying a payment check shall be binding on Landlord. Landlord may, with or without notice to Tenant, negotiate such check without being bound to the conditions of such statement.

11.8 NO RECORDATION.

Neither party shall record this Lease or any memorandum of lease without the consent of the other party.

11.9 JOINT AND SEVERAL LIABILITY.

All parties signing this Lease as Tenant shall be jointly and severally liable for all obligations of Tenant.

11.10 FORCE MAJEURE.

The performance by either party to this Lease of its obligations (except the payment of Rent or other sums of money) shall be excused by delays attributable to events beyond that party’s reasonable control for a period of time that is sufficient for the party to perform its obligations after the cessation of the Force Majeure event acting in a diligent, commercially reasonable manner. Events beyond a party’s reasonable control include, but are not limited to, acts of the other party, acts of God (including reasonable preparation therefore), war, civil commotion, labor disputes, strikes, fire, flood or other casualty, failure of power, shortages of labor or material, government action, regulation or restriction (including extraordinary delay in the issuance of any permit, permit approval or building permit inspection) and unusually inclement weather conditions. Events beyond a party’s control shall not include changes in economic or market conditions, or financial or internal problems of the non-performing party, or problems that can be satisfied by the payment of money.

11.11 EXECUTION OF LEASE.

Submission or preparation of this Lease by Landlord shall not constitute an offer by Landlord or option for the Premises, and this Lease shall constitute an offer, acceptance or contract only as expressly specified by the terms of this Section 11.11. In the event that Tenant executes this Lease first, such action shall constitute an offer to Landlord, which may be accepted by Landlord by executing this Lease within 10 business days after submission, and once this Lease is so executed by Landlord, such offer may not be revoked by Tenant and this Lease shall become a binding contract. In the event that Landlord executes this Lease first, such action shall

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constitute an offer to Tenant, which may be accepted by Tenant only by delivery to Landlord of a fully executed copy of this Lease within 10 business days after submission. Notwithstanding that the Commencement Date may occur and the Term may commence after the date of execution of this Lease, upon delivery and acceptance of this Lease in accordance with the terms of this Lease, this Lease shall be fully effective, and in full force and effect and valid and binding against the parties in accordance with, but on and subject to, the terms and conditions of this Lease.

11.12 AUTHORITY.

As a material inducement to Landlord to enter into this Lease, Tenant, intending that Landlord rely thereon, represents and warrants to Landlord that:

(i) Tenant and the party executing on behalf of Tenant are fully and properly authorized to execute and enter into this Lease on behalf of Tenant and to deliver this Lease to Landlord;

(ii) This Lease constitutes a valid and binding obligation of Tenant, enforceable against Tenant in accordance with the terms of this Lease;

(iii) Tenant is duly organized, validly existing and in good standing under the laws of the state of Tenant’s organization and has full power and authority to enter into this Lease, to perform Tenant’s obligations under this Lease in accordance with the terms of this Lease, and to transact business in the state in which the Premises are located; and

(iv) The execution of this Lease by the individual or individuals executing this Lease on behalf of Tenant, and the performance by Tenant of Tenant’s obligation under this Lease, have been duly authorized and approved by all necessary corporate or partnership action, as the case may be, and the execution, delivery and performance of this Lease by Tenant is not in conflict with Tenant’s bylaws or articles of incorporation (if a corporation), agreement of partnership (if a partnership), and other charters, agreements, rules or regulations governing Tenant’s business as any of the foregoing may have been supplemented or amended in any manner.

As a material inducement to Tenant to enter into this Lease, Landlord intending that tenant rely thereon, represents and warrants to Tenant that:

(i) Landlord and the party executing on behalf of Landlord are fully and properly authorized to execute and enter into this Lease on behalf of Landlord and to deliver this Lease to Tenant;

(ii) This Lease constitutes a valid and binding obligation of Landlord, enforceable against Landlord in accordance with the terms of this Lease;

(iii) Landlord is duly organized, validly existing and in good standing under the laws of the state of Landlord’s organization and has full power and authority to enter into this Lease, to perform Landlord’s obligations under this Lease in accordance with the terms of this Lease, and to transact business in the state in which the Premises are located; and

31

(iv) The execution of this Lease by the individual or individuals executing this Lease on behalf of Landlord, and the performance by Landlord of Landlord’s obligation under this Lease, have been duly authorized and approved by all necessary corporate or partnership action, as the case may be, and the execution, delivery and performance of this Lease by Landlord is not in conflict with Landlord’s bylaws or articles of incorporation (if a corporation), agreement of partnership (if a partnership), and other charters, agreements, rules or regulations governing Landlord’s business as any of the foregoing may have been supplemented or amended in any manner.

11.13 FLORIDA LAW.

This Lease shall be governed by the laws of the State of Florida.

11.14 COUNTERPART.

This Lease may be executed in multiple counterparts, each counterpart of which shall be deemed an original and any of which shall be deemed to be complete of itself and may be introduced into evidence or used for any purpose without the production of the other counterpart or counterparts.

11.15 HOLDING OVER.

If Tenant remains in possession after the end of the Term without having executed and delivered a new lease or an agreement extending the Term, there shall be no tacit renewal of this Lease or the Term, and Tenant shall be deemed to be occupying the Premises from month to month at a monthly Base Rent payable in advance on the first day of each month equal to 125% of the monthly amount of Base Rent payable during the last month of the Term for the first thirty (30) days of such holdover, and thereafter the Base Rent payable shall be one hundred fifty percent (150%) of the Rent payable immediately preceding the termination date of this Lease, and otherwise upon the same terms as set forth in this Lease, so far as they are applicable to a monthly tenancy. In addition to and not limiting any other rights or remedies which Landlord may have on account of Tenant holding over without written consent of Landlord, Tenant shall pay to Landlord any and all direct and consequential damages incurred by Landlord on account of such unapproved holding over including claims by tenants entitled to future possession.

11.16 TIME IS OF THE ESSENCE.

Time is of the essence of this Lease and all provisions contained herein.

32

11.17 APPROVAL OF PLANS AND SPECIFICATIONS.

Neither review nor approval by or on behalf of Landlord of any Tenant’s plans for initial tenant work in the Premises nor any plans and specifications for any Tenant alterations or any other work shall constitute a representation or warranty by Landlord, any of Landlord’s beneficiaries, the managing agent of the Building or Park or any of their respective agents, partners or employees that such plans and specifications either (i) are complete or suitable for their intended purpose, or (ii) comply with Applicable Laws, or (iii) can be completed within any particular time frame or construction schedule, it being expressly agreed by Tenant that neither Landlord, nor any of Landlord’s beneficiaries, nor the managing agent of the Building or Park nor any of their respective agents, partners or employees assume any responsibility or liability whatsoever to Tenant or to any other person or entity for such completeness, suitability, compliance or completion. Landlord represents that any work performed by Landlord prior to the Commencement Date shall be in compliance with all Applicable Laws.

11.18 RELATIONSHIP.

Landlord and Tenant disclaim any intention to create a joint venture, partnership or agency relationship.

11.19 BROKER’S FEE.

Tenant and Landlord each represent and warrant to the other that neither has had any dealings or entered into any agreements with any person, entity, broker or finder other than the Transwestern Commercial Service Florida, LLC and Flagler Real Estate Services, Inc. (the “Disclosed Brokers”), in connection with the negotiation of this Lease, and no other broker, person, or entity is entitled to any commission or finder’s fee in connection with the negotiation of this Lease, and Tenant and Landlord each agree to indemnify, defend and hold the other harmless from and against any claims, damages, costs, expenses, attorneys’ fees or liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings, actions or agreements of the indemnifying party. Landlord shall pay the Disclosed Brokers pursuant to a separate agreement.

11.20 WAIVER OF TRIAL BY JURY.

LANDLORD AND TENANT EACH HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS LEASE.

11.21 RIDERS AND EXHIBITS.

All Riders, Addenda and Exhibits attached hereto and referenced herein shall be deemed to be a part hereof and are hereby incorporated.

33

11.22 TENANT ASSIGNMENT.

Tenant will not assign this Lease, in whole or in part, or sublease the Premises, in whole or in part, without the prior written consent of Landlord, which consent will not be unreasonably withheld, subject to Landlord’s right of recapture set forth below, and in no event will Tenant be released from any obligation or liability under this Lease following any such assignment or sublease. Notwithstanding the foregoing to the contrary, Landlord may, in Landlord’s sole and absolute discretion, approve or disapprove any proposed assignment or sublease by Tenant to an existing occupant of any space in the Park or an affiliate of any such occupant. Landlord will approve or deny any request for an assignment or sublease within 10 business days after Tenant’s written request. No sublessee of the Premises or any portion thereof, may further assign or sublease its interest in the Premises or any portion thereof. Legal fees and expenses incurred by Landlord (not to exceed $2,000.00) in connection with the review by Landlord of Tenant’s requested assignment or sublease pursuant to this Section, including fees and disbursements incurred in the preparation and/or review of any documentation, will be paid by Tenant within 30 days of invoice for payment thereof, as Additional Rent. If the rent due and payable by any assignee or sublessee under any permitted assignment or sublease exceeds the Rent payable under this Lease for such space, Tenant will pay to Landlord 50% of all such excess rent and other excess consideration (less Tenant’s reasonable third party costs for effecting the assignment or sublease) within 10 days following receipt thereof by Tenant. Notwithstanding anything to the contrary contained in this Lease, Tenant shall have the right, without Landlord’s consent, to assign this Lease or sublet all or any portion of the Premises to: (a) a parent, subsidiary or affiliated entity of Tenant, or (b) any entity to which all or a substantial portion of the assets or stock of Tenant have been sold or transferred, or (c) any entity in connection with a merger, sale of stock, consolidation or other corporate reorganization or transaction involving Tenant, or (d) as part of the sale, transfer or assignment of fifty percent (50%) or more of Tenant’s leases. Any subletting or assignment permitted under the terms of the preceding sentence is hereinafter referred to as a “Permitted Transfer”. In addition, Tenant shall have the right to have subleased, licensed or concessioned departments operated as part of Tenant’s primary business operations without the consent of Landlord ( a “Service Provider License”). Tenant shall promptly provide Landlord with written notice of any Permitted Transfer or Service Provider License. No Permitted Transfer or Service Provider License shall release Tenant from Tenant’s obligations hereunder or alter the primary liability of Tenant to pay the Rent and other sums due Landlord hereunder and to perform all other obligations to be performed by Tenant hereunder.

Within 15 days after Landlord’s receipt of Tenant’s request for Landlord’s consent to a proposed assignment or sublease, excluding any assignment or sublease to an affiliate of Tenant or a Service Provider License, Landlord shall have the right to require Tenant to reconvey to Landlord that portion of the Premises which Tenant is seeking to assign or sublet. Tenant shall reconvey that portion of the Premises in consideration of Landlord’s release of Tenant from all future Rent and other obligations, which would not otherwise survive termination of the Lease, with respect to the portion of the Premises so reconveyed. Any such reconveyance shall be evidenced by an agreement reasonably acceptable to Landlord and Tenant in form and substance.

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Notwithstanding anything to the contrary contained herein, in the event that Landlord exercises such reconveyance rights as are set forth above, Tenant, by written notice to Landlord within ten (10) days of Tenant’s receipt of Landlord’s notice to reconvey, may rescind its request to Landlord to approve such sublease or assignment in which case Tenant shall not be required to reconvey such space and the Lease shall continue in full force and effect as if Tenant had not sought to sublease or assign such space.

11.23 LANDLORD ASSIGNMENT.

Landlord will have the right to sell, transfer or assign, in whole or in part, its rights and obligations under this Lease. Any such sale, transfer or assignment will operate to release Landlord from any and all liability under this Lease arising after the date of such sale, assignment or transfer.

11.24 LANDLORD’S LIEN WAIVER

Landlord will waive all rights which Landlord now or hereafter may have, under the laws of the State of Florida to levy or distrain upon or to claim or assert any lien, right, claim or title to, any of the personal property of Tenant (except for judgment liens) which now or hereafter may be located on the Premises, in order to enforce any obligation of Tenant, including, without limitation, the obligation to pay rent and any other monetary obligation arising hereunder.

IN WITNESS WHEREOF, Tenant and Landlord have caused this Lease to be duly executed in duplicate as of the date first above written by their respective duly authorized officers, agents or attorneys in fact as the case may be.

SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF:
		PRICESMART, INC., a Delaware corporation
/s/ Rodrigo Calvo		By:	/s/ Robert E. Price
Name:	Rodrigo Calvo	Print Name:	Robert E. Price
		As Its	CEO
		Date:	11/10/07
Name:			(Corporate Seal)

(signatures continue on next page)

35

		FLAGLER DEVELOPMENT COMPANY LLC, a Florida limited liability company
		By:	/s/ Keith A. Tickell
	/s/ James A. Hoener		Keith A. Tickell
Name:	James A. Hoener		Vice President
	/s/ Susan Blount	Date:	11-16-07
Name:	Susan Blount		(Corporate Seal)

** If the individual signing the Lease is other than the Chief Executive Officer, President

or Vice President of the Company, please attach Corporate Resolutions authorizing his/her

signature on behalf of the Company. Thank you.

36

EXHIBIT A

SITE PLAN

A - 1

EXHIBIT A

SITE PLAN

EXHIBIT A-1

LEGAL DESCRIPTION OF BUILDING

Lot 1, Block 11 of “Gran Park Third Addition”; according to the Plat thereof, as recorded in Plat Book 149, Page 9 of Public Records of Miami-Dade County, FL

A-1 - 1

EXHIBIT B

RULES AND REGULATIONS

1. In the event of an emergency situation in the Park, such as an injury to a person, damage to property, persons in the Park acting in a suspicious or threatening manner, bomb threat, water leak or fire, any tenant who is aware of such emergency shall notify the Property Manager immediately.

2. Upon the termination of a lease, the tenant shall surrender all keys to its Premises to the Property Manager.

3. Every move of furniture or equipment into or out of a building or from one suite to another suite within a building shall be coordinated with the Property Manager at least 24 hours in advance. The Property Manager may designate the time during which the move may be conducted so as to minimize inconvenience to other tenants.

4. Window coverings, which must be of such shape, color, material, quality and design as may be reasonably prescribed by the Property Manager, may not be installed without the Property Manager’s prior written consent which shall not be unreasonably withheld, conditioned or delayed. Landlord may withhold its consent if such coverings are visible from the exterior of the Premises.

5. No tenant shall obstruct the sidewalks, entrances, lobbies, elevators, elevator lobbies, halls, or stairways in or about any building in the Park, and shall not use any such area for storage or for any purpose other than ingress and egress. No tenant shall utilize any mechanical or electrical room for storage purposes.

6. No tenant shall create or maintain a nuisance nor make or permit any noises or odors that are reasonably objectionable to another tenant to emanate from or about its Premises.

7. Each tenant shall observe and obey all parking and traffic regulations, which may include among other things speed limits, stop signs, yielding to pedestrians at all times, no parking zones, tow away zones or parking decals, from time to time established by the Property Manager. No vehicle shall be parked in a manner that utilizes more than one parking space.

8. No tenant shall make any suite-to-suite canvass to solicit business from other tenants in the Park. Property Manager may prohibit any other solicitation in the Park and require registration, satisfactory identification and credentials from all persons seeking access to any part of the Building or Park. No tenant shall conduct or cause to be conducted any auctions or sales in its Premises or in the Park.

9. No tenant shall display any sign, letter, picture, notice, advertisement or the like, whether temporary or permanent, in any common area, including lobbies and elevator lobbies, or in a manner that is visible from outside the Premises.

B - 1

10. No tenant may use the name of the Park or any building situated therein for any purpose other than that of the business address of Tenant, and shall not use any picture or likeness of the Park or any building situated therein in any circulars, notices, advertisements or correspondence without Landlord’s prior written consent.

11. No tenant shall bring any animal (excepting only dogs trained to assist handicapped persons) into the Park. Bicycles, unicycles, motorcycles, mopeds, Segways, skateboards, scooters and all other vehicles are prohibited in or about the buildings and sidewalks of the Park.

12. No tenant shall waste electricity or water. Each tenant shall cooperate with the reasonable requests of Landlord’s property manager to utilize electricity and water in its Premises efficiently. Each tenant shall ensure that no electrical circuit within its Premises is overloaded. No tenant shall adjust any common HVAC controls other than room thermostats installed for specific use. No tenant shall tie, wedge or otherwise fasten open any water faucet or outlet. No tenant shall prop open any common corridor doors or exterior doors of any building.

13. Tenant shall not overload any floor and shall not install any heavy safes, business machines, files or other heavy equipment without obtaining the approval of Landlord’s property manager.

14. No tenant shall deface or damage any property of another tenant or property that is part of the Park, including but not limited to the buildings, fixtures and equipment.

15. Smoking is prohibited in each building, within twenty-five feet of any building entrance, and in the Park common areas, except for smoking areas designated by the Property Manager.

16. Each tenant shall use all improvements, equipment and fixtures within the buildings and common areas of the Park, including but not limited to restrooms, elevators, stairways, hallways, lobby, sidewalks, parking lots and landscape areas, in the manner and for the purposes for which they are designed. Each tenant shall be responsible for any damage caused by its failure to do so.

17. No machinery or apparatus other than computers, copiers, facsimile machines, paper shredders and other small office equipment, or other than fork lift trucks, pallet jacks, racking, automated material handling equipment and other equipment or apparatus normally used in the warehousing business, shall be operated in the Tenant’s Premises or anywhere in the Park without prior written approval of Landlord’s property manager (the “Property Manager”), which shall not be unreasonably withheld, conditioned or delayed. No explosives, articles deemed hazardous because of flammability, or other materials of an intrinsically hazardous nature shall be brought into any building in the Park.

All references to Tenant in these Rules and Regulations shall include the employees, agents, contractors, licensees or invitees of Tenant.

B - 2

EXHIBIT C

MEMORANDUM OF LEASE COMMENCEMENT

THIS MEMORANDUM is made and entered into as of                     , 200    , by and between Flagler Development Company, LLC (“Landlord”) and Pricesmart, Inc., a Delaware corporation (“Tenant”) with respect to that certain Lease between Landlord and Tenant dated as of                     , 200     (the “Lease”).

Landlord and Tenant hereby confirm that the Commencement Date of the Lease is                 , and that the Term shall expire on                 , unless the Term is renewed or the Lease is terminated pursuant to the Terms of the Lease, and that these dates shall be conclusive for all purposes of the Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this document as of the first date set forth in the first paragraph above.

Pricesmart, Inc.	Flagler Development Company, LLC
By:	By:

Print Name:	Print Name:
As Its                  President	As Its                  President

Date: Date:

C - 1

EXHIBIT D

LANDLORD’S SIGN CRITERIA

Location of Sign:

D - 1

V. SIGNAGE STANDARDS

A. ALLOWABLE SIGNS

1. All User/Tenants will be allowed a primary User/Tenant I.D. sign on each building elevation facing a street consisting of the company name and corporate logo only (Sign Type A), located in a designated sign area of the specific building where the User/Tenant is utilizing space. The User/Tenant’s sign may not exceed 3/5 of the allowable height of the sign band. (Example: 5’-O” H sign band or 3’-0” sign and l’-0” space top and bottom). (See Exhibit A-1.)

2. All signage shall be surface mounted and shall be located on building entrance features such as towers or sign-walls, or within a signage banded area located at the top of the building parapet, based upon I- ¹/2”, height per 1” of height of the principal building façade. The size of the allowed Tenant I.D. sign (Sign Type A) will be determined by the amount of space the Tenant leases as follows Building User/Tenant signage shall be a maximum length of 30’ for a single acre user or a two bay Tenant. There will be a maximum allowable increment of 10’ of length of signage per acre of land or two bay lease areas to a maximum of 60’ of total length per user/tenant.

3. No sign shall exceed 3’-O” in overall height or (see Exhibit A) the exact location for any signs must be approved by the Committee prior to any fabrication or installation of signs. A side setback of 3”-0” from Tenant side lease line with adjacent Tenant’ must be observed.

4. Methods of fabrication for Sign Type A are shown in Exhibit B. (It consists of four possible ways to manufacture illuminated or non-illuminaged signs as the primary User/Tenant I.D.

a. Non-Illuminated aluminum or intra (PVC Board) 1” thick letter, pin mounted on spacers  ¹/2 off the face of the building.

b. Non-illuminated reverse channel type letters.

c. Illuminated channel letters.

d. Illuminated reverse channel letters.

All details shown in Exhibit B must be followed by the sign fabricator. No exceptions or substitutions will be allowed.

5. Each Tenant space shall have a postal I.D. number at the front entrance designed, fabricated ar.d installed by the owner. It shall not be removed or relocated.

6. In addition to Sign Type A, each User/Tenant will be allowed one Sign Type B which consists of a 2’-0”Hx2”-0”W max.area on the front glass next to the entry door. The sign may be applied to the glass by silk-screening printing or by computer generated vinyl die cut letters. The corporate logo, corporate name, business hours, etc. may appear in this sign. (Exhibit A2)

7. In addition to the Sign type A & B., the Tenant will be allowed one Sign Type C located on one rear “main door” at the loading dock area. The sign shall be located on the door in an area 1’-6” H x 1’-6” W max. centered on the door 5’-6” from top of sign to floor. This sign must be made from computer generated vinyl die cut letters. (Exhibit C-1).

8. All signs must be permitted by the Tenants’ sign fabricator through the normal Miami-Dade County Sign code procedure prior to fabrication and installation, and a cop of the sign permit must be given to the Developer before installation, along with a copy of sign manufacture’s permit shop drawings.

9. A Tenant may identify his loading dock doors with a 9” high,  ¹/2” thick aluminum cut out postal address numbers (Sign Type D), painted black (Exhibit D-1). No other signs allowed in this area except at main door.

B. TEMPORARY MARKETING SIGNS

1. Signs used to identify a site or building for sale or lease must be of a format compatible to the Beacon Station at Gran Park Signage format.

2 No sign shall be taller than 8’ from grade. All signs shall be 4’wide by 6’ high framed with 4” x 4” support posts to meet all local and building zoning codes.

3. The back of sign shall be totally enclosed with a finished sheet of plywood. Front face sides, top and back shall be painted the same colors. Colors to match Beacon Station At Gran Park standard signs.

C. GENERAL NOTES

1. A user/tenant at Beacon Station at Gran Park shall be defined as any occupant of a building/facility, located within the Beacon Station at Gran Park, whether Owner occupied or Tenant Leased.

2. All building/Tenant signage shall be designed in accordance with Miami Dade County regulations and the Park’s Development Guidelines.

3. No fluorescent light box type signs allowed.

4. Owner must approve all signs (permanent and /or temporary) for User/Tenant space prior to fabrication and installation. Final location of any sign will be determined solely with the Committee’s approval.

5. Tenant to supply Camera Ready Artwork for any logos to be used, including color specifications and designations using the PMS-Pantone Matching System. All colors to be approved by the Developer and/or his design consultant prior to any fabrication.

6. Electricity for signs and hookup for electrical signs is at sole cost of Tenant.

EXHIBIT E

WORK LETTER

1. Allowance for Office Improvements. On the Commencement Date, Landlord shall make available to Tenant up to $65,000.00 (the “Allowance”) to reimburse Tenant for the cost of certain improvements to be made by Tenant to the office portion of the Premises (the “Office Improvements”). The costs that are eligible to be reimbursed to Tenant for the Office Improvements shall include (i) all architectural fees and costs, construction management fees and costs, engineering fees and costs and any other fees, costs and expenses of any kind incurred or payable by the Tenant in connection with the performance of the Office Improvements; (ii) all fees and charges imposed by any governmental entity or authority in connection with the Office Improvements; (iii) sales and use taxes; (iv) insurance fees associated with the construction of the Office Improvements; (v) testing and inspecting costs; and (vi) the costs and charges for materials and labor, contractor’s profit and contractor’s general overhead incurred by Tenant in having the Office Improvements completed. All of the Office Improvements shall become the property of Landlord upon the expiration or earlier termination of the Lease and shall remain on the Premises at all times during the term of this Lease, except for those certain Office Improvements which Landlord may, by providing written notice to Tenant at the time Landlord approves Tenant’s Plans (as hereinafter defined) or modifications thereto, require Tenant to remove and restore the Premises to the condition existing at the time Tenant took possession, with all costs of removal, repair, restoration, or alterations to be borne by Tenant. In the event that Tenant does not use the entire Allowance, Tenant shall be entitled to a credit against Rent coming due under the Lease for any part of the Allowance not used by Tenant. Tenant shall be permitted to commence work on the Office Improvements, subject to Landlord’s approval as required in Section 2 below, on the Commencement Date of the Lease.

2. Approval of Tenant’s Plans. Landlord acknowledges and agrees that in addition to the Office Improvements, Tenant will be constructing certain other improvements to the warehouse portion of the Premises (the “Warehouse Improvements”, the Office Improvements and the Warehouse Improvements are sometimes hereinafter referred to collectively as the “Tenant Improvements”). Prior to commencing any Tenant Improvements work at the Premises, Tenant shall provide Landlord with working plans for the Tenant Improvements (the “Plans”). The Plans shall be subject to the reasonable approval of Landlord, which approval Landlord will not unreasonably withhold or delay. Landlord shall have five (5) business days from receipt of the Plans to review and approve the Plans or state any objections in writing. The failure of the Landlord to respond within the five (5) business day period shall be deemed approval of the Plans. Any objections made by Landlord shall be reasonable in nature and stated in sufficient detail so as to allow the necessary modifications by Tenant. If necessary, the Plans, as modified by the Tenant shall be re-submitted to Landlord within five (5) business days after Tenant’s receipt of the Plans with Landlord’s objections. Upon Landlord’s receipt of the Plans as modified, Landlord shall have three (3) business days within which to return the Plans to Tenant with any new objections, which shall be reasonable in nature and stated in sufficient details so as to allow the necessary modifications by the Tenant. The Plans, as modified by the Tenant, shall be re-submitted to Landlord within five (5) business days after Tenant’s receipt of the Plans with

E - 1

Landlord’s latest objections. This process shall be repeated until the Plans have been finally approved by Landlord and Tenant; provided, however that Landlord and Tenant agree to work together in a commercially reasonable manner so as to finally approve the Plans by no later than December 31, 2007. Any changes to the Plans shall be subject to the reasonable approval of Landlord, which approval Landlord will not unreasonably withhold or delay. Landlord’s approval of the changes may be based upon whether the changes: (i) affect or are not consistent with the base structural components or systems of the Building, (ii) are visible from outside the Premises, (iii) affect safety, (iv) have or could have the effect of increasing Operating Expenses, or (v) in Landlord’s reasonable judgment, are not consistent with quality and character of the Park. Landlord and Tenant shall follow the same process as provided in this Section 2 for approval of any changes to the Plans until the change to the Plans has been finally approved by Landlord.

3. Performance of Tenant’s Work. Tenant shall cause the approved Tenant Improvements work to be done in a first-class workman-like manner in conformity with all Applicable Laws. Landlord may require Tenant to provide demolition and/or lien and completion bonds in form and amount satisfactory to Landlord. Landlord must approve all contractors performing any part of the work, which approval shall not be unreasonably withheld, delayed or conditioned. Workmen’s Compensation, public liability and property damage insurance, all in amounts and with companies and on forms reasonably satisfactory to Landlord, shall be provided and at all times maintained by Tenant’s contractors engaged in the performance of Tenant’s work, and before proceeding with the work, certificates of such insurance shall be furnished to Landlord. Upon completion of any such work, Tenant shall provide Landlord with “as built” plans, copies of all construction contracts, all operations manuals, test and balance reports, and any additional reasonably requested reports and documentation at the conclusion of the construction of the Tenant’s Improvements. In addition, Tenant shall provide a copy of the certificate of occupancy or final inspections for the Premises issued by Miami-Dade County, Florida whichever is applicable for the Tenant Improvements.

TENANT AND TENANT’S CONTRACTORS SHALL BE REQUIRED BY TENANT TO COMPLY WITH THE FLORIDA CONSTRUCTION LIEN LAW SET FORTH IN CHAPTER 713, FLORIDA STATUTES.

4. Payments to Tenant from Allowance. Tenant shall be solely responsible to make any and all payments directly to Tenant’s general contractor and any subcontractors, materialmen, suppliers or laborers. Landlord agrees to reimburse Tenant from the amount available under the Allowance for the Office Improvements based upon applications for payment submitted to Landlord by Tenant. Landlord shall make reimbursement payments to Tenant within 10 days following receipt of the application for payment. In support of each application for payment, Tenant shall submit to Landlord paid and receipted invoices for the completed work together with releases of liens for all such work. Tenant shall also provide such other reasonable documentation as may be requested by Landlord to substantiate the costs for the work for which Tenant requests reimbursement. In addition, Tenant shall provide a copy of the certificate of occupancy or final inspections whichever is applicable for the Office Improvements prior to final payment of the Allowance. Tenant shall indemnify and hold Landlord harmless against any mechanic’s or other liens asserted against the Premises as a result of Tenant’s work.

E - 2

EXHIBIT E-1

FINAL PLANS

(to be attached upon approval of plans)

E -1 - 1

EXHIBIT F

HAZARDOUS MATERIALS LIST

F - 1

Item Number	Item Description
103649	Liquid-Plumr Prof Str 2pk/80z
115953	Tinactic Liquid Aerosol 2/5.3z
11904	Barbasol Shave Cream 3 pk
1206	Jet Pump 110 .5HP 800W
121421	Lysol AP Cleaner-Lemon 128 oz
121737	Lemon Pledge Wood Polish
12304	Forklift Deka Battery
126233	Battery Motorcyle 12A-A
126987	Battery Motorcycle 6N4ZA
13002	5K PRT SM Proc Unit P2/RA-2SM
132065	Lemon Pledge 1/15.6oz
140100	Chemical Filters
14867	Toilet Bowl Cleaner 3/3.5 oz
1507	Freon 507/25Ibs - Refrigerant
15079	Listerine CoolMint 58 oz
15309	Home Defense Pesticide 6 Liter
155010	Electric Motorcycle
156162	Wizard Spk/Citrs Air Frsh 2/8z
15738	Film 135/24-200 4pk Kodak
1575	Clorox Disinf. Wipes 3/40 ct
158728	Suave Deod Aero Pwdr 6oz
159900	Film Advantix 200 3/pk 25/exp
161571	Easy-Off Oven&Grill Clnr 24 oz
16204	Fire Extinguisher 3-A, 40-B:C
16415	Film 135/24-400 4pk Kodak
166071	Media Box 3Pc Set
16889	Film Advantix 400 3pk 25/Exp.
16933	Cold Cup Lid 16/20 oz 600 ct
17253	Triple Tgs Gel Shave Sntv 3/7z
173605	Toilet Bowl Cleaner 2/3.5 oz
17478	Kodak Film 135/24-100 4 pack
175575	Pine Sol Liquid Clnr Reg 175oz
175579	Pine Sol Liquid Cleaner 144 oz
17689	HTH Granular Chlorine 70Ib
17698	Utility Lighter 4Pk
178050	Lysol Disf. Spray-Linen 3/19oz
178485	Easy-Off HD Oven Clnr 16oz
182480	Pam Regular 2 Pk
189833	Lysol Disf. Spray-Linen 19oz.
192026	Tire Sealer/Inflator Airup 18o
193853	Liberty Lites 50 ct.
193942	HotShot Ant&Roach Ki112/17.5oz
193950	HotShot Flyng Insct Ki112/150Z
194540	Bic Mini-Lighters 2ct
194797	Repel Family Pocket Size 1.1 oz
194799	Repel Sportsmen Pocket Sz 1.1z
195558	Repel Sprtmen & Family Sz 6.5z
193801	Kingsford Charcoal Lghtr 61oz
196037	Niagra Spray Strch Lem 22oz
196039	Niagra Spray Strch Hvy 22oz
199321	Liberty Lites 50ct. (Lighters)

2028	900 ORD SM Proc Unit F1/C41 SM
206144	Freeze It Hair Spray 2/10.6oz
206243	Wooden Ktchen Matches 3/250 CT
209123	VC Super Hold Mousse 2/12 oz
210130	Barbie Aventura Gift Set
210131	Barbie Sirena Gift Set
21025	WD-40 11oz 2pk Spanish #52012
212143	Lysol Disf. Spray-Linen 19oz.
216956	Kaboom Shower/Tub/Tile Clnr32z
21857	10.0L Flex Developer LORR
22446	31Gal Roughneck Storage Tote
230965	AirWick Spk/Citr Air Frsh 2/8z
233986	Aim & Flame II
236441	Pam Cooking Spray 2/12oz.
24432	3” Chlorine Tabs 40lbs Pace
25501	Skintimate Shave Gel 3/9.5oz
255549	5.0L Flex RA Bleach Replenishr
25820	Niagara Starch 22 oz
25834	Niagara Spray Starch 4/22 oz
26231	Gas Grill 35kBTU sideburn/Tank
263119	Battery Backup 8 Outlet PureAV
263591	SS Dual Speed Floor Buffer
263592	SS Ultra Speed Floor Buffer
263593	Poulan LawnGarden Tractor
263594	16HP Lawn Garden Tractor
263595	15.5 HP Lawn Garden Tractor
263596	17.5HP Lawn Garden Tractor
263597	20HP Lawn Garden tractor
263633	18HP Lawn Garden Tractor
263752	Battery Backup System
263754	1000VA Battery Backup System
263955	Jump Starter Portable 2 way
263957	Jump Starter Rechargeable
266000	Battery 26-60 525 CCA
26602	Battery 58-60 CCA540
26605	Battery NS4OZL
266052	Battery 26R-60 525 CCA
26606	Battery 24-60 CCA=525
26609	Battery 42-60 CCA500
26620	Battery 34-60 CCA525
26742	Marine Battery NC-27 CCA730
26758	Battery 65-60 CCA850
26801	Marine Battery NG31
268549	UPS Backup 1000VA w/ AVR
268550	UPS Backup 1500VA w/ AVR
268551	UPS Backup 1200VA/670Watts
268552	UPS Backup w/ 2 Surge Protect
268553	UPS 1100VA w/4 Outlets
268554	UPS Backup 750VA w/4 Outlets
270156	CO2 Gas 75LB
2713	10K PRT SM Proc Unit P1/RA-2SM
273600	Dirt Bike Kawasaki Super Shock

273610	Power Wheel Firerock Jeep Wngl
276642	Battery 78-60 CCA=630
276973	My First Roadstar
28316	Battery 27-60 CCA=700
28318	Battery 27F-60 CCA=700
28321	Battery 35-60 CCA=525
29619	Marine Battery NG4D
29621	Marine Battery NG8D
300552	Battery 56-60 CCA535
303652	Battery Motorcycle 16CLB Exide
309654	Battery 51-60 CCA=525
309661	Battery 51 R-60 CCA=435
3101	Auto Fire Extinguisher 5B:C
31168	Lemon Pledge 3pk/7oz
32191	Axe Shower Gel 3/12oz
340340	UPS Back-up Newpoint 550VA
340341	UPS 50Hz 750VA Power Sentry
340789	Battery Backup PowerSource 400
341000	Freon R-134A/30 Lbs
344341	UPS Back-Up System Forza SL751
345340	UPS Tripplite 550VA AVR550U
350929	Emergency Road Kit
353353	Air 10oz Single EcoDuster
355340	UPS Tripp Lite 1000VA SMART100
378032	Battery 78DT-72 CCA 850
378049	Battery 75DT-60 CCA=630
378050	Battery 75DD-72
3796	Ultraclorox2 Bleach 119.7 oz
39175	Battery 70DT-60 CCA=525
39177	Battery 41-60 CCA675
391802	Battery 48-60 CCA=690
391819	Battery 49-60 CCA850
39396	Battery 24-60 CCA525
39807	Cloroxll Dry Bleach FRM 30.3z
407040	Battery 370AH-6 volts
40721	Easy-Off Oven&Grill Clnr 2/24z
4159	Battery Deep Cycle 6V
417850	5 Pc Emergency Kit
420360	Power Buffer 10” 12Volt BF-10
420809	Ultra Surf Powder-156 oz
428	Cartridge HP #45 Black 51645A
444025	Kiddie Fire Extinguisher 2pk
461001	Air Duster Compressed 2pk/10z
468017	Kiddie Fire Extinguisher
468018	Extinguisher 3A4OBC FA34D
4690	2.7 Flex C-41 SM Tank Bleach
49092	Lawn Tractor 12.5HP 38”
505505	Ultimate Detailing Kit
511301	Tiro Soalant 3 Pack
528301	Lawn Tractor 15.5 HP 8-Speed
561	Spray Gun Kit 15 pc
564188	Chlorine Tab “Plus” 40Ibs

5824	Eco Duster 2pk 10oz PerfectDat
584584	Battery 34XCD Orbital Extreme
5933	Propane Tank 16.4oz Disposable
60564	64oz Citronella Oil #60564
6119	Gas Can 5-Gal Plastic
618170	Wheel Weight Adhesive Remover
6188	150 ORD SM Proc Unit F2/C41SM
6337	2.0L C-41 SM Tank Developer
6369	Battery HC-31D Exide Truck
637	Spray N Wash 32zTrigger w/96z
6377	Lghtd 48”Animated Deer 200Lits
640341	UPS Back-Up Philips 550VA
651226	Stonclad UT A/B
651660	Stonclad UT Seal Steel Gray AB
661435	Fire Extinguisher 3-A,40-B:C
6625	Tilex Mildew Remover 2pk 32oz
69033	Liq. Paper Correction Pen 4PK
698112	Car Care Kit 9Pc, Turtle Wax
70158	Listerine Orig. Mouthwash 58oz
708750	Jump Starter w/Docking Station
71156	Kingsford Charcoal 2/20 lb
71177	Kingsford Lighter Fluid 64 oz
737120	64oz Citronella Oil
738090	Compressor 6hp 60GA
74059	Lemon Pledge 2pk/15.6oz
7465	Generator 5250 watts
74678	Lysol Toilet Bowl Clnr 3/32 oz
748748	Motorcycle Kawasaki Ninja
74972	Lysol Disin Spray-Linen 2/19z
762752	42” Lawn Tractor
762753	45” Lawn Tractor
762754	42” Lawn Tractor
768980	Easy Off HD Oven Cleaner 3/24z
784816	EasyOff BAM Grm/Lime Rmvr 3/24
79567	WD-40 11oz 2pk
800802	EVEREADY Battery 34DT FC1
801500	EVEREADY Battery 75DT FC2
802802	EVEREADY Battery 24G FC3
803803	EVEREADY Battery 26G FC4
804600	EVEREADY Battery 26R FC5
805805	EVEREADY Battery 27G FC14
806806	EVEREADY Battery 27MDC FC15
8077	Fire Extinguisher UL 1-A,10B:C
807700	EVEREADY Battery 31SG FC16
808808	EVEREADY Battery 34G FC6
809100	EVEREADY Battery 35G FC7
80989	WhiteBoard Accesories 14pk
810700	EVEREADY Battery 42G FC8
811811	EVEREADY Battery 58RG FC9
812100	EVEREADY Battery 65G FC 10
8138	Alkaline D Reclosable 8pk
813813	EVEREADY Battery GC2-G 6Volt

8148	Alkaline C Battery Size 8pk
814814	EVEREADY Battery 56G FC11
8152	Alkaline AA Pro Pack 24pk
815200	EVEREADY Battery 22FG FC12
816600	Jumpstart 18amp w/Air Compresr
816816	EVEREADY Battery 22NFG FC 13
817700	Jumpstar 18amp w/Tire Inflator
82418	Alkaline Batteries AAA 18pk
83129	Lysol Basin/Tub/Tile Cleaner
831600	Battery 27-60 700 CCA
832100	Battery 35-60 525 CCA
843072	Nail Polish Set 12pk
84575	2in1 Liquid Paper 6pk Sanford
872872	Fuel Injector Cleaner Pyroil
877471	Methanol Chafing Fuel 8oz/12pk
8820	Formula 409 1Gal&22oz.spray
891384	Battery 330 AH-6 volts
893429	Ultra LQD All F/C 100 oz
893818	Ultra LQD All Reg. 100 oz
89884	64oz Party Torch Fuel-Panacea
90500	Clarke FOCUS 33s Floor Scrubbe
921500	No Touch Wet N Protect
921700	No Touch High Shine
940340	Tripplite UPS Battery Back-Up
9481	Battery 9481 Com-4DP Exide Trk
9634	Battery COM-31 D CCA=600
9769	2.0L Flex RA-2 SM Tank Develop
97993	Industrial Fire Extinguisher
98244	Helium Balloon Tank
992200	Car Care Kit Meguiar’s

EXHIBIT G

BEST MANAGEMENT PRACTICES

G - 1

UPDATED: 02/27/96

BEST MANAGEMENT PRACTICES

Best management practices can be thought of as using “good housekeeping” practices. Listed below are several procedures to operate your facility and minimize the risk of contamination to the environment.

1. Waste disposal

a. All hazardous waste must be disposed of via a permitted hazardous waste transporter and taken to a federally approved hazardous waste disposal facility. Receipts of all waste disposals and hazardous waste manifests must be retained for and less than three (3) years, at the generator’s facility and be available for review.

b. In all situations where the waste is deemed to be hazardous, a permitted hazardous waste transporter must be used to transport the waste to a federally approved hazardous waste treatment or disposal facility. The facility generating the hazardous waste is required to obtain an Environmental Protection Agency identification number unless classified as a conditionally exempt generator, by contacting:

Bureau of Waste Planning and Regulation

Florida Dept. of Environmental Regulation

Two Towers Office Building Room 471

2600 Blair Stone Road

Tallahassee, Florida 32399

(904) 488-4805

c. if the waste solvents can be recycled by the facility generating the waste, the solvent stillbottoms/sludge from the reclaiming operation must be collected and handled as a hazardous waste, unless proven otherwise

d. if the waste solvent is recycled by a permitted solvent recycler, receipts must be obtained from the recycler and copies kept at the facility.

A list of DERM permitted waste haulers is available upon request

2. Storage

a. For facilities storing large amounts of chemicals and/or fuels:

1. All chemical and fuel storage must have secondary containment This containment area should be able to hold 110% of the volume of the largest single tank to be stored in this area.

2. Chemical storage areas must be on an impervious surface with secondary containment or a bermed and covered area away from drainage structures (e.g. floor drains or storm drains).

3. Rags used during mechanical repairs or cleaning processes which become contaminated with waste oil or hazardous materials such as solvents, ink, etc. are considered hazardous wastes and may be handled by an approved rag service or an approved hazardous waste transporter. Used rags must not be disposed of in the trash/dumpster unless a hazardous waste profile Indicates otherwise and approval is granted by this department

4. Receipts of all waste and/or wastewater disposal must be. Hazardous waste manifest must be kept for any hazardous waste disposal. Receipts/manifests must be kept for a period of three(3) years on site.

5. In large storage areas, there must be aisle space between storage products. This will enable Inspection of the container for leaks and/or corrosion. Incompatible chemicals or materials should be stored separately.

6. Absorbent material shall be kept on site to cleanup any accidental spill. Used absorbent pads must not be disposed of in the trash or dumpster unless a hazardous waste profile indicates otherwise and approval is granted by this department.

7. Special attention should be paid to storm drain locations (also known as storm sewers). Storm drains are designed to help alleviate rainwater build up. These drains are not connected to the sanitary sewer system, but rather assist in allowing the rainwater to drain into the ground and groundwater. Therefore, industrial discharges should not be allowed to drain into these storm drains. Areas near storm drains must be kept free of oil, grease and other contaminates so that rainwater does not wash these materials into the storm drains

8. Facilities generating more than ten (10) spent fluorescent and/or high-intensity discharge lamps per month must have them recycled. These lamps cannot be disposed off in the regular trash. Spent lamps must be stored in a safe location in order to prevent them from breaking. Contact the Pollution Prevention Program at 372-6784 for further information.

Pollution Prevention Suggestions

The reduction or elimination, at the source, of discharges or emissions to the environment.

1. Waste fluids should be segregated and kept separately. This prevents mixing incompatible substances and prevents contamination of a nonhazardous waste by a hazardous waste. This also allows them each to be recycled or disposed of appropriately and reduce disposal costs.

2. Recycling of waste fluids is a preferred option. This can either be done on-site or shipped to an approved recycler off-site. Units for filtering, adding the necessary additives and restoring coolant are available. (Installation of such units must be approved by DERM and the Fire Dept.)

3. For small to medium facilities, it may be more economical to have a parts washer contractor replenish the parts cleaner and remove the spent solution, than to install a solvent recycling still.

4. Large facilities, on-site solvent recycling stills are usually very economical with payback periods of only 2-3 years.

5. Alternative cleaners are available (e.g. special water based cleaners) that replace traditional solvent. These can be used in a variety of system including dip tanks, power washers with jet sprays, or ultrasonic immersion tanks.

6. Parts cleaning can be done in 3 stages

1. Preclean to remove heavier dirt (e.g. with a wire brush)

2. Sink #1 as an initial sink to do heavier cleaning. Recycled only after full use.

3. Sink #2 as a final sink for precision cleaning (used as make-up for sink #1).

7. Parts can be removed slowly from solvent sinks and allowed to sit a few minutes on “dip racks” which drain back to the sink. Rollaway covers that are kept closed when not in use can be used on the sink. Sludges should be removed often and properly disposed, but the solution itself can be used many times.

8. Stop leaks quickly. Drip pans can be placed to catch leaks. Spot mopping with a bucket (and proper disposal of the water) can be performed. Floor cleaning machines are available that will spray a cleaning solution, scrub with brushed, and vacuum up the solution (to be disposed of properly). Absorbent pads are available that allow the oil to be “squeezed out” into a waste oil drum. The pads can be reused several times.

9. Scrap parts can be sold to metal recyclers.

Questions will be answered by the Industrial Facilities Section staff at (305)372-6600.

Any questions concerning pollution prevention please call the Pollution Prevention Program at(305)372-6784

RIDER NUMBER 1 TO LEASE

dated Nov. 16, 2007

between Flagler Development Company, LLC, as Landlord,

and Pricesmart, Inc., as Tenant

OPTIONS TO RENEW

Provided no default exists beyond any applicable grace and cure periods as provided for in the Lease and Tenant or a Permitted Transferee (as hereinafter defined) is occupying the Premises at the time of such election, Tenant or a Permitted Transferee may renew this Lease for an additional period of five (5) years (the “First Extension Term”) on the same terms provided in this Lease (except as set forth below), by delivering written notice (the “Renewal Notice”) of the exercise thereof to Landlord at least nine (9) months prior to the expiration date of this Lease. Upon Tenant’s or_, a Permitted Transferee’s timely notice of the exercise of the option to renew for the First Extension Term, the Lease shall be extended on the same terms provided in this Lease, except as follows:

(a) The Base Rent payable during such First Extension Term shall be the Fair Market Rental Rate (as hereinafter defined), for buildings comparable to the Project in the West Miami-Dade submarket, at the commencement of such First Extension Term, for space of equivalent quality, size, utility and location, with the length of the First Extension Term, concessions, allowances, brokers’ fees and the credit standing of Tenant or the Permitted Transferee to be taken into account; and

(b) Landlord shall lease to Tenant or the Permitted Transferee the Premises in their then current condition, and Landlord shall not provide to Tenant or the Permitted Transferee any allowances (e.g., moving allowance, construction allowance, tenant improvements allowance and the like) or other tenant inducements.

For purposes of this Rider, the Fair Market Rental Rate (the “FMRR”) shall mean the rent, as of the date in question, which a landlord, willing but not obligated to lease, would accept for the Premises, and which a tenant, willing but not obligated to rent, would pay therefor in an arms-length transaction. Landlord shall deliver written notice (the “Landlord Notice”) to Tenant or the Permitted Transferee, within thirty (30) days after Landlord’s receipt of a timely Renewal Notice, which sets forth the FMRR as determined by Landlord to be payable during the applicable Extension Term after consideration of the factors set forth above. Tenant or the Permitted Transferee shall have the right, within fifteen (15) days following the date of the Landlord Notice, to deliver written notice that it accepts Landlord’s determination of the FMRR, or that it disagrees with Landlord’s determination of the FMRR. Thereafter, if the parties are unable to agree as to the FMRR by the date that is thirty (30) days following the Renewal Notice, the Renewal Option shall be deemed null and void.

For purposes of this Rider, the term “Permitted Transferee” shall mean any party to whom the Lease has been assigned pursuant to the terms of Section 11.22 of the Lease.

Rider Number 1 - 1

Tenant’s or the Permitted Transferee’s right to extend the term of this Lease for the First Extension Term shall terminate if (i) this Lease or Tenant’s or the Permitted Transferee’s right to possession of the Premises is terminated, (ii) Tenant or the Permitted Transferee, at any time during the Lease Term, assigns any of its interest in this Lease or sublets any portion of the Premises (other than a Permitted Transfer by Tenant in accordance with the terms of Section 11.22 of the Lease), or (iii) Tenant or the Permitted Transferee fails to timely exercise its option under this Rider for the First Extension Term, time being of the essence with respect to Tenant’s or the Permitted Transferee’s exercise thereof.

B. Provided no default exists beyond any applicable grace and cure periods as provided for in the Lease and Tenant or a Permitted Transferee is occupying the entire Premises at the time of such election, Tenant or a Permitted Transferee may renew this Lease for a second additional period of five (5) years (the “Second Extension Term”) on the same terms provided in this Lease (except as set forth below), by delivering written notice (the “Renewal Notice”) of the exercise thereof to Landlord at least nine (9) months prior to the expiration of the First Extension Term. Upon Tenant’s or a Permitted Transferee’s timely notice of the exercise of the option to renew for the Second Extension Term, the Lease shall be extended on the same terms provided in this Lease, except as follows:

(a) The Base Rent payable during such Second Extension Term shall be the New Fair Market Rental Rate (as hereinafter defined), for buildings comparable to the Project in the West Miami-Dade submarket, at the commencement of such Second Extension Term, for space of equivalent quality, size, utility and location, with the length of the Second Extension Term, concessions, allowances, brokers’ fees and the credit standing of Tenant or the Permitted Transferee to be taken into account; and

(b) Landlord shall lease to Tenant or the Permitted Transferee, the Premises in their then current condition, and Landlord shall not provide to Tenant or the Permitted Transferee any allowances (e.g., moving allowance, construction allowance, tenant improvements allowance and the like) or other tenant inducements.

For purposes of this Rider, the New Fair Market Rental Rate (the “NFMRR”) shall mean the rent, as of the date in question, which a landlord, willing but not obligated to lease, would accept for the Premises, and which a tenant, willing but not obligated to rent, would pay therefor in an arms-length transaction. Landlord shall deliver written notice (the “Second Landlord Notice”) to Tenant or the Permitted Transferee, within thirty (30) days after Landlord’s receipt of a timely Renewal Notice, which sets forth the NFMRR as determined by Landlord to be payable during the applicable Extension Term after consideration of the factors set forth above. Tenant or the Permitted Transferee shall have the right, within fifteen (15) days following the date of the Landlord Notice, to deliver written notice that it accepts Landlord’s determination of the NFMRR, or that it disagrees with Landlord’s determination of the NFMRR. Thereafter, if the parties are unable to agree as to the NFMRR by the date that is thirty (30) days following the applicable Renewal Notice, the applicable Renewal Option shall be deemed null and void.

Rider Number 1 - 2

Tenant’s or a Permitted Transferee’s right to extend the term of this Lease for the Second Extension Term shall terminate if (i) this Lease or Tenant’s or the Permitted Transferee’s right to possession of the Premises is terminated, (ii) Tenant or the Permitted Transferee, at any time during the First Extension Term, assigns any of its interest in this Lease or sublets any portion of the Premises (other than a Permitted Transfer by Tenant in accordance with the terms of Section 11.22 of the Lease), or (iii) Tenant or the Permitted Transferee fails to timely exercise its option under this Rider for the Second Extension Term, time being of the essence with respect to Tenant’s or the Permitted Transferee’s exercise thereof.

Rider Number 1 - 3

Schedule 1

LEASE TERMINATION AGREEMENT

THIS LEASE TERMINATION AGREEMENT (“Agreement”) is made by and between PRICESMART, INC., a Delaware corporation (“Tenant”), and FLAGLER DEVELOPMENT COMPANY, LLC, a Florida limited liability company (“Landlord”), as of the date on which the later signature of Landlord and Tenant is affixed to this Agreement.

WITNESSETH:

WHEREAS, Landlord and Tenant are parties to that certain Gran Park Lease Agreement dated April 20, 2000 between Landlord, as landlord, and GTS Terminals, Inc., a New Jersey corporation (“GTS”), as tenant, for Suites 2 and 3 of Building #RB4 (the “Building”) located at 10051 NW 99^th Avenue (the “Premises”), as assigned by GTS to Tenant pursuant to that certain Assignment and Assumption of Lease dated as of August 1, 2001 (as assigned, the “Lease”);

WHEREAS, the Building is included in a multiple-building business and industrial park known as Flagler Station (“Park”);

WHEREAS, pursuant to the Lease, the term of the Lease is scheduled to expire on December 31, 2009 (the “Expiration Date”); and

WHEREAS, Landlord has agreed to an early termination of the Lease in consideration of the execution by Tenant of another lease for other space in the Park

NOW, THEREFORE, in consideration of Tenant’s execution of the New Lease, as hereinafter defined, and the mutual representations, covenants, and agreements herein, Landlord and Tenant agree, represent and warrant, as applicable, as follows:

1. Recitals; Capitalized Terms. The foregoing recitals are true and correct and incorporated herein by reference. All capitalized terms used herein that are not specifically defined in this Agreement shall have the same meanings as set forth in the Lease.

2. New Lease; Termination Date. Tenant shall deliver to Landlord, simultaneously with this Termination Agreement, a Lease Agreement in the form attached hereto as Exhibit A (the “New Lease”), as executed on behalf of Tenant, for 126,767 rentable square feet in the building known as Building #26 located at 10800 NW 100^th Street, Medley, Florida 33178 (the “New Premises”). The Lease shall terminate upon Tenant’s surrender of the Premises pursuant to Section 3 hereof which shall be within sixty (60) days after the Commencement Date of the New Lease (the “Termination Date”).

3. Surrender of Premises; Removal of Tenant’s Personal Property and Fixtures. On the Termination Date, Tenant shall surrender and yield up to Landlord the Premises, in good

order, condition and state of repair, reasonable wear and tear excepted. On or before the Termination Date, Tenant shall remove from the Premises all personal property owned by Tenant or leased by Tenant from third parties, and shall remove all fixtures and equipment installed by Tenant on the Premises. Tenant shall be obligated to repair in a good and workmanlike manner any damage to the Premises resulting from the removal of such personal property and fixtures and equipment. Tenant shall complete such work at Tenant’s sole cost and expense, on or before the Termination Date, and shall promptly pay all bills relating to such work; provided, however, that if such repairs are not made by Tenant in accordance with the terms hereof, on or before the Termination Date, Landlord will repair any such damage at Tenant’s sole cost and expense, and Tenant will promptly pay all invoices relating to such work. Notwithstanding anything herein to the contrary, Tenant’s obligation to reimburse Landlord for any such repair costs will survive the termination of the Lease.

4. Release. Effective on the Termination Date, Tenant and Landlord hereby release and discharge each other, including their respective subsidiaries, affiliates, officers, directors, agents and employees, as of the Termination Date from all obligations and liabilities, whether known or unknown, foreseen or unforeseen, under or in connection with the Lease or Tenant’s use or occupancy of the Premises, except (i) those obligations which, by their nature, or by the terms of the Lease, would survive beyond the Expiration Date, (ii) Tenant’s obligation to pay to Landlord the Rent through and including the Termination Date, and (iii) Landlord’s right to collect from Tenant as Additional Rent (or reimburse Tenant, as the case may be), through and including the Termination Date, the difference between the actual Operating Expenses and the estimated Operating Expenses for the Premises, as reconciled by Landlord in accordance with the terms of Section 2.4.2 of the Lease.

5. Landlord’s Representations and Warranties. Landlord represents and warrants to Tenant that Landlord has the power and the lawful authority to execute and deliver this Agreement, and that no consent, authorization, approval, or notice to any other party, including any mortgagee (other than as set forth in this Agreement), is necessary in connection with the execution and delivery of this Agreement by Landlord, or as a prerequisite to its enforceability against Landlord.

6. Tenant’s Representations and Warranties. Tenant represents and warrants that it is the sole tenant in possession of the Premises under the Lease and that it has neither assigned nor subleased its interest as tenant under the Lease. Tenant further represents and warrants to Landlord that Tenant has complied with all of Tenant’s obligations under the Lease.

7. Survival of Representations and Warranties. The representations and warranties set forth in paragraphs 5 and 6 hereof shall survive and continue beyond the date hereof.

2

8. Entire Agreement. This Agreement embodies the entire agreement of Landlord and Tenant with respect to the subject matter of the termination of the Lease, and it supersedes any prior agreements, whether written or oral, relating to the termination of the Lease. This Agreement may be modified only by written instrument duly executed by Landlord and Tenant. There are no agreements or understandings that are not set forth in this Agreement.

9. Binding Effect. The terms and provisions of this Agreement shall inure to the benefit of, and will be binding upon, the successors and assigns of Landlord and Tenant.

10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of the date first above written.

Witnesses:		FLAGLER DEVELOPMENT COMPANY
Name:		By:
			Keith A. Tickell
			As Its Vice President
Name:		Date:                     , 200
		PRICESMART, INC., a Delaware corporation
/s/ Rodrigo Calvo		By:	/s/ Robert E. Price
Name:	Rodrigo Calvo	Name:	Robert E. Price
		Title:	CEO President
Name:
		Date: 11/10/07, 2007

3

EX-10.11

Exhibit 10.11

PROMISSORY NOTE

U.S.$ 4,500,000.00 Dated: November 15, 2007

FOR VALUE RECEIVED, the undersigned, PSMT (Barbados) Inc., a corporation organized and existing under the laws of Barbados, (the “Borrower”), HEREBY PROMISES TO PAY to the order of Citibank, N.A. (the “Bank”), acting through its international banking facility, the principal sum of U.S.$ 4,500,000.00 (United States Dollars Four Million Five Hundred Thousand and 00/100) in twenty (20) consecutive semi-annual installments of U.S.$ 225,000.00 each. The first such installment shall be due on the last day of the initial Interest Period (as defined below), with subsequent installments due on the last day of each subsequent Interest Period and the final such installment due on the Maturity Date; as used herein, “Maturity Date” shall mean (i) the date which occurs ten (10) years after the date of this Note (as stated at the beginning hereof) or, (ii) if the date occurring ten years after the date of this Note is not a Business Day (as defined below), the immediately preceding Business Day.

The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, payable on the last day of each Interest Period, and the date this loan shall be paid in full, at an interest rate per annum equal at all times during each Interest Period to 1.50% per annum above the rate of interest per annum at which deposits in United States Dollars are offered by the principal office of Citibank, N.A. in London, England, to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the unpaid principal of this Note (as of the first day of such Interest Period) and for a period equal to such Interest Period; provided, that in the event that the Borrower fails to provide the Bank with at least three full Business Days’ notice of its intent to make the borrowing evidenced by this Note, and in connection with such failure, the Bank incurs any penalties, fees, costs or charges in providing the funds for such borrowing, then the margin above the interest rate charged by the Bank for the first Interest Period of such borrowing shall be increased by the amount of such penalties, fees, costs and charges. The period between the date hereof and the date of payment in full of the principal amount hereof shall be divided into successive periods, each such period being an “Interest Period”. The initial Interest Period shall begin on the date hereof and each subsequent Interest Period shall begin on the day immediately following the last day of the immediately preceding Interest Period. The duration of each Interest Period shall be six months, provided, however, that: (a) the twentieth and final Interest Period shall end on the Maturity Date; (b) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the immediately preceding Business Day; and (c) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. “Business Day” means any day on which dealings are carried on in the London interbank market and banks are open for business in London and are not required or authorized to close in New York City or in Barbados. During the continuance of an Event of Default (as defined below), the Borrower shall pay interest on the unpaid principal amount hereof, and on any interest, fees or other amounts not paid when due, at a fluctuating interest rate per annum equal at all times to 2% per annum above the Base Rate (as defined below), payable on the dates specified for payment of interest above and upon demand; as used herein, “Base Rate” means the rate of interest (not necessarily Citibank, N.A.’s best or lowest rate) stated from time to time by Citibank, N.A. in New York, New York, to be its base rate.

SECTION I. Payments and Computations; Payment of Structuring Fee.

(a) All payments made by the Borrower under this Note shall be made, without deduction, withholding, set off or counterclaim, no later than 11:00 A.M. (New York City time) on the date when due in freely transferable lawful money of the United States of America to the Bank at its address at 399 Park Avenue, New York, NY 10043, U.S.A., for the account of the Bank’s Lending Office in same day funds. The Bank’s “Lending Office” means the main office of the Bank in New York, New York, U.S.A., or any other office or affiliate of the Bank located in the United States hereafter selected and notified to the Borrower in writing from time to time by the Bank.

(b) Computations of interest shall be made by the Bank on the basis of a year of 360 days for the actual number of days elapsed (including the first day but excluding the last day) occurring in the period for which such interest is payable.

(c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest; provided, however, that if such extension would cause such payment to be made in the next following calendar month, such payment shall be made on the immediately preceding Business Day.

(d) On the date of disbursement of the proceeds of this Note, the Bank shall receive from the Borrower a structuring fee equal to 0.25% of the principal amount of this Note. The Bank may, upon the Borrower’s request, deduct the full amount of such structuring fee from the proceeds of this Note before such proceeds are disbursed by the Bank to the Borrower (provided, however, that for all other purposes under this Note, the amount of the proceeds hereof disbursed to the Borrower shall then equal the sum of the reduced amount actually disbursed to the Borrower and the amount of such structuring fee).

SECTION 2. Prepayments.

(a) The Borrower may, upon at least five (5) Business Days’ notice to the Bank stating the proposed date and principal amount of the prepayment, and if such notice is given the Borrower shall, prepay this Note in whole or in part, together with accrued interest to the date of such prepayment on the amount prepaid, provided that (i) each partial prepayment shall be in a principal amount not less than U.S.$ 225,000.00 and (ii) in the event of such prepayment other than on the last day of an Interest Period, the Borrower shall be obligated to reimburse the Bank in respect thereof pursuant to Section 15(c). Notwithstanding the foregoing, if any such prepayment is for the prepayment in full of all obligations under this Note in connection with a termination of this Note and is being paid by the Borrower from the proceeds of another transaction, then such prepayment may be conditioned upon the closing of such other transaction; provided that (i) if such prepayment is not made on the date set forth in the applicable notice, the Borrower shall be obligated to pay to the Bank any amounts required to be paid under Section 15(c), and (ii) the Bank shall have no obligation to accept such prepayment later than five (5) Business Days after the date set forth in the applicable notice.

(b) If the Bank shall notify the Borrower that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for the Bank to continue to fund or maintain this Note, upon demand by the Bank the Borrower shall forthwith prepay in full this Note with accrued interest thereon and all other amounts payable by the Borrower hereunder. If it is lawful for the Bank to maintain this Note through the last day of the Interest Period then applicable, such prepayment shall be due on such last day.

SECTION 3. Increased Costs.

If, due to either (i) the introduction of or any change (including, without limitation, any change by way of imposition or increase of reserve requirements) after the date hereof in or in the interpretation of any law or regulation or (ii) the compliance by the Bank with any guideline or request from any central bank or other governmental authority (whether or not having the force of law) issued after the date hereof, there shall be any increase in the cost to the Bank of funding or maintaining this Note, then the Borrower shall from time to time, upon demand by the Bank, pay to the Bank additional amounts sufficient to indemnify the Bank against such increased cost; provided that the Bank shall not be entitled to compensation, and the Borrower shall not be required to pay any compensation, under this Section for any such amounts incurred or accruing more than 180 days prior to the date of the delivery to the Borrower of the certificate referred to in the next sentence. A certificate as to the amount of such increased cost, submitted to the Borrower by the Bank, shall be conclusive and binding for all purposes, absent manifest error.

SECTION 4. Increased Capital.

If the Bank determines that compliance with any change after the date hereof in any law or regulation or any guideline or interpretation thereof or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by the Bank or any entity controlling the Bank and that the amount of such capital is increased by or based upon the existence of this Note, then, upon demand by the Bank, the Borrower shall pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank in the light of such circumstances, to the extent that the Bank reasonably determines such increase in capital to be allocable to the existence of this Note; provided that the Bank shall not be entitled to compensation, and the Borrower shall not be required to pay any compensation, under this Section for any such amounts incurred or accruing more than 180 days prior to the date of the delivery to the Borrower of the certificate referred to in the next sentence. A certificate as to such amounts, submitted to the Borrower by the Bank, shall be conclusive and binding for all purposes, absent manifest error.

SECTION 5. Taxes.

(a) Any and all payments made by the Borrower hereunder or under any instrument delivered hereunder shall be made, in accordance with Section 1 or the applicable provisions of such other instrument, free and clear of and without deduction for any and all present and future taxes (including, without limitation, value-added taxes and withholding taxes), levies, imposts, deductions, charges or withholdings and all liabilities with respect thereto, excluding, in the case of the Bank, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which the Bank is organized or any political subdivision thereof and taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction of the Bank’s Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any other instrument to be delivered hereunder to the Bank, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 5), the Bank receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in the minimum amount and in accordance with applicable law.

(b) In addition, the Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under any other instrument to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Note or any other instrument to be delivered hereunder (hereinafter referred to as “Other Taxes”).

(c) The Borrower shall indemnify the Bank for and hold it harmless against the full amount of Taxes and Other Taxes (including, without limitation, any taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 5) imposed on or paid by the Bank or any Affiliate (as hereinafter defined) of the Bank in respect of any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days from the date the Bank makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes, the Borrower shall furnish to the Bank, at its address referred to in Section 13, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under any other documents to be delivered hereunder by or on behalf of the Borrower, if the Borrower determines that no Taxes are payable in respect thereof, the Borrower shall, at the Bank’s request, furnish, or cause the payor to furnish, to the Bank, an opinion of counsel reasonably acceptable to the Bank stating that such payment is exempt from Taxes.

(e) The Bank shall upon written request (but only if the Bank is lawfully able to do so) use best efforts to provide the Borrower with two copies of any form, document or other certification, appropriately completed, necessary for the Bank to be exempt from, or entitled to a reduced rate of, any Tax on payments pursuant hereto. To the extent that any such form, document or certification becomes obsolete, the Bank shall upon written request provide either an updated or successor form, document or certification to the Borrower.

SECTION 6. Use of Proceeds; Security Agreement and Guaranty.

(a) The proceeds of this Note shall be available (and the Borrower agrees that it shall use such proceeds) solely to finance its acquisition of Regan Lodge Inc.

(b) The obligations of the Borrower under this Note are secured by, and the Bank’s disbursement of the proceeds of this Note to the Borrower is conditioned upon, (i) the execution by PriceSmart, Inc. (the “Guarantor”) of that certain Guaranty dated on or about the date hereof (the “Guaranty”), and (ii) the granting by the Borrower and Regan Lodge Inc. to the Bank, pursuant to the terms of that certain Debenture and Deed Of Charge by way of Legal Mortgage made as of the date hereof between the Borrower and Regan Lodge Inc. (Company No. 19394) and Citicorp Merchant Bank Limited, a licensed bank and trust company incorporated in the Republic of Trinidad & Tobago and registered as an external company under the laws of Barbados (the “Security Agreement”), a first-priority security interest in the assets of the Borrower identified as collateral therein and a second-priority security interest in the assets of Regan Lodge Inc. identified as collateral therein subject only to the Debenture/Mortgage dated the 7^th day of May, 2001 (recorded in the Registration Office of Barbados on the 5^th day of July, 2001 as Deed No. 4915) and made between Regan Lodge Inc. and Citicorp Merchant Bank Limited.

SECTION 7. Representations and Warranties.

The Borrower represents and warrants as follows:

(a) The Borrower is a corporation duly organized and validly existing under the laws of Barbados and has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and other approvals) to own, lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted.

(b) The execution, delivery and performance by the Borrower of this Note are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not (i) contravene the Borrower’s organizational documents or (ii) contravene in any material respect any law or contractual restriction binding on or affecting the Borrower.

(c) No authorization or approval or other action by, and no notice to or filing with, (i) any governmental authority or regulatory body or (ii) any other third party with respect to any material contractual obligation, is required for the due execution, delivery and performance by the Borrower of this Note.

(d) This Note has been duly executed and delivered by the Borrower. This Note is the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms.

(e) The Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at August 31, 2006, and the related Consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the fiscal year then ended, accompanied by an opinion of the Borrower’s auditors, or other approved independent public accountants, and the Consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at July 31, 2007, and the related Consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for the last eleven (11) months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to the Bank, fairly present the Consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such dates and the Consolidated results of the operations of the Borrower and its Consolidated Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles in Barbados, consistently applied. Since July 31, 2007, there has been no Material Adverse Change.

There is no pending or threatened action, suit, investigation, litigation or proceeding affecting the Borrower or any Subsidiary of the Borrower before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of this Note or the consummation of the transactions contemplated hereby.

(g) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the U.S. Federal Reserve System), and no proceeds of the loan evidenced by this Note will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

(h) Each of the Borrower and its Subsidiaries (if any) has filed, has caused to be filed or has been included in all material tax returns (national, departmental, local, municipal and foreign) required to be filed and has paid all material taxes, assessments, fees and other charges (including interest and penalties) due with respect to the years covered by such returns.

Each of the Borrower and its Subsidiaries (if any) is in compliance with all applicable laws, ordinances, rules, regulations and requirements of all governmental authorities (including, without limitation, all governmental licenses, certificates, permits, franchises and other governmental authorizations and approvals necessary to the ownership of its properties or to the conduct of its business and laws with respect to social security and pension fund obligations), in each case except to the extent that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

No income, stamp or other taxes (other than taxes on, or measured by, net income or net profits) or levies, imposts, deductions, charges, compulsory loans or withholdings whatsoever are or will be, under applicable law in Barbados, imposed, assessed, levied or collected by the Government of Barbados or any political subdivision or taxing authority thereof or therein either (i) on or by virtue of the execution or delivery of this Note or (ii) on any payment to be made by the Borrower pursuant to this Note.

(k) Neither the Borrower nor any Subsidiary of the Borrower, nor any of their respective properties, has any immunity from jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of Barbados.

(1) The Borrower’s obligations under this Note constitute direct, unconditional, unsubordinated and unsecured obligations of the Borrower and do rank and will rank pari passu in priority of payment and in all other respects with all other unsecured indebtedness of the Borrower.

(m) This Note is in proper legal form under the law of Barbados for the enforcement thereof against the Borrower under the law of Barbados; and to ensure the legality, validity, enforceability or admissibility in evidence of this Note in Barbados, it is not necessary that this Note or any other document be filed or recorded with any court or other authority in Barbados or that any stamp or similar tax be paid on or in respect of this Note.

(n) The Borrower, a nonbank entity located outside the United States of America, understands that it is the policy of the Board of Governors of the U.S. Federal Reserve System that extensions of credit by international banking facilities (as defined in Section 204.8(a) of Regulation D of the Board of Governors of the U.S. Federal Reserve System as in effect from time to time (“Regulation D”)) may be used only to finance the non-U.S. operations of a customer (or its foreign affiliates) located outside the United States of America as provided in Section 204.8(a)(3)(vi) of Regulation D. Therefore, the Borrower acknowledges that the proceeds of its borrowing from the international banking facility of the Bank will be used solely to finance the Borrower’s operations outside the United States of America or that of the Borrower’s foreign affiliates.

(o) Neither the Borrower nor any of its Subsidiaries is an “investment company”, or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company”, as such terms are defined in the Investment Company Act of 1940, as amended.

No information, exhibit or report furnished by or on behalf of the Borrower to the Bank in connection with the negotiation of this Note or pursuant to the terms of this Note contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading.

(q) The Borrower is Solvent.

SECTION 8. Affirmative Covenants.

So long as the loan evidenced by this Note shall remain unpaid, the Borrower shall:

(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries (if any) to comply, in all material respects, with all applicable laws, rules, regulations and orders, in each case except to the extent that failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

(b) Visitation Rights. At any reasonable time and from time to time during regular business hours and upon reasonable notice, permit the Bank or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower its Subsidiaries (if any), and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries (if any) with any of their officers or directors and with their independent certified public accountants.

(c) Reporting Requirements. Furnish to the Bank:

(i) as soon as available and in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower and of Regan Lodge Inc., respectively,

Consolidated and consolidating balance sheets of the Borrower and its Consolidated Subsidiaries and of Regan Lodge Inc. and its Consolidated Subsidiaries (if any) as of the end of such fiscal quarter and Consolidated and consolidating statements of income and cash flows of the Borrower and its Consolidated Subsidiaries and of Regan Lodge Inc. and its Consolidated Subsidiaries (if any) for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Borrower as having been prepared in accordance with generally accepted accounting principles, and certificates of the chief financial officer of the Borrower as to compliance with the terms of this Note (except Section 10(a) of this Note) and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 10(b), provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 10(b), a statement of reconciliation conforming such financial statements to GAAP; upon Regan Lodge Inc.’s merger or consolidation with the Borrower, this Section 8(c) (i) shall no longer apply to Regan Lodge Inc.;

as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower and each fiscal year of Regan Lodge Inc., respectively, a copy of the annual audit report for the fiscal year for the Borrower and its Consolidated Subsidiaries, containing Consolidated and consolidating balance sheets of the Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and Consolidated and consolidating statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for such fiscal year, and a copy of the annual audit report for the fiscal year for Regan Lodge Inc. and its Consolidated Subsidiaries (if any), containing Consolidated and consolidating balance sheets of Regan Lodge Inc. and its Consolidated Subsidiaries (if any) as of the end of such fiscal year and Consolidated and consolidating statements of income and cash flows of Regan Lodge Inc. and its Consolidated Subsidiaries (if any) for such fiscal year, in each case accompanied by an opinion reasonably acceptable to the Bank by Ernst & Young LLP or other independent public accountants reasonably acceptable to the Bank, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 10, a statement of reconciliation conforming such financial statements to GAAP; upon Regan Lodge Inc.’s merger or consolidation with the Borrower, this Section 8(c) (ii) shall no longer apply to Regan Lodge Inc.;

(iii) as soon as possible and in any event within ten Business Days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;

(iv) promptly after the Borrower becoming aware of the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any Subsidiary of the Borrower of the type described in Section 7(1); and

(v) such other information respecting the Borrower or its Subsidiaries (if any) as the Bank may from time to time reasonably request.

SECTION 9. Negative Covenants.

So long as the loan evidenced by this Note shall remain unpaid, (i) the Borrower shall not merge or consolidate with or into any Person without first obtaining the express written consent of the Bank, except that (ii) the Bank’s consent shall not be required in the event that Regan Lodge Inc. or any other Subsidiary of the Borrower at any time merges or consolidates with or into the Borrower, or in the event that any

Subsidiary of the Borrower at any time merges or consolidates with or into any other Subsidiary of the Borrower; however, the Borrower shall furnish the Bank at least 30 days’ advance notice, in writing, of any merger or consolidation referred to in clause (ii) of this Section 9.

SECTION 10. Financial Covenants.

So long as the loan evidenced by this Note shall remain unpaid, the Borrower shall:

(a) Maintain a Debt Service Coverage Ratio of not less than 4.5 to 1.0 during the Borrower’s fiscal year ending August 31, 2008, 3.5 to 1.0 during its fiscal year ending August 31, 2009, 3.0 to 1.0 during its fiscal year ending August 31, 2010, 2.5 to 1.0 during its fiscal year ending August 31, 2011, 2.0 to 1.0 during its fiscal year ending August 31, 2012, and 1.5 to 1.0 during its fiscal year ending August 31, 2013 and each subsequent fiscal year of the Borrower; as used herein, “Debt Service Coverage Ratio” means that certain ratio the numerator of which equals the sum of operating income (including other operating cash income) plus depreciation expenses and the denominator of which equals the sum of gross interest expense plus current maturity of long term debt, in each case of the Borrower and its Consolidated Subsidiaries determined in accordance with GAAP.

(b) Maintain a Leverage Ratio of not more than 1.0 to 1.0; as used herein, “Leverage Ratio” means that certain ratio the numerator of which equals the balance sheet amount of total debt of the Borrower and its Consolidated Subsidiaries determined in accordance with GAAP and the denominator of which equals EBITDA (as defined below).

(c) For purposes of this Section 10, “EBITDA” shall mean the sum of (A) net income, (B) tax expenses, (C) interest expenses, (D) depreciation expenses, (E) amortization expenses, (F) any non-cash items used to determine net income, and (G) losses (or minus gains) from the sale of assets (other than inventory in the ordinary course of business), less interest income, in each case of the Borrower and its Consolidated Subsidiaries determined in accordance with GAAP.

SECTION 11. Events of Default.

If any of the following events (“Events of Default”) shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of this Note when due; or the Borrower shall fail to pay any interest hereon or other amount payable hereunder within five (5) Business Days of the date when due; or

(b) Any representation or warranty made by the Borrower (or any of its officers) under or in connection with this Note or by the Guarantor under or in connection with the Guaranty shall prove to have been incorrect in any material respect when made; or

(c) The Borrower or the Guarantor shall fail to perform or observe any term, covenant or agreement contained in this Note or the Guaranty on its part to be performed or observed, and such failure shall continue for thirty 30 days after written notice thereof from the Bank; or

(d) The Borrower, the Guarantor or any Subsidiary of the Borrower shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least U.S. $225,000.00 (or its equivalent in other currencies) in the aggregate (but excluding Debt outstanding hereunder) of the Borrower, such Subsidiary or the Guarantor (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or

instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case in full prior to the stated maturity thereof; or

(e) The Borrower, the Guarantor or any Subsidiary of the Borrower shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower, any such Subsidiary or the Guarantor seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property; or the Borrower, any such Subsidiary or the Guarantor shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

(f) Any judgment or order for the payment of money in excess of U.S.$500,000.00 (or its equivalent in other currencies) shall be rendered against the Borrower or any Subsidiary of the Borrower, or any judgment or order for the payment of money (to the extent not covered by insurance) exceeds U.S.$4,500,000.00 (or its equivalent in other currencies) shall be rendered against the Guarantor, and (in any of the foregoing instances) there shall be any period of 10 or more consecutive days during which such judgment or order is not satisfied, discharged, vacated or subject to a stay of enforcement by reason of a pending appeal or otherwise; or

(g) Any non-monetary judgment or order shall be rendered against the Borrower or any Subsidiary of the Borrower that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 10 or more consecutive days during which such judgment or order is not satisfied, discharged, vacated or subject to a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise; or

(h) Unless agreed to in writing by the Bank, the obligations of the Borrower or the Guarantor under this Note and/or the Guaranty shall fail to rank at least pari passu with all other unsecured Debt of the Borrower or the Guarantor, as the case may be; or

(i) Any provision of this Note or of the Guaranty shall cease to be valid and binding on or enforceable against the Borrower or the Guarantor, or the Borrower or the Guarantor shall so assert or state in writing, or the obligations of the Borrower under this Note or of the Guarantor under the Guaranty shall in any way become illegal; or

(j) Either (i) any authority asserting or exercising governmental or police powers in Barbados shall take any action, including a general moratorium, canceling, suspending or deferring the obligation of the Borrower or the Guarantor to pay any amount of principal or interest payable under this Note or preventing or hindering the fulfillment by the Borrower or the Guarantor of its obligations under this Note or having any effect on the currency in which the Borrower or the Guarantor may pay its obligations under this Note or on the availability of foreign currencies in exchange for local currency (including any requirement for the approval to exchange foreign currencies for local currency) or otherwise or (ii) the Borrower or the Guarantor, as the case may be, shall, voluntarily or involuntarily, participate or take any action to participate in any facility or exercise involving the rescheduling of the Borrower’s or the Guarantor’s debts or the restructuring of the currency in which the Borrower or the Guarantor may pay its obligations; or

(k) Any authority asserting or exercising governmental or police powers in Barbados or any person acting or purporting to act under such authority shall have taken any action to condemn, seize or appropriate, or to assume custody or control of, all or any portion of the property of the Borrower or the Guarantor; or

(1) The Guarantor shall cease to own directly or indirectly 100% of the outstanding Voting Stock of the Borrower; or

(m) A Material Adverse Change shall have occurred and be continuing; or

(n) The Guarantor shall fail to perform or observe any term, covenant or agreement in the Guaranty, and such failure shall continue for thirty (30) days after written notice thereof from the Bank; or

(o) Any Event of Default as defined in Section 6.2 of the Security Agreement shall occur and be continuing;

then, and in any such event, the Bank may, by notice to the Borrower, declare this Note, all principal amounts evidenced thereby, all interest thereon and all other amounts payable under this Note to be forthwith due and payable, whereupon this Note, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under clause (e) above, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

SECTION 12. Amendments, Etc.

No amendment or waiver of any provision of this Note, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Bank and, in the case of an amendment, the Borrower, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 13. Notices Etc.

All notices and other communications provided for hereunder shall be in writing and mailed (by international courier), telecopied, telegraphed, telexed, cabled or delivered, if to the Borrower, at its address at PriceSmart, Inc., 9740 Scranton Road, San Diego, California 92121-1745, USA. Attention: Mr. Atul Patel; and if to the Bank, at its address at 399 Park Avenue, New York, NY 10043, U.S.A., Attention: Mr. Leslie Munroe; or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. All such notices and communications shall, when mailed, telecopied, telegraphed, telexed or cabled, be effective when deposited in the mails, telecopied, delivered to the telegraph company, confirmed by telex answerback or delivered to the cable company, respectively.

SECTION 14. No Waiver; Remedies.

No failure on the part of the Bank to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 15. Costs and Expenses.

(a) The Borrower agrees to pay on demand all losses, and reasonable costs and expenses, if any (including reasonable counsel fees and expenses), in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiation, legal proceedings or otherwise) of this Note, including, without limitation, losses, costs and expenses sustained by the Bank as a result of any default hereunder.

(b) The Borrower agrees to indemnify and hold harmless the Bank and each of its Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and

against any and all claims, damages, losses, liabilities and reasonable expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Note or the actual or proposed use of the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, non appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this subsection (b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, equityholders or creditors or an Indemnified Party or any other person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower also agrees not to assert any claim for special, indirect, consequential or punitive damages against the Bank, any of its Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability arising out of or otherwise relating to this Note, any of the transactions contemplated herein or the actual or proposed use of the proceeds of this Note.

(c) If the Borrower makes any payment of principal under this Note or pursuant to Sections 2, 3 or 4 or acceleration of the maturity of the Note pursuant to Section 11 or for any other reason other than on the Maturity Date hereof or on the last day of an Interest Period, or if the Borrower fails to make a payment or prepayment of this Note for which a notice of prepayment has been given or that is otherwise required to be made, the Borrower shall, upon demand, pay the Bank any resulting loss, cost or expense incurred by it, including (without limitation), any loss (including loss of anticipated profits), cost or expense incurred in obtaining, liquidating or reemploying deposits or other funds acquired by the Bank to maintain this Note.

(d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 3, 4, 5, 15, 17, 22, 23 and 24 shall survive the payment in full of the principal, interest and all other amounts payable hereunder.

SECTION 16. Right of Set-off.

(a) Upon the occurrence and during the continuance of any Event of Default, the Bank and any of its Affiliates are hereby authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final), at any time held and other indebtedness at any time owing by the Bank or any of its Affiliates to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Note, irrespective of whether or not the Bank shall have made any demand under this Note and although such obligations may be unmatured. The Bank agrees to notify the Borrower promptly after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that the Bank and its Affiliates may have.

(b) The currency equivalent of the amount of any deposit or indebtedness that shall be set-off and applied against any and all obligations of the Borrower hereunder or that may be charged against any or all of the Borrower’s accounts with the Bank or any of its Affiliates shall be that which, in accordance with normal banking procedures, will be necessary to purchase with such other currency, in New York, New York, U.S.A., the amount of United States Dollars that the Borrower has so failed to pay when due.

SECTION 17. Judgments:, Other Currencies.

(a) If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in United States Dollars into another currency, the Borrower and the Bank agree, to the fullest extent permitted by Jaw, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Bank could purchase United States Dollars with such other currency in New York, New York, U.S.A. on the Business Day preceding that on which final, non-appealable judgment is given.

(b) The obligation of the Borrower in respect of any sum due from it to the Bank hereunder shall, notwithstanding any judgment in a currency other than United States Dollars, be discharged only to the extent that on the Business Day following receipt by the Bank of any sum adjudged to be due hereunder in such other currency, the Bank may in accordance with normal banking procedures, purchase United States Dollars with such other currency. If the amount of United States Dollars so purchased is less than the sum originally due to the Bank in United States Dollars, the Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Bank against such loss, and if the United States Dollars so purchased exceed the sum originally due to the Bank in United States Dollars, the Bank agrees to remit to the Borrower such excess.

SECTION 18. Joint and Several Liability; Pronouns.

If this Note is signed by two or more persons or entities, each of such persons or entities shall be jointly and severally liable for the Borrower’s obligations under it, the release of one or more such persons or entities shall not affect the obligations and liabilities of the others, the term “the Borrower” shall mean all such persons or entities and the term “the Borrower (or any of them)” shall mean any one or more of such persons or entities. If appropriate, each pronoun shall be read as a masculine or feminine pronoun and each singular pronoun as a plural pronoun.

SECTION 19. Completion of Instrument.

The Borrower hereby irrevocably authorizes the Bank, if this Note is delivered to the Bank undated, to complete the appropriate blank at the head of this Note with a date that is earlier of the date this Note is delivered to the Bank and the date any obligation intended to be evidenced hereby is first created, or, if it is delivered with elements essential to its being an instrument not completed, to make whatever appropriate insertions are necessary to make this Note an instrument.

SECTION 20. Certain Waivers.

The Borrower hereby waives presentment for payment, demand, notice of dishonor and protest of this Note.

SECTION 21. Binding Effect; Assignments.

The Borrower shall not assign or transfer any right or obligation under this Note without the prior written consent of the Bank. This Note shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns. The Bank may assign to any financial institution (including, without limitation, any financial institution affiliated with the Bank) all or any part of, or any interest in, the Bank’s rights and benefits hereunder and to the extent of such assignment such assignee shall have the same rights and benefits against the Borrower as it would have had if it were the Bank hereunder.

SECTION 22. Governing Law.

This Note shall be governed by and construed in accordance with the laws of the State of New York, United States of America.

SECTION 23. Consent to Jurisdiction; Waiver of Immunities.

(a) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York, New York, U.S.A., and any appellate court from any thereof, over any action or proceeding arising out of or related to this Note or for recognition or enforcement of any judgment, and the Borrower hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such federal court. The Borrower hereby irrevocably appoints CT Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Avenue, New York, NY 10011, U.S.A., as its agent to receive on behalf of the Borrower and its property, service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service may be made by mailing or delivering a copy of such process to the Borrower in care of the Process Agent at the Process Agent’s above address, and the Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address as set forth below. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) The Borrower irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Note in any New York State or federal court. The Borrower hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c) Nothing in this Section 23 shall affect the right of the Bank to serve legal process in any other manner permitted by law or affect the right of the Bank to bring any action or proceeding against the Borrower or its property in the courts of any other jurisdiction.

(d) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably waives such immunity in respect of its obligations under this Note, and, without limiting the generality of the foregoing, agrees that the waivers set forth in this subsection (d) shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States, as amended, and are intended to be irrevocable for purposes of such Act.

SECTION 24. Confidentiality.

The Bank agrees to hold all Confidential Information obtained pursuant to the provisions of this Note in accordance with its customary procedure for handling such information of this nature and in accordance with safe and sound banking practices, provided, that nothing herein shall prevent the Bank from disclosing and/or transferring such Confidential Information (i) upon the order of any court or administrative agency or otherwise to the extent required by statute, rule, regulation or judicial process, (ii) to bank examiners or upon the request or demand of any other regulatory agency or authority, (iii) which had been publicly disclosed other than as a result of a disclosure by the Bank prohibited by this Note, (iv) in connection with any litigation with respect to this Note or the documents executed in connection herewith to which the Bank is a party, or in connection with the exercise of any remedy hereunder or under this Note, (v) to the Bank’s legal counsel and independent auditors and accountants, (vi) to the Bank’s branches, subsidiaries, representative offices, affiliates and agents and third parties selected by any of the foregoing entities, wherever situated, for confidential use (including in connection with the provision of any service and for data processing, statistical and risk analysis purposes), provided that such branches, subsidiaries, offices,

affiliates, agents and third parties are legally obligated to maintain the confidentiality of such Confidential Information, and (vii) subject to provisions substantially similar to those contained in this Section 24, to any actual or proposed participant or assignee hereunder.

SECTION 25. Patriot Act.

The Bank hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Bank to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries (if any) to, provide such information and take such actions as are reasonably requested by the Bank in order to assist the Bank in maintaining compliance with the Patriot Act.

SECTION 26. Defined Terms.

(a) As used in this Note, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.

“Bank” has the meaning specified in the first paragraph of this Note.

“Borrower” has the meaning specified in the first paragraph of this Note.

“Business Day” has the meaning specified in the second paragraph of this Note.

“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

“Citigroup” means Citigroup, Inc. and each subsidiary and affiliate thereof (including, without limitation, Citibank, N.A. and each of its branches wherever located).

“Confidential Information” means information that the Borrower furnishes to the Bank, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Bank from a source other than the Borrower, unless, to the actual knowledge of the recipient of such information, such source breached an obligation of confidentiality in providing such information to such recipient.

“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred and paid in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all

obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all obligations of such Person in respect of Hedge Agreements, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below and other payment obligations (collectively, “Guaranteed Debt”) guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Guaranteed Debt or to advance or supply funds for the payment or purchase of such Guaranteed Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above (including Guaranteed Debt) secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

“Default” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.

“Events of Default” has the meaning specified in Section 11.

“GAAP” has the meaning specified in Section 26(b).

“Guarantor” has the meaning specified in Section 6(b).

“Guaranty” has the meaning specified in Section 6(b).

“Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements.

“Indemnified Party” has the meaning specified in Section 15(b).

“Interest Period” has the meaning specified in the second paragraph of this Note.

“Lending Office” has the meaning specified in Section 1(a).

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“Material Adverse Change” means any material adverse change in the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or of the Borrower and its Subsidiaries (if any) taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or of the Borrower and its Subsidiaries (if any) taken as a whole, (b) the rights and remedies of the Bank under this Note or (c) the ability of the Borrower to perform its obligations under this Note.

“Maturity Date” has the meaning specified in the first paragraph of this Note.

“Other Taxes” has the meaning specified in Section 5(b).

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001, as amended from time to time.

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“Process Agent” has the meaning specified in Section 23(a).

“Security Agreement” has the meaning specified in Section 6(b).

“Solvent” means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Taxes” has the meaning specified in Section 5(a).

“Voting Stock” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

(b) All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles in Barbados consistent with those applied in the most recent balance sheet and statements of income and cash flows referred to in Section 7(e) (“GAAP”).

SECTION 27. Waiver of Jury Trial.

The Borrower and (by accepting this Note) the Bank hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Note or the actions of the Bank in the negotiation, administration, performance or enforcement hereof.

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its officer thereunto duly authorized, as of the date first above written.

PSMT (BARBADOS) INC.
By:	/s/ AtulKumar Chandubhai Patel
Print Name:	AtulKumar Chandubhai Patel
Title:	Treasurer

State of California

County of San Diego

On November 8, 2007, before me, Patricia A. Sweeney, Notary Public,

personally appeared Atulkumar Chandubhai Patel

x personally known to me - OR - ¨ proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and office seal.
	/s/ Patricia A. Sweeney
	SIGNATURE OF NOTARY

EX-10.12

Exhibit 10.12

DRAWN AND/OR PREPARED BY:

Attorney-at-Law

Lex Caribbean Law Offices

Worthing Corporate Centre

Worthing, Christ Church Barbados

DEBENTURE MORTGAGE

STAMPED TO SECURE BDS$9,000,000.00 and US$4,500,000.00 OR THE EQUIVALENT IN BARBADOS DOLLARS

BARBADOS

THIS DEBENTURE AND DEED OF CHARGE by way of Legal Mortgage is made as of the 15^th day of November, 2007 BETWEEN PSMT (BARBADOS) INC., a company incorporated under the provisions of the Companies Act Chapter 308 of the Laws of Barbados as Company No. 17693 and having its registered office situate at Aastra Law, Pinfold Street, Bridgetown, Barbados in this Island (hereinafter called “the Borrower”) of the FIRST PART REGAN LODGE INC. a company registered under the provisions of the Companies Act Chapter 308 of the Laws of Barbados as Company No. 19916 which resulted from the amalgamation of Green Lodge Inc. (Company No. 19662) and Regan Lodge Inc. (Company No. 19394) and having its registered office situate at Musson Building, Hincks Street in the City of Bridgetown in this Island (hereinafter called “the Mortgagor”) of the SECOND PART AND CITICORP MERCHANT BANK LIMITED a licensed bank and trust company incorporated in the Republic of Trinidad & Tobago and registered as an External Company under the provisions of the Companies Act Chapter 308 of the Laws of Barbados as Company No. 16184 and having its principal office in Barbados situate at ITC Building Warrens Commercial Centre Warrens in the parish of Saint Michael in this Island on its own behalf and as security trustee for Citibank N.A. acting through its International Banking Facility (hereinafter sometimes called “the Mortgagee”) of the THIRD PART.

WHEREAS Citicorp Merchant Bank Limited (hereinafter sometimes called “Citicorp”) has at the request of the Borrower agreed to grant and advance to the Borrower the sum of BDS$9,000,000.00 or other banking and credit facilities or accommodation upon the terms and conditions contained and implied in the Citicorp Loan Agreement as hereinafter defined and upon the terms and conditions contained in this Debenture Mortgage.

AND WHEREAS Citibank N.A. through its International Banking Facility (hereinafter called “Citibank”) has at the request of the Borrower agreed to grant and advance to the Borrower the sum of US$4,500,000.00 or other banking and credit facilities or accommodation upon the terms and conditions contained and implied in the Citibank Promissory Note as hereinafter defined and upon the terms and conditions contained in this Debenture Mortgage.

AND WHEREAS Citibank has obtained the approval of the Exchange Control Authority of the Central Bank of Barbados to grant and extend to the Borrower the sum of US$4,500,000.00.

AND WHEREAS the Borrower and the Mortgagor are affiliated companies within the meaning of Section 440 of the said Companies Act and the respective boards of directors and shareholders of the Borrower and of the Mortgagor have resolved that it is desirable and in the interest of the Borrower and the Mortgagor that the Borrower and the Mortgagor should in consideration of the loan and other credit facilities and accommodation provided or about to be provided to the Borrower by the Citicorp and Citibank execute and grant to the Mortgagee such security as is hereinafter contained and hereunder implied.

AND WHEREAS the Mortgagor is the estate owner of the fee simple absolute in possession in the Land as hereinafter defined and described in the First Schedule hereto subject as appears in the Second Schedule hereto and subject also to the charge mentioned in the Third Schedule hereto and the monies principal interest and otherwise now remaining secured thereby but otherwise free from encumbrances.

AND WHEREAS the Mortgagor has agreed to join in these presents for the purpose of providing the Land and other property of the Mortgagor as security for the Loans as hereinafter defined.

NOW THIS DEED WITNESSETH as follows:

1.1 In this Debenture Mortgage:-

“Barbados Dollars” or “BDS$” means the lawful currency of Barbados.

“Citibank Agreed Rate” means the rates set out in the Citibank Promissory Note or from time to time agreed between the Borrower and Citibank.

“Citibank Loan” means the sum of US$4,500,000.00 and (i) all and any amounts owing by the Borrower to Citibank pursuant to the terms of the Citibank Promissory Note (ii) interest to the date of payment at such rate and upon such terms as may from time to time be agreed (or if not agreed according to the usual practice of Citibank), as

2

well after as before any demand or judgment; (iii) commissions, fees and other charges; and (iv) all legal and other costs charges and expenses incurred by Citibank in relation to the Borrower or the properties hereby mortgaged or the other assets hereby charged on a full indemnity basis.

“Citibank Promissory Note” means the Promissory Note dated          the day of                      made by the Borrower payable to Citibank and includes any other facility or agreement between Citibank and the Borrower.

“Citicorp Agreed Rate” means the rates set out in the Citicorp Loan Agreement or from time to time agreed between the Borrower and Citicorp.

“Citicorp Loan” means the sum of BDS$9,000,000.00 and (i) all and any amounts owing by the Borrower to the Citicorp pursuant to the terms of the Citicorp Loan Agreement, (ii) interest to the date of payment at such rate and upon such terms as may from time to time be agreed (or if not agreed according to the usual practice of the Citicorp), as well after as before any demand or judgment; (iii) commissions, fees and other charges; and (iv) all legal and other costs charges and expenses incurred by Citicorp in relation to the Borrower or the properties hereby mortgaged or the other assets hereby charged on a full indemnity basis.

“Citicorp Loan Agreement” means the Loan Agreement dated the          day of                      and made between Citicorp and the Borrower and includes any other facility or agreement between Citicorp and the Borrower.

“Land” means the land more particularly described in the First Schedule hereto.

“Lenders” mean Citibank and the Mortgagee together;

“Loan Agreements” mean the Citibank Promissory Note and the Citicorp Loan Agreement together.

“Loans” means the Citibank Loan and the Citicorp Loan together.

“Secured Liabilities” means all monies obligations and liabilities whatsoever whether for principal interest or otherwise in whatever currency which may now or at any time in the future be due owing or incurred by the Borrower or the Mortgagor to the Mortgagee or either of the Lenders whether present or future actual or contingent and whether alone severally or jointly as principal guarantor surety or otherwise and in whatever name or style and whether on any current or other account or in any other manner whatsoever.

“United States Dollars” or “US$” means lawful currency of the United States of America.

1.2 Subject to any expressed provisions to the contrary herein contained the provisions and definitions contained in or implied by the Property Act Chapter 236 of the Laws of Barbados shall apply and extend to this Deed.

2.1 In pursuance of the said recited agreements and in consideration of the sum or sums of money which are now or may hereafter be lent and paid by the Lenders to or on behalf of the Borrower, the Borrower and the Mortgagor hereby jointly and severally covenant with the Mortgagee:-

(a) to pay all sums due in respect of the Citicorp Loan and in respect of the Citibank Loan in accordance with the terms of the Loan Agreements together with interest on all

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such sums at the Citicorp Agreed Rate or the Citibank Agreed Rate, as the case may be, computed from the date of advance of the same as well after as before any judgment obtained hereunder, usual commission and lawful bank charges.

3.1 In further pursuance of the said recited agreement and for the consideration aforesaid the Borrower as mortgagor and as beneficial owner hereby CHARGES to the Mortgagee with the payment to Citibank and to Citicorp in accordance with the covenants herein contained or implied or in the Citibank Promissory Note or the Citicorp Loan Agreement for the payment and discharge of the Citibank Loan and interest thereon and the Citicorp Loan and interest thereon and all other moneys hereby or in the Citibank Promissory Note or the Citicorp Loan Agreement expressly or impliedly covenanted to be paid by the Borrower and/or the Mortgagor as a continuing security on:-

FIRSTLY ALL AND SINGULAR the freehold and leasehold property of the Borrower and all rights-of-way, easements, licences and privileges, appurtenant or appertaining thereto both present and future

SECONDLY all plant, machinery, equipment, furniture, fittings, fixtures (including trade fixtures), vehicles, goods, inventory, stock in trade and other items of personal property of the Borrower which at any time hereafter may belong to or be vested in the Borrower or be brought or placed thereon or used in connection therewith

THIRDLY all of the Borrower’s right, title and interest in all present and future book debts, accounts and other accounts receivables, contract rights, cash balances, choses in action, stocks, shares, bonds and securities of any kind whatsoever and any interests arising therefrom

FOURTHLY the goodwill and the uncalled capital of the Borrower both present and future

FIFTHLY the undertaking and all other personal property and assets of the Borrower both present and future

SIXTHLY all existing and future insurance policies pertaining to the property charged hereby and the proceeds therefrom

The charge hereby created shall as regards the property firstly described above be a fixed first charge and as regards the property secondly to sixthly described above shall be a floating charge but so that the Borrower shall not without the consent in writing of the Mortgagee create any mortgage debenture or charge upon and so that no lien shall (subject as herein provided) in any case or in any

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manner arise on or affect any part of the property secondly to sixthly described above ranking either in priority to or pari passu with the charge hereby created. The Mortgagee may at any time by notice in writing to the Borrower convert such floating charge into a fixed charge as regards all the assets covered thereby or any assets specified in the notice which the Mortgagee may in its absolute discretion consider to be in jeopardy or which may become the subject of an injunction.

3.2 In further pursuance of the said recited agreement and for the consideration aforesaid the Mortgagor as mortgagor and as beneficial owner hereby CHARGES to the Mortgagee with the payment to Citibank and to Citicorp in accordance with the covenants herein contained or implied or in the Citibank Promissory Note or the Citicorp Loan Agreement for the payment and discharge of the Citibank Loan and interest thereon and the Citicorp Loan and interest thereon and all other moneys hereby or in the Citibank Promissory Note or the Citicorp Loan Agreement expressly or impliedly covenanted to be paid by the Borrower and/or the Mortgagor as a continuing security on:-

FIRSTLY ALL AND SINGULAR the freehold and leasehold property of the Mortgagor and all rights-of-way, easements, licences and privileges, appurtenant or appertaining thereto both present and future including (without prejudice to the generality of the foregoing) the estate in fee simple absolute in possession of the Mortgagor of and in ALL THAT the land and property described in the First Schedule hereto (the “Land”) subject however as appears in the Second Schedule hereto

SECONDLY all plant, machinery, equipment, furniture, fittings, fixtures (including trade fixtures), vehicles, goods and other items of personal property of the Mortgagor which at any time hereafter may belong to or be vested in the Mortgagor or be brought or placed thereon or used in connection therewith

THIRDLY all of the Mortgagor’s right, title and interest in all present and future book debts, accounts and other accounts receivables, contract rights, cash balances, choses in action, stocks, shares, bonds and securities of any kind whatsoever and any interests arising therefrom

FOURTHLY the goodwill and the uncalled capital of the Mortgagor both present and future

FIFTHLY the undertaking and all other personal property and assets of the Mortgagor both present and future

SIXTHLY all existing and future insurance policies pertaining to the property charged hereby and the proceeds therefrom subject to the prior charge particulars of which are contained in the Third Schedule hereto but otherwise free from encumbrances.

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The charge hereby created shall as regards the property firstly described above be a fixed charge subject to the prior charge particulars of which are contained in the Third Schedule hereto and as regards the property secondly to sixthly described above shall be a floating charge but so that the Mortgagor shall not without the consent in writing of the Mortgagee create any mortgage debenture or charge upon and so that no lien shall (subject as herein provided) in any case or in any manner arise on or affect any part of the property secondly to sixthly described above ranking either in priority to or pari passu with the charge hereby created. The Mortgagee may at any time by notice in writing to the Mortgagor convert such floating charge into a fixed charge as regards all the assets covered thereby or any assets specified in the notice which the Mortgagee may in its or their absolute discretion consider to be in jeopardy or which may become the subject of an injunction.

3.3 The Borrower and / or the Mortgagor if and when required by the Mortgagee so to do execute to the Mortgagee or as the Mortgagee shall direct such further legal or other mortgages or charges as the Mortgagee shall require of and on all the Borrower and/or the Mortgagor’s estate and interest in any premises and property now belonging to the Borrower or the Mortgagor or which may hereafter be acquired by or belong to the Borrower or the Mortgagor (including any vendor’s lien) to secure all monies and liabilities hereby agreed to be paid or intended to be hereby secured such mortgages or charges to be prepared at the cost of the Borrower and / or the Mortgagor and to be substantially in accordance with and subject to the terms and conditions contained in this Deed including a power of sale and all other clauses for the benefit of Mortgagee as the Mortgagee may reasonably require.

4. During the continuance of this security the Borrower and / or the Mortgagor jointly and severally covenant with the Mortgagee in the following manner:-

(a) to furnish to the Mortgagee such financial information regarding the Borrower and/or the Mortgagor as is set out in the Loan Agreements and also from time to time such other information respecting the assets and liabilities of the Borrower or the Mortgagor as the Mortgagee may reasonably require;

(b) to keep all buildings and inventories of stock in trade and other insurable property subject hereto insured from loss or damage by fire, hurricane, earthquake, riot and strike and against loss or damage by or from such additional perils risks or events as in the name of the

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Mortgagee at a level of insurance coverage that is used for properties of similar use and value and with an insurance company that is approved from time to time by the Mortgagee and to forthwith deliver the certificates of insurance evidencing the policy or policies for every such insurance to the Mortgagee and to also duly and regularly pay the premiums and other sums of money necessary for keeping on foot such insurances and deliver the appropriate insurance certificate evidencing renewal of the insurance policy to the Mortgagee at least five days before the same shall become due and if the Borrower and / or the Mortgagor have failed to comply with the provisions of this section, the Mortgagee may require any noncomplying insurance of the said buildings and other property to be cancelled and new insurance of the said buildings and other buildings and other property to be effected in a company or companies to be named by the Mortgagee and also may without reference to the Borrower or the Mortgagor effect or maintain any insurance herein provided for and mortgage clauses in a form approved by the Mortgagee shall be attached to all such insurance policies and the foregoing covenants and provisions as to insurance shall apply to all buildings and other property whether now or hereafter erected on the property and in the case of inventories of stock in trade wherever situate and that in case the Borrower or the Mortgagor shall neglect to effect any such insurance or to pay any such premium and to deliver the renewal insurance certificate therefor or in any respect to comply with the provisions of this covenant then and in every such case happening it shall be lawful for the Mortgagee in its absolute discretion to insure the said buildings and other property or any of them in manner aforesaid or to any less amount And it is hereby declared that all moneys received under or by virtue of any such insurance as aforesaid are hereby charged to and shall be paid to the Mortgagee (or if not paid by the insurers directly to the Mortgagee held on trust for the Mortgagee) and shall at the option of the Mortgagee either be applied in or towards rebuilding reinstating or repairing the buildings and other property destroyed or damaged or in or towards payment of the moneys for the time being secured by these presents and further that the Borrower and the Mortgagor will not suffer permit or allow any act to be done or omitted to be done which would result in the cancellation of any of the insurances required to be carried pursuant hereto or which would afford the insurers a valid defence in law to any claim by the Borrower or the Mortgagor under any of the policies of insurance required to be carried hereunder;

(c) to give to the Mortgagee such particulars relating to the buildings and other insurable property subject hereto or any part thereof and such assistance as the Mortgagee shall reasonably require for the purpose of effectuating any such insurance as aforesaid;

(d) if the Mortgagee shall give to the Borrower and the Mortgagor

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particulars of any insurance effected by the Mortgagee in respect of any buildings or other insurance property subject hereto, while such insurance remains in force except with the written consent of the Mortgagee not to effect or keep in force any other policy insuring the same buildings or other insurance property or any part thereof against the same risks;

(e) to immediately inform the Mortgagee of any circumstances which may affect the validity of and/or the premium payable under any policy of insurance;

(f) to keep all buildings and other property subject hereto in good and substantial repair and condition and permit the Mortgagee and the agents of the Mortgagee upon giving two (2) days prior notice of the same at all reasonable times during the day time and without any further consent to enter into and upon any lands and premises of the Borrower and / or the Mortgagor subject to this charge and inspect the buildings and other property subject hereto and view the state thereof and upon receipt of notice in writing from the Mortgagee immediately to remedy restore repair amend and make good all such defects decays wants of reparation amendment and upkeep of the property subject hereto as the Mortgagee may reasonably require and if the Borrower or the Mortgagor shall neglect to do so the Mortgagee may at its or their discretion enter upon the said lands and premises from time to time in order to repair and keep in repair the said buildings and other property and without thereby becoming liable as a mortgagee in possession.

(g) not without the written consent of the Mortgagee first had and obtained to make or permit or suffer to be made any material change or addition whatsoever to the lands and buildings subject hereto or the use thereof;

(h) not do or permit or suffer to be done or permitted anything in consequence whereof the buildings and other property subject hereto may in any way deteriorate or lessen in value or any policy of insurance be increased;

(i) to maintain their corporate existence in good standing under the laws of Barbados and do all such acts and things and file such returns and documents to and with the competent authorities in Barbados in order to comply in all material respects with all laws in force governing companies in Barbados and affecting the Borrower and the Mortgagor and will in the event or reorganisation reconstruction of the Borrower or the Mortgagor execute all such instruments acts and things (if any) as may reasonably be required by the Mortgagee to ensure that all the covenants and obligation binding on the Borrower and the Mortgagor hereunder shall continue to bind the successors of the Borrower and of the Mortgagor;

(j) to keep proper books of accounts and records in accordance with sound accounting practices and ensure that the same shall be open for inspection by or on behalf of the Mortgagee;

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(k) except for the Permitted Liens (as described in the Citicorp Loan Agreement) not apply for or accept any lien which by virtue of any statute law or regulation will rank pari passu or in priority to this security in respect of the property hereby charged or any part thereof without first obtaining the written consent of the Mortgagee;

(1) to insure and keep insured to the reasonable satisfaction of the Mortgagee against liability to pay compensation under the National Insurance Act and Occupier’s Liability Act from time to time in force in Barbados;

(m) not to permit the withdrawal from the Borrower or the Mortgagor of any capital or allow any reconstruction or corporate reorganisation which may result in any such withdrawal nor engage in any capital expenditure in an amount in excess of US$500,000 (or the equivalent thereof) without the prior approval of the Mortgagee, such consent not to be unreasonably withheld;

(n) not without the written consent of the Mortgagee first had and obtained to sell, lease, transfer, part with the possession of or otherwise dispose of any of their freehold or leasehold interest in any of their real property;

(o) not without the written consent of the Mortgagee first had and obtained to sell, lease, transfer, part with possession of or otherwise dispose of any of their material property or assets which shall be required for the efficient carrying on of its business, such written consent of the Mortgagee not to be unreasonably withheld, provided however that the Mortgagee may withhold such consent if in its sole discretion such sale, lease, transfer, disposal of possession or other disposal shall or may affect the value or level of the security it requires for any of its loans or other sums due to it by the Borrower.

(p) except for loans and guarantees permitted pursuant to Section 4.01(1) of the Citicorp Loan Agreement, not to make any loans or give any guarantees without the prior written approval of the Mortgagee (such consent not to be unreasonably withheld);

(q) to comply with all enactments and regulations under the Town and Country Planning Act Chapter 240 of the Laws of Barbados for the time being in force and with all By-Laws whether under that Act or in any other legislation which may affect any property of the Borrower or of the Mortgagor from time to time;

(r) to punctually pay and indemnify the Mortgagee and any receiver

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appointed by it against all existing and future rent rates taxes duties levies deductions charges withholdings assessments impositions and outgoings whatsoever (whether imposed by agreement statute or otherwise and whether in the nature of capital or revenue and even if wholly novel) now or at any time during the continuance of this security payable in respect of the property hereby secured or any part thereof or by the owner or occupier thereof. If any such sums shall be paid by the Mortgagee or by any such receiver the same shall be repaid by the Borrower or the Mortgagor on demand with interest at the Citibank Agreed Rate or at the Citicorp Agreed Rate;

(s) not without the prior consent in writing of the Bank cause or permit any person to be registered under the Land Registration Act Chapter 229 of the Laws of Barbados as proprietor of the Land or any part thereof or interest therein nor without such consent shall the Borrower or the Mortgagor create or permit to arise any overriding interest affecting the Land within the definition in that Act; provided however that the Mortgagor may with the written consent of the Mortgagee, which said consent shall not be unreasonably withheld, become registered under the said Land Registration Act as the proprietor of the Land or part thereof;

(t) to maintain any and all regulatory registrations, approvals, consents, licences and filings registered by the Borrower or the Mortgagor in order to properly conduct its business, including to grant the security over the property hereby secured;

(u) to conduct and carry on their business in a proper and efficient manner and not make any substantial alteration in the nature of or mode of conduct of that business;

(v) to furnish to the Mortgagee on an annual basis evidence of payment of Value Added Tax, Pay As You Earn deductions, National Insurance contributions and other statutory payments;

(w) to repay to the Mortgagee immediately on demand all moneys expended by the Mortgagee:-

(i) in carrying out repairs to or work upon any property as authorised by this Deed;

(ii) in paying all charges in connection with any inspection of any property of the Borrower or of the Mortgagor for the purposes of this security or in connection with any such repairs or work as aforesaid;

(iii) in effecting any insurance policy on the buildings or other insurance property subject in accordance with this Deed;

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(iv) in taking recovering and keeping possession of any property of the Borrower or of the Mortgagor and generally in any other proceedings taken to realise the moneys hereby secured or in perfecting or protecting the security for the said moneys together with a proper allowance for the time and services of any person appointed by the Mortgagee and all Attorneys-at-Law and agents’ charges and commissions for or in respect of the collection of any overdue interest the principal sum insurance premiums taxes or any other moneys whatsoever payable by the Borrower and / or the Mortgagor hereunder and in relation to any other matter hereunder whether any action or other judicial proceeding to enforce such payment has been taken or not.

PROVIDED ALWAYS that all moneys expended by the Mortgagee as aforesaid shall carry interest at the appropriate rate and until payment the same with interest as aforesaid shall be a charge on the property.

5. The Borrower and the Mortgagor hereby further jointly and severally covenant with the Mortgagee that during the continuance of this security neither the Borrower nor the Mortgagor shall at any time without the prior consent in writing of the Mortgagee:-

(a) except for Permitted Liens, create or attempt to create or permit to subsist any mortgage or charge upon or permit any lien or other encumbrance to exist or arise on or affect any part of the properties hereby secured;

(b) except for loans and indebtedness permitted pursuant to Section 4.01(1) of the Citicorp Loan Agreement, apply for any loan or incur any further indebtedness or borrow any sums of money in addition to the facilities hereby secured;

(c) except for loans and indebtedness permitted pursuant to Section 4.01(1) of the Citicorp Loan Agreement, permit any subsidiaries now or hereafter wholly owned or controlled by the Borrower or the Mortgagor to increase any existing borrowings or enter into any new borrowings;

(d) pay any dividends or make any distributions to any of the shareholders of the Borrower;

(e) repay any loans to directors or shareholders of the Borrower or the Mortgagor or repay any inter company loans until the facilities hereby secured are

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repaid in full unless the Mortgagee shall be duly satisfied that such repayment shall not affect the Borrower’s or the Mortgagor’s ability to fulfill its obligations under the Loan Agreements or this Debenture Mortgage;

(f) sell any accounts receivables with or without recourse(other than sells in the ordinary course of business for collection of past due accounts receivables);

(g) enter into any sale or leaseback transactions for the sale or leaseback of any of the assets of the Borrower or of the Mortgagor;

(h) except as permitted pursuant to the Loan Agreements, make or permit to be made any loans, investments or advances;

(i) except as permitted pursuant to the Loan Agreements, consolidate with or amalgamate into any other company or society or sell all or substantially all of its assets or permit any other company or society to amalgamate into the Borrower or the Mortgagor or acquire all or a substantial part of the assets or capital stock of the Borrower or of the Mortgagor or of any other person, firm or company if such acquisition is analogous in either purpose or effect to a consolidation or amalgamation.

6.1 If any Event of Default shall occur and be continuing then:

(a) the Lenders shall cease to be under any further commitment to the Borrower and the Mortgagor and may at any time thereafter (notwithstanding any conflicting agreement or arrangement) declare the Secured Liabilities (or such of them as the Mortgagee may specify) to be immediately due and payable or payable forthwith on demand;

(b) the security hereby constituted shall become immediately enforceable and the power of sale and other powers conferred by the Property Act, CAP 236 of the Laws of Barbados (the “Property Act”) as varied or extended by this Debenture Mortgage shall become immediately exercisable without the restrictions contained in the Property Act as to the giving of notice or otherwise; and

(c) the floating charges hereby created shall immediately attach and become fixed charges.

6.2 Each of the following events shall constitute an Event of Default, that is to say:

(a) if default is made in the payment of any principal to Citicorp under the terms of the Citicorp Loan Agreement under the Citibank Promissory Note; or if

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default is made in the payment of any interest or any other sum of money payable to Citicorp under the terms of the Citicorp Loan Agreement or to Citibank under the terms of the Citibank Promissory Note or hereunder within five (5) Business Days of the date such amount become due and payable;

(b) if the Borrower fails to perform or observe any covenant, agreement or obligation on the part of the Borrower contained in the Loan Agreements beyond any cure periods provided therein;

(c) if the Borrower or the Mortgagor fails to perform or observe any covenant, agreement or obligation on the part of the Borrower or the Mortgagor contained herein and such failure continues for more than 30 consecutive days after written notice from the Mortgagee to the Borrower or the Mortgagor, as applicable, requiring such failure to be remedied;

(d) if the Borrower defaults under any loan agreement facility letter or other agreement or obligation relating to borrowing (which expression includes all liabilities in respect of accepting endorsing or discounting any notes or bills and all unpaid rental and other liabilities present and future under hire-purchase credit sale conditional sale leasing and similar agreements but excludes any trade payables and the Loan Agreements) or under any guarantee (which expression includes all contingent liabilities undertaken in respect of the obligations or liabilities of any third party including all guarantees indemnities or bonds whether constituting primary or secondary obligations or liabilities) in any case which is outstanding in a principal amount in excess of BDS$500,000.00 (or the then equivalent amount in any other currency) or if any borrowing or other money payable under any of the foregoing becomes or is capable of being declared payable prior to its stated maturity or is not paid when due or if any mortgage charge or other security now or hereafter created by the Borrower or the Mortgagor becomes enforceable or if any facility or commitment now or hereafter available to the Borrower is withdrawn or cancelled by reason of default;

(e) if an Event of Default as defined in either of the Loan Agreements occurs;

(f) if the Land or any material part thereof is compulsorily acquired or requisitioned or notice is given of the intention to compulsorily acquire the Land or any part thereof which materially and adversely affects value of the Collateral;

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(g) if any other creditor or an encumbrancer takes possession or exercises or attempts to exercise any power of sale or a receiver is appointed of the whole or any part of the property assets or revenues of the Borrower or of the Mortgagor;

(h) if the Borrower or the Mortgagor ceases or threatens to cease to carry on business or becomes insolvent;

(i) if a distress or execution or other process of law be levied upon or issued against any of the property of the Borrower or of the Mortgagor;

(j) if an order be made or an effective resolution be passed for the winding up of the Borrower or of the Mortgagor;

(k) if a receiver be appointed of any of the Borrower’s or any of the Mortgagor’s property by any court of debenture holder or trustees for debenture holders;

(1) if any security created by any mortgage of charge securing an amount in excess of BDS$250,000.00 (or the then equivalent amount in any other currency) given by the Borrower or by the Mortgagor shall become enforceable and the mortgagee or chargee thereof takes any steps to enforce the same;

(m) if any indebtedness or obligation in an amount in excess of BDS$250,000.00 (or the then equivalent amount in any other currency) of the Borrower or of the Mortgagor for the repayment or any borrowed monies shall become due and payable prior to the specified maturity date thereof due to any default hereunder or is otherwise not paid when due and payable (giving effect to all grace periods therein);

(n) except as permitted pursuant to Section 5(d) hereof, the Borrower or the Mortgagor makes any reduction in its issued share capital;

(o) if any judgment is entered up in the High Court against the Borrower or the Mortgagor or if any order made against the Borrower or the Mortgagor is not complied with or discontinued within a period of ten (10) consecutive days after entry thereof or if an execution distress sequestration or other process is levied or enforced upon or sued out against any part of the property assets or revenues of the Borrower or the Mortgagor;

(p) if the Borrower or the Mortgagor, without the prior consent in writing of the Mortgagee ceases or threatens to cease to carry on the Borrower’s or the Mortgagor’s business or any material part thereof in the normal course or changes the nature or mode of conduct of the Borrower’s or Mortgagor’s trading in any material respect;

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(q) if any material part of the property assets or revenues of the Borrower or of the Mortgagor is sold or disposed of or threatened to be sold or disposed of (otherwise than in the normal course of trading) whether in a single transaction or a number of transactions or is nationalised compulsorily acquired seized or appropriated;

(r) if any necessary consent to the user of the property hereby charged for its existing use is revoked or withdrawn or if any notice served with a view to forfeiture of any leasehold premises hereby charged pursuant to Section 167 of the Property Act Chapter 236 (“the Property Act”) is not complied with within the period specified;

(s) if any licence authorisation consent or registration at any time necessary or desirable to enable the Borrower to comply with the Borrower’s obligations to the Mortgagee or to the Lenders or any one of them, or if any licence authorisation consent or registration at any time necessary or desirable to enable the Mortgagor to comply with the Mortgagor’s obligations to the Mortgagee, or to carry on the Borrower’s or the Mortgagor’s business in the normal course shall be revoked withheld or materially modified or shall fail to be granted or perfected or shall cease to remain in full force and effect;

(t) if any representation warranty or undertaking furnished to the Lenders or the Mortgagee at or prior to the date of this Debenture Mortgage or from time to time thereafter made to the Mortgagee by the Borrower or the Mortgagor is or becomes incorrect or misleading in a material respect.

(u) if either the Borrower or the Mortgagor:

(i) becomes insolvent, or commits any act of bankruptcy, within the meaning of the Bankruptcy and Insolvency Act, 2001 of the Laws of Barbados; or

(ii) commences negotiations with any one or more of its creditors with a view to the general readjustment or rescheduling of all or a material portion of its indebtedness; or

(iii) makes a general assignment for the benefit of or a composition with its creditors; or

(iv) makes, or gives notice of its intention to make, a proposal within the meaning of Section 12 of the Bankruptcy and Insolvency Act, 2001, or if any such proposal is made in respect of the either of them.

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(v) if any guarantee indemnity or other security for any of the Secured Liabilities fails or ceases in any respect to have full force and effect or to be continuing or is terminated or disputed or in the opinion of the Mortgagee is in jeopardy invalid or unenforceable or if this Debenture Mortgage or the security constituted by it is disputed or in the opinion of the Mortgagee is in jeopardy;

(w) if at any time it is or becomes unlawful for the Borrower or the Mortgagor to perform or comply with any or all of its obligations under this Debenture Mortgage or any other agreement between the Borrower and the Mortgagee or any of such obligations of the Borrower or the Mortgagor are not or cease to be legal valid binding and enforceable;

(x) if control (within the meaning of Section 441 of the Companies Act, CAP 308 of the Laws of Barbados) or the power to take control of the Mortgagor or the Borrower is acquired by any person or company or group of affiliates (as defined in such Act) not having control of it at the date of this Debenture Mortgage (unless with the prior consent in writing of the Mortgagee); or

(y) if in the opinion of the Mortgagee a material adverse change occurs in the financial condition results of operations or business of the Mortgagor or the Borrower.

7. It is hereby agreed and declared as follows:

7.01 The security hereby created shall be without prejudice and in addition to any other security or securities of whatever nature and howsoever effected which the Mortgagee may now or from time to time hereafter hold or take from or against the Borrower and/or the Mortgagor.

7.02 This Debenture Mortgage is given by the Borrower and the Mortgagor to the Mortgagee and is accepted and taken by the Mortgagee as a continuing and running security for payment to the Lenders of all money which is now owing or at any time hereafter may be owing by the Borrower or the Mortgagor to the Mortgagee or to the Lenders or for which the Borrower and/or the Mortgagor may be or become liable to the Mortgagee or the Lenders together with interest thereon at the Citicorp Agreed Rate or the Citibank Agreed Rate, as the case may be, from the time or times of the same having been advanced lent or paid as aforesaid, commission, banking charges, law and other costs, charges and expenses, and notwithstanding the money and liabilities hereby secured or intended to be secured may from time to time or at any time or times hereafter be reduced by payments or otherwise yet the Mortgagee may at any time or times hereafter recover under this

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Debenture Mortgage any sum or sums which may be found to be due and owing by the Borrower and/or the Mortgagor to the Mortgagee or to the Lenders on a final settlement of account and interest thereon as aforesaid, commission, banking charges, law and other costs, charges and expenses.

7.03 The moneys hereby secured or expressed and intended so to be shall be limited for principal in accordance with the provisions of the Stamp Duty Act, Cap. 91 of the Laws of Barbados and any statutory modification thereof subsisting from time to time during the continuance of this security. The Mortgagee shall be at liberty at any time and from time to time during the continuance of this security in its absolute discretion as it may think fit without reference to the Mortgagor and/or the Borrower to increase the stamp duty already paid thereon to cover any existing or proposed increase in the total indebtedness and liability of the Borrower and/or the Mortgagor to the Mortgagee or to the Lenders expressed to be secured hereunder in excess of the amount for which this Debenture Mortgage is currently stamped if the same is insufficiently stamped for such purpose and all legal costs, charges and expenses incurred by the Mortgagee in connection with such increase of stamp duty shall be deemed to be properly incurred by the Mortgagee.

8. (1) At any time after an Event of Default under Section 6.2 has occurred, the Mortgagee may in writing under the hand of any attorney or manager for the time being of the Mortgagee or any person authorised by the Mortgagee in writing appoint any person or persons (whether an officer of the Mortgagee or not) to be a receiver or receivers or receiver/manager (hereinafter usually referred to as a “receiver’) as to remuneration or otherwise the Mortgagee shall think fit and remove any receiver so appointed and appoint another or others in his or their place.

(2) Any receiver so appointed shall be deemed to be the agent of the Borrower and of the Mortgagor (which shall alone be responsible for his or their acts or defaults and for his or their remuneration) and the Mortgagee and any receiver so appointed shall have power at any time after an Event of Default under Section 6.2 has occurred (and without obtaining any further consent of or giving any notice to the Borrower or the Mortgagor):

(a) to take possession of collect and get in any property hereby charged and for that purpose to take any proceedings in the name of the Borrower and / or the Mortgagor or otherwise as may seem expedient;

(b) to carry on manage or concur in carrying on and managing the business of the Borrower and / or the Mortgagor or any part thereof and for any of those purposes to raise or borrow any money that may be required upon the security of the whole or any part of the property hereby charged in priority to this Deed or otherwise;

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(c) to sell or concur in selling (but where necessary with the leave of the Court) and to let or concur in letting and to accept surrenders or leases or tenancies of all or any of the property hereby charged or mortgaged and to carry any such sale letting or surrender into effect by conveying leasing letting or accepting surrenders in the name and on behalf of the Borrower and / or the Mortgagor or other the estate owner Any such sale may be for cash debentures or other obligations shares stock or other valuable consideration and may be payable in a lump sum or by installments spread over such period as the receiver shall think fit. Plant machinery and other fixtures may be severed and sold separately from the property containing them without the consent of the Borrower or the Mortgagor being obtained thereon;

(d) to make any arrangement or compromise which he or they shall think expedient;

(e) to make and effect all repairs, renewals and any improvements of the Borrower’s and / or the Mortgagor’s plant machinery and effects and maintain or renew all insurances;

(f) to appoint managers, agents, officers, servants and workmen for any of the aforesaid purposes at such salaries and for such periods as the receiver may determine;

(g) to do all such other acts and things as may be considered to be incidental and conducive to any of the matters or powers aforesaid and which he or they lawfully may or can do as agent for the Borrower and the Mortgagor.

(3) All monies received by such receiver shall after providing for his or their remuneration and for all costs and expenses in carrying on the business of the Borrower and / or the Mortgagor or the sale or disposal of the whole or any part of the property hereby charged or mortgaged be applied in providing for:-

(a) all rates rents taxes assessments and outgoings whatever affecting the property hereby charged;

(b) all annual sums or other payments and the interest on all principal sums (if any) having priority to this security;

(c) the premiums on fire or other insurance and the cost of executing repairs, renewals and improvements of the Borrower’s and / or the Mortgagor’s plant, machinery and effects; and

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(d) in or towards satisfaction of the money hereby secured and the receiver shall pay the residue (if any) of the monies received by him to the Borrower and / or the Mortgagor.

(4) In appointing or refraining from appointing a receiver the Mortgagee shall not incur any liability to the receiver of the Borrower or the Mortgagor or otherwise.

9. It is hereby agreed and declared as follows:-

(l) All moneys payable hereunder by the Borrower and / or the Mortgagor to the Lenders or any one of them shall be paid to the Lenders or any one of them without any deductions whatsoever at the Mortgagee’s principal place of business in Barbados or at such other place in Barbados as Lenders or any one of them may from time to time designate for the purpose.

(2) Any notice hereunder shall be deemed to be duly served in the case of notice to the Borrower or the Mortgagor if it is addressed to the Borrower or the Mortgagor at and left at or posted by registered post to the property or the Borrower’s or the Mortgagor’s last address known to the Mortgagee and in the case of notice to Mortgagee if it is addressed to the Mortgagee at and left at or posted by registered post to the Mortgagee’s principal place of business in Barbados or the place if any for the time being designated in writing by the Mortgagee for the payment of moneys hereunder and any such notice which is posted as aforesaid shall be deemed to have been served forty-eight (48) hours after the posting thereof.

(3) No delay in the exercise or omission to exercise any right power or remedy available to the Mortgagee upon any default under this Debenture Mortgage shall impair such right power or remedy or be construed as a waiver thereof or as acquiescence in such default nor shall any act or omission of the Mortgagee in respect of any default or any acquiescence by the Mortgagee in any default affect or impair any right power or remedy of the Mortgagee in respect of any other default.

(4) Neither the Borrower nor the Mortgagor shall be entitled to exercise any powers of leasing or accepting surrenders of leases given by any Statute in that behalf except with the consent in writing of the Mortgagee.

(5) The provisions of any Statute restricting the mortgagee’s right of consolidation shall not apply to this Debenture Mortgage.

(6) The taking of a judgment or judgments on any covenant or covenants herein contained shall not operate as a merger of the said covenant or covenants or affect the Lenders’ right to interest at the rate and time herein set forth.

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10. The Borrower and the Mortgagor hereby irrevocably appoint the Mortgagee and all others deriving title under the Mortgagee to be the attorney and attorneys of the Borrower and the Mortgagor for it and in its name and on its behalf and as its act and deed or otherwise to sign seal and deliver and otherwise perfect any conveyance by the Mortgagee as mortgagee in any exercise of the power of sale vested in it by virtue of these presents and/or the provisions of the Property Act Chapter 236 of the Laws of Barbados and for that purpose to act by the Mortgagee’s own proper officers agents and attorneys.

10.1 The Borrower hereby certifies by its being a party to these presents that it is a company resident in Barbados for the purposes of the Exchange Control Act of Barbados (as amended).

10.2 The Mortgagor hereby certifies by its being a party to these presents that it is a company resident in Barbados for the purposes of the Exchange Control Act of Barbados (as amended).

IN WITNESS WHEREOF this Debenture Mortgage is executed under Seal in the manner herein appearing.

THE FIRST SCHEDULE HEREINBEFORE REFERRED TO

ALL THAT land (formerly part of a larger area said to contain 20234.27 square metres but found by subsequent survey to contain 20109 square metres or thereabouts itself formerly part of the lands of the Lodge Plantation) situate at the corner of Lodge Road and Highway 2 in the parish of Saint Michael in Barbados containing by admeasurement 16,985 square metres or thereabouts and made up of two parcels of land containing 3,488 and 13,497 square metres and being the lots numbered 2 and 3 respectively delineated and shown on a plan certified on the 2^nd day of March 2001 by Michael H. Hutchinson, Land Surveyor ABUTTING AND BOUNDING on a road 7.14 metres wide on lands now or late of Gardiner Austin & Company Ltd. on a public road called Highway 2 on another public road called Lodge Road and on a road 6.23 metres wide or howsoever else the same may abut and bound Together with the buildings and erections thereon.

20

THE SECOND SCHEDULE HEREINBEFORE REFERRED TO

The easements restrictive covenants and conditions contained or mentioned in a Conveyance dated the 16^th day of July, 1971 (recorded in the Registration Office of Barbados on the 17^th day of December, 1971 as Deed Number 6314) and made between Cyril A. Thornton et al of the One Part and Rocklyn Bus Co. Limited of the Other Part.

THE THIRD SCHEDULE HEREINBEFORE REFERRED TO

Debenture/Mortgage dated the 7^th day of May, 2001 (recorded in the Registration Office of Barbados on the 5^th day of July, 2001 Deed Number 4915) and made between Regan Lodge Inc. and Citicorp Merchant Bank Limited.

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THE COMMON SEAL of PSMT (BARBADOS) INC. was hereto affixed by Atulkumar Chandubhai Patel in the presence of:-		)
		)
		)
			PSMT (BARBADOS) INC. CNR OF LODGE HILL & GREEN HILL ROAD WARRENS, ST MICHAEL BB12001
Witness:	/s/ SHARON C.I. CARTER
Name:	SHARON C.I. CARTER
Address:	22 EALING PARK, STAGE 1 CHRIST CHURCH.
Occupation:	ATTORNEY-AT-LAW
THE COMMON SEAL of REGAN LODGE INC. was hereto affixed by Atulkumar Chandubhai Patel in the presence of:-		)
		)
		)

Witness: Name: Address: Occupation:	/s/ SHARON C.I. CARTER SHARON C.I. CARTER 22 EALING PARK, STAGE 1 CHRIST CHURCH. ATTORNEY-AT-LAW

22

23

DATED 2007

PSMT (BARBADOS) INC.

AND

REGAN LODGE INC.

TO

CITICORP MERCHANT BANK LIMITED

DEBENTURE AND DEED OF CHARGE

BY WAY OF LEGAL MORTGAGE

LEX CARIBBEAN

ATTORNEYS-AT-LAW

EX-31.1

Exhibit 31.1

Certification

I, Robert E. Price, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PriceSmart, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 9, 2008	/s/ ROBERT E. PRICE
		Robert E. Price
		Chief Executive Officer
		(Authorized Officer)

EX-31.2

Exhibit 31.2

Certification

I, John M. Heffner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of PriceSmart, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 9, 2008	/s/ JOHN M. HEFFNER
		John M. Heffner
		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of PriceSmart, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended February 28, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 9, 2008	/s/ ROBERT E. PRICE
		Robert E. Price
		Chief Executive Officer
		(Authorized Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of PriceSmart, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended February 28, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 9, 2008	/s/ JOHN M. HEFFNER
		John M. Heffner
		Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.