Document:

Exhibit 10.2

 

 

 

TERMINATION AND RELEASE AGREEMENT

THIS TERMINATION AND RELEASE AGREEMENT, dated as of March 31, 2005
(this "Agreement"), is executed by and among Wild Oats Markets, Inc., a
Delaware corporation (the "Borrower"), each of the financial institutions
which are a party to the Credit Agreement referred to below (each a "Lender",
and collectively, the "Lenders") and Wells Fargo Bank, National
Association, a national banking association ("Wells Fargo Bank"), as
administrative agent for the Lenders (in such capacity, the "Administrative Agent"),
as L/C Issuer (in such capacity, the "L/C Issuer") and as Swing Line
Lender (in such capacity, the "Swing Line Lender") under 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 to the date hereof, the "Credit Agreement")
among the Borrower, the Lenders and the Administrative Agent. Capitalized terms used
herein and not otherwise defined shall have the meanings given to such terms in the Credit
Agreement.

 

RECITALS

WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to the Credit Agreement pursuant to which the Lenders have agreed to make
Revolving Loans to the Borrower in an aggregate principal amount of up to $95,000,0000, of
which $0 is outstanding as of the date hereof, and the Swing Line Lender has agreed to
make Swing Line Loans to the Borrower in an aggregate principal amount equal to the lesser
of $20,000,000 and the Total Commitment, of which $0 is outstanding as of the date hereof
(collectively, the "Loans"). In addition, pursuant to the Credit
Agreement, the L/C Issuer agreed to issue Letters of Credit for the account of the
Borrower in an amount equal to the to the lesser of $10,000,000 and the Total Commitment,
of which Letters of Credit in an aggregate amount of $8,758,035.12 are issued and
outstanding as of the date hereof (collectively, the "Outstanding Letters of
Credit"). To evidence the Obligations of the Borrower to repay the Loans, the
Borrower executed and delivered to each of the Lenders and the Swing Line Lender, as
applicable, Revolving Loan Notes and a Swing Line Note, each dated February 26, 2003
(except for the Revolving Loan Note made payable to Bank of America, N.A., which Revolving
Loan Note is dated December 12, 2003) and made payable to each Lender or the Swing Line
Lender, as applicable, in an aggregate amount of each such Lender’s Commitment or the
Swing Line Sublimit, as applicable (collectively, the "Notes"); and

WHEREAS, to secure repayment by the Borrower of the Obligations, the
Borrower and certain of its Subsidiaries executed in favor of the Administrative Agent and
the Lenders that certain Amended and Restated Security Agreement dated as of February 26,
2003 (the "Security Agreement") pursuant to which the Borrower and
certain of its Subsidiaries granted to the Administrative Agent, on behalf of and for the
benefit of the Administrative Agent and the Lenders, a security interest in all right,
title and interest of the Borrower in and to the Collateral (as defined in the Security
Agreement); and

WHEREAS, to further secure repayment by the Borrower of the
Obligations, the Borrower and certain of its Subsidiaries executed in favor of the
Administrative Agent and the Lenders that certain Amended and Restated Pledge Agreement
dated as of February 26, 2003 (the "Pledge Agreement") pursuant to which
the Borrower and certain of its Subsidiaries pledged to the Administrative Agent, on
behalf of and for the benefit of the Administrative Agent and the Lenders, a security
interest in all right, title and interest of the Borrower or its Subsidiaries in and to
the Pledged Collateral (as defined in the Pledge Agreement); and

WHEREAS, to further secure repayment by the Borrower of the
Obligations, the Borrower and certain of its Subsidiaries executed in favor of the
Administrative Agent and the Lenders certain Leasehold Mortgages dated various dates
(collectively, the "Leasehold Mortgages") pursuant to which the Borrower
and certain of its Subsidiaries granted to the Administrative Agent and the Lenders a
security interest in all right, title and interest of the Borrower and certain of its
Subsidiaries in and to the Leasehold Collateral; and

WHEREAS, to further secure repayment by the Borrower of the
Obligations, certain of its Subsidiaries executed in favor of the Administrative Agent and
the Lenders an Amended and Restated Subsidiary Guaranty dated as of February 26, 2003 (the
"Guaranty") pursuant to which such Subsidiaries guaranteed the payment
and performance by the Borrower of the Obligations; and

WHEREAS, the Borrower wishes to repay to the Administrative Agent and
the Lenders $234,682.09 as consideration in full for all principal, interest, fees and
other amounts owing under the Credit Agreement and the other Credit Documents (other than
(a) the Continuing Indemnity Obligations (as hereinafter defined) and (b) the Letter of
Credit Obligations with respect to the Outstanding Letters of Credit which will be
transferred to a separate standby letter of credit facility (the "WFB L/C Facility")
to be entered into between the Borrower and Wells Fargo Bank) and in consideration of the
release by the Administrative Agent and the Lenders of their security interests in the
Collateral, the Pledged Collateral, the Leasehold Collateral and their rights under the
Guaranty; and

WHEREAS, the Administrative Agent and the Lenders are willing to accept
$234,682.09 from the Borrower as consideration in full for all principal, interest, fees
and other amounts owing under the Credit Agreement and the other Credit Documents (other
than (a) the Continuing Indemnity Obligations and (b) the Letter of Credit Obligations
with respect to the Outstanding Letters of Credit which will be transferred to the WFB L/C
Facility), and in consideration of the release by the Administrative Agent and the Lenders
of their security interests in the Collateral, the Pledged Collateral, the Leasehold
Collateral and their rights under the Guaranty upon the terms and subject to the
conditions set forth herein.

NOW, THEREFORE, in consideration of the above Recitals, the Borrower,
the Lenders and the Administrative Agent hereby agree as follows:

1. Payment and Termination of Credit Agreement and other Credit
Documents. The Administrative Agent on behalf of the Lenders hereby acknowledges
receipt of $234,682.09 as consideration in full of all principal, interest and fees owing,
and fees estimated to be owed, under the Credit Agreement and the other Credit Documents
and the termination of the Credit Agreement, the other Credit Documents (for purposes of
this Agreement, such term includes, without limitation, the Security Agreement, the Pledge
Agreement, the Leasehold Mortgages and the Guaranty) and all related documents,
instruments and agreements as follows:

 

	
      
        A. 

      

    

    	Outstanding Principal as of March 31, 2005	$0

	
      
        B. 

      

    

    	Outstanding Interest as of March 31, 2005	$0
	
      
        C. 

      

    

    	Unpaid Commitment Fees as of March 31, 2005	$156,649.53
	
      
        D. 

      

    

    	Unpaid Letter of Credit Fees as of March 31, 2005	$28,032.56
	
      
        E. 

      

    

    	Unpaid Legal Fees as of March 31, 2005 and an estimate of
    Legal Fees through April 30, 2005	$50,000.00

 

provided, however, that nothing contained herein shall have
any effect on the Borrower’s obligation to reimburse the Lenders and the
Administrative Agent with respect to indemnification and related obligations and for fees
and expenses set forth in the Credit Agreement and the other Credit Documents (the "Continuing
Indemnity Obligations") which by their terms survive the termination of the
agreement in which they are contained (it being understood, however, that any such
Continuing Indemnity Obligations shall not be secured by any security interests or liens
created pursuant to the Credit Agreement or any of the other Credit Documents at any time
after the conditions precedent set forth in Section 6 of this Agreement have been
satisfied).

2. Termination of Security Agreement, Pledge Agreement and Leasehold
Mortgages; Release of Liens.

  
    (a) The Security Agreement, the Pledge Agreement, each Leasehold
    Mortgage and all documents, instruments and agreements related thereto are hereby
    terminated and the Borrower and its Subsidiaries, respectively, are each hereby released
    therefrom, and the Administrative Agent and the Lenders hereby release, assign, transfer
    and deliver to the Borrower and its Subsidiaries, respectively, without recourse and
    without representation or warranty, all of their right, title and interest in the
    Collateral, the Pledged Collateral and the Leasehold Collateral.

    (b) From time to time, upon request by the Borrower, its Subsidiaries
    or Bank of America, N.A. (the "New Lender"), respectively, the
    Administrative Agent and the Lenders shall, without further consideration other than
    reimbursement for any costs and expenses, execute, deliver and acknowledge all such
    further documents, agreements, certificates and instruments and do such further acts as
    the Borrower, its Subsidiaries or the New Lender may reasonably require to more
    effectively evidence or effectuate the transactions contemplated by this Agreement,
    including, but not limited to, this release and termination of the Security Agreement, the
    Pledge Agreement, the Leasehold Mortgages and this release and discharge of all security
    interests and all other rights and interests that the Administrative Agent or the Lenders
    have or may have had in the Collateral, the Pledged Collateral and the Leasehold
    Collateral. Without limiting the generality of the foregoing, (i) the Administrative Agent
    and the Lenders hereby authorize the Borrower or and/or the New Lender to file any Uniform
    Commercial Code ("UCC") Financing Statement Amendments necessary to
    evidence the termination of any UCC Financing Statements naming the Administrative Agent
    as Secured Party and the Borrower or any of its Subsidiaries as Debtor and (ii) the
    Lenders hereby authorize and instruct the Administrative Agent to execute and deliver to
    the Borrower or its Subsidiaries all such further documents, agreements, certificates and
    instruments and do such further acts as the Borrower or its Subsidiaries may reasonably
    require to more effectively evidence or effectuate the transactions contemplated by this
    Agreement, including, but not limited to, this release and termination of the Security
    Agreement, the Pledge Agreement, the Leasehold Mortgages and this release and discharge of
    all security interests and all other rights and interests that the Administrative Agent or
    the Lenders have or may have had in the Collateral, the Pledged Collateral and the
    Leasehold Collateral.

  

3. Termination of Guaranty. The Guaranty, and all documents,
instruments and agreements related thereto are hereby terminated and each Guarantor is
hereby released therefrom. From time to time, upon request by the Guarantors, the
Administrative Agent and the Lenders shall, without further consideration other than
reimbursement for any costs and expenses, execute, deliver and acknowledge all such
further documents, agreements, certificates and instruments and do such further acts as
the Guarantors and or the New Lender may reasonably require to more effectively evidence
or effectuate the transactions contemplated by this Agreement, including, but not limited
to, the release and termination of the Guaranty.

4. Further Assurances. The Borrower shall fully cooperate with
the Administrative Agent and the Lenders and perform all additional acts reasonably
requested by the Administrative Agent or any Lender to effect the purposes of this
Agreement.

5. Miscellaneous. This Agreement may not be amended, modified or
waived except in writing signed by the party against whom enforcement of such amendment,
modification or waiver is sought. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of which,
when taken together, shall constitute one and the same instrument.

6. Effectiveness. This Agreement and the releases and lien
terminations effected hereby shall become effective upon the satisfaction of each of the
following conditions: (a) the Borrower, the Administrative Agent and the Lenders
shall have executed and delivered a counterpart hereof (including by way of facsimile
transmission); (b) the Administrative Agent and the Lenders shall have received the
payment of the amounts referred to in Section 1 hereof and (c) all conditions to
the effectiveness of the WFB L/C Facility shall, in Wells Fargo Bank’s sole and
absolute discretion, have been satisfied.

IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
of the day and year first above written.

	BORROWER:	WILD OATS MARKETS, INC.,a Delaware corporation

    By: /s/ Freya R. Brier

    Name: Freya R. Brier

    Title: Senior Vice President

	ADMINISTRATIVE AGENT:	WELLS FARGO BANK, NATIONAL ASSOCIATIONBy: /s/ Marc
    Rosenberg

    Name: Marc Rosenberg

    Title: Vice President

	LENDERS:	WELLS FARGO BANK, NATIONAL ASSOCIATIONBy: /s/ Marc
    Rosenberg

    Name: Marc Rosenberg

    Title: Vice President

		U.S. BANK NATIONAL ASSOCIATIONBy: /s/ Jacob Payne

    Name: Jacob Payne

    Title: Assistant Vice President

		BANK OF AMERICA, N.A.By: David R. Barney

    Name: David R. Barney

    Title: Senior Vice President

		VECTRA BANK COLORADO N.A.By: Steven Griffith

    Name: Steven Griffith

    Title: Senior Vice PresidentExhibit 10.3

 

 

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

WAIVER

March 28, 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 5.02(a) of the Credit Agreement, the Borrower has agreed, unless
the Required Lenders shall otherwise consent in writing, not to permit any of the Loan
Parties to create, incur, assume or permit to exist any Indebtedness except for certain
"Permitted Indebtedness", which term includes, without limitation, Indebtedness
consisting of Capital Leases, or Indebtedness otherwise incurred to finance the purchase
or construction of property (which shall be deemed to exist if the Indebtedness is
incurred at or within 90 days before or after the purchase or construction of the
property), or to refinance any such Indebtedness, in each case entered into after the
Closing Date, provided that the principal amount of such Indebtedness outstanding at any
one time does not exceed $5,000,000 in the aggregate.

3. Pursuant to Section 5.03(a) of the Credit Agreement, the Borrower has agreed, unless
the Required Lenders shall otherwise consent in writing, not to permit its Adjusted
Leverage Ratio as at the end of the first Fiscal Quarter period after the Closing Date
through the Fiscal Quarter period ending on April 2, 2005 to be greater than the ratios
set forth therein.

4. 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").

5. 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, (i) the Borrower will have failed to satisfy, and will continue to fail to
satisfy, the covenant set forth in Paragraph 2 above in that the Borrower’s Permitted
Indebtedness consisting of Capital Leases, or Indebtedness otherwise incurred to finance
the purchase or construction of property, or to refinance any such Indebtedness, in each
case entered into after the Closing Date will have exceeded, and will continue to exceed,
$5,000,000 in the aggregate outstanding as of such times; and (ii) the Borrower will have
failed to satisfy the covenant set forth in Paragraph 3 above in that the Borrower’s
Adjusted Leverage Ratio as at the end of all such Fiscal Quarter periods will have been
greater than the ratios set forth therein. The Borrower’s failure to satisfy the
covenant described in clause (i) above would have resulted in the occurrence and the
continuance of an Event of Default (such Event of Default, the "Permitted
Indebtedness Event of Default") and the Borrower’s failure to satisfy the
covenant described in clause (ii) above also would have resulted in the occurrence and the
continuance of an Event of Default (such Event of Default, the "Adjusted Leverage
Ratio Event of Default", and together with the Permitted Indebtedness Event of
Default, the "Restatement Events of Default").

6. The Borrower has approached the Lenders and the Administrative Agent and requested
that the Required Lenders 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 Restatement Events of Default.

7. 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 Restatement Events 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 8 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 31, 2005 among Borrower
and the Lenders, no Default or Event of Default has occurred and is continuing;

(c) The Restatement Events 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.

8. Pursuant to Section 8.04 of the Credit Agreement, the Required Lenders executing
this Waiver below hereby waive, subject to Paragraphs 9 and 10 below, the Borrower’s
compliance with the covenants described in Paragraphs 2 and 3 above and the Restatement
Events of Default that have occurred and are continuing as a result of such
non-compliance.

9. Notwithstanding any of the foregoing, the waiver set forth in Paragraph 8 above
shall only be effective with respect to such covenants and the Restatement Events of
Default. The waiver set forth in Paragraph 8 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.

10. 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 until (i) with respect to the Borrower’s failure to comply
with the covenant described in Paragraph 2 above, May 15, 2005, and (ii) with respect to
the Borrower’s failure to comply with the covenant described in Paragraph 3 above,
through the Fiscal Quarter period ending on or around January 1, 2005; provided, however,
that the Waiver with respect to the previously occurring Restatement Events of Default
shall continue indefinitely.

11. 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: /s/ Steven Griffith

Name: Steven Griffith

Title: Senior Vice President

 

BANK OF AMERICA, N.A.

 

By: /s David R. Barney

Name: David R. Barney

Title: Senior Vice President

  

 

ACKNOWLEDGED AND AGREED:

 WILD OATS MARKETS, INC.

 

By: /s/ Freya R. Brier

Name: Freya R. Brier

Title: Senior Vice President

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