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

WAIVER

March 31, 2005

Wild Oats Markets, Inc.

3375 Mitchell Lane

Boulder, CO 80301

Attention: Chief Financial Officer

1. Reference is made in this Waiver (this "Waiver") to that certain 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 5.03(c) of the Credit Agreement, the Borrower has agreed, unlessthe Required Lenders shall otherwise consent in writing, not to permit Stockholders’Equity on any Determination Date to be less than the Minimum Shareholders’ EquityAmount on such Determination Date, as calculated in accordance with Section 5.03(c) of theCredit Agreement.

3. 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").

4. 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, the Borrower will have failed to satisfy the covenant set forth in Paragraph2 above in that Stockholders’ Equity at the end of each Fiscal Quarter from andincluding the first Fiscal Quarter following the Closing Date through the Fiscal Quarterending on or around January 1, 2005 will have been less than the MinimumShareholders’ Equity Amount as of each such Fiscal Quarter. The Borrower’sfailure to satisfy such covenant would have resulted in the occurrence and the continuanceof an Event of Default (such Event of Default, the "Stockholders’ Equity Eventof Default").

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

6. 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 Stockholders’ Equity Event of Default, the Borrower hasrepresented and warranted to the Administrative Agent and the Lenders that, on the date ofthis Waiver and after giving effect to the waiver set forth in Paragraph 7 below:

(a) The representations and warranties of the Loan Parties set forth in Article IV 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 28, 2005 among Borrowerand the Lenders, no Default or Event of Default has occurred and is continuing;

(c) The Stockholders’ Equity Event of Default would not have occurred but for theSEC Pronouncement 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.

7. Pursuant to Section 8.04 of the Credit Agreement, the Required Lenders executingthis Waiver below hereby waive, subject to Paragraphs 8 and 9 below, the Borrower’scompliance with the covenant described in Paragraph 2 above and the Stockholders’Equity Event of Default that has occurred and is continuing as a result of suchnon-compliance.

8. Notwithstanding any of the foregoing, the waiver set forth in Paragraph 7 aboveshall only be effective with respect to such covenant and the Stockholders’ EquityEvent of Default. The waiver set forth in Paragraph 7 above shall not (i) operate as awaiver of the Borrower’s requirement to comply with any other covenant set forth inthe 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 otherCredit Document.

9. 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 through the Fiscal Quarter ending on or around January 1, 2005;provided, however, that the Waiver with respect to the previously occurringStockholders’ Equity Event of Default shall continue indefinitely.

10. 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: 

Name: 

Title: 

 

BANK OF AMERICA, N.A.

 

By: /s/ David R. Barney

Name: David R. Barney

Title: Senior Vice President

 

 

ACKNOWLEDGED AND AGREED:

WILD OATS MARKETS, INC.

 

By: /s/ Freya R. Brier

Name: Freya R. Brier

Title: Senior Vice President