[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
