Exhibit 10.2



Exhibit 10.2


 


 


***CONFIDENTIAL TREATMENT REQUESTED**





***CONFIDENTIAL TREATMENT REQUESTED**


THIRD AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT


THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Amendment"),
dated as of November 4, 2004, is entered into by and among:



  
    (1) WILD OATS MARKETS, INC., a Delaware corporation (the "Borrower");

    (2) Each of the financial institutions listed in Schedule I to the Credit Agreement
    referred to in Recital A below (collectively, the "Lenders")
    constituting Required Lenders; and

    (3) WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association ("WFB"),
    as the administrative agent for the Lenders (in such capacity, the "Administrative
    Agent").

  




 


RECITALS


A. The Borrower, the Lenders, the Administrative Agent and WFB in its capacity as L/C
Issuer and Swing Line Lender are parties 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 and as further amended by that certain Second Amendment to Second Amended and
Restated Credit Agreement dated as of August 3, 2004, the "Credit Agreement").


B. The Borrower has requested that the Lenders constituting Required Lenders and the
Administrative Agent amend the Credit Agreement in certain respects.


C. The Lenders executing this Amendment and the Administrative Agent are willing to so
amend the Credit Agreement upon the terms and subject to the conditions set forth below.


 


AGREEMENT


NOW, THEREFORE, in consideration of the above recitals and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower,
the Lenders executing this Amendment and the Administrative Agent hereby agree as follows:


 


1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise defined
herein, all other capitalized terms used herein shall have the respective meanings given
to those terms in the Credit Agreement, as amended by this Amendment. The rules of
construction set forth in Article I of the Credit Agreement shall, to the extent
not inconsistent with the terms of this Amendment, apply to this Amendment and are hereby
incorporated by reference.


 


2





***CONFIDENTIAL TREATMENT REQUESTED**


 


2. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions precedent set forth in paragraph 4 below, the Credit Agreement is hereby
amended as follows:



  
    a) Section 1.01 is hereby amended by changing the definitions of the terms
    "Cash Balances", "Cash Equivalents", "Adjusted Leverage
    Ratio" and "Pricing Grid" to read in their entirety as follows:

    
      
        "Cash Balances" shall mean, with respect to Borrower and its
        Subsidiaries at any time, the remainder, determined on a consolidated basis in accordance
        with GAAP, of:

        
          
            (a) The sum of (i) the unrestricted cash of Borrower and its Subsidiaries (including
            cash restricted by a Lien in favor of the Administrative Agent for the benefit of the
            Lenders pursuant to this Agreement) maintained in one or more deposit accounts located at
            a Lender (or in transit to such deposit accounts so long as the amounts in transit relate
            to credit card payments owed to the Borrower or its Subsidiaries and the actual time in
            transit does not exceed three (3) Business Day) at such time and (ii) the market value of
            the unrestricted Cash Equivalents of Borrower and its Subsidiaries (including cash
            restricted by a Lien in favor of the Administrative Agent for the benefit of the Lenders
            pursuant to this Agreement) maintained in one or more securities accounts at a Lender or
            any Affiliate of a Lender at such time;

            
              
                
                  
                    
                      
                        minus

                      

                    

                  

                

              

            

            (b) The Effective Amount of all Loans and L/C Obligations then outstanding under this
            Agreement.

          

        

        "Cash Equivalents" shall mean:

        
          
            (a) Direct obligations of, or obligations the principal and interest on which are
            unconditionally guaranteed or insured by, the United States of America or obligations of
            any agency of the United States of America, in each case maturing within one year from the
            date of acquisition thereof;

            (b) time deposits, certificates of deposit or bankers’ acceptances, in each case
            maturing within one year from the date of acquisition thereof and issued by a commercial
            bank or trust company organized under the laws of the United States of America or a state
            thereof or that is a Lender, provided that (i) such deposits are denominated in
            Dollars or Canadian Dollars and (ii) such bank or trust company has capital, surplus
            and undivided profits of not less than $100,000,000 at the time of acquisition thereof;

            (c) Open market commercial paper maturing within 270 days from the date of acquisition
            thereof issued by a corporation organized under the laws of the United States of America
            or a state thereof, provided such commercial paper is rated at least A-1 (or its
            equivalent) by Standard and Poor’s Ratings Group or P-1 (or its equivalent) by
            Moody’s Investors Service, Inc. at the time of acquisition thereof;

          

        

      

    

  




 


3






  
    
      
        
          
            ***CONFIDENTIAL TREATMENT REQUESTED**

             

            (d) Repurchase obligations with a term of not more than 30 days for underlying
            securities of the types described in clause (a) above entered into with any bank meeting
            the qualifications specified in clause (b) above at the time of acquisition thereof;

            (e) Securities with a maturities of one year or less from the date of acquisition
            issued or fully guaranteed by any state or commonwealth of the United States of America,
            or by any political subdivision or taxing authority thereof and rated at least Aa (or its
            equivalent) by Moody’s Investor Service, Inc. or AA (or its equivalent) by Standard
            and Poor’s Rating Group; and

            (f) Investments in money market or mutual funds that invest exclusively in the
            foregoing items. 

          

        

        "Adjusted Leverage Ratio" shall mean:

        As of any date of determination, the ratio of (a) the sum of (i) Average Total Funded
        Debt as of that date plus (ii) six (6) times Net Rents for the four Fiscal Quarter
        period most recently ended minus (iii) the unrestricted cash of Borrower and its
        Subsidiaries (including cash restricted by a Lien in favor of the Administrative Agent for
        the benefit of the Lenders pursuant to this Agreement) maintained in one or more deposit
        accounts located at a Lender (or in transit to such deposit accounts so long as the
        amounts in transit relate to credit card payments owed to the Borrower or its Subsidiaries
        and the actual time in transit does not exceed three (3) Business Day) as of that date minus
        (iv) the market value of the unrestricted Cash Equivalents of the Borrower and its
        Subsidiaries (including cash restricted by a Lien in favor of the Administrative Agent for
        the benefit of the Lenders pursuant to this Agreement) maintained in one or more
        securities accounts at a Lender or any Affiliate of a Lender as of that date to (b)
        EBITDAR for the four Fiscal Quarter period most recently ended (excluding (i) any
        Executive Contract Expense for such period and (ii) Rental Expense for such period not
        otherwise constituting Net Rents).

        "Pricing Grid" shall mean:

      

    

  





  
    
      
        	Pricing Grid

            (rates are expressed in basis points per annum)
	Tier	Adjusted Leverage Ratio	Applicable Margin for LIBOR
            Loans (bps)	Applicable Margin for Base Rate
            Loans (bps)	Commitment Fee (bps)	Letter of Credit

            Fee (bps)
	1	< 4.50	225.0	100.0	62.5	120.0
	2	> 4.50 <
            5.00	250.0	100.0	62.5	125.0
	3	>5.00	275.0	125.0	75.0	125.0


      

    

  





  
    
      
         

      

    

  




 



  
    
      
         

        4

      

    

  








  
    
      
        ***CONFIDENTIAL TREATMENT REQUESTED**

         

        Any increase or decrease in the Applicable Margin resulting from a change in the
        Adjusted Leverage Ratio shall become effective as of the fifth (5th) day following the
        final day by which a Compliance Certificate is required to be delivered pursuant to Section 5.01(a)
        (regardless of when actually delivered); provided, however, that if the
        Borrower fails to deliver a Compliance Certificate for a Fiscal Quarter when due in
        accordance with such Section, then Tier 3 shall apply (or shall continue to apply) as
        of the fifth (5th) day following such failure. The Applicable Margin in effect from
        November 4, 2004 until the first day of the Fiscal Quarter following the Borrower’s
        delivery of its Compliance Certificate for the Fiscal Quarter ending on January 1, 2005
        shall be determined based upon Tier 3.

      

    

    b) Section 5.01(a) is hereby amended by (i) deleting the "and"
    appearing at the end of clause (xiii), (ii) re-numbering clause (xiv)
    thereof as clause (xv) and (iii) adding a new clause (xiv) to read in its
    entirety as follows:

    
      
        
          
            (xiv) As soon as possible and in no event later than twenty (20) days after the end of
            each month, copies of all recent bank and brokerage statements evidencing the
            Borrower’s compliance with the minimum cash balances covenant set forth in Section
            5.03(f) hereof; and

          

        

      

    

    c) Section 5.02(a) is hereby amended to change clause (x) thereof to read
    in its entirety as follows:

    
      
        
          
            (x) Acquisition-Related Indebtedness in an aggregate principal amount not exceeding
            $5,000,000 at any one time outstanding;

          

        

      

    

    d) Section 5.02(d) is hereby amended to change clause (iv)(B) thereof to
    read in its entirety as follows:

    
      
        
          
            (B) The aggregate consideration paid by the Loan Parties for all such Acquisitions
            (excluding consideration consisting of the Equity Securities of the Borrower or its
            Subsidiaries or of Net Cash Issuance Proceeds) paid does not exceed $5,000,000; and

          

        

      

    

    e) Section 5.02(f) is hereby amended by (i) deleting clause (v) thereof
    in its entirety, (ii) adding the word "and" at the end of clause (iii)
    thereof, and (iii) amending clause (iv) thereof to read in its entirety as follows:

    
      
        
          
            (iv) The Borrower may repurchase shares of capital stock owned by Perry D. Odak in an
            aggregate amount not to exceed, during the term of this Agreement, the outstanding
            principal amount of the Executive Note (plus any interest accrued thereon), so long as
            (the consideration given by the Borrower for such shares consists only of a non-cash
            charge related to the forgiveness of all or any portion of the indebtedness arising under
            the Executive Note.

             

             

          

        

      

    

  




5






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

    f) Section 5.02(f) is hereby further amended by deleting the words "and
    (v)" appearing in the proviso at the end of such section and inserting the word
    "and" in front of the reference to "(iv)" therein.

    g) Section 5.03(a) is hereby amended to read in its entirety as follows:

    
      
        
          
            (a) Adjusted Leverage Ratio. The Borrower shall not permit the Adjusted Leverage
            Ratio as at the end of any Fiscal Quarter to be greater than the following for the
            respective periods set forth below:

          

        

      

    

  




 



	
      
        
          Period

        

      

    

    	Adjusted Leverage Ratio

	Closing Date to and including

    March 27, 2004
	3.75:1.00

	March 28, 2004 to and including June 26,
    2004
	4.75:1.00

	June 27, 2004 to and including

    July 2, 2005
	5.60:1:00

	July 3, 2005 and any time

    thereafter
	5.25:1.00







  
    h) Section 5.03(b) is hereby amended to read in its entirety as follows:

    
      
        
          
            (b) Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed Charge
            Coverage Ratio (i) as at the end of any Fiscal Quarter through the Fiscal Quarter ending
            on July 2, 2005 to be less than 1.00:1.00 and (ii) as at the end of any Fiscal Quarter
            thereafter, 1.05:1.00.

             

             

          

        

      

    

  




6






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

    i) Section 5.03(d) is hereby amended to read in its entirety as follows:

    
      
        
          
            (d) New Leases. The Borrower shall not permit the aggregate amount of New Leases
            for New Stores (excluding relocations of existing Stores) entered into by the Loan Parties
            to be greater than the following amounts for the respective periods set forth below:

          

        

      

    

  




 



	
      
        
          Period

        

      

    

    	
      
        
          Maximum

        

      

    

    
	Fiscal Year 2004
	[CONFIDENTIAL]

	Fiscal Year 2005
    
	[CONFIDENTIAL])

	Fiscal Year 2006
	[CONFIDENTIAL])






 



  
    j) Section 5.03(e) is hereby amended to read in its entirety as follows:

    
      
        
          
            (e) Capital Expenditures. The Borrower shall not permit the aggregate amount of
            Capital Expenditures made by the Loan Parties in any Fiscal Year to be greater than the
            following amounts for the respective Fiscal Years set forth below:

          

        

      

    

  




 



	
      
        Fiscal Year

      

    

    	
      
        Maximum Amount

      

    

    
	
      
        2004

      

    

    	[CONFIDENTIAL]

	
      
        2005 and each Fiscal Year thereafter

      

    

    	[CONFIDENTIAL]






______________________________________


(1)  Confidential treatment has been requested for the redacted
portion. The confidential, redacted portions have been filed separately with the SEC. 


(2)  Confidential treatment has been requested for the redacted
portion. The confidential, redacted portions have been filed separately with the SEC. 


(3)  Confidential treatment has been requested for the redacted
portion. The confidential, redacted portions have been filed separately with the SEC. 


(4)  Confidential treatment has been requested for the redacted
portion. The confidential, redacted portions have been filed separately with the SEC. 


(5)  Confidential treatment has been requested for the redacted
portion. The confidential, redacted portions have been filed separately with the SEC.


 



  
    
      
        
          
             

          

        

      

    

  




7






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  





  
    k) Section 5.03(f) is hereby amended to read in its entirety as follows:

    
      
        
          
            (f) Cash Balances. Borrower shall not permit at any time through the Maturity
            Date the Cash Balances of Borrower and its Subsidiaries to be less than (i) at all times
            on or prior to July 2, 2005, $25,000,000, and (ii) at all times thereafter, $10,000,000.

          

        

      

    

    l) Schedule 4.01(l) is hereby amended by adding thereto the new text set forth
    on Attachment A hereto.

    m) Schedule 4.01(n) is hereby amended to read in its entirety as set forth on Attachment
    B hereto.

    n) Clause 3(b) of Exhibit A to the Credit Agreement (the form of Notice of
    Revolving Loan Borrowing) is hereby amended to read in its entirety as follows:

    
      
        
          
            (b) No Default has occurred and is continuing or will result from such Revolving Loan
            Borrowing;

          

        

      

    

    o) Clause 3(b) of Exhibit D to the Credit Agreement (the form of Notice of Swing
    Line Borrowing) is hereby amended to read in its entirety as follows:

    
      
        
          
            (b) No Default has occurred and is continuing or will result from such Swing Line
            Borrowing;

          

        

      

    

    p) Exhibit N of the Credit Agreement (the form of Compliance Certificate) is
    hereby amended to read in its entirety as set forth on Attachment C hereto.

  




 


3. Representations and Warranties. The Borrower hereby represents and
warrants to the Administrative Agent and the Lenders that the following are true and
correct on the date of this Amendment and that, after giving effect to the amendments set
forth in paragraph 2 above, the following will be true and correct on the Effective
Date:



  
    a) The representations and warranties of the Borrower 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 such date (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) No Default has occurred and is continuing; and

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

  




 



  
    
      
        
          
             

          

        

      

    

  




8






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  




4. Effective Date. The amendments effected by paragraph 2 above
shall become effective as of November 4, 2004 (the "Effective Date"),
subject to receipt by the Lenders executing this Amendment and the Administrative Agent of
this Amendment duly executed by the Borrower, the Lenders constituting Required Lenders
and the Administrative Agent, each in form and substance satisfactory to the Lenders
executing this Amendment, the Administrative Agent and their respective counsel, as
applicable:



  
    a) This Amendment duly executed by the Borrower, the Lenders constituting Required
    Lenders and the Administrative Agent;

    b) A letter in the form of Attachment D hereto appropriately completed and duly
    executed by each Guarantor (the "Guarantor Consent Letter");

    c) An updated Collateral Certificate, appropriately completed as of the date hereof and
    duly executed by the Borrower;

    d) A certificate of the Secretary or an Assistant Secretary (or comparable officer) of
    the Borrower, dated the Effective Date, certifying that (i) the certificate of
    incorporation and bylaws of the Borrower delivered to the Administrative Agent on the
    Closing Date and the effective date of the First Amendment to Credit Agreement dated as of
    May 21, 2004 (as applicable) have not been modified since such date and remain in full
    force and effect; and (ii) the resolutions of the board of directors of the Borrower
    which authorized the execution, delivery and on-going performance by the Borrower of its
    obligations under the Credit Agreement (as amended from time to time) remain in full force
    and effect;

    e) A certificate of the Secretary or an Assistant Secretary (or comparable officer) of
    each Guarantor, dated the Effective Date, certifying (i) the certificate of
    incorporation, articles of incorporation, certificate of limited partnership, articles of
    organization or comparable document of such Guarantor and the bylaws, partnership
    agreement, limited liability company agreement or comparable document of such Guarantor,
    in each case delivered to the Administrative Agent on the Closing Date have not been
    modified since the Closing Date and remain in full force and effect; and (ii) the
    resolutions of the board of directors or other governing body of such Guarantor (or other
    comparable enabling action) which authorized the execution, delivery and on-going
    performance by such Guarantor of its obligations under the Guaranty remain in full force
    and effect;

    f) Favorable written opinion of Freya R. Brier, Esq., general counsel to the Borrower,
    dated the Effective Date, addressed to the Administrative Agent for the benefit of the
    Administrative Agent and the Lenders and covering such legal matters as the Administrative
    Agent may reasonably request and otherwise in form and substance reasonably satisfactory
    to the Administrative Agent; and

    g) Such other evidence as the Administrative Agent or any Lender may reasonably request
    to establish the accuracy and completeness of the representations and warranties and the
    compliance with the terms and conditions contained in this Amendment and the other Credit
    Documents.

  




 



  
    
      
        
          
             

          

        

      

    

  




9






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  




5. Post-Effective Date Covenant. The continuing effectiveness of the
amendments set forth in paragraph 2 shall be subject to the receipt on or before
November 9, 2004 by the Administrative Agent on behalf of each Lender that executes this
Amendment on or prior to November 8, 2004, of a non-refundable amendment fee in the amount
of 0.20% of such Lender’s respective Commitment. The Borrower agrees that the failure
to such amendment fee on or before November 9, 2004 result in the occurrence of an Event
of Default.


 


6. Effect of this Amendment. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit Agreement
shall mean the Credit Agreement as amended hereby. Except as specifically amended above,
(a) the Credit Agreement and the other Credit Documents shall remain in full force and
effect and are hereby ratified and confirmed and (b) the execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein, operate as
a waiver of any right, power, or remedy of the Lenders or Agent, nor constitute a waiver
of any provision of the Credit Agreement or any other Credit Document.


 


7. Miscellaneous.



  
    a) Counterparts. This Amendment may be executed in any number of identical
    counterparts, any set of which signed by all the parties hereto shall be deemed to
    constitute a complete, executed original for all purposes.

    b) Headings. Headings in this Amendment are for convenience of reference only
    and are not part of the substance hereof.

    c) Governing Law. This Amendment shall be governed by and construed in
    accordance with the laws of the State of Colorado without reference to conflicts of law
    rules.

  




 



  
    
      
        
          
             

          

        

      

    

  




10






  
    ***CONFIDENTIAL TREATMENT REQUESTED**

  




IN WITNESS WHEREOF, the Borrower, the Administrative Agent and the Lenders executing
this Amendment have caused this Amendment to be executed as of the day and year first
above written.


 


BORROWER: WILD OATS MARKETS, INC.


 



  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Freya R. Brier

                    Title: Sr. Vice President 

                    
                      
                         

                      

                    

                  

                

              

            

          

        

      

    

  




 


ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL

ASSOCIATION


 



  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Marc Rosenberg

                    Title: Vice President 

                    
                      
                         

                      

                    

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                  

                

              

            

          

        

      

    

  




 


LENDERS: WELLS FARGO BANK, NATIONAL

ASSOCIATION


 



  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Marc Rosenberg

                    Title: Vice President

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                         

                      

                    

                    U.S. BANK NATIONAL ASSOCIATION

                     

                    By: 

                    Name: 

                    Title: 

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                    VECTRA BANK COLORADO N.A.

                     

                    By: /s/

                    Name: Steven Griffith

                    Title: Sr. Vice President

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                    BANK OF AMERICA, N.A.

                     

                    By: 

                    Name: 

                    Title: 

                     

                    By: 

                    Name: 

                    Title: