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

SEVERANCE AND RELEASE OF CLAIMS

This Severance Agreement and Release of Claims (the "Agreement") isbetween Wild Oats Markets, Inc. ("Company") and Mary Beth Lewis("Employee").

Agreement

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

Termination of Employment.
 Effective July 20, 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.
Continuation of Salary and Benefits.

(a) Salary Continuance. Subject to Employee's compliance with theterms and conditions set forth in this Agreement, Company agrees to pay theEmployee a continuation of the Employee's salary (the "SeverancePay") equivalent to one year's salary at the Employee's rate of pay onthe Effective Date. Payment shall be an amount equal to Employee's rate of payon the Effective Date for the period July 21, 2001 to July 19, 2002, to be paidin equal biweekly installments on the same payroll schedule under which theCompany pays its employees, commencing the next pay date following the executionof the Agreement. The period from July 20, 2001 until July 19, 2002 shall be the"Severance Period".

(b) Medical and Other Benefits Continuance. The Company will notcontinue medical or other benefits for the Employee, except as specificallyprovided herein, and the Employee shall not be entitled to participate in anybenefit plans provided by the Company, except as specifically provided herein.

(c) Deferred Compensation Plan. Barring prohibitions imposed by theCompany's deferred compensation plan, the Company will allow the Employee tomaintain the balance of her deferred compensation plan account in the plan untilJanuary 1, 2003, at which time the Company shall distribute the balance of theaccount to the Employee. The Employee shall not be entitle to make any furthercontributions to such account after the Effective Date. The Employeeacknowledges that all sums remaining in the deferred compensation plan are notinsured, and are considered as general funds of the Company for creditorpurposes.

(d) Discount Card. Assuming the Employee complies with the other termsand conditions of this Agreement, the Employee shall be entitled to thereasonable use of the discount provided from time to time to active employees ofthe Company for the Severance Period. In the event that Employee violates theterms of this Agreement or the Company discontinues the discount benefit, thediscount shall immediately terminate.

(e) Options. Employee acknowledges that Employee's stock optionsexercisable for common stock of the Company terminated effective July 20, 2001.As additional consideration for this Agreement and Release, Employee shall begranted a stock appreciation right. Within 14 days following execution of thisAgreement, Employee shall receive a cash payment from the Company equal to thedifference between (1) the strike price of Employee's fully vested stockoptions on July 20, 2001 (to the extend such strike price is lower than theclosing price of the Company's common stock on the NASDAQ National Market onJuly 20, 2001, and (2) the closing price of the Company's common stock on theNASDAQ National Market on July 20, 2001, plus (3) an amount required to gross upthat portion of the foregoing payment related to incentive stock options (asopposed to nonqualified stock options) to compensate Employee for the differencebetween 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 thestrike prices therefor, are shown on Attachment 1 hereto.

3. Conditions to Commencement of Severance Pay. In order for theEmployee to receive the Severance Pay, the Employee must comply with all of thefollowing conditions. At the Company's election, failure to comply with anycondition will result in a delay in, or termination of, any right to receiveSeverance Pay:

(a) The Employee shall return, within **7 days****after signing thisAgreement**, all equipment, tools, phones, computers, keys and proprietaryinformation (including financials, price lists, vendor lists, manuals andstrategic planning documents), in Employee's possession. **All computer filesmust remain intact on all computer equipment returned.**The Company agrees totransfer ownership to Employee of the laptop computer used by the Employee(other than the Zip drive) during the course of her employment.

(b) If the Employee has a Company credit card, within **7 days after thedate the Employee signs this Agreement,**the Employee must arrange forpayment of outstanding charges.

To the best of Company's knowledge, Employee has complied with theprovisions in Sections 3(a) and 3(b); however, such does not constitute a waiverof 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 Companymay elect to deduct any unpaid bills, costs of equipment, personal credit cardcharges or any business expenses for which reports have not been submitted fromthe Employee's Severance Pay.

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

(a) The Employee will not disparage or otherwise discredit the Company orallyor in writing. For purposes of this paragraph (a), any factually accuratetestimony, whether orally or in writing, given by the Employee as required bylaw under oath shall not be considered to disparage or otherwise discredit theCompany. The Company agrees that Perry Odak and Freya Brier, acting as Companyofficers, will not disparage or discredit the Employee orally or in writing toany third party. For purposes of the obligations of the Company,"disparagement" or "discredit" shall not include anyfactually accurate statement or any disclosure required to be made to anygovernmental or quasi-governmental agency, or any disclosure made in the courseof any pending or threatened litigation, mediation, arbitration or agencyaction.

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

(c) The Employee will not discuss the terms of this Agreement with any thirdparty 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 anypublic filing, unless the Company obtains confidentiality treatment for theAgreement as filed, the Employee shall be released from the foregoingobligation. In the event the Employee is required by law to discuss or discloseany of the terms, the Employee must provide the Company with prompt writtennotice prior to disclosure to the third party to allow the Company sufficienttime (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.
Rehire.
 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.
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, 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, "Confidential Information" shall not include  information which is or subsequently becomes known to the public other than  through a breach by Employee of this provision.
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 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.
Cooperation.
 (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.

(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.
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 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).
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 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) 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 be paid in accordance with paragraph 2(a) but in no  event will commence before 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: Freya Brier, Wild Oats  Markets, Inc., 3375 Mitchell Lane, Boulder, CO 80301.
**The Employee hereby acknowledges that the Employee has been advised inwriting to consult with an attorney before signing this Agreement and theEmployee has either consulted with an attorney before signing this Agreement orthe Employee has willingly and knowingly waived his/her right to speak with anattorney prior to signing this Agreement. The Employee fully understands thisAgreement and agrees to its terms.

COMPANY: EMPLOYEE:

Wild Oats Markets,Inc.                            Agreed to and signed, this 4th day of August , 2001****
By:/s/  Freya R. Brier                                   /s/  Mary Beth Lewis        V.P.,  Legal                                                    Signature

 

 

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