Document:

MARTIN SEVERANCE AGREEMENT

SEVERANCE AGREEMENT

THIS AGREEMENT, dated January 12, 2006, is made by and between Wild Oats Markets, Inc.,
a Delaware corporation (the "Company"), and Samuel M. Martin III (the
"Executive").

WHEREAS, the Company considers it essential to the best interests of its stockholders to
foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations,
the possibility of a Change in Control exists and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the departure
or distraction of management personnel to the detriment of the Company and its
stockholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce
and encourage the continued attention and dedication of members of the Company's
management, including the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the possibility of a Change in
Control;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and the Executive hereby agree as follows:

1. Defined Terms. The definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.

2. Term of Agreement. The Term of this Agreement shall commence on the date
hereof and shall continue in effect through December 31, 2006; commencing thereafter, the
Term shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the Executive shall have given notice
not to extend the Term; and further provided, however, that if a Change in Control shall
have occurred during the Term, the Term shall expire no earlier than twenty-four (24)
months beyond the month in which such Change in Control occurred.

3. Company's Covenants Summarized. In order to induce the Executive to remain in
the employ of the Company and in consideration of the Executive's covenants set forth in
Section 4 hereof, the Company agrees, under the conditions described herein, to pay the
Executive the Severance Benefits and the other payments and benefits described herein.
Except as provided in Section 10.1 hereof, no Severance Benefits shall be payable under
this Agreement unless there shall have been (or, under the terms of the second sentence of
Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive's
employment with the Company following a Change in Control and during the Term. This
Agreement shall not be construed as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.

4. The Executive's Covenants. The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in Control during the
Term, the Executive will remain in the employ of the Company until the earliest of (i) a
date which is six (6) months from the date of such Potential Change in Control, (ii) the
date of a Change in Control, (iii) the date of termination by the Executive of the
Executive's employment for Good Reason or by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive's employment for any reason.

5. Compensation Other Than Severance Benefits.

5.1 Following a Change in Control and during the Term, during any period that the
Executive fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the Executive's
full salary to the Executive at the rate in effect at the commencement of any such period,
together with all compensation and benefits payable to the Executive under the terms of
any compensation or benefit plan, program or arrangement maintained by the Company during
such period (other than any disability plan), until the Executive's employment is
terminated by the Company for Disability.

5.2 If the Executive's employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay the Executive's full salary to the
Executive through the Date of Termination at the rate in effect immediately prior to the
Date of Termination or, if higher, the rate in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, together with all
compensation and benefits payable to the Executive through the Date of Termination under
the terms of the Company's compensation and benefit plans, programs or arrangements as in
effect immediately prior to the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.

5.3 If the Executive's employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay to the Executive the Executive's normal
post-termination compensation and benefits as such payments become due. Such
post-termination compensation and benefits shall be determined under, and paid in
accordance with, the Company's retirement, insurance and other compensation or benefit
plans, programs and arrangements as in effect immediately prior to the Date of Termination
or, if more favorable to the Executive, as in effect immediately prior to the occurrence
of the first event or circumstance constituting Good Reason.

6. Severance Benefits.

6.1 Subject to Section 9 below, if the Executive's employment is terminated following a
Change in Control and during the Term, other than (A) by the Company for Cause, (B) by
reason of death or Disability, or (C) by the Executive without Good Reason, then the
Company shall pay the Executive the amounts, and provide the Executive the benefits,
described in this Section 6.1 ("Severance Benefits") and the payment referred to
in Section 6.2, in addition to any payments and benefits to which the Executive is
entitled under Section 5 hereof. For purposes of this Agreement, the Executive's
employment shall be deemed to have been terminated following a Change in Control by the
Company without Cause or by the Executive with Good Reason, if (i) the Executive's
employment is terminated by the Company without Cause prior to a Change in Control
(whether or not a Change in Control ever occurs) and such termination was at the request
or direction of a Person who has entered into an agreement with the Company the
consummation of which would constitute a Change in Control, (ii) the Executive terminates
his employment for Good Reason prior to a Change in Control (whether or not a Change in
Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at
the request or direction of such Person, or (iii) the Executive's employment is terminated
by the Company without Cause or by the Executive for Good Reason and such termination or
the circumstance or event which constitutes Good Reason is otherwise in connection with or
in anticipation of a Change in Control (whether or not a Change in Control ever occurs).
For purposes of any determination regarding the applicability of the immediately preceding
sentence, any position taken by the Executive shall be presumed to be correct unless the
Company establishes to the Committee by clear and convincing evidence that such position
is not correct. The Executive shall not be entitled to receive any Severance Benefits
under this Agreement under any circumstances other than those set forth in this paragraph.

  

  (A) In lieu of any further salary payments to the Executive for periods subsequent to the
  Date of Termination and in lieu of any severance benefit otherwise payable to the
  Executive, the Company shall pay to the Executive a lump sum severance payment, in cash,
  equal to two times the sum of (i) the Executive's base salary as in effect immediately
  prior to the Date of Termination or, if higher, in effect immediately prior to the first
  occurrence of an event or circumstance constituting Good Reason, and (ii) the average
  annual bonus earned by the Executive pursuant to any discretionary annual bonus or
  incentive plan maintained by the Company in respect of the two fiscal years ending
  immediately prior to the fiscal year in which occurs the Date of Termination or, if the
  Executive has not been eligible for at least two annual bonuses as of the Date of
  Termination, the bonus earned by the Executive in respect of the fiscal year immediately
  prior to the fiscal year in which occurs the Date of Termination.

  

  (B) For the twenty-four (24) month period immediately following the Date of Termination,
  the Company shall arrange to provide the Executive and his dependents life, disability,
  accident and health insurance benefits substantially similar to those provided to the
  Executive and his dependents immediately prior to the Date of Termination or, if more
  favorable to the Executive, those provided to the Executive and his dependents immediately
  prior to the first occurrence of an event or circumstance constituting Good Reason, at no
  greater cost to the Executive than the cost to the Executive immediately prior to such
  date or occurrence; provided, however, that, unless the Executive consents to a different
  method (after taking into account the effect of such method on the calculation of
  "parachute payments" pursuant to Section 6.2 hereof), such health insurance
  benefits shall be provided through a third-party insurer. Benefits otherwise receivable by
  the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of
  the same type are received by or made available to the Executive during the twenty-four
  (24) month period following the Executive's termination of employment (and any such
  benefits received by or made available to the Executive shall be reported to the Company
  by the Executive); provided, however, that the Company shall reimburse the Executive for
  the excess, if any, of the cost of such benefits to the Executive over such cost
  immediately prior to the Date of Termination or, if more favorable to the Executive, the
  first occurrence of an event or circumstance constituting Good Reason. 

  

  (C) Notwithstanding any provision of any annual or long-term incentive plan to the
  contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the
  sum of (i) any unpaid incentive compensation which has been allocated or awarded to the
  Executive for a completed fiscal year or other measuring period preceding the Date of
  Termination under any such plan and which, as of the Date of Termination, is contingent
  only upon the continued employment of the Executive to a subsequent date, and (ii) a pro
  rata portion to the Date of Termination of the aggregate value of all contingent incentive
  compensation awards to the Executive for all then uncompleted periods under any such plan,
  calculated as to each such award by multiplying the award that the Executive would have
  earned on the last day of the performance award period, assuming the achievement, at the
  target level of the individual and corporate performance goals established with respect to
  such award, if the Company's incentive compensation plan has such a concept, or, if not,
  at a level commensurate with the Executive's position at the Company and the incentive
  compensation awards paid to similarly situated executives of the Company, by the fraction
  obtained by dividing the number of full months and any fractional portion of a month
  during such performance award period through the Date of Termination by the total number
  of months contained in such performance award period. 

  

  (D) In addition to the benefits to which the Executive is entitled under each DC
  Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the
  sum of (i) the amount that would have been contributed thereto by the Company on the
  Executive's behalf during the two years immediately following the Date of Termination,
  determined (x) as if the Executive made the maximum permissible contributions thereto
  during such period, (y) as if the Executive earned compensation during such period at a
  rate equal to the Executive's compensation (as defined in the DC Pension Plan) during the
  twelve (12) months immediately preceding the Date of Termination or, if higher, during the
  twelve months immediately prior to the first occurrence of an event or circumstance
  constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plan
  made subsequent to a Change in Control and on or prior to the Date of Termination, which
  amendment adversely affects in any manner the computation of benefits thereunder, and (ii)
  the excess, if any, of (x) the Executive's account balance under the DC Pension Plan as of
  the Date of Termination over (y) the portion of such account balance that is
  nonforfeitable under the terms of the DC Pension Plan.

  

  (E) Each option to acquire common stock of the Company granted under a Company
  incentive plan or other arrangement that is held by the Executive on the Date of
  Termination shall, as of such date, vest and become immediately exercisable in full.

6.2  (A) Subject to Section 9 below, whether or not the Executive becomes entitled to
the Severance Benefits, if any of the payments or benefits received or to be received by
the Executive in connection with a Change in Control or the Executive's termination of
employment (whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, any Person whose actions result in a Change in Control or
any Person affiliated with the Company or such Person) (all such payments and benefits,
excluding the Gross-Up Payment, being hereinafter referred to as the "Total
Payments") will be subject to the Excise Tax, the Company shall pay to the Executive
an additional amount (the "Gross-Up Payment") such that the net amount retained
by the Executive, after deduction of any Excise Tax on the Total Payments and any federal,
state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and
after taking into account the phase out of itemized deductions and personal exemptions
attributable to the Gross-Up Payment, shall be equal to the Total Payments.

  (B) For purposes of determining whether any of the Total Payments will be subject to
  the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be
  treated as "parachute payments" (within the meaning of section 280G(b)(2) of the
  Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
  acceptable to the Executive and selected by the accounting firm which was, immediately
  prior to the Change in Control, the Company's independent auditor (the
  "Auditor"), such payments or benefits (in whole or in part) do not constitute
  parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all
  "excess parachute payments" within the meaning of section 280G(b)(l) of the Code
  shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such
  excess parachute payments (in whole or in part) represent reasonable compensation for
  services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in
  excess of the Base Amount allocable to such reasonable compensation, or are otherwise not
  subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred
  payment or benefit shall be determined by the Auditor in accordance with the principles of
  sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
  Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest
  marginal rate of federal income taxation in the calendar year in which the Gross-Up
  Payment is to be made and state and local income taxes at the highest marginal rate of
  taxation in the state and locality of the Executive's residence on the Date of Termination
  (or if there is no Date of Termination, then the date on which the Gross-Up Payment is
  calculated for purposes of this Section 6.2), net of the maximum reduction in federal
  income taxes which could be obtained from deduction of such state and local taxes.

  

  (C) In the event that the Excise Tax is finally determined to be less than the amount
  taken into account hereunder in calculating the Gross-Up Payment, the Executive shall
  repay to the Company, within five (5) business days following the time that the amount of
  such reduction in the Excise Tax is finally determined, the portion of the Gross-Up
  Payment attributable to such reduction (plus that portion of the Gross-Up Payment
  attributable to the Excise Tax and federal, state and local income and employment taxes
  imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such
  repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in
  the Executive's taxable income and wages for purposes of federal, state and local income
  and employment taxes. In the event that the Excise Tax is determined to exceed the amount
  taken into account hereunder in calculating the Gross-Up Payment (including by reason of
  any payment the existence or amount of which cannot be determined at the time of the
  Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of
  such excess (plus any interest, penalties or additions payable by the Executive with
  respect to such excess) within five (5) business days following the time that the amount
  of such excess is finally determined. The Executive and the Company shall each reasonably
  cooperate with the other in connection with any administrative or judicial proceedings
  concerning the existence or amount of liability for Excise Tax with respect to the Total
  Payments.

  

6.3 The payments provided in subsections (A), (C) and (D) of Section 6.1 hereof and in
Section 6.2 hereof shall be made not later than the fifth day following the Date of
Termination (or if there is no Date of Termination, then the date on which the Gross-Up
Payment is calculated for purposes of Section 6.2 hereof); provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined in good faith by the
Executive or, in the case of payments under Section 6.2 hereof, in accordance with Section
6.2 hereof, of the minimum amount of such payments to which the Executive is clearly
entitled and shall pay the remainder of such payments (together with interest on the
unpaid remainder (or on all such payments to the extent the Company fails to make such
payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the thirtieth
(30th) day after the Date of Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been due, such amount shall be
repaid by the Executive to the Company no later than the fifth (5th) business day after
demand by the Company. At the time that payments are made under this Agreement, the
Company shall provide the Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such calculations including, without
limitation, any opinions or other advice the Company has received from Tax Counsel, the
Auditor or other advisors or consultants (and any such opinions or advice which are in
writing shall be attached to the statement).

6.4 The Company also shall pay to the Executive fifty percent (50%) all legal fees and
expenses incurred by the Executive in disputing in good faith any issue hereunder relating
to the termination of the Executive's employment, in seeking in good faith to obtain or
enforce any benefit or right provided by this Agreement or in connection with any tax
audit or proceeding to the extent attributable to the application of section 4999 of the
Code to any payment or benefit provided hereunder. Such payments shall be made within five
(5) business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company reasonably may
require. Within five (5) business days following the final resolution and any such
dispute, attempted enforcement or tax proceeding, either (i) the Company shall pay to the
Executive the remaining fifty percent (50%) of such fees and expenses not previously paid
to the Executive, if the Executive prevails on at least one material issue in such
dispute, attempted enforcement or tax proceeding or (ii) the Executive shall repay to the
Company the fifty percent (50%) of such fees and expenses previously paid to the
Executive, if the Executive does not prevail on at least one material issue in such
dispute, attempted enforcement or tax proceeding.

7. Termination Procedures and Compensation During Dispute.

7.1 Notice of Termination. After a Change in Control and during the Term, any purported
termination of the Executive's employment (other than by reason of death) shall be
communicated by written Notice of Termination from one party hereto to the other party
hereto in accordance with Section 11 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. Further, a Notice of Termination
for Cause is required to include a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of considering such
termination (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty of conduct set
forth in clause (i) or (ii) of the definition of Cause herein, and specifying the
particulars thereof in detail.

7.2 Date of Termination. "Date of Termination," with respect to any purported
termination of the Executive's employment after a Change in Control and during the Term,
shall mean (i) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during such thirty (30)
day period), and (ii) if the Executive's employment is terminated for any other reason,
the date specified in the Notice of Termination (which, in the case of a termination by
the Company, shall not be less than thirty (30) days (except in the case of a termination
for Cause) and, in the case of a termination by the Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice
of Termination is given).

7.3 Dispute Concerning Termination. If within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as determined
without regard to this Section 7.3), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the Date of
Termination shall be extended until the earlier of (i) the date on which the Term ends or
(ii) the date on which the dispute is finally resolved, either by mutual written agreement
of the parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the time for
appeal therefrom has expired and no appeal has been perfected); provided, however, that
the Date of Termination shall be extended by a notice of dispute given by the Executive
only if such notice is given in good faith and the Executive pursues the resolution of
such dispute with reasonable diligence.

7.4 Compensation During Dispute. If a purported termination occurs following a Change
in Control and during the Term and the Date of Termination is extended in accordance with
Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation
in effect when the notice giving rise to the dispute was given (including, but not limited
to, salary) and continue the Executive as a participant in all compensation, benefit and
insurance plans in which the Executive was participating when the notice giving rise to
the dispute was given, until the Date of Termination, as determined in accordance with
Section 7.3 hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall
not be offset against or reduce any other amounts due under this Agreement.

8. No Mitigation. The Company agrees that, if the Executive's employment with
the Company terminates during the Term, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the Executive by the
Company pursuant to Section 6 hereof or Section 7.4 hereof. Further, except as
specifically provided in Section 6.1(B) hereof, the amount of any payment or benefit
provided for in this Agreement shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement benefits, by
offset against any amount claimed to be owed by the Executive to the Company, or
otherwise. 

9. Restrictive Covenants

The Executive agrees that restrictions on his activities during and after his employment
are necessary to protect the goodwill, Confidential Information and other legitimate
interests of the Company and its Subsidiaries, and that the agreed restrictions set forth
below will not deprive the Executive of the ability to earn a livelihood:

  (A) While the Executive is in the employment of the Company and, if the Executive is
  entitled to benefits under Section 6.1 hereof upon termination of employment, for a period
  of twenty-four (24) months after such termination of employment (the "Non-Competition
  Period"), the Executive shall not, directly or indirectly, whether as owner, partner,
  investor, consultant, agent, employee, co-venturer or otherwise, compete with the business
  of the Company or any of its Subsidiaries within a twenty (20) mile radius of any location
  where the Company operates a retail store at the date of termination of employment, or at
  which the Company has entered into a letter of intent or similar commitment for or entered
  into obligations relating to the opening of a retail store to be opened within the period
  of this covenant. Specifically, but without limiting the foregoing, the Executive agrees
  not to engage in any manner in any activity that is directly or indirectly competitive
  with the business of the Company or any of its Subsidiaries as conducted or which has been
  proposed by management within six months prior to termination of the Executive's
  employment. Restricted activity also includes without limitation accepting employment or a
  consulting position with any person who is, or at any time within twelve (12) months prior
  to termination of the Executive's employment has been, a licensee of the Company or any of
  its Subsidiaries. For the purposes of this Section 9, the business of the Company and its
  Subsidiaries shall mean retail operations for the sale of natural and organic foods,
  including groceries, meat, seafood, dairy and frozen products and produce, as well as
  natural vitamins, supplements, homeopathic remedies and body care products. 

  

  (B) The Executive agrees that during the Non-Competition Period or in connection with
  any termination of employment pursuant to which the Executive is entitled to benefits
  under Section 6.1, the Executive will not, either directly or through any agent or
  employee, Solicit any employee of the Company or any of its Subsidiaries to terminate his
  or her relationship with the Company or any of its Subsidiaries or to apply for or accept
  employment with any enterprise competitive with the business of the Company, or Solicit
  any customer, supplier, licensee or vendor of the Company or any of its Subsidiaries to
  terminate or materially modify its relationship with them, or, in the case of a customer,
  to conduct with any person any business or activity which such customer conducts or could
  conduct with the Company or any of its Subsidiaries. 

  

  (C) The Executive and the Company further agree that following any termination of the
  Executive's employment pursuant to which the Executive is entitled to benefits under
  Section 6.1, (i) the Executive shall not make statements or representations, otherwise
  communicate, directly or indirectly, in writing, orally, or otherwise, or take any action
  which may, directly, or indirectly, disparage or be damaging to the Company or any if its
  Subsidiaries or affiliates or their respective former or current officers, directors,
  employees, advisors, businesses or reputations, (ii) the Company shall instruct its Board
  members and senior management to not make statements or representations, otherwise
  communicate, directly, or indirectly, in writing, orally or otherwise, or take any action
  which may, directly, or indirectly, disparage or be damaging to the Executive or his
  reputation. The Executive and the Company further agree that, in the event the Executive's
  employment with the Company is terminated other than by the Company for Cause or as a
  result of the Executive's death, the Executive and the Company shall refer to the
  Executive's departure as a "resignation" in any press release or other external
  announcement or communication concerning the Executive's departure from the Company.
  Nothing in this paragraph is intended to undermine any obligations the Executive or the
  Company may have to comply with applicable law, or prohibit the Executive or the Company
  from providing truthful testimony or information pursuant to subpoena, court order,
  discovery demand or similar legal process, or truthfully responding to lawful inquiries by
  any governmental or regulatory entity.

  

  (D) The provisions of this Section 9 shall not be deemed to preclude the Executive from
  employment or engagement during the Non-Competition Period following termination of
  employment hereunder (i) in a business engaged in retail sales, provided such employment
  or engagement does not otherwise violate the provisions of this Section 9, or (ii) by a
  corporation, some of the activities of which are competitive with the business of the
  Company, if the Executive's activities do not relate to such competitive business, and
  nothing contained in this Section 9 shall be deemed to prohibit the Executive, during the
  Non-Competition Period following termination of employment hereunder, from acquiring or
  holding, solely as an investment, publicly traded securities of any competitor corporation
  so long as such securities do not, in the aggregate, constitute more than 3% of the
  outstanding voting securities of such corporation.

  

  (E) The Executive acknowledges that the Company and its Subsidiaries continually
  develop Confidential Information, that the Executive may develop Confidential Information
  for the Company or its Subsidiaries and that the Executive may learn of Confidential
  Information during the course of his employment under this Agreement. The Executive will
  comply with the policies and procedures of the Company and its Subsidiaries for protecting
  Confidential Information and shall never disclose to any person (except as required by
  applicable law or legal process or for the proper performance of his duties and
  responsibilities to the Company and its Subsidiaries, or in connection with any litigation
  between the Company and the Executive (provided that the Company shall be afforded a
  reasonable opportunity in each case to obtain a protective order)), or use for his own
  benefit or gain, any Confidential Information obtained by the Executive incident to his
  employment or other association with the Company or any of its Subsidiaries. The Executive
  understands that this restriction shall continue to apply after his employment terminates,
  regardless of the reason for such termination. All documents, records, tapes and other
  media of every kind and description relating to the business, present or otherwise, of the
  Company or its Subsidiaries and any copies, in whole or in part, thereof (the
  "Documents"), whether or not prepared by the Executive, shall be the sole and
  exclusive property of the Company and its Subsidiaries. The Executive shall safeguard all
  Documents and shall surrender to the Company at the time his employment terminates, or at
  such earlier time or times as the Board or its designee may specify, all Documents then in
  the Executive's possession or control.

  

  (F) Without limiting the foregoing, it is understood that the Company shall not be
  obligated to make any of the payments or to provide for any of the benefits specified in
  Sections 6.1 and 6.2 hereof, and shall be entitled to recoup the pro rata portion of any
  such payments and of the value of any such benefits previously provided to the Executive
  in the event of a material breach by the Executive of the provisions of this Section 9
  (such pro ration to be determined as a fraction, the numerator of which is the number of
  days from such breach to the second anniversary of the date on which the Executive
  terminates employment and the denominator of which is 730), which breach continues without
  having been cured within 15 days after written notice to the Executive specifying the
  breach in reasonable detail. 

  

  (G) The Executive and the Company agree that in the event the Executive seeks a
  reference from the Company in connection with any future or prospective employment, the
  Company's response to any such reference inquiry shall be limited to and consistent with
  the following: start and end dates of employment, position(s) held and last salary.

  

  For purposes of this Section 9, the following definitions shall apply:

  

  
    (I) "Confidential Information" means any and all information of the Company
    and its Subsidiaries that is not generally known by others with whom they compete or do
    business, or with whom they plan to compete or do business and any and all information not
    readily available to the public, which, if disclosed by the Company or its Subsidiaries
    could reasonably be of benefit to such person or business in competing with or doing
    business with the Company. Confidential Information includes without limitation such
    information relating to (1) the development, research, testing, manufacturing, store
    operational processes, marketing and financial activities, including costs, profits and
    sales, of the Company and its Subsidiaries, (2) the Products and all formulas therefor,
    (3) the costs, sources of supply, financial performance and strategic plans of the Company
    and its Subsidiaries, (4) the identity and special needs of the customers and suppliers of
    the Company and its Subsidiaries and (5) the people and organizations with whom the
    Company and its Subsidiaries have business relationships and those relationships.
    Confidential Information also includes comparable information that the Company or any of
    its Subsidiaries have received belonging to others or which was received by the Company or
    any of its Subsidiaries with an agreement by the Company that it would not be disclosed.
    Confidential Information does not include information which (i) is or becomes available to
    the public generally (other than as a result of a disclosure by the Executive), (ii) was
    within the Executive's possession prior to the date hereof or prior to its being furnished
    to the Executive by or on behalf of the Company, provided that the source of such
    information was not bound by a confidentiality agreement with or other contractual, legal
    or fiduciary obligation of confidentiality to the Company or any other party with respect
    to such information, (iii) becomes available to the Executive on a non-confidential basis
    from a source other than the Company, provided that such source is not bound by a
    confidentiality agreement with or other contractual, legal or fiduciary obligation of
    confidentiality to the Company or any other party with respect to such information, or
    (iv) was independently developed the Executive without reference to the Confidential
    Information.

    

    (II) "Products" mean all products planned, researched, developed, tested,
    manufactured, sold, licensed, leased or otherwise distributed or put into use by the
    Company or any of its Subsidiaries, together with all services provided to third parties
    or planned by the Company or any of its Subsidiaries, during the Executive's service; as
    used herein, "planned" refers to a Product or service which the Company has
    decided to introduce within six months from the date as of which such term is applied.

    

    (III) "Subsidiary" means any corporation or other business organization of
    which the securities having a majority of the normal voting power in electing the board of
    directors or similar governing body of such entity are, at the time of determination,
    owned by the Company directly or indirectly through one or more Subsidiaries.

    

    (IV) "Solicit" means any direct or indirect communication of any kind
    whatsoever, regardless of by whom initiated, inviting, advising, encouraging or requesting
    any person or entity, in any manner, with respect to any action.

    

    10. Successors; Binding Agreement.

    

    10.1 In addition to any obligations imposed by law upon any successor to the Company, the
    Company will require any successor (whether direct or indirect, by purchase, merger,
    consolidation or otherwise) to all or substantially all of the business and/or assets of
    the Company to expressly assume and agree to perform this Agreement in the same manner and
    to the same extent that the Company would be required to perform it if no such succession
    had taken place. Failure of the Company to obtain such assumption and agreement prior to
    the effectiveness of any such succession shall be a breach of this Agreement and shall
    entitle the Executive to compensation from the Company in the same amount and on the same
    terms as the Executive would be entitled to hereunder if the Executive were to terminate
    the Executive's employment for Good Reason after a Change in Control, except that, for
    purposes of implementing the foregoing, the date on which any such succession becomes
    effective shall be deemed the Date of Termination.

    

    10.2 This Agreement shall inure to the benefit of and be enforceable by the Executive's
    personal or legal representatives, executors, administrators, successors, heirs,
    distributees, devisees and legatees. If the Executive shall die while any amount would
    still be payable to the Executive hereunder (other than amounts which, by their terms,
    terminate upon the death of the Executive) if the Executive had continued to live, all
    such amounts, unless otherwise provided herein, shall be paid in accordance with the terms
    of this Agreement to the executors, personal representatives or administrators of the
    Executive's estate.

    

  

11. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed, if to the Executive, to the address
inserted below the Executive's signature on the final page hereof and, if to the Company,
to the address set forth below, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:

To the Company: 

Wild Oats Markets, Inc

3375 Mitchell Lane

Boulder, CO 80301

Attention: Chief Executive Officer

With a copy to: General Counsel 

12. Miscellaneous. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and
signed by the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party hereto of,
or of any lack of compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. This Agreement supersedes
any other agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party. The validity,
interpretation, construction and performance of this Agreement shall be governed by the
laws of the State of Colorado. All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required under
federal, state or local law and any additional withholding to which the Executive has
agreed. The obligations of the Company and the Executive under this Agreement which by
their nature may require either partial or total performance after the expiration of the
Term (including, without limitation, those under Sections 6, 7 and 9 hereof) shall survive
such expiration.

13. Validity. The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.

14. Counterparts. This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the
same instrument.

15. Settlement of Disputes; Arbitration. 

15.1 All claims by the Executive for benefits under this Agreement shall be directed to
and determined by the Committee and shall be in writing. Any denial by the Committee of a
claim for benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions of this
Agreement relied upon. The Committee shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim and shall further allow the
Executive to appeal to the Committee a decision of the Committee within sixty (60) days
after notification by the Committee that the Executive's claim has been denied.

15.2 Any further dispute or controversy arising under or in connection with this Agreement
may, at the Executive's option, be settled by arbitration in Boulder, Colorado in
accordance with the rules of the American Arbitration Association then in effect;
provided, however, that the evidentiary standards set forth in this Agreement shall apply.
If the Executive chooses to settle any dispute or controversy by arbitration, judgment may
be entered on the arbitrator's award in any court having jurisdiction. Notwithstanding any
provision of this Agreement to the contrary, the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection with this
Agreement.

15.3 The Executive acknowledges that he has carefully read and considered all the terms
and conditions of this Agreement, including the restraints imposed upon him pursuant to
Section 9 hereof. The Executive agrees that said restraints are necessary for the
reasonable and proper protection of the Company and its Subsidiaries and that each and
every one of the restraints is reasonable in respect to subject matter, length of time and
geographic area. The Executive further acknowledges that, were he to breach any of the
covenants contained in Section 9 hereof, the damage to the Company would be irreparable.
The Executive therefore agrees that the Company, in addition to any other remedies
available to it, and notwithstanding any provision of this Agreement to the contrary,
shall be entitled to seek preliminary and permanent injunctive relief against any breach
or threatened breach by the Executive of any of said covenants, without having to post
bond. The parties further agree that, in the event that any provisions of Section 9 hereof
shall be determined by any court of competent jurisdiction to be unenforceable by reason
of its being extended over too great a time, too large a geographic area or too great a
range of activities, such provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law.

16. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated below:

  

  (A) "Affiliate" shall have the meaning set forth in Rule 12b-2 promulgated under
  Section 12 of the Exchange Act.

  

  (B) "Auditor" shall have the meaning set forth in Section 6.2 hereof.

  

  (C) "Base Amount" shall have the meaning set forth in section 280G(b)(3) of the
  Code.

  

  (D) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
  Exchange Act.

  

  (E) "Board" shall mean the Board of Directors of the Company.

  

  (F) "Cause" for termination by the Company of the Executive's employment shall
  mean (i) the willful and continued failure by the Executive to substantially perform the
  Executive's duties with the Company (other than any such failure resulting from the
  Executive's incapacity due to physical or mental illness or any such actual or anticipated
  failure after the issuance of a Notice of Termination for Good Reason by the Executive
  pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written
  demand for substantial performance is delivered to the Executive by the Board, which
  demand specifically identifies the manner in which the Board believes that the Executive
  has not substantially performed the Executive's duties, or (ii) the willful engaging by
  the Executive in conduct which is demonstrably and materially injurious to the Company or
  its subsidiaries, monetarily or otherwise. For purposes of clauses (i) and (ii) of this
  definition, (x) no act, or failure to act, on the Executive's part shall be deemed
  "willful" unless done, or omitted to be done, by the Executive not in good faith
  and without reasonable belief that the Executive's act, or failure to act, was in the best
  interest of the Company and (y) in the event of a dispute concerning the application of
  this provision, no claim by the Company that Cause exists shall be given effect unless the
  Company establishes to the Committee by clear and convincing evidence that Cause exists.

  

  (G) A "Change in Control" shall be deemed to have occurred if the event set
  forth in any one of the following paragraphs shall have occurred:

  

  
    (I) any Person is or becomes the Beneficial Owner, directly or indirectly, of
    securities of the Company (not including in the securities beneficially owned by such
    Person any securities acquired directly from the Company or its Affiliates) representing
    31% or more of the combined voting power of the Company's then outstanding securities,
    excluding any Person who becomes such a Beneficial Owner in connection with a Non-Control
    Merger (as defined in paragraph (III) below); or 

    

    (II) the following individuals cease for any reason to constitute a majority of the number
    of directors then serving: individuals who, on the date hereof, constitute the Board and
    any new director (other than a director whose initial assumption of office is in
    connection with an actual or threatened election contest, including but not limited to a
    consent solicitation, relating to the election of directors of the Company) whose
    appointment or election by the Board or nomination for election by the Company's
    stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the
    directors then still in office who either were directors on the date hereof or whose
    appointment, election or nomination for election was previously so approved or
    recommended; or;

    

    (III) there is consummated a merger or consolidation of the Company or any direct or
    indirect subsidiary of the Company with any other corporation, other than a merger or
    consolidation (a "Non-Control Merger") immediately following which the
    individuals who comprise the Board immediately prior thereto constitute at least a
    majority of the board of directors of the Company, the entity surviving such merger or
    consolidation or any parent thereof; or

    

    (IV) the stockholders of the Company approve a plan of complete liquidation or
    dissolution of the Company or there is consummated an agreement for the sale or
    disposition by the Company of all or substantially all of the Company's assets, other than
    a sale or disposition by the Company of all or substantially all of the Company's assets
    immediately following which the individuals who comprise the Board immediately prior
    thereto constitute at least a majority of the board of directors of the entity to which
    such assets are sold or disposed or any parent thereof.

  

  

  Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have
  occurred by virtue of the consummation of any transaction or series of integrated
  transactions immediately following which the record holders of the common stock of the
  Company immediately prior to such transaction or series of transactions continue to have
  substantially the same proportionate ownership in an entity which owns all or
  substantially all of the assets of the Company immediately following such transaction or
  series of transactions. 

  (H) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
  to time.

  

  (I) "Committee" shall mean (i) the individuals (not fewer than three in number)
  who, on the date six months before a Change in Control, constitute the Compensation
  Committee of the Board, plus (ii) in the event that fewer than three individuals are
  available from the group specified in clause (i) above for any reason, such individuals as
  may be appointed by the individual or individuals so available (including for this purpose
  any individual or individuals previously so appointed under this clause (ii)).

  

  (J) "Company" shall mean Wild Oats Markets, Inc., a Delaware corporation and,
  except in determining under Section 15(G) hereof whether or not any Change in Control of
  the Company has occurred, shall include any successor to its business and/or assets which
  assumes and agrees to perform this Agreement by operation of law, or otherwise.

  

  (K) "DC Pension Plan" shall mean any tax-qualified, supplemental or excess
  defined contribution plan maintained by the Company and any other defined contribution
  plan or agreement entered into between the Executive and the Company.

  

  (L) "Date of Termination" shall have the meaning set forth in Section 7.2
  hereof.

  

  (M) "Disability" shall be deemed the reason for the termination by the
  Company of the Executive's employment, if, as a result of the Executive's incapacity due
  to physical or mental illness, the Executive shall have been absent from the full-time
  performance of the Executive's duties with the Company for a period of six (6) consecutive
  months, the Company shall have given the Executive a Notice of Termination for Disability,
  and, within thirty (30) days after such Notice of Termination is given, the Executive
  shall not have returned to the full-time performance of the Executive's duties.

  

  (N) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
  from time to time.

  

  (O) "Excise Tax" shall mean any excise tax imposed under section 4999 of the
  Code.

  

  (P) "Executive" shall mean the individual named in the first paragraph of
  this Agreement.

  

  (Q) "Good Reason" for termination by the Executive of the Executive's
  employment shall mean the occurrence (without the Executive's express written consent)
  after any Change in Control, or prior to a Change in Control under the circumstances
  described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating
  all references in paragraphs (I) through (VII) below to a "Change in Control" as
  references to a "Potential Change in Control"), of any one of the following acts
  by the Company, or failures by the Company to act, unless, (x) in the case of any act or
  failure to act described in paragraph (I), (V), (VI) or (VII) below, such act or failure
  to act is corrected prior to the Date of Termination specified in the Notice of
  Termination given in respect thereof or (y) in the case of first act or failure to act
  following a Change in Control and described in paragraph (IV) below, such act or failure
  to act is corrected prior to the Date of Termination specified in the Notice of
  Termination given in respect thereof:

  

  
    (I) the assignment to the Executive of any duties materially and adversely inconsistent
    with the Executive's status as a senior executive officer of the Company or a substantial
    adverse alteration in the nature or status of the Executive's responsibilities from those
    in effect immediately prior to the Change in Control;

    

    (II) a reduction by the Company in the Executive's annual base salary as in effect on
    the date hereof or as the same may be increased from time to time;

    

    (III) the relocation of the Executive's principal place of employment to a location
    more than 25 miles from the Executive's principal place of employment immediately prior to
    the Change in Control or the Company's requiring the Executive to be based anywhere other
    than such principal place of employment (or permitted relocation thereof) except for
    required travel on the Company's business to an extent substantially consistent with the
    Executive's present business travel obligations;

    

    (IV) the failure by the Company to pay to the Executive any portion of the Executive's
    current compensation or to pay to the Executive any portion of an installment of deferred
    compensation under any deferred compensation program of the Company, within seven (7) days
    of the date such compensation is due;

    

    (V) the failure by the Company to continue in effect any compensation plan in which the
    Executive participates immediately prior to the Change in Control which is material to the
    Executive's total compensation, unless an equitable arrangement (embodied in an ongoing
    substitute or alternative plan) has been made with respect to such plan, or the failure by
    the Company to continue the Executive's participation therein (or in such substitute or
    alternative plan) on a basis not materially less favorable, both in terms of the amount or
    timing of payment of benefits provided and the level of the Executive's participation
    relative to other participants, as existed immediately prior to the Change in Control;

    

    (VI) the failure by the Company to continue to provide the Executive with benefits
    substantially similar to those enjoyed by the Executive under any of the Company's
    pension, savings, life insurance, medical, health and accident, or disability plans in
    which the Executive was participating immediately prior to the Change in Control, the
    taking of any other action by the Company which would directly or indirectly materially
    reduce any of such benefits or deprive the Executive of any material fringe benefit
    enjoyed by the Executive at the time of the Change in Control, or the failure by the
    Company to provide the Executive with the number of paid vacation days to which the
    Executive is entitled on the basis of years of service with the Company in accordance with
    the Company's normal vacation policy in effect at the time of the Change in Control; or

    

    (VII) any purported termination of the Executive's employment which is not effected
    pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for
    purposes of this Agreement, no such purported termination shall be effective.

  

  

  The Executive's right to terminate the Executive's employment for Good Reason shall not be
  affected by the Executive's incapacity due to physical or mental illness. The Executive's
  continued employment shall not constitute consent to, or a waiver of rights with respect
  to, any act or failure to act constituting Good Reason hereunder.

  For purposes of any determination regarding the existence of Good Reason, any claim by the
  Executive that Good Reason exists shall be presumed to be correct unless the Company
  establishes to the Committee by clear and convincing evidence that Good Reason does not
  exist.

  

  (S) "Gross-Up Payment" shall have the meaning set forth in Section 6.2 hereof.

  

  (T) "Notice of Termination" shall have the meaning set forth in Section 7.1
  hereof.

  

  (U) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange
  Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall
  not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary
  holding securities under an employee benefit plan of the Company or any of its Affiliates,
  (iii) an underwriter temporarily holding securities pursuant to an offering of such
  securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of
  the Company in substantially the same proportions as their ownership of stock of the
  Company.

  

  (V) "Potential Change in Control" shall be deemed to have occurred if the
  event set forth in any one of the following paragraphs shall have occurred:

  

  
    (I) the Company enters into an agreement, the consummation of which would result in the
    occurrence of a Change in Control;

    

    (II) the Company or any Person publicly announces an intention to take or to consider
    taking actions which, if consummated, would constitute a Change in Control;

    

    (III) any Person becomes the Beneficial Owner, directly or indirectly, of securities of
    the Company representing 15% or more of either the then outstanding shares of common stock
    of the Company or the combined voting power of the Company's then outstanding securities
    (not including in the securities beneficially owned by such Person any securities acquired
    directly from the Company or its affiliates); or

    

    (IV) the Board adopts a resolution to the effect that, for purposes of this Agreement,
    a Potential Change in Control has occurred. 

    

  

  (W) "Retirement" shall be deemed the reason for the termination by the
  Executive of the Executive's employment if such employment is terminated in accordance
  with the Company's retirement policy, including early retirement, generally applicable to
  its salaried employees.

  

  (X) "Severance Benefits" shall have the meaning set forth in Section 6.1
  hereof.

  

  (Y) "Tax Counsel" shall have the meaning set forth in Section 6.2 hereof.

  

  (Z) "Term" shall mean the period of time described in Section 2 hereof
  (including any extension, continuation or termination described therein).

  

  (AA) "Total Payments" shall mean those payments so described in Section 6.2
  hereof.

  

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

  

  

WILD OATS MARKETS, INC. 

By: /s/ Freya R. Brier

Name: Freya R. Brier

Title: Sr. Vice President

/s/ Samuel M. Martin III

Samuel Morris Martin III 

Address:

____________________

____________________

____________________Exhibit 10.4

WILD OATS MARKETS, INC.

1996 EQUITY INCENTIVE PLAN 

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made effective as of
February 8, 2006 (the "Effective Date"), between Wild Oats Markets, Inc., a
Delaware corporation (the "Company"), and ("Grantee"). 

RECITALS 

1. On February 8, 2006, 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. 1996 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 to provide an incentive to continue 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 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 Restricted Stock. Subject to the terms and
conditions of this Agreement and the Plan, the Company hereby issues to Grantee a total of
_______ shares of the Company's common stock, $0.001 par value (the "Restricted
Stock"). The Restricted Stock is issued as of the Effective Date with a Fair Market
Value, as determined by the Board on that date, of $14.45 per share.

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 as an incentive to continue to perform
service as an Employee with the Company and its Affiliates.

3. Transferability; Restrictions and Forfeiture. Restricted
Stock 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, until Grantee becomes vested in the Restricted Stock in accordance with
Section 5. Upon vesting, the restrictions in this Section 3 shall lapse, the Restricted
Stock shall no longer be subject to forfeiture, and Grantee may transfer shares of
Restricted Stock in accordance with applicable securities laws.

4. Enforcement of Restrictions. To enforce the restrictions set
forth in Section 3, shares of Restricted Stock may be held in electronic form or book
entry in escrow until the restrictions lapse. In the event the Company determines not to
hold the shares in electronic form or book entry, the Restricted Stock may be evidenced in
such manner as the Committee shall determine, including, but not limited to, the issuance
of share certificates in the name of Grantee. In such case, Grantee hereby appoints the
Secretary of the Company, or any other person designated by the Company as escrow agent,
as attorney-in-fact to assign and transfer to the Company any shares of Restricted Stock
forfeited by the Grantee, and shall, if requested by the Company, deliver and deposit with
Grantee's attorney-in-fact any share certificates representing the Restricted Stock,
together with a stock assignment duly endorsed in blank. The stock assignment and any
share certificates shall be held by Grantee's attorney-in-fact until the restrictions set
forth in Section 3 have lapsed with respect to the shares of Restricted Stock, or until
this Agreement is no longer in effect.

5. Vesting; Lapse of Restrictions. Except as provided otherwise
in this Agreement, the Restricted Stock 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 the Effective Date, ______ shares of Restricted Stock (25% of the aggregate
number of shares) granted hereunder shall be deemed free of the restrictions set forth in
Section 3; 

(b) As of February 8, 2007, the restrictions set forth in Section 3 shall lapse as to
__________ shares of Restricted Stock (25% of the aggregate number of shares);

(c) As of February 8, 2008, the restrictions set forth in Section 3 shall lapse as to
__________ shares of Restricted Stock (25% of the aggregate number of shares); and

(d) As of February 8, 2009, the restrictions set forth in Section 3 shall lapse on all
remaining shares of Restricted Stock.

(e) All Restricted Stock shall vest upon the death or Disability (as that term is
defined in Section 22(e) of the Internal Revenue Code) of the Grantee.

6. Change of Control; Full Vesting.

(a) All shares of Restricted Stock issued under this Grant will vest upon a
Change-in-Control as defined in paragraph 6(b), below

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

(i) any person who is or who becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
person 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 outstanding
securities, excluding any person who becomes a beneficial owner in connection with a
non-control merger (as defined in paragraph (iii) below); or 

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

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

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

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

7. Adjustments Upon Changes in Stock; Sale or Merger.

(a) Adjustments Upon Changes in Stock. If any change is made in the stock subject to
this Agreement, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, stock
split and other changes described in Section 12(a) of the Plan), the class, number of
shares and price per share relating to this Agreement and the Plan, shall be adjusted by
the Board or the Committee in accordance with Section 12(a) of the Plan. The determination
made by the Board or the Committee shall be final, binding and conclusive. 

(b) Sale or Merger. In the event of (a) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (b) a merger or consolidation in which the
Company is not the surviving corporation; or (c) a reverse merger (as described in Section
12(b) of the Plan), the shares of Restricted Stock shall be converted, substituted, or
assumed as provided in Section 12(b) of the Plan. In the event any surviving corporation
and its affiliates refuse to assume or continue the Restricted Stock award, and at the
time of the consummation of such transaction, Grantee has Continuous Status as an Employee
with the Company and its Affiliates, the Board or the Committee shall determine, in their
sole discretion, whether all restrictions and limitations shall lapse. 

8. Legends; Additional Requirements. Grantee hereby
acknowledges that the Company may place legends on stock certificates issued pursuant to
this Agreement as such counsel to the Company deems necessary or appropriate in order to
comply with applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock. In connection therewith and prior to the issuance of shares,
Grantee may be required to deliver to the Company such other documents and representations
as may be reasonably necessary to ensure compliance with securities laws

9. Rights of a Stockholder. Subject to the restrictions imposed
by Section 3 and the terms of any other relevant sections hereof, Grantee shall have all
of the voting, dividend, liquidation and other rights of a stockholder with respect to the
Restricted Stock.

10. Tax Withholding Obligations. The Company's obligation to
deliver shares of Common Stock to Grantee upon the vesting of such shares shall be subject
to the satisfaction of all applicable federal, state and local income and employment tax
withholding requirements. Other than for those shares Vested on the Effective Date, if
Grantee has not otherwise satisfied his or her tax withholding obligation related to the
vested shares by 5:00 p.m. Mountain Standard Time on the date the shares become vested,
the Company shall withhold from the vested shares that would have been delivered a number
of vested shares necessary to satisfy Grantee's withholding obligation. 

Grantee, subject to approval of the Company, may satisfy any federal, state or local
tax withholding obligation by any of the following means or by a combination of such
means: 

(a) Tendering a cash payment;

(b) Authorizing the Company to withhold shares from the shares of Common Stock
otherwise issuable hereunder; or

(c) With prior consent of the Company, by delivering to the Company owned and
unencumbered shares of the Common Stock of the Company.

To satisfy the tender of a cash payment, Grantee may authorize the Company to withhold
the amount due from Grantee's pay during pay periods immediately preceding the date of
vesting. If vested shares are withheld to satisfy the tax withholding obligation, the
number of shares withheld will be determined as the number of shares having an aggregate
Fair Market Value equal to the minimum amount required to be withheld or such lesser
amount as may be elected by Grantee. The Company may limit the number of shares withheld
or delivered to the Company to satisfy Grantee's tax withholding obligation, if necessary,
to avoid any adverse accounting treatment for the Company. 

All elections shall be subject to the approval or disapproval by the Company. The value
of shares withheld or transferred shall be based on the Fair Market Value of the stock on
the date that the amount of tax to be withheld is to be determined (the "Tax
Date"). Any election to have shares withheld or transferred for this purpose will be
subject to the following restrictions: 

(i) All elections must be made prior to the Tax Date. 

(ii) All elections shall be irrevocable. 

(iii) If Grantee is an officer or director of the Company within the meaning of Section
16 of the Exchange Act, Grantee must satisfy the requirements of Section 16 and any
applicable rules thereunder with respect to the use of stock to satisfy tax withholding
obligations. 

11. Tax Consequences. Set forth below is a brief summary as of
the date of grant of certain United States federal income tax consequences of the award of
the Restricted Stock. This summary does not address employment, specific state, local or
foreign tax consequences that may be applicable to Grantee. Grantee understands that this
is only a summary, it is not complete, and the tax laws and regulations are subject to
change.

By signing this Agreement, Grantee represents that he or she has consulted with his or her
own personal tax advisor, or determined that consultation is not necessary, and has not
relied on any statements or representations of the Company or any of its agents regarding
tax advice. Grantee understands and agrees that he or she (and not the Company) shall be
responsible for any tax liability that may arise as a result of the transactions
contemplated by this Agreement. 

12. Notices. Any notice required or permitted to be given under
this Agreement or the Plan shall be given in writing and shall be deemed effectively given
upon receipt or, in the case of notices delivered by the Company to Grantee, five (5) days
after deposit in the United States mail, postage prepaid, addressed to Grantee at the
address currently on file with the Company or at such other address as Grantee hereafter
designates by written notice to the Company. 

13. Amendment. The Board may amend the Plan in accordance with
Section 13 of the Plan. The Board may also amend the terms of this Agreement; provided,
however, that the rights and obligations of Grantee hereunder shall not be impaired by any
such amendment unless (a) the Company requests consent of Grantee and 

(b) Grantee consents in writing.

14. Relationship to Plan. This Agreement shall not alter the
terms of the Plan. If there is a conflict between the terms of the Plan and the terms of
this Agreement, the terms of the Plan shall control. Capitalized terms used in this
Agreement but not defined herein shall have the meanings set forth in the Plan.

15. 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.

16. 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.

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

18. Rights to Employment. Nothing contained in this Agreement
or the Plan shall be construed as giving Grantee any right to continue employment or other
service with the Company or its Affiliates or shall affect the right of the Company or an
Affiliate to terminate the employment of Grantee with or without notice and with or
without cause. 

19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard to the
choice of law principles thereof.

20. Entire Agreement. Grantee acknowledges that as of the date
he or she signs this Agreement, it sets forth the entire understanding between Grantee 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. 

 

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates set forth
below to be effective as of the Effective Date. 

  
    
      
        
          
            
              WILD OATS MARKETS, INC.

              Company

              

              

              By:  __________________

                         [Name, Title] 

              Date:  ________________

              

              

            

          

        

      

    

  

ACKNOWLEDGMENT AND AGREEMENT 

By signature below, I acknowledge receipt of the Restricted Stock granted hereunder and
I understand that the grant is subject to the terms and conditions set forth in this
Agreement and additional terms and conditions that may be imposed under the terms of the
Plan. I hereby accept the Restricted Stock awarded hereunder, subject to the terms and
conditions set forth herein. I acknowledge that I have received a copy of the Plan and the
Prospectus for the Plan. I further acknowledge that this award sets forth the entire
understanding between me and the Company and its Affiliates regarding acquisition of stock
in the Company and supersedes all prior oral and written agreements on that subject.

  
    
      
        
          
            
              [NAME]

              Grantee

              

              

              By:  ____________________

              Date:  __________________

              Address:  ___________________________

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