RESIGNATION, WAIVER, SETTLEMENT AGREEMENT AND GENERAL RELEASE

A.

Executive is party to an Employment Agreement with the Company dated March 6, 2001, as amended by the amendments referenced in the Sixth Amendment dated as of August 14, 2006 (as so amended, the " Employment Agreement "). Capitalized terms used herein without definition but defined in the Employment Agreement have the meanings given to such terms in the Employment Agreement.

B.

The parties desire to, among other things, (i) provide for the resignation by Executive of his employment and other positions with Wild Oats and each of its direct and indirect subsidiaries (each, a " Group Company " and, collectively, the " Group Companies "), (ii) settle and resolve all existing and potential disputes between Executive, on the one hand, and the Group Companies, on the other hand, and (iii) provide for certain other arrangements, in each case subject to the terms and conditions herein.

1.

Resignation . Executive hereby resigns, effective as of the Effective Date, from his position as Chief Executive Officer, President, and a member of the Board of Directors of Wild Oats, and in each other capacity that Executive serves with Wild Oats or any of the other Group Companies. Concurrently with the execution and delivery of this Settlement Agreement, Executive shall deliver to Wild Oats a signed letter in the form of Exhibit A hereto reflecting the foregoing resignation.

2.

Payments and Benefits .

(a)

Provided this Settlement Agreement has not been revoked in accordance with its terms, Wild Oats shall pay to Executive $1,943,346 (the " Payment Amount "), in full settlement of any and all amounts claimed by Executive from Wild Oats or any of the other Group Companies under the Employment Agreement or otherwise, except for any other amounts payable as provided elsewhere herein. The Payment Amount is being made, among other things, in recognition of the increased profitability of Wild Oats and in light of the Company’s obligations under the Employment Agreement. The Payment Amount shall be subject to legally required withholdings and deductions and shall be paid as provided in Section 2(i) hereof. Wild Oats and Executive agree and acknowledge that, as of the Effective Date, Executive has no accrued and unpaid vacation.

(b)

In addition to the Payment Amount, Wild Oats shall pay to Executive the Base Amount (as defined in the Employment Agreement) at the rate in effect on the Effective Date, for a period of thirty-six months commencing on the Effective Date, with payments at the Company’s regular bi-weekly payroll intervals, as provided in Section 5(d) of the Employment Agreement. Wild Oats acknowledges that Executive shall have no obligation to seek other employment in mitigation of the Base Amounts payable to the Executive pursuant to this provision of the Settlement Agreement, nor will there be any offset against these payments of any future earnings by the Executive. In the event of the death of the Executive, payments shall be made to his Estate.

(c)

From the Effective Date through the third anniversary hereof, Wild Oats shall continue to contribute to the cost of Executive’s participation (including his immediate family) in the Company’s medical, dental and vision benefit plans and group life insurance plan or to provide reimbursement to Executive, as provided in and subject to the conditions set forth in the last two sentences of Section 5(d) of the Employment Agreement. During such period, Wild Oats shall continue to provide Executive with the benefit of the Company’s discount card plan. Executive acknowledges and agrees that such arrangements shall be in full satisfaction of the Company’s obligations under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"). Rosalie Vitrano, Executive’s spouse, will retain any rights that she has under COBRA in respect of Executive’s resignation, without duplication of the provisions of the first sentence of this subsection.

(d)

The benefits in Sections 2(b) and (c) hereof shall remain subject to the provisions of Section 6(b) and Section 9(d) of the Employment Agreement.

(e)

All options to purchase Wild Oats common stock held by Executive that are vested on the Effective Date will remain exercisable for thirty (30) days after the Effective Date and shall terminate thereafter. The Company has accelerated the vesting of the grant of 4,167 restricted stock units which were otherwise scheduled to vest on or about February 8, 2007, subject to the expiry of the revocation period set forth in Section 7(c)(iv) hereof. All unvested options to purchase Wild Oats common stock and unvested restricted stock units or unvested restricted shares are cancelled and terminated.

(f)

During the ninety (90) day period following the Effective Date, the Company shall furnish secretarial services to Executive at the Company’s expense.

(g)

The Company shall continue to pay, or reimburse Executive for, the monthly lease payments on his current Company leased car for the unexpired balance of the term of the lease as well as for the cost of insurance and maintenance during such time. Executive shall have the right, as between the Company and Executive, to exercise the purchase option under such lease.

(h)

Nothing in this Settlement Agreement shall constitute a waiver of any benefits which are already vested under any Company 401(k) or employee welfare plan.

(i)

The Payment Amount shall be payable as follows (in each case without interest): $250,000 shall be paid to the Executive by the Company by not later than 48 hours of the Effective Date, $200,000 shall be paid by the Company to the Executive on December 10, 2006, and the balance of the Payment Amount shall be paid by the Company to the Executive on January 2, 2007, in each case subject to the right of the Company to defer payment until Executive’s revocation rights referenced in Section 7(c)(iv) have expired.

3.

Covenants .

(a)

Cooperation with respect to Claims . Executive will cooperate with the Group Companies in any current or future litigation, arbitration or processing of any claims involving any Group Company as reasonably requested by Wild Oats and where Executive’s interests are not adverse to those of such Group Company. Any such cooperation will be at no cost to any Group Company other than reimbursement of reasonable out-of-pocket costs of Executive submitted as per the Company’s expense reimbursement policy or otherwise approved in writing by Wild Oats.

(b)

Transition Assistance; Cooperation . During the period of 90 working days following the Effective Date, Executive agrees to provide reasonable assistance to transition his Company responsibilities. At the request of the Company, Executive agrees to make himself reasonably available to provide such services by telephone or during pre-arranged meetings, for up to five (5) hours per week, in each case at mutually acceptable times and locations. Any such work will be at no cost to any Group Company other than reimbursement of reasonable out-of-pocket costs of Executive submitted as per the Company’s expense reimbursement policy or otherwise approved in writing by Wild Oats.

(c)

SEC Filing . Upon execution of this Agreement, Executive provides the representations and warranties set forth in Schedule 1. Executive also agrees promptly (but in no event more than 3 business days) after delivery to Executive of the Company’s draft Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (the " Q3 10-Q "), to provide good faith comments, if any, to the Q3 10-Q (including such comments, the " Modified Q3 10-Q "), and (i) to provide certifications to the Company with respect to the Modified Q3 10-Q substantially in the forms that would be required of the Company’s certifying officers pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, and (ii) to provide customary representations to the Company (and, if requested by the Company, to Ernst & Young LLP) with respect to the SAS 71 review of the Company’s consolidated financial statements contained in the Modified Q3 10-Q as of and for the period ended September 30, 2006 and the related attestation regarding control over financial reporting.

(d)

Termination of Employment Agreement . The parties agree that, as of the Effective Date, the Employment Agreement, and the employment Term contemplated thereby, is terminated, except that Section 6(b) and Sections 7 through 16 of the Employment Agreement (including but not limited to Section 13 thereof entitled "No Duty to Mitigate," and Section 12 relating to "Indemnification") shall survive in accordance with their respective terms and are incorporated by reference herein as if set forth herein. Executive acknowledges and agrees that he is entitled to no further payments, rights, wages, bonuses, or other compensation or benefits pursuant to the Employment Agreement, or any other agreements with the Company or any Group Company, except as set forth herein. Regardless of anything else contained herein, from and after the Effective Date, Executive will have no authority to act for or bind any Group Company and will not hold himself out as having any such authority or as being an employee, officer, director or agent of any Group Company.

(e)

Indemnity . Executive agrees to indemnify and hold harmless the Company Releasees (as defined below) from all material Losses (as defined below) resulting from any material breach of any representation, warranty or covenant of Executive contained herein. Wild Oats agrees to indemnify and hold harmless Executive from all material Executive Losses (as defined below) resulting from any material breach of any representation, warranty or covenant of Wild Oats contained herein.

4.

Restrictive Covenants .

(a)

Executive acknowledges and agrees that, in the performance of the services on behalf of the Group Companies, Executive had access to, received and was entrusted with Confidential Information (as defined below). From and after the Effective Date, Executive will not, except as required by applicable law, disclose to others or use, whether directly or indirectly, any Confidential Information regarding any Group Company without the prior written consent of Wild Oats. " Confidential Information " will mean information about the Group Companies, and their respective suppliers, employees, business partners, clients and customers that is not available to the general public or generally known in the industry and that was learned by Executive through his relationship with any Group Company. Executive acknowledges that such Confidential Information is specialized, unique in nature and of great value to the Group Companies, and that such information gives the Group Companies a competitive advantage.

(b)

Executive recognizes that Executive possesses extensive Confidential Information of the Group Companies. Executive recognizes that such Confidential Information is not generally known, is of substantial value to Group Companies in developing its business, and was acquired by Executive because of Executive’s employment with the Company. Executive also acknowledges that if Executive violated this Section 4 , Executive would be unable, despite Executive’s best efforts and intentions, to avoid using, disclosing, or compromising in some material way such confidential information and that such violation would result in

(c)

Executive, on the one hand, and Wild Oats, on the other hand, agrees that such party will not, directly or indirectly, disparage or talk negatively about the other party or any of its affiliates (including, in the case of Wild Oats, any Company Releasee) to any person or entity (including without limitation to any former, existing, or prospective clients or employees or any person or entity with whom any such other party does business) and will not, directly or indirectly, make or ratify any public statement, oral or written, that disparages or talks negatively about any such other party or any of its affiliates (including, in the case of Wild Oats, each Company Releasee). Notwithstanding the foregoing, nothing in this Section shall prevent any person or entity from (i) responding publicly to any incorrect, disparaging or derogatory public statement to the extent reasonably necessary to correct or refute such public statement or (ii) making any truthful statement to the extent (x) necessary with respect to any litigation, arbitration or mediation involving this Settlement Agreement, including, but not limited to, the enforcement of this Settlement Agreement or (y) required by law or by any court, arbitrator, mediator or administrative or legislative body (including any committee thereof) with actual or apparent jurisdiction to order such person to disclose or make accessible such information.

(d)

The parties agree and acknowledge that each of the covenants set forth in this Section 4 are separate, distinct, and independent of each other. Furthermore, if it is finally determined that any covenant in this Section 4 is unenforceable or invalid in any respect under applicable law, it is the express intention of all of the parties that such covenant should be modified or amended to render it enforceable to the maximum extent permitted by applicable law.

5.

Representations and Warranties of the Executive . Executive represents and warrants that:

(a)

Authority . (i) He has the capacity, power, and legal right to execute and deliver this Settlement Agreement and to consummate the transactions contemplated hereby, (ii) he has duly executed and delivered this Settlement Agreement, (iii) this Settlement Agreement is valid, binding on and enforceable against him, (iv) no approval or consent of any third party, including without limitation any spouse or former spouse or any children or trust therefor, is necessary for the execution, delivery, or performance by him of this Settlement Agreement, and (v) the execution, delivery and performance by Executive of this Settlement Agreement does not and will not conflict with or constitute a breach under any law, order, contract or other arrangement to which Executive is subject or bound.

(b)

Compensation . He was paid all payments, rights, wages, bonuses, and other compensation and benefits to which he was entitled through the Effective Date

(c)

Return of Documents and Property . On the Effective Date, Executive shall return to the Company any and all property of a Group Company not previously delivered to the Company and that is in his possession or under his control. Regardless of the foregoing, Executive has returned any and all Confidential Information (as defined below) of a Group Company not previously delivered to the Company and that is in his possession or under his control and is in physical, electronic of other form (including any such information on his laptop computer, and Executive and has retained no copies thereof in any form.

(d)

Tax and Legal Matters . He (i) is a U.S. resident for tax purposes, (ii) has reviewed with his own legal and tax advisors the consequences of this Settlement Agreement and whether the consideration payable hereunder is subject to any