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 selectedNon-Officer, Non-Director Employees may be given an opportunity to benefit fromincreases 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 ofpersons who are now Employees of the Company and its Affiliates, to secure andretain the services of new Employees and to provide incentives for such personsto 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 beNonstatutory Options granted pursuant to Section 6 hereof. All Options shall bedesignated Nonstatutory Stock Options at the time of grant, and in such form asissued pursuant to Section 6, and a separate certificate or certificates will beissued for shares purchased on exercise of each type of Option.

 

2. DEFINITIONS

(a) "AFFILIATE" means any parent corporation or subsidiarycorporation, whether now or hereafter existing, as those terms are defined inSections 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 inaccordance 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 notinterrupted or terminated. The Board, in its sole discretion, may determinewhether Continuous Status as an Employee shall be considered interrupted in thecase of: (i) any leave of absence approved by the Board, including sick leave,military leave, or any other personal leave; or (ii) transfers between locationsof 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, asamended.

(j) "FAIR MARKET VALUE" means, as of any date, the value of theCommon 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 toqualify as an incentive stock option under Section 422 of the Code and theregulations thereunder.

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

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

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

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

(p) "OUTSIDE DIRECTOR" means a Director who either (i) is not acurrent employee of the Company or an "affiliated corporation" (withinthe meaning of Treasury regulations promulgated under Section 162(m) of theCode), is not a former employee of the Company or an "affiliatedcorporation" receiving compensation for prior services (other than benefitsunder a tax qualified pension plan), was not an officer of the Company or an"affiliated corporation" at any time, and is not currently receivingdirect or indirect remuneration from the Company or an "affiliatedcorporation" for services in any capacity other than as a Director, or (ii)is otherwise considered an "outside director" for purposes of Section162(m) of the Code.

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

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

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

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

 

3. ADMINISTRATION

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

(b) The Board shall have the power, subject to, and within the limitationsof, 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 orcommittees ("Committee") of one or more members of the Board. In thediscretion of the Board, a Committee may consist solely of two or more OutsideDirectors, in accordance with Code Section 162(m), or solely of two or moreNon-Employee Directors, in accordance with Rule 16b-3. If administration isdelegated to a Committee, the Committee shall have, in connection with theadministration of the Plan, the powers theretofore possessed by the Board (andreferences in this Plan to the Board shall thereafter be to the Committee),subject, however, to such resolutions, not inconsistent with the provisions ofthe Plan, as may be adopted from time to time by the Board. The Board mayabolish the Committee at any time and revest in the Board the administration ofthe Plan.

 

4. SHARES SUBJECT TO THE PLAN

(a) Subject to the provisions of Section 11 relating to adjustments uponchanges in stock, the stock that may be issued pursuant to Stock Awards shallnot exceed in the aggregate 486,000 shares of the Common Stock. If any StockAward 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 StockAward shall revert to and again become available for issuance under the Plan.

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

 

5. ELIGIBILITY

No Officer or Director shall be eligible to receive any Stock Award underthis Plan. Subject to the provisions of Section 11 relating to adjustments uponchanges in stock, no person shall be eligible to be granted Options coveringmore 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 conditionsas the Board shall deem appropriate. The provisions of separate Options need notbe identical, but each Option shall include (through incorporation of provisionshereof by reference in the Option or otherwise) the substance of each of thefollowing 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 notless than eighty-five percent (85%) of the Fair Market Value of the stocksubject to the Option on the date the Option is granted.

(c) CONSIDERATION. The purchase price of stock acquired pursuant to an Optionshall 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 thediscretion of the Board or the Committee, at the time of the grant of theOption, (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, withoutlimiting the generality of the foregoing, the use of other Common Stock of theCompany) with the person to whom the Option is granted or to whom the Option istransferred pursuant to subsection 6(d), or (C) in any other form of legalconsideration that may be acceptable to the Board.

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

(d) TRANSFERABILITY. A Nonstatutory Stock Option shall not be transferableexcept by will, by the laws of descent and distribution or pursuant to adomestic relations order satisfying the requirements of Rule 16b-3 and shall beexercisable during the lifetime of the person to whom the Option is granted onlyby such person or any transferee pursuant to a domestic relations order.Notwithstanding the foregoing, the person to whom the Option is granted may, bydelivering 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, shallthereafter 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, beequal). The Option Agreement may provide that from time to time during each ofsuch installment periods, the Option may become exercisable ("vest")with respect to some or all of the shares allotted to that period, and may beexercised with respect to some or all of the shares allotted to such periodand/or any prior period as to which the Option became vested but was not fullyexercised. The Option may be subject to such other terms and conditions on thetime or times when it may be exercised (which may be based on performance orother criteria) as the Board may deem appropriate. The provisions of thissubsection 6(e) are subject to any Option provisions governing the minimumnumber of shares as to which an Option may be exercised.

(f) TERMINATION OF EMPLOYMENT. In the event an Optionee's Continuous Statusas 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 wasentitled to exercise it at the date of termination) but only within such periodof time ending on the earlier of (i) the date thirty (30) days after thetermination of the Optionee's Continuous Status as an Employee (or such longeror shorter period specified in the Option Agreement), or (ii) the expiration ofthe term of the Option as set forth in the Option Agreement. If, aftertermination, the Optionee does not exercise his or her Option within the timespecified in the Option Agreement, the Option shall terminate, and the sharescovered by such Option shall revert to and again become available for issuanceunder the Plan.

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

(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status asan Employee terminates as a result of the Optionee's disability, the Optioneemay exercise his or her Option (to the extent that the Optionee was entitled toexercise it at the date of termination), but only within such period of timeending 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 orher entire Option, the shares covered by the unexercisable portion of the Optionshall revert to and again become available for issuance under the Plan. If,after termination, the Optionee does not exercise his or her Option within thetime specified herein, the Option shall terminate, and the shares covered bysuch Option shall revert to and again become available for issuance under thePlan.

(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during, orwithin a period specified in the Option after the termination of, the Optionee'sContinuous Status as an Employee, the Option may be exercised (to the extent theOptionee was entitled to exercise the Option at the date of death) by theOptionee's estate, by a person who acquired the right to exercise the Option bybequest or inheritance or by a person designated to exercise the option upon theOptionee's death pursuant to subsection 6(d), but only within the period endingon 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 herentire Option, the shares covered by the unexercisable portion of the Optionshall revert to and again become available for issuance under the Plan. If,after death, the Option is not exercised within the time specified herein, theOption shall terminate, and the shares covered by such Option shall revert toand again become available for issuance under the Plan.

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

(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the Boardor Committee to make or not to make grants of Options hereunder, the Board orCommittee shall have the authority (but not an obligation) to include as part ofany Option Agreement a provision entitling the Optionee to a further Option (a"Re-Load Option") in the event the Optionee exercises the Optionevidenced by the Option agreement, in whole or in part, by surrendering othershares of Common Stock in accordance with this Plan and the terms and conditionsof the Option Agreement. Any such Re-Load Option (i) shall be for a number ofshares equal to the number of shares surrendered as part or all of the exerciseprice of such Option; (ii) shall have an expiration date which is the same asthe expiration date of the Option the exercise of which gave rise to suchRe-Load Option; and (iii) shall have an exercise price which is equal to onehundred percent (100%) of the Fair Market Value of the Common Stock subject tothe 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-LoadOption shall be subject to the availability of sufficient shares undersubsection 4(a) and shall be subject to such other terms and conditions as theBoard or Committee may determine which are not inconsistent with the expressprovisions 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 anytime and from time to time, (i) the repricing of any outstanding Options underthe Plan and/or (ii) with the consent of any adversely affected holders ofOptions, the cancellation of any outstanding Options under the Plan and thegrant in substitution therefor of new Options under the Plan covering the sameor different numbers of shares of stock, but having an exercise price per sharenot less than eighty-five percent (85%) of the Fair Market Value for aNonstatutory Stock Option.

(b) Shares subject to an Option canceled under this Section 7 shall continueto be counted against the maximum award of Options permitted to be grantedpursuant to Section 5 of the Plan. The repricing of an Option under this Section7, resulting in a reduction of the exercise price, shall be deemed to be acancellation of the original Option and the grant of a substitute Option; in theevent of such repricing, both the original and the substituted Options shall becounted against the maximum awards of Options permitted to be granted pursuantto Section 5 of the Plan.

 

8. COVENANTS OF THE COMPANY

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

(b) The Company shall seek to obtain from each regulatory commission oragency having jurisdiction over the Plan such authority as may be required toissue and sell shares under Stock Awards; provided, however, that thisundertaking shall not require the Company to register under the Securities Actof 1933, as amended (the "Securities Act") either the Plan, any StockAward or any stock issued or issuable pursuant to any such Stock Award. If,after reasonable efforts, the Company is unable to obtain from any suchregulatory commission or agency the authority which counsel for the Companydeems necessary for the lawful issuance and sale of stock under the Plan, theCompany shall be relieved from any liability for failure to issue and sell stockupon 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 constitutegeneral funds of the Company.

 

10. MISCELLANEOUS

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

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

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

(d) The Company may require any person to whom a Stock Award is granted, orany person to whom a Stock Award is transferred in accordance with the Plan, asa condition of exercising or acquiring stock under any Stock Award, (1) to givewritten assurances satisfactory to the Company as to such person's knowledge andexperience in financial and business matters and/or to employ a purchaserrepresentative reasonably satisfactory to the Company who is knowledgeable andexperienced in financial and business matters, and that he or she is capable ofevaluating, alone or together with the purchaser representative, the merits andrisks of exercising the Stock Award; and (2) to give written assurancessatisfactory to the Company stating that such person is acquiring the stocksubject to the Stock Award for such person's own account and not with anypresent intention of selling or otherwise distributing the stock. The foregoingrequirements, and any assurances given pursuant to such requirements, shall beinoperative if (i) the issuance of the shares upon the exercise or acquisitionof stock under the Stock Award has been registered under a then currentlyeffective registration statement under the Securities Act, or (ii) as to anyparticular requirement, a determination is made by counsel for the Company thatsuch requirement need not be met in the circumstances under the then applicablesecurities laws. The Company may, upon advice of counsel to the Company, placelegends on stock certificates issued under the Plan as such counsel deemsnecessary 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, theperson to whom a Stock Award is granted may satisfy any federal, state or localtax withholding obligation relating to the exercise or acquisition of stockunder a Stock Award by any of the following means or by a combination of suchmeans: (1) tendering a cash payment; (2) authorizing the Company to withholdshares from the shares of the Common Stock otherwise issuable to the participantas 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 Stockof the Company.

 

11. ADJUSTMENTS UPON CHANGES IN STOCK

(a) If any change is made in the stock subject to the Plan, or subject to anyStock Award, without the receipt of consideration by the Company (throughmerger, consolidation, reorganization, recapitalization, reincorporation, stockdividend, dividend in property other than cash, stock split, liquidatingdividend, combination of shares, exchange of shares, change in corporatestructure or other transaction not involving the receipt of consideration by theCompany), the Plan will be appropriately adjusted in the class(es) and maximumnumber of shares subject to the Plan pursuant to subsection 4(a) and the maximumnumber of shares subject to award to any person during any calendar yearpursuant to Section 5, and the outstanding Stock Awards will be appropriatelyadjusted in the class(es) and number of shares and price per share of stocksubject to such outstanding Stock Awards. Such adjustments shall be made by theBoard or the Committee, the determination of which shall be final, binding andconclusive. (The conversion of any convertible securities of the Company shallnot be treated as a "transaction not involving the receipt of considerationby the Company".)

(b) In the event of: (1) a dissolution, liquidation or sale of substantiallyall of the assets of the Company; (2) a merger or consolidation in which theCompany is not the surviving corporation; or (3) a reverse merger in which theCompany is the surviving corporation but the shares of the Company's commonstock outstanding immediately preceding the merger are converted by virtue ofthe merger into other property, whether in the form of securities, cash orotherwise, then to the extent permitted by applicable law: (i) any survivingcorporation or an Affiliate of such surviving corporation shall assume any StockAwards outstanding under the Plan or shall substitute similar Stock Awards forthose outstanding under the Plan, or (ii) such Stock Awards shall continue infull force and effect. In the event any surviving corporation and its Affiliatesrefuse to assume or continue such Stock Awards, or to substitute similar optionsfor those outstanding under the Plan, then, with respect to Stock Awards held bypersons then performing services as Employees, the time during which such StockAwards may be exercised shall be accelerated and the Stock Awards terminated ifnot 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 Awardshereunder to any Officer or Director when permitted under Nasdaq guidelines forplans not approved by the Company's shareholders.

(b) It is expressly contemplated that the Board may amend the Plan in anyrespect the Board deems necessary or advisable to provide eligible Employeeswith the maximum benefits provided or to be provided under the provisions of theCode.

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

(d) The Board at any time, and from time to time, may amend the terms of anyone or more Stock Award; provided, however, that the rights and obligationsunder any Stock Award shall not be impaired by any such amendment unless (i) theCompany requests the consent of the person to whom the Stock Award was grantedand (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 soonerterminated, the Plan shall terminate 15 years from the date the Plan is adoptedby the Board. No Stock Awards may be granted under the Plan while the Plan issuspended or after it is terminated.

(b) Rights and obligations under any Stock Award granted while the Plan is ineffect shall not be impaired by suspension or termination of the Plan, exceptwith 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 2001Non-Officer / Non-Director Stock Option Plan (the "Plan"), has thisday granted to you, the optionee named above, an option to purchase shares ofthe common stock of the Company ("Common Stock"). This option is notintended to qualify and will not be treated as an "incentive stockoption" within the meaning of Section 422 of the Internal Revenue Code of1986, 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 exercisablewith respect to each installment shown below on or after the date of vestingapplicable to such installment; provided, however, that should Optionee'semployment terminate for "cause" this option shall be terminated andcanceled immediately and shall not be exercisable for any number of shares. Forpurposes of this option, "cause" shall mean misconduct including, butnot 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 marketvalue 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 (includingcheck) upon exercise of all or any part of each installment which has becomeexercisable by you.

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

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

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

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

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

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

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

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

6. (a) This option may be exercised, to the extent specified above, bydelivering a notice of exercise (in a form designated by the Company) togetherwith the exercise price to the Secretary of the Company, or to such other personas the Company may designate, during regular business hours, together with suchadditional 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 descentand distribution, and is exercisable during your life only by you.

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

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

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 attachmentsreferenced therein and understands that all rights and liabilities with respectto 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 forththe entire understanding between the undersigned optionee and the Company andits affiliates regarding the acquisition of stock in the Company and supersedesall prior oral and written agreements on that subject with the exception of thefollowing 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 LaneBoulder, CO 80301

Ladies and Gentlemen:

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

 

 

Type of option (checkone)            Incentive                Nonstatutory

Stock option dated:

Number of shares as to whichoption is exercised:

Certificates to be issued inname of: _____________________

Total exercise price: $

Cash payment delivered herewith: $

 

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

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

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

Very truly yours,

_________________________________