WILD OATS MARKETS INC
LEWIS SEVERANCE AGREEMENT
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<FILENAME>lewisseverance.htm
<DESCRIPTION>LEWIS SEVERANCE AGREEMENT
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<title>Lewis Severance Agreement</title>
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<b><font SIZE="2">
<p ALIGN="CENTER">THIS IS A LEGAL DOCUMENT. YOU ARE ENCOURAGED TO CONSULT WITH
AN ATTORNEY BEFORE SIGNING THIS DOCUMENT.</p>
<p ALIGN="CENTER">SEVERANCE AND RELEASE OF CLAIMS</p>
</font></b><font SIZE="2">
<p>This Severance Agreement and Release of Claims (the &quot;Agreement&quot;) is
between Wild Oats Markets, Inc. (&quot;Company&quot;) and Mary Beth Lewis
(&quot;Employee&quot;).</p>
<b>
<p ALIGN="CENTER">Agreement</p>
</b>
<p>or good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Employee hereby agree as follows:</p>
<ol>
  <u>
  <li>Termination of Employment.</u> Effective July 20, 2001 (the
  &quot;Effective Date&quot;), Employee agrees that Employee's employment with
  the Company is hereby terminated, and Employee further resigns from any and
  all officer or director positions held by the Employee with the Company or any
  of its subsidiaries, effective as of the Effective Date.</li>
  <u>
  <li>Continuation of Salary and Benefits.</li>
  </ol>
</u>
  <p>(a) <u>Salary Continuance.</u> Subject to Employee's compliance with the
terms and conditions set forth in this Agreement, Company agrees to pay the
Employee a continuation of the Employee's salary (the &quot;Severance
Pay&quot;) equivalent to one year's salary at the Employee's rate of pay on
the Effective Date. Payment shall be an amount equal to Employee's rate of pay
on the Effective Date for the period July 21, 2001 to July 19, 2002, to be paid
in equal biweekly installments on the same payroll schedule under which the
Company pays its employees, commencing the next pay date following the execution
of the Agreement. The period from July 20, 2001 until July 19, 2002 shall be the
&quot;Severance Period&quot;.</p>
<p>(b) <u>Medical and Other Benefits Continuance.</u> The Company will not
continue medical or other benefits for the Employee, except as specifically
provided herein, and the Employee shall not be entitled to participate in any
benefit plans provided by the Company, except as specifically provided herein.</p>
  <p>(c) <u>Deferred Compensation Plan.</u> Barring prohibitions imposed by the
Company's deferred compensation plan, the Company will allow the Employee to
maintain the balance of her deferred compensation plan account in the plan until
January 1, 2003, at which time the Company shall distribute the balance of the
account to the Employee. The Employee shall not be entitle to make any further
contributions to such account after the Effective Date. The Employee
acknowledges that all sums remaining in the deferred compensation plan are not
insured, and are considered as general funds of the Company for creditor
purposes.</p>
<p>(d) <u>Discount Card.</u> Assuming the Employee complies with the other terms
and conditions of this Agreement, the Employee shall be entitled to the
reasonable use of the discount provided from time to time to active employees of
the Company for the Severance Period. In the event that Employee violates the
terms of this Agreement or the Company discontinues the discount benefit, the
discount shall immediately terminate.</p>
  <p>(e) <u>Options.</u> Employee acknowledges that Employee's stock options
exercisable for common stock of the Company terminated effective July 20, 2001.
As additional consideration for this Agreement and Release, Employee shall be
granted a stock appreciation right. Within 14 days following execution of this
Agreement, Employee shall receive a cash payment from the Company equal to the
difference between (1) the strike price of Employee's fully vested stock
options on July 20, 2001 (to the extend such strike price is lower than the
closing price of the Company's common stock on the NASDAQ National Market on
July 20, 2001, and (2) the closing price of the Company's common stock on the
NASDAQ National Market on July 20, 2001, plus (3) an amount required to gross up
that portion of the foregoing payment related to incentive stock options (as
opposed to nonqualified stock options) to compensate Employee for the difference
between the capital gains tax rate and the Employee's effective tax rate
(39.1% for 2001). The Employee's vested options as of July 20, 2001, and the
strike prices therefor, are shown on Attachment 1 hereto.</p>
  <p>3. <u>Conditions to Commencement of Severance Pay</u>. In order for the
Employee to receive the Severance Pay, the Employee must comply with all of the
following conditions. At the Company's election, failure to comply with any
condition will result in a delay in, or termination of, any right to receive
Severance Pay:</p>
  <p>(a) The Employee shall return, within <b>7 days</b> <b>after signing this
Agreement</b>, all equipment, tools, phones, computers, keys and proprietary
information (including financials, price lists, vendor lists, manuals and
strategic planning documents), in Employee's possession. <b>All computer files
must remain intact on all computer equipment returned. </b>The Company agrees to
transfer ownership to Employee of the laptop computer used by the Employee
(other than the Zip drive) during the course of her employment.</p>
<p>(b) If the Employee has a Company credit card, within <b>7 days after the
date the Employee signs this Agreement, </b>the Employee must arrange for
payment of outstanding charges.</p>
  <p>To the best of Company's knowledge, Employee has complied with the
provisions in Sections 3(a) and 3(b); however, such does not constitute a waiver
of any breach that becomes known at a later date. Failure to comply with (a) or
(b) may result in withholding or termination of Severance Pay, or the Company
may elect to deduct any unpaid bills, costs of equipment, personal credit card
charges or any business expenses for which reports have not been submitted from
the Employee's Severance Pay.</p>
<p>4. <u>Conditions to Continued Receipt of Severance Pay.</u> In order for the
Employee to continue to receive Severance Pay, the Employee MUST comply with the
following conditions during the Severance Period:</p>
<p>(a) The Employee will not disparage or otherwise discredit the Company orally
or in writing. For purposes of this paragraph (a), any factually accurate
testimony, whether orally or in writing, given by the Employee as required by
law under oath shall not be considered to disparage or otherwise discredit the
Company. The Company agrees that Perry Odak and Freya Brier, acting as Company
officers, will not disparage or discredit the Employee orally or in writing to
any third party. For purposes of the obligations of the Company,
&quot;disparagement&quot; or &quot;discredit&quot; shall not include any
factually accurate statement or any disclosure required to be made to any
governmental or quasi-governmental agency, or any disclosure made in the course
of any pending or threatened litigation, mediation, arbitration or agency
action.</p>
  <p>(b) The Employee will not solicit, for him/herself or on behalf of a third
party, either directly or indirectly, any employee of the Company then currently
employed to leave the Company's employ.</p>
  <p>(c) The Employee will not discuss the terms of this Agreement with any third
party other than the Employee's spouse, family or legal or financial advisors;
provided, however, that if the Company files this Agreement as an exhibit to any
public filing, unless the Company obtains confidentiality treatment for the
Agreement as filed, the Employee shall be released from the foregoing
obligation. In the event the Employee is required by law to discuss or disclose
any of the terms, the Employee must provide the Company with prompt written
notice prior to disclosure to the third party to allow the Company sufficient
time (not less than one-half of the time required for a response thereunder,
with a minimum of 5 business days) to contest the pending disclosure.</p>
<ol START="5">
  <u>
  <li>Rehire.</u> The Employee agrees that the Employee shall not apply for
  rehire by the Company on or before January 1, 2003, and the Company's
  refusal to hire before such date shall not be deemed to be discriminatory
  conduct on the part of the Company.<br>
  </li>
  <u>
  <li>Confidentiality.</u> The Employee acknowledges that he/she has been
  provided with, and has created for the Company, certain confidential
  information, both written and oral, including, but not limited to, trade
  secrets and other information related to the Company's practices in
  marketing, pricing, operations, advertising, promotions, merchandising,
  selling and distributing, price lists, vendor lists, customer lists, know-how,
  strategic planning and financial information, collectively referred to herein
  as &quot;Confidential Information&quot;, by the Company. The Employee agrees
  that the Employee will not disclose such information, except to legal
  advisors, orally or in writing, to any third party except to the extent such
  disclosure is required by law, in which case the Employee will provide the
  Company with written notice within 5 days thereafter of the disclosure request
  to allow the Company sufficient time to contest the pending disclosure. For
  purposes hereof, &quot;Confidential Information&quot; shall not include
  information which is or subsequently becomes known to the public other than
  through a breach by Employee of this provision.<br>
  </li>
  <u>
  <li>Release of Claims.</u> By signing this Agreement without revocation, the
  Employee and his/her heirs and assigns hereby agree to <b>release and forever
  discharge</b> the Company, its officers, directors, employees, agents and
  representatives from any and all actions, causes of actions, suits, damages
  and claims, whether known or unknown, which the Employee ever had, now has, or
  may have against the Company for any matter relating to his/her employment or
  termination from employment to the date hereof. The Employee also agrees that
  he/she is legally waiving and releasing any rights the Employee may have had
  on or before the date of this Agreement regarding his/her employment and
  termination from employment with the Company, including those rights relating
  to age, gender, race, disability or religion, under the numerous laws and
  regulations regulating employment, including, without limitation, the Age
  Discrimination in Employment Act of 1967; the Civil Rights Acts of 1866, 1871,
  1964 and 1991; the Employment Retirement Income Security Act; the Equal Pay
  Act; the Fair Labor Standards Act; the National Labor Relations Act; the
  Occupational Safety and Health Act; the Older Workers Benefit Protection Act
  of 1990; the Consolidated Omnibus Budget Reconciliation Act; the
  Rehabilitation Act of 1973; the Colorado Anti-Discrimination in Employment Act
  or any similar act of any other state; the Family Medical Leave Act, as well
  as other statutes and laws that may apply. Notwithstanding the foregoing, the
  Employee does not waive any rights conferred by statute to elect COBRA
  benefits or to apply and receive unemployment benefits. The Employee
  represents that the Employee has not filed any claims with any governmental
  agencies or any civil suits relating to his/her employment with the Company or
  his/her termination of employment with the Company.<br>
  </li>
  <u>
  <li>Cooperation.</u> (a) The Employee agrees to reasonably cooperation with
  the Company, as requested, to effect a transition of his/her responsibilities
  and job-related information and to ensure that the Company is aware of all
  matters that were being handled by the Employee.</li>
<p>(b) The Employee agrees, upon reasonable notice, to furnish information and
  assistance to the Company as may be required in connection with any
  governmental, legal or quasi-legal proceeding, including any external or
  internal investigation, involving the Company, its subsidiaries or affiliates,
  or in which any of them is, or may become, a party. After the Severance
  Period, or if during the Severance Period the assistance is for a period
  longer than 40 hours, the Company will pay the Employee for the time spent in
  providing the assistance with proceedings for a reasonable consulting fee not
  to exceed the Employee's effective hourly wage on the Effective Date. The
  Company will reimburse Employee for any reasonable out-of-pocket expenses
  requested by the Company and incurred in providing assistance to the Company.</p>
  <u>
  <li>Miscellaneous.</u> (a) This agreement will be interpreted, construed and
  governed by the laws of the State of Colorado and the Employee agrees to
  accept jurisdiction and venue for any claims or actions in Boulder County,
  Colorado. (b) If any provision or other clause of this Agreement is held to be
  invalid by a court of competent jurisdiction, the invalid provision will be
  severed from this Agreement, but such invalidity will not affect the validity
  or enforceability of any other provision, and the balance of the Agreement
  will remain in full force and effect. (c) In the event of death by the
  Employee during the Severance Period, the right to receive Severance Pay will
  inure to the benefit of the Employee's heirs, successors or assigns. (d) The
  Company agrees that the Employee's termination shall be treated as a
  resignation in the event a current or prospective employer of the Employee
  requests a reference. (e) The Employee agrees and acknowledges that if, during
  the Severance Period, the Employee breaches any portion of this Agreement, the
  Company has a right to offset amounts due to the Company against Severance Pay
  or terminate any further Severance Pay. (f) The Employee acknowledges that the
  damages the Company may suffer for breach of this Agreement may be
  irreparable, and may be difficult, if not impossible, to ascertain, and agrees
  that the Company will have the right to pursue an injunction or other
  available equitable relief in any court of competent jurisdiction, enjoining
  any threatened or actual breach. The existence of a right to pursue an
  injunction or other available equitable relief will not preclude the Company
  from pursuing any other rights and remedies at law or inequity which it may
  have, including the right to seek recovery of damages. The Employee hereby
  waives the claim or defense that the Company has an adequate remedy at law or
  has not been or is not being irreparably injured by the breach of the
  Agreement, and also waives any requirement that a bond be posted in order to
  bring an action for injunctive relief or declaratory judgment. (g) The Company
  has elected to indemnify Employee for her services as an officer. The Company
  agrees that if, within the next two years, it proposes to amend the terms of
  its certificates of incorporation or bylaws to curtail or reduce the
  indemnification obligations to its officers and directors, including former
  officers and directors, it will provide notification thereof to Employee.
  Employee shall receive indemnification to the extent provided to other
  officers and directors of the Company. The Company further agrees that to the
  extent its Director and Officer Liability insurance covers former officers and
  directors, the Company willnot seek to remove Employee from such coverage
  (subject to the terms of the policy).<br>
  </li>
  <u>
  <li>Expiration of Offer; Right to Revoke Agreement</u>. (a) <b>The Employee
  has 21 days from the day the Employee receives this Agreement to decide
  whether or not to sign it. The Employee acknowledges receipt of this Agreement
  on August 3, 2000. The Employee may waive some or all of the 21-day period.
  This offer will expire if the Agreement is not signed and postmarked within 21
  days. </b>(b) If the Employee signs the Agreement, he/she has <b>7 days after
  signing this Agreement</b> to revoke it for any reason. This Agreement will
  not be effective or enforceable until 7 days after the date the Employee signs
  it. Severance Pay will be paid in accordance with paragraph 2(a) but in no
  event will commence before the expiration of the <b>7-day period</b>.
  Revocation must be in writing and hand-delivered or mailed to the Company,
  postmarked within the 7-day period, and addressed to: Freya Brier, Wild Oats
  Markets, Inc., 3375 Mitchell Lane, Boulder, CO 80301.</li>
</ol>
</font><b>
<p>The Employee hereby acknowledges that the Employee has been advised in
writing to consult with an attorney before signing this Agreement and the
Employee has either consulted with an attorney before signing this Agreement or
the Employee has willingly and knowingly waived his/her right to speak with an
attorney prior to signing this Agreement. The Employee fully understands this
Agreement and agrees to its terms.</p>
<font SIZE="2">
<p>COMPANY: EMPLOYEE:</p>
<p>Wild Oats Markets,
Inc.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font></b><font SIZE="2">Agreed to and signed, this 4th day of August , 2001</p>
<b></b>
<p>By:
/s/&nbsp;&nbsp;Freya R. Brier &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
/s/&nbsp; Mary Beth Lewis<br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;V.P.,&nbsp; Legal &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Signature</p>
<p>&nbsp;</p>
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