***CONFIDENTIAL TREATMENT REQUESTED***

MEMORANDUM OF UNDERSTANDING

 

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

 

Recitals.

 

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

 

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

 

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

 

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

 

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

 

2. Commitment to Transition Plan. The parties agreed that anobjective of both parties is to establish a transition plan whereby TOL’s conversionfrom primary distributor to secondary distributor will be completed by no later than March15, 2004. To carry out the plan, each party agreed to establish a transition team. Thenames and positions of each party’s team members are set forth on Exhibit A. Theteams shall meet promptly and as necessary to work in good faith to develop a detailedtransition plan by no later than December 12, 2003. The resulting mutually agreeable plan("Transition Plan") will be set forth in writing, will incorporate andimplement, 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 incorporatedherein by attachment hereto as Exhibit C. 

 

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

 

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

----

***CONFIDENTIAL TREATMENT REQUESTED***

this Memorandum of Understanding, TOL shall continue to operate asWO’s primary wholesale distributor of the Products in accordance with Section 2 ofthe 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 shallcontinue in full force and effect. **[CONFIDENTIAL]**(4).

 

7. Non-solicitation. Each party agrees that for **[CONFIDENTIAL]**(5).aperiod of one year from the date hereof, it will refrain from soliciting and shall notdirectly or indirectly solicit or recruit the officers and management ("CoveredEmployees") of the other party, **[CONFIDENTIAL]**(6), to leave the service ofthat party or solicit, encourage or cause any business opportunity of the other party tomodify, terminate, or refrain from entering into or expanding any business relationshipbetween such person or entity and that party. This obligation shall survive thetermination of the parties’ Agreement and the Transition Period. The employment of aCovered Employee of one party by the other party following the Covered Employee’ssubmission of an unsolicited response to a public posting of an available employmentposition shall be deemed not to violate this section.

 

 

8. **[CONFIDENTIAL]**(7).

 

9. Survival of Provisions of Agreement. The following paragraphswill survive the termination of the Agreement: 3(c), 10, 13 (for not more than 90 daysfollowing termination of the Agreement), 14(b), 18 (subject to termination pursuant tothis Memorandum), 19(b) (on the final date by the transition team for the cessation ofMCBs), 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 shallhave 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. Theconfidential, 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 totransition its personnel from WO’s Boulder facility any time after January 31, 2004,but **[CONFIDENTIAL]**(13), unless released earlier by the Transition Team. TOL shallhave the right to transition all other dedicated regional personnel at any time afterDecember 31, 2003. 

 

13. Attorneys’ Fees and Costs. The parties agree thatneither party is a "prevailing party" in regards to this Memorandum ofUnderstanding, the Transition Plan, any subsequently executed related agreement or anymatter resolved therein and neither party may make any claim or demand pursuant to Section24(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 CEORichard A. Thorne,Chairman and CEO 
Koninklijke Wessanen, n.v.By: _/s/__Ad Veenhof____________Ad Veenhof, Chairman and CEOAS TO PARAGRAPH 6 ONLY********