Document:

Exhibit 4.1 to Rimage Corporation Form S-8 dated August 5, 2005

EXHIBIT 4.1  

RIMAGE CORPORATION

AMENDED AND RESTATED 1992 STOCK OPTION PLAN

(As amended through May 17, 2005) 

        The purpose of the Amended
and Restated Rimage Corporation 1992 Stock Option Plan (the “Plan”) is to promote the growth and profitability of Rimage
Corporation (the “Company”) and its Affiliates by providing its employees, directors and consultants with an incentive
to achieve long-term corporate objectives, to attract and retain employees and directors of outstanding competence, and to provide
such employees and directors with an equity interest in the Company. 

                1.       STOCK
SUBJECT TO PLAN. An aggregate of 3,695,000 shares (the “Shares”) of the Common Stock, $.01 par value, of the Company
(“Common Stock”) may be subject to Awards granted under the Plan. Such Shares may be authorized but unissued Common
Stock or authorized and issued Common Stock that has been or may be acquired by the Company. Shares that are subject to an Award
which expires, is terminated unexercised or is forfeited shall again be available for issuance under the Plan. 

                2.       ADMINISTRATION. 

		                (a)       COMMITTEE.   The
Plan shall be administered by a Committee (the “Committee”) of the Board of Directors of the Company (the
“Board”). The Committee shall be comprised of two or more members of the Board, each of whom shall be a
“disinterested person” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended. 

		                (b)       POWERS
AND DUTIES.    The Committee shall have the authority to grant Options (Section 4), consisting of either
Incentive Stock Options or Nonqualified Stock Options, Restricted Stock (Section 6), Stock Appreciation Rights (Section 7),
Deferred Stock (Section 8) or Performance Stock (Section 9) (each, an “Award”), or any combination thereof granted under
the Plan, including Awards combining two or more types of Awards in a single grant. The Committee shall have the authority to make
rules and regulations governing the administration of the Plan; to select the eligible employees to whom Awards shall be granted;
to determine the type, amount, size, and terms of any Award; to determine the time when an Award shall be granted; the conditions,
including the attainment of specified performance goals, required for the grant of an Award; to determine whether any restrictions
shall be placed on Shares purchased pursuant to any Option; to determine the time or times within which awards of restricted stock
may be subject to forfeiture and to make all other determinations necessary or advisable for the administration of the Plan. The
Committee’s determinations need not be uniform, and may be made by it selectively among persons who are eligible to receive
Awards under the Plan, whether or not such persons are similarly situated. All interpretations, decisions, or determinations made
by the Committee pursuant to the Plan shall be final and conclusive. The Committee may delegate to executive officers of the
Company the authority to exercise the following powers with respect to persons who are not either the chief executive officer of
the Company or the four highest paid officers of the Company other than the chief executive officer: 

		                (i)       to
select the eligible persons to whom Awards may from time to time be granted under the Plan; 

		                (ii)       to
determine whether and to what extent Awards, or a combination of Awards, are to be granted under the Plan; 

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EXHIBIT 4.1  

		                (iii)       to
determine the number of shares of Common Stock to be covered by each such Award granted under the Plan; 

		                (iv)       to
determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted under the Plan (including,
but not limited to, any restriction on any Stock Option or other award and/or the shares of Common Stock relating thereto and the
performance criteria used with Restricted Stock and Deferred Stock Awards), subject to the power of the Board of Directors
described in Section 12 of the Plan; and 

		                (v)       to
determine whether, to what extent and under what circumstances Common Stock and other amounts payable with respect to an Award
under this Plan shall be deferred either automatically or at the election of the participant. 

		                (c)       FAIR
MARKET VALUE.    For the purposes of the Plan, “Fair Market Value” on a given date shall be (i) the
average of the closing representative bid and asked prices of the Common Stock as reported on the National Association of
Securities Dealers Automated Quotation System (“Nasdaq”) on such date, if the Common Stock is then quoted on Nasdaq;
(ii) the last sale price of the Common Stock as reported on the Nasdaq National Market System on such date, if the Common Stock is
then quoted on the Nasdaq National Market System; or (iii) the closing price of the Common Stock on such date on a national
securities exchange, if the Common Stock is then being traded on a national securities exchange. If on the date as of which the
Fair Market Value is being determined the Common Stock is not publicly traded, the Committee shall make a good faith attempt to
determine such Fair Market Value and, in connection therewith, shall take such actions and consider such factors as it deems
necessary or advisable. 

                3.       ELIGIBILITY.    Any
employee, director or consultant of the Company or of any of its Affiliates shall be eligible to receive Awards under the Plan;
except that only a director who is not otherwise an employee of the Company or any subsidiary of the Company (an “Eligible
Director”) shall be eligible to receive options under Section 5 of the Plan. Any eligible person to whom an Award has been
granted under the Plan is referred to herein as a “Recipient.” A Recipient of an Award under the Plan, or under any
predecessor plan, may be granted additional Awards if the Committee shall so determine. Except to the extent otherwise provided in
the Agreement, the granting of an Award under the Plan shall not affect any outstanding Award previously granted under the Plan or
under any other plan of the Company or any Affiliate. For purposes of the Plan, the term “Affiliate” shall mean any
“parent corporation” or “subsidiary corporation” of the Company, as those terms are defined in Sections 425(e)
and 425(f) of the Internal Revenue Code of 1986, as amended. Notwithstanding the foregoing, no Recipient shall receive grants of
Options and Stock Appreciation Rights under the Plan that exceed 100,000 shares during any fiscal year of the Company. 

                4.       STOCK
OPTIONS.    A stock Option (an “Option”) granted pursuant to the Plan shall entitle the Recipient,
upon exercise, to purchase Shares at a specified price during a specified period. The Committee may grant to eligible employees
Options which are intended to qualify as “Incentive Stock Options” within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and may grant to employees, directors or consultants Options which are not intended to so
qualify (“Nonqualified Options”), or any combination thereof. Options shall be subject to such terms and conditions as
the Committee shall from time to time approve; provided, that each Option shall be subject to the following requirements:

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EXHIBIT 4.1  

		                (a)       TYPE
OF OPTION.    Each Option shall be identified in the agreement pursuant to which it is granted as an Incentive
Stock Option or as a Nonqualified Option, as the case may be. 

		                (b)       TERM.    No
Option shall be exercisable more than ten years after the date on which it is granted. 

		                (c)       PAYMENT.    The
purchase price of Shares subject to an Option shall be payable in full at the time the Option is exercised. Payment may be made in
cash, in shares of Common Stock having an aggregate Fair Market Value on the date of exercise which is not less than the
Option’s exercise price, or by a combination of cash and such shares, as the Committee may determine, and subject to such
terms and conditions as the Committee deems appropriate. 

		                (d)       OPTIONS
NOT TRANSFERABLE.    Options shall not be transferable except to the extent permitted by the agreement
evidencing such Option; provided, that in no event shall any Option be transferable by the Recipient, other than by will or the
laws of descent and distribution. Options shall be exercisable during an Recipient’s lifetime only by such Recipient. If,
pursuant to the agreement evidencing any Option, such Option remains exercisable after the Recipient’s death, it may be
exercised, to the extent permitted by such agreement, by the personal representative of the Recipient’s estate or by any
person who acquired the right to exercise such Option by bequest, inheritance, or otherwise by reason of the Recipient’s
death. 

		                (e)       INCENTIVE
STOCK OPTIONS.    If an Option is an Incentive Stock Option, it shall be subject to the following additional
requirements: 

		                (i)       The
purchase price of Shares that are subject to an Incentive Stock Option shall not be less than 100% of the Fair Market Value of
such Shares at the time the Option is granted. 

		                (ii)       The
aggregate Fair Market Value (determined at the time the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable by the Recipient for the first time during any calendar year, under the Plan or any other plan of the
Company or any Affiliate, shall not exceed $100,000. 

		                (iii)       An
Incentive Stock Option shall not be exercisable more than ten years after the date on which it is granted. 

		                (iv)       The
purchase price of Shares that are subject to an Incentive Stock Option granted to an employee who, at the time such Option is
granted, owns 10% or more of the total combined voting power of all classes of stock of the Company or of any Affiliate shall not
be less than 110% of the Fair Market Value of such Shares on the date such Option is granted, and such Option may not be
exercisable more than five years after the date on which it is granted. For the purposes of this subparagraph, the rules of
Section 425(d) of the Code shall apply in determining the stock ownership of any employee. 

	  	Subject to the foregoing, options may be made exercisable in one
or more installments, upon the happening of certain events, upon the fulfillment of certain conditions, or upon such other terms
and conditions as the Committee shall determine. 

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EXHIBIT 4.1  

                5.       NON-EMPLOYEE DIRECTOR OPTIONS.  

		                (a)       AUTOMATIC
GRANT.   In addition to any other Award which may be granted under the Plan, each Eligible Director shall receive
automatically a Nonqualified Option to purchase 5,000 Shares or such other number of Shares, not to exceed 15,000 Shares, as
determined from time to time by the Committee on the date of each annual meeting of shareholders of the Company at which such
person is elected to serve on the Board. 

		                (b)       VESTING;
TERM.    Options granted under this Section shall be exercisable in full six months after the date of grant of
the Option. Each Option granted under this Section and all rights and obligations thereunder shall, subject to the provisions of
Section 5(d) herein, expire ten years from the date of grant of the Option. 

		                (c)       EXERCISE
PRICE.    The exercise price per Share for all Options granted under this Section shall be the Fair Market
Value of one Share on the date the Option is granted. 

		                (d)       TERMINATION. 

		                (i)       In
the event that an Recipient of an Option granted under this Section shall cease to be a director of the Company for any reason
other than his or her gross and willful misconduct, such Recipient, or in the case of death or disability, such Recipient’s
guardians, administrators or personal representatives, shall have the right to exercise the Option granted under this Section at
any time for the remainder of the term of the Option to the extent of the full number of shares the Recipient was entitled to
purchase under the Option on the date of such termination, subject to the condition that no Option shall be exercisable after the
expiration of the term of the Option. 

		                (ii)       In
the event that an Recipient of an Option granted under this Section shall cease to be a director of the Company by reason of his
or her gross and willful misconduct during the course of his or her service as a director of the Company, including but not
limited to wrongful appropriation of funds of the Company, or the commission of a gross misdemeanor or felony, the Option granted
under this Section shall be terminated as of the date of the misconduct. 

                6.       RESTRICTED  STOCK AWARDS. 

		                (a)       GRANT
OF RESTRICTED STOCK.    The Committee may grant to any eligible Recipient Shares subject to restrictions of
this Section (“Restricted Stock”). Subject to the provision of the Plan and the Award Agreement, at the time of the
grant of Restricted Stock, the Committee shall determine the period during which the Shares awarded as Restricted Stock shall be
subject to the risk of forfeiture and other terms and conditions (the “Restriction Period”) as the Committee may
specify. The Committee may, at any time, accelerate the date of lapse of restrictions with respect to all or any part of the
shares awarded to a Recipient. Recipients of Restricted Stock shall not be required to make any payment or provide consideration
other than: (a) the rendering of services; (b) as provided in the agreement evidencing the Restricted Stock or (c) any Federal,
state, or local taxes of any kind required by law to be withheld with respect to the Restricted Stock. 

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EXHIBIT 4.1  

		                (b)       RESTRICTED
STOCK HELD BY COMPANY.    The Restricted Stock shall be held by the Company during the Restriction Period and
no rights therein may be transferred, gifted, or otherwise alienated or hypothecated during the Restriction Period. If the
Restricted Stock is maintained in uncertificated form, the Company shall denote such shares as being subject to restrictions as
set forth in the agreement evidencing the Restricted Stock as part of the book entry of the Restricted Stock on the Company’s
Common Stock records. 

		                (c)       RIGHTS
AS SHAREHOLDER.    Except as provided in this Section or as otherwise provided in the Agreement, the Recipient
of Restricted Stock shall have, with respect to the Restricted Stock, all of the rights of a shareholder of the Company, including
the right to vote the shares and the right to receive any cash or stock dividends. The Committee, in its sole discretion, may
permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional
Shares (to the extent Shares are available under Section 1), subject to the same restrictions as the shares of Common Stock on
which such dividends were issued. The Company shall mark its Common Stock records that the Recipient of Restricted Stock is the
owner of unrestricted Common Stock promptly after, and only after, the Restriction Period shall have expired without forfeiture in
respect of such shares of Restricted Stock. 

                7.           STOCK APPRECIATION RIGHTS.  

		                (a)       GRANT.    An
Award of Stock Appreciation Rights may be granted to a Recipient either alone or in conjunction with all or part of any Option
granted under the Plan. In the case of an Award in conjunction with a Non-Qualified Option, such Award may be granted either at or
after the time of the grant of such Option. In the case of an Award in conjunction with an Incentive Option, such Award may be
granted only at the time of the grant of such Option. The provisions of Awards of Stock Appreciation Rights need not be the same
with respect to each Recipient. 

		                (b)       EXERCISE;
PAYMENT.    The Recipient may exercise a Stock Appreciation Right by surrendering the applicable portion of
the Award. A Stock Appreciation Right granted in connection with an Incentive Option may be exercised only if and when the market
price of the Shares subject to the Incentive Option exceeds the exercise price of such Option. Upon the exercise of a Stock
Appreciation Right, the Recipient shall be entitled to receive the excess of the Fair Market Value of one Share on the date of
exercise over the Fair Market Value on the date of grant of the Award (or, in the case of an Award in connection with an Option,
the exercise price per share specified in the related Option), multiplied by the number of Shares with respect to which the Stock
Appreciation Right has been exercised, provided, however, that the Committee shall have the discretion to determine whether the
payment in made in the form of cash or Shares, or a combination thereof, subject to the provisions of Section 18 of the Plan.

		                (c)       TERMS
AND CONDITIONS.    Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent
with the provisions of the Plan, as shall be determined from time to time by the Committee, including the terms of Section
7(c)(i)-(iii) below: 

		                (i)       AWARD
RELATED TO STOCK OPTIONS.    Stock Appreciation Rights granted in conjunction with an Option shall be
exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance
with the provisions of Section 4 of the Plan and the terms of the Option. Upon the termination or exercise of the related Option,
the Stock Appreciation Right shall terminate and no longer be exercisable as to the number of Shares for which the related Option
was exercised or terminated, except that a Stock Appreciation Right granted with respect to less than the total number of Shares
covered by a related Option shall not be reduced and terminated until the exercise or termination of the related Option exceeds
the number of shares not covered by the Stock Appreciation Right or the exercise of the Stock Appreciation Right. Likewise, upon
the exercise of a related Stock Appreciation Right, the Option shall terminate and no longer be exercisable as to the number of
Shares for which the related Stock Appreciation Right was exercised. 

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EXHIBIT 4.1  

		                (ii)       TRANSFERABILITY.    Except
as provided in the next sentence, Stock Appreciation Rights shall not be transferable except pursuant to the laws of descent upon
death. Stock Appreciation Rights granted in conjunction with an Option shall be transferable only when and to the extent that the
underlying Option would be transferable under Section 4(d) of the Plan. 

		                (iii)       APPLICATION
OF CODE SECTION 409A.    If and to the extent that any provision of an Award of Deferred Stock is required to
comply with Section 409A of the Code, such provision shall be administered and interpreted in a manner consistent with the
requirements of such Section. If and solely to the extent that such provision as currently written would conflict with Section
409A of the Code, the Committee shall have the authority, without the consent of the Recipient, to administer the provision and to
amend the Award with respect to that provision to the extent the Committee determines to avoid any portion of amounts owed to the
Recipient being retroactively included in taxable income for any prior taxable year. 

                8.       DEFERRED
STOCK AWARDS. 

		                (a)       GRANT.    The
Committee may grant a Recipient the right to receive Shares at the end of a specified Deferral Period, as defined below, or upon
the achievement of specified performance criteria (“Deferred Stock”). Deferred Stock may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine the duration of the period (the “Deferral
Period”) during which, and the conditions under which, receipt of the Shares will be deferred, and the Committee may also
condition the receipt of Deferred Stock upon the attainment of specified performance goals. The provisions of Deferred Stock
Awards need not be the same with respect to each Recipient. 

		                (b)       PAYMENT.    At
the expiration of the Deferral Period, share certificates shall be delivered to the Recipient, or his legal representative, in a
number equal to the shares covered by the Deferred Stock Award, subject to the provisions of Section 18 of the Plan.

		                (c)       TERMS
AND CONDITIONS.    The Award of Deferred Stock and the Shares of Deferred Stock shall be subject to such terms
and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee,
including the terms of Section 8(c)(i)-(iv) below: 

		                (i)       TRANSFERABILITY.    Subject
to the provisions of the Plan and the Agreement, Deferred Stock Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered during the Deferral Period. 

		                (ii)       RIGHTS
AS SHAREHOLDER.    An Award of Deferred Stock shall not be considered outstanding for any purpose, and no
dividends, voting or other rights of a shareholder shall attach to such shares until such time as the Deferral Period has ended
and the shares are issued to the Recipient. 

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EXHIBIT 4.1  

		                (iii)       FORFEITURE;
WAIVER.    Except as provided in the Agreement, upon termination of employment for any reason during the
Deferral Period for a given Award, the Recipient shall forfeit the Deferred Stock in question. The Committee may, in its sole
discretion, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all of the
remaining deferral limitations imposed hereunder with respect to any or all of the Recipient’s Deferred Stock.

		                (iv)       APPLICATION
OF CODE SECTION 409A.    If and to the extent that any provision of an Award of Stock Appreciation Rights is
required to comply with Section 409A of the Code, such provision shall be administered and interpreted in a manner consistent with
the requirements of such Section. If and solely to the extent that such provision as currently written would conflict with Section
409A of the Code, the Committee shall have the authority, without the consent of the Recipient, to administer the provision and to
amend the Award with respect to that provision to the extent the Committee determines to avoid any portion of amounts owed to the
Recipient being retroactively included in taxable income for any prior taxable year. 

                9.       PERFORMANCE
STOCK.    The Committee may grant a Recipient the right to receive Shares upon the achievement of specified
performance criteria or grant a Recipient unrestricted Shares in connection with the performance of services for or on behalf of
the Company (“Performance Stock”). An Award of Performance Stock may be granted either alone or in addition to other
Awards granted under the Plan. The Committee shall determine to whom Performance Stock will be granted, the number of Shares
covered by the Award, the times or other conditions, including attainment of specified performance goals over a specified
performance period upon which an Award will no longer be subject to forfeiture, and all other conditions of the Award not
inconsistent with the terms of the Plan. The provisions of Performance Stock Awards need not be the same with respect to each
Recipient. The Committee may, in its sole discretion, when it finds that a waiver would be in the best interest of the Company,
waive in whole or in part any or all of the remaining performance criteria with respect to any or all of the Recipient’s
Performance Stock. Upon the performance of the service or upon the achievement of the performance criteria (or waiver as provided
above), the Committee shall issue share certificates equal to the number of Shares provided for under the terms of the Award,
subject to the provisions of Section 18 of the Plan. 

                10.       AGREEMENTS.    Each
Award granted pursuant to the Plan shall be evidenced by an agreement setting forth the terms and conditions upon which it is
granted (the “Agreement”). Multiple Awards may be evidenced by a single Agreement. Subject to the limitations set forth
in the Plan, the Committee may, with the consent of the Recipient, amend any Agreement to modify the terms or conditions governing
the Award evidenced thereby. 

                11.       ADJUSTMENTS.    In
the event of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, combination, or exchange of shares or other similar corporate change, then if the Committee shall determine, in
its sole discretion, that such change necessarily or equitably requires an adjustment in the number of Shares subject to Awards,
in the exercise price of an Award or value of an Award, or in the maximum number of Shares subject to the Plan, such adjustments
shall be made by the Committee and shall be conclusive and binding for all purposes of the Plan. No adjustment shall be made in
connection with the issuance by the Company of any Common Stock, warrants, rights, or options to acquire additional Common Stock
or of securities convertible into Common Stock. 

                12.       MERGER,
CONSOLIDATION, REORGANIZATION, LIQUIDATION, ETC.    Subject to the provisions of the agreement evidencing any
Award, if the Company shall become a party to any corporate merger, consolidation, major acquisition of property for stock,
reorganization, or liquidation, the Board of Directors of the Company shall have the power to make any arrangement it deems
advisable with respect to outstanding Awards and in the number of Shares subject to the Plan, which shall be binding for all
purposes of the Plan, including, but not limited to, the substitution of new Awards for any Awards then outstanding, the
assumption of any such Awards, and the termination of such Awards. 

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EXHIBIT 4.1  

                13.       EXPENSES
OF PLAN.    The expenses of administering the Plan shall be borne by the Company and its Affiliates.

                14.       RELIANCE
ON REPORTS.    Each member of the Committee and each member of the Board of Directors shall be fully justified
in relying or acting in good faith upon any report made by the independent public accountants of the Company and its Affiliates
and upon any other information furnished in connection with the Plan by any person or persons other than himself. In no event
shall any person who is or shall have been a member of the Committee or of the Board of Directors be liable for any determination
made or other action taken or omitted in reliance upon any such report or information, or for any action taken or omitted,
including the furnishing of information, in good faith. 

                15.       RIGHTS
AS SHAREHOLDER.    Except to the extent otherwise specifically provided herein, no Recipient of any Award
shall have any rights as a shareholder with respect to Shares sold or issued pursuant to the Plan until certificates for such
Shares have been issued to such Recipient. 

                16.       GENERAL
RESTRICTIONS.    Each Award granted pursuant to the Plan shall be subject
to the requirement that if, in the opinion of the Committee: 

		                (a)       the
listing, registration, or qualification of any Shares related thereto upon any securities exchange or under any state or federal
law; 

		                (b)       the
consent or approval of any regulatory body; or  

		                (c)       an
agreement by the Recipient with respect to the disposition of any such Shares;  

is necessary or desirable as a condition of the issuance or sale of such
Shares, such Award shall not be consummated unless and until such listing, registration, qualification, consent, approval, or
agreement is effected or obtained in form satisfactory to the Committee. 

                17.       EMPLOYMENT
RIGHTS.    Nothing in the Plan, or in any agreement entered into hereunder, shall confer upon any employee or
director the right to continue to serve as an employee or director of the Company or an Affiliate, or affect the right of the
Company or an Affiliate to terminate such employee’s or director’s services at any time, with or without cause.

                18.       WITHHOLDING.    If
the Company proposes or is required to issue Shares pursuant to the Plan, it may require the Recipient to remit to it, or may
withhold from such Award or from the Recipient’s other compensation, an amount, in the form of cash or Shares, sufficient to
satisfy any applicable federal, state, or local tax withholding requirements prior to the delivery of any certificates for such
Shares. 

                19.       AMENDMENTS.    The
Board of Directors of the Company may at any time, and from time to time, amend the Plan in any respect, except that no amendment:

		                (a)       increasing
the number of Shares available for issuance or sale pursuant to the Plan (other than as permitted by Sections 8 and 9);

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EXHIBIT 4.1  

		                (b)       changing
the classification of persons eligible to participate in the Plan or the definition of an “Affiliate”; or

		                (c)       materially
increasing the benefits accruing to participants under the Plan; 

shall be made without the affirmative vote of shareholders holding at least a
majority of the voting stock of the Company represented in person or by proxy at a duly held shareholders’ meeting.

                20.       EFFECTIVE
DATE; DURATION.    The Plan shall become effective upon adoption by the Board of Directors, subject to the
approval of the Company’s shareholders within twelve months from the date of such adoption. 

                    No
Awards shall be granted under the Plan after the earlier of: (a) the date on which the Plan is terminated by the Board of
Directors of the Company; or (b) May 21, 2013. Awards outstanding at the termination or expiration of the Plan may continue in
accordance with their terms after such termination or expiration. 

Approved by the Board of Directors on April 4, 2003.

Approved by Shareholders on May 21, 2003.

Amended by the Board of Directors on February 24, 2005.

Approved by the Shareholders on May 17, 2005 

9Exhibit 10.2

Exhibit 10.2

 

 

***CONFIDENTIAL TREATMENT REQUESTED**

***CONFIDENTIAL TREATMENT REQUESTED**

THIRD AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

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

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

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

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

  

 

RECITALS

A. The Borrower, the Lenders, the Administrative Agent and WFB in its capacity as L/C
Issuer and Swing Line Lender are parties to that certain Second Amended and Restated
Credit Agreement, dated as of February 26, 2003 (as amended by that
certain First Amendment to Second Amended and Restated Credit Agreement dated as of May
21, 2004 and as further amended by that certain Second Amendment to Second Amended and
Restated Credit Agreement dated as of August 3, 2004, the "Credit Agreement").

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

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

 

AGREEMENT

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

 

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

 

2

***CONFIDENTIAL TREATMENT REQUESTED**

 

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

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

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

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

            
              
                
                  
                    
                      
                        minus

                      

                    

                  

                

              

            

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

          

        

        "Cash Equivalents" shall mean:

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

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

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

          

        

      

    

  

 

3

  
    
      
        
          
            ***CONFIDENTIAL TREATMENT REQUESTED**

             

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

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

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

          

        

        "Adjusted Leverage Ratio" shall mean:

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

        "Pricing Grid" shall mean:

      

    

  

  
    
      
        	Pricing Grid

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

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

      

    

  

  
    
      
         

      

    

  

 

  
    
      
         

        4

      

    

  

  
    
      
        ***CONFIDENTIAL TREATMENT REQUESTED**

         

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

      

    

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

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

          

        

      

    

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

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

          

        

      

    

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

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

          

        

      

    

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

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

             

             

          

        

      

    

  

5

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

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

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

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

          

        

      

    

  

 

	
      
        
          Period

        

      

    

    	Adjusted Leverage Ratio

	Closing Date to and including

    March 27, 2004
	3.75:1.00

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

	June 27, 2004 to and including

    July 2, 2005
	5.60:1:00

	July 3, 2005 and any time

    thereafter
	5.25:1.00

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

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

             

             

          

        

      

    

  

6

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

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

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

          

        

      

    

  

 

	
      
        
          Period

        

      

    

    	
      
        
          Maximum

        

      

    

    
	Fiscal Year 2004
	[CONFIDENTIAL]

	Fiscal Year 2005
    
	[CONFIDENTIAL])

	Fiscal Year 2006
	[CONFIDENTIAL])

 

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

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

          

        

      

    

  

 

	
      
        Fiscal Year

      

    

    	
      
        Maximum Amount

      

    

    
	
      
        2004

      

    

    	[CONFIDENTIAL]

	
      
        2005 and each Fiscal Year thereafter

      

    

    	[CONFIDENTIAL]

______________________________________

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

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

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

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

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

 

  
    
      
        
          
             

          

        

      

    

  

7

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  

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

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

          

        

      

    

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

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

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

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

          

        

      

    

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

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

          

        

      

    

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

  

 

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

  
    a) The representations and warranties of the Borrower set forth in Article IV of
    the Credit Agreement and in the other Credit Documents are true and correct in all
    material respects as if made on such date (except for representations and warranties
    expressly made as of a specified date, which are true and correct in all material respects
    as of such date);

    b) No Default has occurred and is continuing; and

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

  

 

  
    
      
        
          
             

          

        

      

    

  

8

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  

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

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

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

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

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

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

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

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

  

 

  
    
      
        
          
             

          

        

      

    

  

9

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

     

  

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

 

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

 

7. Miscellaneous.

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

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

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

  

 

  
    
      
        
          
             

          

        

      

    

  

10

  
    ***CONFIDENTIAL TREATMENT REQUESTED**

  

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

 

BORROWER: WILD OATS MARKETS, INC.

 

  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Freya R. Brier

                    Title: Sr. Vice President 

                    
                      
                         

                      

                    

                  

                

              

            

          

        

      

    

  

 

ADMINISTRATIVE AGENT: WELLS FARGO BANK, NATIONAL

ASSOCIATION

 

  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Marc Rosenberg

                    Title: Vice President 

                    
                      
                         

                      

                    

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                  

                

              

            

          

        

      

    

  

 

LENDERS: WELLS FARGO BANK, NATIONAL

ASSOCIATION

 

  
    
      
        
          
            
              
                
                  
                    By: /s/

                    Name: Marc Rosenberg

                    Title: Vice President

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                         

                      

                    

                    U.S. BANK NATIONAL ASSOCIATION

                     

                    By: 

                    Name: 

                    Title: 

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                    VECTRA BANK COLORADO N.A.

                     

                    By: /s/

                    Name: Steven Griffith

                    Title: Sr. Vice President

                     

                    By: 

                    Name: 

                    Title: 

                    
                      
                         

                      

                    

                    BANK OF AMERICA, N.A.

                     

                    By: 

                    Name: 

                    Title: 

                     

                    By: 

                    Name: 

                    Title: 

                  

                

              

            

          

        

      

    

  

 

 

***CONFIDENTIAL TREATMENT REQUESTED**

 

ATTACHMENT A

INSERT TO SCHEDULE 4.01(g)

Case Caption: Tim Auchterlonie, individually and on behalf of all others similarly
situated, and the general public, and Does 1 through 1000 vs. Wild Oats Markets, Inc. and
Does 1 through 100

Case No.: BC320905

Court: Superior Court, State of CA, County of Los Angeles

Basis of claim: Class action on behalf of all salaried employees in the state of CA
for unlawful deductions from earnings, unlawful nonpayment of overtime compensation to a
alleged nonexempt employee was paid on a salaried basis by Borrower, failure to authorize
and permit employees to take required rest/meal periods, and unfair business practices
under Bus. and Prof. Code 17200. This class action suit was filed in August 2004 and
Borrower was served in September 2004. We have retained counsel who has conducted
preliminary investigations and an evaluation of the merits of the claim. No quantified
damages 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 the
extent of past noncompliance with applicable laws. The Borrower is preparing, and plans to
file concurrent with the execution of this Amendment, a Voluntary Compliance Program
("VCP") filing with the IRS to correct any prior noncompliance. Borrower has
determined that prior noncompliance resulted in events which could disqualify the Plan
pursuant to IRC 401 if not corrected pursuant to the VCP. Borrower currently estimates its
liability for correction of past noncompliance not to exceed $1.5 million; however, such
liability may increase based upon review by the IRS, but in no event does Borrower
anticipate 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 from
time to time, the "Credit Agreement"), among (1) WILD OATS MARKETS,
INC., a Delaware corporation (the "Borrower"); (2) each of the
financial institutions from time to time listed in Schedule I to the Credit
Agreement (collectively, the "Lenders"); and (3) WELLS FARGO BANK,
NATIONAL ASSOCIATION, a national banking association, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), L/C Issuer and
Swing Line Lender. Unless otherwise indicated, all terms defined in the Credit Agreement
have the same respective meanings when used herein. Section references herein relate to
the Credit Agreement unless stated otherwise. In the event of any conflict between the
calculations set forth in this Compliance Certificate and the manner of calculation
required by the Credit Agreement, the terms of the Credit Agreement shall govern and
control.

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 Compliance
Certificate is delivered for the Fiscal [Quarter][Year] ending ___________, ____ (the
"Test Date"). Computations indicating compliance with respect to the
covenants 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 permitted
Adjusted 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 a
Subsidiary during the four Fiscal Quarter period ending on the Test Date permitted under
the 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 had
occurred 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 minimum
permitted 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 minimum
permitted 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 Appendix
A is a list of the real property subject to such New Leases setting forth the lessee
of such property, the location of such property, a brief description of such property, the
owner of such property and the date and title of and parties to the lease for such
property (including all amendments thereof). The maximum number of New Leases for New
Stores (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 Loan
Parties during the Fiscal Year ending 20__ has been $_____________. The maximum aggregate
amount of Capital Expenditures that the Loan Parties are permitted to make in such Fiscal
Year is $_____________.

VI.    Cash Balances (Section 5.03(f)):

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

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

  
    
      
        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 period
covered by this Compliance Certificate, no Default or Event of Default has occurred and is
continuing, with the exceptions set forth below in response to which the Borrower has
taken (or caused to be taken) or proposes to take (or causes to be taken) the following
actions (if none, so state).

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

IN WITNESS WHEREOF, the Borrower has completed and executed this Compliance Certificate
on 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 expressly
agrees that such amendment shall in no way affect or alter the rights, duties, or
obligations 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 the
Guaranty shall mean the Credit Agreement, as amended by the Third Amendment.

4. The Guarantors’ consent to the Third Amendment shall not be construed (i) to
have been required by the terms of the Guaranty or any other document, instrument or
agreement relating thereto or (ii) to require the consent of the Guarantors in connection
with 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 the
day 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:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00088-of-00352.parquet"}]]