EXHIBIT 99
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
as of December 15, 1997, by and between PriceSmart, Inc., a Delaware
corporation ("Employer"), and Xxxxxxx X. Xxxxxxx ("Executive").
RECITALS
A. Employer desires to employ Executive as President and Chief
Executive 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 President and Chief
Executive 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 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 the Board of Directors, perform other services of any
kind or engage in any other business activity, with or without compensation,
that would interfere with the performance of his duties under this Agreement.
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Executive shall not, without the prior written consent of the Board of
Directors, 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
from time to time Executive may be required 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 $225,000 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 (or the Board's Compensation
Committee) at the end of the first year of the Employment Term, and Executive
shall receive such salary increases, if any, as Employer's Board of Directors
(or the Board's Compensation Committee), in its sole discretion, shall
determine.
2.2 BONUS. On the first day of the Employment Term, Executive shall
receive the sum of $50,000. In addition, during the Employment Term Executive
shall be entitled to participate in Employer's Corporate Central Bonus Plan.
All decisions regarding Executive's participation in said Bonus Plan shall be
made in the sole discretion of Employer's Board of Directors (or the Board's
Compensation Committee).
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. Executive shall be entitled
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to a paid vacation of three (3) weeks each year, which will accrue and be
paid out in conformity with Employer's normal vacation pay practices.
Employer's Board of Directors (or the Board's Compensation Committee) may
from time to time in its sole discretion grant such additional compensation
or benefits to Executive as it 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.
2.5 STOCK OPTION PLAN. Employer has adopted The 1997 Stock Option Plan
of PriceSmart, Inc. (the "Stock Plan"). On the date the Employment Term
commences Executive will be granted options to purchase 100,000 shares of
Employer's Common Stock, exercisable at the price of $17.00 per share of Common
Stock, 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 grant of options to purchase 100,000 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 Stock Plan. In addition,
such options shall be granted in accordance with and subject to all other
terms, conditions and restrictions set forth in the Stock Plan.
2.6 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.
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ARTICLE III
TERM OF EMPLOYMENT
3.1 TERM. The term of Executive's employment hereunder shall commence on
January 12, 1998 and shall continue until January 11, 2000 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 one
hundred twenty (120) 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
one hundred twenty day notice period. Executive's employment shall terminate
as of the effective date of his resignation as determined by the Board of
Directors.
3.4 TERMINATION FOR CAUSE. Prior to the expiration of the Employment
Term, Executive's employment may be terminated for Cause by the Board of
Directors of 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.
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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
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 for any reason other than those set forth in Section
3.4 or Section 3.5, 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. 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 cease concurrently with Executive
having commenced comparable employment with, or Executive receiving comparable
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compensation from, another employer. 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
requested 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 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
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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 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.
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Arbitration shall be initiated in accordance with the Commercial Arbitration
Rules of the American Arbitration Association.
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:
________________________
________________________
________________________
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.
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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 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
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PRICESMART, INC. Name: ____________________
Xxxxxxx X. Xxxxxxx
By: _______________________
Name:______________________
Title: ____________________
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