**Exhibit 10.1**

 

**RESTRICTED STOCK UNIT AGREEMENT**

THIS RESTRICTED STOCK UNIT AGREEMENT (the "Agreement") made as of this _____day of _____________, 200_, between Wild Oats Markets, Inc., a Delaware corporation (the"Company"), and <<Name>> (the "Grantee").

**RECITALS**

1. As of <<Date_of_Grant>>, the Company grants (the "Grant") theGrantee Restricted Stock Units ("RSUs"), which are exchangeable for shares ofCompany common stock (the "Stock") under the Wild Oats Markets, Inc. 1996 EquityIncentive Plan (the "Plan") according to the Distribution Election, a form ofwhich is attached hereto, made by the Grantee and pursuant to this Agreement.

2. The Company and the Grantee wish to provide for the grant of the RSUs on the termsand conditions set forth below. RSUs shall only be available to non-employee members("Directors") of the Board of Directors (the "Board") of the Company.

**AGREEMENT**

1. **Grant of RSUs**.

(a) Pursuant to the Plan and subject to the terms and conditions of this Agreement, theCompany hereby grants to the Grantee _____ RSUs effective as of _____________, 200_. Theamount of RSUs granted is based upon the following calculation (check all applicable):

___ Board meeting grant: $3,450 (115% of $3,000) divided by the fair market value("FMV") as determined below, of the Stock on the NASDAQ National Market.

___ Committee meeting grant: $2,300 (115% of $2,000) divided by the FMV of the Stock onthe NASDAQ National Market.

___ Annual service grant: 4,000 RSUs granted each year for service on the Board.

___ Other: ____________________________________________________________________

(b) In the event of a Grant, the FMV of the Stock shall be determined with reference tothe closing price of the Stock as of last day of each board meeting. In the event a boardmeeting adjourns on a day during which the Stock is not traded, FMV shall be determinedwith reference to the closing price of the Stock on the last trading day immediatelypreceding the last day of the board meeting. In all other events, the FMV of the Stockshall be determined with reference to the closing price on the day prior to thedetermination of FMV. 

(c) All fractional shares shall be rounded down.

2. **Vesting**. 

(a) All RSUs will be vested on the date of grant, other than those granted for annualservice on the Board, which shall vest on the one year anniversary of the Grant. If theGrantee is not a Director on the one-year anniversary of the Grant and the Grant is nototherwise vested under this Agreement, then the Grant shall be null and void. 

(b) All units will vest upon a Change-in-Control as defined in paragraph 2(c) below.

(c) A "Change in Control" shall be deemed to have occurred if an event setforth in any one of the following paragraphs shall have occurred:

(i) any person who is or who becomes the beneficial owner, directly or indirectly, ofsecurities of the Company (not including in the securities beneficially owned by suchperson or any securities acquired directly from the Company or its affiliates)representing 31% or more of the combined voting power of the Company's then outstandingsecurities, excluding any person who becomes a beneficial owner in connection with anon-control merger (as defined in paragraph (iii) below); or 

(ii) the following individuals cease for any reason to constitute a majority of thenumber of Directors then serving: individuals who, on the date hereof, constitute theBoard and any new Director (other than a Director whose initial assumption of office is inconnection with an actual or threatened election contest, including but not limited to aconsent solicitation, relating to the election of Directors of the Company) whoseappointment or election by the Board or nomination for election by the Company'sstockholders was approved or recommended by a vote of at least two-thirds (2/3) of theDirectors then still in office who either were Directors on the date hereof or whoseappointment, election or nomination for election was previously so approved orrecommended; or;

(iii) A merger or consolidation of the Company or any direct or indirect subsidiary ofthe Company is consummated with any other corporation, other than a merger orconsolidation (a non-control merger") immediately following which the individuals whocomprise the Board immediately prior thereto constitute at least a majority of the boardof Directors of the Company, the entity surviving such merger or consolidation or anyparent thereof; or

(iv) the stockholders of the Company approve a plan of complete liquidation ordissolution of the Company or an agreement is consummated for the sale or disposition bythe Company of all or substantially all of the Company's assets, other than a sale ordisposition by the Company of all or substantially all of the Company's assets immediatelyfollowing which the individuals who comprise the Board immediately prior theretoconstitute at least a majority of the board of directors of the entity to which suchassets are sold or disposed or any parent thereof.

(d) All RSUs shall vest upon the death or Disability (as that term is defined inSection 22(e) of the Internal Revenue Code) of the Grantee.

Notwithstanding the foregoing, a "Change in Control" shall not be deemed tohave occurred by virtue of the consummation of any transaction or series of integratedtransactions immediately following which the record holders of the Stock immediately priorto such transaction or series of transactions continue to have substantially the sameproportionate ownership in an entity which owns all or substantially all of the assets ofthe Company immediately following such transaction or series of transactions.

3. **Payment for RSUs, Delivery of Stock Certificates**. When theRSUs become payable, the RSUs shall be settled in shares of Stock in accordance with theDistribution Election made by the Director prior to the first receipt of RSUs under thePlan (the "Payment Date").

Notwithstanding any distribution election by the Grantee, in the case of death orDisability, as that term is defined in paragraph 2(d) above, of the Grantee, the RSUsshall be payable within thirty (30) days following death or determination of Disability.In the event the 30th day falls on a day during which the Stock is not traded, paymentshall be made on the next trading day following the 30th day. Subject to the provisions ofSection 7 below, stock certificates (the "Certificates") evidencing the Stockshall be issued to the Grantee as of the Payment Date and registered in the Grantee’sname on the records of the Company. Subject to and conditioned on the satisfaction of anywithholding obligations, the Certificates shall be delivered to the Grantee as soon aspracticable after the Payment Date. Notwithstanding the foregoing, if, at the time thatpayment is due under this Section 3, the Company’s deduction for compensation payableto the Grantee is subject to the restrictions of Section 162(m) of the Internal RevenueCode of 1986, as amended ("Section 162(m)"), payment shall not be made until theCompany’s deduction for the compensation attributable to the payment is not limitedby Section 162(m).

4. **Dividend Equivalents**. The Grantee shall be entitled toreceive cash payments (referred to as dividend equivalents) equal to any cash dividendsand other distributions paid in cash with respect to a corresponding number of shares ofStock.

5. **Adjustments to the RSUs**. 

(a) Adjustment by Merger, Stock Split, Stock Dividend, etc. If the shares of Stock, aspresently constituted, shall be changed into or exchanged for a different number or kindof shares of Stock or other securities of the Company or of another corporation (whetherby reason of merger, consolidation, recapitalization, reclassification, stock split,spin-off, combination of shares or otherwise), or if the number of shares of Stock shallbe increased through the payment of a stock dividend, or if a dividend on the shares ofStock or rights or warrants to purchase securities of the Company shall be issued toholders of all outstanding Stock, then there shall be substituted for or added to eachRSU, the number and kind of shares of Stock or other securities into which eachoutstanding share of Stock that may become payable with respect to the RSU shall be sochanged or for which each share shall be exchanged or to which each share shall beentitled. 

(b) Other distributions and changes in the Stock. In the event there shall be any otherchange in the number or kind of the outstanding shares of Stock, or any stock or othersecurities into which the Stock is changed or for which it is exchanged, then if the Boardshall, in its sole discretion, determine the change, if any, required to the number ofRSUs held by a Grantee or to which any Award granted under the Plan relates immediatelyprior to the making of such adjustment 

6. **Reorganization**. The Board may also provide for theassumption or substitution of the RSUs by the surviving entity and make any otherprovision for the RSUs as the Board deems appropriate in its sole discretion. The Company,or any successor or purchaser of the Company, as the case may be, shall make adequateprovision for the assumption of the RSUs or the substitution of new RSUs for theoutstanding RSUs on terms comparable to the terms of this Agreement.

7. **Withholding**. In the event the Grantee is subject, in theexclusive judgment of the Company, to withholding, the Grantee shall make appropriatearrangements with the Company to make payment to the Company of the amount required to bewithheld under applicable federal, state, local, and other tax laws (collectively,"Withholding Taxes"). The Grantee may elect to pay such Withholding Taxes incash by delivering to the Company a check payable to the order of the Company or, if theCompany agrees, by authorizing the Company to withhold the amount due from theGrantee’s pay during the pay periods immediately preceding and following the date onwhich any such Withholding Tax liability arises. If the Withholding Taxes arise on orafter the date the RSUs become payable, the Grantee may, in addition to the methodsdescribed in the preceding sentence, elect to pay such Withholding Taxes (a) by selling aportion of the Stock then payable under this Agreement if otherwise permitted by thisAgreement or (b) by having the Company withhold from the shares otherwise payable anddeliverable to the Grantee a number of shares having a FMV equal to the amount of theminimum required Withholding Taxes, or such lesser amount as the Grantee may elect. Insuch cases, the value of the shares to be withheld shall be based on the FMV of the shareson the date the amount of Withholding Taxes is determined (the "Tax Date"). TheGrantee must make an irrevocable election of the manner of payment of the WithholdingTaxes 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, theelection shall be made in accordance with the requirements of Rule 16b-3. If, on and afterthe time the RSUs become payable, the Grantee has not made arrangements satisfactory tothe Company to pay the Withholding Taxes, the Company shall withhold from the shares, anumber of shares having a FMV equal to the amount required to pay the Withholding Taxes.The value of the shares to be withheld shall be based on the FMV of the shares on the TaxDate. The Company shall not deliver any shares of Stock unless and until the Grantee hasdelivered to the Company, or has made arrangements satisfactory to the Company to providefully for, the required Withholding Taxes. 

8. **Restriction on Transferability**. RSUs, whether or not vested,may not be sold, assigned, transferred by gift or otherwise, pledged or hypothecated, orotherwise disposed of, by operation of law or otherwise at any time, except by will or thelaws of descent and distribution. 

9. **No Rights as a Stockholder**. The Grantee shall have no votingor any other rights as a stockholder of the Company with respect to the RSUs. Upon paymentof the RSUs and the transfer of shares of Stock to the Grantee, the Grantee shall have allof the rights of a stockholder of the Company. The Grantee’s right to receive Stockunder this Agreement shall be no greater than the right of any unsecured general creditorof the Company.

10. **Miscellaneous**.

(a) Administration. This Agreement shall be administered by the Board. Anydetermination by the Board shall be final and binding on all parties. 

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

(i) If to the Company, to Director of Compensation, 3375 Mitchell Lane, Boulder, CO80301, with a copy to General Counsel at the same address, or at any other address as mayhave been furnished to the Grantee in writing by the Company; or

(ii) If to the Grantee, to the Grantee at the address set forth below under thesignature line, or at other address as may have been furnished to the Company by theGrantee. 

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

(c) Amendment. Except as provided herein, this Agreement may not be amended orotherwise 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 theBoard by a writing that states specifically it is amending this Agreement if a copy of theamendment is delivered to the Grantee; provided, however, no amendment may adverselyaffect the rights of the Grantee without the Grantee’s written consent. Withoutlimiting the foregoing, the Board reserves the right to change, by written notice to theGrantee, the provisions of the RSUs in any way it may deem necessary or advisable toimplement the purposes of the grant and this Agreement as a result of any change inapplicable laws and regulations or any future law, regulation, ruling, or judicialdecision, provided any change shall be applicable only to RSUs that are then subject tothe restrictions provided in this Agreement.

(d) Defined Terms. Capitalized terms shall have the meaning set forth in the Plan orherein.

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

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

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

(h) Rights to Employment. Nothing contained in this Agreement shall be construed asgiving the Grantee any right to be retained on the Board or any committee of the Board ofthe Company and this Agreement is limited solely to governing the rights and obligationsof the Grantee with respect to the RSUs.

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

 

 

 

 

 

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

Wild Oats Markets, Inc.

By: ________________________________

 

 

GRANTEE

_______________________________________

Print Name: ______________________________ 

Address: ________________________________

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