Document:

AMENDMENT NO 1 TO RIGHTS AGREEMENT

 

 

 

AMENDMENT NO. 1 TO RIGHTS AGREEMENT

This Amendment No. 1 to Rights Agreement, dated as of February 26,
2002 (this "Amendment"), amends that certain Rights Agreement,
dated as of May 22, 1998 (the "Original Agreement"), entered
into between Wild Oats Markets, Inc., a Delaware corporation (the "Company"),
and Wells Fargo Bank, N.A., as successor in interest to Norwest Bank
Minneapolis, N.A. (the "Rights Agent").

W I T N E S S E T H:

WHEREAS, pursuant to Section 27 of the Original Agreement, the Company
desires to make certain amendments to the Original Agreement.

NOW, THEREFORE, in consideration of the foregoing and in accordance with
Section 27 of the Original Agreement and intending to be legally bound, the
Company and the Rights Agent agree that the Original Agreement hereby is amended
as follows:

  	Certain Amendments.

  Amendment to Section 1(a). Section 1(a) of the Original Agreement
  hereby is amended in its entirety to read as follows:

  

  "Acquiring Person" means any Person that, together with all
  Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
  more of the shares of Common Stock then outstanding, but shall not include (i)
  the Company, any Subsidiary of the Company, any employee benefit plan of the
  Company or of any Subsidiary of the Company, or any Person or entity
  organized, appointed or established by the Company for or pursuant to the
  terms of any such plan; (ii) any Person who would otherwise become an
  Acquiring Person solely as a result of a reduction in the number of shares of
  Common Stock outstanding due to the acquisition of shares of Common Stock by
  the Company or a Subsidiary of the Company, unless and until such Person shall
  thereafter purchase or otherwise become the Beneficial Owner of additional
  shares of Common Stock constituting one percent or more of the then
  outstanding shares of Common Stock; or (iii) any of the following: David L.
  Ferguson or J.P. Morgan Partners (SBIC), LLC.

  

  Notwithstanding the foregoing, if the Board of Directors of the Company
  determines in good faith that a Person who would otherwise be an
  "Acquiring Person," as defined pursuant to the foregoing provisions
  of this paragraph (a), has become such inadvertently, and such Person divests
  as promptly as practicable a sufficient number of shares of Common Stock so
  that such Person would no longer be an "Acquiring Person," as
  defined pursuant to the foregoing provisions of this paragraph (a), such
  Person shall not be deemed to be an "Acquiring Person" for any
  purposes of this Agreement.

  

    	Amendment to Section 1(h). Section 1(h) of the Original Agreement
    (which defines the term "Continuing Director") hereby is deleted
    in its entirety, and the remaining Section 1(i) through 1(q) hereby are
    renumbered as Sections 1(h) through 1(p), respectively.

    	Amendment to Section 7(e). Section 7(e) of the Original Agreement
    hereby is amended in its entirety to read as follows:

    

    (e) Notwithstanding anything in this Agreement to the contrary, from and
    after the first occurrence of a Section 11(a)(ii) Event, any Rights
    beneficially owned by (i) an Acquiring Person or an Associate or Affiliate
    of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
    such Associate or Affiliate) who becomes a transferee after the Acquiring
    Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
    such Associate or Affiliate) who becomes a transferee prior to or
    concurrently with the Acquiring Person becoming such and receives such
    Rights pursuant to either (A) a transfer (whether or not for consideration)
    from the Acquiring Person to holders of equity interests in such Acquiring
    Person or to any Person with whom the Acquiring Person has any continuing
    agreement, arrangement or understanding regarding the transferred Rights or
    (B) a transfer that the Company has determined is part of a plan,
    arrangement or understanding that has as a primary purpose or effect the
    avoidance of this Section 7(e), shall become null and void without any
    further action and no holder of such Rights shall have any rights whatsoever
    with respect to such Rights, whether under this Agreement or otherwise. The
    Company shall use all reasonable efforts to insure that this Section 7(e)
    and Section 4(b) hereof are complied with, but shall have no liability to
    any holder of Rights Certificates or other Person as a result of its failure
    to make any determinations with respect to an Acquiring Person or its
    Affiliates, Associates or transferees hereunder.

    	Amendment to Section 23(a). Section 23(a) of the Original Agreement
    hereby is amended in its entirety to read as follows:

    

    (a) The Board of Directors of the Company may, at its option, at any time
    before the earlier of (i) the close of business on the tenth day following
    the Stock Acquisition Date (or, if the Stock Acquisition Date occurs before
    the Record Date, the close of business on the tenth day after the Record
    Date), or (ii) the Final Expiration Date, redeem all but not less than all
    the then outstanding Rights at a redemption price of $.001 per Right (such
    redemption price being hereinafter referred to as the "Redemption
    Price"). Notwithstanding anything in this Agreement to the contrary,
    the Rights shall not be exercisable at any time when the Company may redeem
    them pursuant to this Section 23. The Company may, at its option, pay the
    Redemption Price in cash, shares of Common Stock (based on the "current
    market price" as defined in Section 11(d)(i) hereof, of the Common
    Stock at the time of redemption) or any other form of consideration deemed
    appropriate by the Board of Directors. Notwithstanding anything herein to
    the contrary, the Rights shall not be exercisable pursuant to Section
    11(a)(ii) prior to the expiration of the Company's right of redemption
    hereunder.

    	Amendment to Section 27. Section 27 of the Original Agreement hereby
    is amended in its entirety to read as follows:

    

    Section 27. Supplements and Amendments. Prior to the Distribution Date, the
    Company from time to time may, in its sole and absolute discretion, and the
    Rights Agent shall if the Company so directs, supplement or amend any
    provision of this Agreement without the approval of any holder of Rights.
    From and after the Distribution Date and subject to the penultimate sentence
    of this Section 27, the Company may, and the Rights Agent shall if the
    Company so directs, supplement or amend this Agreement without the approval
    of any holders of Rights (i) to cure any ambiguity, (ii) to correct or
    supplement any provision contained herein which may be defective or
    inconsistent with any other provisions herein, or (iii) to shorten or
    lengthen any time period hereunder; provided, however, that this Agreement
    may not be supplemented or amended to lengthen, pursuant to clause (iii) of
    this sentence, (A) a time period relating to when the Rights may be redeemed
    at such time as the Rights are not then redeemable, or (B) any other time
    period unless such lengthening is for the purpose of protecting, enhancing
    or clarifying the rights of holders of the Rights. Upon the delivery of a
    certificate from an appropriate officer of the Company stating that the
    proposed supplement or amendment is in compliance with this Section 27, the
    Rights Agent shall execute such supplement or amendment. Notwithstanding
    anything herein to the contrary, no supplement or amendment shall be made
    after the Distribution Date that would adversely affect the basic economic
    terms of the Rights or would have the effect of making the Rights
    redeemable. Prior to the Distribution Date, the interests of the holders of
    Rights shall be deemed coincident with the interests of the holders of
    Common Stock.

    	Amendment to Exhibit C. The Summary of Rights to Purchase Preferred
    Stock attached as Exhibit C to the Original Agreement hereby is amended as
    follows:

	The eleventh paragraph of the Summary of Rights to Purchase Preferred
        Stock hereby is amended in its entirety to read as follows:

        

        At any time until ten days following the Stock Acquisition Date, the
        Company may redeem the Rights in whole, but not in part, at a price of
        $.001 per Right. Immediately upon the action of the Board of Directors
        ordering redemption of the Rights or at such other time as may be
        specified by the Board when it orders redemption, the Rights will
        terminate and the only right of the holders of Rights will be to receive
        the $.001 redemption price.
	The twelfth paragraph of the Summary of Rights to Purchase Preferred
        Stock (which defined "Continuing Directors") hereby is deleted
        in its entirety.

  
  
  	Miscellaneous Provisions.

    	"Agreement" as Amended. The term "Agreement" as
    used in the Original Agreement shall be deemed to refer to the Original
    Agreement as amended by this Amendment, and all references in the Original
    Agreement to the "Agreement" shall be deemed to include this
    Amendment.

    	Effectiveness. This Amendment shall be effective as of the date
    first written above, and except as set forth herein, the Original Agreement
    shall remain in full force and effect and otherwise shall be unaffected
    hereby.

    	Severability. If any term of this Amendment is held by a court of
    competent jurisdiction or other authority to be invalid, void or
    unenforceable, the remainder of the terms, provisions, covenants and
    restrictions of this Amendment shall remain in full force and effect and
    shall in no way be affected, impaired or invalidated.

    	Governing Law. This Amendment shall be deemed to be a contract made
    under Delaware law and for all purposes shall be governed by and construed
    in accordance with Delaware law applicable to contracts made and to be
    performed entirely within such state.

    	Counterparts. This Amendment may be executed in any number of
    counterparts, each of which shall be an original, and all of which shall
    together constitute a single instrument.

    	Descriptive Headings. Descriptive headings of the Sections of this
    Amendment are inserted for convenience only and shall not affect the meaning
    of this Amendment.

[Remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.

 

  
    
      
        
          
            
              
              WILD OATS MARKETS, INC.

              

              

              By: /s/

              Name: Freya R. Brier

              Title:  V.P., Legal

              
                
                  
                     

                    
                    

                  

                

                WELLS FARGO BANK, N.A.

                

                

                By:  /s/

                Name:  Jennifer L. Leno

                Title:  OfficerSECOND AMENDMENT TO 1996 EQUITY INCENTIVE PLAN

SECOND AMENDMENT

TO

WILD OATS MARKETS, INC.

1996 EQUITY INCENTIVE PLAN

 

On August 19, 1996, the Board of Directors of Wild Oats
Markets, Inc. (the "Company") adopted the Wild Oats Markets, Inc. 1996
Equity Incentive Plan (the "Plan") under which the Company may, from
time to time, issue options exercisable for shares of the Common Stock, stock
bonuses and rights to purchase restricted Common Stock of the Company.

 

RECITALS

 

    A. The Board of Directors of the Company resolved on
    February 3, 2000 to increase the number of shares of the Company's Common
    Stock reserved for issuance under the Plan, by 1,560,000 shares.

  
     

  

    B. Shareholder approval to amend the Plan by increasing
    by 1,560,000 the number of shares of the Company's Common Stock reserved for
    issuance under the Plan was requested and given at the Shareholders Annual
    Meeting on May 5, 2000.

  
     

     

  

AMENDMENT

 

    1. Section 4(a) of the Plan is hereby amended by deleting
    the existing Section 4(a), as previously amended, in its entirety and
    replacing it with the following Section 4(a):

  
     

        (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 4,650,221
        shares of Common Stock (including previously reserved shares). 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 revert to and again become available for issuance under the Plan.

    
      
         

      

    

  

    2. The foregoing amendment is effective as of May 5,
    2000.

  
     

  

3. Except for the above Amendment, all terms and conditions of the Plan are
    unamended and shall remain in full force and effect.
 

WILD OATS MARKETS, INC.

 

By:  /s/ Mary Beth Lewis

 Title: Secretary

 Date: May 5, 2000

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