Sample Business Contracts


Employment Agreement - Wild Oats Markets Inc. and Mary Beth Lewis

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[LOGO OF WILD OATS APPEARS HERE]


June 14, 1999

Ms. Mary Beth Lewis
C/o Wild Oats Markets
3375 Mitchell Lane
Boulder, CO  80301

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 Mary Beth Lewis (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
     ----------
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
     ------------
$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
<PAGE>

Ms. Mary Beth Lewis
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.
     ----

     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 Elizabeth C. Cook, Michael C. Gilliland, Chase
                    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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Ms. Mary Beth Lewis
Page 3


                    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").
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Ms. Mary Beth Lewis
Page 4


          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
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Ms. Mary Beth Lewis
Page 5


          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.
<PAGE>

Ms. Mary Beth Lewis
Page 6


     (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
     --------------------------------
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.
     -------------------------------------

     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
<PAGE>

Ms. Mary Beth Lewis
Page 7


     (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
     -----------------------------
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.
<PAGE>

Ms. Mary Beth Lewis
Page 8


8.   Assignment.    Executive's rights and obligations under this Agreement
     ----------
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
     ------------
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
     ------------
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
     -------
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:  Freya Brier, General Counsel
                           3375 Mitchell Lane
                           Boulder, CO  80301
                           (303) 440-5220
                           Fax (303) 440-5280

          To Executive:    Mary Beth Lewis
                           725 Union Avenue
                           Boulder, CO  80304

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.
<PAGE>

Ms. Mary Beth Lewis
Page 9


     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/ Freya R. Brier
    ---------------------------------


THE EXECUTIVE


By  /s/ Mary Beth Lewis
    ---------------------------------
    Mary Beth Lewis


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