EXHIBIT 10.1
[LOGO OF WILD OATS APPEARS HERE]
June 14, 1999
Xx. Xxxx Xxxx Xxxxx
C/o Wild Oats Markets
0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
Re: EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into as of the 1st
day of June, 1999, by and between Wild Oats Markets, Inc. (the "Corporation"), a
Delaware corporation and Xxxx Xxxx Xxxxx (the "Executive"). The Corporation
desires to employ Executive, and Executive desires to be an Executive Officer of
the Corporation, pursuant to the terms and conditions set forth herein. In
consideration of the foregoing and the promises and covenants set forth below,
the parties agree as follows:
1. Employment. The Corporation hereby employs Executive as Chief Financial
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Officer and Vice President Finance, and Executive agrees to be employed in such
position during the term of this Agreement. Executive shall devote her full
time and efforts to perform her duties faithfully and diligently and, to the
best of her ability, to advance the interests of the Corporation.
2. Compensation. (a) The Corporation shall pay Executive a base salary of
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$150,000.00 per year, with such increases as may be approved by the Compensation
Committee of Corporation's Board of Directors, payable in accordance with the
Corporation's practices in effect from time to time.
(b) In addition, Executive shall be provided with 100% Corporation-paid
medical and dental insurance; four weeks paid vacation per year; and other
benefits that are comparable to the benefits offered to other executive officers
of the Corporation in general, including stock option grants as approved by the
Compensation Committee of the Corporation's Board of Directors. The Corporation
also shall reimburse Executive for all out-of-pocket expenses reasonably
incurred and paid by her in the performance of her duties pursuant to this
Agreement. Such reimbursement shall be in accordance with the Corporation's
policies, and Executive shall furnish to the Corporation the documentation
required to support the deductibility of such expenses for federal income tax
purposes. All payments made under this Agreement are subject to all deductions
required by law.
(c) Executive also shall be entitled to participate in an annual bonus
plan wherein Executive shall receive a bonus of up to fifty percent (50%) of her
base salary based upon
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Page 2
exceeding the internally budgeted EBIT (earnings before interest and taxes) for
the corresponding fiscal year achieved by the Corporation. Budgeted annual EBIT
shall be determined based on the annual operating plan submitted to and approved
by the Corporation's Board of Directors. The bonus payment, if any, shall be
made reasonably promptly after audited financial statements are available to the
Corporation and may be paid in either cash or stock options, or a combination of
both, as mutually agreed upon between Executive and the Compensation Committee.
3. Term.
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a. The term of this Agreement (the "Term") shall commence on the date
hereinabove mentioned and shall terminate on May 30, 2000; provided, however,
that the Corporation may extend this Agreement for additional successive one (1)
year terms upon approval by the Compensation Committee of the Board of
Directors. Notwithstanding the foregoing, however, if the Executive's
employment is terminated as the result of a Change in Control (as defined in
Section 3(b)(v)) during the Term of this Agreement, this Agreement shall
continue in effect for a period of twenty-four (24) months after the last day of
the month in which such Change in Control occurred.
b. The Term may be terminated at any time upon the occurrence of any of
the following events:
i). The death or permanent disability of Executive;
ii). Executive's voluntary resignation;
iii). Executive's discharge for cause;
iv). Upon the thirtieth (30th) day following written notice of
termination other than for cause (the "Termination Without Cause
Notice") from the Corporation to Executive; or
v). On Executive's election for Good Reason upon a Change in
Control. For purposes of this Agreement, a Change in Control shall be
deemed to occur if:
1. any Person (as defined below) becomes the Beneficial Owner
(as defined below), directly or indirectly, of securities of
the Corporation representing a majority or more of the
combined voting power of the Corporation's then outstanding
securities. For purposes of this Agreement, (A) the term
"Person" is used as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"); provided, however, that unless this
Agreement provides to the contrary, the term shall not
include Xxxxxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxx
Venture Capital Associates or their affiliates, the
Corporation, any trustee or other fiduciary holding
securities under an employee benefit plan of the
Corporation, or any corporation owned, directly or
indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of
stock of the Corporation, and (B) the term "Beneficial
Owner" shall have the meaning given to such term in Rule
13d-3 under the Exchange Act;
2. during any period of two consecutive years following the
execution of this Agreement, individuals who at the
beginning of such period
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constitute the Board, and any new director (other than a
director designated by a person who has entered into an
agreement with the Corporation to effect a transaction
described in Sections 3(b)(v), (1) or (3)) whose election by
the Board or nomination for election by the Corporation's
stockholders was approved by a vote of at least a majority
of the directors then still in office who either were
directors at the beginning of such period or whose election
or nomination for election was previously so approved
(hereinafter referred to as "Continuing Directors"), cease
for any reason to constitute at least a majority thereof;
3. the stockholders of the Corporation consummate a plan of
complete liquidation of the Corporation or an agreement for
the sale or disposition by the Corporation to an unrelated
third party or parties of all or substantially all of the
Corporation's assets.
c. Executive shall be considered permanently disabled if Executive is
absent from employment or unable to render services hereunder on a full-time
basis by reason of physical or mental illness or disability for three (3) months
or more in the aggregate in any consecutive twelve month period during the Term.
d. As used in Paragraph 3(b)(ii), "voluntary resignation" means Executive
has resigned for any reason other than at the express written request, whether
or not for cause, of the Board.
e. As used in Paragraph 3(b)(iii), "cause" shall mean only that (i)
Executive has refused to perform or discharge her material objections or duties
hereunder for thirty (30) days after notice from the Board, or (ii) Executive
has engaged in illegal or other wrongful conduct substantially detrimental to
the business or reputation of the Corporation.
4. Compensation upon Termination
a. If this Agreement is terminated pursuant to Paragraphs 3(b)(i) or
3(b)(ii), this Agreement shall terminate immediately or at such later date as
shall be designated by the Board and all of Executive's rights hereunder shall
terminate effective upon such termination.
b. If this Agreement is terminated pursuant to Paragraph 3(b)(iii), this
Agreement shall terminate immediately and all of Executive's rights hereunder
shall terminate effective upon such termination and Executive shall not be
entitled to any further benefits. Except as provided above and as otherwise
specified in any notice of termination, Executive shall not continue after
termination to be an Executive Officer of the Corporation for any purpose and
all rights Executive might thereafter have as an Executive Officer pursuant to
any plan shall cease, except as expressly provided to the contrary in writing
under any such plan.
c. If the Corporation should terminate this Agreement pursuant to
Paragraph 3(b)(iv) by giving a Termination Without Cause Notice:
i). Executive shall cease to be Chief Financial Officer, or to hold
such other office or position Executive then holds in the Corporation or
any subsidiary or affiliate thereof, effective upon the date specified in
the Termination Without Cause Notice (the "Effective Date").
Xx. Xxxx Xxxx Xxxxx
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ii). The Corporation shall be obligated and shall continue to pay
Executive a salary at Executive's then annual salary (excluding bonus) for
a period of one (1) year following the Effective Date. Such payments shall
be made in installments payable as provided in Section 2 hereof.
d. If this Agreement should terminate pursuant to Paragraph 3(b)(v):
i). General. If any of the events described in Section 3(b)(v)
constituting a Change in Control shall have occurred, and the Executive
terminates for Good Reason, the Executive shall be entitled to the benefits
provided in Section 4(d)(iii) upon the subsequent termination of her
employment during the term of this Agreement. In the event the Executive's
employment with the Corporation is terminated for any reason and
subsequently a Change in Control occurs, she shall not be entitled to any
benefits hereunder.
ii) Good Reason. The Executive shall be entitled to terminate her
employment for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without her express written consent, the occurrence after a
Change in Control of any of the following circumstances:
(A) a significant adverse alteration in the nature or status of
her responsibilities or the conditions of her employment from those in
effect immediately prior to such Change in Control;
(B) the Corporation's reduction of her annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for proportional across-the-board salary reductions
similarly affecting all management personnel of the Corporation and
all management personnel of any Person in control of the Corporation;
(C) the relocation of the Corporation's offices at which she is
principally employed immediately prior to the Change of Control to a
location more than 25 miles further from the Executive's home than the
previous location;
(D) the Corporation's failure to pay to the Executive any portion
of her current compensation or to pay any portion of an installment of
deferred compensation under any deferred compensation program of the
Corporation within thirty (30) days of the date such compensation is
due;
(E) the Corporation's failure to continue in effect any material
compensation or benefit plan in which the Executive participates or to
arrange for him to receive any perquisites to which she is entitled
immediately prior to the Change in Control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the Corporation's failure
to continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of participation relative to other participants, as existed at
the time of the Change in Control;
(F) the Corporation's failure to continue to provide the
Executive with benefits substantially similar to those enjoyed by him
under any of the Corporation's life insurance, medical, health and
accident, or disability plans in which she was participating at the
time of the Change in Control, the taking of any action by the
Corporation which would directly or indirectly materially reduce
Xx. Xxxx Xxxx Xxxxx
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any of such benefits, or the failure by the Corporation to provide him
with the number of paid vacation days to which she was entitled
pursuant to this Agreement.
(G) the Corporation's failure to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7.
(H) the continuation or repetition, after written notice of
objection from the Executive, of harassing or denigrating treatment of
him inconsistent with her position with the Corporation.
(I) The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
iii). Upon a termination for Good Reason under Paragraph 3(b)(v), the
Corporation shall be obligated and shall continue to pay Executive a salary
at Executive's then annual salary (excluding bonus) for a period of two (2)
years following the Effective Date. Such payments shall be made in
installments payable as provided in Section 2 hereof, provided, however,
that Executive may elect a lump sum payment discounted at the applicable
long term federal interest rate.
iv). If the Executive's employment is terminated under Paragraph
3(b)(v), all outstanding stock options held by Executive shall become
immediately and fully vested. Such options must be exercised within 30
days of the Effective Date.
v). The Corporation shall pay to the Executive all legal fees and
expenses reasonably incurred by him, in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit
provided by this Agreement.
vi). If by reason of Section 280G of the Internal Revenue Code
("Code") any payment or benefit received or to be received by the Executive
in connection with a Change in Control or the termination of her employment
would not be deductible (in whole or in part) by the Corporation, an
Affiliate or other person making such payment or providing such benefit,
then the severance payments payable under (iii) above shall be reduced
until no portion of the total payments is not deductible by reason of
Section 280G. For purposes of this limitation, (A) no portion of the total
payments, the receipt or enjoyment of which the Executive shall have
effectively waived in writing prior to the date of payment of the Severance
Payments shall be taken into account; (B) no portion of the total payments
shall be taken into account which in the opinion of the Corporation's
counsel does not constitute a "parachute payment" within the meaning of
Code Section 280G(b)(2); (C) the severance payments shall be reduced only
to the extent necessary so that the severance payments in their entirety
constitute reasonable compensation for services actually rendered within
the meaning of Code Section 280G(b)(4), and (D) the value of any noncash
benefit or any deferred payment or benefit included in the Severance
Payments shall be determined by the Corporation's independent auditors in
accordance with the principles of Code Sections 280G(d)(3) and (4). For
purposes of this Section 4(d)(vi), the term "Affiliate" means the
Corporation's successors, any Person whose actions result in a Change in
Control or any corporation affiliated (or which, as a result of the
completion of the transactions causing a Change in Control shall become
affiliated) with the Corporation within the meaning of Code Section 1504.
Xx. Xxxx Xxxx Xxxxx
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(vii) The Executive shall not be required to mitigate the amount of any
payment provided for in this Section 4(d) by seeking other employment or
otherwise nor shall the amount of any payment or benefit provided for in this
Section 4(d) be reduced by any compensation earned by the Executive as the
result of employment by another employer or self-employment or by retirement
benefits.
5. Return of Documents and Property. Upon the termination of Executive's
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employment by the Corporation, or at any time upon the request of the
Corporation, Executive (or her heir or personal representative) shall deliver to
the Corporation: (a) all documents and materials containing trade secrets and
other confidential information relating to the Corporation's business and
affairs, and (b) all other documents, materials and other property belonging to
the Corporation or its affiliated companies that are in the possession or under
the control of Executive.
6. Competition, Confidential Information.
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a. The Corporation and Executive agree that when the term "Confidential
Information" is used in this Section 6, that said term shall refer only to
Confidential Information of the Corporation which is not generally known to
others engaged in similar businesses or activities as the Corporation, or which
was not known by Executive prior to her employment by the Corporation.
b. The Executive and the Corporation recognize that due to the nature of
her engagement hereunder, and the relationship of the Executive to the
Corporation, the Executive will have access to and will acquire, and may assist
in developing confidential and proprietary information which is not generally
known to others engaged in similar business or activities as the Corporation, or
which was not known by Executive prior to her employment by the Corporation
(hereinafter "Confidential Information") relating to the business and operations
of the Corporation, including, without limiting the generality of the foregoing,
information with respect to its present and prospective products, systems,
customers, agents, processes, and sales and marketing methods except that such
Confidential Information shall exclude information already in the public domain
or which enters the public domain through sources other than the Executive. The
Executive acknowledges that such Confidential Information is of central
importance to the business of the Corporation and that disclosure of it to
others or its use by others could cause substantial loss to the Corporation. The
Executive and the Corporation also recognize that an important part of the
Executive's duties will be to develop good will for the Corporation through her
personal contact with customers, agents and others having business relationships
with the Corporation, and that there is a danger that this good will, a
proprietary asset of the Corporation, may follow the Executive if and when her
relationship with the Corporation is terminated. The Executive accordingly
agrees to the following provisions:
i). During the term of this Agreement and for a period of twelve
(12) months thereafter, the Executive will not personally, either on her
own behalf, or on behalf of any other person or entity, except for the
account of and on behalf of the Corporation: (A) solicit employment from
or become an employee of any company which was, at the time of termination
of this Agreement or within six (6) months prior to that date, a competitor
of the Corporation; (B) hire any individual who was, at the time of
termination of this Agreement or within six (6) months prior to that date,
an employee of the Corporation; or
Xx. Xxxx Xxxx Xxxxx
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(C) compete with the Corporation in the area of natural foods or grocery
supermarkets anywhere in the United States.
ii). Nothing in this Section 6 shall be construed to prevent the
Executive from owning, as an investment, not more than 1% of a class of
equity securities issued by any competitor of the Corporation and publicly
traded and registered under the federal securities laws.
iii). The Executive will keep confidential any Confidential
Information of the Corporation which is now known to him or which hereafter
may become known to him as a result of her employment or association with
the Corporation and shall not at any time directly or indirectly disclose
any such Confidential Information to any person or entity, or use the same
in any way, other than in connection with the business of the Corporation,
during and after the term of this Agreement. Confidential Information of
the Corporation shall include, but not be limited to, the following: (A)
the business operations or internal structure of the Corporation, (B) the
employees, customers or clients of the Corporation, (C) past, present or
future research done by the Corporation respecting the business or
operations of the Corporation or customers, clients, or potential customers
or clients of the Corporation, (D) the Executive's work performed for any
customer or client of the Corporation, (E) any method or procedure relating
or pertaining to projects developed by the Corporation or contemplated by
the Corporation to be developed, or (F) any other Confidential Information
of the Corporation. Further, upon leaving the employ of the Corporation for
any reason whatsoever, the Executive shall not take with him, without the
prior written consent of the Board of Directors of the Corporation,
anything containing Confidential Information relating to or pertaining to
the Corporation, whether in written, graphic, recorded, or computer-
generated form, or in any other form.
iv). A violation by the Executive of the provisions of this Section
would cause irreparable injury to the Corporation, and there is no adequate
remedy at law for such violation, the Corporation shall have the right, in
addition to any other remedies available to it at law or in equity, to
enjoin the Executive from violating these provisions.
7. Successors; Binding Agreement. The Corporation shall, upon the Executive's
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written request, require that any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Corporation
would be required to perform it if no such succession had taken place. Failure
of any such successor to assume and agree to perform this Agreement within 30
days of such written request upon such successor to assume and agree to perform
this Agreement shall be a breach of this Agreement and shall entitle the
Executive to terminate her employment and receive compensation from the
Corporation in the same amount and on the same terms to which she would be
entitled hereunder if she terminates her employment for Good Reason following a
Change of Control. For purposes of implementing the foregoing, the date which
is 30 days after the Corporation makes a written request upon a successor to
assume and agree to perform this Agreement shall be deemed the Date of
Termination. Where the context requires, "Corporation" shall mean the
Corporation as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
Xx. Xxxx Xxxx Xxxxx
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8. Assignment. Executive's rights and obligations under this Agreement
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shall not be assignable by Executive. The Corporation's rights and obligations
under this Agreement shall not be assignable by the Corporation except as
incident to the transfer, by sale, merger, liquidation, or otherwise, of all or
substantially all of the business of the Corporation.
9. Severability. The invalidity or unenforceability of any provision of
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this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in several counterparts, each
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of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
11. Notices. Any notice required or permitted under this Agreement shall be
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given in writing and shall be deemed to have been effectively made or given if
personally delivered, or if telegraphed, telexed, cabled, faxed, e-mailed, or
mailed to the other party at its address set forth below in this Section 11, or
at such other address as such party may designate by written notice to the other
party hereto. Any effective notice hereunder shall be deemed given on the date
personally delivered or on the date telegraphed, telexed, cabled faxed, e-
mailed, or deposited in the United States mail (sent by certified mail, return
receipt requested) mailed postage prepaid, as the case may be at the following
addresses:
To Corporation: Wild Oats Markets, Inc.
Attention: Xxxxx Xxxxx, General Counsel
0000 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
(000) 000-0000
Fax (000) 000-0000
To Executive: Xxxx Xxxx Xxxxx
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding of
the Executive and the Corporation with respect to its subject matter and
supersedes any and all prior understandings of the parties. This Agreement may
not be amended, modified, or discharged orally, but only by an instrument in
writing signed by both parties.
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IN WITNESS WHEREOF, the parties have set their hands and seals as of the
day and year above written.
THE CORPORATION
Wild Oats Markets, Inc.
By /s/ Xxxxx X. Xxxxx
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THE EXECUTIVE
By /s/ Xxxx Xxxx Xxxxx
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Xxxx Xxxx Xxxxx
