7
SPECIAL STOCK OPTION GRANT, POST-TERMINATION
AGREEMENT AND COVENANT NOT TO COMPETE
This Special Stock Option Grant, Post-Termination Agreement, and
Covenant Not to Compete is entered into this 20th day of July, 1998 by
and between Wal-Mart Stores, Inc. (hereinafter "Wal-Mart") and Xxxxx
X. Xxxxx (hereinafter "the Associate"). The parties agree as follows:
1. ACKNOWLEDGMENTS. As part of this Agreement, the parties
specifically acknowledge that
(A) Wal-Mart is a major retail operation, with stores located
throughout the United States and in certain foreign locations;
(B) the Associate presently holds a position as President and
Chief Executive Officer, and is a key executive as defined by the
Executive Committee;
(C) as an essential part of its business, Wal-Mart has
cultivated long term customer and vendor relationships and goodwill,
which are difficult to develop and maintain, which require a
significant investment of time, effort, and expense, and which can
suffer significantly upon the departure of key executives;
(D) in the development of its business, Wal-Mart has also
expended a significant amount of time, money, and effort in developing
and maintaining confidential, proprietary, and trade secret
information which, if disclosed or misused, could harm Wal-Mart's
business and its competitive position in the retail marketplace;
(E) as President and Chief Executive Officer, the Associate has
access to confidential and proprietary trade secret information and
other confidential information, including business plans and
strategies, that would be of considerable value to Wal-Mart's
competitors; and
(F) Wal-Mart is entitled to take appropriate steps to ensure (i)
that its Associates do not make use of confidential information gained
during the course of their employment with Wal-Mart and (ii) that no
individual associate or competing entity gains an unfair competitive
advantage over Wal-Mart.
2. SPECIAL STOCK OPTION GRANT. If the Associate executes this
Agreement on or before July 31, 1998, Wal-Mart will award to the
Associate a Special Stock Option Grant equivalent to One Hundred
Percent (100%) of the Associate's base salary in effect on the date of
this Agreement. The Special Stock Option Grant will be in addition to
any other stock options, restricted stock, stock grants, or similar
entitlements that the employee may receive, or may previously have
received, under any other plan or program maintained by Wal-Mart. The
Special Stock Option Grant will vest in seven equal annual
installments commencing one (1) year from the date of the grant, and
shall in all regards be governed by the terms of the Wal-Mart Stores,
Inc. Stock Option Plan.
3. TRANSITION PAYMENTS. In the event that Wal-Mart should
initiate the termination of the Associate's employment, Wal-Mart will,
for a period of two (2) years from the effective date of such
termination ("the Transition Period"), continue to pay the Associate
his or her base salary at the rate in effect on the date of
termination, subject to such withholding as may be required by law and
subject to the following conditions and offsets:
(A) Transition Payments will not be payable if the Associate is
terminated as the result of a violation of Wal-Mart policy;
(B) In the event that the Associate is demoted or reassigned so
that he or she ceases to be a key executive as defined or determined
by the Executive Committee, the Associate will no longer be bound by
the Covenant Not to Compete set forth in Paragraph 4 below and will
cease to be eligible for any of the benefits or payments (e.g.,
Transition Payments) provided by this Agreement. In addition, it is
understood that, upon ceasing to be a key executive, the Associate
would forfeit the stock options granted by this Agreement, but only to
the extent that those options have not vested as of the date of
demotion or reassignment;
(C) No Transition Payments will be payable if the Associate
voluntarily resigns or retires from his or her employment with Wal-
Mart;
(D) Given the availability of other programs designed to provide
financial protection in such circumstances, Transition Payments will
not be payable under this Agreement in the event of the Associate's
death or disability. If the Associate should die during the
Transition Period, Transition Payments will cease at that time, and
his or her heirs will have no entitlement to the continuation of such
payments. Transition Payments will not be affected by the disability
of the Associate during the Transition Period.
(E) Transition Payments will be offset by any amounts that the
Associate may earn during the Transition Period by virtue of self-
employment or employment with, or involvement in, an entity other than
a Competing Business as defined in Paragraph 4(B) below. Violation
by the Associate of his obligations under Paragraph 4 or Paragraph 5
below, or any other act that is materially harmful to Wal-Mart's
business interests, during the Transition Period will result in the
immediate termination of Transition Payments in addition to any other
remedies that may be available to Wal-Mart;
(F) Transition Payments will be payable on such regularly
scheduled paydays as may be adopted and instituted by Wal-Mart for its
other salaried employees.
(G) Receipt of Transition Payments will not entitle the
Associate to participate during the Transition Period in any of the
other incentive, stock option, profit sharing, or other associate
benefit plans or programs maintained by Wal-Mart, and the Associate
shall be entitled to participate in such plans or programs only to the
extent that the terms of the plan or program provide for participation
by former associates. Such participation, if any, shall be governed
by the terms of the applicable plan or program.
4. COVENANT NOT TO COMPETE. In exchange for the Special Stock
Option Grant set forth in Paragraph 2, for his or her inclusion in
the Transition Payment program set forth in Paragraph 3, and for other
good and valuable consideration, the Associate agrees, promises, and
covenants as follows:
(A) For a period of two (2) years from the date on which his or
her employment with Wal-Mart terminates, and regardless of the cause
or reason for such termination, the Associate will not directly or
indirectly
(i) own, manage, operate, finance, join, control, advise,
consult, render services to, have a current or future interest in, or
participate in the ownership, management, operation, financing, or
control of, or be employed by or connected in any manner with, any
Competing Business as defined below in Paragraph 4(B); or
(ii) solicit for employment, hire or offer employment to, or
otherwise aid or assist any person or entity other than Wal-Mart in
soliciting for employment, hiring, or offering employment to, any
employee of Wal-Mart or any of its affiliates;
(B) For purposes of this Agreement, the term "Competing Business"
shall include any general or specialty retail, wholesale, or
merchandising business that sells goods or merchandise of the types
sold by Wal-Mart at retail to consumers that (i) is located within the
United States or any other country in which Wal-Mart or its affiliates
either operate a store or are known to the Associate to have plans to
open or acquire an operation within the next twenty-four (24) months,
and (ii) that has gross annual sales volume or revenues attributable
to its retail operations in excess of U.S. $2 billion or is reasonably
expected to have gross sales volume or revenues of more than U.S. $2
billion in either the current fiscal year or the next following fiscal
year. "Competing Business" as of the date of this Agreement shall
specifically include, but is not limited to, such entities as
Target/Xxxxxx Xxxxxx, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Xxxxxx Bay Company, Carrefour, HEB, and Xxxx
Xxxxxx.
(C) Ownership of an investment of less than the greater of
$25,000 or 1% of any class of equity or debt security of a Competing
Business will not be deemed ownership or participation in ownership of
a Competing Business for purposes of this Agreement.
(D) The covenant not to compete contained in this Paragraph 4
shall be binding upon the Associate, and shall remain in full force
and effect, regardless of whether the Associate qualifies, or
continues to remain eligible, for the Transition Payments described in
Paragraph 3 above. Termination of the Transition Payments pursuant to
Paragraph 3 will not release the Associate from his or her
obligations under this Paragraph 4.
5. PRESERVATION OF CONFIDENTIAL INFORMATION. The Associate
agrees that he or she will not at any time, directly or indirectly,
use or disclose any Confidential Information obtained during the
course of his or her employment with Wal-Mart except as may be
authorized by Wal-Mart. "Confidential Information" shall include any
non-public information pertaining to Wal-Mart's business, and shall
include information obtained by the Associate during the course of, or
as a result of, his or her employment with Wal-Mart, including,
without limitation, information regarding Wal-Mart's processes,
suppliers (including the terms, conditions, or other business
arrangements with such suppliers), advertising and marketing plans and
strategies, profit margins, seasonal plans, goals, objectives and
projections, compilations, analyses, and projections regarding Wal-
Mart's business, trade secrets, salary, staffing, compensation, and
other employment data, and any "know-how," techniques, practice or any
technical information not of a published nature regarding Wal-Mart's
business.
6. REMEDIES FOR BREACH. The parties shall each be entitled to
pursue all legal and equitable rights and remedies to secure
performance of their respective obligations and duties under this
Agreement, and enforcement of one or more of these rights and remedies
will not preclude the parties from pursuing any other rights and
remedies. The Associate acknowledges that a breach of the provisions
of Paragraph 4 or Paragraph 5 above could result in substantial and
irreparable damage to Wal-Mart's business, and that the restrictions
contained in Paragraphs 4 and 5 are a reasonable attempt by Wal-Mart
to protect its rights and to safeguard its confidential information.
The Associate expressly agrees that upon a breach or a threatened
breach by the Associate of the provisions of Paragraph 4 or Paragraph
5, Wal-Mart will be entitled to injunctive relief to restrain such
violation, and the Associate hereby expressly consents to the entry of
such temporary, preliminary, and/or permanent injunctive relief as may
be necessary to enjoin the violation of Paragraph 4 or Paragraph 5.
The parties further agree that any action relating to the
interpretation, validity, or enforcement of this Agreement shall be
brought in the appropriate state or federal court encompassing Xxxxxx
County, Arkansas, and the parties hereby expressly consent to the
jurisdiction of such courts. The Associate further agrees that in any
claim or action involving the execution, interpretation, validity, or
enforcement of this Agreement, he or she will seek satisfaction
exclusively from the assets of Wal-Mart, and will hold harmless all of
Wal-Mart's individual directors, officers, employees, and
representatives.
7. SEVERABILITY. In the event that a court of competent
jurisdiction shall determine that any portion of this Agreement is
invalid or otherwise unenforceable, the parties agree that the
remaining portions of the Agreement shall remain in full force and
effect. The parties also expressly agree that if any portion of the
covenant not to compete set forth in Paragraph 4 shall be deemed
unenforceable, then the Agreement shall automatically be deemed to
have been amended to incorporate such terms as will render the
covenant enforceable to the maximum extent permitted by law.
8. NATURE OF THE RELATIONSHIP. Nothing contained in this
Agreement shall be deemed or construed to constitute a contract of
employment for a definite term. The parties acknowledge that the
Associate is not employed by Wal-Mart for a definite term, and that
either party may sever the employment relationship at any time and for
any reason not otherwise prohibited by law.
9. ENTIRE AGREEMENT. This document contains the entire
understanding and agreement between the Associate and Wal-Mart
regarding the subject matter of this Agreement. This Agreement
supersedes and replaces any and all prior understandings or agreements
between the parties regarding this subject, and no representations or
statements by either party shall be deemed binding unless contained
herein.
10. MODIFICATION. This Agreement may not be amended, modified,
or altered except in a writing signed by both parties or their
designated representatives.
11. SUCCESSORS AND ASSIGNS. This Agreement will inure to the
benefit of, and will be binding upon, Wal-Mart, its successors and
assigns, and on the Associate and his or her heirs, successors, and
assigns. No rights or obligations under this Agreement may be
assigned to any other person without the express written consent of
all parties hereto.
12. COUNTERPARTS. This Agreement may be executed in
counterparts, in which case each of the two counterparts will be
deemed to be an original and the final counterpart will be deemed to
have been executed in Bentonville, Arkansas.
13. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Arkansas.
14. STATEMENT OF UNDERSTANDING. By signing below, the Associate
acknowledges (a) that he or she has received a copy of this Agreement,
(b) that he or she has read the Agreement carefully before signing it,
(c) that he or she has had ample opportunity to ask questions
concerning the Agreement and has had the opportunity to discuss the
Agreement with legal counsel of his or her own choosing, and (d) that
he or she understands his or her rights and obligations under this
Agreement, and enters into this Agreement voluntarily.
WAL-MART STORES, INC.
By: /s/X. Xxxxxx Xxxxxx /s/Xxxxx X. Xxxxx
X. Xxxxxx Xxxxxx Xxxxx X. Xxxxx
Chairman of the Board President and Chief
Executive Officer
July 20, 1998 July 20, 1998
Date Date
