WILD OATS MARKETS, INC.

2006 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AGREEMENT

 

THIS RESTRICTED STOCK UNIT AGREEMENT (the "Agreement") is made effective as of
_______________, 20__ (the "Effective Date"), between Wild Oats Markets, Inc., a
Delaware corporation (together with its Affiliated Corporations except where the
context requires otherwise, the "Company"), and ("Grantee").

 

 

RECITALS

 

1. On ____________, 20__, the Board of Directors of the Company authorized the
award of incentives relating to the Company’s common stock to be issued under
the Wild Oats Markets, Inc. 2006 Equity Incentive Plan (the "Plan") to specified
Employees.

 

2. The purposes of the incentives are to reward each designated Employee for
past service rendered to the Company and/or to provide an incentive for new or
continued service with the Company, increase shareholder value, and advance the
interests of shareholders.

 

3. This Agreement sets forth the terms and conditions approved by the Committee
applicable to the award and issuance of Restricted Stock Units (the "Units") to
Grantee under the Plan. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meanings set forth in the Plan.

 

 

AGREEMENT

 

1. Grant of Units. Pursuant to the Plan and subject to the terms and conditions
of this Agreement, the Company hereby grants to the Grantee ______ Units
effective as of ____________, 20__ (the "Effective Date"). Each Unit represents
the right to receive one share of Stock at the time provided in this Agreement.

 

 

2. Consideration. The Committee hereby issues this award in consideration of
Grantee’s performance of past services to the Company, which have contributed to
the success of the Company and/or as an incentive for new or continued service
as an Employee with the Company and its Affiliates.

 

3. Transferability; Restrictions and Forfeiture. The Units may not be sold,
assigned, transferred by gift or otherwise, pledged, hypothecated, or otherwise
disposed of, by operation of law or otherwise, and shall be subject to
forfeiture in accordance with the provisions of Section 6 below, until Grantee
becomes vested in the Units in accordance with Section 5. Upon vesting, the
restrictions in this Section 3 shall lapse, the Units shall no longer be subject
to forfeiture, and Grantee may transfer shares of Units in accordance with
applicable securities laws.

 

4. Vesting; Lapse of Restrictions. Except as provided otherwise in this
Agreement, the Units shall vest only during Grantee’s Continuous Status as an
Employee of the Company or an Affiliate from the Effective Date through the
dates described below, and the restrictions set forth in Section 3 shall lapse
in their entirety, as follows:

 

(a) As of ___________, 2____, the restrictions set forth in Section 3 shall
lapse as to __________ Units (__% of the Units );

 

(b) As of ___________, 2____, the restrictions set forth in Section 3 shall
lapse as to __________ Units (__% of the Units );

 

(c) As of ___________, 2____, the restrictions set forth in Section 3 shall
lapse as to __________ Units (__% of the Units);

 

(d) As of ___________, 2____, the restrictions set forth in Section 3 shall
lapse as to __________ all remaining Units; and

 

(e) If at any time the number of Units covered by the Vested and Exercisable
portion of this Paragraph includes a fractional share, the number of Units as to
which the Agreement shall be actually Vested and Exercised shall be rounded down
to a next whole share of Stock.

 

5. Payment for Units, Delivery of Stock Certificates. When the Units become
payable, they shall be settled in shares of stock. The Units shall become
payable on the fifth (5th) anniversary of the Effective Date (the "Payment
Date") unless provided otherwise in this Agreement. Notwithstanding the
preceding sentence, in the case of shares that have vested upon death or
termination of employment on account of Disability, the Payment Date is the date
of death or termination of employment on account of Disability. Subject to the
provisions of Section 7 below, Stock certificates (the "Certificates")
evidencing the Stock shall be issued to the Grantee as of the Payment Date and
registered in the Grantee’s name on the records of the Company. Subject to and
conditioned on the satisfaction of any withholding obligations, the Certificates
shall be delivered to the Grantee as soon as practicable after the Payment Date.
Notwithstanding the foregoing, if, at the time that payment is due under this
Section 4, the Company’s deduction for compensation payable to the Grantee is
subject to the restrictions of Section 162(m) of the Internal Revenue Code of
1986, as amended ("Section 162(m)"), payment shall not be made until the
Company’s deduction for the compensation attributable to the payment is not
limited by Section 162(m).

 

 

6. Dividend Equivalents. The Grantee shall be entitled to receive cash payments
(referred to as dividend equivalents) equal to any cash dividends and other
distributions paid in cash with respect to a corresponding number of shares of
Stock covered by the Units.

 

 

7. Adjustments to the Units. The Units granted under this Agreement shall be
adjudicated under Section 11 of the Plan if necessary for changes in the stock
of the Company.

 

8. Reorganization and Change in Control.

 

(a) Full Vesting; Termination; Assumption or Substitution. Upon the occurrence
of a Change in Control (as defined in Section 9(b) of the Plan), the Units shall
become fully vested and payable regardless of whether all conditions for vesting
relating to length of service have been satisfied and without regard to any
deferral elections. The Committee may also provide for the assumption or
substitution of the Units by the surviving entity and make any other provision
for the Units as the Committee deems appropriate in its sole discretion.

 

(b) Assumption or Substitution. The Company, or the successor or purchaser, as
the case may be, may make adequate provision for the assumption of the Units or
the substitution of new Units for the outstanding Units on terms comparable to
the terms of this Agreement.

 

9. Withholding. Upon the award, vesting, and/or payment of any number of the
Units, the Grantee shall make appropriate arrangements with the Company to make
payment to the Company of the amount required to be withheld under applicable
federal, state, local, and other tax laws (collectively, "Withholding Taxes").
The Grantee may elect to pay such Withholding Taxes in cash by delivering to the
Company a check payable to the order of the Company. If the Withholding Taxes
arise on or after the date the Units become payable, the Grantee may, in
addition to the methods described in the preceding sentence, elect to pay such
Withholding Taxes (a) by selling a portion of the Stock then payable under this
Agreement if otherwise permitted by this Agreement or (b) as permitted by
Section 11(d) of the Plan and as otherwise permitted by this Agreement, by
having the Company withhold from the shares otherwise payable and deliverable to
the Grantee a number of shares having a Fair Market Value equal to the amount of
the minimum required Withholding Taxes, or such lesser amount as the Grantee may
elect. In such case, the value of the shares to be withheld shall be based on
the Fair Market Value of the shares on the date the amount of Withholding Taxes
is determined (the "Tax Date"). The Grantee must make an irrevocable election of
the manner of payment of the Withholding Taxes no later that fourteen (14)
calendar days prior to the Tax Date; provided however, if the Grantee is subject
to Section 16(b) of the Securities Exchange Act of 1934, the election shall be
made in accordance with the requirements of Rule 16b-3. If, on and after the
time the Units become payable, the Grantee has not made arrangements
satisfactory to the Company to pay the Withholding Taxes, the Company shall
withhold from the shares, a number of shares having a Fair Market Value equal to
the amount required to pay the Withholding Taxes. The value of the shares to be
withheld shall be based on the Fair Market Value of the shares on the Tax Date.
The Company shall not deliver any shares of Stock unless and until the Grantee
has delivered to the Company, or has made arrangements satisfactory to the
Company to provide fully for, the required Withholding Taxes. The amount of cash
dividend equivalents pursuant to Section 5 shall be subject to Withholding Taxes
applicable to wages.

 

 

10. Restriction on Transferability. Units, whether or not vested, may not be
sold, assigned, transferred by gift or otherwise, pledged or hypothecated, or
otherwise disposed of, by operation of law or otherwise at any time. Any attempt
to do so shall be null and void.

 

 

11. No Rights as a Stockholder. The Grantee shall have no voting or any other
rights as a stockholder of the Company with respect to the Units. Upon payment
of the Units and the transfer of shares of Stock to the Grantee, the Grantee
shall have all of the rights of a stockholder of the Company. The Grantee’s
right to receive Stock under this Agreement shall be no greater than the right
of any unsecured general creditor of the Company.

 

 

12. Miscellaneous.

 

(a) Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be given by first class registered or certified
mail, postage prepaid, or by personal delivery to the appropriate party,
addressed:

 

> > (i) If to the Company, to Wild Oats Markets, Inc., Attention: Corporate
> > Secretary, 3375 Mitchell Lane, Boulder, CO 80301-2294, or at such other
> > address as may have been furnished to the Grantee in writing by the Company;
> > or
> > 
> > (ii) If to the Grantee, to the Grantee at Wild Oats Markets, Inc.,
> > Attention: Corporate Secretary, 3375 Mitchell Lane, Boulder, CO 80301-2294,
> > or at other address as may have been furnished to the Company by the
> > Grantee.

Any such notice shall be deemed to have been given as of the second day after
deposit in the United States mails, postage prepaid, properly addressed as set
forth above, in the case of mailed notice, or as of the date delivered in the
case of personal delivery.

 

(b) Certificates. Stock may be delivered electronically or in the form of
certificates in the discretion of the Company. Any references to certificates
herein are deemed to include electronic delivery of securities.

 

(c) Amendment. Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the Company and the
Grantee. Notwithstanding the foregoing, this Agreement may be amended in the
sole discretion of the Committee by a writing that states specifically that it
is amending this Agreement if a copy of the amendment is delivered to the
Grantee; provided, however, that no amendment may adversely affect the rights of
the Grantee without the Grantee’s written consent. Without limiting the
foregoing, the Committee reserves the right to change, by written notice to the
Grantee, the provisions of the Units in any way that it may deem necessary or
advisable to implement the purposes of the grant and this Agreement as a result
of any change in applicable laws and regulations or any future law, regulation,
ruling, or judicial decision, provided that any such change shall be applicable
only to such Units that are then subject to the restrictions provided in this
Agreement.

 

(d) Defined Terms. Capitalized terms shall have the meaning set forth in the
Plan or herein, as the case may be.

 

(e) Construction; Severability. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.

 

(f) Waiver. Any provision contained in this Agreement may be waived, either
generally or in any particular instance, by the Committee appointed under the
Plan, but only to the extent permitted under the Plan.

 

(g) Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company and the Grantee and their respective heirs, executors,
administrators, legal representatives, successors and assigns.

 

(h) Rights to Employment. Nothing contained in this Agreement shall be construed
as giving the Grantee any right to be retained in the employ of the Company and
this Agreement is limited solely to governing the rights and obligations of the
Grantee with respect to the Units.

 

(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.

 

 

 

 

 

[REST OF THE PAGE IS LEFT BLANK INTENTIONALLY]

 

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

WILD OATS MARKETS, INC.

 

 

By ___________________________________________

_____________________________

 

 

GRANTEE

 

 

_______________________________________________

____________________________