EMPLOYMENT AGREEMENT

This Agreement, dated December 17, 2001, is between Wild Oats Markets, Inc.,
a Delaware corporation (the "Company") and Edward F. Dunlap
("Executive").

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

1. Employment. The Company agrees to employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for a one-year period beginning on the date hereof (the
"Initial Employment Period"). The term of this Agreement shall be
renewed on the anniversary of the date Executive commenced employment for
successive one year periods unless the Company shall provide notice to the
Executive, given within 60 days prior to the anniversary date of the Executive's
employment, that the Company has elected not to renew this Agreement.

2. Position and Duties. During the Employment Period, Executive shall
serve as Chief Financial Officer of the Company at its headquarters in Boulder,
Colorado, under the supervision and direction of the Company's Chief Executive
Officer. Executive shall carry out the customary functions of his position as
determined by the Company, and perform such tasks and responsibilities as
requested by the CEO. Executive shall devote his best efforts and full business
time and attention (except for permitted vacation periods and periods of illness
or other incapacity as provided for herein) to the business and affairs of the
Company and its subsidiaries. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.

3. Salary, Bonus, Options and Benefits. (a) During the Employment
Period, Executive's gross base salary (the "Base Salary") shall
initially be $260,000.00 per annum, which salary shall be payable in regular
installments in accordance with the Company's general payroll practices as in
place from time to time. Any adjustment in Executive's compensation shall be
determined by the CEO or the Compensation Committee of the Board in their sole
discretion. All payments of compensation hereunder shall be subject to federal,
state and other withholding taxes as required by applicable law and the Company's
general payroll policies as in effect from time to time.

(b) The Company shall reimburse the Executive for a reasonable amount
approved by the Chief Executive Officer for (i) temporary housing costs, (ii)
any amounts paid by Executive to his current landlord to terminate any lease to
which Executive is bound for his primary residence as of the date of this
Agreement, (iii) moving expenses incurred, and (iv) the cost of storage of the
Executive's household goods pending his purchase of a permanent residence in
Colorado. Any amounts paid to Executive under this provision shall be increased
for the effective tax rate paid by Executive on such amounts.

(c) During the Employment Period, Executive shall be entitled to participate
in all of the Company's employee benefit programs for which senior executive
employees of the Company are generally eligible as in effect from time to time.
Executive shall be entitled to three weeks' paid vacation per year in
accordance with the Company's policies. Any payments of benefits payable to
Executive hereunder in respect of any calendar year during which Executive is
employed by the Company for less than the entire such year shall, unless
otherwise provided in the applicable plan or arrangement or required by
applicable law, be prorated in accordance with the number of days in such
calendar year during which Executive is employed.

(d) The Executive shall be granted stock options, pursuant to a separate plan
to be established pursuant to certain exemptions promulgated under the NASDAQ
Marketplace Guidelines as an incentive to executives for the inducement to enter
employment, for 120,000 shares of the Company's common stock. The exercise
price shall be the price as set by the Compensation Committee of the Company's
Board of Directors at its next regularly scheduled board meeting. The options
shall vest 25% after the first year of employment, and 6.25% per quarter
thereafter. The options shall have a 10-year term. The options shall be
terminable immediately upon termination of the Executive's employment for
cause, and 30 days after termination without cause. The options shall have such
additional terms as shall be established by the Chief Executive Officer or the
Compensation Committee of the Board of Directors.

(e) The Executive may be entitled to a yearly bonus of up to 75% of his
annual compensation, provided that the Executive meets such goals as shall be
set for the Executive by the Chief Executive Officer or the Board of Directors
or both, and further provided that the Executive is currently employed by the
Company at the time any bonus would be payable. The Company agrees that during
the Executive's first year of employment, provided that at the time bonuses
may be payable the Executive is still currently employed by the Company, the
Executive shall receive a minimum bonus of $75,000, payable $25,000 on June 11,
2002, and the remainder payable within 30 days of the anniversary of the
Executive's commencement of employment with the Company. In addition, upon
execution of this Agreement and commencement of work by the Executive at the
Company's home offices, the Executive shall receive a sum, equal to one month's
salary, to cover incidental expenses incurred by Executive in commencing work
for the Company.

4. Term. (a) The Initial Employment Period shall be subject to earlier
termination (1) by reason of Executive's death or disability (as defined
below), (2) for Cause (as defined herein), (3) without Cause, or (4) by written
resignation of the Executive.

(b) If the Initial Employment Period is terminated by reason of Executive's
termination without Cause during the first 12 months thereof (which shall not be
extended by any renewal of this Agreement), Executive shall be entitled to
receive his then effective Base Salary for a 12-month period. If the Executive's
employment is terminated after the first 12 months thereof by reason of
Executive's termination without Cause, Executive shall be entitled to receive
his then effective Base Salary for a period of months, not to be less than six
nor more than 12 months, which is determined by subtracting from 12 months the
number of full months after the end of the first 12 months of the Initial
Employment Period during which the Executive remained employed. (For example, if
the Executive was terminated three and one-half months following the end of the
Initial Employment Period, the Executive would be entitled to (12 -  3) = 9
months of severance.) Such amounts shall be payable in equal biweekly
installments, subject to all applicable deductions, in accordance with the
Company's normal payroll schedule. Notwithstanding anything to the contrary
herein, no renewal of the term of Executive's employment shall increase the
number of months of severance to which the Executive may be entitled.

(c) For purposes of the foregoing, "Cause" shall mean (1) a
material breach by the Executive of the Executive's obligations of
confidentiality or loyalty; (2) the Executive's willful and repeated failure
to comply with the lawful directives of the Chief Executive Officer or Board of
Directors of the Company; (3) negligence or willful misconduct by the Executive
in the performance of the Executive's duties to the Company; (4) the
commission by the Executive of an act (including, but not limited to, a felony
or a crime involving moral turpitude) causing material harm to the standing and
reputation of the Company, as determined in good faith by the CEO or the Board;
(5) misappropriation, breach of trust or fraudulent conduct by the Executive
with respect to the assets or operations of the Company or any of its
subsidiaries; (6) the continued use by the Executive after notice from the Chief
Executive Officer of alcohol or drugs to an extent that, in the good faith
determination of the Chief Executive Officer or Board, interferes with the
performance by the Executive of the Executive employment responsibilities; (7)
the threat by the Executive to cause, or the actual occurrence of, damage to the
relations of the Company or any of its subsidiaries with customers, suppliers,
lenders, advisors or employees which damage is adverse to the business or
operations of the Company or any of its subsidiaries; or (8) continued
unauthorized absence from work. Termination without Cause shall not include
termination by voluntary resignation, death or disability, and no severance
amounts shall be payable upon the occurrence of any of the foregoing.

(d) Except as expressly set forth in this Section, all compensation and other
benefits shall cease to accrue upon termination of Executive's employment.
Upon termination of the Executive's employment for any reason, Executive shall
be deemed to have resigned from all offices and directorships, if any, then held
with the Company or any of its subsidiaries or other affiliates.



5. Confidential Information; Company Property. Executive acknowledges
that the information, observations and data obtained by him while employed by
the Company and its subsidiaries concerning the business or affairs of the
Company, its subsidiaries and any predecessor to the business of the Company
that are not generally available to the public other than as a result of breach
of this Agreement by Executive ("Confidential Information") are the
property of the Company and its subsidiaries. Executive agrees that he shall not
disclose to any unauthorized person or use for his own account any Confidential
Information without the prior written consent of the Company unless, and in such
case only to the extent that, such matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions to act. Notwithstanding the foregoing, in the event Executive becomes
legally compelled to disclose Confidential Information pursuant to judicial or
administrative subpoena or process or other legal obligation, Executive may make
such disclosure only to the extent required, in the opinion of counsel for
Executive, to comply with such subpoena, process or other obligation. Executive
shall, as promptly as possible and in any event prior to the making of such
disclosure, notify the Company of any such subpoena, process or obligation and
shall cooperate with the Company in seeking a protective order or other means of
protecting the confidentiality of the Company Information. Executive shall
deliver to the Company at the termination of the Employment Period, or at any
time the Company may reasonably request, all memoranda, notes, plans, records,
reports, computer tapes and software and other documents and data (and copies
thereof) containing, relating to, or derived from the Confidential Information
or the business of the Company or its subsidiaries which he may then possess or
have under his control. Executive agrees that he will not retain after the
termination of the Employment Period any copies of any Confidential Information
including, without limitation, any software, documents or other materials
originating with and/or belonging to the Company or any Subsidiary of the
Company.

6. Non-Compete; Non-Solicitation. (a) Executive acknowledges that in
the course of his employment with the Company he will become familiar with the
Company's trade secrets and with other confidential information concerning the
Company and its predecessors and that his services have been and will be of
special, unique and extraordinary value to the Company. Executive agrees that,
during the period in which Executive is receiving compensation hereunder and for
a period of three years following termination of Executive's employment with
the Company for any reason (the "Non-Compete Period"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in the operation of any
supermarket, food store or retailer of health and beauty aids with retail
locations located within a ten mile radius of any store operated (defined herein
as current stores or stores for which leases have been signed as of the date of
termination) by the Company or its subsidiaries as of the date of termination of
Executive's employment with the Company. In addition, Executive acknowledges
that he shall not accept employment in any managerial or consulting capacity
with Whole Foods Markets, Inc. or any successor to or subsidiary or affiliate of
such company during the Non-Compete Period. Such Non-Compete Period shall
terminate immediately at such time as the Company and its subsidiaries no longer
operate supermarkets or food stores. Nothing herein shall prohibit Executive
from being a passive owner of not more than 1% of the outstanding stock of
another corporation, so long as Executive has no active participation in the
management or the business of such corporation.

(b) During the Non-Compete Period, Executive shall not directly or indirectly
(1) induce or attempt to induce any employee of the Company or any subsidiary of
the Company to leave the employ of the Company or such subsidiary, or in any way
interfere with the relationship between the Company or any such subsidiary and
any employee thereof; (2) induce or attempt to induce any customer, supplier,
licensee or other business relationship of the Company or any subsidiary of the
Company to cease doing business with the Company or such subsidiary, or in any
way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any such subsidiary; or (3)
make an oral or written disparaging statement, comment or remark about the
Company or any of its subsidiaries to any employee, customer, supplier, licensee
or other business relationship of the Company or any of its subsidiaries or to
or for the intended use of any member of the press.

7. Employment-At-Will. It is understood and agreed that this Agreement
constitutes employment-at-will and that notwithstanding (i) any general or
specific policies (whether written or oral) of the Company relating to the
employment or termination of its employees, (ii) any statements made to
Executive, whether made orally or contained in any document, pertaining to
Employee's relationship with the Company, or (iii) assignment of Cause by the
Company, the Company reserves the right to terminate the employment of Executive
by the Company in which event Executive's sole remedy shall be to receive
certain payments and other benefits upon the terms and subject to the conditions
provided for herein.



8. Enforcement. It is the express intention of the parties that this
Agreement be enforced to the fullest extent permitted by applicable law in order
to give full effect to the agreements reached herein. Accordingly, if at the
time of enforcement of Sections 5 or 6 a court holds that the restrictions
stated herein are unreasonable under the circumstances then existing, the
parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances shall be substituted for the stated period,
scope or area. Because Executive's services are unique and because Executive
has access to Confidential Information, the parties hereto agree that money
damages would be an inadequate remedy for any breach of this Agreement. In the
event of a breach or threatened breach of this Agreement, the Company, its
subsidiaries and their respective successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violation of, the provisions hereof
(without posting a bond or other security). Sections 5 and 6 shall survive and
continue in full force and effect in accordance with their terms notwithstanding
any termination of the Employment Period.

9. Notices. All notices or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally, one
business day following when sent via a nationally recognized overnight courier,
or when sent via facsimile confirmed in writing to the recipient. Such notices
and other communications will be sent to the addresses indicated below:

|To the Company:                    | To Executive:    
|---------------------------------- | -----------------
|Wild Oats Markets, Inc             | _________________
|3375 Mitchell Lane                 | _________________
|Boulder, CO 80301                  | _________________
|Attention: Chief Executive Officer |                  
|With a copy to: General Counsel    |                  

or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.

10. Miscellaneous. Any provision of this Agreement may be amended or
waived only with the prior written consent of the Company and Executive. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Colorado without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Colorado or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Colorado.



11. Dispute Resolution Process. The parties hereby agree that, in
order to obtain prompt and expeditious resolution of any disputes under this
Agreement, each claim, dispute or controversy of whatever nature, arising out
of, in connection with, or in relation to the interpretation, performance or
breach of this Agreement (or any other agreement contemplated by or related to
this Agreement or any other agreement between the Company and Executive),
including without limitation, any claim based on contract, tort or statute, or
the arbitrability of any claim hereunder (a "Claim"), shall be
settled, at the request of any part of this Agreement, by final and binding
arbitration conducted in Denver, Colorado. All such Claims shall be settled by
one arbitrator in accordance with the Commercial Arbitration Rules then in
effect of the American Arbitration Association. Such arbitrator shall be
provided through the CFR Institute for Dispute Resolution ("CFR") by
mutual agreement of the parties, provided that, absent such agreement, the
arbitrator shall be appointed by CFR. In this event, such arbitrator may not
have any pre-existing, direct or indirect relationship with any party to the
dispute. Each party hereto expressly consents to, and waives any future
objection to, such forum and arbitration rules. Judgment upon any award may be
entered by any state or federal court having jurisdiction thereof. Except as
required by law (including, without limitation, the rules and regulations of the
Securities and Exchange Commission and the Nasdaq Stock Market, if applicable),
neither party nor the arbitrator shall disclose the existence, content, or
results of any arbitration hereunder without the prior written consent of all
parties. Except as provided herein, the Federal Arbitration Act shall govern the
interpretation, enforcement and all proceedings pursuant to this Section.
Adherence to this dispute resolution process shall not limit the right of the
Company or Executive to obtain any provisional remedy, including without
limitation, injunctive or similar relief set forth above, from any court of
competent jurisdiction as may be necessary to protect their respective rights
and interests pending arbitration. Notwithstanding the foregoing sentence, this
dispute resolution procedure is intended to be the exclusive method of resolving
any Claims arising out of or relating to this Agreement. The arbitration
procedures shall follow the substantive law of the State of Colorado, including
the provisions of statutory law dealing with arbitration, as it may exist at the
time of the demand for arbitration, insofar as said provisions are not in
conflict with this Agreement and specifically excepting therefrom sections of
any such statute dealing with discovery and sections requiring notice of the
hearing date by registered or certified mail.

Executed on the date set forth above.

COMPANY:

WILD OATS MARKETS, INC.





By/s/ Freya R. Brier



EXECUTIVE:





By/s/ Edward F. Dunlap

Edward F. Dunlap