Exhibit 10.4



 


 


[LETTERHEAD OF WELLS FARGO BANK, N.A.]


WAIVER


March 31, 2005


Wild Oats Markets, Inc.


3375 Mitchell Lane


Boulder, CO 80301


Attention: Chief Financial Officer


1. Reference is made in this Waiver (this "Waiver") to that certain Second
Amended and Restated Credit Agreement, dated as of February 26, 2003, as amended by that
certain First Amendment to Second Amended and Restated Credit Agreement dated as of May
21, 2004, as further amended by that certain Second Amendment to Second Amended and
Restated Credit Agreement dated as of August 3, 2004, and as further amended by that
certain Third Amendment to Second Amended and Restated Credit Agreement dated as of
November 4, 2004 (as amended, the "Credit Agreement") among (i) WILD OATS
MARKETS, INC., a Delaware corporation (the "Borrower"), (ii) each of the
financial institutions listed in Schedule I to the Credit Agreement (collectively, the
"Lenders") constituting Required Lenders, and (iii) WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, as the administrative agent for the Lenders
(in such capacity, the "Administrative Agent"). Capitalized terms used herein
and not otherwise defined shall have the meanings given to such terms in the Credit
Agreement.


2. Pursuant to Section 5.03(c) of the Credit Agreement, the Borrower has agreed, unless
the Required Lenders shall otherwise consent in writing, not to permit Stockholders’
Equity on any Determination Date to be less than the Minimum Shareholders’ Equity
Amount on such Determination Date, as calculated in accordance with Section 5.03(c) of the
Credit Agreement.


3. Recently, the U.S. Securities and Exchange Commission (the "SEC") issued a
letter dated February 7, 2005, in which it set forth the SEC’s view concerning the
appropriate accounting under GAAP of (i) the amortization of leasehold improvements by a
lessee in an operating lease with lease renewals, (ii) the pattern of recognition of rent
when the lease term in an operating lease contains a period where there are free or
reduced rents (commonly referred to as "rent holidays"), and (iii) incentives
related to leasehold improvements provided by a landlord/lessor to a tenant/lessee in an
operating lease (such letter, the "SEC Pronouncement").


4. Pursuant to the SEC Pronouncement, the Borrower has determined that it needs to
restate its audited Financial Statements for its Fiscal Years 2000 through 2003 and its
Financial Statements presented to the Lenders for Fiscal Year 2004. As a result of such
restatements, the Borrower will have failed to satisfy the covenant set forth in Paragraph
2 above in that Stockholders’ Equity at the end of each Fiscal Quarter from and
including the first Fiscal Quarter following the Closing Date through the Fiscal Quarter
ending on or around January 1, 2005 will have been less than the Minimum
Shareholders’ Equity Amount as of each such Fiscal Quarter. The Borrower’s
failure to satisfy such covenant would have resulted in the occurrence and the continuance
of an Event of Default (such Event of Default, the "Stockholders’ Equity Event
of Default").


5. The Borrower has approached the Lenders and the Administrative Agent and requested
that the Required Lenders waive the Borrower’s compliance with such covenant and the
Lender’s rights and remedies under the Credit Agreement and the other Credit
Documents with respect to occurrence and continuance of the Stockholders’ Equity
Event of Default.


6. To induce the Administrative Agent and the Required Lenders to waive the
Borrower’s compliance with such covenants and the Lender’s rights and remedies
under the Credit Agreement and the other Credit Documents with respect to occurrence and
continuance of the Stockholders’ Equity Event of Default, the Borrower has
represented and warranted to the Administrative Agent and the Lenders that, on the date of
this Waiver and after giving effect to the waiver set forth in Paragraph 7 below:


(a) The representations and warranties of the Loan Parties set forth in Article IV of
the Credit Agreement and in the other Credit Documents are true and correct in all
material respects as if made on the date hereof (except for representations and warranties
expressly made as of a specified date, which are true and correct in all material respects
as of such date);


(b) Except as described herein and in the Waiver dated March 28, 2005 among Borrower
and the Lenders, no Default or Event of Default has occurred and is continuing;


(c) The Stockholders’ Equity Event of Default would not have occurred but for the
SEC Pronouncement and the resulting restatement of the Borrower’s audited Financial
Statements for the Fiscal Years 2000 through 2003 and its Financial Statements presented
to the Lenders for Fiscal Year 2004; and


(d) The Credit Agreement, the Security Agreement, the Pledge Agreement and the Guaranty
are in full force and effect.


7. Pursuant to Section 8.04 of the Credit Agreement, the Required Lenders executing
this Waiver below hereby waive, subject to Paragraphs 8 and 9 below, the Borrower’s
compliance with the covenant described in Paragraph 2 above and the Stockholders’
Equity Event of Default that has occurred and is continuing as a result of such
non-compliance.


8. Notwithstanding any of the foregoing, the waiver set forth in Paragraph 7 above
shall only be effective with respect to such covenant and the Stockholders’ Equity
Event of Default. The waiver set forth in Paragraph 7 above shall not (i) operate as a
waiver of the Borrower’s requirement to comply with any other covenant set forth in
the Credit Agreement or the other Credit Documents or of any other Event of Default, or
(ii) constitute a waiver of any other provision of the Credit Agreement or any other
Credit Document.


9. This Waiver shall become effective immediately upon execution of this Waiver by the
Borrower and Lenders constituting the Required Lenders in the space provided below and
shall continue in effect through the Fiscal Quarter ending on or around January 1, 2005;
provided, however, that the Waiver with respect to the previously occurring
Stockholders’ Equity Event of Default shall continue indefinitely.


10. This Waiver shall be governed by and construed in accordance with the laws of the
State of Colorado without reference to conflicts of law rules. This Waiver may be executed
in any number of identical counterparts, any set of which signed by all parties hereto
shall be deemed to constitute a complete, executed original for all purposes.


IN WITNESS WHEREOF, each of the undersigned has caused this Waiver to be executed as of
the day and year first above written.


ADMINISTRATIVE AGENT: 


WELLS FARGO BANK, NATIONAL


ASSOCIATION


 


By: /s/ Marc Rosenberg


Name: Marc Rosenberg


Title: Vice President


 


LENDERS: 


WELLS FARGO BANK, NATIONAL


ASSOCIATION


 


By: /s/ Marc Rosenberg


Name: Marc Rosenberg


Title: Vice President


 


U.S. BANK NATIONAL ASSOCIATION


 


By: 


Name: 


Title: 


 


VECTRA BANK COLORADO N.A.


 


By: 


Name: 


Title: 


 


BANK OF AMERICA, N.A.


 


By: /s/ David R. Barney


Name: David R. Barney


Title: Senior Vice President


 


 


ACKNOWLEDGED AND AGREED:


WILD OATS MARKETS, INC.


 


By: /s/ Freya R. Brier


Name: Freya R. Brier


Title: Senior Vice President