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

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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