[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 SecondAmended and Restated Credit Agreement, dated as of February 26, 2003, as amended by thatcertain First Amendment to Second Amended and Restated Credit Agreement dated as of May21, 2004, as further amended by that certain Second Amendment to Second Amended andRestated Credit Agreement dated as of August 3, 2004, and as further amended by thatcertain Third Amendment to Second Amended and Restated Credit Agreement dated as ofNovember 4, 2004 (as amended, the "Credit Agreement") among (i) WILD OATSMARKETS, INC., a Delaware corporation (the "Borrower"), (ii) each of thefinancial institutions listed in Schedule I to the Credit Agreement (collectively, the"Lenders") constituting Required Lenders, and (iii) WELLS FARGO BANK, NATIONALASSOCIATION, a national banking association, as the administrative agent for the Lenders(in such capacity, the "Administrative Agent"). Capitalized terms used hereinand not otherwise defined shall have the meanings given to such terms in the CreditAgreement.

2. Pursuant to Section 5.02(a) of the Credit Agreement, the Borrower has agreed, unlessthe Required Lenders shall otherwise consent in writing, not to permit any of the LoanParties to create, incur, assume or permit to exist any Indebtedness except for certain"Permitted Indebtedness", which term includes, without limitation, Indebtednessconsisting of Capital Leases, or Indebtedness otherwise incurred to finance the purchaseor construction of property (which shall be deemed to exist if the Indebtedness isincurred at or within 90 days before or after the purchase or construction of theproperty), or to refinance any such Indebtedness, in each case entered into after theClosing Date, provided that the principal amount of such Indebtedness outstanding at anyone 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, unlessthe Required Lenders shall otherwise consent in writing, not to permit its AdjustedLeverage Ratio as at the end of the first Fiscal Quarter period after the Closing Datethrough the Fiscal Quarter period ending on April 2, 2005 to be greater than the ratiosset forth therein.

4. Recently, the U.S. Securities and Exchange Commission (the "SEC") issued aletter dated February 7, 2005, in which it set forth the SEC’s view concerning theappropriate accounting under GAAP of (i) the amortization of leasehold improvements by alessee in an operating lease with lease renewals, (ii) the pattern of recognition of rentwhen the lease term in an operating lease contains a period where there are free orreduced rents (commonly referred to as "rent holidays"), and (iii) incentivesrelated to leasehold improvements provided by a landlord/lessor to a tenant/lessee in anoperating lease (such letter, the "SEC Pronouncement").

5. Pursuant to the SEC Pronouncement, the Borrower has determined that it needs torestate its audited Financial Statements for its Fiscal Years 2000 through 2003 and itsFinancial Statements presented to the Lenders for Fiscal Year 2004. As a result of suchrestatements, (i) the Borrower will have failed to satisfy, and will continue to fail tosatisfy, the covenant set forth in Paragraph 2 above in that the Borrower’s PermittedIndebtedness consisting of Capital Leases, or Indebtedness otherwise incurred to financethe purchase or construction of property, or to refinance any such Indebtedness, in eachcase 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 havefailed to satisfy the covenant set forth in Paragraph 3 above in that the Borrower’sAdjusted Leverage Ratio as at the end of all such Fiscal Quarter periods will have beengreater than the ratios set forth therein. The Borrower’s failure to satisfy thecovenant described in clause (i) above would have resulted in the occurrence and thecontinuance of an Event of Default (such Event of Default, the "PermittedIndebtedness Event of Default") and the Borrower’s failure to satisfy thecovenant described in clause (ii) above also would have resulted in the occurrence and thecontinuance of an Event of Default (such Event of Default, the "Adjusted LeverageRatio Event of Default", and together with the Permitted Indebtedness Event ofDefault, the "Restatement Events of Default").

6. The Borrower has approached the Lenders and the Administrative Agent and requestedthat the Required Lenders waive the Borrower’s compliance with such covenants and theLender’s rights and remedies under the Credit Agreement and the other CreditDocuments with respect to occurrence and continuance of the Restatement Events of Default.

7. To induce the Administrative Agent and the Required Lenders to waive theBorrower’s compliance with such covenants and the Lender’s rights and remediesunder the Credit Agreement and the other Credit Documents with respect to occurrence andcontinuance of the Restatement Events of Default, the Borrower has represented andwarranted to the Administrative Agent and the Lenders that, on the date of this Waiver andafter 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 ofthe Credit Agreement and in the other Credit Documents are true and correct in allmaterial respects as if made on the date hereof (except for representations and warrantiesexpressly made as of a specified date, which are true and correct in all material respectsas of such date);

(b) Except as described herein and in the Waiver dated March 31, 2005 among Borrowerand 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 SECPronouncement and the resulting restatement of the Borrower’s audited FinancialStatements for the Fiscal Years 2000 through 2003 and its Financial Statements presentedto the Lenders for Fiscal Year 2004; and

(d) The Credit Agreement, the Security Agreement, the Pledge Agreement and the Guarantyare in full force and effect.

8. Pursuant to Section 8.04 of the Credit Agreement, the Required Lenders executingthis Waiver below hereby waive, subject to Paragraphs 9 and 10 below, the Borrower’scompliance with the covenants described in Paragraphs 2 and 3 above and the RestatementEvents of Default that have occurred and are continuing as a result of suchnon-compliance.

9. Notwithstanding any of the foregoing, the waiver set forth in Paragraph 8 aboveshall only be effective with respect to such covenants and the Restatement Events ofDefault. The waiver set forth in Paragraph 8 above shall not (i) operate as a waiver ofthe Borrower’s requirement to comply with any other covenant set forth in the CreditAgreement 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 CreditDocument.

10. This Waiver shall become effective immediately upon execution of this Waiver by theBorrower and Lenders constituting the Required Lenders in the space provided below andshall continue in effect until (i) with respect to the Borrower’s failure to complywith the covenant described in Paragraph 2 above, May 15, 2005, and (ii) with respect tothe 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 Defaultshall continue indefinitely.

11. This Waiver shall be governed by and construed in accordance with the laws of theState of Colorado without reference to conflicts of law rules. This Waiver may be executedin any number of identical counterparts, any set of which signed by all parties heretoshall 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 ofthe 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