Document:

EDWARD DUNLAP EQUITY INCENTIVE PLAN

WILD OATS MARKETS, INC.

EDWARD DUNLAP EQUITY INCENTIVE PLAN

 

1. PURPOSES

(a) The purpose of the Plan is to induce Edward Dunlap ("Executive"
or "Optionee") to enter into an employment arrangement with Wild Oats
Markets, Inc. as Chief Financial Officer, and pursuant to which the Executive
may be given an opportunity to benefit from increases in value of the common
stock of the Company ("Common Stock") through the granting of
Incentive and Nonstatutory Stock Options.

(b) All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and in such form as issued
pursuant to Section 6, and a separate certificate or certificates will be issued
for shares purchased on exercise of each type of Option.

 

2. DEFINITIONS

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

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

(c) "CODE" means the Internal Revenue Code of 1986, as amended.

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

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

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

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

(h) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.

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

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

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

    (2) In the absence of such markets for the Common Stock, the Fair Market
    Value shall be determined in good faith by the Board.

  

(k) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

(l) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

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

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

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

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

(q) "PLAN" means this Wild Oats Markets, Inc. 1996 Equity Incentive
Plan.

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

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

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

 

3. ADMINISTRATION

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

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

  
    (1) To determine when and how each Stock Award shall be granted; whether
    a Stock Award will be an Incentive Stock Option or a Nonstatutory Stock
    Option.

    (2) To construe and interpret the Plan and Stock Awards granted under it,
    and to establish, amend and revoke rules and regulations for its
    administration. The Board, in the exercise of this power, may correct any
    defect, omission or inconsistency in the Plan or in any Stock Award
    Agreement, in a manner and to the extent it shall deem necessary or
    expedient to make the Plan fully effective.

    (3) To amend the Plan or a Stock Award as provided in Section 13.

    (4) Generally, to exercise such powers and to perform such acts as the
    Board deems necessary or expedient to promote the best interests of the
    Company which are not in conflict with the provisions of the Plan.

  

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

 

4. SHARES SUBJECT TO THE PLAN

(a) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate 50,000 shares of the Common Stock. If any Stock
Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full (or vested in the case of Restricted
Stock), the stock not acquired under such Stock Award shall cease to be subject
to the Plan.

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

 

5. ELIGIBILITY

(a) Incentive Stock Options may be granted only to Employees. Stock Awards
other than Incentive Stock Options may be granted only to Employees, Directors
or Consultants.

(b) No person shall be eligible for the grant of an Incentive Stock Option
if, at the time of grant, such person owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
its Affiliates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.

(c) Subject to the provisions of Section 12 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than one hundred thousand (100,000) shares of the Common Stock in any
calendar year. This subsection 5(c) shall not apply until (i) the earliest of:
(A) the first material modification of the Plan (including any increase to the
number of shares reserved for issuance under the Plan in accordance with Section
4); (B) the issuance of all of the shares of Common Stock reserved for issuance
under the Plan; (C) the expiration of the Plan; or (ii) such other date required
by Section 162(m) of the Code and the rules and regulations promulgated
thereunder.

 

6. OPTION PROVISIONS

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

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

(b) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted and the exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.

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

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

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

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

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

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

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

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

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

(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the Board or
Committee shall have the authority (but not an obligation) to include as part of
any Option Agreement a provision entitling the Optionee to a further Option (a
"Re-Load Option") in the event the Optionee exercises the Option
evidenced by the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms and conditions
of the Option Agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of the exercise
price of such Option; (ii) shall have an expiration date which is the same as
the expiration date of the Option the exercise of which gave rise to such
Re-Load Option; and (iii) shall have an exercise price which is equal to one
hundred percent (100%) of the Fair Market Value of the Common Stock subject to
the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option which is an Incentive Stock
Option and which is granted to a 10% stockholder (as described in subsection
5(c)), shall have an exercise price which is equal to one hundred ten percent
(110%) of the Fair Market Value of the stock subject to the Re-Load Option on
the date of exercise of the original Option and shall have a term which is no
longer than five (5) years.

Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory
Stock Option, as the Board or Committee may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 11(d) of the Plan and in Section 422(d) of the
Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subsection 4(a) and shall be subject to such other terms and conditions as the
Board or Committee may determine which are not inconsistent with the express
provisions of the Plan regarding the terms of Options.

7. RESERVED

8. CANCELLATION AND RE-GRANT OF OPTIONS

(a) The Board or the Committee shall have the authority to effect, at any
time and from time to time, (i) the repricing of any outstanding Options under
the Plan and/or (ii) with the consent of any adversely affected holders of
Options, the cancellation of any outstanding Options under the Plan and the
grant in substitution therefor of new Options under the Plan covering the same
or different numbers of shares of stock, but having an exercise price per share
not less than eighty-five percent (85%) of the Fair Market Value for a
Nonstatutory Stock Option, one hundred percent (100%) of the Fair Market Value
for an Incentive Stock Option or, in the case of an Incentive Stock Option held
by a 10% stockholder (as described in subsection 5(c)), not less than one
hundred ten percent (110%) of the Fair Market Value per share of stock on the
new grant date. Notwithstanding the foregoing, the Board or the Committee may
grant an Option with an exercise price lower than that set forth above if such
Option is granted as part of a transaction to which section 424(a) of the Code
applies.

(b) Shares subject to an Option canceled under this Section 8 shall continue
to be counted against the maximum award of Options permitted to be granted
pursuant to subsection 5(c) of the Plan. The repricing of an Option under this
Section 7, resulting in a reduction of the exercise price, shall be deemed to be
a cancellation of the original Option and the grant of a substitute Option; in
the event of such repricing, both the original and the substituted Options shall
be counted against the maximum awards of Options permitted to be granted
pursuant to subsection 5(c) of the Plan. The provisions of this subsection 8(b)
shall be applicable only to the extent required by Section 162(m) of the Code.

 

9. COVENANTS OF THE COMPANY

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

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

 

10. USE OF PROCEEDS FROM STOCK

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

 

11. MISCELLANEOUS

(a) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any part
thereof will vest pursuant to subsection 6(e) or 7(d), notwithstanding the
provisions in the Stock Award stating the time at which it may first be
exercised or the time during which it will vest.

(b) Neither an Employee, Director nor a Consultant nor any person to whom a
Stock Award is transferred in accordance with the Plan shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Stock Award unless and until such person has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.

(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Consultant or other holder of
Stock Awards any right to continue in the employ of the Company or any Affiliate
or to continue serving as a Consultant and Director, or shall affect the right
of the Company or any Affiliate to terminate the employment of any Employee with
or without notice and with or without cause, or the right to terminate the
relationship of any Consultant pursuant to the terms of such Consultant's
agreement with the Company or Affiliate or service as a Director pursuant to the
Company's By-laws.

(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

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

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

 

12. ADJUSTMENTS UPON CHANGES IN STOCK

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

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

 

13. AMENDMENT OF THE PLAN AND STOCK AWARDS

(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.

(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder regarding the exclusion of performance-based compensation
from the limit on corporate deductibility of compensation paid to certain
executive officers.

(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide the Executive with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

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

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

 

14. TERMINATION OR SUSPENSION OF THE PLAN

(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate ten (10) years from the date the Plan is
adopted by the Board or approved by the stockholders of the Company, whichever
is earlier. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.

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

 

15. EFFECTIVE DATE OF PLAN.

This Plan shall become effective on the date of hire of the Executive.

 

 

WILD OATS MARKETS, INC.

INCENTIVE STOCK OPTION

 

EDWARD DUNLAP, Optionee:

 

Wild Oats Markets, Inc. (the "Company"), pursuant to the Edward
Dunlap (the "Plan"), has this day granted to you, the optionee named
above, an option to purchase shares of the common stock of the Company
("Common Stock"). This option is intended to qualify as an
"incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").

The details of your option are as follows:

1. (a) THE TOTAL NUMBER OF SHARES OF COMMON STOCK SUBJECT TO THIS OPTION IS
__________________________.

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

  
    NUMBER OF SHARES (INSTALLMENT)

    DATE OF EARLIEST EXERCISE (VESTING)

  

2. (a) The exercise price of this option is $_____________ per share, being
not less than one hundred percent (100%) of the fair market value of the Common
Stock on the date of grant of this option.

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

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

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

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

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

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

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

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

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

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

(b) By exercising this option you agree that:

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

    (ii) you will notify the Company in writing within fifteen (15) days
    after the date of any disposition of any of the shares of the Common Stock
    issued upon exercise of this option that occurs within two (2) years after
    the date of this option grant or within one (1) year after such shares of
    Common Stock are transferred upon exercise of this option.

  

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

8. Any notices provided for in this option 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 you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.

9. This option is subject to all the provisions of the Plan, a copy of which
is attached hereto and its provisions are hereby made a part of this option,
including without limitation the provisions of the Plan relating to option
provisions, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of this option and
those of the Plan, the provisions of the Plan shall control.

Dated the _________ day of ____________, 2001.

Very truly yours,

WILD OATS MARKETS, INC.

 

By______________________________________

Duly authorized on behalf of the Board of Directors

The undersigned:

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

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

NONE __________________________

          (Initial)

OTHER ______________________________________________________________

  ______________________________________________________________

  ______________________________________________________________

 

 

 

  
    __________________________________________________

    Optionee

    Address: ___________________________________________

    
      ___________________________________________

      
         

         

         

         

      

    

  

WILD OATS MARKETS, INC.

NON-QUALIFIED STOCK OPTION

 

EDWARD DUNLAP, Optionee:

 

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

The details of your option are as follows:

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

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

  
    NUMBER OF SHARES (INSTALLMENT)

    DATE OF EARLIEST EXERCISE (VESTING)

  

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

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

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

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

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

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

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

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

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

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

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

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

  

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

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

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

Dated the ______ day of _________________, 200_.

Very truly yours,

WILD OATS MARKETS, INC.

 

By ___________________________________

Duly authorized on behalf of the Board of Directors

The undersigned:

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

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

NONE _____________________

          (Initial)

OTHER __________________________________________________________

  __________________________________________________________

  __________________________________________________________

 

  
    ___________________________________________________

    Optionee

     

    Address: ___________________________________________

    
      ___________________________________________

      
         

        
         

        

      

    

  

  NOTICE OF EXERCISE

 

 

Date of Exercise

Wild Oats Markets, Inc.

3375 Mitchell Lane

Boulder, CO 80301

Ladies and Gentlemen:

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

 

 

Type of option (check one)        
Incentive         Nonstatutory

Stock option dated:

Number of shares as to which

option is exercised:

Certificates to be issued in

name of: _____________________

Total exercise price: $

Cash payment delivered herewith: $

 

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

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

 

I further acknowledge that I will not be able to resell the Shares for at
least ninety days after the stock of the Company becomes publicly traded (i.e.,
subject to the reporting requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply
to affiliates of the Company under Rule 144.

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

I further agree that, if required by the Company (or a representative of the
underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of my shares of Common Stock or other securities
of the Company during such period (not to exceed two hundred seventy (270) days)
following the effective date of the registration statement of the Company filed
under the Act (the "Effective Date") as may be requested by the
Company or the representative of the underwriters. For purposes of this
restriction I will be deemed to own securities that (i) are owned directly or
indirectly by me, including securities held for my benefit by nominees,
custodians, brokers or pledges; (ii) may be acquired by me within sixty (60)
days of the Effective Date; (iii) are owned directly or indirectly, by or for my
brothers or sisters (whether by whole or half blood), spouse, ancestors and
lineal descendants; or (iv) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which I am a shareholder, partner
or beneficiary, but only to the extent of my proportionate interest therein as a
shareholder, partner or beneficiary thereof. I further agree that the Company
may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.

Very truly yours,

_________________________________DUNLAP EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

This Agreement, dated December 17, 2001, is between Wild Oats Markets, Inc.,
a Delaware corporation (the "Company") and Edward F. Dunlap
("Executive").

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

1. Employment. The Company agrees to employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for a one-year period beginning on the date hereof (the
"Initial Employment Period"). The term of this Agreement shall be
renewed on the anniversary of the date Executive commenced employment for
successive one year periods unless the Company shall provide notice to the
Executive, given within 60 days prior to the anniversary date of the Executive's
employment, that the Company has elected not to renew this Agreement.

2. Position and Duties. During the Employment Period, Executive shall
serve as Chief Financial Officer of the Company at its headquarters in Boulder,
Colorado, under the supervision and direction of the Company's Chief Executive
Officer. Executive shall carry out the customary functions of his position as
determined by the Company, and perform such tasks and responsibilities as
requested by the CEO. Executive shall devote his best efforts and full business
time and attention (except for permitted vacation periods and periods of illness
or other incapacity as provided for herein) to the business and affairs of the
Company and its subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.

3. Salary, Bonus, Options and Benefits. (a) During the Employment
Period, Executive's gross base salary (the "Base Salary") shall
initially be $260,000.00 per annum, which salary shall be payable in regular
installments in accordance with the Company's general payroll practices as in
place from time to time. Any adjustment in Executive's compensation shall be
determined by the CEO or the Compensation Committee of the Board in their sole
discretion. All payments of compensation hereunder shall be subject to federal,
state and other withholding taxes as required by applicable law and the Company's
general payroll policies as in effect from time to time.

(b) The Company shall reimburse the Executive for a reasonable amount
approved by the Chief Executive Officer for (i) temporary housing costs, (ii)
any amounts paid by Executive to his current landlord to terminate any lease to
which Executive is bound for his primary residence as of the date of this
Agreement, (iii) moving expenses incurred, and (iv) the cost of storage of the
Executive's household goods pending his purchase of a permanent residence in
Colorado. Any amounts paid to Executive under this provision shall be increased
for the effective tax rate paid by Executive on such amounts.

(c) During the Employment Period, Executive shall be entitled to participate
in all of the Company's employee benefit programs for which senior executive
employees of the Company are generally eligible as in effect from time to time.
Executive shall be entitled to three weeks' paid vacation per year in
accordance with the Company's policies. Any payments of benefits payable to
Executive hereunder in respect of any calendar year during which Executive is
employed by the Company for less than the entire such year shall, unless
otherwise provided in the applicable plan or arrangement or required by
applicable law, be prorated in accordance with the number of days in such
calendar year during which Executive is employed.

(d) The Executive shall be granted stock options, pursuant to a separate plan
to be established pursuant to certain exemptions promulgated under the NASDAQ
Marketplace Guidelines as an incentive to executives for the inducement to enter
employment, for 120,000 shares of the Company's common stock. The exercise
price shall be the price as set by the Compensation Committee of the Company's
Board of Directors at its next regularly scheduled board meeting. The options
shall vest 25% after the first year of employment, and 6.25% per quarter
thereafter. The options shall have a 10-year term. The options shall be
terminable immediately upon termination of the Executive's employment for
cause, and 30 days after termination without cause. The options shall have such
additional terms as shall be established by the Chief Executive Officer or the
Compensation Committee of the Board of Directors.

(e) The Executive may be entitled to a yearly bonus of up to 75% of his
annual compensation, provided that the Executive meets such goals as shall be
set for the Executive by the Chief Executive Officer or the Board of Directors
or both, and further provided that the Executive is currently employed by the
Company at the time any bonus would be payable. The Company agrees that during
the Executive's first year of employment, provided that at the time bonuses
may be payable the Executive is still currently employed by the Company, the
Executive shall receive a minimum bonus of $75,000, payable $25,000 on June 11,
2002, and the remainder payable within 30 days of the anniversary of the
Executive's commencement of employment with the Company. In addition, upon
execution of this Agreement and commencement of work by the Executive at the
Company's home offices, the Executive shall receive a sum, equal to one month's
salary, to cover incidental expenses incurred by Executive in commencing work
for the Company.

4. Term. (a) The Initial Employment Period shall be subject to earlier
termination (1) by reason of Executive's death or disability (as defined
below), (2) for Cause (as defined herein), (3) without Cause, or (4) by written
resignation of the Executive.

(b) If the Initial Employment Period is terminated by reason of Executive's
termination without Cause during the first 12 months thereof (which shall not be
extended by any renewal of this Agreement), Executive shall be entitled to
receive his then effective Base Salary for a 12-month period. If the Executive's
employment is terminated after the first 12 months thereof by reason of
Executive's termination without Cause, Executive shall be entitled to receive
his then effective Base Salary for a period of months, not to be less than six
nor more than 12 months, which is determined by subtracting from 12 months the
number of full months after the end of the first 12 months of the Initial
Employment Period during which the Executive remained employed. (For example, if
the Executive was terminated three and one-half months following the end of the
Initial Employment Period, the Executive would be entitled to (12 -  3) = 9
months of severance.) Such amounts shall be payable in equal biweekly
installments, subject to all applicable deductions, in accordance with the
Company's normal payroll schedule. Notwithstanding anything to the contrary
herein, no renewal of the term of Executive's employment shall increase the
number of months of severance to which the Executive may be entitled.

(c) For purposes of the foregoing, "Cause" shall mean (1) a
material breach by the Executive of the Executive's obligations of
confidentiality or loyalty; (2) the Executive's willful and repeated failure
to comply with the lawful directives of the Chief Executive Officer or Board of
Directors of the Company; (3) negligence or willful misconduct by the Executive
in the performance of the Executive's duties to the Company; (4) the
commission by the Executive of an act (including, but not limited to, a felony
or a crime involving moral turpitude) causing material harm to the standing and
reputation of the Company, as determined in good faith by the CEO or the Board;
(5) misappropriation, breach of trust or fraudulent conduct by the Executive
with respect to the assets or operations of the Company or any of its
subsidiaries; (6) the continued use by the Executive after notice from the Chief
Executive Officer of alcohol or drugs to an extent that, in the good faith
determination of the Chief Executive Officer or Board, interferes with the
performance by the Executive of the Executive employment responsibilities; (7)
the threat by the Executive to cause, or the actual occurrence of, damage to the
relations of the Company or any of its subsidiaries with customers, suppliers,
lenders, advisors or employees which damage is adverse to the business or
operations of the Company or any of its subsidiaries; or (8) continued
unauthorized absence from work. Termination without Cause shall not include
termination by voluntary resignation, death or disability, and no severance
amounts shall be payable upon the occurrence of any of the foregoing.

(d) Except as expressly set forth in this Section, all compensation and other
benefits shall cease to accrue upon termination of Executive's employment.
Upon termination of the Executive's employment for any reason, Executive shall
be deemed to have resigned from all offices and directorships, if any, then held
with the Company or any of its subsidiaries or other affiliates.

 

5. Confidential Information; Company Property. Executive acknowledges
that the information, observations and data obtained by him while employed by
the Company and its subsidiaries concerning the business or affairs of the
Company, its subsidiaries and any predecessor to the business of the Company
that are not generally available to the public other than as a result of breach
of this Agreement by Executive ("Confidential Information") are the
property of the Company and its subsidiaries. Executive agrees that he shall not
disclose to any unauthorized person or use for his own account any Confidential
Information without the prior written consent of the Company unless, and in such
case only to the extent that, such matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act. Notwithstanding the foregoing, in the event Executive becomes
legally compelled to disclose Confidential Information pursuant to judicial or
administrative subpoena or process or other legal obligation, Executive may make
such disclosure only to the extent required, in the opinion of counsel for
Executive, to comply with such subpoena, process or other obligation. Executive
shall, as promptly as possible and in any event prior to the making of such
disclosure, notify the Company of any such subpoena, process or obligation and
shall cooperate with the Company in seeking a protective order or other means of
protecting the confidentiality of the Company Information. Executive shall
deliver to the Company at the termination of the Employment Period, or at any
time the Company may reasonably request, all memoranda, notes, plans, records,
reports, computer tapes and software and other documents and data (and copies
thereof) containing, relating to, or derived from the Confidential Information
or the business of the Company or its subsidiaries which he may then possess or
have under his control. Executive agrees that he will not retain after the
termination of the Employment Period any copies of any Confidential Information
including, without limitation, any software, documents or other materials
originating with and/or belonging to the Company or any Subsidiary of the
Company.

6. Non-Compete; Non-Solicitation. (a) Executive acknowledges that in
the course of his employment with the Company he will become familiar with the
Company's trade secrets and with other confidential information concerning the
Company and its predecessors and that his services have been and will be of
special, unique and extraordinary value to the Company. Executive agrees that,
during the period in which Executive is receiving compensation hereunder and for
a period of three years following termination of Executive's employment with
the Company for any reason (the "Non-Compete Period"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in the operation of any
supermarket, food store or retailer of health and beauty aids with retail
locations located within a ten mile radius of any store operated (defined herein
as current stores or stores for which leases have been signed as of the date of
termination) by the Company or its subsidiaries as of the date of termination of
Executive's employment with the Company. In addition, Executive acknowledges
that he shall not accept employment in any managerial or consulting capacity
with Whole Foods Markets, Inc. or any successor to or subsidiary or affiliate of
such company during the Non-Compete Period. Such Non-Compete Period shall
terminate immediately at such time as the Company and its subsidiaries no longer
operate supermarkets or food stores. Nothing herein shall prohibit Executive
from being a passive owner of not more than 1% of the outstanding stock of
another corporation, so long as Executive has no active participation in the
management or the business of such corporation.

(b) During the Non-Compete Period, Executive shall not directly or indirectly
(1) induce or attempt to induce any employee of the Company or any subsidiary of
the Company to leave the employ of the Company or such subsidiary, or in any way
interfere with the relationship between the Company or any such subsidiary and
any employee thereof; (2) induce or attempt to induce any customer, supplier,
licensee or other business relationship of the Company or any subsidiary of the
Company to cease doing business with the Company or such subsidiary, or in any
way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any such subsidiary; or (3)
make an oral or written disparaging statement, comment or remark about the
Company or any of its subsidiaries to any employee, customer, supplier, licensee
or other business relationship of the Company or any of its subsidiaries or to
or for the intended use of any member of the press.

7. Employment-At-Will. It is understood and agreed that this Agreement
constitutes employment-at-will and that notwithstanding (i) any general or
specific policies (whether written or oral) of the Company relating to the
employment or termination of its employees, (ii) any statements made to
Executive, whether made orally or contained in any document, pertaining to
Employee's relationship with the Company, or (iii) assignment of Cause by the
Company, the Company reserves the right to terminate the employment of Executive
by the Company in which event Executive's sole remedy shall be to receive
certain payments and other benefits upon the terms and subject to the conditions
provided for herein.

 

8. Enforcement. It is the express intention of the parties that this
Agreement be enforced to the fullest extent permitted by applicable law in order
to give full effect to the agreements reached herein. Accordingly, if at the
time of enforcement of Sections 5 or 6 a court holds that the restrictions
stated herein are unreasonable under the circumstances then existing, the
parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area. Because Executive's services are unique and because Executive
has access to Confidential Information, the parties hereto agree that money
damages would be an inadequate remedy for any breach of this Agreement. In the
event of a breach or threatened breach of this Agreement, the Company, its
subsidiaries and their respective successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violation of, the provisions hereof
(without posting a bond or other security). Sections 5 and 6 shall survive and
continue in full force and effect in accordance with their terms notwithstanding
any termination of the Employment Period.

9. Notices. All notices or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, one
business day following when sent via a nationally recognized overnight courier,
or when sent via facsimile confirmed in writing to the recipient. Such notices
and other communications will be sent to the addresses indicated below:

	To the Company: 	To Executive:
	Wild Oats Markets, Inc 	_________________
	3375 Mitchell Lane	 _________________
	Boulder, CO 80301	 _________________
	Attention: Chief Executive Officer	 
	With a copy to: General Counsel	 

or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.

10. Miscellaneous. Any provision of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Colorado without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Colorado or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Colorado.

 

11. Dispute Resolution Process. The parties hereby agree that, in
order to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement (or any other agreement contemplated by or related to
this Agreement or any other agreement between the Company and Executive),
including without limitation, any claim based on contract, tort or statute, or
the arbitrability of any claim hereunder (a "Claim"), shall be
settled, at the request of any part of this Agreement, by final and binding
arbitration conducted in Denver, Colorado. All such Claims shall be settled by
one arbitrator in accordance with the Commercial Arbitration Rules then in
effect of the American Arbitration Association. Such arbitrator shall be
provided through the CFR Institute for Dispute Resolution ("CFR") by
mutual agreement of the parties, provided that, absent such agreement, the
arbitrator shall be appointed by CFR. In this event, such arbitrator may not
have any pre-existing, direct or indirect relationship with any party to the
dispute. Each party hereto expressly consents to, and waives any future
objection to, such forum and arbitration rules. Judgment upon any award may be
entered by any state or federal court having jurisdiction thereof. Except as
required by law (including, without limitation, the rules and regulations of the
Securities and Exchange Commission and the Nasdaq Stock Market, if applicable),
neither party nor the arbitrator shall disclose the existence, content, or
results of any arbitration hereunder without the prior written consent of all
parties. Except as provided herein, the Federal Arbitration Act shall govern the
interpretation, enforcement and all proceedings pursuant to this Section.
Adherence to this dispute resolution process shall not limit the right of the
Company or Executive to obtain any provisional remedy, including without
limitation, injunctive or similar relief set forth above, from any court of
competent jurisdiction as may be necessary to protect their respective rights
and interests pending arbitration. Notwithstanding the foregoing sentence, this
dispute resolution procedure is intended to be the exclusive method of resolving
any Claims arising out of or relating to this Agreement. The arbitration
procedures shall follow the substantive law of the State of Colorado, including
the provisions of statutory law dealing with arbitration, as it may exist at the
time of the demand for arbitration, insofar as said provisions are not in
conflict with this Agreement and specifically excepting therefrom sections of
any such statute dealing with discovery and sections requiring notice of the
hearing date by registered or certified mail.

Executed on the date set forth above.

COMPANY:

WILD OATS MARKETS, INC.

 

 

By /s/ Freya R. Brier

 

EXECUTIVE:

 

 

By /s/ Edward F. Dunlap

Edward F. Dunlap

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]