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THIS IS A LEGAL DOCUMENT. YOU ARE ENCOURAGED TO CONSULT WITH AN ATTORNEY BEFORE
SIGNING THIS DOCUMENT.

 

SEVERANCE AGREEMENT AND RELEASE OF CLAIMS

This Severance Agreement and Release of Claims (the "Agreement") is between Wild
Oats Markets, Inc. ("Company") and James W. Lee ("Employee").

Agreement

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Employee hereby agree as follows:

1. Termination of Employment. Effective August 30, 2001 (the "Effective Date"),
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. The Company agrees that the Employee's
termination shall be treated as a resignation and retirement in the event a
current or prospective employer of the Employee requests a reference.

2. Continuation of Salary and Benefits. (a) Salary Continuance. 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
"Severance Pay") for a period of one year, commencing on September 1, 2001 and
ending on August 31, 2002 (the "Severance Period"). The Severance Pay will be
paid in equal payments on the same payroll schedule under which the Company pays
its employees. Subject to Paragraph 3 below, the first payment will be made on
the next regularly scheduled pay day for the Company which occurs after August
30, 2001. Employee to receive benefit payout on next regularly pay period
following signing of Agreement.

(b) Medical Benefits Continuance. The Company will continue medical benefits for
the Employee for the Severance Period, including medical, life insurance, dental
and vision plans, but excluding short and long term disability benefits.

(c) Deferred Compensation Plan. Barring prohibitions imposed by the Company's
deferred compensation plan, the Company will allow the Employee to maintain the
balance of his deferred compensation plan account in the plan until January 1,
2002, at which time the Company shall distribute the balance of the account to
the Employee. The Employee shall not be entitled to make further contributions
to such account after the Effective Date.

(d) Discount Card. The Employee will not be entitled to continued use of the
employee discount benefit.

(d)  Company Vehicle. The Employee will be entitled to the continued use of the
company vehicle currently in Employee's possession during the Severance Period.
The Company will continue to pay the cost to insure the vehicle during the
Severance Period.

(e)  Options. (i) Employee acknowledges that certain employees of the Company
(including Employee) are currently under a blackout and unable to trade Company
stock for an unspecified period of time (the "Blackout Period"). The Company
agrees to lift the Blackout Period for Employee on November 15, 2001. Company
further agrees to extend the period of time in which Employee may exercise
Employee's vested stock options to March 15, 2002 (the "Option Expiration
Date"). If such options are not exercised within such time frame, all of
Employee's vested stock options will expire on the Option Expiration Date.
Employee acknowledges that vesting of his stock options ceased as of August 30,
2001.

3. Conditions to Commencement of Severance Pay. 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:

(a)  The Employee shall return, within 7 days after signing this Agreement, all
equipment, tools, phones, computers, keys and proprietary information (including
financials, price lists, vendor lists, manuals and strategic planning
documents), in Employee's possession, including the items listed on Attachment A
to this Agreement. Change to acknowledgement of all equipment. All items shall
be returned in accordance with the Equipment and Credit Card Information Sheet
enclosed with this Agreement. All computer files must remain intact on all
computer equipment returned.

(b)  If the Employee has a Company credit card, within 7 days after the date the
Employee signs this Agreement, the Employee must arrange for payment of
outstanding charges in accordance with the Equipment and Credit Card Information
Sheet enclosed.

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.

4. Conditions to Continued Receipt of Severance Pay. In order for the Employee
to continue to receive Severance Pay, the Employee MUST comply with the
following conditions during the Severance Period:

(a) The Employee will not disparage or otherwise discredit the Company orally or
in writing.

(b) The Employee will not solicit, for him/herself or on behalf of a third
party, either directly or indirectly, any currently employed employee of the
Company to leave the Company's employ.

(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.
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 to contest
the pending disclosure.

5.  Company Obligations. The Company agrees that (a) the following officers of
the Company, Perry Odak, Bruce Bowman, Steve Kaczynski, Freya Brier, Terry Maloy
and Peter Williams (the "OCEO") will not disparage or otherwise discredit the
Employee orally or in writing, and (b) the OCEO will not discuss the terms of
this Agreement with any third party other than the Company's legal or financial
advisors or as may be necessary. Employee acknowledges that the Company may be
required to file a copy of this Agreement as an exhibit to its public filings
under the laws, rules and regulations of the Securities and Exchange Commission.

6. Rehire. The Employee agrees that the Employee shall not apply for rehire by
the Company, and the Company's refusal to hire shall not be deemed to be
discriminatory conduct on the part of the Company.

7. Confidentiality. 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 "Confidential
Information", by the Company. The Employee agrees that the Employee will not
disclose such information, 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 prompt written notice of the disclosure request to
allow the Company sufficient time to contest the pending disclosure.

8. Release of Claims. By signing this Agreement without revocation, the Employee
and his/her heirs and assigns hereby agree to release and forever discharge the
Company, its officers, directors, employees, agents and representatives from any
and all actions, causes of action, 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 Employee 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.

9. Non-Competition. (a) Restrictions. In consideration for the severance
specified above, during the Severance Period, the Employee will not directly or
indirectly, on the Employee's own account or as an employee, consultant,
partner, owner, officer, director or stockholder of any other firm, partnership
or corporation, conduct, engage in, be connected with, have any interest in or
aid or assist Whole Foods Markets, Inc., or its affiliates or subsidiaries or
any other natural foods grocery chain which is a competitor of the Company, or
its affiliates or subsidiaries, nor will the Employee in any way directly or
indirectly, solicit, divert, take away or interfere with any of the business
customers, trade or personnel of the Employer; nor will the Employee interfere
with the suppliers, manufacturers, distributors, wholesalers or other such
companies with which the Employer transacts business; provided, however, nothing
contained herein shall prevent the Employee from engaging in employment with a
conventional grocery chain, so long as Employee is not involved in the natural
foods operations of such conventional operator, or prevent Employee from owning
shares of stock of any such type of corporation, the shares of which are
publicly traded on a nationally recognized stock exchange.

(b) Geographic Limitation. The geographic limitation within which the Employee
shall not compete as set forth in paragraph (a) of this covenant not to compete
is within the continental United States or such lesser geographic area deemed
enforceable by a court of competent jurisdiction.

(c) Acknowledgments. The Employee hereby acknowledges that the terms of this
covenant not to compete is a minimum period of time and that the area of
restriction is reasonable and necessary in order to protect the Employer.

(d) Remedies. The Employee further agrees that damages cannot reasonably
compensate the Employer in the event of a violation of this covenant and that it
would be difficult to ascertain the lost profits which would be suffered and
that, by reason thereof, injunctive relief would be essential for the protection
of the Employer. Accordingly, the Employee hereby agrees and consents that in
the event of any such breach or violation, the Employer may obtain such
injunctive relief in order to prevent a continued violation of the terms of this
Agreement. The Employee, therefore, agrees that the Employer may obtain a
temporary restraining order and temporary and permanent injunctions against the
Employee from any court of competent jurisdiction in the State of Colorado
without necessity of the posting of a bond or other security. The foregoing
shall not limit the Employer in the pursuit of other remedies it may have,
including damages.

10. Cooperation. (a) The Employee agrees to cooperate 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 being handled
by the Employee.

(b) The Employee agrees, upon reasonable notice, to furnish information and
assistance to the Company as may be required in connection with any 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 Severance
Period the assistance is for a period longer than 10 days, the Company will pay
the Employee for the time spent in providing assistance with proceedings for a
reasonable consulting fee not to exceed the Employee's effective hourly wage on
the Effective Date.

11. Miscellaneous. (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 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, but not medical insurance coverage, will inure to the
benefit of the Employee's heirs, successors or assigns. (d) The Employee agrees
and acknowledges that if 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. (e) The Employee acknowledges that
the damages the Company may suffer for breach of this Agreement may be
irreparable, and in any event would be difficult, if not impossible, to
ascertain, and agrees that the Company will have the right to 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 an
injunction or other available equitable relief will not preclude the Company
from pursuing any other rights and remedies at law or in equity 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.

10. Expiration of Offer; Right to Revoke Agreement. (a) 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 November 7,
2001. 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 (November
28, 2001).

(b) If the Employee signs the Agreement, he/she has 7 days after signing this
Agreement 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 not be paid until the next pay period after the expiration of the 7-day
period. Revocation must be in writing and hand-delivered or mailed to the
Company, postmarked within the 7-day period, and addressed to: Angie Suarez,
Wild Oats Markets, Inc., 3375 Mitchell Lane, Boulder, CO 80301.

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.

COMPANY:                                       EMPLOYEE:

Wild Oats Markets, Inc.      

Agreed to and signed, this 14th day of November, 2001

 

By:  /s/ Freya R. Brier             /s/ James W. Lee
  

                                    Signature

 

 

 

ATTACHMENT A

 

TO SEVERANCE AGREEMENT AND RELEASE OF CLAIMS

 

.

 

Name: Jim W. Lee

Address:

Weeks of Severance: 52 weeks

Equipment:

Cell Phone: Returned

Pager: Returned

Laptop: N/A

Camera: N/A

Co. Credit Card: Returned

Keys: Returned

Discount Card: Returned