Exhibit 10.19(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 23rd day of July, 1999, by and between PriceSmart, Inc., a Delaware
corporation ("Employer"), and Xxxxx X. Xxxxxxxxx ("Executive").
RECITALS
A. Employer desires to employ Executive as Executive Vice President and
Chief Financial Officer of Employer.
B. Executive desires to accept such position upon the terms and subject to
the conditions herein provided.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
EMPLOYMENT AND DUTIES
1.1 POSITION AND DUTIES. Executive shall serve as Executive Vice President
and Chief Financial Officer of Employer. Executive shall have such duties and
authority as are customary for, and commensurate with, such position, and such
other related duties and authority as may from time to time be delegated or
assigned to him by the Chief Executive Officer or the Board of Directors of
Employer. Executive shall discharge his duties in a diligent and professional
manner.
1.2 OUTSIDE BUSINESS ACTIVITIES PRECLUDED. During his employment,
Executive shall devote his full energies, interest, abilities and productive
time to the performance of this Agreement. Executive shall not, without the
prior written consent of Employer, perform other services of any kind or engage
in any other business activity,
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with or without compensation, that would interfere with the performance of his
duties under this Agreement. Executive shall not, without the prior written
consent of Employer, engage in any activity adverse to Employer's interests.
1.3 PLACE OF EMPLOYMENT. Unless the parties agree otherwise in writing,
during the Employment Term (as defined in Section 3.1 below) Executive shall
perform the services he is required to perform under this Agreement at
Employer's offices located in San Diego, California; provided, however, that
Employer may from time to time require Executive to travel temporarily to other
locations on Employer's business.
ARTICLE II
COMPENSATION
2.1 SALARY. For Executive's services hereunder, Employer shall pay as base
salary to Executive the amount of $190,000 during each year of the Employment
Term. Said salary shall be payable in equal installments in conformity with
Employer's normal payroll period. Executive's salary shall be reviewed by
Employer's Board of Directors from time to time at its discretion, and Executive
shall receive such salary increases, if any, as Employer's Board of Directors,
in its sole discretion, shall determine.
2.2 BONUS. In addition to the salary set forth in Section 2.1 above,
during the Employment Term Executive shall participate in Employer's bonus plan
for executive management personnel. All decisions regarding said bonus plan
shall be made in the sole discretion of Employer's Board of Directors, or the
Compensation Committee thereof.
2.3 OTHER BENEFITS. Executive shall be entitled to participate in and
receive benefits under Employer's standard company benefits practices and plans
for officers of Employer, including medical insurance, long-term disability,
life insurance, profit sharing and retirement plan, and Employer's other plans,
subject to and on a basis consistent with the terms, conditions and overall
administration of such practices and plans.
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Additionally, Executive shall be entitled to three weeks' paid vacation each
year, which will accrue and be paid out in conformity with Employer's normal
vacation pay practices; Employer may in its sole discretion grant such
additional compensation or benefits to Executive from time to time as Employer
deems proper and desirable.
2.4 EXPENSES. During the term of his employment hereunder, Executive shall
be entitled to receive prompt reimbursement for all reasonable business-related
expenses incurred by him, in accordance with the policies and procedures from
time to time adopted by Employer, provided that Executive properly accounts for
such business expenses in accordance with Employer policy. Additionally,
Executive shall be entitled to a relocation allowance of up to $25,000. The
allowance may be used under the following three criteria: (i) closing expenses
on Executive's home in Seattle, Washington; (ii) moving expenses; and (iii)
temporary accommodation expenses. Expenses of this type will be reimbursed to
Executive upon Executive's submission of the original receipts. Should
Executive's employment with the Employer be terminated (voluntarily by
Executive) within the first year of the Employment Term, Executive will be
responsible for reimbursing Employer in the amount equal to what was reimbursed
to Executive.
2.5 STOCK OPTION PLAN. Employer has adopted The 1997 Stock Option Plan of
PriceSmart, Inc. and The 1998 Equity Participation Plan of PriceSmart, Inc. The
parties anticipate that Executive will receive options to purchase 50,000 shares
of Employer's Common Stock, exercisable at a price equal to the fair market
value of the Common Stock at the time of grant, with such options vesting at the
rate of twenty percent (20%) per year over a period of five (5) years and
expiring six (6) years from the date of grant. Such anticipated grant of options
to purchase 50,000 shares of Common Stock shall be subject in all respects to
the sole discretion of the Compensation Committee of Employer's Board of
Directors, as set forth in the applicable Plan. In
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addition, such options shall be granted in accordance with and subject to all
other terms, conditions and restrictions set forth in the applicable Plan.
2.6 STOCK LOAN. Executive shall be entitled to receive a loan from
Employer, in the amount of $150,000, to be used by Executive to purchase
Employer's Common Stock (at its then-current fair market value). Executive may
borrow said funds at any time during the first thirty (30) days of the
Employment Term. The loan shall be a fully-recourse loan, secured by the
purchased stock, and shall bear interest at the rate of [6%]; interest payments
shall be made by Executive twice per month, with all principal and any remaining
interest due and payable in six years.
2.7 DEDUCTIONS AND WITHHOLDINGS. All amounts payable or which become
payable under any provision of this Agreement shall be subject to any deductions
authorized by Executive and any deductions and withholdings required by law.
ARTICLE III
TERM OF EMPLOYMENT
3.1 TERM. The term of Executive's employment hereunder shall commence on
August 13, 1999 and shall continue until August 12, 2001, unless sooner
terminated or extended as hereinafter provided (the "Employment Term").
3.2 EXTENSION OF TERM. The Employment Term may be extended by written
amendment to this Agreement signed by both parties.
3.3 EARLY TERMINATION BY EXECUTIVE. Executive may terminate this Agreement
at any time by giving Employer written notice of his resignation ninety (90)
days in advance; provided, however, that the Board of Directors may determine
upon receipt of such notice that the effective date of such resignation shall be
immediate or some time prior to the expiration of the ninety-day notice period.
Executive's employment shall terminate as of the effective date of his
resignation as determined by the Board of Directors.
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3.4 TERMINATION FOR CAUSE. Prior to the expiration of the Employment Term,
Executive's employment may be terminated for Cause by Employer, immediately upon
delivery of notice thereof. For these purposes, termination for "Cause" shall
mean termination because of Executive's (a) repeated and habitual failure to
perform his duties or obligations hereunder; (b) engaging in any act that has a
direct, substantial and adverse effect on Employer's interests; (c) personal
dishonesty, willful misconduct, or breach of fiduciary duty involving personal
profit; (d) intentional failure to perform his stated duties; (e) willful
violation of any law, rule or regulation which materially adversely affects his
ability to discharge his duties or has a direct, substantial and adverse effect
on Employer's interests; (f) any material breach of this contract by Executive;
or (g) conduct authorizing termination under Cal. Labor Code Section 2924.
3.5 TERMINATION DUE TO DEATH OR DISABILITY. Executive's employment
hereunder shall terminate immediately upon his death. In the event that by
reason of injury, illness or other physical or mental impairment Executive shall
be: (a) completely unable to perform his services hereunder for more than three
(3) consecutive months, or (b) unable to perform his services hereunder for
fifty percent (50%) or more of the normal working days throughout six (6)
consecutive months, then Employer may terminate Executive's employment hereunder
immediately upon delivery of notice thereof. Executive's beneficiaries, estate,
heirs, representatives, or assigns, as appropriate, shall be entitled to the
proceeds, if any, due under any Employer-paid life insurance policy held by
Executive, as determined by and in accordance with the terms of any such policy,
as well as any vested benefits and accrued vacation benefits.
ARTICLE IV
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BENEFITS AFTER TERMINATION OF EMPLOYMENT
4.1 BENEFITS UPON TERMINATION. Upon termination of this Agreement under
Section 3.3 (Early Termination by Executive), Section 3.4 (Termination for
Cause) or Section 3.5 (Termination Due to Death or Disability), all salary and
benefits of Executive hereunder shall cease immediately. Upon termination of
this Agreement by Employer, at any time during the period August 13, 1999 to
August 12, 2000, for any reason other than those set forth in Section 3.4 or
Section 3.5, Executive shall be entitled to the continuation of Executive's base
salary for the remainder of the Employment Term, payable in equal installments
in conformity with Employer's normal payroll period. Upon termination of this
Agreement by Employer, at any time after August 12, 2000, for any reason other
than those set forth in Section 3.4 or Section 3.5, Executive shall be entitled
to the continuation of Executive's base salary for one (1) year, payable in
equal installments in conformity with Employer's normal payroll period. If this
Agreement is not terminated, then, upon expiration of the Employment Term, and
if Executive's employment by Employer does not thereafter continue upon mutually
agreeable terms, Executive shall be entitled to continuation of Executive's base
salary for one (1) year, payable in equal installments in conformity with
Employer's normal payroll period; provided, however, that Employer's obligation
to pay such installments after expiration of the Employment Term shall be
reduced by the amount of employment compensation (if any) received by Executive
from a subsequent employer of Executive during said one (1) year. During the
period of this severance pay, Executive shall cooperate with Employer in
providing for the orderly transition of Executive's duties and responsibilities
to other individuals, as reasonably request by Employer.
4.2 RIGHTS AGAINST EMPLOYER. The benefits payable under this Article IV
are exclusive, and no amount shall become payable to any person (including the
Executive) by reason of termination of employment for any reason, with or
without Cause, except
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as provided in this Article IV. Employer shall not be obligated to segregate any
of its assets or procure any investment in order to fund the benefits payable
under this Article IV.
ARTICLE V
CONFIDENTIAL INFORMATION
5.1 Executive acknowledges that Employer holds as confidential, and
Executive may have access to during the Employment Term, certain information and
knowledge respecting the intimate and confidential affairs of Employer in the
various phases of its business, including, but not limited to, trade secrets,
data and know-how, improvements, inventions, techniques, marketing plans,
strategies, forecasts, pricing information, and customer lists. During his
employment by Employer and thereafter, Executive shall not directly or
indirectly disclose such information to any person or use any such information,
except as required in the course of his employment during the Employment Term.
All records, files, keys, documents, and the like relating to Employer's
business, which Executive shall prepare, copy or use, or come into contact with,
shall be and remain Employer's sole property, shall not be removed from
Employer's premises without its written consent, and shall be returned to
Employer upon the termination of this Agreement.
ARTICLE VI
GENERAL PROVISIONS
6.1 ENTIRE AGREEMENT. This Agreement contains the entire understanding and
sole and entire agreement between the parties with respect to the subject matter
hereof, and supersedes any and all prior agreements, negotiations and
discussions between the parties hereto with respect to the subject matter
covered hereby. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting on
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behalf of any party, which are not embodied herein, and that no other agreement,
statement or promise not contained in this Agreement shall be valid or binding.
This Agreement may not be modified or amended by oral agreement, but rather only
by an agreement in writing signed by Employer and by Executive which
specifically states the intent of the parties to amend this Agreement.
6.2 ASSIGNMENT AND BINDING EFFECT. Neither this Agreement nor the rights
or obligations hereunder shall be assignable by the Executive. Employer may
assign this Agreement to any successor or affiliate of Employer, and upon such
assignment any such successor or affiliate shall be deemed substituted for
Employer upon the terms and subject to the conditions hereof. In the event of
any merger of Employer or the transfer of all (or substantially all) of
Employer's assets, the provisions of this Agreement shall be binding upon, and
inure to the benefit of, the surviving business entity or the business entity to
which such assets shall be transferred.
6.3 ARBITRATION. The parties hereto agree that any and all disputes
(contract, tort, or statutory, whether under federal, state or local law)
between Executive and Employer (including Employer's employees, officers,
directors, stockholders, members, managers and representatives) arising out
of Executive's employment with Employer, the termination of that employment,
or this Agreement, shall be submitted to final and binding arbitration. Such
arbitration shall take place in the County of San Diego, and may be compelled
and enforced according to the California Arbitration Act (Code of Civil
Procedure Sections 1280 ET SEQ.). Unless the parties mutually agree
otherwise, such arbitration shall be conducted before the American
Arbitration Association, according to its Commercial Arbitration Rules.
Judgment on the award the arbitrator renders may be entered in any court
having jurisdiction over the parties. Arbitration shall be initiated in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association.
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6.4 NO WAIVER. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed or be construed as a further or continuing waiver of any such term,
provision or condition, or as a waiver of any other term, provision or condition
of this Agreement.
6.5 GOVERNING LAW; RULES OF CONSTRUCTION. This Agreement has been
negotiated and executed in, and shall be governed by and construed in accordance
with the laws of, the State of California. Captions of the several Articles and
Sections of this Agreement are for convenience of reference only, and shall not
be considered or referred to in resolving questions of interpretation with
respect to this Agreement.
6.6 NOTICES. Any notice, request, demand or other communication required
or permitted hereunder shall be deemed to be properly given when personally
served in writing, or when deposited in the United States mail, postage
pre-paid, addressed to Employer or Executive at his last known address. Each
party may change its address by written notice in accordance with this Section.
Address for Employer:
PriceSmart, Inc.
0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxx, XX. 00000
Address for Executive:
0000 X. Xxxx Xxxxxxxxx Xxxx XX
Xxxxxxxx, XX. 00000
6.7 SEVERABILITY. The provisions of this Agreement are severable. If any
provision of this Agreement shall be held to be invalid or otherwise
unenforceable, in whole or in part, the remainder of the provisions or
enforceable parts hereof shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
6.8 ATTORNEYS' FEES. In the event of any arbitration or litigation brought
to enforce or interpret any part of this Agreement, the prevailing party shall
be entitled to
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recover reasonable attorneys' fees, as well as all other litigation costs and
expenses as an element of damages.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
EMPLOYER EXECUTIVE
PRICESMART, INC. Name: /s/ XXXXX X. XXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
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