PSMT 8-K
Pricesmart Inc (PSMT)
8-K
2025-05-09
For: 2025-05-08
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2025
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858 ) 404-8800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2)(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(c)
PriceSmart, Inc., a Delaware corporation (“PriceSmart” or the “Company”), today announced the appointment of Gualberto Hernandez as Executive Vice President and Chief Financial Officer effective June 1, 2025. PriceSmart’s current Executive Vice President and Chief Financial Officer Michael McCleary resigned by mutual agreement with the Company, but will continue to serve as an Executive Vice President of the Company through September 30, 2025. Thereafter, Mr. McCleary has agreed to provide consulting support of up to 40 hours per month for three months following his resignation.
Mr. Hernandez has served as Vice President Finance & Strategy for Latin America for The Estée Lauder Companies Inc. since January 2016. During that tenure, he also served as Vice President and General Manager for Latin America for La Mer, an Estee Lauder Companies’ brand, from 2020 to 2023 and since July 2024 as Vice President Finance for Emerging Markets. Prior to Estée Lauder, Mr. Hernandez served as Chief Operating Officer (Finance and Operations) Latin America for Sephora from November 2013 to January 2016. Mr. Hernandez received a B.A. in accountancy from Universidad Nacional de Litoral and an MBA from Universidad del CEMA. Mr. Hernandez is 61 years old.
There is no arrangement or understanding pursuant to which Mr. Hernandez was appointed as Executive Vice President and Chief Financial Officer. There are no related party transactions between the Company and Mr. Hernandez that are reportable under Item 404(a) of Regulation S-K.
(e)
Upon commencement of his employment, Mr. Hernandez will receive (i) an annual base salary of $720,000; (ii) participation in the Company’s annual incentive program (with an annual target bonus opportunity of $180,000); (iii) a stock award having an initial value equal to $4,500,000, with an annual vesting targeted at $900,000 per year; (iv) a cash sign-on bonus of $150,000; and (v) relocation benefits. The sign-on bonus is subject to forfeiture, in whole or in part, under certain circumstances if Mr. Hernandez does not complete two years of employment.
Mr. Hernandez’s initial stock award, which is anticipated to be made in the first quarter of fiscal year 2026, will include an additional prorated amount based on time served in the position during the last three months of fiscal year 2025. Mr. Hernandez’s initial stock award will consist entirely of time-vesting restricted stock awards (RSAs) for the first four years of vesting and 50% RSA and 50% performance stock units (PSUs) for the fifth year of vesting. The performance component of the PSUs will be achieved based on the Company’s actual performance for fiscal year 2026 compared to metrics that will be established by the Compensation Committee for fiscal year 2026, but the PSUs will not vest until the continued service component of vesting has been achieved at the end of the fifth year of vesting (unless accelerated in accordance with the terms of the Company’s Amended and Restated 2013 Equity Incentive Award Plan, as amended, and the applicable award agreements).
The Company and Mr. Hernandez have entered into an Employment Agreement with an effective date of June 1, 2025. The Employment Agreement provides for a one-year term, which will be automatically renewed for an additional one-year term, unless either the Company or Mr. Hernandez provides at least 60 days’ notice that the Company or Mr. Hernandez, as the case may be, wishes to terminate the agreement. The Employment Agreement specifies a base salary amount of $720,000, which may be increased, but not decreased, at the Company’s discretion. The Employment Agreement states that Mr. Hernandez is eligible to participate in any bonus plan and to receive all other benefits offered to senior executives of the Company under the Company’s benefit practices and plans.
In addition to termination at the end of the term, Mr. Hernandez may terminate his employment on 60 days’ prior written notice. The Company may terminate Mr. Hernandez’s employment with cause upon immediate notice or without cause upon 30 days’ prior written notice. In the event that (i) the Company terminates Mr. Hernandez’s employment without “cause”; (ii) upon termination due to an executive’s “disability”; (iii) Mr. Hernandez terminates his employment for “good reason”; or (iv) the Company elects to cause the non-renewal of the employment agreement such that it expires at the end of its then-current term, subject to Mr. Hernandez providing a release to the Company, Mr. Hernandez will be entitled to:
•payment of an amount equal to one times his base salary then in effect, payable in 24 equal installments over a period of 12 months,
•continued contribution of the premium cost for Mr. Hernandez’s and his eligible dependents’ participation in the Company’s group health plan for 12 months,
•payment of any accrued but any unpaid bonus for the year prior to termination and a pro rata bonus earned for the year of termination (payable when all other bonuses are paid), and
•accelerated vesting of the number of shares subject to outstanding and unvested equity awards held by Mr. Hernandez scheduled to vest in the 12-month period following his termination; provided that as to an award that is subject to performance-based vesting requirements, (i) vesting will remain subject to satisfaction of the applicable performance criteria, and vesting will not occur unless and until the applicable performance criteria are determined to have been met, and (ii) Mr. Hernandez will not be eligible for any increases in the number of shares covered by awards subject to performance-based vesting based on corporate performance above target levels.
Upon termination of the employment agreement by reason of Mr. Hernandez’s death, Mr. Hernandez’s estate will be entitled to receive continued contribution of the premium cost for his eligible dependents’ participation in the Company’s group health plan for 12 months and payment of any accrued but any unpaid bonus for any year prior to termination and a pro rata bonus for the year of termination (payable when all other bonuses are paid).
Mr. Hernandez’s employment agreement also contains confidentiality provisions, restrictions on solicitation of employees and interference with the Company’s customers and contracts, and other terms and conditions customary to executive employment agreements.
The foregoing description is qualified in its entirety by the Employment Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
The Company issued a press release on May 9, 2025 announcing Mr. Hernandez’s appointment, a copy of which is furnished as Exhibit 99.1 to this report.
On May 8, 2025, the Company and Mr. McCleary entered into a Separation Agreement with Waiver and Release of Claims (the “Separation Agreement”) detailing the terms of his separation from the Company. Pursuant to the Separation Agreement, and in consideration of Mr. McCleary’s execution and non-revocation of a release of claims in favor of the Company and his agreement to abide by certain restrictive covenants, Mr. McCleary will receive severance equal to $721,000, payable pursuant to the Company’s regular payroll schedule over a period of one year; an annual cash incentive of up to (but in no event to exceed) $180,250, subject to the Company’s achievement of previously established corporate performance metrics for fiscal year 2025; in lieu of a prorated annual cash incentive for fiscal year 2026, a payment of $15,021, representing 1/12th of his target bonus for fiscal year 2025; and contribution by the Company of the Company’s portion of the premium cost of Mr. McCleary’s participation and that of his eligible dependents in the Company’s group health plan for a period of 18 months following termination of his employment or until he has secured other employment, whichever occurs first. In addition, subject to Mr. McCleary’s execution and non-revocation of a release of claims in favor of the Company and his continuing to provide the transition support and abide by certain restrictive covenants, Mr. McCleary will retain, and will be eligible to continue vesting in, restricted stock awards and performance stock units covering a total of 12,074 shares of the Company’s common stock through the applicable vesting dates. Mr. McCleary also will be entitled to receive the dividend equivalents for fiscal year 2025 with respect to performance stock units granted in September 2024 for which the applicable performance criteria will be measured in October 2025. During the term of the Separation Agreement and for a period of two (2) years following the later of the last severance payment by the Company to Mr. McCleary pursuant to the Separation Agreement and the last vesting of equity incentive awards, Mr. McCleary will be subject to customary customer and supplier non-solicitation and employee non-solicitation restrictions.
The foregoing description is qualified in its entirety by the Separation Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits
| Exhibit No. | Description | ||||||||||
| 10.1* | |||||||||||
| 10.2* | |||||||||||
| 99.1 | |||||||||||
| 104 | The cover page from this Current report on Form 8-K, formatted in Inline XBRL. | ||||||||||
* Management contract or compensatory plan or arrangement.
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 hereunto duly authorized.
| Date: May 9, 2025 | /s/ FRANCISCO VELASCO | ||||
| Francisco Velasco Executive Vice President, Chief Legal Officer, Registered In-House Counsel, Chief Risk & Compliance Officer and Secretary | |||||
EMPLOYMENT AGREEMENT
This Employment Agreement (“Agreement”) is made as of May 8, 2025, between PriceSmart, Inc. (the “Company”) and Gualberto Hernandez (the “Executive”).
WHEREAS, the Company desires to retain and employ the Executive, and the Executive desires to be retained and employed by the Company on the terms contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1.Position and Duties.
(a)The Executive shall serve as the Company’s Executive Vice President – Chief Financial Officer. The Executive will report to the Company’s Chief Executive Officer.
(b)The Executive shall perform those services customary to this office and such other lawful duties that the Company’s Chief Executive Officer may reasonably assign to him. The Executive shall devote all of his business time and best efforts to the performance of his duties under this Agreement and shall be subject to, and shall comply with the Company policies, practices and procedures and all codes of ethics or business conduct applicable to his position, as in effect from time to time. Notwithstanding the foregoing, the Executive shall be entitled to (i) serve as a member of the board of directors of a reasonable number of other companies, subject to the advance approval of the Chief Executive Officer, which approval shall not be unreasonably withheld, (ii) serve on civic, charitable, educational, religious, public interest or public service boards, subject to the advance approval of the Chief Executive Officer, which approval shall not be unreasonably withheld, and (iii) manage the Executive’s personal and family investments, in each case, to the extent such activities do not materially interfere, as determined by the Chief Executive Officer in good faith, with the performance of the Executive’s duties and responsibilities hereunder.
2.Term. This Agreement and the Executive’s employment pursuant to this Agreement shall begin on June 1, 2025 (the “Effective Date”) and end on the first anniversary of the Effective Date, unless terminated earlier by the Company or the Executive pursuant to Section 4 of this Agreement. This Agreement shall renew automatically for another one-year term on each anniversary of the Effective Date, unless either the Company or Executive notifies the other, in writing and in accordance with Section 17 herein, at least 60 days prior to the end of the then-current one-year term (the “Expiration Date”) that either the Company or Executive wishes to terminate this Agreement (in which case this Agreement shall terminate in accordance with Section 4(a) herein). The term of this Agreement shall begin on the Effective Date and end on the Expiration Date, unless terminated earlier by the Company or the Executive pursuant to Section 4 of this Agreement (the “Term”).
3.Compensation and Related Matters.
(a)Base Salary. During the Term, the Executive’s annual base salary shall be $720,000 (the “Base Salary”). The Base Salary shall be payable in accordance with the Company’s normal payroll procedures in effect from time to time and may be increased, but not decreased, at the discretion of the Company.
1
502470188v.1
(b)Bonus. During the Term, the Executive shall be entitled to receive a bonus (the “Bonus”) for each fiscal year, payable in cash in accordance with, and subject to the terms and conditions of, the Company’s bonus or other cash incentive program (each, a “Bonus Program”), if either (or both) are then applicable to Company executives. Any Bonus compensation payable to the Executive shall be payable in accordance with the Company’s Bonus Program (if applicable), subject to the condition that the Executive remain employed by the Company through the end of the relevant Bonus year, except as set forth in Section 5 herein.
(c)Business Expenses. During the Term, the Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by him in performing services hereunder, in accordance with the policies and procedures then in effect and established by the Company for its senior executive officers.
(d)Other Benefits. During the Term and subject to any contribution therefor required of employees of the Company, the Executive shall be eligible to participate in all equity, pension, savings and retirement plans, welfare and insurance plans, practices, policies, programs and perquisites of employment applicable generally to other senior executives of the Company, except to the extent any employee benefit plan provides for benefits otherwise provided to the Executive hereunder (e.g., bonuses and severance). Such participation shall be subject to (i) requirements of applicable law, (ii) the terms of the applicable plan documents, (iii) generally applicable Company policies, and (iv) the discretion of the Company’s Board of Directors (the “Board”) or any administrative or other committee provided for under or contemplated by such plan. The Executive shall have no recourse against the Company under this Agreement in the event that the Company should alter, modify, add to or eliminate any or all of its employee benefit plans.
(e)Vacation; Holidays. During the Term, the Executive shall be entitled to take vacation and other holiday time in accordance with the policies applicable to senior executives of the Company generally.
4.Termination. The Executive’s employment may be terminated prior to the expiration of the Term hereof and this Agreement may be terminated under the following circumstances:
(a)Expiration. Executive’s employment shall terminate on the Expiration Date following the Company’s or Executive’s written notice indicating that either the Company or Executive will not renew this Agreement in accordance with Section 2 herein.
(b)Death. The Executive’s employment shall terminate upon his death.
(c)Disability. The Company may terminate the Executive’s employment if the Executive becomes subject to a Disability. For purposes of this Agreement, “Disability” means the Executive is unable to perform the essential functions of his position, with or without a reasonable accommodation, for a period of 90 consecutive calendar days or 180 non-consecutive calendar days within any rolling 12-month period.
(d)Termination by Company for Cause. The Company may terminate the Executive’s employment for Cause. For purposes of this Agreement, “Cause” means (i) the Executive’s repeated and habitual failure to perform his duties or obligations hereunder; (ii) engaging in any act that has a direct, substantial and adverse effect on the Company’s interests; (iii) personal dishonesty, willful misconduct, or breach of fiduciary duty involving personal profit; (iv) intentional failure to perform his stated duties; (v) willful violation or reckless disregard of any law, rule or regulation which materially adversely affects his ability to discharge
2
his duties or has a direct, substantial and adverse effect on the Company’s interests; (vi) any material breach of his contract by Executive; or (vii) conduct authorizing termination under Cal. Labor Code § 2924.
(e)Termination by the Company without Cause. The Company may terminate the Executive’s employment at any time without Cause upon 30 days’ prior written notice.
(f)Termination by the Executive. The Executive may terminate his employment at any time for any reason other than a Good Reason, upon 60 days’ prior written notice.
(g)Termination by the Executive for Good Reason. The Executive may terminate his employment for Good Reason. For purposes of this Agreement, “Good Reason” means the existence of any one or more of the following conditions without the Executive’s consent, provided Executive submit written notice to the Company within 45 days that such condition(s) first arose specifying the condition(s): (i) a material change in or reduction of the Executive’s authority, duties and responsibilities, or the assignment to the Executive of duties materially inconsistent with the Executive’s position with the Company; (ii) a material reduction in the Executive’s then -current compensation; or (iii) the requirement that Executive relocate to an office location more than fifty (50) miles from San Diego, California. The Executive’s continued employment subsequent to an event that may constitute Good Reason shall not be deemed to be a waiver of his rights under this provision (subject to the 45-day time period specified herein). Upon receipt of written notice from the Executive regarding a condition constituting Good Reason, the Company shall then have 30 days to correct the condition (the “Cure Period”). If such condition is not corrected by the last day of the Cure Period, the Executive’s resignation for Good Reason shall become effective on the 31st day following the Executive’s written notice specifying the events giving rise to a Good Reason termination.
(h)The “Termination Date” means: (i) if the Executive’s employment is terminated by his death under Section 4(b), the date of his death; (ii) if the Executive’s employment is terminated on account of his Disability under Section 4(c), the date on which the Company provides the Executive a written termination notice; (iii) if the Company terminates the Executive’s employment for Cause under Section 4(d), the date on which the Company provides the Executive a written termination notice; (iv) if the Company terminates the Executive’s employment without Cause under Section 4(e), 30 days after the date on which the Company provides the Executive a written termination notice; (v) if the Executive resigns his employment without Good Reason under Section 4(f), 60 days after the date on which the Executive provides the Company a written termination notice; (vi) if the Executive resigns his employment with Good Reason under Section 4(g), the 31st day following the day the Executive provides the Company with written notice of the conditions constituting same, if the Company has not cured such conditions by the 30th day; and (vii) the Expiration Date in the event of a termination pursuant to Section 4(a).
(i)Actions on Termination Date. Executive agrees that on or before the Termination Date, Executive shall resign from all board and officer positions with the Company and its subsidiaries and affiliates, and this Agreement shall constitute an agreement to so resign upon the effective date of Executive’s termination.
(j)Access to Company Property. Upon delivery of any notice of intent not to renew or any notice of termination, the Company may, immediately or at any time after such notice, preclude Executive from having access to the Company’s facilities, equipment, computers and any related processes and property.
3
5.Compensation upon Termination.
(a)Accrued Obligations Payable upon any Termination. Upon the termination of Executive’s employment with the Company for any reason, the Company shall pay or provide to the Executive (or Executive’s estate) the following amounts through the Termination Date: any earned but unpaid Base Salary, unpaid expense reimbursements, any vested benefits the Executive may have under any employee benefit plan of the Company, and if a Bonus Program is in existence, any earned but unpaid Bonus for the fiscal year prior to the fiscal year in which the Termination Date occurs (the “Accrued Obligations”) on or before the time required by law but in no event more than 30 days after the Executive’s Termination Date.
(b)Termination by the Company without Cause, or by the Executive with Good Reason, or Due to Expiration of the Term following the Company’s Delivery to Executive of a Notice of Intent Not to Renew. If, prior to the expiration of the Term, the Executive’s employment is terminated by the Company without Cause pursuant to Section 4(e), or the Executive terminates his employment for Good Reason pursuant to Section 4(g), or the Executive’s employment terminates due to the expiration of the Term following the Company’s delivery to Executive of a notice of intent not to renew pursuant to Section 4(a), then the Executive shall be entitled to the following, subject to Section 6:
(i)If a Bonus Program is in existence, the Company shall pay the Executive the pro rata portion of the Bonus earned as of the Termination Date with respect to the bonus year in which the Termination Date occurs (the “Pro-Rata Bonus”);
(ii)Subject to the timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall continue to contribute to the premium cost of the Executive’s participation and that of his eligible dependents’ in the Company’s group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive’s eligible dependents) for a period of twelve (12) months; provided (x) the Executive pays the remainder of the premium cost of such participation by payroll deduction (if any); (y) the Executive is eligible and remains eligible for COBRA coverage; and (z) the Executive reports to the Company on a monthly basis any health care premium payments received from another employer during such 12-month period, as such amounts shall be deducted from any Company-paid COBRA premium contribution. If the reimbursement of any COBRA premiums would violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 (collectively, the “Act”) or Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”), the Company-paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent, necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code. If the Executive’s participation or that of his eligible dependents’ participation would give rise to penalties or taxes against the Company under the Act, as determined by the Company in its sole discretion, the Company shall instead make cash payments to the Executive over the same period in monthly installments in an amount equal to the Company’s portion of the monthly cost of providing such benefits under its group health plan for such period;
(iii)The Company shall pay the Executive severance in an amount equal to one times the Base Salary at the rate in effect on the Termination Date (but without giving effect to any reduction if one or all of the bases for the Executive’s resignation for Good Reason is a reduction in compensation) in 24 equal installments (totaling twelve months) as set forth in Section 6; and
4
(iv)As to each restricted stock award, restricted stock unit or similar equity award granted to the Executive by the Company that is outstanding and otherwise unvested on the Termination Date, and notwithstanding anything contained in the applicable award agreement or the Amended and Restated 2013 Equity Incentive Award Plan, as amended (or any successor equity compensation plan), to the contrary, the equity award will vest as of the Termination Date as to the number of shares scheduled to vest in the 12-month period following the Termination Date; provided that as to an award that is subject to performance-based vesting requirements, (A) vesting shall remain subject to satisfaction of the applicable performance criteria, and vesting shall not occur unless and until the applicable performance criteria are determined to have been met, and (B) Executive shall not be eligible for any increases in the number of shares covered by awards subject to performance-based vesting based on corporate performance above target levels.
(c)Termination by the Company for Disability. If, prior to the expiration of the Term, the Executive’s employment is terminated by the Company for Disability pursuant to Section 4(c), then the Executive shall be entitled to the following subject to Section 6:
(i)If a Bonus Program is in existence, the Company shall pay the Executive a Pro-Rata Bonus;
(ii)Subject to the timely election of continuation coverage under COBRA, the Company shall continue to contribute to the premium cost of the Executive’s participation and that of his eligible dependents in the Company’s group health plan (to the extent permitted under applicable law and the terms of such plan) which covers the Executive (and the Executive’s eligible dependents) for a period of 12 months; provided (x) the Executive pays the remainder of the premium cost of such participation by payroll deduction (if any); (y) the Executive is eligible and remains eligible for COBRA coverage; and (z) the Executive reports to the Company on a monthly basis any health care premium payments received from another employer during such 12-month period, as such amounts shall be deducted from any Company-paid COBRA premium contribution. If the reimbursement of any COBRA premiums would violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Act or Section 105(h) of the Code, the Company-paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent, necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code. If the Executive’s participation or that of his eligible dependents participation would give rise to penalties or taxes against the Company under the Act, as determined by the Company in its sole discretion, the Company shall instead make cash payments to the Executive over the same period in monthly installments in an amount equal to the Company’s portion of the monthly cost of providing such benefits under its group health plan for such period;
(iii)The Company shall pay the Executive severance in an amount equal to one times the Base Salary at the rate in effect on the Termination Date in 24 equal installments (totaling twelve months) as set forth in Section 6; provided, however, that the Company shall deduct from such severance any earned income (other than passive investment income) or disability payments received by Executive during such 12-month period, and as to which Executive covenants to report to the Company such income on a bi-weekly basis.
(d)Termination by the Company due to Executive’s Death. If, prior to the expiration of the Term, the Executive’s employment is terminated by the Company due to Executive’s Death pursuant to Section 4(b), then the Executive’s estate shall be entitled to the following subject to Section 6:
5
(i)If a Bonus Program is in existence, the Company shall pay the Executive a Pro-Rata Bonus;
(ii)Subject to the timely election of continuation coverage under COBRA, the Company shall continue to contribute to the premium cost of Executive’s eligible dependents’ in the Company’s group health plan (to the extent permitted under applicable law and the terms of such plan) for a period of twelve (12) months; provided (x) the Executive’s estate pays the remainder of the premium cost of such participation by payroll deduction (if any) and (y) the Executive’s dependents remain eligible for COBRA coverage. If the reimbursement of any COBRA premiums would violate the nondiscrimination rules or cause the reimbursement of claims to be taxable under the Act or Section 105(h) of the Code, the Company paid premiums shall be treated as taxable payments and be subject to imputed income tax treatment to the extent, necessary to eliminate any discriminatory treatment or taxation under the Act or Section 105(h) of the Code. If the participation of Executive’s eligible dependents would give rise to penalties or taxes against the Company under the Act, as determined by the Company in its sole discretion, the Company shall instead make cash payments to the Executive’s estate over the same period in monthly installments in an amount equal to the Company’s portion of the monthly cost of providing such benefits under its group health plan for such period.
(e)Termination by the Company Due to Cause or Due to Expiration of the Term following Executive’s Delivery to the Company of a Notice of Intent Not to Renew or by Executive without Good Reason and Without Notice. If, prior to the expiration of the Term, the Company terminates Executive’s employment for Cause pursuant to Section 4(d), or Executive’s employment terminates due to the expiration of the Term following Executive’s delivery to the Company of a notice of intent not to renew pursuant to Section 4(a) or by Executive without Good Reason and without notice pursuant to Section 4(f), then the Executive shall be entitled only to the Accrued Obligations in Section 5(a) and shall be entitled to no other benefits from the Company.
(f)Termination by Executive without Good Reason and With Notice. If, prior to the expiration of the Term, Executive terminates without Good Reason but provides the minimum of 60 days’ notice of such termination pursuant to Section 4(f), and such notice makes the Termination Date at or after the time period encompassed by the relevant bonus year, then in addition to the Accrued Obligations set forth in Section 5(a), Executive shall be entitled to Executive’s Pro-Rata Bonus, to the extent such a Bonus Program exists. In such event, the Bonus shall be paid on the date the bonuses are paid to other Executives pursuant to the applicable Bonus Program, without reference to the actual Termination Date.
6.Release; Payment. Except for the Accrued Obligations provided for in Section 5(a), any other payments and benefits provided for in Section 5 shall be conditioned on (a) the Executive’s continued compliance with the obligations of the Executive under Sections 8 and 9 and (b) the Executive or, in the event of his death, his estate, executing and delivering to the Company a full release of all claims that the Executive, his heirs and assigns may have against the Company, its affiliates and subsidiaries and each of their respective directors, officers, employees and agents, in a form reasonably acceptable to the Company, which shall include an affirmation by Executive that Executive shall fully comply with Sections 8 and 9 of this Agreement (the “Release”). The Release must become enforceable and irrevocable on or before the sixtieth (60th) day following the Termination Date. If the Executive (or his estate) fails to execute without revocation the Release, he shall be entitled to the Accrued Obligations only and no other benefits. The installments of severance provided under Sections 5(b)(iii) and 5(c)(iii) shall commence in the calendar month following the month in which the Release becomes enforceable and irrevocable. If, however, the 60-day period in which the Release must become enforceable and irrevocable begins in one year and ends in the following year, the Company
6
shall commence payment of the severance installments in the second year in the later of January and the first calendar month following the month in which the Release becomes effective and irrevocable. The first installment shall include, however, all amounts that would otherwise have been paid to the Executive between the Termination Date and the Executive’s receipt of the first installment, assuming the first installment would otherwise have been paid in the month following the month in which the Termination Date occurs. Any Pro-Rata Bonus payable in Section 5 shall be paid on the later of the date it is to be paid under the applicable Bonus Program and the date that the severance payments commence to be paid under this Section 6.
7.Section 409A Compliance.
(a)All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.
(b)To the extent that any of the payments or benefits provided for in Section 5 are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of the Code, the following interpretations apply to Section 5:
(i)Any termination of the Executive’s employment triggering payment of benefits under Section 5 must constitute a “separation from service” under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. § 1.409A-l(h) before distribution of such benefits can commence. To the extent that the termination of the Executive’s employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A- 1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company or any of its parents, subsidiaries or affiliates at the time the Executive’s employment terminates), any benefits payable under Section 5 that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section 7(b)(i) shall not cause any forfeiture of benefits on the Executive’s part, but shall only act as a delay until such time as a “separation from service” occurs.
(ii)Because the Executive is a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 5 that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (A) the business day following the six-month anniversary of the date his separation from service becomes effective, and (B) the date of the Executive’s death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the business day following the six-month anniversary of the date his separation from service becomes effective, and (B) the Executive’s death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under Section 5 of this Agreement.
(iii)It is intended that each installment of the payments and benefits provided under Section 5 of this Agreement shall be treated as a separate “payment” for purposes
7
of Section 409A of the Code. In particular, the installment severance payments set forth in Section 6 of this Agreement shall be divided into two portions. That number of installments commencing on the first payment date set forth in Section 7 of this Agreement that are in the aggregate less than two times the applicable compensation limit under Section 401(a)(17) of the Code for the year in which the Termination Date occurs (provided the termination of the Executive’s employment is also a separation from service) shall be payable in accordance with Treas. Reg. § 1.409A-l(b)(9)(iii) as an involuntary separation plan. The remainder of the installments shall be paid in accordance with Sections 7(b)(i) and (ii) above.
8.Confidentiality and Restrictive Covenants.
(a)The Executive acknowledges that:
(i)the Company (which, for purposes of this Section 8 shall include the Company and each of its subsidiaries and affiliates) operates membership warehouse clubs in Central America, Colombia and the Caribbean (the “Business”);
(ii)the Company is dependent on the efforts of a certain limited number of persons who have developed, or will be responsible for developing the Company’s Business;
(iii)the Company’s Business is international in scope;
(iv)the Business in which the Company is engaged is intensely competitive and that Executive’s employment by the Company will require that he have access to and knowledge of nonpublic confidential information of the Company and the Company’s Business, including, but not limited to, certain/all of the Company’s products, plans for creation, acquisition or disposition of products or publications, strategic and expansion plans, formulas, research results, marketing plans, financial status and plans, budgets, forecasts, profit or loss figures, distributors and distribution strategies, pricing strategies, improvements, sales figures, contracts, agreements, then existing or then prospective suppliers and sources of supply and customer lists, undertakings with or with respect to the Company’s customers or prospective customers, and patient information, product development plans, rules and regulations, personnel information and trade secrets of the Company, all of which are of vital importance to the success of the Company’s business (collectively, “Confidential Information”);
(v)the direct or indirect disclosure of any Confidential Information would place the Company at a serious competitive disadvantage and would do serious damage, financial and otherwise, to the Company’s business;
(vi)by his training, experience and expertise, the Executive’s services to the Company is special and unique;
(vii)the covenants and agreements of the Executive contained in this Section 8 are essential to the business and goodwill of the Company; and
(viii)if the Executive leaves the Company’s employ to work for a competitive business, in any capacity, it would cause the Company irreparable harm.
(b)Covenant Against Disclosure. All Confidential Information relating to the Business is, shall be and shall remain the sole property and confidential business information of the Company, free of any rights of the Executive. The Executive shall not make any use of the
8
Confidential Information except in the performance of his duties hereunder and shall not disclose any Confidential Information to third parties, without the prior written consent of the Company.
(c)Return of Company Documents. On the Termination Date or on any prior date upon the Company’s written demand, the Executive will return all memoranda, notes, lists, records, property and other tangible product and documents concerning the Business, including all Confidential Information, in his possession, directly or indirectly, that is in written or other tangible form (together with all duplicates thereof) and that he will not retain or furnish any such Confidential Information to any third party, either by sample, facsimile, film, audio or video cassette, electronic data, verbal communication or any other means of communication.
(d)Further Covenant. During the Term and through the second anniversary of the Termination Date, the Executive shall not, directly or indirectly, take any of the following actions, and, to the extent the Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, the Executive will use his best efforts to ensure that such business does not take any of the following actions:
(i)Persuade or attempt to persuade any customer of the Company to cease doing business with the Company, or to reduce the amount of business any customer does with the Company;
(ii)Take any action that interferes with the Company’s contracts or prospective contracts with its customers; or
(iii)Persuade or attempt to persuade any employee or independent contractor of the Company to leave the service of the Company, where such individual was an employee or independent contractor of the Company within one year prior to the Executive’s Termination Date.
(e)Enforcement. The Executive acknowledges and agrees that any breach by him of any of the provisions of this Section 8 (the “Restrictive Covenants”) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if the Executive breaches or threatens to commit a breach of any of the provisions of Section 8, the Company shall have the ability to seek the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity (including, without limitation, the recovery of damages): (i) the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against the Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants; and (ii) the right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by him as the result of any transactions constituting a breach of the Restrictive Covenants, and the Executive shall account for and pay over such Benefits to the Company and, if applicable, its affected subsidiaries and/or affiliates. The Executive agrees that in any action seeking specific performance or other equitable relief, he will not assert or contend that any of the provisions of this Section 8 are unreasonable or otherwise unenforceable. Other than a material breach of this Agreement, the existence of any claim or cause of action by the Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants. Notwithstanding anything in this Agreement to
9
the contrary, in the event that any claim, action, or suit is brought for the purpose of determining or enforcing the rights of the Company under this Section 8, and the Company is the prevailing party in such claim, action, or suit, the Company shall be entitled to recover from the Executive all reasonable costs and expenses incurred by it, including reasonable attorneys’ fees.
(f)Defend Trade Secrets Act. Nothing in this Agreement shall prohibit the Executive from reporting possible violations of federal law or regulation to any governmental agency or entity including but not limited to the Department of Justice, the Securities and Exchange Commission, the Equal Employment Opportunity Commission, and any Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive is not required to notify the Company that the Executive has made such reports or disclosures. Under the Defend Trade Secrets Act of 2016, the Company hereby provides notice and Executive hereby acknowledges that Executive may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) is solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
9.Intellectual Property.
(a)Works for Hire. All creations, inventions, ideas, designs, software, copyrightable materials, trademarks, and other technology and rights (and any related improvements or modifications), whether or not subject to patent or copyright protection (collectively, “Creations”), relating to any activities of the Company which were, are, or will be conceived by the Executive or developed by the Executive in the course of his employment or other services with the Company, whether conceived alone or with others and whether or not conceived or developed during regular business hours, and if based on Confidential Information, after the termination of the Executive’s employment, shall be the sole property of the Company and, to the maximum extent permitted by applicable law, shall be deemed “works made for hire” as that term is used in the United States Copyright Act. The Executive agrees to assign and hereby does assign to the Company all Creations conceived or developed from the start of this employment with the Company through to the Termination Date, and after the Termination Date if the Creation incorporates or is based on any Confidential Information.
(b)Assignment. To the extent, if any, that the Executive retains any right, title or interest with respect to any Creations delivered to the Company or related to his employment with the Company, the Executive hereby grants to the Company an irrevocable, paid-up, transferable, sub-licensable, worldwide right and license: (i) to modify all or any portion of such Creations, including, without limitation, the making of additions to or deletions from such Creations, regardless of the medium (now or hereafter known) into which such Creations may be modified and regardless of the effect of such modifications on the integrity of such Creations; and (ii) to identify the Executive, or not to identify his, as one or more authors of or contributors to such Creations or any portion thereof, whether or not such Creations or any portion thereof have been modified. The Executive further waives any “moral” rights, or other rights with respect to attribution of authorship or integrity of such Creations that he may have under any applicable law, whether under copyright, trademark, unfair competition, defamation, right of privacy, contract, tort or other legal theory.
Notwithstanding the foregoing, pursuant to California Labor Code Section 2870, the foregoing shall not apply to an invention that Executive developed entirely on his own time
10
without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
•Relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or
•Result from any work performed by the Executive for the Company.
(c)Disclosure. The Executive will promptly inform the Company of any Creations he conceives or develops during the Term. The Executive shall (whether during his employment or after the termination of his employment) execute such written instruments and do other such acts as may be necessary in the opinion of the Company or its counsel to secure the Company’s rights in the Creations, including obtaining a patent, registering a copyright, or otherwise (and the Executive hereby irrevocably appoints the Company and any of its officers as his attorney in fact to undertake such acts in his name). The Executive’s obligation to execute written instruments and otherwise assist the Company in securing its rights in the Creations will continue after the termination of his employment for any reason, the Company shall reimburse the Executive for any out-of-pocket expenses (but not attorneys’ fees) he incurs in connection with his compliance with this Section 9(c).
10.Arbitration.
(a)All disputes between Executive (and Executive’s attorneys, successors, and assigns) and the Company (and its affiliates, subsidiaries, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) relating in any manner to Executive’s employment or the termination of Executive’s employment, including, without limitation, all disputes arising under this Agreement (“Arbitrable Claims”), shall be resolved by final and binding arbitration to the fullest extent permitted by law. Arbitrable Claims shall include, but are not limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment insurance claims. By way of example and not in limitation of the foregoing, Arbitrable Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the California Fair Employment and Housing Act, the Family Medical Leave Act as well as all claims under any applicable state or federal statute including but not limited to the California Labor Code, and any claims asserting wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, harassment, discrimination, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, fraud, defamation, invasion of privacy, all claims related to disability and all wage or benefit claims, including but not limited to claims for salary, bonuses, profit participation, commissions, stock, stock options, vacation pay, fringe benefits or any form of compensation. Arbitration shall be final and binding upon the Parties and shall be the exclusive remedy for all Arbitrable Claims, except that the Parties may seek interim injunctive relief and other provisional remedies in court as set forth in this Agreement. The Parties hereby waive any rights they may have to trial by jury or any other form of administrative hearing or procedure in regard to the Arbitrable Claims.
(b)Claims shall be arbitrated in accordance with the then-existing National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA Employment Rules”), as augmented by this Agreement. Arbitration shall be initiated as
11
provided by the AAA Employment Rules, although the written notice to the other Party initiating arbitration shall also include a statement of the claims asserted and all the facts upon which the claims are based. Either Party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither Party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. All arbitration hearings under this Agreement shall be conducted at the AAA office located nearest to San Diego, California. The Federal Arbitration Act shall govern the interpretation and enforcement of this Section.
(c)All disputes involving Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the Parties within 30 days of the effective date of the notice initiating the arbitration. If the Parties cannot agree on an arbitrator, then the complaining Party shall notify the AAA and request selection of an arbitrator in accordance with the AAA Employment Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claims asserted and any action of the arbitrator in contravention of this limitation may be the subject of court appeal by the aggrieved Party. No other aspect of any ruling by the arbitrator shall be appealable, and all other aspects of the arbitrator’s ruling shall be final and non-appealable. The arbitrator shall have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law. The arbitrator shall be required to issue a written arbitration decision including the arbitrator’s essential findings, conclusions and a statement of award. The Company shall pay all arbitration fees in excess of what the Executive would have to pay if the dispute were decided in a court of law. The arbitrator shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable.
(d)Notwithstanding the foregoing, in order to provide for interim relief pending the finalization of arbitration proceedings hereunder, nothing in this Section 10 shall prohibit the Parties from pursuing, a claim for interim injunctive relief, for other applicable provisional remedies, and/or for related attorneys’ fees in a court of competent jurisdiction in order to prevent irreparable harm pending the conclusion of the arbitration.
(e)If for any reason all or part of this arbitration provision is held to be invalid, illegal, or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other part of this arbitration provision or any other jurisdiction, but this provision shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable part or parts of this arbitration provision had never been contained herein, consistent with the general intent of the Parties, as evidenced herein, insofar as possible.
11.Indemnification. This Agreement incorporates, but does not supersede, Executive’s Indemnity Agreement with the Company, which survives the execution of this Agreement in all respects.
12.Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties concerning such subject matter.
13.Successors. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal representatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after his termination of employment but prior to the completion by the Company of all payments due him under this Agreement, the Company
12
shall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to his death (or to his estate, if the Executive fails to make such designation). The Company shall require any successor to the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
14.Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.
15.Survival. The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of the Executive’s employment to the extent necessary to effectuate the terms contained herein.
16.Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.
17.Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the case of the Company, at its main offices, attention of the Board.
18.Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Company.
19.Governing Law. This is a California contract and shall be construed under and be governed in all respects by the laws of California for contracts to be performed in that State and without giving effect to the conflict of laws principles of California or any other State. In the event of any alleged breach or threatened breach of this Agreement, the Executive hereby consents and submits to jurisdiction in the State of California.
20.Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.
21.[Signature page follows]
13
IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written.
PriceSmart, Inc.
| /s/ FRANCISCO VELASCO | |||||
| Francisco Velasco Executive Vice President, Chief Legal Officer, Registered In-House Counsel, Chief Risk & Compliance Officer and Secretary | |||||
| /s/ GUALBERTO HERNANDEZ | |||||
Gualberto Hernandez | |||||
14
SEPARATION AGREEMENT WITH WAIVER AND RELEASE OF CLAIMS
This Separation Agreement with Waiver and Release of Claims (“Agreement”) is made as of May 8, 2025 (the “Execution Date”) by and between Michael L. McCleary (“Executive”) and PriceSmart, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
RECITALS
WHEREAS, Executive is employed by the Company pursuant to an Employment Agreement dated April 1, 2020 (the “Employment Agreement”);
WHEREAS, Executive will resign by mutual agreement with the Company effective September 30, 2025 (the “Separation Date”), subject to the terms and conditions set forth in this Agreement; and
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Executive may have against the Company and any of the Releasees as defined in the Waiver and Release of Claims, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company;
NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:
a.Transition Period. During the period (the “Transition Period”) beginning on the date hereof (the “Transition Date”) and ending on the Separation Date, the Executive will continue to serve as an Executive Vice President of the Company but will cease serving as Chief Financial Officer effective June 1, 2025. Executive agrees that during the Transition Period, he will work towards the orderly transition of Executive’s responsibilities to other Company employees, including Executive’s successor as Chief Financial Officer. The Company will continue to pay Executive his current annual base salary during the Transition Period. Executive agrees that he shall have resigned from all board and officer positions with the Company and its subsidiaries and affiliates as of the Separation Date, and shall execute all documents or notices requested by the Company or any of its subsidiaries or affiliates to effectuate such resignation.
b.Separation Benefits. Provided Executive signs this Agreement, signs the Waiver and Release of Claims attached as Exhibit A promptly following the Separation Date, does not revoke the Waiver and Release of Claims in the time provided for therein, complies with his obligations hereunder and satisfactorily performs the transition responsibilities pursuant to Section 1, Executive will receive the following payments and benefits (the “Separation Benefits”):
a.Severance Payment. The Company agrees to pay Executive cash severance (the “Severance”) in an amount equal to $721,000 (which is equivalent to Executive’s annual base salary as of the Execution Date) less applicable withholdings. The Severance will be paid to the
1
Executive pursuant to the Company’s regular payroll schedule over a period of one (1) year commencing on the Company’s first practicable payroll period following the Release Effective Date (as defined in the Waiver and Release of Claims).
b.Annual Bonus. Executive shall be eligible to receive an annual cash incentive award for fiscal year 2025, without pro ration, of up to (but in no event to exceed) $180,250. Such payment shall be made at the time all other bonuses are paid pursuant to the Company’s annual cash incentive award program and shall be subject to, and measured exclusively based on, achievement of performance metrics previously established with respect to corporate performance for fiscal year 2025. In addition, Executive shall be eligible to receive a pro rated annual cash incentive award for the first month of fiscal year 2026. In lieu of a pro rated annual cash incentive award for the period between September 1 and September 30, 2025, the Company shall pay Executive $15,021, which represents 1/12th of Executive’s target bonus for fiscal year 2025, concurrently with the payment of the annual cash incentive award for fiscal year 2025.
c.Healthcare Premium Payment. Subject to Executive’s timely election of continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) within the time period prescribed pursuant to COBRA, the Company shall continue to contribute the Company’s portion of the monthly premium cost of Executive’s participation and that of his eligible dependents in the Company’s group health plan, which covers the Executive and his dependents for a period of eighteen (18) months after the Separation Date, or until Executive has secured other employment (assuming that the Executive is eligible for, and once eligibility begins, equivalent or better health care via such other employment), whichever occurs first, provided that Executive continues to pay his share of the premium for his and his dependents’ participation. The Executive and the Company are each separately responsible to provide their respective portions of the monthly insurance premium as described above to the insurer.
d.Retirement Transition Coaching. The Company shall reimburse Executive for expenses incurred for retirement transition coaching during the one (1) year period following the Separation Date, up to a maximum aggregate amount of $10,000, which services shall be provided by an individual or agency selected by the Executive. The Company shall reimburse Executive within thirty (30) days following the date on which the Company receives proof of payment of such expense, which proof must be submitted no later than thirty (30) days after the expense was incurred.
e.Equity. Executive will retain, and will be eligible to continue vesting in, the equity incentive awards specified in Schedule 1 hereto through the vesting dates specified on such schedule. Executive also will be entitled to receive the dividend equivalents for fiscal year 2025 with respect to performance stock units granted in September 2024 for which the applicable performance criteria will be measured in October 2025. The amount of such dividend equivalents shall be subject to satisfaction of the applicable performance criteria for such performance stock units and will equal the amount, if any, Executive would have received upon such measurement date if he were still employed by the Company. From the date hereof through the Separation Date, all outstanding awards will remain outstanding and subject to the terms of the Amended and Restated 2013 Equity Incentive Award Plan and the award agreements relating to such awards.
2
c.Accrued Obligations and Benefits. Executive’s health insurance benefits shall cease on the Separation Date, subject to Executive’s right to continue his health insurance under COBRA. Except as otherwise provided for herein, Executive’s participation in all benefits and incidents of employment, including, but not limited to, vesting in equity-based awards, perquisites of employment, and the accrual of bonuses, vacation, and paid time off, shall cease as of the Separation Date. Executive will receive his earned but unpaid base salary, unpaid expense reimbursements (which must be submitted no later than 15 days following the Separation Date), and any vested benefits accrued through the Separation Date (as described in Section 1 above) on or before the time required by law, but in no event more than thirty (30) days following the Separation Date. Executive shall have no obligation to reimburse the Company for up to $5,000 of nonrefundable flight credits held by him relating to business travel booked prior to the date hereof.
d.Payment of Salary and Receipt of All Benefits. Executive acknowledges and represents that, other than the consideration set forth in this Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, reimbursable expenses, commissions, stock, restricted stock, restricted stock units, performance stock units, stock options, vesting, and any and all other benefits and compensation due to Executive, up to the date of execution of this Agreement.
e.Announcement and Nondisparagement. Executive and the Company agree that all statements either of them makes regarding Executive’s separation shall conform, in all material respects, to the mutually agreed upon statement attached hereto as Exhibit B. Executive and the Company agree not to make any statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Executive or the Company or any of its subsidiaries or affiliates or their respective current and former officers, directors, employees, advisors, businesses or reputations. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive or the Company from making truthful statements that are required by applicable law, regulation or legal process. Executive acknowledges that the only persons whose statements may be attributed to the Company for purposes of this Section shall be the Company’s Chief Executive Officer, President, Chief Financial Officer and members of the Company’s Board of Directors.
f.Breach. The Company and Executive acknowledge and agree that any material breach of this Agreement by the other party, including, without limitation, the provisions of the Employment Agreement that remain in effect, shall entitle the non-breaching party to obtain damages and, in the case of the Company, will entitle the Company immediately to recover and/or cease providing the consideration provided to Executive under this Agreement.
g.No Admission of Liability. Executive understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Executive, whether known or unknown. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Executive or to any third party.
3
h.Costs. The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.
i.Arbitration.
a.All disputes between Executive (and Executive’s attorneys, successors, and assigns) and the Company (and its affiliates, subsidiaries, shareholders, directors, officers, employees, agents, successors, attorneys, and assigns) relating in any manner to Executive’s employment or the termination of Executive’s employment, including, without limitation, all disputes arising under the Employment Agreement and this Agreement (“Arbitrable Claims”), shall be resolved by final and binding arbitration to the fullest extent permitted by law. Arbitrable Claims shall include, but are not limited to, contract (express or implied) and tort claims of all kinds, as well as all claims based on any federal, state, or local law, statute, or regulation, excepting only claims under applicable workers’ compensation law and unemployment insurance claims. By way of example and not in limitation of the foregoing, Arbitrable Claims shall include any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Family Medical Leave Act, as well as all claims under any applicable state or federal statute, and any claims asserting wrongful termination, breach of contract, breach of the covenant of good faith and fair dealing, negligent or intentional infliction of emotional distress, harassment, discrimination, negligent or intentional misrepresentation, negligent or intentional interference with contract or prospective economic advantage, fraud, defamation, invasion of privacy, all claims related to disability and all wage or benefit claims, including but not limited to claims for salary, bonuses, profit participation, commissions, stock, stock options, vacation pay, fringe benefits or any form of compensation. Arbitration shall be final and binding upon the Parties and shall be the exclusive remedy for all Arbitrable Claims, except that either Party may seek interim injunctive relief and other provisional remedies in court as set forth in this Agreement. The Parties hereby waive any rights they may have to trial by jury or any other form of administrative hearing or procedure in regard to the Arbitrable Claims.
b.Claims shall be arbitrated in accordance with the then-existing National Rules for the Resolution of Employment Disputes of the American Arbitration Association (“AAA Employment Rules”), as augmented by this Agreement. Arbitration shall be initiated as provided by the AAA Employment Rules, although the written notice to the other Party initiating arbitration shall also include a statement of the claims asserted and all the facts upon which the claims are based. Either Party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. Otherwise, neither Party shall initiate or prosecute any lawsuit or administrative action in any way related to any Arbitrable Claim. All arbitration hearings under this Agreement shall be conducted at the AAA office located nearest to San Diego, California. The Federal Arbitration Act shall govern the interpretation and enforcement of this Section.
c.All disputes involving Arbitrable Claims shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the Parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the Parties cannot agree on an arbitrator, then the complaining Party shall notify the AAA and request selection of an arbitrator in accordance with the AAA Employment Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claims
4
asserted and any action of the arbitrator in contravention of this limitation may be the subject of court appeal by the aggrieved Party. No other aspect of any ruling by the arbitrator shall be appealable, and all other aspects of the arbitrator’s ruling shall be final and non-appealable. The arbitrator shall have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law. The arbitrator shall be required to issue a written arbitration decision, including the arbitrator’s essential findings, conclusions and a statement of award. The Company shall pay all arbitration fees in excess of what the Executive would have to pay if the dispute were decided in a court of law. The arbitrator shall have exclusive authority to resolve all Arbitrable Claims, including, but not limited to, whether any particular claim is arbitrable and whether all or any part of this Agreement is void or unenforceable.
d.Notwithstanding the foregoing, in order to provide for interim relief pending the finalization of arbitration proceedings hereunder, nothing in this Section 10 shall prohibit the Parties from pursuing a claim for interim injunctive relief, for other applicable provisional remedies, and/or for related attorneys’ fees in a court of competent jurisdiction in order to prevent irreparable harm pending the conclusion of the arbitration. In the event of any alleged breach or threatened breach of this Agreement, the Executive hereby consents and submits to jurisdiction in the State of California.
e.If for any reason all or part of this arbitration provision is held to be invalid, illegal, or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other part of this arbitration provision or any other jurisdiction, but this provision shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable part or parts of this arbitration provision had never been contained herein, consistent with the general intent of the Parties, as evidenced herein, insofar as possible.
j.Consulting Support. Executive agrees that during the three (3) months following the Separation Date, he will provide up to forty (40) hours per month of consulting support to the Company’s Chief Executive Officer with respect to transition of responsibility and all matters arising during or related to Executive’s continuing or past employment, including but not limited to all formal or informal matters in connection with any government investigation, internal investigation, litigation, regulatory or other proceeding which may have arisen or which may arise. Executive shall provide such consulting support at reasonable times and places, when, if and as requested by the Chief Executive Officer. The Company’s request for consulting support shall take into consideration Executive’s personal and business commitments. The Company will pay Executive a mutually agreed upon amount per month for such consulting services and will reimburse Executive for all reasonable out-of-pocket expenses (not including lost time or opportunity or attorneys’ fees) incurred by Executive fulfilling his obligations under this Section 11.
k.Trade Secrets and Confidential Information/Company Property. Executive reaffirms and agrees to observe and abide by the terms of the Company’s Policy With Respect to Handling of Confidential Information, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information. Executive’s signature below constitutes his certification under penalty of perjury that he has returned (or will have returned prior to the Separation Date) all documents and other items provided to Executive by the
5
Company, developed or obtained by Executive in connection with his employment with the Company, or otherwise belonging to the Company.
l.Further Covenants. During the term of this Agreement and for a period of two (2) years following the later of the last payment by the Company to Executive pursuant to Section 2 and the last vesting of equity incentive awards pursuant to Section 3 (the “Restricted Period”), Executive shall not, directly or indirectly, take any of the following actions, and, to the extent Executive owns, manages, operates, controls, is employed by or participates in the ownership, management, operation or control of, or is connected in any manner with, any business, Executive will use his best efforts to ensure that such business does not take any of the following actions:
a.Persuade or attempt to persuade any customer of the Company to cease doing business with the Company, or to reduce the amount of business any customer does with the Company;
b.Take any action that interferes with the Company’s contracts or prospective contracts with its customers; or
c.Persuade or attempt to persuade any employee or independent contractor of the Company to leave the service of the Company.
m.Enforcement. Executive acknowledges and agrees that any breach by him of any of the provisions of Sections 11 and 12 (the “Restrictive Covenants”) would result in irreparable injury and damage for which money damages would not provide an adequate remedy. Therefore, if Executive breaches or threatens to commit a breach of any of the provisions of the Restrictive Covenants, the Company shall have the ability to seek the following rights and remedies, each of which rights and remedies shall be independent of the other and severally enforceable, and all of which rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity (including, without limitation, the recovery of damages): (a) the right and remedy to have the Restrictive Covenants specifically enforced (without posting bond and without the need to prove damages) by any court having equity jurisdiction, including, without limitation, the right to an entry against Executive of restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against violations, threatened or actual, and whether or not then continuing, of such covenants; (b) the right and remedy to require Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits (collectively, “Benefits”) derived or received by him as the result of any transactions constituting a breach of the Restrictive Covenants, and Executive shall account for and pay over such Benefits to the Company and, if applicable, its affected subsidiaries and/or affiliates; and (c) as liquidated damages (but not as a penalty) for any breach of Section 12, Executive shall pay to the Company an amount equal to the Severance provided by the Company pursuant to Section 2(a) (except for any minimum amount that the Company may deem sufficient consideration for the release provided in the Waiver and Release of Claims). Executive acknowledges and agrees that the time and expenses involved in proving in any forum the actual damage or loss suffered by the Company if there is a breach of Section 12 make this case appropriate for liquidated damages. Neither the breach of any of the Restrictive Covenants nor the payment of liquidated damages shall affect the continuing validity or enforceability of this
6
Agreement. Executive agrees that in any action seeking specific performance or other equitable relief, he will not assert or contend that any of the provisions of the Restrictive Covenants are unreasonable or otherwise unenforceable. Other than a material breach of this Agreement, the existence of any claim or cause of action by Executive, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of the Restrictive Covenants.
n.No Cooperation with Third Party Claim. Except as specifically provided in this Agreement, during the Restricted Period, Executive agrees that he will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees (as defined in the Waiver and Release of Claims), unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement. Executive agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within three (3) business days of its receipt, a copy of such subpoena or other court order. If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees during the Restricted Period, Executive shall state no more than that he cannot provide counsel or assistance.
o.Section 409A Compliance. All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Because the Executive is a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder), any part of the Severance that constitutes non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (A) the business day following the six-month anniversary of the date his separation from service becomes effective, and (B) the date of the Executive’s death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (A) the business day following the six-month anniversary of the date his separation from service becomes effective, and (B) the Executive’s death, the Company shall pay the Executive or, in the event of his death, his estate in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under this Agreement. It is intended that each installment of the Severance shall be treated as a separate “payment” for purposes of Section 409A of the Code.
p.Authority. The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement. Executive represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement. Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.
7
q.Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
r.Acknowledgement. The Executive acknowledges and agrees that he remains bound by and subject to the terms of the Employment Agreement that survive termination of his employment to the extent necessary to effectuate the terms contained therein including, without limitation, Executive’s covenants of confidentiality and non-solicitation, which covenants are reaffirmed herein. Such covenants include, without limitation, Executive’s agreement not to use or disclose Confidential Information (as such term is defined in the Employment Agreement). The Executive acknowledges and agrees he has returned (or will return on or prior to the Separation Date) all Company property and other tangible products and documents belonging to the Company pursuant to Section 8(c) of the Employment Agreement.
s.Indemnity. The Company acknowledges and agrees that Executive’s Indemnity Agreement with the Company remains in full force and effect. The foregoing shall not be interpreted to limit any rights of indemnification the Company may owe Executive under law.
t.Entire Agreement. This Agreement, together with the Waiver and Release of Claims attached as exhibits hereto, and the terms of the Employment Agreement that survive the termination of the Executive’s employment, represent the entire Agreement and understanding between the Company and Executive concerning the subject matter of this Agreement and Executive’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Executive’s relationship with the Company.
u.Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and a duly authorized representative of the Company.
v.Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions.
w.Attorneys’ Fees. If any action or proceeding relating to this Agreement is brought against any party to this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees, costs and disbursements (in addition to any other relief to which the prevailing party may be entitled).
x.Counterparts. This Agreement may be executed in counterparts and by facsimile or pdf, and each counterpart and facsimile or pdf shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.
{signature page follows}
8
9
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
Executive, an individual
| Date: May 8, 2025 | /s/ MICHAEL L. MCCLEARY | ||||
| Michael L. McCleary | |||||
PriceSmart, Inc.
| Date: May 8, 2025 | /s/ FRANCISCO VELASCO | ||||
| Francisco Velasco Executive Vice President, Chief Legal Officer, Registered In-House Counsel, Chief Risk & Compliance Officer and Secretary | |||||
10
Schedule 1
Vesting Schedule of Grants Not Forfeited
Grant # | Grant Date | Grant Type | Vest Date | Shares | |||||||||||||
003349 | 9/30/22 | RSA | 8/29/25 | 2,423 | |||||||||||||
003846 | 10/23/23 | RSA | 10/26/25 | 8,440 | |||||||||||||
003364 | 9/30/22 | PSU | 10/26/25 | 1,211 | |||||||||||||
Schedule 1
Exhibit A
WAIVER AND RELEASE OF CLAIMS
1.Executive agrees that the Separation Benefits represent settlement in full of all outstanding obligations owed to Executive by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”). Executive, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Release Effective Date, including, without limitation:
a. any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship;
b. any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company or ownership of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
c. any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
d. any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967 (the “ADEA”); the Older Workers Benefit Protection Act; the Executive Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the Immigration Control and Reform Act; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing Act;
A-1
e. any and all claims for violation of the federal or any state constitution;
f. any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
g. any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement; and
h. any and all claims for attorneys’ fees and costs.
The releases described herein shall not be applicable to any claim(s) to enforce, or for breach of, the Agreement. The releases described herein also shall not be applicable to future claims which do not yet exist. Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not release claims that cannot be released as a matter of law.
2.California Civil Code Section 1542; Unknown Claims.
a.California Civil Code Section 1542. Executive acknowledges that he has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Executive, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.
b.Unknown Claims. Executive acknowledges that he has been advised to consult with legal counsel and that he is familiar with the principle that a general release does not extend to claims that the releaser does not know or suspect to exist in his favor at the time of executing the release, which, if known by him, must have materially affected his settlement with the releasee. Executive, being aware of said principle, agrees to expressly waive any rights he may have to that effect, as well as under any other statute or common law principles of similar effect.
3.No Pending or Future Lawsuits. Executive represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Executive also represents that he does not intend to bring
A-2
any claims on his own behalf or on behalf of any other person or entity against the Company or any of the other Releasees. Executive represents and affirms that he is unaware of any injury or illness that may give rise to a workers’ compensation claim and that he has sustained no injury or illness at or as a result of his work with the Company. Executive represents that he has not filed a claim with any state Workers’ Compensation system.
4.Limitations. Nothing in the Agreement or this Waiver and Release of Claims prohibits Executive from reporting possible violations of federal law or regulation to any government agency or entity, including, but not limited to, the Securities and Exchange Commission, the Equal Employment Opportunity Commission (the “EEOC”), or any similar state agency, or making other disclosures that are protected under the whistleblower provisions of applicable law. Executive does not need prior authorization of the Company to make any such reports or disclosures and Executive is not required to notify the Company that Executive has made such reports or disclosures. Nothing in this Waiver and Release of Claims shall affect the EEOC’s rights and responsibilities to enforce the Civil Rights Act of 1964, as amended, the ADEA, the National Labor Relations Act or any other applicable law, nor shall anything in this Waiver and Release of Claims be construed as a basis for interfering with Executive’s protected right to file a timely charge with, or participate in an investigation or proceeding conducted by, the EEOC, the National Labor Relations Board (the “NLRB”), or any other state, federal or local government entity; provided, however, if the EEOC, the NLRB, or any other state, federal or local government entity commences an investigation on Executive’s behalf, Executive specifically waives and releases his right, if any, to recover any monetary or other benefits of any sort whatsoever arising from any such investigation or otherwise, nor will you seek or accept reinstatement to Executive’s former position with the Company.
5.Acknowledgements. Executive acknowledges that he has carefully read and fully understands this Waiver and Release of Claims. Executive acknowledges that he has not relied on any statement, written or oral, which is not set forth in the Agreement or this Waiver and Release of Claims. Executive further acknowledges that he is hereby advised in writing to consult with an attorney prior to executing this Waiver and Release of Claims; that he is not waiving or releasing any rights or claims that may arise after the date of execution of this Waiver and Release of Claims; that he is releasing claims under the ADEA; that he executes this Waiver and Release of Claims in exchange for monies in addition to those to which he is already entitled; that the Company gave Executive a period of at least twenty-one (21) days within which to consider this Waiver and Release of Claims and a period of seven (7) days following his execution of this Waiver and Release of Claims to revoke his ADEA waiver as provided below; that if Executive voluntarily executes this Waiver and Release of Claims prior to the expiration of the 21st day, he will voluntarily waive the remainder of the twenty-one (21) day consideration period; that any changes to this Waiver and Release of Claims by Executive once it has been presented to Executive will not restart the 21 day consideration period; and Executive enters into this Waiver and Release of Claims knowingly, willingly and voluntarily in exchange for the Separation Benefits. To receive the Separation Benefits provided in the Agreement, this Waiver and Release of Claims must be signed and returned to Francisco Velasco, Executive Vice President, Chief Legal and Compliance Officer and Secretary, at 9740 Scranton Road Suite # 125, San Diego, California 92121 or at, if by email
A-3
delivery, [email protected], on or before ____________ __, 2025. Nothing in this Waiver and Release of Claims constitutes a waiver any rights Executive has under the Agreement. Executive acknowledges and represents that, other than the consideration set forth in the Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, reimbursable expenses, commissions, stock, restricted stock, restricted stock units, performance stock units, stock options, vesting, and any and all other benefits and compensation due to Executive, up to the date of Execution of this Agreement.
6.Revocation Right. Executive may revoke his release of his ADEA claims up to seven (7) days following his signing this Waiver and Release of Claims. Notice of revocation must be received in writing by Francisco Velasco, at the Company, at 9740 Scranton Road Suite # 125, San Diego, California 92121, or at, if by email delivery, [email protected], no later than the seventh day (excluding the date of execution) following the execution of this Waiver and Release of Claims. The ADEA release is not effective or enforceable until expiration of the seven day period. However, the ADEA release becomes fully effective, valid and irrevocable if it has not been revoked within the seven day period immediately following Executive’s execution of this Waiver and Release of Claims. The Parties agree that if Executive exercises his right to revoke this Waiver and Release of Claims, then he is not entitled to any of the Separation Benefits set forth in the Agreement. This Waiver and Release of Claims shall become effective eight (8) days after Executive’s execution if he has not revoked his signature as herein provided (such date, the “Release Effective Date”).
{signature page follows}
A-4
I hereby provide this Waiver and Release of Claims as of the date indicated below and acknowledge that the execution of this Waiver and Release of Claims is in further consideration of the Separation Benefits set forth in the Agreement, to which I acknowledge I would not be entitled if I did not sign this Waiver and Release of Claims. I intend that this Waiver and Release of Claims become a binding agreement by and between me and the Company if I do not revoke my acceptance within seven (7) days.
| Michael L. McCleary | |||||
| Date: | |||||
A-5
PriceSmart Announces CFO Transition Plan
Gualberto Hernandez to be appointed as CFO; Michael McCleary to Retire
San Diego, CA (May 9, 2025) - PriceSmart, Inc. (“PriceSmart” or the “Company”) (NASDAQ: PSMT) today announced the appointment of Gualberto Hernandez as Executive Vice President and Chief Financial Officer effective June 1, 2025. PriceSmart’s current Executive Vice President and Chief Financial Officer Michael McCleary resigned by mutual agreement with the Company, but will continue to serve as an Executive Vice President of the Company through September 30, 2025. Thereafter, Mr. McCleary has agreed to provide consulting support of up to 40 hours per month for three months following his resignation.
Mr. Hernandez has served as Vice President Finance & Strategy for Latin America for The Estée Lauder Companies Inc. since January 2016. During that tenure, he also served as Vice President and General Manager for Latin America for La Mer, an Estée Lauder Companies’ brand, from 2020 to 2023 and since July 2024 as Vice President Finance for Emerging Markets. Prior to Estée Lauder, Mr. Hernandez served as Chief Operating Officer (Finance and Operations) Latin America for Sephora from November 2013 to January 2016.
Regarding the CFO transition, Robert Price, Interim Chief Executive Officer, added, “I speak for the entire Company when I say that we are enormously grateful for the contributions Michael has made to our company and particularly to the finance and accounting department. I wish him much success.”
Michael McCleary said, “It is an honor and privilege to have been with PriceSmart for over 20 years, including serving as CFO for the past five years. I have been fortunate to work with Robert Price, as the co-founder of the membership warehouse club industry, and for a Company which strives to improve the lives and businesses of its Members and prioritizes the well-being of its employees and communities where it does business. As shown by the doubling of the club count and more than eight-fold increase in revenues over this period, the warehouse club membership model has proven successful in our markets, and I am confident that under David Price’s leadership, PriceSmart will continue its long runway of growth. As I move into this next phase of my life, I would like to express my sincere appreciation and gratitude to my colleagues and team members.”
About PriceSmart
PriceSmart, headquartered in San Diego, owns and operates U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, selling high quality merchandise and services at low prices to PriceSmart Members. PriceSmart operates 55 warehouse clubs in 12 countries and one U.S. territory (ten in Colombia; nine in Costa Rica; seven in Panama; six in Guatemala; five in Dominican Republic; four each in Trinidad and El Salvador; three in Honduras; two each in Nicaragua and Jamaica; and one each in Aruba, Barbados and the United States Virgin Islands). In addition, the Company plans to open one warehouse club in Quetzaltenango, Guatemala in the summer of 2025. Once this new club is open, the Company will operate 56 warehouse clubs.
This press release may contain forward-looking statements concerning PriceSmart, Inc.'s ("PriceSmart", the "Company" or "we") anticipated future revenues and earnings, adequacy of future cash flows, future dividends, omni-channel initiatives, proposed warehouse club openings, the Company's performance relative to competitors and related matters. These forward-looking statements include, but are not limited to, statements containing the words "expect," "believe," "will," "may," "should," "project," "estimate," "anticipated," "scheduled," "intend," and like expressions, and the negative thereof. These statements are subject to risks and uncertainties that could cause actual results to differ materially including, but not limited to: various political, economic and compliance risks associated with our international operations, adverse changes in economic conditions in our markets, natural disasters, volatility in currency exchange rates and illiquidity of certain local currencies in our markets, competition, consumer and small business spending patterns, political instability, increased costs associated with the integration of online commerce with our traditional business, whether the Company can successfully execute strategic initiatives, our reliance on third party service providers, including those who support transaction and payment
processing, data security and other technology services, cybersecurity breaches that could cause disruptions in our systems or jeopardize the security of Member, employee or business information, cost increases from product and service providers, interruption of supply chains, novel coronavirus (COVID-19) related factors and challenges, exposure to product liability claims and product recalls, recoverability of moneys owed to PriceSmart from governments, and other important factors discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, and other factors discussed from time to time in other filings with the SEC, which are accessible on the SEC's website at www.sec.gov, including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements speak only as of the date that they are made, and the Company does not undertake to update them, except as required by law. In addition, these risks are not the only risks that the Company faces. The Company could also be affected by additional factors that apply to all companies operating globally and in the U.S., as well as other risks that are not presently known to the Company or that the Company considers to be immaterial.
For further information, please contact Michael L. McCleary, EVP, Chief Financial Officer, and Principal Accounting Officer, at (858) 404-8826 or by email at [email protected].