Exhibit 10.2
SEPARATION AGREEMENT, WAIVER AND RELEASE
This SEPARATION AGREEMENT, WAIVER AND RELEASE is made as of November 22,
1998 between EAGLE HARDWARE & GARDEN, INC., a Washington corporation (the
"Company") and DAVID HEERENSPERGER ("Executive").
WHEREAS, Mariner Merger Corporation and Lowe's Company, Inc. ("Lowe's")
and the Company have entered into an Agreement and Plan of Merger By and Among
the Company, Mariner Merger Corporation and Lowe's (the "Merger Agreement")
whereby the Company will become a subsidiary of Lowe's; and
WHEREAS, in light of the change in ownership of the Company, Executive
desires to resign as the Chairman of the Company's Board of Directors; and
WHEREAS, Executive made significant contributions to the growth and
success of the Company; and
WHEREAS, the Company, in recognition of Executive's contributions and
years of valuable service to the Company wishes to provide special severance
benefits to him; and
WHEREAS, Executive and the Company, in the spirit of Executive's
valuable contributions to the Company, wish to amicably resolve any and all
issues relating to the conclusion of Executive's employment with the Company on
mutually satisfactory terms;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
and undertakings hereinafter set forth, the parties hereto agree as follows:
1. CONCLUSION OF EMPLOYMENT. Executive acknowledges that he has
voluntarily resigned from his employment as Chairman of the Company's Board of
Directors and from any other position he has held with the Company, effective as
of the "Effective Time" (as such term is defined in the Merger Agreement).
Executive acknowledges that thereafter he will no longer have any authority to
act on behalf of the Company and Executive shall not hold himself out as a
representative of the Company for any purpose. Executive agrees that he will not
seek further employment with the Company and he specifically waives and
renounces any claim for future employment with the Company.
2. SPECIAL SEPARATION BENEFIT, ADMINISTRATIVE SUPPORT, COBRA
(a) The Company shall pay to Executive during the two year period
beginning on the first day of the month coincident with or next
following the "Effective Time" (as defined in the Merger Agreement) (the
"Term"), a special separation benefit
equal to $315,000 per annum. The special separation benefit, less
applicable income tax, employment tax and other required authorized
withholdings, shall be paid in twenty-four equal and consecutive monthly
installments beginning with the first day of the month coincident with
or next following the "Effective Time" (as defined in the Merger
Agreement). In addition, the Company shall transfer to Executive, for no
additional payment, title and possession to Executive's office
furniture, including Executive's desk, credenza, four office chairs,
coffee table, sofa, lamp, table, facsimile machine and copier.
(b) During the Term the Company shall pay to Executive up to
$3,000 per month, less applicable income tax, employment tax and other
required or authorized withholdings, as reimbursement for Executive's
expense of leasing an office for his use.
(c) During the Term the Company will provide administrative and
secretarial support to Executive at the Company's sole expense.
Executive may designate a secretary (including Sibyl Tice) who is
employed by the Company and the Company will make such person available
to Executive for this purpose.
(d) The Company will pay the cost of Executive's continued health
care coverage under the Company's group health care plan during the
period beginning with the first day of the month coincident with or next
following the "Effective Time" (as defined in the Merger Agreement) and
ending on the earlier of (i) the last day of the eighteenth month
thereafter or (ii) the date that Executive's right to continued coverage
terminates under Section 4980B of the Internal Revenue Code of 1986, as
amended.
3. NONCOMPETITION.
(a) Executive agrees that Executive will not take certain actions
that would be damaging to the Company's or Lowe's competitive position.
By making this commitment, Executive agrees that Executive will not take
any such actions either directly or indirectly, either as principal,
agent, employee, employer, owner, stockholder (owning more than 5% of a
corporation's shares), partner, contractor, consultant or in any other
individual or representative capacity whatsoever.
(b) Executive agrees that for twenty-four (24) months after the
termination of his employment, Executive will not:
(1) solicit or induce any officer, store manager, district
manager, or other employee of the Company or Lowe's to leave his
or her employment with the Company or Lowe's;
(2) hire, or cause to be hired, for any employment in a
line of business competitive with that conducted by the Company
or Lowe's, any
2
person who within the preceding twenty-four month period has
been employed as an officer, store manager, district manager,
merchant or buyer of the Company or Lowe's; provided that this
Section 3(b)(2) shall not prohibit the employment of any person
involuntarily terminated by the Company; or
(3) aid or assist any other person, firm, corporation, or
other entity to do any of the acts described in the previous
subsections (1) and (2) of this Section 3(b).
(c) Executive agrees that for twenty-four (24) months after the
termination of his employment, Executive will not:
(1) accept employment as an officer, director, manager,
assistant manager or other employee for,
(2) obtain any ownership interest (other than an ownership
interest of less than 1% in a publicly traded company) in,
(3) be engaged as a consultant or contractor for, or
(4) otherwise render services for or on behalf of,
any Competitor. Executive understands that the business and business
development of the Company and Lowe's and Executive's previous
responsibilities on behalf of the Company are nationwide in scope.
Accordingly, Executive agrees that this provision will apply throughout
the continental United States.
(d) Executive acknowledges that after the termination of his
employment, Executive will be reasonably able to earn a livelihood
without violating the terms of this Section 3.
(e) For purposes of this Agreement, the term "Competitor" means
The Home Depot, Inc., Hechinger Investment Company, Inc. (including Home
Quarters, Hechinger's, Builders Square) or Home Base and/or any
affiliates, parents or subsidiaries of such entities.
4. CONFIDENTIALITY.
(a) During Executive's employment with the Company Executive may
have learned information that is confidential to the Company
("Confidential Information"). Such Confidential Information includes,
but is not limited to: trade secrets; acquisition, merger, or business
development plans or strategies; plans for opening stores and plans for
relocating stores; distribution information; purchasing and product
information; advertising and promotional programs and plans; research or
3
developmental projects; financial or statistical data; sales and account
information, customer information, including but not limited to
demographic information, and information relating to product preference;
sales and marketing plans and strategies; pricing strategies and
reports; legal documents and records; inventions, techniques, designs,
processes, and machinery; personnel information; and any other
information of a similar nature that is not known or made available to
the public or to competitors of the Company or Lowe's, which, if misused
or disclosed, could adversely affect the business of the Company or
Lowe's. Confidential Information includes any such information that
Executive may prepare or create during Executive's employment with the
Company, as well as such information that has been or may be prepared or
created by others.
(b) Executive agrees that Executive will not disclose any
Confidential Information to any person (including any Company employee
who does not need to know such Confidential Information), agency,
institution, company or other entity, and will not use any Confidential
Information in any way, except as required by law, unless Executive
first obtains written consent of an officer of Lowe's.
(c) Executive acknowledges and agrees that Executive's duties and
obligations under this Section 4 will continue for as long as such
Confidential Information remains confidential to the Company or Lowe's.
5. WAIVER, RELEASE AND COVENANT NOT TO SUE.
(a) By signing this Agreement, Executive forever waives, releases
and covenants not to sue the Company with respect to any and all claims
against the Company of any kind or nature whatsoever arising from any
events which have occurred up to the date Executive executes this
Agreement, including all claims arising from or relating in any way to
Executive's employment with the Company or the conclusion of that
employment, whether such claims are now known or are later discovered.
(b) Executive does not waive any rights or claims that may arise
after the date this Agreement is executed.
(c) Executive acknowledges that there is a risk that after this
Agreement is executed, Executive may discover, incur, or suffer from
claims which were unknown or unanticipated at the time this Agreement is
executed, including but not limited to any claims arising from or relating
to Executive's employment with the Company or the conclusion of that
employment, which, if known at the time this Agreement is executed, could
have materially affected Executive's decision to execute this Agreement.
Executive acknowledges that he is assuming the risk of such unknown and
unanticipated claims and agrees that this Agreement applies to any and all
such claims.
6. REMEDIES FOR BREACH.
4
(a) Executive acknowledges and agrees that any breach of Section
3, 4 or 5 would constitute a material breach of this Agreement for which
the Company would be without an adequate remedy at law.
(b) Executive acknowledges that the Company would be irreparably
harmed if any of the covenants in Section 3, 4 or 5 of this Agreement were
not specifically enforced. Accordingly, the Company shall be entitled to
injunctive relief for the purpose of restraining Executive from violating
those covenants (and no bond or other security shall be required in
connection therewith), in addition to any other relief to which the
Company may be entitled.
(c) In the event that Executive commits a material breach of this
Agreement, the Company shall have the rights to suspend any and all
further payments to Executive under this Agreement, to recover from
Executive amounts provided to Executive pursuant to this Agreement prior
to the suspension of payments, and to seek all other remedies that may be
available at law or in equity.
7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the Company and any successor to the Company, and
any such successor to the Company shall be deemed substituted for the Company
under this Agreement. The obligations of Executive hereunder are expressly
declared to be nonassignable and nontransferable.
8. NOTICES. Any notice given to the Company pursuant to this Agreement
may be served by personal delivery or by sending the same by first-class mail
addressed to the Company's principal executive office at the time. Any notice
given to Executive pursuant to this Agreement may be served by personal delivery
or by sending the same by first-class mail addressed to Executive at his address
on the records on the Company.
9. AMENDMENT. No modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing specifically
referring hereto and signed by the Company and Executive.
10. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
of the parties hereto with respect to the conclusion of Executive's employment
and the obligations of the Company and Executive.
11. NO WAIVER. The failure to enforce at any time any provision of this
Agreement, or to require at any time performance of the other party of any
provision hereof, shall in no way be construed as a waiver of such provision or
to affect either the validity of this Agreement or the obligations of either
party hereto, or the right of either party thereafter to enforce each and every
such provision in accordance with the terms of this Agreement.
5
12. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed in
accordance with and governed by the substantive laws of the State of Washington
without regard to choice of law provisions. Any dispute arising between the
parties related to or involving this Agreement will be litigated in a federal or
state court in the State of Washington.
13. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions of this
Agreement, which shall be construed in all respects as if such invalid or
unenforceable provision was omitted. While the restrictions set forth above are
considered by the parties to be fair and reasonable in all circumstances, it is
agreed that if any such restrictions shall be adjudged to be void or ineffective
for whatever reason, but would be adjudged to be valid and effective if part of
the wording thereof was deleted or the periods or geographical scope thereof
reduced, the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
6
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
EAGLE HARDWARE & GARDEN, INC.
By: /s/ RICHARD T. TAKATA
-------------------------
Name: Richard T. Takata
Title: President, Chief Executive Officer
and Chief Operating Officer
DAVID HEERENSPERGER
/s/ DAVID HEERENSPERGER
-----------------------------
7