***CONFIDENTIAL TREATMENT REQUESTED***

MEMORANDUM OF UNDERSTANDING

 

This Memorandum of Understanding, dated November 19, 2003, is between Wild Oats
Market, Inc. ("WO") and Tree of Life, Inc. ("TOL").

 

Recitals.

 

A. WO and TOL are parties to an Agreement for Distribution of Product dated June
14, 2002 (the "Agreement").

 

B. The parties have determined that it is in their best interests to terminate
the Agreement prior to the expiration of its term, and to effectuate an orderly
transition of WO’s primary distribution business.

 

C. This Memorandum of Understanding sets forth the basic terms of the parties’
understanding regarding the termination of the Agreement and the transition of
WO’s primary distribution business from TOL to a third party (the "New
Distributor").

 

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

 

1. Meaning. Unless otherwise defined in this Memorandum of Understanding, all
capitalized terms herein will carry the same meaning as defined in the
Agreement.

 

2. Commitment to Transition Plan. The parties agreed that an objective of both
parties is to establish a transition plan whereby TOL’s conversion from primary
distributor to secondary distributor will be completed by no later than March
15, 2004. To carry out the plan, each party agreed to establish a transition
team. The names and positions of each party’s team members are set forth on
Exhibit A. The teams shall meet promptly and as necessary to work in good faith
to develop a detailed transition plan by no later than December 12, 2003. The
resulting mutually agreeable plan ("Transition Plan") will be set forth in
writing, will incorporate and implement, at a minimum, the terms reached at the
parties’ November 19, 2003 meeting, which are contained in Exhibit B, and will
be signed by both parties and incorporated herein by attachment hereto as
Exhibit C.

 

3. Secondary Distributorship Agreement. TOL and WO agree to negotiate in good
faith the terms of a secondary distributorship relationship. The parties agree
that this section shall not create any obligation to enter into any such
agreement.

 

4. Termination of Original Agreement. Subject to the terms and conditions of
this Memorandum of Understanding and such additional terms as shall be
negotiated hereafter and contained in the Transition Plan, the Agreement will
terminate effective no later than March 15, 2004 (the "Termination Date"). The
parties will address issues in the Transition Plan that will impact the method
and manner of the parties’ transition. In the event of a conflict between the
terms of the Agreement and the Transition Plan, the Transition Plan shall
control. The parties’ intent is that, except as established in the Transition
Plan or in

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***CONFIDENTIAL TREATMENT REQUESTED***

this Memorandum of Understanding, TOL shall continue to operate as WO’s primary
wholesale distributor of the Products in accordance with Section 2 of the
Agreement [CONFIDENTIAL](1) , from and after the date hereof and until
[CONFIDENTIAL](2), unless otherwise agreed in the Transition Plan.

 

> > 5. Mutual Release of Claims. [CONFIDENTIAL](3).

6. Non-Disparagement. Paragraph 24(d) of the Agreement shall continue in full
force and effect. [CONFIDENTIAL](4).

 

7. Non-solicitation. Each party agrees that for [CONFIDENTIAL](5).a period of
one year from the date hereof, it will refrain from soliciting and shall not
directly or indirectly solicit or recruit the officers and management ("Covered
Employees") of the other party, [CONFIDENTIAL](6), to leave the service of that
party or solicit, encourage or cause any business opportunity of the other party
to modify, terminate, or refrain from entering into or expanding any business
relationship between such person or entity and that party. This obligation shall
survive the termination of the parties’ Agreement and the Transition Period. The
employment of a Covered Employee of one party by the other party following the
Covered Employee’s submission of an unsolicited response to a public posting of
an available employment position shall be deemed not to violate this section.

 

 

8. [CONFIDENTIAL](7).

 

9. Survival of Provisions of Agreement. The following paragraphs will survive
the termination of the Agreement: 3(c), 10, 13 (for not more than 90 days
following termination of the Agreement), 14(b), 18 (subject to termination
pursuant to this Memorandum), 19(b) (on the final date by the transition team
for the cessation of MCBs), 24(b) through (d) inclusive, (g), (i), (j) and (p).

 

10. Elimination of Certain Requirements during Transition Period. From and after
the date hereof, the following provisions contained in the Agreement shall have
no further effect, except to the extent stated:

 

> > a. Section 6(b)(ii);
> > 
> > b. WO may not add any new Product items under 3(b)(i) to the APL nor shall
> > TOL be obligated to achieve distribution of new items for which it has not
> > received notice from WO past the deadlines provided in the Transition Plan;

> c.  [CONFIDENTIAL](8),
> 
> 
> 
> 
> 
> d.  [CONFIDENTIAL](9),
> 
> 
> 
> e.  As of February 4, 2004, Section 9, all TOL promotional and marketing
> support and activity shall cease.

 

--------------------------------------------------------------------------------

(1)  Confidential treatment has been requested for the redacted portion. The
confidential, redacted portions have been filed separately with the SEC.
(2)  Ibid.
(3)  Ibid.
(4)  Ibid.
(5)  Ibid.
(6)  Ibid.
(7)  Ibid.
(8)  Ibid.
(9)  Ibid.

 

--------------------------------------------------------------------------------

 

***CONFIDENTIAL TREATMENT REQUESTED***

 

11. Accounts Receivable and Vendor Issues.

 

> > a. WO shall continue to pay for all Product purchases and other charges due
> > TOL within terms and in the manner set forth in Section 19 of the Agreement.
> > 
> > b. During the weekly Transition Team meetings, [CONFIDENTIAL](10). of TOL
> > and [CONFIDENTIAL](11). of WO shall confer to review and resolve all
> > outstanding accounts receivable and unresolved vendor issues to the extent
> > not addressed in the Transition Plan. [CONFIDENTIAL](12).

12. Transition of TOL Personnel. TOL shall have the right to transition its
personnel from WO’s Boulder facility any time after January 31, 2004, but
[CONFIDENTIAL](13), unless released earlier by the Transition Team. TOL shall
have the right to transition all other dedicated regional personnel at any time
after December 31, 2003.

 

13. Attorneys’ Fees and Costs. The parties agree that neither party is a
"prevailing party" in regards to this Memorandum of Understanding, the
Transition Plan, any subsequently executed related agreement or any matter
resolved therein and neither party may make any claim or demand pursuant to
Section 24(c) of the Agreement for any attorney’s fees or costs arising
therefrom.

 

> > 14. Miscellaneous.
> > 
> > > a. Except as expressly provided herein, the Agreement shall remain
> > > unmodified and in full force and effect. In the event of a conflict
> > > between the terms of the Agreement and this Memorandum or the Transition
> > > Plan, this Memorandum or the Transition Plan, as applicable, shall
> > > control.
> > > 
> > > b. This Memorandum may be executed in one or more counterparts, all of
> > > which shall be considered one and the same agreement, and will become a
> > > binding agreement when one or more counterparts have been signed by each
> > > party and delivered to the other party. Facsimile signatures shall be
> > > deemed original signatures for purposes of execution of this document.
> > > 
> > > c. WO and TOL each represent and warrant to the other that the individual
> > > executing this Memorandum has full authority to execute this Memorandum,
> > > and when executed this Memorandum is a binding obligation of the party.
> > > 
> > > d. WO and TOL agree that, from the date hereof and any time after the
> > > Termination Date, each party shall take such other actions and execute
> > > such other documents as are reasonably requested by the other party and
> > > consistent with the terms of this Memorandum and the attachments hereto
> > > for the purpose of effecting the transactions contemplated by this
> > > Memorandum.

 

--------------------------------------------------------------------------------

(10)  Confidential treatment has been requested for the redacted portion. The
confidential, redacted portions have been filed separately with the SEC
(11)  Ibid.
(12)  Ibid.
(13)  Ibid.
(14)  Ibid.

--------------------------------------------------------------------------------

> > >  
> > > 
> > > ***CONFIDENTIAL TREATMENT REQUESTED***
> > > 
> > >  
> > > 
> > > e. Any disputes arising out of or relating to this Memorandum of
> > > Understanding, the Transition Plan or the Agreement after the execution
> > > date here of shall be submitted to final and binding arbitration before a
> > > single arbitrator selected from the American Arbitration Association’s
> > > Complex Commercial Arbitration panel and the arbitration shall be
> > > conducted in accordance with the American Arbitration Association’s
> > > Commercial Dispute rules applicable to Large, Complex Disputes. The
> > > parties shall endeavor to mutually agree to the arbitrator, but, in the
> > > event they are unsuccessful, the arbitrator shall be selected by the
> > > American Arbitration Association. Any such arbitration shall be conducted
> > > in New York, New York.

Executed as of the date first set forth above.

 

WILD OATS MARKETS, INC. TREE OF LIFE, INC. By: _/s/ Perry D. Odak_______
By:__/s/ Richard A. Thorne___ Perry D. Odak, President and CEO Richard A.
Thorne,Chairman and CEO  

Koninklijke Wessanen, n.v.

By: _/s/__Ad Veenhof____________ Ad Veenhof, Chairman and CEO AS TO PARAGRAPH 6
ONLY