UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended July 31, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______to______.
Commission file number 1-6991
WAL-MART STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware ___________71-0415188__________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 S.W. Eighth Street
Bentonville, Arkansas ____________72716______________
(Address of principal executive offices) (Zip Code)
(501) 273-4000
(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or such shorter periods that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes __X__ No _____
Applicable Only to Issuers Involved in Bankruptcy
Proceedings During the Preceding Five Years
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court.
Yes _____ No _____
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $.10 Par Value -- 2,252,851,199 shares as of July 31, 1998.
<PAGE 2>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in millions)
<CAPTION>
July 31, January 31,
1998 1998
ASSETS (Unaudited) (*Note)
<S> <C> <C>
Cash and cash equivalents $ 884 $ 1,447
Receivables 1,008 976
Inventories 17,617 16,497
Other current assets 428 432
Total current assets 19,937 19,352
Property, plant and equipment 28,898 27,376
Less accumulated depreciation 6,644 5,907
Net property, plant and equipment 22,254 21,469
Property under capital leases 3,107 3,040
Less accumulated amortization 963 903
Net property under capital leases 2,144 2,137
Other assets and deferred charges 2,539 2,426
Total assets $ 46,874 $45,384
LIABILITIES AND SHAREHOLDERS' EQUITY
Commercial paper $ 175 $ -
Accounts payable 9,844 9,126
Long-term debt due within one year 550 1,039
Other current liabilities 4,227 4,295
Total current liabilities 14,796 14,460
Long-term debt 7,414 7,191
Long-term obligations under capital leases 2,520 2,483
Deferred income taxes and other 799 809
Minority Interest 1,802 1,938
Common stock and capital in excess of par value 823 809
Retained earnings 19,225 18,167
Other accumulated comprehensive income ( 505) ( 473)
Total shareholders' equity 19,543 18,503
Total liabilities and shareholders'
equity $ 46,874 $ 45,384
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements
<F2>
*Note: The balance sheet at January 31, 1998, has been derived from the
audited financial statements at that date, and condensed.
<PAGE 3>
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Amounts in millions except per share data)
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Net sales $33,521 $28,386 $63,340 $53,795
Other income - net 359 318 697 604
33,880 28,704 64,037 54,399
Costs and expenses:
Cost of sales 26,422 22,478 49,948 42,605
Operating, selling
and general and
administrative
expenses 5,577 4,767 10,650 9,100
Interest costs:
Debt 123 137 245 271
Capital leases 62 55 134 110
32,184 27,437 60,977 52,086
Income before income taxes,
minority interest and
equity in unconsolidated
subsidiaries 1,696 1,267 3,060 2,313
Provision for income taxes 627 467 1,132 850
Income before minority
interest and equity in
unconsolidated
subsidiaries 1,069 800 1,928 1,463
Minority interest and
equity in unconsolidated
subsidiaries ( 35) ( 5) ( 66) ( 16)
Net income $ 1,034 $ 795 $ 1,862 $ 1,447
Net income per share -
Basic and dilutive $ .46 $ .35 $ .83 $ .64
Dividends per share $ .0775 $ .0675 $ .155 $ .135
Average shareholders'
equity $19,181 $17,123 $19,023 $17,203
Return for the period
on average
shareholders' equity 5.39% 4.64% 9.79% 8.41%
Average number of common shares:
Basic 2,236 2,260 2,238 2,268
Dilutive 2,253 2,269 2,253 2,275
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<PAGE 4>
<TABLE>
WAL-MART STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in millions)
<CAPTION>
Six Months Ended July 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,862 $ 1,447
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 885 770
Increase in inventories ( 1,133) ( 514)
Increase in accounts payable 731 248
(Decrease)/ increase in accrued
liabilities ( 81) 603
Noncash items and other ( 59) ( 44)
Net cash provided by operating activities 2,205 2,510
Cash flows from investing activities:
Payments for property, plant & equipment ( 1,626) ( 1,178)
Investment in International ( 179) -
Other investing activities 50 ( 41)
Net cash used in investing activities ( 1,755) ( 1,219)
Cash flows from financing activities:
Increase in commercial paper 175 -
Proceeds from issuance of long-term debt 508 -
Dividends paid ( 347) ( 307)
Payment of long-term debt ( 786) ( 19)
Purchase of Company Stock ( 472) ( 1,037)
Other financing activities ( 91) 119
Net cash used in financing activities ( 1,013) ( 1,244)
Net (decrease)/increase in cash and
cash equivalents ( 563) 47
Cash and cash equivalents at beginning
of year 1,447 883
Cash and cash equivalents at end of
period $ 884 $ 930
Supplemental Disclosure of Cash Flow Information:
Income tax paid $ 1,534 $ 990
Interest paid 388 395
Capital lease obligations incurred 95 59
</TABLE>
[FN]
<F1>
See accompanying notes to condensed consolidated financial statements.
<PAGE 5>
WAL-MART STORES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Basis of Presentation
The condensed consolidated balance sheet as of July 31, 1998, and
the related condensed consolidated statements of income for the three and
six month periods ended July 31, 1998 and 1997, and the statements of
cash flow for the six month periods ended July 31, 1998 and 1997 are
unaudited. In the opinion of management, all adjustments necessary for a
fair presentation of the financial statements have been included. The
adjustments consisted only of normal recurring items. Interim results are
not necessarily indicative of results for a full year. Certain
reclassifications have been made to the prior year's income statements to
conform to current presentation.
The financial statements and notes are presented in accordance with
the rules and regulations of the Securities and Exchange Commission and
do not contain certain information included in the Company's annual
report. Therefore, the interim statements should be read in conjunction
with the Company's annual report for the fiscal year ended January 31,
1998.
NOTE 2. Inventories
The Company uses the retail last-in, first-out (LIFO) method for the
Wal-Mart Stores segment, cost LIFO for the Sam's Club segment, and other
cost methods for the International segment. Inventories are not in excess
of market value. Quarterly inventory determinations under LIFO are
partially based on assumptions as to inventory levels at the end of the
fiscal year, sales and the rate of inflation for the year. If the first-
in, first-out (FIFO) method of accounting had been used by the Company,
inventories at July 31, 1998, would have been $403 million higher than
reported, an increase in the LIFO reserve of $55 million from January 31,
1998, and an increase of $40 million from April 30, 1998. If the FIFO
method had been used at July 31, 1997, inventories would have been $314
million higher than reported, an increase in the LIFO reserve of $18
million from January 31, 1997, and an increase of $10 million from April
30, 1997.
NOTE 3. Net Income Per Share
The Company presents basic and dilutive earnings per share according
to guidance established in Statement of Financial Accounting Standards
No. 128, "Earnings Per Share." Statement 128 replaces primary and fully
dilutive earnings per share with basic and dilutive earnings per share.
Unlike primary earnings per share, basic earnings per share exclude any
dilutive effect of stock options. Basic and dilutive earnings per share
for all periods presented are the same as previously reported. Basic net
income per share is based on the weighted average outstanding common
shares. Dilutive net income per share is based on the weighted average
outstanding common shares reduced by the dilutive effect of stock
options.
<PAGE 6>
NOTE 4. Segments
The Company is principally engaged in the operation of mass
merchandising stores that serve customers primarily through the operation
of three segments. The Company identifies its segments based on
management responsibility within the United States and geographically for
all international units. The Wal-Mart Stores segment includes the
Company's discount stores and Supercenters in the United States. The
Sam's Club segment includes the warehouse membership clubs in the United
States. The International segment includes all operations in Argentina,
Brazil, Canada, China, Germany, Korea, Mexico and Puerto Rico. The
revenues in the "Corporate and Other" category result from sales to third
parties by McLane Company, Inc., a wholesale distributor.
Revenues by operating segment were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Wal-Mart Stores $23,233 $20,407 $43,970 $38,594
Sam's Club 5,687 5,120 10,727 9,762
International 2,948 1,460 5,553 2,774
Corporate and Other 1,653 1,399 3,090 2,665
Total Revenues $33,521 $28,386 $63,340 $53,795
</TABLE>
Operating profit and reconciliation to income before income taxes,
minority interest and equity in unconsolidated subsidiaries are as
follows (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
July 31, July 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Wal-Mart Stores $ 1,787 $ 1,412 $ 3,187 $ 2,516
Sam's Club 173 145 299 260
International 124 27 206 33
Corporate and Other (203) (125) (253) (115)
Operating profit 1,881 1,459 3,439 2,694
Interest expense 185 192 379 381
Income before income taxes,
minority interest and
equity in unconsolidated
subsidiaries $ 1,696 $ 1,267 $ 3,060 $ 2,313
</TABLE>
<PAGE 7>
NOTE 5. Comprehensive Income
As of February 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income". This
statement establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income is net
income, plus certain other items that are recorded directly to
shareholders' equity, bypassing net income. The only such item currently
applicable to the Company is foreign currency translation adjustments.
Comprehensive income was $990 million and $808 million for the
quarters ended July 31, 1998 and 1997, respectively and was $1,830 and
$1,427 for the six months ended July 31, 1998 and 1997, respectively.
The adoption of this Statement had no effect on the Company's
results of operations or financial position.
NOTE 6. Acquisition
In July 1998, the Company extended its presence in Asia with an
investment in Korea. The Company acquired a majority interest in four
units as well as six undeveloped sites from H. S. Chang for approximately
$179 million. Any resulting goodwill will be amortized over 40 years.
The four units were previously operated by Korea Makro. The transaction
will be accounted for using the purchase method and the financial results
will be consolidated in the Company's consolidated financial statements
during the third quarter of fiscal 1999. The transaction should not have
a material impact on the fiscal 1999 consolidated operating results. Pro
forma results of operations are not presented due to the insignificant
differences from the historical results.
NOTE 7. Pre-opening costs
During the second quarter, the Company adopted Statement of Position
(SOP) 98-5, "Reporting on the Costs of Start-Up Activities". The SOP
requires that the costs of start-up activities, including organization
costs, be expensed as incurred. The impact of the adoption of SOP 98-5
on the Company's results of operations was $13 million. Due to the
immateriality to the Company's results of operations, the initial
application was not reported as a cumulative effect of a change in an
accounting principle.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The Company had 18% sales increases for the quarter and the six
months ending July 31, 1998, that were attributable to an increase in
comparable sales in the Wal-Mart Stores segment of 9% for the quarter
and the six month period, an increase in comparable sales in the Sam's
<PAGE 8>
Club segment of 10% for the quarter and 9% for the six month period and
to the Company's expansion activities.
The increase in the International segment's sales was due
principally to the merger of our Mexican joint venture and public tender
offer that increased the Company's ownership in Cifra, S. A. de C. V.
(Cifra) and the acquisition of the Wertkauf hypermarket chain in Germany.
Since both of these acquisitions occurred during the last half of fiscal
1998, sales during the second quarter and first six months of fiscal 1998
do not include sales from the Wertkauf units or from the additional Cifra
units now included in the Company's consolidated sales and, thus are not
comparable to the sales for the second quarter and first half of fiscal
1999. Sam's Clubs sales as a percentage of total sales fell from 18% last
year to 17% for the quarter and six month period largely as a result of
more rapid growth of sales in other segments. International sales
accounted for 9% of total sales in both the second quarter and first six
months of fiscal 1999 compared with 5% during the same periods a year
ago.
Domestic expansion activity in the first six months of fiscal 1999
included nine new Wal-Mart stores, the conversion of 33 Wal-Mart stores
to Supercenters, six new Supercenters, three new Sam's Clubs and the
relocation or expansion of three additional Sam's Clubs. International
expansion included the addition of four units in Argentina, two units in
Brazil, one unit in Canada and three units in Mexico.
At July 31, 1998, the Company had 1,897 Wal-Mart stores, 480
Supercenters and 446 Sam's Clubs in the United States, along with 13
units in Argentina, nine units in Brazil, 145 Wal-Mart stores in Canada,
three units in China (operated under joint venture agreements), 21 units
in Germany, four units in Korea (operated under joint venture
agreements), 404 units in Mexico, and 14 units in Puerto Rico. This
compares with 1,935 Wal-Mart stores, 383 Supercenters, and 441 Sam's
Clubs in the United States, along with six units in Argentina, six units
in Brazil, 137 Wal-Mart stores in Canada, two units in China, 156 units
in Mexico, and 11 units in Puerto Rico at the same time last year.
The Company's gross profit as a percentage of sales increased from
20.81% in the second quarter of fiscal 1998 to 21.18% during the second
quarter of fiscal 1999. For the six month period ended July 31, 1998
gross profit as a percentage of sales was 21.14%, up from 20.80% in last
year's comparable period. Gross profit as a percentage of sales improved
in the Wal-Mart and International operating segments due to better mix
offset in part by competitive pricing and growth in the lower margin food
business. Sam's Clubs gross profit as a percentage of sales decreased due
to price rollbacks on over 15% of its merchandise assortment to enhance
member value. For the six month period ended July 31, 1998,
approximately one third of the improvement in consolidated gross profit
as a percent of sales was due primarily to changes in the total sales mix
of the operating segments. As the Sam's Club segment comprises a lower
percentage of consolidated Company sales, the gross profit stated as a
percentage of sales is positively impacted since its contribution to
gross margin is a lower percentage when compared with the Wal-Mart and
International operating segments.
<PAGE 9>
Operating, selling, general and administrative expenses decreased as
a percentage of sales from 16.79% during the second quarter of fiscal
1998 to 16.64% for the second quarter of fiscal 1999. For the six month
period ended July 31, 1998 operating, selling, general and administrative
expenses were 16.81%, down from 16.92% in last year's comparable period.
During the second quarter of fiscal 1998, the Company took a one-time
charge of $50 million for closing the majority of the Bud's Discount City
stores. Without the one-time charge, expenses would have been 16.62% of
sales for the second quarter and 16.82% for the six month period ended
July 31, 1997. All operating segments made improvements in their expense
percentage for the six month period when compared to the previous period.
The expense leverage was mitigated in the consolidated results due to the
percentage of our total volume decreasing in the Sam's Clubs segment,
which has lower expenses as a percentage of sales, while the percentage
of total volume increased in the International segment, which has higher
expenses as a percentage of sales than Sam's Clubs. Also, the Company
was impacted by the tighter labor markets and the increase in the minimum
wage that occurred subsequent to last year's second quarter.
The International segment's operating profit increased from $27
million in the second quarter of last year to $124 million this year and
increased from $33 million for the six months ended July 31, 1997 to $206
million in the first half of fiscal 1999. As noted above, the first six
months of fiscal 1999 include the operating profit of Cifra and Wertkauf.
Because the acquisitions occurred during the last half of fiscal 1998,
the additional operating profit resulting from these acquisitions
accounts for a large part of the increase in the International segment
operating profit.
Liquidity and Capital Resources
Cash flows provided by operating activities were $2,205 million for
the six months ended July 31, 1998 compared with $2,510 million for the
same period last year. Operating cash flow is down in fiscal 1999
primarily due to the addition of $1,133 million in inventory compared
with an increase of $514 in the same period in fiscal 1998 and to an
increase in accrued liabilities in the first half of last fiscal year
compared with a small decrease for the six month period ended July 31,
1998. During the first half of fiscal 1999, the Company repurchased $472
million of its common stock, paid dividends of $347 million and invested
$1,626 million in capital expenditures.
At July 31, 1998, the Company had total assets of $46,874 million
compared with $45,384 million at January 31, 1998. Working capital at
July 31, 1998 was $5,141 million, up $249 million from January 31, 1998.
The ratio of current assets to current liabilities was 1.3 to 1.0 at July
31, 1998, 1.5 to 1.0 at July 31, 1997, and 1.3 to 1.0 at January 31,
1998.
In March 1998, the Company announced its intention to increase the
size of its existing share repurchase program by approximately $1.6
billion. With this amount and the remaining portion from last year's
program, the Company may repurchase up to $2 billion of its common stock.
<PAGE 10>
The Company also increased dividends by 15% in fiscal 1999 to $.31 per
share.
On May 7, 1998, the Company filed with the Securities and Exchange
Commission a registration statement for debt securities aggregating $750
million. In June 1998, the Company sold $500 million of bonds pursuant
to its previously filed shelf registration statements and the
registration statement described above. The bonds bear interest at 5.85%
until June 1, 2000. At that date and every second June 1 thereafter
(Reset Date), the interest rate may be reset. The bonds have put options
imbedded that, if exercised, would require the Company to purchase the
outstanding bonds at 100% of the principal amount. The put options may
be exercised on each Reset Date. The proceeds of the sale were used to
meet general working capital requirements.
The Company anticipates that it will continue to generate
significant operating cash flow. The Company foresees no difficulty in
obtaining long-term financing in view of its credit rating and favorable
experiences in the debt market in the past few years.
The Company may issue public debt securities aggregating $501
million under shelf registration statements on file with the Securities
and Exchange Commission. Operating cash flow along with the Company's
ability to obtain short-term or long-term financing should provide
sufficient cash to use for capital expenditures, pay dividends, meet
maturing debt demands, and continue the share repurchase plan.
Accounting Pronouncements
In March 1998, the Accounting Standards Executive Committee (AcSEC)
issued Statement of Position (SOP) 98-1, "Accounting For the Costs of
Computer Software Developed For or Obtained For Internal-Use". The SOP
will be effective for the Company beginning February 1, 1999. The SOP
will require the capitalization of certain costs incurred in connection
with developing or obtaining software for internal-use. Currently, costs
related to developing internal-use software are expensed as incurred. The
Company does not anticipate there will be a material impact on the
results of operations or financial position after SOP 98-1 is adopted.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The Statement will be effective for the Company beginning
February 1, 2000. The new Statement requires all derivatives to be
recorded on the balance sheet at fair value and establishes accounting
treatment for three types of hedges: hedges of changes in the fair value
of assets, liabilities, or firm commitments; hedges of the variable cash
flows of forecasted transactions; and hedges of foreign currency
exposures of net investments in foreign operations. The Company is
analyzing the implementation requirements and currently does not
anticipate there will be a material impact on the results of operations
or financial position after the adoption of Statement No. 133.
<PAGE 11>
Year 2000
The Company has been evaluating and adjusting all known date-
sensitive systems and equipment for Year 2000 compliance. The assessment
phase of the Year 2000 project is substantially complete and included
both information technology, such as point-of-sale computer systems, as
well as non-information technology equipment, such as warehouse conveyor
systems. Over 95% of the required coding conversions on information
technology have occurred to date. The Company anticipates completing all
known remaining coding conversions during the current fiscal year.
Virtually all of the compliance was performed or is expected to be
performed by Company associates.
The next phase of the Company's Year 2000 project, complete system
testing, is scheduled to begin during the third quarter of the current
fiscal year. Testing will continue for all existing systems and ongoing
new releases and enhancements to ensure readiness.
The total estimated cost of the conversion is $12 million, which is
being expensed as incurred. Approximately $9 million of the cost is
related to reprogramming or replacement of software, while approximately
$3 million is related to acquisition of hardware. Approximately $6
million of the $12 million cost of conversion has been incurred as of the
end of the second quarter. All of these costs are being funded through
operating cash flows. These costs are an immaterial part of the
Company's information technology budget. The Company's Information
Systems Division has not deferred any information technology projects to
address the Year 2000 issue.
In addition to internal Year 2000 implementation activities, the
Company is communicating with others with which our systems interface or
on which they rely to determine the extent to which those companies are
addressing their Year 2000 compliance. Testing is beginning in the third
quarter of the current fiscal year and will continue through December
1999. There can be no assurance that there will not be an adverse effect
on the Company if third parties, such as utility companies or merchandise
suppliers, do not convert their systems in a timely manner and in a way
that is compatible with the Company's systems. However, management
believes that ongoing communication with and assessment of these third
parties will minimize these risks.
Although the Company anticipates minimal business disruption will
occur as a result of Year 2000 issues, possible consequences include, but
are not limited to, loss of communications links with certain store
locations, loss of electric power, inability to process transactions,
send purchase orders, or engage in similar normal business activities.
In addition, since there is no uniform definition of Year 2000 compliance
and not all customer situations can be anticipated, the Company may
experience an increase in sales returns of merchandise that may contain
hardware or software components. If returns of merchandise increase,
such returns are not expected to be material to the Company's financial
condition.
To date, the Company has not established a contingency plan for
possible Year 2000 issues. Where needed, the Company will establish
<PAGE 12>
contingency plans based on our actual testing experience with our
supplier base and assessment of outside risks. We anticipate contingency
plans to be in place by July 31, 1999.
The cost of the conversions and the completion dates are based on
management's best estimates and may be updated as additional information
becomes available. Readers are referred to Item 5 of this report, which
addresses forward-looking statements made by the Company.
<PAGE 13>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Shareholders' Meeting was held June 5, 1998,
in Fayetteville, Arkansas.
Election of Directors:
At that meeting, the shareholders elected for one-year terms all
persons nominated for directors as set forth in the Company's proxy
statement dated April 10, 1998.
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
<S> <C> <C> <C> <C>
Jeronimo Arango 2,049,481,540 14,283,631 0 0
John A. Cooper, Jr. 2,050,101,244 13,663,927 0 0
Stephen Friedman 2,036,719,385 27,045,786 0 0
Stanley C. Gault 2,049,529,620 14,235,551 0 0
David D. Glass 2,048,856,076 14,909,095 0 0
Roland A. Hernandez 2,041,695,114 22,070,057 0 0
Dr. Frederick S. Humphries 2,048,179,637 15,585,534 0 0
E. Stanley Kroenke 2,048,790,589 14,974,582 0 0
Elizabeth A. Sanders 2,049,988,600 13,776,571 0 0
Jack C. Shewmaker 2,048,699,008 15,066,163 0 0
Donald G. Soderquist 2,048,906,691 14,858,480 0 0
Dr. Paula Stern 2,049,547,293 14,217,878 0 0
Jose H. Villarreal 2,021,919,983 41,845,188 0 0
John T. Walton 2,048,886,794 14,878,377 0 0
S. Robson Walton 2,049,030,240 14,734,931 0 0
</TABLE>
Proposal to Adopt Wal-Mart Stores, Inc. Stock Incentive Plan of 1998:
The shareholders approved the adoption of the Stock Incentive Plan
of 1998. Under the Plan, incentive and non-qualified stock options,
stock appreciation rights, stock value equivalent awards and shares of
restricted stock may be granted to any associate or non-associate
director of Wal-Mart and its affiliates. The Plan is administered by
the Compensation and Nominating Committee and by the Stock Option
Committee.
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
<S> <C> <C> <C>
1,554,488,237 505,241,335 4,035,599 0
</TABLE>
Proposal to Adopt Wal-Mart Stores, Inc. Management Incentive Plan of
1998:
The shareholders approved the adoption of the Management Incentive
Plan of 1998. The purpose of the Plan is to motivate and reward Company
management, including executive officers, for profit improvement by
setting goals related to profitability. Under the Plan, objective annual
performance goals for the Company and its divisions will be established
<PAGE 14>
at the beginning of each fiscal year by the Compensation and Nominating
Committee. The Plan is administered by the Compensation and Nominating
Committee.
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
<S> <C> <C> <C>
2,044,305,155 54,848,259 4,611,757 0
</TABLE>
Shareholder Proposal:
The Shareholders rejected a shareholder proposal requesting that the
Company endorse the Coalition for Environmentally Responsible Economies
(CERES) Principles as a part of its commitment to be publicly accountable
for its environmental impact.
<TABLE>
<CAPTION>
Against or Broker
For Withheld Abstentions Non-Votes
<S> <C> <C> <C>
66,227,047 1,800,877,467 51,740,894 19,763
</TABLE>
Item 5. Other Information
The Private Securities Litigation Reform Act of 1995 ("the Act")
provides a safe harbor for forward-looking statements made by or on
behalf of the Company. Certain statements contained in Management's
Discussion and Analysis and in other Company filings are forward-looking
statements. These statements discuss, among other things, expected
growth, future revenues, future cash flows and future performance. The
forward looking statements are subject to risks and uncertainties
including but not limited to the cost of goods, competitive pressures,
inflation, consumer debt levels, currency exchange fluctuations, trade
restrictions, changes in tariff and freight rates, interest rate
fluctuations and other capital market conditions, and other risks
indicated in the Company's filings with the Securities and Exchange
Commission. Actual results may materially differ from anticipated results
described in these statements.
Item 6. Exhibits and Reports on Form 8-K
(a) The following documents are filed as exhibits to this Form
10-Q:
Exhibit 10(a) - Form of individual special stock option grant,
post-termination agreement and covenant not to compete between
David D. Glass and Wal-Mart Stores, Inc. is filed herewith as
an Exhibit to this Form 10-Q.
Exhibit 10(b) - Form of individual special stock option grant,
post-termination agreement and covenant not to compete between
Donald G. Soderquist and Wal-Mart Stores, Inc. is filed
herewith as an Exhibit to this Form 10-Q.
<PAGE 15>
Exhibit 10(c) - Form of individual special stock option grant,
post-termination agreement and covenant not to compete between
Bob L. Martin and Wal-Mart Stores, Inc. is filed herewith as an
Exhibit to this Form 10-Q.
Exhibit 10(d) - Form of individual special stock option grant,
post-termination agreement and covenant not to compete between
H. Lee Scott, Jr. and Wal-Mart Stores, Inc. is filed herewith
as an Exhibit to this Form 10-Q.
Exhibit 10(e) - Form of individual special stock option grant,
post-termination agreement and covenant not to compete between
Thomas M. Coughlin and Wal-Mart Stores, Inc. is filed herewith
as an Exhibit to this Form 10-Q.
Exhibit 27 - Financial Data Schedule
(b) A Form 8-K was filed on June 2, 1998, to file the form of
the Puttable Reset Securities PURSsm due June 1, 2018, and the
opinion of counsel to the Company relating to the Company's
public offering of $500 million aggregate principal amount.
A Form 8-K was filed on June 2, 1998, to file the form of
Calculation Agency Agreement and the Statement of Eligibility
of Trustee related to the Company's public offering of $500
million aggregate principal amount of its Puttable Reset
Securities PURSsm due June 1, 2018.
<PAGE 16>
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 thereunto duly authorized.
WAL-MART STORES, INC.
Date: September 11, 1998 /s/David D. Glass________________
David D. Glass
President and
Chief Executive Officer
Date: September 11, 1998 /s/John B. Menzer________________
John B. Menzer
Executive Vice President
and Chief Financial Officer
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 David
D. Glass (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/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers.
(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 Benton
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/S. Robson Walton /s/David D. Glass
S. Robson Walton David D. Glass
Chairman of the Board President and Chief
Executive Officer
July 20, 1998 July 20, 1998
Date Date
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 21st day of May, 1998 by
and between Wal-Mart Stores, Inc. (hereinafter "Wal-Mart") and Donald
G. Soderquist (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 Vice Chairman
and Chief Operating 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 Vice Chairman and Chief Operating 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/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers.
(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 Benton
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/S. Robson Walton /s/Donald G. Soderquist
S. Robson Walton Donald G. Soderquist
Chairman of the Board Vice Chairman and
Chief Operating Officer
May 21, 1998 May 21, 1998
Date Date
8
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 1st day of May, 1998 by
and between Wal-Mart Stores, Inc. (hereinafter "Wal-Mart") and Bob L.
Martin (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 Executive Vice
President and President of the International Division, 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 Executive Vice President and President of the
International Division, 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/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers.
(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 Benton
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/S. Robson Walton /s/Bob L. Martin
S. Robson Walton Bob L. Martin
Chairman of the Board Executive Vice President and
President of the
International Division
April 22, 1998 April 22, 1998
Date Date
8
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 30th day of June, 1998 by
and between Wal-Mart Stores, Inc. (hereinafter "Wal-Mart") and H. Lee
Scott, Jr. (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 Executive Vice
President and President of the Wal-Mart Stores Division, 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 Executive Vice President and President of the Wal-Mart
Stores Division, 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/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers.
(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 Benton
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/S. Robson Walton /s/H. Lee Scott, Jr.
S. Robson Walton H. Lee Scott, Jr.
Chairman of the Board Executive Vice President and
President of the
Wal-Mart Stores Division
June 30, 1998 June 30,1998
Date Date
8
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 3rd day of September,
1998 by and between Wal-Mart Stores, Inc. (hereinafter "Wal-Mart")
and Thomas M. Coughlin (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 Executive Vice
President and Chief Operating Officer of the Wal-Mart Stores Division,
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 Executive Vice President and Chief Operating Officer of
the Wal-Mart Stores Division, 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/Dayton Hudson, Costco, K-Mart, Home Depot, Dollar General,
Family Dollar, Kohls, Hudson Bay Company, Carrefour, HEB, and Fred
Meyers.
(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 Benton
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/S. Robson Walton /s/Thomas M. Coughlin
S. Robson Walton Thomas M. Coughlin
Chairman of the Board Executive Vice President and
Chief Operating Officer
of the Wal-Mart Stores Division
September 3, 1998 September 3,1998
Date Date
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