Sample Business Contracts

Employment Agreement - WO Holdings Inc. and S.M. Hassan

Employment Forms

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                              EMPLOYMENT AGREEMENT

         EMPLOYMENT AGREEMENT dated as of July 12, 1996 between WO Holdings, 
Inc., a Delaware corporation (the "Company") and S.M. Hassan ("Executive").

         This Agreement provides for the employment of Executive as President
of the Company, upon the terms and subject to the conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual undertakings contained
herein, the parties agree as follows:

                             ARTICLE 1.  EMPLOYMENT

         1.1     Employment. The Company agrees to employ Executive, and
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and terminating as provided in Section 1.4 (the "Employment Period").

         1.2     Positions and Duties.

                 (a)      During the Employment Period, Executive shall serve
as President of the Company at its Headquarters in Boulder, Colorado, under the
supervision and direction of the Company's CEO and Board of Directors (the

                 (b)      Executive shall carry out the customary functions of
a President, and perform such tasks and responsibilities as requested by the

                 (c)      Executive shall devote his best efforts and his full
business time and attention (except for permitted vacation periods and periods
of illness or other incapacity as provided for herein) to the business and
affairs of the Company and its Subsidiaries.  Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner.

                 (d)      During the term of this Agreement, the Board shall
nominate Executive to serve as a member of the Company's Board of Directors
pursuant to the terms of the Stockholders Agreement dated even herewith and the
Company shall use its best efforts to enforce the voting agreements contained
therein relating to such election of Executive.

         1.3     Salary, Bonus, Options and Benefits.

                 (a)      During the Employment Period, Executive's base salary
(the "Base Salary") shall initially be $150,000.00 per annum which salary shall
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payable in regular installments in accordance with the Company's general
payroll practices as in place from time to time.  Executive shall be entitled
to an annual review of the amount of Base Salary payable hereunder and
performance review after the initial six (6) months of employment, such review
to be conducted within seven (7) months of the date hereof.  Any adjustment in
Executive's compensation shall be determined by the Compensation Committee of
the Board (the "Compensation Committee") in its sole discretion; provided,
however, that the Base Salary may not be reduced below the amount provided for
in the first sentence of this Section 1.3(a).

                 (b)      Within sixty (60) days following the date of this
Agreement, the Compensation Committee shall establish a cash bonus and stock
option program for Executive, in addition to the Base Salary, with the amount
thereof and the related performance criteria to be established by the
Compensation Committee in its sole discretion.

                 (c)      During the Employment Period, Executive shall be
entitled to participate in all of the Company's employee benefit programs for
which senior executive employees of the Company are generally eligible as in
effect from time to time; provided that the employee benefit programs made
available to Executive shall not be materially diminished from those in effect
on the date of this Agreement, except with Executive's prior written consent.
Executive shall be entitled to four (4) weeks of paid vacation per year.  Any
payments of benefits payable to Executive hereunder in respect of any calendar
year during which Executive is employed by the Company for less than the entire
such year shall, unless otherwise provided in the applicable plan or
arrangement or required by applicable law, be prorated in accordance with the
number of days in such calendar year during which Executive is employed.

                 (d)      The Company shall reimburse (or cause to be
reimbursed) Executive for reasonable out-of-pocket expenses incurred by him in
the course of performing his duties under this Agreement upon completion of an
expense report in accordance with the Company's and its Subsidiaries'
reimbursement, reporting and documentation policies in effect from time to time
with respect to travel, entertainment and other business expenses.

                 (e)      All payments of compensation hereunder shall be
subject to federal, state and other withholding taxes as required by applicable
law and the Company's general payroll policies as in effect from time to time.

         1.4     Term. (a)  The Employment Period shall commence on the date
hereof and end on the second (2nd) anniversary hereof (the "Initial Employment
Period"), subject to earlier termination (1) by reason of Executive's death or
disability, (2) by written resolution of the Board for Cause (as defined

<PAGE>   3
herein), (3) by written resolution of the Board without Cause, or (4) by
written resignation of the Executive.

                 (b)      If the Employment Period is terminated by reason of
Executive's death or disability, Executive's resignation or his termination by
the Board with or without Cause (except felony conviction of any crime
involving theft or fraud), Executive shall be entitled to receive his then
effective Base Salary for a period of one (1) year, regardless of the remaining
term of the Initial Employment Period.  In addition, Executive shall be paid,
under any of the foregoing circumstances, a severance payment in an amount
equal to two (2) times Executive's then effective Base Salary, in addition to
the amount paid pursuant to the previous sentence.  Such amounts shall be
payable in equal biweekly installments over a period of three (3) years from
the date of termination of employment.

                 (c)      Company shall pay Executive's health insurance
benefits for a period of three (3) years after termination of Executive's
employment for any reason other than (i) Executive's death, or (ii) termination
of Executive's employment for a felony conviction of any crime involving theft
or fraud.

                 (d)      Except as expressly set forth in this Section 1.4,
all compensation and other benefits shall cease to accrue upon termination of

         1.5     Renewal Options. The Employment Period shall automatically
renew for successive one (1) year terms unless terminated by Company or
Executive upon ninety (90) days written notice prior to such renewal period;
provided, however, that upon any such renewal, the first sentence of Section
1.4(b) shall be reformed to read as follows:

         "If the Employment Period is terminated by reason of Executive's
         termination by the Board without Cause or by Executive upon a material
         breach by the Company's obligations hereunder which is not cured
         within ten (10) business days of its receipt of written notice from
         Executive, Executive shall be entitled . . . (continue without

         In addition, upon any such renewal, Executive's health insurance
benefits shall be amended to read:  "Company shall pay Executive's health
insurance benefits for a period of two years . . ."

         1.6     Confidential Information; Company Property. Executive
acknowledges that the information, observations and data obtained by him while
employed by the Company and its Subsidiaries concerning the business or affairs
of the Company, its Subsidiaries and any predecessor to the business of the
Company that are not generally available to the public other than as a result
of breach of this Agreement by Executive ("Confidential Information") are the
property of the

<PAGE>   4
Company and its Subsidiaries.  Executive agrees that he shall not disclose to
any unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Company unless, and in such case only
to the extent that, such matters become generally known to and available for
use by the public other than as a result of Executive's acts or omissions to
act.  Notwithstanding the foregoing, in the event Executive becomes legally
compelled to disclose Confidential Information pursuant to judicial or
administrative subpoena or process or other legal obligation, Executive may
make such disclosure only to the extent required, in the opinion of counsel for
Executive, to comply with such subpoena, process or other obligation.
Executive shall, as promptly as possible and in any event prior to the making
of such disclosure, notify the Company of any such subpoena, process or
obligation and shall cooperate with the Company in seeking a protective order
or other means of protecting the confidentiality of the Company Information.
Executive shall deliver to the Company at the termination of the Employment
Period, or at any time the Company may reasonably request, all memoranda,
notes, plans, records, reports, computer tapes and software and other documents
and data (and copies thereof) containing, relating to, or derived from the
Confidential Information or the business of the Company or its Subsidiaries
which he may then possess or have under his control.  Executive agrees that he
will not retain after the termination of the Employment Period any copies of
any Confidential Information including, without limitation, any software,
documents or other materials originating with and/or belonging to the Company
or any Subsidiary of the Company.

         1.7     Non-Compete; Non-Solicitation.

                 (a)      Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and its
predecessors and that his services have been and will be of special, unique and
extraordinary value to the Company.  The parties also acknowledge that the
availability of the services of the Executive and the related covenant not to
compete provided for herein were material inducements to it in agreeing to
enter into the business combination of Wild Oats Markets, Inc. and Alfalfa's,
Inc. being consummated at the same time that this Agreement is being entered
into.  Accordingly, Executive agrees that, during the period in which Executive
is receiving compensation hereunder and for a period of three (3) years
following termination of Executive's employment with the Company for any reason
(the "Non-Compete Period"), he shall not directly or indirectly own, manage,
control, participate in, consult with, render services for, or in any manner
engage in any supermarket, food store or retailer of health and beauty aids
located within a ten (10) mile radius of any store operated (defined herein as
current stores or stores for which leases have been signed as of the date of
termination) by the Company or its Subsidiaries as of the date of termination
of Executive's employment with the Company.  Nothing herein shall prohibit
Executive from being a passive owner of not more than 1% of the outstanding
stock of another

<PAGE>   5
corporation, so long as Executive has no active participation in the management
or the business of such corporation.

                 (b)      During the Non-Compete Period, Executive shall not
directly or indirectly (1) induce or attempt to induce any employee of the
Company or any Subsidiary of the Company to leave the employ of the Company or
such Subsidiary, or in any way interfere with the relationship between the
Company or any such Subsidiary and any employee thereof; (2) induce or attempt
to induce any customer, supplier, licensee or other business relationship of
the Company or any Subsidiary of the Company to cease doing business with the
Company or such Subsidiary, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company or any such Subsidiary; or (3) make an oral or written disparaging
statement, comment or remark about the Company or any of its Subsidiaries to
any employee, customer, supplier, licensee or other business relationship of
the Company or any of its Subsidiaries or to or for the intended use of any
member of the press.

                 (c)      Such Non-Compete Period shall terminate immediately
at such time as the Company and its Subsidiaries no longer operate supermarkets
or food stores.

         1.8     Employment-At-Will. It is understood and agreed that this
Agreement constitutes employment-at-will and that notwithstanding (i) any
general or specific policies (whether written or oral) of the Company relating
to the employment or termination of its employees, (ii) any statements made to
Executive, whether made orally or contained in any document, pertaining to
Employee's relationship with the Company, or (iii) assignment of Cause by the
Company, the Company reserves the right to terminate the employment of
Executive by the Company in which event Executive's sole remedy shall be to
receive certain payments and other benefits upon the terms and subject to the
conditions provided for herein.

         1.9     Resignations upon Termination. Upon termination of the
Executive, Executive shall be deemed to have resigned from all offices and
directorships, if any, then held with the Company or any of its Subsidiaries or
other affiliates.

                          ARTICLE 2.  REPRESENTATIONS
                                 AND WARRANTIES

         2.1     Representations and Warranties of Executive. Executive
represents and warrants to the Company that:

                 (a)      this Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with the terms, and
the execution, delivery and performance of this Agreement by Executive does not

<PAGE>   6
will not conflict with, violate or cause a breach of or default under any
agreement, contract or instrument, order, judgment or decree to which Executive
is a party or by which he is bound, and

                 (b)      Executive is not a party to or bound by any
employment agreement or non-compete agreement with any other person or entity.

         2.2     Representations and Warranties of the Company. The Company
hereby represents and warrants to Executive that:

                 (a)      the execution, delivery and performance of this
Agreement by the Company does not and will not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment
or decree to which Company is a party or by which it is bound, and

                 (b)      upon the execution and delivery of this Agreement by
Executive, this Agreement shall be the valid and binding obligation of the
Company enforceable in accordance with its terms.

                            ARTICLE 3.  DEFINITIONS

         As used in this Agreement, the following terms shall have the
definitions set forth below:

         (a)     "Cause" shall mean (1) a material breach of this Agreement by
Executive which is not cured within thirty (30) days after written notice to
Executive from the Compensation Committee; (2) Executive's willful and repeated
failure to comply with the lawful directives of the Board or the Company's
Articles of Incorporation or Bylaws; (3) gross negligence or willful misconduct
by Executive in the performance of his duties hereunder; (4) the commission by
Executive of an act (including, but not limited to, a felony or a crime
involving moral turpitude) causing material harm to the standing and reputation
of the Company or its Subsidiaries, as determined in good faith by the Board;
(5) misappropriation, breach of trust or fraudulent conduct by Executive with
respect to the assets or operations of the Company or any of its Subsidiaries;
(6) the continued use by Executive of alcohol or drugs to an extent that, in
the good faith determination of the Board, materially interferes with the
performance by Executive of his employment responsibilities under this
Agreement; (7) the repeated threat of Executive to cause, or the actual
occurrence of, damage to the relations of the Company or any of its
Subsidiaries with customers, suppliers, lenders, advisors or employees which
damage is materially adverse to the business or operations of the Company or
any of its Subsidiaries, and which threat is not terminated or which damage is
not cured following thirty (30) days written notice from the Board; or (8)
continued unauthorized absence from work (other than any such continued
unauthorized absence resulting from Executive's disability).

<PAGE>   7
         (b)     "Disability" shall mean Executive's inability to substantially
perform his normal duties hereunder for six (6) months or more during any
twelve (12) month period determined in good faith by the Board.

         (c)     "Subsidiary" of an entity shall mean any corporation or other
business organization of which the securities have a majority of the normal
voting power in electing the board of directors or similar governing body of
such entity are, at the time of determination, owned by such entity directly or
indirectly through one or more subsidiaries.

                         ARTICLE 4.  GENERAL PROVISIONS

         4.1     Enforcement. It is the express intention of the parties that
this Agreement be enforced to the fullest extent permitted by applicable law in
order to give full effect to the agreements reached herein.  Accordingly, if at
the time of enforcement of Sections 1.6 or 1.7 a court holds that the
restrictions stated herein are unreasonable under the circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area.  Because Executive's services are unique and
because Executive has access to Confidential Information, the parties hereto
agree that money damages would be an inadequate remedy for any breach of this
Agreement.  In the event of a breach or threatened breach of this Agreement,
the Company, its Subsidiaries and their respective successors or assigns may,
in addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violation of, the provisions
hereof (without posting a bond or other security).

         4.2     Survival. Sections 1.6 and 1.7 and this Article 4 shall
survive and continue in full force and effect in accordance with their terms
notwithstanding any termination of the Employment Period.

         4.3     Notices. All notices or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, one
(1) business day following when sent via a nationally recognized overnight
courier, or when sent via facsimile confirmed in writing to the recipient.
Such notices and other communications will be sent to the addresses indicated

<PAGE>   8
                 To the Company:

                      WO Holdings, Inc.
                      1645 Broadway                     
                      Boulder, CO 80302
                      Attention:  Michael C. Gilliland, Chief Executive Officer
                      With Copy to:
                      WO Holdings, Inc.
                      1645 Broadway                     
                      Boulder, CO 80302
                      Attention:  Elizabeth C. Cook, General Counsel

                 To Executive:

                      S.M. Hassan
                      1645 Broadway                     
                      Boulder, CO 80302

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.

         4.4     Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

         4.5     Entire Agreement. This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.

         4.6     Amendments and Waivers. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and

         4.7     Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice of law or conflict of law provision or rule
(whether of the

<PAGE>   9
State of Colorado or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Colorado.

         4.8     Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.

         4.9     Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or of any term or provision hereof.

         4.10    Conflict. In the event of any conflict between the provisions
of this Agreement and the policies and practices of the Company, the provisions
of this Agreement shall govern.

         4.11    Negotiation of Agreement. Each of the parties acknowledge that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party of its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be
construed against any party by reason of its preparation.  Accordingly, any
rule of law, or any legal decision that would require interpretation of any
ambiguities in this Agreement against the party that drafted it, is of no
application and is hereby expressly waived.

         4.12    Parties in Interest;Assignment. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors, assigns, heirs, and/or personal representatives, except
that neither this Agreement nor any interest herein shall be assigned or
assignable, by operation of law or otherwise, by Executive without the prior
written consent of the Company, which such consent the Company may grant or
withhold in its sole discretion.  The Company may, without the consent of
Executive, assign this Agreement or any interest herein, by operation of law or
otherwise, to (i) any successor to all or substantially all of its stock,
assets or business by dissolution, merger, consolidation, transfer or assets,
or otherwise, or (ii) any direct or indirect Subsidiary, affiliate or division
of the Company or of any such successor referred in (a) hereof.  Nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties and their respective successors and permitted assigns any
rights or remedies under or by reason of this Agreement.

         4.13    Dispute Resolution Process. The parties hereby agree that, in
order to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in

<PAGE>   10
connection with, or in relation to the interpretation, performance or breach of
this Agreement (or any other agreement contemplated by or related to this
Agreement or any other agreement between the Company and Executive), including
without limitation, any claim based on contract, tort or statute, or the
arbitrability of any claim hereunder (a "Claim"), shall be settled, at the
request of any party to this Agreement, by final and binding arbitration
conducted in Denver, Colorado.  All such Claims shall be settled by one
arbitrator in accordance with the Commercial Arbitration Rules then in effect
of the American Arbitration Association.  Such arbitrator shall be provided
through the CFR Institute for Dispute Resolution ("CFR") by mutual agreement of
the parties, provided that, absent such agreement, the arbitrator shall be
appointed by CFR.  In either event, such arbitrator may not have any
pre-existing, direct or indirect relationship with any party to the dispute.
Each party hereto expressly consents to, and waives any future objection to,
such forum and arbitration rules.  Judgment upon any award may be entered by
any state or federal court having jurisdiction thereof.  Except as required by
law (including, without limitation, the rules and regulations of the Securities
and Exchange Commission and the Nasdaq Stock Market, if applicable), neither
party nor the arbitrator shall disclose the existence, content, or results of
any arbitration hereunder without the prior written consent of all parties.
Except as provided herein, the Federal Arbitration Act shall govern the
interpretation, enforcement and all proceedings pursuant to this Section.

         Adherence to this dispute resolution process shall not limit the right
of the Company or Executive to obtain any provisional remedy, including without
limitation, injunctive or similar relief set forth in Section 4.1 from any
court of competent jurisdiction as may be necessary to protect their respective
rights and interests pending arbitration.  Notwithstanding the foregoing
sentence, this dispute resolution procedure is intended to be the exclusive
method of resolving any Claims arising out of or relating to this Agreement.

         The arbitration procedures shall follow the substantive law of the
State of Colorado, including the provisions of statutory law dealing with
arbitration, as it may exist at the time of the demand for arbitration, insofar
as said provisions are not in conflict with this Agreement and specifically
excepting therefrom sections of any such statute dealing with discovery and
sections requiring notice of the hearing date by registered or certified mail.

         4.14    Full Understanding. Executive represents and agrees that he
fully understands his right to discuss all aspects of this Agreement with his
private attorney, and that to the extent, if any, that he desired, he availed
himself of such right.  Executive further represents that he has carefully read
and fully understands all of the provisions of this Agreement (including the
non-compete provisions of Section 1.7), that he is competent to execute this
Agreement, that his agreement to execute this Agreement has not been obtatined
by any duress and that he freely

<PAGE>   11
and voluntarily enteres into it, and that he has read this document in its
entirety and fully understands the meaning, intent and consequences of this

         IN WITNESS WHEREOF, this Agreement has been signed and sealed the day
first above written.



   Michael C. Gilliland
   Chief Executive Officer


By /s/ S.M. HASSAN
   S.M. Hassan