Document:

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 PresidentExhibit 10.5

 

April 26, 2005

 

 

Mr. Bob Dimond

17595 Belfast Cove

Eden Prarie, MN 55347

 

 

Dear Bob:

 

This letter confirms our offer of employment made to you for the
position of Chief Financial Officer reporting to Perry Odak, CEO. Your base pay will be
$290,000, payable bi-weekly at the rate of $11,153.85. You will also have the opportunity
to receive a targeted bonus of 50% of your annual salary under the terms of the Wild Oats
Markets, Inc. Home Office Incentive Plan. The bonus program is based on achieving company
performance and individual performance objectives. In addition, subject to your continuing
to be employed with the Company, you will receive a guaranteed bonus of $36,250, payable
within 30 days after year-end earnings release, for the first year only of your
employment. If you receive an additional bonus under the Home Office Incentive Plan, the
amount of your guaranteed bonus will be deducted from the additional bonus received. 

 

We are extremely excited to have you join the Wild Oats Markets team.
The education and work experience background you will bring to the position will help us
to obtain goals we have set as a growing organization. 

 

As an inducement to have you accept our offer of employment, the
Company will establish an incentive stock option plan in your name and will make you a
grant of 100,000 incentive and nonqualified (based upon applicable tax laws) stock options
for shares of Wild Oats Markets common stock. The strike price will be equal to the market
value of Wild Oats Markets common stock on your start date.

 

You will be eligible for 20 days accrued vacation for each year of
employment. You have specifically requested time off from July 8th to JuIy 23rd,
which will be honored as part of your vacation time.

 

Wild Oats Markets, Inc. will reimburse you for approved relocation expenses up to
$75,000, plus gross-up for taxes, in addition to four months temporary living which
includes the movement of household goods. For relocation policy guidance, please contact
Danielle Boyd at 720-562-4694. Wild Oats Markets, Inc. has contracted with Relo Direct,
Inc. as our third party administrator for all relocations. The following terms and
conditions apply to reimbursement for relocation expenses:

	You must provide paid receipts or a direct invoice (moving company) showing the expenses
    incurred to obtain reimbursement. 
	You understand that if you are terminated for cause or voluntarily terminate your
    employment with Wild Oats Markets, Inc. within one year from the date you commenced
    working (as opposed to your Hire date), then you will reimburse Wild Oats Markets, Inc. in
    full for the moving expenses provided to you. 

Upon the start of your employment, you will be scheduled to meet with your supervisor
to complete the new hire forms. Since the law now requires us to verify your authority to
work in the United States, be 

Bob Dimond

April 26, 2005

Page 2

 

sure to bring documentation that will permit Wild Oats Markets to verify your
eligibility. Most common documents provided are Drivers License, State Birth Certificates
or Passport and Social Security Card. 

 

Later in the month, you will attend Wild Oats Markets' orientation,
which offers a more in-depth exploration of the origination of Wild Oats Markets,
logistics, and a tour of the facilities.

 

The terms of this letter do not imply employment for a specific period.
Your employment is at will; which means that either you or the Company can terminate your
employment at any time, with or without cause. 

 

In addition, you and the Company will enter into a Severance Agreement,
in form and substance substantially similar to that attached to this letter as Attachment
1, that will provide for the lump sum payment of two times your annual compensation,
continuation of benefits and payment of your average bonus in the event that your
employment is terminated in conjunction with a Change in Control, as defined in the
attachment, in the Company.

 

If your employment is terminated by the Company without Cause (which is
defined on Attachment 2 to this letter) during the first 18 months thereof (which shall
not be extended by any renewal of this Agreement), you shall be entitled to receive your
then effective Base Salary for a 12-month period. After 18 months of employment, the
severance payment is reduced as follows:

	19 months of employment = 11months severance 
	20 months of employment = 10 months severance 
	21 months of employment = 9 months severance 
	22 months of employment = 8 months severance 
	23 months of employment = 7 months severance 
	24 months of employment = 6 months severance 

 

After 24 months of employment the severance stays at 6 months of
severance. This severance is not in addition to and will not be payable in the event of
any payment of severance under the terms of the Severance Agreement.

All severance amounts shall be payable in equal biweekly installments,
subject to all applicable deductions, in accordance with the Company's normal payroll
schedule. Notwithstanding anything to the contrary herein, no renewal of the term of
Executive's employment shall increase the number of months of severance to which the
Executive may be entitled.

Except as expressly set forth in this letter or in any other agreements, such as the
Severance Agreement, entered into between you and the Company, all compensation and other
benefits shall cease to accrue upon termination of your employment. Upon termination of
your employment for any reason, you shall be deemed to have resigned from all offices and
directorships, if any, then held with the Company or any of its subsidiaries or other
affiliates.

 

Bob Dimond

April 26, 2005

Page 3

 

 

Formally your official start date will be April 28, 2005.

 

Congratulations and welcome to Wild Oats Markets.

 

Sincerely,

 

 

 

/s/ Peter Williams

 

Peter Williams

Vice President of Human Resources 

 

 

I have read the letter completely & understand and agree to the
terms. I understand I am an "at will" employee.

 

 

/s/ Robert B. Dimond     4/26/05

NAME
                          
DATE

 

 

 

**Please make a copy for your records and return the original to the
attention of the Compensation Department.

 

 

Attachments (2)

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