WILD OATS MARKETS, INC.

2001 NON-OFFICER/NON-DIRECTOR

 

STOCK OPTION PLAN

 

 

1. PURPOSES

(a) The purpose of the Plan is to provide a means by which selected Non-Officer,
Non-Director Employees may be given an opportunity to benefit from increases in
value of the common stock of the Company ("Common Stock") through the granting
of Nonstatutory Stock Options.

(b) The Company, by means of the Plan, seeks to retain the services of persons
who are now Employees of the Company and its Affiliates, to secure and retain
the services of new Employees and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its Affiliates.

(c) The Company intends that the Stock Awards issued under the Plan shall be
Nonstatutory Options granted pursuant to Section 6 hereof. All Options shall be
designated Nonstatutory Stock Options at the time of grant, and in such form as
issued pursuant to Section 6, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option.

 

2. DEFINITIONS

(a) "AFFILIATE" means any parent corporation or subsidiary corporation, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and (f)
respectively, of the Code.

(b) "BOARD" means the Board of Directors of the Company.

(c) "CODE" means the complete Internal Revenue Code, as amended.

(d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.

(e) "COMPANY" means Wild Oats Markets, Inc. a Delaware corporation.

(f) "CONTINUOUS STATUS AS AN EMPLOYEE" means the employment is not interrupted
or terminated. The Board, in its sole discretion, may determine whether
Continuous Status as an Employee shall be considered interrupted in the case of:
(i) any leave of absence approved by the Board, including sick leave, military
leave, or any other personal leave; or (ii) transfers between locations of the
Company or between the Company, Affiliates or their successors.

(g) "DIRECTOR" means a member of the Board.

(h) "EMPLOYEE" means any person, excluding Officers and Directors, employed by
the Company or any Affiliate of the Company.

(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

(j) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock of
the Company determined as follows:

> > (1) If the Common Stock is listed on any established stock exchange, or
> > traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
> > Market Value of a share of Common Stock shall be the closing sales price for
> > such stock (or the closing bid, if no sales were reported) as quoted on such
> > exchange or market (or the exchange or market with the greatest volume of
> > trading in Common Stock) on the last market trading day prior to the day of
> > determination, as reported in the Wall Street Journal or such other source
> > as the Board deems reliable;
> > 
> > (2) In the absence of such markets for the Common Stock, the Fair Market
> > Value shall be determined in good faith by the Board.

(k) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an
incentive stock option under Section 422 of the Code and the regulations
thereunder.

(l) "OFFICER" means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.

(m) "OPTION" means a stock option granted pursuant to the Plan.

(n) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.

(o) "OPTIONEE" means a person to whom an Option is granted pursuant to the Plan.

(p) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current employee
of the Company or an "affiliated corporation" (within the meaning of Treasury
regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an "affiliated corporation" receiving compensation
for prior services (other than benefits under a tax qualified pension plan), was
not an officer of the Company or an "affiliated corporation" at any time, and is
not currently receiving direct or indirect remuneration from the Company or an
"affiliated corporation" for services in any capacity other than as a Director,
or (ii) is otherwise considered an "outside director" for purposes of Section
162(m) of the Code.

(q) "PLAN" means this Wild Oats Markets, Inc. 2001 Non-Officer/Non-Director
Stock Option Plan.

(r) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.

(s) "STOCK AWARD" means any right granted under the Plan.

(t) "STOCK AWARD AGREEMENT" means a written agreement between the Company and a
holder of a Stock Award evidencing the terms and conditions of an individual
Stock Award grant. Each Stock Award Agreement shall be subject to the terms and
conditions of the Plan.

 

3. ADMINISTRATION

(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).

(b) The Board shall have the power, subject to, and within the limitations of,
the express provisions of the Plan:

> > (1) To determine from time to time which of the persons eligible under the
> > Plan shall be granted Stock Awards; when and how each Stock Award shall be
> > granted; the provisions of each Stock Award granted (which need not be
> > identical), including the time or times when a person shall be permitted to
> > receive stock pursuant to a Stock Award and the number of shares with
> > respect to which a Stock Award shall be granted to each such person.
> > 
> > (2) To construe and interpret the Plan and Stock Awards granted under it,
> > and to establish, amend and revoke rules and regulations for its
> > administration. The Board, in the exercise of this power, may correct any
> > defect, omission or inconsistency in the Plan or in any Stock Award
> > Agreement, in a manner and to the extent it shall deem necessary or
> > expedient to make the Plan fully effective.
> > 
> > (3) To amend the Plan or a Stock Award as provided in Section 12.
> > 
> > (4) Generally, to exercise such powers and to perform such acts as the Board
> > deems necessary or expedient to promote the best interests of the Company
> > which are not in conflict with the provisions of the Plan.

(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board. In the discretion
of the Board, a Committee may consist solely of two or more Outside Directors,
in accordance with Code Section 162(m), or solely of two or more Non-Employee
Directors, in accordance with Rule 16b-3. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan.

 

4. SHARES SUBJECT TO THE PLAN

(a) Subject to the provisions of Section 11 relating to adjustments upon changes
in stock, the stock that may be issued pursuant to Stock Awards shall not exceed
in the aggregate 486,000 shares of the Common Stock. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the stock not acquired under such Stock Award
shall revert to and again become available for issuance under the Plan.

(b) The stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.

 

5. ELIGIBILITY

No Officer or Director shall be eligible to receive any Stock Award under this
Plan. Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than 50,000 shares of the Common Stock in any calendar year.

 

6. OPTION PROVISIONS

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:

(a) TERM. No Option shall be exercisable after the expiration of ten (10) years
from the date it was granted.

(b) PRICE. The exercise price of each Nonstatutory Stock Option shall be not
less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the Option is exercised, or (ii) at the
discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board.

In the case of any deferred payment arrangement, interest shall be payable at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.

(d) TRANSFERABILITY. A Nonstatutory Stock Option shall not be transferable
except by will, by the laws of descent and distribution or pursuant to a
domestic relations order satisfying the requirements of Rule 16b-3 and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person or any transferee pursuant to a domestic relations order.
Notwithstanding the foregoing, the person to whom the Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.

(e) VESTING. The total number of shares of stock subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.

(f) TERMINATION OF EMPLOYMENT. In the event an Optionee's Continuous Status as
an Employee terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination) but only within such period
of time ending on the earlier of (i) the date thirty (30) days after the
termination of the Optionee's Continuous Status as an Employee (or such longer
or shorter period specified in the Option Agreement), or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to and again become available for issuance
under the Plan.

An Optionee's Option Agreement may also provide that if the exercise of the
Option following the termination of the Optionee's Continuous Status as an
Employee (other than upon the Optionee's death or disability) would result in
liability under Section 16(b) of the Exchange Act, then the Option shall
terminate on the earlier of (i) the expiration of the term of the Option set
forth in the Option Agreement, or (ii) the tenth (10th) day after the last date
on which such exercise would result in such liability under Section 16(b) of the
Exchange Act. Finally, an Optionee's Option Agreement may also provide that if
the exercise of the Option following the termination of the Optionee's
Continuous Status as an Employee (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of the
Option set forth in the first paragraph of this subsection 6(f), or (ii) the
expiration of a period of thirty (30) days after the termination of the
Optionee's Continuous Status as an Employee during which the exercise of the
Option would not be in violation of such registration requirements.

(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as an
Employee terminates as a result of the Optionee's disability, the Optionee may
exercise his or her Option (to the extent that the Optionee was entitled to
exercise it at the date of termination), but only within such period of time
ending on the earlier of (i) the date six (6) months following such termination
(or such longer or shorter period specified in the Option Agreement), or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, at the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under the
Plan.

(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, the Option may be exercised (to the extent the
Optionee was entitled to exercise the Option at the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise the option upon the
Optionee's death pursuant to subsection 6(d), but only within the period ending
on the earlier of (i) the date twelve (12) months following the date of death
(or such longer or shorter period specified in the Option Agreement), or (ii)
the expiration of the term of such Option as set forth in the Option Agreement.
If, at the time of death, the Optionee was not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
and again become available for issuance under the Plan.

(i) EARLY EXERCISE. The Option may, but need not, include a provision whereby
the Optionee may elect at any time while an Employee to exercise the Option as
to any part or all of the shares subject to the Option prior to the full vesting
of the Option. Any unvested shares so purchased may be subject to a repurchase
right in favor of the Company or to any other restriction the Board determines
to be appropriate.

(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the Board or
Committee to make or not to make grants of Options hereunder, the Board or
Committee shall have the authority (but not an obligation) to include as part of
any Option Agreement a provision entitling the Optionee to a further Option (a
"Re-Load Option") in the event the Optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other shares of
Common Stock in accordance with this Plan and the terms and conditions of the
Option Agreement. Any such Re-Load Option (i) shall be for a number of shares
equal to the number of shares surrendered as part or all of the exercise price
of such Option; (ii) shall have an expiration date which is the same as the
expiration date of the Option the exercise of which gave rise to such Re-Load
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option.

There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option
shall be subject to the availability of sufficient shares under subsection 4(a)
and shall be subject to such other terms and conditions as the Board or
Committee may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.

 

7. CANCELLATION AND RE-GRANT OF OPTIONS

(a) The Board or the Committee shall have the authority to effect, at any time
and from time to time, (i) the repricing of any outstanding Options under the
Plan and/or (ii) with the consent of any adversely affected holders of Options,
the cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of stock, but having an exercise price per share not
less than eighty-five percent (85%) of the Fair Market Value for a Nonstatutory
Stock Option.

(b) Shares subject to an Option canceled under this Section 7 shall continue to
be counted against the maximum award of Options permitted to be granted pursuant
to Section 5 of the Plan. The repricing of an Option under this Section 7,
resulting in a reduction of the exercise price, shall be deemed to be a
cancellation of the original Option and the grant of a substitute Option; in the
event of such repricing, both the original and the substituted Options shall be
counted against the maximum awards of Options permitted to be granted pursuant
to Section 5 of the Plan.

 

8. COVENANTS OF THE COMPANY

(a) During the terms of the Stock Awards, the Company shall keep available at
all times the number of shares of stock required to satisfy such Stock Awards.

(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares under Stock Awards; provided, however, that this undertaking shall
not require the Company to register under the Securities Act of 1933, as amended
(the "Securities Act") either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such Stock Awards
unless and until such authority is obtained.

 

9. USE OF PROCEEDS FROM STOCK

Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.

 

10. MISCELLANEOUS

(a) The Board shall have the power to accelerate the time at which a Stock Award
may first be exercised or the time during which a Stock Award or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions in
the Stock Award stating the time at which it may first be exercised or the time
during which it will vest.

(b) No Employee or any person to whom a Stock Award is transferred in accordance
with the Plan shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares subject to such Stock Award unless and
until such person has satisfied all requirements for exercise of the Stock Award
pursuant to its terms.

(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee or other holder of Stock Awards
any right to continue in the employ of the Company or any Affiliate, or shall
affect the right of the Company or any Affiliate to terminate the employment of
any Employee with or without notice and with or without cause.

(d) The Company may require any person to whom a Stock Award is granted, or any
person to whom a Stock Award is transferred in accordance with the Plan, as a
condition of exercising or acquiring stock under any Stock Award, (1) to give
written assurances satisfactory to the Company as to such person's knowledge and
experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Stock Award; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Stock Award for such person's own account and not with any
present intention of selling or otherwise distributing the stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise or acquisition
of stock under the Stock Award has been registered under a then currently
effective registration statement under the Securities Act, or (ii) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

(e) To the extent provided by the terms of a Stock Award Agreement, the person
to whom a Stock Award is granted may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of stock under a
Stock Award by any of the following means or by a combination of such means: (1)
tendering a cash payment; (2) authorizing the Company to withhold shares from
the shares of the Common Stock otherwise issuable to the participant as a result
of the exercise or acquisition of stock under the Stock Award; or (3) delivering
to the Company owned and unencumbered shares of the Common Stock of the Company.

 

11. ADJUSTMENTS UPON CHANGES IN STOCK

(a) If any change is made in the stock subject to the Plan, or subject to any
Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a) and the maximum
number of shares subject to award to any person during any calendar year
pursuant to Section 5, and the outstanding Stock Awards will be appropriately
adjusted in the class(es) and number of shares and price per share of stock
subject to such outstanding Stock Awards. Such adjustments shall be made by the
Board or the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company".)

(b) In the event of: (1) a dissolution, liquidation or sale of substantially all
of the assets of the Company; (2) a merger or consolidation in which the Company
is not the surviving corporation; or (3) a reverse merger in which the Company
is the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then to the extent permitted by applicable law: (i) any surviving
corporation or an Affiliate of such surviving corporation shall assume any Stock
Awards outstanding under the Plan or shall substitute similar Stock Awards for
those outstanding under the Plan, or (ii) such Stock Awards shall continue in
full force and effect. In the event any surviving corporation and its Affiliates
refuse to assume or continue such Stock Awards, or to substitute similar options
for those outstanding under the Plan, then, with respect to Stock Awards held by
persons then performing services as Employees, the time during which such Stock
Awards may be exercised shall be accelerated and the Stock Awards terminated if
not exercised prior to such event.

 

12. AMENDMENT OF THE PLAN AND STOCK AWARDS

(a) The Board at any time, and from time to time, may amend the Plan; provided
that no such amendment shall allow for the issuance of Stock Awards hereunder to
any Officer or Director when permitted under Nasdaq guidelines for plans not
approved by the Company's shareholders.

(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code.

(c) Rights and obligations under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the person to whom the Stock Award was granted and (ii)
such person consents in writing.

(d) The Board at any time, and from time to time, may amend the terms of any one
or more Stock Award; provided, however, that the rights and obligations under
any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.

 

13. TERMINATION OR SUSPENSION OF THE PLAN

(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate 15 years from the date the Plan is adopted
by the Board. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

(b) Rights and obligations under any Stock Award granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Stock Award was granted.

 

14. EFFECTIVE DATE OF PLAN.

The Plan shall become effective on October 1, 2001.

 

 

WILD OATS MARKETS, INC.

NON-QUALIFIED STOCK OPTION

 

___________________________________,Optionee:

 

Wild Oats Markets, Inc. (the "Company"), pursuant to its 2001 Non-Officer /
Non-Director Stock Option Plan (the "Plan"), has this day granted to you, the
optionee named above, an option to purchase shares of the common stock of the
Company ("Common Stock"). This option is not intended to qualify and will not be
treated as an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").

The details of your option are as follows:

1. (a) The total number of shares of Common Stock subject to this option is
____________________________

(a) Subject to the conditions stated herein, this option shall be exercisable
with respect to each installment shown below on or after the date of vesting
applicable to such installment; provided, however, that should Optionee's
employment terminate for "cause" this option shall be terminated and canceled
immediately and shall not be exercisable for any number of shares. For purposes
of this option, "cause" shall mean misconduct including, but not limited to,
criminal acts involving moral turpitude or dishonesty.

> > NUMBER OF SHARES (INSTALLMENT)
> > 
> > DATE OF EARLIEST EXERCISE (VESTING)

2. (a) The exercise price of this option is ___________________ ($_______) per
share, being not less than eighty five percent (85%) of the fair market value of
the Common Stock on the date of grant of this option.

(a) Payment of the exercise price per share is due in full in cash (including
check) upon exercise of all or any part of each installment which has become
exercisable by you.

(b) Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which results in the receipt of cash (or check) by the Company prior to the
issuance of Common Stock.

3. This option may not be exercised for any number of shares which would require
the issuance of anything other than whole shares.

4. Notwithstanding anything to the contrary contained herein, this option may
not be exercised unless the shares issuable upon exercise of this option are
then registered under the Act or, if such shares are not then so registered, the
Company has determined that such exercise and issuance would be exempt from the
registration requirements of the Act.

5. The term of this option commences on the date hereof and, unless sooner
terminated as set forth below or in the Plan, terminates ten (10) years from the
date of grant. In no event may this option be exercised on or after the date on
which it terminates. This option shall terminate prior to the expiration of its
term as follows: Thirty (30) days after the termination of your employment with
the Company for any reason or for no reason unless;

(a) such termination of employment is due to your permanent and total disability
(within the meaning of Section 422(c)(6) of the Code), in which event the option
shall terminate on the earlier of the termination date set forth above or six
(6) months following such termination of employment; or

(b) such termination of employment is due to your death, in which event the
option shall terminate on the earlier of the termination date set forth above or
twelve (12) months after your death; or

(c) during any part of such thirty (30) days period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of thirty (30) days after the termination of employment.

However, this option may be exercised on or after the termination of employment
only as to that number of vested shares as to which it was exercisable on the
date of termination of employment under the provisions of paragraphs 1 and 3 of
this option; provided however, that if your employment is terminated prior to
the First Exercise Date (as defined in subparagraph 3(a) hereof), subject to
paragraph 1 hereof, the date of your termination of employment shall be deemed
the First Exercise Date.

6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to the Plan.

> > > > > > (i) By exercising this option you agree that the Company may require
> > > > > > you to enter an arrangement providing for the payment by you to the
> > > > > > Company of any tax withholding obligation of the Company arising by
> > > > > > reason of (1) the exercise of this option; (2) the lapse of any
> > > > > > substantial risk of forfeiture to which the shares are subject at
> > > > > > the time of exercise; or (3) the disposition of shares acquired upon
> > > > > > such exercise.

7. This option is not transferable, except by will or by the laws of descent and
distribution, and is exercisable during your life only by you.

8. Any notices provided for in this option shall be given in writing and shall
be deemed effectively given upon receipt or, in the case of notices delivered by
the Company to you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the address specified below or at such
other address as you hereafter designate by written notice to the Company.

9. If the partners hereto shall have any conflict regarding the terms of this
option, the interpretation of the Company's Compensation Committee shall
prevail.

Dated the ______ day of _________________, 20___.

Very truly yours,

WILD OATS MARKETS, INC.

 

By ___________________________________

Duly authorized on behalf of the Board of Directors

The undersigned:

(a) Acknowledges receipt of the foregoing option and the attachments referenced
therein and understands that all rights and liabilities with respect to this
option are set forth in the option and the Plan; and

(b) Acknowledges that as of the date of grant of this option, it sets forth the
entire understanding between the undersigned optionee and the Company and its
affiliates regarding the acquisition of stock in the Company and supersedes all
prior oral and written agreements on that subject with the exception of the
following agreements only:

NONE _____________________

> > (Initial)

OTHER __________________________________________________________

__________________________________________________________

__________________________________________________________

 

> > ___________________________________________________
> > 
> > Optionee
> > 
> >  
> > 
> > Address: ___________________________________________
> > 
> > > > ___________________________________________
> > > > 
> > > >  

ATTACHMENTS:

2001Non- Officer/Non-Director Stock Option Plan

Notice of Exercise

 

NOTICE OF EXERCISE

 

 

Date of Exercise

Wild Oats Markets, Inc.
3375 Mitchell Lane
Boulder, CO 80301

Ladies and Gentlemen:

This constitutes notice under my stock option that I elect to purchase the
number of shares for the price set forth below.

 

 

Type of option (check one)             Incentive                 Nonstatutory

Stock option dated:

Number of shares as to which
option is exercised:

Certificates to be issued in
name of: _____________________

Total exercise price: $

Cash payment delivered herewith: $

 

By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the 2001 Non-Officer / Non-Director Stock
Option Plan, (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option, and (iii) if this exercise related to an incentive
stock option, to notify you in writing within fifteen (15) days after the date
of any disposition of any of the shares of Common Stock issued upon exercise of
this option that occurs within two (2) years after the date of grant of this
option or within one (1) year after such shares of Common Stock are issued upon
exercise of this option.

I hereby make the following certifications and representations with respect to
the number of shares of Common Stock of the Company listed above (the "Shares"),
which are being acquired by me for my own account upon exercise of the Option as
set forth above:

I acknowledge that all certificates representing any of the Shares subject to
the provisions of the Option shall have endorsed thereon appropriate legends
reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or
applicable securities laws.

Very truly yours,

_________________________________