Exhibit 10.1

SEVERANCE AGREEMENT AND RELEASE OF CLAIMS

 

THIS SEVERANCE AGREEMENT AND RELEASE OF CLAIMS (“Agreement”) is executed this
31st day of March, 2003 by and between PRICESMART, INC. (referred to herein as
“Company”) and Gilbert A. Partida (“Employee”).

 

This Agreement is made with reference to the following facts:

 

A. The Company employs Employee as President and Chief Executive Officer.

 

B. The parties now desire to enter into a binding agreement regarding their
future relationship and to settle and compromise, once and forever, any disputes
and controversies which may now exist or may in the future arise from the
employment relationship and termination thereof.

 

WHEREFORE, the parties agree as follows:

 

1. (a) Employee’s employment with the Company terminates effective April 1,
2003. After April 1, 2003, Employee shall not be entitled to any salary, wages,
commissions, options, bonuses, profit sharing, benefits, insurance or other
compensation from Company or any related entity except as specifically set forth
in paragraph (2) below.

 

(b) Notwithstanding anything to the contrary herein, both the Company and
Employee retain the option to terminate their employment relationship at any
time, for any reason whatsoever, with or without cause, and with or without
advance notice, prior to April 1, 2003.

 

2. In consideration for the execution of this Agreement and the performance of
the terms and conditions herein, the Company shall:

 

a) Pay to Employee severance pay in an amount equal to six hundred fifty
thousand Dollars ($650,000), minus standard payroll deductions, during the 24
month period beginning eight (8) days after execution of this Agreement by
Employee; said payments shall be made in equal installments in conformity with
the Company’s normal payroll period.

 

b) Enter into an Independent Contractor Agreement with Employee, in the form
attached hereto as Exhibit “A”.

 

c) Provide Employee with outplacement services to be provided by a firm selected
by Company, up to the amount of $500.00, which sum to be paid by Company to such
firm, to assist Employee in locating other suitable employment.

 

3. Employee acknowledges that he/she is receiving consideration under this
Agreement to which he/she would not otherwise be entitled. Employee further
agrees and recognizes that by signing this Agreement, his/her employment
relationship with Company is permanently and irrevocably severed as of the date
set forth in

 

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Paragraph 1(a) above, or earlier date pursuant to Paragraph 1(b) above, and that
Company and its related, affiliated, parent or subsidiary companies, if any,
have no obligation, contractual or otherwise, to hire, rehire, re-employ, or
recall Employee in the future (except as set forth in Paragraph 2(b), above).

 

4. Employee understands and acknowledges that during the course of his/her
employment by the Company, as well as any prior employment or relationship with
Price Enterprises, Inc. (collectively “Price”), he/she had access to and became
acquainted with trade secrets and other confidential information of the Company
and/or Price, including but not limited to compilations of information, records,
computer programs, financial information, publication information and vendor
information which are owned by the Company and/or Price and which are regularly
used in the operation of the business of the Company and/or Price. Employee
further understands and acknowledges that despite termination of his/her
employment with the Company, he/she has a continuing legal obligation not to
disclose, and not to use, directly or indirectly, any such trade secrets or
confidential information owned by the Company and/or Price.

 

Additionally, during the three year period after Employee’s termination of
employment pursuant to this Agreement, Employee shall not solicit nor induce, or
attempt to solicit or induce, any other Company employee to cease his or her
employment with the Company.

 

5. Employee understands and acknowledges that all files, records, documents,
equipment, computer programs, printouts, memoranda, lists, notes, work product,
journal documents, production documents, photographic material, advertising
materials, vendor information and similar material relating to the business of
the Company and/or Price, and all copies of same, whether prepared by Employee
or otherwise coming into his/her possession during the term of his/her
employment with the Company and/or Price, are the exclusive property of the
Company and/or Price. Employee agrees that to the extent he/she has any such
material in his/her possession, he/she will return all such material to the
Company on the last day of Employee’s employment with the Company.

 

6. In consideration of the covenants set forth in this Agreement, and for other
good and valuable consideration, receipt of which is hereby acknowledged,
Employee, on behalf of his/her successors, assigns and legal representatives,
fully, irrevocably and unconditionally releases and discharges the Company, as
well as its officers, directors, shareholders, agents, employees, and
representatives, in their capacity as such and otherwise, including their heirs,
executors and administrators, as well as related, affiliated, subsidiary,
predecessor and parent companies (including, but not limited to, Price
Enterprises, Inc., The Price Company and Price/Costco, Inc.), successors and
assigns, separately and collectively, and each of them (collectively
“Releasees”), from all actions, causes of action, suits, debts, charges,
complaints, claims, liabilities, obligations, promises, agreements,
controversies, damages and expenses, including attorneys’ fees, of any nature
whatsoever, known or unknown, suspected or unsuspected, which Employee ever had,
now has, or may have against Releasees, up to the date of Employee’s signing of
this Agreement, by reason of any act, event or omission concerning any matter or
thing, including, without limiting the generality of the foregoing, any claims
against Releasees, arising from or relating,

 

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either directly or indirectly, to Employee’s status as an employee of the
Company or the separation of that employment, any claims arising from any
emotional, bodily or personal injuries, loss of income, employment benefits,
wrongful discharge, or discrimination, whether based on sex, sexual orientation,
age, disability, medical condition, race, religion, national origin, ancestry,
marital status, or any other characteristic or category or combination of same,
as well as any alleged violation by Releasees of any federal, state or local
statutes, ordinances or common law, including, but not limited to, Title VII of
the Civil Rights Act of 1964, the California Labor Code, the California Fair
Employment and Housing Act, the Age Discrimination in Employment Act of 1967,
the Americans With Disabilities Act, the Family and Medical Leave Act, the
California Family Rights Act, the Fair Labor Standards Act, the Equal Pay Act,
or any of the Company’s own policies, procedures or purported express or implied
agreements or contracts with Employee.

 

7. In accordance with the Older Worker’s Benefit Protection Act of 1990,
Employee is aware of the following with respect to his/her release of any claims
under the Age Discrimination in Employment Act (ADEA): 1) he/she has the right
to consult with an attorney before signing this Agreement, and that to the
extent, if any, that Employee has desired, Employee has done so; 2) Employee has
twenty-one (21) days to review and consider this Agreement and his/her release
of any ADEA claim, and that he/she may use as much of this 21-day period as
he/she wishes prior to signing; 3) for a period of seven (7) days following the
execution of this Agreement, Employee may revoke the Agreement and this
Agreement shall not become effective or enforceable with respect to the claims
under the ADEA until the revocation period has expired; 4) this Agreement shall
become effective as to any ADEA claim eight (8) days after it is signed by
Employee and Company, and in the event the parties do not sign on the same date,
this Agreement shall become effective as to any ADEA claim eight (8) days after
the date it is signed by Employee. Thereafter, Employee understands that
Employee cannot revoke his/her waiver of any ADEA claim and that it will be
binding upon Employee; 5) the parties acknowledge and agree that in the event
Employee revokes his/her release/waiver of any age discrimination claims,
Company shall have the unilateral right to terminate this entire Agreement. In
the event of such termination, Employee understands and agrees that he/she shall
not be entitled to any payment set forth in paragraph 2 above, and if Employee
has received such payment, Employee agrees to return such payment to Company
immediately.

 

8. Employee expressly waives any and all rights which he/she might have under
Section 1542 of the Civil Code of the State of California which reads as
follows:

 

A general release does not extend to claims which the Creditor does not know or
suspect to exist in its favor at the time of executing the Release which if
known by him must have materially affected his settlement with the debtor.

 

Notwithstanding Section 1542 of the Civil Code of California, Employee and
Company expressly agree that this Agreement shall be given full force and effect
according to each and all of its express terms and provisions,

 

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including as well those relating to unknown and unspecified actions, causes of
action, claims or other proceedings, judgments, obligations, damages, or other
liabilities, if any.

 

9. Employee acknowledges that he/she is aware that he/she may discover facts
different from, or in addition to, those now known or believed to be true with
respect to the claims, causes of action, and liabilities herein released, and
Employee nevertheless agrees that the release herein shall be and remain in all
respects a complete and general release as to all matters released,
notwithstanding any such known or unknown additional facts.

 

10. This Agreement shall be construed and governed by the laws of the State of
California. In the event that any provision of this Agreement is held to be
void, null or unenforceable, insofar as reasonable and possible, the remainder
of this Agreement shall be considered valid and operative and effect shall be
given to the intent manifested by the portion held invalid or inoperative, and
the parties authorize any modifications necessary to these provisions held
invalid or inoperative so the parties’ intent may be carried out.

 

11. Employee and Company each acknowledge and represent that no promise or
representation not contained in this Agreement has been made to them, and
acknowledge and represent that this Agreement contains all terms and conditions
pertaining to the compromise and settlement of the potential claims and causes
of action referenced above. The terms of this Agreement are contractual and not
a mere recital. Any modification of this Agreement will be effective only if it
is in writing signed by the party to be charged.

 

12. It is understood and agreed by the parties that this is a compromise
agreement and that the furnishing by the Company of the consideration for this
Agreement shall not be deemed or construed as an admission of liability or
wrongdoing. The liability for any and all released claims is expressly denied by
the Company.

 

13. No breach of any provision hereof can be waived unless in writing. Waiver of
any one breach of any provision hereof shall not be deemed to be a waiver of any
other breach of the same or any other provision hereof.

 

14. This Agreement is to be interpreted without regard to the draftsman. The
terms and intent of this Agreement, with respect to the rights and obligations
of the parties, shall be interpreted and construed on the express assumption
that each party participated equally in its drafting.

 

15. Employee represents and certifies that he/she has carefully read and fully
understands all of the provisions and effects of this Agreement, and that he/she
is voluntarily entering into this Agreement free of any duress or coercion.

 

16. All disputes, controversies, or claims between Employee and Company, whether
arising prior to Employee’s employment with Company, during employment, or after
termination of Employee’s employment, including but not limited to the
construction or application of the terms of this Agreement, shall be resolved by
binding arbitration in accordance with the laws of the State of California for
agreements made and to be performed in California. The arbitration shall be
administered by the American Arbitration Association (“AAA”) pursuant to

 

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its rules most applicable to the particular claims being made, as determined by
the AAA, and as then in effect, except as otherwise provided herein. The
arbitration procedures described in this paragraph apply to all disputes between
Employee and Company and any of the Releasees referred to in paragraph 6 of this
Agreement, as well as Company’s officers, directors, employees, and agents, each
of whom is a third-party beneficiary of this Agreement and who may invoke this
arbitration provision. The disputes covered by this arbitration provision
include, but are not limited to, claims of breach of contract (express or
implied), wrongful termination, harassment, discrimination (including, but not
limited to, race, color, religion, sex, national origin, age, disability, sexual
orientation, marital status, and pregnancy), compensation and benefits claims,
tort claims, such as defamation and invasion of privacy, and claims for
violation of any federal, state or local law, statute, regulation or ordinance,
including, but not limited to, the Fair Employment and Housing Act of the State
of California, Title VII of the Civil Rights Act of 1964, the Americans With
Disabilities Act, the Age Discrimination in Employment Act, the Family and
Medical Leave Act, the Family Rights Act, and the Equal Pay Act.
Notwithstanding, these arbitration procedures do not apply to Workers’
Compensation claims. Any arbitration shall be held in San Diego, California,
before one independent and neutral arbitrator appointed by the AAA. The
arbitrator shall determine the arbitrability of all disputes, claims and/or
issues between Employee and Company, and Releasees as well as Company’s
officers, directors, employees, and agents. Fees and costs of the arbitrator
shall be borne by Company. The parties shall be entitled to discovery sufficient
to adequately arbitrate the claims and defenses, including access to essential
documents and witnesses, as determined by the arbitrator. The arbitrator shall
issue a written arbitration decision that will reveal the essential findings and
conclusions on which the award is based. Subject to limited judicial review
pursuant to California Code of Civil Procedure §1286.2, the award of the
arbitrator shall be final and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof. Any demand for
arbitration shall be in writing and must be made within

 

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a reasonable time after the claim, dispute or other matter in question has
arisen. In no event shall the demand for arbitration be made after the date that
institution of legal or equitable proceedings based upon such claim, dispute or
other matter would be barred by the applicable statute of limitations. COMPANY
AND EMPLOYEE KNOWINGLY WAIVE THEIR RIGHT TO A JURY TRIAL.

 

       

COMPANY:

Date: March 31, 2003

     

PRICESMART, INC.

           

By:

 

/s/ ROBERT M. GANS

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Title:

 

Executive Vice President

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EMPLOYEE:

Date: March 31, 2003

     

/s/ GILBERT A. PARTIDA

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Gilbert A. Partida

 

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