Exhibit 10.1

WHOLE FOODS MARKET, INC.

SECURITIES PURCHASE AGREEMENT

November 5, 2008

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TABLE OF CONTENTS

 

              Page

1.

  Purchase and Sale of Stock.    1  

  1.1

   Sale and Issuance of Series A Preferred Stock.    1  

  1.2

   Closing.    2

2.

  Representations and Warranties of the Company.    2  

  2.1

   Organization, Good Standing and Qualification.    2  

  2.2

   Financial Statements.    3  

  2.3

   Authorization; Enforceable Agreement.    3  

  2.4

   Indebtedness.    4  

  2.5

   Litigation.    4  

  2.6

   Title.    5  

  2.7

   Taxes.    5  

  2.8

   Subsidiaries.    5  

  2.9

   Governmental Consents.    5  

  2.10

   Permits and Licenses.    5  

  2.11

   ERISA.    5  

  2.12

   Valid Issuance of Preferred and Common Stock.    6  

  2.13

   Capitalization.    6  

  2.14

   Investment Company Act.    7  

  2.15

   Compliance with Other Instruments.    7  

  2.16

   Environmental Matters.    7  

  2.17

   Compliance with Laws.    8  

  2.18

   No Material Adverse Effect.    8  

  2.19

   Registration Rights; Voting Rights.    8  

  2.20

   Reports.    8  

  2.21

   No Restriction on Ability to Pay Cash Dividends.    9

3.

  Representations and Warranties of the Investors.    9  

  3.1

   Private Placement.    9  

  3.2

   Organization.    11  

  3.3

   Power and Authority.    11  

  3.4

   Authorization; Enforceability.    12  

  3.5

   No Default or Violation.    12  

  3.6

   Financial Capability.    12

4.

  Conditions to Investors’ Obligations at Closing.    12  

  4.1

   Representations and Warranties.    12

 

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  4.2

   Performance.    13  

  4.3

   Compliance Certificate.    13  

  4.4

   Statement of Designations.    13  

  4.5

   Listing of Shares.    13  

  4.6

   Antitrust.    13  

  4.7

   Ancillary Agreements.    13  

  4.8

   Opinion of Company Counsel.    13  

  4.9

   Board of Directors.    13  

  4.10

   Placement Fee.    13  

  4.11

   Payment of Expenses.    13

5.

  Conditions of the Company’s Obligations at Closing.    14  

  5.1

   Representations and Warranties.    14  

  5.2

   Antitrust.    14

6.

  Covenants.    14  

  6.1

   NASDAQ Notice; Listing of Shares.    14  

  6.2

   State Securities Laws.    14  

  6.3

   Antitrust.    14  

  6.4

   Redemption of Outstanding Convertible Notes.    15  

  6.5

   Negative Covenants Prior to Closing.    15  

  6.6

   Use of Proceeds.    15  

  6.7

   Reservation of Common Stock; Issuance of Shares of Common Stock.    15  

  6.8

   Transfer Taxes.    16  

  6.9

   No Issuance of Convertible Debt.    16  

  6.10

   Information Rights/Management Rights.    16

7.

  Right of First Offer.    17  

  7.1

   Certain Definitions.    17  

  7.2

   Right of First Offer.    18  

  7.3

   Termination of Preemptive Right.    19

8

  Voting.    19  

  8.1

   Shares subject to Voting Agreement.    19  

  8.2

   Voting Agreement as to Certain Matters.    19  

  8.3

   Ability to Vote on All Other Matters.    20  

  8.4

   No Successors in Interest.    20  

  8.5

   Termination of Voting Agreement.    20

9.

  Restrictions on Transfer.    20  

  9.1

   No Transfer of Shares Prior to Third Anniversary.    20  

  9.2

   No Transfer to Competitors.    20  

  9.3

   No Block Transfers to Individual Persons.    21

 

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  9.4

   No Restriction on Hedging, Etc.    21

10.

  Standstill.    21

11.

  Board Matters.    21  

11.1

   Definitions.    21  

11.2

   Committees.    21  

11.3

   Board Nomination.    22

12.

  Termination.    22  

12.1

   Termination of Agreement Prior to Closing.    22  

12.2

   Effect of Termination Prior to Closing.    23

13.

  Indemnification.    23

14.

  Publicity.    25

15.

  Miscellaneous.    25  

15.1

   Governing Law.    25  

15.2

   Submission to Jurisdiction; Venue; Waiver of Trial by Jury.    25  

15.3

   Survival.    26  

15.4

   Enforcement of Agreement.    26  

15.5

   Successors and Assigns.    26  

15.6

   No Third Party Beneficiaries.    27  

15.7

   No Personal Liability of Directors, Officers, Owners, Etc.    27  

15.8

   Entire Agreement.    27  

15.9

   Notices, Etc.    27  

15.10

   Delays or Omissions.    28  

15.11

   Expenses.    29  

15.12

   Amendments and Waivers.    29  

15.13

   Effect of Amendment or Waiver.    29  

15.14

   Rights of Holders.    29  

15.15

   Finder’s Fee.    29  

15.16

   Counterparts.    29  

15.17

   Severability.    29  

15.18

   Titles and Subtitles.    30

 

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SCHEDULES AND EXHIBITS

Schedule A    Schedule of Investors Exhibit A    Form of Statement of
Designations Exhibit B    Form of Registration Rights Agreement Exhibit C   
Definitions Exhibit D    Form of Opinion of Dechert LLP Exhibit E    Form of
Opinion of Hallett & Perrin, P.C. Exhibit F    Form of Press Release

 

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SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is made as of the 5th day
of November, 2008, among WHOLE FOODS MARKET, INC., a Texas corporation (the
“Company”), and GREEN EQUITY INVESTORS V, L.P., a Delaware limited partnership,
and GREEN EQUITY INVESTORS SIDE V, L.P., a Delaware limited partnership (each,
an “Investor” and, collectively, the “Investors”; the Investors together with
any assignee or transferee of the Series A Preferred Stock (as defined below) in
accordance with the terms hereof, the “Holders”).

W I T N E S S E T H:

WHEREAS, the Company wants to sell, and the Investors want to buy, shares of the
Company’s Series A Preferred Stock, on the terms and conditions contained
herein;

WHEREAS, in connection with such sale and purchase, the Company is willing to
make certain representations and warranties and to agree to observe certain
covenants set forth herein for the benefit of the Investors, and the Investors
will rely on such representations, warranties and covenants as a material
inducement to their purchase of the Series A Preferred Stock;

WHEREAS, in connection with such sale and purchase, the Investors are willing to
make certain representations and warranties and to agree to observe certain
covenants set forth herein for the benefit of the Company, and the Company will
rely on such representations, warranties and covenants as a material inducement
to its sale of the Series A Preferred Stock; and

WHEREAS, in connection with such sale and purchase, the Company is willing to
grant certain rights of first offer as set forth herein and the Investors will
rely on such rights as a material inducement to the purchase of the Series A
Preferred Stock;

NOW THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants and conditions contained herein, the
parties hereto agree as follows:

1. Purchase and Sale of Stock.

1.1 Sale and Issuance of Series A Preferred Stock.

(a) The Company shall adopt and file with the Secretary of State of the State of
Texas on or before the Closing (as defined below in Section 1.2) the Statement
of Designations of the Series A Preferred Stock (as defined below) in the form
attached hereto as Exhibit A (the “Statement of Designations”).

(b) Subject to the terms and conditions of this Agreement, each Investor agrees,
severally and not jointly, to purchase at the Closing, and the Company agrees,
severally and not jointly, to sell and issue to the Investors at the Closing,
that number of shares of the Company’s Series A 8.00% Redeemable Convertible

 

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Exchangeable Participating Preferred Stock, par value $0.01 per share (the
“Series A Preferred Stock”), set forth opposite such Investor’s name on Schedule
A hereto, at a purchase price of $1,000.00 per share. The shares of Series A
Preferred Stock to be issued and sold by the Company to the Investors pursuant
to this Agreement are collectively referred to herein as the “Shares.” The
Series A Preferred Stock and the Shares will have the rights, preferences,
privileges and restrictions set forth in the Statement of Designations.

1.2 Closing. The consummation of the purchase and sale of the Shares and other
transactions contemplated hereby (the “Closing”) shall take place at the offices
of Dechert LLP, 1775 I Street, NW, Washington, D.C. 20006, at 10:00 a.m. New
York City time, as promptly as practicable (but no more than three (3) business
days) following the first date on which all conditions set forth in Sections 4
and 5 hereof have been satisfied or waived (other than those conditions that by
their nature are to be satisfied by actions taken at the Closing), or at such
other time and place as the Company and the Investors shall mutually agree. At
the Closing, the Company shall deliver to the Investors a certificate or
certificates representing that number of Shares set forth in Section 1.1(b) of
this Agreement against payment of the purchase price therefor by wire transfer
of immediately available funds or such other form of payment as may be approved
by the Company’s Board of Directors (the “Board”). At the Closing, the Investors
and the Company shall execute and deliver the Registration Rights Agreement of
even date herewith between the Company and the Investors, the form of which is
attached hereto as Exhibit B (the “Registration Rights Agreement”).

2. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investors as of the date hereof that, except (x) as
otherwise disclosed or incorporated by reference in the Company’s Annual Report
on Form 10-K for the fiscal year ended September 30, 2007 or its other reports
and forms filed with or furnished to the Securities and Exchange Commission (the
“Commission”) under Sections 12, 13, 14 or 15(d) of the Securities Exchange Act
of 1934 (the “Exchange Act”) after September 30, 2007 (excluding disclosures of
risks included in any forward-looking statement disclaimers or other statements
that are similarly nonspecific and are predictive and forward-looking in nature)
and before the date of this Agreement (all such reports covered by this clause
(x) collectively, the “SEC Reports”) and (y) as set forth in the disclosure
letter dated as of the date hereof provided to the Investors separately,
specifically identifying the relevant subparagraph(s) hereof (provided, that
disclosure in any subparagraph of such disclosure letter shall apply to any
section or subparagraph hereof to the extent it is reasonably apparent on its
face that such disclosure is relevant to such section or subparagraph of this
Agreement) (certain capitalized terms used but not otherwise defined in this
Agreement have the respective meanings set forth in Exhibit C hereto):

2.1 Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the state of its incorporation; has all corporate power and authority to
own its properties and conduct its business as presently conducted; and is duly
qualified to do business and in good standing in each and every state in the
United States of America where its business requires such qualification, except
where failure to qualify would not reasonably be expected to have a Material
Adverse Effect. True and accurate copies of the Company’s Restated Articles of
Incorporation and Bylaws, each as amended and in effect as of the date hereof,
have been made available to the Investors.

 

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2.2 Financial Statements.

(a) The financial statements of the Company and its Subsidiaries on a
consolidated basis for each of the periods included or incorporated by reference
in the SEC Reports fairly present in all material respects, in accordance with
Generally Accepted Accounting Principles, the financial condition and the
results of operations of the Company and its Subsidiaries as of the dates and
for the periods indicated (subject, in the case of unaudited quarterly
statements, to normal year-end adjustments).

(b) The Company and its Subsidiaries do not have any liabilities or obligations
that would be required under Generally Accepted Accounting Principles, as in
effect on the date of this Agreement, to be reflected on a consolidated balance
sheet of the Company (accrued, absolute, contingent or otherwise), other than
liabilities or obligations (i) reflected on, reserved against, or disclosed in
the notes to, the Company’s consolidated balance sheet included in the Company’s
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2008,
(ii) that were incurred in the ordinary course of business and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, or (iii) that were not incurred in the ordinary course of
business and do not exceed $20,000,000 in the aggregate.

(c) The Company and its Subsidiaries do not have any liabilities or obligations
(accrued, absolute, contingent or otherwise), other than liabilities or
obligations (i) reflected on, reserved against, or disclosed in the notes to,
the Company’s consolidated balance sheet included in the Company’s Quarterly
Report on Form 10-Q for the fiscal quarter ended June 30, 2008, (ii) that were
incurred in the ordinary course of business and would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect, or
(iii) that were not incurred in the ordinary course of business and do not
exceed $20,000,000 in the aggregate.

2.3 Authorization; Enforceable Agreement.

(a) All corporate action on the part of the Company, its officers, directors,
and shareholders necessary for the authorization, execution, and delivery of
this Agreement and the Registration Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale, and delivery of the Shares being
sold hereunder (and the shares of Series A Preferred Stock issuable in respect
of dividends thereon from time to time in accordance with the terms of the
Statement of Designations) and the Common Stock issuable upon conversion of the
Shares has been taken, and this Agreement and the Registration Rights Agreement,
when executed and delivered, assuming due authorization, execution and delivery
by the Investors, constitutes and will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, subject to: (i) laws limiting the availability of specific

 

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performance, injunctive relief, and other equitable remedies; (ii) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect generally relating to or affecting creditors’ rights generally; and
(iii) limitations on the enforceability of indemnification provisions contained
in the Registration Rights Agreement (the “Enforceability Exceptions”). The sale
of the Shares is not, and the subsequent conversion of the Shares into Common
Stock will not be, subject to any preemptive rights or rights of first offer.

(b) On or prior to the date hereof, the Board has duly adopted resolutions
(i) evidencing its determination that as of the date hereof this Agreement and
the transactions contemplated hereby are fair to and in the best interests of
the Company and its shareholders, (ii) approving this Agreement, the
Registration Rights Agreement and the transactions contemplated hereby and
thereby, (iii) declaring this Agreement and the issuance and sale of the Shares
advisable and (iv) adopting the Statement of Designations, and, as of the date
hereof, such resolutions have not been rescinded, modified or withdrawn in any
way. The Company has taken all actions necessary or appropriate to ensure that
the restrictions on business combinations contained in Article 13.03.A of the
Texas Business Corporation Act and Section 21.606 of the Texas Business
Organizations Code will not apply with respect to or as a result of this
Agreement, the Statement of Designations, the Registration Rights Agreement and
the transactions contemplated hereby and thereby, including the issuance of
Common Stock upon conversion of the Shares, without any further action on the
part of the shareholders or the Board. True and complete copies of all
resolutions of the Board reflecting such actions have been previously provided
to the Investors. No provision of the Articles of Incorporation or the Bylaws of
the Company would, directly or indirectly, restrict or impair the ability of the
Investors to vote, or otherwise to exercise the rights of a shareholder with
respect to, the Shares (or any shares of Common Stock issuable upon conversion
of the Shares) or any other shares of the Company that may be acquired or
controlled by the Investors.

2.4 Indebtedness. Neither the Company nor any of its Subsidiaries is,
immediately prior to this Agreement, or will be, at the time of the Closing
after giving effect thereto, in default in the payment of any Indebtedness or in
default under any agreement relating to its material Indebtedness or under any
mortgage, deed of trust, security agreement or lease to which it is a party.

2.5 Litigation. There is no action, suit, proceeding or investigation pending
or, to the Knowledge of the Company, overtly threatened against, nor any
outstanding judgment, order or decree against, the Company or any of its
Subsidiaries before or by any Governmental Authority or arbitral body which in
the aggregate have, or if adversely determined, would reasonably be expected to
have, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
is in default with respect to any judgment, order or decree of any Governmental
Authority in a materially adverse manner. The Company is not a party or subject
to, and none of its assets is bound by, the provisions of any material order,
writ, injunction, judgment, or decree of any court or government agency or
instrumentality. There is no material action, suit, or proceeding by the Company
currently pending or that the Company intends to initiate.

 

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2.6 Title. Each of the Company and its Subsidiaries has good and marketable
title to its Property that is real property and good and valid title to all of
its other Property (other than negligible assets not material to the operations
of the Company or any of its Subsidiaries), free and clear of all Liens except
for Incidental Liens, except as would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Company and its Subsidiaries, taken as a whole, to conduct their businesses in
the ordinary course of business consistent with past practices.

2.7 Taxes. Each of the Company and its Subsidiaries has filed all tax returns
required to have been filed and paid all taxes shown thereon to be due, except
those for which extensions have been obtained and except for those which are
being contested in good faith and by appropriate proceedings and in respect of
which adequate reserves with respect thereto are maintained in accordance with
Generally Accepted Accounting Principles.

2.8 Subsidiaries. As of the date hereof, the Company has no Subsidiaries other
than as listed in the SEC Reports.

2.9 Governmental Consents. No consent, approval, order, or authorization of, or
registration, qualification, declaration, or filing with, any federal, state, or
local governmental authority on the part of the Company is required in
connection with the offer, sale, or issuance of the Shares (and the Common Stock
issuable upon conversion of the Shares) or the consummation of any other
transaction contemplated hereby, except for the following: (i) the filing of the
Statement of Designations in the office of the Secretary of State of the State
of Texas, which will be filed by the Company prior to the Closing; (ii) the
compliance with other applicable state securities laws, which compliance will
have occurred within the appropriate time periods therefor; (iii) the
notification of the issuance and sale of the Shares to NASDAQ in accordance with
the NASDAQ Rule 4310(c)(17)(B); (iv) the compliance with the applicable
requirements of the Hart-Scott-Rodino-Antitrust Improvements Acts of 1976 (the
“HSR Act”); and (v) the filing with the Commission of such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement. Assuming that the representations
of the Investors set forth in Section 3 below are true and correct, the offer,
sale, and issuance of the Shares in conformity with the terms of this Agreement
are exempt from the registration requirements of Section 5 of the Securities Act
of 1933, as amended (the “Securities Act”), and all applicable state securities
laws, and neither the Company nor any authorized agent acting on its behalf will
take any action hereafter that would cause the loss of such exemptions.

2.10 Permits and Licenses. The Company and each of its Subsidiaries possess all
permits and licenses of Governmental Authorities that are required to conduct
its business, except for such permits or licenses the absence of which would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of the Company and its Subsidiaries, taken as a
whole, to conduct their businesses in the ordinary course of business consistent
with past practices.

2.11 ERISA. No Reportable Event (as defined in Section 4043(c) of ERISA but
excluding those events as to which the 30-day notice period is waived by
applicable

 

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regulations) has occurred with respect to any Plan. Each Plan complies in all
material respects with all applicable provisions of ERISA, and the Company and
each of its Subsidiaries have filed all reports required by ERISA and the Code
to be filed with any Governmental Agency with respect to each Plan. The Company
has no Knowledge of any event which would reasonably be expected to result in a
liability of the Company or any of its Subsidiaries to the Pension Benefit
Guaranty Corporation other than for applicable premiums. No event has occurred
and no condition exists that might reasonably be expected to constitute grounds
for a Plan to be terminated under circumstances which would cause the lien
provided under Section 4068 of ERISA to attach to any Property of the Company or
any of its Subsidiaries. No event has occurred and no condition exists that
might reasonably be expected to cause the lien provided under Section 303 of
ERISA or Section 430 of the Code to attach to any Property of the Company or any
of its Subsidiaries.

2.12 Valid Issuance of Preferred and Common Stock. The Shares being purchased by
the Investors hereunder, when issued, sold, and delivered in accordance with the
terms of this Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid, and nonassessable, and will be free of restrictions
on transfer other than restrictions under this Agreement and under applicable
state and federal securities laws. The Common Stock issuable upon conversion of
the Shares purchased under this Agreement has been duly and validly reserved for
issuance and, upon issuance in accordance with the terms of the Statement of
Designations, will be duly and validly issued, fully paid, and nonassessable and
will be free of restrictions on transfer other than restrictions on transfer
under this Agreement and the Registration Rights Agreement and under applicable
state and federal securities laws.

2.13 Capitalization. The authorized capital stock of the Company consists of
300,000,000 shares of Common Stock, with no par value (“Common Stock”), of which
140,285,553 were issued and outstanding as of September 28, 2008, and 5,000,000
shares of Preferred Stock (“Preferred Stock”), par value $0.01, none of which
are issued and outstanding (excluding the Shares to be issued to the Investors
pursuant to this Agreement). Each Share initially will be convertible into
68.9655 shares of Common Stock per $1,000 of accrued liquidation preference of
the Series A Preferred Stock, subject to anti-dilution adjustments, all as set
forth in the Statement of Designations. As of the close of business of
September 28, 2008, the Company has reserved an aggregate of 58,600,000 shares
of Common Stock for issuance to employees and consultants pursuant to the
Company’s 2007 Stock Incentive Plan, under which (i) 36,644,871 shares have been
issued and are reflected in the currently outstanding Common Stock, (ii) options
to purchase 17,417,741 shares are presently outstanding and (iii) 4,537,388
shares remain available for future grant. As of the close of business of
September 28, 2008, the Company has reserved an aggregate of 800,000 shares of
Common Stock for issuance to employees and consultants pursuant to the Company’s
Team Member Stock Purchase Plan, under which (i) 614,777 shares have been issued
and are reflected in the currently outstanding Common Stock, (ii) no options to
purchase shares are presently outstanding and (iii) 185,223 shares remain
available for future grant. As of the close of business of September 28, 2008,
the Company has reserved an aggregate of 6,571,413 shares of Common Stock for
issuance upon conversion of its Zero Coupon Convertible Subordinated Debentures
due 2018 (the “Convertible Debentures”), of which 6,479,994 shares have been
issued upon conversion of Convertible Debentures and are reflected in the
currently outstanding Common Stock, and the remaining outstanding Convertible
Debentures are entitled to convert

 

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into 91,419 shares. All issued and outstanding shares have been duly authorized
and validly issued and are fully paid and nonassessable. The Company will
reserve that number of shares of Common Stock sufficient for issuance upon
conversion of the Series A Preferred Stock being issued and sold pursuant to
this Agreement. Other than as provided in this Agreement and the Registration
Rights Agreement, there are no other outstanding rights, options, warrants,
preemptive rights, rights of first offer, or similar rights for the purchase or
acquisition from the Company of any securities of the Company, nor are there any
commitments to issue or execute any such rights, options, warrants, preemptive
rights or rights of first offer. Except as otherwise provided in the Statement
of Designations, there are no outstanding rights or obligations of the Company
to repurchase or redeem any of its securities. The respective rights,
preferences, privileges, and restrictions of the Preferred Stock and the Common
Stock are as stated in the Statement of Designations and the Company’s Restated
Articles of Incorporation. All outstanding securities have been issued in
compliance with state and federal securities laws.

2.14 Investment Company Act. Neither the Company nor any of its Subsidiaries is
an investment company within the meaning of the Investment Company Act of 1940,
as amended, or, directly or indirectly, controlled by or acting on behalf of any
Person which is an investment company, within the meaning of said Act.

2.15 Compliance with Other Instruments. The Company is not in violation or
default of any provision of its Restated Articles of Incorporation or Bylaws,
each as amended and in effect as of the Closing. The execution, delivery, and
performance of and compliance with this Agreement and the Registration Rights
Agreement and the issuance and sale of the Shares will not (x) result in any
default or violation of the Company’s Restated Articles of Incorporation
(including the Statement of Designations) or Bylaws, (y) result in any default
or violation of any agreement relating to its material Indebtedness or under any
mortgage, deed of trust, security agreement or lease to which it is a party or
in any default or violation of any material judgment, order or decree of any
Governmental Authority, or (z) be in conflict with or constitute, with or
without the passage of time or giving of notice, a default under any such
provision, require any consent or waiver under any such provision, or result in
the creation of any mortgage, pledge, lien, encumbrance, or charge upon any of
the properties or assets of the Company pursuant to any such provision, or the
suspension, revocation, impairment or forfeiture of any material permit,
license, authorization, or approval applicable to the Company, its business or
operations, or any of its assets or properties pursuant to any such provision.

2.16 Environmental Matters. No activity of the Company or any of its
Subsidiaries requires any Environmental Permit which has not been obtained and
which is not now in full force and effect, except to the extent failure to have
any such Environmental Permit would not reasonably be expected to have a
Material Adverse Effect. The Company and its Subsidiaries are and have been in
compliance with all applicable Requirements of Environmental Law and
Environmental Permits including applicable limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Requirement of Environmental Law or
Environmental Permit, except where failure to be in such compliance would not
reasonably be expected to have a Material Adverse Effect. The Company and its
Subsidiaries (i) including with respect to their Property are not subject to any
(A) Environmental Claims or (B) Environmental Liabilities, in either case
arising from or based upon any act, omission, event, condition or circumstance
occurring or existing on or prior to the

 

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date hereof which would reasonably be expected to have a Material Adverse
Effect, and (ii) have not received individually or collectively any written
notice of any violation or alleged violation of any Requirements of
Environmental Law or Environmental Permit or any Environmental Claim in
connection with their respective Property which would reasonably be expected to
have a Material Adverse Effect. To the Knowledge of the Company, the present and
future liability (including any Environmental Liability and any other damage to
Persons or Property), if any, of the Company and with respect to the Property of
any of the Company or any of its Subsidiaries which is reasonably expected to
arise in connection with Requirements of Environmental Law, Environmental
Permits and other environmental matters will not have a Material Adverse Effect
on the Company and its Subsidiaries on a consolidated basis.

2.17 Compliance with Laws. Neither the Company nor any of its Subsidiaries is in
material violation of any applicable federal, state, local, foreign or other
law, statute, regulation, rule, ordinance, code, convention, directive, order,
judgment or other legal requirement (collectively, “Laws”) of any Governmental
Authority, except where such violation would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of the Company and its Subsidiaries, taken as a whole, to conduct their
businesses in the ordinary course of business consistent with past practices. To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is
being investigated with respect to, or been overtly threatened to be charged
with or given notice of any violation of, any applicable Law, except for such of
the foregoing as would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of the Company and its
Subsidiaries, taken as a whole, to conduct their businesses in the ordinary
course of business consistent with past practices.

2.18 No Material Adverse Effect. Since September 30, 2007 and except as
described in the SEC Reports, no event or circumstance has occurred that,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect.

2.19 Registration Rights; Voting Rights. Except as provided in the Registration
Rights Agreement, (i) the Company has not granted or agreed to grant, and is not
under any obligation to provide, any rights to register under the Securities Act
any of its presently outstanding securities or any of its securities that may be
issued subsequently, and (ii) to the Company’s Knowledge, no shareholder of the
Company has entered into any agreement with respect to the voting of equity
securities of the Company.

2.20 Reports.

(a) Since September 30, 2006, the Company has timely filed all documents
required to be filed with the Commission pursuant to Sections 13(a), 14(a) or
15(d) of the Exchange Act, except where the failure to so file would not
reasonably be expected to have a Material Adverse Effect.

(b) The SEC Reports, when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects
with the requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder, in each case as in
effect at

 

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such time, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make such statements, in the light of the circumstances in which
they were made, not misleading.

(c) The Company (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are
reasonably designed to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the individuals
responsible for the preparation of the Company’s filings with the Commission and
other public disclosure documents, and (ii) has disclosed, based on its most
recent evaluation prior to the date hereof, to the Company’s outside auditors
and the audit committee of the Company’s board of directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal
controls over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and
(B) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting. As of the date hereof, to the Knowledge of the Company,
there is no reason that its outside auditors and its chief executive officer and
chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next
due.

2.21 No Restriction on Ability to Pay Cash Dividends. The Company is not party
to any contract, agreement, arrangement or other understanding, oral or written,
express or implied, and is not subject to any provision in its Restated Articles
of Incorporation or Bylaws or other governing documents or resolutions of the
Board, that could restrict, limit, prohibit or prevent the Company’s ability to
pay dividends in full in cash on the Shares in the amounts contemplated by the
Statement of Designations for a period of one year from and after the Closing.

3. Representations and Warranties of the Investors. Each Investor hereby
represents and warrants as of the date hereof as follows:

3.1 Private Placement.

(a) Such Investor is (i) an “accredited investor” within the meaning of Rule 501
of Regulation D promulgated under the Securities Act; (ii) aware that the sale
of the Shares (collectively, including the Common Stock issuable upon conversion
of the Shares, the “Securities”) to it is being made in reliance on a private
placement exemption from registration under the Securities Act and
(iii) acquiring the Securities for its own account.

(b) Such Investor understands and agrees that the Securities are being offered
in a transaction not involving any public offering within the meaning of the
Securities Act, that such Securities have not been and, except as contemplated
by the Registration Rights Agreement, will not be registered under the
Securities Act and that

 

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such Securities may be offered, resold, pledged or otherwise transferred only
(i) in a transaction not involving a public offering, (ii) pursuant to an
exemption from registration under the Securities Act provided by Rule 144
thereunder (if available), (iii) pursuant to an effective registration statement
under the Securities Act, or (iv) to the Company or one of its subsidiaries, in
each of cases (i) through (iv) in accordance with any applicable securities laws
of any State of the United States, and that it will notify any subsequent
purchaser of Securities from it of the resale restrictions referred to above, as
applicable.

(c) Such Investor understands that, unless sold pursuant to a registration
statement that has been declared effective under the Securities Act or in
compliance with Rule 144 thereunder, the Company may require that the Securities
will bear a legend or other restriction substantially to the following effect
(it being agreed that if the Securities are not certificated, other appropriate
restrictions shall be implemented to give effect to the following):

“THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, (THE “SECURITIES
ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. THE
HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) IN A
TRANSACTION NOT INVOLVING A PUBLIC OFFERING, (II) PURSUANT TO ANY OTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, INCLUDING
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), (III) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (IV) TO THE COMPANY OR ANY OF
ITS SUBSIDIARIES, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER
WILL NOTIFY ANY SUBSEQUENT PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE. THIS SECURITY MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF THE SECURITIES PURCHASE AGREEMENT, DATED AS OF
NOVEMBER 5, 2008, AMONG WHOLE FOODS MARKET, INC., GREEN EQUITY INVESTORS V, L.P.
AND THE OTHER INVESTORS IDENTIFIED THEREIN.”

 

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(d) Such Investor:

(i) is able to fend for itself in the transactions contemplated hereby;

(ii) has such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of its prospective investment in
the Securities; and

(iii) has the ability to bear the economic risks of its prospective investment
and can afford the complete loss of such investment.

(e) Such Investor acknowledges that (a) it has conducted its own investigation
of the Company and the terms of the Securities, (b) it has had access to the
Company’s public filings with the Commission and to such financial and other
information as it deems necessary to make its decision to purchase the
Securities, and (c) has been offered the opportunity to conduct such review and
analysis of the business, assets, condition, operations and prospects of the
Company and its Subsidiaries and to ask questions of the Company and received
answers thereto, each as it deemed necessary in connection with the decision to
purchase the Securities. Each Investor further acknowledges that it has had such
opportunity to consult with its own counsel, financial and tax advisors and
other professional advisers as it believes is sufficient for purposes of the
purchase of the Securities. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investors to rely thereon.

(f) Such Investor understands that the Company will rely upon the truth and
accuracy of the foregoing representations, acknowledgements and agreements.

(g) Except for the representations and warranties contained in Section 2 of this
Agreement, each Investor acknowledges that neither the Company nor any Person on
behalf of the Company makes, and such Investor has not relied upon, any other
express or implied representation or warranty with respect to the Company or any
of its Subsidiaries or with respect to any other information provided to the
Investors in connection with the transactions contemplated by this Agreement.

3.2 Organization. Such Investor has been duly organized and is validly existing
as a limited partnership under the laws of the State of Delaware.

3.3 Power and Authority. Such Investor has full right, power, authority and
capacity to enter into this Agreement and the Registration Rights Agreement and
to consummate the transactions contemplated hereby and thereby and has taken all
necessary action to authorize the execution, delivery and performance hereof and
thereof.

 

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3.4 Authorization; Enforceability.

(a) The execution, delivery and performance of this Agreement has been duly
authorized by all necessary action on the part of such Investor, and this
Agreement has been duly executed and delivered by such Investor and, assuming
due authorization, execution and delivery of this Agreement by the Company, this
Agreement constitutes a valid and binding obligation of such Investor,
enforceable against it in accordance with its terms, except to the extent that
the enforcement thereof may be limited by the Enforceability Exceptions.

(b) The execution, delivery and performance of the Registration Rights Agreement
has been duly authorized by all necessary action on the part of such Investor,
and the Registration Rights Agreement, when duly executed and delivered by such
Investor and, assuming due authorization, execution and delivery thereof by the
Company, will constitute a valid and binding obligation of such Investor,
enforceable against it in accordance with its terms, except to the extent that
the enforcement thereof may be limited by the Enforceability Exceptions.

3.5 No Default or Violation. The execution, delivery, and performance of and
compliance with this Agreement and the Registration Rights Agreement and the
issuance and sale of the Shares will not (x) result in any default or violation
of the limited partnership agreement or limited liability company operating
agreement, as applicable, of such Investor, (y) result in any default or
violation of any agreement relating to its material Indebtedness or under any
mortgage, deed of trust, security agreement or lease to which it is a party or
in any default or violation of any material judgment, order or decree of any
Governmental Authority, or (z) be in conflict with or constitute, with or
without the passage of time or giving of notice, a default under any such
provision, require any consent or waiver under any such provision, or result in
the creation of any mortgage, pledge, lien, encumbrance, or charge upon any of
the properties or assets of such Investor pursuant to any such provision, or the
suspension, revocation, impairment or forfeiture of any material permit,
license, authorization, or approval applicable to such Investor, its business or
operations, or any of its assets or properties pursuant to any such provision.

3.6 Financial Capability. Such Investor currently has or at Closing will have
available funds necessary to purchase the Shares at Closing on the terms and
conditions contemplated by this Agreement.

4. Conditions to Investors’ Obligations at Closing. The obligation of the
Investors to purchase the Shares at the Closing is subject to the fulfillment on
or before the Closing of each of the following conditions:

4.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 2 (other than the representations and warranties of
the Company set forth in Section 2.2(c)) shall be true and correct as of the
date hereof, except where the failure of such representations and warranties to
be so true and correct without giving effect to any qualification and
limitations as to “materiality” or “Material Adverse Effect” set forth therein,
individually or in the aggregate, would not have a Material Adverse Effect.

 

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4.2 Performance. The Company shall have performed and complied in all material
respects with all agreements, obligations, and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.

4.3 Compliance Certificate. The Chief Executive Officer and/or Chief Financial
Officer of the Company shall deliver to the Investors at the Closing a
certificate stating that the conditions specified in Sections 4.1 and 4.2 have
been fulfilled.

4.4 Statement of Designations. The Company shall have filed the Statement of
Designations with the Secretary of State of the State of Texas, and the
Statement of Designations shall have become effective as an amendment to the
Company’s Restated Articles of Incorporation.

4.5 Listing of Shares. The shares of Common Stock to be issued upon conversion
of the Shares shall have been approved for listing on the NASDAQ, subject to
official notice of issuance.

4.6 Antitrust. Any applicable waiting period (including any extension thereof)
under the HSR Act, as applicable to the transactions contemplated by this
Agreement, shall have expired or been terminated.

4.7 Ancillary Agreements. The Company and the Investors shall have entered into
the Registration Rights Agreement.

4.8 Opinion of Company Counsel. The Investors shall have received from Hallett &
Perrin, P.C., special Texas counsel for the Company, an opinion, dated as of the
Closing, in the form attached hereto as Exhibit D, and the Investors shall have
received from Dechert LLP, special counsel for the Company, an opinion, dated as
of the Closing, in the form attached hereto as Exhibit E.

4.9 Board of Directors. The Board shall have taken all actions necessary and
appropriate to permit Mr. Jonathan Sokoloff and Mr. Jonathan Seiffer
(collectively, the “New Directors”) to be elected to the Board effective
immediately upon the delivery of a written consent to such effect of the holders
of the Shares following the Closing. The Board shall have taken all actions
necessary and appropriate to cause at least one of the New Directors to be
appointed to each committee of the Board immediately following the receipt of
such written consent. The Investors shall have received evidence satisfactory to
them of the taking of such actions.

4.10 Placement Fee. Simultaneous with the Closing, the Company shall have paid
to Leonard Green & Partners, L.P., a placement fee equal to $6,375,000,
representing 1.50% of the aggregate initial liquidation preference of the Shares
issued and sold under this Agreement (the “Placement Fee”).

4.11 Payment of Expenses. Simultaneous with the Closing, the Company shall have
paid the reasonable expenses of the Investors in connection with the
transactions contemplated by this Agreement and the Registration Rights
Agreement and any other ancillary documents hereto and thereto, including,
without limitation, the fees and expenses

 

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of Latham & Watkins LLP, special counsel to the Investors, and Vinson & Elkins,
LLP, special Texas counsel to the Investors; provided, that the aggregate amount
of all such fees and expenses payable to the Investors (including with respect
to fees and expenses of counsel) by the Company shall not exceed $750,000.

5. Conditions of the Company’s Obligations at Closing. The obligations of the
Company to the Investors under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by the Investors:

5.1 Representations and Warranties. The representations and warranties of the
Investors contained in Section 3 shall be true on and as of the date hereof.

5.2 Antitrust. Any applicable waiting period (including any extension thereof)
under the HSR Act, as applicable to the transactions contemplated by this
Agreement, shall have expired or been terminated.

6. Covenants. The Company and the Investors hereby covenant and agree, for the
benefit of the other parties hereto and their respective assigns, as follows:

6.1 NASDAQ Notice; Listing of Shares. To the extent it has not already done so,
promptly following execution of this Agreement the Company shall notify NASDAQ
of a potential change of control in compliance with Rule 4310(c)(17)(B) at least
15 calendar days prior to the Closing, and shall apply to cause the shares of
Common Stock to be issued upon conversion of the Shares to be approved for
listing on the NASDAQ, subject to official notice of issuance.

6.2 State Securities Laws. The Company shall use all commercially reasonable
efforts to (x) obtain all necessary permits and qualifications, if any, or
secure an exemption therefrom, required by any state or country prior to the
offer and sale of the Shares, and (y) cause such authorization, approval, permit
or qualification to be effective as of the Closing.

6.3 Antitrust. Promptly following execution of this Agreement, the Company and
the Investors shall use all commercially reasonable efforts to (a) make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the acquisition of the Shares as promptly as practicable and
supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act, (b) take all other
actions reasonably necessary, proper or advisable to cause the expiration or
termination of the applicable waiting periods under the HSR Act, as promptly as
practicable, (c) keep the other party hereto informed of any communication
received by the Company or the Investors (as the case may be) from, or given by
the Company or the Investors (as the case may be) to, the Federal Trade
Commission (the “FTC”), the Antitrust Division of the Department of Justice (the
“DOJ”) or any other Governmental Authority and of any communication received or
given in connection with any legal, administrative, arbitral or other proceeding
by a private party, in each case regarding the issuance and sale of the Shares;
and (d) permit the other party hereto to review in advance any communication
intended to be given by it to, and consult with it in advance of any meeting or
conference with, the FTC, the DOJ or any such other

 

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Governmental Authority, and to the extent permitted by the FTC, the DOJ or such
other applicable Governmental Authority, give the other party hereto the
opportunity to attend and participate in such meetings and conferences.

6.4 Redemption of Outstanding Convertible Notes. Promptly after the date of this
Agreement, the Company shall irrevocably call for redemption all of its
Convertible Debentures outstanding, and shall pay in full in cash and
irrevocably discharge all obligations in respect thereof as soon as practicable,
but in any event no later than the date that is 60 days after the date of
Closing. The Company shall not, at any time prior to the redemption of the
Convertible Debentures, enter into any contract, agreement, arrangement or other
understanding, oral or written, express or implied, or amend its Restated
Articles of Incorporation or Bylaws or adopt other governing documents or
resolutions of the Board, that restrict, limit, prohibit or prevent the
redemption in full in cash of all of the Convertible Debentures and the
irrevocable discharge of all obligations in respect thereof.

6.5 Negative Covenants Prior to Closing. From the date of this Agreement through
the Closing the Company shall not:

(a) Declare, or make payment in respect of, any dividend or other distribution
upon any shares of capital stock of the Company;

(b) Redeem, repurchase or acquire any capital stock of the Company or any of its
Subsidiaries (other than the redemption of the Convertible Debentures in
accordance with this Agreement);

(c) Amend the Company’s Articles of Incorporation or By-Laws (other than the
filing of the Statement of Designations with the Secretary of State of the State
of Texas in accordance with this Agreement); or

(d) Authorize, issue or reclassify any capital stock, or debt securities
convertible into capital stock, of the Company (other than the authorization and
issuance of the Shares, and the authorization of the shares of Common Stock
underlying the Shares, in accordance with this Agreement).

6.6 Use of Proceeds. The Company shall apply the net proceeds from the issuance
and sale of the Shares for general corporate purposes, including without
limitation (1) repayment of revolving borrowings outstanding under the Company’s
Revolving Credit Agreement dated as of August 28, 2007 by and among the Company,
JP Morgan Chase Bank, N.A., Royal Bank of Canada, Wells Fargo Bank, N.A., J.P.
Morgan Securities Inc. and RBC Capital Markets, as in existence on the date
hereof, (2) investment in capital assets used or useful in the business of the
Company and its Subsidiaries, and (3) payment of fees and expenses in connection
with the transactions contemplated by this Agreement and the Registration Rights
Agreement; provided, that the Company shall not use any of the net proceeds from
the issuance and sale of the Shares to make any payment in respect of any
Indebtedness other than as specifically set forth in clause (1) above.

6.7 Reservation of Common Stock; Issuance of Shares of Common Stock. For as long
as any Shares remain outstanding, the Company shall at all times reserve and

 

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keep available, free from preemptive rights, out of its authorized but unissued
Common Stock or shares of Common Stock held in treasury by the Company, for the
purpose of effecting the conversion of the Shares, the full number of shares of
Common Stock then issuable upon the conversion of all Shares (after giving
effect to all anti-dilution adjustments) then outstanding. All shares of Common
Stock delivered upon conversion or repurchase of the Shares shall be newly
issued shares or shares held in treasury by the Company, shall have been duly
authorized and validly issued and shall be fully paid and nonassessable, and
shall be free from preemptive rights and free of any lien or adverse claim.

6.8 Transfer Taxes. The Company shall pay any and all documentary, stamp or
similar issue or transfer tax due on (x) the issue of the Shares at Closing and
(y) the issue of shares of Common Stock upon conversion of the Shares. However,
in the case of conversion of Shares, the Company shall not be required to pay
any tax or duty that may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that of the
Holder of the Shares to be converted, and no such issue or delivery shall be
made unless and until the Person requesting such issue has paid to the Company
the amount of any such tax or duty, or has established to the satisfaction of
the Company that such tax or duty has been paid.

6.9 No Issuance of Convertible Debt. For as long as any Shares remain
outstanding, the Company shall not issue or incur any debt security or other
Indebtedness that is convertible into or exchangeable for, or accompanied by
warrants for or options to purchase, any capital stock of the Company without
the prior written consent of the Investors, which may be withheld in their sole
discretion.

6.10 Information Rights/Management Rights. For as long as any Shares remain
outstanding, the Company shall provide the Investors and any permitted Affiliate
transferee in accordance with Section 10 (unless otherwise requested by an
Investor) with the following information:

(a) unaudited monthly (as soon as available and in any event within 30 days of
the end of each month), unaudited quarterly (as soon as available and in any
event within 45 days of the end of each quarter) and audited (by a nationally
recognized accounting firm) annual (as soon as available and in any event within
90 days of the end of each year) financial statements prepared in accordance
with generally accepted accounting principles in the United States as in effect
from time to time, which statements shall include:

(i) the consolidated balance sheets of the Company and its subsidiaries and the
related consolidated statements of income, shareholders’ equity and cash flows;

(ii) a comparison to the corresponding data for the corresponding periods of the
previous fiscal year and from the Company’s financial plan;

 

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(iii) a reasonably detailed narrative descriptive report of the operations of
the Company and its subsidiaries in the form prepared for presentation to the
senior management of the Company for the applicable period and for the period
from the beginning of the then current fiscal year to the end of such period;

(iv) to the extent the Company is required by law or pursuant to the terms of
any outstanding indebtedness of the Company to prepare such reports, any annual
reports, quarterly reports and other periodic reports pursuant to Section 13 or
15(d) of the Exchange Act actually prepared by the Company as soon as available
(provided, that any such reports shall be deemed to have been provided when such
reports are publicly available via the Commission’s EDGAR system or any
successor to the EDGAR system); and

(b) such other information as the Investors (or such permitted Affiliate
transferees) shall reasonably request.

Additionally, (x) the Company shall permit any authorized representatives
designated by the Holders reasonable access to visit and inspect any of the
properties of the Company or any of its Subsidiaries, including its and their
books of account, and to discuss its and their affairs, finances and accounts
with its and their officers, all at such times as the Holders may reasonably
request, and (y) the Holders shall have the right to consult with and advise the
management of the Company and its Subsidiaries, upon reasonable notice at
reasonable times from time to time, on all matters relating to the operation of
the Company and its subsidiaries.

The provisions of this Section 6.10 are intended to permit the Holders’
investments in the Company to qualify as “venture capital investments” for
purposes of Department of Labor Regulation section 2510.3-101, and the Company
agrees to permit any reasonable modifications or additions to this Section 6.10
proposed by the Holders in order to ensure that the Holders continue to have
“management rights” with respect to the Company for purposes thereof.

7. Right of First Offer.

7.1 Certain Definitions.

(a) New Securities. “New Securities” means any shares of capital stock of the
Company, including Common Stock and Preferred Stock, whether authorized or not,
and rights, options, or warrants to purchase said shares of capital stock, and
securities of any type whatsoever that are, or may become, convertible into
capital stock; provided, however, that the term “New Securities” does not
include:

(i) Shares issued pursuant to this Agreement and securities issued upon
conversion of such Shares;

(ii) securities issued to employees, consultants, officers and directors of the
Company, pursuant to any arrangement approved by the Board;

 

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(iii) securities issued pursuant to any rights or agreements, including, without
limitation, convertible securities, options and warrants, provided that either
(x) the Company shall have complied with the preemptive right established by
this Section 7 with respect to the initial sale or grant by the Company of such
rights or agreements, or (y) such rights or agreements existed prior to the
Company’s obligations under this Section 7 (it being understood that any
modification or amendment to any such pre-existing right or agreement subsequent
to the date of this Agreement with the effect of increasing the percentage of
the Company’s fully-diluted securities underlying such rights agreement shall
not be included in this clause (iii)(y));

(iv) securities issued in connection with any stock split, stock dividend or
recapitalization by the Company;

(v) securities issued pursuant to the acquisition of another business entity by
the Company by merger, purchase of substantially all of the assets or shares, or
other reorganization whereby the Company will own equity securities of the
surviving or successor corporation;

(vi) securities issued in a bona fide registered public offering underwritten on
a firm commitment basis by a nationally recognized broker-dealer or pursuant to
a prospectus approved by the applicable functional regulator under the
applicable laws of any foreign jurisdiction; and

(vii) any right, option, or warrant to acquire any security convertible into the
securities excluded from the definition of New Securities pursuant to clauses
(i) through (vi) above.

(b) Pro Rata Portion. “Pro Rata Portion” means a ratio equal to (x) the sum of
the number of shares of the Company’s Common Stock held by an Investor
immediately prior to the issuance of New Securities, assuming full exercise
and/or conversion of the Shares and all Company securities exercisable and/or
convertible into the Company’s Common Stock then held by such Investor, bears to
(y) the sum of the total number of shares of the Company’s Common Stock then
outstanding, assuming full exercise and/or conversion of all Company securities
exercisable and/or convertible into the Company’s Common Stock then outstanding,
without giving effect to any limitation on the rights of any Investor to convert
Shares into shares of Common Stock set forth in Section 7(a) of the Statement of
Designations.

7.2 Right of First Offer.

(a) Grant of Right of First Offer. Subject to the terms and conditions contained
in this Section 7, the Company hereby grants to each Investor a preemptive right
to purchase such Investor’s Pro Rata Portion of any New Securities which the
Company may, from time to time, propose to issue and sell.

(b) Notice of Right. In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Investor written notice of its intention,
describing the type of New Securities and the price and terms upon which the

 

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Company proposes to issue the same. Each Investor shall have twenty (20) days
from the date of delivery of any such notice to agree to purchase up to such
Investor’s Pro Rata Portion of such New Securities, for the price and upon the
terms specified in the notice, by delivering written notice to the Company and
stating therein the quantity of New Securities to be purchased.

(c) Lapse and Reinstatement of Right. The Company shall have sixty (60) days
following the twenty- (20-) day period described in Section 7.2(b) to sell or
enter into an agreement (pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within thirty (30) days from the date of
said agreement) to sell the New Securities with respect to which the Investors’
preemptive right was not exercised, at a price and upon terms no more favorable
to the purchasers of such securities than specified in the Company’s notice. In
the event the Company has not sold the New Securities or entered into an
agreement to sell the New Securities within said sixty- (60-) day period (or
sold and issued New Securities in accordance with the foregoing within thirty
(30) days from the date of said agreement), the Company shall not thereafter
issue or sell any New Securities without first offering such securities to the
Investors in the manner provided above.

7.3 Termination of Preemptive Right. The preemptive right granted under
Section 7.2 of this Agreement shall expire upon the date on which all Shares
have been redeemed or otherwise retired and are no longer outstanding.

8. Voting.

8.1 Shares subject to Voting Agreement. Each Investor hereby agrees to vote all
of its shares of Company capital stock that are entitled to vote, whether now
owned or hereafter acquired (collectively, the “Voting Securities”), in
accordance with this Section 8.

8.2 Voting Agreement as to Certain Matters. In connection with any proposal
submitted for Company shareholder approval (at any annual or special meeting
called, or in connection with any other action (including the execution of
written consents)) related to the election or removal of directors of the Board
or any business combination involving the Company, each Investor will vote all
of its Voting Securities as follows:

(a) in favor of any nominee or director designated by the nominating committee
of the Board (provided that the nominating committee’s designation is consistent
with the terms of the Statement of Designations and this Agreement);

(b) against the removal of any director designated by the nominating committee
of the Board; and

(c) in accordance with the recommendation of the Board with respect to any
proposed business combination between the Company and any other Person.

 

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8.3 Ability to Vote on All Other Matters. Except as expressly provided in
Section 8.2, each Investor will be entitled to vote all of its Voting Securities
in its sole discretion on any matter submitted for Company shareholder approval.

8.4 No Successors in Interest. The provisions of this Section 8 shall not be
binding upon the successors in interest to any of the Voting Securities other
than Affiliates of the Investors (including commonly controlled or managed
investment funds).

8.5 Termination of Voting Agreement. With respect to each Investor, the
provisions of this Section 8 shall terminate upon the earliest to occur of any
one of the following events:

(a) the date on which such Investor ceases to own any Shares and any shares of
Common Stock issued upon conversion of the Shares (for the avoidance of doubt,
whether by reason of redemption or transfer thereof or conversion thereof into
shares of Common Stock);

(b) the liquidation, dissolution or indefinite cessation of the business
operations of the Company;

(c) the execution by the Company of a general assignment for the benefit of
creditors or the appointment of a receiver or trustee to take possession of the
property and assets of the Company; or

(d) the acquisition of the Company by any other Person by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation).

9. Restrictions on Transfer.

9.1 No Transfer of Shares Prior to Third Anniversary. Each Investor hereby
agrees that it will not transfer any Shares or shares of Common Stock issued
upon a conversion of the Shares to any Person, other than to its Affiliates
(including commonly controlled or managed investment funds) who agree to be
bound by the terms of Sections 8, 9 and 10 of this Agreement, at any time prior
to the third anniversary of the Closing; provided, that this Section shall not
restrict the ability of the Investors to transfer at any time any Shares or
shares of Common Stock issued or issuable upon conversion of the Shares in
connection with or at any time after the Company has (x) called the Shares for
redemption pursuant to the second paragraph of Section 6(a) of the Statement of
Designations or (y) announced any merger or consolidation in which the Company
is or will not be the surviving entity.

9.2 No Transfer to Competitors. Each Investor hereby agrees that it will not at
any time directly or knowingly indirectly (without any duty of investigation)
transfer any Shares, or any shares of Common Stock issuable upon conversion of
the Shares, to any Competitor of the Company. For purposes of this Section,
“Competitor” shall mean (i) any Person that is a retailer of grocery products in
North America or the United Kingdom and (ii) any Person that has direct or
indirect majority ownership control of any Person identified in the preceding
clause (i).

 

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9.3 No Block Transfers to Individual Persons. Each Investor hereby agrees that
it will not, individually or acting together with other Investors, at any time
knowingly, directly or indirectly, transfer Shares, or any shares of Common
Stock issuable upon conversion of the Shares, constituting 10% or more of the
voting capital stock of the Company then outstanding to any individual Person
(other than to any Investor or any of its Affiliates (including commonly
controlled or managed investment funds) who agree to be bound by the terms of
Sections 8, 9 and 10 of this Agreement).

9.4 No Restriction on Hedging, Etc. Notwithstanding anything to the contrary in
this Agreement, the Investors shall not be restricted in any manner from
entering into any swap, hedge, forward contract or other arrangement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Shares, or of the shares of Common Stock issuable upon conversion thereof,
to a third party.

10. Standstill. Each Investor hereby agrees that at any time that Investor holds
any Shares or shares of Common Stock issued upon conversion of the Shares, such
Investor, its Subsidiaries and its commonly controlled or managed investment
funds will not, without the prior written consent of the Company, directly or
indirectly, acting alone or with others:

(a) acquire or agree, offer, seek or propose to acquire beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of any voting securities issued by
the Company (or securities convertible or exchangeable into voting securities)
to the extent that, after giving effect to any such acquisition, such Investor
and its commonly controlled or managed investment funds would beneficially own
more than 35% of the Company’s voting securities on a fully-diluted basis;

(b) form, join or in any way participate in a “group” (as defined in
Section 13(d)(3) of the Exchange Act) in or with respect to the activities set
forth in clause (a) above;

provided, that this Section 10 shall not apply to the Shares (including the
accretion of dividends thereon and any dividends payable in any other security),
or to shares of the Company’s Common Stock issuable upon conversion of the
Shares.

11. Board Matters.

11.1 Definitions. For purposes of this Section 11, the terms “Permitted Holder,”
“Preferred Director” and “Voting Stock” shall have the respective meanings set
forth in the Statement of Designations.

11.2 Committees. At any time that the Permitted Holders are entitled to elect
Preferred Directors in accordance with Section 10(b) of the Statement of
Designations or to designate for nomination directors in accordance with
Section 11.3 hereof, one Preferred Director will be entitled to sit on each
committee of the Board (subject to the chosen Preferred Director satisfying
applicable qualifications under law and stock exchange rule). In the event the
Permitted Holders are entitled to elect two Preferred Directors in accordance
with Section 10(b) of the Statement of Designations or to designate for
nomination directors in accordance with Section 11.3 hereof, the Permitted
Holders will have the right to designate which director serves on which
committee or committees (subject to the chosen director satisfying applicable
qualifications under law and stock exchange rule).

 

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11.3 Board Nomination. At any time that the Permitted Holders are not entitled
to elect Preferred Directors in accordance with Section 10(b) of the Statement
of Designations, but the Permitted Holders hold shares of Common Stock and/or
Shares representing 7% or more of the Voting Stock of the Company, then the
Company agrees that it shall:

(a) cause the Board to have at least the number of vacancies (either by adopting
a resolution increasing the size of the Board by up to two members or otherwise)
as would be required for Preferred Directors in accordance with Section 10(b) of
the Statement of Designations, as if the Permitted Holders held an equivalent
percentage of Voting Stock in the form of Shares entitled to separate series
voting;

(b) nominate for election to the Board up to two individuals designated by the
Permitted Holders (if the Permitted Holders hold shares of Common Stock and/or
Shares representing 10% or more of the Voting Stock of the Company) or one
individual designated by the Permitted Holders (if the Permitted Holders hold
shares of Common Stock and/or Shares representing 7% or more but less than 10%
of the Voting Stock of the Company); and

(c) recommend that the Company’s shareholders vote in favor of the persons
designated for nomination by Permitted Holders; provided, in any such case, that
unless otherwise approved by the Company’s Nominating Committee, in order for a
person to qualify to serve as a Preferred Director, such person shall be a
partner of Leonard Green & Partners, L.P. as of the date hereof.

Any director so nominated and elected to the Board shall constitute a “Preferred
Director” for purposes of Section 11.2 hereof. Notwithstanding anything to the
contrary herein, under no circumstances will the Permitted Holders be entitled
to nominate to the Board hereunder and/or elect as a series to the Board in
accordance with Section 10(b) of the Statement of Designations an aggregate
number of directors that exceeds the maximum number of directors that otherwise
would be permitted in accordance with Section 10(b) of the Statement of
Designations.

12. Termination.

12.1 Termination of Agreement Prior to Closing. This Agreement may be terminated
at any time prior to the Closing:

(a) by either the Investors or the Company if the Closing shall not have
occurred by the 120th calendar day following the date of this Agreement;
provided, however, that the right to terminate this Agreement under this
Section 12.1 shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date;

 

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(b) by either the Investors or the Company in the event that any Governmental
Authority (as defined in Exhibit C hereto) shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable; or

(c) by the mutual written consent of the Investors and the Company.

12.2 Effect of Termination Prior to Closing. In the event of termination of this
Agreement as provided in Section 12.1, this Agreement shall forthwith become
void and there shall be no liability on the part of either party hereto, except
that nothing herein shall relieve either party from liability for any breach of
any covenant of this Agreement.

13. Indemnification.

(a) In addition to the payment of expenses pursuant to Section 4.12, the Company
(as “Indemnitor”) hereby agrees to indemnify, pay and hold each Investor, and
each of the respective officers, directors, employees and Affiliates of each
Investor (collectively, the “Indemnified Parties”) harmless from and against any
and all other liabilities, costs, expenses liabilities, obligations, losses,
damages (consequential or otherwise), penalties, actions, judgments, suits,
claims and disbursements of any kind or nature whatsoever (but including only
the reasonable fees and expenses of one counsel) which may be imposed on,
incurred by, or asserted against such Indemnified Party, in any manner relating
to or arising out of the failure of any of the representations and warranties
set forth in Sections 2.2(a), 2.2(c) and 2.18 of this Agreement to be true and
correct as of the date of this Agreement (the “Indemnified Liabilities”). Each
Indemnified Party shall give the Indemnitor prompt written notice of any claim
that might give rise to Indemnified Liabilities setting forth a description of
those elements of such claim of which such Indemnified Party has knowledge;
provided, that any delay or failure to give such notice shall not affect the
obligations of the Indemnitor unless (and then solely to the extent) such
Indemnitor is materially prejudiced by such delay or failure. The Indemnitor
shall have the right at any time during which such claim is pending to select
counsel to defend and control the defense thereof and settle any claims for
which they are responsible for indemnification hereunder (provided, that the
Indemnitor will not settle any such claim without (i) the appropriate
Indemnified Party’s prior written consent, which consent shall not be
unreasonably withheld or (ii) obtaining an unconditional release of the
appropriate Indemnified Party from all claims arising out of or in any way
relating to the circumstances involving such claim) so long as in any such event
the Indemnitor shall have stated in a writing delivered to the Indemnified Party
that, as between the Indemnitor and the Indemnified Party, the Indemnitor is
responsible to the Indemnified Party with respect to such claim to the extent
and subject to the limitations set forth herein; provided, that the Indemnitor
shall not be entitled to control the defense of any claim in the event that in
the reasonable opinion of counsel for the Indemnified Party there are one or
more material defenses available to the Indemnified Party which are not
available to the Indemnitor; provided further, that with respect to any claim as
to which the Indemnified Party is controlling the defense, the

 

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Indemnitor will not be liable to any Indemnified Party for any settlement of any
claim pursuant to this Section that is effected without its prior written
consent. To the extent that the undertaking to indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Company shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnified Parties
or any of them. The obligations of the Company set forth in this Section shall
survive until the third anniversary of the date of this Agreement and, with
respect to any claim for Indemnified Liabilities made prior to the third
anniversary of this Agreement, until the final resolution thereof. The indemnity
provided in this Section shall be the sole and exclusive remedy of the
Indemnified Parties after the Closing for any inaccuracy or breach of the
representations and warranties set forth in Sections 2.2(a), 2.2(c) and 2.18 of
this Agreement.

(b) In addition to the payment of expenses pursuant to Section 4.12, the Company
(as “Indemnitor”) hereby agrees to indemnify, pay and hold each Investor, and
each of the respective officers, directors, employees and Affiliates of each
Investor, and each of the respective direct and indirect beneficial owners of
each Investor (collectively, the “Additional Indemnified Parties”) harmless from
and against any and all other liabilities, costs, expenses liabilities,
obligations, losses, damages (consequential or otherwise), penalties, actions,
judgments, suits, claims and disbursements of any kind or nature whatsoever
including, without limitation, liabilities for any taxes in any jurisdiction
(but including only the reasonable fees and expenses of one counsel) which may
be imposed on, incurred by, or asserted against such Additional Indemnified
Party, in any manner relating to or arising out of the failure of any of the
representations and warranties set forth in Section 2.21 this Agreement to be
true and correct as of the date of this Agreement, the breach or failure to
comply with the covenant set forth in Section 6.4 of this Agreement at any time,
and the breach, violation or failure to comply with the Company’s obligations
set forth in Section 4(b) of the Statement of Designations (the “Additional
Indemnified Liabilities”). Each Additional Indemnified Party shall give the
Indemnitor prompt written notice of any claim that might give rise to Additional
Indemnified Liabilities setting forth a description of those elements of such
claim of which such Additional Indemnified Party has knowledge; provided, that
any delay or failure to give such notice shall not affect the obligations of the
Indemnitor unless (and then solely to the extent) such Indemnitor is materially
prejudiced by such delay or failure. The Indemnitor shall have the right at any
time during which such claim is pending to select counsel to defend and control
the defense thereof and settle any claims for which they are responsible for
indemnification hereunder (provided, that the Indemnitor will not settle any
such claim without (i) the appropriate Additional Indemnified Party’s prior
written consent, which consent shall not be unreasonably withheld or
(ii) obtaining an unconditional release of the appropriate Additional
Indemnified Party from all claims arising out of or in any way relating to the
circumstances involving such claim) so long as in any such event the Indemnitor
shall have stated in a writing delivered to the Additional Indemnified Party
that, as between the Indemnitor and the Additional Indemnified Party, the
Indemnitor is responsible to the Additional Indemnified Party with respect to
such claim to the extent and subject to the limitations set forth herein;
provided, that the Indemnitor shall not be entitled to control

 

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the defense of any claim in the event that in the reasonable opinion of counsel
for the Additional Indemnified Party there are one or more material defenses
available to the Additional Indemnified Party which are not available to the
Indemnitor; provided further, that with respect to any claim as to which the
Additional Indemnified Party is controlling the defense, the Indemnitor will not
be liable to any Additional Indemnified Party for any settlement of any claim
pursuant to this Section that is effected without its prior written consent. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Company shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Additional Indemnified Liabilities incurred by the
Additional Indemnified Parties or any of them. The obligations of the Company
set forth in this Section shall survive until the third anniversary of the date
of this Agreement and, with respect to any claim for Additional Indemnified
Liabilities made prior to the third anniversary of this Agreement, until the
final resolution thereof. The indemnity provided in this Section shall be the
sole and exclusive remedy of the Additional Indemnified Parties after the
Closing for any inaccuracy or breach of the representations and warranties set
forth in Sections 2.21, the breach or failure to comply with the covenant set
forth in Section 6.4 and any breach, or the violation or failure to comply with
the Company’s obligations set forth in Section 4(b) of the Statement of
Designations.

14. Publicity. On the date hereof, the Company shall issue a press release
substantially in the form of Exhibit F hereto. No other written public release
or written announcement concerning the purchase of Series the A Preferred Stock
contemplated hereby shall be issued by any party without the prior written
consent of the other party (which consent shall not be unreasonably withheld),
except as such release or announcement may be required by law or the rules or
regulations of any securities exchange, in which case the party required to make
the release or announcement shall, to the extent reasonably practicable, allow
the other party reasonable time to comment on such release or announcement in
advance of such issuance. The provisions of this Section shall not restrict the
ability of a party to summarize or describe the transactions contemplated by
this Agreement in any prospectus or similar offering document so long as the
other party is provided a reasonable opportunity to review such disclosure in
advance.

15. Miscellaneous.

15.1 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York without regard to choice of laws or conflict of laws
provisions thereof that would require the application of the laws of any other
jurisdiction.

15.2 Submission to Jurisdiction; Venue; Waiver of Trial by Jury. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of any United
States Federal court sitting in the County of New York, in the State of New
York, over any suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated thereby (or, solely to the extent
that no such United States Federal court has jurisdiction over such suit, action
or proceeding, to the exclusive jurisdiction of any New York State court sitting
in the County of New York, in the State of New York, with respect thereto). Each
of the parties irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or

 

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hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that any such suit, action or proceeding
brought in such a court has been brought in an inconvenient forum. EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT
(i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS SET
FORTH IN THIS SECTION.

15.3 Survival. The representations and warranties made in Sections 2.2(a),
2.2(c) and 2.18 hereof shall survive any investigation made by any Investor, and
shall survive the Closing for a period of three years thereafter, and after the
third anniversary of the Closing such Sections of this Agreement shall have no
further force and effect, including in respect of Section 13 hereof (subject to
the last sentence of such Section 13); and all other representations and
warranties in this Agreement shall expire at the Closing and have no further
force and effect. All statements of the Company as to factual matters contained
in any certificate or exhibit delivered by or on behalf of the Company pursuant
to this Agreement shall be deemed to be the representations and warranties of
the Company hereunder as of the date of such certificate or exhibit.

15.4 Enforcement of Agreement. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any Federal court sitting in the County of
New York, in the State of New York (or, solely to the extent that no such
Federal court has jurisdiction over such suit, action or proceeding, in any New
York State court sitting in the County of New York, in the State of New York),
this being in addition to any other remedy to which they are entitled at law or
in equity. Additionally, each party hereto irrevocably waives any defenses based
on adequacy of any other remedy, whether at law or in equity, that might be
asserted as a bar to the remedy of specific performance of any of the terms or
provisions hereof or injunctive relief in any action brought therefor.

15.5 Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties hereto; provided,
however, the rights of the Investors under this Agreement shall not be
assignable to any Person without the consent of the Company; provided further,
that the Investors shall be permitted, without the consent of the Company, to

 

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assign all or a portion of their respective rights and obligations to purchase
Shares at the Closing to one or more co-invest vehicles under common control or
management with the Investors, in which case such co-invest vehicle(s) shall
become party to this Agreement by execution of a joinder hereto and each such
co-invest vehicle(s) shall thereafter constitute an “Investor” for all purposes
hereunder as if it were an Investor as of the date hereof, and Schedule A hereto
shall be modified to reflect such assignment of rights and obligations
accordingly; provided further, that any assignment pursuant to the preceding
proviso shall not relieve the assigning Investor of its obligation to purchase
Shares at the Closing until the Closing has occurred and the assignee has funded
its obligation to purchase Shares hereunder.

15.6 No Third Party Beneficiaries. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement, and
no Person that is not a party to this Agreement (including without limitation
any partner, member, shareholder, director, officer, employee or other
beneficial owner of any party hereto, in its own capacity as such or in bringing
a derivative action on behalf of a party hereto) shall have any standing as
third party beneficiary with respect to this Agreement or the transactions
contemplated hereby.

15.7 No Personal Liability of Directors, Officers, Owners, Etc. No director,
officer, employee, incorporator, shareholder, managing member, member, general
partner, limited partner, principal or other agent of any of the Investors or
the Company shall have any liability for any obligations of the Investors under
this Agreement or for any claim based on, in respect of, or by reason of, the
respective obligations of the Investors or the Company hereunder. Each party
hereto hereby waives and releases all such liability. This waiver and release is
a material inducement to each party’s entry into this Agreement.

15.8 Entire Agreement. This Agreement and the other documents delivered pursuant
hereto constitute the full and entire understanding and agreement among the
parties with regard to the subjects hereof and thereof. Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge, or termination is sought.

15.9 Notices, Etc. Except as otherwise provided in this Agreement, all notices,
requests, claims, demands, waivers and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, return receipt requested, or otherwise
delivered by hand or by messenger, addressed:

(a) if to any Investor, to:

c/o Leonard Green & Partners, L.P.

11111 Santa Monica Blvd., Suite 2000

Los Angeles, California 90025

Telephone: (310) 954-0444

Attention: Jonathan A. Seiffer

 

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With a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Telephone: (212) 906-1200

Attention: Howard A. Sobel

(b) if to any other Holder of any Shares, at such address as such Holder shall
have furnished to the Company in writing or, until any such Holder so furnishes
an address to the Company, then to and at the address of the last Holder of such
Shares who has so furnished an address to the Company, and

(c) if to the Company, to:

550 Bowie Street

Austin, Texas 78703

Telephone: (512) 477-4455

Attention: Glenda Chamberlain

With a copy to:

Dechert LLP

1775 I Street, NW

Washington, D.C. 20006

Telephone: (202) 261-3333

Attention: Thomas J. Friedmann

or in any such case to such other address, facsimile number or telephone as
either party may, from time to time, designate in a written notice given in a
like manner. If notice is provided by mail, it shall be deemed to be delivered
upon proper deposit in a mailbox, and if notice is delivered by hand, messenger
or overnight courier service, it shall be deemed to be delivered upon actual
delivery.

15.10 Delays or Omissions. No delay or omission to exercise any right, power, or
remedy accruing to any holder of any Shares upon any breach or default of the
Company under this Agreement shall impair any such right, power, or remedy of
such holder, nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent, or approval of any kind or character on
the part of any holder of any breach or default under this Agreement, or any
waiver on the part of any holder of any provisions or conditions of this
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing or as provided in this Agreement. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.

 

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15.11 Expenses. The Company and the Investors shall bear their own expenses and
legal fees incurred on their behalf with respect to this Agreement and the
transactions contemplated hereby, except as otherwise provided in Section 4.12
of this Agreement.

15.12 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Common Stock
issuable or issued upon conversion of the Shares; provided that no such
amendment shall impose or increase any liability or obligation on any Investor
without the consent of such Investor. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.

15.13 Effect of Amendment or Waiver. Each Investor and its successors and
assigns acknowledge that by the operation of Section 15.12 hereof Holders
holding more than fifty percent (50%) of the outstanding Shares, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights pursuant to this Agreement.

15.14 Rights of Holders. Each party to this Agreement shall have the absolute
right to exercise or refrain from exercising any right or rights that such party
may have by reason of this Agreement, including, without limitation, the right
to consent to the waiver or modification of any obligation under this Agreement,
and such party shall not incur any liability to any other party or other holder
of any securities of the Company as a result of exercising or refraining from
exercising any such right or rights.

15.15 Finder’s Fee. The Company shall indemnify and hold each Investor harmless,
and each Investor shall indemnify and hold the Company harmless, from any
liability for any commission or compensation in the nature of a finder’s fee
(including the costs, expenses, and legal fees of defending against such
liability) for which the Company or the Investors, or any of their respective
partners, employees, or representatives, as the case may be, is responsible;
provided that the foregoing shall not apply to the Placement Fee, for which the
Company is solely responsible.

15.16 Counterparts. This Agreement may be executed in any number of counterparts
and signatures may be delivered by facsimile or in electronic format (i.e.,
“PDF”), each of which may be executed by less than all parties, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.

15.17 Severability. If any provision of this Agreement becomes or is declared by
a court of competent jurisdiction to be illegal, unenforceable, or void,
portions of such provision, or such provision in its entirety, to the extent
necessary, shall be severed from this Agreement and the balance of this
Agreement shall be enforceable in accordance with its terms.

 

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15.18 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

[THIS SPACE LEFT BLANK INTENTIONALLY]

 

30

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

WHOLE FOODS MARKET, INC.

By:  

/s/ Glenda Chamberlain

Name:   Glenda Chamberlain Title:   Executive Vice President and Chief Financial
Officer

SIGNATURE PAGE TO THE WHOLE FOODS MARKET, INC.

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

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GREEN EQUITY INVESTORS V, L.P.

By:   GEI Capital V, LLC, its General Partner By:  

/s/ Jonathan A. Seiffer

Name:   Jonathan A. Seiffer Title:  

GREEN EQUITY INVESTORS SIDE V, L.P.

By:   GEI Capital V, LLC, its General Partner By:  

/s/ Jonathan A. Seiffer

Name:   Jonathan A. Seiffer Title:  

SIGNATURE PAGE TO THE WHOLE FOODS MARKET, INC.

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

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SCHEDULE A

SCHEDULE OF INVESTORS

 

Investor

   Number of Shares    Aggregate
Purchase Price

Green Equity Investors V, L.P.

   324,515    $ 324,515,000.00

Green Equity Investors Side V, L.P.

   97,344    $ 97,344,000.00

Thyme Coinvest, LLC

   3,141    $ 3,141,000.00

Total

   425,000    $ 425,000,000.00

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EXHIBIT A

FORM OF STATEMENT OF DESIGNATIONS

Filed as Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 2, 2008

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EXHIBIT B

FORM OF REGISTRATION RIGHTS AGREEMENT

Filed as Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities
and Exchange Commission on December 2, 2008

 

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EXHIBIT C

DEFINITIONS

The following terms shall have the respective meanings for all purposes of the
Agreement:

“Affiliate” shall mean any Person controlling, controlled by or under common
control with any other Person; and with respect to an individual, “Affiliate”
shall also mean any other individual related to such individual by blood or
marriage. For purposes of this definition, “control” (including “controlled by”
and “under common control with”) means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of securities, partnership or other
ownership interests, by contract or otherwise.

“Capital Lease Obligations” shall mean the obligations of the Company and its
Subsidiaries on a consolidated basis to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal Property
which obligations are required to be classified and accounted for as a capital
lease on a consolidated balance sheet of the Company and its Subsidiaries under
Generally Accepted Accounting Principles (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board, as
amended) and, for purposes of this Agreement, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance with Generally
Accepted Accounting Principles (including such Statement No. 13).

“Code” shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.

“Contingent Obligations” shall mean, as to any Person, without duplication, any
obligation of such Person guaranteeing or intended to guarantee the payment or
performance of any Indebtedness, leases, dividends or other obligations
(collectively “primary obligations”) of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including without limitation, any
obligation of the Person for whom Contingent Obligations is being determined,
whether or not contingent, (a) to purchase any such primary obligation or other
property constituting direct or indirect security therefor, (b) assume or
contingently agree to become or be secondarily liable in respect of any such
primary obligation, (c) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital or
equity capital for the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (d) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (e) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided, however, that the
term “Contingent Obligations” shall not include (x) endorsements of checks or
other negotiable instruments in the ordinary course of business, (y) performance
or payment guarantees by the Company of any Indebtedness of any of its
Subsidiaries of the type permitted under Section

 

F-1

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6.1(f) of the Company’s Revolving Credit Agreement, and (z) the obligations and
liabilities of guarantors under the Company’s credit facilities outstanding on
the date hereof. The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the primary obligation
in respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum anticipated liability in respect thereof (assuming the
Person for whom Contingent Obligations is being determined is required to
perform thereunder).

“Environmental Claim” shall mean any third party (including any Governmental
Authority) action, lawsuit, claim or proceeding (including claims or proceedings
at common law) which seeks to impose or alleges liability for (i) preservation,
protection, conservation, pollution, contamination of, or releases or threatened
releases of Hazardous Substances into the air, surface water, ground water or
land or the clean-up, abatement, removal, remediation or monitoring of such
pollution, contamination or Hazardous Substances; (ii) generation, recycling,
reclamation, handling, treatment, storage, disposal or transportation of
Hazardous Substances or solid waste (as defined under the Resource Conservation
and Recovery Act and its regulations, as amended from time to time);
(iii) exposure to Hazardous Substances; (iv) the safety or health of employees
or other Persons in connection with any of the activities specified in any other
subclause of this definition; or (v) the manufacture, processing, distribution
in commerce, presence or use of Hazardous Substances. An “Environmental Claim”
includes a common law action, as well as a proceeding to issue, modify or
terminate an Environmental Permit, or to adopt or amend a regulation to the
extent that the Company or its Subsidiaries are parties to such a proceeding and
such a proceeding attempts to redress violations of the applicable permit,
license, or regulation as alleged by any Governmental Authority.

“Environmental Liabilities” shall mean all liabilities arising from any
Environmental Claim, Environmental Permit or Requirement of Environmental Law
under any theory of recovery, at law or in equity, and whether based on
negligence, strict liability or otherwise, including: remedial, removal,
response, abatement, restoration (including natural resources) investigative, or
monitoring liabilities, personal injury and damage to property, natural
resources or injuries to persons, and any other related costs, expenses, losses,
damages, penalties, fines, liabilities and obligations, and all costs and
expenses necessary to cause the issuance, re-issuance or renewal of any
Environmental Permit including attorney’s fees and court costs. Environmental
Liability shall mean any one of them.

“Environmental Permit” shall mean any permit, license, approval or other
authorization under any applicable law, regulation and other requirement of the
United States or of any state, municipality or other subdivision thereof
relating to pollution or protection of health or the environment, including
laws, regulations or other requirements relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants or Hazardous
Substances or toxic materials or wastes into ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, processing,
distribution, recycling, presence, use, treatment, storage, disposal, transport,
or handling of, wastes, pollutants, contaminants or Hazardous Substances.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.

 

2

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“Generally Accepted Accounting Principles” shall mean, as to a particular
Person, those principles and practices (a) which are recognized as such by the
Financial Accounting Standards Board or successor organization, (b) which are
applied for all periods after the date hereof in a manner consistent with the
manner in which such principles and practices were applied to the most recent
audited financial statements of the relevant Person furnished to the Investor
and the Holders, and (c) which are consistently applied for all periods after
the date hereof so as to reflect properly the financial condition, and results
of operations and changes in financial position, of such Person.

“Governmental Authority” shall mean any foreign governmental authority, the
United States of America, any state of the United States and any political
subdivision of any of the foregoing, and any agency, instrumentality,
department, commission, board, bureau, central bank, authority, court or other
tribunal, in each case whether executive, legislative, judicial, regulatory or
administrative, having jurisdiction over the Investor, any of the Holders or the
Company, any of the Company’s Subsidiaries or their respective Property.

“Hazardous Substance” shall mean any hazardous or toxic waste, substance or
product or material defined or regulated by any applicable law, rule, regulation
or order described in the definition of “Requirements of Environmental Law,”
including solid waste (as defined under the Resource Conservation and Recover
Act of 1976 or its regulations, as amended), petroleum and any fraction thereof,
and any radioactive materials and waste.

“Hedging Agreements” shall mean any transaction (including an agreement with
respect thereto) now or hereafter existing which is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor transaction, collar
transaction, forward transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions) or any combination
thereof, whether linked to one or more interest rates, foreign currencies,
commodity prices, equity prices or other financial measures.

“Incidental Liens” shall mean (i) Liens for taxes, assessments, levies or other
governmental charges (but not Liens for clean up expenses arising pursuant to
Requirements of Environmental Law) not yet due (subject to applicable grace
periods) or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Company in accordance with Generally Accepted Accounting
Principles; (ii) carriers’, warehousemen’s, mechanics’, landlords’, vendors’,
materialmen’s, repairmen’s, sureties’ or other like Liens (other than Liens for
clean up expenses arising pursuant to Requirements of Environmental Law) arising
in the ordinary course of business (or deposits to obtain the release of any
such Lien) and securing amounts not yet due or which are being contested in good
faith and by appropriate proceedings if, in the case of such contested Liens,
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with Generally Accepted Accounting Principles;
(iii) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation; (iv) easements, rights-of-way,
covenants, reservations, exceptions, encroachments, zoning and similar
restrictions and other similar encumbrances or title defects incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount, and which do

 

3

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not in any case singly or in the aggregate materially detract from the value or
usefulness of the property subject thereto or materially interfere with the
ordinary conduct of the business of the Company and its Subsidiaries, taken as a
whole; (v) bankers’ liens arising by operation of law; (vi) Liens arising
pursuant to any order of attachment, distraint or similar legal process arising
in connection with any court proceeding the payment of which is covered in full
(subject to customary deductibles) by insurance; (vii) inchoate Liens arising
under ERISA to secure contingent liabilities of the Company; and (viii) rights
of lessees and sublessees in assets leased by the Company or any Subsidiary not
prohibited elsewhere herein.

“Indebtedness” shall mean, as to any Person, without duplication: (a) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money or for the deferred purchase price of Property or services;
(b) any other indebtedness which is evidenced by a promissory note, bond,
debenture or similar instrument; (c) any obligation under or in respect of
outstanding letters of credit, acceptances and similar obligations created for
the account of such Person; (d) all Capital Lease Obligations of such Person;
(e) all indebtedness, liabilities, and obligations secured by any Lien on any
Property owned by such Person even though such Person has not assumed or has not
otherwise become liable for the payment of any such indebtedness, liabilities or
obligations secured by such Lien; (f) any obligation under or in respect of
Hedging Agreements and (g) all Contingent Obligations and Synthetic Indebtedness
of such Person.

“Knowledge” of the Company shall mean the actual knowledge of any of the
following individuals: John Mackey, Chief Executive Officer; Glenda Chamberlain,
Chief Financial Officer; A.C. Gallo, Co-President and Chief Operating Officer;
Walter Robb, Co-President and Chief Operating Officer; James Sud, Executive
Vice-President Growth and Business Development; and Roberta Lang, General
Counsel.

“Lien” shall mean any mortgage, pledge, charge, encumbrance, security interest,
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract, and shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions.

“Material Adverse Effect” means any change, development, occurrence or event
(each, a “Company Effect”) that, when considered either individually or together
with all other Company Effects, is or would reasonably be expected to be
materially adverse to (a) the business, properties, assets, liabilities,
consolidated results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole or (b) the ability of the Company to consummate
the transactions contemplated hereby and thereby; provided that any such Company
Effect resulting or arising from or relating to any of the following matters
shall not be considered when determining whether a Material Adverse Effect has
occurred or would reasonably be expected to occur:

(i) any change, development, occurrence or event affecting the businesses or
industries in which the Company and its Subsidiaries operate;

 

4

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(ii) any conditions affecting the United States general economy or the general
economy in any geographic area in which the Company or its Subsidiaries operate
or developments or changes therein or the financial and securities markets and
credit markets in the United States or elsewhere in the world;

(iii) political conditions, including acts of war (whether or not declared),
armed hostilities and terrorism, or developments or changes therein;

(iv) any conditions resulting from natural disasters;

(v) changes in any Laws or Generally Accepted Accounting Principles;

(vi) any action taken or omitted to be taken by or at the written request or
with the written consent of the Investor;

(vii) any announcement of this Agreement or the transactions contemplated
hereby, in each case, solely to the extent due to such announcement;

(viii) changes in the market price or trading volume of Common Stock or any
other equity, equity-related or debt securities of the Company or its Affiliates
(it being understood that the underlying circumstances, events or reasons giving
rise to any such change can be taken into account in determining whether a
Material Adverse Effect has occurred or would reasonably be expected to occur);

(ix) any failure to meet any internal or public projections, forecasts,
estimates or guidance for any period (it being understood that the underlying
circumstances, events or reasons giving rise to any such failure can be taken
into account in determining whether a Material Adverse Effect has occurred or
would reasonably be expected to occur); or

(x) any Company Effects arising out of or resulting from any legal claims or
other proceedings made by any of the Company’s shareholders (on their own behalf
or on behalf of the Company) arising out of or related to this Agreement;

provided, however, that Company Effects set forth in clauses (i), (ii), (iii),
(iv) and (v) above may be taken into account in determining whether there has
been or is a Material Adverse Effect if and only to the extent such Company
Effects have a disproportionate impact on the Company and its Subsidiaries,
taken as a whole, relative to the other retailers of grocery products in North
America and the United Kingdom.

“Person” shall mean any individual, corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.

 

5

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“Plan” shall mean any employee pension benefit plan (as defined in
Section 3(2)(A) of ERISA) subject to Title IV of ERISA and maintained for
employees of the Company or of any member of a “controlled group”, as such term
is defined in Section 4001(a)(14) of ERISA, of which the Company or any of its
Subsidiaries it may acquire from time to time is a part, or any such employee
pension benefit plan to which the Company or any of its Subsidiaries it may
acquire from time to time is required to contribute on behalf of its employees.

“Property” shall mean any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.

“Requirements of Environmental Law” shall mean all requirements imposed by any
law (including The Resource Conservation and Recovery Act, The Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Clean Air Act, and any state analogues of any of the foregoing), rule,
regulation, or order of any Governmental Authority which relate to (i) noise;
(ii) pollution, protection or clean-up of the air, surface water, ground water
or land; (iii) solid, gaseous or liquid waste or Hazard Substance generation,
recycling, reclamation, release, threatened release, treatment, storage,
disposal or transportation; (iv) exposure of Persons or property to Hazardous
Substances; (v) the safety or health of employees or other Persons or (vi) the
manufacture, presence, processing, distribution in commerce, use, discharge,
releases, threatened releases, emissions or storage of Hazardous Substances into
the environment. Requirement of Environmental Law shall mean any one of them.

“Subsidiary” of any Person shall mean any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than fifty percent (50%) of (a) the issued and outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency), (b) the interest in the capital or profits of
such partnership, joint venture or limited liability company or (c) the
beneficial interest in such trust or estate is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more of
its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“Synthetic Indebtedness” shall mean the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person (excluding operating leases) but
which upon the insolvency or bankruptcy of such Person, to the extent
functioning as debt for borrowed money, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

 

6

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EXHIBIT D

FORM OF OPINION OF HALLETT & PERRIN, P.C.,

TEXAS COUNSEL TO THE COMPANY

1. The Company is a corporation and has been duly incorporated under the Texas
Business Corporation Act (the “TBCA”), is validly existing and in good standing
under the laws of the State of Texas and has the requisite corporate power to
own, lease and operate its properties and assets, and to carry on its business
as presently conducted.

2. The Company has the requisite power and authority to execute, deliver and
perform all of its obligations under the Securities Purchase Agreement, the
Registration Rights Agreement and the Restated Articles, and to issue the
Shares, and to issue the shares of Common Stock issuable upon conversion of the
Shares (the “Conversion Shares”) in accordance with the Restated Articles,
assuming such performance was made and the Conversion Shares were issued on the
date hereof.

3. The filing of the Restated Articles with the Secretary of State of the State
of Texas has been duly authorized by all necessary corporate action of the
Company, and the Restated Articles have been filed with the Secretary of State
of the State of Texas in accordance with the TBCA.

4. The Securities Purchase Agreement has been duly authorized by all necessary
corporate action of the Company, and has been duly executed and delivered by the
Company.

5. The Registration Rights Agreement has been duly authorized by all necessary
corporate action of the Company, has been duly executed and delivered by the
Company.

6. The execution and delivery of the Securities Purchase Agreement and the
Registration Rights Agreement, the issuance and sale of the Shares by the
Company to the Investor pursuant to the Securities Purchase Agreement, and the
consummation by the Company of the transactions contemplated by the Securities
Purchase Agreement and the Registration Rights Agreement that are scheduled to
occur at Closing do not on the date hereof:

 

  (i) violate the Company’s Restated Articles of Incorporation and By-Laws as in
effect immediately before the Closing (taken together, the “Governing
Documents”) or the Restated Articles;

 

  (ii) violate any federal or Texas statute, rule or regulation applicable to
the Company;

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(iii)

result in the breach of or a default under any of the agreements listed on
Schedule A hereto; or

 

  (iv) require any consents, approvals, or authorizations to be obtained by the
Company from, or any registrations, declarations or filings to be made by the
Company with, any governmental authority under any federal or Texas statute,
rule or regulation applicable to the Company on or prior to the date hereof that
have not been obtained or made, except as may be required under state or federal
securities laws.

7. The Shares have been duly and validly authorized, and, when issued and
delivered against payment therefor pursuant to the Securities Purchase
Agreement, will be validly issued, fully paid and nonassessable and free of
preemptive rights arising from the Governing Documents and the Restated
Articles. The Conversion Shares have been duly and validly reserved, and,
assuming the Conversion Shares were issued and delivered upon conversion of the
Shares on the date hereof in accordance with the terms of the Restated Articles,
would be validly issued, fully paid and nonassessable and free of preemptive
rights arising from the Governing Documents and the Restated Articles. The
rights, preferences and privileges of the Shares included in the Restated
Articles are permitted by the TBCA.

8. The authorized capital stock of the Company consists of 300,000,000 shares of
Common Stock, with no par value (“Common Stock”), of which [140,285,434] were
issued and outstanding as of November [    ], 2008, and 5,000,000 shares of
Preferred Stock (“Preferred Stock”), par value $0.01, none of which are issued
and outstanding (excluding the Shares to be issued to the Investor pursuant to
the Securities Purchase Agreement). All issued and outstanding shares of Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable.

 

2

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EXHIBIT E

FORM OF OPINION OF DECHERT LLP,

SPECIAL COUNSEL TO THE COMPANY

1. Assuming due authorization, execution and delivery thereof by the Company,
the Securities Purchase Agreement is the legally valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to the Enforceability Exceptions.

2. Assuming due authorization, execution and delivery thereof by the Company,
the Registration Rights Agreement is the legally valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to the Enforceability Exceptions.

3. The execution and delivery of the Securities Purchase Agreement and the
Registration Rights Agreement, the issuance and sale of the Shares by the
Company to the Investor pursuant to the Securities Purchase Agreement, and the
consummation by the Company of the transactions contemplated by the Securities
Purchase Agreement and the Registration Rights Agreement that are scheduled to
occur at Closing do not on the date hereof:

 

 

(i)

result in the breach of or a default under any of the agreements listed on
Schedule A hereto; or

 

  (ii) require any consents, approvals or authorizations to be obtained by the
Company from, or any registrations, declarations or filings to be made by the
Company with, any governmental authority under any federal or New York statute,
rule or regulation applicable to the Company on or prior to the date hereof that
have not been obtained or made, except as may be required under state or federal
securities laws.

4. Assuming the truthfulness of the representations and compliance with the
agreements contained in the Securities Purchase Agreement, the Shares, upon
issuance and delivery and payment therefor in the manner described in the
Securities Purchase Agreement, will be issued in a transaction exempt from the
registration requirements of the Securities Act, and the issuance of the shares
of Common Stock issuable upon conversion of the Shares, if issued and delivered
to you on the date hereof in accordance with the terms of the Restated Articles,
would also be exempt from such registration requirements.

5. The Company is not required to be, and immediately after giving effect to the
sale of the Shares in accordance with the Securities Purchase Agreement and the
application of the proceeds therefrom, will not be required to be, registered as
an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

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EXHIBIT F

FORM OF PRESS RELEASE

Filed as Exhibit 99.1 to the Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 11, 2008