**Exhibit 10.2**

 

 

*****CONFIDENTIAL TREATMENT REQUESTED****

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*****CONFIDENTIAL TREATMENT REQUESTED****

**THIRD AMENDMENT TOSECOND 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:

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(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/CIssuer and Swing Line Lender are parties to that certain Second Amended and RestatedCredit Agreement, dated as of February 26, 2003 (as amended by thatcertain First Amendment to Second Amended and Restated Credit Agreement dated as of May21, 2004 and as further amended by that certain Second Amendment to Second Amended andRestated Credit Agreement dated as of August 3, 2004, the "Credit Agreement").

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

C. The Lenders executing this Amendment and the Administrative Agent are willing to soamend 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 valuableconsideration, 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 andelsewhere in this Amendment shall be used herein as so defined. Unless otherwise definedherein, all other capitalized terms used herein shall have the respective meanings givento those terms in the Credit Agreement, as amended by this Amendment. The rules ofconstruction set forth in Article I of the Credit Agreement shall, to the extentnot inconsistent with the terms of this Amendment, apply to this Amendment and are herebyincorporated by reference.

 

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*****CONFIDENTIAL TREATMENT REQUESTED****

 

**2. Amendments to Credit Agreement.** Subject to the satisfaction of theconditions precedent set forth in paragraph 4 below, the Credit Agreement is herebyamended as follows:

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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;

 

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*****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*)TierAdjusted Leverage RatioApplicable Margin for LIBOR            Loans (bps)Applicable Margin for Base Rate            Loans (bps)Commitment Fee (bps)Letter of Credit            Fee (bps)1< 4.50225.0100.062.5120.02> 4.50 <            5.00250.0100.062.5125.03>5.00275.0125.075.0125.0

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*****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.

 

 

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*****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.

 

 

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*****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 redactedportion. The confidential, redacted portions have been filed separately with the SEC. 

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

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

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

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

 

 

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*****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 andwarrants to the Administrative Agent and the Lenders that the following are true andcorrect on the date of this Amendment and that, after giving effect to the amendments setforth in paragraph 2 above, the following will be true and correct on the EffectiveDate:

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.

 

 

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*****CONFIDENTIAL TREATMENT REQUESTED****

 

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

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.

 

 

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*****CONFIDENTIAL TREATMENT REQUESTED****

 

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

 

**6. Effect of this Amendment.** On and after the Effective Date, eachreference in the Credit Agreement and the other Credit Documents to the Credit Agreementshall 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 andeffect and are hereby ratified and confirmed and (b) the execution, delivery andeffectiveness of this Amendment shall not, except as expressly provided herein, operate asa waiver of any right, power, or remedy of the Lenders or Agent, nor constitute a waiverof 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.

 

 

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

 

**BORROWER: WILD OATS MARKETS, INC.**

 

By: /s/

Name: Freya R. Brier

Title: Sr. Vice President 

 

 

**ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONALASSOCIATION**

 

By: /s/

Name: Marc Rosenberg

Title: Vice President 

 

By: 

Name: 

Title: 

 

 

**LENDERS: WELLS FARGO BANK, NATIONALASSOCIATION**

 

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: 

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***CONFIDENTIAL TREATMENT REQUESTED**

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ATTACHMENT A

INSERT TO SCHEDULE 4.01(g)

Case Caption: Tim Auchterlonie, individually and on behalf of all others similarlysituated, and the general public, and Does 1 through 1000 vs. Wild Oats Markets, Inc. andDoes 1 through 100Case No.: BC320905Court: Superior Court, State of CA, County of Los AngelesBasis of claim: Class action on behalf of all salaried employees in the state of CAfor unlawful deductions from earnings, unlawful nonpayment of overtime compensation to aalleged nonexempt employee was paid on a salaried basis by Borrower, failure to authorizeand permit employees to take required rest/meal periods, and unfair business practicesunder Bus. and Prof. Code 17200. This class action suit was filed in August 2004 andBorrower was served in September 2004. We have retained counsel who has conductedpreliminary investigations and an evaluation of the merits of the claim. No quantifieddamages are pled.

** 
 

 

***CONFIDENTIAL TREATMENT REQUESTED**

 

ATTACHMENT B

SCHEDULE 4.01(n)

The Borrower's 401(k) Retirement and Savings Plan has been reviewed to determine theextent of past noncompliance with applicable laws. The Borrower is preparing, and plans tofile concurrent with the execution of this Amendment, a Voluntary Compliance Program("VCP") filing with the IRS to correct any prior noncompliance. Borrower hasdetermined that prior noncompliance resulted in events which could disqualify the Planpursuant to IRC 401 if not corrected pursuant to the VCP. Borrower currently estimates itsliability for correction of past noncompliance not to exceed $1.5 million; however, suchliability may increase based upon review by the IRS, but in no event does Borroweranticipate that such liability will exceed $2.5 million.

** 
 

 

***CONFIDENTIAL TREATMENT REQUESTED**

ATTACHMENT C

FORM OF COMPLIANCE CERTIFICATE

EXHIBIT N

COMPLIANCE CERTIFICATE

_____________ ___, 20__

Wells Fargo Bank, National Association

as the Administrative Agent

C7301-031

1740 Broadway

Denver, CO 80274

Attention: Yevette Conrad, Loan Specialist

1. Reference is made to that certain Second Amended and Restated Credit Agreement,dated as of February 26, 2003 (as amended, supplemented or otherwise modified fromtime to time, the "Credit Agreement"), among (1) WILD OATS MARKETS,INC., a Delaware corporation (the "Borrower"); (2) each of thefinancial institutions from time to time listed in Schedule I to the CreditAgreement (collectively, the "Lenders"); and (3) WELLS FARGO BANK,NATIONAL ASSOCIATION, a national banking association, as administrative agent for theLenders (in such capacity, the "Administrative Agent"), L/C Issuer andSwing Line Lender. Unless otherwise indicated, all terms defined in the Credit Agreementhave the same respective meanings when used herein. Section references herein relate tothe Credit Agreement unless stated otherwise. In the event of any conflict between thecalculations set forth in this Compliance Certificate and the manner of calculationrequired by the Credit Agreement, the terms of the Credit Agreement shall govern andcontrol.

2. This Compliance Certificate is delivered in accordance with Section 5.01(a)(iii)of the Credit Agreement by a Responsible Officer of the Borrower. This ComplianceCertificate is delivered for the Fiscal [Quarter][Year] ending ___________, ____ (the"Test Date"). Computations indicating compliance with respect to thecovenants in Section 5.03 of the Credit Agreement are set forth below:

** 
I. Adjusted Leverage Ratio (Section 5.03(a) and the Pricing Grid):

As of the Test Date, the Adjusted Leverage Ratio was _____:1.00. The maximum permittedAdjusted Leverage Ratio as of such Test Date is _____:1.00.

The Adjusted Leverage Ratio was computed as follows:

A. Average Total Funded Debt as of the Test Date: $
B. Six (6) *times* Net Rents for the four Fiscal Quarter        period ending on the Test Date:

C. Unrestricted cash of the Borrower and its Subsidiaries        as of the Test Date: $

D. Unrestricted Cash Equivalents of the Borrower and its         Subsidiaries as of the Test Date: $

E. Line I.A. + Line I.B. – Line I.C. – Line I.D.: $
F. Net Income after tax for the four Fiscal Quarter        period ending on the Test Date: $

G. Interest Expense for the four Fiscal Quarter        period ending on the Test Date: $
H. Depreciation and amortization for the four         Fiscal Quarter period ending on the Test Date: $

I. All other non-cash items (less non-cash        gains) for the four Fiscal Quarter period        ending on the Test Date: $

J. Income tax expense for the four Fiscal Quarter        period ending on the Test Date: $
K. All extraordinary items for the four Fiscal Quarter        period ending on the Test Date: $

L. Executive Contract Expense for the four         Fiscal Quarter period ending on the Test Date (to the        extent not included in Line I.I. or Line I.K.): $

M. EBITDA (Lines I.F. + Line I.G. + Line I.H. +        Line I.I. + Line I.J. + Line I.K. + Line I.L: $   1
N. Rental Expense for the four Fiscal Quarter         period ending on the Test Date: $

O. EBITDAR (Line I.M. + Line I.N.): $
P. Rental Expense not otherwise constituting        Net Rents for the four Fiscal Quarter period ending        on the Test Date: $

Q. Line I.O. – Line I.P.: $
R. Adjusted Leverage Ratio (Line I.E. divided by Line I.Q.): _______ to 1.00

_____________________**1  In the event that any Loan Party has made an Acquisition of aSubsidiary during the four Fiscal Quarter period ending on the Test Date permitted underthe Credit Documents, EBITDA for such period shall be calculated on a *pro forma*basis, based on the actual results of such acquired Subsidiary as if such Acquisition hadoccurred on the first day of such period.** 

 

**II. Fixed Charge Coverage Ratio (Section 5.03(b)):**

As of the Test Date, the Fixed Charge Coverage Ratio was _____:1.00. The minimumpermitted Fixed Change Coverage Ratio as of such Test Date is _____:1.00.

The Fixed Charge Coverage Ratio was computed as follows:

A. EBITDAR for the four Fiscal Quarter period        ending on the Test Date (Line I.O. above): $
B. Maintenance Capital Expenditures during the four        Fiscal Quarter period ending on the Test Date: $

C. Taxes paid in cash during the four Fiscal Quarter        period ending on the Test Date: $

D. Line II.A. – Line II.B. – Line II.C.: $
E. Interest Expense for the four Fiscal Quarter period        ending on the Test Date: $
F. Rental Expense for the four Fiscal Quarter period        ending on the Test Date: $
G. Scheduled payments (including at maturity) of principal on         Indebtedness (other than Permitted Insurance Premium         Indebtedness), to the extent actually paid during the        four Fiscal Quarter Period ending on the Test Date         (excluding (i) for all periods through Borrower’s Fiscal        Quarter ending September, 2003, amounts outstanding under         the Prior Credit Agreement, and (ii) amounts outstanding        under the Credit Agreement that would otherwise be due        twelve (12) months prior to the Maturity Date): $

H. The portion of payments, other than optional payments,        made under Capital Leases that should be treated as        payment of principal in accordance with GAAP, to the        extent actually paid in cash during the four Fiscal Quarter         period ending on the Test Date: $

I. The Synthetic Lease Principal Component, to the        extent actually paid during the four Fiscal Quarter period        ending on the Test Date: $

J. Line II.E. + Line II.F. + Line II.G. + Line II.H.        + Line II.I.: $
K. Fixed Charge Coverage Ratio (Line II.D. divided by Line II.J.): _______ to 1.00

** 
III. Stockholders’ Equity (Section 5.03(c)):

As of the Test Date, the Stockholder’s Equity was $_____________. The minimumpermitted Stockholders’ Equity as of such Test Date is $_____________.

The minimum permitted Stockholders’ Equity was computed as follows:

A. Seventy-five percent (75%) of the cumulative sum        of the Borrower’s quarterly Net Income (ignoring any        quarterly losses) for each Fiscal Quarter of the Borrower        after the Closing Date through and including the Fiscal        Quarter ending on the Test Date: $
B. One hundred percent (100%) of the Net Cash Issuance        Proceeds raised for each Fiscal Quarter of the Borrower        after the Closing Date through and including the Fiscal        Quarter ending on the Test Date: $
C. Twenty-five percent (25%) of the gross proceeds        obtained through the issuance of the Convertible Senior        Debentures thereafter expended to repurchase Equity        Securities and/or Convertible Senior Debentures to the        extent such repurchases are permitted pursuant to        Section 5.02(f) through the Test Date $
D. $125,000,000 + Line III.A. + Line III.B. – Line IIIC.: $**IV. New Leases for New Stores (Section 5.03(d)):

For the Fiscal Year ending 20__, the Loan Parties have entered into a total of ______New Leases for New Stores (excluding relocations of existing Stores). Attached hereto as AppendixA is a list of the real property subject to such New Leases setting forth the lesseeof such property, the location of such property, a brief description of such property, theowner of such property and the date and title of and parties to the lease for suchproperty (including all amendments thereof). The maximum number of New Leases for NewStores (excluding relocations of existing Stores) permitted in such Fiscal Year is _____.

** 
V. Capital Expenditures (Section 5.03(e)):

As of the Test Date, the aggregate amount of Capital Expenditures made by the LoanParties during the Fiscal Year ending 20__ has been $_____________. The maximum aggregateamount of Capital Expenditures that the Loan Parties are permitted to make in such FiscalYear is $_____________.
**VI.    Cash Balances (Section 5.03(f)):

As of the Test Date, the amount of Cash Balances of the Borrower and its Subsidiarieswas $_____________. The minimum amount of Cash Balances required of the Borrower and itsSubsidiaries is $_____________.

The amount of Cash Balances of the Borrower and its Subsidiaries was computed asfollows:

A. The sum of the unrestricted cash of the Borrower and its        Subsidiaries as of the Test Date: $

B.  The sum of the unrestricted Cash Equivalents of         the Borrower and its Subsidiaries as of the Test Date: $ 

C. The Effective Amount of all Loans and L/C Obligations        outstanding under the Credit Agreement as of the Test Date: $ 

D. Cash Balances (Line VI.A. + Line VI.B. – Line VI.C.): $ 
3. To the knowledge of the undersigned Responsible Officer, during the fiscal periodcovered by this Compliance Certificate, no Default or Event of Default has occurred and iscontinuing, with the exceptions set forth below in response to which the Borrower hastaken (or caused to be taken) or proposes to take (or causes to be taken) the followingactions (if none, so state).

4. The undersigned Responsible Officer of the Borrower certifies that the calculationsmade and the information contained herein are derived from the books and records of theBorrower and that each and every matter contained herein correctly reflects those booksand records.

IN WITNESS WHEREOF, the Borrower has completed and executed this Compliance Certificateon the date set forth above.
**WILD OATS MARKETS, INC.,

a Delaware corporation

 

By: 
Name: 
Title: 
** 
***CONFIDENTIAL TREATMENT REQUESTED**

Appendix A to Compliance Certificate

 
LIST OF NEW LEASES

 

***CONFIDENTIAL TREATMENT REQUESTED**

ATTACHMENT D

GUARANTOR CONSENT LETTER

November 4, 2004

TO: WELLS FARGO BANK, NATIONAL ASSOCIATION,    As Administrative Agent for the Lenders under the Credit Agreement referred to below

1. Reference is made to the following:

(a) The 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") among Wild Oats Markets, Inc. ("Borrower"), the    financial institutions which are from time to time parties thereto (the "Lenders"),    and Wells Fargo Bank, National Association, as administrative agent for the Lenders (in    such capacity, the "Administrative Agent"), L/C Issuer and Swing Line    Lender;

(b) The Second Amended and Restated Subsidiary Guaranty dated as of February 26, 2003    (the "Guaranty") executed by each of the undersigned (each a "Guarantor,"    and collectively, the "Guarantors") in favor of the Lenders and the    Administrative Agent; and 

(c) The Third Amendment to Second Amended and Restated Credit Agreement dated as of    November 4, 2004 (the "Third Amendment") among the Borrower, the Lenders    constituting Required Lenders and the Administrative Agent.

2. Each Guarantor hereby consents to the Third Amendment. Each Guarantor expresslyagrees that such amendment shall in no way affect or alter the rights, duties, orobligations of Guarantor, the Lenders or the Administrative Agent under the Guaranty.

3. From and after the date hereof, the term "Credit Agreement" as used in theGuaranty shall mean the Credit Agreement, as amended by the Third Amendment.

4. The Guarantors’ consent to the Third Amendment shall not be construed (i) tohave been required by the terms of the Guaranty or any other document, instrument oragreement relating thereto or (ii) to require the consent of the Guarantors in connectionwith any future amendment of the Credit Agreement or any other Credit Document.

IN WITNESS WHEREOF, each Guarantor has executed this Guarantor Consent Letter as of theday and year first written above.

WILD MARKS, INC., a Nevada corporation

 

By:                                                                                       Name:                                                                               Title:                                                                      
 

SPARKY, INC., a Nevada corporation

 

By:                                                                                       Name:                                                                               Title:                                            
 

WILD OATS FINANCIAL, INC., a Nevada corporation

 

By:                                                                                       Name:                                                                               Title:                                                                   
 

WILD OATS OF TEXAS, INC., a Texas corporation

 

By:                                                                                     Name:                                                                           Title:                                                                   
 

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